THE FY94 EXPENDITURE ESTIMATES

Total operating and development expenditure in FY94 is expected to amount to $16.7 billion, which is 18.6% of GDP, up from 17.0% in FY93. The substantial increase is primarily due to increased development expenditure, from 5.5% of GDP in FY93 to 6.9% in FY94. Operating expenditure, on the other hand, will show a more modest increase, from 11.5% to 11.7% of GDP in FY94. These expenditure levels are within Government's medium term policy target of keeping total expenditure to 20% of GDP, with no more than 12% for operating expenditure.

The $16.7 billion budgeted for total Government expenditure in FY94 is 19% more than in FY93. As in previous years, Social and Community Services will take up the largest share at nearly 40%. More than half of this will be for education. The rest will go into healthcare services, subsidies on public housing, environmental protection, community development and support of the arts. The second largest share, at 32% of total expenditure, will be taken up by National Security, including Defence and Home Affairs. Economic and infrastructural development, including transportation, R&D and other civil engineering projects, will take up another 18%.

Let me now elaborate on the FY94 expenditure proposals.

Operating Expenditure

Operating expenditure comprises Expenditure on Manpower, Other Operating Expenditure, Grants-in-Aid and Pensions. In FY94, operating expenditure is projected at $10.6 billion, up 11.1% over the revised FY93 expenditure.

Expenditure on Manpower will go up by $294 million to $2.5 billion. This is 2.8% of GDP, compared to 2.7% in FY93. The increase is to cater for the salary revision effective 1st January 1994, normal salary increments, and for filling essential vacancies. Under the Government's Zero-Growth in Manpower policy, Ministries will continue to meet new demands through productivity improvements.

Other Operating Expenditure or OOE is projected at $5.5 billion or 6.1% of GDP. This is $413 million or 8.2% more than FY93. Apart from inflation and higher workload, the increase also caters for additional expenditure by the Ministries and departments on input GST. Other increases include higher provision for training bursaries for nurses, teaching bursaries, scholarships, and for maintenance of buildings and roads. The implementation of the Small Families Improvement Scheme to help low income families meet housing and educational expenses also accounts for part of the increase.

Grants-in-Aid to various Government funded statutory boards and restructured hospitals are expected to come to $2.2 billion, or 2.5% of GDP. This represents an increase of $316 million over FY93. Larger grants are required to meet the higher operating costs of aided schools, polytechnics and universities. Additional grants and subsidies totalling some $30 million will also be given for education, healthcare and public housing to offset the impact of the GST. A grant will also be given to the Singapore Tourist Promotion Board to compensate the loss of revenue to STPB when the cess rate is reduced from 4% to 1% with the introduction of GST.

As mentioned earlier, Pensions Expenditure is expected to remain at 0.4% of GDP, increasing by $30 million over the FY93 allocation to $388 million. This is because of a larger number of pensioners and the rising cost of medical subsidies for pensioners. Development Expenditure

Development Expenditure is expected to reach $6.2 billion in FY94 or 6.9% of GDP. This is almost 37% of total expenditure, as against 32% in FY93. Government's intention is to allocate an increasing share of the budget for development expenditure, to reach 40% over the medium term.

The main part of the development budget will go towards the provision of social and economic infrastructure. Major healthcare-related projects include the development of Eastern General Hospital, the new Kandang Kerbau and Tan Tock Seng Hospitals, and the combined Institute of Health and National Dental Centre. Infrastructural projects include land reclamation works at Changi East, Tuas, and Buran Darat, the Schools Building Programme, the Roads Building Programme and the Sewerage and Drainage Programmes. To improve public transportation, Government has set aside funds for the development of bus interchanges and the Electronic Road Pricing System. The public can also look forward to better service with the construction of the new Immigration Building and the second phase of the redevelopment of Woodlands Checkpoint.

A capital subsidy of $601 million for public housing has been provided, an increase of 7.5% over FY93. A substantial part of this will be for the Upgrading Programme, including Interim Upgrading to improve the quality of existing HDB estates. Provision is also made for other infrastructure work in HDB new towns and for specific works in existing estates. Funds are also needed to pay for the discount on the sale of tenanted HDB shophouses.

Research & Development (R&D) is crucial to Singapore's efforts to leverage science and technology for industrial competitiveness and to locate higher value added activities in Singapore. The National Science and Technology Board (NSTB), established 3 years ago, will continue to spearhead this effort. A total of $400 million or 0.4% of GDP will be provided for Government-funded R&D in FY94. This represents an increase of $187 million over FY93. The emphasis will continue to be on industry-related R&D, with $350 million allocated to the R&D Fund to be administered by NSTB. Another $50 million will be allocated for research projects of an academic nature to be undertaken by various institutions under the Ministry of Education.

Capital grants totalling $2.2 billion will be given to other statutory boards. This is an increase of $916 million over FY93. The projects include a new campus for Temasek Polytechnic, upgrading of the National University of Singapore, and development of aided and independent schools, junior colleges and vocational institutes. Other projects include the Woodlands extension of the MRT system, the development of water works, recreational facilities and attractions on Sentosa, extension and improvement of community centres, and the redevelopment of Outward Bound Singapore. Grants will be extended to provide recreational and welfare facilities for the elderly and to upgrade Singapore Sports Council facilities. Funds are also allocated for strategic investments and other economic development schemes under the Economic Development Board, including the recently announced Cluster Development Fund. Another major project will be the development of Jurong Island, amalgamating the cluster of petrochemical islands.