ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [23rd February, 1994),

"That Parliament approves the financial policy of the Government for the financial year 1st April, 1994 to 31st March, 1995." - [Minister for Finance].

Question again proposed.

Dr Ow Chin Hock (Leng Kee): ( In Mandarin): Mr Speaker, Sir, I support the motion standing in the name of the Minister for Finance. I would also like to thank the Minister for his generosity.

First of all, I would like to report the mixed reactions of the public to the Budget Statement. The Feedback Unit conducted a dialogue session on the Budget Statement on 28th February. Most of the participants felt that this Budget should be welcomed by the people because there are many goodies given to the people, for example, personal income tax rebate, HDB service and conservancy charges and rental rebates, and also the $300 for the CPF share ownership top-up scheme. I think our people will welcome these goodies.

However, some representatives from the business community expressed their disappointment over this Budget because the corporate tax has not been further reduced. On the other hand, they were worried that the increase of 1.5 percentage points for the employer's CPF contribution would further increase labour cost.

Most of the participants of this dialogue session have reached a consensus, that is, they are concerned with the impact of the forthcoming GST. The union and community leaders, academics and professionals are more worried about the profiteering and inflation that may come with GST. But the businessmen and employers are worried about the GST compliance cost. From these different reactions and the press reports, we can come to one conclusion, that is, "The more you give, the higher would be the expectation. What was given last year does not count. If you give less this year, there will be a lot of hue and cry." No doubt, asking for more is a natural reaction. But the Government should be very prudent and careful in dealing with this matter, that is, not to allow the people's expectation to be raised too high, and to take for granted that every year, there would be some hong bao and gifts to the business community and the ordinary citizens.

The Government should also let the people realise the reasons for giving all these concessions. In my view, the reasons for giving these concessions in the past few years are mainly two-fold. Firstly, to improve our competitiveness and to stimulate our economy. Secondly, to return the wealth to our people according to our economic performance so as to encourage our people to work harder and to upgrade their skills. For example, the reduction of income tax in 1993 and the GST to be implemented are measures to promote our competitiveness through tax reform. The second example, for last year and this year, the various tax incentives given to the finance and other industries and the incentives for overseas development have the primary objective of increasing our GNP. The third example is the CPF Share Ownership Top-Up Scheme. Its aims are to return the wealth to our people, to reward the people for their past contributions, and to encourage them to strive for excellence.

Mr Speaker, Sir, now let me talk about the implementation of GST. With regard to GST, the biggest fear among the people is profiteering and inflation that may come with its implementation. How to contain inflation rate at below 6% is the main challenge facing the Government. The Government will not only have to prevent businessmen from using GST as an excuse for profiteering, but also to pay attention to the fact that inflation may lead some unions and workers to demand for higher wages, thereby triggering a price-wage spiral.

Most of the participants at the dialogue session also suggested that the Government departments and statutory boards should freeze their fees and charges for the next two years. Otherwise, it would undermine the Government's moral authority to persuade the businessmen not to increase prices at random. Furthermore, if the Government departments and statutory boards continue to increase their fees and charges, it may create an impression among people that "we allow only the magistrate to set fire, but disallow the people even to light their lanterns" ( ).

The business community is very concerned that in order to collect GST for the Government, it has to incur additional costs. The business representatives at the dialogue session felt that the Government had underestimated the private sector's cost in this aspect. They also feel that they are merely acting as collection agents for the Government, so the Government should compensate them for their expenses incurred.

Now, let me go on to the issue on external economy. Apart from the amount of our investments abroad, the size of our external economy can also be measured by factor income from abroad. In 1993, our income from abroad was $1.23 billion as compared to $1.37 billion in 1992. I wish to ask the Minister for Finance: what was the reason for this decline? At the same time, I like to know, from the $1.23 billion income from abroad, how much of it came from the public sector's investment overseas.

In the Budget debate last year, I mentioned about the mutual repellence between civil servants and the entrepreneurs. This point was raised in the two dialogue sessions held by the Feedback Unit with the entrepreneurs on venturing abroad. Coupled with my personal interaction with the entrepreneurs, I have now a better understanding of the local enterprises, particularly the small and medium enterprises, and their complaints and reservations on partnership with the Government-linked companies. The private sector feels that GLCs are slow in making decisions.

They think that there are three reasons for this. Firstly, because the people in charge of these GLCs are mainly civil servants. They are more careful and prudent. For every project, they need to have a feasibility study conducted before they commence action. Secondly, it is the same group of civil servants who are managing the Government-linked companies. They have to participate in rounds and rounds of negotiations. They are very busy and they have to travel all over the places - China, Vietnam, India, or Myanmar. If they are not overseas, then they are in the meeting rooms. Therefore, they are unable to make "quick" decisions on various projects. Thirdly, the Government-linked companies are participating in too many projects. So for particular projects, they lack the sense of urgency and the motive of quick completion.

Apart from being slow, the entrepreneurs also observed that despite their "golden reputation", when these Government-linked companies go overseas to negotiate for projects and investment plans, they may not necessarily secure the most favoured terms. Also, some of these entrepreneurs are not quite happy with the attitude of the civil servants because the civil servants are used to being the "regulators". They have given people the impression that "you have to beg them, they would not beg you". On top of that, some civil servants who are in charge of GLCs are not familiar with the local situation and they lack the tact necessary for business dealings. Very often, these have resulted in some unnecessary obstacles and delay, even to the extent of spoiling the whole project.

Despite that, I still believe that the Government should have some means to narrow the gap between the private entrepreneurs and the Government-linked companies. In fact, they should complement and supplement each other. At the same time, the Government should play the catalytic role through these Government-linked companies and statutory boards for our overseas ventures.

The private entrepreneurs have also complained that the local banks are too conservative in their management style. They insisted that the local assets should be used as collateral for loans for overseas development. This has resulted in our entrepreneurs who are venturing overseas having to bear double risks. Some of them thought that this might be the requirement stipulated by the Monetary Authority of Singapore. I hope that the Minister for Finance will be able to clarify this point. More importantly, how are we going to allow our local entrepreneurs to use their overseas assets as collateral for loans? The entrepreneurs felt that the conservative style of our local banks is not in line with the Government's encouragement for our local people to venture overseas. They also suggested that the Government should consider setting up an overseas development bank at this critical moment, or to set up an overseas development fund with the banks to provide loans and thus spread the risk.

In my personal view, the Government should do its best to assist our local entrepreneurs to venture overseas. The Prime Minister and the Senior Minister have been making many overseas trips to look for opportunities for Singaporeans to venture overseas. This is the Government's greatest assistance to our local entrepreneurs to venture overseas. This political goodwill is indeed an intangible asset for our overseas ventures.

Some entrepreneurs who go overseas for development are prone to complaining that they do not enjoy protection under the local laws, the lack of transparency of regulations, and the frequent changes of government policies. As a result, they have to take very great risks and sometimes they do not even know what to do. These entrepreneurs should realize that if these countries have all the comprehensive legal framework and regulations, strict enforcement of the law and consistency in policies, then they would not need our investments for development. To put it simply, when we go to these countries where the development policies are still in the groping stage, we are trying to find an equilibrium in a disequilibrium situation.

While we encourage Singaporeans to venture overseas, we cannot hollow out our domestic economy. We must not only maintain our economic competitiveness, but also continue to attract foreign investments. I notice that the investment commitment from foreign sources in the manufacturing industy has steadily increased from $1.63 billion in 1989 to $3.15 billion in 1993. Recently, a foreign consortium has committed a $3.5 billion investment commitment in the petrochemical industry. This is encouraging. The Economic Development Board has put in a great effort in this aspect, and we must compliment EDB for that. I also notice that from 1989 to 1993, in the same period, the local investment commitments have fluctuated very much. I understand that the nature of investment is volatile. But why is it that the local investment commitment has fluctuated so much more than the foreign investment commitments? Does it mean that there has been a diversion of investment to foreign countries?

Mr Speaker, Sir, let me deal with the next topic, ie, the role of government. The Minister for Finance said in his statement that the Government has a role to play in economic development. Although we rely on market forces, the Government needs to intervene in several areas such as education, skill training, upgrading of economic structure and the provision of a stable environment. I agree with the Minister for Finance.

The Feedback Unit has also discussed the issues relating to market forces and Government intervention with the community leaders. I noted that many people do not quite understand the operation of the market forces. More people ask for the Government to intervene in public housing, public transport, education and health care by providing subsidies. But, on the other hand, for any government intervention measure that affects their own pocket or to increase the Government's coffers, such as the foreign workers' levy and the COE, they will inevitably express strong objection and dissatisfaction. All over the streets, in coffeeshops, in restaurants, people discuss these matters. Many people want to know how much the Government has collected in these two areas. I note that in terms of fees and charges last year, the Government has collected $3 billion. How much of this came from COE and the foreign workers' levy? I would ask the Minister to give us some figures on these two items.

Although the Minister did not put it explicitly, it is in fact quite clear that there is Government intervention in the distribution of income and wealth through subsidies on education, health care and social services. On 11th March last year, in answer to my question, the Minister said that because of the tax rebate and the lowering of tax rates, 74% of our residents will not have to pay any direct tax. In other words, from 1st April this year, although every consumer has to pay GST, the income tax burden will be shouldered by fewer taxpayers. I hope that the Minister will be able to provide some statistics to compare the changes in the number of taxpayers and tax collected for different income groups before and after the implementation of the Goods and Services Tax. In this way, our people will be able to understand better how the Government has redistributed wealth and income in order to benefit the lower income groups.

The Minister has also referred to the surpluses and reserves in his Budget Statement. This year, the estimated surplus is $2.2 billion which is much lower than the $6.97 billion for last year. Over the past two years, most of the surpluses were put into the Edusave Endowment Fund, Medifund and the CPF Share Ownership Top-Up Scheme. The Pension Fund to be set up will also be getting some of these surpluses. On the other hand, our reserves reached the level of $77.87 billion last year. However, this apparently massive amount of money can only sustain six months of imports. Furthermore, it is also lower than our GNP of $90.23 billion of last year. It is just like a family with savings of less than one year's income. I agree with the Minister for Finance that in good years, we should put more surpluses into our reserves for emergency use. Reserves and surpluses belong to the State and the people, not the Government. The Government only collects and manages the funds. It collects taxes and charges on behalf of the people in order to pay for defence, social services and economic development. The money does not go into the pockets of the Ministers or the civil servants. It is only when the country enjoys prosperity and when the people are wealthy that the coffers will be enriched. It is very vicious and vilifying to say that "the Government has money but the people have none."

In conclusion, in the short-term, the Government's task ahead is to deal with the impact of GST. But over the long term, the Government has to face three challenges:

(1) how to focus the people's attention on our national competitiveness, to build up our external economy, and to address the issue of our aging population;

(2) how to manage the rising expectations of the people. The Government cannot ignore the wishes and views of the people. But at the same time, the Government should not try to please everyone with material incentives.

(3) how to strengthen the bond between the people and the Government. In this respect, we should enhance our people's national consciousness, the family concept and the moral values of the individuals. At the same time, the Government must make greater efforts to explain its policies so as to convince the people, to win their minds and their hearts. The Government should also adopt a caring attitude and take practical actions to help citizens who are not regarded as elite so that they will also understand that they have a part to play and a contribution to make. As for those poor and unfortunate people, the Government should provide assistance with warmth.

Mr Speaker, Sir, the way to govern is to implement benevolent policies ( ). The tactic to govern is to win the hearts of the people ( ). As it is said, "He who wins the heart of the people, wins the universe." ( ). This is the lesson of a few thousand years. We must never never forget the teaching from history.

Mr Ling How Doong (Bukit Gombak): Mr Speaker, Sir, the aging of the population is a universal phenomenon. In view of the longer life expectancy of the people, a number of countries have now raised pension withdrawal age. But in Singapore, the PAP with its usual paternalistic style has now doubled the Minimum Sum, or one may call it the retirement account, to $80,000. Out of the $80,000, $40,000 will be attached to the property and the other $40,000 will be by way of cash which the CPF holder will not be allowed to withdraw but will be paid by way of annuity from the age of 60. Quite obviously, this particular measure has been taken on the assumption that Singaporeans cannot be trusted to look after themselves during their old age. Or that if the lump sum is allowed to be withdrawn at the age of 55, they would squander away this money. The question one must ask is this: is $40,000 sufficient to maintain a Singaporean? Obviously not, if one were to go on the expectancy of life. This would then lull the Singaporeans into a false sense of security. They would have thought: The Government has retained $40,000 from us. That is enough. I can afford to spend away whatever money I may have.

The question that we will have to consider is this. What the Government is doing now is contrary to the spirit and intent of the original CPF objective. Previously, it was actually meant as a forced saving and you will be allowed to withdraw at the age of 55 years. The first intrusion into this spirit is this. The Government has decided to retain Medisave. That is the first step. Now, the Minimum Sum. My question is: what next? Would parents of Down Syndrome children and physically and mentally handicapped children be required in future to have their account retained to maintain these poor children? I think the answer is quite obvious.

The next point is this. All in all, the retirement account, together with Medisave, would come to a hefty $90,000. Of course, to everyone of you here, $90,000 is nothing. But we are talking in terms of more than half a million people in Singapore whose income is below $1,300. Is it right for this Government to retain their hard-earned money, knowing that some of them may not have a chance to "smell" it before they leave this world? I would say that the Government has got no moral right to withhold the hard-earned money of the citizens.

We all know that Singaporeans are by nature very thrifty. In fact, now there is clear evidence that Singaporeans are preparing themselves for their old age. The fact is that the POSB accounts have increased and deposits have also increased to billions of dollars. The trend is that more and more Singaporeans are buying insurance policy, either for their old age or for their children's education and so on and so forth. These are good signs that Singaporeans are becoming more responsible.

One more factor that one must remember is this. Compared with 10-20 years ago, most of the men were the sole breadwinners, but now with widespread education, with higher education and with no unemployment problem in Singapore, nearly every household member does have a job. They can work and save the money. Why is there the necessity to withhold the money from these people? Of course, the Government very often cites the figures. In 30 years' time, we will have about 600,000 people over 65 years of age. Therefore, we need to look after them. However, we have to bear in mind one thing. These 600,000 people of tomorrow are the useful citizens of today. They are gainfully employed and they are not destitute. So, it may well be that the ratio is three young men to one old person. So what? These old people are not supported by three young men because in their lifetime they would have saved sufficient money for themselves.

Let me tell Members here: let us not compare with Australia, New Zealand or Switzerland. Singapore cannot, by any stretch of the imagination, be considered a welfare state. These countries have got unemployment benefits. They have so many benefits. In Singapore, we only have the basic subsidies. So let us not compare with these countries. If you want to compare, let us compare.

An hon. Member: We have no unemployment!

Mr Ling How Doong: It is precisely that we have no unemployment, why do you want to retain the people's money? I give due credit to the Government for creating a society where employment is not a problem. But my point is this. That being the case, what is the necessity of retaining the people's money and not allowing them to have their hard-earned money? That is the point. You contradict yourself.

Another point is that Singapore brags itself that it wants to achieve a society where almost every Singaporean will own a property, for example, a HDB flat, and the value will keep going up. That being the case, why cannot this property, an asset of the people, be considered as a pledge for their old age, instead of retaining their money? Of course, the Prime Minister made a statement, "Oh, they do not want to sell the property". If the children are not bothered with the parents and if the parents are the owners of the flat, sell it by all means. What is there to bother? Quite obviously, he must be in a financial strait. The money can be withdrawn over a period of time and when he dies, the Government can repossess the whole flat, set off this amount with interest, and the balance can go to whoever he has willed.

The policy of the Government has a very uncomforting insinuation about these old people, and it could be us by that time. We are considered as dregs and are of no use to society. That is why you say, "Sorry, we have to withhold your money because you would become dregs in time to come." We are these 600,000 people of tomorrow.

Sir, I would now like to move on to another topic. I read in the newspapers that the Government will be making a lump sum payment into the Medisave accounts of about 400 to 500 civil servants who have got five years or less to go before their retirement, but the amount has yet to be worked out. My question is this: what about the other 64,000-plus people, especially those who have served the Government, and who have 10 years or more to go before their retirement? Members will recollect that during the debate on the revision of salaries of the Ministers and civil servants, the emphasis was all the time on market rate. It was all the time on bridging the disparity between the public and private sectors, ie, how the income of the public sector should be brought as close to the private sector as possible.

On this package deal, if the Government says that Divisions II, III and below have been paid more than enough and they are actually on par with the private sector, that is a different matter entirely. If it is not, then it must be a factor to be considered. Can the component of the increment not be broken down? Some of the civil servants get 7.1%. Let us have the components broken down, and say, "Okay, to bring you in line with the private sector, we need to give you 3% or 4% increment. And in view of the fact that you have chosen to be under the old scheme, you would not get the other component, which is meant as compensation for those who have opted for the new medical benefits scheme, ie, either under the Comprehensive Co-payment Scheme or the Medisave-cum-Subsidised Outpatient Scheme." Would the Minister consider this and let the civil servants decide on this point? Either way, I would say that for those who have opted for the old scheme, they should be given the increment. Honestly, I find it hard to believe that the Public Service Division could make such a boo-boo when they declared that those who have opted to remain under the old scheme would not be given any increment. I find it hard to believe that such an efficient Government of ours could make such a boo-boo there.

The next point I would like to mention is this. The Singapore Government practises meritocracy. They believe and endorse equal opportunity for all and they believe in equality. I find it hard to believe why the Government is not prepared to offer the women civil servants the same medical benefits for their children as the male civil servants. There is no reason at all. Financially, it involves only $8.1 million. We must practise what we preach. Set a good example.

Before I move on to the next point, I would like to declare my interest first. I am a practising lawyer. I have a son who is a practising lawyer and I have another son who is a third-year law student. The Singapore Government is well-known as an ardent advocate and exponent of the free market economy, and of free opportunity and it is against protectionism. The recent amendment to the Legal Profession Act to restrict or cap the number of lawyers is something which I would like to highlight. In Singapore, it is the wish of the parents, as the Chinese saying goes, wang zi cheng long ( ). It may be the dreams of the parents and the aspirations of the children to become doctors or lawyers. But now, with the recent amendment, it would appear that some of them would have their dreams shattered. As Assoc. Prof. Walter Woon had spoken before, with the amendment, the Singapore Government would take in 50 from the 15 recognised universities in the United Kingdom. What happens if you have 70 of them, all having Second Class Upper Honours? How do you pick 50 from the 70 graduates when they are of equal merit? How do you pick them?

One more salient point here is this. Because of the stringent admission criteria of the National University of Singapore, some applicants would be rejected. But of those applicants who have been rejected admission to the National University of Singapore, some would have made the grade had they gone overseas, and they would have no problem getting a Second Class Upper overseas. Here comes the inequity. You have two applicants, for example, both of them were rejected by the National University of Singapore because of the high standards for admission here. You have two applicants - one is from a well-off family, while the other is from a poor family. If these two persons have gone overseas to one of the 15 universities, they would have been admitted and would have achieved a Second Class Upper. They would come back and be qualified to take up the Diploma course. But the parents of the boy or girl from the poor family do not have the financial means to send the kid to the university in England. He or she will have no chance to be a doctor or lawyer. Is it fair that this should happen in Singapore? I am asking this House: is it fair? If the Government makes a ruling that only those who do not qualify, fair enough. But the point is some could even go by way of the back-door, ie, go to UK and come back. We are drawing a distinction between the rich and the poor. I hope the Government will really look into this and consider this factor.

I have observed that this Government is so obsessed with accumulating more and more surpluses that it is giving less and less in subsidy to Singaporeans. A Singaporean is likened to Qing Shi Huang ( ). You know the building of the Great Wall of China. But how much did it cost to build the Great Wall of China? Thousands and thousands of people died and were buried just to build the Great Wall of China. Perhaps we need Meng Jiang Nu ku dao wan li chang cheng ( ).

Mr Leong Horn Kee (Thomson GRC): Mr Speaker, Sir, thank you for allowing me to join in this debate.

I just heard Mr Ling How Doong speak at length on a few issues. In fact, I could recall briefly four issues. First, the CPF Minimum Sum Scheme, then the salary increase of civil servants, next, something on the amendments to the Legal Profession Act and, finally, medical benefits for female civil servants.

Sir, today is the debate on the Budget, and these four issues are actually old issues. They are passe. They had been debated in the past and Ministers had answered them fully in the past. I do not know why Mr Ling has taken this occasion to repeat them during the Budget debate. In fact, more specifically, the issues he raised on the CPF Minimum Sum Scheme have just been very recently debated during the debate on the Presidential Address. Many Members have raised questions and asked for clarifications from the Minister. The Minister has given many clear replies to this issue. Perhaps he was not here in that very long debate which lasted many days. Therefore, he touched on these issues here again. But these are issues that have been fully debated in the past.

The last point he raised was that the Government is giving less and less to the people. I would like to counter this point. Mr Speaker, Sir, I think if he has read the Budget carefully, he must acknowledge that this year's Budget is definitely very pro-individual. The individual receives quite a few goodies. Besides the 3% personal tax cut, he also gets a 5% tax rebate, HDB service and conservancy charges and rental charges rebates as well as $300 CPF Share Ownership Top-up into his account. If Mr Ling does not like this Budget, perhaps he would like to ask the Minister to withdraw all these concessions to the people.

Sir, in my view, this year's Budget is in fact a very significant and well-considered one. Many people in the business community have expressed disappointment in this Budget, as it has not offered any major incentives to the business sector. Since we have achieved better than expected growth in 1993, and attained healthy budget surpluses for several years, the business community has expected to be very well rewarded.

Let me explain to the House why I thought this year's Budget is in fact a very good one: it is very significant and well-thought through.

First of all, as the Minister has said in an interview on SBC, this year's Budget should be viewed as a continuation of the 1993 Budget. This year is significant in that you will see the introduction of a very comprehensive indirect tax regime, that is, the GST of 3%. At the same time, corporate and personal taxes are being slashed by 3% and various tax rebates and grants are given to the individuals, especially those of the lower-income group.

In the previous years, the budgets had generally been pro-business. This is valid as we have to recover from a major recession in the mid-1980s. Then the world economy was generally weak in the early 1990s. The USA, Europe and Japan were in recession. During these periods, pro-business budgets were necessary, so as to stimulate economic growth. However, for last year and this year's Budget, Singapore has already reached the pink of health. For 1993, we chalked up an economic growth rate of 9.9%.

Given the healthy state of the economy, now we have to be very cautious that the Budget is not overly stimulative. Moreover, since we are introducing a 3% GST, there is added concern of inflationary impact. We should be watchful over the economy being over-heated. With an over-heated economy, it may also give rise to the risk of an over-inflated stock market and property market. As we know, last year we saw a very active and buoyant stock market as well as the property market. Since the economy is strong and steady, I feel that only minor fine-tuning is needed. Therefore, the Finance Minister is in fact correct to have chosen a conservative and cautious approach this year.

In fact, I would like to commend the Minister for his very appropriate diagnosis of the health of the economy and prescribing the right dose of medicine. There is a Chinese saying dui zheng xia yao ( ) - which means to apply the medicine best suited to the illness of the patient. However, in this instance, the patient is actually not sick at all. Another Chinese saying that best describes the situation is wu bing sheng yin ( ), which means to moan and groan, although one is not ill. If a person is well and in robust health, there is no need to feed him with any more stimulants, otherwise he will be "overheated", in Hokkien, we say "tai luat". Therefore, what he actually needs is a balanced diet and also ample exercise, including doing more outdoor activities.

Talking about venturing outdoor, the Government has actively exhorted our business people and professionals to venture overseas. The Government has done a lot for local businessmen. In the past two years, our Government leaders had led many business delegations to China, India and Vietnam. This year's Budget has offered some tax and CPF incentives for those who venture abroad. I think these incentives are a good start. While it is helpful to have the Government to lead the way, but eventually to land the specific deal or contract, the businessmen have to strike out by themselves. Just like school children, for primary school kids, it might be expected of the parents to fetch them to and fro the school. However, once they have reached secondary and university levels, the school children will have to learn to travel by themselves independently.

There are many stories of Singaporean businessmen who have ventured out early on their own, and made good. To further assist our local businessmen, especially the SMEs, in sourcing business contacts and deals overseas, I say that the Government can do the following:

First, to organise more overseas visits led by Government leaders, including Ministers, targeted at specific industries. Government bodies such as EDB, TDB, or even JTC, can lead delegations overseas. To spread the net wider and to get more local businessmen involved, the private sector associations such as SMA, the ASME, the various Chambers of Commerce like the Chinese, Malay and Indian Chambers of Commerce can also be encouraged to organise their own trade and business delegations overseas, so as to assist their members establish contacts and open doors.

Secondly, the Government can also establish more trade and commercial representative offices overseas under the EDB or TDB in the main overseas cities in countries like PRC, India and Vietnam.

And, thirdly, while we venture to the less developed countries such as in East Asia, we should not forget about opportunities in countries nearer home, such as South-East Asian countries like Malaysia, Indonesia, Thailand and the Philippines. The Government can also lead business delegations to these countries.

While businessmen are venturing overseas, opportunities are abound, but these should not be restricted to large organisations and businesses. Even the small-time businessmen who have the pioneering spirit can venture abroad. Just the other day I heard that a local businessman is actively working out the details for setting up a beef kuay teow outlet in Shanghai.

Sir, it was said in the past that Singapore is a fine city. What they actually mean is that Singapore imposes fines liberally. There is a $500 fine for littering, another fine for not flushing the toilet, and so on. Now I feel that we can call Singapore a "fine and fund" city. "Fund" here I mean "fund", not "fun". Do you notice that there are many funds in Singapore? There are the Skills Development Fund, Venture Capital Fund, University Endowment Fund, Medisave Fund, R&D Fund, and the latest, the big fund called the Cluster Development Fund. Even at the grassroots level, we have our own CC Building Funds. There are so many Funds. Singapore is really a "fund" place, and fund-raising is a perennial affair. But this demonstrates that, fortunately, the Singapore Government and the Singapore people are flushed with money and capital. Therefore, it is appropriate that some of these funds can be channelled to overseas investments.

The biggest brother of all Funds in Singapore is the very pervasive Central Provident Fund. Calls have constantly been made to use CPF for various purposes. I would like to add one more request for its use, and that is, to ask the Government to consider allowing CPF to be used for foreign investments sometime in the future.

At present, the ordinary salaried worker has not caught on the venturing overseas fever. One of the very few means for him to participate is to buy shares of listed companies with strong overseas drive. To enable the ordinary people to invest directly in overseas projects, the Government can consider allowing CPF funds to be used for specific approved projects. I admit that this idea is still in its very early stage at present. Naturally, we must tread with caution on the use of CPF money. But sometime in the future, if venturing overseas is proven to be a viable strategy, the Government can then consider allowing the people to invest in very specific approved projects overseas. An example is the recently announced Singapore-Suzhou project. It can become a privatisation scheme like the Singapore Telecom where Singaporeans are allowed to invest their CPF money in these privatised projects. Again, I must reiterate the need to be cautious on the use of CPF funds for overseas projects.

Mr Speaker, Sir, I would like to move on to comment on some very specific tax incentives.

Property Tax Reduction

The property tax rate has been reduced from 16% to 15%. Given the rapid increase in property prices each year, especially for residential, retail and industrial properties, the savings for business of this 1% cut will be easily eroded by higher property capital values. That is, in effect, in spite of the 1% cut, companies may still be paying higher property tax in absolute terms. Hence, I believe there is justification for the Government to reduce the property tax rate to the targeted 12% more rapidly over the next few years.

Employer's CPF Contribution Rate

The increase of 1 1/2% on employer's CPF contribution rate is quite large. Plus the increase in the Skills Development Fund (SDF) ceiling from $750 to $1,000, the combined effect of these two increases could add another 2%, or so, to the total staff cost incurred by companies. This is quite a big sum for companies to bear. To mitigate the effect of CPF and SDF increases, I thought that the Government could have considered a more gradual increase of, say, 1/2% or 3/4% from the employer's CPF contribution and spread the increase of 1 1/2% over two to three years.

GST

It is indeed an opportune time to introduce GST when our economy is robust. Many companies can absorb some of the costs of the GST increase. I would like to congratulate the Finance Minister for his very impeccable timing. However, I would like to urge him to take extra caution and monitor those businesses which attempt to profiteer on the GST increase, by jacking up their prices excessively. I suggest that perhaps watchdog groups, particularly at the constituency level, can be formed to monitor price increases. For example, our Citizens' Consultative Committees of all the constituencies can be mobilised to form Profiteering Monitoring Groups (PMGs) to watch over retailers in the constituency who might attempt to profiteer from the GST increase.

Tax Concessions for the Individual

I would like to thank the Finance Minister for giving so many goodies to the individual in this year's Budget. In fact, it is opportune to reward the individual as he has worked hard to build up the economy. Previous years' Budgets have been generally pro-business. It is right that this year is pro-individual. Of the many incentives given, I am particularly heartened by the higher level of rebates for HDB service and conservancy charges and rental charges.

It is also most considerate of the Government that higher levels of rebates are given to the lower-income groups, such as, those in the 1-room, 2-room and 3-room categories. These groups may not fully enjoy the 3% reduction in personal income tax since they have low incomes and, therefore, do not pay much income taxes. On the other hand, they have to face the brunt of the full impact of the 3% GST. I would like to urge the Government to continue with these measures to help the lower-income groups as long as healthy budget balances can support these concessions. In fact, I feel more can be done by the Government if it can afford to.

Finally, Sir, I wish to conclude by commenting that while the business community has felt disappointed by the Budget, they should not be. The Government has always been keenly aware of the need to create a conducive environment for businesses to thrive. The main policy direction in this year's Budget is to introduce the GST. They should allow the GST regime to work its course before considering any stimulative measures. The Government must be watchful over the threat of inflation and those who attempt to profiteer from the GST increase. The above are the reasons why I thought this year's Budget is, in fact, significant and well-considered.

The leading industrialised economies, such as, USA, Europe and Japan are showing signs of emerging from the recession. On the other hand, East Asian giants, such as, China, India, Indonesia and others are awakening and beginning to boom. With a firm guiding hand, the Government has led local businesses to sail far and wide to seek our fortunes. Exciting times are ahead.

The Minister for Law (Prof. S. Jayakumar): Mr Speaker, Sir, may I comment on what Mr Ling How Doong has said about the recent measures taken to amend the Legal Profession Act.

First, I want to express my surprise that he now raises this matter several months after the Legal Profession Act was amended in November, and the main thrust of the amendments was to give effect to the Report of the Attorney-General's Committee on the Supply of Lawyers. I have looked at the Hansard here and I find that he did not even bother to attend that sitting. If it was an important issue to him where he had views, I would have thought he would have made it a point to attend the sitting and express his views. He seems to have suddenly woken up to this only several months later.

Having said that, let me say that it is not sufficient to come to this House and dismiss the various amendments which were made as being unfair because Members will recall that in my speech, during the Second Reading of the Bill, I emphasised that these measures and the recommendations of the Attorney-General's Committee were founded on public interest and national interest and clear arguments were given in the Report of the Attorney-General why these measures were needed, why there has to be an optimum projected growth rate of lawyers, and why it is necessary to maintain quality. If he disagrees with it, I think it is incumbent on him to tell us which aspects of the rationale, which aspects of the arguments of the Attorney-General's Report he finds fault with. If necessary, he can move an adjournment motion so that we can have a full debate. But it is necessary for him to tell us which of the premises and arguments which led to the measures he disagrees with.

Mr Ling How Doong: May I speak?

Mr Speaker: Yes, Mr Ling.

Mr Ling How Doong: Mr Speaker, Sir, the thrust of my speech in respect of this is in two areas. One, as spoken by Assoc. Prof. Walter Woon before, is the inequity. The question is: when you restrict to 50 of Second Class Upper, what happens when you have 70? That is what I am worried about. How do you go about choosing from 70 applicants who are of equal merit and say, "Okay, 50 of you are qualified to come, the other 20 are out of the picture." That is the thrust of my speech.

The second area is that, as I mentioned earlier, the admission criteria to the National University of Singapore are very stringent. Therefore, there could be a number of qualified applicants who have been rejected. They could have secured good results but, because of the limited vacancies in our University, they were rejected. If they had gone to the United Kingdom, they would have been easily admitted to one of the 15 universities. The inequity comes in here. You have one parent who is well off and you have another parent who is poor. The rich one, by virtue of being rich, can be a lawyer, but the poor chap cannot be a lawyer. That is my thrust.

Prof. Jayakumar: The most important question to address here is: does the Member agree that what is essential for Singapore, and for the legal profession, is to ensure that the system is such that the legal profession gets a fair share of the best into the legal profession? Does he agree with that basic premise?

Mr Ling How Doong: Mr Speaker, I have known of people who are qualified but are not even admitted to the Medical Faculty. In fact, the Government is doing all these things. So what difference does it make? It is not that all the good ones will go to one particular stream. I do not think that is the case because all along in Singapore, I know that, as a fact, admission to the various faculties does not necessarily depend on this. In fact, there is some sort of engineering going on in Singapore all this while.

Prof. Jayakumar: He has not answered the question. Does he agree, or not agree, that we must ensure good quality in the legal profession? It is a simple question.

An Hon. Member: Yes, or no?

Mr Ling How Doong: Mr Speaker, Sir, I really do not understand. With this arrangement, how can you ensure that the good ones will come in? I have already emphasised the fact that if you have 70 applicants who are qualified to come in, how do you make a distinction as to which 20 must go out and which 50 must come in? And how do you explain that, to a certain extent, only the rich can be doctors and lawyers, but not the poor?

Prof. Jayakumar: I think the Minister for Education has emphasised, on many occasions, that no person is denied admission to the University solely because he cannot afford it. But the Member has refused to answer my question. Because if the answer to the question - he refuses to answer - is yes, I am surprised because, as a member of the legal profession, surely he must agree that it is necessary to ensure high quality for entrance to the legal profession. If that answer is yes, then whether it is 60, 70, or 80, and if there are 50 places, the best 50 will be taken in. Does he agree to the question?

Mr Ling How Doong: I agree and I endorse meritocracy. I agree with that 100%. But you have not answered me regarding the example I have cited - the poor and the rich going to the University. Give me an answer.

Prof. Jayakumar: If he knows of anyone who has been denied a place in the University solely because of financial consideration, he should come and tell us in this House.

Mr Ling How Doong: It is not a denial of admission to the University. The fact that you cannot get admission to the local University here, I doubt you can get a scholarship. I do not think you can get a scholarship to go overseas. No way. This is the inequity. Could you just address the inequity?

Prof. Jayakumar: Mr Speaker, Sir, so long as he refuses to acknowledge that for the legal profession, we must ensure high quality, he is evading the issue.

Mr Zulkifli bin Mohammed (Jalan Besar GRC): ( In Malay): Mr Speaker, thank you for allowing me to join in this debate on the Budget Statement 1994.

Year in and year out, Sir, varying views and opinions are given to describe the Budget and this year is no different. Overall, the reaction has been positive and it must be so given the fact that existing taxes are maintained and no new taxes are introduced. This is made possible because of the stronger than expected economic growth over the past year resulting again in a healthy budget surplus which once again proved the Ministry of Finance has pursued sound and pragmatic fiscal policies.

As for me, Sir, I would like to join the ranks of those who hailed this year's Budget Statement as a "people's Budget" having taken into account the various rebates, perks and incentives dished out to almost every sector of our society. Some quarters in the business sector perceived it as "pro-worker" or "pro-individual" and feel dissatisfied.

Could this dissatisfaction be attributed to their assumption that being "pro-worker" must be contrary to business interests? I certainly hope not because if this was so, perhaps it could be due to a misinterpretation of the actual intention. In fact, the Budget is pro-business in many respects like the property tax cut of 1% (which could work out to as high as 15% savings for some businesses), tax perks for lending and borrowing of securities and extension of tax relief period for economic expansion incentives.

I am confident that the majority of Singaporeans will concede that the Budget is good for both the individuals and the businessman. As one informed source has put it, the whole package of measures announced last year and this year are designed to propel Singapore into its next stage of economic development, ie, to be in the First League of developed nations as we enter the 21st century, and must be consciously seen against this economic backdrop.

Mr Speaker, Sir, allow me now to touch on some specific issues contained in the Budget Statement. Firstly, I would like to focus on the final restoration of the CPF cut with effect from 1st July 1994. By keeping to its word in increasing the employer's contribution and reducing the employee's contribution this year consistent with the strong across-the-board economic growth of 9.9% achieved last year, the Government has restored workers' confidence and this will augur well for the future. The recent pre-budget call by some employers to defer the restoration was inappropriate.

Why do I say so? It is because workers have accepted the stage-by-stage restoration without much fuss despite favourable economic growth and have waited eight years for the full restoration to the new target of 20%. Have employers forgotten that when the cut of 15% was made in 1986 it was done in a single stroke. Employers should not forget that prior to the 1986 cut, their previous contribution was 25% as opposed to the current rate of 20%, ie, workers have forgone 5 percentage points which in monetary terms is no mean sum. Surely employers cannot be worse off when their pre-cut contribution was 25%. On the contrary, the reality is that workers have sacrificed much by restraining themselves in not demanding for the full pre-cut restoration. This demonstrates that our workers are responsible and positive. In this connection, Sir, may I ask whether it is possible to restore the additional 5% employer's contribution in the near future?

Still on the subject of CPF, it is indeed laudable for the Government to make a commitment to top up every CPF account with $300 to enable adult Singaporeans to buy shares. By giving an 18-month period for Singaporeans to build their co-payment share of $750, the Government is giving more than ample opportunity for every working citizen above 21 years of age to participate in share ownership in a manageable and responsible manner without having to indulge in speculation and risk getting their fingers burnt. Thus, I would like to urge every adult Singaporean not to miss this good opportunity as there are not many countries in the world whose governments will take the trouble to go that extra mile to enhance the well-being of its citizens.

Next, Sir, I would like to make some comments on the Skills Development Fund (SDF) levy. To me, the revision of the salary ceiling is overdue as the present level of $750 is already out of date and no longer realistic bearing in mind that the SDF levy was introduced in 1979. However, I have heard that employers are concerned about this increase and this is understandable. However, employers must remember that the SDF was set up primarily for the skills upgrading of their employees and retraining of retrenched workers. Thus, employers stand to gain if workers' skills are upgraded through training and retraining as it will lead to increased productivity.

Another relevant fact is that SDF disbursements far outstripped its collection. On the average, SDF could only collect $13 million to $14 million a year whereas its current disbursements could amount to $50 million and beyond. Even with the raising of the salary ceiling to $1,000, it is anticipated that SDF's collection will still be below its collection level during its initial years. This is because the pool of workers to be trained, in particular the older workers, is getting larger which therefore requires more money to be channelled into training so that Singapore can continue to maintain its competitive edge.

Seen against the scenario I have just given, it is clear that over the years with fewer and fewer workers earning $750 or below, employers have benefitted more than they contributed and hence enjoyed cost savings. We have to come to grips with the reality that economic restructuring has become part and parcel of our Singapore way of life. With the pressing need and increasing importance of training and retraining, I would like to suggest that the salary ceiling for SDF levy be raised to $1,500 instead of $1,000. I sincerely hope that my suggestion will be considered so as to benefit as many workers given the existing educational profile of our workforce which is still some way behind the other Newly Industrialising Countries.

Mr Speaker, Sir, permit me now to move on to my last point, ie, the rebates on HDB service and conservancy (S&C) charges and rentals. This is indeed a boon to the ordinary man-in-the-street as these rebates are additional to the GST offset rebates which take effect from 1st April this year. Such additional rebates are reassuring as there is still a fair amount of fear and anxiety as already some retailers and businessmen have started to increase prices unnecessarily and blame it on the forthcoming GST. Once again, this gesture reiterates Government's commitment to utilise part of the budget surplus, where circumstances permit, to improve the lives of Singaporeans. I would like to urge the Government to vigorously pursue this principle as the beneficiaries are the low-income earners.

In conclusion, Sir, I support the motion moved by the Minister for Finance. 3.12 pm

Mr Chin Harn Tong (Aljunied GRC): Mr Speaker, Sir, I rise to comment on an issue that crops up here and there in this year's Budget Statement but never forming part of the budget proper. I refer to the issue of privatisation, more particularly, the implications of privatisation. Some people, for instance, have voiced their fear that privatisation will lead to higher prices. My concern is the effect privatisation may have on our quality of life. I am also concerned with the principle of free market that is espoused by the Government though privatisation does not sit well with the practice of the Government elsewhere in the economy.

Let me first say I understand and appreciate the need for the Government to privatise some of its functions. For one thing, we will have a leaner and fitter bureaucracy, which is in keeping with our image of a health-conscious society. No, I am not opposed to privatisation. I am only put off by the way privatisation is presented to us.

Sir, whenever the Government decides to do something or other, the Government tells us what the Government has decided is the best thing we can do or have. Of course, the Government is very open minded about the whole thing and is prepared to hear what we have to say. In the end, we must accept the Government has decided correctly for us. From the absolute manner in which the Government expresses its decision, we can be sure the Government thinks it is on the right track.

Sir, when we promote courtesy, nothing is to be prized more than courtesy, even if you smile with a mouthful of rotten teeth. When we promote a green environment, nothing is as healthy and pleasant as a green environment, even if your drain is slimy with moss. When we promote productivity, nothing gives more satisfaction than an increase in productivity, even if you are very rude when achieving it.

Sir, it is the same with privatisation. Privatisation must be good since the Government has decided upon the privatisation of its departments and statutory boards. Of course, we are allowed to quibble on the word "privatisation". To the purists, the Government's effort to restructure its hospitals hardly counts as privatisation. A privatised enterprise should operate and behave like a private enterprise, without any help or hindrance from the Government. However, we have to accept that a privatised enterprise is one which is licensed to make profit from the public and one about which the Members in this House cannot ask too many questions.

When a Government department or statutory board is privatised, we naturally expect the former department or statutory board to be self-sufficient and to be no longer a drain on the Government's revenue. We also expect the staff of the privatised enterprise to work harder than ever to make a success of their venture into the uncertain world of private enterprise and to be rewarded accordingly.

What we are not prepared for is that the attitude of the staff and the services they render to the public may change somewhat after privatisation. We hope it is for the better; but if our luck is bad, it may be for the worse. I am not talking about superficial courtesy. One thing the staff of a privatised enterprise are sure to be instructed by their boss is that a toothy smile is good for business and profit, even if it is as artificial as their dentures.

Customers may no longer be viewed as people whom the staff can serve and help, as they are now rendering a commercial, and not a public service. Customers are not so much human persons as walking dollar notes who are valued according to their denominations, that is, ability to contribute to their privatised enterprise's coffer. The customers who can give most profit to them will receive A1 service with the broadest and friendliest smile. The customers who can barely pay for the services they receive will be given the minimum service without any superfluous smile. If privatised customers do not get a frown, it is because a smile costs less time and effort than a frown.

I hope our privatised enterprises will never show such a commercial face to our public. But this is a very real danger that comes with our emphasis on profit-making as the bottom line for our privatised enterprise. With more and more privatised enterprises expected to make the scene here, our promotion of a caring and sharing society may be the first casualty.

Sir, the Government has assured us, in the Budget Statement, that it is prepared to intervene where the people are too weak or poor to withstand free market forces. Such assurance does credit to the Government. As a matter of fact, the restructured hospitals do make a provision for patients who cannot afford the full cost of privatised health care.

However, some people are relatively weak or poor because of the Government's intervention in the first place. I refer to our workers, whose wages are rigidly regulated in the national interest. The activities of the NWC and restrictive provisions in our industrial legislation all help to ensure that our workers contribute to the maintenance of Singapore's competitive edge. For instance, the NTUC sees to it that wage level does not outstrip the workers' productivity rate.

On the other hand, privatised enterprises do not have to worry about pricing themselves well above their cost level. Their only consideration is they do not price themselves out of existence. The Government has publicly assured that it will undertake to monitor and regulate the rate of charges levied by the restructured hospitals. But no similar assurance is given by any one regarding the rate of charges in the privatised food centres. It may be argued that hawker food prices are insignificant compared to the hospital charges. But, we hope, hospital charges are incurred once in a blue moon, while workers have to pay hawker food charges day in and day out. They amount to a tidy sum over a period of time and are a burden on the workers' pocket.

Sir, the Government has convinced us that privatisation is very desirable from the Government's point of view. It remains to be seen whether privatisation will benefit the public as much as it benefits the Government.

Dr S. Vasoo (Tanjong Pagar GRC): Thank you, Mr Speaker, for allowing me to join in the debate.

Sir, I will get down to the brass tack issues which affect the ordinary persons at the grassroots level.

Sir, this year's Budget has brought benefits to the low income workers and their families. The service and conservancy rebates, the restoration of the employer's contribution of CPF to 20% and the share ownership cash grant scheme of $300, do reflect the Government's concern for reducing the burden of the lower income people.

In fact, the Singapore Government is the only Government that I know of that promotes actively asset accumulation.

Sir, imagine if we do not have CPF that has been implemented since 1954, then we would not be able to talk about withdrawal of savings at 55, and many people may not be able to accumulate savings by then if it has been free for all. If you take the case of Hong Kong, where it is a free market and there is no CPF, a lot of them are now asking for CPF, which is quite the reverse in comparison to our case. The issue that we have to address is savings at old age and how this is going to be drawn out in terms of allowing people to use their savings effectively when they are old. I think that is the basic question that we have to address. The Member for Bukit Gombak in fact has missed the issue. I feel that this whole issue of CPF will have to be looked at in that context.

Sir, the Budget for this year is significant on several counts. In my comments on the budget last year, I highlighted that the Government, though no doubt generous, could have been more generous. I particularly singled out two groups of people which I felt more could have been done. These are the lower income group and the pensioners. Thus, this year I am glad that the Government has been more generous to the lower income group. In fact, to be fair, the generosity accorded by the Government has expanded in scope. This is evident in that more people than last year stand to benefit from the Government's bonus. This time round not just the very poor benefitted but also those who have just enough to meet the monthly expense. And I believe this group is rather substantial. Sir, I hope that the Government will continue to give annual rebates and other bonuses as long as the economy is doing well. This will in fact strengthen the bond between the people and the Government because, in the final analysis, to the common man, it is the issue whether they are getting the direct benefits and whether Government surpluses are, to some extent, reallocated in good times to the ordinary working class. If this is continued, then the bonding between the people and the Government will be further strengthened. So I hope that in good times the Minister for Finance would be able to continue to provide more rebates to the ordinary working class and others who have worked hard to improve the economy.

Sir, as the pool of Singaporeans in the workforce has increased, and as more of our nuclear families have both parents working, the net result is that more and more people are liable to pay personal income tax. Hence, the move to reduce the one-off 5% personal income tax, I am sure, is welcomed by most, if not all. However, Sir, I am told that people still have some nagging anxiety about the Budget. The man-in-the-street feels that all these extra monies would be absorbed when the GST takes effect. I think this feeling and concern is quite real because the ultimate analysis is that the impact of GST and increased cost on the ordinary persons will have to be addressed. Although I feel that this is a misinformed viewpoint, the concern is quite rampant at the grassroots level. Whatever extra they need to pay out, I am sure the Minister will argue, has been considered by the Government and these remedies have been effected. I have been reassured by the Minister for Finance that a large section of Singaporeans would not be worse off when GST comes into effect. For those who are worse off, particularly those who face hardship because they have no income, or they are on public assistance, I hope some immediate assistance would be extended to them.

Sir, I am inclined to believe that the GST in itself is good for the people in general and good for the country in particular. The threat, however, comes not from GST. The fear of the people comes from the unintended consequences of the GST, that is, profiteering. Quite rightly so, too, Sir, as many of the benefits of the GST appear rather vague to people until it is implemented. The effect will take shape then. There may be a cascading effect when GST is implemented. This is the general thinking at the ground level. Sir, what is real, right now, to people is that prices have gone up pre-GST, and, in some instances, quite dramatically. These are over-profiteering by some greedy businessmen. By recognising that there is profiteering, the Government recognises that there is a problem. What is discomforting to the people is that the Government seems to know what is wrong but appears unable to deal with it effectively because it is left very much to the free market to deal with these consequences. Now that profiteering has occurred before GST, it is important to know if businessmen will profiteer further after GST. Hence, the Prime Minister's call for prices, pre- and post-GST, to be monitored is most reassuring. Sir, concrete solutions, I feel, against profiteering in some form of consumer action, either by CASE or at grassroots level through various grassroots' organisations, can be organised. Perhaps, withdrawal of licences for those who profiteer should be instituted against those who are greedy and who profiteer too much.

Sir, in the light of our growing aging population, I am indeed pleased to note that a higher interest rate would be given to the Special and Minimum Sum accounts above the normal usual rates accorded by CPF. However, Sir, the rate is not attractive. I hope a 2% or 2 1/4% higher than the normal interest rate would be a greater incentive for people to save in the CPF after 55 years. Sir, besides this, there is a working group of single persons and others who look after their aged sick parents by employing domestic maids. It would be fair to give them tax deduction for their maid levy. This is a good gesture in recognition of their efforts and concern. Otherwise, some of them would probably be sending and admitting their parents to the home for the aged.

Sir, I highlighted two groups of Singaporeans in last year's Budget Statement. I am glad that the Government has responded to one of the two groups that I have represented. I wish the Government could do more for the lower-income pensioners. Sir, there is a sizeable number of pensioners who have pensions of less than $500. It saddens me that the plight of this group of pensioners is not given more attention than they deserve. The increasing cost of living has really eroded their income. With the GST, they are likely to be affected further, and their income will be eroded further, although much reassurance has been given by the Minister for Finance that they will be getting rebates and other forms of subsidies. But to them, I think the problem is crucial and real. Sir, can anything be done for them? Should they not deserve a review of their small pensions? Sir, how can we attract people to join the civil service when it is seen that the pensioners who have served umpteen years for the Government have become a forgotten lot and they have to from time to time put a case for review of their pension? Sir, the contributions of our pensioners to the good of Singapore cannot be debated. It has been well argued in this House by many of the hon. Members before me. Last year, when the subject was touched, the Minister for Finance said that he sympathised with the small-time pensioners. I hope his sympathy will be translated into some concrete actions to help the pensioners. Hopefully, Sir, their Singapore Allowance will be reviewed.

Sir, I support the Budget Statement.

Mr Chiam See Tong (Potong Pasir): Sir, thank you for allowing me to join in the debate.

As in other years, the Straits Times, this year predictably in its 24th February issue, praised the Budget in its banner headline as follows: "Dr Hu hands out hongbao Budget."

The hongbao was certainly not given to the business community in Singapore. Many businessmen thought this year's budget was a disappointment, in the light of the GST which shall be implemented on 1st April this year. The stock market certainly thought that the Budget was a disappointment. After picking up prior to the Budget day on 23rd February, it took a 38-point plunge the following day after the Budget was revealed. Generally, to the business community in Singapore, the mood was one of gloom after the Budget was unveiled.

Businessmen expected a further cut in the individual and corporate taxes. They expected a further one to two percent cut in corporate tax over and above the 3% corporate tax reduction given in last year's budget. This fact was reflected in the Straits Times report of 25th February under the heading: "Budget offers little to defray costs of implementing GST." The article, inter-alia, stated, "Businessmen struggling with the implementation of the Goods and Services Tax yesterday said that they were disappointed that the Budget had little to offer to compensate their time and money in GST preparations."

If the hongbao in the Budget was not given to the businessmen, was it given to the masses of lower income Singaporeans? The Straits Times seems to think so. Chan Sue Meng, writing in the Straits Times of 24th February, has this to say:

"Finance Minister Richard Hu yesterday handed Singaporeans, specially the less well off, a big hongbao - in the form of a generous Budget for fiscal year 1994. The goodies include a 5% income tax rebate across the board for year of Assessment 1994, and rebates on service and conservancy charges and rentals for those who live in one to five-room HDB flats."

Is the 5% income tax rebate really a goodie? Certainly not for the masses of the lower income Singaporeans; the majority of whom in any event pay very little income tax, perhaps less than $100 a year. The majority of these low wage earners will comprise the 76% of taxpayers who shall not pay income tax on the introduction of GST this year. So the 5% rebate could hardly benefit them. It is the rich that will be much better off with the 5% income tax rebate, in particular, the upper 8% of income taxpayers who pay the bulk of income tax collected by the Government every year. The 5% income tax proportionately will come to a sizeable amount. Therefore, as far as the 5% income tax rebate is concerned, it will benefit the rich, and benefit the poor only marginally.

As far as the rebates on HDB service and conservancy charges and HDB rentals are concerned, those rebates could certainly be more generous, if they are really meant to offset the impact of GST this year. The inflation in the first year due to introduction of GST shall most likely be 9%, like the New Zealand experience, rather than 5% as touted by some quarters. If the inflation is going to be nearer the 9% level in the first year of introduction of the GST, then the rebates given to the one-to five-room HDB flats are insufficient to meet the inflation caused by the GST. The Government should be more generous and give an additional one to two months' rebates in respect of service and conservancy charges and rentals. The HDB rebates that I recommend may be very conservative compared to the surpluses accumulated by the Government each year. Yes, the hongbao in the Budget has not benefitted the business community or the masses of the poorer Singaporeans. The hongbao in the form of budget surpluses, most of which are paid by Singaporeans, have entirely been benefitted by the Government.

The budget surplus last year was reported to be a mind-boggling sum of $7 billion. It is a massive sum of money looked at from every angle. The total Government expenditure last year was expected to reach $15.5 billion. It is not uncommon for governments in the developed nations year after year to have a deficit budget. I am not saying here that the Singapore Government should aim for a deficit budget. But it would appear that the Singapore Government is trying to establish a record in the accumulation of money. The $7 billion surplus last year represented 45% of its total expenditure. That must certainly be a world record or near a world record in achieving budget surpluses.

This year, the Government aims to have a $2.2 billion budget surplus. The Government aims to get richer and richer. The question is, "at whose expense?" Singaporeans will without hesitation tell you that it is at their expense. Singaporeans are being squeezed by frequent cost increases, most of which are Government initiated. The common complaint amongst workers is, "The Government has so much money and yet it is collecting more and more from us. What do they do with all those monies?"

The Singapore Government is the envy of many governments in the West. They are envious of the Singapore Government because it is in a position where it can collect and accumulate so much money. At one time, the New Zealand government attempted to start a forced savings scheme, not unlike our CPF scheme, but it failed. The people of New Zealand voted against that scheme. The people of New Zealand were suspicious of any government accumulating too much wealth because they fear that the government could use those surplus funds to "buy" votes to put them back into power.

In this respect, I am not pointing my finger at the Government. But I do not think that I am wrong in saying that any government which has accumulated massive amounts of funds shall one day be tempted to use them for its own political ends.

I applaud the Government for diverting some of its surplus funds into the Edusave and Medifund schemes and also the pension fund which will shortly be set up. More money, I believe, could be put into education. It is not flattering to know that Singapore has one of the lowest educated workforce amongst the four dragons in the region. This problem of low education amongst our workers was highlighted 10 years ago; it is not a new problem. At one time the Government pointed out that the problem was amongst the older workers. But it is now more than 30 years since the PAP took power. I should say that now the majority of the uneducated workers in our workforce grew up during the rule of this Government. It is time the Government put more money from the surpluses into quality education to prepare the Singapore workers to meet the ever fiercer competition from other emerging nations.

The Government has prided itself in diverting some of its budget surpluses to Singaporeans through the CPF Share Ownership Top-up Scheme (SOTUS). I have commented that it was a clever scheme. It is true that the people who have purchased shares in Government companies, such as Telecom, will benefit in the long term. But the Government in introducing this scheme is not entirely altruistic. The Government will benefit from the massive cheap funds it will be able to gather for itself. The next float of a Government company will be in two years' time. For the next SOTUS exercise the Government will top-up $300 for every CPF member who has contributed $750 or a proportionate sum thereof. At the last SOTUS exercise when Telecom shares were floated, 1.26 million citizens received $242 million in matching contribution from the Government. Assuming that this same number of citizens has $750 in each of their CPF accounts, the Government shall next contribute about $378 million. The amount contributed by the Government and the $945 million being the members' own contributions will eventually go back to the Government when the next lots of shares in the Government company are sold to them.

It can be seen that by the CPF Top-up Scheme, the Government shall gain large sums of cheap money.

Since the PAP took power, its Government's announced policies were to encourage economic growth and establish social stability. In this light, it has used Government surplus funds to create a conducive environment necessary for economic growth such as, constructing the MRT system, building Changi Airport and subsequently Changi Terminal. I agree with these enlightened and farsighted policies. I also agree with the Government's economic policy of using surplus funds to invest in the economy, in places where large capital is needed, for example, in such enterprises like Sembawang, Jurong, Keppel Shipyards, DBS Bank, Natsteel, NOL, SIA and also the Petrochemical Complex. These farsighted massive investments have helped Singapore's economic growth considerably.

The question is how long will the Government continue to keep on this policy of pumping massive funds into investments and thus making its hand greatly visible in the economic activities of the country. Even now, the Government is leading the charge to invest overseas. I am not saying that this move of the Government is bad. But my worry is: when can the indigenous private sector in Singapore come of age, or does it need to play second fiddle to the Government all the time? It moves only when the Government tells it to do so.

My feeling is that, as long as the Government accumulates massive budget surpluses, the indigenous private sector in Singapore will always remain in the shadow of the economic hand of the Government.

Dr Wong Kwei Cheong (Kampong Glam GRC): Mr Speaker, Sir, I support the Budget Statement announced by the Finance Minister.

It is a prudent Budget, cautious and conservative. It consolidates past schemes and addresses future challenges. The Budget is confident that the economic strategies followed by Singapore for more than 25 years are the right ones for the 1990s. We have had better than expected economic growth of 9.9% in 1993 compared to 6% in 1992. However, 1994 is full of uncertainties, such as the US-Japan trade friction and prospects of rising real interest rates. And we may not achieve our projected growth rate of 4% to 5% this year.

In view of such uncertainties, many businessmen felt that the 1994 Budget is too prudent, too cautious and too conservative. They have been looking forward to a one to two points cut in the corporate tax rate on top of the three-point cut announced last year to help defray the cost of implementing the Goods and Services Tax (GST). However, the Budget provides no tax cuts and no allowances to offset the cost of implementing the tax.

Most businessmen were disappointed. To add to their disappointment, the 1.5 point hike in CPF contribution by employers will increase business cost and put a further squeeze on already small margins. This 1.5% hike was higher than expected as most businessmen expected a half point, or, at worst, a one point hike.

To add to their woes, the Budget was silent on the effect of the full-day Area Licensing Scheme on the retail business in Singapore. The Singapore Retailers Association has recently sent out survey questionnaires to its 300 members, and initial responses indicated that, on average, both shopper traffic and sales turnover have decreased by about 30% since the introduction of the full-day Area Licensing Scheme on 3rd January this year. Many retailers fear that sales may drop even further after March, when the GST is introduced and the full impact of the ALS will be felt.

Mr Speaker, Sir, I certainly hope that the Government will study the survey report that the Singapore Retailers Association intends to submit and, hopefully, to lift the ALS, especially on Saturdays, so that people can shop after working.

While the 1993 Budget was a "corporate Budget", the 1994 Budget is a "people's Budget". There will be a 5% individual income tax rebate. There will also be another topping up of the Central Provident Fund accounts for buying shares, and rebates on service and conservancy and rental charges for all HDB dwellers. The Budget also proposes to pay high interest rates for some of the balances with the Central Provident Fund so as to make adequate provision for old age. Singapore has a rapidly ageing population and the Budget proposal represents a move in the right direction.

Finally, the Budget also addresses a key challenge facing the Singapore economy and, that is, how to develop the external wing as the economy matures. In addition to tax incentive measures announced in last year's Budget, the 1994 Budget provides some additional incentives for individuals to venture abroad. The Government has also set up a Cluster Development Fund of $1 billion to encourage Singapore companies to invest regionally. As these companies go regional, many local entrepreneurs will have to follow as they provide the supporting services and products. Many of them lack the financial resources to set up offices and factories overseas. May I suggest that the Government allocate a portion of this Cluster Development Fund to our local entrepreneurs and assist them to go regional.

Sir, I support the motion.

Mr Speaker: Order, I suspend the Sitting and will take the Chair again at 4.15 pm.

Sitting accordingly suspended at 3.52 pm until 4.15 pm. Sitting resumed at 4.15 pm