BUDGET ALLOCATION FOR MINISTRY OF DEFENCE

[Mr Speaker in the Chair]

Dr Kanwaljit Soin asked the Minister for Finance what is the justification for the allocation to the Ministry of Defence of the largest share of the Budget for FY 1994/95, amounting to 27% of the total budget and an increase of 3% over the allocation for 1993.

Dr Kanwaljit Soin (Nominated Member): Sir, Question No. 1. With your permission, I would like to point out that the year 1993 in the Question refers to financial year 1992/93. I apologise for the typographical error.

The Minister of State for Finance (Cdre Teo Chee Hean) (for the Minister for Finance): Mr Speaker, Sir, the Member's question focuses on the share of the Government's total budget allocated to the Ministry of Defence. For FY 1994, this amounts to 27% of the total budget as compared to 30% of the total budget in FY 93. This is a decline of 3 percentage points. Dr Soin may have misread the percentages. Be that as it may, the share that is allocated to defence from the total Government budget is not a particularly meaningful figure, as it depends on what other services the Government provides directly and what it provides indirectly, eg, through statutory boards like PUB, privatised companies like Singapore Telecom, or restructured hospitals like SGH.

Unlike other activities, defence and security cannot be privatised and must be provided by the Government. Hence, its share of the Government budget might appear large.

A more appropriate measure of the size of the defence budget is as a percentage of GDP. The Government has set aside up to 6% of the GDP for defence. As Singapore has developed and grown, this 6% for defence has correspondingly increased, without ever becoming a burden on the economy, or depriving us of resources for other public purposes. Spending on defence has never held back expenditure on education, health or housing. Whenever we have not proceeded with a project, it is because the Government has considered it to be an unwise or uneconomic use of funds, and not because funds are not available.

The 6% limit on defence expenditure has remained unchanged for many years. But Mindef does not automatically spend the entire 6% each year. Depending on the SAF's needs, in some years, less is spent. Provided the cost of military equipment does not escalate too quickly, and economic growth remains strong, we can continue to do so. In FY 94, Mindef's budget is 5.2% of GDP. This is similar to the level of expenditure in recent years.

Singaporeans must never believe that peace can be taken for granted or that security can be ensured by default. The Iraqi invasion of Kuwait and the civil war in Bosnia remind us that Singaporeans cannot survive by someone else's largesse. We have to make adequate preparations ourselves to safeguard our own survival. Nobody else will do it for us.

Steady expenditure on defence is therefore necessary for our survival. It is an insurance premium that provides a secure and stable environment that attracts investments and lets Singaporeans enjoy continued economic growth. My Ministry will continue to support Mindef's operations through the provision of sufficient, but not excessive, financial resources.

Dr Kanwaljit Soin: Sir, I appreciate the Minister's reply, and I am with most of it. But could I ask him whether he thinks 27% of the total budget allocation for defence, as compared to 1.6% for community development, is a good allocation of resources?

Cdre Teo Chee Hean: Mr Speaker, Sir, as I pointed out just now, spending on defence has never prevented us from spending enough money on these other areas.

Dr Kanwaljit Soin: I agree with that. If we reduce 1% on defence, it would not make a great deal of difference to the defence budget but it would add a lot to the community development budget.

Cdre Teo Chee Hean: Mr Speaker, Sir, let me put it this way. We are a small country and we have to spend enough on defence to make sure that we are in a stable and secure situation so that foreign investors would feel comfortable to come here and do business. When our children do national service, it is a sign that they are prepared to defend the country and to place a long-term stake in the future of the country. When we spend on defence, we show that we are prepared to do the same and this sends a very strong signal to others that we are prepared to stay here, sink our roots in, and defend what we have. This is a very important element in creating the right environment for our prosperity and growth.

Dr Kanwaljit Soin: I think our leaders have done a very good job in building very cordial relationship with our neighbours, and right now we are in ---

Mr Speaker: Dr Soin, no speeches. Can you ask your question?

Dr Kanwaljit Soin: In view of this very cordial relationship, would the Minister agree that defence spending is not as important as it would be during less cordial time?

Cdre Teo Chee Hean: Mr Speaker, Sir, we have never built our defence on the basis of the state of relations with any particular country. We have built our defence on the basis that we have to be prepared for the future and that we have to be prepared to defend ourselves. That is the basis. If I may remind the hon. Member, the fact that the Cold War may have ended, for example, is not an indication at all that times have necessarily become better or more secure for the countries in our region.