SKILLS DEVELOPMENT LEVY (AMENDMENT) BILL

Order for Second Reading read. 1.45 pm

The Minister of State for Trade and Industry (Mr Goh Chee Wee): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill will amend the Skills Development Levy Act, which I will refer to as the SDL Act for short. The Bill will widen the definition of the beneficiaries of the Skills Development Fund, or SDF, transfer the existing SDF from the Government to the Singapore Productivity and Standards Board, or PSB, and make some minor amendments to enable PSB to administer the SDF more effectively.

Background

Let me first give Members of this House some background information on the SDF. The SDF was established in 1979 under the Ministry of Finance to support and encourage the upgrading of skills of workers in Singapore. Companies were required to contribute towards the Skills Development Fund through the payment of a certain percentage of their payroll for workers whose income falls below a stipulated cap. In October 1981, the Minister for Finance delegated the administration of the SDF to the EDB. As the focus of the SDF was on training of workers to improve productivity, the SDF was subsequently transferred to the National Productivity Board. With the merger of the National Productivity Board and the Singapore Institute of Standards and Industrial Research to form the new PSB in April 1996, the SDF now comes under the administration of PSB. The accumulated reserves of the SDF currently stand at $359 million.

The SDF has played an indispensable role of facilitating and encouraging Singapore workers to upgrade and acquire new skills. Since its inception, $731 million has been disbursed to support 2.8 million training places. In 1995 alone, 489,911 training places were committed under the SDF. Our investment in training has now risen to a national average of 3.6% of payroll, a marked improvement from 1% in FY86.

Main objectives

The Government needs to amend the SDL Act for two main reasons. First, we want to ensure that all workers, whether they are salaried employees, self-employed or seeking employment, have greater access to training opportunities. Secondly, we want to ensure that SDF support for workers' training can continue uninterrupted during transitions of Government.

With the proposed amendment to the SDL Act, the SDF will be transferred from the Government to PSB as a statutory board. PSB will be responsible for the management and administration of the Fund, with built-in Ministerial controls to prevent misuse of the Fund. PSB will expand existing programmes to support the training of a larger group of workers. The current SDF schemes will be immediately made available to all contract workers and the self-employed. PSB will also extend SDF support to new programmes designed for housewives and retirees who are preparing to re-enter the workforce. One such example is the pilot training programme launched recently by the Ministry of Labour and PSB, in collaboration with the Singapore National Employers' Federation and the National Trades Union Congress, to train housewives, retirees and dislocated workers and encourage them to return to the workforce.

Major amendments

I will now describe in more detail the major amendments proposed in the Bill. There are two major amendments. First, to widen the definition of SDF beneficiaries, and second, to transfer the Fund from the Government to PSB.

Under the existing SDL Act, the beneficiaries of SDF grants are restricted to "persons in employment" and retrenched persons. The present definition therefore caters only to workers in active employment and retrenched workers. Clause 4 of the Amendment Bill extends SDF beneficiaries to include first, persons "in the workforce", for example, the self-employed and contract workers; second, persons "preparing to join the workforce", for example, school-leavers; and third, persons rejoining the workforce, for example, housewives and retirees. About 270,000 persons, or 16% of the workforce, who are self-employed or unemployed stand to benefit from additional training opportunities arising from this wider definition. The revised definition will also facilitate a large pool of the economically inactive persons to enter or re-enter the workforce.

The second major amendment relates to the transfer of the SDF from Government to PSB. The SDF is currently a Government fund. It becomes part of the reserves when the current Government's term of office ends. With an annual grant commitment of about $70 million, the SDF will encounter serious cash-flow problems if it is not able to tap on its reserves after a transition of Government, but has to rely solely on fresh levy collections. Workers' training will be severely disrupted as a result. To avoid this, it is necessary to establish the SDF as a PSB fund, to ensure that funds continue to be available to support workers' training during transitions of Government.

Clause 5 of the Bill transfers the SDF to PSB and establishes it as an independent PSB fund. PSB will be given some flexibility and autonomy to manage and administer the SDF. For instance, clause 6 gives PSB powers to appoint its own agents, decide on remuneration of such agents, and delegate its powers and functions to others accordingly without the Minister's approval. This is similar to section 3 of the Tourist Promotion (Cess Collection) Act.

While PSB is given flexibility to administer the SDF, let me assure the House that there are sufficient built-in Ministerial controls to protect against misuse of the Fund. For example, clause 4 stipulates that the moneys of the Fund may be expended for purposes other than those listed in the Act, only with the approval of the Minister. Clause 7 states that approval from the Minister is needed before PSB can undertake investment outside the terms stipulated by the Trustees Act. The accounts of the SDF will continue to be separately maintained from the rest of PSB's accounts and submitted as part of the annual report to Parliament each year.

Other amendments

Let me now take the House through some of the other amendments of the SDL Bill. These amendments are necessary for PSB to administer the SDF flexibly and effectively as an independent fund. They also provide PSB with greater powers to deal with abuses of SDF funds. This is important as PSB has now been made the custodian of the Fund.

Clause 3 expands the sources of income of the SDF to include not only skills development levy, but also donations, honorariums, as well as contributions by the Government.

Clause 9 makes certain officers of a body corporate, a partnership, a society or associations liable for any offence under the Act.

Clause 10 gives investigative powers to PSB for breaches of the Act, to allow it to request for information, conduct checks and retain documents for investigation purposes.

Clause 11 increases the composition fine to a maximum of $1,000 for persons who infringe the Act.

Clause 13 ensures that PSB conforms to standard financial provisions in administering a public fund. The set of financial provisions applicable to the PSB are described in the First Schedule.

Clause 14 ensures that levies due from persons or companies are given priority in the event of individual bankruptcies or winding up of companies.

And finally, clause 15 allows PSB to make specific regulations necessary for it to carry out SDF activities. These concern the administration, collection, and remission of SDF levies. PSB is required to obtain the approval of the Minister before making these regulations.

Conclusion

Mr Speaker, Sir, the proposed amendments to the SDL Act will enable the SDF to reach out to a larger group of Singaporeans and encourage them to acquire new skills through training. It will also give Government greater ability to support worker upgrading programmes and help keep Singapore competitive in the world market.

Sir, I beg to move.

Question proposed.

Dr Lee Tsao Yuan (Nominated Member): Mr Speaker, Sir, one of the main objectives of this amendment is to widen the scope of the use of the Skills Development Fund to include not only employed persons but also to train persons to join or re-join the workforce. I have three points to make in this regard.

First, the amendment will further our economic goals. There is an estimated target group of about 150,000 persons who are not working but can work. This comprises nearly 9% of the 1.7 million workforce which is not an insignificant proportion. It will therefore help ease our tight labour constraint if some of these people were to join or re-join the workforce. For this, they would need training and re-training. Use of the Skills Development Fund for this purpose will be beneficial to employers, the people themselves, as well as to the nation.

Second, the use of the Fund to train people to re-join the workforce also contributes towards our social goals. It is important for society to recognise that it is not easy for women to balance family and work responsibility and that structures and institutions should be adjusted in order to help women to do so. This is for the sake of the family in particular, and society as a whole. One option is for women to work part- time, flexi-time or to re-join the workforce after a few years of child caring. The amendment Bill helps precisely in this purpose.

Third, the use of the Fund also helps in enabling older people, retirees to be gainfully employed. Nowadays, with an average life expectancy of about 75 years, many older people are still physically and intellectually active and can be employed even when they are above 60. Providing them with re-training would contribute towards helping them to find meaningful employment and contribute towards their sense of dignity and self-worth.

I therefore support this amendment. I hope, however, that the Government will not just stop here but will implement all changes necessary to help bring about this flexibility between work in the marketplace, work at home and retirement. For example, the Back to Work scheme recently elaborated on by the Minister of State is a very good start. It involves 18 companies which are offering more than 3,200 service jobs and the Skills Development Fund will give each employer $350 per trainee. But so far the scheme only involves 18 companies. I hope that more companies will join the current 18 in the scheme. And I hope also that in Singapore we will soon evolve a mindset and a structure whereby we will see women moving in and out of the workforce in order to be able to efficiently and fully balance their child-bearing, family responsibilities and work.

Mr Goh Chee Wee: Mr Speaker, I would like to thank the NMP, Dr Lee Tsao Yuan, who spoke in support of the Bill.

Dr Lee welcomes in particular the widening of the scope of the SDF to benefit those who are currently not working and those who intend to enter or re-enter the workforce and she has cited the example of the Back to Work scheme which is being supported by SDF. I can assure the Member that MTI and PSB, together with other agencies, will continue to introduce innovative programmes to encourage more Singaporeans to re-join the workforce and to encourage more companies to support the relevant training programmes.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Goh Chee Wee].

Bill considered in Committee; reported without amendment; read a Third time and passed.