EXEMPTED BUSINESS

Resolved,

That the debate on the Budget Statement be proceeded with beyond 5.30 pm and the proceedings thereon be exempted from the provisions of Standing Order No. 1 until 6.00 pm at this day's sitting. - [Mr Wong Kan Seng].

Mr Chia Shi Teck: Thank you, Mr Speaker, Sir, for allowing me to join in this debate.

1993 turned out better than expected. Singapore has progressed to become a model city-state. In fact, we read daily that there are so many countries inviting us to start townships in their countries. We would soon find many, many "Singapores" around the world. I salute the Government last year and I do it this year again for a job well done.

Many things happened last year and most noticeably is the thrust for our second wing. The seeds have been sowed. Our Government leaders, in fact, our Prime Minister, Senior Minister and many of the other Ministers have just returned, and they have been working very hard to go for this second wing. Our private sector has also responded. If we take the budget incentives announced last year and this year (it is correct that the private sector is unhappy) and if we digest a bit and look at the two years' incentives, probably it is fair to let the incentives run. The Government is listening.

Last year, there were a lot of incentives given to corporations, and this year, the attention is switched to the individuals, even for individuals who are working overseas, things like the CPF reduction, the tax incentives, and so on. Maybe the Minister would like to explain the rationale behind the individual ceiling tax of 30% versus the corporate tax of 27%.

The other interesting point is the Government returning the dividends to the people, particularly the CPF Share Ownership Top-up Scheme (SOTUS). Last year, there was this $200 offer, but there were still over 10% of people not benefiting from the $200. I do not know whether he has found out the reason. This year, with the 18-month period to top up $750 to enjoy the $300, could we find a way out to help these people who did not respond? Could not the $200 the last time, and $300 this time, be credited to them straightaway, into their Special Account for use at old age? There must be reasons why they are not responding to benefit from the $200?

I am glad the Government is paying higher interest rates for the CPF Retirement Account. Could the individuals who do not want to get into share investments actually keep the money straight into the CPF old age account? That means, top up the $40,000 if they can afford to, and enjoy the higher interest, instead of going to invest outside.

GST and business cost are of big concern. Many, including the Government departments, have raised their prices, not in the name of GST, but giving reasons that they have not increased for the last few years and they are asking the people to buy their reasoning. But the way people are fearing about the price increases, I think it shows that they are not accepting those reasons. It is good that the Government has come out to give the assurance that they would smack hard on profiteers. But our worry is that inflation would not be what the Minister had said last year, that is, a one-time 3% increase. It would look like maybe 5-7%. And what would happen then? Will there be a contingency plan to help out because cost of business will rise? Unions will be asking for higher wages and I think it is justified if inflation shoots up way above the 5-7%.

I declare my interest as a retailer. Dr Wong Kwei Cheong has said about the ALS and the retail business. I think it is real that the retail business is bad, and probably the Minister could look at the report and the survey submitted by the SRA and see how we could go about helping them.

Our assets seem to be inflated. We tell our people that the living cost has not really risen that much. But when they measure it against the things that they want to buy, such as houses and cars, it seems to be a case of asset inflation. I also understand that there are a lot of loans taken to buy houses. Also, the credit card loans. At any one time in a month, I understand that credit card holders are owing $500 million. So is that an indication that our people are having a higher gearing than they should? Of course, employers look at cost and reacted to the 1 1/2% increase on the employer's CPF contribution. I think there is no quarrel. It is only fair that we pay up to the workers who have sacrificed during the recession years.

The only concern and worry is actually the cost in business. If inflation goes up by 5-7%, together with the implementation cost of GST, etc., would we be pricing ourselves out of the market? Would we fall into the trap of Japan that suddenly went into a position where they are now just finding out what had actually gone wrong? Our leaders are actually trying very hard to help Singaporeans cope. As our economy matures, we cannot expect the same kind of growth in Singapore. Our Senior Minister and our Prime Minister have told us that if we want quick growth we should go overseas.

I think a lot of things have not been accepted by our people. I am rather worried, and I am not alone in this worry, to observe that all is not well beneath the good budget numbers. People seem to be afraid. There are many changes that have not been well digested and that may result in discontentment and resentment. The fact that we are so successful has a lot to do with being a cohesive and harmonious society. Our Prime Minister has recently cautioned the people not to kill the goose that lays the golden egg. According to the Prime Minister, the golden goose is of course the Government. Kill it, and that is it. I think no one can quarrel with him that much of our success has a lot to do with our Government, good government. And, granted, investors often cite our political stability, integrity and honesty of the Government as key reasons for investing in Singapore. But, on the other hand, we all also know, agree and accept that Singapore's success cannot be due to one midwife alone. No man is an island, and no government functions in isolation.

There are some key pillars or social institutions that provide the superglue to our well-being and to our staying cohesive and harmonious. We have (a) tripartism - the equal role, cooperation and trust amongst the Government, employers and unions; (b) the very important ethnic and religious leadership. Their importance and influence cannot be under-estimated. Mutual tolerance, respect and understanding prevail. All have to live, work, compete and progress side by side. Chauvinism is not allowed. And the other key pillar is meritocracy. There is no nepotism here. Everyone has an equal opportunity, everyone progresses according to his talents, ability and willingness to work. And, at the same time, the talented are asked to show compassion. The better educated are asked to come out and lead and look after the less fortunate. We need good social community workers too, in addition to the good Government workers, bosses of industries, union workers. Therefore, for Singapore to succeed, we have to have good leaders all round in all these key institutions.

Our success has shifted a lot of our values, as Dr Michael Lim has said earlier. We have become too materialistic. Our aspirations and expectations have multiplied manifold. Sir, personally, I think there is nothing really wrong with wanting to be rich, to live in a big house, drive a big car, dine in the best restaurant, so long as we continue to honestly work for our improvements and have a heart for the less fortunate.

We have to play our part as good and loyal citizens. We cannot envy or be jealous of our brothers and sisters who do better than us. Directly, or indirectly, we all benefit from the contributions of one another. We have to be grateful to the many leaders in the various bodies that lead and sacrifice for the well-being of our fellow men. So, therefore, we have to give them decent competitive compensations; otherwise they will not be motivated. So by and large, the rationale of paying market rates to attract the right talents works. However, there are many jobs - some very, very important jobs, thankless jobs - that money alone cannot buy. Worse still, money may buy the wrong candidates. Examples are politics, religious, charitable, social workers.

(a) Let us take the religious workers. I believe religions all over the world today are finding it more and more difficult to attract people to serve their religions. Full-time people in the various orders are shrinking - priests, monks, nuns, imams, rabbis, pastors, and so on. These holy people answer the call of their God and they serve, believing that they will be rewarded in the next life when they are united with their God. Hindus who believe in reincarnation believe they will move up the social order if they do good now. While there are others who simply serve because that itself is satisfaction, that is reward enough.

It is in our well-being that we have amongst us good and responsible religious leaders. They are very powerful and influential amongst their followers. Under our multi-racial, multi-lingual and multi-religious society, all our religious leaders and ethnic-based leaders have a very important earthly role to play. It is most fortunate that we have good and responsible leaders amongst us now, and it is also good that our Government provides assistance to ethnic-based self-help groups and religious bodies. And, in fact, I would suggest that the Government increase the grants to them to help them do an even better job. Some ask me, just how much should we pay to save our souls? How much should we pay to have a peace of mind? I think that peace of mind is worth it.

(b) Is politics simply a job? Ancient Greeks described politics as a supreme science of philosophy. Politics is about ethics, morals, ideals, and mankind itself. Politicians were well revered and respected then. They provided leadership and vision. They were people of character, integrity, virtue, dedication and commitment. They led the people towards a better future, a better tomorrow. Those were the days, so sighed many people around the world. Politics has become a joke. We hear of dirty politics, money politics. Thankfully, by the grace of God, probably the blessings of our multi-religious society, Singapore politics has not deteriorated to such a sad state. We still treat our Ministers with love and respect. Yet this high social standing is not enough to lure good people into politics. Our leaders have repeatedly expressed their concern. They conclude that much has to do with opportunities to make money outside. Therefore, they propose a market package to compensate these great sons of the soil to come forward and serve Singapore. I check around and I ask former leaders. None has any disagreement in wanting to pay our Ministers decently. The unknown factor is whether this market pay will draw us the right kind of candidates. But many still believe - I hope they are not wrong - that politics is more than just a job. It is a vocation, and it is dangerous to use money as the motivating factor. People who love money should not be allowed into politics. It is just too dangerous.

The recent stepping down of so many of our heavy-weight Ministers worries many of us. However, none of us believe that they were stepping down simply because of pay. Some went so far as to ask whether there were leadership differences in the top hierarchy. Will we ever know?

My question here, Sir, is what can we do if (a) with the best of pay, we still cannot attract public-spirited people to serve the country; and (b) worse still, the wrong people are attracted? Do we have a better plan then? (c) The third group (the community leaders, the social workers, the grassroots leaders) - they play a very important role too in our social fabric. They are the unsung heroes. They spend their precious times, and often dig deep into their pockets, to serve the less fortunate countrymen. They see their MPs and Ministers sacrificing for the good of all, so they come forward to serve. With full market pay now, many commented whether it is still necessary for them to serve - what more to serve free? These men come from all walks of life, and we have to admit that many of them are not less qualified than our politicians.

What about the social, charitable organisations? Are they going to be able to attract volunteer workers in future? Surely our values cannot simply be measured by dollars and cents. Parents often pin their hope on their children. Some hope their child will grow up to become a doctor, a High Court judge, a Permanent Secretary, or even a Minister. So this hope cannot be pay-motivated. I think it could be probably due to the respect the parents have for a particular honourable job.

The civil service in the tripartism, where the Government was mentioned as one of the three legs, makes up the second component. And the recently proposed change in the medical benefits had angered quite a lot of them, if not all of them, and some cried foul, some cried a breach of trust, a breach of contract. So why was the outcry? Thankfully, the Prime Minister himself had come out to assure the civil servants that they are actually part of Government, and why should the politicians upset them. Some said, with all the changes, if they really would not be worse off, then, why change in the first place? I think the Government has done the right thing in setting aside in the pension fund a sum estimated to be equivalent to our outstanding pension liability. Can the Government do the same? If we look at the civil servants' medical cost with our huge surpluses, we can set aside a sum for those who are already enjoying the current life-time free medical service, whilst new entrants come in with a new scheme, like the way we did away with the pension scheme.

There is another point. On the one side, we raise expectations, but on the other side, we cannot deliver, and that often upsets the citizens. We are talking about moving into the next phase where all the more the people have got to rally behind the Government.

There is this particular landed property sale. The Government has raised the hopes of private individuals when it announced the sale of small plots of land for individuals and small-timers to build their own dream homes. Nobody feels upset when lands were tendered out in large parcels. But when hopes were raised and not satisfied, frustrations and anger set in. Small-timers and individuals felt let down. Of course, the Government is right; the Minister is right to say, "Save our sympathies for the 3-roomers." But here we are talking about having raised their hopes, and we tell them, too bad, you have got to compete.

There are many, many more instances of unhappiness here, Sir. I shall not take more time to raise them. But I am trying to drive home the point that beneath the budget numbers, we have to look at the cohesiveness of our society. As we plunge into the next lap, the rulers and the subjects have to work even more closely. Everyone has a role to play. Every role has a dignity. Do not be mistaken that only the brains count.

With your permission, Sir, I would like to share a somewhat crude, but more apt, story - the body anatomy. The brain, the eyes, the mouth, the nose, the legs and hands were all arguing as to who is the most important part of the whole body. Every part has a very strong reason, and each cannot accept the other to be the more important. In that heated argument and commotion came a sudden squeak from the anus. Yes, the anus hole claimed it is equally important - it was modest enough not to claim to be the most important. All laughed. But after shutting the hole for a few days, a week, maybe two, the entire body parts blurred, sweat, shook, and they voted the anus hole to be the most important. They learned their lesson.

Mr Speaker, Sir, I support the motion.

Mr R. Sinnakaruppan (Kampong Glam GRC): Mr Speaker, Sir, thank you for allowing me to join in the debate.

This year's Budget has touched the hearts of many Singaporeans. When a responsible and forward-looking company does well, it will reward its workers with handsome bonuses and will channel part of its profits back to the company to invest into its future operations. The Singapore Government has done just that.

With a better than expected growth of 9.9% last year, the Government has decided to plough back part of the surplus to enhance the assets of Singaporeans, to invest in education and skills upgrading, and to develop an external economy. This balanced approach is indeed laudable. But not all Singaporeans seem to appreciate the balanced and forward-looking stance of this year's Budget.

The business community, in particular, seems to have taken a somewhat short-sighted view of this year's Budget. One of their main disappointments is that there has been no cut in the corporate tax rates. This reflects a failure on the part of businesses to link this year's Budget Statement to that announced last year. Worse still, some employers, and even some Members of this House, including Mr Chiam, have expressed their unhappiness at the much awaited one and a half percent restoration to the employer's CPF contribution rate. Such griping will come to no good and will only result in generating workers' distrust in their employers. These employers certainly seem to have a short memory. If only they care to cast their minds back to 1986, they would surely remember the workers' gesture in accepting a drastic 15% cut in CPF, a 15% cut in their total salary. That 15% cut is 10 times more than the 1.5% restoration this year. Have employers conveniently forgotten the tremendous courage and sacrifice of their employees at a time of need? Have employers forgotten about the painful adjustments that their workers have to make to loan commitments and lifestyles? As it would have happened in other countries, our workers did not take to the streets. Instead they faithfully stood behind the reasons for the cut and helped companies pull out of the recession.

After several years of high growth, low inflation rate and after achieving an outstanding productivity growth of 6.4% last year, the highest since 1984, employers have no case whatsoever for not endorsing the 1 1/2% CPF restoration. Let us also not forget that the employer's CPF contribution rate has only been restored to 20%, and not to the original 25%. The labour movement had not pushed for a full restoration to 25% because it understands the need for our companies to remain competitive. Our workers place a lot of trust in the tripartite relationship that we have built up very carefully over the past many years. The Government has kept its promise. It is now for the employers to positively demonstrate their commitment to this relationship.

Another source of unhappiness stems from the raising of the salary ceiling for the Skills Development Levy from $750 to $1,000. As the Finance Minister has pointed out in the Budget Statement, over the years, collections through the Skills Development Levy have been falling. This is due to the reduction of the rate of levy from 4% to 2% in 1982 and from 2% to 1% in 1986. Also, fewer people earned monthly salaries of less than $750 with each passing year. Therefore, over the years, the cost to employers had actually been declining. In fact, the labour movement was hoping that the levy would be pegged at $1,500 salary level. Nevertheless, a gradual increase is still acceptable.

Employers who complain about the marginal increase in the salary ceiling of the levy are those who do not fully appreciate the importance of training of their lower-income employees. They do not realise that the SDF pay-out to companies is three times more than what is collected from employers each year. This means that employers can actually reap much more benefits from the SDF training schemes than what they actually pay. So my message to employers is simply: "Don't complain about pain, for if you train, you will surely gain."

Mr Speaker, Sir, I would like to move on to another aspect of the Budget Statement. It has been stated that the Government's philosophy on education is to maximise the potential of every Singaporean. And, yet, we find that many Singaporeans are disillusioned that they cannot get a place in the local universities. Every year, when the GCE A' level results are announced, we consistently note that there is a marked improvement in the overall performance of Singapore students over the previous year. Ten or 15 years ago, the number of students getting a minimum of two A' and two O' Pass levels used to be about 70% or 75%. This year, the percentages have surpassed the 90% mark to 91%. When our children do better in schools, it is only natural that they aspire for a university education. Although our university intakes have increased over the years, I am not sure if the projections of perceived demands of our economy vis-a-vis admission places are kept current enough. I wonder if we are too conservative in our admission policies. I understand that more than half of the 15,000 A' level leavers who have applied to our universities each year are being turned away due to the limited number of places. Many of these students have to fulfil their dreams by enrolling in expensive overseas universities.

According to a recent World Education Report, there are about 11,000 Singaporeans studying in overseas universities each year. This number is almost as large as the number of undergraduates in NTU. In other words, they could make up the enrolment size of another university. Have we taken into account this large number of returning graduates in our projections? Are we faced with a glut of graduates when they return to Singapore? Not at all. In fact, these overseas graduates get absorbed very quickly into our workforce and they draw salaries on par with local graduates.

Why should a Singaporean aspiring to maximise his or her potential be made to take a very expensive route to a university education? Is it not possible to give Singaporeans a chance to pursue a degree locally? Why is a tight cap being applied to enrolment in the Open University? I realise that University expenditure and Government subsidy levels are very high. But can we do more to maximise the fullest potential of our prized resources? With both our universities adopting a modular credit system, the Ministry of Education should consider twinning local universities with reputable overseas universities for undergraduate studies. This would enable more Singaporeans to pursue a large part of their university education locally and at a lower cost than going overseas for three to four years.

A few years ago, we talked about making Singapore a regional centre for education. Neighbouring countries are now making great strides in this direction. Are we losing out? Perhaps, it is timely for the Government to set up a review committee on university education. Although in the past, steering committees have been set up for individual universities to chart their own direction, to my knowledge, an overall review of university education has not been done. Such a review committee can take a fresh look at university intake, curriculum, facilities and pay particular attention to the renewed manpower needs as we embark on a new dimension to develop an external economy.

I support the Budget, Sir.

Mr Chiam See Tong: Mr Speaker, Sir, while I support the views of Mr Sinnakaruppan on education, I would like him to make a correction. I have not mentioned anything about the restoration of the 1 1/2 percentage point of the employer's CPF contribution. I have not mentioned that at all.

Mr Sinnakaruppan: Sir, if he has not mentioned, then I withdraw it. But he was quoting so much from the Straits Times that, I was not sure whether I was reading the Straits Times, or was listening to his speech.

Mr Chay Wai Chuen (Brickworks GRC): Sir, I rise to speak in support of the motion in the name of the Minister for Finance.

Various sectors of the economy have categorised the Budget, some as a "people's Budget", others as "one not so interesting for businesses". It is, perhaps, characteristic by now of Singaporeans to take almost for granted what goodies the Minister has to give. In most countries, people wait in fear of the Minister for Finance's budget for any new and increased taxes they may have to bear. But in our case, some people feel disappointed when it is another's turn to receive and no decrease in taxes is given.

I guess the businesses' representatives feel a bit let down because of the corporate tax, now at 27%, was not lowered further. The lowering of the corporate tax was given last year and its full working has not even been translated. Is it reasonable or realistic to expect another decrease when the previous decrease has not fully been worked out for the fiscal matters?

The second concern of businesses was the increase of 1 1/2% for CPF rates for employers - fears have been expressed that it will raise business costs further. We should remember, Sir, that businesses did well last year, and can therefore sustain the higher rate. We must bear in mind that profits were also raised by the better performance of the economy, and the increase in CPF rate is a restoration of an earlier rate.

This Budget is for the people. The Government will pay on behalf of the people in HDB flats, some months of payment in rentals, and service and conservancy charges.

These transfers represent a positive action by the Government in transferring and directly assisting our people in making adjustments in the forthcoming GST. Beyond these fiscal incentives and transfers, I would like to focus a little on the message of the Minister in elaborating on the role of public policy for development by our Singapore Government. I am glad the Minister has come out very clearly to put in perspective the role the Government will still play in selective intervention and in providing the catalytic stimulus and competitive controls for sectors in our economy, amidst the current fervour of the free market.

I am glad that the Minister made mention of the World Bank Study "The East Asian Miracle." The East Asian miracle was not a miracle of free market. It was a miracle of competitive control and selective intervention. The major areas identified by the Study which governments should focus are (a) in macro economic environment, with the minimum of price distortions, (b) flexibility in labour markets and training, upgrading with wage flexibility, and (c) social solidarity.

The Minister has also identified the intervention role of upgrading the economic structure through selective direct investments in strategic projects. To that extent, it will build up a $1 billion fund for Cluster Development.

Mr Speaker, Sir, if you allow me to add, one more important point in the East Asian miraculous success, and Singapore's as well - it is in adopting an outward-looking or an outward-seeking policy in our economic growth and development. All the East Asian economies that succeeded had Uncle Sam as their main market for their exports in the first instance. It was export-led growth, not import substitution and licensing that was the answer to growth and development. India lost decades in this. It was not necessarily the in-thing in the 1970s to believe in export promotion as a strategy of growth. Development economists were in two camps, the outward-looking versus the inward-looking camps; export promotion versus import substitution. It was outward-looking policies which won the day.

It is gratifying to note that we are now encouraging our local businesses to go overseas, to build up the external wing to our economy, while continuing to attract foreign investment to Singapore. This is another aspect of the outward-looking, outward-seeking policies. However, while this is good for our long-term growth, it is useful to remember investing overseas does not add to our economic growth in the first instance. But it would add to our ownership of productive capacity. We are channelling investible funds overseas for overseas countries growth. We should not forget about the need for export promotion for our own Singapore-based industries and to attract high quality investment here.

I am glad that the Minister has set forth the Government's position in public policy for growth and development. It has also allayed the fear of many as to whether the Government will let unbridled free market to work out situations to the detriment of many people. The market will still be governed. Not only in education and health costs, but in strategic action to stimulate and catalyse growth in certain business sectors, the Minister has announced that the governing hand is still at work. This must be quite a relief because I believe in Singapore, the political leadership and Government is very important for economic growth and development. Without political leadership and Government, Singapore can only be a lesser version of Hong Kong. With superior political leadership and Government, Singapore is the cynosure of the world.

Sir, I support the motion.

Mr Loh Meng See (Kampong Glam GRC): Mr Speaker, Sir, I would like first to make some comments on what Mr Ling How Doong said earlier. He started his speech by explaining that the ageing process is universal and that countries are extending the pension withdrawal age. As he was making that statement, I was thinking that the logical extension to that argument would be to ask the Government to raise the CPF withdrawal age of the people. The Government is not asking for the withdrawal age of CPF to be raised but it is asking that the Minimum Sum to be set aside be increased.

The second point he made was that even $40,000 cash that is set aside is insufficient. I believe I heard him say so. I was thinking that if $40,000 is insufficient, why is he asking people not to set aside any sum at all? In fact, the Government is trying to be fair and reasonable, particularly to those people with property, and to ask them to set aside half the amount in cash.

I am a bit disappointed, Sir, that he has even indicated that he expected the people to sell their property if they have no money. This is precisely what the Government is trying to avoid so that the people can set aside the money early and that they can remain in their own homes without having to sell their property.

Sir, economic growth for 1993 at 9.9% is indeed a pleasant surprise. It surpassed the forecast for the year and is 4% higher than the economic growth of 5.8% registered in 1992.

What is significant in the 1993 growth rate is the rate of productivity growth. At 6.4% productivity growth in 1993, it is double that of 1992 growth of 3.1% and four times that of 1991 at 1.5%.

Sir, the Minister for Finance promised last year that the CPF contribution rate will be restored if the economy does well and he has done so this year. I am pleased that the CPF contribution rate for employers will go up by 1(r)% and the employee's share will be reduced by the same percentage from 21(r)% to 20%. This reduction in the employee's share of the CPF is tantamount to giving the workers a wage increase and a bigger take-home pay at 1.5% on gross earnings. This bigger take-home pay could not have come at a better time with the implementation of the 3% GST. With other tax rebates and offsets, the workers who are careful with their expenditure and exercise thrift will end up much better off this year.

For the financial year 1993, the Government received a higher revenue than estimated and had a lower expenditure than provided for, resulting in a sizable budget surplus of $5.5 billion. And $5.5 billion, Sir, is about one-third of the annual expenditure of around $16 billion.

I agree with the approach adopted by the Finance Minister in distributing a part of the budget surplus in the form of rebates to our citizens after the financial year's account has been settled.

I think the business community has been crying wolf giving the impression that nothing has been done for them. In fact, from this year, they will be enjoying a corporate tax reduction of 3%, from 30% to 27%. Though the loss of revenue was estimated last year at $318 million, with the booming economy, I would imagine that the revenue loss would be much higher.

[Mr Deputy Speaker in the Chair]

5.18 pm

Mr Loh Meng See (Kampong Glam GRC): MTI has forecast economic growth this year to be in the region of 6-8%. If we achieve the 6-8% growth this year, we should be more than satisfied. Sir, what we should be aiming for is the real income growth. We must contain the scourge of inflation which can nullify our efforts to attain stronger economic growth. Surprisingly, the Minister has not indicated at what level the inflation rate should be contained this year. Is the inflation rate likely to breach the 3.5% level as experienced in 1991 when the economic growth was 6.7%?

I take comfort in the Minister's statement that in this first year of implementation of the GST, the Government will be in a revenue negative position to the tune of $240 million. The Government will collect $960 million but give out $1,200 million in the form of tax cuts and rebates. This puts the Government in a strong position to counter any allegation that inflation is GST induced.

As the Government has not introduced new measures to stimulate the economy further and aggravate the labour shortage situation and causing wages to rise artificially, there will not be the inflationary pressure to push the cost of operations up. Nevertheless, matters do take a turn which is unexpected. Fighting inflation, wherever the source is, will still be our top priority.

I am glad that the Minister has highlighted the need to improve the educational standards of our citizens and the value of skills training and upgrading. I am not as concerned for those who are still schooling but for those who are already in the workforce. Our economy is going through a process of restructuring. Not only foreign MNCs are relocating their operations, local companies are also doing likewise. It makes economic sense for companies to move to locations that meet their operational requirements especially those that need low skill and low wage workers. Even then for large countries, it is not difficult to recruit better educated and higher skilled workers at lower wages. Therein lies the intense competition for foreign investment and jobs.

Credit must go to the Government for the success in bringing in sizable foreign manufacturing investments into Singapore. With manufacturing investments at $3.5 billion in 1992 and $3.9 billion in 1993, we have been able to create more employment opportunities for our people. It would be a pity if Singaporeans are not the direct beneficiaries of the higher value, better paying jobs, because they do not have the skills, or with older workers, their skills have become obsolete and no longer relevant.

It is not easy for the ordinary workers to perceive the changes taking place. Left on their own, many workers do not see the need for skills upgrading and retraining. We cannot help but to get existing companies and even new companies to play a bigger part in worker training. I welcome the setting up of the $1 billion Cluster Development Fund with the Government playing an active role in developing the industry clusters. When doing so, the Government agencies should also look into the aspect of manpower and training requirements and see in what ways we can better utilise our workers, especially the older ones.

The Skills Development Fund (SDF) may not be able to fund the massive retraining and skills upgrading programmes required in this critical period of economic restructuring in Singapore. The Government could consider giving a bigger grant to SDF. The money invested in worker training will be worth while as we would then be keeping our workers in gainful employment for as long as possible.

We should also tap the resources of the professional bodies in Singapore. Up to now, many professional bodies have confined their activities in the training and development of the members of their profession. The professional bodies should be encouraged to conduct training courses to lower level personnel in work areas related to them at the technician and tradesmen level. In this way, there will be substantial improvement in the overall skill standards of the Singaporean workforce. As much as it is important to serve our customers well, it is equally important that our co-workers possess the skills and knowledge to perform their functions well in the overall delivery of excellent service to the satisfaction of customers.

Sir, this year's Budget is a very good one. I look forward to the Minister giving us many more such budgets in the future.

Dr Kanwaljit Soin (Nominated Member): Mr Deputy Speaker, Sir, productivity, competitiveness, retraining, three very important issues for us in Singapore. The Finance Minister in his Budget Speech said, and I quote:

`We, in Singapore, can prosper and grow together with our neighbours and trading partners, if we remain competitive and productive.'

The Prime Minister in his National Day Rally speeches since 1992 has stressed the importance of remaining competitive, improving our skills and raising our productivity.

Sir, for us to be able to carry out these objectives, the key challenge is the successful management of human resources. The most competitive nations in the 1990s will be those whose people have the right values, education system, motivation and attitudes, says the 1993 World Competitiveness Report. Therefore, soft assets do count in the hard world of competitiveness.

Sir, nearly half of our workers have not completed secondary school. About one-quarter of these workers with less than secondary education are below 30 years of age and number 200,000. This large group of people who are all below 30 years of age will be in the workforce in the next 30-40 years and could become a source of great concern to the nation. What steps are being taken to ensure that we do not continue to have this trend of young people with low educational qualifications?

Let us look at the Labour Force Survey of 1992. Of the employed persons aged over 15 but under 20 years of age, there are 70,000 people and this does not include foreign workers. Of these 70,000 young workers, nearly 4,000 have never attended school or only up to lower primary level. Another 29,000 or 40% of our young workers below 20 have only primary or lower secondary education. How is this possible when we have had a universal and a highly subsidised education system for the last 30 years or so?

Where have we gone wrong? Perhaps the Ministry of Education and other relevant organisations have to do some soul-searching and mind-scratching to find out what is the cause of these worrying statistics and how to prevent this state from continuing.

Sir, one area that has to be studied is education for early childhood development. I am sure some of you will wonder what this has to do with the nation's productivity and competitive edge. Well, if we wish to succeed in our highly competitive region of the world which poses an economic challenge for us, then we have to look at the whole issue of national productivity, competitiveness and skills training from a holistic point of view.

Now, early childhood development has long term effects for human resource development and productivity.

Investment in early childhood development education will help the nation by saving later on because it affects drop-out rates, learning achievements, readiness for learning and also impacts on performance in schools and on the job.

In spite of the well known advantages, early childhood development programmes are often dismissed on account of their costs. Channelling finance and other resources at a late stage, to improve the educational profile of our workers is itself unproductive in the context of having let a golden opportunity slip us by earlier on.

Would it not be more pragmatic to start investing in our people in early childhood and would not this course of action be more consistent with Singapore's philosophy of pre-empting future problems? Therefore, the Ministry of Education and the Ministry of Trade and Industry have to get together and look at the whole issue of early childhood development education, school and post secondary education, human resource maximization and job productivity.

Sir, at the other end of the age spectrum, workers who are over 40 constitute the largest group who either did not attend school or only completed up to lower primary school and these workers number about 150,000. Furthermore, these employees who are over 40 generally constitute a small percentage of workers attending retraining or upgrading courses. The culture of continuing education has to be imbibed by our people, especially our older workers. How do we go about doing this? The NTUC has made a start in this direction and so has the National Productivity Board, but much more has to be done so that we have an educated workforce. Again, the cooperation of a few agencies is required for this effort.

This lack of education of our workforce is a major drawback for the upgrading of skills. The increasing of skills does not only have an economic focus but has social repercussions as well. Worldwide, the gap between the wages of skilled and unskilled workers has widened. With the abundance of cheap and relatively unskilled labour in the region, manufacturing industries that are labour intensive will move out of Singapore and this has been alluded to by the previous speakers. Our production will have to shift towards skill-intensive sectors in value-added industries.

Mr Deputy Speaker, according to the Labour Ministry's figures, the manufacturing sector has been shedding jobs since the beginning of 1992, resulting in a total net loss of 20,000 jobs so far. In five years, more than 100,000 workers in the electrical and electronic manufacturing sector may be out of work. Fortunately, however, those workers who lost their manufacturing jobs have easily found new jobs because of the current full employment rate in Singapore. However, this situation should not lull us into a false sense of complacency. We have to ask ourselves a few searching questions:

(1) Are workers' skills acquired in their manufacturing jobs and who subsequently are displaced from manufacturing being put to good use in their new jobs? It makes little economic sense to provide workers likely to be affected by relocation with skills training if these skills are not utilised. Unfortunately, existing data does not capture this information. We have to overcome this deficiency.

(2) How much are the workers being paid in their new jobs? Do these displaced workers have to work overtime or take up two jobs to make up for their original pay? The latest estimates in 1989 showed that 44% of male workers over 30 did overtime work while 36% "moonlighted" in second jobs. With these added work commitments, workers are unable to make time for skills upgrading in their new jobs. There is the added social cost of spending less time with the family. Again, we have not instituted any database to capture this information.

Another area of concern is that small companies (with less than 100 workers each) employ 40% of Singapore's rank and file workers. These number 400,000 in total. These small companies spend less than 1% of their payroll on training which is way below the national target of 4% set by the National Productivity Board. Large companies with more than 500 workers spend 5% of their payroll on training.

Mr Stephen Lee, the President of the Singapore National Employers' Federation, has recently said:

'We must first help companies, especially the small local ones, to identify their training needs because many do not even know their own business.'

As such, forcing them to meet targets of spending 2-4% of their payroll on training may yield no tangible benefit to the company or nation. According to Mr Stephen Lee, "they may end up sending staff for Lotus 1-2-3 courses, when the company does not even need computers."

The National Productivity Board set up a Management Guidance Centre in 1972 to provide companies with management consultancy services to help them assess training needs and benefits, but I wonder how many small companies have actually used this service. Maybe the Government could consider giving subsidies or tax incentives for companies seeking management consultancy services from the National Productivity Board. This could serve as an inducement to small companies.

Sir, another important fact to know in relation to small companies is that 70% of Singapore's small businesses fail within five years of start-up. This is according to a survey covering the 1980-90 period. This rate is higher than the international average of 50-60% for small business failures. This higher failure rate, coupled with a marked preference by Singaporeans for venturing into service-based businesses, are two obstacles to higher economic growth. The problem is that services tend to generate lower value-added output than manufacturing activities and so we have to moderate this impact of the poorer contribution of the service industry on the GDP.

Prof. M.S.S. EL-Namaki, a Dutch management expert, who conducted the survey on the failure rate of small businesses in Singapore, thinks that we should set up a "small business corporation" to spearhead the structural adjustments needed to pull local entrepreneurs up. We should consider adopting this suggestion.

Another area that needs our urgent attention is employee turnover or job-hopping. This is a serious problem in Singapore and affects business development. Frequent job changes by too many Singaporeans pose a huge barrier to the absorption of training as the learning curve for higher value-added activities is two to three years. This job-hopping adversely affects the enlarging of the trained labour pool which will in turn affect the company's international competitive edge. To overcome this problem of job hopping, we have to increase the bonding between employers and employees.

According to one big study done in the US, companies that make it easier for employees to juggle their work and family responsibilities are rewarded by greater employee loyalty and lower turnover plus increased job satisfaction. The two companies that were studied offered work-family programmes and included the giant consumer and pharmaceutical company, Johnson & Johnson, and another company which is a medium-sized maker of automotive sealing products.

This study showed that employees who take advantage of work family programmes are more likely to participate in total quality management and other programmes that companies consider critical to their competitiveness.

Sir, without hard studies such as these, claims for all the wonderful things work-family programmes do can make hard headed policy makers like ours nervous and disbelieving because they used an untested hypothesis. However, now with proper studies, policy makers must shift their paradigms concerning the importance of bonding between employers and employees.

This new shift in thinking towards providing a family-friendly work environment is not only desirable but also inevitable. Let us therefore in Singapore be one of the first in the Asia-Pacific region to embrace a change that not only improves the quality of our work and family life but thankfully, at the same time, contributes to national economic wealth and improves our competitive edge. Thus, Sir, we can literally have our cake and eat it too, since in Singapore we espouse the twin goals of economic development and maintaining family unity in the face of progress.

The principal investigator of one of these studies said that work-family policies are often seen primarily as a way to attract women to a company but they have additional benefits for the company in increased productivity and also decreased job-hopping.

Sir, no study found evidence to support a fear common among managers that employees will exploit and abuse company programmes.

Fortunately, in Singapore, we have done a similar sort of study. The National Productivity Board and the Singapore Institute of Labour Study conducted a survey in 1992 on employee benefits. The two organisations suggested that companies should offer workers more perks that will help them meet family and social needs. Results of the survey indicated that the majority of companies in Singapore are convinced that this scheme could enhance employees' commitment to work. Up to two-thirds of Singapore workers and unionists support the scheme and feel that it would motivate employees to work harder and raise productivity. Mr Goh Chee Wee had this to say, "Well packaged benefits would motivate Singaporeans to work harder and stay with their companies."

However, Sir, the NPB-SILS survey showed an anomaly. What employers see as perks that will boost the quality of worklife for employees are often not provided by the employers. For example, 85% of the employers say flexible working hours are good, but only 18% practise them. While 60% advocate childcare facilities, only 2% have them.

What is the cause of this gap between the employers' beliefs and their practices? Is the paralysis of action caused by structural impediments like the lack of know-how, tax incentives, etc? We have to address ourselves to this problem urgently.

The Singapore National Employers' Federation, with the Chambers of Commerce, should put their business heads together and work out policies and programmes for firms to become more family friendly. The motivation for this, Sir, need not only be to do the right thing by workers and their families, but to do the right thing by the companies, as these schemes will raise competitiveness and productivity. Why are employers then so tardy in addressing an issue of self-interest and also of national importance? The civil service as the largest employer has gone some way to encourage employee loyalty but could do much more and lead the way so as to prod the private sector.

Sir, another issue that impacts on our economic performance is our tight labour market. To achieve an annual growth rate of 6%, which is predicted for next year, Singapore would need to increase its foreign workforce by an average of 11% a year over the next three years, according to a private study. Employers faced with its tight labour supply in recent years have often pleaded with the Government to let in more foreign workers. However, a one-point rise in the local workforce would raise GDP by 0.3%, but a one-point rise in the foreign workforce would only add 0.1% to the GDP and therefore foreign workers are generally not as productive as the local workforce. Therefore, we should try to utilise the untapped labour market resources of housewives and older workers. A tripartite agency, consisting of Government, employers and unions, could be set up under the auspices of the Skills Development Fund to help retirees and housewives to look for suitable work and to train them for the required job.

Sir, the pursuit of competitiveness contains many traps and pitfalls and we have to be aware of these. We have to learn to innovate and look at the problems from all perspectives. Singapore cannot win by trying to play the same game as some East Asian developing countries which have many young workers. Our population is getting older and our fertility rate is declining. Therefore, for us, it is high productivity jobs, and not just any jobs, that will translate into high national income.

In Singapore, we are seeing now a change to capital-intensive operations. To fully utilise the capital investment, shift work may become a key factor in the new work order. With more workers on shift work, changes in the social support structure will be necessary, for example, childcare services to cater for dual working families on shift work.

Therefore, to address all the urgent issues that relate to labour shortage, training and retraining schemes and retaining our competitive edge, I suggest that we should have a high-powered committee that will evaluate how to promote the quality of our worklife and our national productivity without compromising our family life. I made an appeal to the Prime Minister last year and I would like to reiterate that again, please. This committee should comprise Government, employers, NTUC and NPB and ordinary citizens who have families (both men and women). Singapore's industrial climate has been forged by a harmonious tripartite relationship. We now have to strive to a higher plane of industrial relations and family life that will promote higher productivity and better quality work and family life. We could heed the words of Professor Michael Porter from the Harvard Business School: "The only competitive advantage today that is sustainable is the capacity to improve and innovate." Let us therefore, Sir, improve our economic productivity and maintain our family cohesiveness by innovating at all levels of national life. To the three issues of productivity, competitiveness and retraining, let us add another equally important issue, and that is, family life.

With that, Sir, I support the motion standing in the name of the Finance Minister.

Mr Chew Heng Ching (Eunos GRC): Mr Deputy Speaker, Sir, I am pleased that the Government has decided to plough back budgetary surplus to Singaporeans in the form of tax and public housing rebates, and increasing its contribution to Edusave and Medifund, among others. We see, with great satisfaction, that pensioners' concern that their pension will be paid has been adequately addressed. The setting up of a pension fund for public officers puts to rest their worry that their pension might not be paid. In so doing, the Government has recognised these pensionable officers' constitutionally protected pension as a liability while relieving future taxpayers of the burden. I would like to join my colleagues to applaud the Minister for Finance for his prudence and long-sightedness.

Sir, the business sector is said to be disappointed with the Budget. This need not be so if it remembers that the 3% corporate tax cut announced last year will take effect this year. The business sector cannot expect the Government's Budget to be "pro-corporate" year after year. And, Sir, in the same token, it is also timely to remind Singaporeans that a "pro-people" budget may not come every year as well. And it can only come about if all Singaporeans continue to work hard to increase their productivity. It is a fallacy to expect unlimited "goodies" every year, and it is good that the business sector has now found this out.

Sir, this "pro-people" Budget also appears to be an expansionary budget with increased emphasis on improving social and economic infrastructure. So more jobs will be created. So workers in the already tight labour market will have more jobs to choose from. This is good and yet bad because if this situation is not properly managed, job-hopping will return, as the previous speaker has said. And productivity will fall as more workers suddenly feel that they have become indispensable and will bargain for the highest salary without matching it with their best effort.

An expansionary budget, coupled with the implementation of GST, will quite likely brew an inflationary economy. May I therefore urge the Government to continue to monitor prices of goods closely and to punish those who are found to be profiteering. If existing laws are inadequate to punish profiteers and the unscrupulous, then the Government should consider legislation.

Sir, increasingly more Singaporeans are cynical of Government's policies, however well-intentioned they may be. Many are of the opinion that the current budgetary surplus is the result of Government's "pay-and-pay" policies. Many do not realise that this is the consequence of strong economic growth last year. Many have argued that the Government is taking money from the people's pockets, and putting it into the Government's pocket. And with money collected from various sources putting into one pocket, ie, the Consolidated Fund, the surplus appears very large indeed and lends credence to the argument that the Government is making a lot of money for itself.

Sir, I think there is a need to dispel this notion. The best way to do so is for the Government to show to the public where money collected from a particular source and for a particular cause goes to. Take the case of COE and road tax. Will it therefore not be worthwhile for the Minister to consider applying the COE and the road tax collections directly to benefit its givers? Would it not be better that these collections be channelled into a special fund, call it the "Road Improvement Fund", for use to improve roads, expand road capacity, build underground tunnels, for general road maintenance work, and even to subsidise public transportation to keep costs low, instead of blending this fund with other monies in the State coffers, unfortunately perceived by some as the Government "pocketing" the money.

Sir, my suggestion that COE and road tax collections, and for that matter, any kind of collections, be used to benefit its givers is not new. We have already been doing this through the 4% cess, through the 1% SDF levy where collections are clearly seen to be spent to improve and promote the tourist industry, and to train and upgrade workers' skill respectively. It will be nice if Singaporeans could see, as much as is possible, that some money goes back to benefit them in a more personal and poignant way, on top of the rebates which benefit all across the board.

How then, Sir, would some money go back to benefit the people? Even after giving the rebates and discounts, we still have an enviable budgetary surplus. Could we not set aside some amount of this surplus to a fund to be administered by the Ministry of Community Development for spending on the people at the constituency level? In other words, consider creating a "Welfare or Needy Fund" for needy constituents. Applicants for this fund will have to have a deserved cause to be supported by the constituency Citizens' Consultative Committee and endorsed by its Advisor. Applicants will have to be people with a dire and urgent need for money caused by unforeseen circumstances, such as dependants who suddenly lose their parents in an accident, or where the sole breadwinner dies without leaving any savings for the family. Some money may also be put aside to create a "Constituency Bursary or Scholarship Fund" where deserving students could be more easily identified at the constituency level. I must, however, add that the CCC will have to do a very careful and thorough study and to check on each case, which will be subject to further scrutiny by the Ministry of Community Development which will have its own stringent criteria and guidelines.

Sir, this is just a preliminary suggestion. Perhaps officers of the Ministry could work out the details. Suffice to say that the intention is clear: let the people see that some of their money will go back to them in a use that touches their hearts more deeply. Even if he is not the direct beneficiary, I am sure he will still see and feel the joy of his neighbour's plight assuaged by financial assistance through the State at a time of acute need and great despair.

Sir, lest I be misunderstood, I am not advocating a welfare state as such a scheme will only be in place so long as we continue to enjoy and maintain a budgetary surplus every year, and will only be granted to needy applicants, subject to very careful checks at both constituency and Ministry levels.

Last year's economic performance was exceptionally strong. So the Government could afford to reward all by reducing taxes and letting us enjoy generous rebates. Sir, despite this good showing of a robust economy, I am thankful that the Minister has sounded his gentle reminder to Singaporeans "to prize diligence, effort and enterprise above luck and quick gains."

Sir, I am concerned that some of us might have taken the Government's rewards for hard work for granted. That it is customary and has become the Government's duty to find some rewards for Singaporeans every year, never mind whether Singaporeans have put in sufficient efforts, or irregardless of the state of the economy. Even with so many rebates announced this year, how many will bother to translate the aggregate benefits into dollars and cents, and come to appreciate what the Government has done for them with the implementation of GST? Sir, it will be easy for many to feel the pinch of GST without realising the efforts put in by the Government to offset the impact. Sir, I dare predict that we will continue to hear more grouses and complaints after GST has been implemented.

Sir, is it not therefore timely for the Government to gradually move away from giving fiscal incentives, no amount of which is ever enough? Discounts and rebates as incentives should slowly ---

Mr Deputy Speaker: Order. It is 6.00 pm.

Dr Hu, debate to be resumed, what day?

Dr Richard Hu Tsu Tau: Tomorrow, Sir.

Mr Deputy Speaker: So be it.