ANNUAL BUDGET STATEMENT

Resumption of Debate on Question (23rd February, 2001),

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2001 to 31st March, 2002.". - [Minister for Finance].

Question again proposed. 12.42 pm

Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Speaker, Sir, it must have been a very pleasant task for Dr Richard Hu, the Minister for Finance, to deliver this year's Budget.

The reason is obvious. Unlike the Budget and off-Budget statements in 1998 and 1999, when painful and belt-tightening measures had to be introduced to combat the recession and the adverse impact of the regional financial crisis, in sharp contrast, this year's Budget is a happy one. The only problem, I think, Dr Richard Hu and his Ministerial colleagues had was how to share out and apportion the goodies that a healthy Government budget can enable them to dole out to the different segments of the population. For FY2000, the budget surplus is expected to increase from the original estimate of $2.4 billion to $3.5 billion.

This year's Budget is indeed an extremely generous one. The Finance Minister has given out benefits to practically everyone in Singapore. Allow me to quickly recount some of the very generous benefits doled out. There are the significant 2-5% cuts in personal income tax. Then there is the unexpected 1% cut in corporate tax, following a 1/2% cut already given out last year. Small businesses are given partial tax-exempt benefit for chargeable incomes of up to $100,000. To top off, the Government is giving a 10% rebate on personal income tax. This is more generous compared to the 5% rebate given last year.

The other benefits that touch deeper into the hearts of the lower income group is the Service and Conservancy (S&C) charges, rentals and utilities rebates to various households living in HDB estates. Then there is the additional $500 million contribution into the Lifelong Learning Endowment Fund, an additional $250 million to the ElderCare Fund, and $100 million to the Medical Endowment Fund. These are very gratifying benefits indeed. These and other benefits announced brought great cheers to the people. What is worth noting is that the benefits are biased in favour of the lower income group and the smaller firms.

However, in spite of the excellent benefits, I do feel that there are areas in which the Government can perhaps do more, or be more proactive to anticipate potential problem areas, and detail the possible remedial actions. Uncertainty of External Economic Developments

Sir, the Finance Minister did make general broad brush reviews of the regional and international economic situation. However, I feel what is lacking are some clear statements stressing the likely problem areas in the short and medium term. We are concerned about the worsening US economy. We watch with dismay the geo-political developments in our neighbouring countries, like Indonesia, the Philippines, Thailand, Japan, Malaysia and elsewhere. The Deputy Prime Minister, BG Lee Hsien Loong, has warned about the tough external environment as mentioned in last Friday's newspaper reports.

The Deputy Prime Minister said that given the current political and economic uncertainties in South-east Asia, the external environment Singapore now faces is the most difficult since the 1960s. He warned that any regional political turmoil would have direct impact on Singapore. These are strong statements and a very realistic and sober assessment of the current economic situation. Then, why is it that the Budget Statement for this year did not dwell on this matter in depth? Why are no comments made on how to deal with a potential crisis if another regional crisis or turmoil were to precipitate? We are fortunate that through sound management of the economy, we have escaped the recent crisis in a sharp "V" shape recovery. The people and the business community are indeed very concerned about a recurrence of the recession, meaning a "W" shape downturn.

I suppose the Finance Minister will respond that when the time comes, he will deal with it, and propose off-budget measures. This is not a very comfortable approach. The Singapore Government is known for its practice of looking far ahead, anticipating problems and planning in advance. As the Chinese saying goes: wei yu chou mou ( ), which means to close the windows and the doors before the rain comes.

It seems that this time round, the Budget did not mention these preparations. Are we getting too comfortable and too smug? I do not think so. One explanation I can offer is that talking about a potential downturn may not fit in the tone of the Finance Minister's Budget speech for this year; that things are good, let us come and share the goodies, and let us worry about the rain later. Whatever are his reasons, I do feel that it would indeed give the people more comfort that even in good times, we are reminded that our Government is prepared for any unforeseen eventualities ahead. Similarly, it would bolster the confidence of foreign investors that the Singapore Government is very alert and mindful of external eventualities, and is constantly thinking and planning ahead. We definitely are. This is the trademark of the PAP Government. Collaboration with the Countries in the Region

It is evident that the region is going through a difficult transitional period. I say "transitional" because I am confident that the leaders in the regional countries will eventually overcome their problems. Since we are living in a difficult neighbourhood and we cannot just uproot ourselves and move elsewhere, it is necessary therefore for us to find ways to help our neighbours to get out of the rut, so to speak.

Besides the direct bilateral assistance that we are doing, there may well be other methods for us to help each other, for our mutual benefit. One way is to use the ASEAN framework to do joint trade and investment promotions to the Western economies. Collectively, the economic and trade Ministers of ASEAN countries can work together to persuade the MNCs in the developed countries that this region (ie, Indonesia, Malaysia, Thailand and others) are still good investment areas in view of the low overheads and abundant labour supply. Singapore can help to facilitate this process, if we can undertake joint trade and investment promotions. If foreign investors return to this region, the economic recovery will be hastened. Leap-frogging the Region

While we work hand in glove with our neighbours to attract foreign investors, it is also beneficial that Singapore makes direct approach to countries beyond ASEAN to encourage them to invest here. In this instance, our move to establish bilateral Free Trade Agreements (FTAs) is a step in the right direction. The FTAs will encourage the strong and successful companies in the foreign countries to seriously explore trade and investment opportunities with Singapore. In the process, they can be encouraged to cast their eyes wider, and look at other investment opportunities in our neighbouring countries. At least, we can hope that through their attention being attracted to Singapore and by casting their eyes in our direction, the region will also enter their "radar screen" of these foreign investors as areas of investments. Promotion of Nation Building

Besides the main task of the Budget to plan and allocate resources for the economic development of the country, another major objective of the yearly Budgets is to apportion Government spending and resources to match the broader objective of nation building.

The recently completed year 2000 survey of household income showed that over the last 10-year period from 1990 to 2000, the household income gap of Singaporeans has widened further. The national average monthly income of the lowest 10% wage earners dropped from $370 in 1990 to only $61 in 2000. In contrast, the national average monthly income of the top 10% wage earners increased from $9,670 in 1990 to $16,800 in 2000.

Obviously, there has been a widening in the income gap between the rich and the poor. As I recall, the Senior Minister, Mr Lee Kuan Yew, commented before that this is like a marathon race by all Singaporeans, starting back when we first gained our independence. As we progress and prosper, the gap between the forerunners and the stragglers behind gets longer and longer. This is inevitable. We cannot stop the race and start all over again. We also cannot tell the forerunners to run slower to wait for those behind to catch up.

I support the Prime Minister, Mr Goh Chok Tong's call over the weekend to the people not to fret over this income gap. Firstly, everybody's income has increased, from an average of $3,080 per month in 1990 to $4,940 per month in 2000. The Prime Minister has explained that wealth is not confined to a privileged minority at the expense of the majority. There are opportunities for all. Wealth is redistributed through measures introduced during the Budget, and Government has programmes to reach out and help the poor and needy.

The key to what the Government can do is to provide everyone a sound education so that every Singaporean, whatever are his abilities, can run a good race and earn enough rewards to have a decent and useful life. For the ones with potential, we provide scholarships and bursaries, at all levels, to lift them to higher heights. Another task of the Government is to lessen the burdens that the people have to carry in the race, and at the same time provide supplements and assistance programmes along the way.

In this regard, I can say that Singapore has scored top grade "A" in its mission of nation building. We have provided one of the best educational systems in the world, an envy of many others. Our students scored high grades in international mathematics and science tests. They have done well in top universities around the world. They achieved top honours in international oratorical debates. We have a low, but simple and effective tax regime. Huge foreign investments continue to flow in. We have substantial foreign reserves. And we have consistently achieved high economic growth and healthy budget surpluses.

What I particularly welcome are the various funds to help the poor and under-privileged. We have the Medical Endowment Fund and ElderCare Fund. Another worthwhile programme is the Lifelong Learning Endowment Fund. These funds are very meaningful. They help the poor and elderly to pay for their medical and hospitalisation bills if they cannot afford it. The other fund helps the older workers to be trained and retrained so that they can adapt to the changing technological environment in the work place.

Then what more can be done? Actually, not much more, since there are so many plans already thought out and put in place by the Government. However, I do have a few suggestions. Grassroots Fund for Community Groups

First, I would like to suggest that we establish a Grassroots Support Fund which grassroots organisations can tap on to do more activities for their task to support the Government's plan towards nation-building and building stronger community ties. I would say that even if we allocate a lowly sum of $100,000 per constituency, the Government needs only to put aside $8.3 million yearly for all the 83 constituencies, as a fund for grassroots leaders to help finance their projects. Currently, I do say that the lack of ready availability of money does put a constraint on the scale and the quantity of projects and activities that grassroots bodies like the Residents' Committees and the Community Clubs can organise.

It is a fact that important community groups like the Residents' Committees in HDB estates are formed with no direct funding support from the Government. Often, while they devote much time to organise activities to draw in residents, they also have to raise their own funds for activities and projects. When they have to source for donations from local residents or shopkeepers, or undertake major fund raising project exercises, these efforts can be laborious, energy sapping and time consuming. I feel that this is unfair to our dedicated and hardworking grassroots leaders. Lack of funds should not be a constraint for grassroots groups to do more. They should be freed from time spent on fund raising, so that they can channel more energy towards organising activities and promoting neighbourliness. The grassroots bodies are important elements in the nation-building process. It is time that due recognition should be given to them by allocating them sufficient basic funds so that they can be more effective in their efforts. The money is affordable. To ensure that the money is spent meaningfully, we can allow the advisers of the grassroots organisations to manage and decide how the funds can be used. Reward for Pensioners

The second area where I feel strongly that the Government can do more is the recognition and rewards for pensioners. The retired Government pensioners are a group that has toiled quietly and faithfully to help build up Singapore. Many of them spent their entire career in the civil service. During the old days when Singapore was less well-off, civil servants on pension scheme generally drew lower salaries compared to their contemporaries in the private sector. It was just an honour to serve. Salary was not the key consideration. Things have changed since the pension scheme has been modified where most Government servants are switched to full CPF payments, and civil servants' salaries are matched to the private sector.

However, for the pool of retired civil service pensioners, many are trying to survive and make ends meet on their lowly meagre pensions. They see the fruits of the economic pie which they have helped to build being shared out in the recent years, but they get nothing or very little. Moreover, the pensions are eroded in value through inflation and increase in the cost of living. Not many of them are complaining. You do not see many letters to the press. But I think during the good times like now, it is important that this lot of past contributors is not forgotten.

In this year's Budget, the Finance Minister has made an attempt to provide something for the pensioners. He has increased the Singapore Allowance by $10 to $150 per month and increased the gross pension ceiling from $950 to $1,050 per month. This revision will cost the Government an additional $1.7 million. I wish to lament that this sum of $1.7 million is rather paltry. Compared to the budget surplus expected for financial year 2000 of $3.5 billion, this is only 0.0005%, or less than half of a 1,000th of a percent.

Sir, may I quietly plead to the Finance Minister, on the pensioners' behalf, to ask that some form of a more substantial adjustment be considered so that the pensioners are also amply rewarded. I am not asking for a formula for inflation indexation scheme to constantly adjust pensions for inflation. But an ad hoc review may be a kind and thoughtful gesture. Sadly, this year's Budget cannot be said to be the most generous to the pensioners. I sincerely hope the Finance Minister will sympathise with this appeal. Raising Living Costs and Business Costs

Sir, with your indulgence, I like to speak on two remaining areas that I wish to raise in this Budget debate. It is a constant refrain from both the common people and the business community, that is the call to help contain rising costs of living and costs of doing business.

We have to accept that with rising affluence, living costs and business costs are bound to increase. What the people and the business sector are asking is for the Government to refrain from imposing more charges, rates and fees on them. For example, the low income group is facing difficulty with the recent increase in utility charges due to oil price increases. Their income is falling behind the increase in cost of living. For FY2000, the expected budget surplus is a hefty $3.5 billion. For FY2001, this surplus is expected to increase further to $4.4 billion. That means the Government is collecting more revenue than it needs for its yearly total expenditures. Surely there is no need to raise Government charges and fees. On the contrary, more reduction in taxes, rates and fees may be considered.

As I said earlier, the low income group are the people falling behind the wage gap between the rich and the poor. The Government must continue to find ways to help them. Otherwise, they may feel left behind and become disgruntled or disillusioned that they are not enjoying a share of the country's economic wealth. Their only hope is to see that their children do well in their studies, and they look forward to the days when their children can secure good jobs, attain good stead in their careers. Therefore, education and retraining is the great opportunity equalisation factor. We must ensure that everyone has good access to education and retraining.

As for the business community, they are concerned and disappointed that this year's Budget did not address or even mention how to contain the threat of rising business costs. Although the overall economy has grown by 9.9% in 2000, many local businesses have not fully recovered from the 1998 recession. Good examples are the retailers and the construction sector. They are still facing insufficient business demand, high business costs, high labour, utilities, rental and other costs. A survey recently conducted by the Singapore Confederation of Industries (SCI) has confirmed that most local businesses are still concerned about poor business prospects and rising business costs. Even MNCs based in Singapore are becoming concerned about these business cost increases.

The reduction of corporate tax by 1% is welcome, no doubt. However, companies can only enjoy the tax cut if they make a profit. If they are not profitable, the tax cut is not meaningful. Therefore, reducing cost of doing business is still the best and most direct to them. The only measure in the Budget that helps to reduce business costs is the reduction in property tax rate from 12% to 10%. However, except for the residential sector, this effect is negated by the withdrawal of the 25% property tax rebate. Mr Finance Minister, you gave out with one hand and took back with the other hand. Some may cry foul.

To contain business costs, companies wish to request for a slowdown in the restoration of the employers' contribution rate to 20%. The rate has already been restored to 16% from January 2001. It is appreciated that workers have taken the 10% CPF cut to help lower business cost and help revive the economy. However, many companies are concerned that too rapid a restoration of the employers' CPF contribution to the full 20% will stall their business recovery.

Therefore, the business community would like to urge the Government to make a determined effort to help contain business costs. They hope that with the flexibility of the larger budget surplus, the Government can do a comprehensive review of Government administered charges, such as port charges, land transportation cost, ERP, utilities, COE, levies, and other duties, so that operating costs should be kept as low as possible. Conclusion

In conclusion, Mr Speaker, Sir, I would like to repeat that this year's Budget is an extremely generous Budget. We wish to thank the Minister for Finance and his colleagues for giving us so many benefits and rewards. As he has said in his Budget speech, this year's package of "share-outs" is the most generous to date (except to the pensioners perhaps). This sharing-out is possible because of the effective and prudent Government we have. It is especially significant in the face of the turmoils we see in the surrounding region. The Government will continue to build substantial budget surpluses. Next year's budget surplus is expected to be higher, as I said earlier, at $4.4 billion. If this is achieved, we would be pleased that some of this surplus is shared out with the people, and the balance is put into our national reserves as a cushion against future uncertainties.

Mr Speaker, Sir, uncertainties and changes we are sure to face them, now and in the future. In my view, the best safeguard is not how big our reserves are, but the key is to have an effective and honest Government. That is the one and only surest safeguard.

Mrs Lim Hwee Hua (Marine Parade): Mr Speaker, Sir, the Minister for Finance has presented what most would regard as the most generous Budget to-date. I rise to applaud the positive intent on both the business and individual fronts. I would however want to look at the Budget from two perspectives. Firstly, to look beyond the goodies, at the material changes to, (1) the business environment, and (2) the sharing of more of the fruits of our labour in Singapore's growth. And, secondly, to be vigilant about the development of a psychological divide amongst Singaporeans from the rapid pace of change from the extensive application of ever-changing technology and increasing liberalisation or deregulation of certain industries.

Firstly, on material changes. Sir, the lowering of the corporate tax rate by 1% point and personal income tax rates by between 2 and 5% points is a very significant move. Equally significant is the exemption scheme for smaller chargeable incomes which will benefit the small and medium enterprises (or SMEs), and to a certain extent companies going through a bad patch.

I recall that, in earlier years, there was a concern that lowering our corporate tax rate below the 25% level may lead to Singapore being classified as a tax haven. I am by no means suggesting that we forgo the opportunity to make our tax regime more competitive but I would like to know why this is no longer a concern. Also, if this is no longer a constraint, how much lower can we go? As low as Hong Kong's? Can the Minister also discuss the implications of further reductions in direct taxes for the level of indirect taxes, such as the goods and services tax?

Sir, the gap between the top income tax rate and corporate tax rate has narrowed by 1% point. I would like to ask the Minister whether there is any intention to harmonise the two in the context of entrepreneurship and start-ups.

With the reduction in income tax rates across the board, presumably the tax base, in terms of persons paying taxes, will shrink further. Will this limit the effectiveness of income tax adjustments as a fiscal tool in future? Specifically, will wealth sharing through tax rebates be less wide-reaching as a consequence?

Let me now move on to the development of a psychological divide. In his Budget Statement, the Minister has commented on the need for both the Government and Singaporeans to adapt quickly to changes and that we must continue to be mindful of our local context. I cannot agree more, for the ability to embrace and adapt to trends and changes by Singaporeans will indeed be key to our survival.

Sir, it is in this context that I am concerned - that we are facilitating changes but may not have done enough to help Singaporeans embrace changes, many of which are not immediately obvious. It is this psychological battle or divide which, I feel, merits a lot more attention.

Sir, much has been said about the wealth and digital divides which are largely the consequences of globalisation and use of technology. My colleague, Mr Leong Horn Kee, has spoken at length on the wealth divide. I should also add that much has been done to narrow the digital divide by the relevant Ministries, especially the Ministry of Manpower, MTI, MCIT and the NTUC, in terms of putting training programmes in place and for a wide range of workers. In aggregate, the Government has dedicated serious money, for example, $500 million to the lifelong learning initiative for training and retraining and cannot be accused of not funding enough.

However, Sir, the digital divide, in terms of the haves and have-nots to access to computers and technology, learning and retraining, cannot be addressed simply by pumping in more money or providing even more training programmes. A part of the budget for such programmes must be allocated to extensive public education and reaching out to the target audience, working through the grassroots and community organisations, where necessary. The psychological divide must be narrowed first before the digital divide can be.

The same attention must be paid to persons, who are affected by realignments to our economy, be these displacement of jobs, liberalisation or deregulation effects. Sir, this is not unique to us. Japan is being confronted with a structural unemployment challenge, which is caused by both a mismatch in skills and resistance to taking on alternative jobs. In this context, can more proactive efforts be made to identify the vulnerable industries and counselling be provided as early as possible so that workers are mentally prepared for the need to be retrained? In any case, as it is highly conceivable that contract employment is likely to dominate in future, the sooner Singaporeans modify their mindsets, the more adaptable to change they will be. The more we can minimise the sudden shock of being retrenched, the more willing to consider alternatives will Singaporeans be. Moreover, our limited manpower resources mean that we can ill-afford to lose the contribution of any segment of Singaporeans.

As for adapting to the necessary or desirable liberalisation or deregulation of certain industries, there is anecdotal evidence that some degree of public education is necessary.

Many Singaporeans have complained bitterly about being inconvenienced by bank branch closures, particularly, the POSBank branches that have served them for many years. But is this rationalisation of branch network unique to POSBank or DBS? No, it is not. All the other local banks are also rationalising. Or for that matter, is it unique to Singaporean banks? Again, it is not. I understand that customers in the UK and New Zealand are raising similar objections. Should the banks have done more to educate customers on the impending changes, which are really driven by competitive forces, not purely from a Singaporean context but from a global perspective? Yes, individual banks, or perhaps even the Association of Banks, could have embarked on a public education programme to pave the way for more electronic banking as opposed to branch-based cash transactions. Advice on alternative arrangements, such as the provision of cash-deposit machines, or directions to the nearest shopping mall, well ahead of the closure could have made the transition easier. Where the changes are sweeping, in terms of their impact on daily lives, even the Government can help play a role in public education.

Sir, let me end by making a similar request to the Government to ensure that sufficient resources are set aside for public education on the impending deregulation of the energy or electricity market.

The Minister for Trade and Industry has indicated that, eventually even the retail segment of electricity will be completely liberalised, implying that market forces will determine tariffs, as opposed to a quarterly review right now. A complete pass-through of costs will no doubt be transparent and defensible but Singaporeans need to be mentally prepared for an exposure to an occasionally volatile oil market, such as the phenomenon experienced recently. More importantly, they need to be able to take into account possible swings in their household budget.

On that note, Sir, I support the financial policy as outlined by the Minister for Finance.

Mr Chiam See Tong (Potong Pasir): Sir, in 1996, we had an election budget. That year was an election year. This time round, again, we have essentially an election budget. It is quite foreseeable that the general election shall be held either this year or early next year, before the next Budget Day.

The Minister this year has been much more generous than in 1996. With the election year in mind, the benefits have been mainly aimed at the individual, such as the tax reduction, rebates in service and conservancy charges, rentals and utilities.

Although the tax breaks may not be really beneficial as about 71% of the workers are not paying income tax at all, there are good reasons for the Minister to be generous. The workers have given their full cooperation in the 1998 cost-cutting measures to revive the economy, after it was hit by the Asian crisis. Singapore suffered two years of recession, beginning about July 1997. In respect of the cost-cutting measures, the workers were at the forefront in those steps taken to cut costs. They sacrificed a 10-percentage point cut in their CPF. Even up till today, full restoration of their CPF has not come about yet. Despite the generosity of the Minister, workers have given up more of their pay in terms of their CPF cut than what they shall be receiving in the Budget handouts. The workers therefore deserve this generous budget. Up till now, each of the workers has put in his national sacrifice and he suffers in silence.

There are forecasts that, this year, the Singapore economy shall be slowing down. It is therefore good to put more money in the hands of the HDB flat dwellers. I am thinking of the poor state of the retail business in the HDB heartland, as mentioned recently by Dr Lily Neo, the hon. Member for Kreta Ayer-Tanglin GRC. With the $1.8 billion handout, it is hoped that much of it shall be spent in the local HDB shops, to give those shops some business to keep them alive and the ability to pay their HDB shop rentals. Those rentals shall largely be returning to the Government kitty in any event.

The recession came in 1997. The following year, the Government put in place cost-cutting measures. The cost-cutting measures comprise mainly cutting the workers' salary in the form of CPF and the flexi component part of the workers' pay. The reduction in wage was mainly responsible for keeping the economy afloat. Singapore's economy pulled through the recession and recovered. Last year, it had a surplus of about $4.36 billion, after the deduction of $1.85 billion for the special transfers.

Almost every year, Singapore has a surplus in its Budget. All surpluses are transferred to the reserves and invested. Those reserves are not used up for the benefit of the people. Dr Kanwaljit Soin, the NMP, in 1996, during the Budget debate, suggested that the budget surpluses be used in accordance with a framework she proposed. The Minister, of course, refused and said that the proposal of using the budget according to a framework was too rigid.

I would suggest that more money be released from the surpluses, say, about $2 billion for a start, to make our education system the best in the world. In the initial year, more money is needed to build more schools to keep the class size small. My hope is that every Singaporean, by the time he leaves school, shall be equipped with the English Language. He must be able to understand, to read and to write properly that language. Without a working knowledge of English, our workers shall not be able to be trained to keep up with the knowledge-based economy. That is the problem of a large number of our workforce today. They lack a working knowledge of English and, for that reason, the great efforts put in by the Government and the NTUC seem to be getting very little results. If we want Singapore to go into the ranks of the developed countries, both in terms of per capita income and in social ranking, we must make sure that every one of our workers is properly educated. I say that it is worthwhile for us to use our accumulated surpluses for that purpose.

Mr Ong Kian Min (Pasir Ris): Mr Speaker, Sir, thank you for allowing me to join in this debate.

I support the Budget Statement delivered by the Minister for Finance. I am especially heartened by the Government's commitment to creating the best conditions for private enterprise to flourish in Singapore.

Since our founding by Sir Stamford Raffles in 1819, people from many countries, from different walks of life, have come to Singapore in search of opportunities. They have come in search of a better life for themselves and their families. To many, this means being here to make a decent living and to create wealth. After all, we are not an island to the south of Hawaii, where people chose to retire to, or to while away their days under a coconut tree. Singapore has always been a highly competitive commercial hub for businesses.

Ultimately, it is business that draws foreign people to Singapore and retains local talents to work and live here. If Singapore is a backwater economy with few opportunities for advancement, talent, which is mobile, will take flight to seek out opportunities elsewhere.

In this globalised world, a highly qualified and disciplined workforce, brought about by good education and training, is important but not sufficient by itself to ensure our continued success. As Mr Leong Horn Kee has pointed out just now, we have a very sound and effective education system. Our young achieved the best scores for science and mathematics. In a recent international ranking, our students came out tops. Last year, out of 12,192 students who sat for the "A" levels, 1,251 students (or more than 10%) scored four As. They move on to do very well in foreign universities, often coming up tops in their class. But if after graduation, they decide to remain and work in London, New York or Hong Kong and never return, how would that benefit us?

Singapore must not merely be a training centre for the world. We must not merely be the school that produces good students, nor merely an institution that churns out efficient and diligent workers for foreign employers to recruit. Already, this is happening. Foreign hospitals come to Singapore to look for good qualified nurses. Foreign firms woo our best and brightest research engineers. More conducive business conditions elsewhere tempt our most promising entrepreneurs.

Knowledge, ideas and talents are highly mobile. These are mobile because they reside in the heads of people, who are mobile. When a person is attracted to move to a foreign land with better opportunities, his knowledge, ideas, skills and talents go with him. But capital - our own money, our own national reserves - does not move unless and until we decide to move it. Ultimately, we decide where to move and deploy our money. We should therefore use our financial assets to strategically seek out and attract other people's knowledge, ideas and talents, and retain our own. Sir, I feel that the guardians and managers of our capital have not been creative enough to use the funds at their disposal to attract and retain talent. More can and should be done.

It is noted that this year's budget contains a lot of measures to stimulate the business sector and to allow new industries to mushroom and thrive. This is a good sign that we are concerned about how to make sure that homegrown businesses can flourish. We should not just be concerned about training Singaporeans and foreigners so that they can make it in the world beyond our land. We want them to make it right here within our fair shores.

What we need is to make commercial room so that Singaporeans can be successful entrepreneurs in Singapore. This will be another root to bind good people here to our land. It will help us deal with the very present danger of losing these good people to a digital, globalised world - a world that does not subscribe to the concept of "Our Home, Our Nation."

Entrepreneurs are more invested in a country than professionals, who just offer their services to the highest bidder anywhere in the world. Entrepreneurs will be more engaged and concerned about local issues, because the business they own is at stake. We need to give such local talented trained Singaporeans the business conditions to grow here, so that they can feel invested in this country and have a stake here.

Sir, at the same time that we are making room for top talents, we must also make room for those who are going to have a harder time in this high-speed world. While we must emphasize training and skills upgrading to prepare our population for the new economy, and there are laudable success stories of those who have made it, in reality, not everyone can be retrained for the new digital age. Some may just have to be helped along until their next generation takes over and brings the entire family to a higher plane.

Recently, the media reported that the income gap was widening. Those from low-income families running small businesses face a particularly daunting uphill struggle. The small business owner is becoming a dying breed. There is also a change in business operations and the big boys have an advantage. Take, for example, newspaper kiosks along Orchard Road and at bus stops are tendered and won by big corporations like Singapore Press Holdings. The individual proprietors do not stand a chance in the tender exercise. I understand that some schools are considering tendering their canteens to main contractors, who then find individuals to run the stalls for them.

Of course, this makes commercial sense in terms of control, coordination and efficiency. It is easier to deal only with one "big boss" rather than many small ones. It is easier to sub-contract to a main contractor and let him deal with the small individual problems. However, what this means is that the small guys no longer have an avenue to start small, and will always be an employee and taken advantage of by bosses who act as middlemen.

Many famous entrepreneurs have started small. One example is Li Ka-shing, who started the Cheung Kong factory making plastic flowers. Today, he is a major player in real estate, retail, telecommunications, power generation and port operation.

Do we, in modern Singapore, have room for someone to start small and grow like this? I would say it is a room that is getting smaller every day. But I do think that we need to give some due consideration to the small business owner in Singapore, to give him a fair and fighting chance to carve out some niche here. I am happy that in this budget, we have embarked on this process.

Sir, I support the financial policy of the Government.

Mr Seng Han Thong (Ang Mo Kio): (In Mandarin): Mr Speaker, Sir, in his Budget Statement, Finance Minister Dr Richard Hu described this as the most generous and unprecedented Budget.

This Budget is not only generous, but is thought of by many as being more generous than expected. My personal view is that the generosity of the Finance Minister is a principled and creative one. It is intended to relieve the people from hardship, reassuring the people, pro-business and maintaining competitiveness.

Just now, the Member for Potong Pasir said that this was an "election year" Budget. I think we can only say it is a budget which is presented close to an election year. Utilities, service and conservancy charges rebates will serve to relieve the hardship of the lower-income group. Lifelong Learning Endowment Fund, Eldercare Fund and Medical Endowment Fund serve to reassure the people. The various tax rebates and reductions will not only benefit the business community but also reaffirm their competitiveness.

Yet, the most touching part of his Budget Statement, particularly to the lower and middle income workers who are apprehensive under the impact of the new economy, is the following statement, "This year's Budget emphasises how to help every worker to pull through this difficult but necessary economic transformation." The Minister also said that in the next 10 to 15 years we need to have a workforce comprising at least 65% workers who have received secondary education and above. Yet, in 1999, we had only 35% of our workforce with secondary education.

The Government has allocated another $500 million to the Lifelong Learning Endowment Fund. The Fund has now $2 billion. As this Fund will eventually be topped up to $5 billion, our challenge now is how to mobilise every Singaporean to participate in lifelong learning.

We should let everyone know that the objective of lifelong learning is to enable our workers to tackle the challenges of the new economy, that is, to have a job in the new economy and to lead a good life.

Many workers have this worry: they thought that "new economy" means computer technology, companies reform and restructure, and hence more retrenchments. Then, they may lose their jobs. To undergo retraining, they fear it may be a case of "The spirit is willing but the flesh is weak".

Therefore, during the transitional period of migrating to a new economy, the Government should give them not only the Lifelong Learning Endowment Fund but also the lifelong learning confidence. Tell them, "The new economy is actually built upon the foundation of the old economy. The new economy is not just computer technology, life sciences. It also includes the essentials of our daily lives." The new economy is to solve the problems of our daily lives in more innovative ways, to improve our quality of life, and to let us lead better lives.

Let me give you an example. I believe everyone of us must have taken instant noodles. I believe every family must have stored some instant noodles at home. In fact, many people are storing some packets of instant noodles in their office to tackle the challenges brought about by working in the new economy.

The instant noodle was invented in the 1950s by Ando Momofuku of Japan. He is already 94 years old today. This was the first chicken ramen invented by him in the 50s. The instant noodle is a product of the old economy. It enables us to eat a bowl of steaming hot and stomach-filling noodle very quickly, and it is cheap.

But, instant noodle is also a product of the new economy because it is continuously innovating, and new types of products, new flavours and new packaging are emerging every day. We have now the cup noodle and the bowl noodle. In other words, we do not need to have a cup or a bowl to enjoy a meal of delicious instant noodle. How creative!

Instant noodle is sold all over the world, even taking to the sky. When we are hungry while taking a long haul aircraft, we can simply ask the air hostess for a cup of instant noodles. Instant noodle can take to the sky because it is convenient and innovative.

Instant noodle is part of the new economy. Our Singaporean popiah, kuehs, satay and roti prata can also fit into the new economy. If we can be more creative to make the production of these delicacies more economical, tastier, more "instant-cooking", they can become a part of the new economy. If they can be like the instant noodle selling to all over the world, then they are part of the new economy! I am glad to see that our "Ti Yi Jia" popiah has stepped out of Singapore. Our Bengawan Solo has set up retail outlets at Changi Airport so that tourists can bring our Singapore brand home. These are products of the new economy!

Therefore, I hope that when the Ministry of the Environment and the HDB upgrade their hawker centres, markets and neighbourhood shops, they would create opportunities for creative Singaporeans to start up not only in their HDB flats, but also in our markets and shops, and extend the benefits of the "Creativity Fund" to them. Let the ordinary folks see that when computer technology which is essential to the new economy is creatively applied to our daily lives, it can make life better for everyone.

This is only an example. I can give you hundreds of other examples to illustrate how we could encourage Singaporeans, especially the older Singaporeans, to take part in lifelong learning.

I hope that in the new Budget, the Minister for Finance could consider allocating some funds to encourage employers to employ workers who have undergone retraining, that is, those workers who have migrated from the old economy to the new economy. I also wish that while emphasising the new economy, the Government should also simultaneously tell all Singaporeans that any service or product which brings about better results through creative measures will be needed by the new economy.

Let me give you another illustration. Our public bus service conveys some 2 million passenger-trips every day, about half of our population. Buses spur on our economy, our new economy. If the buses do not move, our economy will be affected. As such, the bus service industry is also part of the new economy. Can we not conduct various training schemes through the Government to attract more workers who are affected by the economic transformation to turn to the bus service industry? I understand that many years ago, SBS attempted to promote a bus driver training scheme, but the response was not encouraging. If we can repackage this scheme, it should be able to help some Singaporeans who are affected by the economic transformation. Let them obtain a Class 4 licence which costs some $1,000. This will also help to alleviate the problem of shortage in bus drivers.

Mr Speaker, Sir, I am citing all these examples to illustrate the fact that apart from computer technology, our essentials in life, such as clothing, food, accommodation and transportation, can also be part of the new economy. As the Finance Minister said, "Every Singaporean can continue to play a role in our new economy."

Mr Speaker, Sir, I support the Budget Statement by the Finance Minister.

Mdm Claire Chiang See Ngoh (Nominated Member): Sir, Budget 2001 is a generous one. As this is my last Budget speech in this House, I would like to express a few wishes for this House to consider.

Sir, by adopting as a starting principle in S21 that "everyone matters", we have, as a society, explicitly recognised that, while we should continue to nurture the elites, the very smart children and big or leading-edge businesses, we must now equally focus our attention on ways to enhance the quality of life for many other Singaporeans who are not so smart, not so capable and also the small businesses like what Mr Seng Han Thong had argued for.

Fortunately for us, there is no abject, absolute poverty in Singapore. However, poverty, as any sociologist or social psychologist will attest to, is a relative measure of well-being. And even in the richest societies, so long as there is competition and a free market place where some are better off than others, there will be pockets of underclass, the disadvantaged and the marginalised. That is not something to be ashamed of or to hide, but instead, to try to reduce it by first understanding what is happening, and then how to deal with it.

We need better and more sophisticated measures of relative poverty, such as the impact of the length of time families spend in so-called "poor" status, on the mental health of various family members and suicide rates; or the impact of low income on educational opportunities, even within a meritocratic society. We need to explore the complex dynamics between drop-out rates from school, crime rate, family break-ups, poorer housing conditions and income levels. The recent release in the Straits Times on the rise of children as young as pre-primary and primary levels seeking psychiatric help is a disturbing trend. Is this, for example, related to income at all? Or is it a stress condition caused by school pressures which affects all social classes?

These are the "untidy", no-simple-answer social complexities which are masked by macro-economic statistics such as per capita GDP. Now that we have arrived as a nation and achieved the highest per capita GDP in the region, we can do more than meeting the basic needs of Singaporeans by addressing the numerous challenges due to globalisation. It is not just the low-income families which are struggling, the impact of modern day stresses claims its casualties in all social classes in different intensity.

However, the low-income or socially disadvantaged families need integrated solutions to their inter-linked problems. As Dr Hu himself had said in a World Bank meeting last year that a "new social contract is needed as distribution of wealth and opportunities cannot depend solely on free market" (June 7, 2000, Business Times). This initiative requires a belief in the worth of the individual by offering to those who fall behind a second chance and additional support to move on. The Government had identified training as an important support but we also need to know what are the socio-psychological barriers to learning and retraining and why are the older workers not stepping forward to retrain. Education is provided for even for the poor with the Education Fund proposed in the Budget, but what about those in the 60s and older who are beyond training and expect to live for 15 to 20 years more? How are we going to share our prosperity with them? Will they get farther behind us as our nation is hurtling into the new era?

We need now to give substance to PM's call for a caring society by starting to construct a new social contract through specific measures. We can begin by committing resources to tracking a range of social exclusion indicators with the objective of monitoring whether we see a permanent underclass emerging.

In addition, I would like to propose four measures.

First, after a decade of dialogues and workshops on the family, we need some closure by enunciating a clear family policy that addresses the needs of families. This will generate an ethical movement to help Singaporeans re-focus on family values and encourage the start-up of a range of services and industries to cater to the needs of working couples. Like the $500 million Lifelong Learning Fund which was set up to develop a slew of programmes to upgrade our workers, we should set up a similar $500 million Family Fund to implement the numerous recommendations on family-friendly programmes.

Second, set up an Inter-Ministry Fund to sponsor joint projects which need to be addressed in a concerted effort by all Ministries and civil servants. For example, in our effort to implement an effective care plan and rehabilitation programmes for domestic violence victims and perpetrators, we need to draw the IT resources of the various Ministries to produce a central database on domestic violence cases and their profile. We have talked about this project for four years and the progress has been slow, because there was no ownership by any one Ministry due to a lack in funding. Other projects include the collaboration among MCDS, MOM, NTUC and SNEF to set up formal structures, processes and activities to facilitate implementation of pro-family practices at workplaces. Another urgent need is to enhance the channels of information sharing and coordination of services between prisons and the community-based voluntary agencies in dealing with special needs of children and their families made vulnerable by both their parents' incarceration due to drug offences. These children, about 850 of them, are left unattended by their own parents. Sir, the fragmentation and duplication of efforts at all fronts is wasteful and frustrating for all the officers involved.

Third, in view of continuing labour shortage in the services sector and particularly higher attrition rates among social work graduates, we may need to develop social work skills within our communities. I propose that we set up a Social Service Training Scheme in each CDC to design adapted social work curriculum to be conducted in various family service centres and community centres, with the objective of producing a larger pool of social service personnel to meet specific needs of that community. Housewives, retirees, mid-life adults wishing to change careers, retrenched mid-40s who have no paper qualifications, retired teachers, nurses and youths can be tapped and trained through modular programmes, to deliver paid social work duties. By introducing social service skills training programmes outside of tertiary institutions and locating them within the community, with proper supervision and accreditation status, we can effectively match the right people to appropriate skill modules.

Fourth, set up a once-off Parliamentary Committee to review and rationalise budgetary, regulatory and professional issues related to the social services and its delivery infrastructure. Let me raise specific issues.

Should Government adjust the current 50-50 co-sharing scheme for subsidising the operating expenses of a VWO to a 60-40 funding formula considering that operating costs are rising faster than Singaporeans' willingness to donate to charities? At the level of service providers, will the Government allow a VWO to operate a school for drop-outs to promote second chance education? Will the Ministry of Education fund it partially? If a VWO is willing to deliver occupational therapy services to homes and charge for its services, can it do so without losing its funding from the Government? There are many suggestions which can enliven the social service sector and make it more dynamic and market-driven, if some of the regulatory restrictions on the operations can be re-assessed. Can we move away from the comfort zone of making small step incremental changes to policies and instead map out new working models which place VWOs at the core of the delivery infrastructure?

In our effort to professionalise and upgrade social services, we need to address the remuneration structure of the sector to incentivise more to join and remain in this sector. In similar arguments which we have used to keep civil servants or teachers in their jobs by paying them well, we need to consider paying social workers well enough to ensure that they deliver quality service to those in need.

Should we also rationalise a policy on eldercare after so many dialogues and workshops were conducted last year? Who is designing a policy on disability and addressing the critical need for rehabilitative and residential needs of the severely mentally handicapped in order to lighten the burden of parents who need to go out to work? Indeed, NCSS and MCDS, as well as MOE, are the institutions tasked to provide new guidelines and seek more funding for services on behalf of these vulnerable communities. I remember the Minister for Finance told me last year that he never failed to give money away if there were good reasons, but only if they were being requested by the various Ministries in the first place. I urge the officers to take this point seriously and help to champion the needs of the community.

There is a need to thoroughly review outdated regulatory mechanisms and planning norms. Let me illustrate. The financial support of 90% capital funding for a special school and rehabilitation workshop for the disabled is based on what the MOE and MCDS define as "supported" areas. These supported areas are based on space norms which were fixed during the seventies, at a time when physiotherapy and occupational therapy were based on high touch and simple equipment. Today, with better and larger physiotherapy equipment, more space is needed, but VWOs will not be funded for this increased space requirement, as the space norms remain unchanged. Believe it or not, this rigidity applies in setting space norms for details such as toilets. And different Ministries set different space norms. For example, for occupational therapy functions, MOE funds 42 square metres for two persons, and MCDS funds 18 square metres.

VWOs today find the norms too outdated, limited and restrictive. So, in order to develop a building with the desired features optimal for the comfort of their clients who are on wheelchairs, for example, a social agency ends up paying close to 40% of the capital funding, instead of just the 10%. On top of that, they need to find more money for furniture installed outside of the "supported areas", including office installations. What is peculiar to me is, for a group such as the Spastics Association which is tasked to equip the disabled with basic self-management skills and cooking being one such critical skill, the space designated as domestic science classrooms is not funded by MOE. Yet, the Ministry funds mainstream schools which conduct domestic science classes. Sir, I think we need to revamp, assess and fix new space norms for special needs.

Sir, given that a budget surplus of $4.4 billion has been forecasted for the coming financial year, and if there is another severe economic downturn, I hope the Minister will focus on the lower 10% segment of the population and support the social services.

My last wish, Sir, is that the representation of women parliamentarians and female community leaders and directors at all levels, will increase in order to provide a multi-layered perspective to social and economic policies. Their increased participation may help to highlight more questions on the social sector which I hope will be given more priority to be raised in this House. If families are the pillars of social cohesion, then women's role in forging this cohesion is critical, as they are the primary care-givers tending to the needs of the young and the old. They know the challenges of keeping families intact. They know the impact of economic upswings and downturns on family cohesion. If we listen to what women have to say and want, gentlemen, we would have helped to solve literally half of the country's problems.

Mr S. Iswaran (West Coast): Thank you, Mr Speaker, Sir, for allowing me to join in this debate. I rise in support of Budget FY2001 and the financial policies that underpin it.

Sir, by all accounts, this is a Budget that is generous and many speakers have already alluded to that. But, to me, I think this Budget is significant for one particular reason and, that is, it is introducing not just a series of one-off transfers, but also systemic and structural changes to our fiscal regime. I think that is important because it has the effect of translating one-off gains in our surpluses into a stream of incentives, a flow of benefits, for both individuals and corporations. And I welcome that because I think it will serve our long-term goals.

As a case in point, I would like to focus on corporate tax. I think lowering the corporate tax by 1%, to 24.5%, is a good gesture, and it is certainly in keeping with the times. Avowedly socialist regimes like Sweden have aggressively reduced their corporate tax, and it is good to see that Singapore is not sitting by waiting to be competitively outflanked by these countries. But having said that, Sir, and I think the previous speaker Mrs Lim Hwee Hua mentioned this and I would like to bring up this point again, the Minister has previously mentioned that the long-term target was 25% for the corporate tax. And one of the reasons he cited was concern about Singapore becoming a tax haven, and I believe this, in particular, was linked to concerns from certain countries which are big investors here. I would like to know how has this scenario changed and perhaps, more importantly, since this threshold has now been breached and we have gone below 25%, the question is: what next? And I would be grateful if the Minister could share with this House the Government's thinking on its longer-term target for the corporate tax, and what will be the parameters that it will use in determining that policy.

Sir, I also welcome the introduction of preferential tax treatment for the first $100,000 of the chargeable income of corporations. This has introduced, I think, as a matter of principle for the first time, an element of progressivity in the corporate tax regime in Singapore. I think this is a very welcome development and certainly SMEs who are profitable will be thankful for it. And I do hope that this is a principle that the Government will apply with greater flexibility in the years ahead in response to scenarios.

I would like to focus on the company stock option plan (CSOP). Sir, the move to extend the preferential tax treatment to established companies is a welcome one. Last year, when it was first introduced for the start-ups, the question was when will it be extended to other companies, since the principles underlying stock options are general in nature. Having introduced the scheme, I would like to ask the Minister two specific questions. The first, why is there a difference in the tax treatment between start-ups on the one hand and established companies on the other? The motivation for a stock option scheme is the same. The Minister has, in the past, argued that it is because start-ups have greater difficulty in attracting talent. But I would ask the Minister to consider this. In the case of start-ups, those who join the start-ups tend to get much larger quantities of stock options. So there is a quantitative element in the attractiveness of start-ups and the option schemes therein.

Secondly, one could also argue quite persuasively that the scope for upside in a start-up is significantly greater provided it succeeds. Given those scenarios, I would imagine that even if the tax regime for stock options is the same for all companies, it should not adversely affect the ability of start-ups to attract talent. So I would appreciate it if the Minister could explain why there is this differentiation and whether there is scope to harmonise this.

The other aspect of this CSOP scheme is the requirement that 50% of employees must have stock options before the company can qualify. Sir, I understand the motivation behind it and I fully appreciate the intent. But I would like to pose two questions: one, which I think is a problem in principle, is stock options in general are targeted as incentive devices for the senior management of an organisation. It is debatable how valuable it is as a device to motivate lower down the ranks, because the quantum given to them would be relatively small. And, secondly, there are other devices such as variable bonuses and other performance-linked incentives, which can take its place. That being the case, I think it poses a problem in principle why we need to insist on this 50% minimum allocation.

The other is the problem in practice. Sir, today, in Singapore, there are many corporations which will use Singapore as a HQ for R&D and certain core types of activities, but it is not uncommon to find that the bulk of their manufacturing operations and other activities may well be conducted outside the country. It is not uncommon to find companies which have got the bulk of their manpower living and working in countries outside Singapore, in ASEAN, China, etc. These are subsidiaries or wholly-owned. In these instances, the 50% requirement, it seems to me, will pose quite a problem for the company to structure a meaningful stock option scheme for those working in China, in order to meet the 50% threshold. So without knowing the full details of the scheme, I would urge the Minister to consider a more flexible application of this requirement. In the limit, it would be best if the requirement could be eliminated altogether. But if that is not the case, then certainly lowering the threshold, I think, would be very helpful for such companies.

Sir, on the matter of systems and structures, may I just turn my focus now to transfers and income redistribution. First, I would like to add my voice to the chorus of those who have asked for a more generous - if I may use that term - treatment of pensioners. I heard feedback from many pensioners that a $10 increment in the Singapore Allowance is by all means not the best that the Government can do, and they ask that they be treated with greater consideration.

Having said that, Sir, in more general terms, the Government has used three main devices to effect some form of wealth sharing or income redistribution and transfers. The first device has been tax rebates and reductions in tax for individual income. The fact that more than two-thirds of Singaporeans, and I believe the proportion will rise with recent measures, I think the first $7,500 of chargeable income will now be tax exempt as well, so the proportion of Singaporeans who do not pay income tax will certainly be above 70%. The effectiveness of tax rebates and tax rates reduction as a means of redistributing wealth or sharing wealth is limited. It is more, I think, correctly regarded as a device to incentivise those who are productively contributing to the economy.

The second device the Government has used is direct transfers. The examples are the CPF top-up or the SC/CC rebates and the like. And in these instances, there is an element of progressivity, because the quantum is pegged to the housing type and the number of rooms in an HDB flat is used as an indicator of the level of wealth or socio-economic standing of the family or an income earner. While this has its limitations, I understand that it is not perfect but probably one of the most practical proxies, and I accept that. But we have to bear in mind therefore that this too has its limitations, as a device to redistribute income and wealth within Singapore.

The third device has been endowments. We have set up numerous endowment funds, as and when our budget surpluses allow for it. These have been the Edusave Endowment, the Medical Endowment Fund, the ElderCare Fund, the Lifelong Learning Fund and so on and so forth. There is a whole range of these endowments. They each serve specific purposes, but the general principle in setting aside an endowment is that the income will be used to meet particular policy objectives.

Sir, all these measures have advantages and disadvantages and, collectively, they do serve a purpose in redistributing and sharing wealth in Singapore. But having said that, I would like to ask the Minister whether, given that fewer Singaporeans will be paying income tax in the years ahead, there is, as part of the Government's financial policy, an effort to perhaps transfer more of the income redistribution through direct transfers as opposed to tax rebates and the endowments. I would like to get some clarification on that from the Minister.

At the same time, and this is a point that Mrs Lim Hwee Hua alluded to, I would like to reinforce this with some specific proposals. I think the Budget is a very imposing document and it is a budget certainly at the macro level. But it is micro in its impact on individuals and companies. There is a need to be able to communicate the effect of the Budget and the slew of Government measures that have been set up time and again to help individuals and companies effectively to the target audience.

I have two specific requests which the Minister if he could consider them, I would be grateful. The first is whether, either as part of any Budget presentation or perhaps as a separate exercise, together with the media or other communication channels, the Government can demonstrate the net effect of various transfers, etc, on the average Singaporean earner. For example, we could define that as a 4-room flat resident with a median income of about $1,500 a month. But the key point here really is bringing the Budget down to the average man's level. Many fail to grasp the significance of various measures. And I feel that this would be one way of getting the message across, that indeed if they look at the totality of what is being offered, that the Government is being fair and channelling the incentives to targeted areas.

The other aspect is in terms of communication on this whole range of endowments that have been created. Each Ministry or statutory board is charged with the responsibility for a particular endowment under its care and manages its own communication. But I think it would be fair to say that on the ground, the information is certainly not perfect and many would still be quite confused or at least unaware of the various schemes and what is required. Sir, the Ministry of Finance has an overview of the entire range of endowments we have set up in Singapore. I think it would be very helpful if the Ministry could, in fact, come out with a communication plan. It is not just about printing brochures but a systematic means of getting the message across to agencies that are interacting on the ground with the average Singaporeans and companies on the whole range of measures in place. And I do not think this is a one-off exercise either because every year we have new developments, and in fact even between budgets we have changes. There is a need to communicate this in a holistic way so that agencies on the ground - for individuals, this could be the CDCs or CCCs even; on the other hand, for corporations, it could be various business groups and so on - understand the total picture and are ready to dispense advice appropriately. I know some of these have already been done, Sir. But I wonder whether the Ministry of Finance could, through its leadership, bring all this together as one key communication device which is managed systematically and regularly, so that all Singaporeans can benefit from the Government's schemes.

With that, Sir, I support the Budget.

Dr Tan Boon Wan (Ang Mo Kio): Mr Speaker, Sir, thank you for allowing me to join in this debate.

This year we truly cross into the new millennium. If this marks our journey into a new future, then surely Minister Richard Hu has ensured that Budget 2001 befits the occasion. This is indeed a commendable Budget. There is something for everyone. It caters to both the future and the present.

The Minister has prepared this Budget with an eye towards the future. He has reduced the corporate, property and individual tax rates. Unlike rebates, these alter the tax structure for the long term. He has made available more money for education to ensure that our young are well prepared for the future. In an increasingly uncertain world, he has provided for national security. He has ensured that research efforts will not be hampered for the lack of funds. This reflects the Government's thinking and vision of a competitive globalised future. The Minister has not forgotten the sacrifices of the people. He remembers their contributions to the sterling recovery and performance of the economy last year. He has generously shared the economic surplus with the people with, for example, increases in tax, rental and service and conservancy rebates. Some people, like Mr Chiam See Tong, have described this as an "Election Budget". But surely at all times, it is the hope of a government to be able to announce a generous budget that a country can afford. I congratulate Minister Dr Richard Hu on Budget 2001.

Sir, Singapore will encounter many challenges as we transit into the new economy which is dictated by information and information technology. Among these, let me highlight the issues of the digital and social divides. These are divisive issues for a society. These issues are not unique to Singapore. All societies moving into the new economy will face them. Several of my fellow Members of Parliament have spoken on these issues. Let me add my views to them.

The new economy needs people who are information technology literate. People who cannot use information technology will be cut off from the many new opportunities that will become available. They will be confined to the less meaningful and low-paying jobs which at the same time will also decrease. People who are tuned to the new economy will thus earn more. The divide between the well-off and the less well-off will widen and become more entrenched with the IT factor. Who are those affected? They are not only people without or with low education but also the older people who grew up in a world without computers and have problems learning to use it.

The digital divide will widen the income gap. This is the reality of the situation. But what is important is to make sure that everyone shares in the benefits of the new economy. I am glad that the Government is allocating more money for education and has spared no effort to introduce IT into our classrooms at all levels, schools, junior colleges, polytechnics and universities. The positive outcome of this effort will be seen in the years ahead. But I would like the Government to do more for the rest of the population - the old, the working people and all the others who are not IT-literate - to help them learn to use the computer. This will open the new and increasing well-paying jobs and opportunities to them. Let us also retain jobs that do not really need to be computerised for the others who cannot adapt to information technology.

No matter what we do, there will always be some who will fall through the net. These are the people who are unable to cope in an increasingly competitive new economy. In the United States where the upper end earns over 400 times those at the lower end it is an indication we are living in a world where the income gap will continue to widen. The feeling of having lost out will increase among those who are less successful. The sharing of the success of the nation will be important for the unity of the country. The system to support those in need needs to be strengthened. This became evident during the recent economic crisis. The solution is not merely financial. The issue is how to help them to get out of the rut and on their feet again. How can we help those who are unemployed to get a job? What can we do to help those who have become structurally irrelevant become employable once again in the new economy? In a rapidly changing world where a person is expected to have many careers in a lifetime, such help will become routine. We need to devise a more robust support system to help our people.

Sir, social cohesion is crucial for a nation. In a new economy, social pressures arising from the impact of information technology will stress social cohesion. We must consciously and proactively tackle these pressures. The Government understands the urgency of the task and has taken steps in this direction. More, however, can and needs to be done.

Sir, I support the Budget.

Mr Chng Hee Kok (East Coast): Mr Speaker, Sir, I rise in support of the motion standing in the name of the Finance Minister.

Like all Singaporeans, I must compliment the Minister for Finance for delivering a sterling Budget. It is hard to find fault with such a Budget, except asking the Minister for Finance to do more of everything.

Perhaps with such a large surplus to give away, I can only suggest that the Government should put some money to train Singaporeans from all walks of life to be IT-savvy. If we wish to transform the way we do things, the way we conduct Government business, especially making use of computers and the Internet, then we must train everyone who is not in school.

The Finance Minister spoke of a major transformation in the delivery of Government services by providing these services online. He said that, "By the end of this year, nearly two-thirds of all Government services will be available online in some way or other, making them accessible 24 hours a day".

While I applaud the Government's long-term plan to move with the inevitable way business is being conducted and targeting its services to be accessible 24 hours a day, there are a number of other issues. Chief amongst this is how to make sure that the users of today, and the users of today are not the school children, they are the housewives, the retirees and the not-so-well-educated, can avail themselves of such services and use these online services effectively. The Government must embark on programmes to make "IT for the Masses" or "IT for Everyone" a competitive advantage for Singapore.

Besides bringing all Singaporeans into the online mainstream, we must make sure online transactions are secure and effective. Are online services user-friendly and easy to locate? Since all Government Ministries attempt to provide their services online, how does the Government ensure that there is some uniformity in the design? The Government must set up a body to ensure security and measure the effectiveness and efficiency of the online services. IT for Everyone

There are now no funds set aside to make IT education available to the whole population. Funds and effort have been concentrated on our students and rightly so. But the population at large who are users of Government services must also not be ignored. The Government must not restrict its resources to just students alone if we are to make IT a competitive advantage for Singapore. We must also pay special attention to the housewives, the retirees, the retrenched workers and those who are not so well educated. In other words, we must bring IT education to the heartlanders.

For this to happen, the Government must intensify its efforts by funding the CDCs, the CCCs and the RCs to help them set up computer centres. These centres will be able to offer IT literacy courses and bring IT to the doorsteps of our residents. This doorstep approach will garner more support from the housewives, the retirees, the elderly and anyone who is interested because it is in their own locality and within familiar settings, on home ground, so to speak. Such an approach will lower the barrier to learning and make IT education easily available and affordable. To the sceptics, I can quote an example to illustrate that such an approach can work.

Sir, take the example of the close collaboration between the Fengshan CC and the Marine Parade CDC in setting up two Student Care Centres fully equipped with computers and four computer centres attached to our preschool education centres. These centres are equipped with broadband systems so as to allow for very quick Internet access. Fengshan PCF kindergarten is one of the first to provide computer-aided education to all children and not only those whose parents can afford to pay. Today, all Fengshan pre-schoolers are taught to surf the Internet and they know how to use e-mail. The younger they are, the lower the barrier to learning.

However, the real success story is the use of the centres to train adults in the evenings and the weekends. There are ongoing computer courses for the masses at affordable and competitive rates for people within the constituency and of course outside. It is available to self-help groups, such as MENDAKI, private companies sending their staff for upgrading courses, and many other organisations. In the last three years alone, some 25,000 persons, and in the last two years more than 9,000 a year have attended courses at the IT centres in Fengshan, and these numbers do not include the kindergarten children. Also, we have opened the centres in the evenings in the last two years and some 3,000 residents actually dropped by to use the computers at a nominal charge. I can shamelessly boast of the success stories that we hear so very often of how computer literacy has helped to improve the lives and livelihood of so many computer illiterate persons in many different and unexpected ways.

So what do Mdm Lee Ah Eng, who is in her mid-50s and living in Bedok North, Mdm Sahara binte Hassan, 38 years, a housewife and Mr Chin Sin Chong, a retiree have in common? Sir, all of them know nothing about computers, let alone sit in front of one. Today, after attending the computer literacy courses at Fengshan IT hub, they can now work on computers with ease that belied their true profession or training. Mdm Lee, the Treasurer of Fengshan WEC, was a butcher's assistant before the epidemic in pigs caused her to lose her job when the Government banned the sale of pork. However, unlike her other colleagues in the same trade, she quickly found another job not so long thereafter as a clerical officer of a pawnshop. Sir, the pawnshop owner needed someone who knows how to use a computer to type out pawn tickets in English and Chinese. Mdm Lee had just completed the Microsoft Word and Rich Win 97 courses offered at Fengshan IT Centre to grassroots leaders. She of course clinched the job right away during the interview after she proved her proficiency on the computer, and this is despite her age and lack of experience as a clerk.

Mdm Sahara is a housewife who has never touched a typewriter, let alone a computer all her life, until she joined a computer course, especially designed for housewives, and she joined the course out of curiosity. She can now surf the Internet for new recipes (cooking recipes are her interest) and exchange cooking tips and culinary skills with friends she has met online.

Finally, there is a Mr Chin who is a retiree in his 60s. He too has no computer knowledge but after attending a course at Fengshan IT Centre, he now volunteers himself as a cyberguide, as we call it, so that he can teach the elderly and other senior citizens how to use computers.

I believe we have proven the sceptics wrong that such an approach cannot work and that we may be putting money in the wrong place. But these are real life examples of why the use of IT has to be widespread and made accessible for the masses, if we are to see a successful use of Government's online services.

User-friendly online services. Sir, having trained the people, we must make certain that online services are truly user-friendly and effective. I quote a recent personal experience of how difficult the Ministry of Manpower's online services were. I went into the MOM's website at www.mom.gov.sg to check whether an intended foreign worker possesses a valid employment pass. Sir, I could not find a link on this web page at all after going through several of the menu items. I finally called a toll free number listed on this page. Unfortunately, the menu of telephone services was not listed on this website. So I had to go to the menu, the sub-menus and several menu items. At the end of it all, out of frustration, I went back to the main menu and got an officer on the line. After five minutes of good classical music, a nice charming officer came to the line and she told me that particular enquiry could not be found on this website. And she gave me the name of another URL, just to search for the bona fide of an intended foreign worker. Sir, I could not understand why the URL could not be hyperlinked to the MOM's website in the first place. The logical thing is that, if this is available at MOM, it should be linked to the website. MOM should not claim that potential employers or landlords can easily go to the website to check on the validity of foreign worker permits when the information they themselves give to the public are sometimes skimpy and also time consuming.

Sir, after gaining access to the second website on this URL given by the officer, I was again frustrated in my attempts to solicit the information I want because my NRIC No. was rejected as I did not type in the prefix "S" before it. Sir, our NRIC Nos. are unique numbers and there is a computer to take care of all this. I do not see why we need to key in the prefix, whether it is "F", "P" or "S", and if you do not key in "S", you can never get the service. Also, requiring the foreign worker's identification number is another exercise of testing the limits of the user's patience. Why must it have to be the so-called FIN numbers, given by the Ministry, and not the worker's passport number, for example. Sir, perhaps, I would like to invite the Minister to try going online himself to test out the system and see for himself why much more improvements are necessary.

Sir, the Inland Revenue Authority, IRAS, is encouraging taxpayers to submit their returns online. While it boasts of some successes, I am not the person who uses it, but I have feedback that it could have been more simpler and easier to use. For instance, taxpayers need not have to do paperwork, or must have paperwork done first before they go online to key in all the information from the worksheet which they have to complete beforehand. Sir, if the system is user-friendly enough, you just key in all the information and the computer should actually work out the worksheet and tell you what is your tax, without having to do the worksheet beforehand.

So all said and done, I firmly believe that the Government must have some form of audit of all its online services to streamline them so that all claims of accessibility can be truly materialised. If efficiency and effectiveness of the Government are to be upheld, a rigorous audit is inevitable and mandatory to ensure that we rise to the challenge and this is really sharpening our nation's competitive edge through the use of IT.

Mr Kenneth Chen Koon Lap (Hong Kah): Sir, after the Finance Minister's Budget speech, the Prime Minister expressed to a few of us in the House that he was surprised at the somewhat muted response by the Members present although the Budget, by all means, is an exceptionally good one, more so against the backdrop of political and economic uncertainties in this region. Could it be that we have gotten so used to expecting positive budgets year after year that we take it for granted that a good budget would be delivered at each session.

In this year's generous budget, all Singaporeans, whether the well-off or the not so well-off, benefited. What is more significant is the much greater apportionment of the budget being given to education, social welfare, training and assistance to start-up companies and local businesses. Why the subdued response? Does it mean that the population has grown soft with years of good progress and prosperity? How does it affect our competitiveness in the future during this time of global uncertainty and growing regional turmoil? Can we afford to be complacent? We are fortunate that we have enjoyed stability and sustained strong economic growth at a time when some of our neighbours are still fighting desperately for survival. We should take this opportunity to consolidate and strengthen ourselves in order to remain competitive and innovative and stay as one of the major economic players in the global arena.

Sir, in the last Parliament sitting, BG George Yeo indicated that the impression that the GLCs dominated over Singapore businesses was erroneous. The GLCs are responsible for only 12.9% of our GDP growth and the MNCs actually are responsible for the major percentage, nearly 40%. However, that does little to change the perception of the GLCs being so dominant in the local business scene. It may be because of the only presence of the GLCs among all businesses in Singapore that leads to this conclusion. The fact that GLCs are involved in almost all types of business, be it manufacturing, retail, property, construction, consultancy services, transportation, communication, finance, etc, leads to the perception that they are in competition with all local private businesses.

Sir, one cannot question the policy of building world-class operations that can compete in the regional arena for the survival of Singapore, a nation without much resources and land mass. This policy is arguably correct as one of the most expedient ways of building such corporations is by the setting up of GLCs because of their ability to amass huge financial as well as human resources. The success achieved by corporations, like the SIA, PSA, ST, Telecom, NOL, DBS, and many others, that have made their mark in the global arena, is proof of the farsighted policy of our Government. Very few, if any private businesses, can have the ability or the economic capacity to achieve what some of these companies have.

Singapore Technologies have continuously ventured into projects which require large economic resources and long-term investment, the latest being in the field of life sciences. JTC's setting up of wafer fabrication industries and spearheading the petrochemical industry in Jurong Island are among some of the shining examples. For Singapore to survive and remain competitive, we need these organisations to venture into new businesses, and R&D projects can be the pioneer for others to follow. However, while recognising the GLC's role in nation building, one should not totally ignore the contribution of the local entrepreneurs.

I am happy that, consistent with the policy of nurturing local entrepreneurs, the Government has come up with many assistance schemes and incentives to help the local businesses to grow. But the Government has to be mindful that these entrepreneurs need space and scope and, if necessary, assistance from the Government to succeed. These businesses which are in direct competition with the GLCs may find it very difficult to survive as the GLCs, with the strength and financial resources, not to mention the very widespread networking, can put them out of business easily. I am not suggesting that the GLCs should be limited in the scope of their involvement or be prevented from freely going into any type of businesses they choose. But there should be a certain balance to consider whether they need to spread the business venture so widely and freely and enter into areas where traditionally our medium and small businesses are trying to survive.

The Government has always stressed that, as long as the playing field is level, everyone should be free to compete. But, in reality, in any competition between GLCs and private businesses, very often, the feeling of the private sector is that, although the field may be level, they are playing with nine or 10 players against 11. There would always be a great imbalance in the competition. To illustrate my point, NTUC Fairprice is doing a tremendous job in operating a business as a workers' cooperative, bringing in benefits to all Singaporean workers, as well as ensuring stability of essential commodities. Let us say that they suddenly decide to corner all retail business in the HDB heartland and put a supermarket in all our neighbourhood centres. Surely our HDB shops would never be able to survive against them because of their size, human as well as financial resources, and eventually, all will be driven out of business. I am sure NTUC has no intention whatsoever of doing that even if it means that it can expand its business and turn out a better bottomline. Therefore, it can be reasonably assumed that any GLC, with its financial resources and, more importantly, its networking, which wants to compete in any local businesses in Singapore, it would have no difficulty in overwhelming the local competitors. The question is: is it desirable to jeopardise the long-term objective of having a strong public and private sector co-existing with each other as the twin engine that would drive the Singapore economy? Therefore, it would be good if the GLCs could concentrate in areas where the enhanced resources and expertise would maximise their potential and performance in ways that a local private business would find difficult in matching, for instance, in the international arena or in certain niche areas.

Venturing into new fields and R&D projects can open new business opportunities for Singapore and, together with the input of the local entrepreneurs, both can flourish side by side. It would be a sad day if our younger generation do not see any future in the private sector and their only option after their graduation is to enter the civil service, the GLCs or the multinationals. I am sure this is not what is best for Singapore and not what the Government's policy is aiming for.

Sir, I cannot help feeling that there still exists this perception of a great divide between the private and public sectors. This is not healthy, nor is it desirable. I would like to continue seeing all Singaporeans, be they in the public or private sector, working together for the good of the nation. All Singaporeans should have a sense of belonging and the opportunity to excel in whatever field and whichever sector they feel most comfortable in.

Sir, I support the motion.

Mr Sin Boon Ann (Tampines): Mr Speaker, Sir, thank you for allowing me the opportunity to participate in this debate, and I rise in support of the Budget for financial year 2001 and the financial policy that underpins it.

Sir, the Minister has pointed out that the Budget debate is a time when we take stock of the economy and the direction that we have taken. The debate is also a time for us to take new bearings for Singapore. What kind of society do we want to create for Singapore and what are the values that we want to promote? As we move into the new millennium, we are cognizant that Singapore is caught up in a transition as the economy adapts to the changes of the global economy where, as the Minister has put it, the main drivers of growth are knowledge and talent.

Changes are not always welcome. This is often the case with those who are not able to cope. For the middle-aged workers who are caught in the middle, economic restructuring and realignment would mean potential job displacement and an uncertain future. For the small and medium enterprises, their inability to cope with competition brought on by an increase in the number and presence of the bigger players in the industry, means declining business and a bleak outlook.

Sir, we need look no further than to consider the present plight of some of the shops in the HDB neighbourhoods. We have been assured by the Minister that, in the new millennium, there is a place for everyone. Invariably, the question to some, if not many, has been: what does it mean for them? Can we assure them that in the midst of this uncertainty brought on by the global economic changes, the dawn of the future would bring about better times for them, while those who have run on ahead would continue to blaze the trail for those who are struggling to follow? We are faced with the basic question that the budget provides the opportune time for us to ask: how can we ensure that the future of Singapore would always have a place for every Singaporean, young and old, rich and poor?

Sir, we know that, at its most basic level, globalisation means, to many of us, liberalisation of trade and greater competition for businesses and resources. Our response is equally clear. We must ride with the tide or be washed away by the currents of change. This is evident in the way we sought to liberalise our economy to facilitate the free movement of labour and capital. Our economy is relatively open to investments. Sir, there are very few impediments to foreigners investing in Singapore, other than those relating to business viability. We have openly encouraged talented foreigners to take up employment and residence here in Singapore, and in the hope that their skills and talents will help add to the talent pool here.

In a way, globalisation is very much driven by the economics of pragmatism. Our policies largely ebb and flow, according to the tide of dollars and cents. In other words, we allow cost effectiveness to dictate and decide our policies. It must be. Competition in the global economy requires us to ensure high profitability through constant shifts in business operations, on the basis of costs and profitability margins. Where foreign labour is cheaper to hire than local ones, we hire foreign labour. Where the industries no longer yield the necessary value-add to ensure high economic growth, we abandon them. Just look around us today. Textile factories are almost non-existent in Singapore, and I do not suppose there are many electrical appliance assembly operations remaining. Similarly, there are not many canning factories left here.

On the labour front, the importation of skilled construction labour, at a fraction of what it would have cost to hire the equivalent of local workers, has but all displaced our own people with similar skill sets. Soon, there will be very few Singaporeans left who are capable of doing masonry work, or carpenters who can undertake form construction.

The intense market competition, brought on by our relentless pursuit of economic efficiency, has left a mark on our population. It is not by accident that we have acquired the dubious honour of being one of the most kiasu societies. We became a kiasu society only because our competitive spirit permeates to all levels of society, practically from cradle to grave.

Sir, I do not deny the benefits of an open economy driven by competition. The benefits of that ideology are, with the collapse of communism, without doubt. However, what is the cost to society? What is the cost to Singaporeans?

At one level, there is the social cost. By allowing a free flow of talent, we tend to displace Singaporeans from the employment that they would otherwise have enjoyed, but for the redundancy made possible by cheaper labour alternatives. In the scheme of things, those who are middle-aged and with limited education, are most at risk to having their employment services terminated prematurely. Such premature termination of employment would invariably cause some dislocation to their family, especially when a displaced employee has a wife and children to support. Unfortunately, it would be the children who suffer. What this would mean is that there would invariably be cutbacks on tuition, music and other enrichment classes and holidays, perhaps overseas. This may, in turn, affect their development in every sense of the word, and affect the future of Singapore.

Sir, when we speak of unemployment, it is not just the employee who is affected, but a whole chain of people down the line as well. So, when we speak of helping these employers to make adjustments to the new economy, we must be mindful of the urgency that is required to act on this matter since there are other lives involved as well. That is one possible cost.

At another level, we have the economic cost. Labour tends always to gravitate towards sources of high wages and opportunities for social advancement. As we become more globalised, we realise that the labour of our people cannot be contained in our territorial boundaries alone. As opportunities exist elsewhere, our people would be under a strong temptation to seek out these opportunities there. In this free society, there is little we can do to stop them. What this means is that while our people get displaced at the bottom because of the inability to compete with others elsewhere, there are others at the top who are prepared to seek their fortunes outside of Singapore. Their skill sets and talents are such that they would not have a problem getting employment in the financial centres of New York or London, or in the information technology houses in the Silicon Valley or teaching positions in Ivy Leagues universities in the US. There is, therefore, this potential for hollowing out of precious limited talents that we have in Singapore, which we will have to replace, either from the younger members of our population or from other parts of the world. Indeed, as our forebears had done in the past, they had migrated from China and India, so, too, unless their roots are deeply planted in Singapore, our younger Singaporeans may likewise follow suit, except, this time, they will be moving out of Singapore.

So we hire people from outside of Singapore, in part to fill in the shoes of Singaporeans who should be taking up this employment. The net result in substitution is that we do not have a steady base of locally qualified employees who are committed to this country. In other words, we end up with foreigners providing the talents for some of the key services in our economy and not just the manual labour. Sir, this is fine as long as we are able to sustain economic growth and provide the base of political stability. However, if future conditions prove unstable, we cannot count on these people to remain behind for us. If this comes to pass, Sir, I think we will have a problem.

In a way, Sir, we are partly to blame for this state of affairs. For want of a better description, the basis on which we govern our relationship tends to be contractual, even if the basis of the relationship is understandable. We contract with students to send them overseas for a good education in exchange for the promise of service when they graduate. If they do not perform their side of the bargain, we claim damages and we shame them publicly. We hire good people for the upper end of the public service. We try them for a few years and, if they do not succeed or they are not suitable, I believe we will tell them to look for their careers elsewhere. So relationship with our people is often kept strictly to contract and are, therefore, economic in nature. Sir, as with any economic relationship, one tends to be calculating. For the young bright Singaporean looking at the future ahead of him and where the world is his oyster, he will soon wise up and ask himself, "What is in it for me?" He will obviously be doing his sums and decide what is in his best economic interest. Can we count on him to put the national consideration before himself? I would like to, Sir, but I doubt it.

By defining success purely in material terms, we have inadvertently raised one generation of young Singaporeans who are dedicated to the god of conspicuous consumption. Driven by a deep-seated materialism, many of our best and most capable will continue to leave our shores to seek their fortunes elsewhere. This will have the effect of depleting our talent pool even further.

Sir, it is, therefore, not just a problem of workers continually learning new skills and working in a new environment that we have to grapple with. It is, I submit, a deeper set of problems derived from globalisation, how this will affect our workers, their families, the likely impact that this will have on the future of Singaporeans and on the limited talent pool that we have.

Finally, there is also the issue of the political cost that we are faced with. Sir, there is evidence that the income gap between the top income earners and those at the bottom has widened in Singapore. That this is so is not a surprise. Globalisation has brought about greater competition for people and talent across boundaries. Where talent is in short supply, market forces have dictated that premium salaries would go to them. On the one hand, the same cannot be said of unskilled labour. An unskilled worker in Singapore, working in a low-technology assembly operation here, will find it difficult to compete with his counterpart in China or in India. On the other hand, a highly skilled IT professional, who is Singaporean, will be in demand by the MNC who is prepared to pay top dollars for his services. The result, unfortunately, has been a widening of the income gap between the two. Yet simple economics tells us that we cannot artificially prop up wages for those from the working class in order to narrow the gap, unless we want to price ourselves out of competition. Against the backdrop of rising prices and the cost of living, the growing income disparity will, no doubt, add to the growth of discontentment within our society. We will, no doubt, begin to see the age-old conflict between the haves and the have-nots rearing its ugly head again.

The statement by the Government, that our workers must go for training and retraining in order to increase their productivity and wages, has almost become a motherhood statement in Singapore. The deeper issue is: how can we ensure that, with training, our workers can be assured of better paying jobs and a more secure future? Can the inherent discrimination against older retrenched, but trained, workers seeking re-employment be overcome? Has the Government looked into and dealt with this issue?

Sir, if we accept the foregoing arguments, then it follows that our financial policy should also be skewed to address these problems raised. For instance, would the Government consider the possibility of giving some form of tax rebates to companies which employ older workers or retrenched workers? Additionally, should special tax concessions be considered to attract highly qualified Singaporeans to return to Singapore to contribute to the growth of our country?

In making this submission, Sir, I know that the answers may not always be there readily for us. However, as they say, the journey of a thousand miles always begins with the first step. I hope the Government will take that first step.

Mr Chew Heng Ching (East Coast): Mr Speaker, Sir, I rise to support the FY 2001 Budget.

I would like, firstly, to commend the Minister for what has been described by many as the "best ever" Budget. Indeed, whilst providing something for all Singaporeans, businesses, SMEs, individuals and families, this Budget has struck a fine balance. It sets the fiscal tone for the future economic development of Singapore, as well as addresses some pressing concerns in our current economic environment.

First and foremost, I am greatly encouraged by the emphasis that the Minister has placed on the smaller members of society. The tax cuts for individuals, for instance, are not the flat-rate type cuts that provide the biggest windfalls to the rich, but were structured to benefit the lower and middle-income taxpayers most; whilst, the corporate tax relief is structured to benefit, in greater proportion, small businesses which have felt the heat from globalisation and greater competition most. I am particularly heartened by the fact that non-taxpayers also share in the surplus built up by the Government last year. For example, the $333 million rebates on HDB service and conservancy charges, as well as savings in rentals and utilities in addition to CPF top-ups, are not only timely, but crucial to maintain the social fabric that keeps and binds our nation together.

Sir, I would also like to stress that it is equally important that the right incentive structures are in place in Singapore to enable the right environment for creativity, risk taking and entrepreneurship, without creating a dependency effect for the less successful members of society on the better-off. The welfare methods that were a hallmark of many European societies of the past and the fiscal drain on big governments by many state-run programmes clearly drained resources and dis-incentivised the able to produce more, is certainly not the route for us.

Hence, the reduction of personal and corporate taxes is significant in that it sends the right signal to Singaporeans and foreigners alike who may be further encouraged to make Singapore their home. Ultimately, it is not increases in Government spending per se that should be the support for any economy, rather the creation of the right long term regimes to align incentives for individuals and companies to take greater risks and produce more.

Sir, whilst I applaud the Minister for delivering a good Budget, I have a few questions to raise. The first question reflects the concerns many Singaporeans have over the worsening state of the world economy today. In the short term, it does look like the flu that the US economy seems to be suffering from has already affected some of our global companies, particularly those in the electronics industry. Singapore has managed to accumulate surpluses in years of plenty, running budget surpluses even whilst the Government had embarked on an expansionary fiscal policy to stimulate the economy in the last two financial years. However, now that we are reducing direct tax rates, will this limit the ability or desire of the Government to provide more off-budget measures to stimulate the economy in the future? Should the flu that the US economy has caught become prolonged, spreading rapidly here, we may have to do more.

For instance, the best economists and analysts were all caught off guard in December 2000 when the US economy started to cool and it was only recently that institutions like the G7 and IMF have started revising downwards the world economic growth with the potential for more shocks to come. There is perhaps a need for Singaporeans to understand and be assured that the Government stands ready should the 5-7 % GDP growth targets that MTI has set for this year not materialise.

After all, it was only 2-3 weeks ago that the Turkish Lira was devalued, and ominously, just like Thailand in 1997, the consensus expectation is that there will be no contagion effect, even though Eastern Europe has started to feel the chill already. A lower tax burden, as the Minister has rightly pointed out, will help businesses and individuals to some degree. However, it does not go very far if revenues are falling or jobs are lost. Potentially, a revisit of the global crisis in 1998 could arise, except that this time, the US, which has almost single-handedly consumed the world out from the recession then, takes the lead downwards.

I would therefore like to ask the Minister if the Government does stand ready to do more for the economy if indeed the US and the global economy slips into recession this year. Has the Government a contingency plan or supplementary budget ready?

Sir, the second question that I have concerns GST. We understand that when the GST policy was introduced some years ago, the longer term stated goal of the Government is to strike a balance between direct and indirect taxes. There is a concern now that with the reduction in direct personal and corporate taxes, the Government may increase indirect taxes through GST. Could the Minister therefore elaborate on what the plans are for GST, and if and when should Singaporeans expect further increases in GST, and will it be met by equally significant reductions in personal income taxes in future?

The third question concerns the allocation of the "share outs" from the budget surplus. It has been widely publicised that escalating health care cost is one of the greatest pressing concerns of working adults, and especially for senior citizens without a stable income. The $10 rise in Singapore Allowance for pensioners, for example, will not go very far to help meet many co-payment schemes by health care providers. Would it therefore not be more appropriate to consider allocating the CPF top-up, not to the Ordinary account, but to the Medisave account and to re-balance the planned contribution from the surplus to the Lifelong Learning Endowment Fund and the Medical Endowment Fund in order to address the pressing need for the aged in meeting their medical expenses in the future?

Fourthly, on a more specific matter, in view of the recognition of the need for Singaporeans to be part of the KBE and to embark on lifelong learning, would it not be more appropriate to review the current cap on tax relief for education course fees, currently set at $2,500 per year? Sir, I believe this level has not caught pace with the rapid rise in costs of tertiary and professional education in recent years and is incongruous to the emphasis that the Government has placed to encourage Singaporeans to upgrade their skills and education. I therefore urge the Minister to consider revising upwards this quantum, to encourage Singaporeans to upgrade their skills and education in order to keep pace with global economic demands.

Finally, Sir, I would like to reiterate and elaborate on the feelings on the ground and on the part of many of my constituents. Whilst MTI and the Government have been optimistic of Singapore's continued growth this year, following the rapid recovery in our economy in the last two financial years, there is considerable concern amongst many citizens that the benefits of recovery have not been fully felt across the board. Many small businesses, like retailers, HDB shopkeepers, market stallholders, etc, have not seen a discernible increase in business activity and whilst we have not suffered the fate of Hong Kong and the UK in the early 1990s, where many households actually suffered from negative equity in their household mortgages, there has certainly been some contraction in our asset prices.

Whilst many of these developments are symptomatic of the underlying changes in the structure of the economy, part and parcel of market adjustment and globalisation, they all contribute to the lack of confidence, and perception of uncertainty in the times ahead.

I would therefore like to commend the Minister for addressing some of these concerns in this Budget which has certainly underlined the commitment of the Government to bridge the gap and to give more support to the have-nots and the less well-off in the form of incentives to help them to do better and, at the same time, encourage the able to do more.

Sir, many of the measures that the Minister has presented in this Budget will certainly go to help those segments of our society that most require it, ie, the lower and the middle wage incomes, the small businesses and the fledging technopreneur sector. With more disposable income, hopefully, it would stimulate spending and business activities and perhaps enhance job creation.

Sir, I would like to end by quoting a saying from the late John F. Kennedy, "if a free society cannot help the many who are poor, it cannot save the few who are rich". This Budget has sent the message to our citizens that the Government has a heart for its people.

Mr Hawazi Daipi (Sembawang): Sir, this year's Budget is characterised by a strong sense of investor confidence in Singapore, which has been contributed, to a very large extent, by the discipline and sacrifice of our workers and our good governance. I am glad that the Government has decided to reward our workers for their sacrifices and help employers to enhance their competitiveness through this year's Budget. Perhaps, because of the good spread of goodies this year, the press was almost unanimous in describing it as "a generous Budget for everyone". I think they are right. But I would call it a "Budget for Social Cohesion" for the focus it gives, not just to the short-term reward for the sacrifices and in helping the lower-income Singaporeans through the rebates, but also in addressing the long-term need to help Singaporeans, particularly the lower-skilled workers, enhance their welfare through skills upgrading as our economy picks up pace in restructuring. With better skills, our workers will be able to enhance their employability and earn higher wages. Helping our workers to be employable is a very important welfare assistance to them, irrespective of their income status. These twin approaches will go a long way to addressing the issue of income disparities which could affect our social cohesion.

Our workers, as reflected by the views of our union leaders, applaud the Budget. One union leader has called it a "pro-all Budget" for the various rebates given away on the service and conservancy charges, utilities and HDB rentals. These will benefit the lower-income workers who are already not paying income tax. Also welcome are the lowering of personal income tax rates by 2 to 5 percentage points, the doubling of personal tax rebate to 10% and higher tax breaks on CPF contributions from the self-employed. Another union leader feels that all these measures show that the Government cares. I would add that the Government has kept faith with the people's trust in the consultative approach among the workers, employers and the Government.

These personal goodies are very important but what is equally significant is Dr Richard Hu's announcement of the Government's plan to allocate more resources to education and to facilitate lifelong learning among our workers. This, as I said earlier, is important to help our workers remain relevant in the New Economy. We learnt that last year, many of the manufacturing investment commitments of $9.2 billion were in key knowledge-intensive industries like pharmaceuticals and high-end electronics - areas that will help Singapore's future growth. We can expect the proportion of jobs that require higher skills will be larger year after year. Even though retrenchments fell to 11,500 last year compared to 14,600 in 1999, we can expect the proportion of retrenchments due to structural reasons would be higher in future.

Sir, it is because of this that our union leaders applaud the plan to beef up the Lifelong Learning Endowment Fund by another half a billion dollars to $1 billion. So is the allocation of the $30 million for Manpower Development Assistance Scheme, on top of the $6.3 billion allocated to education.

So, I join our workers in welcoming this Budget in its aim to helping our workers, especially the lower-income and low-skilled who missed out on education in their younger days, in making the transition to the New Economy by facilitating the learning of new skills. By emphasising skills upgrading and retraining, the Government has shown its commitment to the long-term welfare of our workers.

To me, this is a very important commitment to the welfare of Singaporeans. If we do not provide and improve the facilities and resources for programmes to enhance their employability, especially for the lower-income workers, the State will have to provide a more direct welfare scheme for them in the future. Our population and workforce are greying and our people live longer. If they are to remain independent, they need to be employed. And they can secure employment only if they can contribute to companies. Sir, therefore, we have to help them to gain new skills to remain relevant. The social welfare scheme of the West is costly to the society. In fact, many Western countries are modifying their schemes. We should not take the path that others are already discarding. That is why I support strongly the move to beef up the newly set-up Lifelong Learning Endowment Fund.

Sir, let me conclude by making a general comment on the corporate tax rate. I am glad that the Minister has announced a further cut of 1% point so that our corporate tax rate stands at 24.5%. Last year, Dr Hu cut it by half a percentage point. These measures, I am sure, could help companies to be more attracted to remain in Singapore or to come to invest here. But competition for investments and for jobs is not static. We should watch our competitiveness level all the time because many countries could catch up with us. Already Chile, Hong Kong, Hungary and Ireland, to name a few, have lower corporate tax rates than our 24.5%. At the same time, although many countries have higher corporate tax rates than ours, their effective rates may be comparable to ours as they have their own systems of rebates. Therefore, Sir, looking at these in the package, we have to sharpen our competitiveness edge in areas other than through fiscal measures only.

With this in the background, I would support this Budget which I would describe as pro-workers, pro-people and a Budget for social cohesion.

Encik Ibrahim Bin Othman (Bishan-Toa Payoh): (In Malay): Mr Speaker, Sir, the Budget for this year can be said to be a generous Budget. With a budget surplus of $4.3 billion, the Government is able to distribute some of it to the people, to assist those in the lower and middle income group. With the personal income tax reduction, it will also reduce the burden of the taxpayers to meet the rising cost of living. The budget surplus of $4.8 billion in 1999 and $3.54 billion in the year 2000 shows that we are able to manage our economy well. It also shows the effectiveness of our measures to bring about economic growth. With the cooperation and efforts made by all parties, the Government, employers and workers, our economy has grown by 9.9% last year. It is timely that the Government should share the success of our economy with the people through rebates and tax cuts for the people. In fact, we can say that every level of the people and all sectors of the economy are getting the goodies and incentives mentioned by the Minister for Finance. The people would like to thank the Minister for Finance for this generous Budget.

Mr Speaker, the Budget this year has been described by our businessmen as pro-business. The reduction of 1% to 24.5% for corporate tax for Year of Assessment 2002 is to maintain our competitiveness. It will also reduce the burden of tax by the companies. What is most interesting to me is the exemption of the income tax of 75% for the first $10,000 of income and 50% tax reduction for the next $90,000. This step will benefit the small and medium enterprises. However, businessmen are still expecting that the business cost can be further reduced to assist those who are facing slow economic growth this year. It is true that businessmen will pay reduced tax to maintain their competitiveness. But what is of concern to them is the business cost, such as transportation, payment of levies to the Government, workers' wages and rentals. Therefore, the Government should assist by ensuring that these costs of business will not rise rapidly. It is no point to have all the tax cuts when our companies cannot make profits. I hope the Minister will give an assurance that the Government will take steps to control business costs. And I hope that with these measures taken, we will be able to attract more investments and help start-up companies to expand here.

Mr Speaker, the general public, especially those who live in HDB 1- to 3-room flats welcome the rebate on utilities and service and conservancy charges. These rebates will assist them to settle their monthly bills. I welcome this measure. But I hope we should also consider other ways which are more effective to assist the lower income group in facing rising cost of living. Maybe we can give them a monthly grant to upgrade their skills, so that they will be able to secure a better job in future and maintain their families. I worry that the rebates which I treat as consumption may make them feel complacent and may lead to wastage. If a skills upgrading grant is given, I think this is in a way a long- term investment.

Mr Speaker, the crux of this Budget is to prepare the people to meet the growth in the new era. Singapore has to compete with developed countries in the world market. In the knowledge-based economy (KBE) era, education, training and re-training should be emphasised all the time. Therefore, the allocation for FY2001 of $6.3 billion to the Ministry of Education is right. This is the second biggest allocation. This is to equip our students with the new economy skills. The contribution of $500 million to the Lifelong Learning Endowment Fund is also for such a purpose. We are urging the people to upgrade themselves with skills and knowledge throughout their life to meet the challenges of the KBE era. I fully support the Government's emphasis on education. The upgrading of our people is the only way to improve our economy. Therefore, we should nurture the attitude of lifelong learning among our people. We should emphasise among them that education is a continuing process from cradle to grave. With lifelong learning, every person will be able to follow the development, especially in science and technology, and they will not be left behind.

Mr Speaker, I also notice that out of $6.3 billion allotted for education, $1.4 billion is for the development estimates. This amount is to build facilities such as schools and other institutes of education. In view of the high cost of building educational infrastructure, I think the Fund should be wisely spent. What we understand now is that many schools are not used at night. I hope that the Government will encourage other educational agencies to use these schools to educate workers who do not have a high education. We know that many workers who are 40 years and above do not have secondary education, up to 'O' level. Therefore, we could use these schools to teach important subjects like English, Mathematics and Science, up to 'O' level, for these workers whom I have mentioned earlier.

For the others, they could also pursue upgrading courses which are below GCE 'O' level, ie, `N' level. If these schools are open at night, the workers who live in the housing estates could spare some time, maybe three times a week, to pursue such courses. The Government may give a grant of up to $1 billion to the Lifelong Learning Endowment Fund, so that the people will be able to attend these courses.

The same will apply to the ITE and polytechnic buildings which can be used for technical upgrading courses that can lift the educational standards of our workers to NTC certificates, diploma or higher.

Our schools and educational institutions are run based on meritocracy and multi-racialism. Students compete among themselves to achieve the best in education. The process of multi-racial nation building is also being carried out actively among the young. They interact comfortably in the classrooms and other co-curricular activities in schools. Although there are situations of grouping of the majority race in a few special schools meant for specific purposes, on the whole, our schools reflect the multi-racialism of education in Singapore. This process enables us to educate our young with good values such as the concept of multi-racialism to guarantee the stability of our society in the future. We can say that the process of integration in a multi-racial society has been going on well in our schools.

In respect of integration, I hope this integration process will be carried out smoothly in our housing estates and the work places or in the SAF. We hope one day no question will be raised regarding the issue of loyalty or the contribution of one community towards our sovereign country.

Recently, if we had followed the development in Singapore, the issue of loyalty and the participation of the Malay community in SAF has become a topic for dialogue between the Senior Minister and the Malay/Muslim community leaders. A few young Ministers also attended. I feel that this dialogue is very effective. It went on with maturity, clarity and honesty. In this dialogue, the Malay community has been urged to immediately participate in this integration process. In my view, this has already happened where the majority of the Malay community have already been together with the other communities in their daily lives, whether in the housing estates, in their workplaces, in schools and also at public places. Therefore, the issue of the Malay community wanting to isolate themselves from the other communities should not arise. What has emerged now is in respect of the identity of the Malays who are Islam by religion, especially the attire of covering the aurat, halal food, payment of zakat, and performing their religious obligations like the Haj. The Singapore community should understand that these aspects are obligations which have to be performed by the Malay/Muslim community. They should understand this much earlier to bring about a more understanding and cohesive community.

In conclusion, Mr Speaker, I support the policies of the Finance Minister in his Budget speech, but I hope more funds will be given to improve or step up the cohesion of our multi-racial community.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.35 pm.

Sitting accordingly suspended at 3.15 pm to 3.35 pm. Sitting resumed at 3.35 pm