Mah Bow Tan
Singapore
“The previous generation of Singaporeans overcame huge odds together to create this improbable nation which we call home. Let this generation work as one to define our country for the next lap of our journey. Sir, on this note, I fully support the amended Motion. Page: 143”
“Like all upgrading programmes, there is a certain budget, and a certain pace at which we will build. We have completed the LUP and now we are going on towards the HIP. The Estate Upgrading Programme (EUP) is ongoing.”
“For those who cannot afford home ownership, we will provide rental flats. For the rest where there is hardship involved, that is where the safety net comes in. I do not think we should make the safety net so wide as to bring in everybody.”
“Building a studio apartment is no different from building any other HDB flat. If a person applies now and the building works start now, he can get it in two-and-a-half years to three years. We have stepped up the building of studio apartments over the last couple of years.”
“Mdm Halimah Yacob asked the Minister for Health (a) how many people have signed an Advance Medical Directive (AMD) and how many have revoked them since; and (b) whether there is a need to review the current rules on AMDs which do not require a person who has revoked the AMD to inform the Registrar, thus causing uncertainty for hospitals t…”
“Parents who wish to exert more control over the maximum mobile service charges incurred by their children may consider service options such as mobile pre-paid cards. IDA is aware of the public's concerns on mobile subscriptions, and will continually review policies and look into measures to further protect the interest of consumers.”
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“As at this point in time, there are no flu vaccines against that particular strain, H5N1 strain, either for birds or for humans. But the WHO is actively working on it. They are coordinating a group of laboratories to produce such a flu vaccine, specifically for H5N1. But at this point in time, such vaccines are not available. But there is an anti-viral drug that is available called Tamiflu. Tamiflu is a drug that is able to prevent as well as to treat the bird flu in humans. This is the reason why, as part of our precautionary measures, we are increasing our stock of Tamiflu, although it is a very expensive drug. It is an anti-viral drug which has been proven to be effective for H5N1. As far as pigs are concerned, the veterinarians are always very worried about the pigs because they are a very good reservoir for viruses of all kinds. In fact, they get infected by human viruses and bird viruses. The concern really is that the pigs can actually become a melting pot, as it were, where the bird viruses and the human viruses can mix and mutate. We are monitoring the situation very carefully so far as the import of pigs is concerned. All our pigs are imported from Pulau Bulan. So AVA has kept a close watch on the situation there as well, precisely to guard against such a situation happening.”
“I wonder which part of Hougang! Was it in the Opposition Member's constituency? Sir, as far as I know, the birds that were found to be dead in that particular part of Singapore was a result of some routine culling operations undertaken by the Town Council. There is really no cause for concern. There is a normal programme to keep the population of the wild birds, like crows and mynahs, down. This is part of our regular culling operations. As far as profiteering is concerned, the most effective way for us to counter profiteering is to make sure that there are sufficient alternative sources of supply. For example, if Malaysia gets infected, we will be short of live chickens and eggs because the bulk of our supply of eggs comes from Malaysia. As far as the supply of live chickens is concerned, we have, in place, alternative supplies. There are plenty of frozen chickens available, both in stock as well as they can be ordered from overseas quite easily. In the case of eggs, there is a slight problem because the supply will be restricted. But we never know how prices are going to move. It does not necessarily follow that if they raise prices, they will be able to benefit, because it may well be that because of this that the demand for eggs and poultry will drop. In that case, the supply and demand situation may well be a glut rather than a shortage. I would not be so concerned about profiteering because I know that there are alternative sources available, both for the chickens as well as for the eggs. In that sense, we are quite sure that although prices will go up, they will not be excessive.”
“Could I inform the Member that as far as the keeping of chickens in schools is concerned, yes, we know, for a fact, that many schools keep chickens as part of their nature study classes. Our advice to the schools is (a) keep the chickens in cages; and (b) avoid or minimise contact between the chickens and the children. Last week, MOE has sent out an advisory to all the schools and kindergartens to remind the teachers and supervisors that they should avoid such close contact, and to also keep the chickens in cages. That has already been done. As far as cooked food is concerned, let me reiterate that this virus is not a food-borne virus. It transmits and infects through close contact with faecal material or mucus from infected poultry. So there is really no danger from eating well-cooked and well-prepared food. This is the first point that we should remember. Eating half-cooked chicken and half-boiled eggs has always carried a certain risk, because if we do not fully cook something, it automatically carries a certain risk. Such risks include things like salmonella and all the other bad bacteria that are crawling around. The fact that we do not have such a problem in Singapore is because AVA does such a good job in making sure that the foods that come in in the first place - the eggs, poultry, and so on - do come from accredited sources. They are properly farmed and transported in cold chains, etc. When they come into Singapore, there is random checking. Now, there is 100% checking. That is the assurance that we can give. Anytime we eat something that is half-cooked or raw, we are running a risk.”
“I will be meeting them sometime next week to pass these key messages to them, namely, that we do not have the bird flu virus and we intend to keep it that way. If it does come, we have measures in place to control and eradicate it. In the meantime, the Government will be open and transparent in the way it deals with this, as it did with SARS, because we definitely believe that it is the most effective way of tackling this. Yes, those key messages will be put across in as many different ways as possible, and I will certainly ask the media to help us to pass these messages across to as many people as possible.”
“Dr Teo asked why children are more susceptible. I am not a doctor but I dare say that children are by nature more susceptible. Generally, they are weaker and they normally would be susceptible to any virus or bacteria that affects humans or any pathogens for that matter. My advice for children is the same advice for all, whether children or adults - do not get into close contact with chickens, avoid them at this point in time. As a result of that, all the farms have been told not to accept any visitors. The bird park has stopped its bird shows which involve close contact between visitors and their birds. So have the schools, the zoo and Sentosa, etc. While it is acceptable, and AVA has advised that it is acceptable, for families to keep chickens as pets, please keep them caged so that they do not come into contact with migratory birds and also make sure that they themselves limit the interaction or contact with the chickens. This is an advice I will give to everybody, and not just children, although children are, by nature, more susceptible to disease. On whether we will work with the CDCs on emergency plans, yes, that is the intention. In particular, we will be briefing the grassroots leaders and the advisers to the constituencies that would be affected directly if Avian flu were to hit us. By that, I mean those constituencies where the farms and slaughter houses are located. We will certainly need the cooperation of the grassroots leaders and the farmers themselves to make sure that the culling process is carried out smoothly and effectively. Yes, we will be very happy to work with them. Finally, as to broadcasting of the key messages in the various media, we will be briefing the grassroots leaders of all the constituencies.”
“I am happy to inform the House that the Poultry Association and members of the public have agreed to purchase most, if not, all the poultry from the farmers. As of last night, I believe that they have come to an agreement. The farmers are now quite satisfied with the outcome. Initially, they were a little bit concerned but, thereafter, when they realised, with explanation, what this is all about, they have, by and large, given AVA their cooperation.”
“But in a theoretical situation, if a farm were to be infected, the first thing after we have culled is to make sure that the farm is thoroughly disinfected. It would also take some time for us to make sure that the viral load in the farms is totally eliminated. This can take anything from three months to six months. So, it is not easy for the farms to restart production. And this is why I believe it is important for us to make sure that our farms do not get infected. If they do get infected and if they have to take a long time to restart, then obviously the farmers would have to take an economic decision whether they wish to restart the farm. But this is something that they would have to decide for themselves. The Member also asked about the situation in Pulau Ubin. The reason why AVA went into Pulau Ubin was because all the information that they had, suggested that the threat usually would come from the backyard farms, ie, those that are not biosecured. All the farms that are in Singapore have been required to put in place extensive biosecurity measures, eg, bird proofing, putting nets to make sure that the migratory birds do not come into contact with their chickens, disinfection, quarantine facilities, etc. But it is extremely difficult and expensive for the backyard farmers to put in place similar measures. And this is the reason why AVA decided that they would persuade the farmers, buy the chickens from them in order to make sure that this does not become a backyard entry, as it were, for the bird flu. We wanted to make sure that that is not the weak link in the chain in making sure that Singapore remains free from Avian flu.”
“First of all, on the question of human-to-human transmission, I believe the medical experts in WHO and the scientists have assessed that while there is a theoretical possibility of such transmission happening, which in turn depends on the mutation of the virus, the assessment at this stage is that such a possibility is very low. They are not able to put a number to it but, based on what they know at this point in time, such a possibility is low. Nevertheless, because the implication of something like this happening is very significant, all agencies involved - WHO, OIE, FAO - plus the various countries, are very concerned about this. Therefore, we must take action to ensure that such a possibility remains a remote one. And this is the reason why we are vaccinating all the workers who are involved in the poultry farms and abattoirs and, if ever there is a need for culling, they would also be vaccinated. This is to prevent any possible cross-genetic mutation of the virus. As for the preparedness of the hospitals, MOH has already sent out advisories to all medical personnel, all doctors, including the Chinese sinsehs, to be on the alert for any possible evidence of such infections in humans. The hospitals have also been placed on alert. All the precautionary measures that we put in place for SARS, eg, temperature checking of infected people coming in, are also still in place. So, if ever there is a need for us to activate, we can do so. In so far as restarting production is concerned, frankly, at this point in time, our priority is to make sure that the Avian Influenza virus does not hit Singapore, and all our attention is focused on this aspect of it. We have not really thought about the restarting of egg production right now.”
“The impact of an Avian Influenza outbreak on Singapore's economy should be minimal if the fallout from the disease is contained within the poultry industry. According to the Pacific Asia Travel Association (PATA), the Avian Influenza will not have the same effect on the tourism industry as the SARS crisis did last year. This is because, unlike SARS, the virus is not transmitted from one human being to another. It is mainly transmitted through close contact with infected chickens. The World Health Organisation has not issued travel advisories on Avian Influenza. A 10-country meeting of ministers and health experts in Bangkok on 28th January also concluded that travel advisories are not necessary. So far, there has been no significant adverse impact on our tourist arrivals. Nevertheless, if the situation worsens in the coming weeks, the psychological impact could dampen regional tourism, including Singapore's. The worst-case scenario would be that of a viral mutation that allows human-to-human transmission. The economy, particularly the travel and tourism-related sectors, such as airlines, hotels and retailers, would be badly affected in such circumstances. As of now, this remains very unlikely. Let me conclude by saying that Avian Influenza is still primarily a disease affecting poultry. It does not pose a public health threat. We have implemented measures to keep it out. But we are vigilant and on high alert. We have worked out contingency plans and are ready to take decisive action should Avian Influenza appear in Singapore. Poultry and eggs in Singapore are safe to eat. I advise the public to stay calm but to remain alert. The Government will continue to keep the public informed of developments, in an open and transparent manner.”
“The Government will make ex-gratia payments to the owners of the farms for the live poultry that are culled. Coordinated Government response The Ministry of Health and Government agencies, such as the Singapore Police Force, the Singapore Civil Defence Force and the National Environment Agency, are all ready to assist the AVA in the culling operations. Food safety and supply I would now like to talk about food safety and supply. I wish to assure the House that poultry and poultry products in Singapore are safe to eat. We have a stringent accreditation and surveillance regime to ensure that the food imported into Singapore is safe. As the virus is destroyed by heat, properly-cooked poultry and eggs, and canned and processed poultry products are safe to eat. With regard to poultry supply and prices, as the Avian Influenza hits more areas in Asia, sources of poultry supply will be affected and we expect prices to go up temporarily. Fortunately, we do not require much of the world's supply, so I do not foresee any major problems with getting enough poultry for our needs. Frozen poultry is a good substitute for freshly slaughtered poultry, and we have large supply sources from non-affected countries like Brazil and the USA. For eggs, Malaysia is our main supplier, providing 70% of our needs. In the event that these egg imports have to be suspended, we can turn to other accredited countries, such as Australia and New Zealand. However, eggs from these countries are more expensive. So, consumers may decide to switch to substitutes, such as liquid or powdered eggs, which are commonly used by the food manufacturers and hotels. Economic impact Let me turn to the economic impact.”
“In addition to MND and AVA, other Government agencies are on high alert and monitoring the situation closely. In case Avian Influenza slips through our tight defences, we will act swiftly to contain and eradicate the disease. A Ministerial Committee for Avian Influenza, comprising Ministers from relevant Ministries and supported by an Executive Group, has been set up to oversee our preparations and to decide on the contingency measures necessary if the disease appears in Singapore. Culling plans If Avian Influenza is detected in imported poultry in the abattoirs, import will cease immediately and all birds imported on that day will be slaughtered and safely disposed of. Poultry from earlier consignments in the day will be recalled. The seven local farms that I mentioned earlier are all clustered in the Lim Chu Kang, Murai and Sungei Tengah areas, within close proximity of each other. If the Avian Influenza hits any one of these farms, all the 2.1 million birds in all seven farms will be culled and safely disposed of. We will start the culling as soon as clinical signs of the Avian Influenza appear and we have supporting post-mortem findings and laboratory tests of Type A Influenza. We will not wait for laboratory confirmation that it is the H5N1 strain, which will take another five to seven days. All the farms will be "sealed up" during the culling. No poultry and eggs will be allowed in or out, and strict controls will be imposed over human and vehicular movements. The eggs produced during this period will be destroyed. Such quick and comprehensive action is necessary to eradicate the disease, safeguard public health, and maintain the confidence of our people as well as visitors.”
“Precautionary measures Let me now inform the House of the precautions that the Government has taken to keep Avian Influenza out of Singapore. We have stepped up the inspection and tests on imported chickens and poultry products to ensure that they are safe. We immediately suspended the import of live birds and poultry products from all countries affected by Avian Influenza. We have tightened the biosecurity of our farms and stepped up disease surveillance of migratory birds. We are removing or have removed the free-ranging chickens from Pulau Ubin's backyard farms, which lack the protective measures necessary to keep out Avian Influenza. The poultry slaughter houses have expressed interest in buying the entire stock of poultry. I believe that since last night they have already reached an agreement to do so. Nevertheless, the farms and the residents on Pulau Ubin will be allowed to keep a few poultry in cages as pets. At the same time, we have introduced measures to protect the workers in the poultry industry, ie, those who are working in the farms as well as in the slaughter houses. So, we require everyone working with live poultry in the farms and at the abattoirs to wear protective gear, such as masks, to follow strict hygiene practices and to undergo daily temperature checks. Workers are being vaccinated against human influenza. This will prevent people who are down with human flu from also becoming infected with bird flu, therefore, avoiding the risk of genetic mixing of the Avian flu and human flu viruses to form a new virus strain which may be transmissible between humans. State of preparedness Sir, while we are confident that our measures will keep the disease out, we cannot be complacent.”
“Mr Speaker, Sir, Avian Flu is a viral disease infecting poultry. The current outbreak of Avian Influenza caused by the influenza A H5N1 sub-type, which is highly contagious in poultry, has so far affected 10 Asian countries, excluding Malaysia and Singapore. It has been reported that 17 people who had close contact with infected chickens have died from the disease. More than 50 million chickens have been culled. I would like to brief the House on what steps the Government has taken to prevent the disease spreading to Singapore and, if it does, to eradicate it. Sir, Singapore is free of Avian Influenza. All our tests on local farms, imported chickens, migratory and local birds at Sungei Buloh and the Bird Park have consistently yielded negative results. Common birds like crows, pigeons and mynahs are not known to spread the disease. However, we are doing more tests on them to be doubly safe. While we cannot be complacent, there are some significant factors in our favour. Firstly, we stopped slaughtering live poultry in wet markets 12 years ago. This means that the public generally does not come into contact with live chickens. Secondly, we only have five chicken farms and two quail farms with a population of 2.1 million birds. These are all modern commercial farms with proper protection against outside sources of infection. Thirdly, Avian Influenza remains a disease that affects only poultry. In rare cases, people who come into close contact with infected chickens without adequate protection may be infected. There is until now no evidence of human-to-human transmission. WHO and the Ministry of Health have assessed that even if human-to-human transmission of Avian Flu is possible, such transmission is limited and inefficient.”
“Mr Speaker, Sir, I would like to inform the House that I will be making a Ministerial Statement later on on the Avian flu which will address both Dr Amy Khor's Question Nos. 1 and 2 in greater detail. I will be happy to take questions from Members after that. VISIT OF MALAYSIAN PRIME MINISTER TO SINGAPORE (Outcome) 3. Dr Ong Chit Chung asked the Minister for Foreign Affairs what is the outcome of the recent visit of the Malaysian Prime Minister to Singapore and the discussions that took place between both sides, in particular, how does it impact Singapore-Malaysia relationship.”
“For the 12-month period from December 2002 to November 2003, 11 lessees returned their flats to HDB due to difficulties in servicing their mortgage loans. This number is low as HDB has a range of financial assistance measures to help mortgagors who are in financial difficulties tide over their current situation. These include extension of the loan repayment period, deferring payment of the instalments for six months or more, the reduced repayment scheme, payment of housing loan arrears by instalments, and inclusion of working family members as joint owners. HDB is pro-active in assisting them and providing advice on the measure that will best suit their needs. These measures have generally been effective, but there may be some lessees who feel that disposing of their flats would be the most practical, long-term approach to solving their financial problems. For these lessees, they may choose to surrender their flat voluntarily to HDB if they have not fulfilled the minimum occupation period for their flat yet.”
“It will facilitate the implementation of the Portable Medical Benefits Scheme and the transfer to savings from the Ordinary and Special Accounts to the Medisave Account, and other amendments in line with the overall objectives of the CPF system. Sir, I beg to move. Question proposed.”
“Moreover, with the liberalisation of the use of CPF funds for investment over the years, employees want more discretion in managing their own CPF monies rather than allow their employers to invest on their behalf. In 1999, CPF contributions were cut by 10% and there were no more contributions to the CoWEC after that. In April 2002, the last company on the scheme terminated its CoWEC scheme and transferred the funds to its employees' CPF accounts. Other amendments This Bill also introduces other amendments to enhance the administration and operation by the CPF Board. These include: (a) Clause 2 to replace all references to the previous wage floor of $200 with the current figure of $500, made pursuant to the raising of the salary floor for employee's CPF contributions from $200 to $500 in October 2002; (b) Clause 7 to amend section 24 to clarify that benefits derived from insurance policies and investment-linked insurance policies, purchased under the CPF Investment Scheme, cannot be attached, sequestered, levied upon for or in respect of any debt or claim; (c) Clause 8 to amend section 27 to allow the CPF Board to approve applications by undischarged bankrupts for CPF withdrawals, based on conditions approved by the Minister for Manpower; and (d) Clause 10 to amend section 77(1) by deleting paragraph (m) to reflect the phasing out of the Delgro Shares Scheme in 2004. Conclusion In conclusion, Mr Deputy Speaker Sir, the amendments proposed in the Bill will require CPF members to top-up their Medisave Minimum Sum to the required amounts at or after age 55 if they meet the CPF Minimum Sum.”
“Automatic renewal of Dependant's Protection Scheme (DPS) covers The Dependant's Protection Scheme, or DPS, is an opt-out insurance scheme to provide financial help to families of CPF members who have died prematurely or suffered permanent incapacity. Currently, section 48 stipulates that when a DPS-insured member has no CPF contributions for three years, his DPS cover will not be automatically renewed unless he makes a further CPF contribution or notifies the CPF Board in writing to continue his cover. The Board also sends the member a form to confirm whether he wishes to continue with his cover. If the member does not respond, his cover is not renewed. As a result, there have been cases of needy CPF members not being able to receive the DPS payments due to policies that have lapsed due to ignorance or inertia. To provide better protection for CPF members, clause 9 repeals section 48 to provide for automatic renewal of the insurance cover under the DPS for all CPF members with sufficient balance in their Ordinary Account, even if they do not have active CPF contributions. Members may opt out of the scheme anytime by notifying the Board in writing. Termination of Company Welfarism Through Employers' Contributions (CoWEC) Scheme Clause 9 also repeals sections 70 and 71 to reflect the termination of the CoWEC scheme. This scheme was terminated as it has lost its attractiveness and relevance. The CoWEC scheme was introduced in 1984 with the objective of providing for welfare benefits for employees. The scheme started with eight pilot companies and expanded to a total of 48 companies by 1986. However, the small size of funds in the CoWEC scheme made it difficult for them to manage the funds in a cost-effective manner.”
“Under this Scheme, an employer may make additional contributions, in lieu of the existing inpatient benefits, to an employee's Medisave Account for him to buy medical insurance to cover his inpatient needs. However, section 13B of the CPF Act limits CPF contributions made by a Singapore citizen or permanent resident, including voluntary contributions paid by his employer, to the mandatory contribution amount, or $28,800 in any year, whichever is the higher. This is to prevent excessive CPF contributions for the purpose of avoiding tax. To facilitate the implementation of the Portable Medical Benefits Scheme, clause 4 amends section 13B(3) to exclude any additional Medisave contribution made by an employer to an employee from the computation of the limit of $28,800, but capped at $1,500 per year. Facilitating the transfer of Ordinary and Special Account savings to the Medisave Account Sir, CPF members who are mentally handicapped or critically ill may have a greater need to use their Medisave savings. Such members would have a less compelling reason to save for their retirement adequacy in their Ordinary and Special Accounts. However, the current Act does not allow the transfer of savings from Ordinary and Special Accounts to the Medisave Account. Clause 6 inserts a new section 18C to allow members to apply to the CPF Board to transfer the balances that they have in their Ordinary and Special Accounts into their Medisave Accounts, subject to the prevailing Medisave Contribution Ceiling (currently at $30,000). It also confers on the CPF Board the power to impose terms and conditions governing the transfer to facilitate administration.”
“" The amendments to the CPF Act in this Bill will require members who meet the CPF Minimum Sum to top up their Medisave Minimum Sum balances before withdrawing their CPF. This change was announced by the Prime Minister in August this year. The Bill also seeks to facilitate the implementation of Portable Medical Benefits Scheme and to give effect to other changes to better serve CPF members. Topping up of the Medisave Minimum Sum Sir, the Medisave Minimum Sum (MMS) is to ensure that CPF members have enough money set aside to meet healthcare expenses in their older years. This MMS amount is currently set at $25,000. However, we have not required CPF members to top it up to that prescribed amount before withdrawal of their CPF monies at age 55. This is so even if that member has balances above the CPF Minimum Sum in his Ordinary and Special Accounts which he can withdraw at age 55. From 1st January 2004, we will require CPF members who meet the CPF Minimum Sum to top-up their Medisave Minimum Sum to the required amount. The required amount is set at $2,500 from 1st January 2004 and then increased further by $2,500 (in today's dollars) per year to reach $25,000 (in today's dollars) in 2013. Clause 5 of the Bill amends section 15(6) to require members to set aside or top up in the Medisave Account a sum of up to $2,500 or such other amount as the Minister may specify, at the time when they make CPF withdrawals from 1st January 2004. This includes first withdrawals by CPF members at or after age 55 and all subsequent withdrawals. Sir, let me now focus on the other amendments introduced by this Bill. Additional Medisave contributions above the voluntary contribution limit On 1st October this year, my Ministry announced details of the Portable Medical Benefits Scheme (PMBS).”
“As such, the investment income and Expenses on Investment (EOI) from the Government's reserves managed by GIC are reported separately in the Government's books. A separate budget needs to be provided for expenses and this estimate presented to Parliament at the beginning of the fiscal year. While the general principle that all revenue should go to the Consolidated Fund and all expenditures should be specifically voted remains conceptually sound, it is distortionary in the case of EOI because income and expenditure occur at the same time and are co-dependent: the expenses are integral to the trades. The current arrangement also distorts returns by overstating revenue through accounting for gross proceeds rather than net proceeds. In the private sector, fund managers offset the EOI from investment income and only net proceeds from investment are taken into the books. Even in Government, there are precedents to such a treatment. Expenditure incurred on investment activities involving the Government Securities Fund, for example, is not separately voted but charged against the fund directly as the Government Securities Act allows for direct deduction of such expenses from the Fund. Clause 3(a) will enable EOI to be charged directly to the Consolidated Fund. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Lim Hng Kiang]. Bill considered in Committee; reported without amendment; read a Third time and passed. CENTRAL PROVIDENT FUND (AMENDMENT) BILL Order for Second Reading read. The Acting Minister for Manpower (Dr Ng Eng Hen): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time.”
“Transfer of budgets to follow transfer of functions Currently, when a function and the staff performing it is transferred from one Ministry to another during the financial year, additional budget would have to be provided to the receiving Ministry while the budget for the transferred function is retained with the original Ministry, because the law does not allow the transfer of the funds between Heads of Expenditure. This results in a budget that is distortive and misleading. Clause 3(c) will allow the full transfer of funds between Heads of Expenditure when, and only when, there is a transfer of functions between those Heads. Retention of interest from deposits At present, section 7(4) of the Financial Procedure Act requires interest on all types of deposits placed by the public with the Government to be credited to the Consolidated Revenue Account. On an annual basis, these interest payments have then to be voted separately by Parliament to the Ministry to return to the depositors. This creates unnecessary work flow due to the round-tripping of funds. The interest is due to the depositors, and at no point is it Government revenue. A self-financing mechanism, such that the administration of returning the principal and interest to the public would reside within the Ministry that imposed the deposit, will therefore address the issue. Administration of the deposits could then be managed individually and the interest credited directly to these accounts. Clauses 3(a) and (d) will enable the implementation of this mechanism. Expenses on investment to be converted to Statutory Expenditure The Constitution and Financial Regulations require the Government's accounts to be prepared on a gross basis.”
“- [Mr Mah Bow Tan]. STATUTES (MISCELLANEOUS AMENDMENTS) (NO. 2) BILL Order for Second Reading read. 5.21 pm The Second Minister for Finance (Mr Lim Hng Kiang): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill will amend the Development Fund Act and Financial Procedure Act to allow for: (i) Voted equity to be appropriated from the Development Fund (DF); (ii) Transfer of budgets to follow transfer of functions; (iii) Interest from certain public deposits to be accounted with the deposit and not transferred to the Consolidated Fund; and (iv) Expenses on Investment to be converted to statutory expenditure from FY 2004. Let me now explain the main amendments in the Bill. Voted equity to be appropriated from the Development Fund At present, the Minister for Finance cannot inject capital into a statutory corporation from the Development Fund. Such investments could either be funded from the Consolidated Fund or the Development Investment Fund. However, the scope of the Development Investment Fund is limited to projects that can generate returns. For projects that are highly subsidised, the only current alternative would be to use the Consolidated Fund. But this would be highly distortive as the funding ends up reflected as 'operating' expenditure. It would therefore be appropriate to change the legislation to allow for such capital injections to be appropriated from the Development Fund. Clauses 2 and 3(b) of the Bill will allow the Development Fund to be used to provide capital contribution for investment by way of capital injection in any statutory corporation.”
“Valuation of units in listed unit trusts donated to approved Institutions of a Public Character (IPCs) Clauses 30(g), (k) and (l) amend the Act to clarify that the value of listed unit trusts donated to approved IPCs shall be the price of such units in the open market at the last transaction of such units, as at the date of the donation. Finally, Mr Deputy Speaker, other tax policy changes that have been incorporated in this Bill include: (i) Clarification on the treatment of further tax deductions under the group relief scheme (clauses 12, 14 and 15(b)); (ii) Introduction of the requirement to apportion donations among income subject to tax at different tax rates (clauses 30(a), (b) and (j)); (iii) Changes in conditions to claim of industrial building allowance (clauses 19(a) and 20); (iv) Introduction of tax exemption for Bareboat Charter-In ships (clause 4(b)); (v) Removal of tax treatment that deems certain dividends as interest (clauses 4(a), 5, 6, 8 and 15(b)); (vi) Removal of Approved Credit Rating Agency Incentive (clause 38); (vii) Amendments consequential to the implementation of one-tier corporate tax system (clauses 42 and 43); (viii) Withdrawal of Hotel Refurbishment Scheme (clause 15(a)); and (ix) Withdrawal of Double Child Relief (clause 51). Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Lim Hng Kiang]. Bill considered in Committee; reported without amendment; read a Third time and passed. EXEMPTED BUSINESS (Motion) Resolved, That the proceedings on the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1.”
“Formalising the Central Fund Scheme Most Institutions of Public Character (IPCs) are administered through a Central Fund according to the primary area of activity of the IPC. To instill greater accountability and transparency among IPCs, clause 50 amends the Act to formalise the Central Fund Scheme, thereby legally requiring IPCs to comply with minimum operating requirements imposed directly or through the Central Fund, in accordance with the Income Tax Act. Set-off rules for allowances The existing practice is to set off capital allowances and industrial building allowances within each source of income first, before setting off excess industrial building allowances and capital allowances against other sources of income. Clauses 25, 26 and 29 amend the relevant provisions of the Income Tax Act to make clear the above set-off rules. Change in basis of computing the 80% Rule Currently, a charity has to spend at least 80% of their annual receipts on charitable work in Singapore before it is granted exemption from income tax. This 80% rule is imposed to encourage charitable organisations to spend most of their income on charitable causes, and discourage them from accumulating large surpluses. When a charity receives a donation in kind, other than donation of securities, the value of the donation in kind is included in the computation of the 80% spending rule at the time of donation. With effect from 1st April 2003, only the net proceeds from the disposal of these donations in kind will be included in the computation of the 80% spending rule at the time of disposal. Clause 9 amends the Act to provide for this change.”
“Removal of tax deductions for expenditure on energy conservation Tax deductions for expenditure incurred in upgrading air-conditioned commercial buildings was introduced in 1982 to encourage energy conservation. As all buildings constructed since 1st January 1982 have complied with the overall thermal transfer value requirements, the tax deduction scheme is no longer relevant. Clause 13 amends the Act to provide for this removal. Let me now briefly outline key legislative changes related to improving our tax administration. Changes in withholding tax administration Currently, when local taxpayers make payments to non-residents, local taxpayers must notify and pay the amount withheld to the Comptroller of Income Tax within 10 days - the so-called "10-day rule" - from the date the local taxpayer becomes liable to pay to the non-resident. With effect from 1st April 2003, taxpayers are required to notify and pay the tax withheld to the Comptroller by the 15th of the month following the date the amount becomes liable to be paid to the non-resident. This change will help reduce the compliance burden on local taxpayers that have to withhold tax. Clauses 35, 44(a) and 45 amend the Act to provide for this change. Heavier penalties for serious fraudulent tax offences The current penalty provisions for tax offences under section 96 of the Income Tax Act are similar, regardless of the severity of tax offences committed. To deter serious tax fraud, such as preparation or maintenance of false books of accounts or other records, heavier penalties would be imposed on these more serious tax offences. A new penalty provision (section 96A) is enacted to cater for serious tax fraud. Clauses 47 and 48 amend the Act to provide for this change.”
“Umbrella financial sector initiative To streamline and simplify the host of financial sector incentives, clause 41 amends the Act to provide for the merger of seven existing incentives into an umbrella financial sector incentive scheme (FSI). This scheme would provide a 5% concessionary tax rate for high-growth and high-value added activities and a 10% concessionary tax rate for other qualifying financial activities. This scheme will come into effect on 1st January 2004. Changes to incentives that promote the debt market The tax incentive for qualifying debt securities will be extended to 31st December 2008 to further promote the growth of the debt market. In addition, the tax exemption for income derived from trading in Singapore Government securities will be extended another five years to 27th February 2008. Both the approved bond intermediary scheme and this incentive to provide a concessionary tax rate for income derived from trading in debt securities will also be subsumed under the financial sector incentive (FSI), which I described earlier, with effect from 1st January 2004. Clauses 3(a), (g), (h), (i) and (j) and clauses 34, 39 and 44(c) amend the Act to provide for these changes. Removal of activities that qualify for industrial building allowance Industrial building allowance is currently granted for buildings or structures used for qualifying activities. As activities relating to plantation, mining and pig farming are no longer carried out in our urban environment, these activities would be removed from the list of qualifying activities. Clauses 11, 19(b), 21 and 22 amend the Act to provide for these changes.”
“Approved global trading companies may now qualify for concessionary tax rate of 5% on qualifying income instead of 10%, depending on their contribution to the Singapore economy. Clause 40 amends the Act to provide for this change. Intellectual property promotion The sixth change is intellectual property promotion. With the focus of new services like healthcare, education and creative industries, that involve high-value added and knowledge-based activities, it is critical to continue to build up talents in R&D and in the creative fields. Tax deductions would be granted for patenting costs incurred on or after 1st June 2003. Clause 17 amends the Act to provide for this change. Automatic writing-down allowance over a 5-year period will also be granted for capital expenditure incurred on intellectual property rights such as patents, copyrights and trademarks acquired on or after 1st November 2003. Clause 23 amends the Act to provide for this change. Other changes Mr Deputy Speaker, Sir, the other tax policy changes announced in the 2003 Budget Statement are also covered by changes in the Income Tax Act. I would not subject Members to a repeat broadcast of the 2003 Budget Statement. If there are any other specific policy changes which Members are interested in discussing, I would be more than happy to oblige. Let me now focus on the tax policy changes which require amendments to the Income Tax Act, but were not covered in the 2003 Budget Statement. Our regular review on the relevance of our existing tax incentive schemes has brought out changes or refinements that should be made to these schemes. I will now highlight four major changes.”
“Portable medical benefits would provide our workers with medical benefits coverage, not only when they are in employment, but also when they are in-between jobs. To encourage workers and employers to adopt the new portable medical benefits scheme, or the new transferable medical insurance scheme, the additional amount of tax exempt Medisave contributions that employers can make per year would be raised from $720 to $1,500 per employee with effect from 1st January 2003. From 1st April 2004, employers who implement either of the two new schemes will also enjoy tax deduction for medical expenses up to a limit of 2% of the payroll. Other employers would qualify for deductions of up to 1% of total payroll. Clauses 2 and 10 amend the Act to provide for these tax changes. Tax exemption of foreign trusts The fourth change is a tax exemption of foreign trusts. The development of world class trustee services in Singapore is important to our growth as a wealth management centre. To boost the development of trust administration and custodian services, the current income tax exemption granted to foreign trust administered by approved trustee companies will be extended to foreign trust administered by any trustee company in Singapore. This will take effect from Year of Assessment 2004. Clause 7 amends the Act to provide for this change. Enhancement of global trading programme The fifth change is the enhancement of the global trading programme. International trading companies in Singapore have helped build our global reach over the years. To further promote Singapore as an international trading centre, the global trading programme was enhanced with effect from Budget Day on 28th February 2003.”
“The draft Bill was revised to incorporate suggestions from businesses and the public. Let me now highlight six key policy changes which were announced in the 2003 Budget Statement. Exemption of foreign source income First, exemption of foreign source income. To improve our tax competitiveness, all foreign source dividends, branch profits and service income remitted into Singapore from 1st June 2003 onwards are exempted from income tax. This tax exemption is available to any resident taxpayer, whether an individual or a company, so long as the Comptroller of Income Tax assesses that the taxpayer would be better off coming under the exemption scheme than continuing under the existing tax credit system. To prevent abuse, the exemption would only apply if the foreign income is received from jurisdictions with headline tax rates of at least 15% and would normally be subject to income tax in the foreign jurisdiction. Clauses 3(e) and (f) amend the Act to provide for this exemption. Exemption of domestic interest income The second change is the exemption of domestic interest income. To attract foreign funds and retain domestic funds in Singapore, interest income derived by individual on or after 1st January 2003 from deposits in standard savings, current and fixed deposit accounts, in excess of $100,000, with any approved bank or licensed finance company in Singapore, will be exempt from tax. From Year of Assessment 2006 the exemption would be extended to the full amount of these deposit accounts held by individuals. Clauses 3(d) and (l) amend the Act to provide for these changes. Portable medical benefits The third major change is the portable medical benefits.”
“Yes, it is true that a landowner with a very high baseline would think that with this change his value has been destroyed. But, that is "if", and the operative word is "if" the Master Plan is changed, such that he is able to develop beyond what his high baseline entitles him to. So, the question is that if there is no approval given for him to change his use beyond that particular baseline that he enjoys, he actually does not enjoy any enhancements at all. So really, as I explained earlier, it is a reasonable expectation perhaps, but it is certainly not an entitlement. On the second point, I would repeat my assurance that we will continue to look at how we can refine the Temporary Development Levy scheme to make sure that we continue to make it business-friendly. 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 Mah Bow Tan]. Bill considered in Committee; reported without amendment; read a Third time and passed. INCOME TAX (AMENDMENT) BILL Order for Second Reading read. The Second Minister for Finance (Mr Lim Hng Kiang): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment) Bill 2003 has two components. First, it provides for the income tax changes announced in this year's Budget Statement by the Deputy Prime Minister and Minister for Finance. The second component also includes other amendments to the Income Tax Act arising from our regular review to improve our income tax system. The Income Tax (Amendment) Bill was released for public consultation in June this year. This was the first time such a public consultation has been conducted.”
“By shorter term leases you automatically attract a lower Development Charge, albeit not a directly pro-rated Development Charge, but it is a lower development. So, perhaps we can look at that. [Mr Deputy Speaker (Mr Chew Heng Ching) in the Chair] 5.00 pm Twenty years, again as I said, may not be a very short time. It may well be that the structure that is erected for 20 years cannot be considered a temporary structure, and for that reason it does not fall under the ambit of this Bill. But I take her point that we should continue to look at how we can refine this system even further. And, if there is a market demand to apply this temporary levy scheme to other development types, we can look at it and we will review the policy as we go along. But, bear in mind that the purpose of this change is really to help businesses start their operations without too much upfront costs in order to lower barriers to entry. If we can do that, then it has served its purpose. I believe I have answered all the questions, Mr Deputy Speaker, Sir.”
“Let me say once again that I do not agree with the Member when she said that this particular change is destroying land values. She has also asked whether the baseline register will actually add cost to landowners. Let me assure her that we will be very mindful of the cost associated with creating this register. I have, in fact, made this point to the officers that we will find an administratively simple way to implement this particular amendment so that costs are kept to a minimum. Definitely the impact of this change, at least in terms of maintaining the register, will not be felt by the landowners. On Temporary Development Levy, the issue is whether we have gone far enough or whether we should actually apply that to permanent structures, new erections or whether we should apply that to structures on a longer term basis. As the name suggests, the Temporary Development Levy is really meant for temporary permission for temporary structures. One can argue that something that has been erected for 10 years cannot be construed to be temporary but, nevertheless, the sense is that 10 years is a reasonably long time to allow a business to recover its costs and yet, at the same time, the Government allows the State to bring down the barrier to entry. If we are talking about a structure which is, say, 20 years, for longer term use, perhaps we could look at some other mechanisms to also allow for the cost of doing business to be brought down. I think the sentiment behind the Member's question is a sound one. What I am saying is that perhaps this is not the right mechanism for us to do so. What we can do is to look at, say, shorter term leases.”
“In other words, you were given a high baseline, you are entitled to this value for eternity. The answer is no. It is not a legal entitlement. What is it? It is an expectation that you can develop these lands up to that particular value subject to what is stipulated in the current Master Plan. So even if the Master Plan 1958 or 1980 stipulates a very high baseline exceeding the current Master Plan - in this case, we are talking about Master Plan 2003 - it does not follow that that high baseline is what they are legally entitled to. They can only develop up to Master Plan 2003. This is the main point that I would like to make. Historical baselines are not legal entitlements to land value. They are expectations of enhancements of development potential in the future. They are actually parameters in the Development Charge tax formula. We can change this parameter from time to time. I do not agree that there is a destruction in the value of the land in this particular case. As I have said, the proposal is to refine the tax formula to make it more in line with the principle of collecting Development Charge as and when lands are redeveloped and value is enhanced. Why are we doing this? We are doing this simply because when value is enhanced as a result of State actions, particularly through the building of infrastructure, it is only fair that some of the benefits accruing from this enhancement in land value be channelled back to the State for public infrastructure works, for building of roads, building of MRTs, sewer lines, etc. The proposed revision in the baseline merely re-establishes this principle of sharing of enhancement gains for those sites which may have fallen through the system.”
“In this particular case, we have situations where pieces of land with high baselines, historically derived in 1958 and 1980, would actually result in no sharing of enhancement between the State and the landowner, if such lands were to be redeveloped in future whenever the Master Plan allows. Where such an anomaly exists, we should correct it. It does not matter whether there are many pieces of land or not. The point is that this is an anomaly that has to be corrected because, if it is not corrected, we are not able to apply this principle. Having said that, of course, I can inform the Member that there are quite a few of these sites in the central area. URA has combed through the various sites and they have estimated that there are over 1,000 such sites, mainly in the central area, where there are such high baselines and which, if this Act is not amended, would result in the State not having the ability to share in any enhancement in land values in the future. So that is the reason behind this change. It is not an administrative issue. It is not an issue where we are doing this just because we happen to go through and we see this anomaly and, therefore, we want to change it. I think there is a fundamental principle involved. The other major point that she raised is whether, in this particular amendment, we are actually destroying value. Is it akin to, say, compulsory acquisition of land, where we are actually taking land and compensating based on a certain formula in the Act? Are we destroying value in this? Let me say that when we talk about destroying value, the Member is assuming that the high baselines in the 1958 and 1980 Master Plans are actually legal entitlements to the value of the land.”
“Our experience has been that multiple operators, operating in a single environment, do create problems, and that is the reason why we are requiring in this amendment in clause 3 to make sure that whenever there is more than one operator, it immediately constitutes a material change of use. And as a material change of use, they have to go back for temporary planning permission, in order for the planners to look at the issue, consider the potential problems and then decide whether or not they want to approve. That is the reason why this particular amendment in the clause has been enacted. I hope I have answered Dr Teo's questions. I turn now to Dr Amy Khor's questions. I think she has raised some very fundamental questions pertaining to the Development Baseline. She asked, first of all, why are we doing this. How many sites are there that have this anomaly, and is it worth our while to comb through all the sites in order to just correct a very small anomaly. I go back to the very principle of the Development Charge. The Development Charge is really a tax. It is levied where the value of land is enhanced as a result of some actions of the State, whether this is in the building up of infrastructure that would allow land to be used more intensively, or whether this is some change in planning parameters, or some change of policy regarding land use. All these are actions of the State which have created value in the land. The principle is, as first mooted when Development Charge was implemented in 1964, that where there are enhancements in land value, the State should share with the landowner in that enhancement. That is the first principle.”
“We have to balance this need for operators to satisfy this demand and yet, at the same time, make sure that when they do so, they do not create excessive noise and traffic problems to the surroundings and their neighbours. This is a fine balance and each case is assessed on its own merits. But the reason why they are granted temporary permission is precisely that if they do, in the course of their operation, create such problems, the Competent Authority can withdraw that permission. When Dr Teo asked how do we protect the interests of other residents around the area, this is one way. The very fact that we grant it on a temporary basis, and not a permanent basis, is one way to make sure that the operator keeps to his promise to make sure that the nuisance is minimised. Dr Teo also asked why is it that we are requiring in this Bill to have two or more operators come to URA for planning permission. Why not just allow them to continue? The answer lies in the original planning permission. The original planning permission for such developments usually takes into account a single operator, whether it is a boarding house, a hotel, a childcare centre, whatever. All the planning considerations are based on such a single operator. When you have more than one operator, inevitably, problems do arise. The situation on the ground has shown that, for example, if you have multiple operators in a building operating boarding houses, you have lots of problems - business rivalry, touting and deterioration of the common corridors, etc.”
“So, a comparison would have to be made, the application would have to be assessed: is there an enhancement in land value as a result of this change? If there is, there will be a Temporary Development Levy paid. If not, then it would continue to be given this temporary permission free of charge. Combing through some of the current examples, if we took this system and applied it to them, the indication is that very few of the temporary permissions granted would attract such a levy. So, in terms of impact on businesses, I think the impact would be minimal. However, it is something that is fair, equitable and needs to be done, because there is an enhancement in land value. There is no reason why a temporary permission granted should not attract a levy when there is an enhancement in land value, whereas a permanent permission granted attracts such a levy. So, it is really addressing an anomaly. Dr Teo also asked how do we protect the interests of other users. This again is a valid question, because every time URA planners or the Competent Authority allows a change of use, there is inevitably the question raised: what is the impact of this change of use on the surrounding areas? So, planners always need to look at amenity issues, whether such a change of use would create disamenities to the surrounding areas. Again, I cite the example I quoted earlier on childcare centres. Childcare centres which are sited in residential areas are given very close scrutiny. Why? Because, at first glance, you think that they would create traffic and noise problems and so on. Yet, at the same time, we know that there is such a demand for childcare centres in residential areas.”
“Mr Speaker, Sir, I thank the two Members who have spoken. Both Dr Teo and Dr Amy Khor have supported the changes in the Bill, but they have asked relevant questions and I would like to take this opportunity to address them. First of all, Dr Teo asked what are the likely changes when we talk about giving temporary approval. I have mentioned some examples in my speech. For example, when we allow the living quarters above a shophouse to be used for office space and it is zoned residential, we allow it to be used for office space because there is deemed to be little or no disamenity to the surroundings. Another example I cited was childcare centres in residential estates. I could give a few other obvious ones, such as car-polishing stations in car parks. Members will notice that there are many car parks which have been designated for car-polishing stations. Again, that is a conversion from a car park use to a commercial use. There is also quite a lot of requests for eating houses in areas which are normally zoned residential. A good example is Jalan Merah Saga in the Holland Village area. So, these are some of the temporary permissions that are granted. They do not conform with the Master Plan as it is currently gazetted, but URA planners look at the applications and, if the applications do not create much disamenity, permission would be granted and they are called non-conforming uses, for which this Temporary Development Levy would have to be paid. However, let me say that it does not follow that all such temporary permissions will attract this levy. The levy would only be paid in cases where there is an enhancement in land value.”
“Making it explicit that the use and operation of certain developments as 2 or more separate entities would require planning permission Finally, it will be made clear in clause 3 that for hotel, boarding house, service apartments, workers dormitory, student hostel and place of worship developments, having more than one operator would constitute a material change of use and thus require planning permission. The requirement for planning permission gives the Competent Authority a chance to evaluate and decide on any proposal to have multiple operators in such developments based on planning and other considerations. This is to ensure that amenity issues, such as spillover effects of business rivalry or deterioration of common areas, can be addressed. Sir, in summary, the amendments will simplify and strengthen the legal framework to facilitate planning and streamline the development application approval process, making it more pro-business and in line with present needs. Sir, I beg to move. Question proposed.”
“Finally, Sir, there are three other changes that I would like to quickly explain. Remission of Development Charge Currently, the Planning Act only has provisions to grant exemptions from payment of DC and to refund DC. There is no provision to allow partial reduction of the amount of DC payable, even in situations where it is reasonable for the Government to do so. Provision is now made in clause 13 to allow the Minister the flexibility to consider such requests in future and to remit the DC payable where it is just and equitable to do so. Authorisation of subdivision Currently, owners of certain multi-unit developments such as commercial, non-landed residential and flatted factory/warehouse buildings are required to apply for strata subdivision approval if they want to sell or grant leases for more than a specified number of years. There has been feedback from the Economic Review Committee's Land Working Group to grant greater flexibility to enable longer leases of multi-unit developments. The Government has responded to this call by extending the maximum duration of lease from 14 to 21 years, beyond which strata subdivision permission is required. In the current amendment, the Government has gone one step further to make it easier for owners to obtain approval for strata subdivision. Clause 9 amends section 21 of the Planning Act to enable the Minister to authorise, by notification in the Gazette, the subdivision of land and buildings. With this amendment, strata subdivision for certain types of developments approved for multi-units can be authorised. These building owners will no longer need to apply for strata subdivision approval by the Competent Authority, and therefore help them save time and cost.”
“The Competent Authority would also check the proposal plans to ensure that the planning requirements are complied with. In a move towards greater self-regulation within the industry, and to accord industry professionals a greater role in the development process, the Competent Authority intends to place greater reliance on the QP's declaration of compliance with development control guidelines and/or any proposed deviations from these guidelines in their development applications. This will have the added advantage of speeding up the approval process. Clause 7 inserts a new section 14A to provide that the Competent Authority may grant written permission on the basis of a certification or declaration by a QP if it is required to be submitted together with an application. However, in order that development control is not compromised, there would be a need to put in place a robust control mechanism to discourage errant QPs from making false declarations. Therefore, it is necessary to strengthen the current legal framework to make QPs more responsible for their declarations. Clause 17 amends section 61 to empower the Minister to make rules to: (a) Prescribe the submission requirements for various applications and the type of applications that require QP's declaration, and (b) State the duties, responsibilities and liabilities of a QP in relation to making a declaration. For proposals affecting conserved buildings, the controls are on architectural details. QPs are to ensure that these controls continue to be complied with during construction stage. Clause 8 provides that the QPs would now be required to declare that the building plans that were submitted to the Building and Construction Authority are in accordance with conservation plans approved by the Competent Authority.”
“Sites with approval granted under the hotel concession policy Between 18th April 1968 and 31st December 1969, a hotel concession policy was in effect. Under this policy, special concessions were given to developers to encourage hotel developments. Development Charge, which was otherwise payable for the hotel development, was not levied. A total of 25 hotels were approved under this policy and enjoyed Development Charge concessions. Examples of such hotels include Shangri-La Hotel, Hilton Singapore, Orchard Parade Hotel. There could be the mistaken impression by hotel owners that the concession floor area will continue to form part of their Development Baseline upon redevelopment to non-hotel use. This was not the intent of the hotel concession policy. As the Development Charge was not levied on hotel developments during that period, the Development Charge concession should cease to apply once the hotels redevelop to other development types. The proposed amendment will make this clear. Provision is now made in clause 11 to make it explicit that the floor area of the hotels approved between 18th April 1968 and 31st December 1969 under the hotel concession policy will be disregarded for the purpose of Development Baseline if the hotel use ceases, or if there is redevelopment to other non-hotel use. Sir, I shall now go through the amendments relating to the responsibilities of Qualified Persons in making development applications. Making Qualified Persons responsible for declarations Currently, the URA administratively requires Qualified Persons (QPs) to submit and certify planning information in a development application, which a lay person would not have the technical competence to handle.”
“To reduce the entry barrier for businesses, clause 15 introduces a Temporary Development Levy scheme to tie the amount of levy to the period of the temporary permission. This will allow new business start-ups to choose either to apply for a permanent permission (in which case they would have to pay full Development Charge), or to apply for a temporary permission not exceeding a period of 10 years with payment of a levy. The levy will be based on the period of use according to a prescribed table, but it will be lower than the full Development Charge they would otherwise have had to pay if permanent permission had been issued. The Temporary Development Levy will apply for temporary permissions for both conforming and non-conforming uses, as long as there are enhancements in value. This system will benefit applicants for conforming uses who wish to try out their development ideas before applying for permanent permission. However, I must point out that it will be a new levy for those who are on temporary permissions for non-conforming uses. Today, the Competent Authority allows such non-conforming uses on a temporary basis without any levy. However, since the operators and owners benefit from the higher value use from Government's approval, it is reasonable that part of the value enhancement is taxed through the levy and then redirected back for public use. However, we will only impose the Temporary Development Levy for non-conforming uses from 1st January 2008 when the revised Development Baseline definition, which I elaborated earlier, comes into effect. This will provide sufficient notice to operators and owners. Sir, I shall now move on to the determination of Development Baseline for hotels that were approved under the Hotel Concession Policy.”
“However, it will allow a more equitable sharing of the value enhancement for redevelopment and Master Plan alteration in future Master Plan Reviews. After 2008, the Development Charge system will be fairer and more effective. Temporary Permission Sir, let me move on to explain the changes to be made to facilitate the grant of temporary planning permission. Under the Planning Act, the Competent Authority is required to act in conformity with the Master Plan. When a proposal conforms to the Master Plan, permanent permission is usually granted. However, when a proposed use does not conform to the Master Plan, but can be supported on planning grounds, the Competent Authority may approve the use for a limited period on temporary permission. Some examples of non-conforming use on temporary permissions could be the conversion of the upper storey of a shophouse to office use or the conversion of a residential house to a childcare centre. The power to grant temporary permissions for non-conforming uses is not explicitly provided for under the present Act. Clause 6 in the current amendment will enable the Competent Authority to grant temporary permissions not exceeding 10 years for non-conforming uses. The next amendment is the introduction of the temporary development levy. Temporary Development Levy Currently, the Competent Authority collects full Development Charge upon grant of a permanent permission for conforming uses when there are enhancements in land value. URA has received feedback that the Development Charge, if it is a significant amount, could pose a major hurdle to entrepreneurs who want to try out new business ideas.”
“Before the revision, Figure 3(a), no DC is payable when the site redevelops up to the value allowed under MP 2003. Why? Because the MP 58 or MP 80 baseline is higher than the MP 2003 value. With the revision, Figure 3(b), the value of the approved development becomes the Development Baseline. Enhancement in value above the approved development up to the MP 2003 will now be liable to Development Charge. However, URA will preserve the value of the historical baseline up to the development potential of the MP 2003. This is shown in of Figure 3(b). Owners of these sites will not need to pay DC for developments up to the value of the MP 2003. This is no different from the position before the baseline revision, where DC is also not payable. However, the revision will allow enhancement gains to be shared in future when the Development Ceiling is raised beyond the MP 2003 value. This is shown clearly in the third column of Figure 3(b) where we show a new Development Ceiling beyond the current Development Ceiling and the DC is payable on the difference. When the Development Ceiling is raised in future Master Plan Reviews, redevelopment can take place beyond the MP 2003. The enhancement in value beyond the MP 2003 will be liable to Development Charge. What this means is that it will bring these sites in line with other sites after 2008. Development Charge will now be payable for all sites which have their Development Ceiling raised beyond the MP 2003 value. URA will release more details on how the historical baseline will be safeguarded at a later stage. With the deferred implementation and safeguarding of historical value up to the allowable uses under the prevailing Master Plan, the impact of the redefinition of baseline will be minimal.”
“Landowners will thus not be worse off than they are presently. The historical value locked-in will continue to be applicable after 1st January 2008. Any development proposal on these lands after 1st January 2008 will be exempted from Development Charge payment up to the difference between the locked-in value and the new Development Baseline, if the locked-in value is higher. Once again, because the matter is complicated, let me refer Members to the handout. If Members look at Figure 2(a), before the revision, the MP 58 or MP 80 baseline is the Development Baseline, as I explained earlier, because it is the higher value of all the three, higher than the approved development. However, it is below the MP 2003 value, and therefore Development Charge (DC) is payable. After the revision, Figure 2(b), the Development Baseline is now the value of the approved development ( figure). Strictly speaking, DC payable would now be higher. However, URA will preserve the baseline up to the value of the MP 58 or MP 80 baseline. Value enhancement above the approved development up to the MP 58 or MP 80 value will be exempted from Development Charge. If you look at of Figure 2(b), that portion of it from the new Development Baseline to the original MP 58 or MP 80 baseline will be exempted from DC. Development Charge is payable only when the locked-in MP 58 or MP 80 value is exceeded. With the lock-in, there will essentially be no change in the DC payable before and after the revision. In the same way, sites where the MP 58 or MP 80 baseline is higher than the MP 2003 value will also not be affected if they redevelop their site up to the MP 2003 value. Please refer again to the handout, and this time to Figure 3.”
“Simplify Development Baseline and make it more transparent The change would also simplify and standardise the process of establishing the Development Baseline and improve transparency of the system, as the outdated MP 58 and MP 80 are not easily understood and often require interpretation by URA planners. Advance notice period and auto lock-in of historical baseline Sir, the deletion of references to MP 58 and MP 80 from the definition of Development Baseline, though a necessary and desirable move, will affect those landowners who have sites with MP 58 and MP 80 baselines that are higher than their approved Development Baseline. These landowners would be subject to a higher Development Charge upon rezoning or redevelopment of their sites. To mitigate the impact on these landowners, and to give ample time for landowners to adjust to the revised baseline definition, my Ministry intends to effect the revised baseline definition only in 4 years' time, ie, on 1st January 2008. During this period, landowners who intend to redevelop their lands can submit development proposals and they can still make use of their historical baselines up to the MP 03 intensity for the purpose of computing Development Charge. For landowners who have no intention or are unable to redevelop their lands within this advance notice period, my Ministry will take a further step to safeguard and lock-in the historical baseline in MP 58 and MP 80 that is applicable to their site under the current legal provisions. This is capped at the maximum use and intensity allowed under MP 03 if the MP 58 or MP 80 baseline value is higher than the MP 03. In other words, the URA will preserve the value of historical baseline up to the development potential of the Master Plan 2003.”
“Here, the MP 58 and MP 80 values of a site, as shown in , exceed not only the value of the approved development in , but also exceed the value of the development potential allowed by the prevailing Master Plan in . In this case, the prevailing Master Plan will be the Master Plan 2003, which will be enacted by the end of this year. With the removal of the MP 58 and MP 80 baselines, the value of the approved development will become the baseline instead, ie, of Figure 1(b). Achieve a fairer and more effective Development Charge tax system Let me now explain the purpose of the proposed amendment. In Figure 1(b), where sites have very high MP 58 or MP 80 baseline that exceed the value of the development potential under the MP 2003, no Development Charge is payable if they undergo redevelopment, because the MP 58 or MP 80 baseline exceeds the Development Ceiling. In other words, the benefits of the value enhancement arising from the redevelopment cannot be shared between the land-owner and the State. Furthermore, if the Government upgrades the development potential for these sites in future, the enhanced land value will not be subject to Development Charge as long as the MP 58 or MP 80 baseline is higher than the new Development Ceiling. [See of Figure 1(b)]. Development Charge is payable only for the portion of the new Development Ceiling which exceeds the MP 58 or MP 80 baseline. [See of Figure 1(b)]. Sir, with the proposed amendment, a Development Charge has to be paid once the value of the "approved development" is exceeded. This allows for a more equitable sharing of the enhancement in value arising from an upgrading of the Development Ceiling in future Master Plan Reviews. It results in a fairer and more effective tax system for the redevelopment of sites.”
“With this amendment, the Development Baseline is the value of the approved development for the site for which Development Charge was paid, exempted, or not required to be paid. Any enhancement in value arising from redevelopment would be that above this base, and not that above a historically prescribed base that has no direct link with the actual development history of the site. Better reflect the intentions of the DC System The revised Development Baseline will better reflect the intentions of the Development Charge as a tax on land value enhancement. Sir, as this is a rather technical matter, please allow me to clarify the issue by referring Members to the handout* on the *Cols. 3553-8 Planning (Amendment) Bill which has been distributed. If Members look at Figure 1(a), today, the baseline for a site would be the highest of the three values, either MP 58 or MP 80 or the approved development value. In Figure 1(a), the highest value would be in , the MP 58 or 80 baseline. When the site is redeveloped up to the use and intensity allowed under the prevailing Master Plan (known as the Development Ceiling), the value enhancement will be that between the MP 58 or MP 80 baseline and the Development Ceiling. A Development Charge will be payable for this enhancement. With the removal of the MP 58 and MP 80 values from the definition of baseline, the Development Baseline becomes the approved use for the site, ie, of Figure 1(a). If the land is developed up to the prevailing Master Plan, the enhancement of land value will be measured from this revised baseline in , instead of the higher Development Baseline in . A second situation is illustrated in Figure 1(b).”