Augustine H.H. Tan
Singapore
“There are instances when reserves should be used, but the govern- ment has to make a case to the President and if good arguments are used, the President is expected to concur. I therefore end by asking you, as you have done in your speeches, to support this Bill with a very loud "Aye" when it comes to the vote. [Applause].”
“We must have confidence that in the end, as Singaporeans, we know what is overall best for ourselves. We are a community of free citizens committed to making Singapore a great city to live in and for foreigners to come visit and admire.”
“There is such a thing as initiative. Who initiated the project? What was the objective of the project? And there is such a thing as economies of scale, the benefits of which are passed on to the taxi drivers. Let us not forget those elements. An hon. Member: They do not pay tax on their income.”
“They can still enjoy the seafood regardless of the indigestion. They can do the shopping and do other things in Johor Baru. I believe that what is important for us is that we do not preclude ourselves the option of setting our own national policies.”
“Mr Speaker, Sir, the Minister stated that it is undesirable to employ foreigners to run child care centres because they affect the values of our children. Is it not also true that by having foreign maids in our homes that they too directly impact upon the values of our children?”
“It was a point which I brought out much earlier when a similar matter was debated here in Parliament. Because the government could borrow on the basis of the reserves even though the President has one key to the reserves because there is such a thing as credit-worthiness of the country.”
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“A good insurance policy will alleviate social hardships and save the State from rescuing destitute people later on. Sir, what I find most unusual about this year's Budget is Government's concern about the preservation of the family. First, there is the concern about promoting filial piety by increasing the allowance for aged dependants. However, the income ceiling of less than $1,500 per year that dependants are allowed to have, is very unrealistic. And if people are honest, very few will qualify for the relief. In his address, the Hon. Minister stated, and I quote: 'We will have to be more imaginative and more determined in our efforts at retaining a large number of our womenfolk in the labour force without endangering the upbringing of our children. The family unit is the most fundamental building block in our society and is an institution which we must cherish and preserve even at the cost of sacrificing some economic growth.' Sir, this is indeed a most refreshing and necessary change of emphasis. When women go out to work and commit their infants and toddlers to baby amahs and baby sitters, I believe that there is a great psychological cost in the alienation between mother and child, and the child will grow up with a sense of rejection, hurt, insecurity, selfishness, even a sense of abuse and rebellion. It is simply not worth it from the point of view of developing a healthy nation. After the children have grown up, women may re-enter the labour force. Alternatively, as the Member for Leng Kee has suggested, work could be farmed out to the homes or short-shifts could be devised. Finally, Sir, I agree with the Hon. Minister's warning of the economic dangers we face this year.”
“I am also a little concerned at the high standard of luxury in new buildings put up by statutory boards and by the Government itself. In the Energy section of the Economic Survey, it is reported that electricity consumption by the public sector itself rose by 18% for the Government itself, that is, taking out the statutory boards, electricity consumption rose by 31%. I get a little worried by the vast airconditioned corridors and open spaces at the Singapore General Hospital, and at the luxurious facilities that I see there. I see no reason why people, who can afford to pay for luxurious rooms, cannot go to private hospitals. I still believe that the public sector should provide decent facilities at low prices. Similarly, Changi Airport itself has a lot of vast open spaces and I shudder at the airconditioning cost. I hope that the civil servants themselves will take the lead in minimizing luxury and in saving energy. Coming back to the Budget for 1982-83, Members should not be alarmed by the $3 billion deficit. The deficit is to allow the Government to tap the resources of the Central Provident Fund which now annually generate about $3 billion for development purposes. In fact, Members may like to know that the public sector as a whole, inclusive of the statutory board, generates a substantial surplus every year. This is reflected in the increasing foreign exchange reserves as reported in our Balance of Payments. On the question of tax concessions, Sir, while I welcome the additional relief for CPF contributions, I should like to see explicit provision to encourage people to take up insurance policies. I am concerned that, for many people, housing will gobble up most of their CPF balances by the time they retire, leaving them with little to live on.”
“The barber can try to cut your hair faster with possibly disfiguring results. Similarly, bus conductors, bus drivers, chambermaids, sales-girls, waiters and waitresses get NWC awards without necessarily increasing productivity. The hawker too raises his prices, as he must, because if he does not do that, no one wants to be a hawker after some time. But there is no productivity increase. The result can only be inflation. We should, therefore, take the Hon. Minister seriously when he exhorts us to increase productivity, wherever possible, in the economy. To sum up on inflation, Sir, we could have reduced the inflation rate by, first, increasing the flexibility in our exchange rate; secondly, by controlling the money supply more carefully; thirdly, by being less ambitious about economic growth and, fourthly, by phasing our construction projects to prevent overstraining our construction capacity. Let me now turn to the Budget for 1982-83. The three-fold objective of increasing skilled and professional manpower, of further developing our infrastructure and our public housing, are realistic and consistent with the long-term development of Singapore. Singapore's annual budgets for the last 21 years have, in general, been exercises in good stewardship. As usual, emphasis is put on development expenditure which takes up 55% of the Budget. Recurrent expenditure is kept to a minimum with emphasis on manpower saving through mechanization, rationalization and computerization to increase productivity in the public sector. I am only a little uneasy about the additional amount of $1,720 million budgetted for the Petrochemical Corporation of Singapore. I only hope that the project will be viable or else it will turn out to be an expensive white elephant.”
“The second cause of domestic inflation is our ambitious growth targets. At the present stage of development, I believe that a growth rate of 8-10% is ambitious and will inevitably trigger high inflation because our labour force is growing at a much slower pace than the last decade and there are infrastructural constraints and construction bottlenecks, as noted by the Minister himself. The question is: are we prepared to pay the price in terms of a distorted property market and a distorted structure of wages and salaries? Please note that something of a merry-go-round has already started. The private sector salaries for the graduates and professionals have increased way above the public sector, and recently the Hon. Minister himself had to announce substantial wage increases for graduates in the public sector. This will merely push another round of salary increases because basically there is a shortage of graduates and professionals caused by our very high growth rate. At the same time, these professionals and graduates are not going to be satisfied with the wage increases because they are much less meaningful today since they can no longer buy the type of housing that they could have bought three years ago. The third domestic reason for inflation is the National Wages Council (NWC). We have had three years of high NWC wage increases. Let me illustrate this problem by taking the case of a barber. Because workers in manufacturing and other sectors of the economy get NWC awards, the barber, the person who cuts your hair, feels that he too must reward himself or else it would not pay to be a barber after some time. There would be very few people willing to be barbers. There is no productivity increase in barbering.”
“725 of the Economic Survey reported that, on the average, our money supply as defined by M1 grew by only 12% last year compared to 14% the previous year. However, there were a number of aberrations. At the end of December 1981, our money supply as defined by M1 had actually grown by 18.1% compared to December 1980. Moreover, during the last quarter of 1981, the money supply grew at an annual rate of 49%. No wonder, Sir, the stock market took off again early this year. Sir, please note that according to the Economic Survey Report itself, 59% of the increase in bank loans and advances last year went to the following: Building and construction ... 23% Financial institutions ... 20% Professionals and Private Individuals ... 16% In other words, a substantial part of the increase in money supply went to speculative purposes in the stock market and in the property market. The Monetary Authority of Singapore was probably trying to keep interest rates low in Singapore in an effort to encourage investment. For much of last year, our interest rates were on the average 5-6 percentage points lower than the Asian Dollar rates. This further indicates the under-valuation of the Singapore dollar. However, instead of investments being stimulated, the resultant effect of the increase in money supply was to fuel speculation in the stock and property markets. I do not believe that keeping interest rates low will help our exporters when there is a world recession on and people just do not want to buy our products. We only compound our own inflation problems and distort the stock and property markets. If we wish to help our exporters, we could do so directly by preferential lines of credit instead of increasing money supply generally.”
“The question, Sir, is: What are the causes of our inflation and whether we could have managed with lower inflation? There are both internal and external causes. Let me deal first with the external causes. If the exchange rate is fixed at, say, S$2.10 for every US$l, then a 10% US inflation would also raise prices in Singapore by 10%. However, if we allow our exchange rate to fall by 10%, then we need not import the US inflation at all. It follows then that the key to imported inflation lies in the degree of flexibility in the exchange rate that we are prepared to have. On page 71 of the Economic Survey, it is stated that: 'in maintaining the stability of the exchange rate, the authorities had to balance the benefits of an appreciating Singapore dollar in containing imported inflation against the adverse effect on the competitive edge of Singapore's exports of goods and services.' I suspect, however, that we could have allowed more flexibility in our exchange rate, thereby importing less inflation. I do not believe that our exporters would have been hurt by greater appreciation of our currency for two reasons. The first is that imported inputs probably constitute about 64% of the value of manufacturing output. Hence a currency appreciation would have lowered costs of imported inputs even as it lowered selling prices of exports in Singapore dollar terms. Secondly, the OECD inflation rate of over 10% already provides our manufacturers with considerable competitive edge. Let me now come to internal causes, the first of which is money supply. When we try to hold down the value of our currency, the Monetary Authority of Singapore's official reserves increase and there are more Singapore dollars in circulation, causing domestic inflation. Col.”
“I believe that there should be better coordination between the economic planners of the Ministry of Trade and Industry and the physical planners of the Ministry of National Development. There is no reason why we should be building Raffles City, Marina City, Changi Airport, viaducts, roads, HUDC, HDB flats, hotels (and note, Sir, we are trying to double the hotel capacity over the next five years), shopping complexes and private residential units all at once. We can surely phase the various projects so as not to overstrain the capacity of the construction sector. Last year, the construction sector grew by 31% in current prices or 17.7% in real terms. No wonder there was such a big labour shortage and no wonder the productivity in construction actually declined. And no wonder building costs escalated tremendously. Table 40 on page 64 of the Economic Survey shows that the construction sector experienced the highest rate of inflation in the economy of 12% compared to the GDP deflator of 5%. I come now to the subject of money supply and inflation. In his Budget address the Hon. Minister complained about what he called the stubborn rate of inflation of 8.2% in Singapore. This is, of course, lower than the OECD rate of 10.8% but somewhat higher than Japan's 4 3/4% and West Germany's 5 3/4%. The Economic Survey stated that 58% of the inflation was due to rising food prices and that 60% was internally generated. However, we should note that the figure of 8.2% represents an average inflation rate for the whole of 1981. For example, the December cost of living index itself was 10.4% higher than a year earlier. In January of this year, the cost of living index was rising at an annual rate of 12%.”
“Subsequently, as a result of representations by developers, the Act was partially lifted to allow foreigners to own condominiums or to buy flats in buildings above six storeys. The net result was an unprecedented boom in the property market, pricing most properties beyond the reach of Singaporeans, If the Government were to reimpose the Residential Property Act, prices would drop to more realistic levels. Fifthly, wrong timing in the release of CPF funds for private housing. The Government's intention to release CPF funds for purchase of private residential property was a good one. Unfortunately, the timing was inappropriate and exacerbated the boom. Consider, Sir, the effect of the boom on the real value of our CPF holdings. Before the boom, a CPF balance of, say, $100,000 could have bought a decent terrace house or apartment. After June 1981, the same amount could only buy a third or less of the same unit. Sixthly, release of Government building projects. When the property boom was in full swing, Government launched many new building projects, escalating construction costs. Sir, consider the data on construction contracts awarded during the first three quarters of 1981, as reported in the Economic Survey of Singapore, Third Quarter, 1981. Government should have withheld some building projects last year. Instead, it gave out $3,059 million worth of building contracts for the first nine months of 1981, or 66% of the total for the period. In the third quarter, it tendered out $1,549 million worth of contracts, double the average quarterly value of contracts and more than double those launched by the private sector.”
“No figures are published but I rather suspect there has been a net decrease in private land holdings over the years. Moreover, URA's tender system has probably contributed to the inflation of property prices. At the last URA sale, for example, some choice property sites were withdrawn because the tenders were considered too low. Government could have helped to stabilize the property market if the land had been sold cheaply. Secondly, plot ratios and density regulations. Sir, I am not an architect, neither am I an engineer. But I am told that the regulations laid down by Building Control Division in respect of plot ratios, heights of building and density of different types of building use have contributed significantly to the cost of each square metre of floor space constructed, In view of the land shortage in Singapore, as so vividly illustrated by the Minister for National Development himself recently, perhaps the Building Control Division may want to review its regulations. Thirdly, unnecessary frills in condominiums. I notice, Sir, that many condominiums have swimming pools, tennis courts, squash courts and other recreational facilities. Moreover, in many projects, the floor space per apartment is very generous. All these add significantly to cost. In view, again, of the land shortage and demand for recreational facilities, might it not be better to avoid private recreational facilities and provide more clubs which the general public, including HDB dwellers, could join? Fourthly, foreigners are allowed to buy condominiums. In 1974 or 1975 the property market was greatly stabilized when the Residential Property Act, which prohibited foreigners from owning residential property in Singapore except by permission, came into force.”
“' I would have more to say later about our monetary policy. For the moment, Sir, let me concentrate on the property market. The Economic Survey also states: 'The property market remained active in the early part of the year. Fuelled by strong demand for residential, commercial and industrial properties as well as by speculation, property prices continued to rise sharply in the first half.' What the Survey failed to mention is that property prices increased by well over 500% between the end of 1979 and June 1981. And, contrary to what the Economic Survey reported, property prices did not fall considerably in the latter half of 1981. Such prices were and are still 350-400% higher than in 1979. As I warned in the debate on the Presidential Address in this House in February last year, the inflation in private property prices inevitably affected HUDC and HDB prices by escalating land and construction costs. And sure enough, barely six months later, both of these agencies raised their prices. I might add, Sir, that one additional undesirable sideeffect of the property market boom was the election of the Member for Anson. The question is: Could the unhealthy property boom have been avoided? In my view, there would still have been a boom as an upturn in the construction cycle was overdue and as property prices were rising in most countries of the world in reaction to inflation. However, I believe we could have moderated the boom somewhat. Consider, Sir, the following factors: Firstly, Government's land alienation policy. Government is the largest landowner in Singapore. Moreover, Government has been acquiring huge amounts of private property to build HDB flats and also for URA development.”
“(1979 and 1980, external demand contri- buted 73% and 72% respectively to our economic growth, while last year it contributed only 53%. In other words, 47% of our growth last year was internally generated. But for the big decline in holdings of inventories, the contribution of domestic demand would have been greater. This is a reflection partly of adverse world economic conditions, partly a reduction in the rate of capital accumulation and partly a relatively high rate of consumption expenditure, There was, for example, a 21% increase in expenditure on recreational goods and services. The last factor does not augur well for the future. The Economic Survey also reported that the three fastest growing sectors of the economy were financial and business services (18%), construction and quarrying (17.7%) and transport and communications (12.6%), noting that the financial and business services sector contributed 27% to the overall GDP growth rate. The Economic Survey went on to point out, and I quote from page 15 of the Economic Survey: 'Healthy demand for domestic and offshore banking and other financial services and buoyant activities generated by the thriving stock and property markets provided the main impetus to the expansion.' In other words, Sir, speculative activities in the stock market and property market generated high profits for banks, brokerage firms, real estate agencies and legal firms. This statement is confirmed by the Economic Survey on the same page where it says: 'Despite depressed re-export trade, banks extended loans and advances at a more vigorous pace than in 1980. A greater proportion of the increase in loans and advances was used to finance the booming construction industry and property market as well as activities in the stock market.”
“Mr Speaker, Sir, as we look back at 1981, we should be very thankful to Almighty God for blessing this nation of ours. In the midst of a very dismal year for most countries in the world, with recession, high unemployment and inflation, we achieved almost 10% economic growth. Our inflation rate was below the average OECD rate and those of ASEAN, Hong Kong, Taiwan and South Korea. It is almost a miracle. The Ministry of Trade and Industry aptly described our growth rate as enviable. The Hon. Minister himself must also be the envy of his colleagues elsewhere for being able to present solid achievements for 1981 and to offer tax concessions at a time like this. However, Sir, I am sure neither the Government nor the Hon. Minister would wish to rest on their laurels. Moreover, as they are constantly exhorting Singaporeans to better effort and performance, it is the duty of Members of Parliament to point out shortcomings and to make constructive suggestions so that the Government can make greater and better efforts for the improvement of our nation. Please note my use of the word "constructive" as opposed to destructive and that which appeals to emotion. One can also speak out of resentment and bitterness and one can pander to the gallery. I hope, Sir, that Members of Parliament will avoid this during the course of the debate on the Budget. I propose now to review our economic performance for last year. Let me hasten to add, Sir, that I am speaking with the benefit of hindsight and from the perspective of the armchair. As I read the Economic Survey of Singapore for 1981, the first observation that came to mind was that domestic factors were more important for our economic growth last year than in previous years.”
“Mr Speaker, Sir, has the Hon. Minister looked into other causes for the high attrition rate of resignations from the Civil Service, such as low morale due to the undue emphasis on high flyers and returned scholars, motivation, industrial relations and personnel management? Should it not be a matter of concern to him and to this House that Singaporeans are so concerned with monetary rewards? Should we not divert the attention of people, especially the civil servants, to matters like dedication and other non-pecuniary returns? Would the Minister agree with me that the real cause of the brain drain from the Civil Service is the high economic growth rate that we have been experiencing, especially over the last couple of years? Would he also not agree with me that this is also linked up with the boom in the property market which has priced many people out of the market and that, therefore, the civil servants have turned to the private sector in search of high salaries in the hope of getting good homes?”
“Mr Deputy Speaker, Sir, this Bill represents an important step forward to accelerate the use of computers in Singapore, especially in the public sector. I would like to raise a question in relation to clauses 26 and 27 of the Bill. Clause 26 attempts to protect the secrecy of information collated by public computers. Clause 27 is a safeguard against falsification of information. However, the penalties provided by the Bill for violations of secrecy and for falsification of information are very lenient. There is provision only for imprisonment of a term not exceeding one year or a fine not exceeding $2,000 or to both such imprisonment and fine. I would urge the Hon. Minister to increase the penalties substantially, especially for violation of secrecy. There is also a serious omission in the Bill, Sir. There are no safeguards against errors of information about individuals being recorded to the detriment of such persons. I would recommend that a review or appeal committee be provided for in the Bill to protect persons from wrongful information being recorded against them. There is no mechanism at all for individuals to review the information recorded about them in Government computers. This Bill should be committed to a Select Committee before consideration by this House. There are tremendous implications for the rights of individuals in an age when the Government already exercises so much control over our lives.”
“Sir, those who own private residential property worth $600,000 or more would certainly be grateful to the Hon. Minister for this concession. However, the great majority of Singaporeans can only afford HDB and HUDC flats, the current values of which are far short of $600,000 despite the price increase of HDB and HUDC flats. This raises the question of equity in the administration of Estate Duty. It would be more equitable to treat all estates alike. I would suggest that the exemption from estate duty of $600,000 be applied to all estates, provided a dwelling unit is part of such estates.”
“The best thing would be to out-law it altogether.”
“Mr Deputy Speaker, Sir, according to the Memorandum on the Budget submitted in March this year, estimated revenue derived from betting and sweepstakes amounted to $35.9 million for last year. At the tax rate of 10% on betting and 30% on sweepstakes, the total legalized betting and sweepstakes was probably in the region of $300 million last year. There was probably much more in terms of illegal betting and sweepstakes. It would appear, Sir, that such gambling activities are a billion dollar industry in Singapore. I would like to ask the Hon. Minister for Finance: what exactly is the Government's stand on gambling? Does the Government consider gambling to be desirable or undesirable? Is the Government aware of the corrosive effects of gambling on work ethics, the development of skills and family stability? How can we tolerate double standards in public policy? On the one hand, we have the Ministers of Education, Communications and Labour and Culture trying to promote and preserve good moral values. The Minister for Trade and Industry is trying to upgrade our industries and encourage workers to learn new skills, to work hard especially as a team, and so on. On the other hand, the Minister for Finance makes money out of the vice of gambling and covetousness. Raising the tax on betting and sweepstakes will merely increase Government revenue. It will not discourage gambling. In so many ways already, Singapore is like a gambling casino with speculation in shares and property being rife, betting on soccer and other games, resulting in corruption and bankruptcy. Sports like soccer have been turned from a healthy activity into scandals involving bribery of players. Sir, I think it is time that Government evaluated its policies in regard to gambling.”
“Would the Parliamentary Secretary agree with me that a chambermaid using a broom and a chambermaid using a vacuum cleaner is still a chambermaid?”
“Sir, the Government has been concerned with the upgrading of the skills of our workers. To what extent does the Parliamentary Secretary think that the hotel industry, however it chooses to automate or upgrade by mechanization, would be able to produce the kind of skills that we require?”
“Sir, I just wish to clarify a point. The Government cannot be compared to a private individual. The Government is the largest land owner in Singapore. If the Government were to choose at any time to do so, it can swamp the property market by just unloading land. If we try to sell a small piece of land, say, one-quarter of the land at Hong Lim complex, or whatever it is we call it, we can realize the market price. But when we try to sell thousands of acres of land, we will not be able to get the market price. The market price will go zooming down. So there is no valid comparison at all.”
“Sir, can I make a point of clarification? I did concede that there have been increases in construction costs but I could not understand how the figures were arrived at, especially for land cost and the various components, and I particularly questioned him on the various subsidies which he pointed out.”
“As was pointed out earlier by another Member, we have been building Changi Airport and we are building viaducts, flyovers, Raffles City, Marina City, the General Hospital, hotels, offices, shopping complexes, condominiums, HUDC and HDB flats, all at the same time. Perhaps we should look closely at our construction capacity and try to space things out. Perhaps then, the property market will not be so wild and HDB price increases more tolerable. 5.27 p.m.”
“6 million in unappropriated profit, of which half belongs to the Board. It is, of course, healthy and necessary for every enterprise to make profits. But when the companies have a monopoly position vis-s-vis the Board, it is no sweat at all to make substantial profits. Perhaps the Minister could explain to this House the terms of purchases the HDB makes with its subsidiary companies to supply various types of building materials. The third subsidy claimed by the Minister was stated as follows, and I quote: 'The subsidy indicated reflects land costs at less than half the market rates. If land costs had been computed at market rates, the subsidy would have been another $30,000 to $40,000 per flat.' This statement is a non sequitur, as other Members have pointed out, because the HDB never acquires land at market prices. Consequently, there is no question of subsidy on land cost by Government or the Board. In fact, the public knows that Government bodies, like the URA, have acquired land at a small fraction of the prices subsequently sold at public tender. Sir, I have brought out these points here in Parliament because these are misgivings of the educated public in Singapore. No one can deny that HDB has done an outstanding job and no one can begrudge price increases due to rising construction costs. But the case must be presented fairly and accurately. There is no doubt that there is world-wide inflation in construction materials and there is also the rising cost of labour in Singapore. Perhaps we have unwittingly contributed to such inflation by trying to do too much at the same time.”
“As at 31st March 1980, the Board owed the Government $3 billion but it owned, in addition to the $2.5 billion worth of property, outstanding mortgage loans of $1.3 billion. If we bear in mind that the Board's outstanding property of $2.5 billion was valued at original cost, we can see that its finances are not at all unhealthy. In the Notes to the Board's Accounts for 1979-80, there is an interesting statement by the Auditor-General. On page 84, paragraph l(a)(ii), entitled "Sales of flats and leases of land", I quote: 'The proceeds from sale of flats are shown as a deduction from the long-term assets and premiums from the lease of land are credited direct to the General Fund in the Revenue Account. The Board is unable to follow the desirable method of deducting the cost of the flats and land sold from the long-term assets in the Balance Sheet because the existing accounting system does not provide for the costing of flats and land.' Perhaps the Minister could explain how, between 1979 and now, the Board has somehow managed to cost the flats it is selling to the public. On what basis is it costing the flats? In the Capital Account of the Board presented on pages 76 and 77 of the Annual Report, it can be seen that the Board has accumulated some hidden surpluses in its subsidiary companies, as follows: - 1. Quarry plant $33.9 million (surplus) 2. Brick factory $24.6 million (surplus) 3. Pile plant $ 7.9 million (surplus) 4. Metal workshop $14.4 million (surplus) 5. Tile factory $ 7.7 million (surplus) 6. Prefabrication $ 2.7 million (surplus) factory 7. Sand quarry $ 5.4 million (surplus) Total Surplus $96.6 million Yet another hidden surplus is to be found on page 81. The Board owns $15.6 million in MND Holdings which has accumulated $52.”
“However, in the same table, there is also an item called "property tax" which amounted to $51.3 million. In other words, Sir, in 1979-80, the Board paid $51.3 million to the Government as property taxes and received a so-called subsidy of $52.5 million in return. Of course, every property owner has to pay property tax but he also enjoys some benefit from Government expenditure in return. It is not unreasonable that 70% of the population pays $51.3 million in property taxes collectively through the HDB and receive $52.5 million benefit in return. In fact, Sir, HDB flat owners also pay their own property tax directly to the Government. A second subsidy that the Minister claimed the Board provided is, and I quote: 'the capital subsidy borne by the HDB to finance the difference between the costs and selling prices of flats. This subsidy comes from HDB's reserve funds, The capital subsidy is far larger then the recurrent subsidy as HDB is subsidizing an average of $30,000 per flat. Assuming 20,000 units of flats are sold a year, the capital subsidy is $600 million.' Sir, I searched high and low for this $600 million subsidy or its equivalent in the Board's Annual Report, but I could not find it. On page 78 of the same Report which I quoted earlier, there is a figure of $791.6 million which was spent on land, housing development and improvement. This was financed by a loan of $369 million from the Government and $422.4 million from sundry creditors and temporary advances from the revenue account. However, of the flats, shops and factories built by the Board since 1960, out of a cumulative total worth of $5.7 billion, that is valued at original cost, the Board has sold $3.1 billion and has retained $2.5 billion worth of property.”
“Mr Deputy Speaker, Sir, it is an accepted fact that the HDB has accomplished a tremendous feat in housing 70% of our population. Between 1960 and the end of last year, the Board built an astonishing 372,158 units of flats and shops. In terms of the administration and maintenance of its housing estates, the Board has also done an admirable job. No Minister wants to be unpopular. The Minister for National Development found himself caught in an inflationary situation in the construction industry. It is understandable, therefore, that price adjustments have had to be made for HDB flats over the last three years. However, it would help the public to understand and accept the price increase, if the HDB could explain how the various cost figures are arrived at. After careful study of the Minister's press statement and the H DB accounts as presented in the Board's Annual Report, I feel that the HDB has over-stated the rationale for the price increases. Please do not misunderstand me, Sir. I agree that there is some justification for an increase in the Board's selling prices of flats. What I do not agree with is the quantum that the Board claims it is subsidizing per flat. There are three subsidies mentioned in the Ministerial Statement of 24th May, 1981. According to the Minister: 'The Board receives a subsidy every year from the Government to cover the deficit in its operating expenditure. This recurrent subsidy is mainly for the maintenance and management of housing estates and the salaries of staff. In the last financial year, the recurrent subsidy was $53 million. The subsidy for this financial year is estimated to be $55 million.' On pages 82 and 83 of the HDB Annual Report for 1979-80, there is indeed a figure, called "gross deficit", amounting to $52.5 million.”
“Sir, I have a comment to make regarding the LUM service. This service is a great convenience to the public in that it enables letters posted in the morning to reach the recipient in the afternoon. However, there is a defect in the system, and that is, that there must be somebody to receive the letter. If not, the letter goes back to the post office and it might reach the addressee sometime the next day, or even two days later depending on whether there are people to receive the letter. That defeats the entire purpose of sending the letter in the first place. Perhaps one or two things could be done. One is simply to leave the letter at the address or in the post box or, alternatively, to contact the sender to inform him that the letter cannot be delivered the same day.”
“Has the Minister any plans to expand this particular service because I am very uncomfortable whenever there is a monopoly. The first mistake made by the Ministry of Communications was in combining all bus companies into one company. That was the major mistake. We can undo that mistake if we can promote the operation of other bus companies because that will offer us a basis of comparison. 4.15 p.m.”
“Mr Speaker, Sir, may I just make a number of comments and raise a number of questions? First of all, in his computation of the operational costs of SBS and the projected losses of the SBS, has the 7 1/2% dividend for the bus shareholders already been taken into account? In other words, is the 7 1/2% dividend regarded as a fixed cost? If it is, then I think the losses are really not losses at all because it was a mistake to guarantee the 7 1/2% dividend anyway. Secondly, in computing the profits or losses of the SBS, what is the depreciation policy? In other words, are the buses written off in seven years or 10 years? What is the depreciation policy? That is very crucial in the determination of costs or profit. Another question is the subsidy for the shareholders who have the bus passes. At the time when this question came up before Parliament, I was against giving the subsidy to the shareholders because it is like robbing Peter to pay Paul. Somebody must pay for it and it is the general public that has to pay for it. So when it comes to bus fare increases because of the subsidy to the shareholders, those members of the public who do not own shares are therefore made to pay a higher percentage increase in bus fares. Another question is whether he has done any study of the comparative efficiency of the SBS vis-a-vis bus companies elsewhere in the world, particularly privately owned bus companies. I would not make a comparison with government-owned bus companies because they are always inefficient. My final question is whether he has any plans to expand the operation of the shuttle bus company. I have forgotten the name of that company in Singapore. There is another company that owns the small city shuttle buses.”
“Many of them have indicated to me that they would like to remain within Whampoa. If possible, would the Minister allow them to do so? Thirdly, in connection with the one-room emergency flats, I have had some representations made to me by some of these residents that they have been told to pay the full 20% down-payment for the purchase of flats. These are residents of the emergency flats which are about to be demolished, and so they have to be resettled. But they have to pay the full 20% of the purchase price. As a Member has noted earlier, these people who live in the one-room emergency flats are very poor people. Many of them are without CPF funds at all. They are put to great hardship in finding the 20% cash down-payment. I hope the Minister would consider their case sympathetically and allow them to put the minimum as a deposit, much smaller than 20%. I now wish to make some general comments. As the Housing and Development Board develops more housing estates, the newer ones will be located in the outlying areas and further away from the City centre. But there is some redevelopment occurring in some of the older estates, for example, in Whampoa and in some other areas in the urban and suburban areas. In view of the popularity of these urban and suburban areas, could the HDB not consider higher blocks of flats for sale, in other words, build upwards and with a higher density? Instead of 10 or 12 storeys high, build 20 or 30 storeys high. I know there is a problem in providing car parks and so on. But he could levy a suitable charge for car parks for people who prefer to be located nearer the City centre.”
“I certainly think that the residents of the older housing estates deserve something better. Furthermore, Sir, I would like to ask the Minister to improve the recreational facilities in these older housing estates. I believe we are too stingy in terms of providing swimming pools in the Housing Board estates. Every time I raise this matter, I am referred to the swimming pool in Toa Payoh. It is true that the swimming pool in Toa Payoh is not too far away from Whampoa, but if the Hon. Minister were to monitor the use of the swimming pool in Toa Payoh, he will find that it is really over-used. There is need for more swimming pools in other housing estates. I believe that investments in facilities, such as swimming pools, are certainly worthwhile from the social and even economic point of view. I would rather see our young people swimming and exercising themselves than to spend their time in night clubs, street corners, or dark places smoking marijuana and consuming heroin and other dangerous drugs. Another point I would like to make concerns the demolition of the one-room emergency flats in Whampoa constituency. There are about five blocks of these flats. First of all, I would like to ask the Minister to review the removal allowance. I believe a small removal allowance of $50 or so is given to each household. The Minister has lately commented on inflation in Singapore, and so I hope he will look into this question. Fifty dollars will not get the residents very far in terms of getting a lorry and labourers to carry the furniture upon removal. Secondly, I would like to ask him to assure me and the residents of these flats that, as far as possible, the HDB would do its best to locate them in their area of choice.”
“Sir, may I first of all add to the chorus of compliments for the Housing and Development Board. For such a large bureaucracy it has shown itself to be remarkably responsive to complaints and upgrading of facilities. The people of Whampoa are particularly grateful for the additional lifts which have been provided in many of the older blocks, particularly in St. Michael's Estate. However, Sir, about half a dozen of the blocks in St. Michael's Estate have been left out and these are the blocks which are six storeys high. There is no lift at the moment at all. Presumably,' the Minister thinks that everybody is as fit as himself and able to climb six storeys. I would hope that he does one of two things. One, that he provides the missing lift. Alternatively, perhaps these buildings could be demolished to make way for better quality buildings. I agree with the Member for Bedok that even as the Housing Board progresses in terms of development in Singapore, there should be a constant upgrading, particularly of the older estates. In St. Michael's Estate, Sir, the car parks are built in such a way that when the cars are backed into the parking lots the fumes from the exhaust go right into the ground floor apartments, and I have had quite a few complaints from residents about this particular problem. 4.30 p.m. I would like to ask the Hon. Minister to consider thinning out the St. Michael's Estate and other similar older SIT estates, that means, to remove some of the blocks in order to provide more lungs, more open spaces. If we were to make a comparison between the older housing estates and the newer ones, the first thing that strikes us is that the older housing estates are very much overcrowded.”
“If the Minister were to look at the columns of advertisements of sale of properties, he will come across quite a number of "Owner migrating. Must sell." I will tell you why they are migrating. When their bungalow is worth $1 million, it is well worthwhile considering migrating. Do you want to know why? Because property prices in Australia and Canada and many parts of America are a fraction of property prices in Singapore today. And all these are unnecessary distortions and can be avoided. And I am glad to hear that Government is considering doing something about this and the move is very simple - just go back to what the law provided for initially and that law would have an immediate effect on the market. You call it a depression. I call it a breathing space from 1974 to 1979 whereby Singaporeans could adjust their savings and hope to buy a private residential property but - The Senior Parliamentary Secretary to the Minister for Labour (Mr Fong Sip Chee): Sir, on a point of order. Will the hon. Member please address the Chair? Dr Augustine Tan resumed his seat. 4.33 p.m.”
“Sir, I would like to thank the Minister for Law and Science and Technology for the historical review, which surely proved my point against the Minister for National Development. Sir, in economic matters, measures instituted today do not normally have instantaneous effect. There is a lag effect. It is easier for us to create a depression than to create a boom. I grant that. But if you deny that governments can create boom conditions, then you are denying the whole achievement of the PAP Government over the last 21 years. We created boom conditions out of a virtually God-forsaken place. That is what we have been trumpeting at every election. That is why we get re-elected. Sir, may I set the record straight because the Minister for National Development put words in my mouth, which I never said. I have never denied that there has been tremendous social mobility in Singapore. I have never denied that people living in one-room flats have gone up to four-room and five-room flats. In fact, for the information of the Hon. Minister - he may not be aware of this - there are quite a few owners of HDB and HUDC flats who have formed companies which, in turn, own private residential properties. And it is quite legal, if the Minister for Law would like to confirm it for me or the Member for Kuo Chuan who is not here. There are quite a few instances. We are talking about people's aspirations. People may live in a five-room flat, but if they have got extra money, they would like to invest in something else, maybe for retirement so that when the time comes they can move into such houses. But when the aspirations are limited to a HUDC flat, then it is something else.”
“Mr Speaker, Sir, on a point of clarification. I believe the Minister is shadow-boxing. I did not raise that issue. Mr Teh Cheang Wan remained standing.”
“We are going to create problems for the Government in the future. So I would urge the Government to study this problem very seriously. My point which I made yesterday is still valid. With so many square kilometres of land that we have, even a fraction of the many billions upon billions of liquidity sloshing in the international monetary system can ruin our economy. We are one of the most open economies in the world. We are so open that we are totally unselective in terms of what we allow into Singapore. We welcome foreign investments for productive purposes, but not when they distort our property market and distort our wages, our salary systems and cause inflation in the economy. That is not a productive activity. I recommend the Minister to read Adam Smith. 4.12 p.m.”
“As I tried to show yesterday, a capital of $40,000 or $50,000 could go a long way in terms of creating havoc in the property market. Governments may not be able to create booms and depressions exactly at will but governments can create conditions that can lead to booms and to depressions. The Great Depression in America was caused by the Hoover Administration tightening the money supply overly. I recommend the Minister to read Milton Friedman's Free To Choose and the chapter on the Great Depression. It is well worth reading for education of what a government under a misguided policy and leadership can do, and what damage can be done by a government. My point was simply, Sir, that if the Government would take a sensible measure like restricting foreign ownership, we can dampen this wild spiral in the market. I am not against boom conditions. I am not against people becoming more wealthy. But what I am against is the tremendous distortion built into our system. I do not know whether the Minister ever studied Economics. If he did, he probably studied Alfred Marshall, ceteris paribus, other things being equal, looking at one little pigeon hole at a time. We have to look at the problems in terms of what is called general equilibrium - please do not think I am trying to lecture to the Minister - mutatis mutandis, taking into account repercussions on the rest of the economy, and that is my concern. If we are going to produce a wage distribution of $250 or thereabouts and $20,000 or more at the top, that is a very absurd situation. The people at the top do not feel much better off because of the greatly increased prices of housing. People at the base feel deprived because they have to be stuck with one-room HDB flats.”
“It is a comparison with ourselves. And if people like me do not raise questions in this House, he may not be Minister for very long! Sir, this 1% of the population may include the likes of Wee Cho Yaw but they also include young executives, the brains of Singapore, the entrepreneurs of Singapore, the people in the middle and upper echelons of the civil service. My concern is not with people like myself who have already managed to buy some property some years back, but with the young people starting today looking forward to the future. What can they expect in the future? In terms of buying a car with increasing restrictions, it does not look like they can afford it in the future; in terms of buying a house, it is outside their range. All they can hope for is a HUDC flat. So I ask myself the question: if I were a young man starting out today, what are my expectations of the future in Singapore? Do I have a future in Singapore? And the point which I made was certainly valid - and the Minister has not countered it - and that is, anything in the private property market that is decent costs about $400,000 or there-abouts, and it is well outside the range of a young executive or a young couple, and that point still remains valid. As for the Minister's remark that about 77.5% of the condominiums are being owned by Singaporeans, I wonder what kind of a figure he has produced. Is it based on bookings that the developers have registered with the Controller of Housing? Or does the figure represent actual ownership, say, after one or two years? In other words, has the Minister been incorporating the names of the speculators? And I do recognise that quite a number of the speculators are Singaporeans with limited capital.”
“Mr Speaker, Sir, may I seek your indulgence to clarify a few points made by the Hon. Minister? First, I do agree with the Hon. Minister that Government is providing for over 99% of the population, if we take the income ceiling of $6,000 p.m. as the cut-off limit. And certainly I do agree with him that our Government has done a lot in terms of housing for our people. If we compare ourselves to Hong Kong and Tokyo, living conditions are much superior in Singapore than those places. A young executive in Hong Kong cannot hope to have an apartment bigger than 500 square feet, and even so he has to pay an astronomical rent for it. But having said that, our comparison should not be with the bad conditions of Hong Kong or Tokyo. Singaporeans are going to judge us on our achievements at the present, whether we can do better.”
“But I could not at this stage tell the House exactly whether the total costs of replacement, taking into account inflation, have been provided for. 3.45 p.m.”
“Selfish! Mr Goh Chok Tong: Selfish from the point of view of the person concerned. I did not mention that society will be saddled with the parent's concern or the mother's concern. The Member for Ayer Rajah might have misunderstood me when I talked about the point of direct referral to the specialist clinics and thereby overloading the clinics. When the cases are referred by the GPs to the OPDs, not all cases are automatically passed on to the specialist clinics. If that is so then, of course, his point is correct. It is an indirect route and the same workload is being given to the specialist clinics. The OPDs serve as a screen to ensure that only genuine cases are passed on. This is not to suggest that GPs are passing on cases which are less genuine but, as I said earlier on, there are differences of opinion in diagnosis and, of course, the Ministry of Health would take the opinion of its own doctors in the OPDs. The Member for Whampoa wanted to know the methods of depreciation and whether it takes into account replacement costs. My own understanding is - and I would like to check on this further - that it does not take into account replacement costs, i.e. inflation of costs in replacing assets has not been taken into account. And if we take his point into consideration, which is an important point, there is need to even have a heftier surplus. But in generating the required funds to pay back loans and to finance future development, because of the requirements of the World Bank that there must be an 8% return on average total assets employed and cash to debt ratio of 1.5 times, I would believe that some consideration has been taken into account for the high costs of replacement.”
“Provide them to the House in written form?”
“Mr Speaker, Sir, may I just ask a couple of questions by way of clarification? First of all, in regard to abortion, could the Hon. Minister inform this House how many of the nearly 17,000 cases of abortion reported by the Member for River Valley involved unmarried mothers, and how many of those cases involved were repeat cases of abortion, i.e. women who had previous abortions in previous years? Turning back to PUB, may I ask him what is the method of depreciation used by the PUB? Secondly, would the accumulated depreciation allowances, together with whatever surpluses or profits that the PUB has been earning from year to year, be sufficient to cover the replacement costs of new generators or whatever other equipment that are used by the PUB? Sir, I raise this particular question because in this age of very high inflation, many business firms find themselves in difficulties because their tradtional methods of depreciation and allowing for depreciation allowances are not adequate to cover replacement costs as they are based upon the original cost concept. Mr Rohan bin Kamis (Telok Blangah): Mr Speaker, Sir, can I seek clarification about ward-downgrading? In view of the increase in wages due to the NWC recommendations, would the Minister consider changing the method of allocating wards based on divisional status by increasing the income ceiling? Otherwise this method seems to be throwing the baby with the bath water. 3.42 p.m.”
“Mr Speaker, Sir, with your indulgence, may I make a couple of points for clarification? First of all, it should be noted by the press and the Hon. Minister that I do not sermonize nor do I lecture in this House. I merely participate in the debate. Secondly, one or two quotes from the Bible do not constitute a sermon. A sermon begins with "Dearly beloved" and ends with "Hallelujah". The second point of clarification, Sir, concerns job-hopping. Now, whenever reference is made to Japan, people always conjure up the Zaibatsu, the trading company, the big company. They talk of seniority, lifelong employment, loyalty, and so on and so forth. But they forget that the Zaibatsus account for less than half the Japanese economy and that much of the adjustments needed in a Japanese economy is borne by the other half of the economy comprising very small firms which are subject to frequent bankruptcies, turnover and high mobility of labour, or job-hopping as the Minister chooses to label that economic phenomenon. I would hope that in revising his schemes of incentives and disincentives to discourage job mobility, he would study the Japanese economy more realistically. 2.53 p.m.”
“The US economy will teeter on the tight-rope between high inflation and deep recession. And fifthly, what will be the response of US businessmen? With interest rates so high, it will not be possible to revive the motorcar industry and the housing industry: two key industries in the US. Why do I raise these matters? I raise them because of the implications for Singapore, because I expect continuing difficulties not only in the US economy but also in OECD countries, and we shall feel the backwash effects in Singapore. And I urge the First Deputy Prime Minister again to pay very careful attention to exchange rate and monetary policy in Singapore and to monitor financial institutions very carefully because many financial institutions will be in deep trouble. [Applause] 3.42 p.m.”
“We should learn from our experience of 1972-73 when our money supply just shot up incredibly and inflation rose incredibly in Singapore, and all we did say was to blame OPEC. It was our exchange rate policy which was at fault and today, if we are not careful, we will make the same mistake, and I believe, in the early months of 1980 we made a similar mistake as we made in 1972-73. I hope the First Deputy Prime Minister is listening carefully. Sir, this morning President Reagan of the United States announced his four-point programme to create new jobs, to reduce inflation and to increase productivity. He wants to cut Government spending by $49 billion, to reduce income tax by 10% each year over the next three years and to increase depreciation allowances for business firms, to reduce and to reform Government regulations affecting business, and to maintain a consistent monetary policy. There are five important points for us to note. First, the cuts in taxes and expenditure merely reduce the growth of the US budget. They do not trim the actual absolute size of the budget. Secondly, the critical question is whether Congress will cut expenditures along with taxes to the same degree. Politically, it is much more difficult to cut expenditures than to cut taxes, particularly with the system in America. Thirdly, even if President Reagan gets what he wants, the deficit is still a colossal $54.5 billion this year and $45 billion next year. Fourthly, there is the question of how the deficit will be financed. This is the critical part because it can be financed by printing more money or by borrowing from the private capital market. The monetary policy of the Federal Reserves in America will be critical in the next couple of years.”
“Unhappiness, yes. I just wonder what would happen when the trade unionists who are trained from Harvard and the London School come back. The Labour Ministry also proposes that the CPF Board should be more aggressive in its investment policies. I thoroughly disagree with that. Our CPF funds are meant for retirement and I know there is inflation going on. But we should take care of inflation rather than play about with the money. I do not agree that we should invest the CPF money in a way that banks invest and private indivi- duals invest. I do not believe in fooling with this retirement fund. And we can do something about inflation. Let me next turn my attention to the Ministry of Finance. Sir, in the Addendum to the President's Speech, the Ministry of Finance states that in terms of monetary policy "we shall permit such expansion of the money supply as to achieve a real growth of 8-10% per year for our economy." This is the vaguest way of stating monetary policy, Sir. I have never seen such a statement anywhere else or in any other country. That gives the Ministry of Finance and the Monetary Authority of Singapore complete freedom to do what they like in terms of monetary policy. We would like to get down to the brass tacks of how many per cent a year and within what range we are prepared to allow money supply to grow. I would suggest that the Minister for Finance take Milton Friedman seriously on this score. There is nothing stated in the Addendum about our exchange rate policy and this is a critical variable in our context. It is linked up with monetary policy. Exchange rate policy is the key as to whether we are going to import inflation, we are going to import deflation and we are going to have destabilizing capital inflows.”
“Mr Speaker, Sir, it is my privilege to join my colleagues in thanking President Sheares for his Address to this House. The President has set out clearly the priorities for our social and economic development in the 1980s. No right-thinking Singaporean can quarrel with the three objectives of building a modern industrial society, of ensuring our defence, and providing for renewal in political leadership. However, we can and we ought to have a lot to say about how these goals are implemented. My colleagues in this House have had much to say over these last two days and I do not propose to repeat what has been said. There is, of course, the temptation to rebut some of the points raised but I must not rob the Ministers of their pleasure. However, I will make one small exception for the Member for Kim Seng. I will give him two quotations. Matthew 6:5: Blessed are the meek: for they shall inherit the earth. Matthew 6:33: But seek first his kingdom and his righteousness, and all these things shall be added unto you. An hon. Member: Amen!”
“I have often wondered too, Sir, with all due respect to the Member for Mountbatten, why I should pay the same price for the same bottle of soft drinks, whether it be Pepsi-Cola, Coca-Cola, F&N soft drink or whichever soft drink.”
“Mr Speaker, Sir, I would agree substantially with the observations and comments made by the Hon. Minister for Trade and Industry. I think Government has no business in controlling prices. It is an impossible thing to do. In fact, if Government were to try to do so, the quality of coffee cannot be controlled. Neither can the quality of tea. And not only that, the size of the cup will have to be monitored from time to time to make sure that it remains the same. Some time ago, CASE was after the hawkers for raising the price of a bowl of rice. I thought that was a silly thing to do because the hawkers can simply switch from 100% grade rice to a 10% grade, or mix the rice with something of a poorer grade, or put more water in the rice or reduce the size of the bowl. There are a number of things that they can do. So it is a self-defeating measure to adopt. At the same time, Sir, the case before us is one that surely must arouse the suspicion of the public because the cost conditions of the coffee shops are so widely divergent. Some of them are in rent-controlled premises, others are in the older HDB estates where the rentals are much lower and others are in the newer HDB estates where the rentals are much higher and yet they are asking for a uniform price for each and every coffee shop. Surely, even on the basis of cost plus pricing, it is unwarranted for each and every coffee seller to charge the same price. It smacks of cartelization and I would certainly urge the Minister to look into the possibility of breaking this particular monopoly and, also to be fair, to break other cartels that exist in Singapore.”