ANNUAL BUDGET STATEMENT

Debate resumed.

Dr Arthur Beng Kian Lam (Bedok GRC): Mr Speaker, Sir, this Budget is a budget for all. The Minister for Finance must be congratulated for presenting a Government Budget that is really one that has something for every Singaporean. Singaporeans welcome this Budget. This reflects the Government's policy of enhancing the personal assets of all Singaporeans, and redistribution of wealth through schemes that in the long-term will not lead to a welfare state or develop dependence on the state, ie, developing a crutch mentality. What I would like to bring up at this time are some issues, which though not new, need more focused attention by the Government.

Indirect taxation

The Government's policy is to achieve a broad-based taxation system which will reinforce the work ethic, by decreasing personal and company taxes, whilst the GST will discourage unnecessary expenditure and encourage savings. There are other taxes which take into account social and economic factors, eg, the foreign workers levy and the COE to control motor vehicle population. The Minister has taken great pains in this Budget to try to make sure that all benefit in some way. It is my view, that the middle income have felt most painfully the indirect taxes imposed. For example, the maid levy, the COE, the GST are areas that affect all, but perhaps hit hardest the middle income earner, who is most likely the family to have one or more maids, because both parents are working, they want a larger car, and will probably contribute more in the GST. Those staying in non-HDB estates will also not benefit from either the MUP or IUP. The Edusave Merit Bursary Scheme does not apply to families earning more than $3,000 per month.

These managers and professionals are a mobile lot, and while many are loyal Singaporeans, the temptation or lure to "greener pastures" overseas cannot be excluded. Perhaps, the Minister, with the large resources that he has, can tell the House whether my observations are valid. I will be most glad to hear from him that the much talked about "middle-income squeeze" is a fallacy. Problems of the retail industry

One needs to give no facts or figures to be able to have a feel of what is happening here. This is a problem that has been discussed openly, and received wide publicity in the media. We will need no convincing that Singapore is no longer a shopper's paradise. Many Singaporeans travel overseas, and the weekend shopping spree in Johor Baru reinforces that there is a problem here.

The problem can be viewed from the point of view of shops in the city area (including the CBD), and those in HDB town centres and HDB estates. It seems to be more acute in the city area, showing that the HDB town centres appear to be offering more value for money. However, both are facing similar problems - higher rentals, higher labour cost, difficulty of getting well-trained staff. What is the future of this important sector of the economy? Perhaps the Minister can give his views and also advise retailers.

Rising cost of home ownership

Sir, a successful Swiss friend once told me that he could not make his Singapore wife happy until he bought an apartment for the family. The Swiss, he explained to me, were very happy to rent a home. Yes, the PAP Government has achieved the almost impossible by providing home ownership to the majority. Now, some 95% or more of Singaporeans own their own home. However, the recent high escalation of home ownership is causing anxiety, especially to the young who want to start up their families. In two successful weeks in January 1996, two HDB flats were sold for more than $700,000 each: the Bishan executive maisonette for $770,000 and the Tampines flat for $745,000.

According to one housing agency, agents are now "knocking on doors" in these two estates and urging owners to sell. It was also estimated that 1995 was a very good year for public housing as prices increased on average by 25% over 1994 (open market sales), while prices of private residential property increased by between 6-12%.

The concern for this House must, of course, be to focus on HDB flats, especially for the first-timer and for the first time upgrader. Can the Government provide longer mortgage loans, eg, up to 30 years and also "ballooning schemes" to make it easier for young couples to own their homes, ie, they pay less now when they are earning a lesser salary and more later on when they have a bigger salary? The MAS and the Ministry of National Development need to relook into financing for the HDB units in the face of rising costs. It has also been said that when the Government sells land in a tender, there is always a "reserved price" - a minimum expectation. The question that is raised is that if the Government expects developers to reduce price, then true market values can only be reflected if there is no reserved price. Will the Minister comment on this?

Rising business costs and rising cost of living

Sir, higher rentals, higher salaries, higher cost of transportation are the main causes of rising business costs and rising cost of living. Will the property tax rebate be passed on as rental rebate by the private sector? Very doubtful, as the property owners themselves are complaining of higher operating costs. Has the Minister any figures to show that previous property tax rebates have been passed on to tenants? Sir, I would like to refer to Table A3.1 on page 121 of the Budget book entitled "Consumer Price Index, 1990-1995". I am especially concerned as the steepest increases in CPI are in:

(1) Education, 4.2% (annual percentage increase);

(2) Cooked food, 3%;

(3) Seafood (uncooked), 2.8%. Numbers (2) and (3) refer to food items. As we know, many Singaporeans eat out daily and this is an important cause of concern as the cost of uncooked food is number two in the increase in CPI for 1995. In 1994 the top three were:

(1) Seafood (uncooked), 7.7%;

(2) Transport and communication, 6.7%; and

(3) Cooked food, 4%.

Sir, education, food (especially cooked food) and transportation are daily necessities. We can eat less, but eat we must. We can travel less or use cheaper modes of transport, but travel we must, at least to and from work. We must continue to educate our children, and give them the very best. Many grassroots organisations and non-profit organisations are providing good quality tuition classes and managing other educational programmes. What are the Minister's plans to assist in these areas?

Sir, if I may just spend a short moment on what Mr Ling How Doong touched on, and that is, the book grants. He touched on a wide range of topics but I would like to just dwell a little bit on this matter of book grants.

Sir, we as MPs and community leaders can do things on our own when we see a need. A good example is what Mr Ling has mentioned about book grants and education matters. The grassroots organisations and other charitable and non-profit organisations can do this. We as community leaders and MPs can also do this. The PAP Community Foundation has done this for many years by granting book grants. In December 1995, the PCF Executive Committee and Management Council approved 360 grants to students in the polytechnics (50 in each of the polytechnics) and universities (80 in each of the two universities) at $200 per student. The total cost of this is $72,000. Yes, Sir, we all can do something. The PAP, through the PAP Community Foundation, is doing something. What is the SDP doing?

Sir, I support the motion.

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

Sir, the Finance Minister has been very generous for the 1996 Budget. Despite his generosity, I hope he is not lean to Parliament House because we have a spalling ceiling problem. I am concerned about his safety and the safety of Members there.

Sir, despite that minor problem, and to get back to a more serious note, I must commend the Finance Minister for a very generous Budget for 1996. Almost all Singaporeans stand to benefit from various rebates and allocations made in this year's Budget. It is indeed the best Budget that I have heard so far in my years in Parliament.

Sir, Singaporeans have benefited from the good economic growth our country has made in the last few years. Opposition parties will deny this. They always cry wolf and say nothing has become better, and people are taxed more. This can be easily debunked. My parliamentary colleagues have given clear examples and explanations which have debunked them on this issue.

Sir, it is only with economic growth that more provisions could be made. If you look around, people in many countries do not enjoy such economic benefits. Many of them in these countries have to pay more through higher taxation. Taxes are increased and this is a norm. People are disturbed and they have to bear the hardship. Life for people in many of these countries has not improved. We are in a more fortunate position and we are not facing this problem and many Singaporeans have enjoyed a better life over the years. We must therefore examine why this is the case. Why have we made such good progress and people have been given more benefits over the years? We have made good progress, because of good Government, political stability, and good investments, and to some extent, good fortune. And this, I think has contributed to Singaporeans being able to enjoy a good life and good progress each year.

Sir, the Opposition will always paint a negative picture about this. One must ask them to identify which countries have, in the last few years, been able to give generous benefits and tax incentives to their people. I know of very few countries in the region and elsewhere that have done so.

Sir, the Singapore economy is doing well. Generous allocations have been made to various economic sectors to expand. Would such an increase, both expenditures in the public and private sectors, drive up inflation?

Our inflation has been kept low at about 3% to 4%. What is the anticipated inflation rate for the year? Sir, with increase in inflation, the real income of families will be eroded, and this can affect low income families. I would perhaps like the Minister to address this growing concern facing Singaporeans. Would the Minister give an indication whether he would expect an increase in inflation this year?

Sir, there is also a nagging concern about the increase in cost of living. People generally complain about this. Has cost of living really been going up steeply or is it going up steadily? I think this concern has to be addressed and clarified.

Sir, the working class families have indicated to me that prices of goods and services, particularly prices of food items in their neighbourhoods, seem to have increased higher than the inflation index. I would like to see that monitoring of steep price rises be closely undertaken by the Government and action must be taken against those for over-profiteering.

In the last few years, we have seen active efforts by Government to restructure and privatise public and statutory bodies. The objective of such direction is clearly spelt out by Government. Perhaps it will achieve economic efficiency. However, the outcomes and the consequences of this privatisation and restructuring exercises are less predictable. I would like to ask the Minister the overall impact of such restructuring exercises implemented by the Government on the economy. Has economic efficiency been achieved at the expense of increased prices?

Sir, there are concerns that some of the restructured corporations such as Telecom, TCS, SMRT and others in the pipeline, such as Singapore Power and PSA, would be providing monopolistic services. Sir, would future price increases be capped and the charges moderated? This is important because these are all monopolies and there is a need to ensure that the consumers who are helpless would to some extent be protected against steep increases in prices of their goods and services. And with the move towards privatisation of various Government bodies, I think it is very important that this issue be further examined fully. In this respect, I would suggest a Monopolies Commission be established to deal with them and to moderate profiteering by such privatised or corporatised enterprises.

Sir, in relation to the tax relief for the disabled, I would like to say that the Minister for Finance could afford to be more generous in support of families with disabled children and aged sick parents. These families deserve to be given higher tax relief so that this could reduce their financial burden to care for their dependent and disabled family members. I would also like to urge the Minister to extend Edusave grants to disabled children studying in special schools. Since these children are studying in special schools, they should be made no different from normal children who are studying in other schooling institutions. I do not think that we should deny them this benefit, Sir, because they are our children and despite their disability, they are being educated in special schools. I hope that the Minister for Finance will look into extending the Edusave grant to this group of children.

Sir, I would also like the Minister to consider higher allocation of financial grants to voluntary and charitable organisations. Presently, the Government provides grants on a dollar-to-dollar basis. It would be helpful for Government to review this formula and perhaps increase the grant on a formula of 60 to 40 basis. Perhaps a one-time grant to these organisations on an annual basis, subject to good economic performance of the country, could also be considered. This itself would be a signal to encourage all those who are providing voluntary efforts in supporting community projects to enter into a greater partnership with Government to implement more programmes in helping the less able and disadvantaged in our community. Sir, I hope that the Minister will be able to look into this area as many voluntary organisations have requested for further support to enable them to do a better job.

Sir, the last area that I would like to bring up is incentives for saving. We should not allow agencies and credit organisations to encourage people, particularly our young, to spend more than what they can afford. We should encourage thrift amongst our population and this is important to propel our economy further. In this respect, we should have more policies to encourage and give incentives for good saving habits. Good saving habits should start with the young. I hope that the Minister will look into this issue. And I would like to ask the Minister whether he will implement proactive policies that would encourage savings and whether current policies would be reviewed.

In conclusion, I would like to thank the Minister for Finance and commend him for a very generous Budget for 1996.

Mr Low Thia Khiang (Hougang): ( In Mandarin): Mr Speaker, Sir, I have heard a number of PAP MPs praising the Finance Minister for being very generous. But we must not forget that he is being generous using the money of the citizens of Singapore.

First of all, let me talk about the Government's economic principle. All along, the Government's principle on all the domestic services is that these services must be able to yield economic benefits. For example, the public bus services must not only not run into losses, but they must also ensure that the shareholders can make good profits from their operation.

Now the Government wants to increase electricity tariffs. They claim that the rate of return on the investment is low. But in fact, what they really want is to make sure that the shareholders have good profits after privatisation of the Singapore Power.

Of course, once this organisation, whose original responsibility was to provide essential services to the people, has been privatized, the Government would encourage the people of Singapore to buy its shares as a form of investment. Later on, if the tariffs are increased, the citizen-shareholders will be compelled to suffer in silence. If they do not agree to an increase in tariffs, there will be no return on their investment. On the other hand, if they agree to an increase in the tariffs, their cost of living would go up. Then the Government can unashamedly say, "Well, in the interest of the majority of Singaporeans, the tariffs have to go up!" In the end, the tariffs are raised. Now, these ordinary citizens who are minor shareholders may make a little money from their shares, the Government as the major shareholder will make big money.

In the Budget Statement, the Finance Minister pointed out that the increase in electricity tariff is to have a correct pricing of the factors of production. However, electricity is not only a factor of production for the industries. It is also an essential utility to the daily living of the ordinary people. So the Government has treated the supply of electricity as an investment and it says that we must have a good rate of return on the investment. This is not in conformity with the principle of the Government having the fundamental duty of providing essential services to the people.

If the Government applies this principle of demanding returns on its investment to the other services, like the MRT system, and raise the fares in order to attain good returns on its investment, then the fares will be substantially raised.

When privatising these organisations whose primary duty is to provide basic services to the people, the Government should carefully consider the consequences that may follow.

First, when these Government bodies are privatised, labour costs and other costs will increase. At the same time, in order to gain sizable profits, or to attain the due returns on the investment, charges for the services provided can only increase and never decrease. Then as the major shareholder of these privatized companies, the Government would make a lot of money and they can then give a lot of hongbaos when presenting the Budget. However, come a day when we are unfortunately faced with an economic recession, and the Government's budget would have to focus on how to stimulate the economy and attract foreign investment, it will have no money left to give subsidies and rebates. Then the ordinary folks will have to pay higher tariffs with no offsets or rebates. Worse still, if they lose their jobs, how are they going to make ends meet?

Secondly, upon privatisation, the public transport system and health care services will be operated in the commercial way to generate profits for its shareholders. On the other hand, they are under certain pressure where the charges for these services cannot be raised too high for fear of increasing the burden of the people. These service industries cannot substantially raise their service charges, yet they have to ensure their shareholders of a considerable return. Then, they will have to find ways and means to reduce their operational cost, at the expense of certain aspects of their operations, such as the safety measures of public transport, the quality of medical service, etc. In the long run, will this not result in deviations and getting into great trouble?

Thirdly, once these bodies, whose original duty was to provide basic services to the people, are privatised, they will no longer come under the control of Government departments. One day, if the nation has to face a crisis and the cooperation of these bodies is needed, will there be a problem getting these privatized corporations to cooperate?

Mr Speaker, Sir, let me now talk about the Government's new principle for formulating the budget. This new principle is based on the output and performance indicators of the various departments to decide how much funds should be allocated to them. This would have far-reaching effect on Singapore. For example, if the Traffic Police sets a target of issuing 100,000 summonses for traffic offences a year, and in order to reach this target, does it mean that the Traffic Police will step up their efforts to issue more summonses? If the Police Department fixes a target of 50,000 cases of prosecution a year, what would happen if they cannot attain the target?

At the same time, if the evaluation of salaries and promotion of the CEOs and senior officers of these Government departments which have become autonomous agencies are to be based on whether they can perform beyond their pre-set targets, then I am afraid Singaporeans will have to pay even higher fees for their services. Moreover, those departments whose output cannot be quantified or the nature of their services is such that the volume of output is fixed, does it mean that they will be ignored in the budget, or that they will never get what they asked for in the budget? For example, in the Ministry of Education, the number of students it serves is more or less the same every year. They are in no position to perform beyond the target of service, and hence they will have no surplus to retain.

I hope that when the Government uses this new principle of budgeting, it will make public, in detail, the target of each and every autonomous agency, the funds allocated under the budget, and how the Government supplies the funds according to the output of their services, and the ratio, etc.

Now, let me analyse this year's Budget. Some people say that this is one budget where the Government is sharing its wealth with the people and the newspapers are presenting it with a fanfare that the Government is giving away lots of hongbaos. Let us take a look at these hongbaos from the angle of the revenue and expenditure of the Government.

1. Since the middle income groups have paid a lot of taxes in terms of COEs and foreign workers levy, the Government has designed some tax deduction measures for them. Although the Government suffers a revenue loss of $3.75 million, it had actually collected, in the previous fiscal year, more than $3.6 billion from the relevant taxes and levies.

2. The service and conservancy charges, rentals and public utility rebates for the lower income groups may result in a revenue loss of $126 million for the Government, but, in the previous fiscal year, the Government collected $1.64 billion in terms of Goods and Services Tax (GST).

3. The so-called "sharing the wealth with the people", CPF Top-Up scheme and the Pre-Medisave Top-Up scheme may cost the Government $955 million, but on personal income tax alone, the Government's revenue was more than $2 billion. So in fact, the so-called hongbaos and the measures to distribute the wealth to the people will take up only 6% of the Government's total revenue for the year. Moreover, the Government's revenue over expenditure is more than $6 billion which will go to the reserves. Therefore, through all these policies, the Government has collected a lot of taxes from the people. Then in the Budget, it is just taking a drop from the ocean, but it plays up the whole thing and says that it is sharing the wealth with the people. "Eating up the big and paying out the small", this is the essence of this year's Budget!

Mr Imram bin Mohamed (Nominated Member): Mr Speaker, Sir, the 1996 Budget is undoubtedly an excellent one from many perspectives and I have no hesitation in supporting the motion.

Today, I would like to touch upon the issue of Singapore Power's privatisation which was mentioned during the Budget Speech by the Minister for Finance about two weeks ago. The announcement by the Government to postpone the privatisation of Singapore Power came as a surprise to Singaporeans. But the bigger surprise to the public was the reasoning given. The public had up to now the utmost faith in the Government's plan for privatisation. They believe that Government's plans are always well-thought through. Unfortunately, this time, the announcement to delay Singapore Power's privatisation leaves the public askance.

The Government gave low profitability as the reason for postponing privatisation. Was profitability not known when the decision to privatise was made? Government has said that profitability became apparently low when accounting methods of Singapore Power were changed to comply with commercially common methods. One would expect that Singapore Power's accounts would have been adjusted when the decision to privatise was taken. To announce at this late stage that changing the accounting methods resulted in low profitability can only suggest one of two things. There is more that has not been disclosed, or the Government has not been thorough in its research before taking the decision to privatise. Some even wonder if the postponement has anything to do with the recent corruption case involving a former top official of PUB. The public would need more details to be persuaded that the reason for the postponement is valid. Regrettably, some confidence has been lost.

Next, I would like to question the purpose of privatisation. Some of the more obvious purposes would be (1) to allow public to share in the economy and have a direct stake in it; (2) to increase the shareholder base; (3) to enhance Singapore's stock market size; (4) to increase efficiency and competitiveness; (5) to raise capital; and (6) to facilitate expansion into the region.

I would like to talk on increasing efficiency. One of the ways of increasing efficiency is to increase competition for Singapore Power. However, the limited size of the Singapore market and the heavy capital investments necessary for power plants and distribution networks provide an entry barrier for any potential competitor. Hence, Singapore Power is expected to maintain a monopoly for many more years to come.

As a public company, Singapore Power's conventional objective would be to maximise returns for the shareholders. The Government, by announcing that an increase in tariffs is necessary to make it attractive to potential shareholders, has set a precedent that it is acceptable to simply increase tariffs to please the shareholders. As it has a monopoly, consumers have no choice but to comply. Of course, the argument goes that the public are also shareholders who will benefit from profits made by Singapore Power. But the main beneficiaries will be the bigger shareholders, including foreign investors.

There has to be a control mechanism for Singapore Power charges. I believe this has been in place in the privatisation programmes elsewhere as in the UK. Pricing has to be based on a formula based on cost of production and not profitability. To use return on equity as a measure to guarantee a profit level for a public company is difficult to be accepted by the public. To guarantee a return would, in the long run, mean passing on inefficiency to consumers. A utility board should set pricing controls until competition is available.

The Government also announced that Singapore Power tariffs are low compared to the region. A closer look shows only Taiwan, Hong Kong, Japan and the Philippines are higher. However, if we compare the ratio of average tariff charged to cost per unit, as illustrated in the chart which I have distributed to Members with your permission, we find that Singapore is third highest in the region, next to Malaysia and Korea. This means that Singapore's tariffs are relatively high. With average tariff at 12.37 and cost per unit at 8.04, the tariff to cost ratio for Singapore is 1.538. If Singapore Power is supposedly operating at an efficient level, then how is it not generating sufficient return when price exceeds cost by more than half? If the tariff is increased by 12-14% as proposed, the tariff to cost ratio would rise to 1.72-1.75, bringing Singapore to the second highest position in the region.

In conclusion, as Singapore Power is providing an essential service to the community and as it enjoys a monopolistic position, the Government may want to review the whole approach to privatisation for Singapore Power. The Government should set up an independent committee to study this, including the option of running Singapore Power as a cooperative. The committee can also come up with a recommendation on fair pricing in the light of the created monopoly. If at the end of it, the Government feels that Singapore Power still needs to be privatised, the main reason being to enable Singaporeans to have a direct stake in the economy, as stated by the Minister for Trade and Industry, then the Government should not delay the privatisation. This is because if the Government intends to make Singapore Power more profitable, citizens should benefit from the exercise since, after all, the revenue will be derived from them. If, on the other hand, the Government would still prefer Singapore Power's privatisation to be delayed a few years to command a more attractive listing price from major shareholders, the Government should offer share options to Singaporeans now, to be exercised when Singapore Power is finally listed. The offer price should be based on present value with an appropriate discount. The Government will then not be seen to profit from its citizens.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, the FY96 Budget is the most generous bonus budget in memory. The total tax rebates given away by the Government amount close to $2.45 billion. It has something for everyone. I must congratulate the Finance Minister for being so generous. Of course, to do so, there must be sufficient budget surplus. Our budget surplus reflects the able management of the nation's economy by the Government. Every working adult has contributed to our budget surplus in one way or another; each of us playing a different role. But, ultimately, it is the leadership of our Prime Minister, Mr Goh Chok Tong, that underpins the foundation of our economic success.

My concern is this. There are so many goodies in the Budget that this might plant the seed of dependency in our people. And this is the very mentality which this Government has tried its very best to discourage. I am concerned that repeated direct rebates such as HDB service charges and PUB rebates might establish a tradition which neither this Government nor future governments can reverse without a heavy political cost.

On the other hand, Sir, I support the concept of sharing the fruits of a booming economy with our fellow Singaporeans. I must also admit that every other means of sharing has its own pitfalls. Handing out rebates seems to be the most acceptable one. Obviously, sharing the nation's wealth is indeed a difficult balancing act.

In this debate, Mr Speaker, Sir, I would concentrate on the fiscal policy of the Government and take this opportunity to examine the trend of our budget surpluses over the last five years, along the same line as Dr Lee Tsao Yuan has done. Despite the rebates totalling $2.45 billion this year, the estimated FY96 surplus is still $6.41 billion. On the other hand, if we had not given away this $2.45 billion, we would be looking at an estimated surplus of $8.86 billion or 6.8% of the GDP, the largest in our nation's history.

My question to the Minister is this. Is this a one-time phenomenon as a result of a one-off economic boom in certain sectors? Or is this the result of our tax and non-tax measures coupled with an increasing tax base? Sir, not being a Member of the Estimates Committee, I ploughed through some figures and I have prepared a chart and a table depicting the previous years' surpluses including the estimated, revised and actual numbers, which you have given me permission to distribute earlier.

Sir, if we look at the numbers, the actual budget surpluses from FY90 to FY94, one will notice that the actual budget surpluses have ballooned from $2.54 billion in FY90 to $8.57 billion in FY94. As a proportion of the GDP, the corresponding number has increased from 3.9% to 7.9%.

The Minister in his speech has stated that budget surpluses have averaged 4.4% of the GDP over the last eight years. However, since the surpluses really have started to take off almost vertically in FY91, we should be looking at the numbers since 1991 if we want to determine the trend. Therefore, if we just look at the actual budget surplus numbers from FY91 to FY94, the average is 6.3%. This is significantly higher than the impression given by the Minister.

Furthermore, if we look at the differences between the estimated budget surpluses and the actual budget surpluses, it seems that the Ministry has been doing a rather poor job in forecasting accurately its revenues. At this point, I echo Dr Lee's sentiments about urging the Finance Minister to be more accurate in his forecast. For FY90 to FY94, the Ministry of Finance had consistently put the estimated surplus at around $1-$1.5 billion, when the actual figures had been increasing steadily. Even in FY94, the estimated surplus was given as $1.58 billion, when the actual surplus the previous year had already reached $6.32 billion. Only in FY95 did the Finance Ministry up its estimated surplus to $5.75 billion or 4.8% of GDP. I find it inexplicable that the Ministry had been consistently under-estimating so much for so many years.

One might want to find out that the revised FY95 budget surplus is only $4.81 billion, which is 4% of the GDP. This is also the first time that the revised number has dipped below the estimated number since 1991. Is this a reversal of the trend? Maybe not. Given the track record of the last four years, I would not be surprised if an extra few billion dollars would materialise from somewhere, thereby pushing the actual FY95 budget surplus even higher.

[Mr Deputy Speaker in the Chair]

4.40 pm

Dr Wang Kai Yuen (Bukit Timah): I would like to ask the Minister a simple question. Why is it that despite all the tax cuts over the years - the Minister had been announcing tax cuts over the last 2-3 years in the budget - our budget surplus continues to escalate? Mr Chew Heng Ching has given some answers and said that if we look at the Report of the Estimates Committee, we can get some answers. But I would like to hear it from the Minister himself. I would like to find out whether these surpluses are structural in nature. In other words, whether it is part of our tax structure that continues to yield such tax surpluses. Or is it due to the increasing larger tax base with a larger number in the workforce? The Minister in his speech also referred to non-tax measures like COEs and foreign workers levy developing into significant revenue sources. Can he provide greater details, please? How much does salary escalation or asset appreciation play in the revenue increase? If salary escalation and asset appreciation play a significant role, then tax revenue increases would be almost like an automatic result of what I would call "bracket creep". "Bracket creep" means that the taxable incomes are pushed into higher tax brackets over the years. If that is the case, perhaps tax rates could be cut further to achieve a reasonable budget surplus, which brings me to the topic of what is a reasonable budget surplus.

The estimated FY96 surplus is 4.9% of GDP. The revised FY95 budget surplus is 4.0% of GDP. The Minister in his speech mentioned that the average budget surplus is 4.4% of GDP. Is this a coincidence or is the Minister paving the ground for a new and higher budget surplus target?

Prior to FY95, we seem to be quite happy with 2% GDP budget surpluses. Sir, we should bear in mind that we are actually at this point talking about percentage of GDP. Even at a constant 2% GDP, as our GDP grows by around 7% a year, we are still going to have an increasingly larger amount of surpluses in our budget. Before we accept 4% as the norm, we must satisfy ourselves that there are good reasons to escalate our surpluses to 4% of GDP.

Is 4% GDP surplus a problem? That will depend on our tax philosophy. What is tax? The Oxford Dictionary defines it as "money to be paid by people or businesses to a government for public purposes." Many Western governments will be more than happy if they can achieve a balanced budget, not to mention surpluses of this magnitude.

At this juncture, I would again quote from the Minister's speech. He said:

`Our target is to run a modest budget surplus over the long run so that the public sector does not drain resources from the economy.' What does he mean by a "modest budget surplus"? I would like the Minister to enlighten this House whether a 4% GDP budget surplus is consistent with his statement? Or would a 2% GDP budget surplus be more relevant? If the latter is true, then the conclusion is that our existing tax structure is still high despite all the tax cuts announced and there is still plenty of room to move in that direction. The question is, of course, whether to tax and then share the tax collected with all the people or to tax lightly and leave more money in the pocket of the people, to begin with.

This budget continues to be progressive in placing the major tax burden on the wealthy and giving rebates to the poor and less wealthy. I use the words "less wealthy" because I find it difficult to describe people living in 5-room HDB flats as poor. On top of that, this budget continues to provide a significant portion, close to $450 million of the HDB Development Budget, to HDB upgrading programmes like the IUP and the MUP. As a result of these upgrading programmes over the past few years, many older HDB estates today are newer, cleaner and have better facilities than many landed residential estates. For instance, in my constituency, children from the landed residential estates go to the HDB estate in Clementi to make use of the fun equipment in the children's playground. Many of the landed residential estates in Bukit Timah are now 20-30 years old. Their common infrastructure such as drains and pavements are crumbling.

One of my constituents has upgraded from a HDB flat to a landed property and, by all measures, she should be very happy. Instead, she found herself having left the first world and moved to a third world, figuratively speaking. She found that she has to endure more mosquitoes, broken drain with ponding water, broken pavement, and non-existing public transportation, living in a so-called "rich man's" area. Finally, she also does not have the friendly town council to bring her problem to. So I have only one favour to ask the Minister in this Budget. Rather than asking the various Government departments to repair the infrastructure piecemeal, I urge the Government to appropriate a portion of the budget surplus to implement a new scheme. Let us call it a Landed Property Infrastructure Upgrading Programme (LIUP) to rejuvenate the crumbling infrastructure in landed housing estates. A nation-wide upgrading scheme with an integrated approach would yield a far better result than doing it piecemeal. I think it is about time that those who live in landed estates could participate in our Prime Minister's new vision: Make Singapore the best home.

Sir, as I said earlier, everyone I spoke to is happy with the Budget. This Government has met its promise to share the wealth of the economic growth with our people. Let us hope that this philosophy is maintained in future. I believe this will remain so under the leadership of our Prime Minister as he leads our nation into the 21st century. I urge all Singaporeans to support him in his vision and make Singapore the best home for Singaporeans.

Encik Harun bin A. Ghani (Hong Kah GRC): ( In Malay): A responsible Government and sensitive towards the people's welfare will always endeavour to work hard to fulfil all the responsibilities that have been put to the Government.

It has been proven that the PAP Government has been able to perform its duties excellently not only economically but also in all the other areas. I believe Singaporeans are comfortable if the present Government continues to lead our nation. We are grateful to have an efficient Government and with the support of the people the Government has been able to table a very good Budget this year. The Budget statement by Dr Richard Hu has not caused any unhappiness. Instead, he has brought about happiness to many people, as there are many handouts given to the individuals, the family and the corporations. I hope that this will continue to be good.

I hope the Minister for Finance will give out more to those people who will have to look after their unemployed parents, those who do not have any CPF accounts, and more so for those without personal savings. It is most heartening that many are still looking after their aged parents without passing the burden over to the Government. I hope the Government will not set up more homes for the aged and indirectly the people will be nurtured with the responsibility to look after their parents. It is different from what has been asked by the Opposition Member, ie, to ask the Government to set up more homes for the aged. As for individuals who have lost their parents and will have to take care of their own siblings who are schooling, consideration should be given in tax reliefs or concessions which will relieve them of their responsibility and indirectly it will nurture in them to be responsible individuals within the society and not dependent on the Government. I hope the Finance Minister will consider my proposal in future so that our Budget will always have a bigger surplus. I believe the Finance Minister will always work towards a budget surplus and I am proud to be one of the members of the present Government.

Sir, I would also like to ask the Minister for Finance regarding the distinction between a Singapore citizen and a permanent resident. If $200 is credited to a Medisave account, $150 for the payment of PUB bills and a 10% rebate on income tax is given to both Singapore citizens and permanent residents, I think there is no distinction between a Singapore citizen who voted for us and a permanent resident who did not vote for us. I feel that the interests of Singapore citizens who have voted for the Government should be given preference to the non-citizens. In this way, I hope the Minister for Finance will consider seriously the interests of Singapore citizens as compared to the permanent residents.

Mr Deputy Speaker, last year, during the debate for the financial year 1995/96, the Minister for Trade and Industry has explained in detail measures which will be taken by the Government in respect of the use of water sources. I would like to raise the same matter again so that the Government will be able to explain all the measures which the Government has taken to overcome the water supply for Singapore. I would like to know what has been achieved so far and what are the problems faced by the Government and how such issues have been overcome or resolved. I would like to know what further measures the Government is thinking of in future. I feel that the issue of water is significant towards the livelihood of Singapore, especially in terms of the economic aspect. I believe our competent Government will always try to fulfil the aspirations of the people.

Sir, I support this budget which has been tabled by the Minister for Finance.

Mr Lau Ping Sum (Ang Mo Kio GRC): Sir, the economic performance in 1995 was impressive. We have steady growth, a healthy balance of payments of $12.2 billion or so and strong foreign reserves amounting to more than $97 billion.

The Budget indeed brought good news to one and all, contrary to what some of the Opposition MPs have been saying. It is the right thing to do. Whilst the economy is doing well, the fruits of success should be shared by all.

A friend from China commented that Singapore seems to be using capitalistic means to achieve socialist goals. If by socialism he means the belief in sharing of wealth and improving the standard of living of the people, then indeed Singapore has achieved more than most, if not all, the socialist countries in the world. But the more wealthy citizens have not been left out in Singapore for they too have benefitted from lower income tax, property tax and lower estate duty. Dr Hu's approach is, as usual, one of caution and quiet confidence. Recognising rising business costs and the widespread concern, he has reduced corporate tax to 26%. The reduction is welcome and it is unlikely to over-stimulate the economy. High rental and wages and labour shortage are problems confronting all developed countries. As we progress upwards, these problems are likely to get worse. It is therefore important for the Government to explore all possible options to moderate such increases.

Sir, the stamp duty on property transfers has been reduced by adjusting the threshold values for the three rates, ie, 1-3%. In effect, this would result in maximum savings of $3,000 on property transfers of $360,000 and above. However, the 3% rate is still high, given the high property prices today. For example, even with the adjusted threshold values, the stamp duty for property transfers of a million dollars amounts to $24,600. As an indirect tax, stamp duty remains a very high tax and a reduction in rate rather than adjusting threshold values would be preferable. The reason given for not reducing the rate is that we want to curb speculation in properties. However, for genuine buyers and people who are upgrading and in line with the national objective of asset enhancement, people who buy a property once in five years or 10 years should not be made to pay the 3% stamp duty. Perhaps we can impose 3% on those who buy and sell properties for speculation, but for the genuine upgrader, a lower stamp duty of 1% or 1 1/2% will do.

Sir, the GST has been implemented effectively. The Minister and his team of tax officials ought to be complimented for a highly efficient exercise in tax collection. However, I notice that the GST is also applied on the PUB tax which, by definition, is not a fee for the provision of utility services. It is a tax on PUB charges. I remember it was Dr Goh Keng Swee who introduced it in the early 70s to encourage the conservation of the use of electricity and water. Since GST is imposed on the total PUB bill amount, including the tax component, GST has become in this case a tax on tax. I recall Dr Hu had gone to great length last year to explain that the GST was not a tax on tax. Can the Minister review the need to levy GST on the PUB tax? Whilst the amount involved is small, the principle of consistency should, I think, be followed.

Sir, in this year's Budget, the sum of $150 million has been set aside by the Revenue Division of the Ministry of Finance for relocating the Singapore Turf Club from Bukit Timah to Kranji. I am certain that the Singapore Turf Club is more than capable of devising schemes of various descriptions to finance the relocation of its facilities to Kranji. For example, with the use of modern technology, wireless communications and smart phones, off-course betting can raise its revenue significantly. The Singapore Turf Club can explore other options to divert bets placed with illegal bookmakers to the Turf Club. With electronic betting systems, the Club can offer the convenience of placing a bet anywhere and anytime. Punters and race-goers need little persuasion to part with their money in any case. Would the Minister consider reallocating all or part of the $150 million to other more worthy causes, for example, the National Computer Board's IT Cluster Development Fund or the NSTB's R&D grants which will benefit Singapore in a more meaningful and tangible way in the long run? 5.02 pm

Dr Wong Kwei Cheong (Kampong Glam GRC): Mr Deputy Speaker, Sir, I support the Budget Statement announced by the Minister for Finance.

It is indeed a generous Budget, a hongbao Budget for all Singaporeans. It is also pro-growth, where the business sector is concerned. There are cuts in personal, corporate and property taxes, a series of CPF top-ups, rebates on HDB rentals and utility bills, cuts in estate and stamp duties, personal relief for National Servicemen and even for their parents and spouses.

For businessmen concerned about rising operating costs and the reduced competitiveness of the economy, the Government has introduced a series of tax-cutting measures aimed at maintaining the conduciveness of the business environment.

However, there are areas where the Finance Minister might have done more. For example, the one percentage point cut in the corporate tax rate is half what it could have been. A two percentage point cut in corporate taxes will be better for the entire corporate sector, in view of rising operating costs, particularly with the pending increases of electricity bills, a most fundamental element of operating cost.

The Minister in his Budget speech has mentioned that Singapore Power's (SP) electricity tariffs are too low, and that the Government will raise them gradually over several years to enable SP to earn adequate returns on its capital. I have discussed this issue with our grassroots and with several local entrepreneurs. They are of the opinion that SP is already making adequate returns on its current capital employed and the Government should not increase electricity tariff rates just to float SP on the stock exchange.

Moreover, the Minister, through his prudent policies, has been able to maintain budget surplus averaging 4.4% of GDP over the last eight years. In view of such healthy budget surpluses, I hope the Minister will delay the floating of SP for a few more years so that electricity tariff rates can be maintained at its current affordable rates.

Although this year's budget has been most generous, the Minister has left out budget considerations for a very important segment of our population, ie, our local entrepreneurs who need to look overseas for business opportunities. In the 1995 budget, the Minister announced that the pool of venture capital funds to help local small and medium sized entrepreneurs (SMEs) to venture overseas increased by 33% from $2.6 billion in 1993 to an estimated $3.5 billion in 1994. According to the 1995 Economic Survey of Singapore, the pool of venture funds under management in Singapore as at January 1995 was $5.3 billion.

May I ask the Minister for the number of SMEs that has benefited from such venture capital funds and the amount of money disbursed to such SMEs. I hope for the next Budget, the Minister will provide incentives specially to our SMEs so as to enable them to grow to become Singapore multi-nationals.

Sir, I support the motion.

Dr John Chen Seow Phun (Hong Kah GRC): Mr Deputy Speaker, Sir, there is no doubt that this Budget is a very generous one. Almost all Singaporeans, whether they are old, young, male or female, will be given something. The Government has once again shown that if economic performance is good, it will share the budget surplus with all Singaporeans.

There is one area, however, which this Budget did not address, that is, the training and continuing education of workers. This is an area which we cannot over-emphasize.

Singapore is now a "more advanced developing country". Compared with the developed nations such as Japan and Britain, or the Asian NIEs such as Taiwan and South Korea, we are lagging behind in the skills and education level of our workers. We must therefore redouble our efforts in promoting skills upgrading and continuing education. Otherwise, as cost pressure builds up because of continued economic growth, businesses will relocate elsewhere and our workers will be hard hit and left without a job.

Sir, the number of firms in Singapore with less than 50 workers has risen from 108,500 in 1991 to 129,000 in 1994, an increase of 19%. Correspondingly, the number of workers in these firms rose from 569,000 to 581,800, an increase of about 2%. In contrast, the number of firms having 50 or more workers has increased by only 2% from 3,007 in 1991 to 3,055 in 1994. The number of workers in these firms actually fell 4% from 690,000 to 662,800 over the same period. By 1994, small firms made up 98% of total firms compared to 97% in 1991. In terms of workers, small firms employed 47% of total workforce in 1994 compared to 45% in 1991.

Statistics on workers training have shown that skills upgrading is unsatisfactory among small firms. Although these firms employ close to half of our workforce, they collectively spend only about 1% of their payroll on training, far short of the 4% national target. And in view of the increasing trend of more and more workers working in small firms, there is urgency in giving training of workers in small firms a much needed boost.

Sir, the Government should identify what industry we want to promote and the skills needed and set up skills-based training centres. Workers can be trained in these centres on specific skills such as precision engineering, furniture making or even motor or aircon repair which is now more sophisticated because of higher technology. If Government is not prepared to set up these centres, then it should encourage industry associations or private agencies to set up these centres. Because equipping these centres is costly, Government should give a grant or allow tax incentives for the setting up of such centres. Workers going for training in these centres should also be subsidised either by SDF or a separate training fund set up by the Government. This way of providing skills specific training, I believe, will be more effective and will benefit workers from small firms.

Sir, technology is changing so rapidly and if Singaporeans do not update themselves continually, they will find themselves losing very quickly their competitive edge. At the same time, we should also encourage Singaporeans to upgrade their professional or educational level so that they can increase their effectiveness and productivity in their jobs. We must therefore emphasize the importance of continuing education among Singaporeans. This we can do by giving higher tax relief for such activities and widening the scope of approved courses eligible for tax relief. Can the Minister consider this?

Sir, in previous Budgets, procreation policies were introduced. After so much talk in the past year about the importance of family togetherness and parents transmitting the right values to our children, many expect this year's Budget to be a pro-family budget. However, not enough measures were included in the Budget to promote this important objective.

First, I would like to see that tax incentives be given to encourage part-time work arrangement for women with children. All of us know that the best way of bringing up children is for the parents to spend enough time with them and transmit the right values to them. But the economic reality of Singapore today is such that many married women had to work. We are therefore facing a dilemma between our economic objective and our social or family objective. The ideal situation, I believe, is for our married women to work part-time, especially when their children are young. Perhaps the Minister should give tax breaks for companies to provide employment for married women with children on a part-time basis.

Second, I would like to see tax incentives for companies to set up creches at the work place. I know Government is already providing subsidies for child care. But to enable working women to send their children to a creche at their work place will not only give them a lot of convenience, it will also give the mother the opportunity during lunch breaks to care for their children.

Third, I feel that the SOTUS scheme, as announced by the Minister, should allow married women with young children and not working to have the top-up without the requirement to contribute $500. This is because those who chose to stay at home may not be because their husbands have a high income. Many chose to stay at home because they want to look after their children. The co-payment will not make a difference to those husbands who have a high income. But it will be a burden to those whose income is low.

Sir, I hope the Minister could seriously consider my suggestions. I support the Budget.

Mrs Yu-Foo Yee Shoon (Yuhua): ( In Mandarin): Mr Deputy Speaker, Sir, first of all, I would like to thank the Finance Minister for this year's Budget and express my support for it. The feedback we have received from the people is that this is a generous Budget, showing the Government's care and concern for the people. Coming at the Lunar New Year festive season, this Budget is indeed a big hongbao for everyone.

The Minister stated that when the economy is performing well, we will share the wealth with the people of Singapore. This is a correct long-term policy. In other words, when we enjoy budget surpluses, we can afford to share the fruit of our economic success with the people. This is one way for the Government to express its appreciation for the hard work of the people. As mentioned by the Minister, we are a small country. So how to allocate effectively the resources and make good use of the limited resources, how to make this cost of resources be properly reflected in our policies, are questions we have to deal with very carefully and prudently. We should set aside a budget for mass communication work to enable the people to better understand the long-term policies of the Government and what the Government's programmes are over the long term, that is to say, we want to make our resources reflect the cost. In other words, we must let the people understand that we must pay for the goods and services at market prices, and how to balance the purchasing power with such prices. I think this is a very important matter.

I would like the Minister for Finance to consider that, on a long term, we should not go on the path of straight welfarism. We must balance our budget. I think for basic necessities, like health care, public transport, community development, education, cultural development, etc, the Government must take the basic responsibility by providing adequately for the people. I think more importantly, all these goods and services over the long term must be accessible and affordable to the people.

In recent years, the Minister for Finance has been bringing good news to the people of Singapore, year after year. So every year, the people of Singapore expect the Government to announce more goodies for the people. But as I mentioned earlier, maybe we have to set aside some budget for mass communication work, that is to say, we must refine the art and skill in the allocation and distribution of wealth, so that people will be grateful to the Government for the sharing of wealth with them.

Here, I would like to raise some issues on public education, skill training for the workers and community development. The Minister for Finance has, in this Budget, granted tax reliefs to the National Servicemen, their parents and wives. I think this is very creative indeed. It is a wonderful way to show our appreciation to the sacrifices made by our National Servicemen and members of their families.

As we encourage individuals and companies to regionalise, the Minister for Finance and perhaps the Minister for Labour may consider creating some incentives to encourage the wives and children to travel with their husbands and fathers on overseas assignments, so that the family unit can remain intact. Some special allowances or grants for children's education or wife's allowance or relief should be considered.

The participation rate in our workforce by women is 51%. This is because most mothers want to spend more time with their children at home. We cannot deny the fact that if both parents go out to work, their children will be somewhat neglected. Relationship between the parents and the children will be diluted. As such, we have to step up our efforts in public education and the promotion of family values. However, when I look at the Budget this year, there is only some $200,000 allocated for the promotion of family values, under the Ministry of Community Development. $1 million over 5 years is, in my opinion, inadequate for this purpose. I feel that the most effective way to promote family values is to go via the mass media and television, for example, through TV programmes like the Extraordinary People, On the Lifeline, etc. This kind of programme will help us to build a more caring society and family values. The Government should regard expenditure in this regard as investment rather than expenditure. I think more should be allocated for this purpose.

Next, on the dollar-for-dollar subsidy for voluntary charity projects, construction and renovation of premises for charitable organisations. According to feedback received from my friends and the grassroots, the Government has given them quite a lot of grants and support. But these old buildings which are given to them often have a lot of problems in maintenance and renovation. These volunteer workers, whose primary intention is to help the charitable organisations take care and look after the less privileged in our society, frequently end up spending a lot of time on fund raising rather than doing the charitable work proper. As a result, they have less time to look after these unfortunate people. I think we should take the load out of these volunteers by granting them more funds so that they can have more time to look after the poor and needy.

Over the past two to three years, the Government has been giving a lot of help to the low-income groups. We have already all kinds of schemes and programmes in place such as the Small Families Assistance Scheme, the Edusave Bursary Scheme, the Medisave scheme as well as the various rebates for HDB conservancy and service charges, rentals, etc. But there are some families in the $1,600 to $2,500 income group staying in 3-room HDB flats who are not eligible for this kind of assistance. In some cases, if the sole breadwinner in the family falls sick or for some reasons is unable to work, the whole family will suffer financially. We need to look into their problems. We should be more flexible in our dealing with such cases.

I also mentioned just now that we have invested a lot of money in the education of the younger generation. This is a move in the right direction. I believe we have allocated more than $300 million a year in the expenditure of one university. Can we not also set aside some money for both the younger and older generations of workers who are creating wealth for us? Are we giving them the care due to them, especially in their education, training and retraining? I strongly believe that we should consider setting up an Education Reserve Fund for the workers and employees because these people have family commitments. When they apply for admission to the Open University, to upgrade their skills and knowledge, or go for higher training, they would need a lot of financial assistance. So I feel it is regrettable that in this Budget, there is no concrete proposal to look after the group that I have mentioned, that is, the workers that need training and further education.

Mr Speaker, Sir, I would say that Singapore is a very fortunate country. Our people are very fortunate. Every year, we have budget surpluses and, sometimes, we are even having problems finding ways to make use of these surpluses. On the whole, the Government has already fulfilled its promises. As Members of Parliament, we should, as far as possible, in this rather good budget, ask the Minister for Finance to consider our suggestions to improve the quality of our workforce.

Mr S. Chandra Das (Cheng San GRC): Mr Deputy Speaker, Sir, many words have been used inside this House and outside to describe this year's Budget Statement presented by Dr Richard Hu, Minister for Finance. To me, this is an excellent Budget with something for everyone. I have sat through quite a few Budget Statements in this House and I can safely say that this is the most generous one which combines tax cuts, Share Top-Up Schemes, rebates and tax exemptions.

Despite these generous transfers back to the people, the Government will still end up with a surplus of more than $7 billion for the year 1996.

Sir, Singaporeans must stand up and congratulate the Government for its fine management of the economic affairs of our nation. This is no mean effort, considering what is happening around us in the world.

Sir, I would specifically like to comment on three areas covered in the Budget Statement. Firstly, Government has raised the estate duty exemption on property from $3 million to $9 million. Last year, during the debate in the Committee on Supply on the Ministry of Finance, I pleaded with the Finance Minister to have the limit raised rather modestly. I do not have to tell you what answer I got last year. However, Sir, I am extremely grateful to the Finance Minister for raising the level from $3 to $9 million. But I wonder why such generosity.

Sir, I also welcome the accelerated depreciation allowance for approved energy efficient equipment and efficient pollution control equipment. Under this scheme, the accelerated depreciation allowance will be for a period of one year which means capital expenditure can be expensed off in one year. This will certainly go a long way to help conserve energy and protect the environment. While this is welcome, I am wondering whether a similar scheme can also be introduced for labour efficient equipment. Labour is a scarce resource in Singapore and over dependence on foreign workers can cause all sorts of problems. For example, the construction industry, which is heavily dependent on labour will certainly take advantage if such a scheme can be introduced. A similar scheme for labour efficient equipment will not only improve productivity and efficiency, but, more importantly, it will lead to less dependence on foreign workers. Maybe the Ministry of Labour and the Finance Ministry can examine this proposal.

My third area of concern refers to the retail sector. Many Members in this House have spoken about the problems of the retail sector and I just want to quote from the Economic Survey:

`The volume of retail sales grew by a modest 2.6% in 1995. Most sub-sectors performed weakly. Over the past few years, retail sales have been adversely affected by a number of factors. These are the diversion of consumer spending to asset purchases like car and private property, slower tourist arrivals and lower spending per tourist and a growing tendency for Singaporeans to shop abroad.' Added to this is the factor of the strong Singapore dollar.

The only break for this sector from this Budget is the reduction in property tax. Hopefully, the landlords will respond to the Minister's call to pass on the savings in full to their tenants.

Sir, the effect of the property tax reduction on the battered retail industry, I believe, will only be very marginal. The problem may be a larger one, even a structural one. There are too many players in the retail sector, overbuilding of retail space, development of regional centres, changing patterns of tourist spending. So I believe tax breaks alone will not solve the problems facing the industry. There has to be a shake out and some may have to go under.

The Government can help by being more flexible to changes. There is, at this moment, an over supply of retail space and at the same time office rentals are soaring because of shortage. I am told by some developers that they would be happy to convert their current retail space into office space, if the Government can be a little bit more flexible in their approvals and also a bit generous. If their request for conversion is granted, I believe we will be solving two problems in one, ie, over capacity in the retail sector and shortage of office space. By agreeing and making conversion easy, the Government will be helping the retail sector tide over the present difficulties. Maybe the Government should have more discussions with developers on this issue. Any assistance from the Government at this point will be timely.

In conclusion, Sir, let me once again thank the Minister for a very generous Budget and hope that this will be the direction of future Budgets, barring unforeseen circumstances.

Mr Zulkifli bin Mohammed (Jalan Besar GRC): Mr Deputy Speaker, Sir, thank you for allowing me to join in this debate on the Budget Statement for fiscal year 1996.

Sir, this year's Budget Statement indeed contained several good news, to the extent that it is no exaggeration to describe it as "too good to be true". Almost everyone that I spoke to reacted that they were very pleased with the Budget. If there is any complaint, it is that it is very difficult to fault the Budget. Not surprising though as the benefits cover a wide spectrum of our society. As such, there should be no quarrel this time around as to whether it is pro-worker, pro-business or pro-individual. Simply, it is pro-everyone and perhaps the most appropriate label to attach to it is the "people's budget".

Sir, the Ministry of Finance deserves the highest accolade for once again being able to generate a surplus of $7 billion for the current fiscal year. If I am not mistaken, this is the fifth consecutive year that the Government has been able to share the fruits of our economic development with our people. This speaks volumes for the Ministry of Finance for its judicious handling of our nation's financial resources. However, Government policies alone are not enough, as it must not be forgotten that the hard work put in by our people has also contributed to this creation of wealth.

Despite this sterling performance, some quarters - and I hope they are in the minority - are cynical by commenting that what the Government gives with one hand, it takes back with another. Can these cynics substantiate their claim? If this was true, how do we explain from the social indicators that Singaporeans are better off? Examples are real wages have risen by 5% per year over the past five years; home ownership has reached 92% and 75% of Singaporeans now own shares. Given the scenario I have just mentioned, I am confident that Singaporeans are discerning enough and cannot be easily hoodwinked.

On the contrary, I believe that our people understand and appreciate what the Government is doing. However, we must be pragmatic and realistic by being fully aware of the philosophy behind these give-aways and not assuming that this happy situation will be around year after year and thereby raise unrealistic expectations.

Mr Deputy Speaker, Sir, on specific issues, I would like first to touch on rebates pertaining to HDB rentals. Whilst I applaud the decision to further assist both 1- and 2-room households by increasing to three and two months net rent rebates respectively (against two and one month respectively last year), I am of the view that the Government could have been more generous. I would like to call on the Ministry of Finance to consider giving additional rebates, maybe up to six months, in the coming fiscal year for these low-income families to further alleviate their financial burden, as I believe the additional amount involved can be comfortably absorbed by the good budget surplus.

Next, I support the view expressed by my other colleagues from the labour movement on the absence of new financial incentives for workers' training in the Budget. This is indeed a disappointment as we have been harping on the importance and the pressing need for training and retraining for our workers irrespective of age. By not having some new incentives, we will put the older workers and those employed in small and medium enterprises at a disadvantage. This is because there is little or no opportunity at all for this group of people to undergo training, as many of the SMEs they are employed in have not been involved in training, as they are too preoccupied with bottom-line profits and survival. Surely the Government can do more to act as a major catalyst by giving financial incentives to encourage training of low-income workers in order to keep them employable. Sir, in this connection, I would like to urge the Government to be more pro-active in rendering whatever financial assistance possible to stimulate SMEs to train their employees.

On this note, I support the motion moved by the Minister for Finance. 5.36 pm

Mr John De Payva (Nominated Member): Mr Speaker, Sir, I rise in support of the Budget presented by Dr Richard Hu. And I would like to join other MPs who have expressed appreciation to the Finance Minister for a very good Budget.

As a unionist, I am particularly touched by concessions extended to the lower-income segment of our population. These people deserve whatever assistance they can get from the more fortunate among us, and not just from the Government.

Dr Hu has lowered the minimum tax rate for business and introduced a series of measures to lessen the tax burden of individual taxpayers as well. In a word, every single taxpayer in Singapore needs to pay less this year than last year. But I regret to note that some people have chosen to dub this an election budget. What evidence have these critics to offer to justify such a claim? What they failed to see is that the pattern of concessions had been set some years ago. But they are so fixed in their mindset that they cannot appreciate the generosity of the Government.

It is wrong of these critics to say that the Budget favours the well-to-do, leaving just crumbs for the lower-income. They come to this conclusion simply because savings from the high end of taxpayers are more substantial than those from the lower end. But this is to be expected.

What is it that these critics would have our Government do? Introduce a tax system that will drive away those who could earn more because they are more enterprising? Would the lower-income workers benefit if the higher-income earners pack up and go? Surely not.

Sir, let me now refer to a recent discussion by the Feedback Unit on the Budget. In particular, I would like to draw the attention of the House to a report published in the Straits Times on 2nd March 1996 quoting one of my fellow union leaders, Mr A. Nithiah Nandan, as saying that he welcomed the utility bill rebate, but hoped that the Budget was not an election Budget, as this would mean no more rebates next year.

I was shocked when I read it. Surely, as a responsible trade union leader, Mr Nithiah should have known better than to come to such a conclusion. Or could it be that he was misquoted, as I have been misquoted on a number of occasions? The truth is that he was indeed misquoted. But what did the Straits Times do to put things right? On its 5th March issue, under the heading "What it should have been", the Straits Times said that Mr Nithiah Nandan has clarified - yes, the word used was "clarified" - "that what he said was that it was unhealthy to brush the Budget aside as an election Budget, and that by doing so it would signal to the Government not to give any rebates next year." The way the Straits Times handled this issue leaves very much to be desired. There was no apology by the Straits Times for misquoting my fellow unionist. Instead, the Straits Times gave the impression that it was Mr Nithiah who did not present his thoughts clearly in the first place.

Sir, there are several other instances of this nature, but perhaps I could go on to another issue. Sometime ago, I had to fight tooth and nail to get the Straits Times to make a correction, instead of a clarification for misquoting me. We have said much about the need to inject professionalism at all levels. We must also not forget ethics. In putting Mr Nithiah Nandan in bad light and refusing to admit its own error, the Straits Times is guilty of unethical professional conduct.

Sir, let me now move to another area of concern to trade unions and this concerns training. The Government deserves a pat on the back for its sound education policy. It has invested a lot of money in education up to tertiary level. The question is: should the Government continue to invest in the training of workers as well? I am not saying the Government has done nothing. Employers can apply to the Skills Development Fund to subsidise training of workers. But surely the Government can do more. Perhaps in the course of the budget debate, we will have opportunities to hear from the Government whether it has other plans to help promote training, especially among the older workers.

While we have made tremendous progress in the economic and social fields, we still have people who earn relatively low incomes. How can we help these people break out of the poverty trap? Basically, there are two ways. One way is through education. This is by continuously improving our education system and by offering help to the lower-income families through schemes like Edusave and scholarships offered by grassroots organisations including trade unions.

The second way is through continuous training of workers. Recently, Mr Lim Boon Heng, the Minister without portfolio and Secretary-General of the NTUC, caused a stir when he suggested metaphorically that degrees, diplomas and certificates had expiry dates. In an interview with NTUC News, Mr Lim said that he was not surprised by the reaction. It merely confirmed his worst fears that some people start to rest on their laurels after they finished schooling or university, and are unaware of the implications of the fast-changing technology. What we need to do is to develop a training culture which is so pervasive that a worker would feel left out if he is not attending some skills upgrading course on a continuous basis. NTUC can do its part. But the greater push must come from employers. On its part, the Government can help employers by granting generous tax incentives for workers' training.

Sir, let me end by quoting what Mr Gary S. Becker said in an article on human capital and this was reflected in Business Week on Economic Viewpoint. I quote:

`No nation can thrive in a modern world without investing in its people.'

Mr Loh Meng See (Kampong Glam GRC): Mr Deputy Speaker, Sir, Singapore faced the last economic recession in 1985. The recession prior to that was in 1975. If there was a belief of a 10-year economic cycle, there would have been one in 1995. But it did not happen. Instead, our economy grew steadily over the last 10 years with unusually high growth averaging 9.8% in the last three years. We succeeded because we learnt our lessons well from the 1985 recession. The measures taken then allowed us to take full advantage of the strong regional growth in recent years. What makes it all the more impressive is the successful operation of the flexible wage system tied to the economic growth. Inflation was also kept low. Unlike other countries that are having unemployment, we were able to create 105,900 jobs and the year before that, 70,000 jobs. Singaporeans should count their blessings in being able to find work after graduation and on leaving school. Even the Japanese today will envy us in our ability to provide jobs for our school leavers.

Sir, the challenge facing Singapore in the next 10 years is not likely to be a recession but from the very intense global competition which we will ever encounter since independence.

There is a need to re-visit the Singapore economy, its structure and directions. The technology and trade environment have changed radically, especially over the last few years. I am not sure whether all sectors of our economy have the same understanding and working in unison to ensure our success in this new competitive environment. I would suggest to the Government to revive the Economic Committee. With the participation of the public and private sectors and the trade union movement, we should be able to forge consensus as to where and how our economy should be heading.

Sir, the Minister for Finance has explained quite convincingly of the need to price factors of production correctly to avoid wastefulness and over consumption. Therefore, the price of services like electricity has to be adjusted to reflect the true cost of production.

I hope the Government will apply the same principles when paying compensation to property owners whose land has been acquired or will be acquired. The Government ought to compensate based on the up-to-date true replacement cost to lighten the burden of property owners who have to bear the cost of relocation to an alternative site. There is a similar risk that when land is acquired cheaply there is not the urgency to utilise the site, as seen in many land and properties left vacant and unused for many months after acquisition. I think the matter will be quite pressing when land is being acquired for the North-East MRT line.

Sir, the Government has initiated reforms to the civil service to provide higher quality service at lower cost. This is done by giving civil servants more autonomy and be result-oriented. I support this pro-active attitude of the Government. This means that the whole corporate culture of the civil service will change. The faceless, cold efficiency of the past will be replaced by a more human face, and it will be communicative and responsive to the public needs. The civil servants are likely to project their individual personality in their work. I wish to ask the Minister if there is going to be a change in the tenure of employment of the civil servants in the autonomous agencies.

In the nature of operations, civil servants are encouraged to carve a niche in their careers in the autonomous agencies. Presumably, there is better recognition for work performance in the specialised area and better promotion prospects in the autonomous agencies.

With operating expenditures classified into running costs and transfers, the autonomous agencies will be able to use temporary help and out-sourcing the work if they are found to be cost effective to do so. It helps keep the Government expenditure down to economical level.

Sir, my concern is whether the Government will continue to provide subsidies in public services already enjoyed by the public, especially the elderly Singaporeans. I hope the public will not be made to bear the true cost of services provided as income taxes have already been paid for them.

Also, in the areas where there is possible direct competition with the private sector, will it cause the prices of such services to go up higher in the future at the expense of the members of the public?

Sir, for the rest of the Budget, I have nothing more to add because it has been too generous for me to comment further.