ANNUAL BUDGET STATEMENT

Order read for 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. 12.40 pm

Mr Simon Tay: Sir, the robust growth of the last year was not even for all sectors of society. With globalisation, some are doing very well, while others are still struggling. We are recovering from the crisis but we are entering a period of increasing globalisation and competition. I think one of the speakers, on the first day of the debate, talked about what shape of recovery in terms of alphabets. Let me continue with this.

We fear the U-shape recovery because that will mean that we spend too long at the bottom. What we seem to have, in Singapore's case, is very much a V-shape recovery, last one in and first one out. But increasingly, the present scenario seems to be more of a W, up and down, much depending on what happens in the US market. My own view, however, is that beyond U, V, W, we have to look at the next alphabet, which is the X. The X-shape seems to apply not only for Singapore but for Asia, and this is that some will be going down and are likely to stay down, and this would not just be countries but also companies and sectors of society. In contrast, others would be going up quite rapidly. In Asia X or Singapore X, we will actually need to deal with a whole new way of trying to help those at the bottom improve and hold the society together when we would have quite different levels of results.

This Budget has been welcomed as the most generous Budget. There are suggestions that this is an election Budget and that, in that sense, it would not likely be repeated. I join those who welcome the Budget. However, I hope that there would not be a one-off. Some of the features of this Budget should endure and, indeed, be strengthened.

The budget policy has the makings of a new and very welcome approach for this new age of globalisation and of this X-feature in our society. There are special efforts to target assistance to the less well-off. The Minister has proposed lessening the tax burden, especially for smaller businesses and the lower-income and middle income earners. I welcome these but more, of course, can be done. Some have thought of a social safety net. There are, however, dangers in elaborate systems of welfare. They are costly for the State and for the taxpayers. Even for the recipients of the welfare, there is a danger of creating dependency and of damaging self-worth and motivation. The better approach is one that can both save but avoid ensnaring.

In this sense, I think we are at a bit of crossroads in thinking about the future of our society. It was my privilege recently to chair two talks at the National University of Singapore where I teach. One was by DPM Tony Tan and the other by the Member for Potong Pasir, Mr Chiam See Tong. Mr Chiam, in his talk, emphasised the need for welfarism, to think about how to take care of the poor. DPM Tony Tan emphasised the new and dynamic changes in education - the only way to help give people the skills to meet the challenges of the new economy. Mr Chiam, I think, touched a sympathetic vein among some of the students. But I think DPM Tony Tan challenged them to look at the way forward and how to bring the whole society up, and this is what I mean by the challenges facing us as we go forward. We should not, in that sense, be thinking about a social safety net or an elaborate welfare system. We should instead be seeking to develop a trampoline that would help save people when they fall, but help them bounce quickly back up. How can this be constructed?

First, I think we should focus on the individual. It is good that the Minister proposes doubling the Lifelong Learning Endowment Fund, but the questions of how it will be used are still to be answered in full. I think there is a danger that this Lifelong Learning Endowment Fund will be overly bureaucratic and will favour those who know how to fill up the forms properly and, in the first place, know what they want. I think there has to be much more leeway in this Fund, so that they can target people who truly need help. There should be education bursaries specially targeted for mature students, those who take the Government's call seriously to go back and improve themselves.

More than that, the Government should also consider special counselling for those who wish to upgrade themselves or those who may be working in sectors that may, in future, prove vulnerable. Because, how else will people know that they need to take upgrading and what precisely should they do. Studying, say, the arts may be of interest to some people, but they may not be helpful for them in the particular sector that will emerge.

Government should also increase match-making services for employment. I think, in this way, the counselling, the match-making and the special grants for mature and other special students will need cooperation, not just with the economic agencies of Government but those in charge of community. In this sense, I hope we will see the Ministry of Manpower and the Ministry of Community Development work much more closely together.

I am reminded of this need for counselling and the need for community development, because of a taxi ride I took recently back from the airport. It was a late night flight and when I got in, I was surprised to see a woman taxi driver. After a while, we spoke and I found out that she was a former assembly line supervisor. The factory was upgrading and she had actually been offered retraining at the going rate of partial pay during the period of retraining, but yet she chose to quit and to be a taxi driver. There is nothing wrong with being a taxi driver. But, obviously, this is a job with both independence and yet insecurity and one which, in her case, forced her to drive even later into the night to earn more money, and this despite the fact that she has young children. Of course, everyone has the right to make his own decisions about his own life. But I had to ask whether this was actually wise, not just for her and her career but for the family and for the society. And I hope this is one example the Ministry will consider about needing to counsel our people when it comes to thinking about rather abstract thoughts such as upgrading. In the Singapore of tomorrow, there must be a place for everyone, but to help the process, we will need ushers to help people find their place. Otherwise, people will tend to bunch up at the back and no one will sit in the front row.

There are, in this sense, limits to centrally held funds and Government initiatives, and I would urge the Government to go beyond the Lifelong Learning Endowment Fund to allow individuals to take ownership over their own lifelong learning. Government must neither pity nor pander to people. It must empower them. Measures that can help this include tax write offs or even the use of their CPF when individuals invest in their own upgrading, training and education. When the Lifelong Learning Endowment Fund cannot reach everyone, they can reach into their own resources and should be encouraged to do so.

Secondly, beyond the individual, I join the call of many MPs that Government can and should do more to help small and medium enterprises. Government agencies that deal with SMEs should be strengthened and, in some ways, be retooled. Many of the Government agencies, such as the Economic Development Board, are very used to working with multi-national corporations and big companies. They are good at it, but this is what they are used to and there is a temptation to measure their success by the number of big deals they do with even bigger figures. It must be, however, more difficult and every bit as important to help smaller companies even if the figures are not so impressive. In this, specifically, I want to mention the super business Chamber that the Government is promoting. I believe that when this is set up, this must have a due place for SMEs and local non-Government linked companies. Otherwise, this super Chamber will risk simply reinforcing some of the concerns that people have about SMEs and private businesses in Singapore.

This leads me to my third point, Sir. The perception continues that multi-nationals and GLCs unfairly crowd out Singapore businesses. These perceptions should be addressed if untrue, as the Minister for Trade and Industry has said in a recent sitting of Parliament. If there is any element of truth in some sectors or in particular cases, this should be redressed. We have to ensure a playing field for small and medium enterprises that is level and fair and that, in some ways, understands their limitations and accepts their potential as their entry point.

This is also important because we are increasingly moving away from Government regulation to Government's dependence on markets. After this sitting, we will have a large debate about the deregulation of power and, of course, that, until very recently, was thought to be a Government natural monopoly. Markets are fine things, but markets need to be designed. Markets depend on free and fair competition with sufficient players. Unless Government ensures that markets are open and that the thresholds to entry are not too high and do not block out SMEs, we will create not markets that are free and fair but, unwittingly, we may create cartels. The stickiness of fuel prices in the present climate is an example of this that consumers feel every day. There is supposed to be fair competition in this area but we have trouble if we try to actually find fair prices to reflect the lessening of fuel prices world wide. Government, as a major shareholder, should rein in GLCs who compete in areas where SMEs and start-ups are coming up. These GLCs should stay within their key focus areas, assuming they have thought about these areas, and they should think long term and big.

One additional point, Sir, this time about larger companies. The Minister's Budget Statement has emphasised the growing diversification of the Singapore market. In terms of its markets and products, the USA and disk drives remain important to Singapore, but now less so in proportion to other markets and other products. Such diversification is very much needed. Europe, including Eastern Europe, Latin America and Asia, especially Korea and Japan, will be important to emphasise on the way ahead. The way ahead will be paved by Government, as we negotiate bilateral trade and other economic treaties, but the risks remain, and the risks will remain for the private sector to take. Companies that go out will have to take these risks. Many were hit by the crisis and they will be hit by future ones, as they go out again to the region and the wider world. Given this, I would ask the Government to consider underwriting part of that risk. Government should allow companies that go out to set off overseas losses, if any, against Singapore-based profits. This, I understand, is already allowed in some cases where there is a double taxation agreement, but not in all countries and, certainly, not enough of them for Singapore to go global and truly regional. If certain conditions set in to ensure the validity of these losses, the principle should be carried out to more overseas ventures in new countries and perhaps these can be linked to the bilateral trade and economic agreements that we are negotiating.

Sir, we are entering a world of greater risk and diversity. The Government's role is no longer to drive the engine, fuel the tanks as well as steer the ship. It is more a matter now of stewardship and of empowering others to take the lead. The Government is wise in saying we can no longer ensure that we pick all the right winners. The question now is how we enable our people, our SMEs, our private sector and how we enable and create an environment that can support change, their striving and their thriving.

Mr Jeyaretnam: Mr Speaker, Sir, this Budget, as the last speaker has said, has been termed in some quarters, as an election Budget and being very generous. Of course, it is generous. One can see that. But the question that has to be asked is: is this generosity spread to all our people? Is it even handedly spread or is there any neglect or uncaring attitude towards some sectors of the population?

May I, at the outset, reject completely the idea that it is welfarism to take care of and to attend to the needs of those in society who are unable to afford the needs themselves. It is not welfarism. It is to see that all our people, regardless of their wealth or their poverty, regardless of the level of their income, do not go without the basic needs and necessities they need for human life. For that reason, Sir, I find the Budget lacking very badly. I have no quarrel with the tax cuts, with the rebates and what is being done to help the business sector. But, if I may say so, this Budget shows a callous disregard for the plight of at least 20%, or it may be even 30%, of our people, and it reflects the lack of any political will on the part of this Government to do anything for them. I am, of course, referring to the widening gap in our society between the rich and the poor. I do not think I need to tell the Members of this House that if this widening gap is not checked and something is done to rectify the widening gap, the results for this society will be disastrous. I hope such a thing may not come to pass, but that there will be a greater bonding, as the calls have been from the Government - we hear this again and again - a greater bonding of the people together, a caring for all of them, not that some are left out and only some are cared for.

The Department of Statistics released an occasional paper in May of last year drawing attention to the accelerated widening of the gap between the rich and the poor in Singapore. I spoke on this in this House in August of last year when I proposed a number of measures that the Government could take - not welfarism; I was not proposing handouts - to remedy and to halt this widening gap between the rich and the poor.

The Prime Minister in his National Day Rally speech referred to this release by the Statistics Department of the widening gap. He seemed very upset by a photograph in the Straits Times showing a cleaner with a quote: "I survive on $133 a month." I hope the editor was suitably rebuked and told not to write such nonsense. But that was what the Department of Statistics reported - that persons in the bottom 10% of our society were only earning that amount. The Prime Minister says that it is misleading, and he says that no cleaner earns only $133 a month. But when I spoke last year, I referred to the statistics on wages and I said that for 1999, there were 14,700 workers earning less than $200 a month and there were 33,700 earning less than $400 a month. Is the Prime Minister not aware of these statistics? And then he takes up what has been attempted by even the Department of Statistics, that the fact is that the bottom 10%, he says, have a reasonable standard of living - they have their TV sets, they own their houses - so what are we complaining about? And he attributes the widening gap to globalisation.

May I make it quite clear here that I do accept that in all societies, there must be a gap. But the responsibility of government is to see that the people at the very bottom level are not thereby left out completely. Again, may I repeat, that is not welfarism, that is acting as a responsible government with a conscience. The Prime Minister speaking then quoted President Zedillo of Mexico. And if I may give the quote here. President Zedillo was replying to whether wealth should be spread more evenly and his reply apparently was:

"They are confused. You don't get better income distribution by taking from one and giving to another. You get better income distribution by empowering people to have the capacity to share the benefits of development. The wealth will be better distributed as long as we are successful and continue to invest heavily in education, health and programmes against extreme poverty." The most important part of his observation, may I say, is the last sentence: "The wealth will be better distributed as long as we are successful and continue to invest heavily in education, health and programmes against extreme poverty." The Prime Minister quoted him with approval, but stopped short of that. Is his Government adopting that advice, given by President Zedillo of Mexico? It does not appear from this Budget that the Government is indeed taking that bit of advice to heart - investing heavily in education, health and programmes against extreme poverty.

I was talking about the figures given in the May release. If one looks at the latest figures released by the Department of Statistics before the census report is out, Mr Speaker, Sir, you find that for the lowest 10%, the average household income has dropped again to $61 per month. And this, we are told, includes households where no member of the family is earning income. But what are we to do about these people who are not earning any income? The table goes on to give the average income for households with income at $459. That is by no stretch of imagination enough to cater for the needs of these families. We have to recognise - I have said this time and time again - that Singapore is one of the most expensive cities in the world now. It ranks very high on the list of expensive countries or cities. In the face of this growing cost of living, the lowest 10% are only earning an average of $459 in household income per month. I asked in my August speech: has the Government made a study of how much a family of four will need? I had tried to give my figures and I said it would appear that at least $1,800 would be needed by a family of four. But I am told by several people that is very low, very conservative. They need a lot more than that. But if you look at the latest figures released by the Department of Statistics, there are 30% of our people in our society having a household income of only $1,862 or less.

Mr Speaker, Sir, Singapore is steadily slipping into a country of two nations, unless steps are taken to check this. This was a term coined by a British Prime Minister at the beginning of the last century. And Singapore today in the 21st century is beginning to slip into a country of two nations. So in the face of this grim reality presented by the statistics gathered by the Department of Statistics, what do we have? What Budget is the Minister for Finance proposing - a Budget that gives to those who already have and precious little for the have-nots. It would appear that the motto or object is to give to those who have and to deny those who have not anything, to deny them anything.

The Minister for Finance headlines in Part II or somewhere in his Budget speech says, "A place for everyone in Singapore". And he ends his Budget Statement with that same phrase that, "There is a place for everyone in Singapore . ." When I saw that, Mr Speaker, Sir, I was reminded of two lines in a Christian hymn: "The rich man in his castle and the poor man at the gate. The good Lord make them all." So the poor man has his place at the gate or somewhere down in the cold whereas the rich man has a place in the sun. They all have their respective places, and that has to be accepted by society. Do we?

So I would now propose to turn, knowing that I only have half an hour, to what the Budget does. I see that we have again managed to exceed the estimated surplus for the year 2000. We have managed to increase or put together a surplus of at least $1 billion more than what was estimated. Great! And for the year to come, the estimated surplus is $4.37 billion. May I ask, as I did ask, what comfort is this? To the people in the 50% bottom of our society. If you look at the provisions in the budget, and I am looking only at the Main Estimates provisions provided for operating expenditure, what does one find? That for Health, we are only spending $1.5 billion of our monies on health and that works out to a percentage of 5.6 of the total expenditure. For Education, we are only spending $4.9 billion working out to a proportion of 22.3% of the total expenditure. But when one looks at the Defence expenditure, one finds that we are spending $7.1 billion on Defence, $2 billion over Education and $5.5 billion over Health provisions.

What does this say about our priorities? That health ranks way down below defence of the country. Is not providing that our people are healthy and well enough, also a defence? Is it not necessary to defend our people against attacks of ill health, sickness, just as much as it is necessary to defend the country against attacks from overseas or abroad? I have questioned year in and year out the expenditure on defence, and I am afraid I have not been given a satisfactory answer, and that view is not only mine, it is shared by several people.

I see the Minister for Defence goes to Europe, meets the American Defence Secretary and talks about great understanding and cooperation between the US and the Government on defence matters. If you are relying on American military might and we give them facilities, are they going to run away if there is any attack on this country? So why are we at the same time increasing our defence spending year by year?

May I say a few words on health? Mr Speaker, Sir, healthcare is crippling for our people and I have asked time and time again for a public health service in this country. Again, may I repeat that is not welfarism. That is, as President Zedillo says, investing in our people. It is not welfarism. There was a letter in the Straits Times of 1st March from someone who asked why is it that the same medicine costs much more in Singapore than in Johor Baru and that they have to travel there to get their medicine at almost a little over half the price. Why is it that we cannot afford, from the monies that we have, to see that those who are in need of medical care get the proper medical care at a cost that they can afford without having to go abroad to get medical care? Is that not demeaning ourselves if our citizens have to go abroad to get cheaper medical care? Is that not abdicating our responsibility to them?

I have asked in this House that the Ministry of Health provides a costing, why it costs the Government to charge the fees that it now charges. That question was misunderstood and I was given an answer that all bills have a breakdown of what the costs are for. It is time the Government presented a White Paper on Health and tell the people exactly how much it costs them to keep a patient in hospital. I am not talking about the first class, or the A class wards, but about the people in the C class. Why is it necessary for the Government to charge $30 or more for a bed in the C class? Why is it necessary for the Government to charge extra for every other service given to the patient? That is the sort of costing one should provide so that people may understand. But nothing is done to explain the cost to the people.

So I am very disappointed that health does not rank as a priority with this Government. I am aware, as I said previously, that there can be abuse. I have proposed a social security card system for people earning below $2,000 a month so that their health is taken care of. What is wrong with that? Why cannot the Government provide the funds for that?

Now, if I may turn to Education. Yes, Education provision has increased. But it is still by no means enough. It does not match anywhere near the Defence provision. Why is it not possible, I have asked before and I ask again, to see that children from families earning below $2,000 can have their children educated without any cost to them, without any fees under whatever name it is called? They should not have to pay anything to have their children educated. That way, we will be investing in this country because we have been told again and again that our people are the only resources here.

Mr Speaker: Order. Mr Jeyaretnam, you have used up 30 minutes. Dr Wang.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, Singaporeans reacted very favourably to the generous tax cuts and other social transfers provided in the FY2001 budget. In so far as providing tax relief is concerned, it is indeed the most generous budget ever. Enough has been said regarding the plight of the unemployed, the lower income and the struggling small businesses by Members preceding me and I do not intend to repeat their points. However, Sir, I think we will miss the impetus of the Budget if we do not appreciate the two key objectives of the Government in presenting this Budget. Firstly, to position Singapore for the new era of growth by increasing our attractiveness not only to businesses but also to individuals as a place to live and to work in. Secondly, to give every individual worker the wherewithal to weather this difficult period of transition, to assist promising business enterprises in getting established and to help businesses in dying trades shift out to other industries.

In my opinion, Sir, it is important to measure the budget against these stated objectives and to determine how far this budget goes towards achieving these objectives. As I was listening to Mr J.B. Jeyaretnam, I was wondering whether he ever takes this into consideration. Unfortunately, he has stepped out of the House. So even if I want to address some of his points, he is not here to listen to them. But, nonetheless, let me touch on two points he brought up. Mr Jeyaretnam mentioned about the widening income gap and he said that the Prime Minister had attributed it to globalisation. My question to him is whether he accept this particular reason.

Mr Speaker, Sir, I am in the forefront of the IT industry and I can give a very good example of why this income gap widening is a universal phenomenon, and not just a phenomenon within Singapore. For instance, the United States government at the behest of their IT industry had issued a new category of visa called H1B Visas and it provided a quota of close to 200,000 visas per year. In other words, since its implementation till five years hence, it will be able to suck in close to one million IT professionals from throughout the world. Now, where do these people come from? They are going to come in from developing countries, such as India, China, Eastern European countries and even a few from Singapore.

So, Sir, if we had adopted policies that prevent our IT professionals from having better pay to make Singapore a better place for them to stay behind, then I think we would even face greater migration of our talented and young people to magnets, like Silicon Valley. Sir, a widening income gap is a global phenomenon, and Singapore is already in a very good position to address this problem, compared to the countries I have mentioned. So the key issue is actually not to look at how we can prevent the widening income gap, but how to address the social and economic structure within Singapore as a result of the widening income gap.

And Mr Jeyaretnam did mention that, quoting from the President of Mexico, there are several factors that we should address in so doing: firstly, education; secondly, health; and, thirdly, to address extreme poverty in a society. In addressing education, he has always compared its expenditure with that for defence, that defence expenditure is pegged at 5%, whereas education is only 3.7%. But however it may be, Mr Jeyaretnam does not realise that defence is a capital-intensive expenditure - weaponry, arms, equipment and so on - whereas education is a labour-intensive expenditure. As we stand today, our education expenditure stands at 3.7% of the GDP, and the Prime Minister has already stated in his National Day Rally speech that it is his target to increase this expenditure to 4.5% of the GDP. And, as Chairman of the GPC for Education, I can say that the Ministry is trying its very best to achieve this target and, I think, if we want to spend more money, the MOE might have indigestion on how to properly bring value to the expenditures. Nonetheless, in the budget for the year 2001, there is an increase of close to $500 million in MOE expenditures. So, Mr Jeyaretnam should consider this point before he keeps on repeating how to address the problem of low-income citizens in Singapore, how do we help the lower 30% in our society.

Sir, let me now touch on the budget surpluses in our Budget. For many years now, I have observed that the Ministry has under estimated revenue and actually over estimated expenditure. I wonder whether this is a result of poor modelling or the result of very conservative behaviour, or both. Again, in the FY 2000 Budget, the revised budget surplus is $3.54 billion while the estimated surplus is $2.45 billion, a variation of close to $1.1 billion or 44.5%. And this is after an unplanned $1.94 billion one-time compensation payment to the two telephone companies. In my opinion, Sir, this compensation should be treated in the same category as long-term capital transactions, like proceeds from land sales, and should have come out from a long-term fund rather than from our operating expenditures. Thus, if we take that into consideration, we should be looking at a budget surplus of close to $4.48 billion or a variation of 120%. This is, of course, already a big improvement from the FY99 budget, when there was a variation of close to $9.98 billion when the budget swung from a deficit of $5.1 billion to a surplus of $4.88 billion. Sir, I understand that predicting budget surplus or presenting budgets to Parliament is a very tricky matter because so much of this is dependent on the GDP growth rate. But the projections are so far off that it begs the question of how good we are in forecasting.

Furthermore, at a time when the Singapore Stock Exchange has been urging public-listed companies to disclose their results on a quarterly basis and these disclosures should be as accurate as possible, should Parliament expect less of the Government in this climate? Maybe we do not need quarterly reports on revenue and expenditure but, perhaps, it is not too much to ask for a more accurate budget forecast.

Mr Speaker, Sir, I note that some of these variations in expenditure and revenue result from the under-spending of development expenditure. I also note, in the Report of the Estimates Committee, Parliament Paper No. 1 of 2001, that the Ministry has indeed imposed a reservation fee of close to 3% to prevent under-spending of development expenditures. I would like to find out from the Minister whether this measure is necessary and what is its effectiveness, and whether we are promoting undesirable behaviour within the various Ministries by forcing them to spend money when they could not spend the money. So, are we, in fact, forcing them to incur some waste unnecessarily?

It is good to have budget surpluses, and I am not against budget surpluses. In fact, in my own personal finance, my first principle is prudence, in other words, to always make sure that I have surpluses. However, in managing a nation's budget, I think we should delve further to understand the impact of budget surpluses on the nation's economy. Like a large vacuum cleaner, taxation sucks up liquidity from the economy. Mr Chay Wai Chuen has already touched upon the lack of growth in many economic sectors while our national GDP grew by 9.9% in the year 2000. He also pointed out that the money supply did not seem to grow very much either. I believe he had touched on a very key point. Perhaps the Minister should tell us the correlation between budget surpluses and consumption by our citizens, as every dollar taxed is one dollar less in the pocket to spend.

In my view, if we just look at the budget surplus item in the Budget Book, we see the figures of $4.88 billion in 1999, $3.54 billion in the year 2000, and $4.37 billion in the year 2001. But, Sir, these are actually the surpluses, after provisions for Special Transfers. And we must remember that the money in these various endowment funds, including the CPF Top-Up Scheme, is still removed from circulation in the economy, as the principal sums remain illiquid. So, to actually determine the impact on liquidity, we should look at the surplus before Special Transfers. And the numbers now stand at $5.57 billion, $5.38 billion and $6.22 billion in the three years I have mentioned. So, in three years, if we add up all these sums, $17.17 billion is removed from circulation in the local economy as, presumably, these are transferred to the Government Investment Corporation (GIC), which in turn invests most of these surpluses overseas. With these surpluses hovering close to 3% of GDP year in and year out, it begs the question whether we are locking away too much money and, thereby, starving domestic demand. Well, I do not have the answer, but perhaps the Minister can enlighten this House.

Another way of looking at it is this: is the nation saddled with too heavy a tax burden through direct and indirect taxes? I suspect the Minister must, in one way or another, think likewise, as he is introducing structural and long-term reductions in both income tax as well as corporate tax.

Touching on corporate tax, Sir, as in previous years, the Feedback Unit had conducted a series of dialogue sessions in mid-January 2001 with the business community and the general public as a preview to the Budget. I chaired the English language sessions on business. The participants of the sessions include various chambers of commerce, small and medium enterprises, as well as selected corporations.

Mr Speaker, Sir, unlike the previous year, the feedback from the business community is a bit lacklustre this year. Presumably, people are holding their breath for the details of the Budget, after the Minister had dropped strong hints about the goodies he would provide in the Budget. Furthermore, many ideas were proposed in past sessions and they were yet to be implemented. Nonetheless, we can draw some general conclusions. One is that the corporate tax in Singapore is already reasonable in comparison with the regional countries. So, instead of blanket tax reductions, the business community would have been looking towards specific tax incentives to promote industries targeted by the Government. In this respect, Sir, it is interesting to note that the Minister has desisted from so doing this year.

Mr Speaker, Sir, the reduction of corporate tax from 25.5% to 24.5% is a surprise since we had been told repeatedly that our long-term corporate tax target is 25%. Bearing in mind that it was 26% only two years ago, the reduction is, indeed, rather aggressive. The question is whether the "tax haven" provisions in many developed countries would be triggered by this reduction. And this has, indeed, been touched upon by Mr Iswaran earlier. So I would like to join him by asking the Minister what is the impact on multinational companies (MNCs) in Singapore that would be affected by this tax haven provision in their home countries.

One of the persistent requests from the business community is the suggestion to tax, at a lower rate, smaller companies or start-up companies to help them find their footing. We were reminded repeatedly that Britain has such a tax incentive for small companies. I am very glad to note that the Minister has finally responded favourably to this suggestion and, not only that, he has gone one step beyond the expectation of the business community by introducing a progressive scale into the corporate tax structure, thereby benefiting all companies, large and small.

Sir, on personal income tax, I would say that the measures taken by the Minister in reducing personal income tax rate across all brackets are very generous. I hope that this is not a one-off measure but is the start of a trend towards lower personal income tax rates. Hopefully, this will remove whatever disincentive to the individual to exert greater effort.

The general comment received in the dialogue sessions organised by the Feedback Unit is that the direct tax burden in Singapore is actually relatively low, but there are many indirect taxes based on consumption. These include GST, COE, vehicle import duties, ARF, property tax and so on. As an end result, for the high-income earners desirous of a certain lifestyle, such as car ownership and living in landed properties, the total tax burden is, indeed, rather high.

I am glad that the Minister has made appropriate adjustments to the income tax structure so as not to deter strive and enterprise.

Mr Speaker, Sir, in good years with healthy budget surpluses, the Minister has been consistent in providing provisions into the various endowment funds, such as ElderCare, Medicare, as well as the Lifelong Learning Endowment Fund. This year, he has done the same.

Mr Speaker, Sir, I would like at this point to touch upon the survival of these endowment funds after the dissolution of Parliament. Under the Constitutional amendment to preserve past reserves, once Parliament is dissolved, the net budget surpluses of the present Government over its tenure would have gone into past reserves and, thus, locked away from the reach of the next incoming government. On the other hand, the endowment funds survive the dissolution of Parliament and remain accessible to the next incoming government, at least the interest generated by these endowment funds. I understand that the principal sum is still under the stewardship of the Ministry of Finance and it, thus, forms part of the past reserves.

The question I have is: would there be a proliferation of such endowment funds, as additional specific needs are identified by the Government? Furthermore, since we only use the interest of these endowment funds to meet operating expenditures, the principal sums of these endowment funds would have to be quite substantial. Take, for instance, the Lifelong Learning Endowment Fund. The principal sum has been increased to $1 billion in order to generate $40 million to fund the activities of the lifelong learning programme.

What is interesting to observe is that these disbursements from the funds are actually off-Budget, as they do not show up in the line items of the Ministries involved. At this point in time, these items are still relatively small, and do not distort the total Government expenditures. Nonetheless, they are not pittance and should, in principle, be subject to parliamentary scrutiny. For instance, Members of this House do not know the amount actually paid out from each endowment fund over the years even though we have close to $32 million and $30 million in the Medical Endowment Fund and the ElderCare Endowment Fund respectively. I would suggest that the Minister provide a table somewhere in the Budget Book showing the actual disbursements of each of these endowment funds. The other question I have is whether the amounts yielded by the various endowment funds count towards the limit of not more than 50% of the NII that could be allocated towards the operating revenue of the Government. I hope the Minister could enlighten the House in this respect.

Sir, before I sit down, I would like to make some comments on NII, one of my favourite subjects. With the Constitutional amendment clearly defining part of the NII as operating revenue, the NII contribution, a new item, which is the spendable part of the NII, is now moved above the line in our budget presentation. In the previous year, NII was placed below the line. Then, new money from tax revenue was spent before there was a need to tap more money from the NII and therefore, the so-called new money was segregated from the old money. However, in this new presentation, the new money and old money got mixed together. Like a glass of water, once mixed, it is one and the same. In effect, NII contribution now forms part of the Government revenue and becomes indistinguishable from other sources of income. Of course, as long as the budget surplus at the bottom line is still greater than the NII contribution, we really have not tapped into the NII yet. Nonetheless, this is more than a change in presentation. It is a change in mindset. So by mixing the old money with the new, the Government seems to have overcome a mental hurdle to tap into the investment income generated by our past reserves.

Having set that aside, I have several questions regarding the NII numbers shown in Table 1 of the Budget Book. The revised NII for the year 2000 is $1.55 billion while the estimated NII contribution for FY2001 is $0.86 billion, a decrease of 44.7%. I am interested to find out what accounts for the decrease. Are we foreseeing a dramatic decrease in NII as a result of some poor performance of the Government Investment Corporation which is tasked with investing our reserves? The Minister also did not disclose what percentage these numbers represent. In other words, how much is $1.55 billion out of the total NII, and how much is $0.86 billion out of the NII for the coming year?

As we know, the Constitution stipulates that the Government should set aside at least 50% of the NII as part of the past reserves. The Finance Minister has disclosed in this House that NII for year 2000 was 3.5% of our GDP. That would translate to $5.94 billion in that year, using figures in the public domain. Thus, by our own computation, the NII contribution in FY2000 was only 26%. Assuming that the NII remains at about $6 billion, then $0.86 billion in the next year, FY2001, would only come to 14%, much less than the mandatory requirements. My question to the Minister is: on what basis does the Government decide how many percent of the NII is transferred to the operating expenditure each year? I actually would like to understand the basis they use to decide on these numbers. I think it will help this House to gain a better grasp of the budget, which is already complicated. To me, as it stands, the NII contribution in the Budget Book seems like a book-keeping entry, balancing the various figures so that the annual surplus does not look so high and attract undue attention. Perhaps, the Minister can correct my impression on this topic.

Sir, we have done well as an economy. This is not by accident but is the outcome of a strong partnership between the people and the Government. The Government contributes by implementing farsighted and consistent policies. The people responded with commitments to their jobs and to the nation. I believe with the new Budget philosophy outlined by the Government, Singapore will continue to prosper for many years to come.

Dr S. Vasoo (Tanjong Pagar): Sir, thank you for allowing me to join in the debate. I shall be precise in terms of what I have to say.

Sir, listening to what my parliamentary colleagues have to say over two days, I must say that many of them have made suggestions to improve the budget, and some of them have, in fact, asked for additional provisions for the budget. All this seems very interesting. I would also join them to suggest some improvements to the budget.

Sir, all this is possible because we are making a surplus and we are able to improve the provisions. But then, I was thinking aloud that if we are not able to have additional surpluses, what should we all be talking about? I think that is equally important because we may not be able to ask for all these provisions which we have articulated.

I see that this is the first time that I am hearing the NCMP was not asking for welfarism because all the time, he has been asking for welfarism, but now he has changed his tune. He is not here. I think we have to understand basic economics in the sense that unless we are able to generate wealth, there is nothing to distribute, there is nothing to give away. And in many governments, they are not able to generate wealth and one would be lucky if they do not ask you to come up with more money and empty your pockets. And in many places, this has happened and we should thank the Minister for Finance for having maintained a very positive budget, a very sound economic policy over the last number of years that I know of. He has, in fact, presented very sound budget policies. It is a fundamental fact that we cannot detract from. Unless we are able to generate a surplus, then all the suggestions and what we have will come to nought.

Sir, I would like to commend the Minister for Finance, Dr Richard Hu, for the pro-active Budget for year 2001. I have heard him since I was a parliamentarian in this House in 1984 and since then, he has presented very sound financial policies which have helped Singapore to weather some of the turbulent economic storms.

Sir, I must say this year's Budget is both pro-people and pro-business. Many Singaporeans and small businesses have benefited in big and small ways from the tax changes and other provisions. I hope the Minister would have been more generous towards the low-income families and the elderly who are and still will be most affected by the economic restructuring and transition. As can be noted, the unemployment rate last year has increased from 1.5% to 3.5% and retrenchments, although lower by about 1,700 in the second quarter of the year 2000, are still looming. As more labour-intensive industries are expected to relocate, there would be more job losses and because of relocation, I expect the semi-skilled and unskilled workers would likely be affected most.

It is not too late for the Minister to consider further reliefs and rebates for them. I would urge him to look into a number of areas seriously. First, in terms of the monitoring and control mechanism for increase of charges of public services. There have been increases in charges of public services, such as healthcare, education, transport and utilities. Some of these increases are necessary. But because most of the public services have been restructured or corporatised, there is a potential danger that profit motives can become an overriding factor and this, I think, we have to be on the watch out. We have to monitor and look at the impact, particularly on the average working class families.

The consequences would be that these services can become less affordable and accessible to the ordinary working class families. It is now more urgent for the Ministry of Finance to examine the cost-effectiveness of the public services provided and to monitor the overcharging for public services delivered by restructured Government organisations. I would like to find out if there is a monitoring and control mechanism put in place by the Ministry of Finance or other related Ministries. Such a monitoring and control system can, when necessary, apply brakes on runaway increases imposed by restructured Government agencies and I feel that it is time that we looked at this issue more seriously and that there should be a control board to examine the cost-effectiveness of these services. Are they really cost-effective or are they spending in areas which do not produce any direct benefit to the consumers, or are the consumers themselves getting their dollars worth in terms of the services which are provided by these corporatised Government agencies?

The other issue of concern is inflation. With the recent price increases in goods and services, is inflation kept under control? Would there be an inflationary trend in the near future? All these price inflations can affect the purchasing power of our working class. I want to find out from the Minister if he would be able to let us know whether inflation would be expected this year and by how much.

The next point is on higher transfer of Utilities Save and rebates for low-income families. There is a concern about widening income gap. This has been addressed through education and skills training of young Singaporeans and older workers. With better educational support and opportunities, it is envisaged that, in future, the income gap can be mediated or reduced. There is always an income gap but the question is how wide that gap is going to be, and various efforts need to be made to intervene, re-distribute or to make transfers so that the less better off would have an equal opportunity to be in the race and to be able to make it. However, in the meanwhile, we should be a bit more generous by way of transfers and rebates to help the 36% of HDB families living in 1-, 2- and 3-room flats. These families, whose incomes have not increased significantly because of economic restructuring and economic slowdown in the past, have an increased burden to cope with their livelihood. The Utilities Save of $350 could be increased to $480 as the power bill has gone up by about 70-90% since its revision. The SC&CC charges and rental rebates could be revised and increased between $10-$25 for 3- to 1-room HDB households. For the elderly who are more concerned for healthcare, a higher top-up of their Medisave account with a wider range of usage other than hospitalisation cost, would be helpful. I think there is a need to look at Medisave usage and whether this usage could be applied more flexibly. This would be most helpful to the elderly who are retired and who have less savings in their CPF.

As for CPF top-ups, we should find ways to reach out to the 210,000 persons who did not top up for one reason or another, and help them to benefit from the share of our nation's progress. Community groups can help to provide them with assistance for the top-up and perhaps CPF can work with community organisations to see how we could reach out to these people who have not benefitted from such a scheme.

Sir, I would also like to talk about low-income pensioners, because I have been discussing this issue year in and year out, and I hope that this year the Minister for Finance will be able to hear me out this time again. The increase of the Singapore allowance by $10 is really so meagre, and I would say that it is paltry. Surely the Government can be bigger-hearted by demonstrating that it still cares for the pensioners. I know Government cares for the pensioners. It can care a bit more, by demonstrating that it can make the adjustment by more than $10. An increase is deserving, Sir. Perhaps a $30 increase would be a more positive gesture. More particularly, those low-income pensioners, who get less than the public assistance rate of $200 per month, should deserve attention, as they have given sterling services to our society. They cannot be treated worse off than our public assistance recipients. The Minister should redress this anomaly.

Sir, the other matter that I would like to bring up is that I was listening to Mr Chng Hee Kok who talked about the Ministry of Manpower's website, and the need for people to check on the status or the validity of the work permit of workers. I was quite interested in this issue and I wanted to know whether the Ministry is keeping an update on this. I went to the website and I was able to see that we can check not only on the validity of the work permits but all other information which are required can be obtained. I think good progress has been made, because now people who are concerned about illegal workers will be able to do this check through the Ministry's website itself.

The last issue that I would like to raise is that aside from the status of pensioners, there have been recent views to compare the position of MPs with board of directors of private companies. Such a comparison and viewpoint, to me, is not only erroneous but misplaced. It is just like comparing apples with oranges. Would my parliamentary colleagues want to equate their public office with company directors? Surely not. I am sure Members do not want to demean their MP's office by comparing themselves to a board of directors. I am sure Members agree with me that they do not want their MP's office to be associated with board of directors, would they? On their behalf, I will say surely not. MPs are elected lawmakers to public office by popular mandate and in the case of board of directors, they are appointed by a group of shareholders to private office. MPs are elected to public office and a board of directors is elected to private office. There is a mile of difference on this issue. Sir, I am sure you will agree with me that we should not allow anyone to demean the status of MPs and the public office should be held in high esteem. And I am sure all my parliamentary colleagues would agree with me on this viewpoint.

On that note, I support the motion, Sir.

Mr R. Sinnakaruppan (Kreta Ayer-Tanglin): Mr Speaker, Sir, thank you for allowing me to join in this debate.

Sir, the penultimate paragraph of Dr Richard Hu's Statement describes succinctly the intent of his Budget and I quote:

'There is a place for everyone in Singapore, and everyone will benefit from good governance. It will take effort and even a fair amount of difficulty to reach where we, as a nation, want to get to. This Budget serves to encourage everyone to stay united and succeed together.'

Sir, certainly, Dr Hu's Budget has been well received and certainly they have seen that good governance indeed means greater surplus, and greater surplus is shared and distributed amongst all Singaporeans. But, certainly, the Government must take much greater effort to bring all Singaporeans to reach where we want to achieve as a nation. I will touch on this later in my speech.

Dr Hu's Budget can really be divided into two categories: one, a group of tax measures that will fundamentally restructure the approach to the tax regime; the other is a group of measures that are one-off in nature that benefit a wide cross-section of Singaporeans. On the first category, significant changes have been made to the personal income tax, corporate tax and the employee stock option scheme. The changes in personal income tax are a recognition by the Government to reward individual effort and sacrifice, and sacrifice during the economic crisis where CPF contribution had been reduced.

Despite a sterling 9.9% growth last year, many in the private sector feel that the recovery is patchy and therefore the CPF restoration should be more gradual. On the other hand, workers cannot understand why the Government is slow to restore the CPF. Therefore, the personal income tax reduction, the rebates and other goodies announced in this Budget are the best ways for the Government to satisfy both employers and workers. While the 2% across-the-board reduction in income tax is most welcome, there are concerns in many quarters as to whether this 2% reduction is a prelude to an increase in GST of, say, 2% perhaps by the end of next year.

Sir, the corporate tax reduction, coupled with the tax exemption, will help SMEs who are marginally profitable to thrive and to help them expand their businesses. This is certainly welcome as, in the past, many foreign companies were indeed the beneficiaries of tax holidays and tax exemptions, and only a select few local companies benefitted. These changes will help many SMEs who would find that their effective tax rates would be significantly lower. Sir, at the same time, it is possible that the tax exemption scheme would lead to more associate companies being set up to split incomes. Is there a concern for the Government, as the Budget Statement has been quite silent on this?

Sir, the Government's robust 1% corporate tax reduction comes at a time when many of our regional competitors have also been reducing their tax rates in order to attract foreign direct investments. This reduction by Government seems to signal a change in the Government's past thinking of not making Singapore a tax haven. In this regard, I would like to ask the Finance Minister what is Singapore's medium term target at which the corporate tax will be set at.

On the second group of measures, the one-off goodies that have been given this year, have indeed been most generous. Many Singaporeans have expressed their happiness in this regard. These are like a little bonus to many households, as it will help in some measure to reduce their household expenditure. But beyond that, their happiness will wane soon, as their worries of a long-term livelihood will take root. Families whose household income is between $2,000-$3,000 or less comprise many unskilled workers working in MNCs or SMEs, many shopowners, hawkers, sole proprietors of small service companies, small contractors and so on. With a stronger dollar and higher wage cost, more and more MNCs are going to move their manufacturing plants to other lower cost countries in the region. As Dr Vasoo has pointed out, retrenchments are becoming a regular feature for the lower skilled workers, especially those working in the MNCs. Nearly half of our workers work in the SMEs. Many of them work for companies with less than 10 people. A lot of them work for 2-men, 3-men or 4-5 men companies. These workers are largely unskilled and often do not have the opportunity or the urge to go for skills training or retraining. Many such companies have not been doing well in the past few years since the economic crisis.

Many Members of this House have spoken about the plight of the HDB shop retailers. But what about the many provision shopkeepers in non-HDB shophouses? What about the many sole proprietors owning small service outlets? What about the hawkers, the market stallholders and the small contractors? These people's livelihood are at stake too. A small contractor told me at the meet-the-people session this week that the construction industry is indeed in a bad shape. He said that last week he went for a show around for a small contract tender and found that there were more than 40 contractors who had turned up just for a contract that is not worth more than $40,000-$50,000, and there were many big players there as well. He said that this is indeed a bad sign for the industry.

Dr Hu had said that the construction industry will turn around this year, but many in the industry that members of my GPC spoke to are sceptical of a turn around, and are very concerned that the Ministry of National Development's expenditure has been reduced and this is going to hurt them even more.

The plight of our small enterprises is indeed very worrying. On its part, the Government has done well to allocate significant amounts of money for skills training and lifelong learning. The Ministry of Manpower has done well to unveil a comprehensive Manpower 21 Vision. Many workers have been reached through these schemes. Many more workers, especially vulnerable workers, need to be reached and retrained and reskilled for them to remain employable. Often, the problem is that the most vulnerable workers are often the last ones to be reached and, more often, are the ones who refuse to be trained.

We still have more than 500,000 Singaporean workers in our workforce who do not have a secondary education. Of these, approximately 180,000-200,000 do not have a primary education and they are largely aged between 30-49, and therefore they will have to make a living for themselves and their families for many more years to come.

As Dr Hu has said, it will take effort and even a fair amount of difficulty to reach that we, as a nation, want to get to. The Government must go beyond providing money for training and giving one-off Budget goodies. It must have greater compassion and greater commitment to level up the lower strata of our society. Like the call by Mrs Lim Hwee Hua, it must do much more on public education on what we want to achieve as a nation. It must rally our citizens to help them cope with the impending changes of our economy. Only then can we stay united as one nation and face the external challenges confronting us.

Mr Ang Mong Seng (Bukit Gombak): (In Mandarin): Mr Speaker, Sir, the 2001 Budget is a very generous one. The headline on the Lianhe Wanbao of 24th February mentioned that the Government was giving away 12 angpows: six pro-people angpows, three pro-business angpows and three others, in the form of Lifelong Learning Endowment Fund, Eldercare Fund and Medifund.

No doubt this Budget is generous, but when I spoke to my constituents, they have still some comments to make, and I would like to feed back these comments to the Minister for Finance for his consideration.

I would like to deal with the Utilities Save scheme, the three-tier family and the CPF Top-up Scheme.

The Utilities Save scheme is very popular among the people, but there is a general feeling that this is not extensive enough to cover everybody. The Utilities Save rebates are only confined to the 1- to 5-room families and exclude those living in executive flats, private apartments, condominiums and landed property. Because of the increase in utilities rates, people have to pay more for water and electricity. So to lighten the burden of the people, rebates are given to some citizens. To some extent, this would indeed help the residents in the HDB housing estates. But those residing in private property are excluded from this scheme. The Government may think that those living in private property would benefit from the tax rebates or tax cuts. But not all residents in private estates are high-income earners. Similarly, not all people living in the public housing estates are low-income earners. Our utilities are on a standard rate. Irrespective of private or HDB estates, the electricity and water tariffs are the same. Therefore, you cannot distinguish people by the type of property they live in. The Government should apply the principle of "equal misery and equal prosperity", so that all families will proportionately enjoy some utilities rebates. The amount of rebates may not be large, but at least all the residents can get some benefit and be appreciative to the Government for sharing the budget surplus with them. I believe the end benefit to the Government will far surpass the cost incurred.

When the people first heard about the rebates on utilities, they were all smiles. But when they received the utilities bill later on, the smiles disappeared, because all the utilities rates were increased. Recently, when I visited my constituents, I came across a young couple living in a 4-room flat. They told me that they used to pay only $50 to $60 per month for utilities but now it has been increased to about $80 or $90 -- an increase of about 40%. I explained to them that after July, a $30 rebate will be given to the family for a period of 10 months and it will be able to offset the increases. They were so happy about it and they thanked the Government for helping to reduce their burden. But the family living opposite was not so fortunate. The residents told me that they used to pay between $100 and $150 per month in utilities bill. Now it has jumped to around $220, and the last bill was a hefty $311. For a family of three to pay more than $300 for utilities seems to be on the high side.

There appears to be something wrong with the new software used by Power Supply last year. I would appeal to the Government to make a thorough study into the matter and compensate the consumers for all the amounts overcharged. The problem should be tackled at its roots and not just on the surface. Otherwise, all these rebates given by the Government to the residents will be nothing more than the Tokuhon (Japanese medical plaster) applied on the skin to provide temporary relief to the trauma within. It will not eradicate the problem.

Next, I will deal with the 3-tier family bonus. In this Budget, there are different packages for the benefit of different categories of people, much to the delight of the people. Taxpayers should be happy with the 10% tax rebate. However, there seems to be no goodies for those who have responded to the Government's appeal to forming 3-tier families. With our population ageing more rapidly, quite a lot of problems have arisen. These problems must be resolved early. Many young Singaporeans have responded to the Government's call to set up 3-tier family so that the old and the young could be looked after. On the other hand, the Government must give some clear incentives to reward them. I would suggest the Government consider giving the following incentives to encourage the formation of 3-tier families.

There is a Chinese saying, "An elder in a family is like a treasure at home". If the young people can live with their parents, the old folks can look after their children, and the young couple can then be encouraged to have more children without having to worry that there would be nobody to look after their children. In the meantime, the old folks can be cared for and looked after by their family members. Moreover, the grandparents can inculcate the traditional moral values in the young children so that they would grow up to become useful citizens of Singapore.

The 3-tier family will also contribute to the enhancement of family and social cohesion, as it is often said that the family is the foundation of society. Perhaps, the Government can consider giving a once-off $1,000 3-tier family bonus to the young couples. I hope the Government can consider this proposal seriously.

Next, the CPF Top-up Scheme. The Minister for Manpower, Dr Lee Boon Yang, told us that about 190,000 people did not make contribution of $100 each into their CPF accounts and hence did not qualify for the top-ups of $500 to $1,700 into their accounts. Among the 190,000 people, about 23% are aged 65 and above, and 33% live in 1 to 3 room flats. I would like to urge MOM to conduct a thorough investigation into the matter. Like Dr Vasoo, I would also be grateful if the CPF Board could provide me with the following information:

(a) Of the 190,000 people, how many are singles with no

children;

(b) How many are jobless and have no income at all;

(c) How many are physically handicapped, such as mentally retarded, senile, dementia, non-ambulant; and

(d) How many are living in old folks' homes.

In order that these people could also enjoy the fruits of our economic success, the Government should consider depositing the top-ups of $500 to $1,700 into the accounts of these people who have, in the past, contributed to the country, particularly those who live in 1-room to 3-room flats, and then later, at the time of withdrawal, deduct the basic $100 as a pre-qualification for the top-up at the next top-up scheme. This is killing two birds with one stone. I hope the Minister for Finance can help these people who really need our help.

Mr Speaker, Sir, among the 190,000 people, there may be some who are quite financially well-off and do not need the CPF top-up. Can we ask these people to indicate whether they could donate the top-up amounts, which they would have been entitled to, to the grassroots activities fund or some charity funds. If among the 190,000 people, 10% of the people are willing to donate their CPF top-up money, then we would have $10 million for our grassroots activities fund or charity fund. This will be much better than the $8.3 million as proposed by Mr Leong Horn Kee for the grassroots activities fund.

I hope the Minister can consider my proposals.

Mr Noris Ong Chin Guan (Nominated Member): Mr Speaker, Sir, I rise to speak in support of the Budget.

Last year the Minister introduced a measured Budget using measured fiscal responses to address the millennium challenges. We have just emerged from a recession the year before and there was a need to remain circumspect and yet be bold enough to seize the new opportunities in our knowledge-based economy. Hence, in last year's budget, the withdrawal of each rebate appeared to be followed by a concomitant new tax initiative.

This year, Christmas seems to have come early. With the advent of greater uncertainty over the economic situation for the rest of the year, many are pleasantly surprised by the Minister's generosity. It is therefore not surprising that many people are lauding this year's Budget as an "Election Year Budget" because it is very pro-business and pro-individual. Political overtones aside, I think that it is more appropriate to term this year's Budget as a "Pay Back Budget" in view of the concessions that Singaporeans have to bear with during the recession period.

A Different Scenario

I would now like the Minister to consider other possibilities that require an even bolder fiscal approach this year. Sir, what if the economy becomes less rosy, thereby requiring a stronger fiscal response? What other tax initiatives can help our regionalisation drive? What other tax measures can encourage our promising local enterprises to think bigger, enter into new markets and invest more boldly? What other tax boosts can we give to our SMEs to ride over the current economic uncertainty? How else can we help individuals face the economic uncertainties ahead? We ought to visit these issues and attempt to answer these questions.

Small and medium-sized Enterprises

Firstly, on our SMEs. Many of them have not overcome the effects of last year's recession. Before they can come out of the woods, they are already greeted by the news of possibly another slowdown. I am glad that the Minister has considered their plight in this year's Budget. I am glad that PSB is helping to raise the performance of local enterprises, and I look earnestly forward to learning more regarding Retail 21.

Sir, I suggest that we adopt further fiscal measures to help our SMEs. If we want to grow our local SMEs into world-class corporations, we need to create a conducive fiscal environment to nurture them. Instead of a flat corporate income tax rates for all companies and partial exemption for income of up to a certain level, we might consider implementing a lower rate of income tax for local SMEs. The Budget's measure of introducing a tiered rate system for the first $100,000 of chargeable income is a step in the right direction. However, this can be improved upon. SMEs that are wholly owned by Singaporeans and whose turnover or total assets do not exceed a certain amount could be subject to a lower rate of tax, say, 16% on the first half a million dollars worth of income which is ploughed back into the business, and not distributed as dividends. Low rate would act as an incentive to allow the SMEs to build up their reserves to better weather economic downturn. Furthermore, reduction of tax rates would only be of benefit to companies which make profits. But what if they make losses? As a tax rule for SMEs, we should allow SMEs to use losses incurred during a downturn against income earned in, say, of the preceding two years. If taxes were paid in the preceding two years, such taxes could be refunded to the company. This ability to carry back losses would generally benefit SMEs facing cashflow problem and financial difficulties now. The current tax rules on the carrying forward of losses benefit companies that survive a recession. But the ability to carry back losses would assist companies to ride out rough patches where their fundamental business proposition is sound.

Related to this, I would like to also raise the issue of corporate group relief for losses. Businesses may be organised in separate companies for various reasons. This corporate separation, while real in the legal sense, is artificial in the business sense from the owner's perspective. But our tax rules do not permit losses in one company to be offset against profits in another company, even if one person owns both. If the two businesses were run out of the same company, the losses would implicitly be used against the profits resulting in less tax. In effect, by disallowing inter-corporate losses, the effective tax rate is higher than 24.5% for the above companies taken together. This should not be the case. We should seriously look into the concept of group loss relief.

Where local companies are seeking to expand into other jurisdictions that permit group relief, our companies would be at a disadvantage compared to companies that can take advantage of group relief. In fact, the effective tax rate on such companies can actually be lower than Singapore's statutory rates, notwithstanding that our rate is amongst the lowest of all developed countries.

Globalisation

I will now consider the tax measures to boost our regionalisation drive. Sir, we should provide incentives to local companies to go regional by helping them to build up their reserves. But the current tax rules do not allow funding cost to be deducted if investments do not produce income. This acts as a disincentive to local companies from seeking regional expansion opportunities. They should be allowed to accumulate expenses in periods when no income is earned and deduct expenses when their investments start to produce income. Such expenses can be restricted to cost incurred in regional expansion activities, such as funding and legal costs. Such an incentive would merely be an extension of the Inland Revenue's current liberal treatment of expenses incurred which have generated foreign income. Presently, expenses incurred which generate foreign income that are not repatriated can be accumulated and carried forward to be used to offset such foreign income when repatriated in the future.

Sir, we should also help successful local enterprises to reinvest their overseas profit. Currently, foreign taxes paid by second or third-tier foreign company is not recognised in Singapore when the local parent company receives dividends from its overseas subsidiaries through an offshore intermediate holding company. Since credit is not given for such foreign taxes suffered at the second and third-tier levels, the overseas income brought back to Singapore is effectively taxed twice, by the foreign country and by Singapore. This acts as a disincentive to local enterprises from reinvesting in Singapore even if the best opportunities are available at home. Instead, we should allow local companies to look through intermediate holding companies in foreign countries and receive credit for foreign taxes paid.

I will now turn to issues affecting individuals.

Speculative tax on capital gains on properties

Sir, the tax on speculative gains on sale of real estates was introduced at a time when the Government deemed it necessary to prevent a speculative bubble from forming in Singapore's property market. Aside from the common argument that the current market does not require such measures, I would also like to raise a more fundamental albeit technical issue. Singapore's tax system does not tax capital gains, only income. The imposition of tax on the gain, that is in all respect the capital gain, merely because the subject matter of the gain is real property, would appear to be contrary to Singapore's fundamental tax policy. For this reason, I would encourage the Government to reconsider the rationale for the property speculation tax.

With Singapore's population ageing, an issue is whether retiring persons would have enough to see them through their retirement years, I would suggest that retirement gratuities not be taxed. The taxation of such amounts inherently imposes a larger than usual tax burden as the amount is typically received in one lump sum at the end of the individual's career. Therefore, the individual may be pushed into a higher tax bracket than usual due to the receipt of such an amount, notwithstanding that such amount is intended to provide for his future years.

I would like to point out that retirement gratuities were exempt from tax before 1st January 1993. But with concerns that CPF savings may not be adequate for retirees in today's environment, the reinstatement of such an exemption may be opportune. I would like to take this opportunity to applaud the Government's introduction of the CSOP scheme which I believe will benefit employees and employers alike. However, I also like to draw attention to the fact that free share awards should also be given the same treatment provided similar parameters are met. For instance, there does not appear to be any reason why share awards that are granted to more than 50% of a company's employees should not be covered by the scheme.

On the topic of stock options, I would however like to draw attention to the manner in which stock options obtained by expatriate employees before they came to Singapore, but which are exercised while they are employed in Singapore, are taxed. The exercise of such stock options is subject to Singapore's tax notwithstanding that they were granted and earned during their expatriate years of service outside Singapore. If Singapore is to attract top foreign talent, we need to relook at this issue to ensure that there are no undue issues that may act as a disincentive to such individuals.

Finally, Sir, I would also like to very briefly comment on a few other tax issues, some of which I have raised previously. The first is the need to review the threshold parameters for estate duty, in particular the use of $600,000 as the threshold for non-property exemption is inadequate. The $600,000 is inclusive of CPF which is nowadays easier to achieve. The current exemption scheme appears to favour those with significant property ownership in their investment portfolio. We should revise upwards the non-property exemption allowed, or even abolish estate duty on all non-property assets and allow for estate duty to be levied only on real property passing in excess of the present $9 million. This would encourage Singaporeans to adopt a wider investment strategy rather than to be overly tied down and exposed in the property market.

My second concern deals with the personal reliefs generally. Such reliefs do not appear to have kept up with the time. For instance, the personal income threshold of $2,000 for the wife relief does not appear realistic given the financial pattern of today's family. I suggest we look closely at the current programme of personal reliefs to determine where improvements can be made. One area of concern among the growing number of Singaporeans is the cost of medical treatment for the ageing parents. To encourage three generation households and to ensure that retirees continue to enjoy a certain quality of life, medical costs incurred for geriatric treatment and for other serious illnesses should be given relief up to a certain monetary capping. Perhaps, the personal tax system can be used to help alleviate some of these concerns.

Finally, I would like to propose a topping up of the student's Edusave account to encourage PC ownership. We should encourage our students to be more IT-savvy. But not every student can afford a PC. While there are PCs in the schools, the IT exposure of students without PCs at home is very much restricted. For this purpose, we should consider topping up the student's Edusave account to subsidise or pay for the purchase of a PC or IT-related accessory or software. The top-up can be renewed five years later to keep up with the changes in computer technology.

The post-Budget wish-list that I have just described should not taint the bold and positive aspects of the Budget, as announced by the Minister. But who knows Santa Claus may still be accepting late orders.

Sir, with this, I support the motion.

Dr Lily Neo (Kreta Ayer-Tanglin): I thank you, Mr Speaker, Sir, for allowing me to join in the debate today. Whilst I agree with Members of this House who have spoken earlier that the Budget for this year is a generous one, I feel that it has inadequately addressed our concerns in preparing for the future needs of a fast-ageing population.

Sir, Singapore is indeed facing a fast-ageing population with the "older dependency ratio" decreasing from 10 now to over 30 by 2030. This is worrying. But even more worrying and dramatic will be the increasing number of the very old (those aged 75 and above). This group represents the frail elderly with physical, mental and social limitations. This is the group that is most likely to depend on and tax our health and social services. There will be an almost three-fold increase of this group from just over 90,000 now to about 250,000 by 2030, when it will comprise about 7% of our total population. Sir, we need good planning and astute allocation of immediate resources for a smooth transition to the years ahead.

Older people are more likely to have disabilities; the challenge is to attain a position where we can provide care that allows them to live independently for as long as possible and, preferably, in their own homes with their families. In order to achieve this, I would like to suggest that, henceforth, certain incentive grants be set aside for relevant Ministries to plan and act on innovative ideas that will save us from challenging burdens later on. Incentives should be given for proactive measures that can improve the care of the older generation in future. In view of the daunting task of caring for so many older people in the not too distant future, we have to start working on this potential problem now. Mr Speaker, Sir, our priority is to have in place a system that strengthens our foundation and taps and maximises our voluntary and private sectors. I would like the Minister for Finance to consider the importance in laying the foundation and the infrastructure immediately. Additionally, I would like the different Ministries, such as the Ministry of Community Development and Sports (MCDS), Ministry of Health (MOH), Ministry of Manpower (MOM) and Ministry of National Development (MND) to appropriate proactive measures to make some significant impact over this issue.

For MCDS, I would like to suggest that since our primary objective in the care of the elderly is to enable them to maintain independent lives in the community and in their homes for as long as possible, maintaining the social status quo in those elderly who are well and those elderly who are not totally dependent, should be one of its primary objectives. Thus, by postponing or retarding the functional deterioration in these older persons, MCDS can help them reduce avoidable hospital admissions and minimize premature dependence on long-term care in institutional settings. Sir, the aim must be to help the older persons do things for themselves; not do things for them.

For this to happen, there must be effective support from primary healthcare, community healthcare, social services and modified housing. There must be ample community volunteers and home help for families to care for the dependent elderly in their homes. As a matter of urgency, MCDS should have homecare-cum-domiciliary services, daycare and rehabilitation services, occupational therapy services with equipment and adaptations at homes developed and established. Easy access to these community care facilities, vis-a-vis centres of activity, centres for rehabilitation and daycare centres, is essential. There must be unstinted availability of support and advice. MCDS should facilitate this area by involving community bodies such as voluntary welfare organisations, grassroots organisations, and other groups in the private sector. Such facilitation will translate into lower costs and convenience for a happier people.

Sir, volunteer opportunities should be made available and seniors should be made aware that their skills are valued. We have a large and increasing pool of volunteers to tap from among the older Singaporeans. Training them to be competent in the different areas of our needs will give them recognition and worth. For example, as we are lacking in the community services to support and care for the frail and semi-dependent in the society, we may perhaps equip and train these volunteers to provide them. Perhaps, a well-managed register of volunteers and matching services can ensure successful implementation of this type of volunteerism. Volunteers should be recognised for their work, and it would be good if they can get some privileged and subsidised care when, in turn, they themselves need community services. They should be reimbursed transportation and minor costs of incidentals.

MCDS should also look into another important area. There is a need to facilitate adaptations, either with structural modifications to the homes, or with provision of appropriate equipment to ease the inadequacies of the frail or semi-dependent elderly. This will enable them to continue living in their own homes for as long as possible.

Mr Speaker, Sir, as we figure out how to best prepare for our aging population, half the battle would have been won if we could influence Singaporeans with the correct mindset concerning older persons and retirement. A mindset change needs time and a lot of effort to nurture, and I would like MCDS to prioritise it and enable us to achieve the desired outcome. Sir, older persons should be regarded as useful citizens whose wisdom, skills and talents are valuable resources that must be tapped for as long as possible to benefit society. The mindset on retirement should be: "A time to begin a new chapter in life by being active and involved; starting new activities and setting new goals." Indeed, Sir, older people can approach aging and retirement in new and exciting ways, and MCDS can do much to help them realise such a goal.

A new survey of 803 American men and women aged 50 to 75 has found that 40% of them are working or plan to work after they retire, while an equal percentage plans to do volunteer work. Mr Speaker, Sir, the Ministry of Manpower should encourage and facilitate this type of attitudes by providing avenues for Singaporeans to remain at work and to do volunteer work. Matching the seniors to further training or job placements should also be enhanced.

Older people should be given training opportunities irrespective of age. This will enable them to receive skills upgrading and help them stay relevant in the economy. Sir, people are healthier and are living longer. A skilled labour force of "seniors" can, therefore, be a valuable asset. Companies wishing to retain their older workers through workplace re-engineering should be encouraged and facilitated in this respect. As we plan ahead, we need to turn full circle, and adopt policies and programmes, provide retraining opportunities, offer flexible work hours and encourage those who want to stay on the job to do so. Sir, it is prudent that MOM is continuing to review the retirement age.

Many older people can stay longer in the community with structural adaptations made to their own homes. The Ministry of National Development should facilitate this by having modifications done to older flats, occupied mainly by older folk, in similar fashion to those modified for some rental HDB blocks. Mr Speaker, Sir, having seen those modified rental HDB homes, we know what can be done. The more elderly-friendly features inside the flats and the access or surrounding areas are, indeed, a boon to the older persons.

MND should also facilitate owners of HDB flats in the existing and new HDB flats to modify their homes, if they so wish. Furthermore, MND should also have sheltered homes, studio apartments and retirement villages built in increasing numbers to meet increasing demand through time. Sir, it would be good if MND has schemes in place to encourage private organisations to build such homes.

Mr Speaker, Sir, the Minister for Finance has said that, as our population ages, the healthcare costs for the older generation of our people will rapidly increase. This is the reason why allowances were made to meet the projected healthcare costs in the years to come.

The challenge now is to ensure that we can continue to spend wisely and efficiently in the future. The current 8% of older persons account for 20% of all outpatient attendances and 18% of all hospital admissions. Sir, going forward along such a trend, we will be putting a tremendous burden upon our healthcare resources. We must help the older people maintain independent lives in the community for as long as possible, being aided predominantly by the community healthcare services. As people get older, the emphasis should shift from the extension of life to the improvement of health-related quality of life. In other words, the emphasis should be on "adding life to years and not years to life".

Mr Speaker, Sir, I would like each one of us here present to consider the scenario of having to care for one of our very own elderly parents who should fall ill. This is not an unlikely scenario as many of us do have elderly parents and one in four in our population will face the situation in the not-too-distant future. It is a matter of time when we would have to meet that call.

If faced with that situation now, you may be wondering where to look for help. Must you seek specialist help and, if so, which and how many specialists will you need to send your parent for proper diagnosis and treatment of the different illnesses, which older people can have? How are you going to provide the care if he or she is semi-dependent and you needed to be at work? Do you have the know-how to care for a totally dependent elderly? If he or she insists on staying at home and rejects the idea of care in a nursing home, how do you then cope with all the daily medical requirements? Sir, what I am getting at is to illustrate our need to have in place a healthcare system that provides a one-stop centre which you can call upon to handle such a distressing scenario.

Sir, we should plan a system that promotes independence by supporting people to achieve their potential, and strengthen families by supporting family responsibilities. We must have the personnel, in ample numbers, to assist people with appropriate support to assess medical conditions, advise nursing care, provide home-help courses, and suggest necessary home adaptations and so on. This means a standardised and holistic management of the needs of each family, and an assurance of appropriate care that spares them lots of worry, time and effort.

To have this, we have to start training more medical personnel in various fields. We must have more geriatricians, physiotherapists, community nurses, home-care nurses and home-care helpers. We need "new courses" to impart ideas and experiences of experts in other countries that have gone through this predicament long before us. We can certainly benefit by looking at others in their management of workable systems. A centre or bureau with a dedicated team may be set up for this. It will augur well for us if the Ministry of Health looks into this immediately and the Ministry of Finance funds for this generously.

Sir, the task in the ensuing years may seem insurmountable due to foreseeable increased demands on our healthcare system as a result of greater needs of elderly folk, expectations of affluent citizens, and costs of new medical advances. Whilst we cannot arrest the rising demands and costs, we can challenge ourselves to find and implement the ways to lessen the burden. Promoting "preventive care" to maintain a healthy population for as long as possible will be the basic tenets of our endeavour. The target is to help the older people to live as independently as possible, deliver good medical care at affordable costs, ensure appropriate use of medical resources without wastage, emphasise self-help, and stress responsibility for one's own good health. Spending now to meet this challenge will save us millions of dollars in the future. I am glad that the Minister for Finance recognises this and has started to address the issue by providing substantially more funds for healthcare. I hope the funds will be used to establish the foundations for a sound "Healthcare 21".

Sir, in conclusion, I wish to reiterate that it requires the concerted effort, through close networking and smooth implementation of policies by various Ministries, that would ensure us our success in this issue. Therefore, I would urge the relevant Ministries to garner all their resources and work as one entity for the better of our aging nation.

Mr Harun bin A. Ghani (Hong Kah): (In Malay): Mr Speaker, Sir, I welcome this generous Budget as presented by Minister Hu, and as mentioned in a local newspaper, The New Paper, it would certainly bring happiness to the people. There is much to be said about the Budget this year. However, I would mention only three issues. Firstly, on alcohol. I welcome the measures taken by the Minister for Finance, in increasing the tax on tobacco by $30 a kilogram, but it is a wonder how the tax on alcohol was not increased in tandem. Although I do not question the tax increase, I would like to say about the consequences of alcohol which bring about problems to the family and our youths.

We sympathise with Mr Tan Boon Hui and Miss Ng Shen Ching who died in a road accident when they were preparing to set up a family. It was reported in the Straits Times on 27th February 2001. Both of them died when their motorcycles went out of control on the PIE on 13th May last year. Late last month, the Coroner's Court found that the blood and urine sample of Mr Tan contained excessive amounts of alcohol. We also read early last month about a 7-Eleven branch in Hastings Road in Little India which stopped selling alcohol because there were a lot of fights and clashes by the customers who purchased alcohol there and from several other shops. Please refer to the New Paper on 3rd February 2001. In fact, according to one of the residents there, they would drink until they were drunk and got themselves into scuffles. Another resident also said that they are not prepared to allow their children to go out on late nights in the weekend, for fear of being involved in the scuffle. We were also told that one in every four husbands who is involved in wife battering cases is an alcoholic. This is reported in the New Paper on 20th February 2001.

In fact, one expert, Dr Joseph Ozawa, Director of Physiological Services for the Criminal, Family and Juvenile Justice Centre, said that problems of the family are mainly caused by the husbands who are alcoholics and not those husbands who are drug addicts. He said that this is because it is easier to purchase alcohol than drugs. While I welcome the Subordinates Courts' Family Justice Centre to launch a programme to assist the heads of family who are alcoholics next month in April, I think other measures should be taken and one of them is to increase the duty for alcohol as much as it can so that it is no longer cheap to purchase. In fact, I am the only one who asked it to be increased as compared to the others who did not.

I also welcome the Government's measure to top up $500 million into the Lifelong Learning Endowment Fund this year to reach $1 billion, and more than $30 million for the development of Manpower Development Assistance Scheme so as to equip our workers with the necessary skills.

As lifelong learning will be a new lifestyle in today's living, $1 billion may not be enough. The Lifelong Learning Endowment Fund should be one-third of the sum allocated to the Ministry of Education, which is $6.3 billion. A new way is for the Government to assist those workers who do not have post-secondary education, as this group will be left behind by the changes in our economy. This group, if not helped, will break our social fabric.

Mr Khalid Abdullah, who is of Chinese Indian-Pakistani descent, has written about his surprise when a child who is not more than 10 years old told him and his two children that he could not play at a playground because "you are an Indian and you smell". This is reported in the Straits Times on 19th February 2001.

A month earlier, a New Paper journalist, Melvin Singh, also raised the same issue regarding the smell in the New Paper of 15th January 2001. He wrote about two of his wife's nephews who are of Chinese descent and aged 3 and 5 years. He said, "Both had hugged me in the same way they have done to their other uncles. But one day, one of them told me that my body smells because I have dark skin."

This is something that worries me because of race consciousness. If this is not contained, it will bring about adverse effect in the future.

Finally, Mr Speaker, the generous Budget which has allowed the Government to share their successes with others is a sign of the Government appreciating the effort of the people who are together with the Government during difficult times.

I support the Budget Statement which has been tabled by the Finance Minister, Dr Richard Hu.

Mr Lew Syn Pau (Kreta Ayer-Tanglin): Sir, I join my colleagues in thanking the Minister for Finance for a very generous Budget this year. It is a Budget aimed at making our companies more competitive and, at the same time, put more disposable income in the pockets of the people. I only have a few comments to make.

Last year, Singapore's economic performance was beyond the expectations of many, growing by 9.9%. According to economic statistics disclosed recently, most sectors did better than in 1999, except for the construction sector. Feedback from small and medium-sized enterprises (SMEs) however seem to suggest that 1999 was still very tough for many of them, especially for those who have ventured into the region at the Government's urging and are still not profitable. I do not have statistics to support this assertion as the feedback is mainly anecdotal. Many such SMEs feel that the cost restorations, such as in the employers' share of CPF payments, have come a little bit too fast. This situation was exacerbated by the significant fall in asset values of shares and properties, making many feel even poorer.

The outlook for this year is slower growth. This portends an even worse time for the SMEs. Many such companies offer supporting services or products to the Government, the GLCs, MNCs and other large corporations based in Singapore. Many have ventured into the region and some even further afield to look for new markets. Many have been hurt by the untimely downturn in the region. Some are even in need of recapitalisation to survive.

In this respect, the Government's reduction in corporate tax rate by 1% to 24.5% is welcome. Of more direct benefit to the SMEs is the new tax exemption scheme that will exempt three-quarters of up to the first $10,000 of a company's chargeable income, and one-half of up to the next $90,000 from corporate tax. It will help the SMEs reinvest their initial profits into the business.

I would like to ask the Minister for Finance to consider again the possibility of allowing companies to group their profits or losses for tax purposes. Today, group companies need not be large conglomerates that are usually profitable. Many SMEs today start new companies for new markets or form joint ventures with local partners overseas for new businesses. Property companies are required by law to have a new entity for each project. The new projects are usually not always profitable in the initial years. In fact, those that are not doing well are usually wound up after a few years as the original founders cut their losses. Their cumulative tax losses cannot be utilised unless the companies are bought over by some other companies. The Government should allow such group companies to offset profits of one company with losses from another as long as these companies are subsidiaries of the group. This will lighten the cash flow problems of many companies and encourage them to continue to invest in new markets and go into new businesses.

Given that FY2001 would be a more difficult year, I would like to urge the Government to bring forward or speed up more public sector projects to help the private sector. For example, given that our projected budget surplus is still very respectable, we could increase the number of Main and Interim Upgrading projects which will also benefit our HDB dwellers. I would also like to suggest that we set aside more funds for the upgrading of private housing estates for the benefit of private housing estate residents. Last year, only five private housing estates were selected for upgrading although many qualified under the criteria given. This year, I hope that there will be more such estates selected.

The Government has set aside funds to help SMEs through the Productivity and Standards Board and the Economic Development Assistance Scheme. They are given more in the form of technical assistance, training and consulting to help them modernise management, adopt technology and become more productive. These initiatives are good and will continue to be welcome. SMEs, however, need more than just technical assistance and training today. They need some support from the Government too in the form of equity to grow more aggressively.

The Government, through Temasek Holdings, the EDB Investments, the National Science and Technology Board and other Government vehicles, takes stakes in our local companies from time to time. However, I notice that many of these investments tend to be in big local companies or big projects. Government venture capital companies, such as Vertex, take stakes in start-ups. There seems to be a gap where the SMEs are. I would like to ask that the Government consider investing more in our SMEs. They need more financial support to go into the region with their existing businesses and to venture into new businesses. The stakes need not be big. They should leave the management of such SMEs to the founding entrepreneurs and professionals employed. The confidence of the market, business associates and customers from such Government support will give them a much better chance to succeed in the region. I want to clarify that I am not suggesting a bail out of ailing local companies. I am suggesting that the Government look at good SMEs with viable business models and distinct competitive advantages that have not yet obtained access to the stock markets for their capital for expansion. These companies need our support to grow and eventually become world-class.

Next, I would like to touch on the CPF top-up scheme. I commend the Government for its unique but nevertheless generous way of sharing our budget surplus. Putting the money directly into the CPF however may not be the best way of doing so because many Singaporeans do not see the money and probably do not even know when the money was credited. If they do not even know or feel it, would they appreciate the handout? Perhaps, the Government should consider giving it in cash, cheque or vouchers for a change. This would also help to boost the economy in a year of uncertainty.

The last point I would like to comment on is Edusave. In my view, it is one of the more popular Government initiatives to support procreation and education of our young. However, I still fail to understand why the Government would not extend this to families with four or more children. I am sure the amount involved would not be large. If we want families to have three or more children, we should be consistent in our policies and not discriminate against the fourth or fifth child in such a manner. I hope the Government will review this policy again seriously.

With these comments, I support the motion, Sir.

Mr Ong Ah Heng (Nee Soon Central): (In Mandarin): Mr Speaker, Sir, Budget 2001 has been hailed, as many colleagues have said, a good Budget for the people and businesses. Under the able leadership of our Government, we have managed to achieve a budget surplus. Our economy performed remarkably well in the year 2000. This was due to strong external developments, sound economic policies and, more importantly, it was due to the sacrifice of our workers. The cut in CPF in 1999 has restored our competitiveness and has gained investors' confidence. For this, full credit must go to our workers. CPF contribution has been progressively restored since January 2000, bringing the employer's CPF contribution rate to 16%.

Many people think that this is an election year Budget. However, facts had shown that our economy indeed grew remarkably in the year 2000. It was our workers who had borne the major brunt in the economic recession in 1997/1998. It is only fair and timely that they should be recompensed for such sacrifice.

There are clear signs that the economy is slowing down. In particular, the US economy is heading for a slowdown. We have projected growth of between 5-7%, if the US economy grows by 2-2.5%. Dr Richard Hu cautioned that any negative growth figure in the US will mean that we will be hit hard. Does the Government have other off-Budget measures it had introduced during the recession in 1997/1998? We agree that we must be prepared for difficult times ahead. Growth in global electronics has slowed significantly. As the US is our major electronic export market, to what extent would the slowdown affect our workers' job security?

Therefore, it is right for the Government to promote other high value added industries as we move forward into the New Economy, such as the life sciences and infocomm industries. In these sectors, many new and skilled jobs will be created. However, how can we channel retrenched workers into these sectors? Do they possess the necessary skills to take up these jobs? We need to address the issue of skills mismatch among our retrenched workers. The Government adopted several initiatives through the Manpower Development Assistance Scheme, SDF and the Lifelong Learning Endowment Fund to address the issue. NTUC has the SRP and N-ETF to upgrade skills of our workers, so that they will remain employable and, in the event of retrenchment, they are able to take up higher skill jobs.

While it is necessary to put in place these schemes, it is insufficient to deal with the problem of structurally displaced workers. However, other than these schemes, the retrenched workers themselves must be willing to be retrained and take up jobs in the high growth sectors. After training, the next challenging task is to match these workers with the new jobs. To achieve this end, a better job matching system, coupled with constant contact with the retrenched workers, must be put in place. Equally important is the willingness of our workers to be retrained and take up jobs in these new industries. However, what is causing concern is that many retrenched workers choose to drive taxis rather than take up training and move into these new jobs and industries.

Mr Speaker, Sir, another challenge that we face is the training of our older workers. Even when some of these older workers accepted our advice and went for retraining, more often than not they were turned away at job interviews. Many employers cited age as the main reason for rejecting them. With scarce human resources and the longer life expectancy, we need to make better use of our workers. I am glad a Tripartite Working Committee on Work Redesign has commenced to look into restructuring jobs in the hotel, marine and cleaning industries. I hope that they will look into the issue of how older workers can be fitted into new jobs, rather than focusing too much on increasing productivity.

While striving to maintain investors' confidence in our economy, to that end, the National Wages Council had endorsed the monthly variable component (MVC). The MVC is targeted to form about 10% of total wages. It acts as a first cushioning effect before a CPF cut is considered. However, the progress in implementing the MVC in companies has not been encouraging. As a result, we may not be able to achieve such wage restructuring in time to come. The slowdown in the US economy will have some spillover effects on our economy. Can our workers still look forward to a full restoration of the employer's CPF contribution or will they face the prospect of another cut in CPF if the economy worsens?

Sir, the issue of the cost of living has been discussed many times. However, it is a subject that touches the heart and soul of every Singaporean, especially the lower income group. The recent increase in electricity tariffs had sparked a huge uproar. This was made worse by wrong billing. The continued increase in petrol prices also led many Singaporeans to believe that this is the result of monopoly in the industry. I urge the Government to monitor closely the increase in prices in these companies with particular regard to the basic essential items, such as electricity, water and other basic amenities.

Sir, this is one of the most generous budgets, especially for the individuals. In fact, Singaporeans have been looking forward to it. Naturally, workers would expect the Budget to get better each year. We may not be able to repeat the performance of the year 2000 in 2001, and instead there may be a slowdown in our economy. If that happens, can the Government convince the people to accept something less? Whilst material gains and benefits are important in levelling up our people and sharing our fruits of success, it is not the only thing. More crucial is to cultivate a sense of identity and sense of belonging to our country, which ultimately will ensure our social cohesion and unity in time of crisis as our nation progresses. Therefore, I would like to urge the Government to put in more resources and effort to inculcate this sense and the spirit of nation-building among Singaporeans, and hope that future Budget statements will better reflect this growing need in the difficult times ahead. Hopefully, with this approach, we will be able, over time, to change the mindset of our people and that they are able to bond together and go through the thick and thin of times.

Sir, I congratulate the Finance Minister for his excellent Budget. I also commend him for his understanding of our people's expectations. On this note, I fully support the Budget for 2001.

Mr Ahmad Mohd Magad (Pasir Ris): Mr Speaker, Sir, thank you for permitting me to join in this debate.

As noted by many Members who have spoken before me, the Budget has indeed been very well received, as there is evidently something for almost everyone. I congratulate our Government for its astute handling of Singapore's economic well-being, which has enabled us to emerge not only almost unscathed from the Asian financial crisis but has placed Singapore several steps ahead of our competitors. As a result, we are now in this happy and enviable situation of how to manage our surplus and redistribute the created wealth from our prudent but successful economic management.

I am certainly most supportive of budget surpluses, especially when part of the wealth created is redistributed in the fashion and extraordinary generosity of this very pro-Singaporean Budget. It is highly motivating and, I believe, will spur people to work harder, as it represents a win-win formula for both the country as well as its people. Every party benefits from it. We have to strengthen the virtuous cycle of effort, growth and wealth creation in order for us to maintain this win-win formula.

Mr Speaker, Sir, I would like to join the many others who have spoken earlier, and also in expressing my admiration for the creative manner in how part of this year's Budget is being returned back to Singapore's stakeholders. There is benefit to be derived by Singaporeans from all walks of life as well as, particularly, our small SMEs and new and budding businesses. This is why I referred to it earlier as a pro-Singaporean Budget.

In this regard, Sir, I would like to suggest that the Government consider some form of a formula for the management and redistribution of our annual budget surpluses, as and when we have them. I feel that having a known and shared formula would enable us to have rationalisation in the manner our surpluses are distributed. The Government should first conduct a detailed study of what the appropriate formula should be.

For example, if we can say that 30% or 40% of each year's budget surplus is returned to the people with the rest going into reserves, considering that the growth of our reserves is generally higher than our annual GDP growth each year, this will represent an added incentive for our people and stakeholders to work harder, knowing that a bigger surplus would translate into higher potential incentives for them. Such a formula will make it clear that with a guaranteed commitment of part of the surpluses being returned to the people, the Government cares and is prepared to share its annual wealth creation, while comfort of mind is also built that there is continued set aside for rainy days.

Mr Chay Wai Chuen, the Member for Tanjong Pagar GRC, who spoke last Monday, also noted that excessive budget surpluses can result in unnecessary deflationary pull on the private sector economy through taxes and statutory cost and fees, whereas a more rationalised tax infrastructure, such as returning part of surpluses to the stakeholders, as undertaken in this Budget, can promote a more dynamic and entrepreneurial economy with lesser debt burden. This was further reinforced by Dr Wang Kai Yuen who also spoke on this issue earlier.

Next, allow me to touch on globalisation impact on the lower income group and small SMEs. Sir, while the Finance Minister's Budget should give us good reason to cheer about, the rapidly deteriorating global economic environment certainly does not. Manufacturers are starting to scramble to trim their sails in response to the slowdown in the United States and in case the US market drought is prolonged. In Singapore, our MNCs and high-tech manufacturers are the pumping chambers of our economic heart, with electronic manufacturing making up 64% of our total exports and accounting for more than half of our industrial production. Thus, a slowdown in world demand for electronics products will have a significant impact on jobs related to the electronic industry. This is the reality of the sweeping forces of globalisation affecting Singaporeans, and this will continue to affect our lives even more so in this new millennium. My worry, Sir, is particularly for our older and lower income workers. Apart from the uncontrollable global economic cycles, faster technological changes would also affect these workers' ability to hold jobs due to more aggressive regional and global competition.

I am not as concerned about our young Singaporeans as I believe they are more adaptable to high-tech life and rapid changes in the environment. However, it is this ready acceptance and adaptation by the younger generation that will propel our transition into a knowledge-based economy and correspondingly make the digital divide more pronounced.

As such, Sir, I would like to call on the Government to continue to intensify its efforts and to act decisively and quickly to help our older adult population in retraining and reskilling them. Equipping them with knowledge of IT should also be a priority, as most industrial jobs today require IT familiarisation.

I therefore urge the Finance Minister to support this urgent and worthwhile cause to minimise the threat of a digitally divided society. In view of the imminent threat of another round of unemployment, I would urge the Government to harness and take advantage of all existing infrastructure, including creating new avenues, if necessary, to retrain and reskill older workers. This includes tapping into the vast resources of our unions, working with grassroots and community organisations and employer groups.

Besides individuals, many of our small SMEs are also struggling to survive as a result of the rapidly restructuring economy. In spite of the sterling economic growth last year, it is not uncommon to hear groans of our small businesses that they have not benefited that much from last year's 9.9% economic growth.

Sir, it is common for owners of SMEs to pledge their properties against bank borrowings. Prices of properties today are subject to wild swings and when these diminish substantially, such as the case during the financial crisis years, banks unhesitatingly demand for immediate top-ups to make up for the difference if the outstanding loan amounts are above the diminished collateral value. Those who could not pay had to declare bankruptcy. Sir, there are signs of similar trends emerging as a result of the economic slowdown. I would like to therefore ask the Government to consider the exploration and facilitation of some form of an insurance mechanism to be in place for such cases if none currently exists. This will help prevent viable SMEs from having to wind up just because of a temporary downturn situation.

Tax Relief for Knowledge Upgrading

I move on to tax relief for knowledge upgrading. On the same token, Sir, the Government should be pleased to note that many mid-career workers have responded well to the call for lifelong learning by upgrading themselves through enrolment in professional and degree courses. A recent Straits Times' report noted that about 25,400 people are doing this based on 1999 data. The course fees are not low and can amount to tens of thousands of dollars. As such, I would like to ask the Finance Minister to review and consider doubling the current course fee relief from $2,500 to $5,000. This should be done not only in appreciation of the peoples' positive response to the call for lifelong learning but also to encourage more to do so. Investment in education will go a long way in increasing each citizen's contribution to Singapore's economy.

Attracting Back Singaporeans and Retaining Singaporean Talent

My next point, Sir, is on attracting back Singaporeans and retaining Singaporean talent. An estimated 200,000 Singaporeans are currently living abroad. Many, I believe, are professionals who could make a meaningful contribution to Singapore. Therefore, in addition to our endeavour to attract foreign talent to work in Singapore, we should also intensify efforts to create more opportunities for talented Singaporeans living abroad to return home. We need to continually re-examine our environment to understand the factors why many Singaporeans choose to live and work abroad.

For one, the Government is now much more receptive to get feedback and ideas from Singaporeans. This may not be known to fellow Singaporeans living abroad who felt that Singapore lacks the space for them to express themselves. One way is for the Government to more regularly communicate with overseas Singaporeans to keep them informed of changes in living conditions in Singapore to keep the Singapore heartbeat pounding.

For those who are thinking of leaving Singapore, have them tell us our "shortcomings". Be with us to build a better Singapore. Make this our homeland, a country we are proud to call our home.

The Government can create an abundance of opportunities for all but if the sense of belonging of Singaporeans to Singapore begins to falter, then the future of the nation will be at stake.

Keeping Singaporeans Healthy

I would like to touch briefly on keeping Singaporeans healthy. Is Singapore a sickly nation? I am particularly disturbed by the heading of the publication "Today" dated 23rd February which implied that we are a nation of sick people. Our greatest resource is our people. Everyone in Singapore is important, no matter how old he or she is. Undoubtedly, a healthy individual can contribute more than an unhealthy one. Thus, leading a healthy life should be the norm for every Singaporean and each should be encouraged to do so.

It is a known fact that the competitive environment we live in contributes to stress in many people. We therefore need to and can do more to encourage and motivate every Singaporean to stay healthy and fit.

I would like to urge the Government to consider:

(i) Building more health clubs or exercise facilities in HDB and industrial estates to encourage people to exercise more so that they can stay fit. Wherever possible, the facilities should be free, but if charges are levied the fees charged must be reasonable.

(ii) Building two or more grassroots clubs in strategic sites around Singapore to encourage grassroots members and their families to also indulge in healthy lifestyle. Grassroots leaders play an integral role in community bonding and are therefore valuable assets to the nation. Their welfare must be well taken care of.

(iii) Having more programmes or campaigns to encourage the young to stay healthy and fit. Healthy habits should be inculcated from young so that exercise and adoption of a healthy lifestyle becomes a natural part of their lives when they grow up; and

(iv) For senior citizens, special rebates should be considered for them when they spend on health enhancing products such as vitamins and special food supplements to keep themselves healthy and fit. A healthy and fit Singaporean is not only an asset to himself but also to his family and, undoubtedly, the nation.

On this note, Sir, I support the motion.