ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Debate resumed.

Mr Kenneth Chen Koon Lap (Hong Kah GRC): Mr Speaker, Sir, thank you for letting me join in this debate. Before I turn to the debate proper, I just want to touch on a point made by the hon. Member for Potong Pasir on the equation of GST by reducing the S&C charges and also the rental for 2- and 3-room rental flats. If he had been in this House during the GST debate last year, he would have realised that HDB flat dwellers who stay in 1-, 2-, 3- and 4-room flats have received waivers which more than cover the GST to be imposed. The recent introduction of the so-called ang pow is in addition to the GST deflation.

Sir, the Budget Statement by the Minister for Finance, Dr Richard Hu, is a welcome one by any standard. We have achieved a broad-based 9.9% growth rate, much better than expected. This is more remarkable because it was achieved against a backdrop of dismal performance turned out by most of the developed countries. Such a budget would have brought much relief and jubilation to any one of them. Yet, astonishingly, in Singapore, the stock market reacted by dropping some 70 points. And I heard from a TV programme that a so-called analyst attributed this to a budget blue.

While the adverse reaction from the business is somewhat expected because of the 1.5% increase in employer's CPF contribution and by the fact that they have been building up the expectation that the corporate tax would be reduced by up to 2%, it is hard to believe that such expectation can be realistic in view of the fact that in 1993, the corporate tax had already been reduced by 3%. And one can hardly expect corporate tax to be reduced by a massive 5% point in two consecutive years, especially when we have achieved such high growth rates. But I am more at a loss as to why the general public, especially the HDB dwellers who tend to benefit so much from the waiver of rent in the rental flats and the waiver of conservancy charges, could give the Budget Statement such lukewarm and indifferent reaction. Even the addition of $500 million being injected into Edusave and another $100 million channelled into Medifund from the budget surplus did not generate too much excitement. And surprisingly, the increase of 10% in bus fare or a cup of coffee would create tremendous unhappiness and reaction in the coffeeshop and in the market place.

Have our Singaporeans really been conditioned to expect year after year of good performance and be blinded to the fact that countries all over the world are going through a harsh period of economic recession and that we have become so complacent that we are being insulated from such adversities? It would be totally naive not to realise that our continued prosperity can be stopped by either some unexpected internal happenings like labour unrest or even civil commotion due to racial disharmony or such similar factors or we may well lose our competitive edge to the up and coming developing countries like China, Cambodia and India.

We must not forget that countries like Japan, the United States, Europe and Australia have enjoyed continuous economic prosperity for such a long time that no one would expect that they would be faced with such a devastating economic recession in recent years, especially Japan. Not long ago, Japanese companies were buying up almost everything all over the world - big corporations like Columbia Studio, real estates in Manhattan and almost every hotel and golf courses in Hawaii. And now suddenly, the economic bubble has burst and the government is working overtime in getting the country back on its track.

In Japan, where the people have the highest rate of saving, a coherent social structure and good work ethics and discipline, it may not be too difficult for them to succeed. But if we are put in the same position, I wonder what the consequence would be like and we still rely on our social discipline, community cohesion and prudent economic planning by our Government to get us back to the path of recovery. I would urge those who always call on the Government to spend our reserves freely, especially Members of the Opposition Party, to be more responsible before coming to this House to ask for our hard-earned reserves to be spent freely on welfarism and other unproductive projects just to gain personal popularity. Because if we encounter any prolonged recession, our reserves may be our only life-line.

Sir, we have been reminded time and again that we are near to becoming a developed country. We may not be able to achieve a high growth rate year after year if we just rely on our internal economic growth. Therefore, our Government is perhaps the only one in the world in which the leaders are so consciously and systematically leading the people to develop an external wing. We are constantly developing relationships and promoting trade with our neighbouring countries and establishing new trading partners by encouraging both public and private sectors to venture into these countries. It is no doubt that we are going through an exciting era of rapid development in this region, as our Senior Minister, Mr Lee, has spoken of the thrill of living through one of the most stimulating epoch in history. There are vast opportunities opening up in China, Vietnam, India, and even Cambodia and beyond. While we should look for these opportunities positively, we must remember that for every success story, there may be many, many failures. Therefore, it is essential for us to move with caution, be brave and yet prudent. There should be maximum cooperation between the Government and the people in the sharing of experience and information. More importantly, we must move as one unit, even if we are fighting a different front. We must pool our resources together. But in doing so, it is important that we must not forget the investment opportunities by our trading partners, especially our ASEAN neighbours with whom we have enjoyed such close relationships.

While the euphoria at the moment is being generated by external investments, it is of paramount importance that we must not forget also our internal development. Because no amount of external development can replace the wealth we generate from our internal development, whether in telecommunications, finance, manufacturing, construction and other such businesses.

We should also be very sensitive to the external competition we face. Mr Robert Chua once said that wages in Vietnam are incredibly low compared to ours and that the wages in China, the Philippines and India are well below that of ours. Therefore, we must upgrade our skills, increase our productivity and, most importantly, raise the educational level of our young in order to move ourselves up to a higher level of competition. 0therwise, countries like China, Vietnam and India which are now offering us tremendous investment opportunities will one day become our competitors. With their vast supply of land and manpower, relatively low living standards and well-educated masses, they can develop to be as competitive as we are and may not need assistance in manpower or software from us any more in the very near future.

It is time therefore to look at ourselves critically and stop taking our progress through these years for granted. While internal problems still exist, matters like COE, GST, rising cost of medical expenses, are important for us to resolve. But it would be negative to channel all our energy and over-emphasise such problems and ignore the greater economic picture.

Recently, I had a conversation with a few successful Taiwanese industrialists. They said that one of the reasons why the Taiwan economy grew so fast was that during the early days, the government encouraged every family to produce all sorts of products in the homes for the factories, and almost every home was turned into a small factory with every member of the family working late into the night. This form of support resulted in tremendously high productivity at very low cost. Now that they have more or less arrived, their wages have skyrocketed. Most of their young people are reluctant to work hard any more. They go for soft options. The situation is worrisome.

Our situation in Singapore is not much different and once complacency sets in, it would be extremely difficult to reverse the trend. If we have a performance of 9.9% growth rate and we still show a lot of unhappiness, it is a clear sign of the nation on the verge of losing its fighting edges. And if we are not careful, we might be walking down the same economic path that countries like the United States, Japan and Australia have taken in the last few years. With the Government's prudent planning and management and our traditional work ethic and discipline, we can continue to be a player in such an exciting era of development in this region, and not just be a spectator like countries such as Vietnam, Burma and Cambodia who are so caught up with their internal problems that they have lost out completely this vast opportunity. So let us receive this year's Budget with a greater sense of satisfaction and gratitude and hope that our Minister for Finance will continue to deliver such Budget Statements year after year.

Dr Michael Lim Chun Leng (Cheng San GRC): Mr Speaker, Sir, thank you for allowing me to join in the debate.

James Jacob, in the Economy of Cities, wrote:

"The primary economic conflict, I think, is between people whose interests are with already well-established economic activities and those whose interests are with the emergence of new economic activities."

The dreams, the hypotheses, the research ideas of today will one day spew forth new technologies that will sweep away industries of today and make established industries worthless. Those who do not ride the winds of change will find themselves slowly slipping into obsolescence.

In many ways, the Singapore Government has consistently espoused policies that have kept us at the forefront of emerging changes. The success of the policies and investment have brought material progress. Material progress is, in many ways, elitist, making the rich richer. We have been fortunate that the Singapore Government has made it possible for the large majority of Singaporeans to accrue material wealth and hence avoid the politics of envy. However, the past years of material progress have resulted in a shift in values, a change in aspirations and expectations and an increase in material wealth that is not necessarily accompanied by happiness. Success is now equated with those who have extraordinary wealth. They are often held as examples to be followed. Singaporeans now have much higher expectations.

Increasingly, we will have to grapple with two changes: (1) with those who failed to make the transition to the new changes, and (2) the higher expectations and shift in social values in the younger generation. Only about 54% of our labour force has attained at least a secondary school education. Many of those with lower educational attainment are those in their 40s and 50s who find it difficult to adapt to the changing demands of industry. They have skills which may be obsolete, do not have the fundamentals of education to help them climb the educational ladder and are at an age in which most companies are not willing to hire or retrain them. The only jobs open to them are the lower end jobs with low pay. They seek avenues of self-employment only to face an increasingly hostile market. Whether it is a market stall, a hawker stall or a shop, the tender prices are not for the faint-hearted. They feel alienated and do not know who to turn to. What does the Budget hold for these people? They might find some solace in the rebates on service and conservancy and rental charges, increase in employer's contribution to the CPF and some may be able to benefit from the CPF Share Ownership Top-up Scheme, but otherwise there is not much to look forward to.

I was taken aback recently when an elderly well-qualified administrator remarked to me. What is there for those who have retired? There is nothing. He added that the nation did not recognise the contributions of those who have given the best years of their lives for the nation. Many who have retired, he felt, have not qualified for senior citizen concessions for public services, such as the public transport system at the point of retirement. He expressed disappointment that many recreational places such as Sentosa did not have special concessions for the elderly. I remarked that besides housing, good affordable healthcare services, there was CPF to meet the financial needs. Of course, there are many elderly who have little in their CPF accounts. He, however, was supportive of the Government's move to increase the CPF Minimum Sum. He felt that although he had contributed to the changes that have made Singapore a success, the Singapore today does not appear to have a place for retirees like him.

The middle age who are unskilled and lack educational qualifications and the retirees are two groups of people who appear to have missed out on the good life. Certainly, all the measures in the past few years and in this year's Budget will ensure that in the years to come, less will join the ranks of the unskilled, lowly-educated members of the workforce. For the retirees, surely it will not hurt Government agencies, quasi-Government agencies and statutory boards, to grant concessions to retirees where appropriate in recognition of their past contributions. The Government should study the needs of these two groups of people so that they do not feel alienated in their ever changing environment.

Two days ago, a senior staff member from a newspaper told me that his staff who had a $300 pay adjustment had expected $1,000 pay adjustment. And those who were promoted expected a double promotion. This situation is a reflection of the times where high expectation is the norm of the day. Singaporeans have been urged to strive hard to reach the Swiss standard of living. In this quest for increased material comforts, our social values may have fallen behind the blazing trail of economic growth. In our maturing economy, the younger Singaporeans will find it more difficult to buy a car, own a house, join a country club or aspire to have those material assets that will enable them to tell their friends that they have arrived. Crest-fallen hopes turn to disappointment and sometimes eventually to unhappiness. We must be careful. The mixture of high expectations for material wealth and unhappiness can be a potent potion. Material success appears to be the ultimate goal of our younger generation. Family relationships, social cohesiveness and neighbourliness are all secondary to this goal. This is an unhealthy trend.

The Ministry of Community Development's allocation was only 0.32% of the GDP, yet this is the Ministry that will spearhead the cultivation of family values and promote social cohesion. A set of family values has been espoused by the Ministry of Community Development. It should not be a passing campaign. It should be made to bear fruit and be inculcated in our Singaporean families. If we do not invest in developing family relationships, neighbourly relationships and community relationships, we will have a nation of self-serving beings with no social souls. We should invest in our education system not only to promote educational excellence, but also to inculcate good social values in our youths. We need to invest more in our community centres and our grassroots organisations that play an extremely important role in developing social cohesion in the community. I hope that the Government will not consider the development of social values as being not an economically productive investment, but rather will continue to invest in institutions that will develop social cohesion. A collective effort is required to inculcate family values, social values and community values in Singaporeans. Only then can our society be rich, not only materially but also socially.