MINISTRY OF FINANCE

DR RICHARD HU TSU TAU Minister for Finance

Fiscal Policy

The Government's fiscal and budgetary policies will continue to lay the basis for sustained, non-inflationary economic growth. They will promote a strong and dynamic private sector supported by an efficient and responsive public sector. They will strengthen national resilience, promote social cohesion and enhance the quality of life of Singaporeans.

2. The medium term budgetary objective is to achieve a balanced budget, with surpluses in good years to stimulate growth in lean years. All operating and development expenditures will be financed from operating revenues.

3. Expenditures. The major expenditures will be on investments in our future, i.e. education, health care, public housing, infrastructure and national security. The size of the public sector will be tightly controlled to free manpower for the private sector. Computerised cost information systems will be put in place in all ministries and departments, and more direct linkages established between budgets and outputs to cut waste and make public sector managers more accountable for their expenditures.

4. Revenues. The introduction of a Goods and Services Tax (GST) on 1st April 1994 will be a major tax reform. The GST rate will be kept at 3% for at least 5 years. Tax on companies will be reduced to 27% to stimulate growth and improve the investment environment. Personal income taxes will also be lowered to encourage effort and enterprise. To offset the impact of GST on the lower income groups, a package of tax and non-tax rebates, grants and public assistance will be introduced.Nearly all households in Singapore will be better off after the GST is introduced.

5. We will continue to promote the external wing of the economy. Appropriate fiscal measures will be used to encourage Singapore companies and businessmen to trade and invest in the booming and growth economies of Asia. At the same time, we will help these companies to sink deeper roots into Singapore as they develop their overseas operations so as to prevent a hollowing out of our domestic economy.

Monetary Policy

6. Our exchange rate policy will continue to be to contain imported inflation, maintain price stability and support export competitiveness. Domestic inflation has declined from an average 3.1% per annum during 1989-91 to just over 2% per annum in 1992-93. Beyond the initial one-off effect of GST on prices, underlying inflation is not expected to pick up significantly in 1994.

Regulatory Policy

7. The hallmark of Singapore's development into a successful international financial centre has been the creation of a sound financial system with high prudential standards. We will maintain the integrity of our financial markets through continued supervisory vigilance. However, we will also constantly review and update rules and regulations, to sustain a conducive environment for our financial sector.

Privatisation Programme

8. The successful flotation of Singapore Telecom has created a large new class of citizen shareholders. The Government will privatise other suitable statutory boards and list them on the Singapore Stock Exchange. Singaporeans will be given opportunities to own shares and take a stake in Singapore's success. The Civil Service

9. Civil Service salaries have been revised to keep pace with the private sector. At the same time, a new medical benefits scheme, built upon Medisave and Medishield, was introduced. The Government will continue to maintain its remuneration at levels that will attract and retain the quality of personnel needed to administer the public sector efficiently.

10. We will review the present civil service arrangements for recruiting, promoting and managing personnel, centred on the Public Service Commission and the Public Service Division, which were inherited from the colonial government. Where necessary, we will make fundamental changes to the management of the Civil Service, and free its personnel administration, in order to make the public sector a more responsive and competitive employer without compromising the integrity and impartiality of the Civil Service and the statutory boards.

11. We will give departments with self-contained, coherent functions more operating autonomy to carry out their missions, for example by converting them into statutory boards. We will delegate more personnel management authority to Ministries. This will give line managers greater flexibility, responsibility and accountability in managing human resources.

12. The pilot Workplace Healthy Lifestyle Programme launched in September 1992 to promote health and fitness in the public service received encouraging response. It will eventually be extended to the entire public sector.

13. The Civil Service College offered its first programme in April 1993. Its mission is to engage senior Civil Service officers in a continuous process of improvement, to keep the Service efficient, effective and cohesive. The College will acquire its own premises in a few years' time.

Social Development

14. The United Nations has designated 1994 as the International Year of the Family. We will use this opportunity to make single Singaporeans aware of the importance of family life. The Social Development Unit will be introducing TelePal, an electronic communications system via Teleview, in June 1994. More marriage preparation courses will also be conducted.