ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [1st March, 1995],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 1995 to 31st March, 1996." - [Minister for Finance].

Question again proposed.

Mr Heng Chiang Meng (Cheng San GRC): Mr Speaker, Sir, thank you for allowing me to join in the debate.

Last year, we had a $7 billion surplus. Is this because of good economic growth? Yes, Sir, it is. But I do not believe that that is the full picture because, to economic growth, we must add that the overall tax burden on Singaporeans, both individuals and companies alike, is much too high. So why do I say this? The reason is very simple. Besides direct taxes on income and revenue, there are many areas of indirect taxes in Singapore, including various transfer payments to the Government in the form of levies and import duties. We have GST, COEs, import duties, ARF, maid levy, foreign workers levy, property tax, water conservation tax, cess tax, etc. Even the method of computing corporate tax ensures that companies usually pay higher than 27% because companies normally have other companies under them as subsidiaries and when they lose money they are not allowed to offset against the subsidiaries which make money. So even the company cars are only allowed depreciation charges on a very much reduced basis. The result is that we are clearly overtaxed.

If the Government needs the money, I do not think we have any quarrel with it in getting so much money into their coffers. But the question is: does it need the money? The huge surpluses of last year's plus the previous years' tell us a definite no. While the Government preaches a balanced budget, it actually practises a surplus budget system because within the budgeting process there is a surplus-biased method of calculation. If the Finance Minister presents a balanced budget year in year out, we are very sure that we will get a surplus budget year in year out.

I would like to urge the Government to reduce this overall tax burden. If the Minister agrees, the question is how do we do it. To reduce indirect taxes? Frankly, I do not recommend that we do this because, generally speaking, the indirect taxes usually have policy objectives. The primary objectives are not to raise money but to achieve policy objectives. The side effect of course is increased revenue which is good. I am not saying that increased revenue is bad. But it must be balanced with some form of corresponding drop in direct taxes.

Sir, I would therefore like to urge the Minister to consider three areas of direct taxation. One of course is the greater and faster reduction of income tax. The second one is the abolition of interest on savings which is now computed as part of income. The third area is to abolish the tax on dividends which is also now considered as part of income when individuals receive dividends from companies.

Sir, this is logical because the Government has always been harping that indirect tax is a voluntary tax in the sense that if a consumer does not want to pay the tax the decision is in his hand. If he does not want to pay GST, obviously do not buy anything in Singapore. Buy them overseas and make sure that they are below $600. If you do not want to pay COE, do not buy cars.

In these three areas that I have mentioned, such comment is not true, because surely the Government does not want the people to earn so low that they fall below the income tax threshold. To become a more productive worker, a higher salaried employee, or a successful entrepreneur where your income rises, one automatically has to pay tax. One cannot say that he does not want to pay income tax and therefore he has a low salary. It is not the right way to do so. Therefore, to encourage greater fruits of labour accruing from greater efforts, the Government should strive to keep direct income taxes lower and lower as long as it can afford to. The chronic surpluses show that the Government can still lower such taxes.

The second point is: why do we tax on interest from savings? Surely savings is one area we would like to encourage people to do more and more. After all, I believe the Deputy Prime Minister, in one of his speeches, said that one of the foundations of our economic growth is the high savings rate of the people. Here, I believe the Government should actually look into this issue of abolishing the tax on interest from savings. After all, savings are actually the residue of income minus the expenditure. In this respect, the residue of that income is already taxed because income is already taxed. When you tax on the interest on that savings, it is actually like double tax. So they are taxed twice. This is one reason why in a lot of countries where there are high inflation rates people want to spend more and more currently because they know that the interest from their savings in the future will be taxed. It is better to buy the things now rather than to keep the residue in the bank and let the interest earned be taxed.

Of course, the Minister can always say that there are two avenues where the Government does not tax on savings. One is the CPF which is a compulsory savings scheme and the other is POSB where it does not tax interest from savings. If there are already these leakages, then I would urge the Government to consider that it does not make any difference if this same concession is extended to other forms of savings, like savings in banks and finance companies. After all, looking at the size of POSB, the leakage is already wide enough and opening the floodgates a bit more to allow banks and finance companies into the scheme will not really decrease by too much the amount of revenue which the Government collects.

Sir, on the question of tax on dividends, if the Government is encouraging us to be a nation of shareholders of companies, I would again ask: how does one get the money to buy shares? Normally, for most of us, it is from savings again. So when we use our savings, as I have said, after taxed income, to buy shares. The benefits accruing from those shares in the form of dividends are again taxed. They should not be taxed.

I also know that if at all the Minister answers these points, he will come up with lots of arguments to defend his current policies. I would do the same if I were him. But even as I say that, Sir, I would like to urge him to seriously consider what I have just said. The huge surpluses are no longer necessary. They are no longer economically beneficial to us. They may in fact be a political embarrassment and liability. I think it is time to make drastic changes to the system to reduce the surpluses. If the Government wishes to continue with monetary means to achieve policy objectives, the surpluses must be reduced in other areas. Reducing direct taxes which penalise hard work and thrift fits in with the values we need to succeed in the brave new world of the 21st century.

Mr Kenneth Chen Koon Lap (Hong Kah GRC): Mr Speaker, Sir, this year's Budget Statement is not unlike last year's in many respects. We have registered high growth and performed better than expected and, not unlike last year, it was met with lukewarm and indifferent reactions. Against the backdrop of so many depressing events which happened last year in the world, I cannot see how we can expect a better Budget Statement than the one we are having. If this Budget Statement is made in Mexico, I am sure the Mexicans will have a month-long fiesta.

I am happy to note that part of our surplus is distributed back to our people through the CPF top-up scheme, rebates in income tax and conservancy charges. This is consistent with the Government's intention to redistribute accumulated wealth on a broad-based basis. However, although at first glance, every Singaporean seems to benefit from this distribution, a small group of people who needed this most has somehow been left out. I am referring to those under the public assistance scheme. They do not generally have CPF accounts and therefore cannot benefit from any of the CPF top-up schemes nor do they pay income tax, and not all of them stay in HDB flats. I think it is only fair that they should also receive something, perhaps in the form of a one-off cash grant or the Government can fund more generously through grassroots and charitable organisations to organise projects and activities that can benefit this group of people or even find ways to distribute some essential good to them.

Let me address the two main areas where unhappiness comes from. The first area in which much was expected is the retail sector. But the problem facing the retail sector is complex. While I agree that they are going through a very difficult time the problem cannot be resolved by the reduction of a mere few percentage points in tax rebates. I attribute this structural problem to the following three major factors.

Firstly, we have an over-supply of retail outlets. Added to the worsening situation is the setting up of many shopping centres away from the traditional shopping areas because of the population shifts and the availability of MRT. I think our retailers have to realise that the demand of shoppers has decreased despite an increase in the number of tourists due to many other factors which I will elaborate later. Therefore, it is not uncommon to see that for every new shopping centre that comes into operation, invariably one old one will suffer.

Secondly, due to our strong Singapore dollar, shopping outside Singapore has become very attractive. The lower-end shoppers will flock to Johor and other parts of Malaysia to do their shopping. The middle group of shoppers will venture into Thailand, Hong Kong or even Australia, while the upper-end shoppers will go to Europe and the United States to shop. Because of the price difference and because of the fact that almost every household in Singapore can afford to go abroad at least once a year, they find it economically advantageous to do this because, at the end of the day, most of them will save enough in shopping to pay for their annual holiday.

Thirdly, because of the reduced volume of turnover due to lack of demand, most retail outlets will have to raise their prices of goods to survive. And it becomes a vicious circle, the higher the price, the lesser the demand both from the local and foreign shoppers.

In addition to the above, I have also observed that due to the buoyant property market, many Singaporeans have committed a sizable portion of their income to the purchase of properties. The high cost of owning a car also affects the spending power of a certain group of Singaporeans. Therefore, unless the retail sector can come to terms with all these constraints affecting the business and find innovative ways to deal with the situation, they will have a tremendous struggle to stay in business. A few percentage points in tax rebates is not the answer to their long-term survival. For this reason, I am sure the 2% reduction in property tax is not going to be of any help to them.

Perhaps a survey on the retail market can be carried out by the Singapore Retailers' Association together with the help of the Ministry of Trade and Industry to make known more information on the volume of tourists, the amount of annual spending by the consumers, the quantum of new shopping space available and how much more will come on stream, so that it can help those who plan to enter the retail market to assess the viability of their intended undertaking.

The second area in which much was expected is the commercial sector. They expected a reduction in corporate tax to help in their business venture. Although a reduction of costs in any form can provide a much more competitive business environment, in an economic buoyant situation where the existing tax rate is already competitive compared to other parts of the region, further stimulation may not be necessary at this point of time. In fact, it might have a negative effect on inflation. Even in the US where the economic growth is much slower, the Federal Reserve deemed it necessary to increase the interest rate to dampen the growth of the economy to fight inflation. Besides, this year, the business circle will not have to contend with the increase in the CPF contribution rate as compared to last year. So we have time to observe whether our cost of doing business this year will still be competitive enough to sustain our expected growth.

However, I would like to draw attention to an area of great concern, ie, the effect of rapid aging population on doing business as a whole, especially on our tight labour market and the ever escalating labour cost. Raising of the retirement age is a step in the right direction, but it may not be enough to overcome the problem. Again, it is a structural problem, partly created by our continuous economic growth. As a result, employees are being promoted and wages increase at a very rapid rate. Although increased productivity and the constant effort in skills upgrading have always been the means to balance such increase in wages and promotions, nevertheless, most employees would reach his or her peak in terms of productivity, skills and total output at a certain stage before their retirement age, especially when no promotion is forthcoming. In a situation like this, the company will be tempted to replace this group of senior employees by younger ones for pure economic reasons. This is undesirable.

Although from the company's short-term outlook, it may make economic sense but, from the national point of view, it will be disastrous to lose the productivity and contribution of this group of workers. Therefore, a solution has to be found to strike a balance in recognising the contribution, experience and loyalty shown by the long-serving employees by the employers and, at the same time, adjustment made to the ever rising expectations by the employees. Long-serving employees who are being employed in the same position and not being promoted for any reason but, nevertheless, are able to continue contributing to the company should be willing to accept more reasonable yearly wage increments. And at the same time, the company also has to ensure the continued employment of these employees and reward contribution through bonuses and other means should the company make exceptional profits in any given year.

I understand that at the present moment the CPF rate of a re-employed retired person is being reduced abruptly from 20% to 7 1/2% at the age of 55. Perhaps a gradual reduction and starting at the age of 50 and continuing until the new retirement age of 60 so that the impact of reduction in pay will not be felt so sharply, could be considered. I urge the Government to address this problem and find appropriate solutions. Otherwise, with the aging population increasing, we will be faced with the problem of scarce labour resources on the one hand and, on the other, we would have a group of labour force which cannot be employed effectively.

In conclusion, I would like to see everyone reflect on this year's Budget with a long-term view and in relation to the interest of the nation rather than measure it against the dollars and cents that we individually can expect. In this fragile world, we should rejoice to the fact that we are one of the few nations that not only are we able to float above water but actually doing it by sailing across in a luxury liner.

Sir, I support the Budget Statement.

Mr Koo Tsai Kee (Tanjong Pagar GRC): Mr Speaker, Sir, thank you for allowing me to join in this debate.

The media covered this year's Budget with little fanfare. The Business Times called it an "unspectacular" budget. The Straits Times called it a "prudent" budget. I think such uninspired descriptions of a carefully crafted budget is precisely the reason why the Budget is a good one. I think it deserves accolades.

I think the Minister was wise not to introduce a corporate tax cut. Contrary to what Mr Heng Chiang Meng has said, I think a corporate tax cut this year would almost surely overheat the economy. Last year's economic growth of 10.1% was spectacular, but it does come at a small price. After two years of double digit growth, the economic engine was beginning to run up against available resource constraints. We know that the economy cannot grow faster than what two numbers add up. These numbers are (1) the productivity growth; and (2) the growth in labour supply. Last year's productivity growth was 5.6%. The labour growth, I estimate, was about 3%, making a total of 8.6%. But the economy grew at 10.1%. So the over-heating must appear somewhere. True enough, that figure turned up in the higher CPI which registered a gain of 3.6%, higher than 1993's CPI growth of 2.4%.

Sir, I think the implementation of GST increased the CPI only marginally. The larger increase came from the increase in labour cost. The unit labour cost for 1994 increased by 1.9%, vindicating my suspicion that labour cost, not the GST, was the main culprit in the higher CPI.

But even though the unit labour cost has gone higher, there is nothing to worry about. All developed countries have higher unit labour cost. That is the price of progress. That is the price of development. But to justify the higher labour cost, we need to push up productivity quickly. Since our growth in the labour supply will be constant for many years to come, unless we accelerate our landed immigration programme, sustainable growth in the next few years can only come from productivity increase. If we want to be a developed country, we must have the absolute productivity levels of the developed countries. Here, we still have a long way to go.

This brings me to the question: how to increase productivity? We can throw in money for capital goods and increase productivity in the short term. But for the long term, we must depend on how clever our workers work the machines and squeeze higher productivity out of existing machines, instead of just buying new machines all the time. In short, we need to increase our, what we call, TFP - Total Factor Productivity. I think this is where the Government should come in and give incentives for companies to train workers. The problem here is very serious. Out of a total workforce of 1.6 million, more than half or 850,000 have Primary Six or lower secondary education only. The figures are depressing enough. We do not have either the quality or the quantity to be a developed nation in the next 5-10 years.

Companies are loath to spend money on training when they think that the value added will accrue to another company once the trained staff leave to join their competitors. Hence, companies will always take a short cut. They prefer to upgrade machineries to capture higher productivity. The fact that they can write off the depreciation as expenses is another strong incentive not to spend money on labour training.

But this method of capturing productivity in the short term leaves our mature workers poorer in skills. Why? Because companies will have to retrench older workers and employ young, more educated workers. The urgent task facing the Ministry of Finance is how to encourage employers to train smarter workers on the job. The NTUC and the Government, especially the Ministry of Labour, have been exhorting companies to spend more than 2% of their payroll on training. But most companies do not do so and for good reasons, because there are no incentives to train workers, especially the rank and file members. In order to facilitate a behavioural change, we have to make training worth its while. Make it worth its while for companies, make it worth its while for employees. And I think the best way is through tax incentives. Companies and people respond to incentives, especially monetary incentives, not through Ministerial exhortations. They just shut off their ears. I ask the Ministry to find a way to reward companies meaningfully and substantially. The Government has several tax instruments to do so. And I hope that in next year's Budget or the year after that, the Government can come up with some concrete tax incentives. The tax gain for the companies should be substantial enough. The Government should not worry about the tax loss because the Government can recapture the gains through higher total factor productivity in the 21st century, only five years away.

Mr Speaker, Sir, I move on to tax rebates and surpluses. Many people including Members of Parliament feel that the Government could have been more generous with its surpluses. On the contrary, I think we should build up our surpluses quickly. This is not to say that we should not along the way hand out some rebates to the ordinary folks. I know many Singaporeans, including Mr Heng earlier on, have said that the Government surpluses are becoming an embarrassment. I think the critics should look at two things.

First, the surpluses as a percentage of the GDP is growing smaller. That is the first thing. Second, if we were to look at the surpluses in the context of our foreign reserves, Mr Speaker, we see a totally different picture. The accumulated reserves standing today at about $70 billion as a ratio of our imports of $156 billion is only about 45%. What does this number mean? To get a feel for this number, I refer Members of Parliament to the 6th March issue of Fortune magazine. That issue has kicked up a row in Malaysia, because the magazine quoted a survey by Tom Riley who is a research director of an investment firm, Gary Shiling & Co, who said that the Malaysian ringgit is on the target list of devaluation, following Mexico. Those countries which face a higher risk are the Philippines, Indonesia and Brazil. I think the survey definitely exaggerates the risk of the ringgit. Still, it is one survey which has found its way into Fortune. Fortune and Economist are two magazines read seriously by financial analysts. Obviously heads turned in Malaysia when this fact was published.

After all, Malaysia had a balanced budget. The inflation in Malaysia for 1994 was only 4.3%, slightly higher than ours, and their relative reserve position, ie, reserve as a percentage of their imports was much stronger than Singapore's. If we look at the Malaysian reserve as a percentage of their imports, their number is 60, ours is 45. So they are 15 points higher than ours. Our reserve position is more like Indonesia which has a reserve position of about 40%. Indonesia is a country high on the target list of devaluation by this investment firm.

In the same article, Tom Riley quoted Singapore as the safest of the emerging countries, followed by South Korea, Taiwan and Hong Kong. Singapore is different because we have two pluses over a period of time. The first plus is the budget surplus, and the second plus is the current account surplus. If our current account surplus is strong, that is good. If our budget surplus is strong, it is even better. But if you look at the budget surplus in relation to the foreign reserve, our budget surplus is no big deal. If we were to run down our surplus or to have a smaller surplus, this might lull people into thinking that we can be liberal with our expenditure. The truth is until our reserves reach a position of about 80% of our imports, we should continue to build up our budget surplus.

The budget surplus will come in handy when we need to spend extraordinary amounts of money on infrastructural projects like developing water resources or build desalination plants, or maybe build underground road tunnel systems. In a crisis, we may even have to buy water from afar to barge it in. These crises are real. Technologically, the problem can be solved, but the solutions are expensive, and the surplus should provide one way to the solutions.

I would like to move on to the income tax philosophy. Here, I am supporting my Parliamentary colleague, Mr Heng Chiang Meng, on the fundamental change in income tax philosophy that needs to be looked at in the years to come. If we look at the major sources of revenue for 1994, the lion's share came from direct taxes. It is about 37% of the revenue. The GST only contributed about 4.8%, which is a minuscule amount. This reliance on direct taxes is still, I think, too high. Since the Government is committed to holding the GST at 3% for the next four years, this pattern of revenue source will be more or less the same for the next few years.

When I first came into Parliament, I proposed that we look at the expenditure tax seriously, and I mean seriously, but the Ministry has not looked at it at all. This expenditure tax idea is an idea whose time has come. The idea has moved from the academic area to the policy area, and now in America and Europe, into the political arena.

An expenditure tax is a tax levied on expenses, not on income. So it is a fundamental change. But like an income tax, it can be progressive. Many people fear that expenditure tax will hurt them, but the expenditure tax will not. The tax can exempt a typical household from paying taxes by raising the limit of tax expenses. For example, if a typical household needs, let us say, $10,000 to keep a family healthy and happy, then taxes need only be levied on expenditure in excess of $10,000. So on $11,000, he is taxed the $1,000 at the marginal rate. A higher threshold can be fixed which would exempt most households from paying taxes. But the important thing, as Mr Heng Chiang Meng has correctly pointed out, is that savings are not taxed, and should not be taxed.

The Ministry has told us several times in this House - in 1976 when Mr Heng first mooted it, and in 1992 when I mooted it - that the tax is difficult to implement and that it violates confidentiality. Of course, they are not true. Yes, there are problems but the only major obstacle is the political will, or the lack of it.

To be sure, I am not saying that we need a tax now. I do not know whether Mr Heng says we need it now, but I am saying we do not need it now. We just need to study the idea and keep it on the front burner. Policy entrepreneurs in the Ministry of Finance and the Ministry of Trade and Industry should start looking at different facets of the expenditure tax in a new light. There is nothing wrong with our system of taxation for now because everything balances out. Savings are still high. But as a method of taxation, the direct tax and GST combination would be out of date in the early part of the next century. I am convinced that in the next 10 years, one of the developed countries will gather enough political courage to implement the tax. Why? Because the present tax system discourages savings, interest is taxed, it promotes profligacy and is screwing up all the economies of the developed countries except Japan.

Mr Speaker, the gross domestic savings in Singapore are very high - 47% of GDP. But if we look at the disposable savings, ie, savings minus the enforced CPF savings, we find that our savings rate is not that impressive. In fact, many Singaporeans think that thrift does not pay. Unfortunately, events have proved them right. Over the last few years, savings earned negative returns. First, the CPI was higher or about the same as the interest given by banks on saving deposits, and then the interest earned was taxed. But what was right for them was not so good for the nation because people are going into debts to capture asset inflation and asset inflation is becoming a problem for the masses. Is it any wonder that young Singaporeans have decided to live today and let tomorrow take care of itself? There is an advertisement on watch which Mr Speaker might be familiar. It is in Chinese. The Chinese saying goes: bu yao tian chang di jiu, zhi yao ceng jing yong you [ ]. Translated, in a commercial sense, it means the present is more important than the future.

Mr Speaker, the idea of an expenditure tax was first proposed by Prof. James Meade, a British, in the early 1970s. But the idea is now uniting unlikely political bedfellows from both the left and right of the political spectrum, precisely because the present income tax system is putting people into debt. Mr Dick Armey, the US House Majority Leader, is already pushing for the expenditure tax in Congress. A variant of the Armey expenditure tax has now been proposed by Senator Pete Domenici, Republican Chairman of the Senate Budget Committee from New Mexico and also an unlikely bedfellow, Democrat Sam Nunn from Georgia. I do not expect them to push through the expenditure tax so quickly, but the idea is that it is at the top of the political agenda and is taking centre stage.

We move from America to Germany. Germany, once a bastion of financial prudence, has chalked up successive current account deficits and budget deficits and this has forced a serious rethinking into the present income tax system which has discouraged households to save. Instead they want to spend. I urge my fellow MPs, particularly the Ministry of Finance staff, to read an article by Thomas Mayer. The article was reprinted in the Asian Wall Street Journal on Wednesday, 25th January 1995. Thomas Mayer is the financial analyst from Goldman Sachs & Co. He tells of how the German culture of savings has turned into a culture of spending. Mayer calls for the expenditure tax to be implemented quickly in Germany because the present tax system discourages Germans - once one of the world's most prolific savers - to spend and spend. The savings gap is now prohibiting investments in Germany. Thomas Mayer's views mirror the intellectual and financial elites in Germany.

I move on now to the rebates and the CPF Share Ownership Top Up Scheme. The Government has done the commendable, in my mind, by giving a generous one-off rebate to tax payers, and offering to pay some of the rent, and service and conservancy charges of HDB dwellers. But I hope that the beneficiaries of these tax rebates will not factor these rebates into their expenditures and adjust to a different lifestyle. I urge these beneficiaries to save the rebates and treat the rebates as a bonus to be saved.

There are critics who charge that the CPF Share Ownership Top-Up Scheme is no big deal. I think these people do not know the real value of money to ordinary folks. I see these folks in Shenton Way queuing up for long hours just to catch the opportunity to buy one or two Transit Link cards, hoping that these cards would go up in value. But how much can the value of a Transit Link card go up? Certainly less than the few hundred dollars that the Government is going to put into our accounts. I think the CPF Share Ownership Top-up Scheme deserves support and it should not be belittled.

In conclusion, Mr Speaker, Sir, this year's Budget is a good one. I would like to congratulate the Minister. He is not here, but I hope that RAdm Teo Chee Hean will take it up with him. I hope that his staff will think seriously about the expenditure tax because he and I may not be in Parliament when the expenditure tax is finally implemented. But I think they will get the credit for seeding the idea into the Ministry.

I support the Budget.

Mr Heng Chiang Meng (Cheng San GRC): A clarification, Sir. I was mentioned five times in Mr Koo's speech. I do not know whether to be upset or flattered because I am not too sure whether it was honourably or dishonourably mentioned. He said that a reduction in corporate tax would overheat the economy. I would like to ask him how he arrives at this conclusion. He uses the US as an example. Does he not know that one of the key financial instruments of policy by the Federal Reserve Board is money supply. In Singapore, the MAS has stated categorically that money supply does not have any significant impact on inflation in Singapore but the preferred instrument of policy for MAS is the exchange rate, and not money supply. So I would like to ask him how he arrives at the nexus that a reduction in corporate tax would overheat the economy.

Mr Koo Tsai Kee: Mr Speaker, I said it very clearly in my speech that the economic growth cannot exceed the sum of two numbers. The first number is the productivity growth. The second number is the supply of labour growth. If you add up these two numbers last year, they came up to about 8.69%. Our economy grew by 10%. So there was really a mild over-heating. If you were to reduce corporate tax this year, it will almost certainly overheat it. I do not know what the MAS has said, but these are economic fundamentals.

Mr Heng Chiang Meng: Just one point, Sir. I would like him to show me the actual economic study on this. I am very sure that he cannot come up with any economic basis for his statement.

Mr Koo Tsai Kee: Mr Speaker, I will try to send him something.

Mr Davinder Singh (Toa Payoh GRC): Mr Speaker, Sir, I declare my interest in a group which has gone regional.

Sir, the Singapore Government has encouraged Singapore companies to go regional. Regionalisation is crucial if we are to meet the challenges of the global economy and to continue to create wealth for Singapore. Overseas expansion brings with it job opportunities which Singaporeans who are talented and adventurous can take up.

The Government is continually refining its policies to encourage regionalisation. Budget after budget, economic incentives to maintain Singapore's competitiveness and to encourage Singaporeans to venture abroad have been introduced and refined. This year's Budget Statement recognises that it is important to strengthen the incentives for businesses to venture and to succeed overseas.

Some time ago, a package of incentives was introduced to encourage our companies to invest abroad. Today, if a Singapore company has an overseas investment and as a result derives foreign income, the Singapore company does not have to pay any Singapore tax on that income in Singapore if tax exemption has been granted or if the foreign tax credit is equal to or exceeds the Singapore tax payable.

Tax exemption is granted on a case by case basis under the Income Tax Act and the Economic Expansion Incentives (Relief from Income Tax) Act. Under those statutes, companies must make applications to the authorities and satisfy a number of criteria before tax exemption can be considered. It is a matter of discretion.

The other route is to obtain a foreign tax credit which is equal to or exceeds the Singapore tax payable.

Under existing law, foreign income in relation to which there is a foreign tax credit is allowed to be distributed as tax-exempt dividends. This enables foreign income to flow through to shareholders without double taxation.

However, the flow through is limited to two levels of shareholding. It is also subject to the Singapore company owning at least 50% of the shares of the company paying the dividends.

The Minister has recognised that companies have found it necessary to restructure their holdings in a manner which results in more than two levels of shareholding in Singapore. Also, because it is common practice in Singapore for companies to form consortiums to invest overseas, it is not uncommon that shareholders own less than 50% in the dividend paying company.

To address these realities, the Minister has decided to extend the flow through of tax-exempt dividends beyond two levels of shareholding provided that the 50% shareholding requirement is satisfied. He has also decided to waive, but on a case by case basis, the requirement of the 50% shareholding in the dividend paying company.

The whole idea behind regionalisation is to add wealth to the nation. That is done by investing overseas and, in due course, channelling the profits back home. In making the changes announced on Budget day, the Government has shown that it is alive to business realities. It has made changes which will result in more money ending up in the pockets of shareholders resident in Singapore.

If the object is to enable Singaporeans to keep more of the profits, it is difficult to understand why the Government has not recognised that companies may have to restructure not only their Singapore interests, but their overseas holding as well, and this restructuring may have to be done in a manner which results in the imposition or the intervention of a foreign subsidiary between the Singapore holding company and the foreign operating company which pays overseas tax. In other words, the holdings overseas may have to involve more than one tier. The concessions just announced only apply if the first tier foreign company pays tax overseas. The issue that is left unaddressed is what if, as is often the case, the second tier company and not the first tier foreign company is the company that pays the tax?

The first tier foreign company may be sited in a tax haven and may not pay tax. And in that event, tax-exempt dividends cannot be received and/or paid in Singapore. I would be interested to understand the rationale for this distinction.

Many investors either buy into or incorporate groups of companies overseas for various reasons, including reasons of tax efficiency. Countries like the US or the UK allow group relief for corporate groups in their territories. A Singapore investor may find a foreign asset or business very attractive but may have no choice but to invest in an entire group to get at that asset or business.

If the object is to encourage regionalisation and the repatriation of profits, the Singapore Government should grant a concession to ensure that, first, the income received in Singapore can be received as a tax-exempt dividend and, secondly, that that tax-exempt dividend can flow through to many levels in Singapore.

Also, I would be interested to learn what the rationale is of the 25% or 50% shareholding requirement to qualify for this concession. As part of our drive, we are encouraging companies from other countries to enter into joint-ventures with us with a view to investing in third countries. If those joint-ventures are incorporated locally, and if because of demands of equity or because we need the expertise of our foreign partners, a Singapore party's stake is limited to less than 25%, there is no reason in principle why the Singapore party should not enjoy a flow through of tax-exempt dividends if the dividends originate from foreign income earned by the joint-venture. If one has to settle on a figure, why 25%, why 50%, why not 5%? After all, the Companies Act deems a person who has an interest in 5% of the voting shares of a listed company as a substantial shareholder.

Finally, is there a reason for not extending the concessions to capital gains on foreign investments? Today, capital gains on disposal of foreign investments cannot be passed on to shareholders in Singapore in the form of tax-exempt dividends. This is because capital gains are not taxable here. Therefore no foreign tax credit is available. This may result in double taxation for Singapore companies if the capital gain is taxed overseas.

There is no reason in principle for the different treatment. A disposal of a foreign investment contributes as much to our accumulation of wealth as trading profits. What is the evil which we are seeking to address by not extending the existing concessions to capital gains overseas?

The answer should not be that Singapore companies can make applications for tax exemptions under the Income Tax Act or the Economic Expansion Incentives (Relief from Income Tax) Act. Those applications sometimes make things quite cumbersome. We want to promote ourselves as an attractive place to do business from. We should rationalise all these incentive schemes to make matters simple for the investors. Unless there is a serious likelihood of a substantial loss of revenue to the Government, we should extend the concession net as wide as possible and not make businessmen go through cumbersome application procedures. 1.22 pm

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, I rise to support the Budget presented by the Minister for Finance.

Many have spoken in this House in support of the Government's move to help Singaporeans offset the introduction of the GST. Like them, I welcome the 10% rebate on personal income tax, the rebates for HDB homes and the crediting of the $500 into the CPF accounts of Singaporeans. I also agree with the development expenditure to upgrade HDB flats, build schools, hospitals, improve on our transport system and R&D spending.

The various tax measures to promote high value-added financial activities and to encourage regionalisation have been examined by more able MPs expert in this field and I do not wish to go over them.

I would, however, like to cover a few areas like the CPF scheme, water conservation and funding for bus shelters.

Mr Speaker, Sir, we intend to give out $500 into the CPF accounts of Singaporeans. I receive this with mixed feelings because not all Singaporeans will benefit. In fact, we might have missed giving to certain sections of our population like housewives in their late 50s or 60s. We also intend to credit $300 into the CPF Share Ownership Top-up Scheme. Not all Singaporeans want to put their money in the stock market.

Having said all that, I would like to put forward a few thoughts and ideas which the Minister may like to consider. To begin with, we may perhaps categorise Singaporeans into those below 60 years old and those above 60 years old. The two groups, I believe, have different needs. The first, being younger, want to venture into stocks, shares, housing. The second group may, in my opinion, be more concerned about health and financial support.

I would like to suggest, therefore, for those below 60 years, we should give them an option to have the $300 top-up into the Share Ownership Top-up Scheme, the Medisave scheme or the Special Account. And for those over 60 years, we should credit the $500 into a Special Medisave Account for all Singaporeans aged 60 years and over and who have no CPF or very little CPF. The first option is worthwhile considering because not all Singaporeans are interested in shares, stocks or gold. Some, for personal or religious reasons, do not find the stock market a place to put their money in. I suggest allowing them the choice to put their money either in the Special Account or the Medisave Account.

The second option is for putting aside $500 into a Special Medisave Account for Singaporeans aged 60 years and over. I think we can create this account. This is to ensure that the surplus is shared by more Singaporeans than what the working CPF members are at present enjoying. My thinking is many Singaporeans 60 years and over have little CPF or no CPF because they worked at a period when CPF contribution was low or negligible. They are now in the autumn of their lives. Cost of living has gone up. Inflation has eaten into what little savings they have and, above all, some are beginning to have medical problems.

Many in this group of Singaporeans are women, and I think there are about 53% of Singaporeans 60 years and above who are women. This group was highlighted recently in a report by an NUS lecturer, Dr Shantar Kumar. And in this report, amongst others, he highlighted the plight of many 60-year old women who would very likely go through their twilight years, widowed, with little or no income, and with low savings. Many will also have health problems which will rob them of some or all of their mobility. The monograph calls for a study into support needs of this group. I am therefore suggesting that this group of Singaporeans, which falls into the 60 years and above category, should be assisted by way of crediting a similar amount of $500 into a Special Medisave Account. It is no use putting aside $200 into their Ordinary Account or top-up $300 for the purchase of shares. I think it is good to put it into a Medisave Account for their health needs, especially hospitalisation.

Mr Speaker, Sir, there are about 247,000 Singaporeans over the age of 60 years. Of these, 20% are working and therefore can benefit from the present schemes. 80% or approximately 180,000 Singaporeans are not working, do not have CPF accounts, and therefore cannot benefit from the schemes. If the $500 given to the Singaporeans with CPF accounts is also given to this group, the Government will have to pay out approximately $98,700,000. I think we can afford to give out this amount to these Singaporeans as we have sufficient surplus.

Let me bring to the attention of this House and you, Mr Speaker, Sir, an observation that irks me, and I am sure your goodself, and many Singaporeans.

Mr Speaker, Sir, if you happen to visit some of our HDB estates, you will probably be impressed generally by the estate. However, if you let your eyes wonder to the bus shelters, you may wonder if our town planners have lost their sense of balance and aesthetic taste. Look at our bus shelters and look at the new covered linkways. It is a contrast. A beautiful linkway ending in a tardy bus shelter. They are a sight for sore eyes. Mr Speaker, Sir, it is not the town planners' fault. It is just that PWD and the town councils cannot agree on the terms of dovetailing the two. Both have their reasons. PWD gives nine conditions for town councils to comply, amongst which town councils must pay and maintain the upgraded bus stops. Town councils cannot be responsible for maintaining bus shelters. Town council funds are used to improve the estates. However, we have reached an impasse. The question is: Are we prepared to let this mis-match to be perpetuated? I think we should not. Beneath all this exchange of letters and meetings, Mr Speaker, Sir, I suspect PWD has not set aside funds for this.

Therefore, can I ask the Minister to be generous to PWD if they do apply for funds for upgrading or even to town councils by the CIPC funding, if the Minister thinks town councils should be allowed to do the job. I leave it to the Minister to decide whom he thinks fit. All that we want is to bring some sense of balance and proportion to our otherwise beautiful HDB estates.

Mr Speaker, Sir, I support the water conservation tax. Yesterday, the Minister for Trade and Industry had told this House about the pressing need to conserve water, and I support this call and the call made by the Prime Minister earlier this year. This tax is a reminder that we should not take this very precious commodity for granted and that we should save today to avoid unpleasantness in future. Perhaps, instead of using punitive measures, we should reward those who make special efforts to save water. For a start, we could give tax incentives for those who build water tanks in their homes, not HDB or in flats, and we can also give those who build water tanks in factories. Of course, the design and safety aspects must be carefully looked into. We could provide tax concessions and incentives to those who put money into the research and development of water conservation systems in the estates, both private and public. Town Councils should be encouraged to look into ideas to conserve water within neighbourhoods to clean our corridors and void decks. I believe it can bring out the best in people who have to face very difficult situations. Singaporeans must read what Prime Minister Goh said recently about the water situation. Ignore this and we will be queuing up for water very soon.

Yesterday, Mr Speaker, Sir, I sought your permission to share my constituency's experience on the use of industrial water to flush our toilets. But time constraint did not allow me.

Mr Speaker: No, you were out of order.

Dr Tan Cheng Bock: This is one of the suggestions being considered by the Ministry of Trade and Industry.

Mr Speaker, Sir, industrial water is very corrosive and was used in Teban and Pandan HDB estates and some estates in Boon Lay and Jurong. It was an experiment conducted some 18 to 20 years ago when the estates were built. The water corroded the pipes very quickly and before long, these toilet pipes leaked. My poor residents spent many years warding off smelly, messy industrial water by way of umbrellas and plastic covers over their heads whenever they went to the toilets. [Laughter.] This is not a laughing matter, Mr Speaker. They went through this. I tried to persuade the Government to stop its use for the last 15 years. And in fact, I spent a good deal of my MP life chasing and persuading every newly-appointed Minister for National Development to intervene. But to no avail. Because it was a Government policy. I even brought photographs to this House to show the Minister and all present to prove my case. But my poor residents continued to suffer from the leaking toilet pipes washed by this corrosive industrial water. I almost gave up fighting. But each time, I visited their flats, I was more determined to help. It was very embarrassing visiting them because the first thing they wanted to show you was their leaking toilets. This embarrassing experience was also shared by Mr Ong Teng Cheong, our present President who was then making a Ministerial visit to my constituency, and I believe you also, Mr Leader of the House, when you visited my constituency.

Finally, in 1991, armed with the 75.5% support from the last General Election, I succeeded in persuading the Prime Minister, Senior Minister and Mr S. Dhanabalan, then the Minister for National Development, to understand the depth and extent of the issue, and now my residents do not need umbrellas and plastic covers to go to the toilets. But it was a heavy and costly price, a tidy $22 million had to be put in to repair and replace these leaking pipes. At this point, I must thank the Senior Minister whose support finally turned the issue around. On behalf of my residents of Teban, Pandan and, I am sure, Boon Lay and Jurong, I thank the Prime Minister, the Senior Minister and Mr Dhanabalan.

Mr Speaker, Sir, you need two systems - a potable water system and an industrial water system. You need two sets of pumps. Industrial water, as I said, is very corrosive. It eats into the pipes, especially cast iron pipes and also it leaks at the joints. It is smelly because it is not treated sufficiently well as it cannot be drunk. It stains the toilet bowls and, worse still, it invites mosquitoes into the flats, even the highest flats. Because mosquitoes lay their eggs in the reservoirs, and by the time they are transported and go into the flats, into the water closet, they become adults. And they fly out through the water closet outlets, so you get mosquitoes right even on the 20th floor. On top of this, the use of more pumps means more noise and more frequent breakdowns. I understand my fellow MP colleagues' concern about our water problem. I too am concerned. Their suggestion to use industrial water to flush toilets seems a very practical and logical one. But my Ayer Rajah's experience shows that this seemingly practical idea turned out to be a nightmare for my residents.

Having said all that, I do not want to discourage the use of industrial water. Presently, it is being used to serve our industrial estates. If the time comes when the water needs have been stretched to the limit, we may not have much choice. In the meantime, we must continue to better manage this industrial water to be less corrosive. We must experiment with different piping systems. I hope the time will not come when industrial water may have to be reintroduced to flush our toilets in public and private housing. To avoid this, Mr Speaker, Sir, we must save water.

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

I hope the industrial water problem will not be brought to our estates. The Member has given a gruesome picture on this whole issue. But if we conserve water and think of the water problem ahead, we would not face Dr Tan Cheng Bock's dilemma.

Mr Speaker, Sir, the Minister for Finance has surfaced an important problem, that is, the rising expectations of the young. We will face this problem inevitably. However, it is important that we grapple with the problem. We cannot avoid the problem, and we need to find effective solutions to meet the needs of our growing affluence and the expectations of the young. I hope the Minister for Finance, in his discourse, in the years to come, will be able to find some effective solutions to meet the expectations of the young.

Sir, we can alert young Singaporeans to the challenges and the difficulties that they will face in meeting their aspirations. Nevertheless, if their aspirations are not met, I suppose there are other consequential effects that we are likely to face. Migration is likely to be one of the issues if the hopes and promises are better in other areas in the region and these are some of the consequences that we will have to face. Therefore, to avoid these problems, we need to try and find ways to meet these rising expectations.

Sir, I hope that we could look at some of the fiscal policies which will help to prepare our young people to be more skilled and better trained. And if they are better trained, they would be able to grapple with the complex changes in technology and be better prepared to become more competitive. If we can enlarge the cake and they can probably have more resources and more income, then we will be able to meet some of their expectations.

However, there should be a better control of monopolistic tendencies in the private sector for housing, car ownership and bus transport. I feel that we have not done sufficiently enough to undertake some selective interventive measures to deal with such monopolistic tendencies, be it in housing, car ownership or transportation. We have not intervened sufficiently enough. The contrary argument is to let market forces decide. But market forces can decide to some extent. If left in the hands of a few key selective players who monopolise the sector, then I think the market forces will be askewed and the price escalations are likely to be very acute.

Sir, I feel that the Minister should consider, where possible, selective intervention in some of these sectors. We should control, when necessary, in some of the sectors where there are a few key significant players because these significant players are likely to escalate prices and create excessive inflation, ie, asset inflation, price inflation and, to some extent, excessive profiteering.

Sir, the consequences of these will be that the young will find themselves being displaced quickly in getting access to these goods and services. They can get frustrated as these goods and services remain elusive. True, we should allow market forces to decide in this matter from time to time. But I think there is a need for the State to intervene and mediate in some of these matters.

Sir, perhaps, the Government can allow more large cooperatives and Government-owned corporations to enter the market to compete and break the monopoly where necessary.

Sir, the other issue that I would like to address is the relocation of industries which we are likely to face in the near future. Our labour-intensive economic sectors would be affected by increased competition for cheaper labour cost in the region. Many older semi-skilled and unskilled workers could be affected by the relocation of these industries. Some factories can be saved by automation and workers can be trained for other gainful jobs. It appears that the training funds and incentives are not attractive to both employers and employees for them to take advantage of it.

Sir, could more realistic and attractive fiscal measures not be implemented to help our companies to restructure and to train our older workers who could be affected by future retrenchments at the various factories? Small and medium enterprises could be given grants to restructure quickly.

On Skills Development Fund, which my fellow Members have talked about, there have been appeals for the Skills Development Fund to be reviewed. I think we have been very slow in attempting to look at how the Skills Development Fund could be made more relevant and accessible to meet the training needs of older workers and others whose skills need to be enhanced.

Sir, I think there is an urgency to address this problem so that older workers and others who are less skilled could be better prepared to meet the challenges of imminent retrenchment and relocation problems that we will be facing in the near future.

Sir, the other area which is of concern and we should pay a bit more attention is the greying population. The fiscal measures to deal with the greying population is limited to tax relief for the care of aged parents. This only deals with the tail end of the greying problem. I think we should be more pre-emptive and we should probably be looking at how we can implement fiscal policies which will strengthen the family's capacity to address some of the problems of the care of the aged sick.

Sir, there is a need to look into the provision of more comprehensive policies to deal with the needs of our aging population. Tax relief for the care of the aged sick, incentives for employers to re-employ older workers after 60 years of age, support for voluntary initiatives to provide services, all these need to be reviewed urgently. We should not be caught with the burden of State care for the aged. Where possible, more relief should be given to families for looking after their aged sick. The present tax reliefs and incentives given to families for caring their aged sick are rather dismal.

Sir, another matter is the issue of help for low income pensioners. As I pointed out in the earlier debate, low income pensioners have been a neglected group of people. Their problem deserves attention because they have low income and because of the increased cost of living over the last five years, their effective pensions and savings have been reduced and their capacity to purchase goods and services has been reduced to a great extent.

Sir, these pensioners have given long years of public service, but their pensions are dismal and cannot help to meet the rising cost of living. Should they not be given a revision in their pension? I strongly feel that they should and they are no less deserving than those who were pensioned later.

Sir, their Singapore Allowance should be revised upward. And the depleting Medisave of these low income pensioners could be replenished and this would be a positive gesture by the Government to recognise the contributions of this group of pensioners who have in fact given bastion services to the Government in the earlier years.

Sir, last but not least are the problems and aspirations of the low income families. We could afford in this Budget to be a bit more generous to low income families. The rental and service and conservancy rebates are only a trickle of the surplus budget. It accounts for only about 0.001% of the budget surplus. This is indeed very minuscule. In giving a further increase to these families, we hope it will help them to offset the GST burden. And I hope that the Minister in his subsequent review would think about this group of families and see how their burden could be reduced.

Sir, on that note, I support the Budget Statement.

The Minister for Communications (Mr Mah Bow Tan): Mr Speaker, Sir, this year's Budget has been described as a development budget. It is in line with the Government's philosophy of investing in our future to "lay the foundations for sustained growth into the next century", as the Finance Minister said in his Budget speech.

A good and efficient transport system, where goods and people can move about freely, with minimum hassle and minimum cost, is a very basic, although sometimes taken for granted, pillar of a modern economy.

The Government has never hesitated to spend on transport infrastructure. In the last 10 years, our spending on road infrastructure was $2.3 billion, and on public transport and rail infrastructure, including the construction of the MRT, another $5.2 billion. This year alone, we will spend $216 million on roads and another $325 million on public transport and rail.

What have these massive investments achieved? 20 years ago, many roads were narrow and congested. Only 17% of households owned cars. Today, 31% of households own cars. 20 years ago, the vehicle population was 280,000. Today, it is 614,000, more than double. Yet, we have managed to keep our roads relatively free flowing. We have achieved this through timely infrastructure building and better traffic management.

Road capacity was increased significantly. New traffic demand management measures like GLIDE and ALS have kept traffic flowing in the CBD. The MRT was introduced in 1987 and it ushered in a new era in public transport.

Our transport system is now the envy of many cities around the world, many of which suffer from grid-lock and chronic traffic jams. But Singaporeans expect more, and why not when rising income levels and uninterrupted improvement in living standards for more than two decades have conditioned Singaporeans to expect that life will get better year after year.

But is it sustainable? The answer lies in whether we can temper our expectations with a sense of reality, and whether we can free ourselves from conventional wisdom and look for new and innovative ways of meeting these expectations.

The aspiration of many Singaporeans to own a car must be tempered by the reality that ours is a small country, with limited land, which has many competing uses. The frustration at seeing car prices rising over the years must be balanced by the realisation that this is because more and more Singaporeans are doing well. In 1980, 5% of every Primary One cohort became graduates. Today, the figure is 19% and is growing. If you include diploma holders, the figure is coming close to 60%.

So the reality is that we cannot all expect to own a car. The Government cannot create more land to build more roads to meet this aspiration. But the Government can, within the constraints we face, provide an efficient transport system that keeps Singapore and Singaporeans on the move, so that you and I can enjoy a good life and business can make money. This is a realistic goal. This is one which the Government can and will fulfil.

How can we enhance the mobility of Singaporeans and meet our transportation needs into the next century and beyond? The approach of simply increasing road capacity is not sustainable. Many roads are already built to the limit. We can build underground tunnels to relieve congestion, but they are very costly. We can build more viaducts, we can build more spaghetti junctions which are also very costly, very pollutive, very noisy.

We will continue to build as far as possible. Over the next few years, our road building programme will add 225 lane-km of roads. Government will invest heavily on new roads, expressways and viaducts and we will spend, instead of $200 million a year, something like $250 million to $300 million a year, or roughly $1.1 billion for the next five years. At a later stage, we may have to embark on an underground road system.

We will also relieve bottle-necks, for example, by building interchanges as we are now doing for junctions like the Holland Road/Farrer Road/Queensway interchange, and by extending the expressways like Tampines and Seletar Expressways, and by upgrading certain trunk roads into expressways like Jalan Ahmad Ibrahim.

We will also apply intelligent traffic management techniques to improve traffic flow. By 1997, all traffic lights would have been linked to the GLIDE computer which will provide more green waves. We will also install systems which can warn motorists of traffic jams and accidents ahead.

But all these investments in road building and road management alone are not enough. To further improve our transport system to meet the aspirations of Singaporeans for greater mobility, within the constraints of limited land, my Ministry intends to take the following additional measures:

(1) We will increase the spectrum of public transport services and, more importantly, service levels.

(2) We will improve the management of vehicle usage to sustain a higher vehicle population while preserving mobility for both motorists and public transport commuters.

(3) We will give due priority to public transport.

(4) We will integrate and optimise the planning, development and management of our land transport system. Rail

Please allow me to elaborate. The MRT has allowed our city to be developed to a much higher intensity. It is the backbone of our public transport system. We intend to make the rail network more extensive. We expect to ultimately extend the present 67 km of MRT lines to about 160 km of MRT and LRT lines by the year 2030. This estimate excludes possible LRT feeder systems in HDB new towns.

My Ministry is currently undertaking feasibility studies for a new North-East Sector MRT Line, and also for an MRT extension to Changi Airport, and an LRT system to serve the Marina Centre area. Results of these studies should be completed by the middle of this year. We will also study whether it is feasible to have additional LRT lines.

Recently, I led a delegation of transport specialists and town planners to Europe to look at various LRT systems. We were shopping for ideas, not hardware. So we did not come back with any particular system. But what we saw convinced us that the technology is available to bridge this gap between bus and MRT. The technology is available that can offer a level of service which approaches that of the MRT in terms of reliability and comfort and, at the same time, has almost the same flexibility and accessibility as that of the bus. The question is whether this technology is cost effective.

The MRTC has called for tenders for the provision of LRT systems in two areas: Bukit Panjang and Buona Vista. Results of Stage 1 of the tender will be released soon. Stage 2 of the tender will involve the financial feasibility of the projects, including the cost to build and to operate the system, the fare structure, and so on. Whether the projects will proceed will depend on the results of Stage 2 of the tender. If feasible, LRT system studies will be initiated for other HDB towns, both existing and planned.

Bus Service

The MRT and LRT cannot serve every area. Buses will continue to play a key role in the public transport system. The Government's policy of allowing a duopoly of bus companies to provide the bulk of bus services, with smaller companies providing services at the fringe, remains our best option. It allows the Government to insist on universal coverage and also to regulate fares so that the public's access to basic bus services remains good and affordable.

The Public Transport Council has established a set of comprehensive bus service standards, which defines what is a basic bus service, at today's fares. The setting up of standards is an important step in our efforts to further improve services. What these standards mean is that operators are put on notice that these are the standards that they must meet. Commuters know that if they do not get such a service, they have cause for redress. The Public Transport Council knows exactly where it stands in settling disputes and in deciding on new services. It does not mean that all services are up to par. For example, three trunk bus services will have to be upgraded to within 12 minutes of peak headway, and 12 feeder services must be upgraded to within the 10 minutes peak headway specified in the standards. The bus operators have until May this year to achieve this.

We will also encourage bus companies to exceed current service standards instead of just simply meeting them. Feedback indicates that commuters want higher frequency of feeder services. They want additional short services to alleviate over-crowding on major demand corridors and they are concerned with long travelling time on buses. The PTC will ask the bus companies to consider providing special buses which can meet the demand for a higher level of service. As these services are optional services requiring additional buses, passengers who want such a service must be prepared to pay a premium.

Priority for Public Transport

We will seek to make public transport more convenient. We will smoothen transfer between buses and MRT, and further integrate bus and MRT facilities. We should work towards reducing total journey times, by speeding up bus journeys as well as minimising the waiting time, both real and perceived, in between connections.

We intend to accord efficient road users greater priority in the use of road space. For example, buses compete with other vehicles for limited road space. Buses carry 80 people; cars typically carry one or two. If you compare with double-decker buses, for example, the illustration is even starker because double-deckers can carry up to 120 people. So it is only fair for buses to be given priority over other road users. Measures to give priority to buses will include more B-signals and more bus lanes. These measures, I am confident, will lead to speedier bus travel and more reliable bus schedules.

Another area we will look into is waiting time. Waiting is inevitable. We cannot eliminate it totally. But we can transform waiting into a more acceptable experience. We will begin by managing the psychology of waiting. By this, I mean we will reduce the cost of waiting and reduce the uncertainty of bus arrival times. Passengers can use their time better if there is real time information on departure and arrival times at bus stops and nearby MRT stations. If the real time information is available to him, the commuter can decide whether he should rush or whether he can afford to take a leisurely stroll, or do something else.

When I visited a Transport Co-ordinating Centre in Frankfurt recently, I was told that they have done surveys which showed that passengers perceive waiting time to be shorter if they know exactly when their bus will arrive. Our bus companies are now studying the feasibility of implementing systems which can monitor the location of buses on their roads, provide real time passenger information and also correct deviations of buses when they stray from schedule. On its part, the Government will consider providing the necessary infrastructure at bus stops and MRT stations for bus operators to display relevant passenger information.

We will also spruce up selected bus stops and provide more amenities. New bus stops will be better designed, and some will have sheltered linkways to the nearest building. We will look into providing bus stops with amenities like telephones, food and drink dispensing machines. So if Dr Tan Cheng Bock has got any good idea, I will be happy to hear it from him.

Taxi Service

Taxis constitute the high-end of the spectrum of public transport modes. A high quality taxi service must provide the convenience of a car with the personalised service of a chauffeur. It must also be of a consistently high standard and it must be generally available on demand.

MINCOM's policy is to price taxi service correctly and let supply and availability of taxis respond to market demand. This policy is sound provided we correctly reflect the cost of taxis as a highly personalised form of transport. For example, a taxi occupies as much road space as any other car, but unlike a car, it causes more road congestion because of empty cruising which is unproductive and wasteful.

To ensure that commuters receive the high quality service they expect, the ROV will introduce an operator licence for taxi companies. Taxi companies will be held accountable for the service provided by their drivers. ROV will monitor indicators on customer service provided by each taxi company, for example, number of complaints, ability to meet taxi despatch bookings, accident rates and roadworthiness of taxis. These service indicators will be published regularly for the benefit of passengers. It will serve to encourage those companies with good service quality and put the rest on notice that they have to pull up their socks.

ROV will also discontinue the current practice of issuing and renewing taxi licences of taxi companies liberally. Instead, taxi companies will be benchmarked regularly according to performance indicators that emphasise productivity increases and reductions in empty cruisings. Only taxi companies which meet the performance targets will be able to renew taxi licences or granted new ones. The ROV will announce details soon.

Managing Private Vehicle Usage

The Government recognises that there will always be Singaporeans who will prefer to travel by car, notwithstanding any improvement to the public transport system. We also recognise the growing desire to own cars. These are legitimate aspirations of an affluent society. To accommodate these aspirations without congesting the roads, we will need to optimise vehicle flow through vehicle management and usage measures.

Road Pricing Scheme

So far, the ALS has been confined to the CBD. The Whole-Day ALS allowed us to increase the COE quota. When the Electronic Road Pricing system is ready in late 1997, we will also be able to relieve congestion on roads outside the CBD and release additional COEs to allow more Singaporeans to own cars.

The expressways are potential candidates for ERP. Surveys conducted by PWD show that certain stretches of our expressways are already congested during the morning peak hours. Traffic volumes on these stretches are very heavy, and they have exceeded the design capacity. Vehicle speeds have fallen to as low as 17 kph, in contrast to the average speed of 55 kph recommended by PWD.

The Government will be implementing a pilot Road Pricing Scheme (RPS) for a short stretch of the East Coast Parkway during the morning peak period when traffic there is at its heaviest. A pilot project will start in June this year. Gantries will be erected at the stretch of the ECP between Fort Road junction and Rochor Road towards Jurong. Another will be at the entry into the ECP from Ophir Road, again in the direction of Jurong.

We have chosen the East Coast Parkway because the area around the gantries has adequate bypasses and is also well-served by public transport. Motorists will be required to purchase and display an RPS licence to pass through the gantries. Details of the pilot RPS will be announced shortly.

Whole-Day ALS

We started Whole-Day ALS in January 1994. A comprehensive traffic survey in January 1995 showed that the traffic situation in the CBD remained unchanged since the last survey in May 1994. Since the Whole-Day ALS has kept traffic conditions in the CBD at an acceptable level, no adjustments will be made to the ALS fees for the time being. However, we will make one slight adjustment. In response to requests from retailers in the CBD and members of the public, and in view of the traffic survey results, we will be shortening the ALS hours on Saturdays by one hour to end earlier at 2.00 pm instead of 3.00 pm with effect from 2nd May 1995.

Vehicle Quota for Next Quota Year

With road pricing schemes like ALS and ERP, we can keep expressways and trunk roads which provide vital links to economic activities relatively free-flowing even during peak hours. However, it is impractical to price all roads. With increasing vehicle population, we cannot sustain free-flowing traffic conditions on all roads at all times of the day. Traffic conditions will worsen over time.

With Whole-Day ALS, we could, and we did, increase the COE quota. With ERP, we should be able to increase the COE quota further. We will evaluate the Road Pricing Scheme in a year's time, and then study whether additional COEs can be released pending the implementation of ERP. In the interim, growth of the vehicle population will be fixed at 3% per annum. The quota allocation for the next 12-month period from May 1995 to April 1996 will be 45,552 COEs or a monthly quota of 3,975 COEs. Further details on the breakdown by vehicle categories will be released shortly by ROV. Land Transport Authority

Finally, to coordinate our efforts to improve our public transport system and to manage traffic more effectively, the Government will set up a new statutory board to be known as the Land Transport Authority (LTA). The LTA will integrate the functions of planning, development, implementation and management of all public and private transport infrastructure and policies. It will be formed by merging the Roads and Transportation Division of the PWD, the ROV and the Land Transport Division of the Ministry of Communications. It will also merge with the MRTC so that planning and implementation of both road and rail infrastructure will be under one roof. This will not be done immediately, but should be achieved within two years. A single integrated agency, given the mission and the responsibility of meeting the nation's transport needs, will be better able to identify alternative infrastructure and policy options and evaluate the trade-offs between them. It will ensure that transport projects and measures undertaken complement each other in the most effective and cost efficient manner. This in turn will help us achieve an optimal national transport system, providing better service to commuters and value-for-money for the nation.

MINCOM expects to establish this Authority within six months. Details are being worked out and will be announced in due course.

Mr Speaker, Sir, the challenge facing us now is not how to give every Singaporean a car. This is not possible even if our roads are congestion free. The real challenge is to meet the aspirations for increased mobility.

We will provide commuters with more choice. We will create a more comprehensive range of public and private transport modes, ranging from buses, LRT, MRT, taxis to private cars. The individual can then choose the mode of travel to suit his preference and his pocket.

During the debate on the Presidential Address in January 1994, the Member for Braddell Heights, Mr Goh Choon Kang, quoted a Chinese proverb used by the wise men of ancient China to advise their rulers: `fang min zhi kou, shen yu fang chuan' ( ), loosely translated, it means that governing the people is more difficult than guarding against the water level in a river. In essence, what Mr Goh meant, I believe, was that the principles of taming a river resemble the art of governance. He added that to prevent a river from over-flowing and flooding requires more than damming. Dredging and providing outlets are equally important.

If I may paraphrase Mr Goh, in formulating our land transport policy, my Ministry will not only dam, but also dredge and provide alternative outlets. We will improve mobility for all Singaporeans by extending the range of public transport services available and upgrading the quality of service; managing vehicle usage to sustain a higher vehicle population; giving due priority to public transport; and coordinating all efforts to improve our national transport system, through a newly-established Land Transport Authority.

Mr Cheo Chai Chen (Nee Soon Central): ( In Mandarin): Mr Speaker, Sir, I would like to raise two main points today. One is the question of saving water and the other is the merger of town councils.

At the PAP Cadre Members' Conference on 15th January 1995, Prime Minister Goh Chok Tong stressed the need to arrest the trend of rising water consumption and indicated that the Government would implement measures to conserve water. I then expected that in the 1995/96 Budget, water tariffs would be raised. True enough, as expected, the Minister for Finance announced the increase in the water conservation tax by 5% for both domestic and non-domestic use, citing prevention of water wastage as the reason.

With the increase in population and more activities in commerce and industry, consumption of water is inevitable. Water is precious and it should not be wasted. In Singapore, which is lacking in water resources, this is certainly true. But increasing the water conservation tax will increase the burden of the people, especially those lower income and larger families. This is very unfavourable to them.

Water is essential. We cannot live without water. The question lies in the habit and method of using water. Good habits and correct methods are important. For example, when you are not using water, the tap must be turned-off; when you are using water, the tap should not be turned on full blast; and when you wash your car, you should use a pail instead of running a hose, etc. These correct methods of water usage can save water.

I believe that nobody wants to burn his own pocket by deliberately wasting water. They are in fact lacking in the cultivation of good habits and neglecting the correct methods of using water. Therefore, we must promote the education of water conservation, rather than resorting to the imposition of a water conservation tax.

As more than 50% of our water resources are dependent on the water supply from Johor, the reduction of water consumption will not have much effect on our water supply. The only thing is that we may lose more foreign exchange. That is the real problem.

According to the report in the Lianhe Zaobao on 11th March 1995, the Johor State government had intended to discuss the new water prices with the Singapore Government. I guess the Government's increase on water charges this time may have something to do with this matter.

Water is precious. We should not waste it, but we must try to promote the conservation of water at all times, and not just before the increase in water charges. The effect of just one "Save Water Campaign" is not enough. We must start from the school and the family to educate our children and family members on how to save water. Only when we have enhanced the water saving awareness among our people, and cultivated in them the good habits and correct methods of water usage, then can we achieve the desired results.

In the long-term, apart from saving water, we should also actively develop our own local water resources. I think this is a better way. In yesterday's debate, I was very happy to hear the Minister for Trade and Industry, Mr Yeo Cheow Tong, telling us that the Government had already carried out such plans.

In the short-term, I think the most effective way is to continue to get water supply from Johor. In view of this, to maintain and improve relationship with Malaysia is very important. In this regard, the Government has been doing well and I am very happy about it.

However, there is one thing that puzzles me. On one hand, the Government is stressing the preciousness and importance of water, yet on the other hand, it has covered up part of the Lower Seletar Reservoir for the construction of the golf course for Orchid Country Club. This is ironical. Because of this country club, the area of the reservoir has to be reduced by about one-quarter. Why is the Government so inconsistent?

Let me now deal with the merger of town councils, because this involves the wastage of public funds. Under the present regulations, town councils can merge into a larger town council. This is not a healthy way of doing things. I feel that the town councils should function on the basis of the constituency it represents. We should not allow the merger of one single constituency with another single constituency, one single constituency with a Group Representation Constituency (GRC) or a GRC with another GRC, because if one of the constituencies should be lost to another political party in future, then you will have to have a separation. So this merger and subsequent separation will cost a lot of money, such as the changing of signboards, directional signs, logos, letter-heads and other stationery, and accounts have to be settled before handing over. All these will cost a lot of public funds to be wasted. I hope that the Government will pay attention to this.

As a matter of fact, I have no objection to cooperation between town councils, but I do object to their merger. Cooperation between town councils will save on expenditure, particularly in making purchases and contracts. There are quite a lot of benefits in such cooperation between town councils.

Finally, I would like to take this opportunity to raise two other points with the Government with the hope that they will attract the attention of Government:

1. I have noticed that when contractors are drawing lines on our public roads, they dirty the road surface by causing paint to spill and stain on the roads. This makes the roads very unsightly. I hope that the PWD will take the necessary action to prevent this staining on the roads;

2. Vacant flats in the various constituencies should be let out or sold to the people as soon as possible.

Mr Speaker, Sir, on the whole, this year's Budget is not bad.

Mr Choo Wee Khiang (Jalan Besar GRC): Clarification, please.

Mr Speaker: Yes.

Mr Choo Wee Khiang: ( In Mandarin): Mr Speaker, Sir, I would like to ask Mr Cheo two points. Firstly, he said that there was a loss in foreign exchange when we bought water from Johor. What is the connection between the two - the loss of foreign exchange and the purchase of water from Johor?

Secondly, is he thinking of merging his Nee Soon Central Town Council with the PAP town councils in his neighbouring constituencies? In fact, I feel there is nothing wrong with a town council merging with another town council. It is a case of mutual willingness. I can appreciate his predicament, but can he please clarify?

Mr Cheo Chai Chen: ( In Mandarin): Mr Speaker, Sir, on this question from Mr Choo, I would like to elaborate. On the loss of foreign exchange, if we buy water from a foreign country, we have to use our money to buy the water, so we lose our money to the pockets of the foreign country. This is a loss of foreign exchange. If we conserve water and the water is ours and we have our own water resources, we can use them for a longer period of time. But now most of our water comes from Johor and so what we should do, over the long term, is to actively develop our own water resources and not to continue relying on foreign supply of water.

On the merger of town councils, why am I raising this question here? I think it will be easier to explain if I give you an actual example. For example, in the past, Nee Soon South and Nee Soon Central were jointly managed by one town council to take care of the area. But when the SDP won Nee Soon Central, the town council was split into two. In the course of splitting, we have to settle our accounts, change the road signs, signboards, letter-heads and other stationery of both constituencies. Both sides would have to do these all over again. That means we have to spend a lot of money. Both town councils have to waste a lot of money.

Now, Nee Soon South Town Council has merged with Ang Mo Kio Town Council. If the Government keeps the same electoral boundary and, in future, if Nee Soon South is won by another party, not necessarily the SDP, then they may not want to continue to remain in the Ang Mo Kio Town Council. So again, they will have to separate from the Town Council and in the process, more public fund will be wasted. The two town councils would start all over again. Their stationery, signboards, logo and a host of other things will have to be changed. The road signs would also have to be changed, and they will have to go through all the trouble of settling their accounts again.

I am more in favour of cooperation rather than merger between town councils because in cooperation, like in the case of joint purchase of dustbins for the town councils, they can call just one and the same tender exercise, and with the economy of scale, they can buy them at a cheaper price.

2.31 pm

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

Since 1988, the Government has accumulated surpluses every year. This year is no exception. Instead of the usual $1 billion or $2 billion surpluses each year, the Minister had budgeted a huge $5.8 billion surplus for FY 1995/96. If we add to that the investment income and receipts from sale of land, the Government shall be receiving a whopping $9.3 billion, representing something like $3,200 from every man, woman and child in Singapore, taking our Singapore population at 2.85 million. The fees and charges to be collected are budgeted at $3.6 billion. That sum is nearly three times that budgeted for FY 1992/93.

In the past, Singaporeans applauded the Government for being so efficient in the management of the finances of the country when it accumulated surpluses year after year. But now, I sense that the mood has changed. I can even venture to say that the average working Singaporean and Singaporeans who are running small businesses shall grit their teeth when they learn that the Government is budgeting for another surplus, not $1-$2 billion this time but $5.8 billion. And knowing the efficiency of the Government in collecting money, the budgeted surplus may well exceed the $6 billion mark.

Why do they grit their teeth? They do so because they know from past experience that when the Government is aiming for a budget surplus, the high costs shall not come down and Government and statutory board fees and charges shall certainly increase before the end of the year. It is also unlikely that licences, like the COEs, shall drop further. Anyway, it is a good source of revenue for the Government. The level of collection of other fines and charges shall have to be increased as shown by the increased budgeted amount. On record, so far, this Government is budgeting for more surpluses than the previous Government. I suppose it has to, because it cannot use the surpluses accumulated by the previous Government unless it gets the consent of the President and no new self-respecting Prime Minister will go to the President to seek that consent in normal times. The Goh Chok Tong's Government shall have to build up its own surpluses. So do all incoming future governments unless, of course, the Constitution is amended, which is unlikely as far as we can see.

So it would appear that budgeting for surpluses shall be the order of the day in the years ahead. It would appear that Singapore would not have an easy time ahead of us. Having noted that the Government shall have a big surplus this year, the obvious question is: what does the Government intend to do with all that massive amount of money? The total budgeted receipt is $9.3 billion. The Government is clearly not handing them out to the poor and needy or to support any welfare programmes. I say that the Government owes a duty to the people of Singapore to let them know what it intends to do with those surpluses. Does it simply just want to preserve the bulk of it in case of emergencies, or invest it, or what? If it intends to invest the money, whether it is to be done locally or abroad. We know that the Government has initiated the Suzhou project which costs about $30 billion. Is the Government going to commit more money in Suzhou? The sum of $9.3 billion is receipts over outlay. That means all the developmental and infrastructural needs of the country have been catered for. The $9.3 billion are pure surpluses.

The Government should tell the people of Singapore what it intends to do with those moneys. Most people in Singapore would not object to the Government accumulating surpluses. What they are unhappy about is the way the Government does it. The Government always uses fiscal means to solve almost every problem in Singapore, whether it be a national, social or health problem.

A current example is the so-called water problem. The Prime Minister announced that we may suffer water shortage in 15 to 20 years' time. The next thing we know is that the water conservation tax is raised. There must surely be other solutions other than increasing the tax on water conservation charges. My estimate is that the increase in water conservation tax may be close to $30 million which will offset the $30 million the Government is making payment for rental and service and conservancy charges for HDB flat dwellers. The Government will not lose anything.

If there is really a water problem now, I would suggest that the Government start a Save Water campaign for one month and repeat it every year. Then it could monitor the water consumption of every household and commercial and industrial enterprise. If water consumption rises above the permitted amount for a householder, now fixed at 20 cubic metres, then a warning should be served on that consumer. If that consumer fails to heed the warning, then his water supply should be shut off for one or two days. Once the consumer is deprived of water for one or two days, the lesson of water conservation shall surely be put across to that person very effectively. The consumer shall, of course, be made to pay the turn-off and turn-on charges. On the other hand, an increase in water conservation tax will not effectively teach people to conserve water. For the rich who can afford to pay the water conservation tax he would merrily continue to consume large amounts of water. He may use our good clean water to wash three of his cars and hose his garden to make it look like the Garden of Eden. Where is the lesson of water conservation as far as that rich person is concerned? The lesson cannot be really got on to him. Instead of increasing the water conservation tax, the Government should replace it with a more equitable solution.

The Government says that householders consume about 55% of the water supply and that businesses consume the other 45%. This statement does not give the true picture of water consumption in Singapore. Although the industrial and commercial sectors use up 45% of the water supply in Singapore, their number comprises only about 15% of the account holders, whereas domestic account holders add up to 85% of the total consumers. This means that we have a situation where 85% of household consumers use up 55% and the other 45% is used up by only 15% of the account holders. In other words, if we compare account holder with account holder, you will find that in fact the industrial and commercial account holders use up to five times more water than the domestic account holders.

In Singapore today, the big time water guzzlers are not families but those in the industrial and commercial sectors. The Government should then not penalise householders but get the businesses to do something about the water problem. It is not that businesses like to use more water because as the economy improves, so do businesses improve, and water consumption will also increase.

Now, the most obvious thing to do is to make factories and other industrial plants recycle their waste water for reuse. The Minister has suggested that desalination is a solution. But it is not really the best. We are not an oil producing country, like Saudi Arabia. If there is going to be another oil price hike, the desalination plant may not be economically feasible.

In 1965, Lee Kuan Yew said that if there was a hostile government across the Causeway, we have to start to dig wells in Singapore. My question is: has the Government done a thorough research into the possibility of being self-sufficient in water supply from local sources? If the Government carries out an intensive investigation to find water resources locally, it may well discover a huge reservoir underground somewhere in Singapore. Have we done that? Of course, as suggested by a hon. Member, I am tempted to say that maybe at Potong Pasir you will find one reservoir. And I can tell you from personal knowledge that it used to be a water resource-rich constituency.

The Government has plenty of money. It should set up some fund to engage a special team to specifically advise the Government on how Singapore can be self-sufficient in water supply. Somebody has suggested that a dam be built across the Singapore side of the Straits of Johor. I think this is a very good idea. It was, in fact, canvassed in the local papers a few years back. In fact, Hong Kong has done it. I have read about the building of that dam in Hong Kong and the engineering side is not that really difficult. They just have to pile rocks and, surprisingly, pile mud on top of the rocks. When the mud settles, the mud seals off all the gaps in the rocks and then you have a dam. I think the Singapore Government should seriously consider this idea.

With such a large surplus expected this year, it is expected that there will be a large number of proposals and suggestions on how the surpluses can be used. In principle, the Government should look at the needs and priorities objectively. After all, we are Singaporeans. "We are Singapore" as the patriotic song which is broadcast over TV regularly tells us. The Government should not in its use of the budget surpluses distinguish between Opposition and PAP wards, although on record PAP constituencies have benefitted $51 million to-date towards community projects. And the Opposition has not been given one cent in respect of such projects. Similarly, upgrading programmes up till now have only been confined to PAP constituencies.

I hope the Government will change all that and look objectively at the urgency of the needs of each constituency, especially in the older HDB estates. Some of the more urgent problems the Government should give assistance to are, for example, grants to older estates to repair sunken aprons. These are caused by the sinking of the lower level at the void decks, causing ugly and dangerous gaps between the void decks and the level below them. The Government should give grants to repair sunken aprons.

Another urgent matter is that in older estates which are 20 or more years old, you will find that nearly all the water pipes underground have corroded and there are massive amounts of water leakage underground which are sometimes hard to detect. What the Government needs to do is to give money, because they are costly and the Town Councils find it a burden on them. The Government should step in to replace all those underground water pipes that are in fact more than 20 or more years old. Because it is difficult to repair them ad hoc. Whenever there is a leakage, you try to repair them which is difficult. Money should be spent and replace the whole lot of them. Since at this time there is talk of conservation of water, perhaps Government could treat that as one measure of conserving water in Singapore.

In the older estates also, in the early days, the Government was eager to plant big trees. All these trees have now matured and their roots are causing great problems to the car parks. They have spoiled all the car parks and these trees need to be cut down. The car parks have to be repaired and then the trees have to be replanted and the car parks redone again. All these are very costly projects. I am involved with a Town Council and I personally know these are the problems.

I also join Members in urging the Government to help pensioners who are not earning very much, especially more assistance should be given to pensioners who are chronically ill. Government should either waive their medical charges or allow them to pay at a lower rate. I think Government should help these workers who have given much of their whole life to building the nation.

The other problem that has been brought up, which is close to every housewife, is the maid levy. Much has been talked about it. Unless, of course, the Government can build enough creches or child care centres to mind the babies, I think the Government should take steps to waive or lower this levy to help mothers to go to work and increase their combined household income. I think this is a real problem and the Government should look into it.

I have gone through this year's Budget and noted that there is no subvention for Woodbridge Hospital. The Government has asked Singaporeans to be more competitive and go abroad in its regionalisation drive. This has put great stress on families. The society has also become more affluent and successful. One of the main problems of success is also the growing problem of mental illness. The Government should pay more attention to this area in its health policy. Mental illness is a growing problem. I urge the Government to put aside more resources for more mental health facilities. For a start, it could build more psychiatric outpatient clinics and to train more social workers who can help people who have psychiatric problems or who are suffering under great stress. I think the Government should not neglect this area in its health care policy.

Mr Choo Wee Khiang (Jalan Besar GRC): May I seek clarification, Sir, from Mr Chiam?

Mr Speaker: Yes.

Mr Choo Wee Khiang: Sir, I have four questions to ask Mr Chiam. First of all, I wonder how Mr Chiam will reconcile the fact that a country having surpluses means that the people will have a tough time ahead.

The second question is whether he would consider volunteering his Potong Pasir ward to have a water shut-down for two or three days per week to encourage people to save water.

Thirdly, I am not an engineer, but I would like to know how can a dam be so easily built by piling mud and rock. Maybe he can explain.

Fourthly, he talked about upgrading of old estates. I think the Prime Minister already mentioned before that all of us have got to queue. I do not think Mr Chiam would like the Government to carry out upgrading projects in the four Opposition wards and not in the other PAP wards. All of us have got to wait. So be a bit more patient.

Mr Chiam See Tong: Sir, if every government's aim is to have surpluses, it must collect its money from somewhere. The money just does not drop from heaven. So it is going to collect more money from the people. Of course, the people will have a tough time ahead. They will have less money.

The proposal that I mentioned is not for the whole population to shut down water for two or three days. Everybody can have their needs of water. The PUB can monitor the water bills and if they note that this fellow has been consistently consuming above the permitted level, then they send him a warning and say, "Look here, your water consumption is too high. Please reduce it." If he does not heed the warning, then they take enforcement action to shut off the water supply. It can be easily done. You just lock it up. And then for one or two days, if he has no water, he has got to go next door with a pail to try to get some water, then he will learn the lesson.

As regards building a dam, this is what I read in the Readers' Digest many years back when Hong Kong built this dam. It has been done. Of course, there are engineering problems. But I am talking of just the bare basics. You dump a lot of rocks and then you cover up with mud. And surprisingly enough, the mud will seal off the leaks. [Laughter]. Do not laugh. This is an engineering possibility. I think it is a feasible thing to do in Singapore and the Singapore Government should give it a go.

Of course, the problem is the salinity of the water. Over time, the saline water will be diluted. Of course, you cannot totally get rid of salinity in such a situation.

I am not saying that Opposition wards will not be given upgrading. They have to. But the point is that although they are equally old, equally run down in status, there are as yet no signs that they will be upgraded. Because I know that just across my constituency, Kim Keat Constituency has been upgraded. It is just across the road and some people described it as a first-class condominium. If it can be done across the road, why can it not be done on the other side of the road?

Mr Choo Wee Khiang: Sir, I am still not convinced with Mr Chiam's answers. Since he cannot answer me on how to reconcile having surpluses and having a tough time ahead, can he tell me how many countries in the world are having deficits and yet the people are enjoying it?

Mr Chiam See Tong: Sir, I have not said that. He wants to put words in my mouth and ask me to answer him. I have already explained. Because of the amendments in the Constitution, each government must accumulate its own surplus. Otherwise, if there is an emergency, it has got no money to rely on.

Mr Choo Wee Khiang: So it is a good thing to have surpluses.

Mr Chiam See Tong: I did not say that. I said that since that is the order of the day, surpluses must be obtained from someone. So in this case, it is from the people of Singapore. And if the people of Singapore are going to pay more to the Government, they will have less and so they will have a tough time ahead. That is what I said.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.20 pm.

Sitting accordingly suspended at 2.57 pm until 3.20 pm. Sitting resumed at 3.20 pm