EXEMPTED BUSINESS (Motion)

Resolved,

That the proceedings on the Budget Statement be continued beyond 4.30 pm until 5.30 pm at this day's sitting and be exempted from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

3.39 pm

Encik Umar Abdul Hamid (Ang Mo Kio GRC): Mr Speaker, Sir, let me begin the debate by expressing the reaction of my constituents towards this year's Budget Statement. Many of them felt that the budget reflects the true commitment of the Government to the people and the generosity of our leadership. Generally, they are in support of the Government's expenditure policy that invests for the future betterment of the people and the country.

Sir, our economic and fiscal policies have proven itself to be prudent and reliable. Take 1992, for example, where despite uncertainties in the world's economy, we still enjoyed 5.8% economic growth. I am confident that we are in the right track and with the strong support and cooperation of the people, we will be able to enjoy 6%-7% of economic growth this year.

Sir, this year's budget for the first time presented a unique package of tax incentives that encourages our businessmen and entrepreneurs to go abroad and take advantage of the business opportunities in the high growth countries around us. Being responsive and adaptable to changes are the key factors for Singapore to continue to develop its economy. Another unique package that we have this year is the changes in the corporate and personal tax that form part of the GST package.

Credit must be given to the Government for implementing the GST in a revenue-negative way. I am also pleased to note that the Government has ensured Singaporeans that no household should be worse off when the GST is implemented. However, Sir, there are some Singaporeans who are very concerned about the multiplying effect of the tax and the irresponsible acts of profiteering. In fact, the latter is the greatest concern of Singaporeans. I would like to take this opportunity to urge the Government to have control and to take severe action against those who resort to profiteering. Such action should include taking away their business licence and they should be barred from doing business for a certain period of time. I certainly believe that such deterrent action will protect the rights of the consumers.

On individual income tax, the Government has given an across-the-board one-off rebate of 5% for Year of Assessment 1993. Accompanying the GST, the Government will reduce the percentage of the highest tax bracket by 3% with proportionate reduction in other tax brackets. However, Sir, the proportionate percentage reduction of income tax does not seem to be favouring the lower middle and lower income group, because proportionally they will be entitled to only 1% of reduction. Unlike Mr Low and other Opposition Members here who only criticize but fail to put up suggestions, I would like to request the Minister to consider giving a 2% reduction to the taxpayers who happen to fall in these income tax brackets. In my opinion, a 2% reduction is a more justifiable compensation of the GST for the lower middle and lower income group. Alternatively, the Government may want to consider raising the minimum taxable income group level to $7,500 per annum.

Mr Speaker, Sir, one of the reasons why the Government has kept the personal relief of our income tax is to make our tax system as broad based as possible. The amount is certainly not a true indication of our personal yearly expenditure, for it does not take into consideration the increase in cost of living. The GST is a solution to our broad-based tax system and with its implementation, I would like to urge the Government to consider raising the amount of the income tax personal relief. I must admit that an increase of $1,000 to the personal relief is below my expectation. I would like to urge the Minister to consider a personal relief based on a certain percentage of the cost of living in the Year of Assessment.

Sir, I am also very pleased to note that the Government has committed to channel a substantial part of its FY 93 surplus towards building up the Edusave Endowment and Medical Endowment Funds. The Government has emphasised its commitment to education for the future success of Singapore. Its fundamental objective is to produce well educated and highly skilled Singaporeans. In line with this objective, may I suggest that the income tax continuing educational relief be increased from the present level to accommodate the continuous rise of fees for continuing education or adult training courses. The relief will certainly encourage more Singaporeans to pursue their investment in skill upgrading and education.

Mr Speaker, Sir, Singapore must never be a welfare state if we want to remain competitive and, at the same time, it must not be a safe haven just for the rich. We have to align our policies to encourage savings and healthy competition. A good compromise of taxation and relief are the means by which we can achieve these goals. With that, Sir, I support the motion.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, I strongly support the CPF Top-Up Scheme introduced in this year's budget. The Minister for Finance has also mentioned that depending on future surpluses in the Government budget, more disbursements would be coming along the way. I recall urging the Government to share the fruits of Government surpluses in a more direct way in last year's budget. This Top-Up Scheme reminds me of the cash disbursement by the Alaskan Government to the residents of Alaska when its coffers overflowed with money from its oil-boom years. Singapore does not have an oil field, but our reserve is better than having one. Properly managed, the nation can tap this reserve for generations to come. I think the people of Singapore should let this fact sink into their mind, that future disbursement will be the norm so long as the PAP continues to form the Government.

Mr Speaker, Sir, both the two tax reforms introduced by the Government in this budget, namely, incentives to promote an external economy and the corporate and personal income tax rebates, will sustain a long term economic growth for Singapore, as eloquently argued by my colleague, Mr Koo Tsai Kee. The incentive for an external economy is a non-controversial issue and is welcomed by everyone. The same cannot be said of GST, which is introduced to make up for the shortfall of revenue from corporate and personal income tax.

Like my colleagues, I would not go into the pros and cons of GST, as there is a GST Bill standing in the name of the Minister for Finance. However, I would like to discuss about the tax rebates introduced in this year's budget, mainly to annul the impact of GST.

The Government has declared many times in the past that GST is not an exercise to collect more revenue. The budget announced by the Minister clearly demonstrates the Government's resolve to put its money where its mouth is, and I quote the Minister:

'We will ensure that as far as possible, no household should be worse-off when the GST is implemented.'

In fact, I think the Government is bending backward to make GST palatable. Through income tax reduction, tax rebates and suspension of usage taxes, most households would come up ahead. I could not recall any incident in the past that this Government has done something similar. I commend Mr Goh and his Cabinet for the compassion they have shown to the people of Singapore, in particular, the lower income group.

My only reservation is that the Government might be doing too good a job in selling GST. By now, every Singaporean is under the impression that overall they will come up ahead when GST is introduced. In fact, there was one person who came to my meet-the-people session very much aggrieved that in future he would be worse off because he is not paying any tax now, as a result of the Government's third child incentive scheme. By default, people like him would be worse off when GST is implemented. I bring this fact up not because I think he is deserving of consideration but because of this impression left in the people's mind.

At this juncture, may I ask the Clerk ofParliament to distribute the tables used by the Minister in his Budget Statement. [Copies of tables distributed to hon. Members] These are the five tables in Appendix F of his Budget Statement, Annual Accounts of Different Types of Flats, to demonstrate how different households would fare from 1st April 1994 till 31st March 1999 under a 3% GST regime. However, if one looks at the figures very carefully, one would realise that the balance for every case would come out to be positive because the Minister made a very important assumption, ie, price increase will go up by 3% and no more. I asked myself this very simple question: by how many percent would prices go up in 1994 before all these positive balances go to zero? For the 1-room rental flat, my computation shows that the net gain will become zero when price increases by 6.8%, inclusive of the 3% GST. There is a margin of about 3.8%. So for others, the margin is even narrower. If you look down the table, you will see that the figure ranges from 4.7% to 4.1% for 2-room flats; for 3-room flats it is about 5%, and 4-room HDB purchased flats, 4.6%. In other words, the margin is that narrow. If the price increases indeed go beyond 5% for the household, all these gains will be wiped out. I would like to highlight this fact to the Minister who, I must assume, is well aware of the situation.

As my colleagues, Dr Arthur Beng and Dr Toh have mentioned, even without profiteering, the effect of rounding up and the cost of GST compliance would probably drive up prices by more than 3%. So the chances of zero balance instead of positive balance are very high. Of course, with profiteering, the bright picture the Minister presents no longer exists. I think this shows how important it is for the Government to ensure that there is no undue price increase. Furthermore, I would like to urge the Minister to be more pessimistic in his analysis on the impact of GST. I urge him to err on the safe side and maybe keep some tricks up his sleeve with additional rebates or higher quota of rebates, if necessary, so that the expectation that the Government has created in the people's mind that "no household should be worse-off" can be met. I think a lot of people will be disappointed and they will feel short-changed if their experience does not match up with their heightened expectation. If this is indeed the case, this could generate a backlash of unhappiness towards the Government upon the implementation of GST.

In retrospect, in my mind, Sir, it would have been better for Government to adopt the stance that GST is a tax reform to create a more rewarding business environment. By making business more profitable, it is hoped that entrepreneurs will take greater risks and create greater wealth. More MNCs will come to Singapore to establish their business. It is hoped that with companies being more profitable, the employees of these companies will receive better compensation and everyone would be better off in the long run. However, this would come at a price. And the price is the shifting of tax burden from businesses on to consumers, thereby increasing their tax burden as a group. We should state this very clearly as a fact of life and create the proper expectation in the minds of the people. In future, if the GST-induced inflation can be controlled and indeed the tax rebates more than offset the increased tax burden, then the outcome would be a bonus. This would have been my preferred approach.

Sir, coming to the shifting of tax burden from businesses on to the consumers, I would like to use Appendix G of the Minister's speech, which is Total Revenue Loss to Government of Offsets. By looking at that particular Appendix, I come out with some interesting figures. The total tax reduction in this budget is $1,070 million, of which $318 million is corporate tax reduction. This means that the reduction given to the population at large, if we remove the corporate tax, is $1,070 million less $318 million, which is $752 million. This is before the temporary relief of $34 million.

On the other hand, the GST on consumers is expected to generate around $921 million. There is a difference between $921 million and $752 million, and the difference is close to $169 million, which is the tax burden shifted from the companies on to all groups of consumers. This is not a small number that we are talking about. It amounts to about 50% of the corporate income tax reduction. Even if we throw in the temporary relief of $34 million, the transferred tax burden still amounts to $135 million. Who bears this burden? It is possible that the GST on business consumption, which cannot be reimbursed, would form part of this amount. If that is the case, then the total cost base of doing business would have increased, thereby partially offsetting the benefit of corporate tax reduction. If households have to bear part of this burden, then some households would really be feeling the pinch since the Minister has assured us that most households would be better off. So, instead of me making guesses, perhaps I would request the Minister to enlighten me which groups bear the additional amount of money and what would be the impact on them.

Sir, another issue I would like to bring up is the reduction or the suspension of Government taxes with the implementation of GST. It is interesting to note that the Minister for Finance did not use the word "abolish" when he suspends these taxes, thereby leaving open the option of reintroducing these taxes in future. I would urge the Minister not to be too quick in their reintroduction. Perhaps the Government should take this opportunity to review whether these taxes are needed in the first place under the new tax regime and, hopefully, abolish them entirely.

One thing I am pretty confident of is that the reduction of cess to 1% would indeed be temporary. Cess is the sole source of income for the Singapore Tourist Promotion Board (STPB) whose function must be continued for the benefit of the tourist industry in Singapore. I do not think STPB is getting any of this GST revenue. This is quite clear from STPB's support for the refund of GST to the tourists. As such, I think it is a matter of time before cess would be increased back to 3% or more, perhaps in one or two years' time. It looks like that instead of having plus-plus on our bills, the day of plus-plus-plus would be a feature of Singapore living very soon.

In conclusion, Sir, let me reiterate my support for the tax reforms introduced by the Minister in his budget. I only hope that he will take some of my comments into consideration.

Dr S. Vasoo (Tanjong Pagar GRC): Thank you, Mr Speaker, Sir, for allowing me to join in the debate.

Sir, I would like to commend the Minister for Finance for the tax changes introduced and the implementation of GST. Sir, I know you will agree with me that we need to generate resources in order to provide better quality of health care, housing and education. To sustain these services, we need to continue to have economic growth. If we do not, many of these services, their quality and standard, will go down. In many countries where there is this problem of generating economic growth, they run into budget deficit. This is the reality of the situation that we will have to look at, and we will have to grapple with and manage.

As a case in point, the Opposition parliamentarians run town councils. They still have to generate finances to manage their town councils. I am sure they do not give excessive rebates or refrain from imposing high fees to run the town councils. In short, I do not think they provide a free service to run the town council. These are some of the realities that we see.

It is fortunate that in the context of Singapore, we have been able to have good economic growth. Because of this, we have been able to sustain and improve the quality of our social services. This is because we have good government and good leadership to manage our economy. In the context of our good economic situation, I am thinking whether the Minister for Finance would have been a bit more generous in trying to provide the various rebates and support to groups that will be seriously affected by the change to our tax system.

Sir, I am not sure that the consumers or the taxpayers know what GST is all about. It is a foggiest idea to them, and all they know is that it is another tax system. In order that GST can go down well and be consumer-friendly, it must be started off well. Current taxpayers must have, at the end, in terms of what the Minister has stated earlier in his Budget Statement, a net gain when GST is implemented. If they are worse off in the year of implementation, then the GST would leave a negative impact as a start. The Minister has assured that the majority of the people will not lose out. I hope that this will be the case and not just on paper. However, Sir, I am sceptical about this, especially when excessive profiteering spirit is unleashed and the impact on the consumer will be adverse. The compensation package to cushion the effect of GST on the working class will be outweighed by the surge in increased costs by excessive profiteering.

Sir, to cushion this, it may be advisable to consider a further $100 rebate per annum for 1-, 2-, 3- and 4-room families. Or, perhaps, one may for the next five years consider pegging the rebates on the basis of some inflationary index.

Sir, I also have a number of other concerns regarding the Budget Statement. What are the implications to retirees, pensioners and households with more dependants? How would small businesses be affected? Why are some goods not exempted? What effective actions will be taken against profiteering?

Sir, the retirees, pensioners and households with more dependants will be affected most by GST. Retirees with little or no savings require a higher compensatory package to cope with the anticipated increase in cost of living. The present rebates and financial assistance are inadequate and may not reach them at all, although we have suggested a system through the CCCs to assist them. I hope that this plan could be implemented more effectively at the grassroots level. An additional annual direct financial support of $100 may help them a little.

Sir, the small-time pensioners would also be more adversely affected, and the increase of $30 of the Singapore Allowance is so small and really not worth arguing about. The Minister could be more generous, and perhaps a $50 allowance will reflect a better recognition for the plight of the small-time pensioners.

Households with more dependants, Sir, particularly those with school-going children, are more likely to be hit by the GST. More rebates to cover school and food expenses have to be considered.

In the case of small businesses, they are likely to be caught with some increase in the administrative cost to implement GST. They may also face a little cash flow problem as they have to pay upfront for their goods to be re-exported. It will be helpful to small businesses, which form a useful part of our economy, to be given a one-time grant for the administrative set-up of the GST collection. We also need to ensure that the period of reimbursement for payment could be shortened so that it could ease their cash flow problem.

Sir, in order to arrest the regressive nature of GST for the lower income group, it would be more useful to grant GST exemption to hospital charges, public transport, rice and oil. I see no reason why this cannot be done. Is there a cogent argument against this? Is it not administratively feasible to look into this, so that we will be able to reduce the impact on the lower income families?

Sir, on the question of excessive profiteering, most of the ground feedback is that people are concerned about the pending rampant profiteering that will come about before the GST is implemented. There is much talk about this than GST itself. Government has to come out with a more effective action plan to deal with this problem. And I think the earlier we set up a monitoring system or even a hotline to deal with this problem, at least to identify which are the pockets that profiteering seems to be rampant, it might in fact ease off the potential urge by various quarters to profiteer. So strong deterrent actions such as cancellation of business licence, as suggested by my parliamentary colleague from Ang Mo Kio GRC, and prosecutions against offenders could be instituted.

Sir, the final thing that I would like to bring up is the need to encourage people to save more. Since GST does activate savings, may I recommend the Minister to consider exemption from tax the interest derived from the first $100,000 savings in any bank, besides Post Office Savings Bank. This will provide further incentive for people to save and to also participate in building our economy.

Sir, with that note, I support the motion.

Mr Chew Heng Ching (Eunos GRC): Mr Speaker, Sir, Budget '93 is indeed a "Bonanza Budget". The Hon. Minister plays Santa Claus with his bags of goodies containing such incentives and perks that virtually satisfy every Singaporean. Whilst it looks into the plight of the lower income by giving them rebates on property rentals and HDB service and conservancy charges to cushion the impact of GST, it also lowers direct taxes for individuals and corporations, and introduces other incentives galore to encourage enterprise, to stimulate local companies to venture abroad as well as to attract offshore activities to Singapore. For all these, Sir, for his setting a far-sighted and comprehensive direction for our economy, the Hon. Minister must be saluted.

But, Sir, even as we are slowly ascending the highs of a recovering economy, with the Government timely rewarding us with a most palatable budget, I find it necessary, amidst this euphoria, to sound a word of caution. Our economy remains dependent on the performance of the economic giants. Japan, Australia and most European countries are still waddling to find a way out of their economic cesspool. And we have yet to see the full impact of President Bill Clinton's austerity measures on the US economy.

Sir, whilst the announced budgetary plans would help us regain much of our competitive edge, I would like to urge Singaporeans to continue to work hard, be realistic in their expectations, be prepared to respond to the call for overseas postings as we restructure our economy in an increasingly external dimension, to overcome the problems of a small domestic market and a limited resource base.

We know for a fact that Government-linked companies (GLCs) and statutory boards are strong and cash-rich. The Minister has suggested that GLCs and statutory boards should link up and work with the private sector. Indeed, this is the most sensible approach because it avoids the dreaded scene where two or more Singapore corporations compete with each other overseas. They should therefore pool their financial and manpower resources together for better gains and for mutual benefit. But I would go further to suggest that we let the GLCs and the statutory boards play the role of a "big brother". Because they are well represented and well respected in this region, they can help establish linkages. Let them open the doors of the many contacts they have established to our own private sector.

It is equally a fact that the private sector is rich in entrepreneurial expertise and business mind as our GLCs and statutory boards are strong in cash. Therefore, let the private sector go into commercial, manufacturing and services activities. Let the GLCs and statutory boards help these foreign countries build their infrastructures, such as industrial estate development, telecommunications, sea and airport development. Let each sector lead and flourish in the business or undertaking that it is best suited for, and be able to achieve the best gains yet with consummate ease. Let the two sectors complement each other, let them work hand-in-hand. Only then will the vision, succinctly put by the Minister, of local companies and their foreign operations becoming a major contributor to our national wealth and standing strong as a second pillar of the Singapore economy be realised.

Sir, for companies in the private sector which are venturesome enough to take up the Government's challenge to invest overseas, they should be encouraged to link up with their overseas operations with Singapore in some tangible ways. The seven tax incentives given to encourage firms to regionalise, whilst good, should be made more transparent. As they are now, some of the incentives are granted on a case-by-case basis and the interpretation as to who is entitled can be very broad and flimsy, and will hardly motivate an entrepreneur at the threshold of investing overseas. It has been suggested that there should be some publicised and known criteria, and I am sure the Minister has taken heed of that.

Other than putting in fiscal measures to encourage foreign investments, the objective towards greater regionalisation cannot be complete without getting Singaporeans to like an overseas posting. Therefore, we should try to create a "Singapore environment" overseas. Cater to the needs of employees' families. Look after their children's education. Make their spouses, especially their wives, feel at home while they are overseas. Recently, there was an announcement that children of overseas employees will not be required to have passed a second language for admission to the Singapore universities. This is indeed welcome news and a step in the right direction.

Sir, I would now like to take the discussion back to Singapore. The Minister has promised to keep the public sector lean and trim so that a bigger share of national manpower and financial resources would be available to the private sector. Indeed, this will mean Government revenue will be kept low allowing room for further reductions of our tax rates in order to maintain our competitiveness. The Government has also emphasised that control of costs will remain the cornerstone of Government's expenditure policy. Sir, on behalf of the Estimates Committee for which I am Chairman, I thank the Minister, for he has made our task of keeping a close watch on Government expenditure easier.

I am also pleased that the Social and Community Services will continue to take up a lion's share of up to 40% of Government expenditure for FY 93 to enable Singaporeans to be housed in affordable, clean environment, their children provided with better quality education as well as good basic health care for all.

However, Sir, I am somewhat alarmed by the 17% increase over FY 92 in manpower expenditure. The Government has done a good job in maintaining zero growth in manpower; it has reduced some 600 posts. Taking the average salary increase of about 7% per annum in recent years, the proposed 17% increase in manpower costs would appear high. Is the Government proposing to revise the salaries of civil servants? Sir, I am not against any upward revision of salaries for civil servants. I would suggest that any increase in salary be carefully studied for its inflationary impact and the pressure it puts on the private sector to follow suit. We do not want a situation where any lowering of our tax rates to make us competitive be negated by unnecessary, unchecked increases in our wages.

Finally, Sir, I come to the talk of the town - the GST. The introduction of GST is, indeed, opportune as it will be implemented at a time when the Singapore economy remains strong. I heard that Members of the Opposition are not in favour of GST. They argued that since we have large reserves and operating on a budgetary surplus every year, there is no need for GST.

Sir, reserves are savings. Savings are accumulated when times are good and to be used when times are bad. When it rains, you collect water so that it comes handy when drought strikes. You do not empty your water tanks because you see rain falling. This is basic home economics. Sadly, Members of the Opposition do not seem to understand this. They might also not see that GST seeks not to increase revenue but to reform our tax system to make us competitive and to reward the enterprising.

Sir, the Minister's promise to cushion the impact of GST on Singaporeans is earnest. It is workable if profiteering can be absolutely prevented. Otherwise, there will be at least, initially, an inflationary rise. As our economy picks up momentum in the next 12 months, inflationary pressure is bound to build up. We should, therefore, ensure that the impending introduction of GST will not add on unnecessarily to this pressure. May I, therefore, suggest that the Government consider reviving the Committee on Profiteering and Inflation to closely monitor price movements, combat profiteering and educate consumers as soon as possible.

Sir, the Edusave grant per child will be increased from $50 to $100 per annum so that it will, in the words of the Minister, "more than offset the GST payable on school books and other miscellaneous items". I would like to ask the Minister to clarify whether this statement is correct. Because my understanding is that when the Edusave Endowment Fund was discussed in Parliament recently, the argument then was that the Endowment Fund cannot be used to pay for school fees and textbooks. Can it now be used to pay for school fees and textbooks? Would the Minister clarify this query?

Finally, Sir, I recall it was towards the end of last year when the Senior Minister urged Singaporeans to venture abroad. What amazed me, Sir, is hardly four months later, this Government has given us a well-designed package of incentives and goodies to encourage our investing abroad. Indeed, Sir, we have not only seen a leaner and trimmer civil service today, we are beginning to see a civil service more responsive to the needs of our businesses and the common folks alike. The civil service efficiency has, indeed, improved by leaps and bounds. And as Singaporeans take up the call to venture abroad, we know we can count on the civil service, and by that I also include the statutory boards, to respond to our needs even more promptly and sensitively and flexibly. Count on us as we also count on you, the Civil Service, to do the best we can for Singapore.

With that note, Sir, I support the motion moved by the Minister for Finance.

Assoc. Prof. Walter Woon (Nominated Member): Mr Speaker, Sir, thank you for allowing me to join in this debate. The main focus of people's attention today is the cost of living. In particular, everyone is looking at the impending imposition of GST. Death and taxes are two things that are inevitable in our life. I think GST is also inevitable. The only real debate is about how its effects can be minimised.

The package of offsets and incentives that the Minister has outlined is a generous one but it will not benefit everybody. After all the hue and cry, after all the debate and discussion, one hard fact remains, and that is GST will be regressive. The person who will benefit most is the rich miser, the person who earns a lot but spends a little. For most wage-earners, the offset package will, probably, more than compensate for the additional sales tax, if spending is kept within reasonable bounds.

But there is one group in particular that will be hit by higher prices without compensating offsets. I refer to retirees. Working people will get tax cuts. Retirees will not. People who live in HDB flats will get rebates. But retirees who are living in bigger HDB flats, or in private property, benefit not a jot from the package offered by the Government. Not everyone who lives in private property is rich. The middle class lives in this shadow land beyond the warm glow of Government subsidy. Dr Wang Kai Yuen has asked who is going to bear the brunt of this redistribution of tax. I fear that most of the brunt will fall on the middle-class retirees.

What then is the solution? I think we have to step back and remind ourselves that the primary responsibility for looking after retirees should be on their children. When it comes to supporting retirees, I think it is dangerous to start with the idea that the Government must do more and that the Government must give more. While it is good that the Government should be open-handed when it can afford to, Government handouts cannot be a long-term solution to anything.

The onus of helping retirees to tide over GST and subsequent cost of living increases should be on their children. I hope we have not reached the stage where people feel that it is the Government's job to support the old. I am confident that most Singaporeans will know where their moral duty lies. Those who benefit from the tax cuts and rebates should pass on part of their benefits to their parents who may not benefit at all, being retired. There are some people who can afford to maintain their parents, but will not. The hon. Members of this House, especially the lawyers and social workers, will, no doubt, have met several examples of the breed. Right now, there is no mechanism to compel a person to support his parents. He can cut his parents off completely even though it is within his means to support them.

The law provides children with the right of support from their parents. The law provides wives with the right to be supported by their husbands. But Singapore law makes no provision at all for parents to obtain support and maintenance from their children. This cannot be a satisfactory state of affairs. I propose that the Government legislate the right for parents to get maintenance from their children. A parent should be given the legal right to claim maintenance from his children. Legislation of this sort will not affect the vast majority of citizens any more than legislation requiring parents to maintain their children affects them. It is only the small recalcitrant minority who can but do not support their parents who will be affected. Such a law will be in line with our objective to reinforce and entrench good values. Contrary to what some may think, filial piety is not a value exclusive in eastern societies. It is a universal value. "Honour thy father and thy mother." The source is middle eastern albeit it rendered into English. Can any one object to having filial piety entrenched by law?

What are the objections to such a law? The first objection is that there will be some who will say that it is unprecedented, that no one else has done it. They are wrong. There is a precedent. It comes from England. The English enacted a law requiring children to maintain their parents. This was done in the reign of Elizabeth I in the Poor Law Act of 1601. This law provided that the children of a person unable to maintain himself should maintain him at such rate as the local Justices of the Peace should assess. The penalty was a fine of 20 shillings per month for each defaulter. The Poor Law Act of 1601 was part of a corpus of English law that existed when Singapore became a British possession. It, therefore, probably applies here for technical legal reasons that I shall not trouble this House with. It is no longer law in England. In 1948, the British introduced the welfare state and the onus of providing for the old was transferred to the Government. We do not want to follow that unhappy precedent. But the Poor Law Act of 1601 cannot be applied meaningfully in Singapore because there is no mechanism for its application. It hangs there tantalisingly out of reach, a right without a legal remedy. That is why we need modern legislation.

There is no reason to be afraid of such legislation. We take it for granted that children must be maintained by their parents. It may surprise hon. Members to know that this is not a common law right. It is a right created by statute. In Singapore, it only dates from 1872. It is a relatively modern creation. A parent's right to support from his children should be seen as a corollary of a parent's obligation to support his children. If we can legislate the latter, there can surely be no objection to legislating the former. Some will say that it is impossible to fairly assess maintenance for parents. This is also wrong. The courts assess maintenance for children. They assess maintenance for wives. The problem of maintenance for parents is not fundamentally different. There may be those who complain that the burden is too much. A man must support his wife, he must support his children. Now it is proposed that he should support his parents as well. This is too much. I trust that no one will raise this objection. There is no merit whatsoever. Most Singaporeans manage to support family and parents without the need for legislation. The proposed legislation will not change things for them. What will change is that the parents will be entitled to ask for support from children who can afford to pay but refuse to do so.

Let me summarise what I have said. Prices defy the law of gravity. They only go up. Government handouts to retirees are a bottomless pit. It is not a long-term solution since there is no guarantee that Government will always be able to afford welfare payments. The onus of supporting retirees should be on their children. Most Singaporeans support their parents. There are some who can afford to do so but will not. The solution is to legislate the right for a parent to obtain maintainence from his children. This right is already part of Singapore law through the Poor Law Act of 1601. The trouble is that there is no mechanism for enforcing that right. Such a legal right would be in keeping with our desire to entrench good values in our society.

In conclusion, let me say that there is no legal impediment to passing such a law. It will cost the Government nothing. It will send a powerful signal as to the type of society we seek to create. If it benefits even a thousand Singaporeans, even a hundred Singaporeans, even ten Singaporeans, I say it is worth the effort.

Mr S. Chandra Das (Cheng San GRC): Mr Speaker, I rise in support of the Budget Statement. I wish to congratulate the Finance Minister for his generosity.

Sir, I would like to join in the debate at this point of time and would confine my remarks to one particular topic. Sir, the need to have an external economy to complement the domestic economy need not be over-emphasized. If we do not go regional and global, we will surely remain on the ground floor and miss taking off with the other NIEs.

Sir, all the incentives and encouragement currently given are directed at the MNCs, GLCs and the larger Singapore companies. This direction is correct and well-placed. The MNCs, larger corporations and the GLCs have the finance, manpower and connections to embark on such regional and global activities. Every assistance and encouragement must be given to them in order for them to succeed.

Sir, I am a little concerned with our approach to the smaller companies and individuals. In my recent travels to Kampuchea, Myanmar and Vietnam, I met with a large number of Singapore businessmen. By Singapore standards, they are very small indeed. They are largely in trading, manufacturing and leisure business. These are people who work for themselves and have ventured overseas because of lack of opportunities in Singapore. A common feature is that the majority of them do not have university degrees and a number of them are not English educated. Furthermore, this group is also a very young group. One person I met in Phnom Penh told me that if he works his guts out in Singapore, he may be able to make about $3,000 to $5,000 per month. But here in Phnom Penh, he makes many times over operating a manufacturing enterprise. He spends nine months of the year in Phnom Penh. Sir, I can recount a number of other stories but this one example would suffice. In Ho Chi Minh City, I am reliably told that there are about 100 Singaporeans living there. 75% belongs to this Phnom Penh type which I have just illustrated. The balance 25% would be representatives from MNCs, GLCs and large companies.

Mr Speaker, Sir, the point I want to make is that there is a large talent pool of Singaporean entrepreneurs available. The fact that we have neglected or ignored them does not mean we do not have local entrepreneurs. We also have not been able to make the distinction between good managers and entrepreneurs. Our managers, the good ones, have been recognised and rewarded, and rightly so. Some good managers have even passed off as good entrepreneurs.

Sir, I would like to appeal to the Government and related Government agencies like EDB and TDB to pay some attention to these young Singaporeans who have ventured on their own even before the call to go regional. These young Singaporeans, and I have met quite a few recently, are very proud Singaporeans who want to succeed. Sir, I believe they need encouragement from the officialdom, advice, information and, if necessary, in cases some form of seed money. More importantly, Sir, they would need recognition that such people do exist. 4.31 pm

Dr Wong Kwei Cheong (Kampong Glam GRC): Mr Speaker, Sir, I support the Budget Statement announced by the Finance Minister. This is a pro-business, growth oriented budget and will benefit everyone. My comments are as follows:

(1) CPF increases. To enhance international competitiveness, taxes will be cut 3%, with a likely further reduction of 2% next year. Companies will have a 0.5% hike to their share of CPF payments to 18.5%, while the employee's contribution will be reduced by 0.5 percentage point to 21.5%, making a total of 40%. Companies can expect a further hike of 1.5% in 1994 to 20% and the employee's contribution will be reduced to 20%. The total CPF contribution will be maintained at 40%.

However, this shift in CPF payments will effectively increase the total wage cost of the employers and will be harmful to our economic growth as our real wage growth of 5.5% in 1992 remained higher than the labour productivity growth of 3.1%, as shown in Chart 4.5 of the 1992 Economic Survey of Singapore. This is the fourth successive year of wage increases exceeding productivity increases since the 1985 recession. We must bear in mind that one of the main causes of the 1985 recession was the fact that annual wage increases exceeded productivity increases for several years prior to 1985 and seemingly, we are now repeating the same mistake.

Mr Speaker, Sir, may I once more appeal to the Finance Minister to review this policy of maintaining a total CPF contribution rate of 40%. This is simply too high. And the Finance Minister should seriously consider reducing the total CPF contribution rate in his next budget statement so that productivity increases can once again catch up with our wage increases.

(2) Goods and Services Tax (GST). The proposed GST is simple. It is at a low rate of 3% and is guaranteed to stay that way for five years at least. The GST has enabled the Finance Minister to lower corporate and personal income taxes in order to promote enterprise and growth and be more competitive internationally.

In order to help the lower-income groups, the Finance Minister has increased education and health subsidies and he has given rebates on property tax, rebates on rentals and service and conservancy charges for smaller HDB flats, and higher public assistance to needy families. All these measures are aimed to smooth over any initial difficulties and inconveniences caused by such major changes in our tax system. Since my Parliamentary colleagues have made many useful comments and proposals on the GST, I would like to highlight the following:

(a) Exports. According to the White Paper on GST, all exports will be relieved of GST by zero-rating. The exporter does not collect GST on his exports, but he is able to claim credit for the GST that he has paid on his inputs. This will cause great inconvenience and cost to the exporter as he has to file claims for all the GST that has been paid by the suppliers. He may also have to wait for months before he can get his money back from the Government. Unlike domestic sales, the exporter has to compete in the international markets. He cannot add the cost of the GST to his customers. Unless the Government sets up a very efficient GST refund system, our exporters will lose out in the international markets.

According to the 1992 Economic Survey of Singapore, exports in 1992 grew by a modest 1.4% to reach $103 billion, compared with a 7% increase in 1991. The GST may further reduce the growth of our export trade. I hope the Finance Minister can assure our exporters that the Government will make extra efforts to minimise the negative effects in terms of time and money on our exports.

(b) Local entrepreneurship. According to the Government White Paper on GST, firms with a turnover of less than $1 million will not need to account for GST on their taxable supplies of goods and services. This threshold will exempt nearly all provision and retail shops, hawkers, HDB shopkeepers and taxi drivers from the GST. It will also exempt many local entrepreneurs who have set up businesses to supply goods and services to larger companies, especially the export-oriented multinational corporations.

In order to further promote local entrepreneurship, may I suggest that the Finance Minister use $1 million as the threshold for companies to be taxed at a lower rate. Local entrepreneurs do not have the resources to compete with the big MNCs for export incentives, pioneer status and other tax benefits.

The Finance Minister in his reply during the 1991 budget debate (Hansard, Vol. 57, col. 383) rejected a similar proposal because companies may be tempted to reduce their overall tax burden by hiving off parts of their operations to subsidiaries. The Government must have certainly considered such issues when deciding on $1 million as the threshold for GST. I would therefore like to request the Finance Minister to consider once more a two-tier progressive corporate tax system whereby smaller companies will enjoy a lower tax rate.

(c) HDB upgrading. In this year's budget, the Finance Minister has paid particular attention to the needs of the lower-income groups, especially those staying in smaller HDB flats, and he has given rebates on rentals and service and conservancy charges in order to offset the impact of the GST. However, the GST will certainly increase the cost of upgrading old HDB estates which the Government has started in several constituencies.

Marine Parade GRC, for example, has started a pilot HDB Upgrading Programme, and the cost paid by each household through the CPF is about $4,000 which is about 10% of the total cost. This is quite affordable. May I ask the Finance Minister what effect will GST have on the cost of the HDB Upgrading Programme, and how much will residents have to pay for future upgrading programmes?

Sir, I support the motion.

Mr Chay Wai Chuen (Brickworks GRC): Mr Speaker, Sir, I wish to speak in support of the motion in the name of the Minister for Finance.

[Mr Deputy Speaker (Mr Eugene Yap Giau Cheng) in the Chair]

4.40 pm

Mr Chay Wai Chuen (Brickworks GRC): Sir, I would not touch on matters of the GST as the Bill is up for Second Reading. I will concentrate on some specific points in the Budget. While the economy grew by 5.8% last year and performed creditably compared to the other NIEs such as Taiwan, Hong Kong and South Korea, I am concerned about the weaker relative performance in productivity of Singapore. If one looks at the index of relative unit labour cost - I share the view of the previous speaker, Dr Wong - and if we compare this index with the other NIEs, we notice that - for the past four years I made the same observation in a row - our relative unit labour cost index against the NIEs has been rising by about 10-12 points annually over a base of 100.

A unit labour cost measure or an index does not say anything specific about what is happening to the output and productivity. However, comparing ourselves across the range of other wages and other sectors in the other NIEs, it is interesting to see that our labour cost has gone up by over 10 points annually compared with these countries. Are we losing out in the competition with the NIEs?

In the Budget Statement, it was mentioned that productivity rose by 3.1% over 1991. This again, looking across the last 10 years, is the second lowest annual productivity increase for the past 10 years. Even then, we are only referring to labour productivity. What happens when we consider the cost input of the capital which works with labour in producing the output? If we consider the productivity and its corollary, the cost, with the combined inputs of labour and capital, I wonder whether the total factor productivity of Singapore industries is matched with the wage cost increases that we are generating. I suggest that the Government look into deriving a statistical series on this total factor productivity to give a better indication of the competitiveness of our industries after paying for labour and capital.

The second point I wish to make concerns the external dimension of the economy. Creating the external wing to the economy does not necessarily imply a high economic growth for the Singapore economy by the GDP or GNP measure, unless incomes are continually repatriated back to Singapore. Hence, it is important for the Government to identify the right type of companies for strategic industrial development overseas.

Sir, I have made this point in my budget speech in 1989 and it is available in Hansard. I will not test your patience with this. The appropriate tax measures, incentives and support measures must be developed for such strategic industrial development in order to maximise the success of these ventures and the linkage with the Singapore economy. Unless this is done, it will not generate a spin-off for the domestic economy and enable the domestic factors to multiply value and opportunities for them downstream. Singaporeans thus may not generally benefit from these overseas ventures.

The third point I want to make concerns the high ratio of Government revenue to the GDP. Since 1988, the figure has been creeping. It was 23% in 1992. I am glad that the Minister for Finance has noted this. He does not believe that this figure is too burdensome. Yet, in Chart 4 as presented, the 1992 figure of 23% is the highest for the last 12 years.

If a 1% increase is about the equivalent of $700 million by our GDP measure today, a 1.6% increase over the last year in this share of the GDP operating revenue, as a proportion of GDP from 1991 to 1992, it is about $1.1 billion. So I urge the Government and the Minister to watch this figure closely in order that the Government does not over-tax the economy. In this respect, I can detect in the last one or two years specific attempts by the Government to pass back some of these reserve surpluses of the Government to the people. Schemes such as Edusave and Medifund and the discount assistance for the purchase of soon to be corporatised public statutory boards' shares, such as Telecom and PUB. I commend these measures to enable more and more Singaporeans to be part of the share-owning and property-owning democracy. What we are doing in these schemes are probably unique in the world. I hope the Government can explain and publicise this asset-sharing and asset-enhancement programme and the rationale for it to more and more Singaporeans so that they can take part in it and share in the benefit of this democracy.

Finally, I support the motion in the name of the Minister for Finance.

Mr Chia Shi Teck (Nominated Member): First and foremost, I must congratulate the Government for our strong economic health. We are actually on the first class status and we must count our blessings in that we do have a fantastic Government. We do have a diligent and most obedient work force and a very cooperative and responsible union. Our employers are also very fair. So all of us are in the same boat and the Government has started off with the right policy in that we immediately took off, after a short while of inward-looking, in export-driven and open competition. Our EDB has done a fantastic job in bringing better and better investments into Singapore and along came all the professionals and technical experts. All of us have benefitted and grown from it. While the other countries were looking inward, we were all looking outside and competition is nothing new to our Singapore businessmen. But, Mr Deputy Speaker, we are in a maturing economy and the population is ageing. We are no more that cheap. We are facing labour shortage and there is more competition, not just from the region but from the world over - Eastern Europe, the old Soviet Union, China, Vietnam and so on. Our own economy is growing more slowly and the Government is looking at 4-6% growth.

The talk now is that we have to have an external economy. But let me point out a word of caution that we may be taking this whole thing out of perspective. We still need a strong domestic economy. I think it is most important that we continue to make Singapore attractive and the EDB continues with its good work in attracting better and better investments into Singapore. Otherwise, if a hollow-out were to take place, we would be in big danger. The hollow-out is not unreal because once the MNCs find that there is no more money to be made here, once the professionals find that it is no more a place of convenience for them to make money here, they will start to go. And all the properties that we have invested will become white elephants.

The Government must look into creating a friendly environment for investors to come here and also for professionals to want to come here to live. From the figures given by the Minister for Home Affairs, we are doing well. The number of Permanent Residence (PRs) granted for the last few years has been in excess of the 20,000 figure yearly. The number of new citizenship given, naturalised citizens, is in excess of 7,000 in the last few years. The number of Singaporeans emigrating has gone down to less than 2,000 last year. So we are doing well. That means we are very attractive and people are coming here and we have got to continue to do that.

As to the external economy, we must be looking at Singapore as an anchor where MNCs as well as local enterprises network out of Singapore and bring the benefits back into Singapore, and not a process of uprooting. If individuals were to go overseas and benefit and prosper, the question is: would they come home? How do we bring them home? It would be like those of us who have children who are pursuing overseas education. The worry of parents would be that once they are out, would they come home? They worry that they will pick up foreign values and they would not come home. If we have love and if we have bondage, and there is a lot here for them to come home to, then they will come home. As a country, we should do the same, ie, we should make the people want to come home.

I feel that nation building is very, very important. That people would take this as their nation and not a place of convenience for them to make money. The fear of our people here is, as some of the earlier speakers have said, that the cost of living must go up. With more and more additional costs coming in, and with an ageing population, the people fear that they may not be able to live their dawn years here. So I am suggesting to the Government to look at ways of rooting Singaporeans. Our Government has done a fantastic job in using home ownership as a good way of rooting Singaporeans. The question is, with additional cost, will this home ownership backfire? The roof over our head will not be able to feed our stomachs if we have no incomes. As the population ages, many of us will be retiring in years to come, where would our income be? If we cannot afford to live here, we may just sell off our properties and move to cheaper countries. So we must prevent that. Probably some of these fears may not be totally real. It could be a perception. But we have to arrest it. I think if the Government were to introduce more ways of sharing the fruits of our labour, as it has done, like the Edusave, Medifund, and now the $200 topping up, these are good ideas to make Singaporeans feel wanted. So we have to look at other ways of affirming, assuring and appeasing our citizens. Those who contribute to the nation, our national servicemen and reservists. The Minister for Finance has, since the last budget, given $1,000 and $500 for them in tax relief. I think that is too little. But taking that there are these national servicemen, there are the people who represent the country, the national representatives, the sportsmen, the social and community volunteers, the high taxpayers, probably we could look into ways of rewarding them and making them feel that their contributions are not idled.

There are some retirees who have actually said that during Singapore's formative years they have contributed quite a bit. But the way we are going about protecting our reserves, they may not be here to live and enjoy the reserves that they have helped to accumulate. So I am suggesting whether or not we could have a credit point system where we could spread some benefits to these people who have contributed, and weighing their contributions we credit certain bonuses into their accounts, which can only be used after the retirement age, ie, instead of giving the $200 straight for buying shares, it might be better if we create a fund where from our surpluses will become bonuses into their accounts. The more surpluses that we accumulate, the more they will get each year.

We can set a policy. Instead of rebates going straight into their accounts for use now, it should go into the retirement account. It is like the blood donation scheme that we have. The more you contribute, the more you get back in times of need. All people who have served club membership could become honorary life members where they enjoy certain privileges. In the commercial circle, we do have VIP cards for big spenders in our shops.

The Government may like to share the bill when we bring the retirement age to 60 years. To demonstrate the sincerity of the Government, I suggest that instead of just reducing the CPF contribution rates for the older workers, the Government tops it up. Because if we are asking the older workers to retire later and continue to make a contribution, probably it would be good for the Government to top up the CPF contribution. Giving higher personal relief to this group of older workers and lowering their tax and giving them higher rebates, maybe we could also pay higher CPF interest rates to these older workers as a way of demonstrating that they have contributed much to the growth of Singapore. I share Mr Walter Woon's point that maybe we should make children look after their aged. But that may not appease the retirees because the retirees want to look at themselves. They have contributed, so the nation returns some to them. What their children can give them is a separate problem. But their contributions should not be ignored. I think many retirees have spoken up on this.

In the Next Lap, the Government has talked about the different values. A lap is a lap. We want more Singaporeans to be in the lap taking the race. If we are not careful, we may be running in circles, because it is a lap that we are talking about.

We have been giving a lot of emphasis on people who are good in politics. We want the best in politics. We want the best in the administrative services - the managers. But there is more to life than these two groups. Now there is this big talk about the entrepreneurs and earlier on Mr Leong Horn Kee said, "How about giving them awards?" But there are the other groups -the entertainers, the people who bring a lot of fun; musicians, dancers, and the performers. Surely, they should also be elevated to the same status as all of us in this House. What about the glory seekers, the people who bring glory to the country, the sportsmen who carry our flags? They are not to be housed during the SEA games in the hotels. These are things that touch them because if we look at Singapore, whilst on the one side we want an external economy, we have not exploited all the other avenues that can make Singapore more prosperous. So there is a lot of money to be made out of the arts and the entertainment circles. There is a lot of money to be made out of sports too where we can make this a sports hub. The question is, because of our position and our fantastic infrastructure and efficiency, we can generate a lot more activities other than just doing a little production of goods and services.

Not all future leaders need be really academicians or people with all straight A's. Just an example, in the Baltic Republic, the Lithuanian President, Mr Landsbergis, is a classic intellectual, music professor, accomplished pianist, and he had taken on the might of Mr Gorbachev and the Defence Minister in bringing the tiny little Baltic state to independence. Probably in future we would have sportsmen and musicians as Nominated MPs. To give recognition to all these other people, they should be invited to State functions.

As to the budget numbers, I am very assured. That is why I keep saying the Government is fantastic, looking at the numbers. We are looking at $17-plus billion of revenue for 1993, out of which only about $7.2 billion would be from the income taxes, the rest will be from other revenues. So the $7.2 billion is very small out of a total of $17 billion. That does not include our other investment incomes. It also does not include the sale of land and future corporatization of Telecom and so on. So we are very healthy. We have a huge reserve. I am not proposing that we deplete our reserves. The very fact that we do not have natural resources and the very fact that the population is ageing tell us that we have to increase our reserves. But increasing the reserves is not an end. Surely the people that contribute to this increase in the reserves want to share part of it. So I hope the Government will, other than this operating revenue, look at a system where we make use of our reserves to earn more income. Probably we pay, out of the earned income, a certain percentage will be used to top up the reserves, and the balance to be distributed as bonuses to the people, not for their immediate consumption but into their CPF old-age account, the special account which I mentioned earlier. If our income is in excess of, say, $3 billion, the excess could be chalked up into our CPF account.

Singaporeans must accept the fact that we cannot deplete our reserves as we do not have natural resources. But if the Government administrators can make use of the reserves to buy into resources, we can become like Brunei, though our oil reserve is not here. But the fact is that we can buy into many national resource companies and make use of those incomes to help cushion our aging population. Because the population ages, I feel all the more we should not introduce a GST. Not because our population is aging, therefore, the tax base shrinks, hence we need to introduce the GST. Principally, I accept the GST is a very fair system. But I am a proud Singaporean and the Government has made me proud. And each time the Government tells me, we are different, we are so special, we introduce a lot of ideas and schemes that no other country can follow, and we are in a very strong position to do that because we have accumulated huge reserves. We can make the reserves work for us. And because the population is aging, we should not frighten them into an extra worry. A lot of these things are actually psychological. The cost of living, the spiralling effect - many colleagues here have spoken that the 3% will not be so - the worry about rounding up, and all these may spiral into higher cost and add more worries to the people who are getting old in Singapore.

Next, I move to corporatisation and privatisation. Many people out there in the streets wonder, first, who owns all these companies, who owns all these corporations. It must be the Government and, ultimately, as a custodian for the people. And the next thing is the worry about privatisation on costs.

There are two kinds of Government companies. One would be those on the essential services; the other would be on the non-essential services. And I think, very quickly, the Government should privatise all non-essential businesses. There is no reason for Government to be in the business of selling roast ducks, for instance. So they should be out of that. But as to the essential services, there is this worry. The cost of living will go up, as an earlier speaker has mentioned, and the management would view it differently now. How would the shares of a company go up? According to the Prime Minister, if you keep your Telecom shares, they must go up. Then why sell them away to foreigners? Why not keep them for Singaporeans? So if we do privatise and want the money, then the money must be put into good use and the people of Singapore must be told, "Look. This money raised will be invested and income will be shared. You will have some share of the income." And I think people will buy it. But the worry is that, after corporatisation, though the hospitals have not been listed, there was this privatisation exercise done, the total medical cost has gone out of proportion. That is a big push.

The GST gives reason for everybody to increase the price. Many people will argue that they have not increased their prices for the last few or umpteen years, and all because of our good policy of open competition. The barber is afraid that the neighbour would not increase the price, if he were to do so. So there is this competition. But now with the excuse of GST, he knows, his neighbour is going to do it, he would do it. Everybody in the other estates would do it. So instead of $5, they will go for $6, and then you will see the spiralling effect. That is one reason why I think we should not have GST as this is not the right timing. As some speakers have spoken earlier, the cost of doing business is increasing and the competitiveness is actually eroding.

As an employer, I feel for the employees. The workers in Singapore, by our cost of living, are certainly under-paid. They are under-paid! But when we compete externally, using all these cost composites, we find that we are no more competitive. So something is wrong. Unions, I think, will not clamour for higher wages just for clamouring sake. They are responsible people, as I said when I started off the debate. But it is the cost of living that is frightening them and they are waiting to see how the GST is going to affect them. They will be clamouring for higher wages, and that will spiral up the whole cost problem.

The role of Government, Mr Deputy Speaker, is certainly to provide good essential services, and essential services are needed not just for the population but also for business. And I hope that can be controlled.

Our meritocracy has done us well. But we have gone ahead of meritocracy into what we call "moneytalkcracy". Everything is money, and that is the frightening thing now. Moneytalkcracy - we have done it in business, we were taught in school when we were young, that 'Money cannot buy Happiness'. But now we add the term, "Say the rich to fool the poor". Because in Singapore, if you have no money, you just cannot get by. I believe the Government is conscious of this high cost and that is why the Cost Review Committee is set up to look at what is real, and what is not real. The other Chinese saying which I heard over the radio goes this way, and it is being used quite often: Qian bu shi wan neng, dan mei qian, que wan wan bu neng ( ). It almost amounts to the same thing that money is not everything, but without money in Singapore you just cannot get things done. And I think that is the fear.

I must commend the Finance Minister for putting really great effort in trying to cover every area, every segment of the population. And I think for that the Minister should be really praised for going through all the hard work. I am not against the GST as a matter of principle. But I am against the GST now as it is not timely to introduce it now, although many people have said it would be good to introduce it when you are in a position of strength. But I am not so sure we are really in a position of strength other than the fact that we have huge surpluses and reserves. But in terms of competition, in terms of the unknown, and the total effect of getting us out of place is real. And venturing overseas is something very close to all of us businessmen. I will pick it up during the discussion on the Ministry of Trade and industry.

Mr Ho Peng Kee (Sembawang GRC): Mr Deputy Speaker, Sir, this Budget opens a new chapter in Singapore's economic history. Just as the 1986 "Beat the Recession" budget was instrumental in steering Singapore out of recession, this Budget puts Singapore on a firm footing to compete in the super league, in building an external economy and reforming our tax restructure. It does not provide all the answers but a framework on which further incentives and reforms can hang.

Sir, concerns arising from the Budget can be divided into business concerns and consumer and worker concerns. Colleagues have raised in this House many business concerns. Let me just focus on consumer concerns which I am in close touch with as Vice-President of the Consumers Association of Singapore (CASE).

Some parliamentary colleagues have mentioned that the main concern of consumers is the spectre of price increases and profiteering by retailers, both before and after the implementation of GST. Recognising these concerns, Government has rightly reassured consumers that profiteering will not get out of hand. To ensure this, calls have been made to various bodies to play their part, besides the Government, NTUC, CASE, grassroots organisations (which I think play a very important role) such as the CCCs, the RCs, the merchant associations and, above all, individual consumers. Each group has a unique role. If each group does not do its part, it is no use to point fingers if things go wrong. On the part of CASE, already we are gearing up for GST. We are prepared to conduct more regular price surveys, which we are already doing, and seek the cooperation of the media to publish these so that there is wider circulation. And we are also prepared to work with grassroots organisations to monitor price increases.

It should be noted, however, that whilst it may be possible to identify and single out blatant profiteers, it will be more difficult to identify excessive profit-makers or arrest an overall rise in prices exceeding 3%. Of course one may use 3% as a guideline, but it may not be so easy in practice.

Some businesses, we read in the press, are already increasing their prices. When asked, they claim that these increases are not due to impending GST. They gave a string of other reasons - rent increases, increases in suppliers' prices, etc. Some may be genuine reasons, others more suspect. Nearer implementation date, it is not unlikely that more businesses will increase their prices to take advantage of a likely increase in sales as consumers buy to beat the GST deadline. They will attribute such increases to reasons other than GST. How would Government deal with this phenomenon? In any case, what is the baseline for calculating the 3% - February 1993 when GST was announced or March 1994, just before GST comes into effect? Of course you will say, rightfully so, commonsense, it should be March 1994. But, in reality, if prices rise significantly between February 1993 and March 1994, consumers will feel that GST-led price increases would have exceeded 3%.

I support Dr Vasoo's proposal that Government take the lead to bring the various groups together to discuss an action plan on how to counter excessive profit makers and profiteers. I recognise the fact that Government has already gone the extra mile to assure consumers that there will be no profiteering. But I think this proposal by Dr Vasoo to come together to put forward something more concrete is something consumers will appreciate and, in fact, Mr Chew Heng Ching has suggested one specific way, which is, to re-activate the Committee on Profiteering.

Let me now just ask the Minister three questions. First, will steps be taken to increase the circulation and acceptance of one-cent coins? This will not solve the problem but this may help to counter the phenomenon of rounding off. Will Government take steps to encourage the acceptance of these coins by retailers? Secondly, will steps be taken to require shops that are exempt from collecting GST and which have not registered, to be identified perhaps by a notice or an emblem, so that consumers will know the status of retailers with whom they are dealing? And thirdly, is Government taking the opportunity to encourage more Singaporeans to go cashless? If so, how?

As we have heard in this House today, not every Singaporean may be convinced that offsets and rebates will result in a better financial position for him or her after GST. Government has asked consumers to do their sums. Many may need help to get their sums right. And this is where I think grassroots leaders can play a useful role. In any case, I urge Government to closely monitor the effects of GST and make adjustments when necessary?

Mr Deputy Speaker, Sir, just to make it clear, despite these concerns, I am for GST.

Entrepreneurship - just a few words on entrepreneurship. Much has been said of the need to cultivate greater entrepreneurship in Singaporeans. Fiscal incentives are important but, in themselves, they are not enough. Government measures such as the building of Singapore schools overseas or setting up of Singapore clubs will help. Employers on their part can do their bit by providing better working conditions for employees who are willing to venture overseas. In addition, they can help the re-entry adjustment process into Singapore of returning employees. Younger employees can be sent overseas to expose them, as is happening now with many recent graduates. In my recent trip with Mr Chen to Vietnam and Laos, with a group of ASEAN parliamentarians, we went out of our way to meet some Singaporeans working in Hanoi and Vientienne. They seemed to be adjusting quite well and were enjoying their stint abroad. I feel that there is a need to publicise these Singaporeans in the media regularly as The Straits Times did recently - a Singaporean hairdresser working in Hanoi, running the only up-market salon in Hanoi. He was no big-time executive, well-heeled. He was an entrepreneur in his own right, somebody who is doing something very unique. And I think we should do this more regularly with the help of the media. They are just ordinary Singaporeans who have taken the steps to go overseas. Like Mr Chandra Das, I am of the view that there are entrepreneurs around and now that it is fashionable to be an entrepreneur or to be known as an entrepreneur, I urge more of them to come forward.

At home, I think it is important to cultivate the necessary mindset. For a start, I would say, let us encourage Singaporeans to be more physically active. I feel that sports and rugged activities play a part in our national effort to encourage more entrepreneurial spirit and skills. More media publicity should be given to events, such as triathlons, Marathon Man contests, adventurous exploits by Singaporeans overseas, etc. More recognition and Government support should be given to clubs, such as the Singapore Adventurers' Club. Greater support should be extended to school uniformed youth groups, such as the NPCC and the NCC. More companies should be encouraged to organise outward-bound type camps for their employees. The outward-bound facilities on Pulau Ubin should be exploited not just by companies but by schools, RCs and clubs.

I want to end by making this observation. A well-known local entrepreneur, Mr Ho Kwon Ping, in an address to the Foreign Correspondents Club reported in the Straits Times on 4th March 1993, had this to say, and I quote,

"... many American CEOs are proud of their collegiate sports achievements because they felt these experiences shaped their leadership and teamwork skills, and taught important lessons on winning, losing and competition - lessons which served them well in the game of life." I say, "Mr Ho, well said, I support these words."

Sir, I support the motion.

Encik Mohamad Maidin B P M (Aljunied GRC): ( In Malay): Mr Deputy Speaker, the 1993 Budget is among the most comprehensive ever tabled in this House. I wish to touch on a few aspects.

First, on developing a second wing for the Singapore economy in the rapidly-developing Asia-Pacific region. Local companies should ensure that they have a place in the growing prosperity now spreading across this region. Being a small nation does not mean we cannot play a major role that will bring positive results to this development. In fact, from the point of view of capital and efficiency, the capacity of local entrepreneurs should not be underestimated. In this respect, I welcome the various tax incentives announced.

These incentives are adequate and not excessive. They are enough to spur our entrepreneurs to explore regional opportunities without making Singapore unattractive. This balance is important in order that our domestic economy can remain strong. If the incentives to go abroad are far more attractive, the excessive cash outflow that results will affect domestic investments and this will in turn be detrimental to domestic economic development and job opportunities. The Government should always be mindful of this balance. There is no point developing a second wing overseas if this only weakens us domestically. The second wing must act as a stabiliser for a strong domestic economy.

On the CPF Top-up Scheme to buy shares, I also welcome the Finance Minister's announcement of a scheme to enable Singaporeans with CPF accounts to buy shares at a discount. This is a very good way for us to increase the number of Singaporeans investing in the share market. More importantly, it enables Singaporeans to become owners of large, privatised Government companies, such as Singapore Telecom. I hope when more Government-owned companies are privatised, they will be made available to Singaporeans through similar schemes. It is hoped that a large proportion of our people will be motivated to set aside their funds and to invest. Eventually, more families, in fact, every Singaporean adult, will become joint-owners of these large, profitable companies.

I understand that many Singaporeans are actually surprised that the Government would grant as much as $200 to top up every CPF account that has at least $500. Mr Deputy Speaker, many regard this an unusual move, indeed, uncharacteristic of Singapore. This is understandable. Singapore does not possess rich natural resources that can be distributed among ourselves. All our wealth is the result of the toil of Singaporeans, who know that nothing can be gained without hard work. I think that principle still stands true. The $200 top-up scheme should not be seen as the start of more such topping-ups. We should not have such unrealistic expectations, or we will end up disappointed. Instead, the move should be seen as a gesture of appreciation from the Government for the hard work the people have put in to bring progress for Singapore. It is also intended to help more people enjoy the fruits of our success. More importantly, it also goes to encourage the habit of saving and investing. I hope those who do not have CPF accounts, including housewives, retirees and the self-employed, will be encouraged to open accounts. Children should help their parents by opening accounts for them so that they will not be left out. Our parents are the people who had put in the early efforts that have now brought us prosperity. We should help them enjoy the fruits of their labour in their old age.

The third point concerns the GST. Singaporeans on the whole welcome the GST announcement with mixed feelings. There is anxiety and there is happiness - anxiety over its effect on price levels, and happiness over the many concessions granted to offset it. Based on feedback I receive, it is clear that the people's worry about the GST has nothing to do with the 3% rate. They know that it is low, that it is in fact the lowest GST rate in the world. Their worry actually centres on certain questions they cannot answer: whether businessmen, hawkers, shopkeepers, etc, will be honest enough in implementing the GST, whether prices will not rise more than 3%, or whether there will be businessmen who are prepared to absorb the GST and not raise prices. These are among the questions in the minds of Singaporeans. I find that many Singaporeans are convinced that businessmen will take advantage of the GST. Many fear that they will have to pay far more than 3% from 1st April next year. They are concerned that businessmen will erode all the benefits and gains they ought to obtain through the concessions and rebates announced by the Minister for Finance the other day. That is the actual worry among Singaporeans, not the 3% rate.

I would like to suggest that the Government consider strengthening its enforcement unit to monitor and study price trends following the introduction of GST. Should there be undue increases, appropriate measures should be taken. Large organisations like NTUC Fairprice and its retail affiliates can play a part in stabilising prices. Other retail cooperatives should also be encouraged to play a similar role. I also hope that companies generally will try to absorb the GST or part of it. This can be done because they enjoy a number of concessions too, including the reduction in corporate tax. More importantly, the public should be firm. They should boycott those shops that take advantage of the GST and patronise other shops. The number of stalls and shops in Singapore is large enough. Retailers who are moderate and do not cheat should be supported. This will create pressure on those retailers who seek to fish in troubled waters.

The real challenge for us here is how to dispel the people's fears concerning the GST and help them understand and then accept the system. If, as the Government expects, the majority are indeed not worse off after the implementation of GST, because of the concessions and tax rebates, I believe GST will become a way of life here without much problems. In this respect, price stability following the implementation is crucial. If price variations are within control, people will have the chance to familiarise themselves with the system and to make the necessary adjustments. GST will be better accepted in a situation of stable prices. Everyone, whether he is a shopkeeper or the man-in-the-street, must realise that only through successful implementation of the new system of tax on consumption will we be able to enjoy lower personal income and corporate tax rates. At the same time, those who have not been paying income tax and yet are enjoying all the public services provided by the Government with the taxes paid by others will now be able to make their own contributions through the GST.

Mr Deputy Speaker, there are two other subjects which I would like to touch upon briefly. One is the 20:20% target CPF rate to be reached by July next year. I am pleased with the Minister's announcement of this new schedule, which will equalise CPF contribution rates on both sides, employers and employees. The achievement of this target will be the realisation of the hopes of many of our workers, as I had mentioned during last year's budget debate. The Government's schedule then was to reach the target of 20% contribution on each side by 1996. Workers have been wondering why the employer's rate, which had been swiftly cut during the economic recession, had to take 10 years to be restored. The new schedule, which brings the target forward by two years, will be welcome news to the many workers who had sacrificed what was due to them in the interests of their employers and in order to help the economy weather the recession.

Finally, the doubling of the Edusave grant to $100 per student a year. I also welcome the Government's plan to increase the Edusave grant to students from $50 to $100 per year from next year. This is a very productive way of channelling Government funds for the benefit of our students. I hope this contribution will be used in the best way possible to provide a more comprehensive education for our children.

Mr Deputy Speaker, I support the motion.

Mr Deputy Speaker: Order. It is now 5.30 pm.

Dr Hu, debate to be resumed on what day?

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

Mr Deputy Speaker: So be it.