Lee Hsien Loong
Singapore
“Yes, of course, every time I sell the land, I put money into the Reserves, but I am not putting the money into the Reserves all today. I am putting it in a stream of payments, 30 years apart.”
“Speaker, Sir, I do not think it was a very difficult question to figure out, that when I spoke to MTI, I spoke to the Minister, because Mr Gan Kim Yong is the Minister for Trade and Industry.”
“" I think that would have been unjust because he has not been charged. If there is a case, the case has not been heard, he has not been found guilty or acquitted or whatever. I cannot prejudge a case based on an incomplete investigation – started recently, or a partial investigation, just entered into the formal phase.”
“Mr Speaker, Sir, first, Mr Leong is quibbling over words. In February, Mr Tan Chuan-Jin told me, "I offer to resign". I said, "Yes, sort out your constituency first". In other words, decision taken. The moment to execute it, I will decide. So, it is quite clear. Legally, he has not resigned.”
“Sorry, Mr Speaker, to respond to Ms Poa on why not no pay leave. It is my judgement to make. The Civil Service works in one way; their basis is if you have been convicted, then you are on zero pay and other consequences will follow.”
“I am very happy to note that Assoc Prof Jamus Lim appreciates the second key and is seeking a third. And I hope that it portends a change in your attitude towards the Elected President and his custodial powers. But I think the Brazil example is a very interesting one.”
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“A*STAR has done a very important and outstanding job promoting R&D in Singapore. Mr Lim Chuan Poh is taking over from Mr Philip Yeo as Chairman of A*STAR next year in April. But there will be no change in our approach or emphasis or the resources we will be devoting to R&D. This remains a priority. Thirdly, we will invest in infrastructure, keep it up-to-date and relevant to industry needs because what businesses need will change year by year. The quality of the infrastructure - the power supply, the Internet access, the air links, the sea links, the whole environment which enables them to be productive without wasting their time struggling with red tape or battling with Government departments - we will keep that up-to-date and first-class. And we also will provide for our own population which grows, we hope year by year, because as we put more people into Singapore, we must make sure that they have the facilities, and land transport is one important area - new expressways and possibly new MRT lines. These are things that we are presently studying. Singapore is small, we are not just talking about above the ground, we are even talking about underground. We are planning and we will be building Jurong Rock Cavern, an underground storage facility in Jurong Island. We will excavate the rock, make caverns for storage for oil and petrochemical, and boost our position as an oil and petrochemical production and trading hub. We will also invest in our city to make it more vibrant and compelling. You have seen the plans which I presented two National Day Rallies ago. We are transforming Marina Bay. We are rejuvenating Orchard Road. And we are going to be not just a green city but a green and blue city because we will have water in the city.”
“The real reason why we have to invest in Singapore is because we believe in this place. We know it has a future, we want it to have a future, we are going to put our resources and effort into this country to make sure that it will have a future. It is an act of faith. We will save and invest today, to assure Singaporeans of a better tomorrow. How will we do this? The most important investment is in our people, human capital, which means education. It is a top priority for the Government. We spend a lot of money on education - about 4% of the GDP every year. And we will do more to provide a top-quality education in all our schools, in our ITEs, polytechnics and universities, not just at the top but across the board, in all the schools and in all the streams. So whether you are a top or an average student, whether you work with your mind and write, and whether you work with your hands, you are given the best preparation. It does not matter which path you take. We will equip every child with the skills to succeed in a fast-changing world. Secondly, we will invest in research and development (R&D) - to develop our intellectual capital and take our economy to the next level because we are not just making things based on other people's prescriptions and recipes and designs, but coming up with our own ideas with which you can create new things, new possibilities and new wealth. This requires long-term commitment and sustained funding. It cannot be turned on or turned off, spend when you have money and cut back when you do not have funding. Scientists need certainty and predictability - many years to work consistently at projects before the germ of an idea is proven, realised and developed and becomes something useful.”
“So I suggested, and I am glad that Members agreed, to lift the Standing Order which imposed this restriction and this allowed MPs to speak more effectively and to reach out to their constituents much more closely. It also helps to create a climate where our mother tongues are spoken in Singapore, not just in coffee-shops, not just at home but in Parliament where national matters of the highest importance are discussed. But remember, English remains our common working language. That has not changed and that will not change even as we make the effort to promote the use of our mother tongues in Singapore. Our future looks bright. The policies we have pursued are showing results. The economy is growing steadily, doing very well this year. Many jobs have been created. Just in the first three quarters, we had 123,000 jobs. If we just calculate, we have 36,000 babies born a year and with 123,000 jobs after three quarters, we have already overbooked our babies three-and-a-half times. But it shows how strong the economy is. Unemployment is down and the whole city is bustling with activities. So this is a backdrop against which we meet to discuss and chart our direction for the next five years. I would like to discuss four of the strategies which we are pursuing. Firstly, investing in our future. Secondly, preparing for our ageing population. Thirdly, tackling income disparity. And finally, preparing for our future needs, in other words, paying the bills. Invest in our future Our first priority is to invest in the future of Singapore because this is the way to sustain economic growth, to create jobs and opportunities and to generate the resources that we need. But that is the utilitarian reason.”
“If we can do this, Singaporeans can maintain their self-dignity and self-confidence and we will be able to carry out our long-term plans. Singapore has very strong fundamentals and we have a lot of space for our developments. If we keep going the right direction, the prospect is good and all our people will enjoy better standard of living and we will be able to sustain a competitive economy and a society which is cohesive and inclusive. * Cols. 745-748. (In English): I wish to thank all the MPs who have contributed their views and their suggestions on the President's Address and on the Addenda. We have a new Parliament with many new MPs, representing Singaporeans of all races and age groups. I welcome them to the House. I appreciate their contributions to the debate. Their maiden speeches showed that these MPs may be new, but they found their feet and they found their voices. As one PAP MP said to me, her daughter told her, "Wah, ma ma, ni bi fan dui dang yi yuan hai yao xiong." I think that is quite a compliment to the PAP MPs. I am particularly happy that many have spoken in two languages. It is a reflection of the new generation. We have bilingual MPs, we have more English-speaking voters. Previously, backbenchers were only allowed to speak in one language. They had to choose and were forced to choose. Many who could speak in their mother tongues would choose to speak in English because that is the way the debate is moving, that is the way to reach out to a big audience outside. But it would have been a loss not to have these MPs be able to speak also in their mother tongues and present themselves directly to connect with their voters and to be able to reflect the multi-cultural and multi-lingual reality of Singapore society.”
“We must have the confidence. We have to be objective and positive in looking at these questions and not sweep them under the carpet. However, we must not exaggerate the issues or problems and cause unnecessary anxiety to the people. Of course, the Opposition parties adopt a different view, because if the people are not worried, then the Opposition will be out of job. So, as the leaders of our country, we have to be objective in analysing and countering the problems in a calm manner. My colleagues and I, in the past few years, have been exploring the problems of globalisation. With this phenomenon of globalisation, we have to harness the benefits and minimise the downsides. What is the best way to do so? I will, in my speech in English, speak on two important issues. First, on the problem of the ageing population and the plans the Government has to help the elderly Singaporeans and to cope with an ageing society. Secondly, I will talk about the widening of our income gap and how the Government is going to gradually extend our safety net so as to help the less fortunate ones and those who are in need. We are now facing a new environment, so our policies and methods must not be the same as before. It cannot be exactly the same as what we did in the past. We have to adjust our policies and adjust our directions. However, we must not depend solely on the Government. The Government will provide more assistance and alleviate the impact of globalisation on our people. This is something we must and will do. At the same time, we want to help people to make a living for themselves, so that they can stand up on their own, be self-reliant and be able to support their families. This is an ideal. We have to move towards this direction.”
“If it is a good thing, we would have to counter the difficulties or problems that are brought about by globalisation. Overall, I think globalisation is a good thing for Singapore because it enables us to align ourselves with the world so that our people and companies can seize the many opportunities that are opening up. Because of globalisation, we have attracted talents from all over the world to Singapore. Because of globalisation, our economy has attracted many multi-national companies to invest here, and because of globalisation, Singaporeans can go to work and earn a living and make new waves for Singapore in Asia and other countries. Because of globalisation, our economy can grow and the standard of living of our people can be improved. Globalisation has brought us happiness, but it has also caused some misery to some because of the widening income gap. Many people feel the pressure of competition from other countries. Some feel that they have no security in their jobs and they are uncertain about their future. Many low-income people are having problems and are worried about their essential needs. They are concerned about the cost of living and their ability to afford expensive medical fees. In the past few days, our MPs have spoken on these concerns and reflected the feelings of our people. In fact, this is the duty of our MPs. We have to share the worries of the voters and solve their problems for them. But voicing their issues alone is not enough. The MPs should also lead the people to solve their problems, inspire and encourage them so that they can be more confident in the future of our country. It is not just blind confidence, but it is well-based, because we have the confidence that we can solve the problems and we can counter the difficulties.”
“This is not really because of what was written in the Lianhe Zaobao but because this is a very important debate. We are now discussing Singapore's direction for the next five years or even longer. However, I hope that we would take a pragmatic approach to this issue of language. English is our common working language. My fellow Cabinet Ministers and I are not able to make multi-lingual speeches in Parliament on every occasion. So, in future, we will decide whether or not we will speak in more than one language. Backbench Members of Parliament can of course speak more at ease. For those who are able to speak in more than one language, they could speak in other languages at the appropriate moment. I think this will bring about an atmosphere where people would speak with the mother tongues even on very serious national issues and not just for casual conversation. The language environment in Singapore is unique. In Singapore, English, Malay, Mandarin are used quite extensively. They are the languages for our everyday living. In the Indian community, some converse in Tamil and discuss matters using Tamil. I think not many countries in the world have such a very complicated and enriched language atmosphere. I think we should not lose this very unique environment because this has brought us competitive advantage and it also gives us our roots and our sense of identity. We should not lose this very precious cultural heritage and our competitive advantage. To be able to converse in many languages gives us a better chance to tackle challenges facing us with globalisation. When we talk about globalisation, many MPs also spoke on this matter and have analysed it from various perspectives. I think we have to ask one fundamental question: Is globalisation good or bad for Singapore?”
“They can help the Government to find the best possible solutions to settle the problems and keep Singapore renewing and improving. Our new generation MPs are conversant in English. However, when discussing major affairs of the nation in Parliament, apart from using English, we should also use our mother tongues. As such, in this Parliament sitting, I proposed to amend the Standing Order to lift the restriction on use of multiple languages, allowing backbench Members to speak in more than one language. Sir, at the beginning, I suggested that we amend our Standing Orders to lift the restriction on the use of multiple languages and to allow our Backbenchers to speak in two or three languages. After the motion to suspend the Standing Order was passed, our MPs immediately took advantage of the change and began making their maiden speeches in two languages. Bilingual speeches make the debate in Parliament livelier and more exciting. We have achieved our objective. The MPs can reach out to their voters, particularly the older voters, because when the proceedings in Parliament are telecast over TV, the voters can see their own MPs speaking in Malay, Mandarin or Tamil, which they can listen to directly and understand what the MPs are saying without having to listen to a translation. Of course, the MPs have to work harder and the Ministers must also work harder. Last Friday, there was an article in Lianhe Zaobao which said that the people were now paying attention to the Prime Minister and his Cabinet Ministers, to see if they would reply in more than one language too. They were looking forward to see if the Ministers would reply in two languages or even three languages. Therefore, I have decided to speak in three languages today!”
“As a nation we have done well. Our economy is vibrant. However, we cannot remain static. The world is changing quickly, and so is our society. Globalisation affects us directly and powerfully. It will open many opportunities and at the same time bring many challenges. Economic growth and job creation will remain an important focus of my Government. In general, incomes of Singaporeans have continued to rise, but the income gap has widened. Unskilled and less educated workers continue to be at high risk. We need to overcome this challenge. We should not hold back those who are doing well. But we will continue to help those who are unable to adjust to the new realities. We also need to face the challenges of an aging population. I will explain in my speech in English what we need to do. My Government will prepare new programmes to meet our social needs. But Singaporeans should not depend on the Government to do all that is necessary. Instead, each of us must make the effort to improve our lives, to be self-reliant and enterprising. Then together we can create prosperity for ourselves, our families and our nation. I will now continue my speech in Mandarin. * Cols. 741-744. (In Mandarin): [For vernacular speech, please refer to Appendix A *.] Mr Speaker, Sir, this debate on the President's Address has deep significance. This is because Singapore is now at a critical moment. We are facing new and rather severe challenges. We are at a crossroads, and we have to make important decisions. These decisions will bring about deep impacts. Many MPs have contributed their suggestions and spoken passionately about issues they feel strongly about. Their views are valuable.”
“[For vernacular speech, please refer to Appendix A *. ] Mr Speaker, Sir, I welcome the many contributions by Members of Parliament during this debate. The Members have spoken from the heart. They have voiced the concerns of the people of Singapore and given their own views to further move the nation forward. During this debate, Members of Parliament were allowed to speak in more than one language. Some spoke in both English and Mandarin, while others spoke in both English and Malay, and there was also a Member who spoke in English and Tamil. Many of our new Members and a number of the not-so-new Members are bilingual. They belong to the new generation who have been educated in both English and their mother tongues. This is an important debate. Parliament is meeting for the first time since the last general election. We are setting the direction for the country for at least the next five years. It is therefore appropriate that many MPs spoke in their mother tongues. This way, they can connect better with a broader cross-section of Singaporeans and with their voters. English will remain our main language of business and communication. But when the occasion and the topic warrant it, the speeches of the MPs in English and their own languages will be more effective for the people of Singapore. I hope this will help to create a climate in Singapore where Malay is used, not just casually, but to discuss serious issues. The Malay language is an important cultural heritage which we must keep alive. Also because we live in the Malay Archipelago, our leaders and those in business should understand our neighbours, and communicate with them in Malay or Bahasa Indonesia. This will help us to reach out to our neighbours and help Singapore to thrive and prosper in peace.”
“This project is in line with our commitment to collaborate with our ASEAN neighbours and Australia, to work in the best interests of children, in particular the more vulnerable ones. Let me assure Dr Khor that we will be completing our Penal Code review within this year. We will also carry out a public consultation exercise when the review is completed. FOREIGN WORKERS (Rental of HDB flats) 3. Assoc. Prof. Ong Soh Khim asked the Minister for National Development (a) what are the regulations with respect to rental of entire HDB flats to foreign workers; (b) if any quotas are maintained with regard to the percentage of units in a block of flats that can be rented out; and (c) what are the measures, if any, to prevent HDB flats from being exploited and used as hostels for foreign workers.”
“Dr Amy Khor Lean Suan asked the Deputy Prime Minister and Minister for Home Affairs (a) when will the review of the Penal Code be completed; (b) if he will update the House on whether tougher laws against sex with minors, including extra-territorial laws for such offences, will be implemented; and (c) what further actions, if any, are being taken to deter child sex offences both locally and overseas. Mr Wong Kan Seng: Sir, I had explained in the House before that the review of the Penal Code was prolonged because it is a very important piece of legislation and we want to be as thorough as possible in reviewing it. I also recently informed the House that the Government has decided to amend our laws to extend extra-territorial jurisdiction over our nationals who sexually exploit minors overseas. This is intended to deter our nationals from preying on minors in other countries by denying them a safe haven through enacting legislation with extra-territorial effect. The measures against child sex tourism will be introduced as part of the legislative changes that we will make once we have completed the review of the Penal Code. Dr Khor would be pleased to know that MCYS, together with MHA and the Singapore Tourism Board, have been working closely to operationalise our commitment to the Regional Education Campaign, which is spearheaded by ChildWise Tourism, an Australian-based NGO working in tourism destinations where child sex tourism exists or is emerging. As part of the Regional Education Campaign, flyers against child sex tourism were distributed at the National Association of Travel Agents Singapore Fair held last month, to educate the public to help act against child sex tourists.”
“IRAS' operating expenditure in FY2004 has increased to $183.3 million in FY2004 - from $166.6 million in FY2003 and $164.6 million in FY2002. But this increase is related to a one-time investment in a new information system called the Inland Revenue Interactive Network (IRIN). It replaces the previous system which has outlived its useful lifespan and needs to be replaced due to technological obsolescence. IRIN will help improve IRAS' tax processing capabilities and provide a wider range of e-services for taxpayers. With IRIN, taxpayers including companies and GST traders will be able to enjoy a comprehensive suite of transactional, enquiry and account management e-services at their personalised tax portals. As IRIN is a major project, it is being implemented over four years. During the transition from the previous system to IRIN, IRAS has had to incur additional expenses in maintaining and operating the old system as IRIN is being developed and phased in. This means extra manpower and operating costs during the transition period until the previous system is fully retired in 2006. The introduction of IRIN has made necessary not just higher once-off costs in computer services but also in staff costs during the period of development. As fewer staff are required to operate IRIN, IRAS released about 120 staff under the Staff Early Release Scheme at the end of FY2004. The once-off compensation payout to these staff added to the staff-related costs that year. When IRIN is fully implemented, IRAS expects to exploit its full potential to achieve a quantum leap in operational efficiency and enhance its taxpayer service. SEX WITH MINORS (Tougher laws) 2.”
“In 2005, 53% of PSC scholars came from households with monthly incomes above $5,000 while 47% came from households with monthly incomes below $5,000. Based on the 2004 Labour Force Survey, 37% of Singapore households had monthly incomes above $5,000 and 63% had monthly incomes below $5,000. In 2005, 47% of PSC scholars came from families who lived in private housing. Based on the 2004 Labour Force Survey, 15% of all households lived in private housing. HOUSING MOBILITY STUDY 27. Assoc. Prof. Ong Soh Khim asked the Minister for National Development in light of the recent 1995-2005 housing mobility study by the Department of Statistics (a) what is the percentage of housing shifts which occurred during each year for (i) the first 5-year period of the study when the residential property price indices were relatively higher; (ii) the later 5-year period of the study when the unemployment rates were higher; and (b) if there are any correlations between housing mobility and residential property price indices and unemployment rates.”
“Temasek Holdings has a comprehensive risk management framework to guide its investments. This framework addresses all major categories of investment risk, including market risk, credit risk, regulatory risk, operational risk and political risk. Like any professional investor, Temasek will weigh these risks and take up investment opportunities only if the expected returns are commensurate with these risks and meet its investment objectives. This applies to all of Temasek’s investments, including Shin Corp. Temasek invested in Shin Corp because it saw value in the investment. Temasek has a positive outlook for the region and the communications sector. Shin Corp is a strong player in the Thai market with a capable management team. As shareholder, the Government’s role is to ensure that Temasek has in place a competent board of directors to guide its investments and a clear set of processes to ensure accountability and rigour in its investment decisions. The Government holds Temasek accountable for delivering a good rate of return on the overall investment portfolio. As we have stated in this House before, it is not in Government’s interest to approve individual investments by Temasek, nor to second guess Temasek’s risk assessments. These are business decisions for Temasek to take. INTELLECTUAL PROPERTY OFFICE OF SINGAPORE (IPOS) (Boosting of IP development and patent applications) 20. Dr Tan Sze Wee asked the Deputy Prime Minister and Minister for Law what is the Intellectual Property Office of Singapore (IPOS) doing to boost intellectual property development and to encourage more patent applications in Singapore beyond the current levels, when the number of patents filed were 7,884 in 2003, 8,266 in 2004 and 8,260 in 2005 respectively.”
“Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. ACKNOWLEDGEMENT TO THE CHAIR”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In accordance with Article 148(1) of the Constitution, Heads of Expenditure to be met from the Consolidated Fund and Development Fund, other than statutory expenditure, have to be included in a Bill to be known as the Supply Bill. The purpose of the Supply Bill before Members is therefore to give legislative approval for the appropriations from the Consolidated Fund and Development Fund to meet expenditure in the Financial Year, 1st April 2006 to 31st March 2007. The Heads of Expenditure and the sums that may be incurred in respect of each head are shown in the Schedule to the Bill. These have been approved by the House in the Main and Development Estimates of Expenditure for the Financial Year, 1st April 2006 to 31st March 2007, as amended and contained in Paper Command No. 3 of 2006. The Supply Bill, when approved, will empower me to issue warrants authorising expenditure up to the amount for each head as shown in the Bill to be paid out from the Consolidated Fund and Development Fund. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Sir, I beg to report that the Committee of Supply have come to certain resolutions. First Resolution reported "That the sum of $31,040,325,410 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Main Estimates for the financial year 1st April, 2006 to 31st March, 2007 (as amended), contained in Paper Cmd. 3 of 2006." Second Resolution reported "That the sum of $12,143,342,000 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Development Estimates for the financial year 1st April, 2006 to 31st March, 2007, contained in Paper Cmd. 3 of 2006." Mr Lee Hsien Loong: Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions." Question put, and agreed to. Resolutions accordingly agreed to. SUPPLEMENTARY SUPPLY (FY 2005) BILL Order for Second and Third Readings read. The Second Minister for Finance (Mr Raymond Lim Siang Keat): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to make provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act 2005. The additional sums have been presented as Supplementary Estimates, which have been considered and approved by the House as Command Paper No. 2 of 2006. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Ministers who hold multiple portfolios do not receive multiple salaries. They receive only one salary based on the salary grade they are at as decided by the Prime Minister. The Ministry of Finance publishes the budgeted expenditure on manpower for political appointment holders in each Ministry in the Budget book annually. The Ministry does not intend to disclose the salaries of individual Cabinet Ministers. The framework for setting Ministerial salaries and the salary benchmarks were debated openly in Parliament when they were first formulated in 1994, and again in 2000 when they were revised. Revisions to Ministers' salaries and key changes arising from private sector salary trends (such as salary cuts and restorations) have also been made public. The formula for the Ministerial salary benchmark has remained unchanged since the last revision in 2000. The benchmark is pegged to two-thirds of the income of the 24th highest earner (median) among a group comprising the top eight earners from the six professions (bankers, accountants, engineers, lawyers, MNCs, local manufacturers). Ministers took the lead by taking wage cuts in November 2001 and July 2003, following the economic downturn during those periods. These cuts have been restored in two steps in July 2004 and January 2005, along with those for the civil service, to the pre-November 2001 levels (prior to wage cuts). Notwithstanding the restoration of the cuts, Ministerial salaries have lagged behind the salary benchmarks compared to the year 2000. APPENDICES”
“Mr Speaker, Sir, first of all, Mr Low Thia Khiang asks: unconditional needs-based versus what? It is versus what we have been doing, where we have many helping hands. We have ComCare, S&C, U-Save and Progress Package. We have many schemes to address problems according to their needs. But unconditional needs-based, that you will all be entitled, do not be afraid to put your hand out. This is something which should have been debated during the debate, when he made his speech, instead of scoring political points. Then we can discuss whether it is wise or unwise, how he raises it. Well, there will be further opportunities for him to do so, I assure him, before the General Election. As for funding being thin, let me tell Mr Low that every self-respecting Finance Minister has more than one bottom card and I have not shown him all of my cards yet. On Mr Steve Chia's land sale, this is the principle in the White Paper which is settled between the Government and the President, and it has been tabled. It is not an arbitrary arrangement. Land is a form of asset. So when you transform one asset into another, you are not earning something, you are just changing from land to the equivalent amount of money. The money can come back and become land. So land is locked up, therefore, the money is locked up. This is a straightforward matter. There is no monkey business or anything strange about it. Question put, and agreed to. Resolved, That Parliament approves the financial policy of the Government for the financial year 1st April, 2006 to 31st March, 2007.”
“He should have said this in the debate, not now.”
“And so jobs have been created - 111,000 last year. If you look at university graduates, last year 92% got employed within six months of final examinations. Polytechnic students - 91% found jobs within six months of final examinations. So overall, I am confident we are on the right path. Our strategy of competitiveness and cohesion is the right approach for taking us into the future.”
“So when asked how she would use her family's share of the Progress Package, she said she would save the money for the education of her two young children, aged five and six, as the road ahead is still long for them. So, not everybody is buying 4D. These are the stories which give you heart and hope, and convince me that we are doing the right thing for Singaporeans. Ultimately, we can only help Singaporeans if we can continue to grow the economy. Therefore this Budget also focuses on attracting investments to grow the economy, and to create jobs. The incentives and the measures we have put in place in this Budget and in previous years are beginning to bear fruit. We have seen good growth in a wide range of areas and let me just cite you a few. In transport engineering, we have become the largest and most comprehensive centre in Asia for the provision of aerospace maintenance, repair and overhaul services (MRO) - that means aeroplane engines being serviced and overhauled in Singapore. Our shipyards build 70% of the world's oil rigs and platforms and their order books are full for the next five years. We are competitive. In retail trade, wholesale and retail trade has been growing double digits in the last three years. I know HDB shops are still having some difficulty and MND has been helping to tackle some of their problems, but overall, the retail sales have been doing well and even provision and sundry shops in 2005 did better - went up by 8.6% compared to 2004. In financial services and wealth management, we have had double-digit growth over the past five years - assets under management reaching $570 billion by end 2004. Each time I meet them, I ask them how well are you doing? They say "Sshhh", do not tell anybody, but they are doing alright.”
“He became a landscaping technician. Starting pay, $1,150 just February last year. He did well. After four months, he got a raise to $1,300 and last December he was promoted to supervisory position. Now, he earns $1,500 a month and oversees the work of a four-man team at Marina City Park. So it is a small programme to assist the person, but it has helped him to make good in his life. The other recipients all had stories to tell and were proud of themselves, and I think that is the way we should help people. It shows us that as long as we believe in our workers, and people believe in themselves, it is possible for them to move up the job ladder, earn higher salaries, and live better lives. With the Progress Package, we will provide much needed help for the lower-income. So after I announced the Budget, the newspapers went and looked for specific cases to see how it affected people's lives. Shin Min Daily reported one odd job worker, Huang Qichang, who lives in a three-room flat with his wife and two daughters. The family will get Growth Dividends ($800 each husband and wife), Workfare Bonus for him ($600), NSmen's bonus for him (he had two daughters, so only for him, $400), U-Save rebate because three-room flat ($100); adds up to $2,700. He told the papers that he will use the money to pay off his outstanding bills. His daughters currently have to go to their classmates' houses to use computers to do their school assignments, so with money from the Progress Package, he is going to buy a study table and a new computer for his daughters. And there was another example in Lianhe Zaobao, a 32-year-old lady, Wang Suyan and her family. She earns $300-$400. She just works part-time as a coffee shop assistant. Husband is a factory technician, monthly income less than $1,500.”
“There will be other unique circumstances which we have not anticipated, but it is not possible to have rules that cater to all of these. Otherwise, it will be a whole book. So, those with genuine cases can appeal to the grassroots advisers who will take up the matter with the CPF Board. We will continue to work through the mass media to inform all Singaporeans about the Progress Package, but we will pay special attention to those who need additional help to sign up. We will enlist the help of grassroots leaders to reach out to residents staying in one and two-room flats. We will also be working with the welfare and nursing homes, community hospitals and even prisons to help the residents get the Progress Package. Our approach is working Mr Speaker, Sir, I believe that overall, our approach of targeting help at the most needy and those willing to help themselves is working. People who are in genuine need have benefited and have got useful help. Under the Job Re-creation Programme, which is spearheaded by NTUC and WDA, the tripartite partners from 13 sectors have come together to re-create jobs and retrain job seekers. Last Friday, I went to DXO. It is a disco, but there was no music. This was just a Job Re-creation Programme Awards Night. Mr Lim Swee Say invited me. I gave awards, among other things, to 15 JRP participants, workers, and I spoke to them all after that. I was very impressed and moved by their commitment. One of them is Mr Arumugam s/o Ramalingam. He is 45. He had a business failure back in 1997, and he was declared bankrupt. He worked for a cleaning company for five years - he got retrenched in May 2004. But he did not lose hope. He did not give up. He took up a National Skills Recognition Scheme course in landscape maintenance.”
“So, the first thing is - do not worry, the administration is simple. Second, the conditions are simple and fair. Mr Ang Mong Seng, Dr Teo Ho Pin, Dr Warren Lee and some members of the public have asked why we have not used property ownership instead of place of residence for the Growth Dividends and CPF top ups, because you could be living in your parents' or relatives' home. I agree that the proxy of the residential address is not quite perfect, but generally speaking, those people living in higher-value homes will have more resources to call on even if they do not own the place they live in. If we tried to determine the person's exact wealth or the wealth of the household per capita, it will be complex and intrusive, and I think Singaporeans will resent that. If there is some inequity, or maybe a few people benefit more than they needed to, we have to take the rough with the smooth. The Workfare Bonus has the condition that one must work at least six continuous months in each year to qualify for the Workfare Bonus. Many MPs, including Mdm Halimah, have asked us to clarify this because sometimes a person may be unemployed for a short time, between jobs or some other reason, in spite of him making the effort to stay continuously employed. Over the past week, we have also heard from some low-wage Singaporeans. So, we have reviewed this and decided to be flexible. We will allow exceptions for those who have worked for at least half a year to also qualify for the bonus, even if their employment period had a break in it. Let me also clarify that it does not matter if you switch from full-time to part-time or contract work. What we ask for is that you work for six months - effort from individuals to work regularly and to help yourselves.”
“I cannot do that unless I know in detail everybody's life, how the household is structured, what your finances are, and what your background circumstances are. But, we try to be roughly fair, and over time, with the range of packages, taking all our policies together, I think generally we have been fair to all. Implementation of Progress Package - fair and simple Now let me deal with some of the queries on the details of the Progress Package. First, do not be anxious about the need to sign up. Most Singaporeans only have to be patient and wait for the letters to come. The letters will tell you exactly how much you will be getting, then just sign up from 1st April if you want to receive it on 1st May. But even if you are a little bit late, we will keep the window open until the end of the year. Let us know whether you want us to credit your bank account or you want the cheque in the mail. There is no need to put in $50 in your CPF account this time, but in future we will think about it. Only those who meet the age, income and housing criteria for the Workfare Bonus but do not have CPF contributions and have not received a tax return, they are the ones who should fill in a Workfare Bonus scheme income declaration form by 1st April. It is a serious declaration. It is an IRAS form. There are serious consequences if it is not properly filled. Please declare honestly what you have earned and we will work on that basis. I also welcome Mr Chew Heng Ching's and Mdm Ho Geok Choo's suggestions that better-off Singaporeans may want to donate their Progress Package to others because they may not need the money. They can do so. We have arranged for this. When they sign up online, they can donate to a list of available charities.”
“Ivan Png and Dr Ong Seh Hong have suggested we could have taken a more broad-based approach and provided more to the 'asset-rich, cash-poor' group, younger lower-wage workers in their 30s, housewives and so on. I recognise that these are all groups which have some claim. The Progress Package recognises the contributions of all Singaporeans. Every adult Singaporean will receive at least $200 of Growth Dividends and many Singaporeans will receive more. But, we have to set priorities to make the most of the package and to send a clear message on what our focus is. This Progress Package is weighted towards poorer Singaporeans and lower-income workers. For the Workfare Bonus, we have focused on the older lower-wage workers because they are more vulnerable in terms of employment, security of jobs, and their income. Our aim is to make sure that nobody is left behind when we restructure and upgrade the economy. I think the message has got through. The New Paper reported one housewife, Madam Kwan Yoke Kuan, who said that looking after the older lower-income group is more important. This, I think, sums up the sentiment of many Singaporeans. Over the past week, I have received many emails too from people who agree with the Budget's focus of targeting help for those who are lower-income and most in need. I should also like to urge Members to look at this package not by itself but in the context of the many other things which the Government has done and the many other packages which we have introduced over the years. As I explained just now, we've spent more than $10 billion, including this Progress Package, since 2001 on various assistance measures. It is not possible to be absolutely fair to every group every time.”
“He explains why a legal minimum wage is also not a sensible approach. He says Europe's welfare system based on replacement incomes and minimum wages will not survive globalisation. Because, if you go for minimum wages, you are actually pricing yourself out of the market. You are encouraging other people to come in to work - to take the work away. You will not survive globalisation and there is no way to turn back the tide of history. So what does he propose? He proposes wage supplements, which means paying people to work - the way we are doing Workfare. He says even wage supplements is expensive, because you have to pay everybody - you have to pay all those who are working and not just those who are not working. But he thinks if you do the sums, it probably will be less expensive than going for unemployment benefits and minimum wages. I think the most important thing is, whether we call it wage supplements or Workfare, we are encouraging people to work, we are encouraging people to take care of themselves, and we are ensuring that they have a reasonable standard of living. At the same time, we let the market do its work so the economy can restructure, can grow, and in time they will upgrade, retrain and be able to do better for themselves. The Progress Package Targeted approach Now, let me talk about the Progress Package. When there are budget surpluses, we have periodically shared the fruits of growth with Singaporeans and that is what the Progress Package does. But there is a key difference. With the Progress Package, we are taking a more targeted approach. There is more for the older workers and for the lower-income group most affected by economic restructuring. More for the elderly most worried about medical and retirement needs. Some MPs like Ms Irene Ng, Prof.”
“We can improve it but it is a scheme which has worked out and people have accrued retrenchment benefit rights which are very important - as I am sure Mdm Halimah will confirm. If it is going to be on top of the present system, is it wise to have double provision for unemployment protection at additional cost and with additional negative side-effects? What are these side-effects? Straits Times today had a timely article: "How the next welfare state must work?" It is an article from the Ifo Institute for Economic Research in Munich and it is by the Director, Prof. Hans-Werner Sinn, who is an eminent economist. The research institute is a well-respected European, German, think-tank. They produce Ifo Business Surveys which track how the European economy is going. Their article today says how the next welfare state must work and what is wrong with the present welfare state. I read from the article: "In Western Europe, the welfare state helps these people by paying replacement incomes in the form of social aid, unemployment benefits or early retirement benefits". Unemployment benefits - so it gives you replacement income. In other words, if the market does not provide you with a sufficient income from your labour, the state will provide an income without requiring you to work - which is what unemployment insurance is about. He goes on to say: "As humane as this policy is meant to be, it is largely responsible for the mass unemployment from which Europe suffers. The reason is simple - replacement incomes are wages for doing nothing." Then he goes on to explain this is an old problem but it is worse now because of China and India, and now wages have to adjust. So, another way European companies have tried to fix this is with a legal minimum wage, to prevent wages from falling.”
“Who is to pay for this unemployment insurance? If you raise employee contributions to CPF, then you reduce workers' take home pay. Are you prepared to do that? If you raise employer contributions, then you are going to increase business costs and lower competitiveness. In fact, since the ERC recommendations, we have been working hard to adjust the CPF contribution rate to be at a sustainable level to lower cost and yet have enough for retirement requirements, for housing requirements, and for medical requirements. Quite a number of MPs, including Ms Penny Low and others, have pointed out that we must make sure that we have enough money for retirement. Every additional item you take out of the CPF means $1 less from somewhere, from retirement needs or from housing needs. You might say: Decide the principle, then we can figure out how to do it later on. But I think we have to look at the practicality and the practicality is: who is to pay for this? Also in Singapore, most workers already have some form of retrenchment protection. MOM did a survey two years ago in 2004 - 96% of private sector establishments with at least 25 employees paid retrenchment benefits to their local employees who had at least three years of service. So there is already some kind of unemployment protection which is in the retrenchment benefits scheme. If you are going to introduce a new layer of unemployment insurance, is it going to be on top of retrenchment benefits or in lieu of retrenchment benefits? I think you have to consider carefully because if it is in lieu of retrenchment benefits, you have to take away a well-established scheme which is more or less working.”
“Nobody over-declares when you pay income tax but when you claim negative income tax, over-declaration can be a significant problem. But, however this Workfare idea evolves, we must never allow it to expand into a permanent needs-based welfare scheme that is not conditional on work. Because that is the way to financial ruin and worse still, as many MPs have pointed out - Dr Amy Khor, Dr Chong Weng Chiew, Dr Wang Kai Yuen and Dr Tan Boon Wan - it will breed a crutch mentality. Alternative suggestions for helping vulnerable workers Some have suggested a few other ways to help vulnerable workers. One is to have tax incentives for companies to hire older workers. It is possible but I am not in favour. I will tell you why. A tax incentive is, in principle, no different from a Workfare Bonus which is paid directly to the workers, except for this - it goes through the company and the company has to make a profit before it can take advantage of the tax incentive. I would rather pay this directly to the worker. Also, if I make a tax incentive which extends to all older workers and not just the older lower-income workers, then there will be a lot of deadweight loss because I will be granting tax exemption on many people who really do not need the tax incentive. It is more straightforward to give a direct grant to workers, like through this bonus. In fact, that is how other countries which have earned income incentives do it - direct payments. Mr Inderjit Singh suggested providing more retrenchment protection through increasing compulsory CPF savings or having a national unemployment insurance scheme. It is also one of the items in the Workers' Party manifesto. The same question applies to both - which is, who is to pay for this protection?”
“$20,000 is equivalent to 20% of the selling price of a three-room flat, and an even bigger proportion of the selling price of the two-room flats which HDB will be building. So, we have made one very big move on the additional CPF housing grant, which is permanent, and which is targeted at the lower-income groups. The Workfare Bonus marks a significant step because it provides low-wage workers with a cash bonus. If you work, you get the cash bonus at the end of the year, twice - this year based on 2005 work, next year based on 2006 work. It is a once-off scheme because this is the first time we are doing it. Payments will be for two years. We should experiment and gain experience with the scheme first, before considering whether we need a more permanent work-based assistance scheme like this, and if so, what form it should take. With once-off schemes, we can afford to make mistakes. But with a permanent scheme, mistakes will be much harder to reverse and we have to be mindful of unintended consequences. Will a scheme like this cause employers to push wages down permanently? Will it reduce the incentive to upgrade to a higher paying job? How do we deal with a problem, which Mr Chiam talked about, where somebody works hard, goes from $1,200 to $2,500 doing overtime and then, as a result, falls out of the net and does not qualify? To some extent, that is unavoidable but how steeply do you want the bonus to tail off with income so that for each extra dollar of work, it is still worth your while to go for that extra dollar? This is the sort of problem we have to watch out for and study. How complex will the Workfare scheme be to administer? How do we prevent people from over-claiming?”
“Dr John Chen and Mr Zainudin Nordin talked about the need for systematic and sustained measures and also asked whether we could make the Workfare Bonus permanent to help the lower-income and unemployed in the longer term. I agree that sustained measures are needed. Indeed, most of the key Workfare measures are permanent and address structural issues. We are providing more social support for low-income families so that parents can go out to work. We are expanding job opportunities through job redesign and equipping individuals with higher skills for better jobs. WDA is expecting to spend a lot of money - $140 million per year over the next three years on training and re-creating jobs, and we are investing heavily in education. I agree completely with MPs - Dr Lily Neo, Mr Arthur Fong, Mr Ong Ah Heng, Ms Eunice Olsen - who said that it is important to concentrate on children of lower-income families so that they can, in turn, help to lift their families out of poverty. We have a comprehensive approach that includes early intervention, making sure that education is affordable to all, reducing school dropout rates and strengthening vocational training pathways. The Opportunity Funds support our commitment to help these children. Financial support for workers There are two key financial measures to encourage work. One is the additional CPF Housing Grant, and the other is the Workfare Bonus. The additional CPF Housing Grant is a permanent scheme, consistent with our policy of helping Singaporeans to be homeowners. It will help provide lower-income HDB first-timers with a significant sum for buyers to own their homes - a significant sum over and above the subsidy which all HDB buyers already enjoy.”
“At the same time, we have to provide the help in a way that encourages recipients to make the effort to work, not to free-ride on state support, to target the areas where the needs are greatest, to involve the community and the grassroots network and leaders, and to maintain fiscal discipline and responsibility. Workfare, not welfare The key principle was set out by Ng Eng Hen's Committee on Low Wage Workers - Workfare, not welfare. Because, the best way to help people is to help them re-train and find work, so that they can take care of themselves and their families. This is something which many MPs have said in different ways over the last few days. Long-term measures to help workers Dr Amy Khor asked whether we can find sufficient jobs for all those willing and able to work. There are many jobs. Last year alone, we created 111,000 jobs. Job vacancies in the private sector, just in establishments with at least 25 employees, rose to a four-and-a-half year high of 20,000 in September 2005. But, many of the jobs created are at the higher end. Nearly half the job vacancies require at least an upper-secondary qualification, which is not surprising because this reflects our economic restructuring. So, while there are jobs available, the workers who are unemployed will need the skills and qualifications in order to take up these jobs. That is why we have many initiatives like the Workforce Skills Qualifications System to help them to do so. At the same time, NTUC is working with WDA to step up the Job Re-creation Programme and to re-create 10,000 jobs a year.”
“A typical low-income household would have received more than $11,000 in total from all these schemes. This, not counting the Progress Package. Furthermore, Mr Low has had nothing to say about the substance of the Progress Package, unlike, for example, Mr Chiam See Tong, who has gone through and has pointed out some issues with implementation, particularly with the Workfare Bonus. Indeed, Mr Low had nothing to say about his alternative propositions as to how the Workers' Party proposes to take Singapore forward and to help low-income Singaporeans - nothing. It only shows that he is really not interested in whether Singaporeans are getting the help they need. He is only interested in scoring political points. The underlying principle that must continue to guide this Government is fiscal prudence. Every term of the Government must live within its means and the Budget must be in overall balance over the economic cycle, and that is what guides this Government. Moving forward together Economic growth is a basic pre-condition to raise living standards across the board. But incomes will get stretched out as we restructure the economy and as globalisation hits us. Older workers and lower-income groups will face particular difficulties. So we have to augment our broad-based approach with more targeted help. Deliver the fruits of growth to every citizen, especially the older workers and lower-income groups who need the most help. Ensure that nobody is left behind and left out.”
“The safeguard ensures that our past reserves are protected and politicians will not make free with them in order to win popularity. But the Workers' Party advocates that we abolish the Elected Presidency and remove the Second Key. That is why I believe that the Opposition's approach and the Workers' Party's approach is fiscally irresponsible. Mr Low Thia Khiang's memory also seems to have been selective. He claims we are not spending enough for Singaporeans who need help. But, he has forgotten. During downturns, we have provided assistance to Singaporeans who have difficulties coping. Mr Low said that after giving out the New Singapore Shares and holding elections in 2001, we pushed up the GST rate. Yes, we did. But what we also did, which he forgot to mention is that before we raised the GST, we provided $2.7 billion worth of Economic Restructuring Shares to help Singaporeans cope. So the GST was completely buffered by the Economic Restructuring Shares, and the New Singapore Shares is a completely different package, a clean benefit which all Singaporeans enjoy. So to say that the New Singapore Shares resulted in the GST after the elections is as they say in Latin "suppressio veri suggestio falsi" (by suppressing the truth you suggest a falsehood). Mr Low also said we have not done enough to help the poor on a consistent basis, and our help is only once in five years. Since 2001, this Government has spent about $7.8 billion in total for a variety of assistance measures not counting this Progress Package. This includes the New Singapore Shares in 2001, the ERS from 2002 to 2004, the CPF Top-Ups from 2004 to 2006, U-Save, Service and Conservancy Charges and Rental Rebates, and so on.”
“These land sales add up to more $10 billion, but they are locked up, as past reserves, and cannot be touched because this is not new money. It is not earned, it is not capital gains, it is just transformation of a piece of land into cash, transformation of one asset into the other. The land has been locked up, so the cash proceeds are also locked up. This was Today's mistake. Mr Steve Chia also made this mistake but I believe he must have made some other mistakes in order to reach such a huge number. Fiscal sustainability Mr Low Thia Khiang asked why it is okay for the Government to incur a deficit of $2.9 billion and yet when the opposition suggests increasing expenditure on education and healthcare, we say it is fiscally irresponsible - which it is. The reason is that the Workers' Party proposes to spend regardless of whether we can afford it on a sustained basis. To quote the Workers' Party Manifesto, it talks about "an unconditional needs-based welfare safety net". In contrast, this Government lives within its means without neglecting its obligations to lower-income Singaporeans. Regular expenditures are funded by regular revenues and not irregular capital receipts. I had explained earlier that the Progress Package does not draw on past reserves and will not impose an ongoing fiscal burden on taxpayers. Mr Steve Chia's speech yesterday shows vividly where the Opposition's approach will lead. He wants to raid the bank. He proposed cutting all sorts of taxes and fees; just declare that Christmas has arrived. Or as Zaobao says "zuo chi shan kong" (sit and eat until the mountain is empty); it is precisely this kind of free spending which the Constitution and the Elected President have been designed to prevent.”
“The amount was computed because it was a changeover year, and it was computed in accordance with the Apportionment Rules between the outgoing and the incoming government as laid out in the White Paper on the protection of reserves. The Government also received $2.45 billion over FY2002 till FY2005 in capital receipts from statutory boards which were returning capital in excess of their needs. On the other hand, if you total up the budget surpluses and deficits between FY2002 and FY2006, including $3.59 billion of Special Transfers in 2006, the net cumulative Overall Budget Deficit is $4.23 billion. So, just taking the $2.51 billion that the current government got in FY2001 plus the $2.45 billion in capital receipts from statutory boards - that adds up to $4.96 billion - we can comfortably fund the $4.23 billion net cumulative Overall Budget Deficit from FY2002 to FY2006. So, we have enough funds with some left over. But let us not exaggerate. Today reported on 24th February that the Government is able to draw on capital receipts from statutory boards in the current term and such receipts raked in $13.42 billion between the fiscal years 2002 and 2005. Mr Steve Chia yesterday further inflated this figure to $19 billion. Mr Steve Chia says that he is misled and that the people are misled by the Government. But actually it is Mr Steve Chia who is misleading all of us because these numbers are all incorrect. We do not have $13.42 billion of capital receipts to draw on as reported by Today, let alone $19 billion as claimed by Mr Steve Chia. Let me explain. Today's main error is to treat capital receipts from the sale of Government land as money we can spend.”
“First, we provided the ERS (to offset the GST increase) which was $2.7 billion. Later on, we deferred part of the GST increase, staggering it, first 3% to 4%, then 4% to 5% - the deferral cost $600 million-$700 million. It is big money. And now, we are having this Progress Package. Going forward, we are not likely to have the same combination of events. Nevertheless, the position will be fairly tight and we must continue to be vigilant and focused. There seems to be some confusion about how we will fund the Special Transfers of $3.59 billion for FY2006, judging from the media and analysts' reports on the Budget, and also from what has been said in this House. As I stated in the Budget Statement, we have some funds which accrued to the current Government when it took office in 2001, as well as some capital receipts from our statutory boards during the term of this Government. We do not reflect these capital receipts in the overall budget position because despite what Mr Steve Chia said, they are irregular, lumpy and uncertain sources of funds. Over the last 10 years, these capital receipts have fluctuated between $30 million at the lowest to a few billion dollars at the highest. If we had included them, it would have overstated the amount of regular revenue we have on a year-to-year basis with which to fund our regular expenditures. But these capital receipts remain available to the Government to spend within its term, without drawing on past reserves. Taking them together with the funds from the changeover of year 2001, we have enough to pay for the Special Transfers without drawing on past reserves. Let me just go through some of the numbers. We started off the current term in 2001 with $2.51 billion of funds accruing to the incoming government.”
“And Mr Ong Kian Min had asked if we should have been more tight-fisted and withheld some of the generous cash give-aways. It is good that Members are looking beyond this Budget to these issues of long-term growth and fiscal sustainability. But let me assure Members that this Budget will not strain our long-term fiscal position. First, the size of the Progress Package, $2.6 billion, is not large compared to that of the New Singapore Shares which was $2.5 billion and Economic Restructuring Shares which was $2.7 billion. So it does not imply unprecedented generosity as mentioned by Dr Amy Khor. However, because we have become more targeted in our approach, older, lower-income households can expect to receive more this time and the impact on them will be more significant. Second, our Progress Package is not a permanent programme. It is once-off. We are not promising this every year or every five years or every so many years. It is once-off, needed this time because we are restructuring, because the economy has turned good, and yet we know that there are some segments of the population needing help. So, a Progress Package is justified. Also, our transfers to the Endowment Funds, which Prof. Ivan Png mentioned, are accounted for conservatively. Prof. Png suggested that the Overall Budget Position should be calculated based on actual expenditures rather than the total transfers to these funds. This is a plausible accounting treatment, but we have chosen a more conservative approach in line with our principle of fiscal prudence. Going forward, our fiscal position is sustainable. In this term, it has been tighter than we expected and tighter than before. Several reasons - because there was a slow economy in 2002 and 2003 and we have had two major packages.”
“I do not think a contract obligation stipulated by the Government as the buyer of the contract will solve this problem, because really it is a legal obligation that the vendor pays its workers, pays the CPF, meets all the legal rules which he has to meet. Anybody who does business with the Government, or with anybody else, is expected to do that. If they do not, there will be penalties. From time to time, employees complained that they have not been given their pay. In such cases, if they have missed out on the rightful employment benefits, they should seek the union's advice or they should approach MOM for help. Specifically on the change on headcount arising from the MMF, Mr Chay Wai Chuen has questioned the apparent increase in the public service headcount despite the MMF. May I clarify that the increase which he saw in manpower in the FY2006 Budget - 1.6% increase in the headcount - is actually an increase in the establishment posts and not the actual headcount, because often the establishment posts are left unchanged for some time while agencies work out how to cope with fewer personnel by, for example, streamlining or modifying processes when they have natural attrition, resignations and retirements. On the other hand, when agencies undertake new functions, they introduce additional posts. So, overall headcount numbers have come down although the establishments have not yet. Funding this Budget Now, let me talk about one very important issue which MPs have raised, and that is, funding this budget. Several MPs, including Mr Yeo Guat Kwang, Mr Chew Heng Ching, have asked if this Budget's stance diverges from our principle of fiscal prudence and our longer-term sustainability.”
“Still quite small, but I think there is further potential. Outsourcing has resulted in direct savings for the public. For example, the Ministry of Finance itself has reduced the fees charged to suppliers for registering as Government suppliers by at least 10% as a result of outsourcing this service. Mdm Halimah has raised concerns that MMF should not inhibit public sector agencies from employing older workers and she has warned that best sourcing should not simply become "cheap-sourcing", because private companies may cut back on staff welfare and benefits to win jobs. The public sector's approach is that we employ the candidate who best fits the job requirements regardless of age, sex or race. But when we outsource, we outsource to reliable vendors - we should not assume that outsourcing achieves lower costs simply by having the vendors cut the workers' salaries. There will be, in some cases, specialised private sector providers which offer lower costs simply because the business which is best sourced to them is their primary business. So, they can achieve greater economies of scale and innovation. Also, I would say that we want to outsource to a reliable company, not one which submits a ridiculously low bid and then is unable to meet its obligations or pay its workers and then runs into trouble halfway, leaving the Government to pick up the pieces. Mdm Halimah has suggested that the Government considers stipulating in outsourcing contracts that providers must comply with labour laws and pay the employees decent wages on time. I recognise this concern and there have been some cases which have run into problems. But, the solution lies in enforcing the labour laws.”
“On the other hand, there will be new spending needs in healthcare, education, training and R&D which will put pressure on our finances. So, we have to keep the Government lean and trim to manage these new spending priorities. Over the years, we have introduced various initiatives to help do this. To drive discipline, we have the Manpower Management Framework (MMF), the headcount freeze and other schemes. To get value for money, we have best sourcing, demand aggregation, the Centre for Shared Services and so on. Dr Ong Seh Hong has raised concerns that cost-cutting efforts such as the Manpower Management Framework should not come at the cost of poorer service levels, or worse still, drive agencies to outsource services at an increased cost to the public. We are mindful of these concerns. The MMF aims to achieve headcount reductions through productivity improvements, job redesign or by re-prioritising functions. Where there is additional manpower required, the framework is responsive to the circumstances of the Ministries. For example, for the Budget Terminal at Changi - it is a new service. We are providing additional manpower headcount. Or, because the IR is coming, MHA needs to set up a Casino Regulatory Authority of Singapore - we are studying how we can increase MHA's baseline in order to account for this new function so that there will be appropriate manpower recruited for this. Best sourcing results in outsourcing only if the private sector can do the task more cost-effectively and, therefore, cannot be the cause of increased fees. Since we launched Best Sourcing in February 2003, we have market-tested 218 functions. We have outsourced 59% of them. The annual operational cost savings is S$25 million or 25% of in-house costs.”
“Assemble one page 'best of breed' and they tell us: please match this and then we will think about whether to put you into the running. And if we need them, we have to make an offer which they will consider, but one which leaves us above zero. Not ending with a net negative but above zero. If they come, we get the economic spin-offs. On the other hand, if we say we give the same favourable tax rates, flat tax rate, to other companies that we give to the best, most desirable project which we want to anchor here, the Government will get very little revenue. So we have to retain tax incentives to attract and retain strategic businesses and activities. At the same time, we have to ensure that our incentives are granted fairly and objectively - that the companies must meet our criteria and deliver specific net benefits to our economy. Overall, our formula has served us well. Quite a low headline rate to support enterprise, plus targeted incentives, usually with clear sunset clauses, to promote strategic investments. But we try to keep our tax code clean - we do not encumber it with many special perks and loopholes as happens in other countries, because we would like to keep the playing field as level as possible, subject to this constraint - that there are companies, which we need, whom we cannot charge the full rate. Maintaining fiscal prudence Even as this Budget invests in key areas of growth and shares the fruit we have reaped with Singaporeans, it maintains our core principles of fiscal prudence and sustainability over the long term. Keeping Government lean and trim As I said in the Budget Statement, our major taxes are at about the right levels.”
“But sometimes it is helpful to paint a broader picture of the industry trends and state clearly where the Government sees a strategic national advantage - in this case, in being an air hub rather than keeping out competition in order to protect Singapore Airlines; so that managements and unions recognise that tough changes are necessary. As Mr Inderjit Singh pointed out, the comments may have preceded an upward tick in the SIA stock price. So maybe the market took it positively. Maintaining a competitive tax environment Finally, on maintaining a competitive tax environment, Prof. Ivan Png has suggested minimising tax incentives and moving towards a simple tax system with a low headline tax rate. This is an ideal which I sympathise with, but unfortunately, reality is not so simple. The basic problem is this. We want the best companies in the world to come and locate here - offer the best technology, best jobs, best markets - but these best companies are in demand everywhere. Other governments are courting them. Even the developed countries are courting them. America, Japan, Europe - they offer lucrative incentives to selectively anchor key businesses and investments. Sometimes, they give outright cash grants per job created - one hundred thousand or two hundred thousand Euros because every job created is one fewer job on the unemployment rolls. So, if we want them to come here and we say you pay the same here as everybody else in Singapore - 20% corporate tax - we cannot get them. We are out of the running. They come to see us and they show us; they say this is best of breed. Best of breed - they 'shop' for the best incentives from different governments - investment allowances, tax holidays, grants, training assistance schemes and so on.”
“Our companies have expanded overseas over the years, but these are decisions which the companies have to make - with their boards and their managements. The Government cannot dictate the pace of expansion for individual companies. In fact, Inderjit also reminded us that we should not get involved in dictating things for these companies. In the long term, Temasek's aim is to reduce exposure in Singapore from half, which it presently is, to about one-third. The companies are moving. Sometimes, we give them an encouraging nudge. The Minister Mentor (MM) once in a while gives a very encouraging nudge. Members will have read that he has been talking to SIA and its management and unions. Mr Inderjit Singh raised an eyebrow and suggested that we have failed to observe the ERC's recommendation to ensure that GLCs are commercially-run without interference by the Government. I think without interference does not mean without encouragement. MM's involvement has been chiefly in resolving the labour relations situation in SIA. It reflects his long association with the tripartite process and his standing as a trusted and well-intentioned neutral party by all the players. It is also driven by the Government's larger strategic interest to safeguard our status as an air hub and to help SIA restructure to face a new landscape while it is still doing well. So MM's comments to SIA that it needs to consider trimming its businesses was not a directive. The specific restructuring and adjustment to deal with the future will have to be decided by SIA management and its board, based on what makes commercial sense.”
“I would be careful about having char kway teow or something like that; the more fragrant it is, the bigger the problem upstairs. But it does not mean that rules will never be changed. The position is continually open and we will review our rules as business needs change, and as views evolve on what the public considers acceptable, in terms of level of safety, convenience and public order. So, I encourage Members to keep on raising the subject and pushing the boundaries. With this dynamic tension, from what you think will be good and what we feel we can do, we will be able to become more pro-enterprise. I hope that in the process, Members will be able to understand what are the constraints and real problems. Mr Inderjit Singh has asked us to be patient before asking about results from the entrepreneurship promotion efforts. I also ask that he and other Members be equally patient because it will take time for the pro-enterprise mindset to become entrenched. But, we have success stories and we have outcomes which we can be proud of. For example, there is a home-grown sheet metal fabricator and machining company called Eng Tic Lee Achieve, which acquired new capabilities and became the first company in Southeast Asia to manufacture pharmaceutical packaging machines in partnership with a leading German equipment manufacturer. Many others have also made their mark in the region in China, in India, and also now in new markets in the Middle East. As we continue with efforts to improve entrepreneurship, I am confident we will have many more success stories to celebrate. GLCs Still on local enterprises, Mr Inderjit Singh has asked about efforts by Temasek companies to become globalised Singapore enterprises, as recommended by the ERC.”
“It should not put retail businesses nearby at an unfair disadvantage or at risk from large firms which are enjoying concessionary rents. It will increase the supply of retail shop space - that is true - but that is supply and demand, and I think, overall, that is good for the customers. Pro-enterprise Government Mr Wee Siew Kim and Mr Zainul Abidin Rasheed have suggested that public agencies need to be more pro-enterprise. For example, they suggested that some small businesses should be allowed to operate at void decks. We have relaxed rules for small businesses. We used to be very stringent and some of the regulations were overly restrictive. We review and update them on an ongoing basis. For example, we now allow small businesses like car cleaning and mobile ice cream kiosks in HDB car parks, provided they do not affect the parking needs of residents, they do not create nuisance to the residents, or compromise the safety of car park users. We have also liberalised street hawking so vendors can sell food like ice cream, which does not perish so easily, in housing estates and car parks. Last year, we included newspapers and costume jewellery because, in the downturn, we felt this is one way people would be able to make a little bit of money for themselves and tide over their family. But many of the conditions and rules are there for some reason, and we cannot remove rules which are necessary for public safety or for the living environment. HDB has drawn the line on using void decks for commercial activities. I think we have to be fair to the people who live upstairs, especially on the second floor, and we have to preserve the residential character of the housing blocks.”
“Our philosophy is that if SMEs have good potential for growth and for success, we should encourage and help them in all the ways which are possible. But if SMEs are non-viable, then we should not artificially prop them up because that will just extend their pain and misery. It would not do a real favour to their owners and to the employees. Mr Inderjit Singh and Mr Chay Wai Chuen raised the question of incentives like the Global Trader Programme and the Warehouse Retail Scheme, which they felt were biased towards foreign companies and multi-nationals. This is not true. As a principle, our incentives are focused on promoting desired activities and influencing where companies decide to locate, be they Singaporean companies or foreign companies. The incentives are not biased or structured in terms of ownership. In the case of the Global Trader Programme, it is aimed at making Singapore a global trading hub. It targets all companies that commit to conducting substantial offshore trading activities, and to carry out business activities which will result in spin offs to our local economy. It really does not matter whether these are local or foreign companies. As a matter of fact, there are some local traders which are enjoying this incentive, such as Petra Foods and Agritrade; maybe not as many as we would like, but it is open to them. In the case of the Warehouse Retail Scheme, this is designed to encourage companies, whether local or foreign, to establish their regional activities in Singapore. The requirement for this scheme is that 60% of the gross floor area must remain industrial but the balance can be used for retail. But when it is designated for retail, the user is charged full retail rates, comparable to retail rates in the vicinity.”