THE FY97 EXPENDITURE ESTIMATES

Total Government expenditure is projected at $23.9 billion or 16.2% of GDP, down from 17.9% for FY96. This is still significantly higher than Government expenditure over FY93-95, which averaged 13.3% of GDP. The increase is mainly due to higher development spending, which has risen from around 4% of GDP in FY93-95 to more than 6% of GDP since FY96. On the other hand, operating expenditure in FY97 is expected to remain in the FY93-95 range of 9-10% of GDP .

In line with Government expenditure priorities, the largest share or 38% of the budget will go towards social and community services, which includes education, health, the environment and public housing as these are areas which yield lasting returns. Spending on security will take up the next largest share, at roughly 33% of the budget. Spending on economic and infrastructural development will take up 20% of the budget in FY97, which is much more than the average of 15% over the last 5 years. This includes substantial funding for economic promotion as well as transport improvements such as the building of MRT, LRT and roads.

Operating Expenditure

Operating expenditure is estimated to be $14.1 billion in FY97, slightly lower than the $14.5 billion spent in FY96. However, FY96 operating expenditure was unusually high, since it included a one-off compensation payment of $1.5 billion to Singapore Telecom for the early termination of its exclusive telecommunication privileges. If this is disregarded, operating expenditure will rise by 8% . This is largely due to a 9% increase in Running Costs, from $11.9 billion in FY96 to $13.1 billion in FY97. This is less than the projected GDP growth rate in nominal terms. Transfers will increase marginally by 2% from $1.02 billion in FY96 to $1.05 billion in FY97.

As a percentage of GDP, operating expenditure will decrease from 10.7% of GDP in FY96 to 9.6% in FY97. However, if we disregard the one-off compensation payment to Singapore Telecom, FY96 operating expenditure would have amounted only to 9.6% of GDP, which is the same as projected for FY97.

Education accounts for the largest increase of $450 million in operating expenditure. More funds are provided to continue the restructuring of the Education Service by promoting deserving teachers and recruiting NIE trainees to the Service before graduation. Higher grants have also been provided for the tertiary institutions due to an increased intake of students.

The Government will spend more to encourage reading and learning. More community and children's libraries will be built in convenient locations to promote the reading habit whilst the greater use of information technology systems in our libraries would provide easier and faster access to information from around the world.

Development Outlays

Total development outlays in FY97 are projected at $27 billion. This comprises $9.8 billion in development expenditure, which refers to development outlays funded from operating revenues, and $17.2 billion in loans to statutory boards.

Development expenditure in FY97 is projected to increase marginally from $9.6 billion in FY96 to $9.8 billion. This is the second successive year for substantially higher development spending, considering that development expenditure varied between $3.9 billion in FY93 to $6 billion in FY95. As a share of GDP, development expenditure is expected to reach 6.6% in FY97, slightly less than the 7.1% in FY96, but substantially higher than the FY95 level of 4.8% .

Economic and infrastructural development is expected to take 41% of total development expenditure, exceeding the share of social and community services which was the leading spender in past years. While funding on social and community services continues to increase, development expenditure on economic and infrastructural development is set to double from $2 billion in FY96 to $4 billion in FY97.

This shift reflects Government's determination to step up economic initiatives to woo new investments and to boost Singapore's attractiveness as an investment destination. Some of the major economic projects include land reclamation at Changi East, Tuas View and Jurong Island, the building of a road link to Jurong Island, the development of the Southern Islands, and compensation for sites in Woodlands identified last year to be acquired for expansion of wafer fab plants.

To strengthen our domestic economy further, financial assistance through the provision of grants and loans will be provided under the Economic Development Assistance Scheme and the Cluster Development Fund. These will attract and nurture investments in Singapore and upgrade the capabilities of our local companies. Another $586 million in research funds is being provided to widen and deepen Singapore's R&D base under the aegis of the second National Science and Technology Plan. Funds are also provided under the Tourism 21 Masterplan to upgrade our tourism industry and to maintain Singapore's position as a tourism centre in the region.

On infrastructure, a major commitment is Government's vision to build a world class transport system in Singapore. A firm decision has been taken to proceed with the construction of the North-East MRT Line, the Changi Airport MRT Extension and an LRT system in Bukit Panjang. These are further steps in our aim to develop a first class public transport system as an alternative to private car ownership.

Social and community services will take up the second largest share of 32% of development expenditure, with major allocations to education, public housing, the environment and healthcare. If loans are included, the share of social and community services in development outlays rises to 70% .

Education accounts for one-third of development expenditures within this sector, mainly on the building and upgrading of schools, and purchases of computer equipment to introduce IT into classroom teaching. Public housing is next, with one-quarter of the allocation, or a sum of $860 million. This includes $257 million in capital subsidies to HDB for building of flats, and a larger sum of $415 million for the main and interim HDB upgrading programmes. Environment projects include the 5-year programme to upgrade sewerage facilities and the development of an off-shore sanitary landfill off Pulau Semakau.

Although small in comparison, development expenditure on information and the arts will double, while that for community development is planned to increase by nearly 50% . Our public libraries will be revamped and expanded into a new network of regional, community and neighbourhood libraries supported by a sophisticated IT infrastructure. This will improve access to books and information materials and help cultivate a well-read and informed society in Singapore. It will cost the Government over $600 million over the next four to five years.

New sports and recreational centres will be built in Bishan, Bukit Gombak, Choa Chu Kang, Jurong East and Jurong West, to improve access to sporting facilities and encourage wider participation in sports for a healthy lifestyle. Older community centres are also being upgraded to meet the higher expectations of Singaporeans for better recreational facilities.

Major development expenditures subsumed under the security sector include the re-development of the Woodlands Checkpoint to accommodate heavier causeway traffic, a new checkpoint complex at the second crossing at Tuas, and the building of a new Police HQ Complex.

To ensure readiness during an emergency, civil defence shelters will be built in all new HDB flats and underground MRT stations on the North-East MRT Line.

Funds are also set aside for the construction of a new race course complex at Kranji to allow the relocation of the Turf Club from its present site. This will free up land in Bukit Timah for good quality residential housing.