ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Debate resumed.

Mrs Yu-Foo Yee Shoon (Yuhua): Mr Speaker, Sir, I would like to thank the Minister for Finance for a fair Budget. The interests of both workers and business are well taken care of.

I am grateful that the Government has taken the final steps to achieve its target to equalize employers' and employees' CPF contribution at 20% each. During lean years, workers tighten their belts. During good years, Government must restore their confidence. The business community should not complain about this restoration, especially my MP colleagues who are businessmen.

With sound economic growth, our salary structure will continue to shift upwards. We also have to set up workers' training to meet the needs of changing industries. Therefore, the SDF salary ceiling should be revised upwards from time to time.

SDF levy is not an extra business cost. It is part of training costs for companies. Companies cannot avoid training their workers if they want to stay competitive. In fact, employers who send their workers for training have gained from SDF funding. So I should thank the Minister for Finance for revising the SDF salary ceiling.

I am also happy to note that Government will give rebates on HDB service and conservancy charges and rentals, extend the claim period for procreation incentives from seven to nine years and further contribute $500 million to Edusave and $100 million to Medifund in the financial year of 1994.

In his Budget speech, the Minister for Finance has clearly stated the role of Government in economic management. I have no doubt that Government, with its excellent track record, will continue to improve Singapore's competitive position.

Mr Speaker, Sir, I would like to direct the House's attention to our social and community development. I feel that we need to pay more attention to strengthening our social fabric as we face fierce international competition. We need a strong and united home base to serve as the springboard for our external interests.

Plugging into rapid growth in the Asia-Pacific region brings both opportunities and challenges for Singapore. The professional and skilled Singaporeans are mobile. They are keenly sought after. They will command world-class salaries. However, our less-skilled or unskilled workforce will have to compete against cheaper labour in Vietnam, China and India. This keen competition will make wage increases for them more difficult. As Singapore grows with the region, all our incomes will continue to rise. However, incomes of those at the bottom of the structure will rise more slowly. These trends can exert pressure on our social cohesiveness.

One way to tackle these trends is to help those in the low-skill, low-income families to break out of the circle. We have to step up training and retraining of workers, especially the older ones. Many older workers above 40 do not receive adequate training. Those 40 and above make up about 30% of our workforce. Yet they took up only about 7.5% of training places funded by SDF in 1993. We must identify the obstacles and solve them.

Companies must be prepared to employ older workers and equip them with the relevant skills. I am dismayed by the practice of some established companies, even Government-linked companies, which retire workers at 45. We must also equip our young with the education and skills that will stand them in good stead. Our policies must also motivate the low or under-achievers. We must continue to invest in vocational training for the less academically inclined in the institutes of technical education (ITE). We must pay close attention to those in the neighbourhood schools.

During the period of rapid economic growth, the developed nations have responded to social change by giving out generous social welfare benefits. Today, as economic growth slows down, these welfare states could no longer sustain the promised benefits. The social contract between people and government is subject to great stress.

Similarly, we will face increasing pressure from Singaporeans for Government to expand and strengthen the social safety net, especially given the recurrent budget surpluses. We do not want to go the way of the welfare states which weakens individual responsibility, the work ethic and the family structure. We have to chart our own way.

Government has traditionally kept expenditure on community development low. For FY 94, 1.6% of the budget or 0.32% of GDP has been allocated. We do not want to give handouts. But some worthy programmes may incur expenditure. When necessary, Government must be prepared to implement creative incentives to promote self-reliance and hard work. For example, we may need to allocate more budget for MCD to implement programmes to strengthen the family and community.

Grassroots organisations, the Citizen Consultative Committees (CCCs), Community Centres/Clubs (CCs) and Residents' Committees (RCs) are set up to promote social interaction and cohesiveness. They also form a crucial communication link between Government and people. We need an effective grassroots network to keep in close touch with residents and their changing needs. We can then respond effectively.

Our grassroots leaders work hard to serve the community. They volunteer their time on top of their own work and family commitments. They require the support of the full-time Community Development Officers (CDOs) employed by the People's Association.

Grassroots work is highly labour intensive. CDOs need to reach out to residents, talk to them, understand their problems, explain Government policies, organise community activities like block parties and so on. These require time and personal touch. More CDOs will be needed when residents increase, as in new HDB estates. More CDOs are needed also when grassroots organisations step up their programmes. Therefore, I request the Minister for Finance to be flexible in enforcing the zero manpower growth policy with respect to CDOs. Our investment in newer and better facilities in CCs has to be supported by investment in manpower.

As our population ages rapidly, we will have to tackle its many attendant problems. One major issue is housing arrangements for the elderly. Government's policy in this area should be flexible enough to meet different needs. The traditional and perhaps best arrangement is for the elderly to continue to live with their children or grandchildren in the same household. According to a recent study, for the past decade, 85% of the elderly in Singapore still live with their families. Our policies should continue to encourage children to live with the elderly, either in the same household or nearby in the same block or neighbourhood. On the other hand, we should also provide options for those elderly who do not stay with their children for one reason or another.

Taiwan's experience is instructive. The same study shows that in the two years between 1989 and 1991, the percentage of its old people living with their children dropped by 7%, from 70% to 63%. About 14% of Taiwan's old people now live alone.

What choices should be made available to the elderly? At the bottom end, Government is already supporting the aged destitute in old age homes, and the aged sick in nursing homes. At the top end, private developers will respond to market demand for rich retirees.

I would like to focus our attention on those in the middle. They are the ordinary salaried workers who have retired. They have to make their every dollar stretch. They may not want to continue to live in their 4- or 5-room flats after their children have moved away.

Cooperatives and self-help groups can take the initiative to set up retirement villages. Retirement villages are dedicated housing for the old, equipped with special facilities. Cooperatives will be providing a valuable social service. Government can provide support by leasing suitable land at subsidised rates to the cooperatives. Cooperatives can run these retirement villages on a self-financing basis, covering operating costs. This will keep costs low for the retired residents. This works on the same principle as child care centres where Government leases out space at nominal charges.

Another issue is how to encourage Singaporeans to support the elderly and strengthen family ties. Government should recognise the efforts of those who support their parents and grandparents. We can give suitable tax incentives.

Under the present rules, a taxpayer can only claim parent relief if the dependent parent does not earn more than $1,500 a year or $125 a month. This income ceiling should be raised to a more realistic level. We want to encourage those beyond 60 to continue working. Such older workers can earn at least $300 a month or $3,600 a year. Therefore, I would like the Minister for Finance to consider raising the salary ceiling for parent relief to at least $4,000 per year.

Under the present rules, one taxpayer can claim relief for his or his spouse's parents, grandparents or great grandparents, subject to a maximum of two such dependants. Our family size has been getting smaller; life spans are getting longer. Therefore, each of us has more aged dependants. Under the present rules, if a single taxpayer lives with his two parents and one grandparent in the same household, he can claim tax relief for only two of them, not all three.

I would like to suggest that the Minister for Finance consider removing the ceiling of two dependants per taxpayer. Such a ceiling does not support our policy of encouraging filial piety. Tackling a substantial aging population is a new challenge for Singapore. We need to think of more innovative ideas, flexible policies and multi-pronged approaches to meet this challenge successfully.

Government has recently reviewed its role in providing health care. Government is committed to providing good and affordable basic medical services to all. Government has since implemented the new medical benefits scheme in the civil service, based on the principle of co-payment. I am glad that Government has taken steps to clarify the initial doubts felt by many civil servants. However, questions from civil servants to the NTUC Hotline show that there are still some concerns. I would like to highlight some of them.

(1) There are no Class C wards for some medical specialities. Officers eligible for Class C wards are automatically admitted to Class B2 wards. He has to co-pay his hospital bill based on B2 ward rates. Can such an officer co-pay based on Class C rates instead, since he did not choose to be upgraded?

(2) This is a concern of woman officers whose husbands are also civil servants. Why must such woman officers opt for the same medical benefits scheme as their husbands if they want to enjoy the husband's medical benefits?

(3) Some have asked whether the Minister for Finance can give them an assurance that the co-payment rates of 15% and 40% will not be increased at least for the next five years, like GST. I look forward to clarifications on these concerns.

As our society progresses, we will face many new challenges. We will keep old methods and policies that have served us well. We must also continue to find new innovations and solutions. Our aim is to get everyone on board as we propel ourselves forward. Our policies must focus on our common destiny and strengthen our social fabric. I am confident that with prudent and farsighted economic and social management, the Government will be able to lead Singapore into the First League of Nations.

With this note, I support the Government's financial policy.

Mr Teo Chong Tee (Changi): ( In Mandarin): Mr Speaker, Sir, this year's Budget has brought some good news to many people in the lower-income group. These include the 5% income tax rebate, the adjustment in the CPF contributions, both for employers and employees, the increase in tax deduction for CPF contributions by the self-employed and no tax changes in the import duties for liquor and cigarettes, but the most welcome measure is the financial assistance given to the 1-room to 5-room HDB flat dwellers in the form of rebates for S&C charges and rentals. These measures will go a long way to alleviate the burden which will be incurred by the people when they cope with GST. This also shows that the Government sympathises with the plight of the people.

In the past few months, there has been a spate of price increases on goods and services before the implementation of GST. This has increased the burden of the people and, therefore, many people are dissatisfied with the Government with regard to GST. It cannot be denied that GST will be a major reform of our taxation system and will enhance our competitiveness and lay a strong foundation for our future.

However, GST will bring about some pressures and worries for the people because after the implementation of GST on 1st April, everyone will be affected. The family expenditure will increase. Therefore, we have to provide more assistance to the lower-income group. The tax rebates and the various forms of assistance in the payment of HDB rentals and S&C charges provided in the Government budget amount to the Government giving some of its surpluses into the pockets of the people and this will foster the people's confidence in the Government. The people hope that during the period of rapid economic growth and when the Government accumulates more surpluses, the people should be allowed to share in the fruits of such growth. One example of the Government returning the surpluses to the people is the CPF Share Ownership Top-Up Scheme. However, such top-up schemes should be used to encourage people to increase their savings and not to create a frenzy to buy shares among the people, because investing in shares does entail great risks. Some people who have bought Telecom shares have made some money and they think that they could buy other shares and make the same amount of money. Hence, there has been a scramble to queue up to buy shares and such people are turning the share investments into gambling. As a result, some people have incurred losses.

Mr Speaker, Sir, the Government will launch another CPF Share Ownership Top-Up Scheme. But we should ensure that such a scheme will not bring about the unintended result of gambling on the stock market.

This year's Budget is pragmatic. This Budget not only lays the foundation for our future prosperity, it also helps, through various offsets and rebates, to alleviate the burden of the people, with the result that 75% of the people would not have to pay income tax. Many people hope that the Ministry of Finance will keep to its promise of not increasing the GST tax rate beyond the 3%. If the economy is doing well, the Government should not increase other taxes, and further adjustment should be made to the CPF contributions so as to make GST a means to strengthen our competitiveness.

Mr Umar Abdul Hamid (Ang Mo Kio GRC): ( In Malay): Mr Speaker, I support the Budget presented by the Minister for Finance.

Recently, much emphasis has been placed on family values in conjunction with the International Year of the Family this year. But the Budget this year has been more concerned with the individual rather than the family. I agree with the suggestion by Mrs Yu-Foo Yee Shoon to introduce incentives for family life. As we know, the family plays an important part in all aspects of our life. The Government needs to play a role in nurturing the family spirit. The Government can grant incentives for better family life. These incentives can open the way towards a stronger family life in our long term interests. The concern about a growing number of neglected elderly persons in the future can be allayed if the family spirit is nurtured as early as possible. These incentives can be in monetary form such as better reliefs for those who are looking after a multi-generation family or other privileges to reduce the burden or further encourage children to look after their parents. As such, I would like to call upon the Government to grant benefits aimed at fostering a family spirit and not benefits for the individual only.

I also welcome the Government's move to increase the allocation to the Edusave Fund by 100% from $500 million to $1 billion. In view of the fact that our students are a valuable share in the future, these investments and increases are appropriate and timely. They will mean that secondary school students, for example, who are receiving $150 each will now have $300 each. There are already schools planning to use two-thirds of the amount and others which are going to use a certain sum only based on the needs and the capabilities of their students. In other words, even before the increase of $0.5 billion for this year, the schools are already making plans as to how best to use the money. The amount as a whole is no mean sum. In order not to burden the school administration in planning the use of the allocation, community self-help bodies like MENDAKI, SINDA and CDAC should be allowed to benefit from the allocation too. They can use the Edusave funds for activities that are in line with the goals of the schools. In this way, these organisations can enjoy a closer working relationship with the schools. I am confident that the two sides will obtain a more comprehensive and balanced benefit in the use of this Government grant.

Another matter I would like to touch on here is the development of private institutions providing educational services, both academic and technical. The effective role of these private schools is undeniable. Indeed, they should be encouraged considering that they offer further opportunities for workers or those who are interested in continuing education to further enhance their achievements. At the same time, in view of the growing number of such institutions and the response from the public, this will mean the creation of a large, influential market of high potential. This might have an impact on the Government's policy to achieve a balance in expertise in all areas of endeavour. If we could have a form of guidelines to manage the direction of these institutions, their role will be more integrated with the aims of the Government.

In presenting the Budget this year, the Minister for Finance stated the need for Singapore to enhance the individual's potential to the highest possible level. In this connection, I would like to know the progress of the Singapore Open University. Unlike the National University of Singapore, the Open University functions to give more people the opportunity to further their education to degree and post-degree level. Towards this end, it would be necessary for the admission system of the Open University to be more flexible in terms of qualifications and admission places. This flexibility should not mean that the degrees are perceived as being of a lower quality than they really are. I would like to ask the Minister whether the Open University can play a role in meeting the objective of enhancing the individual's potential to the highest level. Is every eligible applicant admitted to the University? If not, what are the problems faced by the administering body?

Every year, the Government has presented strategies for Singapore to go overseas. Various strategies have been presented covering enterprise and industry, but no idea has been given by the Government as to the role that can be played by educational institutions like the polytechnics and universities in Singapore. The Government should issue guidelines to these institutions towards increasing the number of professionals who can then spread out and serve at the regional level in Southeast Asia. Singapore, as a reputable urban centre, is capable of an effective contribution by encouraging more professionals to find a foothold in countries requiring their expertise. Countries that are now adopting open market policies are in great need of their know-how. This would further expand and promote business for Singapore and the region. This can be achieved more effectively if university and polytechnic enrolments are increased according to the areas of expertise required. I understand the Government's concern over creating a situation where there are too many graduates or professionals chasing a limited number of jobs. However, I think this concern can be avoided because the demand for expertise in this region far exceeds what Singapore possesses. I am more concerned with the situation where the economies of the countries we have invested in goes into rapid growth and they require more professionals from Singapore. These professionals would then leave Singapore and we would be faced with the problem of shortage of professionals to lead the country in various areas.

In conclusion, the prosperity that we have enjoyed year after year would be more meaningful if we can share it with the countries that have always looked up to us as an example. The rapid progress of the region can only be an advantage to Singapore. The Budget presented will consolidate further the stability of the country. Although it was not what our businessmen had expected, the signs indicate stable progress and a secure business environment.