Lee Yock Suan
Singapore
“The position will be clear when the regulations have been drafted. Right now we are debating it in the absence of actual wording of the regulations. The regulations will be fair, they are meant to maintain a level playing field, and we should wait for the regulations before we pass judgement. The intention is not to go after everybody.”
“I think the Member will be aware that Internet is a very dangerous place. We can have all kinds of poison letters and they will just spread like wild fire. So we must have some means to try and minimise this and make sure that everything is orderly and fair.”
“The other Members have no problem supporting the Bill, including Mr Chiam. I think the position is about 95% clear. 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 Lee Yock Suan].”
“Then we will have to see the actual situation. But, as I said, the intention is to go after the popular sites, the main sites of parties and non-party political sites. If it is an individual, eg, a young man posting up his own site and saying "These are my views", we are not going to go after those people.”
“The intention is to make the rules clear for the main parties involved in the contest, in other words, the party websites. These are the areas we are mainly after.”
“I thank Mr Chiam for reminding me about his question. On listening to his speech, I was under the impression that he was asking whether this ban on opinion polls applies to the mass media. The answer is yes, it applies to all media, not just the Internet but also newspapers, TV and so on. Thank you for pointing this out.”
The complete record
Every one of 1,595 lines we hold for Lee Yock Suan, in date order, each linked to its source. Free to read, in full, without an account. Page 23 of 32.
“May I explain first? Mr Chiam See Tong resumed his seat.”
“Mr Chairman, Sir, allow me to reply in my capacity as Deputy Chairman of the People's Association. Whilst listening to the Member, I was wondering what big new issue he is going to raise. Apparently, it is the same two old topics that have been discussed last year and fully explained by the Minister of State for Community Development. I wonder how many more years we are going to hear this same story repeated. As regards the Sennett Community Centre, it has already been explained. The fact that we have closed down the CC and put it to other use is nothing new. It is happening all over Singapore in the other constituencies as well. For example, in my own Constituency, Cheng San, when my modern CC is completed, I will be closing down my temporary centre and moving into the new one. This is part of the progress that we are making in Singapore, that when we come to a certain stage, we get the residents to donate, we build a centre that is adequate for the purpose --- Mr Chiam See Tong rose.”
“The Member can file a Question for Oral Answer and I will explain fully on this point. Basically there are four areas where foreign workers can be employed - in manufacturing, hotels, construction, and domestic services. Non-traditional source workers are only confined to construction and domestic service. Outside these sectors, for example, for the retail trade, the thinking is that, since they are mainly domestic orientated and not facing international competition, they should not have to depend so much on foreign workers. However, we may be able to consider them on a case-by-case basis. Also, we do not want the employers to be too dependent on foreign workers. For example, there are firms that exceed 50% dependence on foreign workers. The question is whether there is an economic justification for them to locate in Singapore if they need to have that high level of dependence on foreign workers. I do not have time to speak further. Amendment, by leave, withdrawn. The time allotted for Head R having expired, the following amendments were not proceeded with:”
“It is a question of the physical strain of having to sit there for long hours; a matter of posture, matter of rest between certain intervals of work. And of course, they feel tired having to look at the screen for so long. My Ministry has issued guidelines in 1981 concerning the various aspects of the VDUs, how they should be arranged, what kind of controls they should have to reduce glare, what kind of seats they should have to provide proper support for the person, regular check-up of the eye, and lighting, and so on, covering the whole range. Recently we checked this with the guidelines issued by the International Trade Union and found that our guidelines are very similar. There has also been concern raised about the possible linkage of the use of VDUs with abortions. Again, there is no conclusive evidence here. The studies have not shown a clear and conclusive correlation. It is possible that these clusters of pregnancies in certain cases amongst VDU operators could have arisen from chance occurrences. So there is no clear evidence here. Similarly there is no evidence to show that the use of VDUs will result in facial rashes. So I think the workers can be reassured that there is really no long-term hazard so far detected or proven. My Ministry will, of course, continue to monitor the developments, and if there is clear evidence of problems, we will take action to minimize the hazards involved. I think it is important we do not alarm the workers unnecessarily.”
“Normally they do not realize that they are slightly deaf until they are tested. There are two ways of safeguarding workers here. One way, of course, is to try and cut down on the noise level in the machines but this is very expensive. The other way is to encourage the wearing of ear plugs and to make sure that when they are issued with ear plugs, they know how to use them properly and they do use them properly. My Ministry has been going round to the factories to conduct workshops. In 1986, workshops were conducted in 50 factories to teach the workers how to protect their hearing. We have also organized seminars on this problem and published various pamphlets to inform the workers and the management. We will be intensifying our efforts in this area and we will be requiring the companies to assign officers who will be responsible for this particular aspect to make sure that the workers do wear the protective devices. This incidentally also extends to the Ministry of Defence when they do their firing practices. The last area concerns the use of video display units. I think this is a problem that has been raised quite a few times during budget debates. I think we should not unduly alarm the workers in this area. The studies in the US, Europe and elsewhere and also in Singapore have not produced evidence to show that, in fact, there is danger in the areas mentioned by the Member. For example, in the area of radiation levels, studies in the US, England and also in Singapore by our Ministry of Health have shown that the radiation levels are within safe limits. The common problems faced by workers who have to sit for long hours in front of their video display units are not unlike those of other desk-bound jobs.”
“Mr Chairman, Sir, concerning safety committees, there are already over 600 factories which have formed safety committees. My Ministry goes round regularly to check on how the committees are functioning and also to give guidance to the new committees which have been formed. Their assessment is that over 90% of these committees are discharging their responsibilities effectively. One of the most important areas is really to provide training to these safety committees. And so far, over 1,500 committee members have been trained. The question is whether we should extend this requirement to factories employing less than 50 workers. There are certain problems here. Factories of a small size do not have the same resources. Also, being smaller, the channels of communication are much easier within their organizations. So the thinking of my Ministry at the moment is not to invoke this regulation as a form of compulsion but to do it by way of encouragement. We will monitor the situation and see how to proceed from here. The suggestion made by the Member regarding recognition for safety committees is a good one and I have noted it for my Ministry's consideration. Concerning noise induced deafness, it is true that this is the most common form of health hazard in factories in terms of numbers. The recent increase in the number of cases has arisen mainly because of the requirement of compulsory medical examinations. As a result, more cases have come to light. In 1986, there were about 1,700 NID cases out of a total of 2,100 cases of occupational diseases. Fortunately, only 9 cases of noise induced deafness were severe enough to be entitled to workmen's compensation. Most of the other cases were at a very early stage affecting their hearing in the non-audio range.”
“So we are wondering whether to repeal the whole section and redo it, which means we must not leave out any particular combination of CAs or we might have to allow certain new sections to be added in to provide for this variable wage component under wage reform.”
“If the cases are taken up in court and proven in court, the employers could be imprisoned for a term not exceeding 12 months or to a fine not exceeding $2,000, or to both such imprisonment and fine. So I think there is adequate protection under the law. Coming to the point mentioned by the Member for Geylang Serai. Basically, he is appealing for greater information sharing by employers. I agree with him fully that in order to facilitate our flexible wage system and yearly wage negotiations, it is important for the employers to make available to their employees and unions the information concerning the state of the company and the future prospects. Much of this information will in fact be available eventually to the public. They have to be lodged with the Registrar of Companies. So this information should be made available to the unions. On their part, I think the unions have to educate their own branch leaders on how to read the various accounts. It is important that they understand the various elements that go into the accounts. And, of course, where information is confidential, then they should respect confidentiality of the information. The Member for Yuhua requested that the Ministry look into amending section 47 of the Employment Act to facilitate wage reform. This is something that we are already doing. And we will welcome views on how we can go about doing this. The way this section has been drafted, I think it is rather complex. Various elements have been grafted on over the years and it is very difficult for the public to understand the section.”
“Mr Chairman, Sir, as time is running out, I will try to be very brief in my response. Firstly, concerning the points raised by the Member for Kebun Baru. I agree with him fully that in order to facilitate wage restraint and wage reform, the principles should apply equally to both management personnel as well as workers. I think it is important that management show by example that they are prepared to also sacrifice for the welfare of the company to ensure job security. Concerning the case that he mentioned, I think it is very unfortunate that this case has come about, and if the union were to bring this to my Ministry's attention, we will look into this matter. Fortunately in Singapore most employers are enlightened. For example, from our records, last year out of 89 claims for recognition submitted by the unions, 82 were successful. The unions only lost in seven cases. Out of these 82 cases, 41 were gained through direct recognition by the employers without the need to go through a secret ballot. This is an indication that the employers are enlightened and they realize that if the workers want to have a union, they should allow it to be formed; and also that in the Singapore context, the unions are very responsible and they will, in fact, help the company to facilitate wage reform and so forth. On the part of the union too, I think they have to further educate their branch leaders and make them understand the importance of partnership in the company. Both management and the workers are really in the same boat. If the company prospers, then the employees will benefit. If the company flounders, jobs will be lost. So there has to be this spirit of cooperation. There is adequate protection under the law against companies trying to take measures to prevent unionization.”
“Mr Chairman, Sir, I think it is a good suggestion. There is no problem at all. Members are free to leave as much of their money with the CPF as they want to and it will be tax-free in terms of interest and the amount they withdraw. Question on the amendment put, and negatived.”
“I am not giving way. I want to explain this. The best way is to ensure that the Government is prudent and invests the money wisely. The money is there. I do not understand why he takes so long to understand this point. Instead of wasting Members' time, I will explain this to him outside.”
“The basic point he made is that we seem to be opening up the CPF to too many schemes. I do not know whether he is of the view that we should henceforth disallow CPF to be used for home protection, for Medisave, for residential properties, for shares and for gold. Is that his position?”
“Sir, it is a pity the Member was not here earlier when I explained the thinking on the long- term CPF rate. Many of the points that he raised have been covered already. I do not want to waste Members' time going over the same issues again. Perhaps I can explain to the Member outside the Chamber. Many of the issues that he has raised are not new. I do not know whether I should repeat my answers again. Some hon. Members: No.”
“But I expect that very soon I will be able to announce the full scheme and this will be one of the elements to encourage the employment of older workers. Some figures were quoted by the Member showing that the percen- tage of CAs which have provided for a retirement age of 60 seems to have gone down. I will have to examine those data closely. Data given by SNEF are only of a very small sample. So maybe we should not judge from that sample alone. But the basic point is that both the unions and the Government want to push up the retirement age and we should all work together to bring this about. If necessary, we will make various changes, for example to CPF, to facilitate this process.”
“On their part, they should automate and try and upgrade their activities to minimize their dependence on foreign workers. As I have explained before, it is not a tenable option for us to depend on more and more foreign workers in order to achieve economic growth. So the employers must accept this and live with the situation. The Member for Yuhua has commented on part-time employment and made various suggestions and given her views. I agree with her that we need to strike a balance here, and I have said so in my earlier reply. I also agree that we need to have safeguards to make sure that the workers are not worse off or exploited. But we must not assume that once we exclude them, if we do decide to exclude them from certain provisions, that therefore they are necessarily worse off. Because what it means is that there is more flexibility for employers and workers to come to terms. The end result could be higher hourly wages. But anyway the position is still open and we are prepared to consider all options in consultation with the employers and the unions. The Member for Boon Lay wanted further comments on the retirement age. Yes, the Government is concerned and wants to raise the retirement age to 60 progressively. This will have to be done through discussions between employers and workers and unions, not by legislation. We want to try and encourage both parties to move in that direction because Singaporeans are healthier and they live longer. So we should encourage them to work beyond 55. As I have explained, we have almost completed our review of the CPF scheme and it is almost certain that the CPF rate for workers beyond age 55 will be lower than before age 55. We may not be able to implement this transition all in one step. It may have to be over a number of years.”
“Whether you need to offer the foreign workers the full salary as before, in other words, 25% more take-home pay than Singaporean workers, that remains to be seen. My own assessment is that workers are mainly interested in take-home pay and there is a very wide pool of foreign workers, not only in traditional sources but other sources, who I think will be keen to come and work in Singapoe. So it would be up to the employers to make a careful assessment of what is needed to attract the new foreign workers. The way we have arranged matters should already minimize the cost impact because we are not affecting Singaporean workers and we are not affecting existing foreign workers. It is only the new ones that they have to be concerned with. Of course, with the new ones being on a new scheme there could be repercussions. This has to be examined. But I think they should maybe get together within their own industry associations and decide how they want to proceed and do it in a controlled, orderly manner. I am prepared to consider what measures should be taken further to discourage job hopping. I think it is a bit early perhaps to say what precisely these measures will be. We will monitor the situation. I have already mentioned one possibility, and that is, to allow the existing workers to opt into the new scheme if they want to. There could be other possibilities. I am prepared to consider them. Another point that should be noted is that the objective of this exercise is not to enable employers to have cheaper foreign workers. That is not the intention. The intention is that they should have access to foreign workers, preferably the skilled and semi-skilled types who can contribute to the economy.”
“For example, Sembawang Shipyard, the Government has already sold so many per cent of shares and will now sell more shares on the stock market. I do not think this will affect the employment of the workers in any way. In other situations the company may be sold off entirely as a going concern. Again the jobs would be there and the workers will have to continue working there. A third situation will be where certain activities are privatized. For example, garbage collection. In that situation instead of working for the Ministry of the Environment the workers will be working for the private sector contractors. We are short of workers in this area, and so long as the workers are productive, I think they need not fear that there will be no jobs available for them. Of course, if need be, my Ministry will come in and try and help the workers to adjust, help them find other jobs. But it is also the responsibility of the parent organization, the employers, to help the workers to adjust to the new situation. But I do not foresee that there will be big problems in this area. The Member for Cairnhill has spoken out, I think mainly for employers, on this question of the extension of the foreign workers' levy. As I have explained earlier on, the Government is taking a flexible approach to this issue. We want to try it out with $140 and see from actual experience what should be the appropriate level of levy, and if need be, we will make adjustments. But the employers should not just throw everything back to the Government and say, "Look, you introduce this. You should control everything. You should make sure wage cost does not go up." It is their job to manage, to accept that there is going to be this new situation and arrange matters accordingly.”
“Mr Chairman, Sir, in my earlier comments I have, in fact, touched on or answered some of the points. I have taken note of the views expressed. For example, the point with regard to working mothers raised by the Member for Toa Payoh. As I have explained before, we will have to examine if there are any impediments and if anything should be done to remove them. For example, on this question of maternity leave, I do not know whether members of the public are aware that in the recent package of tax incentives this element has, in fact, been included indirectly. Apart from the five years' tax holiday up to a maximum of $20,000 tax rebate, there is also an additional element of 15% of the mother's earned income. This amount is, in fact, equivalent to two months' maternity leave. In other words, the woman can take two months unpaid leave and then claim back against tax later on. This is the way that it is being done indirectly. The intention is that in that situation the burden will be borne by the Government through tax rather than by the employer. Secondly, this will, of course, make sure that the people who benefit are mainly those who can afford to have more children. Whatever is done to the Employment Act or other Acts will have to be guided by the overall population policy of the Government. So my Ministry will work together with the Ministry of Health and other Ministries and if there is a need we will take further action. The Member for Aljunied has raised some concern about the job security of workers whose employers have been privatized. Privatization has various meanings. In one situation it merely means the Government selling more shares.”
“Mr Chairman, Sir, I think there may be a few other Members who might want to comment on similar topics. I would prefer them to speak now so that I can answer them altogether.”
“Mr Speaker, Sir, the measures taken by my Ministry to reduce industrial accidents in the construction industry include, firstly, the enforcement of safety and health provisions at worksites and, secondly, the training of construction workers, supervisors and members of safety committees. In both enforcement and training, my Ministry pays special attention to the provision and use of safe working platforms, overhead shelters and barricades at worksites. This is to prevent the two major types of accidents, namely, those of workers falling from heights and being struck by falling objects. In addition, we are promoting self-regulation at worksites by safety supervisors and safety committees. These measures have helped to reduce the number of worksite accidents from 1,427 in 1985 to 1,090 in 1986. As a result, the accident frequency rate dropped from 5.5 accidents per million man-hours worked in 1985 to 5.0 in 1986. The number of fatal accidents fell from 42 in 1985 to 26 in 1986. Worksites are inspected by my Ministry's inspectors on the basis that the more hazardous ones are inspected more frequently. For example, high-rise buildings under construction are inspected as frequently as once a fortnight, while MRT tunnels under construction are inspected more frequently, about twice a week. Frequent inspections are also made on worksites of recalcitrant contractors with unsatisfactory safety records. The following question stood on the Order Paper: 10. Mr Chew Heng Ching: To ask the Minister for Community Development if he is satisfied with the work performed by the Feedback Unit.”
“Mr Speaker, Sir, in our surveys, we do ask the householders how long they have been unemployed and whether they are actively looking for a job. This question of hardcore unemployment is partly a question of definition because even those who have been unemployed for, say, 12 months, may get jobs subsequently and are replaced by others. We do have data on what group has been unemployed for how long, and how many in each category. The data show that between June 1986 and December 1986 the number of people who have been unemployed for more than 12 months has gone down. SMALL ENTERPRISE BUREAU (Status report) 9. Mr Chew Heng Ching asked the Minister for Trade and Industry if he will give a status report on the work carried out by the Small Enterprise Bureau under the Economic Development Board.”
“Mr Speaker, Sir, unemployment statistics are obtained by the Research and Statistics Department of my Ministry through sample surveys of households every quarter. The sample households are selected by a rigorous statistical procedure which ensures that they are an accurate representation of the population. The main survey is in June each year when about 25,000 households representing about 5% of total households in Singapore are interviewed. The other surveys are in March and September (when about 4,000 households are surveyed) and in December (when about 8,000 households are surveyed). The selected householders are personally interviewed by surveyors and asked for details on their employment status, occupation, wage levels and their personal characteristics, for example, age and educational level. The data from these surveys are used to estimate the total number of unemployed persons in Singapore as well as the profile of the workforce.”
“Mr Teo Chong Tee asked the Minister for Trade and Industry whether our businessmen participate in international trade fairs overseas; if so, what were the products normally promoted at these fairs; and how successful were they in securing sales of these products in terms of revenue subsequently earned from exports for 1984, 1985 and 1986.”
“Under the existing law, when a company is wound up, the first priority of claims goes to the secured creditors. These are the bankers and others who have provided financing to the company based on a first charge on the assets. After this come the unsecured creditors. First on that list is winding-up expenses. Second come salaries, including employees' CPF contributions. Third on the list would be workmen's compensation for injuries incurred during work. Fourth, salary in lieu of leave. Fifth, employer's CPF contribution. So the Member can see that the contributions deducted from the employees' salaries, ie the employees' CPF contribution, already ranks very high in terms of priority under the category of unsecured creditors. As to whether we should change the arrangement for secured creditors, I think I have given my answer previously. I do not think we should do that because it may affect the willingness of banks to extend loans to businesses. The problem at the moment is well under control. I can give the Member some figures to indicate this. For example, of the 3,916 employers who were late in the second half of last year, they owed an amount of $31 million altogether. The CPF Board has succeeded in its measures to recover $23 million. The balance that is still owing is only $8 million. If we compare this to the total CPF collected in the second half of 1986, it was $2 billion. So the amount owing by these roughly 4,000 employers is only 0.4% of the total CPF collections due. So the mechanism has already been effective and there is no need for us to make further changes to the law. PARTICIPATION IN INTERNATIONAL TRADE FAIRS 13.”
“Mr Speaker, during the second half of 1986, 3,916 employers were habitually late in making their CPF contributions, ie they were late in making their contributions for three or more months. This number constitutes about 6% of the total number of employers making CPF contributions. 31 companies which came under receivership in 1986 were in arrears in their CPF contributions. The CPF Board has filed claims with the Receivers and Managers for the arrears and is awaiting payment from them. To date, the highest amount of contributions owed to the CPF Board by an existing company is $803,940. This amount is owed by Southern Ocean Shipbuilding Pte. Ltd. The company has repeatedly been in arrears since June 1984. Action by the Board has led to the recovery of some $2.7 million in arrears and penalty interest. The Board has subsequently taken up winding-up action against the company to recover the rest of the contributions. Under court order, the creditors of the company have met and most of them have agreed to an arrangement for the settlement of debts proposed by the company. The Board will be paid the CPF arrears by 18 monthly instalments.”
“The same overtime rate of pay is applicable to all the employers, ie the employer has to pay 50% over the normal pay for overtime work. Normally when companies require their workers to work overtime, it means they have good business. There are orders to be filled. So in general there is really no need for us to give further incentives either to the employers or to the employees for overtime work.”
“The question of the high wage cost has already been addressed last year when the cut was made in the employer's CPF contribution rate from 25% to 10%. I think that is sufficient and the experience over the last 12 months or so and the economic recovery since then bear out the adequacy of the measures taken. So there is no need for us to go further and cut the workers' pay. Is the Member for Potong Pasir so keen that we should constantly cut into workers' wages?”
“Mr Speaker, Sir, payment for over- time work will not be exempted from Central Provident Fund contributions. Workers who are required to work overtime should be paid the full benefits that they are entitled to, including CPF. As CPF contributions form part of workers' wages, exempting overtime pay from employers' CPF contributions would tantamount to cutting the workers' wages. As it is, the employer's CPF contribution rate has already been cut from 25% to 10% to reduce wage cost. Some workers may prefer a lower employee's CPF contribution rate for overtime pay or, for that matter, all categories of pay. The question here is what the total CPF rate should be to meet the basic objectives of the CPF Scheme. Exempting overtime pay from CPF contributions would require the contribution rate for basic pay to be raised to compensate for the reduction. This could lead to distortion of the labour market and the way work is structured. It is therefore better to apply the same rate of CPF contribution to all categories of pay. Administratively, it would also be very difficult for the CPF Board to differentiate between the various categories of pay to apply different rates of CPF contribution.”
“Therefore, there is no need for us to widen the CPF scheme to provide for educational expenses. This is a fundamental point. I do not want to go and debate about whether CPF for education is for consumption or for investment. The point we should ask ourselves is: what is the CPF for? Is it for education? Is it for retirement? Is it for housing? What is it for? In the past, the tendency has been to add more and more uses to the CPF. Every time there is a problem where some funds are needed, you go to CPF. As a result, the CPF rate has become higher and higher. The question that was raised is: why do we not allow the parents to extend the loan from their CPF to the children? I think the more basic question is: should we allow CPF for education at all? Because once we allow CPF to be used as educational loans, where do we stop? Do we then allow CPF to be used for education without repayment? Should we allow it to be used for overseas education? Where do we draw the line? My fear is, once we concede to this point, we will be opening Pandora's box and again allowing CPF to go into areas which are alien to the objectives of the CPF scheme.”
“Mr Speaker, Sir, since the question of CPF for education has been raised again, may I be allowed to respond? I have previously explained at some length to the House what the Government's thinking on CPF is, and that is, to confine the CPF scheme to its basic objectives. These are housing, Medisave and a minimum retirement income. If we confine the CPF scheme to these three basic objectives and do not allow ourselves to stray into all kinds of areas, we will then be able to avoid having too high a CPF rate. We are now studying the CPF rate. What should be the long-term rate? If we want to allow CPF to be used for education, it means we must have a higher CPF rate. But the thinking of the Government now is to keep the CPF rate not too high because otherwise the economy might not be able to afford it. Also, CPF members will then have more take-home pay, more savings of their own, more funds at their disposal for whatever uses they want to use the money for. For example, they might want to use their extra income for education. If we were to concede that CPF should also be used for education, then we will have to increase the CPF rate for everybody whereas only some members will need to use the CPF for educational purposes. As announced by the Minister for Education, the Government has already decided on a very generous loan scheme to finance those students who are able to make it to University. I think there will be no problem for these students, once they graduate, to repay these loans which will amount in most cases, other than those in dentistry or medicine, to only a few thousand dollars. There should be no problem for them to repay these amounts from their future income once they start to work.”
“The difference can be topped up. Sir, I think I have covered all the points. 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 Lee Yock Suan]. Bill considered in Committee. [Mr Deputy Speaker in the Chair] Clause 1 -”
“The thought has not crossed my mind yet. But as of now we are looking at each individual member. He must have at least $60,000 before he can make contributions to a parent, and the maximum he can contribute is $30,000 minus the parent's balance at age 55. If several children wish to contribute to one parent, the maximum in any case is only $30,000 minus his balance at age 55. In the case of both aged parents who are still alive, the ceiling is $45,000. This is in keeping with the Minimum Sum Scheme because parents living together can live on a smaller amount of $45,000 instead of $30,000 each. The Member for Jalan Kayu raised two questions. One concerns grandparents. As I have explained, at the moment the scheme is only for children and parents. Whenever there is a new scheme announced, the tendency is to widen the scheme further and further. We must guard against that. For the time being, I would draw the line at children and parents, and let us keep the CPF scheme to its original purpose, which is mainly for the member's own needs. He asked about the case where one or both parents are non-CPF members. In my statement and in my clarification, I have said that even if the parent is a non- CPF member the children can still open an account for him, the CPF Minimum Sum Scheme account, and proceed to top it up. That point is clear. It covers not only those who will be reaching 55 but those who are already above 55. The scope of the scheme has, in fact, been very much widened. We estimate that there are some 300,000 parents who are already above 55 years old. But we will have to look at their past CPF records. Our records fortunately are complete and so we know, say, some 10 years back when they withdrew the money, how much they had in their CPF balance.”
“We must make sure there is a joint ownership so that there is protection for the parent; otherwise the scheme could lead to abuse. We cannot be sure that the child will look after the parent. If the child wants to nominate his property for the parent's sake, he must make it a joint property and the parent's name must be included in the property. The Member for Delta asked about single persons. Unfortunately, a single person has no children. He could have children really but he missed out. Perhaps he should get married or he should find other means of support with his own savings. Under the present scheme as drafted, which is meant for children to support their parents, unfortunately there is no means to help these single persons. As I have said, I am reluctant at this point to widen the scheme further to cover other relatives. The Member for Thomson raised a few points. He asked whether the amount used for topping-up is immediately withdrawable. The answer is, it can be withdrawn by the parent from age 60. For example, if you have a parent who is already 65 and you open a minimum sum account for him, the parent will be able to withdraw the money straightaway. But that account will be in the parent's name so as to make sure that the money is for his own use. Hopefully, this will provide some protection and minimize abuses. The parent will have to consent to the withdrawals and the money is meant for him. In the case of a husband and wife, ie, whether they can be considered jointly, I am not very clear about this point. Does the Member for Thomson mean that we look at the joint account of both the husband and wife and so long as the amount is above $60,000 we allow them the transfer, or in what sense? We have in any case to study this a bit further.”
“The main reason is an administrative one because we have to wait until the parent is 55 to know how much he or she has in the CPF account. We would only allow the topping-up to be the difference between his own balance and $30,000. So long as this topping-up amount is kept with the CPF Board, whether in the children's account or the parent's account, it does not really make much difference in terms of earnings. The parent can only withdraw from the sum from age 60 in any case. If, therefore, we try and allow the transfer at an age when the parent is younger than 55 years, we have to look at the procedures. It may mean that we have to project the member's CPF balance until age 55 and also make some adjustment at age 55. It could be rather complicated. However, I will ask my officers to examine the suggestion and see whether there is any merit in it, especially in the case of, say, a daughter who is about to get married and she needs to help the parent to keep the flat. This, of course, involves the HDB also. If HDB is prepared to relax its rules and allow the daughter to keep her CPF for payment of the existing flat jointly owned with her parents and live with her spouse in the a flat, then there is really no problem. But if for some reason the HDB thinks it is not wise to allow it and they want to promote a nuclear family, for example, maybe the topping-up could be one possibility, but we will need to study it further. Her third question was whether children can pledge their properties to enable the parents to withdraw their entire CPF savings at age 55. The answer is yes, provided the property is in the joint name of the children and the parents.”
“In the case of private properties not purchased with CPF money which a member chooses to pledge in lieu of the minimum sum in cash, the CPF Board will keep the procedure very simple. There will be no need to appoint private lawyers to go through the process. The CPF Board will go through the search, certification and registration process on its own so there will be minimum expense involved. I think it is in the region of maybe $50. There was a complaint in the press recently on this point and I think the CPF Board has already clarified it. The Member for Tanah Merah came up with a good suggestion that we should provide advisory or counselling services to members when they reach 55. As I have explained, we will be producing a pamphlet to illustrate all the different schemes which are available now for them to choose as to where they want to put their money. These are offered by nine insurance companies and 23 banks, as alternatives. They can, of course, leave their money with the CPF Board which will be the safest form of investment. They have to make up their minds as to how they want to invest their minimum sum. If they put the money somewhere else, there could be a slightly higher risk which they should be aware of but the returns are likely to be better. The alternatives are there. Members should make up their own minds on this matter and there will be a pamphlet and guidance from the CPF Board to explain the different alternatives. Coming now to the questions from the Member for Yuhua. She also supported tax exemption and I thank her for her support. Her second question is: why do we have to wait until the parent is 55 before we allow the children to top up his or her account?”
“However, there are other categories of people, for example, who may suffer from physical inability, be physically incapacitated or mentally incapacitated after they have passed the age of 55. In those cases, they may still live for quite a long time. The scheme will still apply to them. The Member's other question concerned the charge on properties. This applies only in the case of private properties because for HDB flats we have simplified the procedure so much that there is no charge really. It is only an undertaking by the member that if he sells the HDB flat, the minimum sum must be put aside. Under the Housing and Development Act, in fact, the property cannot be mortgaged to anybody. A charge cannot be imposed without the consent of the HDB. In the case of HDB properties, sales must be done through HDB. We can depend on HDB to administer and collect this minimum sum for us and so we are able to keep the procedure very simple. In the case of properties bought with CPF, as I have explained, there is already a charge on the property to secure the return of his CPF money to his account if he should decide to sell the property before age 55. We have simply extended the charge to cover the property in respect of the minimum sum beyond age 55. Similarly, for other properties not purchased with CPF money, we will have to apply a new charge through the simplest possible procedure and at minimum cost. This charge must last for as long as the person lives because the idea is to protect that minimum sum for his own benefit so that it cannot be seized by creditors. The charge will be in place for as long as the person lives.”
“My own assessment is that there are probably very few siblings or other relatives who are willing to contribute cash or CPF to another sibling or relative's account. So this is going to be a rather uncommon situation. Anyway, for the time being I would prefer to just try out the scheme as it stands and not widen the scope any further. We must realize that the CPF scheme is basically for the member's own benefit. It is going to be designed so that it is only enough for his own needs. We have already made a concession here for those who can afford it. But we should not widen this transfer too widely, otherwise it will defeat the purpose of the CPF scheme. The other point made by the Member for Pasir Panjang is that the scheme should be a voluntary one. Indeed my note says so, that this is purely voluntary. There is no compulsion on the part of anybody to contribute to his parent's account. Coming now to the questions from the Member for Tanah Merah. He asked whether a person suffering from terminal illness and who is exempted from the Minimum Sum Scheme will be examined by a private doctor or a Government doctor. The answer is that he will have to be certified to be suffering from a terminal illness or disease by a doctor appointed by the CPF Board. We must make sure there is no abuse in this case. I think it is only fair and just and humane that we allow people who are about to die within a year or two to enjoy the full benefits of their savings instead of trying to lock up the amount for their kin. That is why I have specifically exempted this group of people from having to put money aside under the Minimum Sum Scheme.”
“In fact, the schemes proposed by some insurance companies are so attractive that I think even those members who need not set aside the sum under the scheme should seriously consider whether they should plan on putting aside some money on their own because the insurance companies are able to provide this risk-sharing aspect and the member can be sure that he will have a sum to draw on monthly for as long as he lives. The returns are fairly good, I think, judging from the schemes put up by the insurance companies. Coming now to the points from the Member for Pasir Panjang. I have already touched on the point about tax exemption. Concerning adopted children, the answer is yes; if the children are legally adopted; they will be allowed to enjoy the benefits of the scheme. In other words, they can either contribute cash, which hopefully will be tax-exempt in the future, to their parents' CPF accounts, or they can transfer from their own CPF to their parents' accounts, provided of course the member himself has at least $60,000 in his own account. We must have this cut-off because we need to protect the member himself to make sure he has enough for his own needs before he is allowed to transfer CPF to his parents' account. That is the reason for the $60,000 floor which is placed on the contributor's CPF account. Can siblings also transfer CPF to their siblings' accounts? The scheme as conceived is meant to promote filial piety, in other words, children to look after their parents. The Bill, as currently drafted, does not provide for siblings to contribute to their siblings' accounts or, for that matter, other relatives to contribute to, say, an aged person.”
“In the case of those who have the ability to contribute the full amount to their parents' account so that the parents have $30,000 to put aside at age 55, and if the parents were to buy an annuity plan with this sum for life, the money should be enough to last them for as long as they live. There are various attractive schemes offered by the approved insurance companies which pay as much as $300 per month for a long period, for as long as the members live. The CPF Board will be publishing a short pamphlet explaining the different schemes that are available to the public. I hope this pamphlet will enable the members when they reach 55 to make a good investment decision on where they want to place their money, either with the CPF Board or with banks, or with insurance companies. The Member for Cairnhill also asked whether, with the current low interest rates, the sum will be enough to last a member for 20 years. In other words, if he puts aside $30,000 at age 55 and it earns interest, would it last 20 years? The answer is yes, provided the average interest rate is at least 4ª% per annum. The calculations have been based on 4ª%. The money is put aside at age 55. It earns interest for as long as it is deposited. The capital and interest will be enough to pay out to the member $230 per month for 20 years. Judging from past experience, I think the interest rates are likely to go up again in future. So I am fairly confident that the average interest rate should be at least 4ª%. If Members are doubtful about this point and they have $30,000 to set aside, the best way, as I have said before, is to put the money into an annuity plan so that they can be sure that they will have this sum to drawdown upon for as long as they live.”
“Mr Deputy Speaker, Sir, I would first like to thank all the Members for their support of the Bill. I see that the Topping-up Scheme has aroused quite a bit of interest among Members. The Minimum Sum Scheme was well debated in August. So I propose to be very brief in my explanations and confine more to the questions raised by the Members. I shall take the questions in the order they were raised. Firstly, the question from the Member for Cairnhill. He and also several other Members touched on this point of tax exemption for cash contributions. My Ministry is discussing this with the Ministry of Finance. We strongly support this idea that the cash contributions should be exempt from tax. In other words, the con- tributions should be deductible from the CPF Members' taxable income. There will have to be certain forms of control, of course, to be placed by the Ministry of Finance. I am sure with the strong support from Members, I should be able to persuade the Minister, perhaps during the coming Budget Statement, to tell us his thinking on this point. It is a good move to promote filial piety. The second point raised by the Member for Cairnhill concerns a second topping-up. We have only come to the first topping-up and we are already thinking of a second topping-up. Let me first clarify that the scheme is not meant to be a total solution. With or without this scheme, with or without tax exemption and Government encouragement, it is the duty of all children to look after their parents. So I hope this point will be borne in mind. The scheme itself is not meant to be everything. It is only meant to be a form of encouragement, although a very substantial one.”
“The topping-up can be done in one lump sum or once a year over a period of up to 10 years from the time the parent turns 55. The amount used for topping-up can only be withdrawn by the parent in monthly instalments from age 60. Such minimum sum accounts can also be opened for parents who are non-CPF members. For parents who have already passed 55, the amount will be reduced, depending on their ages and the topping-up must be done within the next 10 years, ie, by 31st December 1996. The Topping-up Scheme will be implemented from 1st April 1987. Sir, I shall now ask the Clerk of Parliament to distribute a brief note (Cols. 1063 - 1066) which will help to clarify the details of the Topping-up Scheme. note - THE CPF MINIMUM SUM ACCOUNT TOPPING-UP SCHEME (Cols. 1063 - 1066) [Copies of note distributed to hon. Members.] Sir, I beg to move. Question proposed. 11.10 am”
“This figure will be reviewed every three to five years to compensate for inflation and rising standard of living. Members with low balances need only set aside smaller amounts. From age 60, the member can withdraw $230 per month from his minimum sum account, except in the case of certain approved annuity plans which offer to pay more than $230 per month for a principal sum of $30,000. Upon the member's death, any remaining amount will be paid to his nominees or, if there are no nominees, to his estate. A married couple, who are both CPF members, will need to set aside $45,000 at most, and not $30,000 per spouse. They can withdraw $345 per month. These and other details as announced in August will be spelt out in Regulations. Clause 9 of the Bill introduces a new paragraph (i)(b) into section 45(1) of the Act to enable such Regulations to be made. Sir, the other clause of the Bill which I would like to highlight is clause 5. It introduces two new sections 12C and 12D to enable children to contribute to their parents' Minimum Sum accounts either through transfers from their own CPF accounts or with cash. On the death of the parents, the unexpended portion of the contributions will be transferred back to the CPF accounts of the persons who made the contributions. The details of the CPF "Topping-up Scheme" will be set out in Regulations. A CPF member must have at least $60,000 in his CPF account, including amounts withdrawn for housing and investments but excluding Medisave, before he can transfer any excess to his parent's account. The maximum amount of such topping-up is the difference between $30,000 and the parent's CPF balance at age 55, before withdrawal. For both parents, the maximum amount is the difference between $45,000 and their combined CPF balance at age 55.”
“There are three methods of doing this, depending on the type of property. For a property sold by the HDB or other housing authorities, the owner need only sign an undertaking to set aside the minimum sum should he later sell the property. For a private property purchased with CPF money, there is already an existing charge to secure the refund of the CPF money to a member's account if he sells the property before he reaches age 55. Clause 7 of the Bill will extend this charge beyond age 55 but only for the value of the minimum sum. The extended charge will be removed if a member opts instead to set aside the minimum sum in cash. Either of these two methods will apply to the vast majority of CPF members who own properties. For them, therefore, there will be minimum inconvenience and no additional cost. However, there will be a few CPF members who may wish to nominate private properties not purchased with CPF money. In such cases, it is unavoidable that a fresh charge will have to be created on their properties, for the value of the minimum sum. However, the procedure will be kept as simple and as inexpensive as possible. The charge will be to protect the member's minimum sum for his benefit. The new subsection (12)(12) protects a CPF member's minimum sum kept in an approved bank, the CPF Board or an approved annuity plan from seizure by the member's creditors for payment of any debts or claims. Where a member has pledged a private property in lieu of the minimum sum in cash, the charge on the property will provide the necessary protection from creditors. In the case of HDB flats, similar protection is provided under sections 43 and 44 of the Housing and Development Act. The minimum sum to be set aside at age 55 is $30,000.”
“Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to provide the enabling legislation for the implementation from 1st January 1987 of the CPF Minimum Sum Scheme which was announced and debated in the House last August. The objective of the Scheme is to ensure that in future most CPF members will have at least a minimum sum to live on after age 60. I shall highlight the key provisions of the Bill. Clause 4 of the Bill amends section 12 of the principal Act to introduce new subsections (6) to (13) which provide for the main features of the Scheme. The new subsection (12)(6) requires a CPF member who withdraws his savings at age 55 to deposit the minimum sum with an approved bank or in a retirement account with the Board or to purchase an approved annuity plan. From this, under the new subsection (12)(7), he will be able to withdraw a monthly income, starting from age 60. The new subsection (12)(8) excludes three categories of CPF members from the Minimum Sum Scheme. All members who have attained the age of 55 before 1st January 1987 are excluded although they may opt to participate in the Scheme. So are members who have an adequate and assured source of income for the rest of their lives, such as Government pensioners. The third category are those who are suffering from a terminal illness or disease. Non-citizens who have left or are about to leave Singapore permanently are excluded under the existing section 12(2) of the Act. CPF members who wish to pledge their properties or their spouse's properties in lieu of setting aside the minimum sum in cash may do so under the new subsections (12)(9) to (12)(11) as well as section 14 as amended by clauses 7 and 8 of the Bill.”
“Mr Deputy Speaker, Sir, as at 31st December 1986, 8,910 persons were registered with the Employment Services Department as compared to 9,900 at the end of 1985. A total of 3,460 persons secured jobs through the department in 1986. The job market has improved in the last quarter of 1986 with an estimated 15,600 jobs created. The improvement was, however, only in certain sectors, notably Manufacturing, with about 8,200 jobs created, Commerce with 6,600 jobs and Community, Social and Personal services with 2,500 jobs. The Construction sector continued to decline, losing 2,200 jobs. On the whole, 1986 saw a net increase of about 11,000 jobs. Growth in the second half of 1986 created about 29,000 jobs which more than offset the loss of 18,000 jobs in the first half of the year. Based on preliminary figures, the unemployment rate for December 1986 is estimated to be 4.6%, down from 6.5% in June 1986. Allowing for seasonal adjustments, the final figure for December 1986 may be slightly higher than 4.6%. GOVERNMENT RULES AND REGULATIONS (Update) 10. Dr Wong Kwei Cheong asked the Minister for Trade and Industry if he will give an update of the rules and regulations that have been eased by various Government ministries and departments as a result of work done by the recently formed Business Enterprise Committee.”
“Mr Speaker, Sir, it is true that lenders tend to under-estimate the value of the property. The market price agreed upon may therefore be more than the valuation by the bank. But in the recent property market, with intense competition amongst the banks, I think they are tending more and more towards the market price. But this is one of the safety factors really. Whether or not the buyer eventually ends up in financial difficulty depends on how he has planned his purchase. It is very important for him to go in with his eyes open and do the calculations. For example, those who have bought their properties at high prices, at the peak of the market, I think nobody can help them because the prices have come down severely. But for the new buyers going in, they should realize that the maximum they can withdraw for property is 80% of the valuation. So they should plan their cash flow accordingly. WATER SUPPLY 10. Mr Goh Choon Kang asked the Acting Minister for Trade and Industry what steps his Ministry has taken to ensure the water supply that Singapore needs. The Acting Minister for Trade and Industry (BG Lee Hsien Loong): Mr Speaker, Sir, Government policy has been for PUB to develop all available water resources in Singapore. This has been done. We have recently completed the Sungei Seletar/Bedok Water Scheme. This is the last major surface water source available in Singapore for development. The PUB has two water agreements with the Johore Government. These agreements assure us an adequate supply for our present needs.”
“That means the purchaser already has to foot something like 20% to 30% of the total amount in cash. Furthermore, in a few years' time, is he aware that many of these purchasers will be in financial difficulties because they will no longer be able to use their CPF funds to meet their monthly repayments?”
“In the case of HDB and HUDC flats purchased from HDB, the buyer can borrow from the HDB up to 80% of the value of the property. He can also use his CPF for the 20% downpayment. In other words, the full purchase price, including the interest on the loan, can be met from CPF savings. If you add up the total sum of money withdrawn, capital plus interest, it exceeds 100% of the value of the property. In my opinion, this is too generous actually, but it is already there and it helps the lower income groups to own HDB flats. You may compare the sum withdrawn with the appreciation of the flat. The total sum withdrawn could be maybe 140% or 150% of the purchase price of the flat. And if the property value appreciates by that extent or more, then the CPF withdrawn would have been secured. But if the appreciation is less than that amount, part of the CPF has, in fact, been spent on housing. Therefore, for private properties, I am cautious and at this point there is no reason for us to liberalize further. As I have explained, part of the money is, in fact, consumed, and I think it is prudent for the buyer to estimate and calculate carefully, based on the 80% limit. They could either save more in their CPF so that they need to borrow less, or perhaps buy a smaller property, or even service the instalments partly from CPF and partly from their own cash. Dr Augustine H.H. Tan (Whampoa): Is the Acting Minister for Labour aware of the difficulties faced by buyers of private properties who make use of their CPF funds in two respects? Firstly, because of the limit of 80% of the valuation of property that may be used from CPF funds, very frequently the valuation by the banks or finance companies is already 10% or 15% below the market price at which the property is purchased.”
“Mr Speaker, Sir, the amount of CPF savings which can be used to purchase a private residential property is limited to 80% of the value of the property. The 80% limit is to ensure that should the market price of the property fall, the member's CPF money invested in the property will be safeguarded. This is the same limit which financial institutions apply when extending loans for residential properties. A CPF member can invest up to 100% of his Ordinary Account balance in one or more properties. In the extreme case, a member may, therefore, have no cash balance in his Ordinary Account at age 55, having invested all of it in properties. If a property is partly financed with a bank loan, a significant portion of the CPF withdrawn would have been used to pay the interest on the loan and is therefore in a sense consumed. In comparison, only 40% of CPF investible savings may be invested in Singapore trustee shares and gold with a sub-limit of 10% for gold. Thus, only part of the existing balance, excluding the minimum sum of $30,000, can be invested in shares or gold. The rules are therefore already more liberal for property investments. The 80% limit on property financing appears reasonable and prudent. It should not be changed unless there are strong justifications having regard to the basic objectives of the CPF scheme.”
“Mr Leong Horn Kee asked the Acting Minister for Labour, in line with his recent decision to increase the percentage of investible Central Provident Fund savings to purchase gold and securities, whether he will also consider increasing the use of CPF funds for the purchase of a private property from 80% to 90% or 100% of the valuation of the property.”