COST REVIEW COMMITTEE REPORT (Motion)

Debate resumed.

Mr Chin Harn Tong: Sir, a retiree with a small fixed income is, of course, beyond redemption. The CRC's Report shows inflation in Singapore has been more gentle than generally perceived. But given time, even the most gentle rain wears down the hardest stone. An average yearly inflation rate of 2.5% will mean $1,000 is worth less than $750 in terms of purchasing power over a period of ten years.

Inflation has necessarily a different perspective for low-income households and retirees than for more affluent groups. The persons crowding together in a sampan barely afloat in the water will fear even the tiniest wavelet while the passengers riding high in an ocean liner will not even feel the movement of a wavelet. The CRC has recognised the different effects of inflation on different income groups by recommending three separate Consumer Price Indices for this purpose, instead of the existing single Consumer Price Index.

However, the reliable measurement of inflation in relation to low-income households and retirees is only a very small part of the problem these people face. The much bigger part of their problem is how to cope with the effect of any inflation. The CRC is right in concluding inflation is inevitable in Singapore's circumstances, that is, scarce natural resources and heavy dependence on imports. But the CRC does not go into the question of whether inflation is completely or partially beyond the control of the Government. If it is completely beyond the control of anyone in Singapore, then there is nothing we can do except to grin and bear it. But if there is some element of inflation we can control, then we should be doing something about it.

Sir, one pleasing aspect of the CRC's Report, I find, is the implicit assurance that market forces will not be allowed to rage full blown through the Singapore economy. This is obvious in education, health and public housing. There is one point, however, which the Report does not touch upon but which I think should be made known. Some foreign armchair critics allege Singapore workers' wages are rigidly controlled by the Government. They are under the misapprehension that the free play of market forces will push up wages higher. In fact, the opposite is more likely to be true. If the Government allows the employment of workers to be governed by market forces, employers will bring in more foreign workers who cost less. An uncontrolled influx of foreign workers can but only push wages down for Singapore workers. Singapore seamen can testify how they lose out to foreigners on jobs and wages under free market conditions.

Sir, my reason for bringing out this point is that the Government has its grounds for not always allowing market forces to have free play. Inflation is similarly a phenomenon that is not uncontrollable. The CRC's Report recommends the spacing out of necessary increases in prices to make the effect of inflation more palatable. The difference is that the full force of the increases will be felt later than sooner. But to the low-income group and retirees, it would be more meaningful to minimise inflation than to package inflation more attractively.

The recommendation of the CRC that, for example, price increases should not be allowed to be rounded up to the disadvantage of consumers will, I think, help to minimise inflation. Perhaps, the Government may consider enacting legislation to ensure any necessary price increases as a result of the proposed GST will not be more than what is required to cover the GST. Sir, sellers have the habit of conveniently rounding up price increases, always to their own advantage. The extra few odd cents make a difference to those with a small or fixed income.

I hope the Government, in adopting the Report, will additionally consider ways of not only spacing out the timing of inflationary price increases but also minimising the extent of inflation itself. The CRC's Report does not deal with whether there are elements of inflation which are controllable. The Government has shown from time to time it is prepared to rein in the free play of market forces when the Government views it as socially desirable to do so and the circumstances allow it to do so. On the same basis, the Government may consider ways of controlling inflation, apart from the measures recommended by the CRC, if it is not beyond the means of the Government to do so. Whether it is socially desirable to do so, I have no doubts how those with a small or fixed income will view it.

Mr Umar Abdul Hamid (Ang Mo Kio GRC): Mr Speaker, Sir, I would like to join my colleagues to congratulate the Chairman and members of the Cost Review Committee for preparing a comprehensive Report that covers areas of great interest and concern to Singaporeans.

However, Sir, there are a few points in the Report that need a little chiselling to give it a more sculptured finishing. I will focus my speech in the area of education. Mr Speaker, Sir, in the Report, the Committee noted that many parents engage private tutors for their children to help them enter the best schools and these private tuitions are extremely labour-intensive and, therefore, more costly than other forms of supplementary teaching. On this point, the Committee recommends that parents should make use of tuition programmes provided by schools and community organisations. Sir, I support this recommendation but, at the same time, would like to urge the Government to increase their support to the community organisations to facilitate parents in sending their children to tuition classes provided by these organisations.

As we know, Singaporeans place great emphasis on quality education and excellent educational performance. Today, private tuition has placed itself as an important facet in our educational pattern. Teachers recommend it. Parents sought after it and pupils begin to depend wholly on it. With such great demand and the limited supply of good tutors, it is not surprising to find that the cost of private tuition has escalated by more than 100% from 1982 to 1992. In fact, due to its high return of capital invested, substantial numbers of Singaporeans have left their profession to become private tutors.

Mr Speaker, Sir, the demand for private tuition is not due to the failure of our education system but due to the perception of parents that extra coaching in the form of private tuition is the only way to put their children on the competitive edge. Some parents believe that the more they give, the better will be the return. Unfortunately, Sir, this is not true all the time. I had a personal encounter with one of the parents who, until today, cannot accept the fact that to have an excellent pupil, the child needs more than private tuition and a tuition class organised by one of the community organisations. Their child has to spend almost every night being tutored by private tutors, and on weekends, the child has to attend tuition classes organised by a community organisation. The parents believe that they have carried out their responsibility by providing tuition as a means of home-coaching substitution, and what is more worrying is that they have consciously done it to compensate for their own busy schedules to spend their time qualitatively with their children.

Sir, many parents are not aware that uncompromising qualitative tuition can equally and effectively be obtained through organised group tuition. These tuitions are offered through community organisations, like Mendaki, Sinda and CDAC. The tuition classes are conducted by qualified and trained personnel and these programmes are well-coordinated and closely monitored by the organisations. I am happy to inform the House that Malay parents are beginning to have confidence in Mendaki's Weekend Tuition Scheme and this is reflected through the increase of last year's enrolment of 3,000 to 10,000 pupils this year. The average performance of Malay pupils who attended Mendaki's Tuition Scheme has increased at an encouraging rate. However, to accommodate the growing demand for quality tuition programmes, Mendaki has to allocate and relocate their resources. More schools are needed to be used as tuition centres and more tutors will be required. Recruiting more qualified and trained tutors will mean bigger financial commitment from Mendaki and if Mendaki cannot continue to absorb the increased cost of providing quality tuition classes, parents will have to absorb it. Hence, before the cost is transferred to the parents, I would like to urge the Government to increase their financial support to community organisations, like Mendaki, Sinda and CDAC.

Apart from community organisations, schools can play an active role to encourage pupils to do away with private tuition. In the Straits Times' report on Sunday, 10th October 1993, it was mentioned that one of the schools started a programme to teach its pupils how to study on their own and build their confidence so that they can perform equally, if not better, without attending private tuition. I would like to encourage other schools to look into this programme and regard it as part of the school's development to produce well-rounded and independent pupils.

Sir, next I would like to touch on university fees. With the increasing university fees, capable students from the lower-income group are beginning to feel the pinch of acquiring higher education. The Cost Review Committee has rightly recommended that the Government should maintain its subsidy rate for university fees at the current 79% of recurrent cost, instead of reducing it to 75%. Undergraduates should not be made to absorb the increasing recurrent cost of the university for they are going to be our future pool of leaders who are going to manage our country. The Government must continue to provide education that is within the affordability of the people, though I agree that those who benefit from the higher education should bear the bigger part of the cost. Again, I would like to urge the Government to continue capping the subsidy to the university at 79% of the recurrent expenditure. At the same time, I would like to urge the university to start looking into ways to raise revenues to offset the increase of recurrent cost. And one way of doing it is to fully optimize their equipment and conduct continuing education courses that will benefit the general public. The university's extramural department should step up its effort to conduct more courses and all revenues collected can be ploughed back into the respective departments that have fully utilized their equipment to conduct these courses. Though I am not saying that the universities are abusing their grant, I strongly agree with my colleague, the hon. Member for Jalan Besar GRC, that an independent committee should be formed to look into the cost control of the universities.

Sir, in the light of the event that happened in the United States where some of the top elite universities were found to have abused the grants provided by the government, it is best that we avoid any future misgivings or perception that our universities are not practising cost control or, worse, abusing the grants given to them.

Mr Speaker, Sir, for Singapore to continue enjoying economic growth, it must continue to produce highly skilled and better educated people. High cost should not be the prime hindrance for Singaporeans to obtain education and the Government must continue to play its part in providing affordable education for our children. Education is an investment that we can only reap in the next generation, but not tomorrow.

With that, I support the motion.

Mr Chiam See Tong: Mr Speaker, Sir, first of all, I want to comment on the motion. The second limb thereof, "calls on the Government to accept the Committee's recommendations to contain rises in the cost of living". The Government has already given its reply to this part of the motion. In his letter dated 18th September 1993 and published in the Cost Review Committee's Report which was addressed to the Chairman of the CRC, the Prime Minister replied, inter alia:

`Your Committee has recommended specific steps the Government can take to keep costs low in Singapore. The Ministries concerned will study these proposals and implement all those which are practicable.'

We already have the answer to that part of the motion. So it would appear that the debate on the second limb of the motion is going to be a long academic exercise. It is also true of the time spent on putting up the CRC Report. It was another academic exercise. Nothing new has come out of it.

Yesterday, research analyst, Koh Su Haw, was quoted and he has also been quoted in this House today. I would like to quote him in a different context again. Mr Koh said:

`It seems funny that they took a year and there is nothing new to the report. The report seems to have been a political exercise rather than one in economics.'

I agree with Mr Koh. The CRC Report is more politically motivated than a sincere desire to tell the Government to find ways and means to keep costs low in Singapore. Rising costs due to Government policies have been a hot topic at every General Election since 1980. The PAP lost a massive 12.3% votes to the Opposition in 1984 and the slide of votes to the Opposition has not abated. The PAP has not been able to arrest the trend. In my view, the setting up of the CRC is an attempt to slow down or stop the Opposition from gaining more votes at the next General Election.

[Mr Deputy Speaker in the Chair]

4.20 pm

Mr Chiam See Tong: Soon after the Cost Review Committee was formed, we noted that its Chairman was already biased. He told the press that there was no problem in regard to rising costs. The only problem was the high expectations and high aspirations of Singaporeans for a better life. No wonder Mr Koh observed that "there is nothing new to the report". There was nothing in the report which the Government had not already told the people. The CRC predictably reported inflation was low, the CPI computations were correct and there was no rise in costs.

The people of Singapore, of course, did not believe it. How can there be no rise in costs when HDB rentals are so high, various licence fees, stamp fees, have been jacked up. School fees, parking fees, hospital charges, prices of HDB flats, diesel tax on taxis, have all gone up. Yet, the Government tells them that there is no rise in costs.

The Government on its part has stood firm. It says that the CPI is sound. There is low inflation, no rise in costs as perceived by the people. All these are backed up by the findings of the CRC, though the CRC did admit that there are cost rises in health care, housing, education and transport. To me, these findings of cost rise in health care, housing, education and transport are the crux of the matter. The CRC should in fact look into it further but it did not. Instead, it pronounced that the Government was all along right. There was no significant rise in costs. The attitude taken by the CRC can be compared to that of a man who goes to a doctor and when asked how was his health, he replied, "I am all right, except that I have a weak heart, high blood pressure, a lump in my stomach and high sugar content in my blood." Any doctor would know that these are serious symptoms and the doctor should take the proper action to cure the patient.

The CRC similarly, when told that costs of health care, housing, education and transport have risen, should take the proper steps, namely, to have a good look at the way the CPI is calculated and correct it. But it did not.

I had a look at the Report on the way our CPI is worked out. I note that what is relevant in our Singapore context is not given enough weightage. Food is given the heaviest weightage, namely, 40%. Everybody knows that food prices in Singapore historically have never gone up drastically. We import about 80% of our foodstuffs and with the strong Singapore dollar, raw food in Singapore has always been relatively cheap. The important items such as health care and education are assigned low weightage, only 2.5% and 5% respectively. On a specific item like hospitalisation fees which is important in the Singapore context, it is only given a miserly 0.36%. We know that the prices of private housing and motor cars have shot through the roof, making them not affordable to many people, which to them were once affordable are only given under the heading of "Housing" and "Transportation and Communications" 17% and 14% respectively.

Mr Lim Boon Heng: Sir, may I seek clarification from Mr Chiam?

Mr Chiam See Tong: Let me finish, please. Therefore, one can see at a glance the CPI is rather misleading. All those items that concern Singaporeans at this particular time of relative affluence are given artificially low weightage. No wonder the inflation rate in Singapore is recorded by the Government as being so low.

The message of the CRC Report seems to me to be quite clear. It is as follows. The Government is right. The CPI is sound. The inflation rate is low, averaging 2.4% over the last 10 years. There are no substantial rises in prices. Do not ask Government to subsidise health care, housing, education and transport. Although there were substantial price rises in these areas, subsidy is taking taxpayers' money and to dish them out to others. It will distort the free market and eventually bankrupt the country.

The message, to me, is more political than economics. Anyway, Singaporeans are a proud people. They do not want handouts but they do certainly want assistance in education and health. It is only right that the Government assist Singaporeans to get the best education and to let them develop to their fullest potential.

At every General Election, when the PAP wins an election, it is like going under a social contract with the people. I believe that one of the contractual terms is that the Government should provide education to the people at affordable rates. In fact, more importantly, I think they should give them more university places. There are not enough tertiary places in Singapore at the moment. That is the reason why we see great numbers of canvassers of foreign universities coming to visit our schools and urging the students to study overseas.

Mr Chandra Das: They need the money!

Mr Chiam See Tong: I believe Singapore could do with an additional university.

Mr Chandra Das: Open University!

Mr Chiam See Tong: Again, as regards the Government's help for universities, I would say that the Government should assist Singaporeans up to 50% of the tertiary educational costs. After all, the Government is willing to pay dollar-for-dollar in respect of donations from the public. It should do the same for university tuition fees. I have the impression that the Government wants the students to pay 75%. [Laughter]. I stand corrected. If I am wrong, I withdraw that.

Much has been touted by the Government that it subsidises the building of HDB flats. This is not true. At most, the Government gives book subsidies and not actual cash handouts to help HDB in the building of its flats. In the 1984 General Elections, the SDP published a report that the HDB was making profits in its sale of HDB flats. Up till now, the Government has not rebutted the SDP's report.

Mr Chandra Das: You were supposed to build the flats.

Mr Chiam See Tong: In any event, the general public has never really believed that the HDB flats are subsidised by the Government.

Mr Lim Boon Heng: Mr Deputy Speaker, Sir, I know Mr Chiam has got some problems with doing sums. And this particular issue is going to be very difficult because it involves the computation of the CPI. Unless a person is mathematically sound, it is very difficult for him to understand why the weightage of things like hospital charges is less than food. I really regret very much that he did not sit in the Committee. I could have found some way of explaining this to him. But if he still persists that the CPI is wrong, I must emphasise that it is calculated according to international standards and nobody else has found it to be wrong, not even Mr Low Thia Khiang has found it wrong. If it is wrong, and this is a serious allegation, can you prove it to us that it is wrong and show us how it should be calculated? He has had a whole year. Where is his calculation? That is the first clarification I want to ask.

The second clarification I want to ask Mr Chiam is this. He talks about economics. There is one fundamental law of economics and that is the law of supply and demand. If there is more demand for one commodity, the price must go up. Any economist, even at A-level, will tell you that.

An hon. Member: Even at O-level now.

Mr Lim Boon Heng: Even O-level now. So if there are more people going for cars than the supply, then the price must go up, is it not? What is Mr Chiam's point about economics that we have done wrong?

Mr Heng Chiang Meng (Cheng San GRC) rose ---

Mr Deputy Speaker: Let Mr Chiam clarify first.

Mr Heng Chiang Meng: I want some clarification so that he can answer at the same time.

Mr Deputy Speaker: Can you let Mr Chiam clarify first?

Mr Chiam See Tong: I am talking from the layman's point of view. The layman, ie, the man in the market place, the man in the coffee shop, is suffering price increases, not by, as the Minister has said, economic forces, but by Government policies. They can see it so clearly. Now we have this new law on parking of heavy vehicles. Everybody knows that more costs will be coming on him. So for every Government policy, for every social ill, the way the Government corrects it is by money. So the layman perceives that the cost rises are due to Government policies. As far as the CPI calculation is concerned, there may be an international standard which I am unaware. But the thing is that by looking at the Report, the weightage seems to be given to food which does not, in our local context, rise very much. So naturally the CPI will not go up. What about those items that have shot through the roof? As far as the people who are affected, like the newspaper report, one Mr Han, I think, says that eight years ago his friend could buy a Toyota car for $40,000. Now he has to pay $120,000. Out of the $120,000, he has to pay COE at $30,000. So it seems that the Government has a hand in all the costs that go up. I think that should be reflected in the CPI in Singapore's context.

Mr Dhanabalan: Point of clarification, Sir. Would Mr Chiam agree that an item should be reflected according to how important it is to the family's expenditure? Would he agree with that?

Mr Chiam See Tong: I think that is fully and internationally accepted.

Mr Dhanabalan: Would Mr Chiam refer to Annex E, page 145 of the Report, which sets out the weighting pattern? In other words, how important different items are in the average household expenditure. Does he say that this is not an accurate reflection of the average household expenditure in Singapore?

Mr Chiam See Tong: There may be a way of calculating CPI. As I said, I am not aware of it. But to the man-in-the-street, as Mr Chua Beng Huat has said, his position is that prices have gone up. If prices have not gone up, and if they have not suffered, the Government's votes will not fall. That is one of the main reasons why I think the Government's votes have fallen.

Mr Dhanabalan: Sir, let us stick to the subject at hand. Mr Chiam made a very serious allegation that the CPI does not reflect what the average family incurs in terms of costs for various items. He said that food should not be 40%.

Mr Chiam See Tong: I did not say that.

Mr Dhanabalan: You said it.

Mr Chiam See Tong: I said it is heavily weighted at 40%.

Mr Dhanabalan: What does "heavily weighted" mean? Does it reflect the expenditure of a household or not?

Mr Chiam See Tong: Yes, it does.

Mr Dhanabalan: It does. So it is accurate to say that 40% should go towards food?

Mr Chiam See Tong: Yes.

Mr Dhanabalan: So what does "heavily weighted" mean? Are we trying to skew the CPI?

Mr Chiam See Tong: But there are many Singaporeans who go to the hospitals and they pay higher hospital fees and it is only reflected at 0.36%, which is not true.

Mr Dhanabalan: Would Mr Chiam agree that if somebody goes to hospital or buys a car or a house, it is an expenditure that is incurred once in many years, and therefore it should be averaged out? Would he agree?

Mr Chiam See Tong: I think we are talking at variance. I am saying that if you go and take a survey, you will see that the man-in-the-street will complain vigorously that costs have gone up. That is his perception. What happens is that the Government calculates the CPI and insists that this particular person has not suffered a cost rise. By calculating the CPI in this way, it shows that the inflation is only at 2.4%. If a man suddenly has to pay an increase of $50,000 for his flat for that year, can you say that inflation is only at 2.4%? Certainly not.

Mr Dhanabalan: First of all, if the flat goes up by $50,000, he does not pay in that year. Mr Chiam knows that. Let us forget about the layman's perception. What is Mr Chiam's perception?

Mr Chiam See Tong: My perception is that the Government should be truthful in telling the people that, in fact, there are cost rises, and not sticking to the fact that there are no cost rises. The Government only says that it is the perception, the higher expectations and aspirations of the people, which I think is not right. The Government should come out bluntly and say, "Yes, there are cost rises and we are taking steps, either to curb or lower it, or put it on hold." The Government has never done that.

Mr Dhanabalan: Can Mr Chiam point to the part of the Report which says that there are no cost rises? Please quote.

Mr Chiam See Tong: I have already stated in my speech the position of the CRC.

Mr Dhanabalan: Please point out the part of the Report which says that there are no cost rises. Mr Chiam has repeated many times that the Government says that there are no cost rises. Where in the Report does it say there are no cost rises?

Mr Chiam See Tong: It has given the impression that the inflation rate is very low in Singapore and sometimes even negative. But the inflation rate is in regard to the items that have not affected most of the items which people need. But, as I said, at our relative affluence, there are certain items, like better housing, motor cars, where the increases in costs have affected them.

Mr Dhanabalan: Sir, I thought we started off by trying to clarify, and Mr Chiam admitted that an item should be reflected in accordance with the proportion that the household spends on that item. Of course, some items go up more than other items. If brandy goes up a hundred times, does it mean that, overall, the average household will spend a hundred times more? Surely not, because brandy is probably an insignificant part of a household's expenditure. Therefore, an item must be reflected in the basket in accordance with the proportion that a household spends on that item. Mr Chiam agreed to that. I assume he still agrees to that. Does Mr Chiam agree that an item must be reflected in accordance with the proportion that a household spends on that item?

Mr Chiam See Tong: Sir, I think one person is allowed to speak only once to a question.

Mr Deputy Speaker: I will decide on that. Do you want to clarify?

Mr Chiam See Tong: My position is like that of Mr Chua Beng Huat. I think there are two perceptions. One from the Government's point of view, which adheres strictly to the CPI and it says that the inflation rate is low. In other words, cost rises only about 2.4%. But to the average person who suddenly has to incur a heavy rise, for example, in the sudden rise of prices of HDB flats, he has to put 20% downpayment, which is a massive sum tied up for two, three or four years; or he has to suddenly change a car, or two of his children, paying $10 a month for school fee, suddenly has to pay $200, or a taxi driver who has to pay $7,700 for his diesel tax - all these people perceive that there are rises in costs. We cannot deny that. That is my point. I do not want to go into the argument of calculating the CPI.

Mr Dhanabalan: Sir, perception is one thing. But one must try and assess the accuracy of the perception. Therefore, economists and statisticians collect a lot of data. This table on page 145 was not dreamt up by somebody sitting in the office to determine how much people spend on food. Thousands of households were interviewed, and records were kept daily on what they spent. That is how this was derived. Regardless of what the man-in-the-street, the average man, the layman, thinks, I want to know what Mr Chiam thinks. If he agrees that this is an accurate reflection, that overall the CPI is an accurate reflection of the inflation rate, then what is he doing to correct the misperception of the layman? Is he trying to correct the misperception or is he trying to worsen it?

Mr Chiam See Tong: Sir, I do not know what the Government expects of the Opposition. The Opposition's role is to voice the concerns of the people. This is what I hear very often when I go down to my constituency. I talk to people and they cannot stop grumbling. I do not think that Singaporeans grumble just for the sake of grumbling. I think they really have to dig deep into their pockets to take out the money to pay for increase in prices. There is a case for these people. Therefore, I think the Government should address rising costs in education, health, housing and transport. These are basic essential things. They are not luxuries. That is the job of the Opposition. I do not have to give answers to the Government.

Mr Dhanabalan: We are not asking Mr Chiam to give answers to the Government or to support the Government. All we are asking is that he should also, as he requests of the Government, tell the truth. If he does not know the truth, he should search for the truth. In the case of the perception of the public about inflation, if he is serious about searching for the truth, then he should at least read this Report in detail. I think the problem about Mr Chiam and others whom he has quoted, like Mr Chua, is that, you want to hold to a position and you are saying, "Please, do not confuse my prejudices with facts." Please search for the truth, and I think you should, like your request of the Government, speak the truth. Are you convinced, on the basis of this Report, that the CPI is accurate, that there is no attempt by the Government to skew the picture of inflation in Singapore, that this does not try to paint the wrong picture? But perhaps people's perception may be different. I am not saying that is not so. But is Mr Chiam, as somebody who wants to know the truth about the inflation in Singapore, satisfied? If Mr Chiam is not satisfied, what is Mr Chiam going to do in terms of trying to find out the truth?

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

Mr Chiam See Tong: I think my position is quite clear. As far as the CPI is concerned, the general position of inflation in Singapore reflects the general inflation of Singapore. But for particular cases of Singaporeans who have suffered, for example, the taxi driver who has to pay $7,700 for the diesel tax, or suddenly a rise in the price of flats, I think even the Minister for National Development would not deny this. The rentals of HDB premises have risen tremendously. Of course, they are passed down to the consumers. I think these are the matters which people have been complaining of and, as a result, the Government had commissioned this Committee to be formed. This Report makes good sense in many ways. But the point is that: has it addressed itself to those people? I think there are a large number of people who are affected by Government policies of trying to cure social ills with fiscal measures.

Mr Deputy Speaker: Mr Dhanabalan, I think you have the last say, and then we will proceed to Mr Lim Hng Kiang.

Mr Dhanabalan: Mr Deputy Speaker, Sir, it is quite clear that Mr Chiam does not really want to look at the true position on inflation.

Mr Lim Hng Kiang: Thank you, Mr Deputy Speaker, for giving me this opportunity. I wanted to wait until Mr Ling and Mr Chiam have spoken to see what new ideas they have to resolve this issue, but I find that they are the same points raised since 1985/86. For that, I must congratulate Mr Chiam for tutoring and nurturing Mr Ling in the same footsteps. He has raised ---

Mr Chiam See Tong: Can I get a point of order? I think there is no need to be sarcastic in this House.

Mr Lim Hng Kiang: Mr Deputy Speaker, I was not trying to be sarcastic. I was trying to compliment Mr Chiam that the points that Mr Ling raised were indeed the same points that Mr Chiam had raised with the late Mr Teh Cheang Wan and also Mr Lee Kuan Yew.

Let me go through these points. First, on subsidies of HDB. The construction costs of HDB flats are published every time. These are the tender costs by contractors, and you can refer to the published data. The issue is land cost. Here, Mr Ling raised the same points as Mr Chiam did when Mr Chiam had a debate with Mr Lee Kuan Yew seven years ago, and that is, land has no value, according to Mr Chiam. Government should cost the land of HDB flats at its acquisition cost. I think Mr Chiam will remember the debate in which he had to back down and accept that land has a value in Singapore, and that value is determined everyday in the market through willing buyer, willing seller, and determined by valuers.

The idea that HDB should cost the land at acquisition cost is simply ridiculous. Let me give you an example. Very soon, Gillman Camp will be given back to Government. The cost is zero. So the Government would price the cost there at zero dollar. The Government is going to reclaim land in Seletar and Punggol at huge cost and would have to reflect that at acquisition cost. So we will reach a point where a 4-room flat in Gillman, in Alexandra Road, will be very, very much cheaper than a 4-room flat in Punggol and Seletar. How could that be?

Mr Chiam, I think, will remember the debate he had with Mr Lee Kuan Yew and perhaps he should tell Mr Ling, since Mr Ling is not here, the outcome of the debate, unless they are not on speaking terms.

An hon. Member: Not on talking terms.

Mr Lim Hng Kiang: Not on talking terms. Or Mr Cheo can convey the message.

I think the point is the cost of building an HDB flat is clearly established and it is reflected in the Annual Report of HDB every year since 1985. So the debate has not progressed since 1985, despite having all these data published.

Next, the selling price. Mr Ling says 4-room flats have gone up from $70,000 to $100,000, and now to $150,000. I think he should know that they are 4-room flats, and a 4-room flat in the 1970s was only 83 square metres. Today, a 4-room flat is 105 square metres. So if the price of a 4-room flat goes up, it is because the flat size itself has gone up, the improvements have gone in, and also costs have gone up.

Mr Ling says a 4-room flat costs $150,000. That is true. We do sell 4-room flats in Bukit Merah for $150,000, but we also sell 4-room flats in Choa Chu Kang, in Woodlands, for less than $100,000. So a 4-room flat will cost differently in different locations and depending on the design. As a result, the Government has introduced smaller 4-room flats which are about 90 square metres, and we are now selling them at between $80,000 and $95,000. So we price according to what it costs. Having determined the cost and having determined the price, we should make sure that it is subsidised.

We now look at this issue of subsidy - how big a subsidy ought to be incorporated. Again, Mr Chiam had this debate in 1985/86 whereupon he was challenged by the late Mr Teh to undertake the building of HDB flats and to sell them back to HDB at the prices that HDB would sell. Today, when Mr Peh Chin Hua reminded Mr Ling of the debate, Mr Ling claimed that the SDP laid down some conditions before they could take up the offer. I was not here then, but I have been reading up the Hansard, and if my memory serves me well, Mr Chiam laid down 19 conditions before he could take up Mr Teh's offer. Among these 19 conditions, two are worth repeating. First condition was the SDP would only build if it did so for all HDB flats. So it is all, or nothing. It is not one block; it is everything. Of course, Mr Teh could not leave all the HDB flats to SDP. Second condition was 20% of the cost of building all these flats must be given to SDP before it would start work. So Mr Teh said, "Mr Chiam, you can't be serious. My HDB building programme is $3 billion a year. You want 20% as downpayment before you start work? You mean, I have got to give you $600 million before the SDP starts work?" So Mr Teh obviously could not accept his conditions. Mr Ling has again today referred to these conditions not being accepted before the SDP builds.

The fact of the matter is that all these data are available. People understand the costs; people understand the subsidy that is received by the people from the Government. Just yesterday when Mr Chiam heard Mr Chng Hee Kok mention that a Tampines Executive flat was sold immediately after the person got it, and he made a capital gain of $200,000, Mr Chiam jumped up and said, "Cannot be, cannot be!" That is exactly the subsidy that such a person has received. That is the subsidy the person has received because he was allowed to sell it before the five years are up. When the Government explained that subsidy is based on what he pays and what he could have sold, either at the resale price or, in this case, because of certain rules he is allowed to sell immediately, that is the amount of subsidy. And the same concept applies to a 4-room flat or a 3-room flat. Today, you buy a 4-room flat from the Government at $100,000. The resale value of a 4-room flat, which is much older, in the same location would have been $160,000 to $180,000. So the person who bought the 4-room flat enjoys a subsidy no less than $60,000 or $80,000.

But the key question to ask is: we have not denied that costs have gone up and that prices have gone up. The HDB prices its flats taking into account the costs it has to pay. Construction costs have gone up, but it moderates the prices of HDB flats so that the subsidy is still kept intact, and the people do not have to pay more out of their income. And this is the calculation that HDB does each time and, as explained in the CRC, at the end of the day, even though the cost of a 4-room flat or a 5-room flat has gone up, to the individual household, he asks himself: does he pay more today than he paid more five years ago as a proportion of his income? Does he have to fork out more out of his income for housing today than he did five years ago or 10 years ago? And HDB does its calculations each time it makes its price increases and ensures that the proportion of income spent on housing remains the same. For a 4-room flat, it has remained at about 22% of a household income all these years. For a 3-room flat, in fact the percentage spent on housing has dropped. If you refer to the Report, it is all there. So as far as the layman is concerned, that is what he is interested in. Cost has gone up; the price has gone up, but he is still able to afford it because he is spending not more than what he would have paid five years ago.

Mr Chiam See Tong: Mr Deputy Speaker, Sir, may I clarify?

Mr Deputy Speaker: Yes.

Mr Chiam See Tong: I agree with the Minister that I had a long debate on land value with the then Prime Minister. I have to clarify that at that time when I said that there was no land value, I meant that the Government could peg any land value to the price it wanted to when it sold to the HDB from its own land bank. But I do not want to go back to history.

Sir, the issues are HDB subsidy and whether HDB makes profit on the sale of its flats. Up to today, we have never really got a clear picture of what subsidy really means in regard to the purchase of HDB flats and whether it is just a book subsidy, just only for accounting purposes, or whether really the Government takes out money from its pocket to subsidise the buyers of the flats.

Our contention, in fact, is that there are no subsidies, whether book or actual handout. The HDB is, in fact, making profits. As I have said, we have published an article to this effect way back in 1984/85, and we have stated that for a 3-room flat, either the Government suffers a loss of $607 or it makes a profit of $22,000; a 4-room flat, the Government can make up to $6,000 to $40,000; a 5-room flat, the Government can make a profit of up to $14,000 to $63,000; and an executive flat, the Government can even make as much as $90,000. We have got all these figures worked out based on what the Minister had said in regard to building a flat. We have taken into account construction cost, as the Minister has rightly pointed out, from the published reports; land cost, resettlement cost, financial and overhead costs, professional and supervisory fees.

I think this particular subject is not tabled for debate. I am willing to debate on HDB subsidy and whether HDB makes a profit. I think we can have another day to do so. The public deserves to know whether or not there is actually subsidy and what the subsidy means, and whether the HDB makes profits on its sale of flats.

Mr Lim Hng Kiang: Mr Chiam, we have all day. We can debate it today.

Mr Chiam See Tong: I can start off, if you want to.

Mr Lim Hng Kiang: Let me respond to him first. He has the article which says that for a 3-room flat, the HDB could have made $22,000; and a 4-room flat, the HDB could have made a surplus of $40,000. These were precisely the numbers which led to the debate between Mr Teh and Mr Chiam. Mr Teh said, "Look. If you say that HDB makes a surplus of $22,000 for a 3-room flat, and for a 4-room flat it makes a surplus of $40,000, here is a piece of land, you build it; you sell it back to us at the then selling prices, and you make the profit." And BG Lee at that time, as Minister of State, told him, "Mr Chiam, take the offer. You can make a profit of $60 million straight into your SDP funds." But he did not take up such a lucrative offer. Instead, he gave 19 conditions, and wanted $600 million downpayment before he would start work.

These figures of costs and subsidies are published in HDB's accounts every year, audited by the Auditor-General. Last year, it showed that HDB incurred a net loss of $645 million in its sale of flats or, on the average, a loss of $30,000 in every flat that it sells. If you say that the HDB could have made a profit, I agree with you, which is the point that Mr Chng raised. HDB could have sold at market price and made the $200,000 profit from the person instead of selling him at the price and he sells it in the market and makes $200,000. That is the subsidy given to the person. And you were very upset yesterday. How could it be? The person is getting away with $200,000. That $200,000 is a subsidy that the person enjoys and every person who buys a HDB flat enjoys that subsidy because what he pays is much less than what he would have got in the private market.

Let me give an example of how Hong Kong prices its flats. The Hong Kong housing authority prices its flats at X dollars and it says, "Look, this is what it would have fetched in the market, Y dollars, and therefore you are enjoying a discount from the market of 30%, 40%, or 50%. You are allowed to sell your flat 10 years later. At the end of 10 years, when you make the capital gain, the discount which you enjoyed when you purchased the flat, you have to return it back to the government." So they actually practise the subsidy in accordance with market price and recover that later when the flat is sold. In Singapore, we are very generous. We price it and we let the people enjoy the subsidy. And when they sell it five years later, they pocket the capital gain.

Mr Deputy Speaker: I think we have exhausted the subject.

Mr Low Thia Khiang: Can I have a clarification from the Minister of State, Sir? Just one point.

Mr Deputy Speaker: What is your clarification?

Mr Low Thia Khiang: Can I take it from the Minister of State that the subsidy of HDB flats is the difference between the HDB selling price and market rate?

Mr Lim Hng Kiang: There are two definitions of subsidy. In the HDB's account, there is a financial subsidy. What it costs to HDB to build a flat and what it sells, and that is the subsidy I was referring to. That is a net loss. I did not say that is a subsidy. That is a net loss the HDB makes for every flat that it sells. For every flat the HDB sold last year, it made a total loss of over $600 million or a net loss of $30,000 per flat. Subsidy is what it could have fetched in the market and what we are selling it to you. And that is the $200,000 that we are talking about the sale of the Executive flat. If the person had sold it back in the market, he could have sold it for $200,000 more. That is the real subsidy that he is enjoying and the real value that he is getting from the Government.

Mr Chiam See Tong rose ---

Mr Deputy Speaker: I think we have exhausted the subject. Mr Koo.

Mr Koo Tsai Kee (Tanjong Pagar GRC): Thank you, Mr Deputy Speaker. I thought the debate was interminable.

Mr Deputy Speaker, Sir, I rise to support the motion that this House accepts the Report of the Cost Review Committee. This Report represents the collective effort of 16 Singaporeans from across the economic and political spectrum, both the PAP and the Opposition, to understand why there is this perception that cost increases have raced ahead of income. Invitations were sent out to SDP but they refused. And now Mr Chiam comes round and says that this CRC Report is a political propaganda to win votes for the PAP. I think Mr Chiam should apologise to these 16 members, both the PAP and the Workers' Party, and also the neutral people from the University, from the press, for imputing this malicious intention on their part. I think their efforts were selfless. They took time off from their office and some of them took leave. And here Mr Chiam comes round and says that these people are part of the political ploy.

Sir, what the Committee found was that some costs have been high. The Government has never denied that the cost has been low and the CRC Report confirms that some costs have been high. But mostly, cost increases lagged behind income increases. What has increased, as the CRC Report found, was our expectations and these translated into lifestyle cost.

Sir, the CRC Report nails the lie that the CPI does not reflect the cost of living. It also nails the lie that the Government fudges its figures and cooks up its statistics. The figures have been put under the microscope. They have withstood the test of multi-partisan scrutiny. Mr Chiam did not see the facts. That is his problem. I think we should let the matter rest.

Sir, I note that the CRC Report has also recommended that the Consumers' Association of Singapore (CASE) be given substantial funding for it to perform its role as a consumer watch-dog association for all Singaporeans. On behalf of CASE, I would like to thank the Committee for its deliberations.

I wish to add, at the outset, that money alone cannot be the panacea for CASE. Ultimately, CASE must assemble a core of dedicated men and women to run the Association. But more money at this stage will help CASE to educate consumers on their rights. We will help consumers to go about living with GST sensibly.

Sir, the immediate task for CASE is to help consumers get over the fear that GST will stoke inflation, and will feed inflation. There will be calls, I have already received some, to ask CASE to act as a witch-hunter, looking out for hawkers, dealers and shoppers who profiteer. But, Sir, what separates profit from profiteering is a very fine line. It is not a broad blur. It is a very fine line. At the outset, I want to emphasise that CASE is not against making profits. Profit is not a dirty word. Profit is sometimes even necessary to advance the interest of consumers.

Sir, in July, I visited the Philippines with some 23 trade unionists. There, we became witness to the reality of people power. People power in the Philippines got rid of Marcos. But people power also created huge lobby groups out to advance all kinds of agendas, not all of them bad, but together they are divisive. What is immediately obvious to any tourist, or to any businessman in the Philippines, is the unpredictable brown-outs which condemn the lives of decent, honest Filipinos of up to 10 hours of darkness. Many reasons have contributed to this sorry state of affairs. But, Sir, it was powerful consumer voices which successfully prevented the electricity companies from raising prices on their utilities. So in the Philippines, consumers asked for low utility rates. They got no utilities at all. Now, they are asking for utilities. It cannot be done overnight.

Therefore, Sir, CASE will not be out on a witch-hunt to nail down the most profitable companies in Singapore because, in a market economy, like Singapore, the companies that make good profits are often the most efficient providers of goods and services. At the macro level, it is not possible to have wage increase without some cost increase. If our wages go up, it is unrealistic and unfair to expect the laksa seller, or the taxi driver, to hold down his income forever.

Sir, in a market economy, CASE believes that profiteering can only occur when knowledge is imperfect. For this reason, CASE hopes to find the resources to disseminate the prices of key consumer items captured in the CPI basket in the media when GST is implemented. This is one more reason why CASE needs more money from the Government.

CASE is encouraged by the two words "substantial funding" in the CRC Report. The reporters got excited by these two words. They rang me up, "You have got lots of money now." But, Sir, the word "substantial" must be viewed in the light of the very small base. It must be viewed, as my colleague here says, relatively. The previous funding for CASE was five cents per head. We all know what we can do with five cents today. If funding were to be increased to, say, 50 cents, per head, this increase is indeed very substantial, but the absolute value is still minuscule. Sir, "substantial" must be taken in the context of a substantial increase in both substantial percentage terms and in absolute terms. That is the reason why in the NWC negotiations, we always say that for those low wage income earners, the wage increase must be factored in absolute terms plus percentage terms. So I think we must not abuse statistics and realise Mark Twain's calling that there are lies, damn lies and statistics.

But it does not mean that even if CASE were to get good funding from the Government, CASE should remain silent over price increases of public sector goods and services. Sir, under my watch, CASE will ask the Government to explain to the people why the prices of goods and services need to be raised. This transparency of information is good for the Government. It is good for consumers so that, collectively, Singaporeans can understand the reasons for the increase, and the consequences of not doing so, like raising utility rates in the Philippines which they fail to raise and therefore they have no utilities today. The burden of proof for each increase must lie with the Government. And the people should see the Government's reasoning in the light of world cost increases, their income increase and the consequences of not accepting these increases.

But, Sir, CASE will not be all things to all people, even though we need the support of all Singaporeans. In an editorial of 1st October 1993, the Straits Times leader suggested that, and here I quote, "provided it serves the public interest and becomes a key element in the national effort to keep inflation from eroding living standards, it [CASE] will get the support." I think the leader was mistaken. CASE cannot fight inflation. It has no tools. CASE does not sell any goods and services. It does not have the fiscal and monetary tools to fine-tune employment and inflation.

But what can CASE do? CASE can do something. What CASE can do is to make the public aware of their consumer rights. CASE has the moral authority to publicise unfair traders which, I think, in the free market, is really more powerful than any legislation. But legislation cannot hurt. It will give CASE, a consumer watch-dog association, both the power to bite as well as to bark. A dog that can bark only is a pet dog, and not a watch dog! So we need to bark, we also sometimes need to bite occasionally, like the German Shepherd. You see the German Shepherd does not bark, but when it barks, you know you are in danger. When it bites, you are finished.

Sir, the Government went to New Zealand to study their GST. Rightly so, because New Zealand is showing the world how to reform and re-invent government on many issues a long way ahead or long before the words "re-inventing government" became fashionable in America. New Zealand led the world in the accrual budgeting system, which I had earlier urged this Government to implement soon. When the GST went into operation in New Zealand, the New Zealand Fair Trading Act followed together back to back.

I now urge the Government to look closely at New Zealand's Fair Trading Act implemented in 1986, the same year the New Zealand GST was put into place. The Fair Trading Act is an Act to give consumers and tourists a fair deal. Why? Because there are unfair traders among us. The Fair Trading Act covers advertising and selling. Specifically, it prohibits misleading and deceptive conduct, false representations and unfair practices. The Fair Trading Act was also a key tool in preventing profiteering in its implementation of the New Zealand GST. For example, the Fair Trading Act prescribes that advertised prices must include GST or it must be clearly stated that GST is excluded.

Sir, today, when you look at the advertised prices in our press, sometimes you do not know what the prices really mean. For example, when you want to buy a car, you look at the advertisement in the press. Many of the prices quoted in the newspapers on cars do not reflect the COE. Some do, some do not. They have the discretion on that. Some people are confused. I am confused sometimes.

Similarly, when banks or finance companies advertise their loan interest rates, these interest rates come in different shades. Sometimes they quote yearly reducing, sometimes monthly reducing, sometimes daily reducing. When you put money in the bank, they tell you it is daily compounding, monthly compounding and various shades. But the problem lies more with the lending side. Consumers need to have a common base for comparison. I often wonder how many people actually know the effective yearly interest rate credit card companies charge consumers on their overdue payments. I believe it is quite high. I think they should work it out.

Sir, there are more daily transgressions of the consumer sensibilities that sometimes disgust me and I think we all should be disgusted. For example, some retailers have the audacity to advertise for sales all year round; never mind that the colour of the sales banner has already faded. Others continue to mark down limited items as loss leaders to deceive customers into believing that there are unlimited items on sale. So people rush down only to be disappointed. Then they complain to CASE. What can we do?

Sir, why do traders and shopkeepers keep doing these things? Simply because they think they can get away with it without getting into too much trouble with the law.

Consumer affairs are given top priority in New Zealand and elsewhere. In New Zealand, I believe there is even a Minister of Consumer Affairs. But I do not think Singapore needs to go so far.

Mr Chandra Das: You are looking for a job?

Mr Koo Tsai Kee: I am not looking for a job.

Sir, it is instructive to look at Hong Kong, because Hong Kong is a model that we should approximate within limits. In Hong Kong, they do the right thing. The Minister of State there talked about how Hong Kong built public houses. In Hong Kong, they do the right thing, I believe. And they have a statutory department to deal with consumer affairs and that department is staffed by over 100 professionals. And here in Singapore, we have CASE with only 15 staff, many of them semi-professionals and most of them are employed to serve our Advisory Councils. And people expect CASE to do great things. How is it possible? I do not know.

But things, I hope, will take a turn for the better. The CRC Report has made its recommendations on CASE, but it has left the details to the Government. In my personal view, the Government should decide once and for all whether CASE deserves its full support. CASE cannot go on serving the needs of three million Singaporeans and six million tourists, minus those Malaysians coming in from the Causeway, on the present Government grant of $150,000 based on 5 cents per head funding basis. Sir, the NTUC and the SLF have been the two key pillars of strength for CASE. I hope the Government will now put the roof over our house.

Sir, I congratulate the CRC for their well researched Report. I hope Mr Chiam See Tong will gain his sanity back and see that perception is one thing, reality is quite another.

Sir, I support the motion that the recommendations of the CRC Report be accepted by Parliament.

Mr Chiam See Tong: Sir, a clarification from the Member for Tanjong Pagar GRC.

Mr Deputy Speaker: Is there any part of his speech that you do not understand?

Mr Chiam See Tong: If I am not mistaken, the Member is also the President of CASE. He says that when he sees the advertisement on cars, he is confused. I am just wondering whether he really meant it. How can he lead a consumers' association when he himself is confused by advertisements?

Mr Koo Tsai Kee: Sir, when you look at the advertised price of a car in the newspapers, and it does not specifically say it is COE inclusive or COE exclusive, how do you know? So you must call up. The immediate reaction is: does it include COE or does it not? At that point, I am confused. But, of course, I have the common sense to ring up and check before I go to the showroom and take a look.

Dr Kanwaljit Soin: Thank you, Sir, for giving me the opportunity to speak.

The Report of the CRC is, on the whole, a commendable and very thorough piece of work. Its recommendations are especially praiseworthy and I endorse most of them. However, there are certain areas that require further clarification. There is no doubt that our standard of living has gone up in Singapore. Otherwise, we would not be the second most affluent country in this part of the world, next only to Japan. And for this economic feat, the Government and the policy makers have to be commended.

There is, however, also no doubt that costs in some areas have risen sharply as detailed in the Report. To highlight some of these sharp cost increases between 1988 and 1992, the following examples will suffice.

(a) Hospitalisation fees rose by an annual average of 8%. Specifically for 1990, in SGH, the ward charges for A and B1 wards rose by 21-29%. For Alexandra and Tan Tock Seng Hospitals, the ward charges rose by 12-23%.

(b) University tuition fees went up by an annual average of 17%.

(c) A 4-room Model A HDB apartment rose by 12.3%. A 5-room Improved HDB apartment rose by 15.7% and an Executive apartment rose by 18.5%. HDB flats sold in the resale market and private housing were also pushed up enormously. Some people say astronomically.

(d) Public transport costs increased in 1991, not in the other years, by more than wages.

(e) Car prices rose by 22% in 1992 and parking fees rose by 14% over the period 1988-92.

(f) Indirect taxes increased by 11% per year between 1987 and 1992.

During this same period, 1988 to 1992, the average annual percentage increase in nominal monthly earnings went up by 8.9% and this is something to be proud of. But there is no doubt that the public's perception that there has been a sharp increase in prices in some areas is justified. Of course, some of these price increases were also justified and this has been explained in the Report. However, the overall inflation rate as measured by the CPI has hovered around 3%. How do we reconcile this? Therefore, let us turn to the Consumer Price Index.

I have no doubt that the CPI calculation method is sound and serves as a comparable cross-country reference. However, there may be certain factors that blunt the accuracy of the CPI as an indicator of inflation where Singaporeans are concerned and I attempt to summarise this with my meagre knowledge of economics.

1. The 1992 CPI was based on the household expenditure survey of 1987-88, done five years ago. Obviously, with each passing year, from the time of the household expenditure survey, the CPI is less reflective of the current consumption pattern of the households. The CPI which will be calculated on the 1992-93 household expenditure survey will more accurately reflect the current inflation rate.

2. The household expenditure surveys of 1982-83 and 1987-88 were grouped around 1985 which was the recession period. And this could explain why there was little difference in the weightage of items in the baskets of the two household expenditure surveys. Also, the effects of the recession might have affected the expenditure patterns and price changes accordingly. However, since 1988, the structural changes that occurred in Singapore would have rendered the 1987-88 weights less representative. Here, I must stress again that for international purposes, I realise that a 5-year revision of the household expenditure survey is the norm. But Singapore's remarkable progress in the last five years has defied norms and thus we have a predicament here where the CPI, calculated according to international norms, is not necessarily representative of the inflation that all of us feel.

3. The CPI is based on expenditure groups but the conclusions apply to income groups. The Department of Statistics believes that there is a strong correlation between income and expenditure. This may not necessarily be true in a high savings society. To put together a high income family with a low expenditure pattern and a low income family with the same expenditure pattern in a similar category may not capture the impact of inflation on the low income family.

4. The recommendation of the CRC for separate CPIs to be compiled and published for different income groups, ie, the lowest 20%, the middle 60% and the highest 20%, is very commendable, but I think we have to broaden this and focus it even further.

(a) The bottom 10%. This group needs to be helped out of the poverty trap and we must know specifically how the cost of inflation affects them. According to the 1990 census, 13% of households had incomes of less than $900 and 4% of households had incomes of less than $350.

(b) The pensioners who have fixed incomes.

(c) The self-employed who do not get automatic yearly wage increases.

(d) The single person households of which there are at least 6,500 consisting of old people living alone.

Thus, the CPI is too general and aggregate a figure to be of tangible meaning to the majority of people at a micro level in spite of its international macro usefulness for cross-country comparisons. Just as the economic success of some countries is captured more by the purchasing power parity (PPP) figure rather than the GDP figure which is currently being used for cross-country comparisons, we in Singapore also want to have a measure of inflation of our cost of living that reflects not only our expenditure pattern but also our purchasing power and our aspirations. We will have to put our heads together and think of a suitable new index. The CPI does not reflect our need adequately.

Furthermore, although the CRC Report states that low expenditure households generally experienced lower inflation than the general population during 1984-1992, at the same time, the Committee notes that a lot of Singaporeans with household incomes of between $500 and $1,000 a month might not be captured in official statistics. Therefore, we are not addressing the concerns of this group adequately and I think this comprises about 15% of households and this is the group that should be the concern of all of us who are more fortunate.

Although both the Lorenz curve and the Gini Coefficient show that there has been an improvement in the income distribution among resident households between 1980 and 1990, we have to be concerned about the following facts:

(a) The absolute gap in dollar terms between the lower income group and the others has widened.

(b) Many lower income people are working overtime or have taken on extra part-time jobs and yet there is a widening of the absolute gap in dollars between them and the others. Furthermore, we are gearing towards a high-tech and a knowledge intensive phase in our industrial policy and this is going to disadvantage the bottom 15-20% of our society even more, unless we take cognisance of this and I think the Report has done this, but I am reiterating it. Unless we take cognisance of this and make a concerted attempt to help them to upgrade, social cohesion will be affected. Thus, we have to address the feelings of those lower-income households as "having been left behind".

Another fact to consider is that lower income households tend to have more children than higher income families, and thus the dollar of the lower income homes has to stretch further and price increases, therefore, may be felt more acutely by them.

Sir, I am going to turn to the different areas of concern where costs have risen. Health costs. High costs have been attributed to high manpower cost and advances in medical technology, besides other reasons. In fact, the higher manpower costs were also contributed by the use of medical technology because of the necessity of specialised personnel to operate the wherewithal of high technology. Thus, it would seem essential to separate medical costs into two main categories: (a) costs arising from provision of basic medical care and (b) costs arising from value added care. For example, the use of high technology. The cost arising from the provision of basic medical care should be heavily subsidised, as the health of our population is one of our most precious resources.

Thus, for B2 and C classes, basic health care should be provided at a nominal rate. Yes, I know that the subsidy is high but again I am making a point. If the patients in these two ward categories, ie, B2 and C, need expensive high-tech care, they should go through a means testing, and co-pay a percentage of the cost of the service that is commensurate with their means. For A class wards, there should be no subsidy at all for both basic and high-tech care, while for B1, the long term subsidy rate of about 20% is acceptable.

In order to encourage people to become more self-sufficient where medical care is concerned, every Singaporean over the age of 21, working or non-working, should have a Medisave account. This has become feasible as CPF accounts for Group A Telecom shares have been opened for many non-working Singaporean adults. This account could be used to put in extra money by citizens for Medisave purposes.

The criteria for Medifund usage should only be financial difficulty and should be spelt out and publicised more widely. It is unfair to penalise a full-time housewife and give her low priority for Medifund because her husband has been errant and did not contribute to Medisave or MediShield. How can she be blamed and penalised for her irresponsible husband? In fact, she is to be sympathised and supported, especially if her husband does not work regularly or is in a DRC or is in prison.

As for public housing, the HDB stopped building 3-room flats in 1987. I agree with the CRC that the HDB should start building 3-room flats again. Besides being more affordable to newly married people, they have to think of the plight of those living in 1-room rental flats who find it impossible to upgrade, as they have limited choices, either to upgrade to a 4-room or 5-room flat, which is a big jump, or to buy a resale flat from the open market. These 3-room resale flats are limited in number and older singles are also vying for them. Our present system is making it hard for those in rental flats to become home owners. With the massive upgrading exercise of HDB estates, the value of each apartment is increased by doing up the exterior and interior. This is done with public money with owners only paying a small amount. Thus, the occupiers of these upgraded flats should be required to stay in their flats, for example, a further minimum of two years before selling it, otherwise they are capitalising on state funds. If this sort of regulation is not instituted, then the price of HDB apartments may be pushed up further.

Now, education, Sir. At present, the subsidy rates for students at independent schools depend on monthly household income. If the family income is below $2,000, the subsidy of school fees is 50%. If it is below $800, the subsidy rate is 100%. Since this scheme is working well, why can we not use it for university students? Just as the lower income families find it a burden to send their children to independent schools, it is also a financial burden when their children go to university. So for those really poor income families, below $800, the subsidy rate in the university could be pushed up to 100%. Also, the children's education grants for those eligible for the Small Families Improvement Scheme should continue to university, and not stop at pre-university.

Quite rightly in Singapore, we have shunned the slippery slope of welfare benefits for all and sundry. However, we have to look at our whole policy of subsidies, as was pointed out by the hon. Member for Tampines GRC. While maintaining the principle of meritocracy, we must not forget a caring and communitarian approach towards the less fortunate 20% in our society who need the help of the rest of society, especially the top 20%, so that we have a level playing field, a point mentioned by Dr Arthur Beng. Only when we have a level playing field, then all of us can play soccer, even though we may take up different positions in the game. The other thing to remember is that we must enjoy the game together and play it to the best of our ability, but with fairness to all concerned.

Finally, it has been noted in the Report many times that sharp simultaneous price increases in health, education, transport, etc. were partly caused by the uncoordinated timing of the different Government Ministries, both within each Ministry and also between the different Ministries. Sir, this unacceptable and worrying practice has to be checked, as has been recommended in the Report. A possible solution is to have a permanent Government appointed Cost Review Committee, and all future Government price and fee increases should be monitored and assessed by this Committee so that the public is buffered from financial earthquakes and will only feel minor tremors.

With that, I support the motion.

Mr Chew Heng Ching (Eunos GRC): Mr Deputy Speaker, Sir, by now, the House must have heard enough accolades showered on the Cost Review Committee. Indeed, Mr Lim Boon Heng and his Committee richly deserve all the praises and compliments for having frankly, fairly and incisively discussed, analysed and deliberated a very sensitive topic that concerns all and proffering good and practical recommendations and conclusions.

Sir, there are snide remarks levelled at the Committee's efforts, labelling it as a political exercise for the PAP. I think this is most unfair to the hard work put in by all concerned to prepare the Report. Sir, the Report contains details supported by facts and figures. When it had to criticise the Government, the administration, it criticised without fear or favour.

Sir, I would like to discuss the Committee's Report by looking, firstly, at the impact of cost increase on the lower income group. Secondly, on the need to offer more choices to the people of Singapore. Thirdly, on the need to phase out our tendering or privatisation of scarce resources in Singapore.

Sir, in the Committee's key findings, it is noted that the proportion of households with monthly incomes of $4,000 and above rose from 6.3% in 1980 to 24% in 1990, and households earning less than $1,000 per month fell from 48% to 16%. Sir, whilst more households have higher earnings now than 1980 to somewhat offset the increase in cost over the same period, my concern is for the 16% of households whose family incomes remain at less than $1,000 per month. Cost increases over the last 10 years have been considerable. $1,000 may not be able to buy the same basket of goods today. Thus, to these 16% whose family incomes remain low at $1,000 or less per month, today's health care, housing, transport and education costs are more than just a pinch to them.

The Committee has pointed out that the impact and the severity of certain cost increases could have been ameliorated. It has identified simultaneous cost adjustments after the last recession as one cause. The solution is simple, as the Committee has noted: coordinate fee increases, if they really cannot be absorbed by the Government, and introduce them gradually over a period of time. But more importantly, Sir, give the people a choice. I think this recommendation of giving Singaporeans a choice echoes the inner voices of many, especially those in the lower income group.

On health care cost, if they cannot afford, or are reluctant to pay for the services provided by private and restructured hospitals, respect their wishes. Maintain at least one, if not two, unrestructured Government hospitals. Allow for more class C wards, extend consultation hours at Government polyclinics, as suggested by some Members.

On education cost, if they could not afford independent schools, have enough Government schools so that the poor but otherwise bright students will continue to have good schools to nurture them for success. If private kindergartens are too expensive, have more PAP Foundation kindergarten classes which offer low cost kindergarten education. Give Singaporeans a choice, a real and choosable choice.

Sir, for a choice to be real and choosable, I would urge the Government to constantly review the standard of services provided, such as in health care and education, and if necessary, to adjust the subsidies to keep pace with cost increases so that the quality of service will not suffer, and the services remain affordable. If the choices are provided by statutory boards, the MRT and the bus companies, make sure there are enough alternatives for the people to choose from. Thus, while there are people who like to live in bigger and even self-designed flats with better finishings, there are those who just need a decent roof over their heads. The HDB should therefore continue to answer to the needs of these people who would rather live within their means and build smaller budget flats for them.

Similarly, when a bus commuter could save 60 cents or more a day taking a non-airconditioned bus to work, we should give him the choice, and ensure that there are enough non-air-conditioned buses plying the route.

Sir, the Government has always wanted Singaporeans to have a share of Singapore, to be part of its prosperity and success. Thus, instead of restricting Singaporeans to rent a piece of Singapore, whether a flat, a shophouse, or even a hawker stall, we encourage ownership. Unfortunately, the best approach to determining the price of a piece of valuable Singapore is through the tender system. This policy is inherently correct and is for the benefit of Singaporeans because property prices tend to rise in the long run. But the immediate impact could always be counter-objective. Sir, this is because land is scarce in Singapore. In the midst of a booming economy now, exacerbated by the kiasu mentality of some Singaporeans, bid prices have sky-rocketed. The result: successful property developers, shopkeepers and stallholders inevitably will have to pass the high bid costs down to the consumers in order to survive. And consumers will have to pay more, resulting in higher costs of living.

Sir, whilst the policy of allowing Singaporeans to own Singapore is laudable, the timing of tendering exercises is very important. Just as the bad coordination of bus fare and MRT fare and health care cost increases have upset some Singaporeans in the past, will not the sudden rush-in of tendering for almost everything - COE, share prices, land, shophouses - be cause and reason enough for another disenchantment? Already, we have read and heard of grouses about too many tenderings and their effects on costs and prices.

I would, therefore, urge the authorities concerned to go slow and to coordinate all these tendering programmes. Meanwhile, the HDB should continue to rent out shophouses and stalls to tenants at affordable prices so that they will be able to compete with large departmental stores which enjoy the distinct advantage of economy of scale and superior cash flow.

Finally, Sir, critics should not lose sight that we are a small country without natural resources. When society becomes more affluent and the propensity for spending increases, the desire to purchase expensive branded goods becomes even more intense. This is inevitable as the country succeeds in creating more wealth for her people. But for Singaporeans who cannot afford at the moment, there are always other choices. And this is where the Government, the HDB, the MRT, the bus companies and even the NTUC could lead in providing the choices, catering to the basic needs of Singaporeans inexpensively.

With that note, Sir, I give my support to the recommendations by the Cost Review Committee to contain rises in the cost of living.

Mr Low Thia Khiang: Mr Deputy Speaker, may I seek a confirmation from the Member for Eunos GRC? I heard just now the Member say that he urged the Government to adjust subsidy rates to offset cost increases. Could he confirm that was what he said?

Mr Chew Heng Ching: Yes. I did mention that the Government should constantly review subsidies for the lower income group, so that the cost increases could be contained.