CITIZENS CONSULTATIVE COMMITTEE ASSISTANCE SCHEME (Number of applications received)

Mr Charles Chong asked the Deputy Prime Minister and Minister for Finance what is the number of applications received under the Citizens Consultative Committee (CCC) Assistance Scheme and what is the number actually qualified to receive assistance.

The Second Minister for Finance (Mr Lim Hng Kiang) (for the Minister for Finance): Mr Speaker, Sir, 14,161 applications were received under the CCC Assistance Scheme in January 2003. Of these, two were successful.

The high number of applications is probably because many members of the public thought that it was a general unconditional handout from the Government which they might have a chance of getting. But the CCC Assistance Scheme was specifically to offer additional help only to those households, with a monthly income of $3,600 or less, whose extra GST expenditure is not adequately offset by the GST offset package. The People's Association and MOF held a press briefing on 25th January 2003 to clarify the rationale of the Scheme. Recent feedback from the CCCs indicates that the number of applications has tapered off.

The GST Offset Package was designed with a 5% GST rate in mind. Although the transition to a 5% GST rate is now phased in over two years, the Government kept the offset package intact. This is an additional reason why the vast majority of Singaporeans are receiving offsets worth more than 100% of the additional GST they have to bear.

Mr Charles Chong (Pasir Ris-Punggol): Mr Speaker, Sir, could the Minister give us an indication as to how much money was disbursed in these two successful cases compared with the cost of administering the scheme? And could he also give us his view whether we have failed to reach out to people who would benefit from the scheme or have we introduced inadvertently a scheme which everybody seems to be applying but very few are qualifying?

Mr Lim Hng Kiang: The way the scheme is run, each applicant would have to list out his income and his expected GST expenditure and also the expected offset package that he has received. We would then analyse and see what is the difference. And if indeed the offset package he has received is less than the GST expenditure which he is likely to incur, then we would give him the additional assistance. In the first family, the amount of grant approved is about $105. In the second family, it is about $72.

Let me explain that the CCC Assistance Scheme is not a new scheme introduced by us. We put in place this scheme when we introduced GST in 1994. If Members remember, Dr Richard Hu explained why such a scheme was necessary. I think he put it very cogently. Basically, we have the various assistance schemes for Singaporeans which provide a safety net. All of us have tried to be as comprehensive as possible in designing these safety nets. But just in case people are not protected by these safety nets, then we have this "mother of all schemes" called the CCC Assistance Scheme where they just come forward, explain how it has affected them and if indeed they have been adversely affected, we will provide them the assistance. And that worked out quite well in 1994.

This time round when we raised the GST, we have, of course, had the experience of the previous GST arrangement and we have improved the offset package. The most important change that we have made this time round is the ERS which really hands out cash grants to Singaporeans and we are very confident that every Singaporean has got an offset package that more than offsets the GST expenditure. But because we had this scheme in 1994, we thought we should not remove the scheme and still keep this safety net even though we know that having improved on the offset package, the number of applicants would be very, very few and indeed it turns out that actually the number of applicants who were eligible would be very small. But this GST change comes amidst the economic downturn, so more people are in financial difficulties. It comes about after we have run the EDRS scheme which unfortunately may have given the impression to some Singaporeans that there can be handouts if they come to the CCC and apply for it. As a result, it generated this big increase in the number of applications. That is the reason why PA and MOF took action to explain this. I think we are getting this message across and the number of applications has come down.

Mr Charles Chong: Mr Speaker, Sir, I think the Minister has not quite answered my question on the cost of disbursement but it does not matter. Would the Minister consider cutting our losses and diverting the cost savings and the amount allocated for this scheme to other worthwhile causes where more Singaporeans can benefit from?

Mr Lim Hng Kiang: The reason why I did not answer the question is because I do not have the data. We have not estimated the cost to run this scheme because this scheme is run by the CCC. So it is not easy to ascribe the specific cost to this system. But I think it is useful, psychologically and politically, for us to have this scheme so that whoever falls through the net knows that there is this scheme that they can come forward and avail themselves. It is good for us and although we may have designed the offset package comprehensively, we never know which sector we may have missed out. I think it is right for us to include the scheme. We did not expect that many applicants would turn up and that it would be costly for us to administer this scheme. But the perception on the ground is that this is a free grant and everybody tries their luck.

So now, we have to take actions to make sure that people understand the scheme properly. I think it is a worthwhile scheme to run. It will run its course and, at the end of the exercise, people who felt that they have been disadvantaged or they did not benefit from the GST package know that there is a recourse that they can turn to. And those who tried their luck had been given a hearing. We calculated for them to show specifically that the GST offset package that they get more than pays for the additional GST expenditure. I think we also win a convert to the GST scheme. It is good for us to keep the scheme and not close it and divert the cost of running it to other schemes.

Mr Tan Soo Khoon (East Coast): Mr Speaker, Sir, I cannot understand why the Minister says that it is worthwhile to continue with the scheme when so far, only two persons have benefited. Does it make any sense for us to have a scheme like this and we end up explaining to people why in the first place they do not qualify at all? Would it not be possible for the Minister to look into the formula by which we calculate their eligibility?

Mr Lim Hng Kiang: Mr Speaker, Sir, I have explained the background to the scheme. If, when we introduced this scheme, we told this House that we were removing this scheme, I am sure MPs like Mr Tan Soo Khoon would have stood up and said that the Government should keep this scheme in case our offset package was not comprehensive enough and, therefore, we should have this safety net to catch these people. I think our intentions are quite clear. We have designed a comprehensive GST package but the society has different segments and we provide this safety net in case people feel that they have not benefited from the offset package. We have run the scheme. People have turned up. They were unsuccessful. There are some costs to us in having to explain to them.

But, personally, I think this is worthwhile because when you sit down with the person and go through the calculations with him, you convince him that, in fact, the additional GST expenditure that he has incurred is not very significant and the GST offset that he has got from the Government is significant enough to offset it. So it may seem a very costly and laborious way of convincing individuals but, personally, I think it is worth it and, therefore, I do not think we should stop in the middle of the exercise. The numbers are coming down, so I do not think that it will incur too much administration from now on.

Mr Tan Soo Khoon: Mr Speaker, Sir, I am afraid that the Minister has not got my point. Why do we want to have a scheme for which we have announced that there would be quite a big sum of money - I cannot remember how much it was - and in the end, we tell people, everyone who comes to us, that they do not, in fact, qualify at all? What is the point of having such a scheme? I am in support of a scheme to help people during these difficult times, especially if it is to absorb the increase in the GST, but I think what we would like to have is a scheme that works and not a scheme that, in the end, ensures actually that from the word "go" when you apply, you do not qualify at all.

Mr Lim Hng Kiang: Mr Speaker, Sir, we must understand the objective of the scheme. We started off by saying that when we increased the GST, all Singaporeans would be expected to pay a higher GST component when they buy things. At the same time, we have a GST package which will help them offset this additional GST component. And because of the ERS, we make sure that everybody is better off with the GST package. That is the intention of having this scheme. Because the design of our ERS is by household type and therefore there may be those people, for example, who stay in private property but at the lower end of the private property, who have high income levels, who may not be a national serviceman, and do not get the extra GST. So there may be a segment of people in that situation whose income level may be around $3,000 or $2,000 and because they are not staying in an HDB flat, they may not be the head of the household and therefore do not get the benefit through the Utilities Save and the S&C grant, they do not benefit fully from the offset package. So these are the cases that we want to cater for.

When we made this announcement, we have set aside a few million dollars. We did not make it a very big programme to cater for this group. We know from our calculations that such families ought to be very few, but from 1994 till now, the household formations and the type of housing in Singapore have changed. I think Members would remember that when Dr Richard Hu proposed this scheme in 1994, he was very concerned about many of the families staying in the Chinatown area which are not HDB flats. They are not heads of households, so they would not benefit from the S&C grant, the Utilities Save and schemes like these. Therefore, we kept the spirit of that scheme to cater for such people who do not fall into the main segments that would benefit from the GST package. The intention of designing this scheme is good. It is intended to target at that group of people. As it turns out, that group is far fewer than we expect. We have raised expectations. People thought that it was a free handout. They came and tried their luck. We cannot turn them away, so we used that as an educational exercise.