THE FY91 BUDGET ESTIMATES

Development expenditure is expected to increase from 6.4% of GDP in FY90 to 7.3% of GDP in FY91. Operating expenditure, on the other hand, is kept at 12.5% of GDP, below the medium term ceiling of 13.0% of GDP. Overall, Government expenditure as a proportion of GDP will increase, from 22% of GDP in FY90 to 23.9% of GDP in FY91. This is still within the 25% limit that Government has set for the long term.

Total expenditure in FY91 is projected at $15.8 billion, an increase of $2.1 billion or 15.4% over the revised FY90 expenditure of $13.7 billion. Recurrent expenditure accounts for $10.9 billion or 69.3% of total expenditure, whilst development expenditure accounts for $4.9 billion or 30.7% of total expenditure.

The Ministries of Education, National Development and Defence will account for half, while Social and Community services will take up almost a third of total expenditure in FY91. This reflects Government's priorities which are national security, quality education, affordable housing, a clean and green environment, good healthcare services, and improved facilities for the arts, sports and recreation to raise the quality of life in Singapore. Statutory expenditure on debt servicing will be $2.7 billion or 16.9% of total expenditure.

Recurrent Expenditure

Total recurrent expenditure for FY91 is projected to be $11.0 billion. This represents an increase of $1.3 billion or 12.9% over the revised FY90 expenditure. The rate of increase for FY91 is lower than that in FY90 over FY89, but as a percentage of GDP it is one percentage point higher at 16.6%.

Expenditure On Manpower or EOM is projected to rise by 11.1% to $2.2 billion. EOM for FY91 constitutes 3.3% of GDP, marginally higher than the 3.2% recorded in FY90. The increase is mainly to cater for normal salary increments and the provision for essential vacancies. This has, however, been mitigated by a reduction in the total staff establishment, largely the result of efforts by Ministries to optimise manpower resources.

In March 1988, I announced in this House that Government should aim to maintain 'zero-growth' in its staffing level as at 1986. I am pleased to inform the House that the total authorised establishment of Ministries and Government-funded statutory boards in FY91 will be trimmed by about 1,300 posts or 1.2% to slightly over 99,400 posts. This is 7.4% below the actual staff strength as at 31st December, 1986. The staff complements of the Ministries of Health, National Development and Finance will be reduced owing to restructuring or privatisation of some of their functions. Staff increases are, however, allowed for some Organs of State and Ministries, including the Ministries of Education, Home Affairs, Foreign Affairs, Communications and Trade and Industry. These increases are required for new programmes.

Other Operating Expenditure or OOE is projected to increase by 4.6% to $985 million. The increase is relatively low because of the exceptionally high "one-off" expenditure in FY90 arising from Government's $88 million contribution towards the 25th Anniversary Charity Fund. Excluding this item, the increase is $132 million or 15.4%. This is mainly due to higher provisions for investment management fees, cash grants to stallholders in markets and food centres affected by HDB's redevelopment programme, child care subsidies and financial assistance to voluntary institutions. Higher capitation grants to special education schools and financial assistance schemes in independent schools also account for the large increase. A sum of $18 million has been budgeted as Government's dollar-for-dollar contribution to the endowment fund for the newly approved Singapore International Foundation. An additional sum of $7 million is also set aside to match contributions to be received in FY91 for the 25th Anniversary Charity Fund from public pledges made in 1990.

Grants-In-Aid or GIA will increase by 4.7% to $1.3 billion. The increase is largely to meet higher operating deficits of the tertiary institutions.

Pensions expenditure is expected to rise by 6.3% to $318 million. This is mainly due to the increase in the number of pensioners and the rising cost of medical subsidy to pensioners.

Debt servicing costs are projected to increase substantially, from $2.0 billion in FY90 to $2.7 billion in FY91. This represents an increase of $636 million or 31.3%. The increase is to meet interest payments on new domestic loans expected to be raised in FY91 and to cater for higher interest charges on floating rate stocks issued to the CPF Board.

Development Expenditure

Development expenditure in FY91 is projected to be $4.9 billion. This represents an increase of nearly 22% over FY90.

Excluding expenditure on public housing, direct Government development expenditure will rise to $2.2 billion, an increase of nearly 60%. Major development projects include reclamation at Buran Darat, Telok Ayer Basin and Changi East; and the construction of the Senoko Refuse Incineration Plant, the new Institute of Health and National Dental Centre, hospitals, polyclinics, single session secondary schools, roads, and civil defence facilities and shelters. Capital subsidy for public housing is projected to be $819 million. This includes a capital subsidy on the sale of HDB flats, and provisions for specific works and the upgrading programme, as well as capital grants to Town Councils.

Capital grants to other statutory bodies will amount to $1.5 billion, an increase of 20.2%. The major items of capital expendi- ture include payments for the MRT system and Changi Airport Terminal Two; development of infrastructural facilities and attractions at Sentosa and the Singapore Zoological Gardens; development of university campuses and staff quarters, independent schools, aided schools, junior colleges and vocational institutes; and the upgrading of facilities for the Singapore Broadcasting Corporation. Grants are also provided for the Economic Development Assistance Scheme administered by EDB and to meet depreciation expenses of facilities attributable to subsidised patients in the restructured hospitals.

The projected development expenditure includes a contingency provision of $318 million for new development projects that may be approved for implementation in FY91. A sum of $200 million is also provided for Public Sector R&D expenditure in FY91, of which $117 million has already been committed. The balance of $83 million will be available for new R&D projects. The newly established National Science and Technology Board, under the Ministry of Trade and Industry, will co-ordinate all R&D projects with effect from the new financial year.