ANNUAL BUDGET STATEMENT

Debate resumed.

Mr Simon S C Tay (Nominated Member): Mr Speaker, Sir, this Budget comes at a time of economic uncertainty. It is clear that Singapore will be affected by the regional downturn. It is also clear that the present downturn is unlike any other we have faced, quite different and potentially deeper than what we have seen in the mid-1980s. What is less clear is the extent and duration of the downturn and the particular sectors that will be hardest hit. But also has to be decided which sectors Government will intervene to help and which it will leave to their own means, for better or worse. For those sectors where Government intervenes, the method and extent of intervention have also to be seen. Against this background, the Government has set three priorities: (1) to rally the people; (2) to help resolve the regional crisis; and (3) to plan for the future, so that Singapore will emerge from the crisis stronger than before.

Sir, this Budget seems to focus on (3) to plan for the future. It gives a wide range of incentives for newer, emerging industries that Government wishes to foster. For other sectors, the Budget gives less relief than many had hoped for. The Minister for Finance has emphasised that the Government believes there is no immediate need for bailouts and that off-Budget items would be held in reserve if things turn for the worse. This seems a confident and prudent approach. It is an approach that, however, postpones potentially harder economic questions that this present economic crisis may yet require us to answer. When the Government holds other measures of help in reserve, it remains to be seen how well and how timely the Government will read the needs on the ground and shape its response. What we need, at this juncture, is a promise of close monitoring and that the Government would remain open to calls for assistance.

In the present Budget, while the emphasis seems to be on incentives rather than bailouts, as I have said, one exception stands out. This is the measure to forgo property tax on land under development. This measure will cost the Government some $200 million in revenues forgone. This is a considerable amount to assist one particular sector, property developers. The last time this measure was taken was in the mid-1980 recession. In contrast, Sir, measures to help other sectors, such as hotels and retailers, are scant, if not, non-existent. Measures to help the individual taxpayer with a 5% rebate, while useful, are not as ample as they were last year where a 10% rebate was given. The present rebate seems even smaller when we compare it to the 25% given during the recession year of 1985.

When we compare the assistance given to property developers with the 5% rebate, we must note that the relatively small number of developers will receive some $200 million, as I have said, while all taxpayers will in total receive the lesser sum of about $130 million from the rebate. Two questions arise from these comparisons. First, is it the Minister's view that the property developers are in a situation akin to that which was witnessed in the mid-1980s and, by comparison to the help given to them, is it the Government's view that other sectors like hotels and retailers and individuals are not so badly hit at present? The second question is how much must other sectors and individuals be affected before Government will assist in a larger way? What yardsticks will Government use to measure when it will be timely to bring in its reserved off-Budget assistance into play? In asking this, I note that the business sector has perceptions that things are already bad. Among some individuals I also know there have been already reports of distressed sales of property and even some suicides apparently triggered by economic woes. We have a reactive Budget. The important question is that it should be clearer when the threshold for reaction will come.

Sir, in bad times of uncertain growth, many will look to the Government for assistance. It is not of course that all who ask must get what they ask for, not even Singapore's reserves are large enough for everyone's wish-list. But in deciding who to help, when and how much, there has to be a legitimate and fair basis for decisions and just as important, transparency.

Sir, I have suggested that this Budget focuses on the third priority to plan for the future so that Singapore would emerge from the crisis stronger than before. While I agree largely with this policy, I think it is also important that this Budget gives equal expression to the first priority, to rally the people. In good times, many would be proud of Singapore, of being Singaporean. The more severe test of this pride is during bad times. Will the people rally? Does Singapore have sufficient heartware to pass the test of bad times? This is a question that follows from the Prime Minister's speech in this House in June last year about Singapore of the 21st century. The Singapore 21 Committee, of which I am a Member, and I declare my interest, Sir, will undertake its work on Singapore's heartware during the course of this budget year. There is a real danger, Sir, that some will think that the relevance of heartware is sidelined by economic exigencies. I hope that many more will be persuaded that, to the contrary, the question of heartware becomes even more important this year. It is precisely during these testing times that the heartware becomes vital and people have an opportunity to unite.

How does heartware and the priority of rallying the people find expression in this present Budget? I am encouraged by the farsighted and generous provision for education. There is every need for a long-term and sustained commitment to the education of our youth. Additionally, Sir, I believe more can and should be done for heartware in terms of charities and the arts. These two subjects are of course very different. But they connect to heartware, how we take care of the less fortunate in our society and how we give expression to ourselves as Singaporeans. Both charities and the arts also need long-term and sustained commitment and they both share the prospect of diminished financial support during the coming hard year.

The economic uncertainties of 1998 will likely cause businesses and individuals to cut back on their contributions to charities and the arts. Some arts groups I have spoken to have already seen or anticipate a drop of about a quarter of their support. The Government's emphasis has been on the many helping hands' approach. The Government is not to be the sole provider but businesses, individuals and the people sector - societies, clubs and others - must also help. I do not ask Government to change the many helping hands' policy. I do not ask them to step in with more money where private sector has pulled back, although of course there seems to be more than ample surplus for this. What I do ask is for Government to keep its contribution to charities and the arts constant, as far as possible. If there are cuts by this Government, this would be read by the private sector that the Government accepts that these matters are not priorities. Then they too will cut back. The other helping hands will take their signal from Government. In this way, our `many helping hands' policy means that a cut of a single dollar by Government must be multiplied by the corresponding cut of other helping hands.

I also ask Government to recognise that even if their contribution to charities and the arts remains constant, the cut-back by the private sector will be felt. That is to say, in the `many helping hands' approach, the pulling back of any one hand would destabilise the charity or the arts in question. I therefore ask Government to consider if there are ways to encourage the private sector hand to remain constant even in these coming hard times. One measure, it seems to me, is to use the tool of double deductions.

Sir, we currently allow contributions to approved charities and the arts to be deducted from taxable income on a one-to-one ratio. My suggestion is that this ratio be doubled. I understand a double deduction is already available for some contributions under the National Heritage Board, mainly for donations made to museums. I would encourage its wider application during the current downturn. I reiterate that this is not for Government to give more money or to give up the `many helping hands' approach, rather my suggestion is to find incentives for private sector hands not to waver in hard times. This would help maintain the consistent support that is needed for both the charities and the arts. For charities, especially, it should not be the case, that in hard times, the recipients of charity who can least help themselves would be those hardest hit.

Sir, in conclusion, the Budget is not just a question of dollars and bottom lines. It represents our priorities as a nation. In bad times as much as in good, or even more so, we must prioritise not just big businesses and heartware but also people and heartware. I urge the Minister to consider the needs I have pointed to.

Mr K. Shanmugam (Sembawang): Sir, the Minister has a particularly difficult task this year. The groups which seek his assistance are many. If the Minister accedes to all the requests, we will be well and truly on our way to financial ruin. On the other hand, he cannot completely acknowledge all requests. The difficulty is always in identifying and, more importantly, defending his choices as being legitimate. This year, in particular, there has been a chorus of complaints about the budget due partly at least to the unreasonably high expectations of handouts aired publicly before the budget.

How should we assess the budget and to what extent are the complaints legitimate? I would, as a point of reference, consider three factors. The first is the macro economic picture. Does the budget serve to retain investor confidence in Singapore and show the world that we are rational people who set a steady course and do not steer away from it? By that test, the budget scores extremely well. It tells the world that we are in a strong position, that there is no reason to panic and that there are no U-turns. By going for budget surplus even this year and by refusing to accede to most of the requests for help, the Minister has produced what I would call a "crunchy" budget. It is a word I borrowed from a journal which uses the yardstick of crunchiness to test government policy, crunchy as opposed to being soft. It is a crunchy budget which recognises that there will be pain, and rightly recognises that generally Government cannot ameliorate that pain. The Government has succeeded until now by being crunchy and not by being soft. It should continue on that course.

The second point of reference that I would use is to consider the extent to which the Government is prepared to consider or create a macro economic environment which will provide the framework for sectors of the economy to thrive. Again, the Minister has to be commended for recognising the need for creating the right environment for the banking and financial sectors to grow. People complain that this is a Shenton Way budget. That criticism appears to overlook two points: first, that the manufacturing sector already has several tax breaks and incentives and that perhaps this budget simply tries to equalize that position vis-a-vis the banking sector. Secondly, the criticism really fails to recognise the great potential there is for Singapore if the financial sector's full potential is recognised and realised.

The third point of reference that I would refer to I will call the cost of business issue. It is not the Government's business to do micro economic tinkering or molly coddle specific sectors. The Government should broadly aim to provide macro economic stability, keep taxes low and provide its services at market rates.

What should the Government do about the services that it provides? The Minister has heard over the years the same complaint - the costs of doing business are too high - and his reply has also been the same. I would suggest perhaps a slightly different way of considering the problem. The Government provides various services and charges for such services. The private sector complains that the charges are too high. The Government, on the other hand, says that the charges are at market rates and such charges are also sometimes imposed to try and achieve certain socio-economic goals. Having heard a Member of the GPC who heard representations from the industry, all I would say to the Minister is that there is a substantial gulf in the perception between the Government and private sector as to whether the charges are at market rates and whether they are fairly reflective of the market rates. This year, in view of the economic situation, the Government should review its charges and the cost of its socio-economic policies, bearing in mind that often it is a monopoly provider of such services. And it should carefully review and, where possible, the charges should be in line with the prevailing economic conditions.

In this context, one other point is that the Minister must know that the retail sector has been suffering for years, but consistent with what I said earlier, I am not herer to plead the case for the retail sector or any other sector. But this year, that sector faces even more challenges, and this is a year when the individual Singaporean is likely to have less liquidity. Mortgage rates are higher. Incomes are going to be squeezed. One should consider whether this is the year when tax rebates should in fact be reduced from 10% to 5%. It appears a peculiar move. It will mop up what liquidity there might otherwise have been in the market. The Minister may reply by saying that the rebate is a bonus anyway and that it is at the discretion of the Government. And my short reply to that would be that as far as possible, more money should be left with the individual to decide how he or she wishes to spend it, rather than mopping it up.

With that, Sir, I support the budget.

Mdm Claire Chiang See Ngoh (Nominated Member): Mr Speaker, Sir, during these difficult economic times, it is prudent that the Government still plans to achieve a budgetary surplus of $2.7 billion. Some people have said that the Government should propose a very expansionary budget, and even chalk up a budget deficit, in order to pump-prime the economy which may enter into recession soon. I believe, however, that what characterizes our current economic problems, and makes it different from our previous recessions, is our vulnerability to external economic shocks. The fall-out from Indonesia's deepening crisis may hit us much harder than we can currently anticipate and, if it does, we may well need a mid-year mini budget which may advocate some deficit spending. But at this current state of uncertainty, I support a policy of conservative prudence.

It is reassuring to know that the Government is spending on long-term investments on education, infrastructure and defence, which truly underpin our economic success. We cannot just talk about our economic fundamentals; we must continually reinvest in honing and sharpening these fundamentals, which this budget has done.

There is disappointment, however, about the lack of immediate palliative measures to help small and medium enterprises in their business difficulties. Many SMEs feel that the Government could have cut more levies, fees, charges and taxes and increased public spending in more sectors of the economy, thereby improving cashflow and business prospects in the private sector.

The Government may not think that the conditions are serious enough, but a survey done by the Chinese Chamber of Commerce in January 1998 indicated that 94% of the respondents were adversely affected by the regional financial turmoil. I hope the authorities will monitor the situation closely and prepare in time contingency measures to deploy off-Budget expenditures to assist struggling enterprises.

I would like to take this opportunity to highlight the need to spend more in areas which I think are important to Singapore's long-term development. I shall confine my remarks to the community service sector. I would like to propose six priorities for budgetary expenditures.

First, more spending on social development projects because prevention is better than cure. In the budget's development expenditure for FY 98, the Ministry of Community Development (MCD) is given the lowest priority among all Government Ministries. It is just 0.11% of GDP, with the exception of the newly-created Manpower Ministry which has no development expenditure at all.

While I recognise that development projects for other Ministries are equally worthy of our attention and support, I am concerned and curious to know why a Ministry such as MCD, which handles family support services and community intervention programmes to promote families and prevent their disintegration, has less need for development projects than other Ministries.

I observe some disturbing social trends which were recently reported in our newspapers: increasing youth crimes, teenagers not confiding in their parents, rising divorces, increasing single households' problems, declining O' and A' levels results and low esteem among those who did not fare well in 1997, etc.

We may well accept that the Ministry of Home Affairs with all its responsibilities will be given a development budget which at $900 million is more than five times greater than MCD's development budget, which is $178 million only.

What is perhaps a little lopsided, however, is the fact that MHA's Police programme alone, which is $240 million, is given a development budget which is 45% more than the total development budget of the entire MCD. The equivalent is $240 million for the Police programme and $116 million for the entire development expenditure for MCD.

I wonder if there is a correlation between an expanded Police programme and family instability, ie, the more unstable a family, resulting in family abuse, runaway kids and drug addiction and other concomitant problems, the more the need for policing activities to keep crime rates down and restore community security.

Is there an argument that in the long-run, it is a more effective and sustainable strategy to invest and encourage preventive programmes in neighbourhood FSCs (Family Service Centres) by MCD than having to spend on remedial institutions like the Police Force, drug centres, prisons and detention homes?

In a similar vein of thinking, more development expenditure by the Government on family life education programmes in promoting family relationships will prevent spousal violence, child abuse and juvenile delinquency, creating less need to deploy police officers and health officers in clinics and hospitals in the management and rehabilitation of the violence. The dollars wasted in the time and energy spent in managing family conflicts is not inconsequential. Some countries have shown that the aggregated resources spent represented a sizable percentage of the GDP. It may be worthwhile for us to attempt a similar evaluation exercise. If MHA were to focus on remedial rather than preventive programmes, then perhaps MCD could be given a larger development budget to undertake preventive programmes. The increase in the development expenditure for MCD, however, is only 7% which is $12 million over the last fiscal year, whereas for the Police programme, the increase is 38%, which is $66 million.

Second, spend to build a body of knowledge in our community service delivery system. A more serious concern is the fact that MCD will spend only $7.5 million or 1.4% of its total expenditure of about $532 million on research and information technology. And in MHA, there is not even any provision on research at all. How much of MCD's research and information technology budget will actually be spent on research on family and community issues, I do not know.

I do not need to emphasise the importance of having continuously updated, integrated data on families at risk to help policy makers from various Ministries define their management strategies and operational procedures. A one-off nation-wide survey on families which MCD is currently engaged in may be necessary and useful for identifying demographic and family relationship patterns, but it does not substantively add to our enforcement officers' operational knowledge which should be grounded by case analysis, informed by research inputs and tested by practices uniquely adapted for our society.

Without building up a research department within the Ministries, handling family cases or providing the budget for such efforts to be undertaken by other academic institutions for the Ministries, we will find our enforcement officers less and less equipped with effective intervention and family therapy methods and able to identify the necessary social programmes to enhance service standards among our frontline workers.

Third, spend to set up a Neighbourhood Continuum of Services for all ages. It is an important item on my wish list to see more but small, efficiently run old folks homes, children centres, youth hang-out joints, family service centres, day-care rehabilitation centres for the old and the disabled, special programmes for physically and mentally disadvantaged in more schools in every constituency. As to how many of these services need to be set up in relation to the population base in the constituency, what optimal size will be ideal to achieve best performance, the number of workers and the kind of social work skills we require, these are key issues to address, and I do not think we really know.

Fourth, spend to identify national manpower needs in the social service sector. Without guided research data to inform us exactly what are community service needs, we may be busy building more development projects, but unable to clearly evaluate their relevance, impact and sustainability for the community which needs our services. How do we even start mapping the needs of the community and determine the continuum of services and skills to be set up? It will be the public, the vulnerable victims and dysfunctional families who will be shortchanged due to incompetent service standards. It also results in economic wastage.

By comparison, our Government seriously identified the need for skills upgrading in our workforce and a large sum of money is put aside by the Ministry of Manpower to retrain our workers in the industrial sector after research into skills retraining. We all agree to this pro-worker and pro-business directive because it enhances our competitiveness and fuels our growth engines in the economy. In a similar manner, I argue that we need to commit priority time and resources to critically evaluate community service delivery programmes, identify where the needs are, train our social workers and volunteers with the necessary skills to offer the public value-added service and rehabilitation treatment so that as healthy and well integrated families, we help to build the social foundation for Singapore to cope with the challenges of the 21st century.

Fifth, budget for fitting the puzzles of Inter-Ministry management and integration.

Another component which I think should be included in a budget is programme management and evaluation expenses. In cases of juvenile delinquency and drug offences, violence in the home involving young children and other family disputes, their management is very often beyond the boundary of one Ministry. Take a family violence case, for example. It involves the intervention efforts of MOH, MCD, MHA, MOE, the Courts and FSCs. I take an example of spousal violence case. MOH will determine the extent of abuse through medical examination; MCD offers the social support through FSCs and protects the child by taking her or him to a place of safety; MHA offers protection and safety to the victims and directs abusers for rehabilitation; MOE identifies cues and signs of abused children or child witnesses in schools to intervene early before their traumas deepen. Recognising that case management has to be multi-disciplinary and involves multiple parties from different Ministries, we need to study, pilot and evaluate intervention and rehabilitation programmes.

Following this argument, I would like to propose that the Minister set aside a special budget to pay a team of consultants to re-engineer a cross boundary integrated study in community management. It is time to take a fresh look and review as well as recommend how Ministries can and should work effectively together to solve social problems. Models from other countries and their experts can be consulted for this purpose.

My last budget proposal is for a Central Registry of victims and perpetrators for fast response and efficient intervention. In most countries, a Central Registry is set up to capture victims' information in computers so that front-line agencies like the police, the courts, the hospitals, FSCs and Helplines are electronically linked up to better able to track offenders and victims and adopt appropriate prevention measures before crimes are alerted. A national priority must be given to setting this up for the purpose of promoting quick alert, fast response, efficient referrals and cross-checks.

I have highlighted six budget priorities for the community service sector which I hope the Minister will look into and consider giving off-Budget expenses for their implementation. If we give $3 million to start up each of these programmes, the total will only be $18 million, which is a small drop of the expected surplus of $2.7 billion. The return on investment in dollars spent in this sector, unlike in business, is not immediately calculable, but as in education, its rational reinforcement only helps to refine our social service network of institutions and expertise and restore to the community its sense of well-being. A sense of well-being felt by Singaporeans is arguably a most competitive human resource which we can bring to the economy and this country. That, for me, Sir, is priceless and enduring.

Mr Ahmad Mohd Magad (Pasir Ris): Mr Speaker, Sir, in spite of this year's budget being dubbed a prudent one, I am glad to note that many MPs who have spoken before me are generally supportive of it. The Budget Statement is in line with our larger goals of preserving our long term competitiveness and achieving a stable growth pattern as we position ourselves to become a developed economy.

What is impressive is the Finance Minister's ability to show a surplus of $2.7 billion or about 1.7% of GDP in a difficult and uncertain year. This is important as it demonstrates to fellow Singaporeans and the international business community that in spite of the financial woes enveloping the region, and to some extent our economy, we are still intent on building our reserves even though it may be the lowest in years. The financial crisis has certainly proven the importance of building a strong and healthy reserve, without which we would have suffered the same fate as some of our neighbours did in the regional currency battering. For the year ahead of us, what is even more important is the fact that this very surplus will become available immediately for infusion into the economy should there be a need for the Government to implement off-Budget measures, as already promised by the Finance Minister, Dr Richard Hu.

Sir, as stated by several Members already, the financial services sector is once again the major beneficiary of the host of incentives unveiled in the Budget Statement. As this sector is one of the key propellants of our economy and the fact that it is also tied to our goal to be a global financial centre and a regional business hub, it is therefore appropriate for this sector to be given a further boost.

Above all, I am pleased to note that there is no softening in the allocation of funds for education, although we could have done better in setting aside more funding for Continuing Education and Training (CET) in the wake of the current financial crisis. I am sure several of my labour MP colleagues will touch on this subject at length. In spite of the need to be prudent in crafting the Budget during this unstable period, we must continue to build on the philosophy and wisdom of "teaching a man how to fish". Inculcating creativity and thinking skills in our school children will provide the foundation for them not only to survive in an increasingly challenging world but will also shape their mental framework to overcome adversity.

However, Sir, in the wake of our expected growth slowdown and the full impact of the regional economic crisis expected to be felt this year, it is fair for the business community to also anticipate a budget that would offer them some relief to help them tide through the current difficult period.

As already stated by Mr Leong Horn Kee, Chairman of the Government Parliamentary Committee for Finance, Trade and Industry, and also being a member of the Committee myself, I wish to echo the disappointment expressed by the various Chambers of Commerce and Industry and the trade groups and associations the Committee met with after the announcement of the Budget Statement. They strongly felt that the budget primarily benefited certain segments of the financial sector and failed to provide sufficient reprieve in lowering business costs in the current difficult and challenging business environment.

As a result of the financial crisis afflicting the region, many of our local businesses are experiencing various setbacks and are cash strapped due to their exposure in the regional markets, especially Indonesia, Malaysia and Thailand. Demand for the products they sell to these countries has sharply decreased due to the exchange rate situation, and at the same time their imports from these countries are finding fewer buyers as Singaporeans tighten their belts on spending. Sales contracts made before the currency crisis and denominated in regional currencies are resulting in drastic exchange losses, and to make matters worse, payments are coming in slower than ever before, thereby contributing to cash flow difficulties. On the local front, interest rates are higher and banks are more conservative in extending credit. Many businesses are therefore confronted with tight cash flow, reduced turnover, relatively higher costs, and potentially higher bad debt exposure.

Sir, the recent widening of the scope of the Local Enterprise Financing Scheme (LEFS) is indeed the sparkle in the Budget for our local businesses, especially for the small and medium-sized enterprises (SMEs). It will help to alleviate cost pressures on businesses. However, some groups expressed the concern that the enhancement will primarily benefit larger companies which will be viewed more favourably by the financial institutions in their lending considerations, whether or not they are prepared to co-share the lending risks.

I suggest that some attention be given by the administrating body of the scheme, ie, the Singapore Productivity and Standards Board (PSB), to deserving companies which may have difficulty in securing working capital loans from the financial institutions.

Concerning the wide range of Government assistance schemes available for companies to take advantage of, the local enterprises continue to feel that there is room for further simplification of the procedures. Many are turned off by the amount of paper work required to apply for the schemes. I hope the appropriate Government agencies administering the various schemes could look into this matter.

In regard to the 15% tax rebate for commercial and industrial properties, while this directly benefits the property owners, there is concern that many private owners will not share this concession with their tenants. I suggest that some form of a concession-sharing formula be considered to require landlords who rent out their properties to share the rebate with their tenants. Only then will this concession benefit a wider cross-section of the business community.

Sir, on the extension of rent freeze by the JTC and HDB, it was strongly felt that the freeze did not offer anything extra to lower operating costs, as both agencies had frozen their rentals since the middle of last year. As rent in most cases represents the second highest component of business cost, I suggest that this area be closely looked at as a possible off-Budget action, should the situation worsen.

On corporate tax reduction expected by certain quarters, I personally feel that it would not make much of a difference to businesses in a year where profits are expected to be generally lower or where there are no profits to be made at all.

However, I do hope that some form of a multi-tier corporate tax system for local SMEs as proposed by Mr Lew Syn Pau in last year's Budget debate is being considered by the Minister for Finance. As an example, Mr Lew suggested that the first $2 million in taxable income could be taxed at 15%, the next $3 million at a higher rate of 20% and amounts above $5 million at the long term rate of 25%.

Such a move will help local SMEs grow faster as the savings in corporate tax could be ploughed back into the business. One way to ensure that the money is reinvested is to make it a condition that companies could only enjoy the scheme if the tax savings are retained in the business for re-investment purposes.

Mr Speaker, Sir, on the 5% one-off tax rebate for individuals, while I do understand the rationale for the reduction from the 10% one-off given last year, I wish the Minister could have been more generous in the light of the current economic gloom. The relief could have helped make up for the declining disposable income anticipated this year as a result of lower variable bonuses and salary increases because of more difficult business conditions. The spare cash could, in turn, be channelled back into the economy to help the ailing retail sector which is experiencing a serious slowdown.

Sir, I think it is important in this rapidly changing and events-driven economic environment for the Government to closely feel the pulse of the business community and economy on a regular basis to ensure that off-Budget measures could be taken swiftly before the situation becomes very difficult to contain.

Having said all that, Mr Speaker, Sir, I believe there is an urgent need for businesses to learn that they cannot continually look up to the Government to solve their business problems. They need to be educated on the realities of the harsh and fiercely competitive business environment which calls for responsiveness to changing circumstances and customer expectations in the smallest possible lapse of time. They must be made to understand that survival today means effectively managing perpetual motion or risk becoming obsolete.

Finally, Sir, amidst the gloom hovering over us, it is important also for us not to be obsessed with the negatives and forget about the opportunities abound in the region. With the strength of the Singapore dollar relative to regional currencies, there are tremendous opportunities to acquire or buy into companies which are in dire need of capital infusion in our neighbouring countries.

On that note, Sir, I support the financial policy in the name of the Finance Minister.

Mr Jeyaretnam: Mr Speaker, Sir, before I move on to speak on the Budget, may I just say a few words about how refreshing I found Dr Tan Cheng Bock's outburst on, what I guess, an attempt to silence even an MP speaking up. I do hope that Dr Tan Cheng Bock would accept the invitation of the Leader to move a motion in the House that Singaporeans should not be admonished or stepped down for speaking up, and he will find in me a ready supporter. I await the motion from Dr Tan Cheng Bock.

Dr Tan Cheng Bock rose ---

Mr Speaker: Do you wish to give way to Dr Tan?

Mr Jeyaretnam: No, Sir. I want to continue.

Mr Speaker: Dr Tan, resume your seat.

Dr Tan Cheng Bock resumed his seat.

Mr Jeyaretnam: Maybe afterwards. May I move on to the Budget because we are allowed half an hour for the Budget speech.

Mr Speaker, Sir, may I make a few introductory remarks about the Budget before I come to the specific concerns of my Party on this Budget.

[Mr Deputy Speaker in the Chair]

4.35 pm

Mr Jeyaretnam: One is that, reading it, it sounded to me more like the 1997 Budget. It seems to be a rehash of the 1997 Budget. It read more like the 1997 Budget than a Budget for this year.

The other observation that I wish to make is that, as has been mentioned by a number of speakers, the Government's assessment of the impact of the financial turmoil in the region on Singapore seems to be different from that outside the Government. The Government would appear to take the view that Singapore should come off quite well without getting hurt too badly. But that does not appear to be the view of the people in the business community and outside. We only had the statement of the Singapore National Employers' Federation on 4th March, replying to the head of the NWC saying that there should be no cuts in the basic pay. The Federation's reply was that it was too early to say pay cuts were not necessary and that some companies had already taken the step to cut the pay of their executives. This is something that was lost on the Deputy Prime Minister when he replied to my motion about six weeks ago. Because he seemed to think there were no pay cuts outside the Government and Government should not move in first.

So there are these conflicting views. And as has been expressed, this Budget would appear to be not alive to the seriousness of the economic crisis that faces us. I get that impression. It seemed more alive in the 1985 Budget but not in this Budget. A thought passed my mind and that was whether the Finance Minister was perhaps getting a bit too old in being Finance Minister, or getting tired of it.

Mr Deputy Speaker: Order. You shall not be personal with your remarks.

Mr Jeyaretnam: All right, Sir. I am sorry. But may I also then move on to the other observation that I wish to make, and that is this. He says in his Budget speech that the Government is keeping a "tight lid", a cap on operating and development expenditures. And he goes on to say elsewhere that it was the Government's "deliberate policy to keep the public sector lean and trim". Having said that, if one looks through the Budget, one finds that the operating expenditure has gone up by $1.12 billion over 1997, and that is, after the Minister says it will be the policy of this Government to keep a tight lid on expenditures, particularly operating expenditure. I have no quarrel with the increase in the development expenditure, but this operating expenditure.

I look at the expenditure for the Prime Minister's Office. And I see the operating expenditure there has gone up this year by $7.55 million. I also read what was the work programme under the Prime Minister's portfolio. And if I may read from the Budget book, Mr Deputy Speaker, Sir:

"The work areas under the Administration programme include providing administrative support to the Prime Minister, Senior Minister and Deputy Prime Minister, administering the Singapore State Arms and Flag and National Anthem Rules, allocation of state cars as well as matters relating to National Honours and Awards. The Elections programme covers the production and public exhibition of the registers of electors, maintenance of the electoral database and conduct of elections in an election year. The Corrupt Practices Investigation Bureau investigates allegations and complaints of offences under the Prevention of Corruption Act, maintains records of persons investigated by the Bureau and provides screening services to public authorities and authorised organisations."

To administer this programme which, as I have read, includes, among other matters, administering the State Arms and Flag, the National Anthem Rules, allocating state cars, the elections programme and the Corrupt Practices Investigation Bureau, we are told that the operating expenditure should be raised by another $7.55 million. And we are told also that this programme is administered by no less than four Ministers, one Senior Minister (this post has been vacant for the last two years but apparently it is considered necessary to have a Senior Minister as well, besides the four Ministers), one Minister of State, one Parliamentary Secretary and two Political Secretaries. Really, Mr Deputy Speaker, do we need six Ministers to administer the work programme that I have just read out? And I see that, of the increase in the operating expenditure, it is the expenditure on political appointments that has gone up by $4.4 million from 1997, and it has gone up by $7.4 million from 1996. I see the Prime Minister has left the House, but I was hoping we would hear from the Prime Minister, because the Finance Minister may not be in a position to answer this. Why do we need all these Ministers to administer this programme? Is this, Mr Deputy Speaker, Sir, a case of Parkinson's law in operation? And do we still need nannies for the Ministers to oversee what the Ministers are doing in their own Ministries? I say this because it seems to me that not enough thought has been given to what we are spending on the administration. I have taken the Prime Minister's Office as an example.

Now, may I move on, Mr Deputy Speaker, Sir, to my Party's concerns in this Budget. Several speakers have spoken of the concern of the business sector. I am not here to say that we should not take care of the business sector. They are most important. But at the same time, I think one must not forget that labour has an equal part to play in the economy and in attempts to resuscitate the economy. And as I said, my Party is concerned about the effect on the workers. Before I come to that, may I also mention something which I have overlooked, and that is, the total absence in this Budget of any cost cutting measures on the part of the Government. Mention has already been made of no announcement of JTC and HDB decreasing their rental charges or that they have any intention to do so. Neither is any mention made of the amount of revenue that is collected by the Government in fees and licences. Do we still have to maintain these high fees and licence charges when the businesses are finding it difficult to make their ends meet?

May I now move on to the Party's concern. The Minister says again, in his Budget, that our priority this year should be to protect jobs. We say amen to that. But look through the Budget Statement and we see no word at all of how the Government proposes to protect the jobs of the workers. As was mentioned by the Singapore National Employers' Federation in their statement on 4th March, the rate of unemployment has increased this year and several speakers have mentioned this. I was told the other day, when I was at Ang Mo Kio, of a company telling one of its workers that either he took a pay cut or face losing his job. How is the Government going to protect the workers' jobs? Has the Government any plans to stop employers from taking advantage of the recession to terminate the services of workers who have been with them for years and employing cheaper labour?

During the last sitting of this House, when there was a question from my Party Member to the Minister about paying retrenchment benefits to workers who have worked for more than 10 years, the Minister of State said that there was no need for any legislation. May I tell the Minister for Labour and the Government that if there had been some legislation protecting the workers' rights by requiring employers to pay compensation for unfair termination, employers would not be trigger-happy, to use that term, to lay off their workers. But we do not have any such law and, as I said then, our workers are completely at the mercy of the employers. What is the position of our workers vis-a-vis foreign workers? Are they going to lose their jobs in preference to foreign workers? Sometime ago, I thought I read about the Secretary-General of the NTUC, who is also a Cabinet Minister, saying that it would not be right to expect companies to keep Singapore workers and only get rid of foreign workers first.

Across the Causeway, Mr Deputy Speaker, Sir, I see the government has announced its intention to keep strict watch on companies laying off workers by requiring them to explain the proposed retrenchment. Does the Government here propose to do anything like that? Then there is the question of retraining of workers. I had asked the Minister for Labour to let me know what is being done by the Government on retraining and his private secretary rang up to say, "You can't have it now. The Minister will be giving an answer in the House on Monday and you will have it then." I have not been able then to study the Government's plans on retraining. So it is very difficult for me to speak on that. But I think Mr Chiam has already touched on it slightly, and that is, it does not seem really to provide for the situation that we are facing at the moment. A lot of it is left to the employers or the agencies outside and the Government itself is not controlling the retraining of workers.

The Finance Minister went on to speak about the United Kingdom rolling back on welfare. I think the Minister was a little unfair. If he had studied what the Labour Government in the United Kingdom has planned, he will find that it is not just rolling back welfare payments for workers but has prepared well thought-out plans and schemes to find employment for those between 18 and 25 and for those who are over 25 who have been unemployed. There are booklets available and perhaps the Minister should look at them. Why cannot the Singapore Government do something on those lines?

Then there is the relief or help for those who lose their jobs. All the Minister can offer is the rent rebates and the service and conservancy rebates and the utilities rebates. But the rent rebates and S&C rebates are lower this year than what they were last year. For 1- and 2-room flats, the S&C is reduced by one month. For a 3-room flat, it is reduced by 1� months. For a 4-room flat, it is reduced from one month to _ month and for a 5-room flat, it is reduced from one month to � month. Is that all the help that the Government proposes to give to people who are going to find themselves without a job and are unable to make their ends meet? Is there nothing else that this Government can do? There was a wonderful opportunity for the Minister and for the Government to do something, not just for the wealthy but for the entire country, and that was to suspend the Goods and Services Tax for the period of the recession.

Mr Deputy Speaker, Sir, we were opposed to the Goods and Services Tax. We called it an evil tax, an unfair tax. But the Government proceeded, and the result was an immediate increase in prices of everything. Of course, retailers and manufacturers had to put up their prices if they have to pay the Goods and Services Tax. And I see that it is now a good earner in revenue for the Government. For 1998, it is estimated at $1.95 billion and it has gone up by $90 million over 1997 and it is the third biggest earner in tax revenue. I was curious to see that there was another item "Other Taxes" which brought in $2.3 billion. I wonder whether the Minister would explain what these "Other Taxes" are. And again, the fees and services collections account for a very significant portion of the revenue. May I ask the Minister: was suspension of the GST ever considered at all? Even if it was not thought possible to suspend the whole GST, was any thought given to exempting the tax from basic necessities like food and clothing and education?

What about the water tax? Was any thought given to suspending the water tax and other taxes on basic services provided to the people? We were told that the reason for the water tax was because there was a threat to cut off our water supply. But now, we have been told by the Malaysian government that it has no intention to cut off the water supply. So will the Minister consider waiving even that little bit, cutting off the water tax, because that affects almost every household in Singapore?

Mr Deputy Speaker, Sir, the Budget should address all sections of the community. As I said, we have no quarrel when it addresses the concerns of the business community. But it abysmally fails to address the concerns of the workers and of those who are not well-to-do. And it is, Mr Deputy Speaker, Sir, in many ways a very disappointing Budget. As has been mentioned, the business community is not exactly clapping. Nobody is clapping at this Budget. It is unfortunate that the Minister has missed the many opportunities that were open to him and to the Government to show that it was concerned about the economy and its effects on the people and that it would take into account the hardships of our people and that is why I call this a most disappointing Budget we have had for many, many years.

Dr Vasoo: Mr Deputy Speaker, Sir, I heard a very refreshing and interesting speech by my parliamentary colleague, Dr Tan Cheng Bock, but not the speech and viewpoints of the NCMP. That aside, I know that you are functioning on a very tight schedule. So I shall be very precise and raise a few issues.

Sir, I would like to state that this year's budget is rather prudent and I expected some giveaways for low-income families, but there are less giveaways this year. This is understandable as the economic situation is expected to be tight for the next few years. However, I would state that it would be better to maintain a status quo in terms of the budget, rather than to increase other related charges because there were off-Budget charges which had been implemented earlier such as electricity, medical and property charges. The increases which have been announced by some Ministries and restructured Government bodies have increased the burdens of the households and companies. These increased charges should be reviewed as they were implemented before the economic downturn. I hope the Minister, in his off-Budget proposals, would take this into consideration. Sir, such practices should be carefully monitored to ensure that the budget is not jettisoned out of course.

Sir, I would like to touch on a number of issues. First, is the plight of the low income pensioners. The pleas of low income pensioners have been heard by the Minister many a time. I hope he will not just hear but act to bring some relief to the pensioners. It is high time that we revised the pensions of very low income pensioners, particularly those whose pension is very low and meagre, much lower than the public assistance rate. These pensioners have given sterling services to the Government during their time and it is about time that we gave them an uplift their life and their shoe-string income. And this is particularly the case for those without children and immediate relatives. I think they do deserve our attention and we should provide the best of support we can give for this group. Although there is an argument that there is the Singapore Allowance, I do not think that the allowance together with their meagre pension would reduce their burden at all. I feel that the Minister should give very close attention to this group of low income pensioners.

Sir, the other issue is to look at the effects of corporatisation. In the last five years, Government has corporatised various public sector services. The question we should ask ourselves is whether the corporatised public sector services are achieving their objectives. Are these corporatised bodies efficient and effective? I think it is very important to review their performance at this stage.

Sir, a number of public sector services such as health care, telecommunications, power and gas, and broadcasting have made their presence felt in the last number of years through corporatisation and restructuring. They set charges and commit huge expenses. A lot of them spend millions of dollars. All these decisions have implications on the consumers, namely, cost and efficiency of services. In short, one cannot ignore that these public services must be affordable to the majority of the population. Sir, I must say that there is always the temptation that these corporations strive to make high and mindless surpluses, as they do not want to show up as inefficient. When this happens, consumers would have to carry the brunt as they have limited alternatives to purchase services, other than telecommunications where there has been competition in telecommunication services. A number of operators have come in. Prices have been reduced and I am sure you would agree with me that it would be a welcome change to have a number of other operators to provide public services so that they can give the monopolistic private sector services a run for their money. I must say that the interest of the consumers must be protected and regulatory bodies must be established to make them accountable.

I read with much concern the comments of the Public Accounts Committee which stressed for more accountability of corporatised public services and statutory boards. It is high time that the Government imposed some controls on them so that the interests of the consumers are safeguarded. I think this is very critical at this stage of growth and there is a need to ensure that there is good accountability from these various corporatised public service bodies. I want to find out from the Minister whether these corporatised public service bodies are efficient in making surpluses or cost effective in providing services. This is essentially a very important issue that we would have to review and examine.

Sir, on incentives for savings, we have to encourage Singaporeans to save more, and not to spend money that they can save. The spend culture will make us more indebted and economically vulnerable. We cannot expect to be a strong society if we have low reserves. I would like to urge the Minister to give incentives or rebates to those who save. We will have to encourage a more saving culture so that we will be more consolidated and be able to manage even in difficult times.

Sir, on the question of training for workers, particularly older workers, companies that have older workers should be given tax rebates for training of their workers besides the funding from the Skills Development Fund. The Skills Development Fund is not comprehensive to cover various grades of workers. An additional tax rebate for companies which take active steps to retrain older workers should be considered. The present incentives are cosmetic and not serious enough to step up the interest to train our workers. It is important to encourage some of these companies to think about more innovative ways to retrain older workers. And I am sure the Minister could be a bit more liberal and provide grants and support to companies which are more positive and prepared to undertake the retraining of older workers.

On that note, I support the motion.

Mr Low Thia Khiang: (In Mandarin): Mr Deputy Speaker, Sir, Singapore is facing financial and economic difficulties. How long the difficult situation will continue or how deep it will sink is still uncertain. But what we can see is that many businesses are faced with a stagnated market and serious cash flow problems. Many people are faced with a reduction in income or even unemployment. Everybody is trying to adjust or adapt, but they soon discover that the options open to them to adjust or adapt are not many.

In the business community, many items of operational cost such as rent, wages and various Government charges are fixed expenditures. The little bits of rebates offered by the Government cannot effectively bring down the operational cost for them to pull through. As for the ordinary citizens who are unemployed or have suffered a reduction in income, they still have to pay the instalments for their mortgage loans, educational fees, GST and the various charges that have been raised again and again over the years.

During the Budget debate last year, I pointed out that the escalation of the various service charges such as public transportation, refuse collection fees, university fees, water conservation tax and the selling price of HDB flats was worrying. I also warned the Government that if it was unable to resolve the problem of business cost resulting in the workers' salaries being stagnated or the factories closing down, then the pressure on the people would be mounting.

Unfortunately, many people are already facing this pressure. The Government should review the price mechanism that it has been employing all the time to achieve its policy objectives. The side effect from the price mechanism principle is higher cost of living and higher operational cost for businesses. When times are good, and business is good, the various costs and charges would go up. Once the economy takes a downturn, income is reduced, and they will face a big problem because the fixed expenditure cannot be changed.

For the business community, when the economy is good, the costs of materials and operations will go up. When sales are good, they could still manage to pull through. But once the situation is bad, when their sales drop, they would not make enough money and they will have a serious cash flow problem. Because of this high cost of operation, the profit margin is low, and they could not save enough for a rainy day. Once they face difficulties and are caught in the midst of instalment payments, there is no way they would adjust or trim their overhead expenses to tide over.

From this budget, it is apparent that the Government feels that the economic situation faced by Singapore is not serious enough. But the survey by the Singapore Chinese Chamber of Commerce and Industry reveals that more than half of the businesses are facing cash flow problems. A global securities institution, Morgan Stanley, has predicted that Singapore may face zero growth in its economy. I hope that the Government's judgment this time is correct. I hope that it would not repeat what it did in 1985 when it waited until many companies had closed down and the economy was well battered before they resorted to contingency measures. What I do not understand is that when the Government levy taxes, they always say that we have to provide for a rainy day. But when we are having difficult times, when the people are tightening their belts and not knowing whether they could tide over, the Government does not come to their rescue. All they say is, "wait and see". When the people are faced with unemployment problems, the Government's policy is to enhance their employability so that they could resolve their unemployment problem. If you can find a new job that pays you the same wages, it is well and good. But if you cannot get a job that gives you the same pay or you cannot even get a new job, then what is going to happen?

When we face an economic depression, when people are facing a long unemployment situation and if the Government is unable to attract new investments to create job opportunities, then what protection can we give to our workers? What I am more worried is that, with the financial crisis in this region, the value of the Singapore dollar may be affected. Our imported goods would be more expensive and our people will face serious problems of inflation. Under such circumstances, would the Government promise to suspend the collection of GST?

The Government has also said that if the economy takes a turn for the worse, it will consider reducing the CPF contribution rates or allowing people to withdraw some CPF savings to tide over. But the problem is how much money do our people have in their ordinary accounts in the CPF? The HDB flats are getting more and more expensive. Under the new policy, the people have to withdraw everything they have in their ordinary accounts before they could obtain a loan from HDB.

I understand that many Singaporeans have only enough CPF savings to pay for their loan instalments. What happens if one day we suffer a very serious depression and many people are unemployed and faced with serious inflation, what can our people rely on? When the economic situation is good, the Government feels that the people could afford it and they keep on increasing charges. When the budget is released, the rebates given to the people are so small. It is just like trying to put out the fire of a burning cart-load of wood with a cup of water. When salaries are frozen or incomes are reduced, the Government does not provide anything for them. To the Government, it is a situation whereby the "horses will continue to be raced, and the taxes will continue to be levied."

Mr Seng Han Thong (Ang Mo Kio): (In Mandarin): Mr Deputy Speaker, during the Budget debate last year, the MP for Hougang used the analogy of "wool coming from the back of the sheep". This year, he switched to the horse, saying "the horses will continue to be raced, and the taxes will continue to be levied". This being the "Year of the Tiger", I think the most appropriate animal to be used as an analogy should be the tiger.

The financial and currency crisis this time is like a tiger. When the tiger is around, we will have difficulty climbing the mountain. I think the Government should play the role of the legendary hero Wu Song. In the episode from the Chinese classic The Water Margin, Wu Song drank three big bowls of strong liquor to gather enough courage to go to the mountain where he encountered the fierce tiger and killed it with his bare fists. Our Government can play the role of Wu Song, but it relies on prudent financial policy rather than alcohol to defeat the "tiger". We must go to the mountain, face the tiger squarely and defeat it, for the benefit of not only our own people but the people around us as well.

This Budget is presented in the midst of a regional financial and currency crisis. It hits our neighbouring countries, like Indonesia, Malaysia and Thailand, and we are also affected. Our Singapore dollar is also affected. However, I feel the impact of the currency turmoil has not been fully and adequately reflected in this Budget. Perhaps, the Finance Minister wants us to remain unruffled. He does not want us to be unduly worried. He only indicated that if the situation gets worse, he will take off-Budget measures to assist the people. I hope that in his reply tomorrow, he can enlighten us on what measures he is going to take to pull us through the difficult times.

As we can see, some companies are beginning to downsize or restructure and many workers are affected. I feel that this is a very important lesson to learn. At a time when we want to attract foreign talents, we should also help our own workers to upgrade their skills. However, there is no mention in the Budget of any specific measures to promote job upgrading for our workers.

Many businessmen feel that this Budget has not provided adequate help to the small and medium enterprises. Although there are existing packages to help them, they feel that it is something which "you can see but cannot enjoy". The government officials, on the other hand, say "You do not see it, thus you don't enjoy it." So there is a perception gap between the businessmen and the bureaucrats. I feel that we should have more dialogues between the SMEs and the authorities so that the business community can understand what facilities are available to them.

Similarly, some people feel that owners of 5-room HDB flats should be entitled to the same rebates as those living in the smaller flats, because living in bigger flats does not necessarily mean that they are better off than their neighbours in the smaller flats.

From these observations, we can see that people are more concerned with their own interest. Of course, we cannot fault them for looking after their interest. But at a time when we are faced with this regional financial crisis, we should have a [ ] "sense of crisis" rather than the [ ] "sense of self-interest". I feel that in this budget we have not fully made use of this opportunity to inculcate in our people a sense of crisis. Let us reflect on what happened at the SilkAir accident. After the crash, many people came forward and signed the book of condolence and attended the public memorial service. It is a very valuable lesson. Singaporeans are more united and have more human touch because of this incident. Therefore, we should make use of this regional financial crisis to unite our people so that we have a sense of crisis and have less sense of self-interest.

We should also encourage the people to upgrade themselves. In the past few years, many Singaporeans have been upgrading. They have been upgrading in terms of their housing. When they can afford it, of course, it is well and good for them to upgrade. Unfortunately, there are many people who are upgrading even when they could not afford it. They upgraded from a small flat to a big flat, and then from a big flat to a bigger unit. Now, because of this crisis, many people are changing from the bigger flats to the smaller flats. They are downgrading! In fact, the people should be encouraged to upgrade their skills rather than their flats. In the past, we said that a skill in hand can benefit you for a whole life time. But in the present context, one skill is just not enough. We must be multi-skilled so that we will not be caught in the wrong foot in the face of an economic crisis.

I agree with the Government's policy to curb property speculation. I feel that we should encourage our workers to upgrade themselves. Not only the workers, but even the managers and CEOs should also upgrade their skills. Of course, this financial crisis has some negative effect on us, but it has also brought to us some revelation.

Firstly, we have a very stringent and highly transparent monetary policy. It is because of this that we are able to withstand the impact of this recent regional turmoil and Singaporeans are beginning to understand this.

Secondly, our people are beginning to realise that they cannot keep raising their expectations indefinitely. They must have the ability to adjust to changes.

Thirdly, whether it is investment or speculation, we have to face risks. Although for investment the rate of return may not be very high, if you speculate you may lose your last penny.

So I feel Singaporeans should have more sense of crisis and less sense of self-interest. I hope the Minister will give us more details on the off-Budget measures he proposes to take if things get worse, when he replies tomorrow.

Mr Shriniwas Rai (Nominated Member): Mr Deputy Speaker, Sir, thank you for giving me this opportunity.

Sir, before I proceed with the Budget proper, I hope you will allow me to comment on the point raised by Dr Tan Cheng Bock, and state my view to this House.

Sir, I agree with him and the other Members that no civil servants should undermine the confidence of Members of Parliament and their standing in public as well as in Parliament. However, Sir, when we discuss the conduct of a person who is outside this House, we should be cautious, temperate in our language, and we should see that in no way do we cast aspersion of the civil service as a whole because no matter how strong the political leadership is, if the civil servants are not committed to carry out the work, goods will never be delivered.

Sir, if a Member wants to speak on the conduct of a civil servant, he should at least file a proper motion. Dr Tan Cheng Bock, in fact, spoke more on the Chairman of EDB than on this Budget. I think it is proper that we, the Members, should abide by the Standing Orders. I especially remember reading in the papers some years back when an hon. Member of this House criticised somebody outside this House and Members took great exception. I think we should re-express the same sentiments today.

Sir, when we examine the Budget presented by the Minister for Finance with the background of the turmoil that is facing many South East Asian countries, we can say that this has been a Budget without pain. The Budget is positive, prudent and, if I may say so, promising.

Our priorities are right. Defence and education have been given top priority and they should be so. I am glad that no Member so far, either opposition or from the Government backbenchers or the NMPs, has questioned the spending on defence and it is important because we are living in a turbulent world. Defence and stability cannot be taken for granted.

Sir, we have a very pragmatic budget. This did not come about because of the planning just of last year. It is the result of careful finance balancing and planning that the Government has taken over the years. Some Singaporeans take it for granted that this is a natural process. Some believe that there will always be some surpluses. Sir, while talking of the surplus, I am a little disappointed that the Minister could have been a bit more charitable by giving less surplus and the money could have been channelled to areas which I am going to discuss later.

Sir, a stable, open, transparent, honest Government which is committed to improving the life of the people has brought about this Budget. Even the Government's worst critics cannot deny the Government's sound fiscal policy. In any economic development, the people have a pivotal role to play. So is the case of our economy and our people. The people must undergo some sacrifice now for a better future. All of us should upgrade our skills even if it may mean some change in our lifestyle. Here, I agree with Mr Seng Han Thong that we should all, irrespective of what our position in economic life, train ourselves. Some temporary loss would yield gain in the future.

Sir, I would like to share some concerns shown by the private property owners. They are concerned that the prices are falling, distressed sales are on the rise. The bottom line is yet to come. It is reassuring to note that the glut in private property would not increase as the Government will control the release of land. I urge the Minister to review the position from time to time to see that the property market does not fall dramatically. I believe a long slump in the property market will not be good for the economy. But having said that, let me add a word of caution, Sir. I share the sentiments of Mr Inderjit Singh. We must not allow the free market forces to be stifled. While we must see that the property market is protected, we must not allow the free market to be flouted.

Mr Deputy Speaker, Sir, I am a little disappointed, and I share the sentiments by some Members of this House, that despite the urgent need for skills training, the Minister has not been very generous in this area. No special fund has been allocated from the Budget to train the workers. All we have is a previous set-up under the Skills Development Fund. I urge the employers to take more interest in skills training. Wherever possible, they should not wait for retrenchment or wait for the Government's call for skills training. They on their own initiatives should try to find out which area of skills development will help them. The Government could in some cases offer financial assistance to small enterprises so that they can take full advantage of the workers' training. I believe the present system is not adequate.

Mr Deputy Speaker, Sir, it is encouraging that our financial sector is being reorganised and I congratulate the Minister for the various tax incentives in this area. I am sure this area will further grow, and let us hope that we will become the best financial sector in the Far East.

We should encourage more fund managers and financial experts to settle down in Singapore. Therefore, I have no hesitation in supporting the Government's move to allow talented people to come and work here. Singapore would benefit from these people. Our diplomatic missions abroad should promote the policy as other countries are equally interested in wooing these people. They are in short supply. We must not miss them.

Sir, I have no doubt that the Government will not allow these talented personnel who have come here to take away jobs from our people. The simple truth is that we do not have such people in our midst. Even developed countries are trying to attract these talents. We need them more than they. This is why even USA, with a highly successful workforce, is trying to get computer engineers from Asia. Similarly, medical specialists are in high demand both in USA and UK. I support, and I hope every Singaporean support this move.

In Singapore, where we do not have any natural resources, we are depending on our manpower and our location. It is therefore very vital that we attract top talented people. They will enrich our workforce. They will add high value to our economy in the end. The whole economy will benefit. And we must not be shortsighted, as some people think that the Government is neglecting its own people. The truth is that Government is concerned about Singapore citizens and we will always be concerned.

The Government in allowing these people to settle is going to help the workforce. However, Sir, I have one caveat, and this is an important caveat. We must try to persuade these skilled people to train our workforce, to train our senior echelon in the area of speciality.

We must make an extra effort and sell to these people our sound fundamentals and sound educational system. We have very good local as well as international schools. We are a safe haven where they can come and work and settle here.

Sir, many Members are disappointed that the tax rebate has not been increased. I am one of the minority who says that the Minister has been very prudent. The 5% is a fair figure, bearing in mind that the people who are going to pay these taxes are those who are in a higher bracket. However, I would have been happier if some of the savings from the 5% could have been allocated to skills training. I am hopeful that the Minister would look into this area when reviewing this, and when the need arises.

Mr Deputy Speaker, Sir, if we look at the totality of the picture and not some areas, we are in a better position than many countries of the world. There seems to be a fear that because of the problems facing our neighbours, we may be in a long period of economic recession. I agree with the Minister that there will be no recession as our fundamentals are very strong. Our growth may be slow, but there will be some growth. It is better to have a period of cooling-off. An overheated economy can burn our pockets. We have overcome worse economic conditions. We can do so provided we are united in our resolve.

Mr Deputy Speaker, Sir, some Members have said that the Minister has failed to stimulate the economy. Artificial stimulation, whether in the economy or in any human organisation, can never be satisfactory. Let the natural process take its place, and only when we have a need do we introduce stimulative measures.

Sir, I support the motion standing in the name of the Minister for Finance.

Mr Low Thia Khiang: Sir, may I seek a clarification from the Member?

Mr Deputy Speaker: Yes.

Mr Low Thia Khiang: Sir, the Nominated Member says in his speech that he is glad to note that no Member of Parliament, including Opposition MPs, raised questions on defence expenditure. I would like to ask him: what is wrong in questioning defence expenditure and whether the Budget debate is not for the purpose of questioning and scrutinising Government expenditure, be it defence or any other Ministry?

Mr Shriniwas Rai: Mr Deputy Speaker, Sir, what I was trying to state is that we all support the defence policy. I am not questioning the right of Members to debate this issue. I am saying that so far the Members, who have spoken, are in support of the Government's defence policy. We know where our priorities lie. I am not checking for a moment the constitutional right of the Members to question either in Committee stage or now. I hope this will satisfy the hon. Member from the Opposition. I am saying our priority on defence and education is right. We are not saying: why are you spending more on education and defence? I hope he understands the position.

Assoc. Prof. Chin Tet Yung (Sembawang): Mr Deputy Speaker, Sir, the economic turmoil in the region has brought to us the realisation that Singapore may not be the master of its own destiny. The economies of the region are interlinked and interdependent. Prosperity or misery felt by one may equally be felt by others, although the dosage of bitter medicine may differ. For many young Singaporeans who have known only prosperity in their working lives, the crisis is surprising and frightening. The usual response is: We are doing well. Why are we affected? The Minister for Finance is to be complimented for giving a detailed account of the crisis, although we may need an update as the situation changes even as we speak, such as the delay by the IMF in paying the next tranche to Indonesia, and Indonesia responding by saying that the IMF's demands are unconstitutional. The Minister has presented a careful, restrained Budget, recognising the need to help ailing businesses to promote certain desirable businesses and the need to continue to strengthen the infrastructure of Singapore. There is no doubt that in terms of macro-economic planning, the measures introduced in the Budget would go some way to meeting the challenges posed by the crisis.

To the young working population, however, the crisis translates itself not in terms of the IMF, Central Bank, or macro-economic policies. To these young workers, the questions are: Does the wife have to go back to work? Where can we put the children, if she does that? And what else can we do to service the debts that we have accumulated. Every last cent counts. This is typified by one young constituent who said to me: Why only 5% rebate when we need every cent we can earn? He knows about the crisis. He knows that one needs to be prudent but he nonetheless is concerned that he cannot make ends meet. It is in this context that I have to ask whether the measures of relief to taxpayers, the 5% rebate, and the rebate on HDB S&C charges, are sufficient to cater to the needs of many young families who are facing a year of uncertain wage policies. The spectre of retrenchment, of bankruptcy also may loom large for some. Paradoxically, at a time when there are fewer jobs, housewives who did not contemplate an early return to work now may have to in order to buttress the family income. But they are constrained by factors such as the lack of child care and pre-school facilities. This is an issue that should be addressed in the current Budget.

One of the key pillars of Government policy is to invest in the young. There is no doubt that much has been done in this regard, especially in relation to the building of schools and the roll out of the IT Master Plan for schools. But I am talking about the care for the very young - the pre-schoolers. At the moment, the provision of child care centres is within the aegis of the Ministry of Community Development while pre-school facilities are undertaken by the PAP Community Foundation and other private agencies. There is an acute shortage of trained minders and teachers in relation to the provision of facilities for the pre-schoolers. We do not have the quantity, and the quality can always be improved. It seems to me that there should be provision in the Budget for several measures.

First, to provide for institutions to train more child minders and teachers for the pre-schoolers. Second, to provide concessions or subsidies to those who are providing such services so that they can employ better teachers and minders. And third, to provide incentives or subsidies for the training and retraining of teachers and minders for the pre-schoolers. There is no provision for such measures in the current Budget. The provision for child care in the MCD budget is a small one, relatively speaking.

Child care services and pre-schooling are taken very seriously in advanced countries. For example, in France, 98.8% of three-year olds and 100% of four-year olds are enrolled for pre-primary schooling. In West Germany, the figures are 30.8% and 68.5% respectively. In the US, the figures are 28.5% for the three-year olds and 53% for the four-year olds. The source is from the OECD: `Education At A Glance', published in 1995.

Mr Deputy Speaker, Sir, as the industrialised economies move from brawn to brains, it is never too early to start cultivating the minds of our young. The Minister has mentioned the excellent achievements of our students in international surveys. That is a cause for happiness and congratulations to our educators. I believe, however, that studies have also shown the importance of child care and pre-schooling in the pre-primary years. A study in the United States that took nearly three decades to complete revealed that the group under review who participated in pre-primary schooling had excellent results in terms of social discipline, in avoiding undesirable behaviour and in doing well in college. This motivated in fact the Federal Government to spend about $3 billion a year on such programmes. Admittedly, of course, the situation is different in Singapore but it certainly deserves more attention. We, unfortunately, do not have figures for Singapore which in itself is a cause for concern. As Singapore moves towards its goal of becoming a developed country, such facilities grow in importance and should be provided on a larger scale. It is hoped that such measures may be considered in due course.

Finally, in these times of economic turmoil, all of us would do well to remember that when times are hard, the need to show character and regard for others is paramount. No doubt, the need to earn a comfortable wage is always uppermost but one must be careful not to sacrifice principle for pay. One of the most unfortunate incidents that has been mentioned in this House that has come to light is the conduct of scholars in relation to their bonds, that is, the so-called bond-breakers. Scholars are role models for their younger counterparts who are still in school. They shoulder not just legal obligations but moral ones as well. Now these scholars have redeemed their bonds, have not committed any offence or civil wrong. However, the moral responsibility rests on them to fulfil what they promise to do. Moral responsibility and a good sense of long-term interest should guide these scholars who are role models for our young.

Sir, the Minister for Finance has provided us with a Budget that seeks to fuel investment confidence at a time of economic uncertainty. It is to be especially welcomed in this regard and I hope that the Minister will consider more measures for the young families that may face hardship.

On the whole, I strongly support the Minister in his motion.

Mr Sin Boon Ann (Tampines): Mr Deputy Speaker, Sir, I rise to speak in support of the motion standing in the name of the Minister for Finance.

Sir, without doubt, the region in the last 10 months went through a crisis that proved to be most challenging and perhaps the most unnerving since the Second World War. Never before have we seen such relentless pressures on our economy. The regional currencies lost much value because of the sell down by those who lost confidence. Companies simply went under and unemployment ballooned. The mood soon became despondent for many. This proved to be the right recipe for social unrest. The disaffected and hungry took to the streets in violent anger while governments most affected tried desperately to stem the tide of events. The problems soon shifted from an economic dimension to a political one in some cases, which resulted in the erosion of confidence in government leadership.

Sir, Singapore, stable as it may be, by no means escaped from the forces that affected the region. As the Minister has pointed out, the region's financial crisis had a contagion effect and put a damper on the economic outlook for Singapore. The growth prospect for the economy seems less promising as businessmen began to brace themselves for a tough year ahead. Indeed the growth estimate of our GDP for financial year 1998/1999 at approximately 2.5% to 4.5% from our GDP growth of about 7.8% in financial year 1997 projects a cautious mood on our part in assessing the future. In real terms, all major business sectors, with the exception perhaps of some sectors in manufacturing and construction, would see some weakening of the business conditions.

Sir, rightly, therefore, in view of the poor economic outlook for the region and Singapore, in particular, that this year's Budget should be a prudent one. Public expenditure should be trimmed when necessary and Singaporeans should be encouraged where possible to be constantly mindful of the difficult times that loom ahead. While most people would accept the underlying basis of our Budget this year, there are also many who feel that this Budget does not go far enough to adequately prepare them for the conditions ahead. In fact, looking at the present Budget, it was felt that more can and should be done to help the citizens in coping with the rising cost of living brought upon to some extent by the weakening of our currency. There are many who are disappointed that the rebate given is pegged at 5%, and not 10%. It is arguable that the rebate of 10% should be given to taxpayers to cope with the difficult conditions. Even if the majority of Singaporeans do not pay taxes, maintaining a tax rebate at 10% would have sent a strong signal support to the people.

Sir, for the majority of Singaporeans who do not pay taxes, which speaks a lot about their annual income, I would urge the Government to consider a greater rebate on the service and conservancy charges and utilities. A greater rebate on the service and conservancy charges and utilities will go a long way in helping these citizens cope with the pressures of rising cost of living in Singapore. For the businessmen who have invested in the region, they are, I am told, disappointed that there is no additional assistance from the Government in the present Budget. The current financial crisis has had a significant impact on the operations.

Mr Deputy Speaker, Sir, going regional is to a large extent encouraged and initiated by the Government. To the extent that our businessmen have responded to the call to invest in the region, the Government should actively assist these companies to cope with the present difficulties. Additional tax reliefs for these companies in respect of their regional operations would provide the much needed moral support required at this stage. In the current financial crisis, the systemic weakness of the business and financial institutions has often been blamed as one of the causes. It is often said that the close relationship enjoyed between the private business sector and those closely linked with the establishment is one of the reasons why some economies in the region went into difficulty. Such companies were extremely influential and as a consequence were able to leverage on the connection which they enjoy to procure financial institutions to lend monies on very soft terms and often not adequately securitised. There was often no proper assessment of creditworthiness of the project being funded through the loans. The banks found themselves in a position of not being able to recall the loans when economic weather changed. There was a lack of transparency in the system and it resulted in much institutional weakness and hidden inefficiencies in the affected economies.

Sir, through it all, the regional crisis has also paid much credence to a cardinal principle that government should be transparent as far as possible. Transparency begets accountability which in turn controls the conduct of those who are held to account. In every government, the degree of transparency is a matter of calibration. It is a balance between the need to maintain confidentiality because national interest demands it and the need to keep the people informed so that they can better exercise their right to vote. How the calibration is to be made is dependent on the Government of the day who enjoys the mandate of the people. In the final analysis, there is an increasing expectation these days towards greater transparency and accountability, where possible, rather than to have less of it. How is this applicable to us?

Sir, in Singapore, we have come to accept Government-linked companies (GLCs) as playing a strategic role in developing our economy. As the Minister has said at the last sitting, the GLCs have moved into areas which are of strategic interest and where entrepreneurs in Singapore have limited resources to venture into or have no knowledge of. In recent years, GLCs have grown, both in number and size. Today, there are few areas of business the GLCs have not gone into. Their business interests range from telecommunication, banking and finance to aerospace and property development. The market capitalisation of these companies runs into hundreds of millions of dollars and one would not be wrong to say that the performance of these companies is a barometer of the state of the Singapore economy.

Sir, GLCs, the way in which they are owned, managed and run, are often distinguished from ordinary companies for a number of reasons. Firstly, these are companies wherein the Government has sizable equity interest in, either directly or indirectly, through such holding companies as Temasek or GSIC. Secondly, a substantial number of officers who run these companies came from the civil service. And thirdly, a good number of these companies have substantial business relations with the Government.

Sir, by any measure, the GLCs have contributed in no small way to Singapore's profile as an industrial economy and they have given us a place in the world economy that we would not have otherwise got if we had just allowed the economy develop its own course without the GLCs. However, as the GLCs grow in size and number and the value of the equity holding expands over the years, we must ensure that there is an adequate system in place to provide for the accountability for the conduct of these companies. At the moment, the scope of public accountability of these companies, both in relation to corporate disclosure and governance, is limited. Presently, officers of these corporations are accountable under law to shareholders. They owe a duty principally to the company. However, in the case of ordinary shareholders who own shares in listed companies, participation at shareholders' meeting is often given a miss. Even if they are inclined to do so, the ordinary shareholders do not have the necessary technical expertise to analyse reports and hold directors to account by asking relevant questions. In other words, there is usually very little known beyond the audited accounts about these companies. Control of these companies is often in the hands of the managers.

Sir, GLCs by virtue of the status, have very strong bargaining power in business dealings. In a government that is as disciplined as ours, we can be assured that the GLCs are tightly run and managed and that they are not likely to abuse their privileged position. However, we cannot always assume that our system of Government and political culture will remain unchanged. In a weak government, control over the GLCs may not be firm. There will always be a danger of mismanagement without a proper system of control. The consequences may be similar to that which confront the countries in the region today.

Mr Deputy Speaker, Sir, GLCs essentially provide a corporate vehicle for Government to go into business. Accordingly, because the Government is in business, there is an expectation that the forum of accountability of these companies should be wider than just a shareholders' meeting. I share the sentiment expressed by my colleague earlier wherein he said the GLCs perform essential functions within the economy. In these days, we can expect corporatised entities to provide utility services, services to people who are users, who are not necessarily shareholders in a company. And in the context of these people who have to depend on these companies for services, I think there is something to be said about holding these companies to some extent accountable to the consumers.

Sir, the Public Accounts Committee feels, and I agree, that it is important to ensure that public money invested in GLCs is well spent and decisions are made under the best circumstances. The call is for greater accountability and through appropriate disclosure, information may be given as to the performance of these companies. I would like to ask the Minister whether the Government, in addition to the measures which we have at the moment, is considering other measures to provide for greater transparency and disclosure in the GLCs. Such a move, Sir, would strengthen the confidence of the public in the management of our GLCs.

On that note, I support the financial policy of the Government.

Mr Ang Mong Seng (Bukit Gombak): (In Mandarin): Mr Deputy Speaker, Sir, when the Finance Minister was formulating the new Budget for this year, many countries in Asia were facing the financial crisis and Singapore, to a certain extent, has been affected by this. Therefore, in formulating the new Budget the Government is bound to be prudent in its attitude. When the new Budget was disclosed, we knew that the Minister was adopting a moderate and prudent strategy to cope with the financial crisis, and to make adequate preparation in case the turmoil deteriorates so as to cope with the difficult years ahead. The Minister also ensures that we have a balanced budget in order to maintain our long-term economic competitiveness and to accumulate massive surplus so that we will move forward when the financial turmoil subsides. I believe this is a correct and farsighted Budget.

Mr Deputy Speaker, Sir, when our neighbouring countries are urging their people to donate money and other valuables to help their countries weather the economic crisis, our Government has been able to provide tax rebates and rebates on S&C and utilities charges to the people so as to lighten the burden of the people. During this critical period, the Government has been able to provide assistance to the people. Although this is not a big red packet, it nevertheless is something we are happy about. There are some taxpayers who say that the tax rebates have been reduced from 10% to the present 5% and they are quite disappointed. Tax rebate is normally given only during good times. It is a measure to return some of the wealth to the people. But because of this year's economic slowdown and the tightening of our monetary policy, the budget has been reduced. This is to be expected. But taxpayers feel that their tax return was based on 1997 income and yet they have to pay tax from this year's income. This year, they are faced with economic recession and there will be a reduction in their income. Hence this is an increased burden on them. So they hope that the Government, during this economic slowdown, would give them more tax rebates in order to lighten their burden, especially those businessmen who fail in their business or those workers who have been retrenched. I hope the Minister would explain to the people why such tax rebate has been reduced by 5%. If the taxpayers understand the rationale for such a reduction, they will support the Government's policy and be more united in order to work for a better future.

Mr Deputy Speaker, Sir, Singapore is a commercial and financial centre. Our Government's policy has been to encourage our local enterprises to be more enterprising. At the same time, we attract foreign investors to come here and invest. These are the twin engines for our growth. This year, our budget has provided for certain beneficial measures to the financial and property sectors, so that they can grow satisfactorily even in the midst of a financial crisis. However, there is little assistance for the industrial and commercial enterprises. Because of the regional financial turmoil and the slowdown in the economy, many companies have received less orders from the region. However, their cost of business has not come down. Therefore, these companies are faced with dwindling orders and they have cash flow problems.

According to the Chinese Chamber of Commerce's survey, about 54% of the companies said that their business has been affected and about 45% of the companies said that they are faced with cash flow problems. In order to help these businesses to tide over this period, I would recommend certain measures to the Government. First, the JTC and HDB should consider curtailing their rental on land and factories to reduce their cost of doing business. At present, JTC and HDB rental is based on the rental they formulated three years ago when times were good, the so-called market rental. But in the present situation, the market rental has gone down. For example, the tender prices for the two pieces of land offered for sale by URA have gone down by many times as compared to those in 1996. Therefore, during this critical period, the Government should adjust the rental for land and factory spaces, so that a more reasonable rental could be formulated. I suggest that JTC and HDB should consider reducing rental by 10% for two years. In this way, they could directly help to bring down business cost in order to enhance their competitiveness.

Secondly, they should liberalise the subletting of factory space. During an economic recession, many tenants need lesser factory space. Therefore, the authorities should consider letting these tenants to have more flexibility to sublet their factory spaces in order that the usage of their factory space could be maximised. This will also reduce their operating expenses, and more optimum use can be made use of such space and land.

Therefore, I suggest that JTC and HDB should consider increasing the ratio for subletting from 50% to 75%. This will effectively help the tenants to tide over this period and also help those who want to launch new businesses to find the factory space. This will provide good opportunities for those who are interested in entering the manufacturing industry.

Sir, I hope the Minister for Finance would consider my suggestions.

Mr Bernard Chen (West Coast): Mr Deputy Speaker, Sir, much has been said about the regional currency turmoil that has resulted in the slowdown of economic growth in virtually all the countries in South East Asia. The Finance Minister is prudent to refrain from forecasting growth for Singapore or, for that matter, for other countries in the region. We are, I think, in general agreement, save for a few other Members in this House, that, at best, things are likely to remain bad and they may get worse. There is little doubt in my mind that we are heading for very difficult times for at least the next 1-2 years. The question is not so much whether there is going to be a recession now, but how deep it will be and what our responses should be.

The last time we had a recession was in 1985. At that time, the regional economies were growing well. We ourselves were plagued by high costs caused partly by the necessary move to higher technology industries and a tight labour force. Once we have improved our competitiveness and set the fundamentals right, we were able to get out of the recession relatively unscathed. There were no drastic retrenchments and no loss in real income. For the next decade, we were able to capitalise on the boom times in the region, especially with the emergence of China as an economic power and the revival of Vietnam.

This time round, the issues are different. The currency turmoil and other difficulties have caused a loss of investor confidence that has affected investment flows into the whole region. Countries have to battle against the difficult task of reviving their economies to create jobs. They also have to tackle the prospect of increasing inflation and for some countries, even shortages of essential foodstuff and materials. In other words, we cannot depend on the region as we did in 1985. Even if we manage to retain and sharpen our fundamental strengths, we cannot escape the adverse effects of recession in the region. Take the simple example of tourism. A great number of tourists originate from the other ASEAN countries. We should be lucky if half the number who visited Singapore show up this year. With recession in these countries and their depreciated currencies, we cannot really blame them for not coming. Tourist arrivals are likely to fall sharply this year, maybe as much as double digit. And if the haze comes a bit earlier this year, the drop may be more precipitous. This will have a rippling effect on the retail sector that depends on tourism, including hotels, restaurants, shopping centres and transport services. Taxi drivers are going to find fewer fares. This fall in demand is not likely to be compensated by Singaporeans who will also tighten their belts. Even if we cut prices for these services, there may not be sufficient customers. The effects of this slowdown will permeate to a wide cross-section of our economy. Everyone will in one way or another be affected.

What should be our response then? It is fair to say that we in Singapore have been having it good for many years. High economic growth has translated into rapid rise in real income and better well-being for everyone. The Government has been able to record surpluses every year in the past decade. The times are so good that many Members in this House have remarked that we are making too much money. Our people's expectations have also soared at the same time. HDB flats have now given way to Executive Condominiums and private condominiums in districts 9, 10 and 11. IUPs are not quite enough. Our people want more MUPs. On the whole, our people's tolerance level has also lowered. At the slightest inconvenience, there will be complaints to the MPs and to the press. Increasingly, our people are beginning to think of themselves rather than the community as a whole. Many of our young and successful citizens are coming to the view that it is their right to be rich and powerful, without realising that their ascent to fame and fortune has been helped by the nation's progress with everyone pitching in their effort. More important, just as dinners will not last forever, good times too would not last. We must prepare ourselves for the ups and downs that will inevitably come.

Therefore, we should first look at what we ourselves can do rather than just asking the Government for more hand-outs. It would be reasonable for us to do so if we have been responsible for the slowdown as in 1985. The present problems are externally generated and in many instances are out of our control. It comes with the ups and downs of business cycles, although much of the present problems are man made. There is a Chinese saying that "when the horse dies, get off and walk." There is nothing we can do if we stay on the horse, especially if it is a dead one. If we look back the last 30 years, this is precisely what the Government and our people did when we got into trouble. We did not ask for charity. Instead, we adapted ourselves to the situation at hand and made adjustments. There is no running away from the painful effects of a recession. This time round, the recession is going to be painful. Those of us who lived through some recessions can vouch for the fact that in certain cases, the pain can be considerable. However, if we are strong and have a higher threshold of pain, we will be able to survive and become stronger. The question now before us is: are we prepared?

The sustained economic growth for the past two decades, allowing for the minor setback in 1985, may have lulled our citizens, especially the younger ones among us who have not lived through recessions, into believing that economic prosperity will go on forever. The good times that we have been having have lowered the threshold of pain considerably. Continued success has also bred individualism, selfishness and, worse, greed. We can find examples of these traits in the working places, restaurants, shopping centres and even golf courses. The arrogance with which some young and successful people flaunt their wealth and power is evident in the way they spend and the way they treat those who serve them. I was told of an incident in which a member of an exclusive golf club, when he failed to get satisfactory service from the waiter, reminded the latter in no uncertain terms that he had paid a princely sum to join the golf club and expected that he should be served properly. In another incident, a member of a golf club took legal action to intimidate the club on a very minor disagreement because he thought that it was a "matter of principle."

The lower threshold of pain will see our people yelling for blue murder when conditions deteriorate just a little bit. Worse, it may lead to panic and recourse to expedient measures that will not solve the longer term problems. The attitude of "every man for himself" will erode community's ability to fight together.

We need to brace ourselves for the difficult times ahead. We must increase our threshold of pain to ensure that we can pull through and become fitter and trimmer at the end of these bad times. Given our sound fundamentals, we should be able to achieve this target. By working together, we can face the problems head on and seek strength through unity of purpose. In doing so, there will be those amongst us who are weaker and will need help. We should extend all possible assistance to help them tide over this difficult period. This help should not only come from the Government but also come from those of us who are in a better position to help. I would especially urge our younger Singaporeans, those successful ones, to help our country sail through these difficulties. For those who may be afflicted by the symptoms I have mentioned, I hope there will be a change of mindset so that they can work together with their fellow countrymen. For those who are not, I can only appeal to them to continue their good work and reinforce their fine efforts. In the coming months, we will need to work even closer together and survive the storms that will surely and inevitably sweep our shores. I appeal once again to all our fellow citizens, let us stay tight together and overcome.

Dr Ker Sin Tze (Aljunied): Mr Deputy Speaker, Sir, the Finance Minister has allowed companies to claim double tax deduction for approved relocation and recruitment expenses incurred in the hiring of talents from abroad so as to help offset the extra costs which these companies will have to incur in employing such talent to supplement our local workforce. Such a policy move is indeed encouraging. As mentioned by the Prime Minister at last year's National Day Rally, human talent, whether in the form of new immigrants or foreign nationals on work-stints of a few years, will be the key factor in ensuring that Singapore stays economically competitive and successful in this information age. While I do believe that the budgetary initiative will undoubtedly strengthen the positive factors in attracting foreign talent, I would like to put forward, for the Minister's consideration, a few additional points.

The benefits of the double tax deduction scheme primarily accrue to companies which recruit overseas talents, I would like to suggest that assistance should also be rendered to the talents themselves. As such, I would propose, firstly, that a unit, known as Foreign Talent Unit, be set up in the newly named Ministry of Manpower to centralise, develop, implement and oversee Government policies pertaining to the recruitment of overseas talent. This unit should gather information and feedback from foreign nationals currently working in Singapore so that we can tap upon their experience, and understand from them the particularistic problems that nationals from particular countries face when working and living in Singapore. This unit will serve as a nerve centre to coordinate what I believe must be a multi-pronged approach, and which will necessarily involve both Governmental institutions, such as HDB and our schools, and private companies and organisations.

The major difficulties faced by foreign nationals working in Singapore are most importantly housing, and thereafter schooling for their children. Housing is expensive here, and rentals high. The Government has already worked out a scheme for JTC to buy and own a stock of HDB flats which are to be let out entirely to foreigners. This will certainly alleviate the housing problem to some extent.

With regard to schooling, the problem has not been totally solved. High-ranking expatriate staff have the schooling expenses of their children paid on their behalf by their employers. However, middle management expatriate staff will have to bear such expenses themselves, and many are not able to afford the fees charged by international schools. The Government should, through assistance offered by the Ministry of Education, encourage them to send their children to a local school instead, and special arrangements can then be made for their children to continue learning their own languages, be it German, French or Tamil. Moreover, a small number of foreign children studying in our schools will also promote greater understanding of foreign cultures and facilitate interaction between our students and those from other countries. This will be beneficial in broadening the contacts and outlook of both parties, and in the process enriching the educational experience.

The Foreign Talent Unit should also selectively screen and entice qualified expatriates and skilled labour from overseas to become immigrants. This will add to the pool of skilled and professional labour here, a favourable development which will enhance the quality of our workforce and strengthen our economic fundamentals on a permanent basis. However, the successful integration of new immigrants into our society will be a pre-requisite before their inherent potential can be unleashed. Therefore, the Government should tap on the resources of both Governmental institutions and private enterprises to render adequate assistance to immigrants to enable them to adapt better to local working conditions and, more generally, to the Singapore way of life.

While we are trying to attract foreign nationals to work in Singapore, we should not lose sight of Singaporeans who are staying overseas. For one reason or another, some Singaporeans may choose to work overseas and they form a part of our useful overseas network. However, some of them may wish to return in the future, and we should attempt to make it easier for them to reintegrate into our community. In this instance, suitable initiatives that can be considered include special assistance to enable them to purchase HDB flats and efforts to ease their children back into the Singapore education system.

We are all aware that a high quality workforce is the only tangible resource Singapore possesses. Hence, we have to do manpower planning carefully to satisfy our future needs. I therefore support the Minister's proposal to introduce the double tax deduction scheme in connection with the recruiting of overseas talent and hope that the Government will consider as well the suggestions that have been put forward.

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

Mr Chuang Shaw Peng (Nominated Member): Mr Deputy Speaker, Sir, I would first like to compliment the Finance Minister on the prudence with which the Budget was assembled. There is merit in conservatism in times of uncertainty and there is merit in ensuring the Budget reflects consistency at the policy level. I fully support the measures introduced to facilitate the development of the financial services sector as well as the range of rebates to help lower income families. However, the market reacted unenthusiastically in the following days after the Budget announcement. The corporate world appears to think that the Budget is insufficient for these trying times. Many individuals are also disappointed in that the current Budget offers only 5% personal income tax rebate across-the-board compared to last year's 10% in the face of the most turbulent years since confrontation.

It is interesting to reason out why the public reacted this way. I would think that since the Budget has to be presented in late February, it is understandable that the Finance Ministry would have used information that was good up to the end of December. But if it is so, it happens that the significant economic events that affected our economy took place in January and February this year. So the important question is: is the Budget catering to our current needs?

The point that I would like to raise today correlates to the questions I posed in the last two parliamentary sittings on the loan exposures of local institutions to the regional economies. In his reply to my query in January, DPM Lee said that the local banks' exposure to the region was small. Then in February, we were updated with the report that the local banks' exposure to the region has increased and that had not affected our banking system much. Yet, in the last few days, barely a month from the second report, Tat Lee Bank announced heavy losses to the point that an unprecedented move by the MAS was needed to allow Tat Lee Bank to re-value its assets in order to shore up its balance sheets. Most of the other big four banks have also reported huge provision for losses. To top that, we have heard financial reports of banks across the causeway sustaining massive losses. All these reports show that local banks with an exposure of more than $20 billion to Malaysian businesses may go on to suffer more and more losses in the coming months.

This sums up my concern for the timeliness of information used in these fast changing economic times. It is only with timely and accurate information that we can react fast. Perhaps the public's lack-lustre response to the Budget announcement sends the message that the Government is not reacting fast enough and not providing the leadership that the people are yearning for in this crisis. I think the Government can do more this time by stimulating the economy with a more expansionary Budget.

It has been reported by many Members of this House that a survey conducted by the Chinese Chamber of Commerce shows that more than 50% of its members have been affected badly by the crisis. Many complained about credit squeeze and the high cost of running business. Yet other than the LEFS Scheme, no other significant measures have been introduced in this regard. I would like to call on the Government to work closely with the various trade associations to feel the pulse and the health of the local enterprises and, at this point, I would like to echo Mr Leong's call for the pre-Budget consultations to take place in the next Budget.

Sir, may I remind the House that for years the Ministry of Finance in Japan has reacted slowly to their growing economic problems. Now it seems that it has become increasingly difficult for Japan to propel itself to full recovery. I only hope that we would not go the same way.

I urge the Minister not to allow the current economic difficulties to deflect our long term infrastructure development plans and, hopefully, it would not affect the construction of our underground road system and the facilities needed to push our vital economic sectors.

Mr Deputy Speaker: Order. It is 6.30 pm. Debate to be resumed what day, Dr Hu?

The Minister for Finance (Dr Richard Hu Tsu Tau): Tomorrow, Sir.

Mr Deputy Speaker: So be it.