Ow Chin Hock
Singapore
“Thirdly, I believe that Mr Simon Tay referred to links with ASEAN+3. Let me say that we do not preclude any such flexibility. Indeed, APEC is an established forum linking Australia and New Zealand with ASEAN and East Asia.”
“Sir, I am not an expert on the Constitution, but I am aware that the Supreme Court's ruling is different from Mr Estrada being impeached and convicted in the Senate. NUCLEAR WEAPONS AND UNITED STATES ARMED FORCES IN SINGAPORE (Facilities) 2. Mr J. B.”
“However, we are mindful that nowadays, Singaporeans who like to experience living and working overseas, have many other attractive career options, in both private and public sectors.”
“Sir, let me thank the Minister on behalf of the 3-room flat dwellers. My supplementary question is: in future, if any rebates are given, will the Minister consider making the amount of the rebates inversely proportional to the size of HDB flats, in other words, the smaller the flat the greater the amount of rebates?”
“Lastly, clause 8 of the Bill also proposes to amend the Banking Act to allow the Singapore branches of foreign banks to transmit information to their head offices or other overseas branches for data processing.”
“These requirements would help to ensure that such businesses are run in a proper manner, and that records are kept to provide an audit trail of transactions, in order to deter illicit transactions from being conducted via such businesses. However, these requirements impose additional costs on the licensees.”
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“This difference between the growth of TFP and the growth of labour productivity seems to strengthen the observation that growth in TFP has been due to capital deepening and/or faster increase in capital productivity, and not improvements in labour productivity. Does the Minister agree with this interpretation?”
“Sir, the last issue I want to bring up is skills training and productivity. The educational profile of our workforce is a determinant of our economic competitiveness and our capacity to adapt and adopt technological advances. So may I ask the Minister or his Minister of State what is the current educational profile of our workforce as compared to that of 1984? Sir, you may recall that in the Economic Committee Report, 1986, one table showed that 53% of our workforce had primary or lower than primary education, 31% had secondary education, 11% had post-secondary, and only 5% had tertiary education in 1984. There is a need to retrain workers, particularly older and less skilled workers and those employed by SMEs. So what has been done by NPB and, in future, SPSB? I agree with the Minister's observation that SMEs have made use of the Skills Development Fund in the training of workers. May I ask the Minister to update the House on the distribution and disbursements of SDF by size of firms, regardless of whether it is local or MNC, type of training and age groups? On the question of productivity, the Minister for Finance reported that the total factor productivity growth averaged 2.8% per annum from 1986 to 1995 as compared to 1.4% from 1974 to 1986. May I ask what accounted for this increase? Is it because of the increase in capital-labour ratio? I note that growth rate in labour productivity has been declining from 7% to 4.7% per year in the last three years. Also, in terms of sectoral productivity performance, the commerce sector was the only sector to report an increase in productivity growth in the last three years.”
“Sir, may I also seek some clarification regarding SP's returns. Firstly, let me refer to Appendix I which the Minister has distributed. Under the commercial accounting standards, in the denominator, both for ROTA and ROE, there is a word "average". May I ask "average" over what? Secondly, the Minister is aware that production of electricity enjoys economy of scale, ie, the greater the output, the lower the unit cost. If I heard him correctly, he said that SP expects 7% of ROTA and about 10% to 11% of ROE. May I ask what output level these figures are based on? Thirdly, it is concerning allocation of fixed assets of PUB, including land, properties and other equipment which are used by all services - gas, water, and electricity. What are the criteria of apportioning the fixed asset value among the three services by PUB?”
“Sir, under this amendment, let me raise another issue, ie, water consumption. Water is precious and we must conserve water for ourselves and for future generations. May I ask the Minister to update the House on the current situation? Specifically, whether the Save Water Campaign last year and the increase in water conservation tax rate by 5 percentage points in 1995 have slowed down the growth rate in water consumption. What were the growth rates of domestic water consumption and non-domestic water consumption in 1995 as compared to the corresponding figures in 1994? Among domestic users, were thwew any differences in growth rates of consumption among different household sizes? Another question is: what are the future measures that the Ministry of Trade and Industry and its agencies will take on the demand side (eg, whether the Save Water Campaign will be continued this year and in the future) and on the supply side (eg, what is the progress of the proposed desalination project)?”
“(3) What are the differences in accounting principles and practices between the World Bank and commercial enterprises which have led to the discrepancy in the calculation of SP's rate of returns? Is it the depreciation policy, or allocation of land, property, and other fixed assets commonly used by electricity, water and gas supplies, or in other areas? (4) People are concerned with the direct and indirect effects of the proposed increase in electricity tariffs on their cost of living. What is the estimated increase for households with different levels of electricity consumption? Would the PUB bill rebates offset the increases?; and (5) How would the proposed increases of electricity supply affect the electricity-intensive industries?”
“Sir, the pricing of and rate of return on investment on electricity supply is a new issue. The proposed public listing of Singapore Power (SP) has been deferred. I agree with the Minister for Finance that public listing of SP and increases in electricity tariffs are two separate matters. They should have been separate matters, if not for the reason given for the delay of the listing of SP. According to the Straits Times on 13th February 1996, one major reason given by the Minister for Trade and Industry for the delay of SP listing is that SP is not earning adequate returns. The delay of listing may disappoint some potential investors and stockbrokers, but the announcement of increases in electricity tariffs by 12-14% over the next three to four years has caused widespread concern. The proposed increases in electricity tariffs also reinforce the perception among people that "privatisation of statutory boards always leads to higher charges". This was one of the main issues discussed at the dialogue session on the Budget statement on 1st March 1996. I said two days ago, on 11th March, that I support the economic principle of pricing correctly factors of production, including electricity supply, so as to avoid misallocation of scarce resources. If the PUB has been under-pricing electricity, it would mean that scarce resources have been misallocated in the past. If not because of the proposed listing of SP, the Government might not have noticed it. There are a few specific questions that the Minister may wish to clarify: (1) What is the 'adequate' rate of return of investment on electricity supply? (2) Should the economy of scale and externalities of electricity supply be taken into consideration in calculating its rate of return?”
“May I ask the Minister the following questions: (a) Could the information on the criteria and application procedures of the various schemes by the various agencies be compiled into one booklet in different official languages and be distributed to SMEs through the Chambers of Commerce and trade associations? Can the information also be sent by the Registry of Companies and Businesses to the new companies and businesses when they register? (b) On the use of the assistance schemes, may I ask whether it is true that larger SMEs are more likely to benefit from these schemes because they can have a full time staff looking into these schemes and applying for these schemes? Also, is it true that the smaller enterprises also suffer from inertia once they start operation and have no time and motivation to apply or even look at these schemes? (c) Many small firms, eg, retailers and shops in HDB estates, may be unable to adapt to our economic structural changes. So apart from the sale of HDB shops, should the Government assist them, and in what way?”
“Sir, the third issue I wish to raise is also an ever-green issue, ie, local SMEs. Local SMEs face many problems, for example, small scale of operations, low productivity, lack of managerial skills, small demand and inability to cope with rising costs. The Feedback Unit's dialogue session on the Budget Statement on 1st March 1996 and the earlier dialogue session with the Singapore Chinese Chamber of Commerce and Industry also highlighted other problems faced by SMEs: (a) training of their workers; and (b) awareness and use of the various assistance schemes. I have sent the notes of these dialogue sessions to the Minister. Sir, the Government needs to assist and promote our SMEs. SMEs are important to our economy. According to the 1995 Economic Survey, SMEs accounted for 92% of the establishments, 48% of the employment, and 29% of the value-added in the manufacturing, commerce and services sectors in 1993. May I ask the Minister whether he can provide some figures on the size and relative importance of local SMEs, in the overall economy in 1995, and not just the three sectors. Sir, SMEs are not a homogeneous group. The Government needs to be selective. Assistance schemes must be targeted at the SMEs that can benefit the most from the schemes, ie, SMEs which can stand on their own feet and grow and even regionalise, and not just to promote SMEs to complement MNCs as their suppliers, contractors and minor partners. There are various assistance schemes and programmes administered by EDB, Singapore Productivity and Standards Board (SPSB) and TDB. But according to the Chambers of Commerce and trade associations, some SMEs are not even aware of the assistance schemes available to them.”
“Sir, I beg to move, That the total sum to be allocated for Head W of the Main Estimates be reduced by $100. Sir, under this amendment, the first issue I wish to raise is regionalisation and Singapore's overseas investments. At this stage of our economic development, regionalisation is a must and not an option. We need to regionalise because of the supply side constraints and also the constraint of the small size of our domestic economy. Regionalisation generates factor income from abroad to augment our GNP. But an impression was created that the Singapore Government is targeting at promoting investments in some selected countries such as China, Vietnam, Myanmar and India. This is perhaps because of Ministers' visits and the mass media coverage. But I believe that Singapore's cumulative investments in neighbouring countries are in fact much larger. Sir, may I take this opportunity to ask the Minister a few questions so as to put the matter in total perspective. (1) What is the cumulative stock of Singapore's foreign equity investment by recipient countries? And what activities or industries are these investments in? (2) What were the amounts of factor income from abroad (FIFA) and the percentage of FIFA compared to GDP (FIFA/GDP ratio) in the last few years? (3) What are the major problems of regionalisation, both arising from our own limitations and the systems of the host countries? (4) What are the prospects for regionalisation if political stability in the region does not deteriorate?”
“But to have it dismissed in two brief paragraphs down here and to leave it entirely to the market is, may I suggest, unsatisfactory. Because there are many people who feel that the present system is skewed towards the 5-figure per month group, and most Singaporeans are not in that group. No doubt there will be long waits and no doubt there will be problems of implementation. But if that balloting system or quasi-balloting system is found to be unfeasible, at least let us know why it is unfeasible. Do not just dismiss it out of hand like this. I think sometimes the Government treats Singaporeans as if they do not really have the capacity to understand these things. I think by and large, most Singaporeans are rational and they know that we cannot have everything - cheap cars, unlimited usage. Economics is a hard and unsympathetic master. If we leave it entirely to the market to govern the allocation of COEs, what we are going to have is a situation where the prices will gallop off over the horizon and woe betide those who cannot keep up with it. And as long as the desire is there to have a car, the result is frustration, which may lead to disenchantment and may lead to a less committed younger segment. The key question I think is whether or not in this particular matter we can accept a little less economic rationality in the interest of greater social contentment. After all, the people on the lower rungs of the earning ladder are just as much stakeholders in Singapore Incorporated as those who are earning five figures a month. Sir, I support the motion.”
“I think a useful analogy might perhaps be drawn as far as public housing is concerned. In the case of housing, we have always had a public and a private sector. For a person who cannot afford the very high prices that prevail in the private sector, he has the option of going to the public sector, where allocation is done not solely on the basis of market forces but by balloting. In the White Paper, if we read pages 31 and 32, the question of balloting for COEs is dismissed rather glibly in just two very brief paragraphs. It says on page 31: `Of course, it is possible to allocate a fixed supply of COEs to lucky recipients which are below the market clearing price, as some have suggested, by way of a ballot.' At page 32, it says: `Even this will not increase the number of COEs or the number of Singaporeans who can obtain COEs. Furthermore, this will be unfair to the many Singaporeans not lucky enough to receive an under priced COE.' May I suggest that this actually misses the point. It is not a question of whether we can increase the number of COEs, but whether we can increase what people perceive to be the fairness of the system. I am not suggesting at any time that we should go for a total ballot system, ballot the whole lot, because obviously it would be unfair. But is it possible to look into a public and private system, just like for public housing, and take a proportion of the lower end COEs and allocate these by ballot? After all, the Minister has said that the ratio will go up from 1:10 to 1:7. Therefore, there will be more COEs. I do not know because I am not an economist and I do not have all the information whether this is in fact feasible.”
“For many people, it is, in fact, a visible symbol of a person's material success. In a materialistic society like ours, I think the desire for this kind of tangible symbolism is very strong. I do not think we can significantly reduce the desire for cars without fundamentally changing the basis of our society, and it is going to take a generation or more. And since we cannot fundamentally change the desire for material icons, as it were, I think we must accept that no matter what we do with public transport, no matter how efficient it is, there will always be that demand for the car for the sake of having a car, not just as a means of transport. Because people will want the car to show that they have arrived, not just any old car. They will want a car with a luxury name. Singapore must be the only place in the world where Mercedes Benz outsells Toyota. It is a testimony either to our affluence or to our collective stupidity. But there it is. We have a very, very odd situation here because of a very strong desire to have these material things. Given that the supply of COEs must be limited, the question is whether or not any other way can be found to allocate the COEs. When I first started working many years ago, a no-frill entry level car cost about 10 times my monthly salary. A young graduate who starts working nowadays will be hard put to find a motorised tin can at 10 times his salary. He just cannot afford it. I have heard many young graduates, many young people, express dissatisfaction and frustration at the fact that they can no longer afford these things, and they feel that somehow they have been treated unfairly and there is this sense of frustration. How do we then give the people at the lower rungs of the earning ladder a decent chance to have a car?”
“And this means that motorists in Singapore will have to put up with the inevitability of both high car prices as well as the increased cost of usage. I think we should make a distinction between three things which are not entirely clear from the White Paper, the distinction between supply, demand and allocation. When we talk about using COEs as a means of curbing demand, may I suggest that this is not entirely accurate. COEs do not curb demand. They cap the supply. The demand is there because people desire cars. And we cannot control that desire by imposing an arbitrary limit on the number of COEs. What we do is that we cap the supply. And because the supply is capped and the demand is there, the prices shoot up. When the White Paper says that COEs are a way of curbing demand, I think we should be very careful about looking at that. I think most people in Singapore, having thought about the matter, accept that we cannot keep on building roads and putting cars on the roads because eventually we are just going to run out of physical space. I think that is accepted by all thinking Singaporeans. So it is not a question of convincing people to accept COEs as a means of limiting supply. I think much of the unhappiness with the COE system is not with the principle of limiting supply, but the question of how the COEs are allocated. How do we allocate the COEs, and not whether or not we should have COEs? That is what I think bothers a lot of people. Controlling COEs does not mean reducing desire. The problem is that the whole COE scheme is economically rational. It is efficient. But it takes no account of the emotional aspect of the problem. The problem is that the car is not just a utilitarian vehicle to get us from point A to point B.”
“A related question is: what is the reason that we cannot finance part of the asset replacement cost by borrowing? In page 60 of the White Paper, it is mentioned that we should not finance projects through excessive borrowing. I am not talking about excessive borrowing, but some borrowing should be considered. Sir, we should be cautious about this asset replacement principle, the third principle. Once implemented, taxis and bus companies, indeed all transport operators, will request for a similar replacement financing principle. Moreover, should all future expansion and investment on port, airport, telecommunication, public utilities and other infrastructures follow the same replacement financing policy? Assoc. Prof. Walter Woon (Nominated Member): Sir, I have read the White Paper and I must say that I support the motion before the House. The White Paper is one of a series of White Papers that we have received over the last few years, explaining the rationale behind Government policy. As an ordinary citizen, may I thank the Minister for having given us this opportunity to examine the basis of Government policy rather than just imposing it upon us. Looking at this White Paper, it is clearly very well thought out. It is clearly very well written in the tradition of all the White Papers that we have received. May I, however, concentrate on one little area here. Some people have expressed the hope that with the introduction of electronic road pricing, COEs will disappear. But I think it is clear from listening to the Minister and from reading the White Paper that that is not going to be the case. ERP is there to curb road usage. COEs are there to control supply. The two apparently will co-exist.”
“With regard to operating cost, some specific questions need to be clarified: (a) Should the depreciation rate of public transport equipment be capped at a certain level, say, for example, not exceeding the percentage increase of CPI? (b) Should the bus and public transport operators be reimbursed for the revenue loss from concession fares? (c) Is the dividend on SBS shares included in the operating cost? Sir, the most significant change is the third financial principle on asset replacement. The White Paper proposes that the second set of operating assets will be financed by fare revenue covering only the historical cost of the first set of operating assets, while the Government co-finances the balance. The advantages of this proposal are that fare increases can be moderated and that MRT extension or LRT may be built earlier. However, the replacement cost principle involves inter-generation transfer of assets. One characteristic of social overheads, including infrastructures like the public transport system, is its longevity, lasting more than one generation. The questions are: which generation should pay for it, and who in the generation, taxpayers or users, should pay for it? The White Paper says in page 60: `Each generation should pay for the services and assets it consumes.' This is fine, but the problem is that assets are not consumed within one generation. Sir, I am not comfortable with this particular principle. The proposed third financial principle implies that we are committing now the future government and future taxpayers. Can the Minister explain this principle in greater detail so as to convince us and the people that the proposed principle is fairer, as mentioned in the White Paper? And fairer to whom?”
“Fare increases will perhaps be more acceptable if there are improvements in the quality of public transport services. The LTA should consider setting up operation performance standards for each of the differentiated services so that we can ascertain whether the public transport services have really improved 10-15 years later. I emphasise the word "operation" standards and not "design" standards. One perception is that bus companies are profit-oriented and not service-oriented and these companies have accumulated huge profits. Although it was clarified in one dialogue session that only one-third of the bus routes were profitable, another one-third just achieved break-even and the rest were operating at a loss, and that the rate of return on capital on buses was low (only about 4.5%), the people remain sceptical. They are unhappy with the present duopoly situation. One repeated suggestion is that a few more bus companies should be allowed to operate so that competition will improve service standards and moderate fare increases. I believe Dr Vasoo has raised this recently. However, this suggestion of more competition should be balanced against the benefit of the economy of scale. The White Paper has warned of the danger of a free-for-all bus competition, as experienced in Britain, and it had endorsed the present duopolistic bus industry structure as a sound one (this is in page 44). I find the reasoning not very convincing. Perhaps the Minister should respond to this issue of greater competition again in the context of the White Paper. The second financial principle is that the services must at least recover operating cost.”
“Other participants also suggested that the Government could design "walking towns" where the main amenities, like markets and schools, are sited within walking distance, for example, 500 metre radius, without the need for roads. As for private transport, there were some arguments among these professionals whether control measures on car usage could replace control measures on car ownership. These are the feedback we collected in the last session. Sir, my personal view is that the two specific concerns raised by unionists and grassroots leaders on the increase in fares and prices and the standard of public transport services need special attention from the Government. They reflect the views of the man-in-the-street. The ordinary citizens or so-called " " (lao bai xing) will not be able to relate to a world class transport system in 10-15 years' time when they have to face fare increases within one or two years, and live with the existing inadequacies and inconveniences of the public transport system. Sir, a policy proposal should not only be correct, it should also be accepted. In my view, fare increases are inevitable because public transport is a labour-intensive service. Manpower cost accounts for 50% of the operating cost of bus companies. Also, new vehicles, trains and equipment will cost more in the future. Increase in productivity, efficiency and the economy of scale perhaps can only moderate the quantum of increases. I agree with the first financial principle that fares must be realistic and revised periodically to adjust for justifiable cost increases. The Land Transport Authority (LTA) should learn the lesson of the sudden increases of MRT and bus fares in October/November 1990.”
“Nevertheless, some participants felt that the concept of a world class land transport system might be too abstract for the man-in-the-street to relate to. (b) One major concern among grassroots leaders, unionists and student leaders was whether the proposed world class land transport system would lead to "world class" prices. They were also concerned about the impact of the Electronic Road Pricing on taxi fares. If the road pricing cost is passed on to taxi commuters, the lower income group would no longer be able to afford to take a taxi even on special occasions or during an emergency. (c) On service standards, they reiterated the same points of previous dialogue participants that public transport should be reliable, convenient, comfortable and affordable. It should not only satisfy the demands of regular commuters, but also aim to attract car owners to use the service. They felt strongly that in the current bus services, there was much room for improvement, and that the bus companies were not doing enough. For example, buses are always crowded during peak hours; the frequency of buses in outlying areas, for example, Jurong and Loyang industrial estates, is poor and too many transfers need to be made. They requested for more express bus services to the city and public housing estates. They also suggested that the increase in bus fares should be on a percentage basis, instead of rounding up to 5 or 10 cents. (d) Some professionals and academics in the dialogue session felt that cargo transport and storage needs should be taken into account in planning for a world class transport system, in order to cut down the need for cargo transport across the island. There could be integrated land-use planning for the ports, factories and warehouses.”
“Mr Speaker, Sir, I support the motion. Land transport is one of the key bread and butter issues facing Singaporeans. For this reason, the Feedback Unit has organised several feedback dialogue sessions on land transport, including three dialogue sessions between December 1994 and January 1995 and the last one, just a few days ago, on 15th January 1996. The latest dialogue session focused on the White Paper on "A World Class Land Transport System". The notes of the dialogue session had been sent to the Minister. From the three dialogue sessions in December 1994 and January 1995 and other feedback inputs, it appears that the focus of attention on land transport has shifted from "car ownership" to "public transport". Specifically, dialogue participants agreed that the only solution is "not more cars but better public transport because of Singapore's land scarcity". They also agreed on the need for the Government to control car ownership and usage so as to maintain a free-flowing road system. However, participants wanted the public transport system to be improved. They emphasised that public transport services should be reliable, convenient and affordable. [Mr Deputy Speaker in the Chair] 4.20 pm The participants of the latest dialogue session on 15th January this year raised similar points but the White Paper provided a more focused discussion. The following points were made: (a) The participants generally welcomed the proposals in the White Paper. But they observed that many Singaporeans were keen to understand how the proposals in the White Paper would affect them individually, especially on the mode of transport available to them and its cost.”
“Sir, I support the Bill but I would like to seek one clarification. What is the size of the Government Securities Fund at this moment?”
“There was a need to carve out some functions hitherto under EDB to create these two new Boards in the early 1970s. So my first question is: What is the compelling reason for merging these two Boards now? Specifically, in what way will the merger of these two statutory boards contribute to a faster TFP growth than if the two agencies were to continue to function separately? After all, the SPSB will still have to work and coordinate its efforts with other agencies such as EDB, NTSB, and so on, to raise TFP. Second question: Should the functions of SISIR be merged with NTSB instead of NPB as both agencies have been dealing with different aspects of technical progress? Third question: Should a separate new agency be established to take over the development and upgrading of local enterprises, instead of submerging this important role under SPSB? If we intend to develop a strong domestic sector, there should be a holistic approach to help local enterprises grow. Lower productivity is but one of the problems faced by local enterprises. Will a separate agency, focusing on the local enterprises, be more effective in helping local enterprises grow? Sir, a final question: Why was the Task Force Report not given to my GPC members and me on or before 1st November 1995 when it was released to the press?”
“While the Task Force report correctly observed "there is a limit to which we can realistically influence demand intensity because of our heavy reliance on international market", it nonetheless places much emphasis on `economic restructuring' as one of the three key factors which has direct bearing on TFP growth in the future. Economic restructuring involves reallocation of resources from low value-added, low-technology economic activities to high value-added, high-technology activities. But such reallocation of resources is conceptually different from the improvements of the quality of labour and capital, and technical progress. Sir, more important than the conceptual difference is that the scope and strategy of economic restructuring are well beyond the powers and functions set out for this new agency. Although the Task Force Report indicated that the SPSB will focus on `economic restructuring', `in-employment training' and `technical progress' to achieve its mission, the scope of SPSB's work under `economic restructuring' is in fact confined to development of small-and-medium-sized enterprises (SMEs), a function taken over from EDB. Similarly, the scope of SPSB's work under `technical progress' will be limited to technology development, application and commercialization, and also standardization and quality infrastructure, and other functions under the current SISIR. R&D activities and technological infrastructure will remain in the domain of the National Science and Technology Board (NSTB) and its related research institutes and centres. This brings out some specific questions concerning the institutional reform. Both the National Productivity Board and SISIR grew out of EDB, and developed into two separate statutory boards in 1972 and 1973 respectively.”
“If we break this period into two sub-periods: from 1980 to 1986, the average growth rate of TFP was negative (-0.8%); the increase in capital intensity (by 10%) made up for this poor performance of TFP to increase the overall productivity growth by 4.7%. However, from 1986 to 1992, the TFP grew by 1.7% while capital intensity by 3.6%. Now the target for TFP growth is set at 2% per annum in order to sustain a 7% GDP growth, up to the year 2000. Whether this is achievable depends on the improvements made on the determinants of TFP growth. I now turn to the second issue on how to raise TFP. The Task Force report listed five determinants of TFP growth: (a) education and training; (b) economic restructuring; (c) technical progress; (d) changes in capital structure; and (e) intensity of demand. The report emphasized on the first three factors and recommended "a holistic approach to manpower development, economic restructuring and technical progress". Sir, conceptually, TFP growth is determined by productivity changes of the factors of production (ie, labour and capital) and technical change. `Education and training' increase TFP through labour, `changes in capital structure' raise TFP through capital, and `technical progress' increases TFP by shifting the entire production function, ie, increasing value-added or output for a given bundle of resources, that is, labour and capital combined. Hence, `economic restructuring' and `intensity of demand' cannot be treated pari passu with the other three determinants of TFP.”
“Mr Speaker, Sir, I support the Bill. I would like to seek some clarification and ask some questions. This Bill sets out the functions of the proposed Singapore Productivity and Standards Board (SPSB) in clause 6 and its powers in clause 7. The objective and mission of this new Board are not stated in the Bill. However, from the report of the Task Force on Institutional Reform for Productivity and Quality Improvements, which was released on 1st November 1995, it is obvious that the SPSB's mission is to increase Total Factor Productivity (TFP) growth; and through increase in TFP, help to enhance Singapore's economic competitiveness. We need to look at this Bill in a wider context. Here we need to address two issues: why and how to increase TFP growth? Specifically, how would the institutional reform contribute to TFP growth? On the first issue, our economic growth in the past 35 years has been input-driven by injecting into the economy more labour, and subsequently, more capital. This has brought about rapid economic growth. However, this pattern of growth cannot be sustained in the future because of labour shortage, keener competition for foreign investments, and diminishing returns on larger capital investments. From now on, our economic growth will have to increasingly depend on the increase in TFP, a performance indicator of how effective and how efficient we use our human and capital resources. The past performance of the TFP growth has been poor, as the Minister of State has just mentioned. From 1980 to 1992, TFP grew by only 0.4%, and, if I may add, it contributed only 10% of Singapore's overall productivity growth; the other 90% came from increase in capital-labour ratio.”
“So until I see the statement or the article, or both, I cannot say that the SDP has come clean before the people of this country. There is one particular point I want to point out to Mr Ling. He asked for the full text of Lingle's speech. In fact, he need not do so. I will just ask him two specific questions: (a) Is Dr Chee Soon Juan deaf? If not, after listening to Seow's and Lingle's speeches, including their attacks on our judiciary, why did Dr Chee not rebut Seow and Lingle? Mr Ling said that was his only mistake, but I say that was a very big mistake because Dr Chee did say that the SDP had its own agenda at Williams College, and his mission was to clear up any misperception that foreigners or Americans have about Singapore. (b) Why did the SDP not respond to William Safire's attacks on our judiciary even before Williams College, at Williams College and after Williams College? All these were published in letters to the Straits Times and Lianhe Zaobao in September and early October. I have shown Mr Ling copies of these letters. Mr Speaker, Sir, as I promised yesterday, I intend to call for a division at the end of this debate. We have come to the end of this debate. I wish to call for a division.”
“Mr Chiam has made his stand very clear that he has absolute confidence in our judiciary. I am glad that Mr Chiam has agreed to support my motion. Sir, Mr Chiam has once again proven that he is a truly honest, responsible and patriotic Opposition MP, as he has shown it in the Flor Contemplacion case. Mr Low Thia Khiang was put on the spot, as he said, but he was a little bit evasive. However, he was honest enough to say that he did not want to end up like the SDP. I do not want to say more, but I would remind him that the Workers' Party's Secretary-General did issue a statement saying that the WP does not wish to enter into a debate over "what Dr Chee said or did not say at Williams College". But this was a good opportunity for Mr Low Thia Khiang himself, as a Member of this House, to state his stand. But he has missed the opportunity. Now let me come to Mr Ling How Doong's response. Sir, you may have seen that just now I gave him a copy of Mr Seow's speech, with some highlights, so that he could read it. I have also given him copies of my press cuttings on my exchange with his Secretary-General on this important issue of the judiciary. I reminded the SDP MPs yesterday that "this is a final opportunity for SDP to come clean". Mr Chiam has done so with his passionate speech. Mr Ling and Mr Cheo, in their speeches as SDP MPs, only said that Seow's attack on our judiciary was wrong. But they have still not come clean on the SDP's action and on what SDP's Secretary-General said or did not say at Williams College. SDP is now offered another opportunity by the Deputy Prime Minister to publish in its party organ The New Democrat an article along the line suggested by DPM. Mr Ling said there will be a statement.”
“Mr Speaker, Sir, I would like to thank the Members for their contribution to this debate, in particular, the Senior Minister for sharing with Members why and how the Chief Justice and other judges in Singapore were appointed. SM has reminded us that the debate on this motion is not about Dr Chee Soon Juan or even Francis Seow. The crux of the matter is that some American media and human rights groups want Singapore to change and they want us to follow their prescription to be "democratic" like some Asian countries which have heeded their advice. These American media and human rights groups want to use Francis Seow and Dr Chee to attack and undermine the integrity and independence of our judiciary, a key pillar of our political system. By doing so, they hope to cut Singapore down to size, as I said yesterday. The Prime Minister has made similar points about the campaign by some western media and human rights groups against Singapore and the Singapore Government in his National Day Rally Speech on 20th August 1995. I am glad that PAP MPs who spoke have focused their speeches on the crux of the matter, namely, the independence and integrity of our judiciary. It is very clear that my PAP fellow MPs will not allow anyone, Singaporean or foreigner, to attack or question the independence and integrity of our judiciary without being challenged. This will send a clear signal to all Singaporeans and to foreigners alike. We, as Parliamentarians, have the duty to protect and defend our judiciary against any baseless attack and criticism. Mr Davinder Singh is right that Parliament has the responsibility to protect the honour of our judges. I am very touched by Mr Chiam See Tong, although he is still a SDP MP.”
“Not everything. Mr Ling How Doong: Yes. How it started, who were the speakers and all these things. He cannot just pluck from the air and say, "Let me also talk about what Safire said one month ago." BG Lee Hsien Loong: Is Mr Ling aware that Dr Chee is on record as claiming that this speech was written and settled before he left for Williams College?”
“In it, Dr Chee said: "If you believe everything that Mr William Safire has said in his columns a few months back, then you are mistaken about Singapore." He then listed out specifically which of Safire's criticisms he disagreed with, and I quote: `Singapore is not like Burma or China or the erstwhile Soviet Union. Although I maybe under surveillance, I travel freely in and out of the country. Although the national newspapers are government-controlled, press statements and letters expressing the views of my party are published. Although the sale of chewing gum is banned, and chewing of gum doesn't carry a $1,000 fine. Although the penalty for drug trafficking is death, smoking a marijuana cigarette does not automatically earn you a place on death row. Singaporeans enjoy a high standard of living with a relatively safe environment. The civil service is efficient and the PAP government is comparatively corrupt-free. Ours is not a dictatorial regime Iraqi-style although we have a long way to go before we find democracy.' This was a prepared speech from a written text, not an off-the-cuff comments. Dr Chee referred specifically to it at the alternative panel. So we must treat it as part of Dr Chee's response to any "misperceptions, positive or negative" which he felt the participants or the audience at the alternative panel had. More than a month earlier, in my letter of 12th August, I had asked Dr Chee which of Safire's grave criticisms he disagreed with. The list in this speech was Dr Chee's answer. It was a considered, comprehensive catalogue of what, in Dr Chee's opinion, were Safire's errors. By clever implication, he endorsed the other Safire's criticisms as true.”
“Dr Chee was completely familiar with the issue of the integrity of our judiciary. On 7th August, Dr Chee had offered to go to Williams College to rebut William Safire's criticisms of Singapore. In a letter to the newspapers on 12th August, I had asked Dr Chee not to wait for an invitation to Williams College, but to state his stand immediately on Safire's most serious criticisms against the integrity of the judiciary: a. Did Dr Chee agree with Safire, that we had a "corrupt judiciary" who were "black-robed enforcers of conformity"? b. Did Dr Chee agree with Safire's descriptions of Christopher Lingle as being "out of reach of corrupt judges' crippling fines and canes", and of Francis Seow as an "exiled Singapore dissident ... now a fellow at Harvard Law School"? and c. Did Dr Chee agree with Safire that in the Flor Contemplacion case, the Government had covered up official wrong-doing and wrongly hanged Contemplacion? Dr Chee refused to answer my questions. Therefore, when Francis Seow and Lingle repeated these accusations against the judiciary, and Dr Chee said "I do agree very much with many things that Mr Seow and Dr Lingle have said", he thought he had cleverly delivered a blow on the Singapore judiciary without having uttered the allegations himself, but using the mouths of Francis Seow and Lingle. At the alternative panel, Dr Chee referred to the speech he would be delivering the next day, 16th September, where he would address "some of these misperceptions, positive or negative" about Singapore. This is the speech printed in The New Democrat Issue No. 3, 1995. Dr Chee's speech of 16th September is significant, both for what he said, and also for what he did not say.”
“It challenged the PAP to produce evidence to back our accusations that the SDP had supported Seow's claims, and offered to issue a public apology if such statements could be found. I have produced the transcript of its Secretary General's statements at the alternative panel just now. Dr Chee has demanded that the media publish in full his speech at Williams College, claiming that this will vindicate him. The SDP has since published its own version of events in a Special Williams College edition of its party organ, The New Democrat. Sir, with your permission, may I ask the Clerk of Parliament to circulate to Members copies of this issue New Democrat Issue No. 3, 1995. [Copies of The New Democrat distributed to hon. Members]. Members will note that The New Democrat completely blacked out the fact that the SDP delegation attended the alternative panel with Francis Seow and Lingle. It does not carry Francis Seow's and Lingle's speeches, nor a single word of Dr Chee's remarks at the alternative panel! Why this glaring omission? It is because the SDP and Dr Chee know that what Dr Chee said at the alternative panel at Williams College was wrong, and are trying to cover it up. Sir, earlier I have circulated the transcript of Dr Chee's remarks at the alternative panel and the Special Williams College edition of The New Democrat, so that Members can see for themselves the dishonesty of the SDP. This is yet another example of Dr Chee altering the record after the event, in order to deceive the public about the wrongs he has committed. He did it with Dr Vasoo over the minutes of the meeting with the Dean of NUS, Prof. Ernest Chew, when he called them "fabricated". He is a compulsive liar. Sir, Dr Chee's comments at the alternative panel were not casual remarks.”
“Members will note that not only did Dr Chee not rebut Francis Seow and Lingle or defend our judiciary, but his very first statement was, and I quote: "I've heard a lot of comments and questions about Singapore and Singapore's government this evening and I must say that I do agree very much with many things that Mr Seow and Dr Lingle have said and that even as we speak, me and my colleagues that are here this evening are going through some of these difficulties." (Paragraph 2) So Dr Chee "agreed very much with many things that Mr Seow and Dr Lingle have said". In other words, without having to utter their unfounded allegations himself, he had endorsed Francis Seow's and Lingle's attacks on the Singapore judiciary. Dr Chee "agreed very much" with them that the Singapore judiciary is pliant and corrupt, and is being used by Mr Lee Kuan Yew as a legal weapon to bankrupt or cripple the opposition. Dr Chee went on to say that while Mr Goh Chok Tong had promised to work for more open and consultative government, and I quote: "My own feeling is that he has not come very far. But when you look at the constraints he has to work under, not least of which is the presence of Mr Lee Kuan Yew, the difficulties become very evident." (Paragraph 5) In other words, Dr Chee was saying that these problems with the judiciary highlighted by Francis Seow and Lingle had been very serious problems in the past. Furthermore, because Mr Lee Kuan Yew has prevented Prime Minister Goh from making this a kinder, gentler Singapore, the situation has not improved much, and the problems still continue. After I gave notice that I would be moving this motion in Parliament, the SDP issued a statement signed by Dr Chee Soon Juan.”
“Judges in Singapore are invariably leaning over backwards in favour of the Government and the establishment, and award them with grotesque sums in damages for so-called defamation ... the rule of Lee has displaced the rule of law in Singapore." b. Mr Lee Kuan Yew "appointed as Chief Justice of Singapore a banker, who had not practised law for two decades, whose superior claim to this illustrious position was that he was a faithful crony" c. Mr Lee Kuan Yew "uses the courts as a legal weapon with which to bankrupt or cripple the opposition", because he is "confident that these judges know on which side the judicial bread is buttered." Dr Christopher Lingle also spoke at the panel. He alleged that while courts in Singapore follow commercial law, contract law and property law very closely, he went on to say, I quote: "the problems come in when there may be a dispute that involves the Government and the opposition or critics. Businessmen are unlikely to have any engagements in courts on any ground other than commercial. This creates an illusion of a rule of law as opposed to the rule of Lee ... I actually refer to it as lawless order, because there is an illusion of law and order, ... this perception of order based upon arbitrary enforcement of law." Dr Chee Soon Juan was the last person to speak at the alternative panel. He spoke from the floor, at the end of the question and answer session. Sir, with your permission, may I ask the Clerk of Parliament to circulate to Members copies of the transcript of Dr Chee's remarks at the alternative panel. [Copies of transcript distributed to hon. Members]. Sir, I obtained the transcript from journalists who were present at the alternative panel. I have highlighted the key passages, paragraphs 2 and 5.”
“They are Mr Wong Hong Toy, the Vice-Chairman of the SDP, and Mr Mike Chan, an SDP member. Both Mr Wong Hong Toy and Mr Mike Chan are employees of Bukit Gombak Town Council, whose Chairman is Mr Ling How Doong. Mr Wong Hong Toy is the Community Relation Manager and Mr Mike Chan is the Estate Manager. Furthermore, Dr Chee himself is the Legislative Assistant to both Mr Ling How Doong and Mr Cheo Chai Chen. In June 1993, after Mr Chiam See Tong resigned from the SDP Central Executive Committee, the remaining CEC members, including Dr Chee Soon Juan, Mr Wong Hong Toy, Mr Ling How Doong and Mr Cheo Chai Chen declared that they constituted a "collective leadership", and that the CEC would be the policy-making body of the party, as laid down in the SDP Constitution. The SDP CEC said in a letter to its party members, and I quote: `This is the bone of contention between the CEC and Mr Chiam. A party calling itself democratic must have a democratic decision-making process.' This was reported in the Straits Times on 26th June 1993. So the high-powered SDP delegation to Williams College, which included both the Secretary-General and the Vice-Chairman of the party must have gone with the authority of the SDP collective leadership. We must therefore hold the SDP Members of Parliament, who include two SDP CEC members, accountable for the actions of Dr Chee Soon Juan and his SDP delegation in Williams College. Francis Seow's speech at the alternative panel on 15th September was an unfounded frontal attack on the independence and integrity of the Singapore judiciary. Among other accusations, Seow charged that: a. "The judiciary in Singapore is neither independent nor free. It is pliant. It is corrupt. It is beholden to the PM (by which he referred to SM Lee) and the establishment.”
“This was not an isolated effort by a few academics in one liberal arts college in Massachusetts. The Prime Minister's visit, and the award of his honorary degree, became the focus of a major campaign by some US media and human rights group to humiliate the Prime Minister and cut Singapore down to size. George Crane organised an "alternative panel" discussion on 15th September, the day before the Prime Minister was due to receive his degree. He invited Mr Francis Seow, Dr Christopher Lingle, and Dr Chee Soon Juan to speak at the panel. Francis Seow had colluded with US diplomats who were interfering in Singapore politics, after receiving assurances of support from the US should anything go wrong. Seow absconded before his trial for tax evasion charges, and is now a fugitive from justice in the United States, and a convicted criminal. Dr Lingle was convicted by a Singapore court for committing contempt of court, arising from an article he wrote for the International Herald Tribune, which accused the Singapore judiciary of being compliant. George Crane invited Dr Chee because he needed someone from Singapore to lend credibility to the alternative panel. Dr Chee had already sought to participate in the debate at NUS, which the Prime Minister had offered William Safire and George Crane, but which Safire and Crane regrettably declined. Crane got Polis, a student association, to pay for Dr Chee's air ticket. Dr Chee immediately accepted, and duly turned up at Crane's alternative panel to associate himself with Francis Seow and Lingle. Dr Chee did not go to Williams College in his personal capacity. Two other SDP members accompanied him, and attended the panel discussion together with him.”
“Mr Speaker, Sir, I beg to move, That this House: (1) notes with regret that the Secretary-General of the Singapore Democratic Party (SDP), Dr Chee Soon Juan, with two other SDP members, attended the "alternative panel" discussion organised by Dr George Crane in Williams College on 15 September 1995, and there endorsed Mr Francis Seow's attacks on the judiciary, and (2) deplores the SDP's support for a baseless attack by a fugitive from justice on the independence and integrity of our judiciary and legal system, that ensure the rule of law in Singapore. Mr Speaker, Sir, an honest and independent judiciary is a key pillar of our political system. The 1994 World Competitiveness Report, by Geneva-based World Economic Forum (WEF), rated Singapore ahead of Japan, Britain and the United States in terms of public confidence in the fair administration of justice. Singapore is the only Asian country in the top ten. The Hong Kong based Political and Economic Risk Consultancy (PERC) has also ranked Singapore's legal system as the best in Asia. Sir, no one - I repeat - no one, Singaporean or foreigner, should be allowed to attack or question the integrity or independence of the judiciary, without being challenged either to back his criticisms with evidence, or withdraw them and apologise. Members are familiar with the events surrounding the award of an honorary degree to Prime Minister Goh Chok Tong in September by his alma mater, Williams College in Massachusetts. Dr George Crane, a faculty member, organised opposition to the award in the College. He got William Safire, the New York Times columnist, to write a venomous article against the Prime Minister and Singapore. George Crane himself wrote a long article, which was published in the Washington Post on 30th August 1995.”
“Sir, the Minister's statement on 13th March 1995 on the long-term supply of water has pre-empted most of the points I wanted to raise under this issue on water consumption. However, I would like to ask him three specific questions: (1) Is water consumption of households income elastic? (2) Is water consumption of households price elastic? and (3) Is water consumption more sensitive to household size? In other words, what are the major determinants of water consumption of households?”
“However, while labour productivity can increase due to better education and training and improvement of work attitude of workers, labour productivity can also be raised by higher capital-labour ratio. There are two questions which have been bothering me. So I take this opportunity to ask the Minister to help me to clarify these doubts. (1) What are the main sources of labour productivity growth in Singapore? (2) Has capital been used efficiently? 5.00 pm”
“Sir, I wish to focus on Employment and Productivity. In employment, two figures should be noted: (a) 71,200 new jobs were created in 1994, marginally higher than 70,800 jobs created in 1993, and (b) 9,300 workers were retrenched in 1994, higher than the 6,500 in 1993. Retrenched workers need not be absorbed by the new jobs created because they do not necessarily match the job requirements in terms of education, skills, occupations, and age group. May I ask the Minister a few questions here: (1) what is the profile of the 9,300 retrenched workers in terms of occupations, education and age groups, and so on? (2) What sectors and industries have absorbed these retrenched workers in 1994? (3) What types of new jobs were created in 1994? Are they white-collar or blue-collar, skilled or unskilled jobs? Sir, labour productivity grew by 5.3% in 1994, lower than the 6.7% in 1993. However, it was still higher than the 5.2% increase in real wage. The sectoral productivity growth rates, however, were uneven, ranging from 1.2% for the financial and business services sector to 11.4% for the manufacturing sector. The strong productivity growth in the manufacturing sector was more than enough to offset higher labour cost increases, resulting in the decline in unit labour cost for the manufacturing sector. However, unit labour cost for the overall economy rose by 1.9% because productivity growth was lower, and wage growth was higher in 1994 compared to 1993. All these figures show the importance of productivity growth. Productivity increase allows real wage to increase, and workers' living standard to improve without eroding our economic competitiveness.”
“So what are the reasons for investing so heavily on infrastructure development, including land development, for developing this particular industry cluster? Sir, the last point is that while Singapore continues to attract foreign investments, Singapore companies have also invested overseas. According to the Department of Statistics' estimate reported in the Economic Survey, the total Singapore direct investment abroad increased from S$7.8 billion in 1990 to S$13.1 billion in 1993. 45.2% of the Singapore investment in 1994 was in East Asia, including 26.4% in ASEAN, 15.3% in other NIEs and 2.9% in China. I was very surprised by the very low investment figure in China, 2.9% of $13 billion, which works out to be about $380 million. May I ask the Minister how are Singapore's overseas investments estimated? Is there a gross under estimation of investment in China and other countries? Is there any plan by EDB and TDB to build up the data bank on investments abroad by Singapore companies, the type of economic activities they are in, and other information so as to measure or gauge the extent of Singapore's regionalisation drive?”
“Sir, under my second amendment, I would like to raise the question of Foreign Investment and Investment Overseas. Last year, our manufacturing investment commitment reached $5.86 billion, a record high. 75% of the investments was foreign investment. The Prime Minister and all Singaporeans should be happy with these figures. The Economic Survey reported that the electronics, chemical and petroleum industries attracted the major share of these investment commitments. May I ask the Minister to give some detailed breakdown of the investments by industries? How many new jobs will be created? And what will be the linkages and spin-off activities from these investments? I suppose electronics and petrochemicals are the two areas identified for cluster development. Let me offer some observations here, Sir. (1) The electronics industry accounted for 39.1% of the total manufacturing value added and absorbed 33% of the employment in the manufacturing sector. However, as we all know, electronic products have very short product life cycle. Hence, the industry is not very stable. So should steps be taken to restructure our manufacturing sector so as to avoid our over reliance on the electronics industry? (2) The second observation. Petroleum products, industrial chemicals, paints, pharmaceuticals and other chemical products together accounted for only 14.6% of the total manufacturing value added. And because of their capital intensive operations, these three industries absorbed only 4.1% of the total manufacturing employment last year. Thus, job creation cannot be the reason for promoting this group of industries. Moreover, petroleum product industries have the lowest value added per dollar worth of output, 17.5 cents per dollar.”
“I note that on 23rd January 1995, the Minister of State for Trade and Industry reported in this House that the CPIs for the different income groups will be released in July. I hope he meant July 1995 and not July 1996. The Minister of State also said that the 1992/93 Household Expenditure Survey was completed in September 1993. This survey, Sir, as we know, forms the basis of weightage for calculating CPIs. So may I ask the Minister two questions? (1) why has the Department of Statistics under MTI still not come out with the CPIs for the different income groups nearly 18 months after the Household Expenditure Survey was completed? Our CRC Report took only one year to complete. (2) has the 1992/93 Household Expenditure Survey shown any significant changes in consumption patterns as compared to the 1987/88 survey? In particular, have the percentages of private road transport and accommodation increased in view of the so-called asset inflation? Have the middle-income households been subjected to the so-called middle-class squeeze? Could we have an answer based on the survey's preliminary results? 4.30 pm”
“Sir, I beg to move, That the total sum to be allocated for Head W of the Main Estimates be reduced by $100. Sir, last year, the Consumer Price Index (CPI) increased by 3.6%, higher than the increase in 1993, but still lower than the expected increase of 5.5%, following the implementation of GST. The strong Singapore dollar and subdued oil prices helped to check imported inflation at 0.7% level. The increase in domestic inflation was mainly attributed to domestic source - 40% of the increase was due to high food prices, another 50% was accounted for by increased costs of transportation and communications, and miscellaneous items. Sir, among the major expenditure groups, the highest increase was transportation and communications, 5.9%. This was followed by cooked food, 4.6%. It should also be noted that the retail prices of food items rose by 3.9% in 1994, the highest annual increase since 1982. While the increased cost of transportation and communications was expected because of higher car prices, parking fees and taxi fares, prices of food items, particularly cooked food, need to be monitored closely. This is because the lower the household income, the higher the percentage of expenditure on food. Sir, in 1992, I was drafted into the Cost Review Committee under the chairmanship of Mr Lim Boon Heng. The CRC has recommended that separate CPIs be compiled for different income groups to complement the overall CPI. May I ask the Minister whether this has been done. If so, how did the CPI for the lowest 20% income group behave as compared to the CPIs for the middle income and the higher income groups? How would the increase in food prices affect the low-income households?”
“Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. The Chairman: Amendment No. (2), Mr Chiam.”
“I do not think that is correct. In page 106, Table A1.5, the last entry "Less: Non-Residents Expenditure Locally" is subtracted from the PCE.”
“But other than tourists, there are large numbers of non-residents working in Singapore and their expenditures are subject to tax. The question is whether the subtraction of these non-residents' expenditure from the PCE has led to the under-estimation of PCE which should form the base of GST collection.”
“Sir, could I clarify a few points? Firstly, I believe the Minister has not answered my question on whether GST has been imposed on tax. I have with me a few bills - PUB and restaurant bills. I just want to make this point quickly. This particular household has consumed water and electricity amounting to $174.81, domestic refuse was $16.50, but there was a 2% Government tax on PUB charges amounting to $2.68 and the 10% water conservation tax of $1.60. So the total bill was $195.59. The 3% GST was imposed on $195.59 which included the two taxes which I mentioned, ie, the Government tax on PUB charges and the 10% water conservation tax. In other words, it is tax on tax. Secondly, Sir, I am more concerned about the regressive nature of GST. I have asked two specific questions: one, whether the HDB rental rebates and S&C rebates have offset the GST burden of the lower income households which have not paid any income tax, or they have paid very little income tax before the introduction of GST. Second, are there many retirees or pensioners who are living in non-HDB properties who have made claims from the CCC Assistance Scheme? Finally, I am glad that the Minister agreed that the private consumption expenditure (PCE) could be under-estimated. Let me point out to him that in page 106 of the Economic Survey, there are two adjustments to the PCE figures. First, residents' expenditure abroad of about $4.5 billion in 1994 was added to the PCE. This expenditure was not subject to tax because Singaporeans spent it abroad. The second adjustment was non-residents' expenditure locally. This was subtracted from the PCE. That amounted to $11 billion in 1994, a very sizeable figure. I believe that these non-residents include tourists. Tourists can claim GST refunds.”
“In terms of timing, as far as possible, changes on non-tax measures should be announced together with tax changes in the Budget Statement so as to facilitate business planning and provide a greater degree of certainty. The second suggestion, Sir, is that as non-tax revenue also represents withdrawal from the macro-system, it may be desirable to inject part of the revenue back into the system in the form of contributions to specific funds rather than into the Consolidated Fund. For example, part of the COE revenue can be channelled into a public transport improvement fund, and part of the foreign workers' levy collection can be siphoned off to the Skills Development Fund. While tax revenue is put into the Consolidated Fund, from which expenditure on administration, defence, infrastructure and public goods can be met, non-tax revenue should be linked to the expenditure on activities which help to reduce the demand for and/or improve the efficiency in the use of scarce resources, such as land and labour. I know the Minister is not in favour of such linkages. However, I wish to persuade him by pointing out that, (1) economically, such linkages do not compromise on economic efficiency, and, (2) politically, they are desirable. Such linkages enable payers of non-tax revenue to see the external benefits of their contributions and, hence, make the non-tax fiscal measures more acceptable or at least less painful. 3.45 pm”
“Sir, under amendment (c), I wish to raise some issues on tax and non-tax revenue. In this year's Budget Statement, the Minister has explicitly recognised both tax and non-tax burdens. In Table 1 of his Budget Statement, Singapore's tax revenue was estimated to be 17.7% of our GDP, which ranked the third highest among the eight ASEAN and NIEs, after Korea and Malaysia. Singapore's non-tax revenue was estimated at 4.4% of our GDP, again the third highest after Taiwan and Malaysia. Based on Singapore's GDP of $105.3 billion in 1994, the non-tax revenue was $4.6 billion. This is a sizeable amount, about 3.1 times of the GST revenue and 57% of the corporate and personal income tax revenue in 1994. Sir, non-tax revenue is collected from various fiscal measures which allocate scarce resources, for example, the COE allocates scarce land and the foreign workers' levy allocates labour. For businesses, the non-tax and tax measures are costs, and whether these items appear above or below the bottomline is immaterial. Similarly, for households, both tax and non-tax measures are a fiscal burden that reduces household disposable income. Thus, the fiscal burden, whether from tax or non-tax measures, on businesses and households must be taken in totality. The overall level of this fiscal burden must be kept low so as to (a) check rising business costs, (b) attract foreign investment, and (c) provide maximum incentives for wealth creation. In this context, the Minister may wish to consider two suggestions: First, changes in non-tax measures should be coordinated in terms of their effect and timing. While each non-tax fiscal measure may be justified in terms of its specific objective, but taken together, the burden of non-tax measures can be substantial and they need to be monitored.”
“Such a breakdown is important as it shows the incidence of the tax, ie, who eventually bears the tax burden. From the figures given by the Minister, it appears that those with higher income or higher purchasing power have ended up better off because of income tax cuts in this tax reform. There is nothing wrong with that if we wish to provide incentives for wealth creation. But the more important questions are: (1) Have the rebates offset the GST burden of the lower income households which had paid little or no income tax before? (2) How many of the retirees and pensioners who are not living in HDB flats have made claims from the so-called CCC Assistance Scheme? Finally, Sir, one significant fact that arises from the larger than projected GST collection is that if economic growth continues at a steady rate, the Government should be able to keep the GST rate at 3% even after five years as the tax base will be much larger and growing. In this context, may I ask the Minister to clarify one statement he made, ie, "making GST revenue neutral in the long run". Is this an ex-ante concept or ex-post concept? Another question is whether the Government has accepted the 1986 Economic Committee's recommendation that "the Government should shift from direct to indirect taxes as its main source of revenue"? If the Government has accepted this recommendation, how will these two long-term objectives be achieved at the same time if the income tax rate is brought down only to 25%, and given the fact that direct taxes still constitute the main source of tax revenue now? Are these two long-term objectives consistent?”