PURCHASE OF PROPERTIES BY SENIOR MINISTER AND DEPUTY PRIME MINISTER BG LEE HSIEN LOONG

Debate resumed.

Mr Zulkifli bin Mohammed (Jalan Besar GRC): ( In Malay): Mr Speaker, Sir, earlier this month when the Prime Minister declared open the Tampines East Community Club, he reminded Singaporeans that the challenge faced by Singapore (be it the last three decades when we first achieved independence, today or in the future) remains the same, that is, to fulfil the hopes and aspirations of Singaporeans. High on the list of aspirations and hopes among successful Singaporeans, mainly the young professionals, is to have better private housing and to own a bigger house. This can only be achieved when there is political stability, strong political leadership and buoyant economic growth.

The current excitement on the purchases of HPL condominium units by SM Lee and DPM Lee must be seen against this scenario. Yesterday, all the facts and circumstances pertaining to this issue were laid bare by the Prime Minister, the Senior Minister and Deputy Prime Minister Lee before this House to clear any doubts and misgivings surrounding this issue. The Prime Minister had also disclosed to this House that a proper investigation had been conducted and it was firmly established that there was no impropriety or cover-up in the matter. Both Senior Minister Lee and DPM Lee had also given detailed account of their purchases of what should rightly be a private matter for which they were not obliged to tell the public. If Singaporeans are still not convinced by the explanations given, then there is a great cause for concern as the honesty, integrity, credibility and honour of, not only the two Ministers, but also of our Government, is at stake. That this property issue had led some Singaporeans to question the credibility and the moral authority of Senior Minister Lee and DPM Lee is a sad day in our nation's history. Every Singaporean should be honest to admit that this would not have happened if it does not involve prominent public figures. What this episode proves yet again is the never ending vulnerability of those who hold high political office, in particular Ministers.

Sir, as a nation, I sincerely hope that Singaporeans have not lost their bearing and orientation. Have we forgotten the trials and tribulations that SM Lee and our pioneer political leaders had gone through in the early years of nationhood? Thirty years ago, when we had independence thrusted upon us, very few people had the confidence that we could survive or progress. History has proven our critics wrong because today our country is in good shape, our economy is sound and we have a strong defence system. Most important of all our people are well looked after -- they have good education and job opportunities, they are adequately housed, and they enjoy a world-class standard of living. Would all these achievements, which have been painstakingly built up over the years, be possible without the able, honest, dedicated and courageous leadership of our Senior Minister, who together with his contemporaries, had made hard-headed decisions in the crucial years of our nation's independence for the long-term good of Singapore. Of course, what we are enjoying now would not have materialised if not for another important factor, that is, the strong emotional bonds between the Senior Minister and his generation of political leaders have managed to establish with the people of Singapore. In building modern Singapore, SM Lee and his team have made great personal sacrifices and have more than discharged their responsibilities towards our people. Such sacrifices also apply to Prime Minister Goh and our current political leaders to ensure Singapore's survival for many more years to come.

Bearing in mind what I have just said, does it make sense for SM Lee and DPM Lee to undermine their standing and stature not only within Singapore but also in the eyes of the international community? If we are rational and level-headed, the answer then is obvious.

Sir, it is indeed absurd for us to accept that what is a normal commercial transaction has turned into a controversy. The decision to have this debate is a right move and I share the view that there are more pros than cons in debating this issue. It reflects the level of political maturity that has evolved in our nation's short history of slightly over three decades. It augurs well for the future of our country because it demonstrates clearly the PAP Government consistent stand on being open and transparent on issues which affect public interest, no matter how politically sensitive it is and irrespective of who is involved. Now that we have had a full debate on this issue and all lingering doubts and uncertainties have been clarified, it is only logical for Singaporeans to see this issue in the right perspective and decant themselves of any emotional hang-up and put it behind us. 4.02 pm

Mr Lee Kuan Yew: Mr Speaker, Sir, first, I want to thank the Members of the Opposition for helping to clear publicly any doubts about the legality or propriety of the purchases.

Mr Chiam had said so, Mr Ling How Doong had said so, Mr Low Thia Khiang had said so. I am sorry that Mr Cheo was unable to make up his mind and has decided to leave it to the people to decide, which I do not think speaks well of the trust the people in Nee Soon put in him. He is here, the people of Nee Soon are not here. He can judge better than they can judge. They watch television. But from the three out of four Members of the Opposition, they have said that there is no question of illegality or impropriety and that, in fact, any question of wrongdoing arose only because the money was returned. I agree. He was not here yesterday when I explained why it was returned. I think he was not here also when the Deputy Prime Minister earlier in the day explained why it was returned. I hope he accepts the explanation and perhaps satisfy himself or, at least help satisfy his constituents. And in fact they should write a petition and say, "Please don't give it to charity. Or if you must give to charity, please don't forget Bukit Gombak."

Mr Speaker, Sir, I would like to take this opportunity to answer the questions that have been raised, especially by the Nominated Member, Dr Lee Tsao Yuan, on the Singapore dream. Is it now out of grasp? But it is a challenge relatively small in the wider challenge and that wider challenge is: can Singapore continue, be successful after the first generation is gone? There are many doubters. In fact, many still believe that because I am in Cabinet, therefore it is me that is able to keep up these standards and that therefore things have not deteriorated. That once I am gone, so will this pristine quality.

I take this as perhaps the most serious challenge and I think it is no better stated than by Samuel Huntington, Professor of Political Science, Harvard. And he went to a seminar in Taipei last year, 27th August 1995, where he extolled all the emerging democracies and denounced Singapore. He is a person of some renown, some standing. He is the man who wrote the article "The Clash of Civilisation" which is coming. In his speech, he threw down this gauntlet to me. He described the Taiwanese model and all the other liberal models which were following the American pattern, then he described Singapore. He conceded, yes, it is successful but it is authoritarian and will die with the authoritarian person. Let me quote what he said:

`The contrast between this model [that means the Singapore model which he disapproves of] and the democratic model is often set forth in terms of the contrast between Singapore and Taiwan. A contrast that is real is also often exaggerated as in the recent New York Times headline, which summed it up as a difference between "clean and mean", on the one hand [that is me and all of you], and "filthy and free", on the other [that is Taiwan and the new democratic President, freely elected by 21 million people].'

It is a matter of great importance to the Americans because it is not just Singapore and Taiwan. The Americans are most concerned about it: which is the model to which mainland China will be attracted. And he was quite honest. Yet, as the article also pointed out (this was the New York Times article), Taiwan and Singapore are the two most successful Chinese societies in the 5,000 years' history of Chinese civilisation, and one or the other is likely to be the model for the future of mainland China. That is a very, very big issue. So when they gun for us, remember, they want us to disappear -- not that they hate us, we are their best friends, we help them -- but they do not want us to succeed as long as we follow this policy of clean, honest administration, no monkey business, no free rampant press that is free to spread false information, libellous information, without challenge, as in the Philippines or as in America.

He concedes, "Some authoritarian governments, Singapore among them, have been remarkably successful in producing economic prosperity, social order, general well-being." But do you know what they always say, cannot chew chewing gum, cannot spit in the streets, cannot urinate in the lifts, got to keep toilets clean, fine for this, that and the other, that is authoritarian, is against democracy. It stifles creativity according to Dr Chee Soon Juan. If we can do all those things, chew gum, pee in the streets, spit around, that will make you creative.

He says, "Singaporeans legitimately boast about the lack of corruption of their political system." "Legitimately boast" - we do not boast. We do it because it is a matter of need, of survival. If we are like the others, money politics, what is the advantage of the big banks, the big petrochemicals, the big refineries, billions of dollars worth of investments? Why do they come to this tiny island which Mr Ng Teng Fong, one of our most successful property developers, says it is so small, you cannot see it on the map? But you just look at the prices.

"And Lee Kuan Yew", says Samuel Huntington, "has provided the example and the discipline necessary to achieve this." In other words, he concedes that example and discipline were necessary to achieve this. If I am down, if I go and take $416,000, the example is gone, is it not? They will cheer and give me the most rousing send-off of anybody who has to quit politics. But I am not likely to oblige them. Why should I?

His real gauntlet is in his last paragraph. He praises Taiwan, which he is entitled to do. I admire many of the things they have done. Small island, of course slightly more resources than us, but from a small Japanese colony, bereft of infrastructure, or not much infrastructure, they are now one of the thriving industrial states of Asia. But of course not all things are right as Dr Ker Sin Tze who has just come back from the President of Taiwan's inauguration on Monday, would tell us. I am waiting to hear from him. You never read this in the Western press. But you read it in the (Yazhou Zhoukan), you read it in Taiwan newspaper, (Tian Xia), very moderate, balanced monthly, you read it in the Hong Kong press, (hei jin hei she hui) and even Newsweek -- I do not know whether they knew what they were doing -- showed a picture where the President of Taiwan had to hold up the hands of the local Mafia boss in order to get the votes of that area. If I go and do this act, the Western press would say, "Here is another Andreotti." But because it is Taiwan following their pattern, he says, "No, no. That is democratic politics."

He says, "The freedom and creativity that President Lee has introduced here in Taiwan will survive him. The honesty and efficiency that Senior Minister Lee has brought to Singapore are likely to follow him to his grave. In some circumstances, authoritarianism may do well in the short term, but experience clearly shows that only democracy produces good government in the long run, as in America."

But long before he threw me that challenge, the gauntlet, I had been thinking of the responsibility my colleagues and I face as time creeps over us, and we went in for systematic self-renewal. If we left it to chance, this House would not have the people who are sitting here. And even the four Opposition Members would not have won their seats without using money. Every government in this part of the world, having got into office, ensures its re-election by being able to give money. But the Opposition cannot raise the same amount of money. So they must win. Read what the newspapers say per voter gets in Taiwan, hundreds of millions of dollars. Read what the newspapers say when there is an election for UMNO, until Dr Mahathir deplores the practice. He is worried and he is open about it. And the Deputy Prime Minister is also against it. But a system has set in. We did not allow that system.

We finished off the secret societies within the first three years of office. From 1955, we suffered at the hands of the gangsters and I had to fight a by-election in Tanjong Pagar. Before the next elections, we set out and cleaned them up. There are no gangsters running in Singapore. You win or lose on your merit. We have formed our own rules. I believe - I would not call this an incident, I am not sure what is the appropriate word for it - out of this particular occurrence, good has come and will come to Singapore.

What does it prove? That the system I set up worked without me in charge, and the Prime Minister was in charge. The Finance Minister did not report to me. When the matter went up to him, he went to see the Prime Minister. The Prime Minister did not consult me. He had an inner pow-wow, because it is a dangerous thing investigating me and the DPM. He never told me this. I heard all this only now. He consulted Dr Tony Tan, Wong Kan Seng, Jayakumar. They decided and rightly said, "Have to investigate". I was ill or recovering from my stent operation, have to be questioned.

In other words, the system worked, because of the men I put in charge, including Mr Koh Beng Seng, whom Dr Goh and I nurtured. He is an honest man. He had to report against somebody who was his protector and his patron, because he was about to be sacked when he clashed with the former head of MAS. And I told Dr Richard Hu, "No, we change the boss. This man is an honest man, keep him there." I think Dr Richard Hu will remember that. But he did his duty. He did not come to tell me and say, "Sir, I've got this case against you. I'd better give you the documents. I think you'd better hide it." He could have done that and returned the favours I did him. Because he had clashed with Mr Joe Pillay who was MD of MAS and he was Deputy MD. And knowing him as an expert in the banking field, knowing Joe Pillay was an all-rounder, not an expert, I supported him, and Joe Pillay went to National Development and another MD took over. But he did not report to me and I am very proud of it. I chose the right man.

My younger brother, Dr Lee Suan Yew, rang me up yesterday and said, "You know, Ong Beng Seng is very worried. He said that both I and Richard Hu said in Parliament that giving DPM 12% showed corruption or intention to corrupt. What will happen to him with Koh Beng Seng who is gunning for him?"

An hon. Member: Ong Beng Seng.

Mr Lee Kuan Yew: No, what will happen to Ong Beng Seng with Koh Beng Seng in charge. He says he is really worried. So I spoke to the Prime Minister and spoke to Richard Hu and I think it is only fair that I should say this. I told my brother yesterday. I said, "No, you are wrong. If Ong Beng Seng does his job, Koh Beng Seng will not do any harm to him. But if he does his job wrong, is not open, not straightforward, bending the rules, he has to face the consequences."

I want to say this. I have cleared this with the PM and the Finance Minister. That MAS and SES have nothing against HPL or Ong Beng Seng. He can do his business. There is no need for anybody to run away from him, as if he is a leper. He is a straightforward businessman. Let us be very careful not to destroy entrepreneurs. He is an entrepreneur and I admire him as an entrepreneur.

When President Suharto asked the PM to move into new areas in the tourist industry in Indonesia, I saw several entrepreneurs, one by one. I came to the conclusion that Ong Beng Seng was the best operator of them all. So I said, "You move in. Try and lead as many of our teams as possible, team up with pribumi entrepreneurs there, not with Chinese Indonesians, because that will lead to more complications. Get pribumis." He told me, "Yes, I understand, don't worry."

He does not always succeed. He went to Vietnam to start a hotel. He followed me. He even got a site and one member of the committee of Ho Chi Minh City was put on his board, which is not the Singapore practice. But it still failed because he got the wrong member on the board.

I think it is important for us to make a clear distinction if we are to succeed. The people here have to be Jesuits, in this sense. We do not touch it. We play according to the rules. But to succeed, we need Ng Teng Fong, the Kwek Hong Png family, the Lum Chang group, Ong Beng Seng. I will not be able to do what they can do. But I can conceptualise and having met them, I understand what it is we as a Government can do to facilitate their enterprise. I have met Ker Sin Tze's Liang ---

An hon. Member: Wu Ching Liang.

Mr Lee Kuan Yew: Wu Ching Liang. He is a very good man and also very bright. But please do not believe that because of my association with them, I now think like an entrepreneur or I think like them or will act like them.

I believe it is a plus and I never doubted it, because I am guided by one simple principle in my life. What I am afraid to have publicly discussed, I never privately do. Whatever I do privately, I may have to keep it secret for some time. But if it comes out, I am prepared to defend myself. It has served me well and I am happy that the House is in total agreement, the Opposition and the Government, that there was nothing wrong. But what is most important is that we bring it out into the open and that the world knows the new leaders were prepared to act on the same standards. We are disproving Professor Samuel Huntington.

There are a few things which I want to settle first. My daughter-in-law, Ho Ching, wrote to me this morning. She said, "Better clarify about Singapore Technologies." Otherwise, she cannot get good men. She said that she did not get much. But she, as the MD, had paid $1 million in bonuses to successful MDs of her subsidiaries. She has written this to me, so I am sure she would not mind my announcing it, because people will know it anyway.

Last year, her salary was $21,500 per month. With the 13-month AWS, it was $279,500 per annum. Her bonus was $290,000, making a total of $569,500. Let me tell the Opposition. This is chicken feed compared to what the big companies are paying. This is a Government GLC. I have been urging the GLCs to follow private company practice - stock options, bonuses varying year by year. Because without that, Singapore Technologies have lost some good men. And the $1 million also caused a big row. There is no harm letting it be known. It is a difference in philosophy. She was trying to follow the market and gave $1 million. The Chairman, Dr Yeo Ning Hong, thought, "God, $1 million, better clear with me." But she thought that was the market price. But he has been in Government for so long, the idea of paying $1 million, when he was earning $300,000-$400,000 as a Minister, shocked him.

I think we start thinking in different terms. It is an unfair and unequal world. If you want an equal world, you end up with the Communist system. Mao Ze Dong's salary was about 15 or 20 times that of the lowest paid worker and so everybody was on grade 1, 2, 3, 4, 5, 15, 20. But as I explained to you, when the man took his Mao jacket off, it was fur-lined. The ordinary worker had not got a fur-lined jacket and he got different perks. And the system did not work.

She has been offered a higher salary of $28,000 last year. She decided, for her own moral authority over the others, to set the example and refused to take it. She stayed put at $21,000, but in April this year, Dr Yeo Ning Hong pressed her again and insisted that she takes $28,000. So I suppose she will be declaring a higher income tax. $7,000 more a month, that is $84,000 more a year.

If you start paying the DPM what he was paid before it was pegged to the private sector, should he stay on? Yes, says Mr Chiam, we all should. Maybe he would. But for how long, when he can make more? Maybe he would, not wanting to make more, because his father did this and he feels he may be under an obligation. But you cannot run the system. The system will malfunction unless it is monitored and adjusted. And I say this very seriously, that the salary adjustments were part of the process of clean and honest Government.

Ministers, high salaries, buying homes -- it is going to be an election issue. I am prepared for that. The Prime Minister is prepared for that. What would you have? Ministers, as in other countries, owning huge bank balances elsewhere in Geneva, Zurich, homes in California, London, Sydney? Or Ministers buying homes in Singapore, and if Singapore falls, collapses, they also are finished? They cannot buy shares because we have inside information not only of what the economy is doing, but what we intend to do to intervene.

The Prime Minister asked DPM to cool this property market. He and the Finance Minister have been working on that package, together with Lim Hng Kiang for the last one month. They could have just told one little word to somebody and you sell before this package and a few hundred million dollars can be cleaned up, before the stock market went down, or people are saddled with properties which they can no longer sell. But you've got to trust them. You've got to have men who can be trusted. He owns two properties, plus three others, which now have dropped in value. So has my wife. But we take this decision. We are accustomed to taking such decisions. All my life, if I allowed personal interest to decide which way to go, we would have a different country. The value of all his properties went down at least by 15%, 20%.

In fact, the package he put up with Lim Hng Kiang -- these are the young team -- they were very aggressive. And the Finance Minister says, "Okay,". When I saw this, I was most disturbed, because you can bring the market down, you cannot bring the market up. It is difficult. People must have confidence. So I was glad that we brought back Tony Tan from banking, and he minuted "This is too much". And I said I agreed. The PM was in Vietnam. I faxed him. I said, "Don't overkill. Let us go step by step." If this does not stop the speculation, there are a few other measures we can take which will stop the speculation. But we do not want to stop the growth of the property market. Honest buying and selling and the desire of the people to buy houses should be matched by the supply of land for builders, and so the decision was made, and I think it will work. It is already cooling off. By another 3-4 months, it will pick up and find a new level. No longer this fever.

But Dr Lee Tsao Yuan brought up a fundamental question: the dream, is it out of reach? I have discussed this with the young Ministers, and I have put up certain proposals which startled them. Let me explain a certain philosophy of Government and a certain philosophy of society on which my old colleagues and I have governed Singapore. Men are not equal in a society. But you've got to be able to bring them together into a united whole, a sense of one nation, one society, that we share successes and we share tribulations.

The other example is Hong Kong. Every man for himself, the British Government is just a referee. If you win, winner takes all. So you have seven, eight, nine, ten Rolls-Royces, house on the hill, house in town, yacht, and then you find shanty huts on the hillsides in the New Territories. We cannot do that. They do not have to defend themselves. If they had to defend themselves, and everybody has got to have a gun, that system would not work.

I have a secretary now who is digging up the records, because when I have spare time I am writing up what my colleagues and I did. He produced me a document way back in 1965, immediately after independence, and we had to build up an army. Dr Goh went around, from a corporal, that was all his experience, he set out to form the PDF. So Members of Parliament, civil servants, ex-volunteers, put on uniforms, went marching and the first National Day Parade, we had some kind of an army. But immediately I said, National Service for all, build up the largest possible base on a small manpower, which means they are not going to fight, unless they have something to defend.

So I worked out the CPF scheme and HDB to match. It has taken 30 years (1965 to 1995) to reach 85% HDB home ownership, 10% private home ownership. So 5% have no stake. For 95% of Singaporeans, as the properties go up, they rise with it. So a taxi driver who bought a 3-room flat for $25,000 -- $30,000, today it is worth $150,000 to $180,000, and with main upgrading, in another five years, if he just waits, it will be worth $300,000. You show me one city in Asia where that is so. You say that is social engineering. I say, yes, it was. I am not ashamed of it. It was good. Was it completely altruistic? Yes, and no. Politically, we had a vested interest, because we knew an ownerless, renting proletariat is a fickle, volatile voter. As you can watch Taipei, they voted against the KMT, you watch Tokyo, they voted against the LDP, you watch Seoul, they voted against the ruling government. Or you watch Delhi, they voted against Congress. But in Singapore, they know that if they vote against the PAP and they land up with Dr Chee Soon Juan and all the bright young men that Mr Chiam hoped to get -- I know he has learnt his lesson, but it is a little bit too late -- they may toss around a vote just to needle the new Prime Minister, but they know that the wrong vote and the property just goes right down and they are worth very little.

What then is the philosophy behind it? If I can use a metaphor, I say life is a marathon. It is an unending competition, without a finishing line; you finish one, the next marathon begins. So when we started in 1959, and we fired the "go" signal, everybody thought, yes, I am going to win this prize -- just, equal society, equal opportunities for all. But we are not equal human beings. Some have great stamina, some have not. Some have great energy, and good minds to think out a strategy, some have less. So by the half-way mark, by about the 1970s, the middle 1970s, I could feel that many knew that their children were not going to win the first prize. Because in a marathon, everybody starts off most energetically, then after a few kilometres they are drenched with water and panting and so on, so they know it is better to give up. But if they gave up in life, the country suffers. So all along the way, we gave consolation prizes. You finish one kilometre, you get a prize. You give up, you do not get the second kilometre prize. So he tries and he paces himself to collect the most kilometres.

That is a reality. It has to be faced. But if you say, all equal, whether you finish or you do not finish, then you will never produce a marathon winner. Do not believe that Pete Sampras and Boris Becker train every day, for what? For your enjoyment, or to win the first prize and with it millions of dollars. That is what spurs them on. You just wait, given a few years, you will find young Chinese trying to be like Michael Chang in China. I am sure they are going around looking for those with the right joints, right muscles, right height, so that, unlike Michael Chang, he would not be looking so small at the other end of the court. It is that which produces human progress. That is why the West, America and Western Europe beat Russia, the Soviet Union and China.

I read a magazine article of what happened to the gymnast champion Olga in the Olympics. What was she doing? This was the London Sunday Times magazine. She had no sponsors, she was a coach with a miserable flat, husband, children, poor food, and they showed pictures of the flat. On the other hand, the American champion, Mary Lou Retton, who won at Los Angeles Olympics, beautiful costume, every gymnastic leotard or whatever, carried her name, multimillion dollars. So one succeeded, the other failed.

I started life as a socialist and a near communist. So we formed up with the communists, all men are equal. But I decided that this was not true. It is against my observation and my logic. We are a close family -- three brothers, one sister. We are similar but we are not equal. Some are better athletically, some are better mathematically, some have more energy, some have less energy. My own children - they are very similar but they are also good at different things. And that is the nature of man and you have to devise a system that enables each one to thrive to his maximum. So you give prizes along the way. Now, who wins the big prizes? This is a very big problem.

I choose another metaphor. If we sit around a table, let us say, 10 of us, play bridge or poker, and each starts off with 1,000 chips. At the end of five hours, I will tell you the chips will go into a big pile in front of two or three. Must be. It is in the nature of human beings. Some are good at bridge. If you meet Kasparov in chess, you have no chance. Even IBM Blue got defeated. So what chance have you got? So out of 10, three are winners. Let us say we break up into eight teams of 10. Next week, three out of 10 meet again in 10. Finally, you have what you have in the world - the billionaires. Just think that over. Why are they billionaires? Because they have that extra -- the killer instinct!

Can Singapore allow that to go to its logical conclusion? I think we cannot. The British tried it -- to reverse the process -- they failed. The tragedy of the British Labour Party was they refused to admit that men were not equal. So when they implemented socialist policies, equal educational opportunities, and it did not produce equal results, they said, "class system". Those who went to public schools had the advantage. Those who went to all these county schools were out, never got to the best universities because they had poor teachers. That is not true. That is rubbish! I used to subscribe from my student days to the Fabian Society pamphlets that believe in this fair, equal, just society. When it failed and they still had people with good results, some with mediocre results, and many with poor results, they said, change the system. And what was the change? Two headmasters wrote this paper. When I read it, I thought to myself: "God! There is no hope." They proposed that you take all the best teachers who are all in the best schools and send them to the weakest students. And the weak teachers can teach the good students, and then you equalise. It is what you call a procrustean solution. If the man's leg is too long for the bed, just chop his leg off. I decided I will stop subscribing to the Fabian Society. You cannot do that.

Lee Tsao Yuan has raised a very significant problem which, I think, is with us. And the solution -- there are several -- which I have put to the Prime Minister and his colleagues. They are a bit nervous because it is such a fundamental kind of solution but does not need immediate action. Way down the road, 5-10 years, they can think about it. Let me explain.

The British tried to kill off the landed properties by taxing them when they die - 95% estate duty, high income tax. You re-distribute wealth. The result: the wealthy landowners, the Duke of Westminster who owns Covent Garden and the West End, put it in trust, entail. So they only have life interest and it belongs to their children, and then their grandchildren. So when they die, they only pay estate duty on themselves, their portion, life interest. And so the sons, the moment they have owned it, they entail again, and so on. So they could not get it. And you say you tax too much, they put their money abroad. So in the end, they got no change. But if you have no change, and you have great disparity, eventually you have a revolution. That is why revolutions take place. That is why the French revolution took place. There comes a time when the winners have too much and the losers say let us overturn the system, and they do. And the last time that happened in France was 1958 when they brought back de Gaulle, and he started afresh. The British never had a revolution. They went on by evolution but the problem is not solved. Their class hatreds have diminished to some extent but the underlying antagonism at the unfairness of it, of people with huge landed properties, and they with nothing.

But how do we solve this? If we do nothing, our able will leave. If they cannot get good properties, they will go off to Australia, Canada. They will be second-class citizens, but anyway they will have a big house. And Singapore's economy will go down. I think we should find a solution for this. And the first solution is an immediate one which can be solved within 2-3 years, if not earlier.

The private sector market will always be what it is. They are going to get the best customers to boost their properties, to maximise profits. If we had allowed the private sector to do public housing, it would have failed. Because they would be wanting to build and sell to the best-paying customers, the best buyers. We have a different target -- to give everybody, particularly those who cannot afford, a home. So we entered that market and controlled it, and today build up 85%.

Now we face this little problem, or it is little in numbers, because the young executives and professionals do not decide the outcome of the election. The outcome of the election is decided in the housing estates. But I think they are an important section because they are vocal, they are the people we want to join us. So a solution must be found.

I have suggested, and they are thinking about it, go in for luxury executive condominiums. We enter that market. We sell to Singaporeans, if necessary, by ballot. 3,000 a year, 5,000 a year, we can do it. We have the capacity, together with the private architects, to do that. Heng Chiang Meng will be put out of business, partially. So will Leong Horn Kee, partially. But it will be equal to any of the best that the private sector can produce because we will use private sector architects, use their contractors, their materials, but lower price, but no quick resale, because that is not the Government's duty. You say you want a home, we sell you a home, maybe 20% less than the private market. But you stay in it 10 years before you sell it to a foreigner. When you sell, you sell to another Singaporean. In other words, it is like SIA or SPH shares. When you sell it in Singapore, you know you do not get a premium. And so the SIA local and SIA foreign shares, there is a wide gap. So too are SPH local and foreign shares. In fact, as you go along, every year, the next buyer knows he has to wait less time. So the price begins to rise. That is one way, and it can be solved, and immediately you get 3,000, 4,000 or 5,000 couples less disgruntled.

Another way, and maybe the private sector will welcome this -- Heng Chiang Meng, Leong Horn Kee, even Mr Dhanabalan's company -- we sell you land, but as part of the tender, we tell you beforehand that 10% of the units, or maybe 15% if the demand is high, can only be sold to Singaporeans and the strata title will stipulate that for 10 years, they can only be sold to Singaporeans. In other words, same buildings, same flats, but no free market, no foreign buyer bonus or premium. So when you bid for the land, you deduct for what you will lose, sale price. It can be done. That is a quick solution. The aim of HDB is really to scale down and not to move up, because they want to get out of it and just concentrate on the lower income. But, unfortunately, we now have a higher income group or middle-higher income group that feels that it is being priced out.

I am not sure that we need to do anything much at the moment. Let us first watch and stabilise this market. Let us see what happens. In three to six months, the market will be stable. Then we will know whether it has dropped by 5%, 10%, 15%, whatever, and we keep it stable. Meanwhile, all these options can be calculated. But in the longer term, as I told you, when we play, smaller and smaller winner versus winner, the chips end up in the best winner. When Kwek Hong Png died he must have left a few hundred houses, in corporations, buildings, and so on. One day Ng Teng Fong's children will also have a few hundred houses; so will Wee Cho Yaw, and I do not know who else are in this big-owning class. I have only several, or my wife has several.

I have suggested to them, think about this as one way, do not do it like the British, tax them, because all you will do is to have them unload, move out their money from Singapore, then you are left with nothing. Leave it. But when they die, you say you can have two for each child or member of the family, the rest must be sold within X number of years, like we do for foreigners. Give them 10 years, 12 years, 15 years, so the market is not suddenly depressed by a five-year sale, but over time you have to sell off. In other words, more people get a chance to buy and own good quality housing. But as DPM pointed out to me, he argued this with him, he said: But in the end, it will go back to the chaps who are the big and the best players. I agree. Some will go back, but each time we are doing a redistribution of the chips, you keep each generation, new group of young executives and professionals, being able to get into every sector. What we must not have is that those families that already have will always have and the new families cannot have. That will lead to division. I worry because my son, the DPM, his house, which his mother helped him buy for $1.5 million, at the time he bought it, I thought it was not much of a house. I am told in the market it is worth $10 million. So I did a mental calculation. In another 15 or 20 years, at the rate of escalation, it will have gone up to $20 million. How can his son ever hope to own a house like that? And he has three sons, one daughter. So only one son will get it and they've got to wait until both mother and father have left the scene.

So some reshuffling of the cards has got to be thought out well before this problem becomes acute and we must have the will, the ingenuity and the creativity to think of solutions. I do not know if Mr Ling spends his time thinking about these problems, but perhaps he has his think-tank, Dr Chee, pose him these problems and let us see what his solutions are. But I urge you to believe me. We did not embark on this in jest for our personal fame, for our personal glory. We got saddled with this responsibility and there are times when I wish the coin had dropped the other way and I had not gone into politics. Then somebody would have done this job and I would be like my brother, with $60 million. As he told me, "No, easily you will make twice that amount." All younger brothers think better of their elder brothers.

But we thought out the plans carefully. Not me alone. There was Dr Goh, there was Lim Kim San, quite a few of us, worked out, put the idea, lift it into shape and you have today's Singapore. But societies are not static. Technology changes and new generation comes in, new lifestyles, they also want to come up to the top. And the critical factor is to have social mobility.

I will now come to the last and most sensitive of all these issues, namely, the question of what is inherited and what is trained or taught. I believe in the bell curve. I make no pretence that you get two farm horses, you get a race horse. That is not how race horses are bred. If you read how they breed race horses, you know that they all come from Arabia and that they have had race horses from all over the world. But the ones whose parenthood goes back to Arabia, Arabian horses, they win.

So what happens when you have a society that begins to have education stratifying it, is that if the man is not so stupid as to go and do what some of our men are still doing, a doctor marries his nurse, or a lawyer marries his secretary, and so on, if he marries his equal, the chances are you either have a doctor or a dentist or some professional. But even the lowest, by the nature of the way human beings reproduce, they may not produce so many bright ones. But it is amazing how from some great great grandfathers, some bright great great grandson or granddaughter comes out from a very poor family. And it is the business of the Government when such a person appears to open the way for him to rise to the top. That is not what the Labour Party wanted. They wanted everybody to go to the comprehensive schools so that all come out equal. They do not even want them to go to a special grammar school where bright young poor kids are brought together for special training to send them to Oxbridge. But you see it is not a practical solution, does not match reality, so it has not succeeded.

Supposing they took the other way, get all these young bright kids, train them, send them to the best schools and the universities. They will be on top. And that is the way we have gone. So when Dr Tony Tan started the independent schools, which I urged him to do, it is really not to stratify our society but to raise our level, because too many people were sending their children abroad, because they could not find quality schools in Singapore.

One day when Mr Ho Kah Leong told me that his daughter had gone to school in Melbourne, I said something must be done. It cannot be. We are doing ourselves harm. Unless we upgrade the quality of our schools, there will be more daughters and sons abroad, of people who can now afford it. So by these independent schools plus the scholarships of at least 25% from those who are poor, we are able to get the best wherever they come from, whether they come from bright homes or not bright homes, equal chance. But please remember they do not start with equal capacities. If you believe we all start with equal capacities, then you will embark on policies that will not work.

If we try to make our son a musician, he would have failed. I could have got him the best music teachers, he came back with his report card -- A, B, C, D, E, F -- it was always D or E for music. He cannot sing, he cannot play musical instruments. Three children, more or less the same, one slightly different, can play better than the other two, more agile. This assessment of reality and then matching policies to maximise on reality is the reason why we have succeeded.

I would like to make one last important observation. Do not hesitate to face a problem head-on. Never dodge it. It is what I have done in this case. I would never run away. Not possible. You put out an SES statement, I must respond. I must go to the end of the world with you because what is at stake is what I have set out to do. It was not a one-man job, I was just the conductor and I had a good orchestra, good players in that orchestra. And I do not want the music to stop with the new conductor and new instrumentalists. It is important. But for the Prime Minister to succeed under different conditions, he has to face the conditions of 1996 and the prospect of a very different world, a booming economy, not just in Singapore. We will be in a few years less booming than many of our neighbours, including China. China will keep going at 8% or 10% because it is starting from a low base. And if we are not careful, many doing business there will find the cities becoming so improved. They can improve it, if not in 10 or 20 years. Once they start going to Chinese schools, they may never come back, as those who have gone to Australia, New Zealand, many do not come back.

So in this very mobile world, we have to work out a system that will keep a certain hard core of men and women of ability who are committed to Singapore, who want to see Singapore survive, who want to keep up one little place in Asia which has blazed the trail. We went against the odds. We did not follow conventional wisdom. People said we should not have multinationals. We did not have the entrepreneurs. We will never have the kind of entrepreneurs that the Japanese, the Americans and the Europeans have. They are top men. We have one Sim Wong Hoo and he is having a hard time against the competition. His Creative Technology, you can think that 200 or 300 bright Americans, including Chinese in America, improve on it and suddenly, you have lost your market, you are out.

Yes, we have to find niches for ourselves. But if we think we are going to blaze the trail to new technology, we are kidding ourselves. The Japanese can. They have got the numbers. They have got the people with that capability, 125 million of them. So they could have crystal displays, LCDs. I asked an American executive in Williamsberg, "How did they become so good? Did they learn from you?" He said, "No. We were very careful not to give them anything. They thought it out themselves." And now all American laptops are at a disadvantage. Because when they make a new one, they sell first to Japanese companies. So Japanese laptops have beautiful clear screens and then, later on, American laptops have it. Can we do that? I really doubt whether we can.

Once in a while, we throw out an unusual man like Chris Tan and we bring him back and he starts our IMCB. But he is important. If we can find enough of our Chris Tans to come back and we provide him with a hard core of our own, then we can survive, we can succeed. Then we will prove to Samuel Huntington that he is wrong. And that is my ambition. It is a challenge which I think I am winning. [Applause.] 5.14 pm

Mr K. Shanmugam (Sembawang GRC): Sir, I will try the thankless task of speaking after the SM. The questions that have been asked about the HPL purchases by the Senior Minister and DPM, I think go straight to the heart of a basic principle on which the Senior Minister has built his entire political legacy. The principle that personal integrity or the core of our leadership is completely beyond any question or reproach. Since the questions have been raised, the facts have been set out clearly, the two Ministers have subjected themselves and their conduct to searching examination. And on the facts that have come out, a right thinking person can only conclude that there is nothing in the conduct of either of the two Ministers which can be the subject of the slightest reproach. Having said that, I think it is worth considering the nature and the merits of the questions that have been raised outside this House and compare them against the facts. And I think that exercise will show that there is no basis for any criticism.

To me, there seems to be two underlying themes to the questions that have been raised. First, some have said that as Ministers, the Senior Minister and the Deputy Prime Minister should not have received their discounts. Second, some go even further and are unhappy about the very fact that the two Ministers had purchased the flats before the flats were officially launched for sale. The often unstated assumption is that the Ministers had in some way used their public positions to obtain an unfair advantage or had in some way been privileged.

Both these questions primarily raise the issue of whether the SM and DPM had in any way used their public offices for private gain. If they did, then they would have done wrong. If they did not, then that quite simply is the end of the matter. For purposes of this debate, that is the issue and the only issue, and it is a very narrow question.

With that in mind, I will deal with the first criticism that the two Ministers should not have accepted any discount. To me, this argument appears to be utterly divorced from reality. They purchased the flats like other purchasers who were successful. They received discounts like several other purchasers, except for one unit in the case of DPM for which there were special reasons. Everyone who buys a flat knows that it is a standard marketing technique and others have said that in this House. It is also standard industry practice to offer discounts to early purchasers. Often, these early purchasers would include those connected to the project, like lawyers, architects and so on. To my knowledge, when my firm is involved in a project, the lawyers will be offered some units, often at discounts at the rates given to other early purchasers.

In the case of Scotts 28 development, a partner of mine was offered a unit at a price. He asked what the list price was and was told that there was no such thing. He just had to accept or not accept the price quoted. In that context, to say that there was a discount from the list price is quite meaningless. I think that really disposes of the first argument as regards three of the four properties that were purchased. The whole issue is not whether one received a discount or did not receive a discount. The issue is whether a special favour, in money terms, was given by reason of position. The two Ministers received a standard discount, neither bargained. Both bought properties at a time when the market was relatively soft and paid prices which were higher than that prevailing for similar locations. There was no use or abuse of public office.

As regards the unit in respect of which the DPM received a 12% discount, let us consider the facts. He had chosen a unit at a lower discount. HPL had double booked that unit. Having previously told him that the unit was available, HPL found itself in the slightly embarrassing situation of having to tell him that the unit was no longer available. How do you tell the DPM the unit he chose is not available? He has to be persuaded to let go off that unit and, at the same time, HPL hardly wants to lose the DPM as a customer. And let us face facts. If the SM and DPM buy HPL properties, that fact alone is worth millions of dollars to HPL. Others will buy too and future developments by HPL can be priced almost at HPL's will.

There are two ways of approaching this issue of the 12% discount. I am prepared to accept that those are the facts and I have no doubt that most others will do so too. However, assume that, for argument sake, one wishes to argue that what the DPM has said should be disregarded and that in fact a special and unfair benefit was probably given to him. Is that a tenable argument? It would, in my view, be quite untenable. Let us be sensible. Can it be believed that HPL chose to give a special and unfair advantage to the DPM over others? Who were the other purchasers? Would HPL give a special benefit to the DPM that it would not at the same time offer to SM? To believe that would be tantamount to saying that HPL effectively told the Senior Minister that he was not as important as the DPM, or that the DPM was corruptible whereas the SM was not. Everyone knows how the SM and DPM would react to any such suggestions. Would not HPL be asking for trouble? And would HPL really dare to try and play games between SM and DPM? Who in Singapore would dare? As it were, to say to the SM that he was not as important as his son and effectively thumb their noses at the SM and/or say to him that his son can be tempted while the SM cannot be trifled with, I think that is just plain absurd, and businessman like Ong Beng Seng is not that silly.

Let me now deal with the second argument that somehow the Ministers were privileged in being able to purchase the flats before they were launched. Again, if the two Ministers had used their positions in a hot market to get on to the list of purchasers, then that would have been wrong. But that is not the case here. This criticism arises, in my view, from an unfortunate telescoping of different time periods. In 1996, the market was hot. In 1995, the market was relatively soft. In 1996, people were rushing to buy the properties in the two HPL developments. In 1995, HPL was not sure that it could sell these units and had to consider carefully how it was going to sell. With their 1996 perceptions of a hot market, people appeared to be quick to jump to the conclusion that the two Ministers were privileged in being able to get to buy these properties which others could not.

In 1995, when these units were offered, not everyone who was offered bought. Partners of mine knew about them and were not interested. One of them showed enough interest and was offered a unit at the soft launch. He decided against buying. Prices were high, direction of the market was uncertain. In that situation, the two Ministers made their own judgment and bought. I cannot see any argument for privilege. So when one judges them, you look at the situation as it was in 1995. And this may not be polite to say, but let me be honest and say this. When I first heard about the discounts without knowing of the time and the purchases were made, it did cross my mind as to how these discounts could have been obtained properly when everyone else could not buy these properties. But once the facts were brought to light, the situation is clear. It is clear, I think, and I would urge Singaporeans therefore to consider the facts carefully without cynicism and with an open mind. They would then conclude that there was no abuse of public positions and no wrongdoing of any sort. There is therefore no basis for criticising either of their conduct.

The SM yesterday touched on the issues of equity, ethics and fairness. On the facts again, it is difficult to see what advantage was taken which in any way was inequitable, unethical or unfair. But as to the broader question of whether in a hot market when there is a rush for a few units, whether people of influence should get priority because of who they are, that is a more difficult question which raises not only issues of equity, ethics and fairness but also public perception of how people in high public office are expected to behave. But that is not the subject of debate today. Those are not the facts we have. That situation should be addressed separately and I do not think that can be brushed off as being an unimportant issue.

Sir, I would also make some observations on what Mr Chiam said yesterday. Mr Chiam raised the issue of Ministerial salaries again and said that this was the reason for the public concern over these purchases. I think we should keep the issues separate. On salaries, I will say to Mr Chiam again what I have said previously. We should ask what kind of persons do we want as Ministers. It is accepted, I think, (1) public office is a calling; (2) it requires a person with interest in society and a desire to contribute to change things; and (3) such a person must be exceptionally bright. The point is this. When one considers accepting public office, the questions you want that person to ask himself are: (1) Can I contribute? (2) Am I good enough? (3) Am I cut out for this job? (4) Do I have the motivation? You do not want him to ask another question: can I afford it?

If the potential Minister is of the highest calibre, then you would either agree he would be earning very well or will have the potential to do so. Such a person in general might be willing to serve in public office only when there is no substantial financial sacrifice involved in the move. It must be seemless so far as the financial aspects are considered. Money should not be an attraction but neither should it be an impediment. That is the real point that I think Mr Chiam should accept.

Sir, this whole episode highlights another very important feature of our system which I would like to say a few words on. I started my speech by saying that the SM has built his entire political legacy on his integrity and incorruptibility. The Prime Minister has also made that as his principal foundation. The PM's actions in this matter illustrate that and his own personal convictions and the manner in which he has discharged his constitutional responsibilities. I think the House should recognise that.

Let me elaborate. When it was first brought to the Prime Minister's attention that questions were being asked about the property purchases, he had two options. It did not touch on him personally and he could have pretended that nothing was happening. However, the Government would have lost some credibility because in our society, a whispering campaign which was going on about financial integrity which is not rebutted can be cancerous and vicious.

The second and more difficult option would be to investigate. To his credit, the Prime Minister asked for an investigation after consulting some of his Ministers, but did not consult the Senior Minister or the DPM. What the Prime Minister did illustrates two fundamental constitutional principles which underpin our entire political and legal system and they are: first, the rule of law and equality before the law. No matter who it is, everyone is equal before the law. Everyone, including the SM and DPM, is subject to it. The principle should be that if anyone does any wrong, the law would be applied. That the PM disregarded the fact that the two Ministers, being the Senior Minister and Deputy Prime Minister and ordered their conduct to be investigated, is the best example one can get of the application of this rule.

Second, the proper discharge of constitutional responsibilities by the Prime Minister. You can have the best constitution in the world with nice-sounding phrases about equality before the law, rule of law and so on, however, if you do not have persons of character and integrity to discharge the responsibilities properly, then that constitution would be a worthless piece of paper. It is men and women of character and integrity who make it work. The Prime Minister discharged his constitutional responsibilities by ordering an investigation. I think few appreciate the enormity of that decision. Here was a very formidable man, the patriarch of the state, and to decide to investigate him and the DPM was a very brave decision, and a correct one.

Singaporeans will now know one thing for certain. If the SM and DPM can be investigated, then anyone can be investigated. I think that realisation will help dispel any doubts as to whether the creed of political honesty and integrity has been successfully passed on from the SM to the second generation. That may perhaps be the most important result achieved out of this whole matter. And when judgment is passed on Senior Minister's political legacy, it would be an important, if not the most important aspect of that legacy that he has successfully institutionalised the principle of integrity in the top leadership. And the best example of that came when he himself was ordered to be investigated.