DEBATE ON BUDGET STATEMENT (Business Motion)

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DEBATE ON BUDGET STATEMENT:

(Business Motion) The Second Minister for Finance (Mr Lim Hng Kiang): Mr Speaker, Sir, I beg to move,

That, notwithstanding the Standing Orders, an additional day, namely, Wednesday, 10th March 2004, be allotted for the debate on the motion for approval of the financial policy of the Government for FY 2004/2005 moved by the Deputy Prime Minister and Minister for Finance on 27th February 2004.

Many Members have indicated their desire to speak on the various issues raised in the Budget speech. Some Members have been extremely diligent, proposing no less than 28 measures on the population issue. So I think we need to extend the time to cater for all these proposals being put up.

Resolved,

That, notwithstanding the Standing Orders, an additional day, namely, Wednesday, 10th March 2004, be allotted for the debate on the motion for approval of the financial policy of the Government for FY 2004/2005 moved by the Deputy Prime Minister and Minister for Finance on 27th February 2004. - [Mr Lim Hng Kiang].

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ANNUAL BUDGET STATEMENT: Order read for Resumption of Debate on Question [27th February, 2004],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2004 to 31st March, 2005." - [Deputy Prime Minister and Minister for Finance].

Question again proposed.

Dr Gan See Khem (Nominated Member): Mr Speaker, Sir, thank you for the opportunity to speak and to share my views on the Budget speech delivered so eloquently by the Deputy Prime Minister and Minister for Finance.

Economists generally predicted that the world economy is in the midst of synchronised recovery and all the major emerging economies in Asia are likely to be buoyant through much of 2004. The expectations are that China will remain the big industrial growth story, despite likely R&D revaluation. India will continue to grow in the software and service areas. Singapore and the rest of ASEAN will find growth niches. Taiwan and Korea will emerge as investors. It is heartening to note that we are looking towards a cyclical growth in the Singapore economy. But when I read the Budget Statement by the Minister for Finance, I note that the Government is still concerned that the structural problems in the economy remain.

I support the Government's pro-business stand in this year's Budget. The business sector fully supports the Government's key pro-business initiative to cut the corporate tax rate by 2% to 20%. However, it is disappointing to note that there is no corresponding cut in personal tax when the top rate stays at 22% and any further reductions are mothballed till an economic recovery is more certain. The maintenance of the

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personal income tax regime signifies that there is not going to be an attempt to encourage spending and consumption, except for the cut in the price of car ownership. And as every entrepreneur will remind us, business prospects are important or may be even more important than tax cuts.

The Budget does reflect positive changes for entrepreneurs, especially with the $100,000 exemption of chargeable income for a new company which applies to each of the three years falling within the Year of Assessment 2005 to 2009. The Budget proposal to exempt foreign source income for individuals is a good move to attract the large pool of resources currently residing out of Singapore to be remitted back home. This will have an enhancement effect on the local wealth management industry. Whilst these are encouraging moves by the Government to boost the local business activity, the question that needs to be addressed is whether the above pro-business changes are enough to create a vibrant business climate in Singapore and attract not only creative local but also foreign entrepreneurs to set up business here.

Please allow me to identify a few areas where further enhancement may be needed.

First, on corporate tax. The question I would like to ask the Government is whether the 20% tax cut is the end of the road. Is this the target the Government has set itself to achieve or the limit that it would accept? Would the Government consider a further cut to 17.5% corporate tax rate to be competitive with Hong Kong, or even to consider the 12.5% level to be in line with the corporate tax rate in Ireland? Hong Kong companies have the advantage of being the gateway to the enormous Chinese market. Despite its economic woes over the last few years, Hong Kong -based companies are now

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riding the wave of the spill-off of the economic expansion in China , and they also enjoy a favourable and simple tax regime.

Personal income tax is at 15.5%, though it will be increased to 16% in the coming financial year. In Hong Kong 's case, there is no capital gains tax nor is there a tax on dividends or interests. Hong Kong has no sales or value added tax. In Ireland 's case, the pro-business regime has brought enormous economic benefits of attracting new and creative entrepreneurial activity than any other countries to-date. Singapore 's effective corporate tax collection is lower than the 20% that we announced, due to the tax holidays and pioneer status given to MNCs.

In the early days of our economic development and our attempt to attract more MNCs to Singapore , the provision of pioneer status and tax incentives was a very important key tool to attract these enterprises to Singapore . But as we move towards a regime whereby we want to promote entrepreneurialism and we want to have a more entrepreneurial economy, then it is time that we reviewed the pioneer status and the tax incentives accorded only to MNCs. This system penalises other companies because we are all supporting pioneer companies. In order to create a more entrepreneurial Singapore , we need to have a simple and transparent low-tax regime that uniformly applies to all companies and not only to pioneer status given to selective MNCs. I believe a simple and a low-tax regime would do its part to encourage not only MNCs but also other entrepreneurs and SMEs to set up their base in Singapore .

The pro-entrepreneur initiative articulated by the Finance Minister is a welcome change and is a good intention on the part of the Government. The question most of the start-up entrepreneurs that I have spoken to asked me is

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whether that is enough, or that is relevant. As most of us know, very few enterprises make money in the first three years and, if they do, there is no reason why we need to cap their tax incentives at $100,000. In fact, many entrepreneurs out there have asked whether the Government will review the three-year limit and, say, extend the tax holiday to seven years to make these tax incentives more meaningful to new enterprises. The business sector really applauds the Government's move to cover all set-ups under the Enterprise Investment Scheme which really gives opportunities to other budding entrepreneurs like BreadTalk.

Before questioning if this is enough, can we also look at the Irish example because, in addition to the tax incentives, Ireland has put together many grants and other schemes to help start-ups and new enterprises? An important part of the Irish incentive package is the availability of grants towards initial start-up costs. Cash grants are given towards the cost of fixed assets, and these are available to companies to help defray the cost of setting up the operations. Fixed assets are eligible for assistance, including site purchase and development, buildings, new plants and equipment. Of special interest is the employment grant which is specifically geared towards companies which create employment but do not need to invest heavily on fixed assets. These grants are non-taxable. An amount will be approved for each job created. Ireland has given generous grants and made these available towards the cost of major training initiatives by companies, so that companies can substantially upgrade their skills base. What they also have is that grants are available for the development and expansion of an R&D facility. The cost available for the grant includes expenses for the acquisition of sites, premises, plant and equipment, wages

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and salaries, materials, services, consultancy fees, feasibility studies and technology acquisition.

Would the Government consider giving tax deductions for investments and not failure as an incentive for a less risk-averse investment climate? For example, in the United Kingdom , individuals get tax exemptions upfront, even if companies fail. If Singapore were to have enough angel investors to fund new and exciting business enterprises, could we allow angel investors to claim for tax losses for the full amount of investment losses? A more supporting tax regime will be required to create a more vibrant new business investment climate in an entrepreneurial Singapore . With these tax changes, we can hope to attract high net worth individuals to reside and invest in Singapore .

The creation of a vibrant and enterprising Singapore will require mindset changes as well as physical policy changes. We need to highlight a more consumption model in our economic planning and encourage more private sector initiative into how we manage our enormous national savings which are now channelled primarily through overseas investments through GIC and Temasek and other Government-linked companies. There also needs to be more institutional shift to encourage entrepreneurialism. We note that the Finance Minister has proposed a deficit budget this year, and the business sector hopes that he will continue to promote a deficit budget for years to come.

Our Constitution promotes prudence

and conservatism in our fiscal policy. This is really very useful for Singapore in the years where we have double-digit growth. When the economy slows down and when the economy is mature, we do not see an era where we have double-digit growth again. I would like to request that the Government review and re-appraise

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the Constitution which forces such extreme fiscal conservatism and promote a period of internal generated growth.

I hope we are not the generation which is accused of selling the family jewels, as I talked about encouraging more aggressive fiscal policies. But in an era where there is intense competition for talent, new enterprises and innovation, I think the need for a change in institutional mindset needs to prevail.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, the economy is recovering. All indicators point upwards. Companies are starting to hire again. Confidence of the people is slowly recovering. Consumption is picking up in all sectors: housing purchases up, home improvements up, travel up. Everything is up. Everyone breathes a sigh of relief. There is a feeling in the air that good time is just around the corner. While the common man might have short memory, the Government should retain the institutional memory of the lessons learned in this most severe recession we have just endured. In this respect, the Government's decision to cut the budget by 2% per year for two consecutive years is noteworthy.

Mr Speaker, Sir, following its usual practice, the Feedback Unit conducted three pre-Budget Statement dialogue sessions. In these sessions, the participants did not provide any new ideas or suggestions. Generally, the sentiment was for the Government to hold the ship steady. Keep the cost of doing business down. Reduce land cost. And, as usual, the plight of the SMEs in obtaining finance is also raised.

On the personal tax arena, most contributors emphasised that the middle class needs some relief as the lower income groups have been the focus of Government largesse in the past.

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Generally, while people harboured some wishes on the Budget Statement, they were not expecting too much. They knew that the tax revenue is down and the Government's budget is in deficit.

A refreshing suggestion was made by an accountant to do a total review of our tax regime system-wide as the current one was based on an entrepot economy of Singapore in the early 1900s. Our economy today is much more diverse and complex. We are trying to develop a vibrant wealth management industry. Doing so would require a different tax regime. Exempting an individual's foreign sourced income is necessary in this context. I am glad that the Minister has finally accepted this recommendation after this proposal has been repeatedly raised in a wish-list in feedback sessions.

Mr Speaker, Sir, the Minister has reduced corporate income tax from 22% to 20%. Tax reduction is always welcome. However, this would primarily benefit existing companies that are profitable. It still leaves the rest of the companies which are trying to break-even in the cold. These companies would have benefited more from lower costs of doing business, such as statutory levies, taxes and fees. With the expiration of some of the tax rebates, in fact, for these companies, costs have gone up again. Thus, it is regrettable that the Minister did not continue some of the cost reduction measures like property tax rebates. It would have been more welcome if the Government could have brought about a permanent reduction of these costs, instead of just providing a temporary relief.

Sir, the Feedback Group on Finance and Small and Medium Enterprises has called for measures to help SMEs to increase their access to financing. I am glad that the Minister has finally agreed to a measure through securitisation. We

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look forward to greater details on how SMEs could operate under the new scheme.

I am also heartened that the Minister addressed the middle-class squeeze by reducing the ARF from 130% to 110%. This is indeed a much welcome move.

Mr Speaker, Sir, in addressing the future of Singapore , although he did hold out a vision of Singapore as a Land of Opportunity , the Minister's primary focus on the future is on the declining birth rate of Singaporeans. He informed the House that measures to encourage more women to have babies would be implemented once the inter-ministerial committee headed by Mr Lim Hng Kiang has finished its work before National Day. Many speakers before me have touched upon what these measures could be and I would not dwell into them, except to say that we should not stop there. We should look into the future, into what Mr David Lim called the "emotional aspect" and what Mr Ang Mong Seng called the "family value".

Sir, I believe that the number of children a couple would have is largely determined by the value the couple placed on family. If they grew up wanting a larger family, they will have a larger family despite all the financial burden. If they grew up placing greater importance on creature comfort than children, they would have one, two or, sometimes, zero children. Thus, to redress the declining birth rate, we must inculcate the correct values of on our people from young. There are really no quick fixes.

The intrinsic burden of having children is well illustrated in the "Cashflow" game designed by Robert Kiyosaki of "Rich Dad, Poor Dad" fame. It is a board game much like Monopoly with the roll of a dice to determine the number of steps one's chip

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moves on the board when your turn comes up. The game is designed with the objective to teach players money management concepts to enable them to get out of the so-called rat race. As a wage earner, one gets out of the rat race when one's unearned income exceeds one's monthly expenditure. Sir, my wife was very much taken up by the educational value of the game and got everyone in the family to play the game. In this game, the player learns to invest in rental properties, stocks and shares so that the unearned income will go up. Sir, the spoiler in the game in getting out of the rat race is the cost of bringing up children. Whenever one has the misfortune to draw a card indicating that a new baby was born in the family, the chance of getting out of the rat race gets very much worse. When the number of children exceeds three, there is practically no chance of getting out of the rat race no matter how high is your income. After a few games, even my 9-year old son would groan whenever he draws a baby card and say, "No, not again, another baby." Sir, this is what we got when we did not pay attention to the inculcation of family value in our youth and focused on the material incentives in motivating our people in the past.

Sir, in real life, whether we are conscious of trying to get out of the rat race or not, we intuitively link the cost of bringing up children with our personal financial well-being. From a dollar and cent point of view, in modern day concept, it is true. This being the case, I urge the Committee led by Mr Lim Hng Kiang to consider how we can address the value system of Singaporeans - how to inculcate the love of a bigger family in our young people. Of course, Sir, this would take at least a decade to show effect. As a society, we must take a total approach to this problem. True, by all means, introduce measures, financial incentives needed to turn the situation around but we should not forget the long-

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term measures as well. For instance, we might get MOE to include a pro-family concepts in our moral education and National Education curriculum.

Sir, the Minister also commented that the economic uncertainty since 1998 also contributed to the plunge in the total fertility rate. The experience of many of our unemployed in the age group of 50s now with teenage children still in school would surely put a damper on our younger people in having children. To turn around the declining TFR, we must instill confidence in our people about the future of Singapore .

While it is true, Sir, that our economy is recovering, I suspect this recovery in the manufacturing sector, at least, feels like a rebound and not a solid recovery based on concrete fundamentals. The rebound of business activities is probably due to an increase of the utilisation of the existing capacity in our plants and equipment. I see that, concurrently, the hollowing out of our manufacturing would continue unabated as China continues to impress with its manufacturing prowess. In the IT sector, India is the rising star. Have we downsized sufficiently to once again be attractive for foreign investors? The marketplace would tell us soon enough.

Sir, I believe that this recovery is giving us a breathing space, a temporary relief from the unrelenting global realignment of production capacity for best return on investment. It is paramount for us to make use of this breathing space to transform Singapore . To me, Sir, just cutting costs alone, be it in Government or in private sector, is not the way forward. The logical conclusion of just cost cutting while leaving everything unchanged is to bring us down to the same standard of living as our lower cost competitors. This is not something even the most ardent cost-

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cutters, like Mr Inderjit Singh, would want.

Mr Speaker, Sir, I find it invigorating that the Minister has held out the goal of transforming Singapore into a Land of Opportunity . This is an exciting vision. I hope he will find another occasion to flesh out this vision. Furthermore, this vision energises every segment of the society, rich, poor, young or old. It must be a Land of Opportunity for every Singaporean. It should not be a Land of Opportunity just for the talented or the rich.

Sir, what would constitute a Land of Opportunity ? Whatever the definition, I find it difficult to acclaim that ours is a Land of Opportunity if our economy were to grow at an anaemic 2-3%, the long-term sustainable level of a mature economy. I would interpret the Land of Opportunity to mean that we must transform our society so that our economy would be humming along nicely at a 7% or 8% annual clip.

Sir, at the moment, it seems to me that our economy has lost its forward momentum. Like a car with one of its wheels spinning

in a slippery pothole, it would be hard for the car to move forward on its own steam without an external push. Today, we have a first-world standard of living, a first-world cost of doing business without the depth and width of the knowledge and technology that underpin the strength of a first-world economy. As our competitors adopt our economic strategies, we found ourselves behind the 8th Ball.

Sir, it is not always so. In fact, Singapore has become a model of other resource-constrained societies. In the March 2004 issue of National Geographic that features on Armenia, Singapore was repeatedly held up by the Armenians as a model for the landlocked country to develop a viable and dynamic economy.

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As others look towards us for inspiration, where do we look in turn? What is the model for us?

Sir, we have tried to emulate the industrialised countries to develop our own intellectual properties in R&D. Despite all the money NSTB has disbursed to IT R&D, we have been less than successful in that area. Today, the focus of A*STAR is on life sciences. What were the problems that we had run into? In short, problems of a small population size, lacking economy of scale because of the miniscule domestic market. I suspect we would continue to have minimal success if we were to emulate the paths taken by economies much larger than ours. Our population base is just too small.

Sir, how do we become a Land of Opportunity? I do not have the answers, but I believe we need to think out of the box in several areas.

Firstly, we need to review whether Singapore is destined forever to have a very small population. The last Government planning target I recall reading in the newspapers was five million. If that were the case, we cannot even compete or compare with a city like Hong Kong or Taipei, not to mention Shanghai or Beijing. All of us grew up with this mindset that Singapore is a small country. We have limited land. We do not have sufficient water. To achieve a measure of self-sufficiency, we set aside close to one-third of our prime land for water catchment. Because of these constraints, yes, we will always have a small population.

There are many limitations with a small population, least of which is our mindset. I will give one example. For instance, because we believe that we cannot produce sports champions from

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such a small population base, we do not even try. What is the problem with this mentality? This mentality seeps through the population and, today, we have young Singaporeans who would not even try when they perceive that they are faced with insurmountable hurdles in whatever they pursue. I was shocked when a HR manager told me that when it sought interns among the students in a MBA programme in Singapore, all the applicants were PRC or Indian students. No Singaporean students even attempted, because they have already concluded that they would not be good enough. Maybe we did a very good job of convincing ourselves of the superiority of foreign talent. But not even try? That is the depth of our lack of self-assurance, our lack of self-confidence. Clearly, Sir, this is a mindset we must get rid of.

Sir, so long we depend on rainwater and water from Malaysia to supply our drinking water, there is indeed a limit to the population we could support on the small land area of our island. Thanks to former Prime Minister Mahathir, we were forced to take the dramatic decision to recycle our sewage water as NEWater. When Prime Minister Goh took a swig of the NEWater and the population followed at many National Day dinners, I believe we had broken this mental constraint on our own potential. Now that we are prepared to accept NEWater, we are indeed liberated from the stranglehold of limited water supply. This being the case, Sir, we could support a much larger population in Singapore. In my mind, we could probably double our population to eight million. If we could accept this as a planning premise, we would be talking about a very different Singapore.

Secondly, we could have exploited our strength as a safe and peaceful oasis in a world of turbulence. Our competitors in the economic arena would not be able to replicate this in their countries. We could leverage on this reputation to develop into

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a fun city where high net worth individuals could come to have fun and recreation. Here, we are only limited by our own imagination. Looking at others, I am particularly impressed by the United Arab Emirates, where they have recently developed two fern-shaped islands. Sir, this is an impressive leap of imagination for a desert people. On these islands, most of the waterfront properties are taken up by wealthy westerners whose lifestyles are very different from the Arabian culture and religion. Yet, the people of UAE are able to accept having areas in their country where an international lifestyle could be maintained without the rest of the country having to give up its traditional values. Could we have done the same? In our recent sales of Sentosa Cove, could we have emulated UAE and opened the sales to an international clientele resulting in a very, very different Sentosa Cove? Could we have changed our mindset to transform Sentosa island into a resort for the rich and the famous?

Mr Speaker, Sir, these are just two possible scenarios. I am sure if we put our best minds together, many more great ideas challenging our conventional wisdom will surface. Some of these will be really exciting.

Sir, if we could double our population to eight million, say, in 15 years, the population-induced growth alone will return Singapore to a growth-oriented society. To achieve this, we cannot depend on organic growth, as we cannot even have enough babies to replace ourselves. Therefore, our people must be open to a larger influx of foreign-born in our midst. True, we have to balance the interests of citizens with those of immigrants. But, as a society, we would benefit tremendously from the energy and drive of immigrants. We must plug ourselves into the world and transform our country more in the mould of Dubai, Luxumberg and even Monte Carlo.

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Mr Speaker, Sir, I think we need a vision that is bold and imaginative to liberate ourselves from the limitations we place on ourselves. I support the Minister's goal to transform Singapore into a Land of Opportunity. It is paramount that we take the right steps at these crossroads, so that our children can have a bright future.

Dr Ong Seh Hong (Aljunied): ( In Mandarin ): Mr Speaker, Sir, I support the Budget Statement presented by DPM Lee, the Minister for Finance. I would like to offer my views on the issue of procreation.

Manpower is the foundation of nation building. That Singapore , a small country with a small population and lacking in natural resources, has been able to achieve economic growth is due mainly to the development and optimal use of its manpower resource. Hence, we must ensure that we have enough manpower resource to sustain our economic growth, and enough taxpayers to support our various social and healthcare programmes.

However, many young people do not want to get married and have babies. Even those who want to have babies would come out with a lot of excuses to say they dare not have babies, would have fewer babies or have babies only at a later stage. By then, their reproductive function has already degenerated. Thus, we find people who want to have babies but are not able to conceive.

The fall in the birth rate cannot be attributed to one single factor. The approach to solving this issue should, therefore, be a multi-faceted and long-term one, in order to turn the tide around. Many people have talked about the factors for the fall in the birth rate. The family planning of the past has been too successful. The then slogan of "The more babies you have, the less you have to share" was indelibly engraved in the

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minds of the last generation of Singaporeans.

Moreover, economic prosperity, the world trend, the emergence of individualism and hedonism tend to make many young people unwilling to get married and have babies. Take a look at the present day media, such as the TV programmes, movies or fashion magazines. None of these makes any attempt to encourage people to get married or have babies. They are all devoted to topics concerning lifestyle, fashion and the pursuit of physical pleasures. They do not encourage the setting up of families. As Dr Wang has said, there was this board game called "Rich Dad, Poor Dad" that promotes materialism but discourages people to have families. Given the context of such culture and social ethos, that our birth rate has been plummeting is not surprising.

People say that child-bearing is a matter of personal preference. But I feel that it is not only the bounden duty of everyone to procreate, but it is also the moral obligation of every citizen towards his family, parents, society and the state.

Mencius said, "Among the three instances of unfiliality, the worst is having no descendants." This saying is still relevant in today's society. Many old people complained to me that their children did not want to get married or, if even after they were married, they did not want to have babies. They are disappointed, as their hope of spending time with their grandchildren has come to nought. Is this not an unfilial act?

Not having children will result in the rapid ageing of the population, thereby causing economic downturn and threatening the survival of the nation. Is this not being irresponsible to the nation?

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Every common man is responsible for the well-being of his country. A person who is not willing to have babies will be a liability to other people, because they would have to support them in their old age. Is this not an irresponsible act towards others?

We cannot use just financial incentives or loans to induce procreation. The problem should be approached on a multi-faceted basis. As many Members have said, I think we should go all out to promote family values to proclaim the serious consequences of not having children. Such a message could be transmitted through television serials, highlighting the joy of having more children and having them early, as well as the sorry plight of a childless old couple and the grave problems faced by an ageing society. Through such dramas, the message could be vividly brought to the audience and to tell them what the consequences would be if we do not have babies.

At the same time, the Ministry of Education should also inculcate pro-family and pro-procreation values among the students, right from Primary One, as suggested by other Members as well. But mere preaching is useless. The Government should walk the talk by providing practical measures to help people to get married and have babies earlier. I feel that the Government should consider this.

To encourage couples to have more babies and to have them early, I propose to have the incentives linked up with the age of child-bearing and the number of babies born. Mothers who have more babies and have them at an earlier age would have better incentives. For example, a mother who has a baby before the age of 25 will enjoy better incentives than a mother who has a baby after the age of 25. For the second and the third babies, the differentiation may be fixed at

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the age of 30. Birth order should also be made a criterion. A mother giving birth to a second baby enjoys better benefits than one giving birth to the first baby and so on.

When DPM Lee raised the issue of extending maternity leave, there were heated responses from the various walks of life, including employers and women folk. Employers feel that the extension of maternity leave would add to their cost, especially to the small companies which employ only a few workers. If a woman employee gives birth, then she will be granted leave for a few months. Mothers themselves feel that too long a maternity leave would disadvantage themselves. They would be discriminated against and their service may not be renewed or their promotion hampered. Instead of extending the maternity leave, we could consider allowing maternity leave for more babies, so that the mother would also benefit from the birth of the third, the fourth and the fifth child as well. I hope the Government would consider this.

Employers and employees should also have the flexibility to decide on matters of maternity leave. For example, the two-month maternity leave could be extended to six months if the employee could work half a day, so as to cause the least disruption to the company.

There should be more support for infant childcare. After their birth, the mothers will have to go back to work. So, looking after their babies is a problem. The present allowance for each child on childcare service is $150 and this amount has not been raised up to now, and this applies to designated full-day childcare centres only. I think the Government should raise the amount substantially, especially for the infant-care centres. Flexibility is also called for in matters of childcare allowance because many children are being looked after by

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grandparents, nannies or maids and so such allowance should be paid to them too. To prevent abuse, each maid or nanny could be paid an allowance for not more than two children. We should also encourage employers to set up childcare centres at places of work to make it convenient for parents to send their children there without much hassle. During lunch hours, they could go there and look at their children. Companies that provide such childcare facilities should enjoy double tax relief. As for childcare services provided by VWOs, most of the capital cost should be borne by the Government, as mentioned by Dr Lily Neo yesterday. I support her appeal to give greater assistance to VWOs in running their childcare centres.

One frequently heard pretext for not having babies is the pressure that our children have to bear under our education system. However, after a detailed analysis, we found that the bulk of the pressure comes from the parents who force their children to attend one kind of tuition class or another - all kinds of classes - dancing class, music class, calligraphy class, etc. So we have to address this misconception on the part of parents.

For those who are not able to conceive, they should receive assistance. Those who cannot conceive should be given financial assistance to seek medical treatment. The expenses for such treatments are generally high. Those who want to have babies at later stages of life will find problems in conceiving. Therefore, they should be allowed to use their Medisave to pay for such treatments. If medical treatment does not help, then we should simplify the procedure for child adoption to make it easier for them to adopt children here or from abroad. At present, they have to go to foreign agencies to get children adopted. Therefore, MCDS should set up

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a one-stop centre for child adoption to assist those who would like to adopt children.

Those who insist on not having babies should be responsible for their old age needs. If they decide not to have children, then we should make sure that these people be responsible for the provision of their old age needs so that they will not be a liability to the nation.

Our early policy on family planning heavily penalised mothers who have more than two children by way of preventive maternal hospital charges, low priority in school admissions and placement in childcare centres. While we should refrain from punishing those who choose not to have children, we ought to make them prepare for their old age, eg, by making them contribute to an account known as "Preventive Eldercare Account" so as to prevent them from being a liability to other people. The money in this account would provide for their needs when they are in their old age.

Apart from encouraging couples to have more babies, we should also look at other means to increase our manpower resource. We should continue to allow foreign talents to come here and hopefully, they will become our citizens one day. We must make sure that they can integrate into our societies. In this respect, differential treatments between PRs and citizens should be substantiated. There should be some form of compulsion for permanent residents to become citizens. For example, a timeframe of five years should be laid down for a permanent residential status. If at the end of five years, after enjoying all the privileges of a PR, they do not take up citizenship here, they should lose their PR status. Of course, we will continue to welcome them to stay and work here. In this way, we will get rid of those who

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want to become just PRs and not citizens, while at the same time enjoy all the privileges conferred on a PR. In addition, we should make full use of our manpower resources by getting rid of retirement age. As long as people are physically and mentally fit, they should be allowed to continue working.

Mr Speaker, Sir, should the Government want to launch a campaign to have more babies, I propose to use this slogan, "One is no good, two is no better, three is all right, four is nice, five is most reliable."

Mr A Nithiah Nandan (Nominated Member): Mr Speaker, Sir, thank you for allowing me to join in this debate.

This year's Budget is a pro-business budget, particularly with the reduction in corporate tax from 22% to 20% which would cost the Government $800 million. Besides this tax reduction, there are a number of initiatives to help the business community. The way I and many workers view this year's Budget is one which is positioned to enhance our competitiveness and attract more investments. We hope all these will translate into ensuring job security and more employment opportunities for workers. I believe that this year's Budget and earlier initiatives, such as CPF cuts and wage restructuring, are very strong signals to the business community of Singapore's desire to remain a competitive place for their investments.

Having done all this is not enough. The Government must ensure that Singaporeans benefit from the efforts and Government's initiatives. Here, I wish to make the following suggestions:

First, employers should make every effort to train and employ Singaporeans in available jobs and newly created jobs. The Government and its agencies should proactively train Singaporean workers,

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especially in jobs coming from newer investments and in the service industry where there is a shortage for workers, especially in the IT and nursing services, rather than allowing employers the easy way out by engaging foreigners. Tax incentives in future should be targeted at companies which employ majority Singaporean workers or other Government assistance should be given to such employers to incentivise them to employ more Singaporeans.

Next, allow me to touch on the newly introduced "S" Pass for foreigners. Here, I wish to highlight several feedback I have received from many Singaporeans:

(1) Many Singaporeans are worried that the introduction of the "S" Pass will further erode their chance of getting a job in a bleak job market.

(2) Many are of the view that employers may opt for all foreigners as they do not have to pay CPF and other benefits when they hire foreigners.

(3) Sir, even though there is a cap of 5%, it is still very worrying, especially in a bleak job market, where many Singaporeans still remain unemployed. The Government should take note that the "S" Pass is targeted at those earning $1,800 per month. This is close to the median level salary in Singapore. Currently, many Singaporeans who have lost their jobs in the middle level have great difficulty in getting back their job. The introduction of "S" Pass would further add to their woes. To make matters worse, outsourcing and best sourcing have made many Singaporeans lose their jobs. A number of these outsourced or best sourced jobs have gone to foreigners.

Here, many Singaporeans I have spoken to wish that the Government would closely monitor employers who engage foreigners rather than

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Singaporeans. The Government could make it difficult for such employers to hire foreigners by saying this, "I am not suggesting that we should totally stop hiring foreigners. Neither am I against foreign talent. But we should not do it to the detriment of Singaporeans." What needs to be done is that the number of foreigners employed and their dependants who also seek jobs in Singapore should be maintained at a level at which it would not affect job opportunities of Singaporeans.

Next, I wish to move on to a hotly-debated subject in this House. In this year's Budget, the Government has given its strong desire to address the issue of falling birth rate amongst Singaporeans. Earlier speakers have given many suggestions and I agree with most of them. I would not want to dwell on it, but I am concerned with some of the suggestions.

The suggestions of granting six months' maternity leave and giving fathers parental leave are all very ideal proposals. I, too, wish this could be possible. But, realistically, as a trade unionist, I get very worried about its consequences. I am very concerned for our female workers. After going for six months' maternity leave, they may return to realise that their jobs have been out-sourced or best-sourced, and they have to look for another job, or permanently stay at home. As for the male workers, the employers already show their unhappiness when their workers go for their National Service training, and if we further add that with long paternal or parental leave, the companies may just pack up and leave Singapore. The whole family would then be in serious trouble.

Sir, in Singapore, many are dual-income families for economic reasons. So whatever we do, it should not affect the employment of the male or female worker. Just to illustrate a point, even Government-linked companies strictly follow the Employment Act which states

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that employers need not have to grant paid maternity leave if the employee has worked less than six months for them. Now, this is the harsh reality of the business world.

Sir, with all these constraints, what are the solutions? The solutions and funds needed for it must come from the Government to address a critical long-term issue of the nation. Yesterday and today, hon. Members of this House have give a number of suggestions. I am sure Minister Lim Hng Kiang and his committee would consider them seriously. I wish to add two more suggestions. But before that, let me mention the feedback from a number of our young union members who have got married recently. Their reaction is that they are, of course, definitely passionate about having children, otherwise why should they get married, they asked me. They are definitely passionate, but besides being passionate, they need money to take care of their family. And cost is a critical factor, whether we agree or not. That is one of the important factors in raising a family and a child. If you look at our 2-child policy, even the Government has always said, "Stop at two. If you can afford more it, have more." Affordability is the critical issue. By passion alone, we cannot raise a family or, by compassion, family values. That is all critical, but beyond that I think you need to actually provide some financial assistance.

It is good to have quite a lot of foreigners to come and live here and work with us. But that would not actually substitute our own Singaporeans having their own babies and making sure the nation continues, because this is the culture that we have built up for nearly 30-40 years. Foreigners would never come and fill up the gap completely. They may fill it up temporarily. So we should not totally rely on them. There

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were many suggestions made. Yes, of course, we can encourage more foreigners to sink their roots in Singapore. But I think it is equally important for Singaporeans to have their own children and make sure the nation progresses further. And that is very critical.

In this context, I have two suggestions to make:

(1) Let us just not focus our attention on the childless couple, or the couple with one child, and the better educated. We should broaden the net and encourage all Singaporeans to have three children.

(2) We should grant monetary assistance as follows: (a) $500 per month for the infant care of the 1st and 2nd child to the mother, grandparents, relatives or friends who look after the child; (b) $300 per month for the childcare subsidy of the 1st and 2nd child, either to the mother, grandparents, relatives or friends who look after the child; (c) $300 per month for the infant care of the 3rd child; and (d) $200 per month for the childcare of the 3rd child. The childcare subsidy could be given till the 12th birthday of the child. Sir, these suggestions may cost the Government a considerable amount, but then it is for a very worthy purpose, that is, our long-term survival as a nation, and it is similar to what we spend for defence of our nation.

Sir, before concluding, I wish to thank the Government for raising the Skills Development Fund salary ceiling from $1,500 to $1,800, as this would benefit more workers. I am equally glad with the $100 million allocated by the Government into Medifund. But this alone is not sufficient. The Government should take every step possible to reduce healthcare cost so that Singaporeans by and large could manage their own healthcare cost. In this context, the introduction of a nation-wide health insurance is critical.

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Sir, workers in the 50 and above age group are grateful to the Government's gesture of topping up their Medisave account. But, at the same time, many low-income Singaporeans were saddened that a number of rebates given last year were not further extended this year. If the economy continues to do well, they look forward to the Government announcing some rebates or benefits during the National Day Rally speech by the Prime Minister.

Sir, I support the motion.