ANNUAL BUDGET STATEMENT

Resumption of Debate on Question (25th February, 2000)

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2000 to 31st March, 2001.". - [Minister for Finance].

Question again proposed. 1.12 pm

Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Speaker, Sir, this year's Government Budget is underpinned by the remarkable recovery of the Singapore economy. We are glad to hear from the Finance Minister that the Asian financial crisis is largely behind us. Everyone could heave a sigh of relief. Because it was not so long ago that during the off-Budget measures announced in June 1998, that we were very concerned about a protracted U-shaped or, as the Deputy Prime Minister said, W-shaped, and a drawn out regional economic crisis that could last 2-4 years. The sufferings, not just to us, but also to the people in our neighbouring countries, would be unthinkable. Anyhow, we are all extremely glad that against all expectations, Singapore achieved a dramatic V-shaped recovery.

What is even more remarkable is the fact that the Government FY99 Budget is expected to attain a surplus of $3.2 billion, as against an originally estimated budget deficit of $5.1 billion. This is a gigantic turnaround of $8.3 billion. While on the one hand, we wish to commend the Government, and the Finance Minister in particular, for this very positive turnaround, on the other hand, we wish to better understand two things. One is the reason for this discrepancy for the huge budgetary miscalculation, and hence whether the budget induced belt-tightening measures were unnecessary pains for the people and the local companies. The second point is whether, after achieving such a remarkable positive budget surplus, more could be done to reward the people and companies who have rallied so solidly behind the Government at the time of the economic crisis.

Sir, I notice that for this year's Budget, the press had been hard put to pin a label or tag for this Budget. The Straits Times has been kind in calling it a "something for everyone" budget. But have not all past years' budgets been something for everyone? I think the best description for this year's Budget is that it is an e-Budget. It is an e-Budget not just because of its strong biasness towards e-commerce, but it also caters to the elderly, entrepreneurs and ESOP.

In addition, I call it an e-Budget because it is an economical Budget, ie, a Budget that is economical in giving away just about enough, without being too extravagant.

Sir, the Government has achieved a sterling performance in the management of the economy and the fast turnaround. The fact that we could achieve a budget surplus in FY99 as we were barely emerging from the crisis is extremely commendable, as I said earlier. However, for this year, I am disappointed that with such a good surplus, the Finance Minister has decided to so quickly roll back the set of economic recovery measures, and has not given enough goodies to reward the people for suffering through the belt tightening situation. Essentially, I feel that the Government could have retained the bulk of the economic recovery measures for another year.

I recall that during the off-Budget debate in June 1998, we had likened the Finance Minister, our good Doctor Hu, to a medical doctor who was dispensing medication to the sick patient (the Singapore economy) which was suffering from a serious bout of flu. The medications were the budget recovery measures. It seems to me now that just as the patient is beginning to show signs of recovery, the good doctor has decided to roll back the medications. Has he cut back on the salubrious good doses of antibiotics and pills? Is this wise? Are we pulling back too quickly?

Mr Speaker, Sir, my concern is that the patient (which is the Singapore economy) is just beginning to enjoy a sharp and good recovery, and then the course of medical treatment is quickly cut back. Would the recovery spatter? Should we be consistent in going through the full course of recovery measures, which are originally meant to be over two years? In fact, why not add more vitamins and beneficial herbs to further strengthen the patient, and be doubly sure that he becomes strong and robust, and can run even faster ahead in the race?

Hence, in looking at the package of recovery Budget measures announced, I feel that the Government should not have removed the 10% corporate tax rebate for companies. The 10% savings on corporate tax would be very helpful for companies to further fund their capital expenditures for automation, IT spending, streamlining and restructuring. To reward the individuals in accepting the belt-tightening measures, I would have thought that they should be rewarded by keeping the 10% personal income tax rebate, instead of cutting down to 5%.

Sir, it is apt to call this Budget an e-Budget. As we move into the new millennium, there is a need to prepare Singapore to participate more deeply in the New World Economic structure. The world is changing so fast that the recovery, and a sustained growth for that matter, cannot be taken for granted. The point is that with the advent of new technologies, telecommunications and the World Wide Web, or commonly called the Internet, the world is changing and coming together at a very fast pace. The essence is to be e-relevant, and not become irrelevant. If Singapore becomes irrelevant in the new world order, we will surely fall by the wayside and wither.

Singaporeans should be made to understand that in the new world order, we are no longer competing amongst ourselves in Singapore, or just against our neighbouring countries. Because of technological and communication advances, we are forced now to compete with the best in the world. If we cannot compete against the best in the world, we will become irrelevant. For example, the DBS Bank is no longer competing with other local banks, but against MayBank, HSBC, BNP and Citigroup and other premium banks in the world. Our NOL and SIA have to compete worldwide. Even our small traders and retailers are not just competing against other local retailers and traders, but have to face up against the retailers and traders in other countries. Ultimately, in fact, they will be competing against the e-commerce virtual companies, like Amazon.com and e-Bay.

Nowadays, people choose not only which is the best and cheapest retail store to shop, but also which is the best and cheapest country to shop. As a country, we have to compete against other countries as the best place for our people and foreign professionals to live and raise their children. People also have many choices as to where to park their money. Singapore, because of our inherent domestic constraints, has lost its gloss as the best place to shop. We also cannot lay claim to be the best place to live. But we must continue to be a place where investors are prepared to put their money, and local and foreign professionals find conducive to work in.

Against the backdrop of the New World Economy, Singapore and Singaporeans have to stay relevant. The Budget therefore has to address two key imperatives. One is to devote sufficient funds, effort and attention to build Singapore into an advanced knowledge-based economy that can compete with the rest of the world, and the second is how to mould and build up our local people and capabilities which, infused with the right measure of foreign abilities, would be able to measure up against the best in the world. Our Government leaders, including PM, SM, DPM and other Ministers, have spoken recently in their speeches to embrace IT, be enterprising, be risk taking and facing up to the new challenges ahead.

On account of the fact that we need to compete globally, I am disappointed that the Budget measures fall short of giving a shot in the arm for our companies and individuals to help them to prepare and propel them into the IT age.

Bill Gates, the founder of Microsoft and reputed to be the richest man in the world, in his book called Business@the speed of Thought, said that in the digital technology age, business in the years 2000s will depend on velocity. That is, success depends on how quickly businesses are conducted. Thus, he means business is at the speed of thought, which is at the speed of light. Speed itself is a strategy. A good example is the recent saga of the sale of Cable & Wireless Hong Kong Telecom (HKT). Among the many factors, including political, I feel that Pacific Century CyberWorks has won the deal because of the speed with which they could react to the news that this company is available for sale and that they could make decisions very fast. Hence, speed is important. Anyway, let us leave this saga of the Cable & Wireless Hong Kong Telecom to another avenue for debate.

As I was saying earlier, I feel that the Government Budget could have been bolder, speedier and more generous to help propel Singapore into the IT age. At the corporate and individual levels, the Budget could have been bolder in giving encouragement and incentives to those who dare to take risks. If the risk-takers who started ventures failed, they could be encouraged to start again. For those who succeeded, they should be richly rewarded. Moreover, in the process of carrying out their ventures, we should review and ensure that the Government agencies and Government regulators should facilitate rather than put obstacles in their paths.

To encourage more companies to embrace IT technologies and invest in new ventures, I would like to suggest that the Finance Minister could look into the following areas:

First, group offsetting of operating losses. The Government has been hesitant to allow group offsetting of subsidiary losses because of the concern over abuses and leakages. This is understandable. However, I feel that in the case of a genuine desire to venture into a new business, the company which is taking a huge risk can be allowed to offset their share of the losses in the subsidiary ventures against the profits in the other main businesses. If operating losses of new ventures can be allowed, a company's risk adversity would be reduced. If the Government is concerned about giving a blanket group offsetting approval, then approval can be granted on a selective industry basis. For example, such group offsetting could be considered for approved investments in IT and e-commerce.

Second, give pioneer status for start-up ventures. As in the early years of Singapore's economic development, pioneer status was given liberally to new companies so as to stimulate industrial development. I think the same approach can be taken for start-up companies in the new pioneering fields such as IT and e-commerce. They are pioneers indeed in an unknown and fast moving environment of the IT and e-space. They have to move at the speed of thought and compete against the best in the world, such as their counterparts in the Silicon Valley in the USA, or other similar start-ups that are sprouting in other parts of the world, such as Canada, Europe, India and even China. I wish to suggest that these start-up companies in Singapore can be given 5 years pioneer tax-free status.

The above two incentives are meant to work hand in hand to encourage a proliferation of start-up companies and build up a sizeable pool of financial backers. Many of these start-ups, perhaps as high as 90%, will not make money or even survive to enjoy their first 5 years of tax-free status. However, for those technopreneurs and their financial backers who succeed, they will be hugely rewarded. And Singapore will benefit, because we have managed, in the process, to become e-relevant, instead of irrelevant.

Sir, this widespread, I would call it, "broadband"approach is better than a selective guarded "arrow band" approach, because of the uncertainty of technological changes and velocity of such changes. We do not know for sure which companies, whether a large GLC or a small start-up, will have the ideas, responsiveness, drive or creativity to succeed. Therefore, by encouraging as many as possible start-up companies to be formed, and give them the correct incentives and environment, hopefully, some of them will succeed. Even those who have failed are not lost, since the entire process will help propagate an environment in Singapore of technopreneurship and risk taking, something which both our PM and SM have said is sorely lacking in Singapore. For those who succeed, they will become our hero stories. In Singapore, we are also in dire shortage of home grown success stories. The only often-quoted one is Mr Sim Wong Hoo of Creative Technology. I feel we need more of such success stories, as they are plentiful in the USA, like Stephen Case of AOL, Jeff Bezos of Amazon.com and Lawrence Ellison of Oracles, or Masayoshi Son of Softbank in Japan.

The third is tax relief or double taxation allowances for IT expenditures. As a move to encourage companies to adopt IT systems and re-engineering of their businesses, I would like to propose that the Finance Minister consider giving tax reliefs or double taxation allowance for companies which want to spend money to purchase IT equipment that will improve their productivity or efficiency. This incentive will be particularly important to SMEs which are usually not IT oriented, and do not have the in-house technical expertise to help them push into the IT environment.

Fourth, personal income tax reliefs for purchase of computers. As I said earlier, I feel strongly that as the Government has achieved a substantial surplus of $3.2 billion, it could have been more generous in rewarding the citizens. Of course, the $250 CPF top-up payment into the individual's CPF account is a very appreciated gesture. In addition, I would like to propose that the Government consider giving a tax relief of, say, perhaps $500 a year to all citizens who purchase a personal computer.

The objective is to encourage all citizens, whether young or old, to purchase a personal computer (PC). I am very pleased to read about Government's intention to commit $25 million over three years to provide used PCs to the lower income group, as announced by Mr Yeo Cheow Tong, the Minister for Communications and Information Technology, last week. However, I think that the used PCs scheme may not be enough to reach all the households in the lower income group. Some people may not be interested in using used PCs. They may think that it is too slow or it may not have the advanced features to excite them. My proposal, which is to give an incentive of personal income tax relief to purchase new PCs, will serve as a meaningful gesture and a supplementary scheme to this MCIT scheme. This will be particularly meaningful to the middle and lower income groups to encourage working adults to purchase PCs, whether for use at home or in the office. For those who are not paying personal income tax, an alternative scheme can be devised, whether the local constituency's grassroots organisations, such as the Citizens Consultative Committees (CCCs) can become the channel through which the Government can give out a grant of, say, $200 each to encourage the lower income groups to buy PCs.

In addition, I would like to propose that, so as to promote a wider spread of IT and computer education, especially for the adult or older population, the Finance Minister encourage adults to attend self-improvement computer courses. Again, personal income tax relief of, say, $500 each can be given for attendance at computer courses conducted by approved educational companies. Similarly, for those people of the lower income group who do not pay personal income tax, grants can be given to designated grassroots organisations such as the CCCs to conduct computer courses, where the lower income persons can attend at discounted rates.

While it is suggested that Government funds be used to foster knowledge technology, e-commerce talent pool and skills, and prepare our economy for the global stage, we must also devote money, effort and attention to build and enhance our local capabilities. Here, Mr Speaker, Sir, I am referring to how to assist our SMEs.

While we wish to promote a pool of companies and individuals to compete against the best in the world, we must not forget that there is the main body of the working population and the SMEs which employ them who need help to change and adapt to the new economy. These SMEs need to understand the technological changes in the market place, how they can restructure or adapt, and how their owners, managers and employees can be trained or retrained to remain employable. This is how to remain e-relevant.

As the Minister has said, some sectors of the economy are not fully out of the woods yet. These sectors will continue to need assistance. They are the retail, tourism, construction and trade sectors. They may think some of the budgetary measures could mean that their recovery process may slow down or take longer. I would like to appeal to the Minister to look into industry specific measures that can be implemented to continue to assist these sectors that are lagging behind in the recovery. This could be achieved by the Finance as well as the Trade and Industry Ministries calling for separate meetings with representatives of these sectors, so that their problems can be studied in depth, and appropriate assistance given when necessary.

Similarly, the local small and medium enterprises (SMEs) may be slow in achieving a quick recovery because they are beset with multifarious problems, such as heavy overheads, labour and managerial insufficiency, low productivity, rising retail and labour costs and structural changes. Therefore, better liaison and consultation between the Government and the SMEs will give rise to effective targeted measures to assist them.

Mr Speaker, Sir, I would like to conclude by urging the Minister for Finance to take a more urgent, bolder and generous approach to prepare Singaporeans and the local companies to meet the challenges of the new economy. As the Finance Minister has said in the conclusion of his Budget's speech:

"We have to face up to the challenges of a globalised economic system and keep pace with changes . . We need to accelerate the pace of economic restructuring. ."

Thus, I would like to urge the good Finance Minister, do not hold back your pen, write in the benefits and incentives now, so that we can be better placed to meet the velocity of changes ahead.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, just like Mr Leong before me, I too find the turnaround of a projected budget deficit of close to $5.1 billion in FY99 into an actual budget surplus of $3.1 billion, a swing of $8.3 billion, to be a great surprise. Like a magician, the Minister has managed to pull the proverbial rabbit out of his hat.

Mr Speaker, Sir, maintaining budget surplus is a good thing. On the other hand, perhaps we should also revisit the circumstances under which FY99 budget was presented. Time was bad, prospect was gloomy. Economy was in recession. As we all learned in our first course in economics, the economy needed a shot in the arm from the Government's spending. FY99 budget was supposed to do just that. The Government planned to maintain its spending even though it meant incurring a deficit. However, by the close of the financial year, the Government's cup overflowed.

I notice that in arriving at this budget surplus, besides higher than expected revenue, the Government actually incurred $3.4 billion less development spending partly because of better prices and partly also because of some lower priority projects being rescheduled. Development expenditure for FY99 stands at 6.9% of GDP, and that is lower than 8.7% in FY98. The question is why should some lower priority projects be rescheduled? Were there good reasons to do so? Is there a change of heart of the Government from trying to extend a helping hand to the economy into a hands-off stance? Basically, in my mind, Sir, if prices were good, should the Government not let out more contracts to gain better value for money? Should we not pump prime the economy a little bit more by keeping those lower priority projects in the pipeline? It seems that some of these lower priority projects might include something like pedestrian bridges, road widening and other civil engineering work that would be needed sooner or later. In my own ward, I was informed by the authority that a pedestrian overhead bridge originally slated for completion in September 1999 would be done. Yet even at this very moment, there is no sign of any activity. Could this particular project be a victim of one of those lower priority projects? If so, are there many more such similar projects? As we all know, the recovery is actually spotty. So would the construction industry not be given a boost if these lower priority projects were actually let as scheduled?

Furthermore, we are all aware that the Government has cut back on MUP and IUP in HDB estates because of the projected budget deficit. As the economy turned around towards the middle of the last fiscal year, could the Minister not be more generous by allocating more money back to HDB so that such upgrading programmes could be maintained? I feel that the Minister has been overly conservative in this particular respect.

Mr Speaker, Sir, looking at FY2000, it is noteworthy that development expenditure has increased to $12.9 billion, an increase of $2.25 billion. But by doing so, it merely brings us back to the same level of development expenditure as in FY98. Part of this increased expenditure probably includes those lower priority projects I mentioned earlier. It is also pertinent to note that as a percentage of GDP, the new development expenditure stands at 7.8% and while it is higher than 6.9% in FY99 it is actually lower than 8.7% in FY98. Development expenditure is an investment into our future. I would like to see development expenditure being maintained at a higher level compared to what is provided in FY2000.

What strikes me as unusual in this Budget is that close to $1 billion has been set aside for new priority projects that may materialise in FY2000. This is a very interesting sentence in the Budget Statement, since most development expenditures would require careful planning, and it is unlike this Government to allocate such a large amount for new priority projects that may come about within a short period of 12 months. So my question is: Does the Minister have something up his sleeves? Is he saving some goodies for Singaporeans? If so, would he be kind enough to drop some hints?

I am glad to note this Budget provides a significant increase for Education, historically the second largest allocation after Defence. There is a 15.3% increase in Operating Expenditure and 21.7% increase in Development Expenditure. This reflects the importance this Government attaches to education of our children, in particular for the coming knowledge-based economy. I hope this is not a once-off increase but part of a long-term investment in the future.

Mr Speaker, Sir, let me now comment on the various tax changes in this Budget.

Before doing so, allow me to report that the Feedback Unit had conducted a series of dialogue sessions in the middle of this January with the business community and the general public as a prelude to the Budget. The Feedback Unit moved the dialogue session ahead of the Budget so that the inputs of the participants could be considered in the preparation of the Budget. I chaired the English language session which was held on 17th January 2000. Participants of the session for the business community were drawn from the various chambers of commerce, small and medium enterprises, as well as selected corporations. The wish list is a long one and it is included in the report of the meeting.

The general consensus of the business community was that the recession is by and large over. Nonetheless, the recovery is spotty with some sectors, such as construction, retail, still reeling from the economic downturn. Furthermore, many companies have suffered during the recession and are still in the process of recuperation. The participants generally would like the Government to maintain the various cost-cutting measures implemented by the Government for another year. Doing so will allow most companies to restore their health to deal with the challenges of the future.

On tax-deductible savings for retirement, one participant, noting that expatriates are exempted from the CPF scheme, suggested that a tax-deductible individual retirement saving scheme be established.

On saving for retirement, it was noted that most taxpayers do not enjoy tax deduction for their insurance premium payments as their CPF payments exceeded the eligibility condition for deduction. Perhaps additional tax allowances could be given to insurance premiums.

Apparently, Sir, these appeals found a sympathetic ear with the Minister. He has maintained a number of cost-cutting measures, albeit at a lower level. For instance, property tax rebate is being extended for another year at a lower rate of 25%.

Corporate tax rate will be lowered to 25.5% from 26% but only from Year of Assessment 2001. With the withdrawal of 10% corporate tax rebate for this year, Year of Assessment 2000, the corporate tax rate effectively will return to 26% from 23.4%, and then later down to 25.5%. The question is why should we subject the businesses to this variation of corporate tax payable.

Furthermore, the Minister is fully aware of "tax haven" provision in many developed countries that would be triggered against a host country when its corporate tax rate drops to 25% or below. As such, the use of lower corporate tax rate to make Singapore more attractive for multi-national companies has its limitations. For instance, in Japan, I believe that the "tax haven" trigger is exactly at 25%. So, after this rate has been lowered to 25.5%, there is really not much leeway left for the Minister to play with. I am sure the Minister has been exploring other fiscal measures to enhance the attractiveness of Singapore to foreign investors. So it would be useful if he could elaborate on some of these measures.

Taking the half step in this fiscal year, it is clear that the Government is preparing the ground for a complete withdrawal of all the cost-cutting measures implemented earlier. So I think Singapore business leaders and workers are well-advised to be prepared mentally.

On the personal income tax measures, most Singaporean taxpayers express disappointment that the personal income tax rate has not been adjusted this round. Furthermore, the once-off 10% rebate is also withdrawn altogether. As a trade-off, the Minister announces a few measures that while laudable, do not bring about much immediate benefits.

I am glad that the Government has accepted the recommendation of the Inter-Ministerial Committee on the Ageing Population to implement a tax-deferred voluntary saving scheme next year. This is a good idea to complement the CPF scheme for those who can afford it. However, for most Singaporeans who are already putting away 30% of their income into CPF, I doubt many would be able to take advantage of this scheme. Furthermore, for those who are likely to participate, they are either high-income earners close to the age of retirement or young unmarried singles without many obligations. Although the details of the scheme are still being worked on, I would like to ask the Minister whether the saving in this SRS could only be withdrawn after the official retirement age, as at today at 55, or otherwise determined by the Government. Would he consider not imposing a retirement age at all in this SRS, so that the individuals who put money in this SRS could decide as and when to withdraw the saving? I think this flexibility is useful and important, and it would encourage the individual to save for rainy days, periods of unemployment, dire needs, or for those who are prepared to go back to study by taking time off from working.

Since the Government is agreeable to allow foreigners working in Singapore to participate in this SRS, it would have addressed the concern raised by expatriates during the feedback sessions I mentioned earlier. It will overcome some of their concerns regarding how they would save for retirement.

Next, I would like to touch on the extension of the tax relief scheme for CPF cash top-up for grandparents. This step is laudable but, again, I wonder what kind of impact this would have. First of all, most taxpayers with grandparents are likely to be young, below 30 years old, and furthermore their parents are still likely to be very active in their working life; in fact, in the most productive of their working life, and would be able to support their grandparents. These young taxpayers are probably still establishing themselves in the world and not many of them would be able to contribute up to $6,000 a year to fully benefit from this scheme. Perhaps, the Minister can inform the House how many taxpayers could take advantage of this particular scheme and therefore achieve his objective to enhance "inter-generation ties".

Would it not be more beneficial if the Minister could review the CPF cash top-up scheme for parents, but not for grandparents? There are many taxpayers today who have made use of this scheme to continue to support their parents and have reached the limit of the tax relief for cash top-up because there is a provision for the Minimum Sum limit. I would urge the Minister to review the limit of this Minimum Sum so that those who have already reached the limit can continue to enjoy tax relief when they continue to support their parents. The Minister is aware that the Minimum Sum has actually been increased from $30,000 to $60,000 over the years. Depending on their age, different senior citizens today would have different top-up limits. The older ones would be entitled to $30,000 and the younger ones would then be entitled to $60,000. As we all know, the older the person the more expenses he would incur. So the Minister would find great support among Singaporeans if he could, in the first instance, revise all the top-up limits to $60,000 so that all those who have reached their existing caps today could continue to obtain tax relief for their filial sons and daughters who contribute to their support.

Secondly, I would urge the Minister to increase the annual contribution limit from $6,000 to a higher number. I surmise the total revenue loss if we undertake all these measures would be a small number and doing so would go a longer way towards promoting filial piety and the concept of extended families.

Another tax incentive that I would like to see in the Budget but did not get a nod from the Minister is the tax incentives for the third and fourth child. Currently, the incentive is set at $10,000. But this limit was set close to 10 years ago. It is time to review the amount and I would like to urge the Minister to consider increasing this amount to encourage larger families for those who can afford it.

Mr Speaker, Sir, Singapore has gone through a recession and came through unscathed. Our coffers are in great shape. I would like to thank the Minister for his outstanding contributions as Minister for Finance during the period of his term of office and for his stewardship of the Ministry during this crisis. Despite his recent health problems, he has continued to serve Singapore selflessly. Indeed, Singaporeans are indebted to him.

Mr Yeo Guat Kwang (Cheng San): (In Mandarin): Mr Speaker, this year we have the good fortune to debate our Budget on a happier note. Our economy has got out of the difficulties brought about by the regional financial crisis. A friend of mine has drawn an analogy of the ups and downs of our economy. He said that each time we entered the Year of the Tiger, our economy would face difficulty. From the financial crisis in 1998, the recession in 1986 and the oil crisis in 1974, it seemed to have formed a pattern or a rule of some sort. Fortunately, after the Tiger Year, we would be able to jump up again like a rabbit, followed by the vitality of the Year of the Dragon and the dance of the golden snake. The prospects seem bright again.

Sir, this may well be a great coincidence. In reality, we cannot blindly believe in this kind of rule and our economic development cannot be taken for granted. We are able to go through the difficulties because of the strong tripartism that we practise in Singapore. When the time becomes better, we should spare no efforts in enhancing the strong partnership and nurture our togetherness as a nation - one country, one people, one Singapore. Our tripartite partners have to constantly work closely to strengthen our competitiveness so as to expand our economic pie. In this way, we would be able to safeguard our workers' jobs and also help to improve their quality of life.

Mr Speaker, Sir, another main reason that Singapore was able to recover so quickly is Singaporeans' ability and willingness to see the big picture and accept the bitter medicine to help nurse our economy to health. This kind of selflessness helps us to recover quickly.

During the economic crisis, many companies closed down and thousands of workers were retrenched. For those who were able to keep their employment, many had to accept wage freeze or wage cut to help the companies tide over the difficult times. We should therefore thank all the workers for their understanding and sacrifices. I am glad that the Government has decided to top-up $250 in each worker's CPF account. It is certainly a good gesture to reward our workers for the sacrifices they had made. This will also help to strengthen the trust in our leaders. I hope the Government will consider the suggestion that such CPF top-ups for workers should continue whenever there is a good budget surplus until the CPF cut is fully restored.

Mr Speaker, to the majority of our rank-and-file workers who earn a basic salary of less than $2,000 per month, the sum of $250 is equivalent to about 2% of the employer's CPF contribution.

I am also very glad that the ordinary Singaporeans are not left out in this year's Budget. The service and conservancy charges, utilities and rental rebates for HDB residents amount to $154 million. If we take the CPF top-up, the contributions to Medifund and Eldercare Fund, individual income tax relief and so on, the total giveaway is more than $1 billion. This is a glowing testimony that ours is a caring Government.

However, our economic recovery is not exactly an even one. Some sectors of our economy are not quite out of the woods. Quite a lot of workers are not free from worries. They will be happier if the once-off personal income tax rebate could remain at 10% and everybody will be happy.

I also welcome the additional tax relief for the maintenance of parents. It is a good incentive. But I hope the Government would consider higher tax relief for those who look after their parents by making an effort to stay nearby or in the same HDB estate with their aged parents. Such people should be given higher tax reliefs.

Mr Speaker, Sir, we are moving in this fast-paced competitive world, and as the Chinese saying goes: "Know yourself, know your enemy and you will fight a 100 battles and win them all." We must know our weaknesses and our strengths. I also recall reading an article by IDEA of London suggesting a looser monetary policy, keeping our wages at a competitive level and containing our industrial and commercial property prices as the key strategy that we should consider. I agree with these suggestions. As far as our wages are concerned, we have taken steps to make them competitive. It is only proper that we also align our industrial and commercial property prices to make them even more competitive.

As a labour movement, our first priority is the well-being of our workers. We must see to it that they have jobs. When we negotiate wage increases, we always take into account two factors: (1) productivity gains; (2) the ability to pay by the company. But wages form only part of the overall business costs, and, in fact, only a small part. It would also be good if the non-wage costs, particularly Government charges, could be held down so that companies can continue to operate profitably in Singapore and our workers will have good jobs. It is only then that we would be able to create a good environment of doing business for the companies and our workers will be able to have better jobs and enjoy higher standard of living.

Dr Vasoo: Mr Speaker, the Budget for the Year 2000 which has been recently presented is a realistic Budget. We are indeed pleased to see that we are getting into the economic growth again and this is encouraging. I commend the Government for taking various measures to deal with the economic crisis we faced earlier and the Finance Minister for his good financial management.

Sir, it is not easy to persuade him to do more than what he has set aside for the Budget. I have tried hard every year to try and tug at his heartstrings to get more funds to be released, but each year I have great difficulty. I hope that this year, with the new millennium, he would be able to hear out and accede to some of the requests that I would be putting up. I hope that he will be able to see what he can do more for the community.

Sir, I have a few suggestions and observations to make relating to the Budget. With the restructuring of our economy, we expect more labour intensive industries to relocate and this will displace our older workers who are middle aged. I think we know some of their problems. But I feel that we need to monitor and see the impact of this changing economy in terms of their employability and how they are likely to be affected. They will face difficulties in finding the same type of job and salary. They will be less employable because they do not have the skills to fit into the changing job requirements. The employers will take advantage to employ cheaper semi-skilled and skilled foreign workers and this compounds the problem further as they tend to pay these foreign workers less salaries and, to some extent, the Minister for Manpower is trying to ensure that we have a foreign worker levy. But somehow I think they will find a way out to depress the wages further. Sir, there is a danger of structural unemployment amongst older unskilled workers. It will be painful for them as they have teenage children to support, in terms of their education and other needs.

Sir, may I draw the attention of the Minister for Finance that funds allocated to skills training are inadequate to train more than one third of our unskilled and semi-skilled workforce. In order to make a good impact, further tax rebates to encourage employers to upgrade their workers should be considered. More worker training funds should be allocated to ITE so that it can work with NTUC and the Ministry of Manpower to implement a more comprehensive plan for older worker training to enhance their employability. This is going to be a critical problem that we will face in the next five to 10 years, especially when the economy is being restructured and we are moving to a knowledge-based economy. This has got a tremendous impact. I feel there is every reason for the Ministry of Finance to allocate more funds to the Ministry of Manpower, trade unions and other sectors which can help to prepare the workers to meet the challenges ahead. And unless and until we do this, there is no point saying that the workers need to be trained and we need to prepare them for the KBE economy. All this remains rhetoric unless we really translate them into real action and there is indeed an urgent need for the Ministry of Finance to allocate the funds because there is a surplus and we can do more for this group of workers.

Sir, the other issue that I would like to raise is that Singaporeans are appreciative of the CPF top-up of $250 in their ordinary accounts. This is indeed a bonus for the working class Singaporeans and I must say that many governments cannot afford to do this. This is only possible because we have done well and the Singapore Government, trade unions and employers have worked together to try and revive the economy. This is an important effort that we have all jointly undertaken and I feel that the Minister for Finance could be more generous as mentioned by my colleagues, Dr Wang Kai Yuen and Mr Leong Horn Kee, who have urged the Ministry to see whether it could roll back some of its plans and allocate more funds for those who have contributed.

The Minister should be urged to grant a grace period until the end of this financial year, 31st March 2000, for retirees and retrenched workers to make one CPF contribution so that they can get their CPF top-up. This group could not make the CPF contribution because they could not find employment within the cut-off period. It would be a good gesture and a show of good heartware of the Government to extend the benefit to them if they can make the CPF contribution soon. I hope that the Minister for Finance could look into this issue because I know many of them deserve it, and attempts could be made to see how their CPF top-up could be granted.

Sir, there is a continued case for us to review the status of low-income pensioners and each year, I have tried to persuade the Minister to see what can be done for this sector of the population and also for the poor segment of the population who need help. We need to examine more closely the impact of the recession on their livelihood. Some of them are retirees, others are older and jobless persons and pensioners with low pensions. They all deserve a little more attention for the simple reason that they have contributed to Singapore's past development. As for the low-income pensioners, I have sounded their plight to the Minister many times. I hope that this time, he would open up his purse string and distribute at least a one-time year-end payment during good times for them. We should not forget them as they have given sterling service. For the low income families and single elderly, it will have greater impact if rental rebates and rebates for SC&CC charges can be increased by 25% per month. This will reduce their burden of increased cost of living, particularly meeting basic necessities, and many of them do not really have any income. They deserve our attention and I feel that we could do more.

Sir, the Minister has considered the need to encourage family members to take care of their aged parents. He has increased the tax relief for looking after the aged parents to $5,000. This is reasonable but he has not taken into consideration the financial burden of those who have to look after their aged sick parents. I hope he will be generous, at least, to this group next year.

We have to examine more closely the social consequences of corporatisation of our public services and the restructuring of our economy to a knowledge-based economy. We must see that public services remain affordable and the working class is not priced out of the market to purchase goods and services. The Government must intervene, when necessary, to mediate and enable working-class families to have access to services by levying charges which remain within their reach. In short, many of these services would have to be reviewed to ensure that they remain affordable. Otherwise, we would have a large sector which may not get access to the services for which they require.

In consequence, if we remain aloof and oblivious to the needs of this group, we can expect the social divide to widen and people who are productive may give up the race because they cannot catch up. Therefore, policymakers who are involved in the promotion of KBE should look closely at the dangers of the wide digital divide and how those who have IT skills and those who do not can be bridged through skills training and education. Here, I must say that we need to prepare a younger generation of Singaporeans, as early as pre-school age, to IT exposure and deploy more funds for the promotion of IT education at grassroots level and within the means of the working-class families. The $25 million which has been allocated by the Ministry of Communication and Information Technology is actually peanuts in the light that there are many people who need to be trained and exposed at the grassroots level. The Ministry of Finance could, in fact, be more supportive of this scheme and allocate more funds to the Ministry so that it is able to promote hardware. Hardware is essential but without trainers and people to provide them the guidance, exposure and education, it remains not effective and does not make an impact. And many of these hardwares will remain as white elephants in many of these centres because there are not sufficient attempts to see how the training is carried out at the grassroots level to those who really need to be exposed.

Sir, we should allocate and deploy more funds to the younger children within the community, particularly at the pre-school centres, and if this could be done earlier, many children who belong to the working-class families can get early exposure or an early headstart so that they could catch up and remain in the forefront of the KBE. Otherwise, if we do not do this, our drive to KBE would land us up in KJE, a dead-end road for the less well-off families.

Sir, to conclude, I must say that we have done well despite serious social and economic difficulties of the region. We will face more challenges when we restructure our economy and we must pay more attention to the semi-skilled and unskilled generation of workers who will need more support to cope with the changing economy.

Sir, on that note, I support the Budget.

Mr Low Thia Khiang (Hougang): Sir, may I seek a clarification from Dr Vasoo? Dr Vasoo mentioned in his speech that he is afraid that there might be some services which may be out of reach of the lower income families. Would he elaborate on what these services are?

Dr Vasoo: I think the Member should raise the question with the Minister or the relevant Ministry. But what I am saying is that for the working-class, education, health services and other related services must be within their reach. The prices that are charged should remain affordable so that many of these families, at this juncture, do get access. I hope that it continues to be so and the respective Ministries should see how subsidies and other related aspects could be given to ensure that we do not leave out a group of people who otherwise need support.

Mr Chiam See Tong (Potong Pasir): Sir, this year's Budget is an inconsequential one. The workers have not been given any significant benefits, neither has the business community. The real beneficiary is the Government, as usual ending up with hefty surpluses.

Firstly, let us look at the position of the workers. For two years, our workers were at the forefront in the fight against the recession which has gripped this country and the region since July 1997. The workers were the first to suffer. Their casualties include massive retrenchments, pay-cuts and lowering of the employer's CPF by 10 percentage points. Our workers have suffered. They were the ones who were affected most by the cost-cutting measures, to hold back the recession and not let it get worse. Yet, at this time, when the economy has basically recovered, what do we see? No rewards for the workers, only pittance of small rebates of service and conservancy and other charges for HDB flat dwellers. Those rebates are less than the ones given last year.

The two years' recession has left the workers worse off this year. Last year, many of the workers still had some savings to rely on but after two years of recession, all their savings have dried up. And this year, they are in a worse position than last year. They should be given more benefits this year. I think the Minister should have been more generous and reward the workers. The employer's component of the CPF should have been restored at least by a further 2 percentage points, if not more. I do not think that the economy shall be adversely affected if 2 percentage points of the employer's CPF contribution are restored.

The economy of America is strong. So too is that of the EU. Japan's economy is said to have bottomed out in 1999 and it is on the road to recovery. The countries in the region have all recovered from the recession and are showing positive growth too. For Singapore, the NUS Economic Studies Unit predicted that its GDP shall be 7.9% this year. It can be seen that the world, the region and Singapore's economic prospects are not that bad. Therefore, there is no reason for the Government for not increasing the employer's CPF rate by another 2 percentage points.

At the moment, there is already a restoration of 2 percentage points of the employer's CPF to take effect on 1st April this year. I do not think that that is enough. With the high cost of living, workers in Singapore are generally living from hand to mouth and any cut in the CPF shall certainly cause hardship among them, as happened in 1998. On the other hand, an increment of the CPF rate contribution, even if it is only 2 percentage points more, shall be a great help to the workers as most workers have to pay their HDB monthly loans through their CPF. It is really a sad day for the workers on Budget day not to have any restoration of the said employer's CPF contribution rate. So much for the gratefulness of the Government, for the sacrifices made by the workers. When times were bad, the Government called upon the workers to accept a lowering of the CPF contributions, to tighten their belts, to accept pay cuts. The workers responded positively. There were no strikes, no trouble given to the Government. Yet, when times are good again, the Government appears to have forgotten the sacrifices made by the workers.

Other than the two percentage points which the Government has restored to the workers, the other thing that the Government could do is to lower the foreign maid levy, which now stands at $345 per month per maid. I have been told that the foreign maid levy is higher than the salaries received by the maids themselves. My feedback is that, generally, a Filipino maid receives $350 per month, an Indonesian maid receives about $240 a month, and a Sri Lankan maid receives about $200 per month.

The Government makes the most money when a foreign maid is employed in a household in Singapore. Yet, the Government has not provided any services to the foreign maids. The Government has not provided training for them to be good housekeepers or child minders. The only thing the Government does is to allow them to work here and impose a heavy levy on them. The foreign maid levy, to me, is nothing more than a tax imposed on the maids. The Government says that the rationale for such a high rate of levy or tax is to prevent Singapore from being flooded with foreign maids. With such a high levy, the great number of foreign maids wanting to work in Singapore has not diminished, but still continues to increase. As we have heard on the sitting of 22nd February 2000 in this House, the Minister for Manpower said that there were about 100,000 foreign maids employed in Singapore. So, the number of foreign maids working in Singapore has not abated, but it is increasing despite the imposition of the high rate of levy. The fact is that there shall always be families wanting to employ foreign maids, as both spouses have to go to work. The cost of living is so high that families generally cannot depend on the income of one breadwinner to support the whole family. As a result, when both spouses are required to seek employment, a foreign maid has to be employed, primarily to look after their children and aged parents, and to cook for them.

The employment of a foreign maid is a necessity for many families in Singapore. Therefore, no matter how high the Government raises the levy, the families that need some domestic help to look after their children and aged parents shall somehow find ways and means to employ a foreign maid, either by changing jobs for higher paid ones or to work longer hours to pay for the increased levy. The policy of high levies shall never be a deterrent for Singaporeans who have to employ foreign maids. What is going to happen is that Singaporeans shall seek cheaper maids or employment agents shall force foreign maids to accept lower pay, which shall also not be a good thing because Singaporeans shall then get poorer quality maids. The Government should lower the foreign maid levy by, say, $45, to $300 per maid per month, for a start. This shall be a great relief to many working Singaporean couples.

I have spoken on many Budget debates and highlighted the visibly large surpluses accumulated by the Government each year. The people of Singapore are beginning to feel that these accrued budget surpluses are, in fact, not the people's money, but exclusively the money of the Government, although the Government always says that they hold it in trust for the people. Much of these surpluses is collected from the people. The opposition suspects that the policy to accumulate massive amounts of funds by the Government is not exclusively for economic reasons, but for political ones. We have seen that in the 1997 general elections, the Government made it clear that it shall only upgrade HDB flats in precincts that supported Government policies. The words "support Government policies" are an euphemism for the words "vote for the PAP". The residents of HDB flats were made to understand that if they do not vote for the PAP, their flats shall be upgraded last. The upgrading of HDB flats was a major strategy of the PAP to win votes in the 1997 general elections. The budget surpluses of the following year were to be used for the upgrading programme of HDB flats. As it turned out, 1998 was the worst recession year and the Government had to announce a scaling down of the upgrading programme promised by the PAP the previous year. The budget surpluses that were used for the upgrading of HDB flats after the 1997 general elections were clear evidence of the use of surpluses by the Government for a political motive.

Sir, in this year's Budget, the surplus is shown as $2.45 billion. This surplus is only the surplus of income over expenditure. The actual receipts or the money which shall be collected by the Government is actually about $3.41 billion. This sum takes into account what the Government receives from its investments and sale of land. When we talk of budget surpluses, we are only referring to part of the money to be made by the Government. The budget surplus this year only shows $2.24 billion but actually the net receipt of the Government is $3.41 billion. The statistics which only show budget surpluses each year of the Government do not show a true picture of the receipts of the Government, which are more than the budget surplus for each year.

It is touted that the Government has $150 billion in reserves. I do not see the rationale for accumulating so much money, other than the political benefits from it by the party in power. The Government wants to awe the people that it has so much money. I think the Government should not continue to accumulate so much money. It is time to release some of those monies back to the people for their benefit, in particular, to benefit people in education and training. Money spent on the people's education is not wasted. It is not a consumption but an investment.

The Government tells the people of Singapore that we are embarking on a knowledge-based economy, and the majority of Singaporeans agree with the Government that we should build a knowledge-based economy. For a knowledge-based economy to succeed, there is a presumption that the majority of our workers have attained their basic education and they are conversant with the three Rs. The truth is that the majority of our workers are poorly educated and poorly trained. Since I came to Parliament more than 10 years ago, I have been hearing that our workers should be further trained and retrained. But as far as I know, no real success in this respect is in sight. Even today, the Budget Statement says:

'Less than half of our workforce above the age of 40 has secondary and higher education. We need to level up this group of workers numbering some 834,000 or 42% of our workforce through training and retraining to help them cope with the new economy.'

What I suspect is that those 800,000-odd workers may not be able even to read and write English at all, because our school system has automatic promotion. Those who fail in primary one are automatically promoted to primary two. They fail at primary two and they are pushed up to primary three and so on. They finally fail primary six and they are put in 'N' classes in secondary schools. And after one or two years in secondary school 'N' level classes, they just simply drop out of school, and they join the pool of almost illiterate workers.

The Government must make up its mind to put a stop to this kind of a school system. Otherwise, the continuing growth in the number of illiterate amongst our workforce can never be stopped. At one time, the Government blamed the large number of uneducated amongst our workforce on the previous government, ie, before the PAP took power. But now we see workers above 40 years old who are not properly educated. All these workers have gone through the PAP system of education, and 42% of them are not properly educated and not fit for the new economy.

The only solution is that the Government must have a political will to improve our education system. For this, the Government must release surpluses to spend on building more schools and recruit more teachers. I estimate that the Government should spend an additional $780 million more each year to really give effective teaching in our schools, especially the neighbourhood schools, to make sure, for a start, that all pupils at least learn to read and write the English language by the time they leave school. I recommend an additional sum of $780 million to be spent to reduce the class size by one quarter of its pupils. I believe that with a smaller class size, the teaching can be infinitely more effective. I have been informed that there is a sizable number of students studying in HDB neighbourhood schools who do not manage to read and write the English language at all when they leave school. If this is true, then something drastic must be done to our school system.

Another area that I feel the budget surpluses can be beneficially used is to train more of our local workers to become skilled construction workers. It is noted that almost all construction workers at our construction sites are foreigners. This is surely not a healthy situation. Our Government should try to get more of our local workers to be trained as skilled construction workers by giving attractive subsidies for the training. At this time, it is perhaps a good time to do so when the construction industry is in the doldrums. 2.27 pm

Dr Jennifer Lee (Nominated Member): Mr Speaker, Sir, the Minister for Finance has delivered the good news to us that he is once again in the happy position of announcing a budget surplus this time of $3.2 billion. He did not dwell long on this accomplishment, but he did pause to observe that Singapore had emerged largely unscathed from the regional crisis and attributed this to strong economic fundamentals underpinned by years of consistent and rational policies. While I am fully in agreement with and appreciative of the good leadership that has made possible these policies, I think we have been guilty of forgetting or of taking for granted the other major underpinning of our economic success, namely, the ordinary Singaporean of whom we expect extraordinary effort, extraordinary commitment and extraordinary resilience.

The Minister moved on to deal with the challenges that lie ahead for Singapore in competing in the new millennium. He spoke of the increasing intensity of competition that will be inevitable in the face of globalisation and the onslaught of technological advancement. The times are going to get tougher and the pace even more punishing. He spoke of the competitive edge that we have in hardware in our infrastructure, and he identified as a key component of the software aspect of our competitiveness, the quality of our people. He said, as many of our political leaders have often repeated in recent times, that as a small country, every Singaporean matters. But his focus was on everyone to consciously improve their skills and look for new ways to do the job better.

I have a concern for the ordinary Singaporean, and the ordinary Singaporean family. In the face of these new challenges, the demands of the new global, knowledge-based economy, the hectic pace and the pressure that starts from the child in primary school and, in fact, following the recent accounts in the newspaper from preschool, how will our ordinary Singapore family cope?

Already, we are beginning to see some fault lines show in the increasing examples we have of young people getting into trouble, not so much in the numbers perhaps, but in the violence of their crimes. I believe all Members of the House have numerous stories from their constituents of the pressures that the latter faced. In the last month alone I have heard of three families who have carted their children off to Australia to escape the pressure. Of these, in two of the families, the mothers accompanied the kids while dad remained in his job in Singapore. What kind of a family life is this? And with regard to the children, will they return to Singapore after their studies are done?

What of the far greater number of families who do not have the means of this form of an escape valve?

Mr Speaker, Sir, I am not suggesting for a moment that we should, even if we could, stop the world because we want to get off. There is no turning the clock back and wishing for the nice comfortable world that used to be. It is precisely because we cannot turn the clock back, that I believe that it is time for us to review all the policies that we have that impact on the Singapore family, to see if we cannot do better in supporting and strengthening this precious entity.

In the House in October last year, the Prime Minister spoke of his concern with regard to two trends: the falling fertility rate, Singaporeans not replacing ourselves, and the increased number of Singaporeans going overseas. He noted that there are many reasons for the declining fertility rate - urbanisation, education, changing lifestyles, singlehood and late marriages. The stresses and pressures of modern life are intimately intertwined with all of these factors. The Prime Minister was absolutely right when he commented that simply the extension of the family benefits to fathers that I had proposed in that same sitting would not be the solution. There is no magic bullet.

It would take a wide ranging review of a multitude of issues to come up with a clear vision of what outcomes we want for the Singapore family, a decision to prioritise the needs of the family, and a clear statement in the fact of conflicting demands of the importance of acting on this decision. Follow through and implementation will take plenty of political will and muscle, and the slaughter of not a few sacred cows.

But if we are serious about making this vulnerable little island a good home for all of us in the long term, then we must approach the problem in a comprehensive manner, in the same way as we approached our economic well-being in establishing the Committee on Singapore's Competitiveness (CSC) to map out a comprehensive set of long term economic strategies, and not have individual Ministries take small bites at the subject in an ad hoc manner. And as Government adopted the strategies proposed by the CSC as the blueprint for developing Singapore into an advanced and globally competitive knowledge-based economy, so we need in tandem a blueprint for forming and preserving strong happy families, not just to enjoy the fruits of this material success but, in fact, to ensure that we are able to soldier on effectively.

We have a slew of policies in place that impact on the family in various ways, many of them enacted and implemented at various points in our history, for various good reasons and priorities at that time, that altogether now send sometimes conflicting messages to Singaporean women and men as they make their way through life taking decisions on marriage, starting a family, bringing up children and possibly finding time and space for themselves.

Just let me walk you very quickly through the factors that come into play at these various points. For a start, even before worrying about helping the family to cope with the pace and pressures of life in the new millennium, persuading young Singaporeans that they want in fact to form a family in the first place. For the young Singaporean deciding to get married - yes, no, or wait?

We have brought up a generation of youngsters on the lap of economic well-being, who have very high expectations, and who place economics - work and career - before family and home. And understandably so, when so much more tangible and immediate rewards come with having a successful career than for being a good spouse or a good parent. Expressed appreciation from the boss, promotions, a good salary, and the attendant lifestyle that this affords.

Is there some way to moderate these values? What could we be covering in a life skills curriculum in school that might place some emphasis on the importance, joys and responsibilities of family life? How do we engage parents in the process?

In a survey commissioned by the SDU in 1998, 62% of young couples felt that it was important to have financial stability before embarking on marriage, and 33% would delay marriage until a matrimonial home is ready, even if they were otherwise ready for marriage. There are limited options for housing for the young couple just getting started in life, apart from getting into the queue for a HDB flat. There are various HDB grants and schemes to assist young couples, and also promote and facilitate extended families living together or in close proximity. These are good. And then there is the Fiance/Fiancee Scheme which requires a $5,000 registration deposit on application, and the production of a marriage certificate three months after taking possession of the flat. Does this push them into marriage too quickly, without enough consideration, resulting in increasing number of divorces in this younger age group subsequently? A review of the impact and implications of the assorted policies may be timely.

Then we come to the decision to have children, the first baby. Again, attitudes and values, weighing work and family come into play. Wait for one's career to be better established, to better afford the financial responsibility that comes with bringing up a child?

The decision to have baby number three carries with it weighing the tax benefits against the maternity benefits, or rather, the lack thereof. Dr Wang has made the point about increasing tax incentives for the third and fourth child. I myself rather think that one should be looking at the loss of maternity benefits and maternity leave for the third child and above. In fact, I think the group that benefits from the increased tax incentives is much smaller and at this point in time we are ready to look at encouraging a wider portion of the population to consider having the third child and not just the very top cream of the economic crop.

Looking after baby. How many young couples are fortunate enough these days to have the family infrastructure available and willing grandparents on hand to help with child minding? If not, a decision has to be made between engaging a maid, fostering the baby to a child minder, or finding a good child care centre.

With the child care centre - the quality of care, the availability of a place in a conveniently located centre, and cost and subsidy, are all issues. This is the one solitary item I found highlighted in the Budget estimates that was specifically for the family - the 49 additional childcare centres and 25 student centres provided for under MCD. Should we be doing more over and above this?

The viability of each of the options varies from one young family to another. What is important, therefore, must be the availability of the range of options. With one child, a childcare centre, especially with the available Government subsidy, may be a good option. With two children, it is probably cheaper to get a maid, who then also helps with the housework. If the maid levy was less, or could be put aside towards a gratuity to be paid to the worker at the end of the contract period, would parents be able to afford to attract and hire a better calibre employee, who can then act more as a governess in helping to bring the children up, relieving some of the pressures that are felt in terms of providing a good environment for the child at home?

Once the first baby arrives, the parents have then to address how to balance work and home responsibilities with the burden falling very much at the moment on mum. To stop work, work part-time, or continue to work full time.

At a median Singaporean household income of just around $3,000, for many of the 56% of dual income families in Singapore, continuing to hold down a full-time job is a necessity for both parents. How to cope with the demands of the current working environment, the pressures of increasing productivity, constantly learning new skills, and yet manage to do a decent job of bringing up a child and maintaining the household?

We need to look at how to convince companies of the benefits of implementing family friendly practices to help employees with this balance. How can Government support and facilitate the process? By sourcing and providing information of best practices in other countries, by commissioning local studies to demonstrate applicability to our own environment, by providing tax and other financial incentives where applicable, and by setting the example as a major employer in Singapore.

These family friendly practices should include measures to facilitate re-entry to work, when the kids are older and more independent, for the parents who had earlier stopped work to attend to family responsibilities full-time. Then, when the kids get to school, life becomes a pressure cooker seething with anxieties and angst. The study done by Stella Quah on the Singapore Family, published in May last year, identified children's education as the single greatest worry for parents. Over and above the simpler issues of the availability of before-and-after-school-care, important to working parents, are the pressures that come from the curriculum load, streaming and examinations that are characteristic of our education system.

The Ministry of Education has in recent years announced many admirable initiatives which, if and when fully implemented, should go some way to dealing with the problems and challenges. But there seems right now still a huge gap to bridge between the existing and the desired situations. Mr Chiam has asked for more funds for the Education Ministry to decrease class size and improve the situation. I noted in fact that in this Budget 2,400 positions had been provided for. Not only that, when I look at previous years, I believe there is a huge vacancy rate in the Education Service. My concern is not so much that there is no willingness to put money aside to provide for this, but how on earth are we going to find the bodies, the brains and the hearts and souls to fill up these positions that will help ease the position? That, in fact, is key to the situation.

With the ageing population, the care of frail elderly family members will start becoming a factor that needs consideration. Fortunately, in this instance, Government has anticipated the problem and action has already been initiated in this area in the work of the Inter-Ministerial Committee on the Ageing Population.

Finally, changing the traditional views and practice in the sharing of home responsibilities. More flexibility in the assumption and sharing of different roles and duties will allow couples to better manage the calls on their time and attention, to achieve better outcomes for the family. Two people willing to pitch in according to their strengths and aptitudes without preconceived ideas about rigid divisions of labour are going to be that much more effective and efficient in sharing the responsibilities of bringing up a happy family.

Fortunately, we are seeing more younger men helping out in more ways with home responsibilities these days. Just recently, a group of three young men have got together to establish a Centre for Fathering. How can we support and facilitate this trend? Training in parenting for both our young men and women is much needed.

Mr Speaker, Sir, as you can see, many Ministries need to be involved if we are to address the subject of strengthening the Singaporean family in a holistic and coordinated manner. Not just the MCD, the obvious Ministry, through its Family Development Division. MCD, by the way, soon to be the MCDS, Ministry of Community Development and Sports, and alas, not even MCDF, Ministry of Community Development and the Family. But also the Ministry of Education, Ministry of Manpower, the Productivity and Standards Board under MTI, Ministry of Finance. Practically, every Ministry has policies and can do things that will impact and that can help support the Singapore family, as we push for all the training and the entrepreneurial talent. In the meantime, the Singaporean and his or her family, that is the mainstay, and that is ultimately what produces all the energies and the engine that drives what we are trying to achieve, I think we sometimes stand in danger of taking that very much for granted, as we are so caught up in undoubtedly all of the other very important things that we need to pay attention to. I think the Singapore family needs and deserves our attention. I will pick up in the debate on the estimates that follow specific issues with the Ministries.

But I should like to call upon perhaps a more coordinated approach. When Government feels that something is important, it places priority on it and straightaway the resources move, and you can see this. The best recent example is, having identified the issue of ageing, we formed the Inter-Ministerial Committee on Ageing Population. And we now have $200 million in the Eldercare Endowment Fund. The Minister for Finance has introduced various tax incentives in the Budget for looking after our older population. If only we would pay the same amount of attention to putting something together for the Singapore family. 2.46 pm

Mr Inderjit Singh (Ang Mo Kio): Mr Speaker, Sir, thank you for allowing me to join in the debate.

Sir, many of us were anxiously waiting for this year's Budget which we anticipated as a growth budget and one that was going to give a strong signal that Singapore is indeed serious about participating in a global knowledge-based economy which is now at our doorsteps. We are now in a completely different era where competition is not in Singapore, nor is it in the region, but it is now throughout the world. Whether we like it or not, we have to participate and fight to win if we want to ensure our survival. The good news is that we have a level playing field and have as good an opportunity as any other world-best countries and economies to be successful. The bad news is that the competition is going to come to our doorsteps and it will be here whether we like it or not and our old ways of doing business is not going to work in this future. All of us will have to make major mindset changes, including how we formulate the country's budget.

Sir, today I will be touching a bit on the strategies that we should consider in planning our economy and I will give my detailed suggestions during the Committee of Supply's discussions.

First of all, I would like to talk about Singapore's role in this global world and the lessons that we must learn from others.

Singapore is fortunate to have a strategic geographical position and through this we have developed ourselves as a hub for various activities like trade, logistics and travel and as a language hub linking Asia to the rest of the world, which were all very important in the `old economy'. In the new economy, information technology will create tremendous efficiencies in the way goods and services are produced and distributed. IT has also increased the productivity of workers, and it is going to reduce uncertainties, create visibility and transparencies and break any barriers that governments may try to erect to protect their economies. So the question is: are our infrastructure and hardware going to make the same difference in this new economy as they did in the past? My contention is that it will not and we will have to create new competencies and use of IT will continue to play the role we played in the old economy, but we know that the physical and geographical advantages are not going to be the differentiating factors anymore. Neither will we have the luxury of just importing and transplanting proven technologies and competencies from other more advanced countries into Singapore as we did in the past. Every one of our competitors will be able to do the same or even better than us. Our role therefore has to be one of an innovator and leader, capable of being in the leading edge of things, and be a choice place where business will be done efficiently.

Sir, the recent Cable and Wireless HKT and SingTel episode should be a lesson that we should learn. It basically says that we are not yet ready to participate in a very fast moving new economy. The paper wealth and the speed at which Pacific Century Cyberworks group moves are good examples of how things are going to be done in the future.

The worry I have is that this is just a signal and an indication of things to come if we do not change fast. The fact is that Singapore started talking about and planning for a knowledge-based economy about two years ago and many other Asian countries, including Hong Kong, started this journey later than us. Hong Kong, for example, has leap-frogged Singapore despite their later start and the danger is that Singapore may lose out in its battle to be the Asian Hub for this new economy and the Silicon Valley of the east. If we do not change, we may just get the number two or number three position. And we as a nation, I believe, cannot risk being in this position.

Sir, in my speech today, I would like to touch on three areas which we should focus on in order to be a more potent source in this new economy and these are: (1) Changing the way Singapore is governed; (2) Promoting entrepreneurship; and (3) How to build world class local companies.

Changing the Way Singapore is Governed

Sir, many observers have advised us that the Government should rethink the traditional strong guiding role in developing the country and the economy. My suggestions are as follows:

First, we need an entrepreneurial civil service that is willing to take risks in policy making. In some cases, when we are unsure, it may be necessary to implement a policy first, based on the best of everyone's judgement and, if necessary, fine-tune it as we learn our lessons. If we wait for a perfect policy to be formulated, the battle may be lost. Sir, our Government and civil service need to transform its administrative role to one of being entrepreneurial.

Second, in the new economy, as we compete with the best in the world, public policy making and decisions need to be made at very fast speed, which I call Internet speed. And I believe from certain research that I have done, one Internet year is equivalent to seven physical years in terms of how fast things change. This means that we must be able to move seven times faster than how we had moved in the old economy. In my opinion, the loss of the Cable and Wireless HKT deal was a result of how fast our Government and GLCs are able to make decisions. Richard Li's Pacific Century Cyberworks is an example of how Internet speed works in this new economy. In certain cases, decisions based on gut feel and on the fly may be necessary.

Sir, I have an experience that I would like to share with the House about the speed at which things get done in this new economy. I have started an e-commerce shopping portal about six months ago. I managed to build quite a good concept in the last six months. About two weeks ago, I had a call from a CEO from the Norwegian company that was also doing a similar portal. And we started talking just about two weeks ago. The true negotiations really started last Friday night at about 10.30 pm in my house. We negotiated through the night until 4.00 am on Saturday morning, and we shook hands that we had a deal. We then passed on the work to our lawyers who worked the whole of Saturday. I got the draft legal document on Saturday evening. We met on Saturday at 2 o'clock in my place, thrashed out the whole legal document, and by 4.30 pm the document was ready. At 5.15 pm, I left my home, rushed to a hotel to sign the agreement, witnessed by the Norwegian Ambassador. By 6.00 pm, the deal was done. And this took us just 48 hours. This is an example of how Internet speed works if you want to be successful in this economy.

Thirdly, we should seriously consider my suggestion that I made in the past, that of outsourcing the governance of Singapore to the people and the private sector as much as possible, wherever possible. While certain sectors cannot be outsourced, for example, defence and a number of other Ministries, there are others that can be. And through a partnership, we will have a better chance of succeeding. In this way, with a shared responsibility, we will be able to make better decisions and move faster than before. Our Government agencies will do well if they act only as facilitators and not as drivers in this new economy, because too much of Government involvement will only slow things down. So agencies like the NSTB and PSB should either be privatised or they should modify their roles to become more effective.

Fourthly, I feel that the civil service needs to be rewarded differently so that they will be motivated to transform Singapore to a knowledge-based economy. If we do not do anything about this, there will be a feeling of being left out and a reluctance to change policies for the sake of promoting entrepreneurship and enriching the private sector. I feel that we need to seriously consider revamping the compensation system.

Fifthly, I believe that we have failed in attracting many good people with private sector experience into the civil service because of the bureaucratic and promotion practices that exist today. People do not feel that they will get what they deserve and be able to advance their careers should they move from the private sector to the public sector. I hope that the Government can relook at its practices to change things to attract more people of varying backgrounds into the Government service.

I feel that we should not worry about perfecting and devising perfect policies before we make changes. As I mentioned earlier, a little uncertainty and a little chaos may be necessary and may not necessarily be a bad thing for the country. In fact, this type of uncertainty and chaos is what that threw up the truly entrepreneurial group of Ministers and civil servants during the era of our first generation leadership of Singapore. Too much of structure will create complacency in society and weak leadership.

Promoting Entrepreneurship

Sir, without doubt, the promotion of entrepreneurship is the most important activity all of us should focus on in the next 10 to 15 years of economic development, because the nation needs this new breed of wealth creators who will then generate jobs and create a better standard of living for Singaporeans.

In my opinion, it was a disappointment that nothing new was done and no new initiatives were introduced in this year's budget regarding promotion of entrepreneurship. Any spending in entrepreneurship development should be seen as an investment and not as a handout. I would have hoped that the budget surplus that we surprisingly got could have been better spent in this area.

I would like to suggest a few things on what we can do about promoting entrepreneurship.

Firstly, our tax system needs to change with time. I feel that we are too caught up in devising a single tax system for all our economic activities. I suggest that the Minister consider a mass customisation approach, as the Minister for Education had considered for the education system, to our tax regime as it needs to be proactive in supporting certain types of activities like technology and info-communication start-ups. We should treat entrepreneurs and start-up companies differently, be it in how we tax them or in the incentives, grants and Government charges levied on them. We should also facilitate their growth and help remove bureaucratic obstacles. For example, I feel that the employee stock options and share grants in start-up companies could be treated differently from those given by companies already established or companies that have already been listed. Similarly, technology savvy investors could also be given preferential treatment on how they are taxed or how they can minimise the burden of investing in companies that eventually collapse.

Secondly, capital raising should continue to be liberalised. We should make it easier to raise funds for start-up companies either through angel investors who are well incentivised to do so and also by making it easier to list new companies on a stock exchange and by allowing international access of funds to Singaporeans.

Thirdly, the Government should allow the private sector companies or individuals manage its funds. If the Government can identify a pool of well established local businessmen and entrepreneurs, we can develop a cluster of small funds that can act as catalysts for many more new start-ups in Singapore. Currently, the Government funds are being invested in only a few large and well established venture capitalists who can serve a different purpose from the smaller cluster of funds.

Fourthly, in the new economy, we will be seeing an acceleration in innovation, never seen before in history. The way businesses and companies are run will be re-invented all the time. To participate in this economy, all Singaporeans need to become knowledge workers who must be prepared to accept constant change as a way of life and to survive, everyone needs to continue to learn new skills. While once upon a time a single career path and hence a once-in-a-lifetime learning and training was sufficient, in the future environment, this will lead to an early end of our earning ability. I therefore feel that it is about time that we revamped our education system and the values we believe in, including the practice of meritocracy so that our workers can become effective knowledge workers of the future.

Developing Local Companies into World Class Companies

The third area I want to talk about is the development of local companies into world class companies.

Sir, the promotion and growth of many more successful local companies who can compete head on with any other of the world-best companies is a very important task in the next few years. In this respect, I feel that we should have taken the opportunity to give more incentives to companies to regionalise and globalise in the current year's budget. We now have a unique opportunity to acquire or merge with or invest in good companies around the world, given our financial strength and strategy.

In our quest to create world class companies, we have been focusing too much on our GLCs. Once again, the SingTel and Cable & Wireless HKT deal has shown us that despite being highly successful locally in Singapore, many of our GLCs will not be able to compete effectively outside Singapore. We have also recently seen a number of other failed deals by some other GLCs and my worry is that while we can compete effectively in our small Singapore market, we do not have the ability to compete globally. I do not have the full answer as to where the problem really lies, but my feel is that there is too much of comfort with a large Government ownership in such companies. We should fully privatise all GLCs and let them be driven by market forces. In fact, it will do the GLCs a lot of good if they are run purely on a private enterprise basis.

Thirdly, since we are just coming out of the economic crisis, I feel that this is an excellent time to incentivise local companies to restructure and consolidate. They should focus more and more on the value creation proposition and be less dependent on just cost factors in the future. Many European countries have been able to breed world class companies despite their high costs and this is because of their focus on technology and value creation. Nokia and Ericcson are just two examples of such companies coming from these countries.

Fourthly, we should watch against rolling back too quickly all the cost containment measures implemented last year. Delaying any cost measures by another one year will allow companies to regain their full strength and they will not have to worry about cost at this stage. During this time, they can focus on their restructuring plans. If we roll back the cost measures too fast, we may risk a reversal of the recovery seen by some companies. We should wait a little longer before changing things.

Fifthly, in my opinion, after so many years, we have failed to find a good solution or formula in helping our local small and medium enterprises (SMEs). I believe a major restructuring is needed in how we support and nurture SMEs. If we do not do things differently, the recently announced SME 21 plan will have little chance of success and I will give my suggestions on how we can do this during the Committee of Supply discussions. But the gist of my suggestion is to let the private sector handle this, including the administration of grants and incentive schemes. The various industry organisations and Chambers of Commerce can do a good job in this area.

Sir, e-commerce is the future for Singapore and our traditional traders risk collapse if they do not embrace the Internet economy. However, in the meantime, our traders still need some help, especially in the area of financing their trade and in modernising the whole order fulfilment process, to compete in the new economy. I feel that the Government is not doing enough and is too quick to decide that the trading sector does not need any more help. Similarly, I believe that the legislation and tax regime are not fully ready to participate in the e-commerce world and there is an urgent need to address this issue.

Sir, the new economy is already here. We have no lack of capable people with many ideas. What we need is a conducive environment and a sea of entrepreneurs in the private, people and public sectors to come up tops. We have the ability and the will power to make it happen. We must be prepared that we may have to adjust and re-adjust our policies and strategies as we move ahead and learn. We must be prepared to give up certain efficiencies for the sake of success. Now is the time to act, so I hope the Government will urgently address the issues that Members will raise during the next 10 days of debate regarding the promotion of enterpreneurship.

Mr Speaker, Sir, I support the motion.

Mr Noris Ong Chin Guan (Nominated Member): Mr Speaker, Sir, over the years, it has become a somewhat popular Shenton Way tradition to attach terms to describe the Budget. This millennium Budget is no exception. Some have called it "The Good Old Budget" in respect of the SRS and tax reliefs for dependent parents and aged grandparents. Others have called it "The Cyber Budget" in recognition of the tax initiatives for an increasingly borderless virtual world. But it is a bothersome Budget for taxpayers who were disappointed by the full or partial withdrawal of a number of rebates. In this regard, some have even called it "The Withdrawal Budget".

Some of these are quite unfair terms that have been coined out of parochial interests. It is unfair because people conveniently chose to overlook a possible GST hike that did not materialise. It is unfair because people chose to forget the conditions attached to one-off rebates. Personally, I prefer the term "measured Budget" for the Minister's measured fiscal response to the millennium challenges. It is a measured response because the withdrawal of each rebate appears to be followed by a concomitant new tax initiative. It is a measured response because while we see great challenges ahead, we must not lose sight of the lessons that we have learned from the recession, that we need to remain competitive, that a continued bright outlook is sometimes contingent upon forces and factors entirely beyond our control. And so, Sir, there are merits in adopting a measured fiscal approach. For this reason, I support the Budget.

But I would like the Minister to consider a scenario that assumes the challenges to be somewhat more compelling and that requires a slightly more rigorous fiscal approach. What happens when the twin forces of IT and globalisation require stronger response from the Government? What are some positive tax initiatives to accelerate the path to become the Asian Silicon Valley and to maintain our position as the regional business hub? What tax measures can be considered to encourage our local companies to think bigger, enter into new markets and invest more boldly? How can we give a tax boost to companies that are still struggling from the lingering effects of the economic downturn? We ought to visit these issues and attempt to answer these questions.

Firstly, companies that are still facing economic difficulties. The V-shape rebound is understandably met by a U-turn in recession year tax rebates. The conditions for these rebates were laid out beforehand by the Minister. Once the economy improves, the rationale for the rebate collapses and reason compels that the rebates be removed. If specific business sectors require a post-recovery boost, new tax measures should be designed to deal with a specific issue at hand. This seems to be the measured approach adopted for this Budget. But, Sir, have companies and businesses recovered entirely from this recession? Statistics suggest that our growth is not broad-based across all sectors. In the course of my day-to-day business dealings, I have also come across many people who feel that we are not fully out of the woods. Many SMEs are still struggling. Many SMEs bore the brunt of the recession, much harder than larger businesses. The withdrawal of rebates will again hurt them harder in relative terms as compared to larger businesses.

Sir, if we are genuinely concerned about growing our local SMEs into world class companies, we will need to create a conducive environment for them to grow. A conducive physical environment should be part of the blueprint for local SME growth. Instead of a flat corporate income tax rate for all companies, we might consider implementing a lower rate of income tax for local SMEs. SMEs that are wholly owned by Singaporeans could be subject to a lower rate of tax, say, 16% on the first million of income which is ploughed back into the business and not distributed as dividends. Low rates will allow the SMEs to build up their reserve to better weather economic downturn that will occur in the future as part of the normal business cycle.

For the purpose of helping SMEs still suffering from the lingering effects of the recession, consideration should be given to allowing SMEs to use losses incurred during the recession years of 1998 and 1999 against income earned in previous years. This ability to so-called "carry back" losses would greatly benefit SMEs that are facing cashflow problems and financial difficulties now. The current tax rules allowing for the carry forward of losses is only of benefit if a company actually survives the recessionary years.

While on the topic of providing relief for tax losses, I would also like to raise the issue of corporate group relief for losses. Businesses under the common control of a shareholder, or group of shareholders, may be organised in separate companies for a variety of reasons. This corporate separation, while real in the legal sense, is artificial in the business sense from the perspective of the owners. We hear the Government's message that the more entrepreneurial approach of style is needed to sustain us beyond the millennium in the face of the tough regional competition. But the willingness to take structured risks may manifest itself in operational structures, giving rise to quarantine losses. Our tax rules do not permit losses in one company to be offset against profits in another company even if one person owns both. If the two businesses were run out of the same company, the losses would implicitly reduce the profits resulting in less tax. In effect, by not allowing inter-corporate losses, and I use the term loosely, the effective tax rate is actually higher than 25.5% for the above companies taken together.

In line with certain other countries, I suggest we seriously look into the concept of group loss relief. The structured separation of businesses and risks into separate companies should not lead to the very real problem of taxing a corporate group at a tax rate that is effectively higher than the statutory rate.

I would now like to focus on the other possible tax measures to boost our regionalisation efforts in an increasingly globalised world. Risks are involved for companies going regional. Investment and external financing are required. Interest costs, in some cases quite substantial, are incurred. In initial years, the company invested may be expected to operate with little, if any, profits. It will take time for them to build up their reserves in order for such companies to repatriate profits back to Singapore. We can try to minimise the time needed by local companies going regional to build up their reserves. We can try to help our local companies to be competitive in a global environment.

Current tax rules do not allow funding costs to be deducted if the investment does not produce income. This serves as a disincentive for local companies to seek regional expansion opportunities. We can assist such companies by allowing them to accumulate expenses in periods when no income is earned and allowing them to deduct such expenses when the investment starts to produce income. Such rules could be targeted specifically to costs incurred in regional expansion activities, such as funding and legal costs, and would help companies that are starting to plan for regional expansion. The tax authorities already administratively allow expenses to be accumulated and deducted in future years where foreign income is earned, but not brought into Singapore in a given year. It is not such a great extension to allow expenses to be accumulated on certain expansionary activities to be treated similarly. On top of helping companies to get started in regional expansion, we should also think forwardly and consider how best to allow successful companies to reinvest their overseas profits. Currently, foreign taxes paid by a second or third tier of foreign company may not be recognised in Singapore when the Singapore parent company receives dividends from its overseas subsidiaries through an offshore intermediate holding company. Since credit is not given for such foreign taxes suffered at the second and third tier level, the overseas income that is brought back to Singapore is effectively taxed twice, once by the foreign country, and once by Singapore. This may act as a disincentive to a Singapore company that has been successful abroad from reinvesting in Singapore even if the best opportunities are available at home. We should remove this potential road-block and, as a general rule, allow companies to look through intermediate holding companies in foreign countries and receive credit for foreign taxes paid.

I now turn to issues affecting individuals. The Minister, in his Budget speech, stated that only employees will be eligible for the Supplementary Retirement Scheme. It does not appear that any provision has been made to allow entrepreneurial business owners, such as the self-employed like sole proprietors and partnerships, to take advantage of this scheme. It appears strange that the scheme does not apply to SME entrepreneurs who are willing to take risks in the prime of their life. There is no guarantee that their ventures will succeed. There is no certainty that having risked it all, they would have enough for their old age. As it is, the CPF contribution rate for the self-employed is already capped at $14,400 per year. Is this enough for them in the long-term? What if their businesses do not prove to be successful in the next recession? Should we try to help them build up their reserves as well? Depriving entrepreneurs of the old age safety net may not be the way to forge a more risk-taking mentality among Singaporeans. We need to support them by putting in place provisions to facilitate their personal financial planning for old age. We need to ensure that any Government initiative does not indirectly prejudice their ability to achieve long-term personal financial goals. For these reasons, we should make the scheme open to self-employed entrepreneurs in addition to employees.

In line with the Government's desire to create a more innovative business environment and consistent with remuneration trends in the world of technopreneurship, the Government has introduced provisions governing the taxation of employee stock option schemes. The business community, as a whole, is encouraged by the Government's plan to improve the tax treatment of such schemes and has much focused in this area.

In light of this scrutiny, we need to carefully consider how best to motivate companies to make more widespread use of such schemes when warranted and we need to determine how best to motivate key employees in an organisation to take long-term stakes in the company they work for. We have seen in the past how speculation, be it in the share counters or properties, destabilises and undercuts the society's economic and social progress. We need policies that encourage people to take a longer term view of things. I, like the rest of the business community, will wait with interest for the details in respect of the stock option scheme. However, I would encourage the Ministry to improve the taxation of such schemes to encourage the long-term development of the stock option schemes.

Besides proposing tax initiatives to face the challenges in the economy, I would also like to very briefly comment on a few other issues. The first is the need to review the threshold parameters for estate duty. For example, in relation to estate duty, the use of $600,000 as a threshold for non-property exemption seems to be inadequate. After all, the $600,000 is inclusive of CPF which nowadays, as a result of higher income and better investment opportunities, is easily achieved. The current exemption scheme appears to favour the very wealthy, or at least those with significant property ownership and their investment portfolio. Consideration should be given to revising upwards the non-property exemption to allow or, more radically, abolishing estate duty on all non-property assets and allowing for estate duty to be levied only on real properties passing in excess of, say, $9 million. This would encourage Singaporeans to adopt a wider investment strategy rather than to be overly tied down and exposed to the property market.

My second concern deals with the personal reliefs generally. Such reliefs do not appear to have kept up with the times. We have introduced business tax measures to keep up with the move towards technopreneurship in the economy. We should consider measures to keep up with changes in society. For instance, the personal income threshold of $2,000 for the wife relief does not appear realistic given the financial pattern of today's families. I suggest that we look closely at the current programme of personal reliefs to determine where improvements can be made. One area which seems to be of concern to a growing number of Singaporeans is the cost of medical treatment for their ageing parents. Perhaps, the personal tax system can be used to help alleviate some of their concerns.

Thirdly, I would like to propose the topping up of students' Edusave accounts to encourage PC ownership. We want to encourage our students to be more IT savvy. Not every student can afford a personal computer. While there are personal computers in schools, the IT exposure of the students without personal computers at home is very much restricted.

Sir, IT has increasingly become an integral part of how we educate our next generation, both during and outside school hours. In this regard, we should level the learning field for our students by giving each and every student the opportunity to widen their learning experience through the use of a personal computer. We should make personal computers an essential part of the home, as much as telephones and television sets are. For this purpose, I suggest that the Government consider granting topping up of students' Edusave accounts to subsidise or pay for the purchase of personal computers. The top-up can be reviewed five years later to keep up with the changes in computer technology. This amount in the Edusave account will be for the sole purpose of allowing students to own a personal computer at home such that a programme can be put in place by the school to effect learning at home.

On a final note, I cannot help, just like my other colleagues here, but notice the glaring disparity between what was budgeted last year and the eventual out-turn. I understand that the V-shaped recovery is remarkable. I understand that revenue collection has not fallen last year and that development expenditure intended to stimulate the economy is no longer required. What all this adds to, of course, is that we have over-budgeted last year under exceptional circumstances. But when I cast my eyes back to the previous Budget estimates, I wonder if the Government has developed a trend of over-budgeting, albeit in smaller amounts. I wonder if the buffer built into previous Budget estimates could have arisen out of a mentality of conservatism and safety nets. A conservative mentality that was, and probably still is commonly associated as being symptomatic of the bureaucraticism in the civil service. I hope not. But it is a side message emanating from over-budgeting. I hope not because in order to adequately meet the millennium challenges head on, we need both the private and the public sectors to be more rigorous and less risk-averse. The Government should lead this change to promote this renewal and stance for Singaporean entrepreneurs to factor-risk into their business strategy and the Government should send the correct messages through this budgeting process.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.45 pm.

Sitting accordingly suspended at 3.24 pm until 3.45 pm. Sitting resumed at 3.45 pm