COST REVIEW COMMITTEE REPORT (Motion)

Debate resumed.

Mr Chng Hee Kok: Mr Speaker, Sir, as I was saying, the value of the time and effort spent cannot be easily measured when this is viewed as another step forward in the process of bond building between the Prime Minister's Government and the people. Hence, the Report has to be fully discussed and debated and I hope that all my colleagues in this Chamber will give a resounding vote in favour of this motion.

Sir, much has been written and presented in the media on the findings of the CRC, but I understand that this debate is rather one sided. There is little or no public response. Does the public at large agree with the findings? Do they have an intuitive feel that the findings on changing life-style mirror their own lives? Will this Report put an end to this issue at the next General Election?

I can only answer with some certainty to the last question and quite clearly the answer is no. The question of cost of living as measured by the CPI is a political hot potato. It is easily exploited by the Opposition and I think no government is immune. Although this is multi-dimensional in character, it is a single dimensional issue as far as some people are concerned. When a person is affected by hospitalisation or COE or housing, he does not seek to understand rational arguments.

I am therefore concerned by the comments of one Mr Koh Su Haw, who was quoted in the Sunday Times on 3rd October 1993. He said:

'They came to the conclusion (meaning the CRC Report) that the CPI was accurate and that the problem was with people's perception. This was the same conclusion they started out with. It seems funny that they took a year and there is nothing new to report. The report seems to have been a political exercise rather than one in economics.'

Mr Koh is a research analyst. Most probably, a graduate. Highly probable that he is earning a substantial four-figure salary. He is only in his early twenties. He is what most Singaporeans will consider to be a very successful individual. Yet, his comments, if shared by many of his peers, are indeed a cause for concern. Does this mean that some of our better educated are not able to discern between reality and perception? Worse, if this generation who is the biggest beneficiary of our economic success feels that they are worse off as a result of, say, COE. If this is part of the bond building process, I think Singapore has some way to go. Whatever people may say about the Government, I think this Government cannot be accused of fudging national statistics or whatever national statistics published. Therefore, this is a very fundamental principle and the Government has no choice but to continue to rebut any such disbeliever.

On this, I must also compliment the press. All the articles which I have read so far suggest that our journalists are in fact level-headed, pragmatic and have a deep understanding of the issues involved.

Reviewing the Cost Review Committee's Report, it is apparent that postponing certain unavoidable cost increases during the mid-1980 recession years fuelled public perception of sharply rising costs. Perhaps if such increases had been spread out more evenly and in smaller dosages and at more regular intervals, the perception of rising costs would have been different. In this regard, I must say that had the one cent coin been more popular, cost increases should not have been rounded up in many cases like bus fares. The one cent coin today is very fashionable in the United States, a trillion dollar economy. With the implementation of the GST next year, I think we must bring in the use of one cent coins. After all, today, the Public Utilities Board and Telecoms charge to one cent.

Besides verifying the accuracy of the CPI, the next most important significant finding in the Report is that prices have, contrary to public perception, not outpaced real wage increases. In other words, our incomes are not eroded by price rises.

The Committee's one-year study shows that prices of basic items have not gone up markedly. In fact, there has been negative inflation in some instances because of our strong Singapore dollar. Prices of most imported goods, ranging from essential foodstuffs to luxury items such as video cassette recorders and televisions have, in fact, gone down. I think even prices of oranges for our Lunar New Year from China this year had also dropped compared to last year. For many people, travelling abroad is certainly much cheaper today.

Let me now move on to an important area covered in the CRC Report and that relates to land and labour constraints. The key areas identified for study by the CRC, which are education, health care, transportation, housing and business, are all affected by two key constraints in Singapore. Whether we like it or not, there are two realities we must accept in Singapore - labour and land shortage. These two factors will continue to have a significant bearing on the cost of services such as education and health care, and possessions such as landed property and motor vehicles. As long as our economy continues to grow at current levels, there will be a labour shortage. Hence, anything that is labour related or labour intensive will continue to cost more as wages go up. As salaries and wages improve, cost must go up and this is more marked and more so in service industries.

Singaporeans cannot expect the good life and not pay our nurses and teachers high salaries. I think the question is how much should Government subsidise these essential services. I will deal with this question of Government subsidies in the later part of my speech.

[Mr Deputy Speaker in the Chair]

4.08 pm

Mr Chng Hee Kok: For entrepreneurs, the cost of doing business in Singapore has admittedly gone up and will continue to do so, especially for those who require relatively cheap labour, because labour will never be cheap in Singapore relative to what one can get in neighbouring countries. It is inevitable that low value added industries must and should continue to relocate elsewhere.

The other reality - and the most agonizing because there is no way out - is our island's limited space and scarce land resources. This fact will continue to make ownership of private property and cars premium possessions that are out of reach of many Singaporeans.

I move now to what has been highlighted in the Report on changing life-style and I like to call it improving life-style. Materially, there is no question that Singaporeans are better off today than 10 or 20 years ago. Less than half a generation ago, many of our parents actually worked as domestic maids and washer women. But today, we employ no less than 60,000 foreigners for such services, and the numbers continue to grow.

According to the Singapore Tourist Promotion Board, in 1971, nearly 80,000 people travelled by air and sea. This rose to 330,000 in 1981. In 1991, 1.6 million trips were made by Singaporeans. These figures do not include travel to and from Malaysia. In other words, our population of some 3 million Singaporeans made 1.6 million trips abroad in 1991.

There are other statistics worth mentioning here which will illustrate the whole range of Singaporeans who have benefited. Despite the punitive and prohibitive taxes and other fiscal disincentives against car ownership, there was one car to every 10 Singaporeans last year. In 1983, it was 1 to 15 and this is despite the fact that our population has grown in 10 years.

Today, 94% of Singaporeans in the bottom 20% income group own a refrigerator. 90% of them own a television set and some maybe with more than one television set.

Another interesting indicator is Singapore's consumption of electricity. This has more than doubled in 10 years. In 1983, each person consumed 493 kilowatt hours. In 1992, this went up to 1,024 kilowatt hours, because most households can afford and have household electrical appliances and many actually have airconditioning.

There are 265 telephones to 1,000 Singaporeans today. Ten years ago, it was only 194. In 1981, 39% of our population had life insurance and this rose to 59% in 1992.

Eating out is a very common family affair. This is pointed out in the CRC's Report. Although not measured, more are eating out at more expensive places - for the comfort, ambience and usually as a result of our children's desire to visit modern fast food restaurants.

Mr Speaker, Sir, what all this means is that Singaporeans with rising affluence have developed more expensive tastes and have acquired a life-style with more material assets and these cost more to maintain. There is this constant competition on the hard earned dollar. This competition on the dollar which we earn results from succumbing to media advertising, the whims of our children, keeping up with our neighbours and, of course, payment for essential services. In economics, this is known as a ratchet effect and demonstration effect. The ratchet is a mechanical device that turns only one way and not the other. Simply put, this means the adjusting of a life-style upward with increasing income and always the difficulty or impossibility of a downward adjustment.

Is this upward adjustment of our life-style something that we need to worry about? I think the answer is both yes and no. The answer is no, as I believe it is the Government's role to promote and help our people to achieve a good life with a high standard of living. We have said so many times. The answer is yes, there is something to worry about if the public does not see the linkage between a strong competitive economy which makes a good life possible, and that there is always a price that must be paid. It is not possible to earn good salaries here and pay low prices like those in China and own a house like one in Australia, all at the same time and place.

Perhaps if we adjust our mind-set, this may be possible. I must stress that this does not necessarily mean that we need to lower our expectations of the good life. It is more a change of perception of what constitutes the good life, how to achieve it and what possessions are realistically within reach, given our constraints and the environment. For instance, if you are living in a land-locked country with the sea many hundreds of miles away, and lazing by the beach every week is your idea of a good life, I think you will have to change your recreation or else you have to pay a lot of money every week just to travel to the beach. This is the same scenario as indulging in car ownership in the land scarce island of Singapore.

Singaporeans should therefore reconsider their options. They should redirect their energies and aspirations, and make the necessary adjustments to get good value for their dollar without necessarily giving up the good life. Singaporeans should aspire to be international citizens. Affluence has broken down so many barriers for Singaporeans. We can earn our dollar here and spend it abroad, especially on things that cost less to produce overseas.

We may be limited by scarce land in Singapore, but we are not limited by boundaries or our financial resources to purchase from abroad what is not available here or to obtain from abroad what we cannot get in Singapore. I think some Singaporeans are already doing that, eg, Singapore corporations developing golf courses in nearby countries and Singaporeans joining golf clubs in Johor and Batam.

Instead of buying weekend cars, why not think of owning weekend homes that cost a fraction abroad and spend our holidays there, just like people in the developed countries with their summer homes? Many of my friends I know in Europe, who can afford it, work and live in cramped homes in the city, but they take regular trips out to the countryside where they have their summer or country homes. I think Singaporeans should treat the world as our summer home.

There is much talk about exhorting our people to lower their expectations. I am afraid this is counter productive. High expectations is what motivates our people. It is the driving force behind what we have achieved today. I think a better solution is to help the public to define what is considered a good life. Right now, upgrading is the buzz word. Everybody wants to upgrade. It is almost impossible to switch gears. We can, however, in tandem, focus on widening our vistas of what is the good life. This is not unusual. The Japanese did it some three to four years ago. In the face of a US onslaught on trade protectionism, the Japanese government exhorted the people to buy foreign-made goods and work shorter hours - have longer leisure hours and enjoy yourselves. And they are doing it after four decades of sheer hard work.

I think our Government has a similar role here. The vistas to a good life means travel, the appreciation of the arts, country clubs in Johor and Batam, a weekend condominium in Johor or a house in Australia or China. In other words, continue to aim high, but widen our space.

I think this is very important as the problem will get more acute. With current rates of economic growth at 6-8% and growth in real incomes, in 10 years, we shall double our national income. Each time a country doubles its national income, the national psyche undergoes a transformation, it seems. We expect improved efficiency, take beautiful and clean surroundings for granted, demand to see better facilities in housing estates, better lifts, more covered walkways, buses and telephones that work, higher demand on services and lots more. In short, even higher expectations. Witness the Orchard Road Mall. Ten years ago, this would have been unthinkable. We actually spend millions of dollars to pave up a public thoroughfare with good quality ceramic floor tiles. Many developing countries today are still not able to provide adequate housing for their people, and here we actually spend money and worry about the beauty of our public roads and thoroughfares.

What all this means is that the Government must start the planning process now. Just like the community clubs are different from the community centres, the community clubs of tomorrow must be no less than today's country clubs - with swimming pools and dining facilities - everything except the golf course. We need more than just cosmetic changes.

Besides the local environment, the Government can do something else here. One of them is, as I said earlier, to widen our space. The Government should facilitate the building of the second causeway and the extension of the MRT line to Johor. In the long run, as long as Johor, and Malaysia continues to grow at current levels, Johor will be an excellent gateway for Singaporeans and owning a weekend home next to a golf course will be a good solution to rising aspirations. Therefore, I urge the Government to work closely with the Malaysian Government and speed up these two development projects.

I move now to the issue of subsidies. Whether it is health care, education, housing or transport, the whole issue of prices rests on one word and that is subsidy.

At the heart of the Report is the question of Government subsidies which I thought the Cost Review Committee should have more fully addressed. Whether it is health care, education, transportation, housing or business cost, the extent of the price chargeable to the consumer all relate to what is the role of Government and the extent of the cost to be passed on to the people. There are many questions which we can raise on Government subsidies. What is the role of Government and to what level do we subsidise the cost of education, health care, housing and public transportation? Are subsidies on education similar to that on health and housing? Have we reached a level of development in home ownership that subsidies should be scaled down and, if so, in what areas? Should an HDB upgrader be entitled to a similar level of subsidy as a first-time house owner? How do we ensure that in health care, the subsidies are going to those who need it most? These and many such questions deserve a coherent and comprehensive reply from the Government. I urge the Prime Minister to address these issues in a comprehensive manner.

Government must stick to certain principles in using the market mechanism and application of subsidies. On the one hand, the Government is known to champion free market principles so strongly that the public perception is that the word "subsidy" is not in the Government's vocabulary. Yet there is a high degree of subsidy in housing, health care and education. Even when there are subsidies, the principle is not uniformly applied. On the one hand, the Government invests in our national defence and agrees to shoulder this 100% from taxes. Yet, when it comes to investment in education, the Government does not even pay fully for school extensions.

Hence, there are indeed subsidies, and the issue before us is how are the subsidies being applied. To ensure that our reserves are not misallocated resulting in demand distortion, the free market is indeed the best approach. At the same time, the political and social realities are that certain segments of our population will be adversely affected and this has to be looked into. Therefore, instead of an across-the-board approach, targeting subsidies at those who are in need will prevent us from falling into the abyss which the developed countries are now facing.

The mistake - and even tragedy - of heavy Government subsidies is apparent in many developed countries today. Heavy subsidies must lead to misallocation of precious resources. It is inevitable that with high subsidies, abuse sets in. Everyone wants a right to subsidised services, but nobody wants to pay taxes for it. But someone has to pay. Eventually, the entire country pays for it. Countries such as Germany, United Kingdom, United States, Sweden, Australia and New Zealand are well known examples which have highly subsidised welfare and health services and now suffer from serious structural problems, and other problems of abuse which their governments are not able to remedy. All these countries are in recession and the problems are structural - high public expenditure and subsidies in non-productive areas leading to high Government deficits, high interest rates and huge unemployment.

Let me quote an example. Britain's National Health Service (NHS) used to be held up as a model for other countries. Now, the NHS system is creaking and running out of cash. One of the anomalies of the system is a confusion of priorities - first come, first served. For example, if your grandmother dislocates her hip bone, she may have to wait up to six months before she can get a hospital bed and get her ailment fixed. At the same time, NHS pays for non-essential cosmetic surgery for aspiring models who want a nose job as long as they are earlier in the queue.

Excessive subsidies and welfare spending result in ballooning government deficits which can only be met by borrowing or by increased taxes. In the US, government subsidy for health has increased from 20% some years ago to 56% today on an individual's health bill. In Sweden, the ratio of total tax revenue to GDP is 52%. Sweden is a very well known example. For the average worker, it means that he hands over half his pay packet to the Government in the form of taxes. This kills his incentive to work.

The alternative to taxes is government borrowing, which means the government will be mortgaging the future of our children and the country. By 1990, New Zealand had acquired a national debt of NZ$62 billion. New Zealand's population is not much bigger than ours. Cost of servicing this NZ$62 billion debt is more than what is spent on health services or education.

What every citizen must realise is that the Government has no money of its own. Every cent that the Government spends comes from the people, directly or indirectly.

When the Government imposes heavy taxes on businesses and workers to finance its welfare and other subsidies, a vicious cycle results. These welfare programmes and other subsidies also breed layers of bureaucracy. In some countries, four out of every 10 workers are employed by the government. If a businessman who employs a worker at a minimum salary of $1,000 per month has to pay another $1,000 in social security levies, payroll taxes and other benefits, he becomes uncompetitive. As a result, many industries in Europe find that their products are becoming increasingly uncompetitive in the world market. At the same time, a business under such conditions is loath to employ more people.

Hence, young people who want to work are unable to find employment due to the employers' reluctance to employ, and they end up to live on unemployment benefits. Those who are working find themselves forking out up to half their pay cheques to the Government in taxes. They may find that with disability allowance, child support, housing and other allowances, they are better off not working. So they decide to go on welfare. This is a very common occurrence in the developed countries. An interesting example is Spain. For every person working, there is today one on welfare. The result for the nation is mounting budget deficits and rising unemployment. It is not surprising.

In the OECD countries today, there are some 35 million people unemployed. The unemployment rate in the EEC countries is crossing 12%. Despite the serious recession, the governments are not able to cut back on highly subsidised health and welfare services. In some cases, the government is bankrupt and it is still not able to do that. I think no Government dares to take the risk of removing or curtailing subsidies for fear of being booted out of office. So subsidies remain, and the country grows weaker.

Sir, with this backdrop, it will be a very careless and irresponsible government to increase subsidies, especially on public services as cost increased. We need subsidies, but where and which are the productive areas that we need to subsidise? In my view, only education should continue to qualify for special treatment. Education is an investment in our people and our future. The current rate should be retained as only the products of such subsidised education can contribute to our continued economic growth.

Overall, education cost has gone up but is still affordable despite sharp fees at some independent schools. Perhaps, generally, some parents are feeling the financial pinch from the constant demands to participate in fund raising efforts initiated by the schools. This is one area our Government should review. If education is indeed an investment, then the Government must provide all the funding needed for developing the infrastructure. School extensions, air conditioning libraries, providing audio-visual facilities, and other so-called frills, should be fully borne by the Government. Besides diverting the energies and attention of teachers and principals away from their primary role, fund raising has the adverse effect of causing a financial burden on most parents as this adds to the perceived problem of cost of living. We know that fund raising may be voluntary, but this is never so, as I think no parent wants to see his son or daughter return to school empty-handed or being looked down as a result of a small contribution.

A recent issue of the Economist magazine reported that one reason for the success of East Asian countries such as Malaysia, Indonesia, Thailand and Singapore is their investment in basic education for their people. Generally, these countries spend more than 60% of their education outlay on primary and secondary education. By contrast, they pointed out that Latin American countries usually spend less than half that amount on basic education. This is one of the factors for the unprecedented growth of these Asian economies in the last 25 years, averaging no less than 6.5%.

Still, it is in Singapore's own interest to see that our students who are capable of developing further, up to tertiary level, should be given every opportunity to do so. It has been pointed out that the percentage of our workforce with tertiary education is way behind other NIEs like Taiwan and South Korea. We need to produce more graduates for the new technologies which the economies are now moving to. In a healthy and growing economy, the greater the multiplier effect the greater the value added to the economy.

At the same time, we are also closing the subsidy gap and there seems to be strong social arguments for doing this. We need more tertiary graduates, but we want them to pay more for their education. There is a dichotomy here. I suggest we peg the subsidy level at current levels and do some re-thinking on this issue. We have to balance out between the necessity to invest on producing more tertiary graduates and, at the same time, ensuring that they return more to society as a result of their expensive education and high earnings potential. In Australia, there is a special tax on graduates for a certain number of years. In other words, we tax our graduates upfront. The Australian way is to tax them when they start work. Perhaps, the re-thinking will focus on a combination of both.

Sir, let me move now to the question of subsidy on public housing. I applaud the Government's decision to continue building 3- and 4-room budget flats. At present, 91% of Singaporeans own their homes. Half of all those who applied for new flats in 1992 were upgrading to bigger flats. The corresponding figure in 1987 was one-third and only 4% in 1977. Still, it is necessary to ensure that everyone, and in particular, those in the lower income group can enjoy affordable basic housing.

I have spoken out on a number of occasions in this Chamber on the need to review our subsidy policy on housing, particularly subsidies on the larger room flats. As a small step, and which is in line with what I have spoken on in the past, I welcome the recommendations calling for a review of housing subsidies for executive apartments to be phased out. With the high subsidies on larger room flats, there is only one way to make money, and that one way is to make sure that one applies for the largest flat possible and in the most desirable area. Recently, I come to understand that an executive flat owner in my constituency sold his flat for $400,000. This is nothing new. The only thing is that this is a new flat. And before he even moves in, he has already profited more than $200,000, and all through the generosity of the HDB and our new three-child family scheme. In other words, the five-year bar on ownership is removed when he has got his third child. That is what I understand. I am happy for that family. Unfortunately ---

Some hon. Members: No.

Mr Chng Hee Kok: I spoke to Mr Lim Hng Kiang today. I am happy for that family. But news of people making money on large flats is quite unsettling for those who feel that they may have been left out if they remain in their present flat. So they have to make sure that they upgrade.

Now, with 91% of our people owning their own homes, the objective of a house ownership society has been met. It is time now to look at the principle and all the issues relating to subsidy in public housing.

On health care, Sir, I understand that a White Paper on affordable health care will be presented soon, and I propose to leave this issue for a fuller debate. I am sure that paper will generate a great deal of interest as the question of health subsidies must be the key issue.

Sir, finally, let me move down to the question of public transportation and the COE. Although the majority of the people are agreeable that the vehicle population must be controlled, they are not happy about the resulting high COE prices. Unfortunately, high economic growth and continued improvement in real incomes in the range of 6% to 8% will completely outmatch the 2% to 3% increase in car population. The result is that COE prices have gone up, and they will contine to go up. And the result is public alarm and frustration and this is aggravated by the result of monthly tenders. The monthly results on COE prices keep this issue in constant focus. The public is convinced of other less painful solutions and that the Government is not doing it because the Government is out to raise money. I say, let the Government return this money to the people via direct means through the tax system or the CPF. Although we have never matched a revenue source with its expenditure and disbursement, the yearly declaration of what I call a COE dividend will go a long way towards mitigating this political problem. This move will illustrate that the COE is not a fund raising exercise. At the same time, it rewards all users of public transport system. Somehow, we have to find an innovative Singaporean solution to this political problem which, like it or not, is very pervasive and unhelpful.

Question proposed.

Mr Chiam See Tong: Mr Deputy Speaker, can I get a clarification from Mr Chng? He says that immediately upon purchasing an HDB flat, he could make $200,000. From my understanding, a purchaser of HDB flat cannot resell it until after five years.

Mr Deputy Speaker: Mr Chng, do you want to clarify?

Mr Chng Hee Kok: Mr Deputy Speaker, Sir, I said "I come to understand". I will check my facts and I will answer it tomorrow.

Mr Peh Chin Hua (Jalan Besar GRC): ( In Mandarin): Mr Deputy Speaker, I second the motion in the name of Mr Chng Hee Kok, Member for Tampines GRC, to endorse the conclusions of the Cost Review Committee Report and to call upon the Government to accept the recommendations.

The rise in the cost of living, business cost and inflation has caused much public concern and it was also one of the main issues in the 1991 General Election. A thorough debate on the Report is therefore a good public education exercise to enable the people to further understand the contents and suggestions in the Report.

Mr Deputy Speaker, Sir, I believe that the Report of the Committee, led by the Minister in the Prime Minister's Office, Mr Lim Boon Heng, is a thorough and comprehensive document. The rising cost of living and inflation rate have been carefully analysed and many practical recommendations have been made. These will assist in the future development of the country. It is a very valuable document.

Another conclusion of the Cost Review Committee is that having examined in detail the accuracy of the CPI, the CRC found that the method of calculation is sound. The Committee is satisfied that the CPI is calculated in accordance with international convention and that there are no significant inaccuracies in the CPI. In other words, the average rate of inflation was only 2.4% from 1980 to 1992, which is the lowest in the world. This conclusion dispels the doubt of some people and also helps to strengthen the people's confidence in the Government and to have more faith in the future policies of the Government. It also nails the inaccuracy of the Opposition.

Mr Deputy Speaker, Sir, the CRC mentioned that in discussing the problem of rising cost, it is advisable to separate lifestyle and price changes. Many people feel that the cost of living in Singapore has risen much higher than what official statistics show. This may be due to the improving standard of living. Better household income has led Singaporeans to continue expecting higher quality goods and services. This shows that our standard of living has very much improved. Although the expenditure of Singaporeans is higher, their income has also been increasing all the time and so has their standard of living. Therefore, it is better to strike a balance between our lifestyle and the changes in prices. I think it is better than to advocate slackening our pace in the standard of living in exchange for the early days of cheap prices. I believe that most Singaporeans will not want to turn the clock back to such a situation.

On education, I agree with the Committee's recommendation that the Government should maintain its subsidy rate for university fees at the current 79% on recurrent expenditure instead of reducing it to 75%. The universities should also control cost. According to feedback given to me by many university students, there is no tight control in the universities' budget. The high recurrent expenditure has resulted in a rise in operational cost.

I suggest, therefore, that the Ministry of Education and the Ministry of Finance jointly set up a committee to oversee the recurrent expenditure of the universities. This may include examining whether there is an over-supply of teaching staff or excessive acquisition of equipment or purchase of big equipment for minor projects, under-usage of facilities or wastage of energy. I would, therefore, believe that the setting up of a committee will control operational cost whereby the parents and students would not be troubled with the continuous rise in university fees.

The school fees in independent schools should also be controlled. As long as the Government does not reduce the educational subsidy and there is proper control in educational cost, it will set the minds of parents and students at ease when there is a necessity to raise the school fees.

On health care, the Committee recommended that there be at least one Government hospital to preserve the patients' option for treatment. At the same time, hospitals should improve their public relations exercises so that the public can be better informed about the availability of financial assistance. Financial counselling of patients should also be handled with sensitivity.

According to my knowledge and understanding, in the early 60s and 70s, Singaporeans would only stay in hospital when they have no other choice. However, after treatment, they were grateful to the PAP Government for the medical assistance and medical care. But in the 80s and 90s, most Singaporeans would cast doubts about the medical assistance rendered by the Government when they are discharged from the better equipped Government hospital. They will be billed and they have doubts about the Government service.

Mr Deputy Speaker, Sir, I agree with the CRC's recommendation to retain at least one Government hospital to allow patients a wider choice. At the same time, the Government should make available more affordable class C and B2 wards, so that people will have the same attitude of appreciation to the PAP Government as was the case in the early 60s and 70s. As long as medical subsidy is not misused, it is worth considering. After all, the conception by Asians and Westerners is different. To the Asians, it is considered inauspicious to be admitted to hospital. So, it is unlikely that Asian people like us would abuse the medical services. Therefore, I would appeal to the Government to consider giving more subsidy to the health care for our people.

I agree with the Committee's recommendation that the Government should focus its building efforts and subsidies on providing affordable housing for the lower and middle income groups. The Housing and Development Board should consider building more 3-room flats for sale to the public at posted prices.

Mr Deputy Speaker, Sir, the new generation of Singaporeans is brought up in a prosperous and politically stable environment. Under the stop-at-two family planning policy, our children have their own rooms to stay in and our people receive better education and better income. Naturally, they will opt for bigger and better flats and live a more comfortable life. According to the statistics from HDB, in 1992, 50% of engaged couples were opting for 5-room or Executive flats when buying their first homes. But the prices for 5-room and Executive flats are not affordable to them and so they blame the Government for the rising costs.

Therefore, I would suggest that, besides building more 3-room flats for sale at posted prices, the Government should also consider changing the design of the 3-room flats. It should consider expanding upwards by re-designing the 3-room flat from the usable floor area of 60 square metres to a compact apartment with an attic with a total floor area of 100 square metres. The new-design flats with prices to be capped at an affordable range of the current 3-room flats will satisfy the needs of the new generation. This is also beneficial to Singapore which is scarce in land.

Mr Deputy Speaker, Sir, the details of my suggestion of the compact apartment are as follows: Using the present usable floor area of a 3-room flat of 60 square metres, we build upwards, that is, by expanding the present 2.7-metre ceiling height to 4.4 metres. The building cost will not be very much higher and the selling price will not be badly affected. Secondly, let the buyers apply to HDB to erect their own attic in the living room, to set up a study room in the master bedroom, or an attic in the bedroom to serve as a servant's room. All these modifications would give the occupiers more living space. Attic space in the kitchen and toilet could also be set up for storage purposes. I think it will be more convenient and more acceptable to the new generation of Singaporeans. Engaged couples whose total incomes do not exceed $3,500 shall be eligible to apply for this type of flat. This will not only satisfy the lower and middle income groups but will also enable `A' level holders and graduates to satisfy their need for accommodation. This may be small but you have a lot of usage space and they do not have to look to 5-room or Executive flats which are beyond their means.

The Government subsidy should remain at 30% or above and the downpayment for this type of compact apartment should be 5% instead of 20% for other types of flats. This will facilitate engaged couples who have just started their working life and the lower and middle income groups to apply for the flats. Compact apartment should be restricted to only new applicants for HDB flats because they contain a high subsidy from the Government. This will prevent misuse of Government subsidy.

Mr Deputy Speaker, Sir, this type of compact apartment can be a little cosy home for the young and a haven for the senior citizens. This will be generally welcomed and I hope that the Government can consider this proposal.

In short, as the Prime Minister, Mr Goh Chok Tong, has said, because the CRC has dealt with the matter openly and convincingly, their conclusions will dispel the misimpression of rapidly rising costs in Singapore and will reassure the people that the costs of living are well under control in Singapore. I believe that any farsighted Government will provide subsidy on education, health care and housing but will also prevent the misuse of such subsidies.

In this competitive society, young Singaporeans should adopt the same attitude as the older generation in facing challenges. They should place the welfare of society before self. Singapore could only enter into a new era if we are more realistic. We should not emotionalise the question of our cost of living.

Mr Deputy Speaker, Sir, I support the motion in the name of the Member for Tampines GRC.

Mr Low Thia Khiang: ( In Mandarin): From what Mr Peh has said, there appears to be a wastage in the purchase of equipment and staffing position in the university. I think this is a very serious allegation. Can the Member give us more details and information?

Mr Peh Chin Hua: (In Mandarin): According to my understanding, I think there is such a situation but how serious it is, I really do not know. That is why I am suggesting that there should be a committee to look into the issue.