COST REVIEW COMMITTEE REPORT

Order read for Resumption of Debate on Question [12th October 1993],

"That this House endorses the conclusions of the Cost Review Committee contained in Paper Misc. 5 of 1993 and calls on the Government to accept the Committee's recommendations to contain rises in the cost of living." - [Mr Chng Hee Kok].

Question again proposed. 1.10 pm

Dr Arthur Beng Kian Lam (Bedok GRC): Sir, I rise to support the motion.

Sir, I would first like to congratulate the Chairman and Committee members for the thoroughness in which they dealt with the issues under review. I would like to comment on some areas of the Report.

Firstly, the Consumer Price Index. Sir, when the Prime Minister commissioned this Committee to its task, many Singaporeans looked eagerly to its work and report. That members of the SDP opted out of this Committee is an opportunity wasted on their part, and shows a lack of commitment on their part. In contrast, Mr Low Thia Khiang made a Minority Report. I must give him credit for the effort he has put in.

Sir, the public expects the CPI to be all-encompassing. As the Report has stated, and I quote:

"public unhappiness over the CPI stemmed from a misunderstanding of the nature and purpose of the index." In layman's terms, the public is looking for an index which they can use to compare various costs. They want to use this index to convey to the Government about areas which they believe costs are rising too rapidly or too steeply. Thus, it is the public's concerns over the cost of housing, health care, education and transport that could not be conveyed to the Government through the CPI. However, these costs did rise, and in some areas, very steeply. Furthermore, the combined effect of the various increases did indeed "hurt the pocket", although in varying degrees. Each of these increases could be justified by each Ministry, but taken as a group, it did hurt, and it hurt a little bit more.

I therefore welcome especially recommendation No. 47 of the Committee that Government fee increases should be carefully coordinated to avoid the same mistake again. However, the Committee stops short here. The public needs to be further reassured: Who will be responsible for this coordination? It will not be an easy task to coordinate the various Ministries and statutory boards, and now even GLCs and public-listed companies (for example, the bus companies and soon Singapore Telecom). Perhaps, the Frontbench would like to comment on this. The public needs to know which Minister or Committee of Ministers will be responsible for this.

Sir, regarding the explanation that certain increases, for example, in health and housing, which were rapid and steep in the post-recession years, I find it difficult to accept this explanation. During the recession years, all Singaporeans sacrificed through the CPF cut-back. This helped in the speedy recovery of the economy. Surely, there was no urgent need to "catch up" so quickly. I make this point because I hope that this sort of "quick-fix" solution will never happen again. Do we expect those patients who were sick and admitted to restructured hospital in 1989 and 1990 to accept this? It would indeed be very difficult to convince them. Thus, I agree with the Committee that in the issue of achieving "target subsidy rates" the "time-frame" must be very clearly spelt out. The Government must also be flexible in this respect and take into account factors like a recession or unforeseen factors. If the civil service is forced to stick rigidly to these target dates, the increases to the public may become painful or unaffordable. This is one aspect in which there is no credit at all to over-achieve.

Sir, on the issue of health, the CRC "agreed that restructuring was not a major cause of fee increases". The other reasons given for higher hospital bills were attributed to change in disease patterns and demand for more and better health care services. I agree that these two are contributory factors. However, if nearly half of the patients are warded in B2 and C in 1992, as shown in Chart 5.1 on page 46, my own conclusion is that restructuring must be a significant, if not, a major, cause of fee increases. This is further reinforced by the recommendation of the CRC itself that there should be "at least one government hospital".

Education

Sir, I welcome the recommendations on education, especially the capping of the subsidy rate for the universities. I would like to make reference to the costs for primary and secondary students, especially the issue of private tuition. The Ministry of Education survey showed that parents at the primary level spent on the average $108 per month, and those in the secondary level $172 per month on tuition. This goes to show that parents feel that their children need more academic assistance.

Sir, at this point, I would like the CRC and the Ministry of Education especially, to give the issue of the Day School a second look. It was a good concept, which failed. The causes are many. They could have been the facilities, curriculum, staffing, or the target group could have been wrong in that we included from primary one to primary six, where maybe it should be only those who are the older children from primary four to primary six. Perhaps we should study the reasons for the failure of what I consider a most worthy project. With the problems of working parents, and now with parents having to travel overseas to work, compounded with that of teen-gangs and the concern of drop-outs, Day School may well be the solution. What is spent on tuition could be better spent on full-day school. The net effect may be not only more cost-effective, but will also address the social problems faced by working couples. Let us give Full Day School another try. Perhaps on the question of cost for Full Day School, the Government could consider a dollar for dollar grant, that is, if the parents spend $100 extra on Day School - rather than they spend $100 on tuition - the Government gives $100 extra to the school.

Public Transport

Sir, both of the major bus companies - SBS and TIBS - are public listed, and together hold the monopoly or duopoly of bus services. The Report states that "as public listed companies, they have to generate profits for their shareholders". Does this not also hold true for all companies? Is this not the wish of all businesses and even governments? The Report in paragraph 14, page 84, states that profits of the two bus companies fell from $55 million in 1988 to $23 million in 1990. Note that they did not lose money. Therefore, bus fares were increased, and "profits recovered and amounted to $51m in 1992". When diesel prices increased during the Gulf War in 1991, bus fares increased. When diesel prices fell, other reasons were given for not reducing bus fares. However, they made a hefty $51 million profit in 1992. The Ministry of Communications should watch these reasons given more carefully. The Public Transport Council should be more alert.

Finally, Sir, as a nation which has been rated to have one of the world's leading workforce, we naturally have high expectations. I agree that our expectations cannot be unrealistically high, or else we will lose our competitive edge in the international market. However, in a meritocratic and mature society we cannot prioritise for our citizens what should or should not be their aspirations: is it a car, a weekend car, a weekend home, an executive flat or a landed property? Singaporeans must decide for themselves their own aspirations realistically and work hard towards achieving their own objectives. It is the role of Government to ensure a level playing field for all, and to help the less fortunate.

Mr Ling How Doong (Bukit Gombak): Mr Speaker, Sir, in November last year, SDP held a forum and it was pointed out at the forum that medical, housing, education and transport costs had increased disproportionately to the increase in wages. This has in fact been confirmed by the Cost Review Committee. However, the Cost Review Committee has insisted that the increase is in fact due to the high expectations of the people. SDP did not participate in the deliberation of this Committee - I must mention the fact here - because before the Committee had a chance to meet and deliberate, Ministers had already made statements to the effect that the rise in the cost of living was in fact due to the high expectations of the people. They have in fact prejudged the whole thing. And that is one of the reasons why we did not want to participate in the deliberation of the Committee.

During the forum we also suggested a separate category of cost increase assessments for various income groups, and this has in fact been in the recommendation.

I will come to housing. The question of public housing is not so much on affordability but rather on subsidy. I think the question here is whether it is justified for HDB to charge the amount it is presently charging for HDB flats. In considering this question, HDB should give a detailed breakdown of its land cost as well as its construction cost. When I say "land cost", I mean the amount paid for the acquisition of the land and not the notional price paid for the land. I understand the practice now is for the Government to acquire the land and later on sell it to HDB as a sort of paper transaction. The Government sells it to HDB at the market value. The flats are constructed and the sale is based on the market value, but not on the actual cost of acquisition of the land. In fact, yesterday, the hon. Member for Tampines GRC, Mr Chng Hee Kok, mentioned the fact that bigger HDB flats should be phased out. I would assume from that statement that Government has been subsidising the bigger HDB flats. I would like to be convinced of this.

I suppose the bigger HDB flats would include executive flats in Pasir Ris which are costing around $230,000 to $240,000 each. If we look at the price of $230,000 for these executive flats and compare it with a condominium, say, of $650,000, one would say, between $230,000 and $650,000, the difference is over $400,000. Surely between $300,000 and $400,000, there must be a subsidy. But then one must be reminded that for an HDB flat, you are not given a car park lot. For a condominium, you are given a car park lot. For an HDB flat, you are not given one. In other words, living there for 99 years, you have to pay a parking lot fee of $50 a lot per month, and it is increasing. So if you pay for 99 years, it comes to about $100,000. You add that to the $230,000, it comes to $330,000, and not forgetting the introduction of the foreign workers levy, the original cost of the flat could be only $200,000. The $30,000 is actually levy already collected by the HDB. Similarly, the private condominium is sold at $650,000. It could be that the $50,000 is also due to the charge or levy of the land, and the price has gone up. Then there is the question of renovation for HDB flats. There are many factors. I am saying this: convince us that there is a subsidy for those bigger HDB flats.

Looking at the Report of the Cost Review Committee, Table 6.1, it was mentioned here that for a 4-room flat, the average annual percentage increase was only 12.3% between 1988 and 1992. But if you look at the years 1988 to 1991, a 4-Room Model A flat cost $65,000, $71,000, $76,000 and $88,000 respectively. Now it is $103,000. It appears that it is almost a 40% increase, instead of 12.3%. In fact, the price of the latest 4-room flat is already $154,000. That would in fact be much more than this.

I think the question here is: how many workers have actually had their wages increased up to 40% or more? So I would disagree with the Report of CRC that there is not much increase between wage increase and the increase in the cost of living.

Coming back to health care in Singapore, all the time the question here is that they all use the term "affordability" - whether the patient can afford the hospital charges and fees. Affordability could even mean making profit on affordability. Look at it this way. If you can afford it, you have money, you pay more. That could even be profit-generating from this sort of principle governing this. With the widening of the use of CPF money where the siblings, the parents and relatives' CPF could be utilised for their medical care, I suppose a very small percentage of the people will not be able to afford medical care, unless you are a single person. Other than that, if a patient cannot afford it, what about his mother, father, brother or sister? Everyone will be able to afford it. I am suggesting that the criterion for affordability should be confined to the disposable CPF account of the patient and it should not cover the parents and the siblings.

I will now touch on transport. As Dr Arthur Beng has mentioned earlier, we have dual monopoly of two transport companies in Singapore. The question here is not whether the increase should be one cent or ten cents. Because even if there is no increase, this can be circumvented. Profit wise, it can be circumvented simply by re-routing, and it has been done of late. Instead of travelling directly from A to B by taking one bus, because of re-routing by SBS, you have to take two buses, resulting in you having to pay double for the fare. So the question here is: should a monopoly be allowed to re-route and, perhaps, make more profits from the new routes? I am suggesting that being a monopoly, it has the duty to serve the people. They must not be allowed to choose the more profitable routes, or run more regular buses along the popular routes and leave out those less profitable routes. Otherwise, in the transport scene, it should be open to all the other bus companies to compete in this way.

The introduction of airconditioned bus services is, in fact, a false expectation for the people. You would say, "You can always travel in a non-airconditioned bus. Why do you choose to travel in an airconditioned bus?" But the problem is this. Sometimes, certain bus routes are confined only to airconditioned bus services. Of course, there are routes where you have both airconditioned and non-airconditioned buses. But the problem is that the regularity of the bus service will be reduced. So you may be forced to take the airconditioned bus because if you miss one non-airconditioned bus, you may have to wait for another 15-20 minutes for the next non-airconditioned bus to come along. Therefore, in this way, the burden of the people in the lower-income group would be enhanced, forcing them to pay more for their transportation.

Another way of reducing cost would be for the Government to introduce less profit-orientated policies. A lot of the rise in the cost of living are a spinoff from Government policies, like COE and the levy on foreign workers. Quite obviously, with cost going up and if it spreads round, ultimately, the consumers will have to bear the burden of this increase.

Therefore, in respect of education, I agree with the Cost Review Committee that for tertiary education, the subsidy should not go down below 79%. The subsidy should be maintained at 79%, rather than at 75%. Perhaps, the Government should consider more grants for those in the secondary schools bearing in mind that most of the independent schools have increased their school fees from $75 to $100, $150 and $175. This was reported in the newspapers recently. This would definitely increase the burden of the lower-income group. We should also consider the fact that the survey found out that tuition fee came to about $170. So if the independent schools charge a fee of $200 plus the tuition fee of $170, the total comes to $370. Here, we are not talking about the majority of Singaporeans earning $3,000 or $4,000. We are talking about Singaporeans earning between $1,500 and $1,700. Would they be able to pay for their children's education in the independent school where the school fee and the tuition fee alone would come to about $370, not forgetting transport cost and pocket money?

In the light of this, I am suggesting that there should be more grants and subsidies for these well-deserving school children. I would like to repeat this again. Education is an investment which will reap a tremendous return for Singapore. If all Singaporeans are well educated, it is going to be a good return for Singapore.

The Parliamentary Secretary to the Minister for Information and the Arts (Encik Mohamad Maidin B P M): Mr Speaker, can I ask some clarification from the Member?

Mr Speaker: All right.

Encik Mohamad Maidin B P M: Sir, I just want to ask the Member for Bukit Gombak a few questions. One, in his speech, is he suggesting that Singaporeans should pay in advance to get a car park lot when they buy a HDB flat? Two, how did he arrive at the figure of $100,000 based on $50 a month over 99 years? My calculation shows that it is about $59,000. And these are paid $50 a month, and not in advance, or a lump sum. The third question is: can the Member explain what was the main point that he wanted to drive across in his speech because I have some difficulty in trying to grasp the meaning?

Mr Ling How Doong: In fact, when I mentioned $50, I was talking of the open car park. I was not talking of the multi-storey car park which is $75. You may remember that the former Prime Minister mentioned in 1984 that, ultimately, car park fees would go up to $150, and car park fee is not static. So if you work on that basis, would it not come to $100,000 for a 99-year period?

Mr Lim Hng Kiang: At the present value of $75, it comes to less than $100,000.

Mr Ling How Doong: No. As I said earlier, it was mentioned in 1984 that car park fees would go up to $150 and when you calculate it on that basis, it comes to $100,000. One has got to make provision for contingency, etc. We do not know. I calculate on that basis. But I cannot give you an exact figure. This is how I arrived at $100,000 in 99 years. It is a rough estimate.

Encik Mohamad Maidin B P M: Should they buy the car park lots like in condominiums?

Mr Ling How Doong: No. Free provision for car park lot. Because if you buy a condominium, you are given a car park lot free of charge. It is like a package deal. It is included in the package.

Mr Peh Chin Hua: ( In Mandarin): Mr Speaker, I would like to ask two questions in Mandarin. Mr Ling, I think, has given the wrong impression of the situation that in the subsidy for housing, the Government has not been giving subsidy because the land cost should not be included. What I would like to know is that, some years ago, the HDB asked the SDP to build its own flats. Why is it that the SDP has not been able to do so all these years? The second question is this. The SDP leader said just now that he disagrees with the finding of the CRC on the question of rising cost of living. Since the Report cannot convince him, can he present a report which can convince us?

Mr Speaker: Do you wish to respond, Mr Ling?

Mr Ling How Doong: I will respond in Mandarin.

Mr Speaker: Yes, make it brief.

Mr Ling How Doong: Yes, Sir.

(In Mandarin) It was the late Mr Teh Cheang Wan who asked the SDP to build its own flats. We had already made some counter-proposals. But these counter-proposals were not accepted. How could we proceed? If our counter-proposals had been accepted and we failed to carry them out, then you can ask me the question. Since our counter-proposals have not been accepted, how do you expect us to proceed with them?

Mr Peh Chin Hua: ( In Mandarin): Your counter-proposals must be reasonable. For example, in mainland China, you must pay for land use although you do not own the land.

Mr Loh Meng See (Kampong Glam GRC): Mr Speaker, I just want to seek a clarification from Mr Ling. Is he suggesting that the Government does not allow family members to tap the Medisave savings of their relatives in the hospital? I just want to confirm that point from him.

Mr Ling How Doong: No, Sir. My point is about the criterion for affordability. In other words, if you cannot afford it, you will get the subsidy from the Government. For example, last year the Government actually spent slightly over $1 million subsidising people who could not afford to pay. So my suggestion is that the criterion should be based on the disposable CPF account of the individual. If he cannot pay, he cannot bring in his siblings or the family and say that he has become affordable and give him the assistance in that way. I am not against the idea that the CPF of family members should not be utilised for the patient.

Mr Loh Meng See: Then how does the Member suggest that the hospital management admits the patient? Should they ask him whether he would need the Medisave account of his relatives in deciding on the ward charges? Or the hospital need not have to ask that question of the particular patient and so decide on that basis?

Mr Ling How Doong: I think that question has got to be answered by the Minister because the Minister has stated repeatedly that the poor and the needy do not have to worry about medical care. In other words, if an individual who has got insufficient money to go to the hospital for treatment, the Government will subsidise him. It is as simple as that.

Mr Yeo Cheow Tong: Sir, may I be permitted to ask Mr Ling a question? Is he proposing that since many of the older people, even those who are working today, in their 50s but self-employed, do not have Medisave and because they do not have Medisave, they should automatically be given free treatment?

Mr Ling How Doong: To answer that, I think the Minister needs to explain the word "affordability". Can he afford it? The Government has promised the people that it will give them medicare if they can afford it. If they cannot afford it, the Government will look after them. It is unfortunate that these people cannot look after themselves.

Mr Yeo Cheow Tong: Sir, the Government has always made it very clear that those who are unable to afford paying even the heavily subsidised Class C charges will get their charges waived. We stand by that. We have had no occasion where people have come forward and say, "We have not been able to afford it" and were denied treatment or were still forced to pay without being given the option to get a waiver of fees. If Mr Ling is aware of any cases of this nature, please let us know. But he has still not answered my question. What about a person who is self-employed who does not have any Medisave, but his children have Medisave accounts? Is he saying, as long as you do not have a Medisave account, you do not have to pay the bills? Is he suggesting that?

Mr Peh Chin Hua: ( In Mandarin): Mr Speaker, Sir, Mr Ling has not replied to my second question. I would like to ask him when he is going to present his report to us.

Mr Ling How Doong: ( In Mandarin): SDP has not made any promise that we are going to present a report. Why is the Member asking us when we are going to present a report? We have never said we are going to present a separate report. Why is he suddenly asking us this question?

Mr Peh Chin Hua: ( In Mandarin): According to a report in the Lianhe Zaobao, the SDP will be presenting their own report.

Mr Ling How Doong: ( In Mandarin): This has not been approved by the Central Committee of our Party.

Mr Peh Chin Hua: ( In Mandarin): In other words, he is saying that he is unable to settle his own domestic affairs.

Mr Speaker: Mr Ling, you still want to clarify?

Mr Ling How Doong: No.

Dr Ow Chin Hock (Leng Kee): ( In Mandarin): Mr Speaker, Sir, over the year, the Cost Review Committee (CRC) spent a lot of time conducting research and holding discussions and debates and, finally, completing the Report. The Committee members came from different backgrounds. They reached consensus on certain issues. One example is that the real income of our people has increased over the last 12 years. Majority of the Committee members also supported other issues, eg, the basis of CPI calculation is correct. Even in Mr Low Thia Khiang's personal report there are more common grounds than differences in substance with the CRC Report. This, I think, is an achievement. I hope that Singaporeans are able to see this point and look at the conclusions and recommendations of the CRC from a very objective and rational point of view.

I ask myself two questions: Does the Report reflect the opinion of the people? Are the conclusions able to dispel the doubts of the people about cost of living? To some extent, the answers are in the affirmative. The CRC has dealt, in depth, with many issues concerning the people, such as health care, education, transport, housing and GST. Moreover, the Committee's recommendations such as the retention of at least one Government hospital, the building of more 3-room and 4-room budget flats, the increases in the fare of MRT and buses should be on the basis of five cents or below, and the freezing of the university education subsidy at present level, if implemented, they will benefit people in the lower and middle income groups. It will also convince the people the determination of the Government to arrest the rise in the cost of living. I hope the Government will accept these recommendations and implement them early.

On the other hand, from a different angle, there is still a perception gap between the Government and the people on the cost of living. The reasons are very simple. The Government looks at the issues from the macro point of view whereas the people look at them from the micro point of view. The Government uses statistics and policies to analyze the problems of the rising cost of living but the people complain about the rising cost of living based on their actual experience and feelings. As an illustration, housewives look at the situation through their food basket and workers look at it through the prices they pay for the meals they eat outside. Similarly, those who want to buy cars, flats or send their children to university or send their relatives to the hospital, their concern is whether they can afford the prices or fees needed. The increase in CPI by 2.4% per annum in 1980-92, and the annual average increase of household income by 7.2% per year in 1980-1990, etc, have no relevance or meaning to these people.

Behind the discussion on the cost of living, there are two hidden crucial questions. The first is, in the face of rising wages and costs, can the Government subsidy rate in public housing, education and health care remain unchanged? Or should it be adjusted downward? For example, if the unit cost is increased from $100 to $150 and the subsidy rate is maintained at 80%, then the amount of subsidy of the Government will increase from $80 to $120, but the users will complain that they have to pay an increase of $10, from $20 to $30. If the Government does not allow the subsidy rate to increase and instead lower it, then the users will have to pay more correspondingly. For example, in 1987-1992, the Ministry of Health reduced the subsidy rate from 55% to 44% of the recurrent costs, but the actual amount of subsidy increased from $165 million to $271 million. The increase in the amount of subsidy means the increase of the taxpayers' burden. We have to ask ourselves: is it equitable for 3-room and 4-room flat dwellers to pay tax to subsidise the better-off who are hospitalised in B1 and A class wards? Similarly, is it fair to use 90% of the recurrent expenditure on education subsidising undergraduates who constitute only 5.2% of the total student population?

Furthermore, subsidies will distort resource allocation. The higher the subsidy, the lower will be the fees and this will create extra demand to arise which, in turn, lead to further subsidies, and result in what we call "the vicious cycle of subsidy". The Government's stand on subsidy is therefore very firm and consistent. Hence, although the Government is subsidising education, health care and public housing heavily, it is also stressing all the time that we should learn from developed countries to avoid state welfarism and the adverse consequences of such policies.

Mr Speaker, Sir, how to use the subsidy is a question of efficiency. It is more objective and it can be calculated on the basis of the rate of social returns. But who should get the subsidy and how much should the subsidy be for everybody is a question that relates to equity in wealth distribution, and it involves subjective judgement.

The next crucial question is rising expectations. Demands are getting more and more diverse and the demand for quality is also increasing. This is a conflict between unsatiable wants and limited resources. This issue is always present and remains the same from the primitive society to the developed modern society. Rising expectation is a motivation. It encourages people to work harder, to work better, to raise their educational and skills level. It is a good and positive force. However, if expectation rises beyond the capacity of the person and, coupled with the demonstration effect - the comparison with colleagues, neighbours, "when people have, I must also have" - then there will come a time when the expected standard of living cannot be met. This will lead to disappointment and discontent, and some even blame Government policies for denying the fulfilment of their expectations!

Moreover, many people are only concerned with their individual demand but ignore the externality created by their demand. For example, people who want to buy cars only know that cars are private goods, but they ignore the fact that the use of cars has imposed a demand on limited public resources, in this case, land. Also, when many people wish to buy cars at the same time, the demand on land, the limited resource, will be substantially increased. From this angle, we may look at the COE as a measure that the Government uses to restrict the use of limited resources, and that COE price reflects the cost of externality of demand for cars. If more land is used on construction of roads, there will be less land for factories, offices, housing and defence.

I raise two crucial issues, ie, subsidy and expectations. They are issues that do not have optimal solutions because they involve basic conflicts of interest between the State and the people. When values tend towards individualism and materialism, the perception gap between the people and the Government will also be widened. Some people even try to intimidate the Government with the ballot paper and emigration. But in one specific area, there are common interests between the people and the State and, that is, education and skills training. To the individuals, the raising of educational and skills levels will enhance their own earning capacities and help their children get out of the poverty trap. To the State, educational and skills levels will increase the economic competitiveness of the country. Therefore, we should give more subsidies on education and skills training. This is an investment in human resources and it is also an investment in the next generation.

But in the primary and secondary level, it is not just a question of skills training or teaching them how to make a living and to service the national economy. We must also inculcate in the children the correct values in life. This should be the long term objective of the running of the State.

When the CRC was formed, the then Chairman, Mr Lim Boon Heng, invited the then Secretary-General of the SDP, Mr Chiam See Tong, to join the Committee but he refused to do so. His colleagues in the House also refused to join the Committee. I remember that at that time it was reported in the press that the SDP had indicated that they would themselves do a study on the rising cost of living, but till now, they have not come out with any report thereof.

Our 16-member committee has presented its Report. Mr Low Thia Khiang has his own minority report. The SDP has been given ample opportunities to present its own report. Mr Ling How Doong confirmed that SDP has no report. It is not too late for SDP to produce a report. Just now, when I heard the Member of the SDP, Mr Ling How Doong, the impression I gathered was that he had not looked at the CRC Report carefully, or perhaps he does not quite understand what the Report is all about. Maybe he just wanted to distort the conclusions of the Committee. There were some examples of his distortions. I will focus on one of them to clarify and refute what he has said.

He said that the Committee blamed the high expectations of the people for the rising medical cost. If he had read carefully page 46 of the Report, he will note that we have given many reasons for the rising medical cost. For example, we pointed out in the Report that advancement in science and technology has made medical equipment more and more expensive. This is one of the reasons. We also pointed out that the Government's cut in the subsidy rate was another reason. The third reason was that people have failed to exercise prudence when they used their Medisave balance. The fourth reason was that the pattern of diseases has changed. If Mr Ling How Doong had carefully read the CRC Report, he would not have made such ridiculous remarks.

Mr Speaker: Mr Chandra Das.

Mr Chiam See Tong (Potong Pasir): Before Mr Chandra Das speaks, can I clarify what Dr Ow has just said?

Mr Speaker: Yes.

Mr Chiam See Tong: He refers us to page 46 of the Report and he pointed out that higher hospital bills are due to equipment, Medisave being used, and so on and so forth. But in calculating its cost, has the Government included land cost and building cost? Maybe these are massive items which the Government tries to recoup. That is why the hospital bills have gone up. Can I clarify from Dr Ow?

Dr Ow Chin Hock: ( In Mandarin): When I quoted the reasons given in the Report just now, I meant to rebut what Mr Ling How Doong has said. Mr Ling said that the rise in medical fees was due to rising expectations. I need just only one reason to rebut his point. As we could see from the Report, from pages 44 to 46, there are other reasons for the increase in medical fees. What Mr Ling said could not stand. If Mr Chiam said that the Government is trying to recover its building cost from these higher fees, I think it is not correct. However, rising land cost could have something to do with the Government's attempt to reduce the subsidy rate.

Mr Ling How Doong: Mr Speaker, when I said that the increase in the cost of living was due to the high expectations, one must bear in mind that there are actually four items here involved: education, health, transport and housing. When I mentioned the fact that the Government says that it is due to high expectation, it does not necessarily mean health care. Here, the Government has already stated that it is due to people wanting to have better upgraded HDB flats, and in respect of hospital treatment, instead of going to third class, they choose to go to first class. Is that not high expectation?

Dr Ow Chin Hock: ( In Mandarin): In our conclusion, the Committee mentioned that rising expectation is one of the reasons. There are also other reasons, such as limited resources, reduction in subsidy rate and the simultaneous adjustment of fees by the public service within a short period of time. These reasons are applicable to education, transport, public housing, and not just health care. These are in the Summary of the Report. Since he has not studied the Report carefully, I would like to refer him to page 6 of the Report.

Mr S. Chandra Das (Cheng San GRC): Mr Speaker, Sir, I would like to join other Members in this House to congratulate the Chairman and members of the Cost Review Committee for a well-balanced Report and also for making the various recommendations to the Government. In turn, Sir, I am happy to note that the Government has accepted the Report and that the Prime Minister has instructed the various Ministries to study and implement the recommendations.

We will have to wait and see how the major recommendations are implemented by the Ministries concerned. It may be necessary to monitor the implementation very closely, otherwise this Report will just be another report.

Sir, the Cost Review Committee has rightly identified four areas of public concern: housing, health, education and transport.

In my view, Sir, the Committee has spent too much time trying to justify the cost increases in the past, be it education, housing or health. For example, Sir, in page 2 of the Report on health, it says:

"First, costs increased due to higher wage costs, and higher costs of new equipment and treatment methods. However, fees were not increased after 1984 because the government did not want to impose a burden on the public during the recession and the wage-restraint period which followed it. As a result, fee increases in 1989/90 were sharper than if the increases were spread out over a longer period." This is more a justification for cost increases. Cost increases on health services and other services will take place and will continue to take place. What is more important is to contain future runaway increases in prices. In this context, the Cost Review Committee has been bold in its approach to identify and make various recommendations.

First, Sir, in education, the Committee recognised the concerns about the affordability of university fees, independent school fees and private tuition. I strongly support the Committee's recommendations that the Government subsidy rate for university fees should not be reduced to the target of 75% of recurrent cost, but capped at the current 79% of recurrent cost. This will ensure that future university fee increases will be kept at moderate level. However, Sir, I would have been happier if the Committee had also suggested some guidelines for capping fees of independent schools. Notwithstanding the assurances from the Ministry of Education, higher fees in independent schools would certainly deter children from poorer homes to apply for these schools. We must try and keep our independent schools within the reach of all our bright children, and not just to cater for those who can afford it.

Sir, on the question of health, everyone in Singapore is concerned about health costs, and the fact that the Committee has recommended that there should be at least one Government hospital does, to some extent, confirm that restructuring of existing hospitals has resulted in increased costs for the average Singaporean. The question to ask is: Is one Government hospital enough or sufficient? Apart from one Government hospital to allow patients a wider choice, I believe it is also important that the Government considers building more community hospitals in catchment areas to complement the one Government hospital recommended by the Cost Review Committee. Sir, I must emphasise that the community hospital should be a no-frills hospital. If a patient goes there for a headache, he should be treated for headache and not rushed immediately for a head scan.

Sir, on the question of transport, I agree with the Committee that future bus and MRT increases be in smaller steps of one cent to five cents. This will help the public to adjust gradually to fare increases. But more importantly, apart from fare increases, the Committee did not suggest any improvements on the level of service of public transport. We have an efficient MRT and a very good taxi service. Unfortunately, Sir, the same cannot be said about our bus services. Apart from costs, the public would like to see an improvement in the quality and coverage of the bus service. Here I believe consumer convenience is often sacrificed for operational efficiency and profitability. The point is cost increase is not the only cause of unhappiness among commuters. Quality of transport service must improve with higher charges.

Sir, on the question of housing, I agree with the Committee that the Government should continue to provide affordable housing for the lower and middle income groups and hence should concentrate on building 3- and 4-room flats and leave the provision of 5-room and executive flats to the private sector. However, if the Government still wants to continue to build 5-room and executive flats, then I would strongly suggest that every Singaporean be given only one bite of the cherry. Let the Government decide on a subsidy level for all first-time home buyers and give it to them by way of a cash grant and leave it to the individual to decide whether he wants to buy a 3-, 4-, 5-room or an executive flat. In this way, every Singaporean in the approved income level for public housing will get one bite of the cherry. It will also give the Government greater flexibility to further help those in the 3-room/4-room category by its own pricing policy.

Sir, it is the job of the Government to provide affordable housing for the majority of Singaporeans. Having housed more than 80% of Singaporeans, maybe a review of our public housing policy is timely.

Next, I would like to comment on one of the items mentioned by the Cost Review Committee. The Cost Review Committee has identified NTUC Fairprice as one of the organisations which will have an interest in keeping consumer prices down. NTUC Fairprice outlets can act as a reference point for consumers to compare prices. Sir, I would like to declare my interest as Chairman of NTUC Fairprice. On behalf of NTUC Fairprice, I would like to reaffirm our commitment and endorse the Cost Review Committee's recommendation that we carry out the social role of stabilising prices of essential items, thus helping to curb inflation and profiteering.

Moreover, Sir, we would also ensure that essential consumer goods are readily available and be kept at fair prices. Whilst trying our best to maintain fair and low prices, it should not be expected of Fairprice to score the cheapest for all the 10,000 or so items stocked in its stores as compared with a mere thousand-odd sold at other provision shops.

Today's customers are looking for "best value for money". This means apart from price, there are other factors such as quality and freshness of products, the general ambience of the shopping environment, the assortment and convenience as well as customer service. Sir, Fairprice will continue to give its customers the "best value for their money".

The social role will not be eroded with the passage of time and, if anything, it will only be enhanced. We will also take up the suggestion of Mr Lim Boon Heng to provide more outlets for one and two roomers.

We, on our part, will do our best to help the lower income stretch their dollars to get their daily necessities.

On this note, Mr Speaker, Sir, I support the motion standing in the name of my colleague, Mr Chng Hee Kok. 2.16 pm

Mr Robert Chua Teck Chew (Nominated Member): Thank you, Mr Speaker, for giving me the opportunity to speak on this motion.

First, I want to join my other parliamentary colleagues in congratulating Mr Lim Boon Heng, the Chairman of the CRC, and his members for giving us a comprehensive review of the cost situation in Singapore.

I would like to touch on only two subjects because of time constraint.

First, on education. I support the Committee's recommendation concerning maintaining the subsidy for university fees at the current 79% instead of the proposed 75%. Also, future fee increases, as recommended, should also be made gradually. I would like to draw the House's attention to Table 8.7 on page 79. If you look at how university tuition fees had been increasing between 1986 and 1992, we can understand why people are very anxious. The increase in university tuition fees during that period was between 21% and 44% per annum. So that is a hefty increase and it is very difficult for people to accept that this is necessary so that the subsidy level can be brought down. So the recommendation of the Committee to graduate or make the increases gradual should be taken very seriously. Otherwise we will have a lot of anxious parents not knowing where is the limit.

I would like to touch more on the review of business costs and competitiveness. Whatever cost increases we have to bear in Singapore will be acceptable provided we can afford it. And our affordability will depend on whether we remain internationally competitive, so that companies can continue to pay wage increases to raise the standard of living of our people.

I note that "the committee agrees that business costs have indeed risen sharply in recent years." Also, the Committee asked: Fee increases: Why did so many fees rise at the same time? We accept that over a period of time, fees and other costs must continue to rise. But the question is: should they rise so fast, and so steeply, at the same time?

I would like to illustrate, Mr Speaker, the plight of the businessman in the last few years with someone trying to get on to an automatic treadmill machine - one that is modern and hi-tech. On this modern machine you do not pedal it any longer by your own power. It is fully driven and you can change the speed and the slope or the incline. I would like to liken a businessman in Singapore getting on one of these machines and he has no control over the speed nor the inclination or the slope of the machine. It is beyond his control. First, he has to run as fast as the machine moves in order to stay on the treadmill, and there are forces causing him to do that - competitive forces from outside - whether it is cheaper labour elsewhere, cheaper land, or cheaper operating costs in the international environment.

I will give you some examples. The Report mentioned that JTC charges S$15 to S$16 per square metre per year for land in the outlying areas such as Jurong. Recently, I took a mission to Sarawak. In Kuching, they charge S$15 per square metre for 60 years, which means land here costs 60 times more than in Kuching, and this is not jungle or anything. It is a free industrial zone two kilometres from Kuching airport.

So here we have got tremendous external pressure and competition. Labour cost here is two to three times higher than Malaysia or six to 10 times higher than in China. Here the businessman is running against very strong competition and he has to keep running and increasing his speed to keep up with this treadmill. But on top of that, he also has to challenge the slope that he has to climb and, in this case, the slope is not determined by him. I would like to suggest that the slope, in many instances, the inclination, the percentage of it, is caused or decided by a lot of Government and statutory boards' fees, taxes and levies. Over the last few years, it seems that everybody wants to have a finger on that button to change the slope, each saying, "I am only going to change that by only 1%. It shouldn't hurt that fellow." But when you put it altogether, before we know it, the businessman has to run against an inclination of 10% or more, and at increasing speed. That is why quite often you find him exhausted of energy and resources.

I like to propose that the recommendation to keep increases gradual and spread out over many years be taken seriously. How can we do that? I believe it is time we looked again at an earlier proposal I made that we should form some kind of a national tripartite council to, at all times, monitor our international competitiveness, whether it is labour, land or other cost increases. There is a call by the Committee in its Report to try and coordinate increases of Government departments and statutory boards. Who coordinates them at this time? I believe that a tripartite body can be more objective and can look at different angles so that it can be an effective machinery for making sure that we remain internationally competitive and that our cost increases will not erode our competitiveness.

I believe that this is a very important Report for Singapore and I hope that the Government, as the Prime Minister has proposed, would take it seriously and implement all the recommendations to make sure that not only the cost of living will remain low and affordable to Singaporeans, but that our business costs will be contained and properly monitored so that we will never lose our international competitiveness. Give the poor man on the treadmill a chance. Don't give him a heart attack.

Encik Mohamad Maidin B P M: Mr Speaker, Sir, may I first congratulate the Chairman and members of the CRC for having done such a thorough review and completed a comprehensive Report.

With your permission, Sir, may I highlight some of the important points in the Report which were reported in the media at the end of September.

Out of the many reports in the Straits Times of 28th September, one of which has the first few paragraphs stating that:

"Fast-rising wages allowed Singaporeans to enjoy higher standards of living although prices rose in the last 12 years. ... There were, however, sharp increases in housing, health, education and transport costs in recent years, which made people fear that more increases were coming, it added. Between 1980 and last year, prices went up by an average of 2.4 per cent. But nominal wages ... went up by 8.9 per cent over these years."

Sir, this is a fairly straightforward report from the Cost Review Committee's findings.

Second example - this is again in the Straits Times of 28th September:

"When people say that living costs have increased, they actually mean their present lifestyle is more expensive, not that prices have gone up. Because they did not always distinguish between the two, they perceive living costs as having risen by more than what was reflected in the Consumer Price Index (CPI)."

This is another conclusion, Sir. But unlike the earlier one, this is not so straightforward a comment or observation, and I know that there are people who have difficulty understanding and accepting this view.

Another example headlined "Scarce resources, so notion of the 'good life' must change." This is on the same day of the Straits Times, and I quote:

"Singaporeans' expectations of what constituted the good life have contributed to the cost increases in recent years, says the CRC. There was nothing wrong with Singaporeans having high aspirations as this would motivate them to study and work hard. But given the country's scarce resources, not everyone would be able to achieve what he desires. The Singaporean notion of "the good life" would need to change in years to come, and would have to be seen as a total package. ... "Given the country's resource constraints, not every graduate will be able to afford a car or private property."."

Sir, while I respect the views and comments made here, it seems that, to some extent, a car and a private property have been regarded as the ultimate aim of our people, mainly the graduates. This is an area which we can discuss further for I am doubtful, and I hope it is not something to be taken that everyone aspires for the same things in life.

Another example, Sir, again on the same day in the Straits Times:

"Workers' Party MP Low Thia Khiang said that the Government should increase its public spending to offset living costs."

Here, Sir, on the same day, Singaporeans read and probably thought that the Member for Hougang had found a solution to the whole problem - a very simplistic one though - just increase public spending.

The same approach, it seems, has been tried in other countries and so far most have not been successful. In fact, in many cases, it has been found that throwing money at problems only increases more burden to the state, taxpayers and creates more problems.

Sir, these reports are examples of what Singaporeans read following the release of the CRC Report. These and others, I believe, will raise questions in the minds of many Singaporeans.

In fact, Sir, for me, after going through some of these reports, I cannot help wondering whether COST is really the right issue to come under review. For that matter, I think the CRC should stand for Conscience Review Committee. This is going to be difficult, but I will try to explain what I meant.

Firstly, I am sure that deep inside, many Singaporeans are happy that we have grown from a third world swamp, probably a slum, into a successful city-state, and almost fully developed. And with that come all the many fruits of our own hard work, our people's hard work, from one generation to another. And not to forget, a strong, capable, responsible and committed leadership; again from one generation to another. How lucky we are!

Singaporeans today are enjoying the prosperity we have achieved. Some 90% are property owners - be they HDB flats, private flats or other landed properties. We enjoy overseas holidays. We enjoy very good food, affordable good food. At the same time, the car population keeps growing - whatever the price. After all that, there are still the billions of dollars more being invested in the stock market. And many millions of dollars more are being invested in properties and businesses overseas, be it in Malaysia, Batam, China, Australia, or other countries. All these have been achieved despite our smallness in population and land size. We do not even have enough of our own water supply, even if it is to be used for the purpose of drinking only. And no natural resources to talk about other than our own people.

Sir, I am sure that deep inside, Singaporeans know and must have felt that all these cannot be anything other than a remarkable achievement. It is our achievement as a people, as a nation. So the question is: what went wrong? Really, Sir, I must say nothing. Oh, yes! Prices have gone up. I almost forgot. But then, what is so unusual or unnatural with that, when at the same time our income levels have increased manifold for the past many years and, in most years, at a rate higher than inflation or even our own productivity.

And yes, I am also sure that many of us heard that in this same world of ours, there are people in other countries who are still very, very poor, unemployed for a very long time, or even facing starvation. And we must have heard, read and saw on TV that even for those with money, lots of money, they cannot buy anything in their jumbo supermarkets simply because there was nothing available for sale.

Sir, I am also sure that given a choice, there are probably many millions of people and nations who would willingly exchange what we have in abundance, that is, money, food, luxury items and the good life, with all that they have, or more correctly, with all that they do not have. It is clear that the good life here (probably seen as extremely good by others) that we so leisurely take for granted, are things that millions of others could only dream of. And yet if we all hear correctly, Singaporeans are complaining.

Yes, Sir, we are complaining against our own prosperity. Prices of almost everything have gone up. That is very true. From a cup of coffee to a simple hair cut, from vegetables to HDB flats, from cars to landed property - they all cost more today than 5, 10, or 20 years ago. All these came about because we are so prosperous. How else can it come about? Are there any examples in any part of the world where the people and the country prosper but prices remain the same for 5, 10, or 20 years? Definitely not.

Instead, there are too many examples of how wealth were accumulated by only a select few and misery suffered by many others in the same country and this is contrary to what is happening or has been happening in Singapore for many years.

Sir, some two or three decades ago, we were still a poor nation. Before that, just a poor colony trying to survive. Our population was smaller. Even our land size was slightly smaller. Many were unemployed. Salaries were many times lower. Very few people could afford anything beyond the basic necessities.

As a result, there were very few cars on the road. Even fewer people could afford their own homes, let alone landed properties. At that time also, banana was the favourite fruit, plus maybe a few local varieties. Everything was cheaper. In fact, very cheap. There was very limited demand due to very limited buying power.

How things have changed. Today, there are too many cars on our roads. Most roads are crowded, even on our superb expressways. One breakdown of vehicle is enough to break the system. This despite the COE and today's high prices of cars. But then, we are still not barred, or disallowed, from buying a car. Demand is still high. Buyers have to queue for new releases. Those who cannot afford brand new cars can easily afford a second-hand car. Public transport is very good.

Sir, on top of that, most people already own their own homes. A growing number, including HDB flat dwellers, has additional properties. So many can afford luxurious condominiums and landed properties. Clearly, Sir, so many of us have so much money.

Today, bananas remain a favourite fruit in Singapore but no longer as cheap. But we are still buying lots of it. And in most Singapore homes today, people are eating so many varieties of imported fruits which come from all corners of the world, including Japan, China, Australia, New Zealand and even as far as USA and Canada. These are clear examples of our better standard of living and quality of life. We can afford to enjoy so much more things today than ever before Life, I must say, has never been better.

With such a strong demand situation in land scarce Singapore, I do not think we should be surprised that prices of properties have gone up by so much. In fact, the majority of Singaporeans who are home-owners themselves must be very happy. Their investments in properties have proven to be extremely profitable.

Sir, we may never be able to explain completely what really happened the past year or so that prices of certain items have gone up by so much. Maybe properties in Singapore have been under-priced for too long. For all we know, it may even go higher in future, especially with the Asia-Pacific region looking so promising. And already, yesterday, a report on the BBC said that lots of money and probably lots more from America and elsewhere are pouring into the stocks and property markets in the region. They believe our stocks and properties are still cheap and are providing very good returns.

In the midst of all these activities, there is Singapore, the global city-state. Our economy is still growing steadily and the Singapore Dollar stable and strong. Also, Sir, Southeast Asia has never been as stable and promising as it is today. With the Indochinese states joining the rest of Southeast Asia to pursue economic goals instead of political and ideological objectives, our future seems destined towards greater prosperity.

Sir, at this juncture, maybe I should do a review of my own comments and observations so far. Hopefully, I have not given the impression that I am complaining too much about our complaining attitude against our own success, wealth and prosperity. I think Singaporeans generally can and will remain realistic in their expectations of the good life. They need not moderate it. In fact, they need just to be realistic. Many things are possible if you are willing to work for it.

Whatever the level of prices today, especially for luxury items, like cars and properties, we need not feel so deprived. We need to remain a hardworking and possibly a smarter team of people so that we can get what we believe we could, be it a bigger HDB flat or any other.

Maybe I should add that not everyone in Singapore aims to own a car and landed property and we should not assume so. Many families are enjoying the good life without one or both. They are happy living in a nice HDB apartment with many friendly neighbours. And they are the majority. Their children are growing up in a safe environment and getting good education and they are not working less hard than any other Singaporean.

Sir, I believe that as a nation, we can achieve even more. Every Singaporean can do even better. In doing so, we must always be realistic. We are not as cheap as before but we are not beyond reach. And no matter how rich we become as individuals or as a nation, we remain a tiny state.

I think many people realise this which partly explains why many Singaporeans always go overseas and many frequently go across the Causeway, the most convenient place to go, because they want to go to a bigger country with a lot more space to move around. With their level of income here and the strong Singapore Dollar, many feel a lot richer there. In fact, many things are cheaper, and if you pay in Malaysian Ringgit, you feel even more so.

As a result, some people decide to have the best of both worlds. So, they go to JB very regularly to shop. They do not mind the Causeway jams. That is their choice. Nobody is complaining. There are others who have bought their homes in Johor and shuttle to Singapore daily to work and earn a living. Again, that is their choice, no matter how uncomfortable the journey and the jams may be.

However, Sir, back in Singapore, we should not start to expect the impossible, like wanting to earn a Singapore level of income but, at the same time, enjoying a Malaysian level of prices here in Singapore. Even in Johor, property prices in JB are not the same as that elsewhere in the State.

Sir, in conclusion, I hope and believe that, in fact, Singaporeans will remain a people with realistic hopes and aspirations. The Government can do its bit to educate Singaporeans on this. For this, I believe, is the better way to achieve the good life.

Mr Chiam See Tong: Sir, may I get a clarification from the hon. Member?

Mr Speaker: Yes.

Mr Chiam See Tong: Mr Maidin is talking of the good life in Singapore today and that includes getting all kinds of fruits from as far as USA. What time span is he talking about? Is it only after the PAP came into power that we could get all kinds of fruits from the USA?

Encik Mohamad Maidin B P M: Yes, Sir.

Mr Chiam See Tong: Sir, from my own personal knowledge, I have been eating fruits, like Sunkist oranges and apples from USA, as early as 1947.

Encik Mohamad Maidin B P M: They were probably imported by someone who later became a member of the PAP.

Mr Chiam See Tong: No, Sir. These fruits were, in fact, brought to our homes by hawkers who carried their ware with a pole and two baskets.

Encik Mohamad Maidin B P M: Sir, I was not yet born in 1947. But certainly, the Member will accept that, today, you can buy almost any fruit available in the market and there is so much more to enjoy. I think it is not the same as in 1946 which was just after the War. I do not know what kind of fruits we imported then. But anyway Mr Chiam may be able to tell us.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.15 pm.

Sitting accordingly suspended at 2.48 pm until 3.15 pm Sitting resumed at 3.15 pm

[Mr Speaker in the Chair]

Debate resumed.

Mr Goh Choon Kang (Braddell Heights): Mr Speaker, Sir, I support the motion.

I would like take this opportunity to make a few recommendations. Firstly, on education. I would like to suggest that we maintain the Government subsidy rate for university fees. That means no more reduction in the subsidy. This happens to coincide with the recommendation of the Committee. In addition, I would like to suggest that we freeze the number of independent schools, because the more such schools we have, the more kiasu parents will send their children to these schools and the more they will complain about high school fees in these schools.

Secondly, on housing. The Ministry of National Development has revealed that at least $30 billion worth of new private properties would come into the market in the next seven years. This is the value of around 46,000 landed and condominium units which already have planning permission and are likely to be built by the year 2000. Roughly, a third of this stock is landed property. This is according to the Business Times report dated 6th October 1993.

The CRC Report has highlighted our land constraint as one of the factors which contributes to the increase in the cost of getting a house or a car. That being the case, we should be more careful in releasing more land for private development, especially landed property. Our priority should be reserved for public housing and non-landed properties. So the question is: are we releasing too much State land for private housing?

The third point is on transport. The CRC proposed making public transport more convenient, efficient and affordable to commuters so as to convince more Singaporeans not to own a car. This is a step in the right direction. However, if the Government can expedite the construction of MRT extensions to other parts of the island, especially the north-eastern line, there will be less reason for people to own a car. I hope the Minister for Communications can take note.

The CRC noted that when the COE first started in May 1990, the bidding price for a medium-sized car was only about $3,000. But between April 1990 and September this year, it has risen to the range of $25,000 to $35,000. This has made people very unsettled and they blame the Government for using COE as a revenue generating measure. Therefore, the CRC's suggestion to channel revenue collected from the various vehicle restraint measures into a consolidated fund is a good one. The Government can make use of this fund to expedite the construction of the MRT or for other road expansion. The consolidated fund is thus used to improve the existing network of public transport system. People will then see the direct relationship.

Finally, Sir, on health. The CRC recommended that the visiting hours of selected Government outpatient clinics be extended beyond the present hours. I support this recommendation. But at the same time, I also hope that the Ministry of Health would also consider the possibility of setting up small-scale outpatient clinics in new towns to supplement the existing polyclinics. Because it is very inconvenient, especially when a person is ill, to travel to the nearest Government polyclinic. Take the residents of Serangoon New Town, for example, the nearest polyclinic is the Hougang Polyclinic and there is no direct bus service. You have to change two buses to get there. If we have a small-scale outpatient clinic like in the past, I think this will help.

Secondly, although there are many private clinics in our new towns, I think a lot of low-income earners still find that charges of private clinics are expensive. So setting up these small-scale Government outpatient clinics can also act as a check on the prices charged by the private doctors.

The Minister (Mr Lim Boon Heng): Mr Speaker, Sir, everyone has a view on the cost of living. And the views expressed so far by Members of this House testify to this fact. It is not my intention to reply to points raised by Members of this House, except to say that many of the suggestions that came up in the debate so far were, in fact, also aired during the process of discussions of the Cost Review Committee. Some of the suggestions were rejected. Others were not agreed to. But there have also been a few new suggestions which, I suppose, the appropriate Ministries would have to consider and, if they are practical, to implement.

I want to take this opportunity to set the House on track as to what it is that the Cost Review Committee set out to do and what it has concluded. The first question which the Cost Review Committee dealt with was: Is the Government wrong, and the people right on the subject? Does the CPI tell the wrong story?

Sir, after a year's discussion, the CRC came to the conclusion that the CPI is sound. The CRC did not come to this conclusion hastily. It dissected the problem, and looked at it from different angles. It examined how the CPI was computed. It examined the impact if some of the inputs, such as the rental index, or the weights in the basket, were wrong.

The CRC examined the impact on different income groups, by expenditure groups and by the types of housing people lived in. The CRC also examined the impact by age of the main family earner. Those who have read the Report thoroughly know how thoroughly the Committee had looked at the problem. And it came to the conclusion that the CPI is sound. Inflation has indeed been low. What was heartening was that the impact on the lower income had been lesser than for the rich. Overall, wages have risen faster than prices.

The CRC then went beyond, to determine what troubles the people most, and examined in detail these questions on education, health care, transport and housing.

Fundamentally, there was nothing very much wrong. Minor improvements can be made including better coordination of price increases in so far as the public sector is concerned. Even Mr Low Thia Khiang, a Member of the Opposition, did not differ substantially from the rest of the Committee. I hope that he now has a better picture and will try to reconcile what he said during the General Elections and what he knows now.

It is, of course, a matter of regret to me and I think to many Members of this House that the Members of the SDP failed to participate in this Committee. They were given every opportunity. They declined. Among the reasons which I remember them saying was that they did not have time. I have always wondered what they were elected for if they did not have time for a problem they profess to be of utmost importance and troubling the people so much.

The Cost Review Committee has done a year's work. We assume that the SDP has also looked at the subject. But today, all that we were told by Mr Ling How Doong was that they held a forum and there is no report. Yet, in the

1991 General Elections, the SDP made this one of their main issues. So if what Mr Ling How Doong said today is all that they have to say, then surely they must have blown an anthill into a mountain. It also indicates how much interest he has in the subject. There is still some hope. There are two other Members of the SDP, although belonging to different factions. I hope they will enlighten the House about the SDP's view on this subject. Otherwise, as they say, forever maintain your peace.

Mr Speaker, Sir, the press had reported and this has, in some cases, been reflected in the speeches in this House about what was said by a certain research analyst, Mr Koh Su Haw. I quote the Sunday Times of 3rd October 1993:

`Research analyst Koh Su Haw, 26, said that the CRC failed to shed new light on the problem: "They came to the conclusion that the CPI was accurate and that the problem was with people's perception. This was the same conclusion they started out with."'

Mr Koh's reaction may be typical of a group of Singaporeans. He accuses the CRC of having started with a preconceived idea, and implies that the CRC set about proving this notion. Mr Koh is unfair to the members of the CRC. I can testify. The members of the CRC, far from going into their work believing that the problem was with the people's perception, went in to try to prove the Government wrong.

If Mr Koh had read the full Report, he would know that the CRC cited four sources of inflation. They are:

1. Scarce resources. Singapore faces shortages of land and labour.

2. Timing of fee increases. Several fee increases were carried out around the same time in recent years.

3. Reduction in subsidy rates. This came about as the Government set the levels of subsidy.

4. The "expectations" factor. With many years of prosperity, there is an expectation that standards of living will continue to rise rapidly.

In other words, while the CRC did not find the Government wrong, it did throw light on why people feel the cost of living has gone up. Although Mr Chandra Das felt that we went about the job trying to do too much justification, I think it is important to find reasons why people feel the way they do. Mr Koh, being an analyst, surely understands that if a position is right, facts and figures cannot be bent or twisted to show that the position is wrong. Since rationality is the hallmark of a good analyst, Mr Koh must ask how his own assumptions should be squared with the conclusions of 16 independent-minded persons in the CRC. Does he now still doubt the conclusions of the Cost Review Committee?

Another person interviewed by the Sunday Times of the same date, and here I quote again:

"Sociologist Chua Beng Huat said that while the CRC explained cost increases at the same macro-level, its report lacked "flesh and blood". The Government would have to bridge an apparent contradiction between cost of living statistics and "everyday reality", he said."

"If I am poor, and you tell me that I am no worse off today, that I am better off today than 10 years ago, do you think I will believe that?"

Unfortunately, the Sunday Times' report did not make clear whether Mr Chua agreed with the macro view or not. Probably he did not. The report indicated that Mr Chua was one of 17 persons interviewed, and they had mostly not read the Report. As a sociologist in our university, he should read the Report before he passes judgment.

Then he should tell us what is "everyday reality", and how it differs from that of the CRC. For the record, the CRC members are quite well aware of "everyday reality". In its Report, the CRC noted, and I quote: [Chapter 13, paragraph 96]

"... the needs of the less well-off members of society have to be addressed. Although almost all Singaporeans have enjoyed rising standards of living, some have experienced a relatively larger increase. This had given rise to fears among those who have not done as well that they might be left behind as others move ahead." And in Chapter 3, paragraph 16, the CRC said this:

"... lower-income households do have a sense of being left behind. Their living standards are better than before but those who remain in this group are still disappointed to find that they have not improved their position relative to others. One major way of improving their standards of living is to improve their earning capacities, which requires investment in training and skills upgrading. In addition, society must be prepared to provide a certain amount of support to this group like subsidised rental for flats, subsidised health care and education, and financial assistance to the destitute, as is the case at present."

It is clear, therefore, that the CRC is well aware of the problem of how the poor feel. So the question to Mr Chua really is this: Mr Chua is not poor. What role should he, as an upper income member of the community, play to help the poor he sympathises with? Some may say that the Government should subsidise more. In fact, points were raised this afternoon. Did the Cost Review Committee discuss how much Government subsidies should be?

Apart from calling on Government to keep the subsidy level for university fees where they are now, ie, 79%, instead of reducing it to 75%, the CRC examined subsidies only in relation to the impact the adjustment of subsidies to target subsidy rates had on the rise in the cost of living. It is outside the terms of reference of the CRC to consider how much Government should subsidise. This is the prerogative of the Government. So I hope that Mr Chandra Das would raise this subject in this House, which is the appropriate forum.

In making an exception for education, the CRC wished to distinguish it from other areas. Education is a form of investment in human resources. Expenditures in other areas should properly be classified as consumption. None of the CRC members advocated that we become a welfare state. Why does the subject of subsidies come up for discussion in public and in Parliament? I believe no one in this House wants a welfare state. Then what is the reason? I believe the subject crops up only because Government has healthy surpluses. If we have a deficit, this Parliament would be discussing how to reduce the deficit, not whether Government should subsidise more. And you know the problem in the US.

Government has to decide how much it should subsidise. The Prime Minister has, in his reply to me on the Report, stated that Government "will keep the cost of the services it provides as low as possible, and continue to subsidise education, public housing, and basic health care heavily." Because we continue to chalk up healthy surpluses, there will be calls for Government to subsidise more.

Singaporeans, especially young Singaporeans, should consider this matter most carefully. We are a young nation, at the peak of our dynamism now. Thirty years from now, when the population has aged, and has less dynamism, there may not be such healthy surpluses. So, is it wrong to save while the going is good, so that the savings can be used to support an older population to continue to enjoy the high standard of living 30 years from now?

Spending to raise the productive capacity of the people, or so that people can enhance their assets, these can be done. Indeed, the Government is doing so. However, to subsidise consumption, such as health care more heavily now, when we already enjoy first world standards of health care, is unwise. Parliament can, and should discuss whether Government's subsidy levels are appropriate. But finally we must decide, we must agree on what level of subsidy.

The CRC listed seven measures on how to keep inflation low. These include keeping a free trading environment, sound financial and economic policies, and raising productivity levels. There is one other measure, not discussed by the CRC, which Singaporeans should consider. This is the question of family support. In this particular instance, I want to refer to discussions in this House generating from Mr Ling How Doong's speech.

There is an unhealthy trend for greater State support. That is reflected by what Mr Ling How Doong said. There are examples of this in our daily life. For example, when child care is a problem, people look to the Government to provide the solution, and people look to Government to subsidise child care. In the years to come, when there is an older population, the care of the elderly will be of greater concern. In most European countries, the burden has shifted on to the State. The cost is tremendous, and unbearable, as their governments now find.

Studies have confirmed the obvious. Family care of the elderly is the lowest cost solution, and in most cases, the most meaningful one for the elderly. We will have to decide whether we will go the Western European way of caring for the elderly, or maintain traditional family support, while we still can. The seeds of our problem have already been sown, and taken root. Families have dispersed in different housing estates. There are hardly any extended families.

If we cannot reverse the trend, if we cannot preserve the values of filial piety, then surely in 20 or 30 years time, the cost for our country will be high. If it is the Government that is to be responsible for taking care of the old, then surely the tax rates must be commensurate with the cost. Again, this is a point, I hope the young, in particular, will consider seriously.

Next, Sir, I turn to the subject of expectations, and I quote, firstly, Sunday Times of 3rd October 1993, a statement by Mr Michael Fernandez. He said:

"I think it is not fair to tell people to aspire to life in a developed country, and then to tell them to scale down their expectations."

For the record, all members of the CRC agreed that there is nothing wrong with having aspirations. And I quote Chapter 13, paragraph 56 of the Report:

"The CRC was of the view that there is nothing wrong with such aspirations of the younger generation. Having high aspirations motivates Singaporeans to work hard."

But what must you tell Singaporeans when there are resource constraints? Certainly, there is nothing wrong with dreaming of a private property. But when we have land for 30% of the housing stock to be of private property, what can you say to the 60% of each cohort who will be tertiary-trained and who will want for themselves what they think graduates before them obtained easily and cheaply? In 1970, I do not know what the figure was for each cohort who went on to university, but I know in 1980, and this is in the Report, 13% of the cohort were tertiary trained, ie, polytechnic as well as university. In 1992, this rose to 45%. So one must conclude that maybe it was only 5% in 1970; it must be lower. So if one was a graduate from the 1970s and early 1980s, then one belonged to the cream of society. There was an exclusiveness about being a graduate in that context. They can, and they have, owned private property. Not as easily as our young people today think, but after hard work, they have.

Today, I repeat, 60% of each cohort is going to be tertiary-trained and they will compete for that 30% of housing stock, which is private property, and they will compete for it not only among themselves but also some of the other 40% who will make it. So should not the CRC be honest and tell them that not all will fulfil their dreams? This is what the CRC had decided to do, and I think we had been honest about it.

Many people have talked about life in a developed country? What is life in a developed country? Each with a summer house, as Mr Chng Hee Kok said yesterday? I worked in Oslo in 1972/73. Yes, I envied my Norwegian colleague from the same university his access to a summer house. Let me stress: access to a summer house, not ownership of a summer house. In case Singaporeans get the idea that every Norwegian has a summer house of his own, I have to correct the impression. A minority have access to summer houses, and some of them do own those houses. Just a few months ago, this same Norwegian friend of mine spent Christmas here. Now it is his turn to be envious. And he remarked: "Singapore must have the highest ownership of Mercedes cars in the world!" That is his observation. He compares it with what he sees in his own country and Europe. He is not saying that all Singaporeans go around in Mercedes cars, but he was remarking that there did not seem to be any lack of money, if there are so many such cars, even though the prices are so high.

This leads me to ask: what is life in a developed country? But there are many Singaporeans who travel each year. They have been to developed countries. So what is the good life they have, which we are deprived of?

Just as the CRC tells Singaporeans that our resource constraints will remain, "... cannot be wished away, and will force upon society difficult and unpleasant choices as how these should be allocated", I would like to ask Singaporeans to face up to what life is like in Singapore, compared to life in developed countries.

I have lived in Europe, and in Japan. I know that life here, while not equal to the best in Europe, is not far behind. Our school education is better than in England; our children come out better educated. We enjoy equal, if not better standards of health care, while as a nation, we pay less. We clearly have a higher rate of home ownership here.

What is it that we lack? Cheap cars? Yes, but can you still drive in the big cities like Paris and London? Cheap houses? I am not sure apartments in the big cities are much cheaper than in Singapore. As the Cost Review Committee has exhaustively explained, these are two prized possessions which not all Singaporeans will realise. Many dream, but only some will achieve.

But apart from these two items, certainly we should identify the things which make for a higher standard of living. And provided we are willing to work hard for them, certainly we can have them.

A livelier cultural scene? Yes, if we compare ourselves with the big cities, we are lacking in this area. But London and Paris have much larger populations and a wider audience base. If we compare ourselves to the smaller cities, we may not be so far behind. But if it is a livelier cultural scene that we want, we can certainly bring those facilities to Singaporeans.

I have lived in Japan also, for two years. I know we have a better quality of life. Already, many years ago, our living conditions far surpassed the Japanese. And it is true Japanese expatriates "cry" when they are recalled home. They will not enjoy the space we have in our homes, nor the access to golf courses that Singaporeans today enjoy. Even so, if there are things which the Japanese enjoy which we do not, we can also create and bring them to Singaporeans.

Singaporeans may not realise that they are today enjoying first world standards of living, without paying first world prices. Certainly our graduates have nothing to complain about wages. They already command first world rates of pay. Not true? Then why do Australians, New Zealanders and Britishers come here to work on local terms? Why are they willing to forgo expatriate terms? It may not seem fair to tell people to aspire to life in a developed country, and then tell them to scale down their expectations. But surely it is fair to tell them that they have arrived. Yes, not everything is here. But if we define clearly what we want, there is no reason why our people cannot enjoy those also. And in order to arrive and enjoy all those things, we must focus our minds on the fundamentals that make it possible. As Mr Robert Chua has said, we must maintain Singapore as a competitive place for doing business where business can thrive, that we have high value-added industries that can pay workers higher wages to enjoy those things.

I am reassured that our young graduates, while aiming high, are realistic about expectations of the good life, as reported in the Sunday Times. And they also say they are willing to work hard. However, notwithstanding all that we do and how much we put in, not all will make it to achieve their dreams; some will be disappointed.

Vivian Lim made a point which explains why people feel disgruntled. This is reported again in the Sunday Times. And she said this: "I suppose most people would tend to use friends as a reference point". Comparison, that is why people feel unhappy.

To those who feel unhappy when they compare themselves with friends, let me commend the good advice in the piece of writing entitled "Desiderata":

"If you compare yourself with others, you may become vain and bitter; for always there will be greater and lesser persons than yourself." The same passage also had this:

"... whatever your labours and aspirations, in the noisy confusion of life keep peace with your soul. With all its sham, drudgery and broken dreams, it is still a beautiful world. Be careful. Strive to be happy." [Applause].

Mr Chin Harn Tong (Aljunied GRC): Mr Speaker, Sir, the Prime Minister was reported to have praised the Cost Review Committee (CRC), under the chairmanship of Mr Lim Boon Heng, for doing a good job in thoroughly analysing the cost-of-living situation in Singapore. I do not think more than a few Members in this House will grudge the CRC such praise by the Prime Minister. The CRC's Report is a weighty volume as befitting the gravity of its subject. I find it heavy going to wade through the Report, which is as thick as a good-sized novel. But, of course, it is much more factual, realistic and objective and has no fairy-tale ending; the CRC does not promise we can live cheaply thereafter.

While I have no general criticism of the CRC, I have comments to make on certain aspects of the cost of living which the CRC does not deal with. The people at the bottom of the pile will always be hardest hit by any inflation. How can persons in households with monthly income of not more than $1,000 ensure their standard of living does not fall further as their nominal income is slowly but steadily eroded by inflation over a period of years? Another point is that, in a greying society coupled with longer life expectancy, retirees will form a growing group. Moreover, with the family nucleus tending to consist of only parents and their children, more retirees can be expected to live by themselves. What will be the effect of imperceptible inflation on the standard of living of retirees with a fixed income over a period of years?

To be fair to the CRC, its Report did touch upon the low-income households and the senior citizens, but with a different emphasis. It may be beyond the scope of the CRC to project the effect of rising cost on the standard of living of various groups or categories of Singaporeans. I think such effect is a matter for concern as the CRC's Report clearly shows that inflation, granted though it is gentle inflation, is inevitable in Singapore's circumstances.

The CRC's Report also implies that Singaporeans who are in employment or are carrying on a profession, business, trade or any other work are more or less cushioned against inflation. The further implication is that the lower a person's income, the thinner the person's cushioning against inflation.