ECONOMIC RESTRUCTURING SHARES

[Mr Speaker in the Chair]

Dr Amy Khor Lean Suan asked the Deputy Prime Minister and Minister for Finance if the Ministry can consider (i) extending the deadline for the 128,000 persons who missed out on the Economic Restructuring Shares (ERS); (ii) providing some measures to reach out to this group of people; and (iii) assisting them with their top ups if they are in financial difficulties or have some other compelling reasons for being unable to do so.

Mr Gan Kim Yong asked the Deputy Prime Minister and Minister for Finance whether his Ministry will consider waiving the $50 contribution to the Central Provident Fund (CPF) required to qualify for the Economic Restructuring Shares (ERS) in instances where the recipient is facing financial difficulties.

Dr Lily Neo asked the Deputy Prime Minister and Minister for Finance, in view of the large number of 128,000 persons who missed out on the Economic Restructuring Shares (ERS), will the Government consider extending the deadline for this group and waiving the $50 top-up in the Central Provident Fund (CPF) for those with financial difficulties.

Mr Loh Meng See asked the Deputy Prime Minister and Minister for Finance (a) what are the reasons for a sizeable number of more than 100,000 citizens not topping up their CPF to benefit from the new Economic Restructuring Shares; (b) what is the profile of these citizens and why are they having difficulty to top up; and (c) will the Government be able to give them another chance to benefit from the scheme.

Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance if he will (i) give a breakdown of the profile of the 128,000 Singaporeans who missed out on the Economic Restructuring Shares (ERS); (ii) inform the House whether additional efforts are being made to reach out to these people and help them with the top-up, if needed; and (iii) state whether the unallocated money from the ERS will be channelled to provide more aid to the poor and needy.

The Deputy Prime Minister and Minister for Finance (Mr Lee Hsien Loong): Mr Speaker, Sir, with your permission, I will answer Questions 1-5 together.

Mr Speaker: Yes.

Mr Lee Hsien Loong: The ERS is part of the offset package to help Singaporeans adjust to the increase in the GST rate. It covers the net increase in tax for nearly every Singaporean for at least 5 years. There is no question of the offset not being adequate for this purpose.

Based on the latest data from CPF Board, about 100,336 Singaporeans, or about 5% of the total of 2.18 million eligible Singaporeans, did not contribute $50 into their CPF accounts by 31st December 2002. This is lower than the earlier reported figure of 128,000, which was not the final count, as last minute contributions were still being processed by CPF Board.

The detailed breakdown is in the table (Cols. 2273 - 2274) that I have circulated to Members, and you should find it on your seats. The highest rates of non-participation came from those staying in welfare homes and 1-room HDB flats. The rate for those in 2-room HDB flats was also rather high. There were 9,791 of such cases in all (in other words, welfare homes, 1-rooms and 2-rooms). They account for about 13% of the total number of eligible Singaporeans in these categories, but only 0.5% of the total number of eligible Singaporeans. This is the relatively small group that we should focus on. Annex - Singaporeans who did not qualify for ERS (Cols. 2273 - 2274)

The Government has put in considerable effort to remind Singaporeans to top up their CPF accounts by 31st December 2002 to qualify for the ERS. In August 2002, CPF Board sent letters to all Singaporeans to inform them of the ERS Scheme and to remind those who had not yet topped up to do so as soon as possible. In November and December 2002, MOF and CPF Board issued press releases, and ran radio trailers and newspaper advertisements. We mobilised the grassroots organisations (GROs). The grassroots organisations not only put up reminder posters at HDB void decks, but made house visits to those staying in 1- to 3-room HDB flats. If the occupants were not in, they made repeat visits; sometimes three or four times. If the residents could not afford the $50, the grassroots organisations helped them financially on a case-by-case basis.

There could be many reasons why people did not top up their CPF accounts in time. Some may have forgotten, others may have been overseas. There may even have been some who were not interested in the shares. The grassroots leaders who made the house visits have reported that a significant proportion of those who had not topped-up their CPF accounts could not be found at the addresses given. Conceivably, they had not updated their addresses on their NRICs with the National Registration Office and hence, would not have received information about the ERS scheme posted to them.

Among the lower income households, especially the older folks, many of those who did not top up probably did not have active CPF accounts. They may have found it difficult to top up their accounts, even though help from the GROs was available. Some may not have understood how the scheme would help them.

Mr Gan Kim Yong and Dr Lily Neo have asked to waive the $50 CPF top-up requirement for those with financial difficulties. Let me explain the purpose of the $50 contribution. Besides encouraging Singaporeans to maintain an active CPF account that helps provide for their retirement, the top-up is a way for Singaporeans to show that they are doing something to receive their ERS. It is really to put up your hand and say, "I'm here. I would like to participate in the scheme". It is not desirable for the Government simply to give the shares to all Singaporeans, without even knowing where he is or whether he wants the shares. For example, the person may have emigrated, and may not have maintained his links with Singapore. Why should we give it to him?

Dr Lily Neo, Mr Loh Meng See and Dr Amy Khor have asked if the Government will give those who missed out another chance to benefit from the scheme. For those who are not poor, and these form the majority of those who did not top up, I think we should respect their decision not to participate in the scheme. The Government made them an offer, they decided not to take it up, and we should leave the matter there. We have to be fair to the 95% of Singaporeans who took the trouble to top up by the deadline, some of them queuing up to do so on the last day. If each time the Government sets a deadline, it gets extended because people did not make the effort to meet it, soon the Government's terms and statements will not be taken seriously.

However, for the lower income groups, ie, the 9,791 cases of 1-roomers, 2-roomers and people in welfare homes, I agree fully with the MPs that we should be flexible and make a further effort to reach them. They are the ones most likely to have had genuine financial difficulties and to have been unable to make alternative arrangements. They are the most in need of the ERS shares. The Government will therefore make a special arrangement to help them.

We will give all the Advisors to the grassroots organisations the list of residents staying in 1- and 2-room HDB flats, and welfare homes, who have not topped up their CPF. The grassroots organisations will get in touch with them and make arrangements for them to participate in the ERS scheme, extending financial help where necessary. As the numbers are not too many, it should be feasible for us to take this more personalised approach. The special facility will be provided up to 31st March 2003, to give the grassroots organisations sufficient time to identify and reach out to those in need.

Mr Steve Chia asked whether the unallocated money from the ERS will be channelled to provide more aid to the poor and needy. The special arrangement I have just mentioned will help some more needy Singaporeans get their ERS. The rest of the ERS money will remain in the ERS Fund, and become available for future ERS distributions. The ERS Fund is set up as a private trust fund specifically to distribute ERS shares. The Government has many other schemes to help the poor and needy who require assistance.

For future lots of ERS, we are considering possible ways to be more flexible with the CPF contribution requirement, especially for the lower-income, the elderly, and Singaporeans staying in welfare homes. My Ministry is studying the options. We have time as the next contribution is not due until 31st December 2003.

Dr Lily Neo (Jalan Besar): May I ask the Deputy Prime Minister whether he would consider the extension of the ERS CPF top-ups to 3-room HDB dwellers as well, as there are residents in the 3-room HDB flats who also require assistance from the grassroots and the MPs?

Could I also ask whether it is a fair proposal for the Community Development Council to come up with matching funds in the respective constituencies to help those residents who have financial difficulties in their CPF top-ups?

Mr Lee Hsien Loong: Mr Speaker, Sir, first, on the 3-roomers. I think we have to draw the line somewhere. If I had drawn the line at the 3-roomers, I think Dr Neo would have asked me for the 4-roomers. But, nevertheless, there will be cases where 3-roomers will have financial problems. And if MPs come across any such cases and write in to the CPF Board, the Board will consider them sympathetically.

As for using the CDC's money to match, perhaps we should remember that the CDC's money actually came from the Government in the first place. But I am sure the Member will have sources of funds and that the CDC has arranged for donations and wants to use those donations for this purpose, that would be very helpful.

Ms Braema Mathiaparanam (Nominated Member): Sir, two supplementary questions, please. As regards those who have been helped with the $50 through the CCC's visits, could we know the number of people who have been helped, because they could not even afford the $50? The other question that I have is on the almost 10,000 people - the 1-roomers, 2-roomers and residents of welfare homes. The Deputy Prime Minister spoke about arrangements. What exactly are these arrangements? And if they do not have $50, is it possible to help them in other ways?

Mr Lee Hsien Loong: Mr Speaker, Sir, I do not have the exact number of how many were given $50 by the grassroots organisations, because these were arrangements made by the individual Advisors. But I am assured that the Advisors have gone through it and wherever people needed assistance and could not afford the $50, it has been forthcoming. I do not think the number is very large. I believe they would number in a few hundreds.

As for what exactly the arrangements will be for the 10,000 which we are talking about now, I leave that to the Advisors. I have discussed it with them, particularly the Advisors from the constituencies which have larger concentrations of the poor and older folks, like Dr Lily Neo in Kreta Ayer and a few others who have smaller flats and older residents. And they assured me that the financing is not a problem. The question is: does the person want to participate and is it really a problem that he is unable to find the $50? If it is, we can make the arrangements for him. Because if you just look at it, 10,000 people times $50, it is $500,000; divided by 80 Advisors, it is about $6,000 per Advisor. It is not an enormous amount of money. It can be arranged.

Mr Heng Chee How (Jalan Besar): Sir, in the review that the Ministry of Finance is conducting for future ERS, I would like to ask the Deputy Prime Minister whether he would consider lowering the quantum from $50 to something less, eg, $10, for this particular exercise. The groups that have the highest disqualification rates are actually the lower income. After all, everybody who qualifies could actually draw out their $50 the day after receiving their ERS.

Mr Lee Hsien Loong: Mr Speaker, Sir, we will consider all possibilities. I think for the older folks, we can be much more flexible. Because as Mr Heng Chee How has pointed out, once you pay the money in, you are entitled to draw it out the next day. But for the younger people, they are not entitled to draw it out the next day. When they reach the age of 55, then they can take it out together with the rest of their CPF money. So I think there is a point. And to put in $50 in order to collect $400 or more from the Government is not an unreasonable request.