ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Debate resumed.

Mr Chiam See Tong (Potong Pasir): Sir, may I get a clarification from Dr Wang.

Mr Speaker: All right.

Mr Chiam See Tong: I did not know that I have a new marker who is taking me on. He says that I got it right when I said that we need more creativity and initiative to produce goods that are value added to justify our higher standard of living, compared to the neighbouring countries. And I got it wrong when I said that we need an environment of democracy and freedom to have creativity and initiative. He says that democracy would bring chaos and disturbance. Of course, I certainly did not mean that democracy is freedom to do illegal acts, but it is more a political philosophy. We accept democratic principles and principles of freedom.

He further says that we can inculcate and teach our young creativity and we cannot do that for old or mature people, because he says we cannot teach old dogs new tricks. The fact is that if we teach people creativity, it is a contradictory term. The whole idea of having creativity is to have a system that will allow our children to think in unorthodox and unusual ways. If we limit them to certain parameters, we cannot have creativity. That is under an authoritarian system. I will give an example.

Mr Speaker: Mr Chiam, are you seeking a clarification from Dr Wang or are you making a new speech?

Mr Chiam See Tong: I am seeking a clarification.

Mr Speaker: I think you are embarking on a totally different matter. Could you go direct to the clarification you want from Dr Wang?

Mr Chiam See Tong: All right. I want to challenge him on what he said about teaching creativity to young people. I will give an example on the meaning of creativity.

Mr Speaker: Order. Mr Chiam, you cannot embark on a new speech when you rise to seek a clarification.

Mr Chiam See Tong: I would just give this example and ask a clarification from him.

Mr Speaker: Could you make it very quickly?

Mr Chiam See Tong: It is on whether we can teach creativity in our schools. A building is almost completed. The architect and the owner were in the building and they had a problem of putting a lift in the building. Because that was the orthodox thinking and there must be a lift inside the building. Then in came this despatch person who had no training in architecture. He said, "What's the problem? If you can't put a lift inside the building, you just put it outside." And that is how the bubble lift was started. That is what we mean by creativity. We do not need formal training to have creativity.

The clarification is whether he agrees that in fact you need rather an environment of freedom and an environment of democracy to have creativity.

Dr Wang Kai Yuen: Mr Speaker, Sir, first of all, I am not a marker for Mr Chiam See Tong. In fact, we entered Parliament at the same time and we have also travelled together on Parliamentary missions. We are close friends but I am definitely not a marker for Mr Chiam See Tong.

Secondly, if Mr Chiam is talking about promoting creativity and innovativeness of young people, we are on the same wave length. We completely agree with each other. My point is that he is saying that for an adult population to be more creative and to create more opportunities in high-tech enterprises, we need to have more and greater political freedom. Let us do a mental experiment. Let us take the key people that we are talking about and physically transport them to a more liberal society. Would these adults become more creative? I think most of us will agree that we cannot be that creative.

Mr Low Thia Khiang (Hougang): Sir, may I seek a clarification from Dr Wang? Would Dr Wang agree that these people who are transported to a politically more freedom area may not be creative, probably because in their old environment there was no opportunity for them to be creative?

Dr Wang Kai Yuen: Mr Speaker, Sir, that is precisely my point. If we have grown up in an environment and gone through an education system, we are what we are today. And no matter how we change the environment, we are not going to be very different. So the focus that we should be paying attention to is on young people.

Mr Low Thia Khiang: Why do we not change the environment here?

Dr Wang Kai Yuen: Well, we can actually do a mental experiment and have Mr Low Thia Khiang transported to America with complete freedom and see whether Mr Low would become more creative!

Encik Harun A. Ghani (Hong Kah): (In Malay): Mr Speaker, Sir, at a time when our country is facing an economic crisis, we are fortunate because we have leaders who have the calibre, ability and honesty in discharging their duties. If it is not because of them, our country, which has no natural resources and also limited land area and having a population of less than 3 million, will be turned into chaos by demonstrations comprising unsatisfied citizens against the Government which they feel has not discharged its duties correctly, especially at a time when we have almost 28,000 retrenched workers and a large portion of them are still unemployed. But our Government has not faced this situation because our leaders have set up wise measures to overcome this problem.

One other reason is that our leaders are calm and not panicky. They have always emphasised on understanding, tolerance and harmonious living among us. As citizens, we should also play our part in upholding the spirit of harmony. We should always cooperate with one another and respect one another. Economic stability also depends on such a harmonious situation. We should be wary when we listen and read the speeches of leaders of our neighbours. We should not react on the explicit or implicit intention in their speeches, especially when our workers are facing retrenchment.

The Budget Statement for the year 1999 by the Finance Minister, generally, is accepted by the community, because they are conscious that the Budget Statement is based on an uncertain economic background. As Members of Parliament, we are thankful for the generosity of the Minister for Finance to grant rebates to the flat dwellers, and this is most encouraging. I hope this will be treated as a privilege and not regarded as a matter of right, because if these rebates were to be granted every year in this bad economic situation, it is a question which will not be difficult for the Minister for Finance to decide. But when the economic situation is unstable, it will be difficult for the Minister to make a decision. I believe the grant of these rebates has been fully considered. Despite that, I hope that the Minister will be able to consider my appeal. It all depends on whether we could meet the expenditure for this financial year despite the deficit of more than $5 billion.

The 5% tax rebate for the Year of Assessment 1998 should remain. It will be able to assist the expenses of taxpayers. But if we take into account the unemployment situation where there are 28,300 retrenched workers, I believe some of them would still have to pay their income tax, and it would be onerous on them. Therefore, I hope the Minister for Finance will consider increasing the income tax rebate for 1998 from 5% to 10%. If it cannot be granted to all the taxpayers, it should be granted to taxpayers who are unemployed or who have remained unemployed till today.

The Budget Statement for 1999 is good and has been expected. But once again this year, I will ask the Minister for Finance to consider the financial problems of those taxpayers who are taking care of their parents-in-law. This is the third time that I have raised this issue. And I would also urge the Minister to consider giving rebates for full-time housewives who are without income. I believe it is the duty of the children to look after their parents, even though they are not their natural parents. The duty to take care of their parents-in-law is also burdensome, especially in terms of the household expenses. I believe that the number in this category is small and it will not affect the expenditure of 1999.

The moderate expenditure of 1999 is a surprise. Because in a situation where we promote savings and spending according to our ability, the water tariffs have suddenly gone up. I think in an uncertain economic situation, it is not proper to increase water tariffs. Therefore, I hope, and for the citizens of Singapore as a whole, water tariffs should not be increased at this time, but it could probably be implemented when the economic situation is stable or when salary increase and bonus are reinstated.

I was given to understand that 6,000 motorcyclists were fined for offences in connection with entering the Restricted Zone, either intentionally or otherwise, in the last five months. For the whole year, this number may increase by two or three times. It also involves other vehicles like cars and lorries. The payment for entering this zone is aimed at reducing congestion. I am thankful to LTA for granting a road tax rebate. But it would be better if the road tax be further reduced so that motorists would be relieved of the expenses and use it for their children's school expenses and household expenses. I believe the Minister will say that Singaporeans are always not satisfied. When given a piece, they always want a bigger share. But this is the reality of life for Singaporeans. In fact, this is the time for us to ask the Minister for Finance to consider whatever problems that they face, especially relating to money. There is a saying, if you are fortunate, it will float, otherwise it will sink.

In conclusion, for the first time, there is a budget deficit of $5 billion for the estimates of 1999-2000 and the measures that have been taken have not yet shown any result. What happens if the economy does not recover or becomes worse? Is the Minister for Finance ready to face such a situation? Although the Prime Minister has said that fellow Singaporeans should not be worried, because we are able to use the reserves of 1997 to face this economic recession, I hope the Minister for Finance will look for other means to use the reserves so that we need not be worried when we face a worse situation if it were to come.

In conclusion, I support the motion in the name of the Minister for Finance.

Mr Ang Mong Seng (Bukit Gombak): (In Mandarin): Mr Speaker, Sir, this year's Budget is the second deficit budget since the independence of Singapore, and we are in a situation where our neighbouring countries are facing political and social upheaval and their stability is in trouble.

Singapore is a small country, like a small boat in a sea of towering waves. We need a very capable helmsman to keep the boat under control. We also need the cooperation of all passengers on board the boat to balance it properly. In this way, we will be able to ensure that this small boat will sail through the towering waves to reach our destination eventually. So we must be prepared for all eventualities and face any unforeseen worsening of the situation.

1999 is a challenging year. At this very critical moment, the Government is able to give a 10% across-the-board rebate on personal and corporate income tax and also rebates on HDB rentals, utilities and S&C charges to lighten the burden of our people. For the business people, there is also a whole series of assistance schemes to help them, in addition to the $10.5 billion cost-cutting package announced in November last year. This year's budget is one in which the Government is sharing the people's hardship. This budget has the support of all the ordinary folks as well as the business community.

On the budget itself, I would like to make the following suggestions:

(1) We must have more tax rebates for donations to charity and social community services. I support Mr Lim Swee Say's proposal that the Government should give more incentives during these bad times. When we feel that money is not enough, we should make it possible for more enthusiastic charitable people to donate more money to charitable and community organisations. I believe and suggest that the Government would be able to give them double tax deduction for their donations, just like what we have done for the foreign maid levy.

(2) We should revalue the commercial and residential properties more readily so as to keep in line with their market value. The Government is granting a 55% property tax rebate. I think it is a good policy. But some commercial properties were bought in the year 1995/96, when the property value was at its peak. Now that the property market value has dropped by about 30% to 40%, I hope the Property Tax Department will take a more realistic approach to revalue these properties, particularly commercial properties, to reflect their present market value and give them the proper tax rebate.

(3) On GST, I also support Mr Lew Syn Pau's proposal that GST should be reduced from 3% to 2% for a period of two years. At present, businesses with annual business turnover of not more than $1 million are exempted from GST. I feel that the ceiling should be raised to $2 million. This will help the small and medium enterprises and the neighbourhood shops in HDB estates as well as the residents there.

(4) Liberalise the rules on subletting of land and factory premises. Last year, I successfully proposed to the Minister to liberalise the subletting of JTC and HDB factories and shops. Factories are now allowed to sublet 50% of their space and those companies which are linked to the parent company are allowed to sublet up to 75% of the factory space. However, this rule applies only to factories which are in occupation of more than 5 years. In other words, only those who have been in occupation of the property for not less than five years can enjoy this kind of preferential treatment. I think JTC and HDB should repeal the 5-year limit to allow those who bought their factories at the peak prices in 1995/96 to sublet part of their premises so as to collect some rent to help them tide over these difficult times.

(5) Financing for SMEs. Many small and medium enterprises managed to obtain bank loans in 1995 and 1996 through the help of EDB at low interest rates. This is a good policy. Many SMEs have benefited from this. However, because of the 1997/98 economic recession, the business of these SMEs is severely affected. At the same time, these companies have to pay interest to the bank at rates higher than before. During this critical period, can the Government consider setting up a two-year bridging loan at preferential rates to help these companies tide over these difficult times?

Next, let me deal with the expenditure on education. This year, the Ministry of Education's budget is 3.2% higher than last year's. The idea is to train and educate more people so that they can serve society and contribute to the country. This is a long-term investment on our human resources so as to prepare Singaporeans to face the challenges of the 21st century. I believe all Singaporeans will support the bigger budget for the Ministry of Education.

There are a few issues I would like to raise on Education. One, we must ensure that there are sufficient places in the universities for our own local students. I strongly believe that every Singapore citizen should be given at least 10 years of education in primary and secondary schools. Those with good results may go to junior colleges, polytechnics and even universities. At the moment, we have two universities - NUS and NTU. Every year, we are able to provide for 9,000 places, with 10% reserved for foreign students, ie, about 900 places for foreign students. According to the newspaper report this morning, the Ministry of Education intends to raise the number of places reserved for foreign students to 20% of the total enrolment each year. I would like to ask the Minister whether this extra 10% of places for foreign students will come from the existing 9,000 places or is the Ministry of Education going to create more places in the universities for foreign students without reducing the places for our local students, since our third university will only start to enroll students in the year 2004. There are still five years to go before 2004. During these five years, if we take away another 10% from the 9,000 places for foreign students, that means our local students' opportunities will be correspondingly reduced.

At present, graduates from the polytechnics have to work for two years to earn some credits to qualify for admission to the university. I think this is a good idea. But polytechnic students who graduated in 1997/98, when we were facing a severe economic crisis, are experiencing great difficulties in finding jobs because many factories and companies are retrenching their workers. In these circumstances, many polytechnic graduates cannot get jobs, thereby jeopardising their chances of admission to the NTU. Those who can afford can go overseas to get their degrees, but those who are not so well to do will lose the opportunity to enter the university. In view of the economic crisis, this policy should be adjusted accordingly so as to ensure our students will not be deprived of the opportunity to enter the university.

Next, I would like to deal with the problem of brain drain. Every year, we have only 9,000 places in the universities for our students. Many parents are telling me that their children cannot gain admission to the local universities and have to go overseas. To be able to go overseas for further studies is a good thing. SM Lee has also said that when students go overseas for study, they can mingle with students of foreign countries and establish rapport with them. After their graduation, they will be able to strengthen relations with other countries and contribute to the development of our nation. I have not been able to get the statistics from the Ministry of Education on how many Singapore students have to go overseas each year because they are unable to get places in our local universities. I was told that the Ministry did not have the relevant data. This gives me cause for concern. It is important that we keep track of the number of students who have to go to universities overseas because there is no place for them in our local universities.

I would suggest that the Ministry of Education set up a special department to assist our students in finding places in foreign universities and to maintain contact with them. This way, we will be able to know when they have graduated from these universities, and find some way to make them come back, so that our good talents will not be lost. Our students who went overseas and do not come back after graduation are a loss to our society. We have invested at least 10 years of education on them. I would ask the Minister how much money we have invested on each student for the 10-year period from primary one to secondary four.

Although the Budget this year is not particularly spectacular, it is not a bad budget either. If the Government and the people can work together to overcome our difficulties, we will be able to tide over the difficult times. We hope that at the end of the tunnel, we can see some light.

On this note, I support this Budget.