Hon Sui Sen
Singapore
“Sir, I must inform the Member for Rochore that the companies are run on the basis of private sector companies, i.e. their budgets are drawn up by their boards of directors. I do not know to what extent their budgets follow Government budgets but they are certainly not regulated in the sense that Government budgets are rigidly enforced.”
“Perhaps the Member is referring to PIE's operations with respect to the Armed Forces. PIE provides some of the supplies for feeding our army and other armed forces. If the private sector is equally viable, equally able to supply foodstuffs, I see no reason why they should not also compete with the PIE.”
“Jeyaretnam asked the Minister for the Environment and Minister for Communications if he will request the Port of Singapore Authority to consider providing transport alternatively paying a transport allowance to all employees of the PSA who have been moved out of the PSA Staff quarters in Blair Plain and as a result of which have been put…”
“INTRACO is a company in which the Government has some equity. I believe the proportion is somewhere around 20%. So in a sense it is not exactly a Government controlled company, although 20%, of course, is a fairly considerable share. In the case of PIE, the answer is yes, it is a Government company.”
“The dividend yields for the three holding companies were nil, The yields for the operating companies were nil for 34 companies (including eight which have yet to commence operations), 1% to 10% for five companies, more than 10% but less than 20% for 10 companies, and at least 20% for nine companies.”
“Sir, the simple answer to that is no, for the purpose of this Bill. This Bill merely enacts legislation to implement the 1982 Budget concessions.”
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“When the FY 77 Budget has been approved, a similar exercise will be done to recast it into the new format. This will give the civil service further experience with the new system and hopefully enable the framing of the FY 78 Budget to be made properly and in time for the next financial year. DOUBLE TAXATION AGREEMENTS (Assessment of benefits) 5. Mr Ho Kah Leong asked the Minister for Finance what benefits Singapore has derived from the many double taxation agreements concluded with other countries; how are the benefits assessed; and whether a similar agreement will be concluded with Indonesia.”
“Needless to say, these changes will require quite radical changes in the mental attitude of the civil service. There will have to be a greater awareness of cost-benefit and cost-effective criteria. There will have to be a greater emphasis on the correlation of financial requirements with objectives and targets. The civil service will have to develop performance indicators, norms, standards and historical data for estimating budgetary requirements. For actual expenditure the civil service will have to find effective ways of achieving the objectives or targets of their Ministry's programmes. Finally, at the end of the financial year, performance will have to be measured and evaluated. The evaluation of performance (the performance annual review) will be an integral part of the budgetary system, because this will enable the assessment to be made for the following year of the size of funds to be allocated on the basis of performance. In view of the nature and complexity of Government activities, much effort will be required to devise systems of measurement and refinements of performance indicators and norms as well as procedures for evaluation and assessment. Action has already been taken to explain to the civil service the new system and to train those officers directly involved in the budgetary process in the Ministries and Departments. The first rounds of discussions and talks involved recasting FY 1976 Budget into the new format. Numerous sessions were held to explain the principles and concepts involved. The major problems and difficulties associated with the system have been identified and in the second and third rounds of discussions, solutions and various compromises were worked out.”
“Mr Speaker, Sir, the new budgetary system will be a major departure from the present. It will naturally pose a number of problems in its implementation but these are likely to be mainly on orienting the civil service towards performance criteria in estimating and expenditure. The new system will do away with the present preoccupation on "things to be bought" and emphasise "the things to be done". The Budget will be framed to show each Ministry's programme, that is, what it intends to do. All expenditure items under each programme will be arranged according to projects and activities. Since each programme will constitute a separate subhead, Ministries will have great flexibility to reallocate expenditure within each programme to make the best possible use of the funds to achieve the objectives of the programme. However, all this implies that in estimating expenditure requirements, Ministries submit proposals on the basis of performance. For example, for road construction, estimates will have to be based on the total length of roads to be built and the cost per unit run and how these compare against past costs and achievements and what the targets for the new year represent in the Ministry's total 5-year plan and other costs and benefits data. On the expenditure side, Ministries will have to monitor expenditure from the point of view of results and whether alternative means cannot be found to cut costs and improve, productivity. Because there will be greater flexibility, there will be less delays in changing the nature and content of expenditures to meet changed conditions. For example, within the constraints of their manpower budget, each Ministry will be able to employ more staff or less staff on a particular programme if conditions require this.”
“Mr Speaker, Sir, the answer to the Member for Changi's question is a definite "Yes". The Member would have noticed that Changi Village has been redeveloped into a modern complex consisting of shops, flats, a hawker centre and a market, all set in a landscaped site bordering the sea with a pedestrian mall, bandstand and shady trees. The Singapore Tourist Promotion Board is organising an East Coast Tour covering visits to Changi Village, Selarang Barracks, Changi Prison, East Coast Lagoon and possibly a visit to a kelong. At Changi Village, tourists will be able to do shopping and enjoy cool drinks and hawkers' food under open-air kiosks. Historical pictures with write-ups of the history of Changi Prison and Selarang Barracks will be sold. Visitors, particularly British and Australian servicemen who have served in Singapore, and their families, may find Changi a nostalgic place worth a visit. MINISTRY OF FINANCE (Implementation of new budget system) 4. Encik Mansor Haji Sukaimi asked the Minister for Finance what difficulties are envisaged in the implementation of the new Budget System and what measures are being or will be taken to ensure that the system is implemented smoothly.”
“Perhaps an Empress Place roar, in the same way as the Kallang roar, will help to achieve our objective. Question put, and agreed to Resolved, That Parliament approves the financial policy of the Government for the financial year 1st April, 1977 to 31st March, 1978. ADJOURNMENT Resolved, "That Parliament do now adjourn." - [Mr Hon Sui Sen] Adjourned accordingly at Twenty-eight minutes past Seven o'clock p.m. MAIN AND DEVELOPMENT ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 1977 TO 31ST MARCH, 1978 (Cols. 903 - 906) APPENDIX - COMPARISON OF TAX LIABILITIES AND DISPOSABLE INCOME BETWEEN 1972 AND 1976 (Cols. 907 - 908)”
“I think the basis of assessment of their performance is even more rigid because it is properly quantifiable by the profits which are made in companies or by results in economic development which ensue from their appointments to the statutory boards. For example, I think a board as vital as the Economic Development Board would be assessed even more closely than a normal department of the Government. I want to end my statement by a reference to the growth rate of 6-8%. Some Members thought that the growth rate was unduly optimistic, that the mildly rosy nature of the consensus which has been reached in the OECD and elsewhere is not entirely justified. Well, this may be so. This is again a matter for individual judgment. In 1978, at about this time of the year, I think we shall see whether or not the estimate of 6-8% which we have made is correct. The Member for Kampong Kembangan has suggested that there should be cautious optimism. I think we are being cautious, optimistic and, at the same time, realistic. We had a 7% growth rate as the possible growth for Singapore. We would be cautious by putting it at 6% and optimistic at 8%. So we said 6-8%. On that basis we should not be too far off the mark, But I think that this time next year I will be able to know whether or not I was right, whether the Member for Kampong Kembangan is satisfied, or whether the Member for Serangoon Gardens was correct in saying that it was too optimistic. To close this debate, may I say that since the Member for Kampong Kembangan has spoken of football in this debate, we all need to have the highest morale in the business of economic development and that we, Ministers and MPs, as well as the Civil Service, should try to maintain this very high morale.”
“I myself consider that the growth that Singapore has had over the last 18 years since 1959 has been due not only to the Ministers and, of course, the Members of Parliament who represent the People's Action Party -although they should be given the credit which is their due, this growth has also been due to the fact that we have a good and efficient Civil Service. Like all organisations, of course, there is always room for improvement. There were also some criticisms of them because they hold office in the boards of private or public companies and in statutory boards. Very often these are a part of the duties of the Civil Service. For example, the CPF is a statutory board, but it is a part, as much as any other function, of the Ministry of Labour. In the same way, some of the industries which the Ministry of National Development has set up, like Food Industries and so on, are really for carrying out of the work of the Ministry of National Development. For example, in the experimental work which they are doing on the breeding of pigs in flatted buildings it was the Treasury that insisted that they should set up a separate company in order that all the elements of costs and of revenue could be properly accounted for so that one can see the distinction between what is being done in that company and what would normally be done by officers in the departments of the Ministry of National Development. As for the accountability of the civil servants, there is some kind of impression that they are not subject to any control. The fact is that their performances in these companies and in the statutory boards are most certainly monitored by the people who appoint them. In the case of the Ministry of Finance companies and statutory boards, they report to the Minister for Finance.”
“As for an assurance asked by the Member for Khe Bong that there would be no further taxes or increases in the year, I think he knows by now that Ministers of Finance never give assurances of this kind. I now come to the question of civil servants. There were some comments on civil servants, and I am glad that the ex-civil servant, who is now the Member for Kampong Kembangan, was here to hold up the flag for the civil servants. I listened with some regret to the Member for Aljunied. I thought that while it is true that civil servants can very often take care of themselves, it is not possible for them to do so in this House. It is a matter for regret that the performance of the civil servants should again be raised for attack, as not all the suggestions of the Member for Aljunied are invalid. In fact, the suggestion for a rotation of staff so as to give civil servants a very broad experience is entirely in accordance with the policy, if not always the practice, of the Government and of the Civil Service. But I think he spoils the value of his suggestions and comments by making quite unnecessary attacks on the civil servants. The picture of Ministers invariably listening to civil servants who have been in the Ministry for a very long time is not entirely flattering to Ministers. We initiate the policy, and sometimes we even try to implement it, and the civil servants take their orders from us. But I think the Member for Aljunied contradicts himself in the next breath by saying also that the civil servants fear their superiors and try all they can to please them, and that they answer letters to the Press promptly because they are afraid of coming to unfavourable notice.”
“The Member for Khe Bong was among those who raised this with some heat. And, of course, I heard the Member for Marine Parade who came up with figures which he referred to as being in a Table(See Appendix II, cols. 907-8) which he would present in Hansard. I look forward to reading this and to be impressed by the figures which he has produced. All I need now say is that I will examine these figures very carefully. I suspect the increase of 6950% in tax liability for the lower income group may have been due to the fact that the tax base was very low. If it is say, $1 then 6950% would be $69. In fact, if you move from zero to $50, that does not make it an infinite increase in the tax. As I say, I will have a very close look at the figures which he has produced for the Cases A. B and C. As for index linkage. I think this is a matter which I would be very reluctant to give any special consideration. I do not know whether this has been the accepted practice in many other jurisdictions, and I am loathe to be the first to start in Southeast Asia, if not, in Asia. There was the question whether I could spare $26 million. The answer is, I can spare it if I can find it elsewhere. One comment made by the Member for Alexandra was that the tax on cigarettes and drink was not a real disincentive to smoking and drinking. I am, of course, prepared to impose a much higher rate if that is his advice, and I would certainly look further into this matter. After hearing the Member for Changi, and until I heard the Member for Punggol just now, I thought that perhaps I had given, in vain, a concession on estate duty which no one wanted. But I am glad that this is appreciated in certain quarters.”
“The Member for Jurong was properly concerned with the difficulties and hardships experienced by his constituents in Jurong. There were comments by the Member for Anson on tourism and brain centre developments. But I will not go into these matters because these are points which can be raised in the Committee of Supply. There were very many questions raised on income tax, personal allowances, and so on. I think I answered these questions during the debate on the President's Speech and I do not think I need now go into this matter in any detail.”
“It may be that in 1978 or 1979 the effects of the Agreement on Preferential Trading Arrangements on the five ASEAN industrial plants, or the arrangements for ensuring that oil and rice would be available in times of crisis, would bear sufficient fruit to make a considerable impact upon the Gross Domestic Product of Singapore. At the moment, all we can say of ASEAN is that it shows very considerable promise and that we will need to spend very much more time on it. The economic strategy on manpower was a matter of interest to very many MPs and the need for skills and productivity was generally appreciated. One Member suggested that we should have some regard for unskilled workers, In this respect we have not paid any particular attention to unskilled workers because there is really a shortage of unskilled workers in certain industries like construction and ship-repairing, where we have had to issue quite a number of work permits. So if there is really a considerable number of unskilled workers willing to engage in less attractive jobs, there are already industries waiting for them. On the responsibilities of management for instituting productivity incentive schemes, I was perhaps misunderstood, or the Member for Leng Kee had not read the first part of my Budget speech which said that productivity incentive schemes were the responsibility of management because they had greater resources and experience in this area and that the rewards for productivity should be in incentives which are to be accorded by the management. The Member for Kampong Kembangan put this matter right, but I am not sure whether the Member for Leng Kee was present when he said that. There were very many other comments on elements in economic tactics rather than strategy.”
“Our efforts have been to maintain stability and an easy money policy, so that there would be sufficient liquidity in the banks to promote development activities. Perhaps it was wrong to assume that there was no need for special mention. He also suggested that quarterly figures be included in the Economic Survey. Some figures are available of the kind of data we present in the Economic Survey, on a quarterly basis, but not in the full range or the accuracy of it. So it may be some time yet before we are ready to produce these quarterly figures in the annual Economic Survey. I now go on to trade policy which has been mentioned by quite a number of Members. I think the Member for Jalan Kayu was the first to suggest that there should be a coordinating body for export promotion. Possibly a Trade Development Council may be a solution to the problems which we are facing - how to coordinate the efforts of the Chambers of Commerce, the Singapore Manufacturers' Association and our own Trade Department export promotion efforts. So it is something which we are proposing to give consideration to over the next few months. The next matter which has been raised related to ASEAN and the development of activities under the ASEAN umbrella. I made a pretty short statement on ASEAN in the Budget Statement because I did not consider that at this stage while there is very considerable ferment and activity among Economic Ministers and by the officials, that there had been sufficient implementation of projects to make a significant contribution to the economy in 1977.”
“For example, he commented that the improvement in productivity was due to the economy pulling out of recession. This, of course, is a plausible explanation, although my Ministry and I myself differ from such an assessment. In the shipbuilding and ship-repairing industry, for example, there is no doubt that the keener competition which has been due to the recession has increased the productivity in the industry's attempt, not always successful, to maintain their profit margins by getting rid perhaps of their less efficient workers and improving the productivity of the ones they retain, There are other comments which he made on the decline in the construction sector and the need for the Ministry of Finance to have regard to this in the future. Some of the decline in private sector construction has been due to the lack of demand, for example, there has been a certain glut in commercial buildings, and it would not be possible for the Government to further stimulate commercial buildings. In the hotel sector, of course, it would be something which we would encourage over the next few years. There was also comment on the private share of expenditure declining over the last one year. This has been due to the fact that because of the private sector's hesitation in capital expenditure the public sector has taken over much of the development work and has consequently increased its share of the Singapore expenditure. The Member for Whampoa has also made comments on exchange rate policy, or the lack of a statement in the Budget concerning such policy. The exchange rate policy has been constant over the last two years or so.”
“Mr Deputy Speaker, I have listened with deep and absorbing interest to all that hon. Members have said today and on the last Budget day. I thank them for their general support. There have been very few critical comments but quite a number of useful suggestions. Some of these, such as those relating to Sun Tzu and moral influence, food and cooking (the nyonya cooking) and other matters, require consideration at the pace and deliberation appropriate to philosophy, poetry, songs and cooking. I will therefore do so at my leisure. But at the slower growth rate that we are now experiencing, maybe a lot of us will have more leisure time! Other suggestions are sometimes critical of my own Ministry of Finance's assessment of the economic situation in Singapore and I propose to spend some time replying to them. I have taken copious notes and since I cannot expect equal time with all the Members who have spoken, I propose to concentrate only on highlights. If I may take the economic strategy, first of all I would like to make some general remarks on the nature of the Economic Survey and the planning and the prospects for 1977. The assessments in my Economic Survey and in the Budget Statement are, of course, to some extent personal or departmental, and it is quite possible that economists in the business and academic sectors may have their own views. In fact, the wealth of data that has now been supplied in the Economic Survey is intended to induce such individual evaluations, if necessary, even to the devising of economic models from, say, banking and university circles, of the economy of Singapore. So in considering the comments which have been made by, say, the Member for Whampoa, I think it may well be that he would consider his own assessment of the situation as correct.”
“The net profits of Singapore Pools (Pte) Ltd during the past five years were as follows:- FY Profits 71/72 $5,740,543 72/73 $6,873,900 73/74 $7,216,799 74/75 $7,140,818 75/76 $7,444,083 With regard to using the profits of Singapore Pools to finance sports and other activities for the public, it is Government policy and practice to finance Government expenditures out of consolidated revenues. The provision of sports and recreational amenities is a part of the overall services Government provides to the people of Singapore. The organisation responsible for sports facilities and services is the Singapore Sports Council (SSC) which receives an annual grant from Government to help it finance its activities. The grant extended to SSC comes from monies collected as general revenue (including Singapore Pools) and I consider the present financial arrangements satisfactory. They have not prevented the full development of public sports and recreational activities in Singapore. The SSC itself has been extending financial assistance to various sports and recreation organisations which it feels merit support. Capital grants are provided by Government for the construction of community centres. These grants are assessed on the overall requirement, and there is therefore no need, and no greater advantage, on more than one source of financing by Government. Community Centres are intended to serve as a focal point for community participation and involvement and partial financing of the construction of community centres by voluntary public contributions should be encouraged as one form of such participation and involvement.”
“Mr Yeo Choo Kok: To ask the Minister for Finance (a) what was the annual profit of the Singapore Pools (Pte) Ltd during the past five years; and (b) whether his Ministry will use part of the profit to subsidize various constituency sports clubs to promote sports and games or to donate to the building funds of new community centres in those constituencies where fund raising is not easy. ANNUAL BUDGET STATEMENT (Allotment of another Sitting Day for Debate) Business Motion”
“Sir, I am not aware that it will cause any inconvenience. I thought the purpose of this was to simplify so that it would have the North designated as Bedok North and the South as Bedok South. I suppose that would simplify directions. 3.30 p.m. Pursuant to Standing Order 21(2). the following Questions on the Order Paper stood over to Tuesday. 15th March 1977. as requested by the respective Members: 19. Mr Teo Chong Tee: To ask the Minister for Finance whether it is planned to develop Changi Village as a tourist stopover point in view of its close proximity to the Changi International Airport. 20. Encik Mansor Haji Sukaimi: To ask the Minister for Finance what difficulties are envisaged in the implementation of the new Budget System and what measures are being or will be taken to ensure that the system is implemented smoothly. 21. Mr Ho Kah Leong: To ask the Minister for Finance what benefits Singapore has derived from the many double taxation agreements concluded with other countries; how are the benefits assessed; and whether a similar agreement will be concluded with Indonesia. 22. Mr Ho Kah Leong: To ask the Minister for Finance what is the rationale behind the sale of 31 per cent of the Government's equity holding in Singapore Airport Duty-Free Emporium Private Limited to Singapore Airlines Limited; and what are the benefits to the Government from that transaction. 24. Mr Ch'ng Jit Koon: To ask the Minister for Finance what are the criteria for exemption of cultural shows from entertainments duty; and whether he will revise the criteria to encourage more cultural shows with local content to be staged in Singapore. The following Question has been transferred to Written Answer to Question. 23.”
“However, the high tax rate of 40% imposed on the income of resident companies, whether such income is earned within or outside Singapore, has offered little incentive to reinsurance companies to retain their premiums in Singapore. I am therefore changing the tax on income from reinsurance business to a concessionary rate of 10%. This concession will take effect also from Year of Assessment 1978. Government Borrowing As the yield from the two tax increases is partly offset by the loss in tax concessions, the deficit of $1,505 million shown in the Estimates is not significantly changed in amount. To meet such deficit, there could be some drawing down from the Development Fund of the surpluses that have been accumulated over the years. Another possibility is for the Government to borrow to make up the shortfall. How much of this will eventually be met from borrowings and how much by drawing down our reserves, it is too early to say. Our capacity to borrow is indicated by the increase in 1976 in our domestic debt by $1,501 million, and in our external debt by $117 million. The recent Swiss Loan of 50 million Swiss Francs which was successfully floated at a coupon rate of 5 1/2% and an issue price of 99 shows our high credit standing in international markets. Concluding Remarks Mr Speaker, Sir, we have weathered severe economic storms in the last 3 1/2 years I hope nothing as shocking as the 1973 oil embargo and quadrupling of oil prices ever happens again. The weather is getting fine and fair and our Ship of State is in good shape. The command should therefore be "Steady as she goes." Mr Speaker, Sir, I beg to move.”
“For purposes of assessment, it will be convenient if the interest element is treated as one half of the pension. Effectively, therefore, tax will be payable on only half of the pension. This concession will, however, only apply to resident pensioners. The revenue loss is estimated at $600,000 per year. This will take effect from Year of Assessment 1977. (3) To further develop Singapore as a financial centre and its Asian Dollar Market from its present gross size of US$17.3 billion, the tax on income derived from Asian Dollar Market operations will be streamlined. The 10% concessionary tax will now be extended to cover all offshore income derived from Asian Dollar Market operations other than exchange profits and transactions with domestic banking units and residents. Specifically, income derived from transactions amongst Asian Currency Units (ACUs) and with banks outside Singapore will be taxed at the rate of 10%, and the necessary certification requirements from banks overseas will be abolished. Such transactions include dealings and holdings of foreign currency, negotiable certificates of deposits and bankers acceptances, broking, and dealings. holdings, floatation and underwriting of Asian Dollar bonds. The present formula of establishing profits to be taxed at the concessionary rate has not worked satisfactorily. The formula will be modified to ensure that offshore operations will enjoy in full the concessionary tax rate of 10%. This concession will take effect from Year of Assessment 1978, that is, to cover earnings in 1977. (4) Because of our locational advantage and good business infrastructure, Singapore has the potential to become an important centre for reinsurance business.”
“(1) To encourage home ownership and the more stable society comprised of home owners, the present tax rates on estate duty will be revised with effect from 1 April 1977 The exemption limit will be increased from $50,000 to $100,000 and the remission limit will also be correspondingly raised from $230,000 to $280,000. The effect of this concession will be that all properties under $100,000 will pay no estate duty at all. This should cover all HDB and most HUDC flats and possibly some terrace houses. For properties valued between $100,000 and $280,000, the raising of the remission limit will also mean a reduction of tax from what would presently be payable. For example, a $200,000 house would be taxed at $3,337.50 only, instead of $8,837.50, payable under the existing estate duty liability. The easing of the exemption and remission limits on estate duty should ensure that in almost all cases, families will not lose their houses because of too heavy estate duties (2) This concession is for about 1,700 resident pensioners who are paying income tax on the pensions they receive, mostly as Government pensioners. I propose to revise the basis of the tax on their pensions. The pension periodically paid to them is similar to the annuity paid by insurance companies for which Members will remember the tax concession I previously gave by remitting the tax on the portion of it representing a capital repayment. Similarly, the pension payment may be treated as comprising two elements, one element being part repayment of capital and the other, payment of interest on the capital. At present. both elements are subject to income tax. Only the interest portion should properly be considered as income and taxed accordingly. This I therefore propose to do.”
“As for changes to existing taxes, I propose only two small increases in taxes which will bring in some $8.8 million. However, I also intend to give several tax concessions, the cost of which will partly offset this increased revenue. Tax Increases Let me first take the two tax increases. (1) Measures introduced by the Government to discourage smoking as a grave health hazard appear to be losing much of their earlier effect and now need reinforcing. I am therefore increasing the duty on tobacco and cigarettes. Duty on leaf tobacco will rise from $35 to $36 per kilo. Import duty on cigarettes will rise from $43 to $45 per kilo while excise duty will increase from $3.70 to $4 per kilo Cigars and cheroots will rise from $40.60 to $45 per kilo and pipe tobacco retail and pipe tobacco bulk will rise from $28 to $30 per kilo and $22.40 to $25 per kilo respectively. Increases are also made on other tobacco products, namely, beedies, snuff, cut rag, ang hoon and tobacco which is not elsewhere specified or included. The revision of duty which is expected to yield an additional $2.3 million in revenue will come into effect today. (2)With effect from today also, I am raising the import duty on intoxicating liquors. Import duty on brandy will rise from $165 to $200 per decalitre (dal) while the duty on whisky will rise from $165 to $190 per dal. Rum and gin will also increase from $165 to $190 per dal, liqueurs from $165 to $185 per dal and other spirit beverages from $215 to $240 per proof dal. Import duties on malt liquors and samsu will also increase. Beer will rise from $25 to $27 per dal, stout from $25 to $26 per dal and samsu at 60% proof strength from $125 to $130 per dal. The additional revenue yield is $6.5 million. Tax Concessions There will be four tax concessions.”
“Tax Changes Honourable Members who have read the Ministry of Finance Addendum to the President's speech already know that this possibility would make no more than a marginal contribution towards reducing the large deficit. For this FY 77 Budget I am not introducing any new taxes. Hon. Members: Hear, hear!”
“At the same time, it must be recognised that the posts which have been approved are essential and must be filled substantively The organisation and staffing of the civil service plays a crucial role in the ability of the administration to expand judiciously and economically the very large sums of money allocated in the Budget. There are shortages of officers in a number of Ministries, especially Education, Home Affairs, Health and Defence. Recruitment is progressing and will be closer to establishment in the coming year. In the case of Other Operating Expenditure the increase of $239.4 million or 13.8% has been kept down by stringent controls over expenditure and the more stable price levels that have prevailed in FY 76. Revenue We must now consider how the large expenditures in FY 77 are to be financed. The total estimated revenue for FY 77 at existing tax rates is $3,362 million This represents an increase over the revised estimate for FY 76 of 6.3% and an improvement over the expected growth rate for FY 75 of 2.3%. Income tax is still the largest single source of revenue, with 41% of total receipts, or $1,380 million for FY 77, up 15% over expected receipts in FY 76. The revenue of $3,362 million will be sufficient to cover the current expenditure and leave a balance of $611 million which will be available for transfer to development account. In spite of this large contribution from revenue account of $611 million to finance development, there remains a deficit of $1,505 million. Would it not be possible to cover part of this by new or increased taxes?”
“The object is to help stimulate the economy and accelerate economic recovery. To this end the major expenditures have been allocated to those areas where Government spending has been most effective in pump-priming the economy, that is, to public housing which at $980 million represents 18% of total expenditure and to airport and road development at $394 million, Direct Government expenditure on economic services will be $1,174 million or 43% of expenditure on development. Of this.$553 million will be spent to further promote public sector investment in industrial and commercial development. The money will be disbursed largely as loans to the Jurong Town Corporation and to industrial and commercial enterprises. This large expenditure on development will be made possible because of stringent pruning of the recurrent expenditure estimates especially on staff and manpower in the civil service. This will enable a transfer of $611 million to be made from the Main Estimates to the Development Fund. The amount of $611 million compares with $625 million in FY 76 and $500 million in FY 75 Excluding the $61 1 million transfer, total recurrent expenditure under the Main Estimates will be $2,751.1 million. This is only 11% higher than for FY 76. It is the minimum required to maintain the present level of Government services. Staff increases have been provided only for new functions or the expansion of present activities. The net increase in the permanent establishment for FY 77 is 144 posts or 0.2% over the FY 76 establishment, a record low for the civil service for the past few years.”
“To react quickly to unfavourable trends, our manufacturers, traders and businessmen must devote more effort to develop new markets, Government will, on its part, do all it can to assist and to safeguard and promote Singapore's economic interests. FY 77 Budget Estimates Mr Speaker, Sir, I would now like to move on to the Main and Development Estimates. The detailed analysis in the Memorandum on the Main and Development Estimates, together with the review of public finance in the Economic Survey, should provide Honourable Members with all necessary information. I propose therefore to be brief in my remarks. But I should perhaps first comment on the changes in format that have been introduced to the Establishment List. These have been made necessary because the Government establishment system has been improved. It has been found desirable to do away with the system of grading of appointments and the payment of acting allowances for such appointments. Officers will now hold appointments in their substantive grades. Promotions will not depend on vacancies in the civil service but be on the basis of merit. The Establishment List for FY 77 will therefore no longer show grades of appointment under Heads of Expenditure. Instead the authorised manpower of each Ministry is classified according to Personnel groups and the number of posts approved for each group is shown in the Establishment List. Expenditure The total expenditure being budgeted for FY 77 is $5,459 million, but almost half of this will be spent on Development. This is in line with the rate of expenditure on development that has occurred over the past few years. In FY 75, budgeted development expenditure was $2,188 million and in FY 76, $2,610 million. In FY 77 it will be $2,708 million.”
“While workers must put in their best efforts, employers have an equal responsibility to improve their management of personnel or of plant and machinery to increase productivity. Employers should consider the introduction of appropriate incentive schemes to reward efficient workers for their productivity. The initiative for formulating such schemes is clearly their responsibility as they have the greater resources and experience in this area. Manpower Development Our manpower development programmes must now emphasise training in more and more specialised skills, To instil correct work attitudes in our workers, employers must provide a proper working environment, Good employers usually have hardworking dedicated workers. With basic manpower needs largely met, we should next develop the quality of our managerial and executive grades. The new managers should possess not only management and entrepreneurial capabilities, but also technical competence in the new industries. These managers may need to learn their skills by working their way up through as many plant operations as possible. They will after all merely be repeating the experience of so many of the top management executives in the biggest multi-national corporations. Concluding Remarks on Economic Policy We shall continue to pursue our long term economic strategy programme for our economy's transformation to an industrial centre and a base for regional and international services. In dealing with the uncertainties and difficulties of the next few years, we shall need a more flexible approach to developments in the region as well as the major industrialised countries.”
“The Monetary Authority is also considering further measures to develop the secondary markets in fixed interest securities and Asian Dollar Negotiable Certificates of Deposit. As for tourism, we shall encourage more convention business in Singapore by both regional and international groups. We would therefore have to expand our convention facilities with more hotel rooms and convention halls, with perhaps one large convention centre which hotels might participate jointly in developing. Convention business can best be secured at source and our hoteliers, airlines and travel agents must redouble their promotion efforts overseas to woo more such business. Government. through the Singapore Tourist Promotion Board and Sentosa Development Corporation, will supplement their efforts by developing more tourist facilities and attractions. Wages Policy Our past performance in manufacturing, trade and services has been assisted by policies of orderly wage increases and good labour-management relations. We must ensure that this situation continues, The National Wages Council should now consider the full offsetting from the annual single wage increase award of all increases granted since the last award whether from increments granted in wage scales or from any form of fringe benefits. In this way, we can perhaps hope to keep our wages at reasonable rates for industries competing in an extremely difficult world market, against countries beset with high unemployment and spare manufacturing capacities Countries so afflicted will provide stiff competition not only to the products but also to the services we sell. Our shipbuilding and shiprepair industries know this only too well.”
“Accordingly, our bilateral agreements with the Philippines and Thailand respectively for a mutual across-the-board reduction of 10% of existing tariffs on all products traded between us will be brought within the framework of the Agreement for Preferential Trading Arrangements. Under the terms of the Agreement, however, any bilateral Preferential Trading Arrangements must also be extended, if so desired, to other ASEAN members. We have therefore made some modest beginnings in ASEAN economic cooperation. If there were a sense of urgency in the political Ieaderships of the ASEAN countries to meet our long term problems, then I am confident there will be the political will and a spirit of give and take, and much more development may be expected in the coming years. Services Development By improving transportation and communications facilities, as well as finance and insurance services, Singapore has developed rapidly as a regional services centre. We are now well organised in the offshore banking, insurance and oil businesses. We are equally well-placed to become a centre for regional and international warehousing activities, especially for capital goods and equipment. We shall therefore try to encourage over the next few years international corporations to establish their distribution operations here. As some fiscal incentive may be necessary for this purpose, the Fiscal Policy Implementation Committee has been asked to consider appropriate measures. There should also be further development of our Financial Centre, Facilities in the forward market for foreign exchange will be further expanded to provide a sufficiently large market in foreign exchange to enable commerce and industry to hedge their future receipts and payments in foreign currencies.”
“Government and traders must work closely together if we are to counter the increasingly protectionistic attitude of some of our major trading partners, consolidate our established markets in the United States, Japan and Western Europe, and explore new markets especially in West Asia. In the development of new markets, it is vital that we build up as many contacts as possible. We shall therefore consider setting up permanent exhibition centres in West Asian markets to promote our manufactured products and services. To assist our exporters to meet the very keen competition in international trade, cheaper export finance is being made available. The MAS rate to the Banks for rediscounting export bills has been made more attractive by pegging it at 2% below the average prime rate. Further. the rate is now being adjusted frequently to take into account the regular fluctuations in the prime rate. Our exporters should also make more use of the facilities provided since June last year by the Export Credit Insurance Corporation, especially for sales to lesser known new markets and customers. ASEAN Economic Cooperation Since the Conference of ASEAN Heads of Government held in Bali a year ago, some progress has been made by Economic Ministers and officials of the five member-countries on the establishment of five ASEAN industrial projects and on the terms for according each other preferential trading arrangements. The ASEAN Economic Ministers have approved an Agreement on ASEAN Preferential Trading Arrangements and have defined in the Rules of Origin the nature of the products to which such preferential arrangements may be extended. The Agreement will provide the framework for any multilateral or bilateral agreements for preferences between member-countries.”
“Industrial Development Despite difficulties and by employing many of its best staff overseas, the Economic Development Board's promotion efforts succeeded in attracting investment commitments of $364.2 million in 1976. However, 58% of this is for expansion by industries already operating here Large unused production capacity and high unemployment in the industrialised countries no doubt affected the drop in new investments from overseas. The task of investment promotion for the coming year remains difficult While we can only sometimes offset adverse external developments, we must continue to press on with our promotion efforts in the United States, Japan and Western Europe. On the home front, however, we shall maintain a healthy investment climate. We shall do what we can to keep our major production costs stable, and ensure that industrial facilities and services will be readily available for investors. We shall pay special attention to the relatively smaller but more technology-oriented industries. More industrial finance will be given through the Capital Assistance Scheme beyond the $16 million so far approved. Such finance will also be available through the Small Industries Finance Scheme, in which 14 cases have already been approved, involving a total of $1.73 million. This Scheme should gather greater momentum this year. As a further step, the Jurong Town Corporation will construct smaller factory buildings to suit supporting industries and services. Trade Development To safeguard our economic interests, our trade, investment and diplomatic offices will be strengthened in key centres.”
“390 MW electricity compared to 704 MW five years ago. We are now in a much better position to meet demand for infrastructure services at short notice. Finally, our efforts to promote Singapore as a centre of international finance and tourism have also achieved some success. Financial operations have expanded greatly The number of banks established in Singapore was 72 in 1976. There is a swing towards offshore and international banking with the setting up of offshore and merchant banks. The Asian Dollar Market is now serviced by 69 Asian Currency Units and has expanded from US$2,980 million of deposits in 1972 to the present US$17,350 million. With the raising of 15 Asian Dollar Bonds, our financial centre may be said to have attained maturity. Such development has been made possible by fiscal incentives and by rationalisation of banking procedures. The rapid growth of the tourist industry is shown in tourist arrivals, which increased from 880,200 in 1972 to 1,492,200 last year. We should now be adding to our 10,255 hotel rooms. Of interest also is the convention business which has expanded significantly. 133 conventions and exhibitions were held last year compared to 80 in 1972. All in all, therefore, we have laid a sound foundation for sustained growth through the five basic elements of our long-term development strategy. My Ministry's Economic Planning Model predicts that, on this strategy and barring major upheavals in the world economy, we should be able to achieve an annual growth of 6 - 8%. Turning from consideration of our development strategy, I would now like to discuss the tactics we can adopt to foster economic growth in 1977.”
“As for development of science and technology, our manufacturing industries have become more technological and sophisticated. A good indicator of this technological advancement is the value-added per worker. This has increased in real terms from $8,814 per worker in 1972 to $10,088 in 1976. Investment commitments in the higher value-added industries accounted for 84.7% of total investments compared to 78.2% five years ago. Such advancement was achieved across a wide range of industries from electrical machinery and appliances, transport equipment, and textiles to metal fabrication and precision engineering. Our industrial base has also been broadened by greater diversification which gives flexibility in meeting ever fluctuating external demand. Perhaps more visible are the results in infrastructure development. We have now adequate industrial land and buildings to meet the demands of investors. The Jurong Town Corporation has in the past five years prepared 1,800 hectares of industrial land and completed 252 standard factory buildings and 207,200 square metres of flatted factory space. Communication links have been expanded to meet the needs of our manufacturing, trading and business communities. They can now communicate with 175 countries through the much improved telecommunication facilities. Automatic telex services are now available to 88 countries. Such services are well used. The number of outgoing telex calls rose from 356,000 in 1972 to 2,312,000 last year. Domestically, there are now 374,000 telephone links, almost doubling the number in 1972. The rapid growth in the industrial and commercial sectors would also not have been possible without expanded utilities supplies. The Public Utilities Board has now at its disposal an installed capacity of 1.”
“We can also, by appropriate domestic policies, counteract some of the more negative effects of a world economic slowdown. Economic Strategy Programme It has been five years since I announced in this House our Economic Strategy Programme for the 1 970s. This was aimed at modernising and transforming Singapore's economic structure so that it would become a `brain' services centre. A package of public policies was designed to fulfil the five basic objectives of the Programme in manpower, science and technology, infrastructure, taxation and promotion. The Programme was intended to be flexible. In the event, it had to accommodate the energy crisis and the worldwide recession which followed it. We had to scale down our expectations. It may be useful to review the present status of the Programme. Let us start with our manpower development programmes in education and industrial training. The annual output of graduates from the technical institutions, including the Singapore Polytechnic, Ngee Ann Technical College. Industrial Training Board and the Joint Industrial Training Centres administered by the Economic Development Board has increased from 5,240 in 1972 to 8,930 in 1976. The training of skills was concentrated on the engineering trades, metal machining and fabrication as well as on selected fields of precision engineering. There are now 5,155 apprentices under training in various industries compared to 574 five years ago The demand for skilled manpower by our industries is being largely met. The technical bias introduced a year ago in our education system will further provide the essential element of correct work attitudes to complement the inculcation of skills.”
“Tourism remained buoyant. Tourist arrivals increased by 13%, very near the average growth rate of the pre-energy crisis years. Although below the average growth for the past five years, our 7% economic growth in 1976 may perhaps be considered not unsatisfactory. The policy of diversifying our economic activities has made us less vulnerable to the violent fluctuations of the world economy. Prospects for 1977 World economic recovery, which was strong in the first half of 1976, slowed down in the second half as the major industrialised countries feared, by setting too fast a pace, to trigger off another round of inflation. As a result, there was some stagnation in growth and increased unemployment. However, the Governments of the major industrialised countries have since considered measures to stimulate their economies again to provide more jobs and reduce unemployment in their own countries. For their trading partners, such renewed growth will have the effect of providing an increased demand in export markets. The fear of causing unacceptable increases in inflation, however, remains. The recent two-tier oil price increases by the OPEC countries will impose further restraints to economic stimulation. On the whole, therefore, the world may grow more slowly this year than in 1976. The OECD countries are expected to make only 3 3/4% in real GNP growth, down 1 1/4% from 1976. Inflation is forecast to increase by 7 1/2%, the same as last year. World trade is expected to grow at 6%. Singapore's own performance in 1977 will naturally be affected by these external circumstances. We can, however, try to take advantage of differences which appear now to exist between the developed countries in the less synchronised economic conditions of 1977.”
“Mr Speaker, Sir, I beg to move, "That Parliament approves the financial policy of the Government for the financial year 1st April, 1977 to 31st March, 1978." Sir, I have distributed in advance to Honourable Members my Economic Survey of Singapore, 1976. Honourable Members will find it further simplified and improved from last year's Survey to give them a better appreciation of our economy's performance in 1976. I would like nevertheless to highlight some of the features of the Survey before going on to speak of the financial policy for the coming year. Singapore's Economy in 1976 1976 saw the gradual recovery of the world economy, with the industrialised countries in the Organisation for Economic Cooperation and Development (OECD) making a real growth of 5%. There was also less inflation in most countries, with the OECD as a whole registering 8%, down from 11.2% in 1975. Singapore benefited from the world economic revival, with real growth at 7.0%. At current prices, growth was 9.6%. The GDP deflator was a modest 2.4%, indicating the stable price conditions in 1976. More remarkable, the Consumer Price Index fell by 2% in 1976. This was, in large measure, due to the relatively stable food and oil prices. But Government's anti-profiteering measures and consumers' efforts also played a role in keeping prices down. The unemployment rate for 1976 remained at a low 4.5%, the same as a year ago Unemployment, measured by the number of persons seeking work at the Labour Exchange, fell from 39,500 at the beginning of the year to 30,750 at the end. Our manufacturing industries, with the exception of shipbuilding, staged a comeback, with a real growth of 10% in 1976 in contrast to the negative 2% in 1975. Trade also increased a welcome 21% after a decline of 7% the previous year.”
“Mr Speaker, Sir, I beg to move the motion* standing in my name under item No. 2 in the Order Paper. * The motion reads as follows: That this Parliament. pursuant to section 7 of the Civil List and Pension Act (Chapter 52), resolves that the Schedule to the said Act be varied by deleting the figures "$208,200", "$894,400", "$214,580" and "$5,700" appearing in the second column thereof and substituting therefor the figures "$214,500", "$906,600", "$210,060" and "$2,450" respectively. Sir, it is proposed to increase the provisions for the Privy Purse by $6,300 and the Salaries of Personal Staff by $12,200. The increase is largely required to meet the 1976 NWC wage supplement and the annual increment of salaries of staff. The decrease of $4,520 under Expenses of Household is due mainly to an expected reduction in the consumption of public utilities because the staff no longer qualify for free water. A lesser provision is also required for Special Services. It is, therefore, necessary to vary the provisions in the schedule to the Civil List as follows:- for the "Privy Purse" from $208,200 to $214,500; for "Salaries of Personal Staff' from $894,400 to $906,600; for "Expenses of Household" from $214,580 to $210,060; and for "Special Services" from $5,700 to $2,450. Sir, I beg to move. Question put, and agreed to. Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 521, resolves that the Schedule to the said Act be varied by deleting the figures "$208,200". "$894,400". "$214,580" and "$5,700" appearing in the second column thereof and substituting therefor the figures "$214,500". $906,600". "$210,060" and "$2,450" respectively. ANNUAL BUDGET STATEMENT 3.09 p.m.”
“In view of this change, clause 2 of the Bill provides for exemption of the Commission's budget from gazetting. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself Into a Committee on the Bill. - [Mr Hon Sui Sen]. Bill considered in Committee; reported without amendment, read a Third time and passed. CIVIL LIST”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill seeks to amend the National Statistical Commission of Singapore Act, 1971, to provide for:- (i) the preparation of the Annual Report of the Commission on a financial year basis; (ii) the formal appointment of the Auditor-General to audit the Commission's accounts; and (iii) exemption of the National Statistical Commission's budget from gazetting. An amendment was made in 1972, to provide for the financial year of the National Statistical Commission, to be brought in line with the Government's financial year. The accounts for the Commission have since then been prepared on a financial year basis, ending 31st March. However, the Annual Report of the Commission required under the Act, is still being prepared on a calendar year basis. Clauses 3 and 5 of the Bill would provide for the Commission's Annual Report to be prepared on a financial year basis, enabling the Commission to present its accounts and its Annual Report together to Parliament. In view of the adjustment, the 1976 Annual Report will cover 31st March, 1977. In accordance with the policy to improve the accountability of public funds in Statutory Boards, the Auditor-General has been auditing the accounts of the National Statistical Commission since its inception in 1972. To formalise the arrangements, the necessary provisions have been incorporated in clause 4 of the Bill. With the merger of the National Statistical Commission with the Statistics Department on 1st April 1976, control of the Commission's expenditure has been delegated to the Statistics Department. Funds previously under the control of the Commission have reverted to Government.”
“Sir, perhaps I do not understand the duties of Ministers. I criticise my departments and I criticise my Government servants in the privacy of my office, and I hope I give them hell from time to time, but I do not expect to do so in the House here. If there are points which I should be critical of, and he suggests that I take note of them. I will certainly do so. But I do not think I can be expected to come here and say, "I have given them hell because of certain points and I want to tell you all about this." 4.29 p.m.”
“Sir, I am not quite sure what he expects me to do here. Should I stand up in this House and say. "I have these glowing reports from the EDB but I am not very satisfied with them"? In fact, I am not always satisfied with the glowing reports, but does he expect me to come here and criticise the performance of the Ministry under my charge? If he has any critical comment to make of them, perhaps I could really answer; and if I agree with some of his comments then I will say so. But he can hardly expect me to initiate criticism of my own Ministry and departments.”
“I am prepared to answer his point of clarification, but if he wants to make another statement, it would mean that I would have to make a further lengthened statement.”
“Mr Deputy Speaker, Sir, may I suggest that if he wants all this information, which I can supply in very great detail, perhaps in all the annual reports of the EDB and - Dr Augustine Tan: Unfortunately, Sir, the Hon. Minister -”
“With regard to the industries, the larger consumers of electricity have been granted exemption from the tax. Dr Augustine Tan: Mr Deputy Speaker, Sir, I did not want to interrupt while the Minister was speaking. So may I be permitted to clarify a number of points? I do not know who drafted the Minister's replies but many of them were inadequate. For example, when he referred to the various schemes of Government like Export Financing, Capital Assistance Scheme, Small Industries Financing Scheme, and so on. he gave us no details of the actual implementation, that is, what has actually been achieved, what is the cost involved, and what is the number of firms involved. He merely gave us a regurgitation of the principles of those schemes. Similarly, when he referred to the Labour Training Scheme. he talked in general terms, describing what those schemes are but without telling us the number involved and no reference to cost effectiveness. Another example is when he referred to the percentage of women in the civil service and pointed out to an 8% increase in the number of women, but he did not tell us in what categories those women are in. If they all joined the Service as sweepers and cleaners, we can, of course, enlarge the number ad infinitum. A further point he referred to was in regard to wage differentials and said that there was little the Government could do. That is not true because Government policy substantially affects demand and supply. For example, whether or not to grant more immigration permits -”
“This is in line with Government policy to discourage ownership of private motor vehicles. Consumers as a whole group do not face any additional cost over and above what is necessary to compensate for increases in crude prices. The duty of 1 .8 cents per litre for automotive diesel oil was, for instance. removed in the January 1976 round of price increases. As to the tax on PUB bills, this was first introduced in January 1969 with legislation of the Statutory Boards (Taxable Services) Act. The tax was intended mainly to defray increased defence expenditure. The majority of the people are not really penalised by the surcharge on PUB bills. On each occasion that the PUB was obliged to raise either its electricity or water tariffs, the tax structure was also revised accordingly to give relief to the smaller domestic consumers. When the tax was first imposed in January 1969, households whose bills were in excess of $10 per month were liable to pay tax. The cut-off point has since been revised on four occasions and is now pegged at $35 per month. However, we are reviewing it once again since we shall have to consider it in conjunction with what increase we must allow in electricity tariffs because of increased oil prices. May I repeat what my colleague, the Minister for National Development and Communications, has stated? On the average some 70.5% of the total domestic households in Singapore do not pay Government tax on their PUB bills as their bills are less than $35 a month. In addition a further 14.5% pay tax and only at 5%; and the remaining 1 5% pay at the 10% tax rate. As for the latter category of households, the imposition of Government tax should induce them to be more economical with regard to consumption of public utility.”
“He also suggested that as tax collectors are "notoriously conservative when it comes to tax incentives, those who are directly in charge of tax collections should have little to do with the formulation of tax incentives." I think the Government is aware that the present tax rates are not sufficiently attractive to induce the growth of off-shore trading activities in Singapore and certain proposed tax concessions for business engaged in offshore trading are now being examined by the Fiscal Policy Implementation Committee. The primary function of the Committee is to study how to implement major tax changes which have already been decided as a matter of policy by the Government. The tax administrators are included in the Committee to render technical advice on how the new tax incentives can be implemented smoothly. In any case if there is any difficulty, I think any conflict should be resolved by the Minister for Finance who is both responsible for development of international trading centres as well as restrictions which the Budget impose upon other tax policies. Finally, I come to the problem of oil companies and the adjustments to the retail price of petrol. There is also another example quoted by the Member for Moulmein about the tax surcharge which properly is a matter for the Ministry of Finance, On the unhappiness over the so-called increases of taxes in the form of additional duty on petrol, I would like to inform Members that adjustments to the price of petroleum products inclusive of adjustments in duties are related to price increases of crude supplied by OPEC countries. The overall increase allowed is spread among major price-controlled items so as. to favour industry and public transportation.”
“In that case, it would save me the burden of answering this particular part of the question. Without referring to specific Members of Parliament, several Members have pressed for an upward revision in the personal allowances for income tax. This issue, of course, is perennial before each budget session, not only by Members but also by the press, At the risk of boring the old incumbents and also the new Members, may I take the opportunity to repeat once again the reasons for not Increasing these allowances. First, any significant increase in personal relief would result in a substantial loss in revenue. A small increase of $1,000 in personal relief would cause the Government to sacrifice $26 million in revenue a year. Our revenue performance in the last financial year and in the coming year is not so strong as to permit an increase in such income tax relief. If such relief were to be increased, a new tax or an Increase in other taxes may have to be imposed to make up for the loss in revenue. Secondly, while the cost of living has gone up, so has the per capita income which Increases the ability of the taxpayer to pay income tax. Thirdly, the ever-increasing public expenditure has to be borne by as many people as can bear them. It is salutary for them to be reminded that the services provided by Government must be paid for, Now I come to the Member for Kallang. He said that "the present income tax rates are not conducive to attracting international operations that neither buy nor sell in Singapore." He welcomed the establishment of the Fiscal Policy Implementation Committee to consider how best the tax system cap be adjusted.”
“I think the Member for Punggol also suggested that the personal relief should be increased in proportion to the increase in the cost of living since 1948.”
“These discussions have given both parties a better appreciation of each other's problems. However, under the new budgetary system, there would be more definite criteria, and accordingly there will be less subjective evaluation and less room for dispute among officials. I would like now to move on to the various comments on tax matters. I think the Member for Nee Soon desired to have greater debate on tax changes. I would like to point out that the last major tax changes were introduced in 1 968 and were prompted by the need to raise revenue for building up our Armed Forces. Since then, there have been few changes in the tax structure. though we have found that we have imposed tax disincentives or given tax concessions. Increases have been made mainly to existing taxes on private sector vehicles. cigarettes and tobacco products, liquors and petroleum. These revisions were made not so much to raise additional revenue, though this is always welcome, as to alleviate traffic congestion and pollution, to bolster Government's anti-smoking campaign and to discourage consumption of non-essential items. It is quite obvious that it would be impossible to have prior debate in Parliament on such tax increases since advance notice of taxes would lead to hoarding, speculation and profiteering. Nevertheless. I wish to assure the House that where none of these problems would arise from proposed changes to the tax structure, if for example, we should wish to change the tax system from income taxation to value added tax as has been suggested by the Prime Minister yesterday. then hon. Members would be given every opportunity for debate on the new tax structure. I come now to a suggestion of the Member for Thomson on income tax relief.”
“There was one suggestion which relates to the revision of the Parliamentary Pensions Act. I think this was brought up by the Member for Nee Soon. As this has been answered by the Prime Minister. I need not go into this other than to say that the Act provides for the award of a gratuity equal to one year's salary to the dependants of Members of Parliament who die whilst in office. This is similar to the payment of a death gratuity to dependants of a Government officer who dies while in service. The Member for Katong spoke on the new budgetary system and on the need for good inter-personal relations between officials of my Ministry and those of other Ministries so as to ensure the successful implementation of the new budgetary system. The new budgetary system is targetted for implementation in the financial year 1978. Hon. Members will be fully consulted and informed through the Estimates Committee of the changes contemplated in this new system. The new budgetary system is essentially performance oriented. It will classify Government operations, work and expenditure by objectives. It will also provide greater flexibility to Ministries in the usage of funds so long as the objectives are realised and cost effectiveness is maintained or improved upon. The Member for Kampong Kembangan has put down a Question for oral answer and Members who want more information on this system can. refer to the answer I will be giving. Coming back to the Member for Katong, I agree entirely that the success of the new budgetary system. as with any system, will depend to a very large extent on the cooperation of the parties working it. There have always been discussions between officials of the Ministry of Finance and those of other Ministries on the latter's budget requirements.”
“Sir, I now turn to other questions on the civil service. The Member for Anson suggested that Government officers be allowed a further opportunity to exercise their options for conversion to the CPF scheme. I should like to state that when this exercise was conducted for Divisions Ill and IV in 1973. they were given one month to make up their minds and also specifically told that the options were irrevocable. The majority of officers opted for the CPF scheme. If we allow officers a second chance to opt for the CPF scheme, likewise to be equitable. officers who have opted for the CPF scheme would have to be given a second option to revert to the Pension scheme. This is clearly undesirable and goes against the basic principle of irrevocability of options. The Member also spoke. I think, on the use of CPF contributions for purchase of flats. Like other members of the public, Government officers may use their CPF contributions to buy flats built by the Housing and Development Board and the HUDC. Additionally, there is an arrangement whereby Government officers who are confirmed in their appointments can apply for loans from the Housing Board to purchase Housing and Development Board flats without the usual down payment. Finally, I think the Member made an observation on senior officers being bypassed in promotions. I think by "senior officer" he means officers who are senior by age being bypassed. Of course, under the Government's promotion policy, seniority is taken into account, so also the merit qualifications and experience of the candidates. Only those found deserving on the basis of these factors are promoted. Seniority is only one of the factors for consideration. Of course, officers who have been longest in their jobs ought to know better and be more efficient.”