ANNUAL BUDGET STATEMENT

Debate resumed.

Dr Wong Kwei Cheong: Mr Speaker, Sir, I rise in support of the motion standing in the name of the Finance Minister.

Sir, while I support the Budget as a whole, I would like to draw the attention of the Minister for Finance to a number of concerns that have been expressed by many people, both in public and in private. For example, the Singapore Manufacturers' Association (SMA) has just released the results of a survey conducted over January this year, showing that the manufacturers' main concerns are as follows: (1) rising labour costs; (2) low profit margin; (3) strong Singapore dollar; (4) keen competition in the foreign market; (5) keen competition in the local market; (6) shortage of skilled workers; (7) shortage of production workers; (8) difficulties in penetrating new markets; (9) rising Telecom cost; (10) meeting required quality standards; (11) shortage of technicians; (12) rising utilities cost; (13) rising transport cost; (14) shortage of clerical and related workers; and (15) rising rental cost. Of the 15 points listed above, Mr Speaker, Sir, ten are concerns that can be directly linked to policies and/or measures adopted by the Government.

These concerns are also expressed by other businessmen, besides manufacturers. Hence, we need to look at them in greater detail.

Rising labour cost and the strong Singapore dollar

According to the Economic Survey of Singapore 1991, real wage growth for 1991 was 7.6% compared with 5.9% in 1990. With labour productivity growing by only 1.5% in 1991, this marked the third year in a row where real wage increases have exceeded productivity gains. In addition to rising labour costs, the Singapore dollar appreciated against the currencies of the three Asian NIEs, namely, Hong Kong, Taiwan and South Korea, about 4% to 9%. Our relative competitiveness declined further in 1991. There is a danger, Sir, that we are repeating the same mistakes that were made in the early 1980s which led to the recession of 1985.

According to the 1992 SMA survey, two out of five manufacturers have either moved or intended to relocate part of their business to neighbouring countries to cope with rising costs. Mr Speaker, Sir, the message is clear. We are rapidly losing our competitiveness. I hope the Government is fully aware of the problems faced by our manufacturers and businessmen as a result of rising labour costs and an appreciating Singapore dollar. The Budget did not address these issues. I hope the Minister can explain to this House what measures the Government is taking to help restore our competitiveness.

Labour shortage

The next problem highlighted by the 1992 SMA survey concerns the shortage of labour, involving skilled and unskilled production workers, technicians, clerical and related workers. This is not a new problem. The unemployment rate, as at June 1991, was 1.9%, showing that we continued to have full employment. However, according to the 1992 Singapore Yearbook of Statistics, for persons aged 15 years and above, there were about 1,516,000 economically active persons and 819,400 economically inactive persons, of whom 244,000 were males and 574,900 were females. I must admit I have not made any in-depth study of these economically inactive persons, but can I request the Minister to form a task force and study how this large group of economically inactive persons can be drawn into the labour force and help alleviate the huge labour shortage problem?

What I fail to understand, Mr Speaker, Sir, are the reasons for the recent increase in the foreign maid levy from $250 to $300. The Government should encourage more of the economically inactive females to join the workforce by making foreign maids affordable. This levy increase will make it less attractive for women in the lower-income group to work, thereby aggravating the shortage of production workers, and clerical and related workers. Rising costs

Finally, the problems relating to rising Telecom cost, rising utilities cost, rising transport cost and rising rental cost. These are perennial problems. No one can question the Government's desire to recover all operational costs. What about excessive profits? I hope the Minister can inform this House the additional profits made by Telecom as a result of the new system of charging telephone calls according to usage. The bulk of this profit will be contributed by business houses, as there is a limit to the extent of control over their telephone usage. If Telecom has made excessive profits, as we all suspected, will the Government be prepared to review its telephone charges?

In conclusion, Mr Speaker, Sir, I must congratulate the Minister for introducing another "painless budget". However, all the blood-letting has been done outside the budget. Increases in foreign workers levy, foreign maid levy and Telecom charges are good examples. Such practices are disruptive and businessmen cannot do proper costings if cost changes are made frequently. May I request the Minister to consider including all such levies and charges into the Annual Budget Statement? Otherwise, if the present practice is continued, the Budget Day will be a non-event.

Sir, on this note and with these comments and suggestions, I support the motion.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.10 pm.

Sitting accordingly suspended at 2.45 pm until 3.10 pm Sitting resumed at 3.10 pm

[Mr Speaker in the Chair]

Debate resumed.

The Parliamentary Secretary to the Minister for Information and the Arts (Encik Mohammad Maidin B P M): ( In Malay): Mr Speaker, Sir, I wish to commend the Minister for Finance for presenting a budget that seems simple but is based on tested principles. I am sure it would have a strengthening effect on the nation's financial administration.

The Budget this time reflects continuity. It does not propose any change on the income tax, something that the people always look out for. The budget proposals this time have to be seen alongside the changes that have been made in the tax rate in the past. In any case, there is still the 5% rebate, which should serve to motivate the people to work hard to achieve their aims.

More importantly, the Minister for Finance is giving special attention to the low-income group who live in 1-, 2- and 3-room flats by sponsoring their service and conservancy charges for this December. Not forgotten are the national service reservists in the armed forces, police force and the civil defence who are granted a relief in recognition of their service, totalling $20 million. But this should not be seen as a reward. Their sacrifice and contribution for the sake of peace and security in the country is invaluable.

Goods and services tax

Mr Speaker, the introduction of any new form of taxation is always received with apprehension, especially when people have gotten used to relief after relief from the Minister for Finance. In this regard, I feel the Government has made the right decision to introduce a White Paper on the goods and services tax (GST) in the second half of the year. This would enable debate on the planned introduction of the goods and services tax, in the House and later among the public. The Government needs to explain this proposal clearly and get sufficient feedback from all quarters of society. We need to look into the impact of GST on the cost of living and Singapore's position as a shopper's paradise. More importantly, we need to ensure that basic necessities are kept out of the goods and services tax. If the introduction of GST could be offset by lower income tax rates, I think it would be seen more positively. The details would be clearer when the White Paper is presented later. So I think I will not comment on this further.

CPF - 20%-20% by 1996

The Government has fixed the long-term CPF rate at 20% on either side, the employers and the employees. But the announcement that this target is to be reached by 1996 has raised some questions among workers. When we experienced the recession, workers willingly agreed to an immediate reduction of the employer's CPF rate. Now, when the rate is to be raised to just 20%, they are wondering why it has to take 10 years after the recession. Could we not consider reaching the target earlier, say, by 1994?

Education, housing and health

Sir, as in the past, education, housing and health continue to be given special attention. The Budget reflects the Government's commitment to providing Singaporeans the widest educational opportunities, quality housing and better health care. There is no doubt that the Budget is giving priority to these areas, as well as defence which also receives a large allocation, in the interests of national stability and long term prosperity.

Education receives particular attention with the allocation of $1 billion from the budget surplus towards Edusave. Edusave is another important step in the Government's effort to provide more educational opportunities for the people. Edusave will open the doors for students to a wider scope of education. It would have a positive impact on the all-round development of our students.

Comprehensive education

Comprehensive education is going to be an increasingly important area. In this regard, I would propose that allocation be made towards evolving an educational programme to help Singaporeans know themselves and their country better. I am talking about a subject, not necessarily for examination purposes, to be taught at primary and secondary, and even tertiary levels, to give our people a grasp of the basics about Singapore. This subject can be called simply "Singapore". The aim is that our education system would produce people who are not just educated and skilled, but who also know and love the country.

We are perturbed when we hear some Singaporeans singing glowing praises of some other country they have visited or read about, while totally ignoring its shortcomings and faults. Some even view their own country negatively. At the same time, we have also come across people who are not even sure of the country's geography when shown the map of Singapore. Of course, many know where the Singapore River is, but there are many other rivers here which seem alien to them.

I give these simple examples as they beg the question of whether Singaporeans really know their country when discussing matters of greater importance, matters pertaining to our survival. These include subjects like our history, the factors of our survival, our challenges, inter-racial harmony, our national administration, our political system, judicial system, national defence and so on. Although we have a short history, I think we possess a treasury of anecdotes and experiences that can serve as examples and a source of pride to all of us. In many respects, the problems we face are unique and we look for unique solutions, appropriate to our own situation. To foreigners, some of our measures may seem odd, but we know that they are necessary for our common good.

We need to draw up plans to help our young people grow up with a sense of pride and love for the nation. But this can only be achieved if Singaporeans know Singapore well. There is a Malay proverb that says: Tak kenal maka tak cinta, or, to know is to love. A comprehensive educational programme on Singapore would strengthen our loyalty and love for the country. It would be an important investment. It would also overcome some of the problems that we face from time to time. When people develop strong emotional roots here, they would not find it easy to emigrate to some other land on the promise of greener pastures. Another Malay proverb: Hujan emas di negeri orang, hujan batu di negeri sendiri, baik lagi di negeri sendiri - the grass might be greener on the other side, but it is still better here in our own land.

But proverbs alone are not enough. We need to nurture this national spirit from young and the best place to do this is in our schools.

National reserves

We have since independence espoused a fiscal policy that encourages economic growth. At the same time, we have always remembered to save and strengthen our reserves. Today, when our reserves are growing, and indeed we might say it has grown fairly large, we find some sections of our society itching in their fingers and palms. We hear some quarters asking for part of the reserves to be spent and for subsidies to be increased.

I agree that the Government should maintain some subsidies, such as those for education, housing and health. These are vital areas. But this has to be done subject to economic performance and should not go to the extent of jeopardising our reserves. In this regard, the Government's stand of cautious spending must be supported. Rather than being questioned, this practice ought to have the support of the people.

The experience in many other countries already trapped by the policy of giving subsidies must serve as a lesson for us. Singaporeans should not seek to persuade their political leaders to take the easy way out by spending the reserves just to win their hearts. This easy way out is actually the way to a difficult future. Efforts need to be made to help Singaporeans understand the significance of having a large reserve and its importance to confidence and to our economic stability.

Some quarters of our population, I think, do not believe there will be any disaster should we spend just a few billions of dollars out of the tens of billions of dollars in our reserves. But that is not the problem. The problem is getting used to excessive spending, spending more than what we earn, because, as have been seen in other countries, this can be addictive. When we can no longer curb it, other problems will arise, with ramifications beyond our ability to control.

There is a Malay proverb that encourages savings: Sedikit-sedikit, lama-lama jadi bukit, which means little piles in time make a mountain. This has been our principle in regard to our reserves. But once we start digging into it, little by little, even a mountain will in time be flattened. Worse still, if we get carried away, even that flattened piece of land will be reduced to a hole in the ground. When this happens, we will turn from a nation of savers to a nation of debtors. We, and generations to come, will have to bear the burden of debts. This is something we must avoid. Although our economy has been growing rapidly for the past two decades, it does not mean we will always be so fortunate. As it is, our rate of growth has already begun to moderate, and who knows what might happen next.

So, let us take heed and be prepared. Let us keep up this practice of saving and strengthening our reserves for as long as the economy allows. We can only save when we have surpluses. Tomorrow, when hard times come along, the reserves will be our saviour. We have no other assets to serve as our stake.

Sir, I support the financial policy of the Government.

The Minister of State for Education (Encik Sidek bin Saniff): Sir, the 1992 Budget is a pragmatic one taking into account the need for the economy to stay on course in terms of growth while at the same time taking into consideration the uncertain or bleak outlook of the major industrial countries of the world. It also shows that our heart and mind are always with the people - ordinary people - even when we globalise our philosophy as well as our strategy.

To me, it has its overall impact, short-term as well as long-term. And we may need to further scrutinise the measures and maybe even find further solutions. Because I believe yesterday's formula can seldom solve today's problem. Today's formula many a time cannot solve tomorrow's problem. Tomorrow's problem we must have tomorrow's formula, a fresh new formula.

I shall now elaborate on five specific areas and measures which would definitely have an impact on our economy and, in the final analysis, on our people.

Firstly, the reduction of corporate tax rates from 31% to 30%. It is a clear policy to enhance Singapore's position as a major manufacturing and financial centre in the world. It is a step towards helping to reduce the rising cost of doing business in Singapore. Consciously taking steps to reduce their internal operations we can also encourage them to venture into new markets such as in East Asia, Vietnam, China and, of course, in the ASEAN region. It is important for our business to be forward-looking and create business niches or opportunities for ourselves overseas instead of the typical attitude of waiting for opportunities to be created. It means venturing into new markets and forming partnerships and strategic alliances with domestic institutions or businesses in the countries they wish to operate.

Secondly, Sir, the impact of the reduction of corporate tax on HDB business. There are some 60,000 business establishments in Singapore employing 50 or less employees. The majority of their businesses are located in HDB estates or the small shophouses. I met, together with my Eunos Division activists, their representatives a week before the Budget Statement. At that time, they still felt the increased costs of operations. They do not quite like it. But the reduction in the corporate business tax is a welcome relief, I would suggest, for the HDB businesses. And as the Minister for National Development said, the sale of HDB-tenanted shops in fact is a hongbao for the shop tenants. It is a tremendous booster dose for the small businesses.

Sir, based on my discussion with them, I still think there is an urgent need to further help HDB businesses upgrade their operations such as entrepreneurial training, direct assistance in training and consultancy through the Skills Development Fund levy, as outlined by our own Ministry as well as our agency like the NPB.

Small businesses have been the cornerstone for the development of the Japanese economy in the early fifties and sixties. And for us, much emphasis has been put on foreign MNCs. Much more emphasis must be put on to our small businesses. Maybe it is timely for them to form a cooperative and for us to set up a Small Business Bureau to develop the much needed strategic plan for upgrading the operations of specifically small HDB type of business.

Apart from private sector involvement, there is a need for a multi-agency approach involving EDB, NPB, NCB, TDB and other related Government agencies. This would help to increase the value-added of the HDB type of business which is a critical pull factor in the next stage of our economic growth and development.

Thirdly, Sir, the double deduction for skill and knowledge-intensive financial activities. The double deduction for skill and knowledge-intensive financial activities once again reveals the Government's foresight in providing incentives to boost Singapore's role as a regional financial service centre. To aspire to be a global financial market, it is imperative that local MNCs as well as foreign ones need to invest in knowledge-intensive services. The double deduction for skill and knowledge-intensive activities is a step in the right direction.

Though mention was made to attract talented persons with specialised expertise and experience to work in Singapore, I think there is a need to develop our own indigenous pool of talent and expertise. The Management Schools at NUS and NTU and other institutions have done a good job in keeping pace with the developments, but I think there is a further need for them to continue to keep pace with these developments and, where necessary, to restructure their courses so that the new graduates are equipped with the requisite skills to meet the demands of the financial market sector. The Skills Development Fund and NPB could look into assistance for post-employment trends for both workers and frontline executive level personnel engaged by the financial market. It is also important that we spend more time upgrading the skills of the workers in the financial market so that they could play a more important role in upgrading the activities of the sector.

Just like the dealers in the futures commodities market, the TDB, in this respect, could undertake to conduct courses which would upgrade the skill of the dealers, including the administration and other support staff.

Fourthly, public housing. During my discussion with my activists last week, an activist told me that he had to take the painful decision of lowering his expectations by turning down his original plan of buying a maisonette. He had already registered to buy it. Now he has to satisfy himself with a five-room flat. I hope it is an extreme case.

Nonetheless, according to them, the cost of public housing has risen. Resale price has risen even more. This, to my mind, has an impact, especially on the younger generation and the newly married couples. The emerging trend is that more and more Singaporeans in the lower middle income group are feeling the pinch. At least that was what the majority of them told me.

Mr Speaker, Sir, it is important that public housing is affordable for the younger generation of Singaporeans, especially the newly married couples. Ways could be found to match their reasonable expectations.

To me, it is simply because, with 86% of our population now located in HDB estates, HDB is no more a roof above our heads. It is not an ordinary housing estate. It is not a building. To me, it is an institution. It is Singapore. It is us, with all the social, economic, cultural and political implications. I wish we can look into this area more closely.

Finally, foreign maid levy. It would be worth our while to debate it in this august Chamber, not now, not during the Committee of Supply, but on special days allotted just for this. I think we could be more pragmatic in our criteria in allowing Singapore households to employ maids. We must find ways of balancing between not turning ourselves into Berlin (they said that if you want to see the Turks, you do not have to go to Ankara, go to Berlin), and yet we could be slightly more generous to our neighbours, fellow ASEAN countries, especially.

This is another subject that needs our comprehensive and thorough debate in this House. It is an issue of the future that will affect our citizens, our children, our value system, and it must be seen in a wider context.

Sir, most of the Filipino, Sri Lankan, Indonesian, Thai and other maids are dutiful daughters who, because of poverty or other financial circumstances, are forced to seek employment abroad so that they could support their families back home. Such a movement of labour, to me, is part of an international trend in the globalisation of the new world order, something that you cannot stop. It will be there.

We have in our midst Singaporeans who have found work abroad in the United Kingdom, America, Canada, Australia and other industrial and developing countries. Such a movement of Singaporeans helps to strengthen Singapore's global link with the world economy and provides valuable experience and employment to those adventurous and skilled Singaporeans. Hence, I would like to urge that the employment of foreign maids must be seen in the context of that wider global trend.

For example, by basing stictly on the income criteria may not be a practical solution for women earning less than $1,200 to employ maids unless their husbands have a high salary. Most have maids out of necessity. Of the $1,200, after $700 deduction, maybe they have about $500 or so surplus, which means a lot to them, especially for their children's education and other necessary comforts.

There are working mothers with two or more children and whose salary is above $2,000 and holding professional jobs. We must find pragmatic solutions for these professional women and thus encourage them to have more babies and, at the same time, help ease their anxiety relating to child care.

Sir, this seems to be one of the most important reasons why more professional women are leaving the workforce for a few years to look after their young children. Some argue it is good for them but the question is: how long? This would affect of course the company or the institution even more should the woman hold critical position, not forgetting her own career and her own satisfaction in that particular company. This is where I think their happiness lies. And maybe the next time when you wish them Selamat Hari Raya, or Happy Hari Raya, or Happy Deepavali, or in Chinese, Gongxi Fa Cai, you can emphasise Xin Nian Kuai Le even more.

Dr Michael Lim Chun Leng (Cheng San GRC): Mr Speaker, Sir, though not a clairvoyant, the 1992 Budget with its characteristic prudent fiscal policies was predictably cast in the image of its predecessor. Despite its similarity to previous budgets, it was a breath of fresh air considering the looming clouds of an economic slowdown.

Our fiscal prudence has stood us well. Despite the difficult economic conditions throughout the world last year, our economy had achieved a creditable 6.7% growth rate. Compared to the trend of government spending in other countries, we have been allocating an inordinate amount of the expenditure to the key areas of education and housing. This is essential as Singapore, being a small nation whose only resource is its people, must invest in its people. To protect its people and the country, the allocation for military defence has also been justifiably significant. Together, the total allocation to these three areas of education, housing and defence accounts for 47.9% of the expenditure. Unlike many countries whose expenditure on social and health services hangs like a sword of Damocles over their stretched financial resources, Singapore has managed to keep our allocation to health to 5.6% and community development to 1.4%.

Wisely, we have also discouraged a subsidy mentality. Nevertheless, we must always be mindful of the needs of those who are economically less able. While my esteemed colleagues deliberate on free market policies and expound on the solutions to a widening gap between earnings and productivity, the rise in Singapore's unit labour cost and the declining export growth rates, I will focus my attention on the lower income group.

On this note, I am heartened that the Minister for Finance has taken pains to ensure that the lower income group has also something to look forward to. For citizen householders staying in rented and owner-occupied HDB flats of 3-room size or smaller, the gesture of a one month rebate of the service and conservancy charges is certainly a rainbow in the sky. Though there is no pot of gold at the end of this rainbow, more gestures in a similar vein will help to bring cheer to this group of Singaporeans who have little to look forward to during the Budget period.

Though many in this group may not benefit from the 5% personal income tax rebate, as they may not earn sufficient income to pay tax, some will still benefit. The tax relief for reservists is also a step in the right direction. Not only does it give recognition to the contributions of reservists but it will benefit a large segment of Singaporeans, especially those in the lower-income group.

I stand firmly behind the Government's decision to achieve a CPF rate of 40% with equal contribution by both employer and employee. The increase of the employer's CPF contribution from 17.5% to 18% and a reduction of the employee's contribution from 22.5% to 22% will bring cheer to many in the lower-income group.

The allocation of $1 billion to the Edusave programme will help to ensure that children from low income families will not be deprived of educational opportunities as a result of financial constraints. I am also heartened by the proposal to allocate funds to the Medifund programme in the near future when the proposals are more concrete.

Despite these silver linings in the cloud of an economic slowdown, my heart is heavily weighed down with concerns for the lower middle and the low income group. Though the budget is painless, the pain inflicted in between budgets may sometimes be bruising. An example of this is the recent increase in levy charges for foreign workers. Though the intentions are good, we must tailor the policy to ensure that the added financial burden does not make it economically non-viable for someone to continue working. This is more so when we have a tight labour market. The time-based telephone charges is another case in point. This together with the water conservation tax are forms of consumption tax.

The recent announcement on the introduction of a White Paper on Consumption Tax for goods and services in the near future has further raised the spectre of fear. I fear not for myself but for the economic crunch that the lower-income group may face. The principle of consumption tax must be tempered by the need to avoid unnecessary burden on the lower-income group.

We must remind ourselves that each policy by itself may not cause a significant dent in the finances of each family but the cumulative effect may tip the scales to economic hardship for those in the low income group. We must realise that those in the low income group may not dare to wear a smile on their face on budget days for it is like the calm before the storm; they have to brace themselves for the winds of taxation that blow in between budget days.

Indeed, none in this House will ever feel a chill down their spine whenever a policy which increases the cost of living sweeps through this House. We must, however, not lose the quality of empathy. We may never experience the effect of such policies on our quality of life, but in the inner sanctum of our hearts we must be able to feel what these people feel and in the innermost niches of our minds, we must learn to understand their perceptions.

Just as I do not believe in encouraging welfarism, I also believe that those in the lower-income group must be encouraged to work hard knowing that their just rewards are for them to keep. Therefore, I beseech the Government to add a drop of empathy here and to add a drop of flexibility there when concocting policies, so that the final potion may not be too overwhelming for my dear friends in the lower-income group, on the contrary it should be invigorating.

With this passionate plea, I support the Budget.

The Minister of State for Information and the Arts and Education (Dr Ker Sin Tze): ( In Mandarin): Mr Speaker, Sir, this year's Budget, like those presented by Dr Hu in the past, is solid and realistic.

Apart from changes in the tax rate on futures trading and financial services, there are no other major tax changes. In the personal income tax, the 5% rebate was started last year. To the Singapore residents who live in 1-room, 2-room and 3-room flats, the payment by the Government for their service and conservancy charges for December is good news for them.

In addition to this, the tax relief for the reservists, the increase in cess and the restriction on the purchase of duty-free liquors are measures that affect only a small segment of the population. The only measure that affects the whole population, in general, is the increase of 5% on the water conservation tax. On the whole, the Budget of this year has no substantial difference from that of last year's. Basically, it is an extension of last year's budget.

Looking carefully at the budget presented by the Finance Minister over the past few years, we can see clearly that Dr Hu has always been very prudent and cautious, always keeping expenditure within the limit of income, and to spend according to what the revenue is. The idea is to ensure that there is more income than expenditure and leave a surplus, if possible. This is the best way of doing business, running a country and a family. To a family if there is a surpl-us, then you will always be ready to meet with any unforeseen circumstances. To the society and the country, if the coffers are rich with budget surpluses, then we will have enough means and resources to meet any recession. But we can see also that the budget of a country is much more complicated than that of a family. The budget of a government is a means that can be used by the Government to lead and regulate economic activities. During recession, or bad times, the Government can increase development expenditure to support and sustain economic activities and to prevent the deterioration of the economic situation. When the economy is under inflationary pressure, then the Government can cut expenditure to prevent overheating of the economy. Therefore, a deficit budget has the effect of stimulating the economy, whereas a surplus budget will have contracting effect on the economy. Even if it is a balanced budget, the effect is still inflationary.

In 1991, there was the Gulf War in the early part of the year which made the people very pessimistic about the economy. But at the end of the war, the economy turned out to be much better than expected. We achieved 6.7% of our economic growth. But this year, the economic prospects of the United States and other advanced countries are bleak. Our economy will be affected and we can only expect to achieve 4% to 6% economic growth. If during this period, the Minister for Finance can increase the development expenditure or cut down certain taxes to stimulate economic activities, then I am sure the people will have more confidence in our economy. During an economic slowdown, any measure that increases production cost will add on to the burden of the private sector.

Traditionally, Sir, the people look up to the Government as their protectors like parents. They expect the parents to protect them as they would protect their children. So during the cold weather, the government should provide more warm clothing and blankets to the people. But the general impression given by the Government is that it is only after you have caught a cold that the Government will give you the medicine and care. This has already affected the physique of the people and the medical cost is certainly more than the cost to prevent the illness from developing. But this perception, of course, is not entirely correct, although it is a very popular one. This does not mean, however, that the Government should implement a deficit budget. What I am saying is that the Government should use flexible fiscal policies to reduce the surplus, when necessary, to maintain the stability in our economy and our development, and this is a good measure of flexibility that we can adopt.

Over the past two years, we see slower economic growth and the property market is rather quiet. The exception is that the prices of many old rent-controlled premises in the conservation area have gone up after the rent-control has been repealed. Property taxes go up with the increase in annual values of the properties. But in Neil Road, Bukit Pasoh and Cantonment Road, there are many old houses occupied by Chinese clan-associations. Some of these clan associations are very small, and they depend on the subscriptions, which are also very small, to survive. So if they have to pay for a substantial increase in their property taxes, then they will find it difficult to make ends meet. In the end, they may have to sell the properties and move to some remote places. But in the traditional concept of the Chinese, it is only as a last resort that they sell the properties passed down by their ancestors. Furthermore, members of these associations live in the neighbourhood. If the associations are moved to other places, they will lose their existing members and their activities may be shrunk. Some of these associations may even be dissolved. This is not in keeping with our efforts to preserve our traditions and our community characteristics.

Mr Speaker, Sir, under section 3, item 6(5) of the Property Tax Act, if the whole property or part of the property is used for charity purposes, or is conducive to the social development of Singapore, then tax exemption may be granted. Chinese associations also contribute to the social development but they are not granted tax exemption. The explanation is that they are only servicing the Chinese community. This is not in keeping with the intention of the Act.

The Chinese associations look after the Chinese community, while the Malay and Indian associations look after their respective communities. This is a form of division of labour. They should all be given equal treatment for tax exemption. Furthermore, some of these associations cater not only to their own community, but also other communities. One example is the Buddhist Lodge which gives scholarships and bursaries to Malay and Indian students as well. So the Ministry of Finance can perhaps consider granting tax exemption or concession on property tax to those associations which have also contributed to social development, according to the quantum and degree of contributions. Tax exemption or concession should also be given to Malay and Indian associations to make sure that they will not be forced to move out from their original locations because they cannot afford to pay the higher property taxes. This, I think, is good for encouraging healthy social activities and the preservation of our heritage and traditions.

Although, Mr Speaker, Sir, I have raised two matters, namely, the need for more flexible fiscal policies to maintain our prosperity and to grant property tax concession to associations, I would say that this year's Budget is still one that we should welcome.

Mr Speaker, Sir, I support the 1992 Budget of the Government.

Dr S. Vasoo (Tanjong Pagar GRC): Thank you, Mr Speaker, for allowing me to join in the debate. The debate appears to be a bit balanced in the sense that the Minister has presented a more or less balanced Budget. 3.58 pm

[Mr Deputy Speaker in the Chair]

Dr S. Vasoo (Tanjong Pagar GRC): Sir, Singaporeans are savers, and we have a large proportion of Singaporeans, particularly the older generation Singaporeans, who are frugal and thrifty. We have been able to save in terms of assets and resources. Would this be the case for the coming generation? I hope the younger Singaporeans will be encouraged to save.

There is a need to review our incentives to encourage people to save. This is important as consumerism is making a serious inroad in changing the attitudes of the young. Sir, as you are aware, many young people in industrialised countries are more inclined to have a "spend all" attitude. This trend can lead to serious consequences and we must take steps to correct this dangerous attitude where people are engaged in a spending spree. Some of these consequences are: We will have a large pool of spenders who spend more than they can afford. It will lead to individual debts and it can be demoralising. Secondly, their indebtedness can lead to other deviant behaviours such as illegal trade and other criminal activities. Thirdly, the community may not have sufficient resources or surpluses for other investments.

Sir, I feel that the policies that we have at this juncture do not provide the incentives for people to save. We have to find ways to inculcate in the young that it is good to save and incentives are made more attractive for people to save. We should consider tax exemption for interest on savings up to $50,000 in banks other than Post Office Savings Bank. This will in a way allow tax exemption for people who save in private banks too.

Sir, the fact that our people are our most important asset cannot be over-emphasised. We have no natural resources of our own. We even have to rely on others on essential things, eg, water. With hindsight, our political leaders have made the right decision to have concentrated on building our economy in the infant days of this nation. Present-day Singapore is the envy of many people. Our achievements have been stressed many a time and also in this House. A big amount of the credit must go to our workers who have provided tremendous support to build our economy, both in the private and governmental sector.

Sir, there is a small group of workers who have given tremendous effort to contribute to our nation-building and these are people who have retired. I am talking particularly of our pensioners and many of these pensioners, both men and women, have contributed to the progress of our nation. But somehow we seem to have forgotten about the contributions of these people. We have not taken an active interest to see how their efforts could to some extent be recognised. While our pensioners have made no insignificant contribution to this country's greatness, to-date there is little recognition given to this group of citizens, if at all.

For a long while, another important group of our citizens were not given any recognition. I am talking about our reservists. In this Budget, we have finally been able to give a token of recognition in the form of tax relief to reservists. Sir, I urge the Minister to consider and implement some form of recognition for this group of people, particularly our pensioners, just as a token of good gesture. A recognition of their support would go a long way to provide a signal that their contribution is worthy of our community's recognition. I know that the Minister may think that it is a small issue. We have from time to time brought up this matter in this House and I hope that he will look into it.

Sir, the value of our population has increased over the years as the nation gets better educated. We must not get complacent. We must continuously and arduously enhance the quality of our workforce in whatever way possible. Human capital investment becomes an important area for us to review. And it is necessary that we place an important premium in education, particularly in the training of our older workforce.

Sir, as you know, knowledge is power. A better educated workforce would help provide for a more productive workforce. Hopefully, further training will serve to improve the productivity of our workforce. The urge to address this problem is magnified by the fact that our economy has been challenged by various economies in the region. It is therefore important for us to ensure that we keep the competitive edge and we are able to meet the challenges ahead. One way would be to allow our workers to upgrade themselves, and be better equipped in terms of their skills.

Presently, our tax system allows for a course relief of a maximum of $2,000. As our population gets better educated, upgrading oneself almost invariably means taking up sophisticated courses. Needless to say, sophistication also means costlier courses. For example, some of the part-time evening courses may cost as much as $1,800. Quite a few of these courses are conducted by various institutes and organisations and they cost more than the $2,000 relief that is provided. So there is a need to review whether the course relief could be increased so that more people will be encouraged to enhance their skills and be better educated. This requires the attention of the Minister.

Sir, Singapore's physical landscape has evolved so much that someone who has been to Singapore 20 years ago would not be able to recognise Singapore today. Singapore's transformation is more than skin-deep. We have more and classier shopping complexes. Our people are eating better to a point that they are more conscious of what they eat today. More of our children are going to schools and doing well. These are both signs of an affluent society as well as symptomatic of a costlier society. While there are changes all round, something appears to have been able to withstand the test of time. For one, the most recent adjustment to the personal income tax relief allowable to an individual was 20 years ago. In this age and time, the total relief of $3,000 allowable to an individual is stretching the dollar a little too far. Sir, I do not intend to be drawn into the debate over the cost of living for Singaporeans. Enough has been said about this topic. Rather, 20 years and subtle changes to Singapore suffice for consideration to revise this meagre sum.

Sir, I urge the Minister to consider my proposals, given the ramifications of consumption tax to be presented some time later. The consumption tax would give the Government a surer and a broader tax base. Concomitantly, it would also burden citizens with a higher cost of living. Given that, a higher amount of personal tax relief is justifiable.

Sir, I would like to support the motion of the Minister. 4.10 pm

Mr Ling How Doong (Bukit Gombak): Mr Deputy Speaker, Sir, allow me to express my appreciation for this opportunity to participate in this debate.

Sir, I have noticed of late nearly all the Ministers, if not some Members of Parliament, have been lamenting that there is a trend in Singapore for the people to make use of the reserves. I do not know where they got this feedback, other than the fact that polls have been carried out and they seem to give the impression that some Singaporeans are going for more use of the reserves. I think the question here is: what sort of question or questionnaire was in fact put to the voters or to the residents of Singapore regarding the use of reserves? If the question is a simple one: "Would you want to make use of the reserves to improve your standard of living?", I am afraid the answer would be a yes, simply yes. But it is important to draw a distinction between budgetary surpluses and all the surpluses accumulated by the statutory bodies over the years. And the question should be rightly asked: "Do you think the Government should pool all the surpluses in the reserves?" and not just "Would you want to make use of the reserves to improve your standard of living?" If the question had been put differently, I think you would get a different set of answers.

From the polls, it is quite obvious that the majority of Singaporeans believe that Singapore should have more reserves, that Government should put aside money as reserve for a rainy day, I suppose. It is not whether the reserves should be spent. The question here is: what is the limit that the Government should put aside our surpluses as reserves? What is the limit? If the limit is not defined, there will be no end to the whole thing. Every time you clamour for more subsidies, you are being accused of utilising the reserves. But where do we stand? Do we say we keep on accumulating massive reserves and, at the same time, neglecting certain areas where we need to have more subsidies? Examples are education, housing and health. Why is the Government grudging that more subsidies are given in the field of education? For the simple reason that now with more and more schools being converted into independent schools, only 25% of the students will be able to get scholarships. What about the other 75% of the students? Are we assuming that all the students who manage to get into the independent schools are from well-off families? Statistics have already been given that most of them are from HDB estates. That would be a clear indication that they are either from the middle or lower income groups.

Also, it is an accepted fact that the only resource we have in Singapore is the human resource. Why is the Government not considering subsidising more for education? We are so bogged down with the fear that the national reserves will be used that we have in fact lost the true meaning of the question of the reserves being utilised and the question of more subsidies in certain fields which are considered as investment. The Government should, when it comes to the question of subsidies or reserves, consider how much we should accumulate as reserves, and not just keep on accumulating massive surpluses. Like the ROV, we have more than $1.7 billion and we have $600 million for HDB.

With the increase in the levies on the 300,000 foreign workers and 69,000 maids, the Government is going to collect over a billion dollars every year on levies alone. Every time when there is a clamour for subsidies for an essential investment, we grudge that we are eating into our reserves. Even if it is so, so be it. It must be. When we come to the field of education, more people should be subsidised. Not all Singaporeans who send their children to school are like all of us here, who can afford it. We must not forget, Sir, if I may repeat again here, that we have 750,000 people earning only $800 a month, and 450,000 people earning only $1,000 a month. Do you blame these people for asking more money to subsidise their children in school? It is out of necessity, rather than with the intention to squander away the Government reserves. We must do more for these people. When this class of people clamour for subsidies, they should have our support because it is a genuine case for want of support. It is not a case of squandering away our reserves for consumption purposes, which, of course, I would even object. I am not one for welfarism. But I am one for our people to be subsidised in the fields of education and in the field of housing.

I am quite sure the Government has got all the feedback. These are the two areas that the Government ought to look into. The last election was a clear indication. Singaporeans feel that the increasing fees and costs in education and health have burdened them unnecessarily to the extent that they may be financially unable to cope with the situation. I can give an example. It is like a millionaire making a will to the children. In the will, he said that the children can only make use of the money when they reach the age of 21 but, in the meantime, they could hardly subsist. They could not even live now. But the will says, "No, you cannot make use of the money until you reach the age of 21." Why can we not use more of this money for the benefit of the people in the field of education?

Sir, the next point is the question of HDB upgrading. Sir, the problem with the Frontbench is this: They cannot take criticism from us. When I brought up the matter, I merely explained the plight of a number of people. I mentioned the plight of the retirees and of those in the low income group who have got no money for the upgrading. The reply was, "Well, you are against upgrading". But anyway it is not for my decision, and luckily, the money does not belong to anyone of you here. It is the people's money and if the people want upgrading, you have to give it to them. This is what a democratic society is all about.

Sir, my question here is: before you call for a vote in respect of the HDB upgrading, did you tell the people, the residents, how much of the interior of their flat will be improved and what will be the improvement? And would it be spread over a period of time and, in the long run, will there be any increase in the contribution of 10%? It would appear that this is another pilot project. Just like the kindergartens, it is always a pilot project. You use the term "pilot project" so that you can back out anytime you want. It is a wonderful term to use.

Mr Dhanabalan: Point of clarification. Would the Member allow me to clarify?

Mr Deputy Speaker: Mr Ling, would you allow the Minister to clarify?

Mr Ling How Doong: Sir, when we come to the debate on the HDB, he will have a lot of time to explain.

Mr Dhanabalan: Sir, he has not submitted a cut under my Ministry's head.

Mr Ling How Doong: Mr Deputy Speaker, Sir, I watched the newsreel on television last night and they drew a comparison between a private housing estate doing upgrading and that of HDB. I think it is a very wrong comparison. It has no relevance at all. You must always bear in mind one factor. When a developer buys over old flats, they upgraded them with profit in mind. They are for sale. So they are very different from HDB flats. For all you know, you cannot sell to anybody you want.

An hon. Member: Why not?

Mr Ling How Doong: That person must be qualified in the first place.

An hon. Member: Of course, you can.

Mr Ling How Doong: But you cannot sell to anybody you want.

Mr Dhanabalan: Sir, point of clarification. He must give me a chance to clarify, other-wise he will make a fool of himself.

Mr Ling How Doong: Sir, I would not give way. Because at the last debate, I was not given a chance to reply. So why should I give him a chance to reply now? I am not going to give him a chance to reply.

Mr Deputy Speaker: You may continue then, Mr Ling.

Mr Ling How Doong: Sir, when the private sector upgrades, they sell to the people. In the case of HDB flats, most of the tenants would be stuck there for good. This is simply because, if they sell, most of them would not be able to buy another one as the price keeps going up. So it will be beyond the ability of most of the HDB flat dwellers to buy another flat, Sir.

An hon. Member: You sell your flat at a higher price.

Mr Ling How Doong: But they will have to stay in the open air. If they stay in the open air, is the Ministry of Community Development willing to help these people? Sir, I would not want to dwell on this any further.

The next point is, if I remember correctly, sometime back, before the introduction of the tax on telephone bills, the Government wanted to give the first number of calls free, and then impose a charge for every subsequent call. Later on, I believe a compromise came about, ie, the Government imposed a tax on the total bill. Now, with the introduction of the time-based charging system, I am wondering why the tax is still there. The tax should be abolished now, because it is based on the number of calls made. Therefore, the tax should be abolished.

Mr Dhanabalan: Sir, may I take a few minutes just to clarify a few points.

Mr Deputy Speaker: You have just five minutes.

Mr Dhanabalan: I just want to illustrate that Mr Ling obviously has not read the papers or tried to make himself informed about HDB policies. First of all, he said that an HDB owner cannot sell his flat to anybody except to those who qualify. But the qualification of the eligibility is so widely defined that more than 90% of Singaporeans qualify. An HDB owner can sell his flat to any permanent resident, any citizen, there is no limit on income, and there is no limit on ownership of private property. This means that an owner of HDB flat can sell his flat to almost anybody in Singapore. There is no restriction.

Mr Chiam See Tong: Not true.

Mr Dhanabalan: Of course, it is true. The only requirement is that the person stays in the flat. They should not buy the HDB flat as an investment. Anybody can buy an HDB flat on the second-hand market even if he owns a private property. There is no limit on income and he can be a permanent resident or a citizen. This covers almost everybody in Singapore. So he should get this point first.

Secondly, on upgrading, obviously he has not read the papers.

Mr Chiam See Tong: A single person cannot buy a 5-room flat.

Mr Dhanabalan: I said "almost everybody".

Mr Chiam See Tong: There you are!

Mr Dhanabalan: If Mr Chiam is advocating that a single person should be allowed to buy a 5-room flat, then I think he should bring it up and we can debate that point whether Singapore can afford it. But I did not say "everybody" in Singapore. Sir, I said "almost everybody". In fact, the market is so wide that it should not affect the resale value.

Secondly, on upgrading. Of course, all the facts are made available to those who are affected by upgrading: how much would be spent on the interior of the flat, how much would be spent within the block, how much would be spent outside the block, and not just the sums but the exact items of upgrading before they are asked to vote. They are not just merely told in descriptive language, there are plans, there are models, there are films. So before the Member speaks on this, he should make himself fully informed. If he does not know about it, he should put in a Question. Maybe we can give him the clarification, but he should not make a speech without even taking the trouble to find out the facts.

Mr Deputy Speaker: Mr Koo Tsai Kee, you have about three minutes.

Mr Koo Tsai Kee (Tanjong Pagar GRC): Mr Deputy Speaker, Sir, I rise to support the Budget Statement moved by the Minister for Finance. But before that, maybe one comment. The press calls me the "letter-writing MP". Maybe Mr Ling How Doong should be called the "Subsidy MP".

Sir, first, I would like to make a pronouncement of the 1992 Budget Statement. Different people have made different verdicts. Some say it is a "Pro-worker" Budget, some say "Pro-business", "Pro-reservists", and some say "a healthy life-style Budget with a heart for the poor". To me, Sir, the Budget is a "Pro-Singapore" Budget. It is a Budget that looks to the future from the cautious perspective of the past. The Budget charts the course out of the prevailing economic storm that threatens to engulf the world into economic chaos. Under the ever watchful eyes of the Minister for Finance, Dr Hu, the 1992 Budget Statement would steer away from the rocks of recession and the white waters of inflation. Many other economic ships, like those of Australia, the United States of America and Britain, have already hit the reefs of recession. Britain is suffering now from the longest, (but they say not the deepest) recession in as many years. Dark clouds are also gathering ahead for the industrial superpowers like Germany and Japan.

Sir, as our economic ship enters the impending economic storm as Japan and Germany, our survival strategy must be very clearly understood. First, we must stay cool, listen to our captain, Dr Hu, and have faith in him, which the Chinese say: (da hai hang xing kao duo so).

An hon. Member: Mr Goh is our captain.

Mr Koo Tsai Kee: The Prime Minister is the Head of Government. Dr Hu is our financial captain. Dr Hu has steered us through an economic storm in the mid-80s. I think he will help us reach the bountiful shores again in the 1990s.

An hon. Member: No more carriage.

Mr Koo Tsai Kee: It is the economic ship now. The days of the carriages are over.

Second, in a seafaring economic journey, we must never panic and start to throw our lifeboats overboard unnecessarily. What are our lifeboats? Sir, I am referring to our seemingly huge financial reserves that members of the public, and I think Mr Chiam and Mr Ling have made reference to. Already, I hear and read of Singaporeans wanting us to use our lifeboats.

Mr Deputy Speaker: Order. It is now 4.30 pm.

Dr Hu, debate to be resumed on what day?

The Minister for Finance (Dr Richard Hu Tsu Tau): Tomorrow, Sir.

Mr Deputy Speaker: So be it.