UNIVERSITY FEES

[Mr Speaker in the Chair]

Debate resumed.

Encik Wan Hussin bin Haji Zoohri (Aljunied GRC): ( In Malay): Thank you, Mr Speaker, for allowing me to join in the debate. I have three points to raise.

Firstly, concerning Malay students who are studying or will be studying at the University. This year, for the first time, Malay students will no longer automatically enjoy free tuition fees. So, I hope all the consultations or arrangements between the University and MENDAKI could be finalised as soon as possible, so that if any part of the fees need to be paid by any Malay student, the matter could be resolved before the start of the academic year. This will relieve the students and their parents of anxiety as to their position in this regard, and they could then face the new semester with peace of mind. And I hope Malay students affected by these changes will take full advantage of the facilities offered by MENDAKI to overcome whatever financial problems they might encounter in paying the fees.

Secondly, I am pleased to hear the Minister's announcement of plans to establish a university endowment fund. I am confident that this fund will be as successful as other funds that have been set up previously by various parties, in view of the strong and sincere spirit of giving that our people have demonstrated, not to mention the support that I am sure will be forthcoming from Members of Parliament who are former students of the University.

In this connection, I hope the Minister could state whether, should there be any move to raise the fees again in future, the increase could be postponed until such time as this endowment fund is large enough to cover part of the increase required. In other words, whether with this fund we could minimise any future fee increase.

A third point of concern to me relates to the fees paid by foreign students. In the statistics that were just distributed, I note that foreign students in the non-laboratory category pay about $7,000 in fees. I think this is much lower than what Singapore students would have to pay to study overseas, in a Western university. The National University of Singapore is equal in status, stature and excellence to the leading universities of other countries, so why can the University not fix its fees for foreign students at an equivalent or higher level? The National University of Singapore degree is valued not only in Singapore but overseas too. The value of the knowledge acquired by these students here should be reflected in the fees they pay. I hope this point could be considered.

Dr Lee Siew-Choh: Mr Speaker, Sir, the recent announcement of the increase in university tuition fees cannot be said to be totally unexpected. It is the PAP's policy to pass the buck to the people, to make the people pay and pay, whenever and wherever possible. The Senior Minister has said it often enough - there is no free lunch, that is, for the people, not for the Ministers. Hence, Medisave and the so-called restructuring of hospitals and the present increases in hospital charges. Hence, the regular increase in the many fees, charges, taxes and fines. Hence, the proposed consumption tax which the PAP Government is preparing to introduce.

In education, there are already independent schools with their high school fees. In the universities, we now have the latest increase in tuition fees, the third since 1987. Government says that it has reduced subsidy for the university from 77% to 74.5% of the university's annual recurrent expenditure by 2 1/2%. But it has also said that it intends to further reduce this subsidy to between 60% and 70%. So we may expect still more frequent and even higher increases in university tuition fees in the near future. University education then becomes, as many people have feared, education for the rich and the well-to-do. The middle and low-income groups may soon find that they cannot afford to send their children to university even if they pool family resources.

Why the fee increases? Government has said that the increases in the number of staff and their salaries have increased the universities' costs all round. The Minister has also said that 20% of the total recurrent expenditure on education is already spent on 5% of students in the universities, and that it is only right for the university students to pay more fees so that more funds may be spent on students in polytechnics, junior colleges, technical institutes and schools.

From Government's statements and what the Minister has said, it would appear that Government is very short of money and so must make do with the little that it has. But that is not the true position in Singapore. We have huge surpluses over the last few years and we have more than $42 billion (nearly $50 billion is the latest figure) in reserves. Therefore, we are not short of funds. Why then the increases in the fees? How much does Government really save from these increases?

If the costs of education have gone up, all we need do, Sir, is to apportion more funds for education for our children. In the 1991-92 budget, funds for education amounted to only 3.69% of our GDP. This is much less than what other countries allocate. Government has repeatedly stressed the need to invest in our human resources. If that be the policy, then we should spend much more on education at all levels, in order to provide truly a fully-rounded education for all our children, and to develop our people to their fullest potential. Some Western countries, like Germany and Australia, provide free or almost free education right up to tertiary level for all their citizens. How many other countries also do that? The Minister could tell us. And how much do the students in these countries really pay? I understand that the students pay very little.

We may not be able to emulate these countries in toto, Sir, but we should at least be able to provide university education for all who may benefit from it, even without the need for loans and other strings. Anyway, fees should be as low as possible.

Government's statements in the press say that American students in certain universities in the US pay higher fees than Singapore students in the NUS and NTI. But Government does not mention the fact that people in America have much higher wages, and that American universities grant scholarships and bursaries quite liberally.

Government has tried to soften the blow of tuition fee increases by raising the ceiling of university loans from 50% to 65%. It says that the students may also have loans from the university's own loan funds, and that loans may also be repaid over a longer period, from 15 to 20 years. But all this has not lightened the burden placed on the students.

The Prime Minister has said that Edusave will give every student an even start. If students have to repay loans over a number of years, how could those from middle and low-income families have an even start with students from the rich and the well-to-do families? Therefore, university fees, already high enough, should not be further increased. Perhaps parents may be allowed to use their CPF savings to pay for their children's tuition fee increases, as the Minister has said, but even that may not be of great help as most people do not have big CPF savings. And though an increase in the number of scholarships and bursaries might help, only a small number of students ultimately may benefit.

The solution, Sir, to the problem of increasing costs for higher education is not to increase fees every time, but to allocate more funds for education either from endowment funds or from Government subsidies.

Let me conclude by saying that it is all a matter of Government priorities. If Government truly believes that education is of prime importance for our children and leaders of the future, then it should allocate appropriate funds accordingly.

Assoc. Prof. Maurice Choo (Nominated Member): Mr Speaker, Sir, the education of the individual benefits not just the individual but the state he lives and works in. This fact is even more pertinent to states heavily dependent on human resources. For this reason, we, in Singapore, can always justify educational subsidies.

The students in the National University of Singapore have communicated with me and I feel that I can air some of their more useful points. At issue is the level of subsidy. It may be argued, as the Minister has just done, that education which confers higher earning power should be subsidised less. Equally, it may be argued that education which confers higher earning power may benefit the State more in commercial as well as non-commercial terms and, therefore, deserves greater support. For university education, we must have a firm idea of what the desirable level of subsidy should be in the medium term. This can be fine-tuned, of course, to differentiate between different fields of study. But once the projected levels of subsidy are known, the schedule of projected increases, say, over three to eight years, should be made known. This will enable parents and students to plan their finances well ahead of time, thereby increasing the sense of control they have over their choices and future.

Financial institutions also have a stake in higher education as a better-educated populace translates into better business for them. Students today may be reluctant to use commercial loans in greater numbers than they are doing currently because the terms are unattractive and onerous. These institutions should be encouraged to take a longer view and offer favourable interest and repayment terms to a group of clients who are characterised by low risk and high future value.

As the fee hikes are substantial, greater flexibility of financial arrangements may be considered for the short term. Three suggestions are offered:

(1) the CPF loan scheme, which can currently only be drawn from the accounts of students' parents, can be extended to the accounts of the siblings as well;

(2) when the students begin to pay their loans after they start working, they may be allowed to use their own CPF contributions to help to do so in order that cash flow problems during their early adult working life are reduced. And this is the period when they have the lowest earning power and the highest requirement for cash for various things, like housing, marriage, and so on;

(3) encourage and promote education insurance schemes along the lines of Medisave to prepare for the cost of tertiary education. In this regard, the Edusave Scheme which is primarily aimed at levelling educational opportunities should not be diverted for this purpose.

Finally, Sir, education is, of course, known to us as a great social leveller. Access to it must not only be guaranteed but also be seen to be truly open and developed.

Dr Tony Tan Keng Yam: Mr Speaker, Sir, let me first extend my thanks to all Members, who have spoken this afternoon, concerning the Ministerial Statement on fee increases and for their many comments and suggestions. I am happy to note that this subject has been thoroughly aired this afternoon and Members can be assured that the points which they have made will be taken up seriously by my Ministry and by NUS and NTI.

Now let me deal with some of the points in greater detail. First of all, the feedback which Mr Chandra Das has received that in order to encourage more students to take up the loans, we should look into the reasons why they are not taking up the loans . The reason is possibly that the students are not familiar with the loans and documents which should be produced so as to make the loans more user-friendly. I am happy to inform him that this is a matter which is being taken up by NUS and NTI. They will be producing brochures to tell the students about how the loans can be taken up, the terms of repayment and any other technical issues which the students will need to know before they decide whether or not to take up the loans. So this matter is well in hand.

Sir, his next point is that there should be audit committees to make sure that the universities are spending their money wisely. I think, Sir, this is a very pertinent point. Universities are very expensive institutions. They consume large amounts of money. For this financial year, they will spend over $400 million and it is incumbent on the universities, on the Government, on Parliament, to ensure that this money is well spent and not frittered away. But I would like to inform him that, in fact, the expenditure of the universities is very closely monitored. It is not that the NUS and NTI are allowed simply to spend as much as they like and if they run short of money, then they just increase their fees and the Government automatically increases its loan funds and they have essentially a blank cheque to do as they like. Before the university is allowed to increase its fees, it must present a budget which has to be approved by the Ministry of Education as well as the Ministry of Finance because, after all, even with the fee increase, the major part of the university's revenue comes from the Government in the form of a Government grant, which accounts for 75% of the university's revenue and expenditure. We cannot simply give money away without making sure that the money will be well spent for the purposes for which the money is specified. Those of you who have dealings not only with my Ministry but also with the Ministry of Finance will know that it is not so easy to get money from the Ministry of Finance. So I would reassure Mr Chandra Das that this matter is well in hand. But again it is a good point and I am glad that he has made it and the universities, both NUS and NTI, should take note of this and make sure that the costs are kept as low as possible so that no unnecessary expenditure is incurred.

Sir, the Member has made the point about foreign students which some members of the public have brought to him. Dr Low Seow Chay and Mr Wan Hussin also made the same point that we should increase the fees for foreign students so as to make it unnecessary for local students to pay more and make sure that local students have got enough opportunities to go to our two local universities. There should be no doubt that the purpose of having NUS and NTI in Singapore and funding them so generously is to educate our own people. This must be the first priority. Why should we go out of our way to educate the children of other countries? So our first priority must be to make available as many opportunities as possible for Singaporeans and permanent residents to go to universities and for their children to have the opportunity of university education.

Why then, Sir, do we make it a point to try and attract foreign students to NUS and NTI? I have dealt with this point in other debates but it is worthwhile to repeat the same points again. The purpose is not so much for the benefit of foreign students. The purpose is to benefit ourselves, our students and Singapore. It is good for our students that in their university education, they should have the opportunity to mix with students whose backgrounds are different from theirs, so that they will be able to have a more rounded education, their horizons will be expanded and I think their education will then be more meaningful.

At the same time, Sir, there are considerabe benefits to Singapore in having foreign students educated here. When they go back, there will be an automatic network of former students who will, in the course of time, occupy important positions, both in the private sector as well as in the public sector, particularly in the countries around us. That is why we have made special provision to try and encourage ASEAN students to study in Singapore. Indeed at one time, Singapore was the educational centre of Southeast Asia. Students came from all over Southeast Asia, primarily from the countries around us, to study in Singapore. And I think the benefits of having Singapore as the educational centre in Southeast Asia have been manifested over these many years. So we should, therefore, not try to put unnecessary obstacles in the way of foreign students to come and study in Singapore.

What we should do, Sir, is to make sure that there are enough places for our own Singapore students so that no Singapore student who deserves to go to the university will be denied a place and that we have done by expanding NUS, by upgrading NTI into a full university in July and, if necessary, in the years to come, we will start a third university. So there will be ample places for Singaporeans to go to university, and I do not think the right way is to cut down the number of foreign students but to make sure that there are more than enough places for our own local students.

Sir, the Chairman of the GPC on Education, Dr Ong Chit Chung, has made a point that we should try and spread out the fee increases so that parents and students will be able to manage their budget. As I have said, in future, I do not expect to see fee increases of the same magnitude as in the past few years and, therefore, the universities will be able to have fee increases which are more manageable and perhaps spread out over a few years. His suggestion for NTU to take over the alumni roll of Nanyang University to help in raising money for their endowment fund is an excellent suggestion which I will convey to NTU. There is a strong bond or sentiment among Nanyang University students. I hope that the university will be able to build on this bond in order to help raise funds for its endowment fund and that the graduates of Nanyang University would respond to this call.

Dr Low Seow Chay and Mr Choo Wee Khiang made the point that if there are students who still need finance even after their parents have used their CPF or after they have borrowed from the Government, we should make sure that if they need money for other expenses like this it should be available. I would assure them that this would be available because the universities have got their own loan funds and bursary funds. And both the universities and the Government share the same objective, and that is, to make sure that no student who deserves to get a place in the university will be prevented from having a university education simply because his or her parents cannot afford to pay the fees. If the Government loan is not enough, then the university will make available finance from its own funds to enable the student to pay the fees so that no student will be deprived of a university education simply because of the fees.

The point brought up by Mr Lau Ping Sum and Dr John Chen concerning the allocation of costs between the various faculties as well as between the undergraduate and the graduate courses and to make sure that these costs are properly apportioned; in other words, I believe, to make sure that undergraduates are not subsidising research students, this is a valid point. The universities try to keep these costs separate. I will just point out that universities, like all other educational institutions, are people intensive institutions. The major part of their costs is actually in salaries. And the major reason why the universities require so much money is that they have low staff/student ratios. We can always run universities in a much cheaper way by having more students to each staff member. But then the quality of teaching will deteriorate.

The major part of the revenue increase will actually go to hire more teachers in order to keep the staff/student ratio at a reasonable level. Every year we have got NWC increases and wage costs go up, and the university costs must go up and therefore fees must go up, but in future years it will be at a much lower rate than in the last four years.

The point brought up by Dr Low Seow Chay and Prof. Maurice Choo regarding the use of the CPF of siblings to help pay the fees, I believe this has already been announced by the Ministry of Labour in the papers this morning. I think they said that this is possible on a case by case basis.

The other suggestion is that after the students have graduated they should be allowed to use their CPF to pay off the loans which they got from the Government. The Minister for Labour has informed me that the students' union has also written to him about this. He is replying to them and there is no doubt that he will be very happy to send his reply to the Members who have asked this particular question. If Members are not satisfied, they can always raise a Question for Oral Answer in Parliament.

On the point brought up by Encik Wan Hussin regarding the particular problem of Malay students and whether consultations have been made with MENDAKI, I would assure him that this has already been the case and that no Malay student will face undue financial difficulties about this. MENDAKI is well aware of the fee increase and they have been in consultation with NUS and NTI. So that has been taken care of.

Dr Vasoo asked whether the ceiling for loan can be increased to 70% or 75%. 65% seems to be quite adequate at the present time. In fact, the university students are quite happy with 65%, but we can always consider a loan increase, if necessary. But I believe that if we increase the ceiling of the loan to 65% plus the money which is available from NUS and NTI from their own loan funds, there is actually enough finance for the time being to meet the needs. But we will keep that point under consideration.

There are two points brought up by Prof. Maurice Choo. One is whether the banks can offer lower rates of interest to students, because this is a preferred group of customers who later on would go out and earn a lot of money and be very good customers of the banks and the banks should therefore take this opportunity to cultivate their custom. I am sure that the banks will take this into consideration. And if the banks would like to do it, I have no objections.

Similarly, whether we can have some educational insurance, I would like to inform him that there are quite a number of insurance companies in Singapore which already have got educational insurance schemes. The students' union also raised this with me. What I told them was to write to the various insurance companies and find out all the terms. I am sure the companies will be very pleased to provide the information. If they want, they can distribute and disseminate this to all the students and the students, if they like, can take it from any of the insurance companies.

I think I have dealt with all the points here, except for one point raised by Dr Lee Siew-Choh as to why the Government does not essentially just provide a bigger subsidy to the university instead of raising fees and that we should spend more money on education. The Government, as I have repeated many times, not only I but all my colleagues including the Prime Minister, has said that education is our top priority. Our only resource is our people here. We are quite sensible people. We know that it is worth our while to spend money on education and I can say quite frankly that the Ministry of Finance has been most generous in financing education in Singapore and we should not quarrel with the money which they have given us.

The amount of money which we now spend on education in Singapore constitutes some 4% of our GDP. We have put it as our objective that we will raise the amount spent on education to 5% of our GDP in the coming years as the various schemes for upgrading education in the primary schools, the secondary schools, the post-secondary education and universities come to fruition. 5% of our GDP means that essentially some 20% of total Government spending, $1 out of every $5, will be spent on education. I think this is a very generous amount. Although I am the Education Minister and, of course, every Minister likes to get as much money for his Ministry as possible, we have to be responsible. There are other vital Government Ministries such as Defence which have to be allocated their fair share of money. Education is vital, so are a lot of other Government Ministries. And the Ministry of Finance must make a fair allocation of money to all the various Ministries. I am of the view that 5% of our GDP or 20% of total Government spending on education is a generous allocation and should be enough to finance all the schemes which will be implemented by the Ministry of Education.

Sir, I am worried about one particular comment which he has made, ie, why does the Government with all its huge surpluses need to raise fees and cause anxiety to parents and worry to students and some trouble for Members of Parliament? Why do we not give the universities more money and save us all this trouble? I think this is a very dangerous philosophy. All these huge surpluses have come about because we have had a very thrifty generation. We have had a lot of surpluses because we have worked hard and we have saved money. I do not think that we want to be the generation which has spent all the money which was accumulated by the first generation.

We are in a sense new rich in Singapore. And looking at all our vast surpluses, it appears to us that there is no limit and that we can spend on anything we like. But believe you me, it only takes a few years to spend what your fathers and your forefathers have earned. And I believe that it is prudent for us to manage our finances properly, spend where it is necessary and, as I said, the Government has been most generous with regard to spending on education as well as with other social services like health, looking after the aged and so on. But if we have free education, if anybody can go to school or university and does not pay anything, will we have a better education system? I do not believe so.

There is psychologically an advantage in making people pay for a service, even if the payment is only a nominal one. Of course, we have to make sure that any payment which people make will not cause distress and, particularly in the case of education, will not make it difficult or impossible for poorer children to go up the education ladder. That is why we must have a wide variety of safety nets, Government loan schemes, private loan schemes, university loan schemes, to help any child who needs financial assistance, whether this is in independent schools or at university level. By making them pay a little bit, I think it helps to concentrate the mind wonderfully, that you are there, you are paying for something, therefore, you should make the best use of your life, whether it is in school or university. Under those circumstances, I think they would turn into better students and eventually better citizens.

Sir, before I conclude, one last point made by Mr Chandra Das about letting students know and consulting with them. I met with the student leaders of NUS and NTI last Monday, 29th April, to discuss about the increase in university fees and the impact on students in NUS and NTI. On the whole, it was a good meeting. The student leaders pressed their case with determination but also with a sense of responsibility and a sense of politeness. Some of their suggestions and requests, we have been able to accept, as I just announced in the Ministerial Statement. Other suggestions and requests, I explained to them that we could not consider at the present time because they were not in accordance with present Government policy. The student leaders took the point well, and a few days after the meeting they very kindly sent me a courteous letter to thank me for taking time to meet with them and listening to their suggestions and requests.

Sir, I think we can take pride in the students who are now being educated in the National University of Singapore and the Nanyang Technological Institute. They are a credit to themselves, to their families, to their universities and to the fine young men and young women of Singapore. NUS and NTI deserve the support of all Singaporeans. And provided that Government sets the lead by way of substantial initial donation and possibly by way of dollar-for-dollar contribution until the target is reached, I am confident that with the traditional generosity of Singaporeans and the strong support of the alumni of NUS and NTI, we should be able to reach our target of $1 billion for the endowment funds for the two universities within a period of five years.

Much obliged, Sir.

Mr Speaker: Dr Tan, would you like to withdraw your motion?

Dr Tony Tan Keng Yam: Mr Speaker, I beg leave to withdraw the motion.

Motion, by leave, withdrawn.