Richard Hu Tsu Tau
Singapore
“Sir, I think it is eminently fair, because the proposal really is for the Government to spend money to give shares to Singapore citizens. Either you agree or you do not agree. Or, if you agree, perhaps you consider the amounts insufficient or too much.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The purpose of this Bill is to make provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 2001.”
“I think the Prime Minister and DPM Lee have already explained it will be based on income levels, with people living in flats as a proxy. So there is no political content in it. It depends on the income level, whether you have served national service or whether you are an elderly person.”
“I really do not understand. I know you are arguing on technicality for which I agree that you may have a point. But, nevertheless, because it is a proposal to share Singapore's surpluses with the population, the distribution is not something which you can argue against.”
“As I said, the estimates will be available around mid-October. I do not think, at this time, I want to give a specific date when the second package will be announced, but it will be done as soon as practicable. IN-PRINCIPLE AGREEMENT WITH MALAYSIA ON OUTSTANDING BILATERAL ISSUES (Assessment) 4.”
“Mr Speaker, Sir, when the $2.2 billion off-Budget package was announced in July this year, we said that the Government would do more to assist Singaporeans if the global economic situation worsened in the coming months.”
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“Mr Speaker, Sir, I would first like to thank all Members of the House who have spoken on the Budget in the past two days. As time will not permit me to address every Member's concern in detail, I will focus on the main issues raised, leaving matters of detail which come under the purview of individual Ministries to the Committee of Supply, beginning tomorrow. Let me begin first by touching on the broad fiscal policies concerning many of the issues raised by Members in the past two days. These policies are fundamental to the economic strategy which have brought Singapore to where we are today and they bear reiteration. I will review Government's taxation policy before dealing with the many areas of concern which have centred around the lack of fresh incentives to help the manufacturing and SME sectors which are going through a difficult period, the apparent bias towards the financial sector in the FY97 Budget and Government's policy on the accumulation of reserves. I will take these in turn. Government's Taxation Policy The Government's underlying philosophy has been to tax factors of production as lightly as possible in order to encourage enterprise. This is achieved by having a lower across-the-board tax rate and making available special tax incentives to encourage targetted activities. The private sector and some Members of this House were disappointed that the corporate tax rate was not reduced in this year's Budget. I would like to remind them, however, that the corporate tax rate had been reduced by five percentage points over the past five years, from 31% in Year of Assessment 1992 to 26% in Year of Assessment 1997. The most recent tax cut was only made last year and, in fact, will only take effect in the current Year of Assessment.”
“Tomorrow, Sir. ADJOURNMENT Resolved, That Parliament do now adjourn. - [Mr Wong Kan Seng.] Adjourned accordingly at Twenty-one Minutes Past Four o'clock pm.”
“The total sum expended on Ministerial travels for the whole of 1996 amounted to $519,427.33. Details of the amount incurred by each Minister and Minister of State are given in Annex A (Cols. 521 - 522). Annex A (Cols. 521 - 522) This amount constituted 5.9% of that spent by Government on all travel and travel-related expenditure in 1996. In terms of the total running costs of Government, it came to 0.005%. It is expected to go up in future years, in line with Singapore's increasing international profile and its regionalisation drive. Annex A (Cols. 521 - 522)”
“CONCLUSION Mr Speaker, Sir, globalisation has brought with it new challenges. Today, the world economy is much more open. Investments and labour flow freely across borders. Many more opportunities abound. But competition in this new global environment is also keener, and much more intense. Singapore's continued success will depend critically on our ability to adapt and adjust to this new world economic order. Singapore's economic fundamentals are sound. We have invested in the education of our work force, built up an excellent infrastructure, and fostered an environment which is conducive to business and economic growth. If we continue to adopt far-sighted policies, remain alert to new opportunities and challenges, and stay nimble and fleet-footed, I am confident that we will be able to succeed in the new global economy, and continue to do well in the years ahead. Mr Speaker, Sir, I beg to move. [Applause].”
“This tax treatment allows employers to tax-plan and enjoy the tax deduction merely by including the requirement for CPF contributions within the contract of employment, even though it is no longer required under the CPF Act. In line with our policy of allowing preferential tax treatment only for compulsory CPF contributions, I have decided to rationalise the tax treatment such that all CPF contributions made voluntarily or obligatory under contracts of employment will no longer be tax deductible for both the employer and the employee. Further, the employers' contributions will be taxable as income in the hands of the employee. As a concession, the new tax treatment will take effect from 1st January 1999. However, exception will be made for Singaporeans posted overseas. In support of the regionalisation programme, we will continue with the current tax exemption for Singaporeans posted overseas who make voluntary CPF contributions. OTHER TAX CHANGES Concessionary Tax Rate for Residential Properties Undergoing Construction Currently, home owners who demolish their properties for reconstruction will have to pay property tax at the rate of 12% on the annual value of the vacant land. This is generally very much higher than the annual value of the residential house. As a concession, I have decided to allow home owners who rebuild their houses for their own subsequent occupation a concession during the period when their houses are undergoing reconstruction. These home owners will be eligible for the owner-occupier's rate of 4% on the annual value of the residential house. This concession will take effect immediately. All home owners who are presently rebuilding their homes will also be eligible for the concession.”
“In the first two instalments, not all eligible persons participated in the scheme as some might have had difficulties making the $50 co-payment. Lowering the co-payment to a token $20 is a special gesture to enable as many elderly Singaporeans as possible to benefit from the scheme whilst maintaining the principle that health care should be a joint responsibility between the individuals, their families and the Government. Eligible recipients will have to make the co-payment of $20 between now and 31st December 1997 into their CPF Medisave Account. The Government will match this $20 with a contribution of $100 to $350 depending on the age group. 300,000 senior citizens qualify for this scheme and the total cost of this, if fully taken up, is $85 million. Voluntary Contributions to CPF In 1995, the Ministry of Labour announced that mandatory CPF contributions by employers will no longer be required for foreigners who are issued with an Employment Pass, Professional Visit Pass or Work Permit on or after 1st August 1995. A grace period up to 31st December 1998 was given if foreign workers jointly apply with their employers to the CPF Board to continue with the mandatory CPF contributions provided the employee remains with the same employer. Under current tax laws, where the employer and employee agree in the contract of employment to contribute to CPF, the employee's contributions continue to be tax-deductible even though it is no longer required under the CPF Act. The employer's contributions are also deductible for the employer but is considered as income and subject to tax in the hands of the employee.”
“This CCC assistance scheme will be extended to lower income households affected by the increase in utilities rate but who are unable to benefit from the utilities rebate and S&C grant. CPF Medisave Top-Up Scheme Last year, we topped up the Medisave account of Singaporeans to emphasize the key role of Medisave in providing for the medical needs of citizens. To further assist Singaporeans to build up their Medisave, the Government will pay $100 into the account of every Singapore citizen between 21 and 59 years of age, and $200 into the account of every citizen aged 60 and above. The larger quantum for the senior citizens is in recognition of their contributions towards nation building, their lower accumulation of Medisave during their working years, and also their greater medical needs. The payment will be made on 1st October 1997. This is expected to cost the Government $227 million. Pre-Medisave Top-Up Scheme The Pre-Medisave Top-Up Scheme is to help older Singaporeans who retired before or soon after the introduction of Medisave to build up their Medisave accounts. The first two instalments under the Scheme had been paid in January 1996 and January 1997. The third and last instalments are to be paid in January 1998 and January 1999, subject to the state of the economy. As the economy has done reasonably well, I am happy to confirm that the Government will pay the third instalment of the Pre-Medisave Top-Up Scheme in January 1998 as scheduled. The top-up grant will be paid into the CPF Medisave accounts of eligible Singaporeans who are 63 years or older on 1st April 1997. For this third instalment, the co-payment required will be $20.”
“Households with smaller bills which are unable to use up the rebate within the month can carry over the balance of the rebate until it is fully used up. The Government has also decided to grant the same utilities rebate of $100 for 1-3 room HDB flats and $50 for 4-room HDB flats in 1998. In addition, the Government will provide additional grants to help defray the S&C charges for Singapore citizens staying in 1-, 2-, 3- and 4-room HDB flats. The S&C grant will be $3 per month for 1-room flats, $4 per month for 2-room flats, $5.50 per month for 3-room flats, and $4 per month for 4-room flats. The grant will be given monthly for a two year period from July 1997 to June 1999. The utilities rebate, together with the S&C grant, will more than offset the increase in water and electricity rates for the 1 to 3-room HDB flats. For the 4-room HDB flats, the package of utilities rebate and S&C grant will cover at least half of the increase in utilities rates. The utilities rebate and additional S&C grant will cost the Government about $72 million a year. Subject to good economic performance, the Government plans to continue to grant utilities and S&C rebates to the lower income households in the next few years to help them defray the increase in their utilities bills. Those lower income households who do not live in HDB flats and hence are unable to benefit from the utilities rebate and S&C grant can obtain help from the Citizens Consultative Committees (CCCs) assistance scheme. The scheme was created in 1994, when GST was introduced, to help lower income households who for whatever reason are unable to benefit from the package of offsets for GST.”
“3-Room Flats Three months' net S&C charges, after deduction of the GST offset rebates and S&C grant to be given. The S&C rebates will be made on 1st October, 1st November and 1st December this year. 4-Room Flats One month's net S&C charges, after deduction of the S&C grant to be given. The S&C rebate will be made on October this year. 5-Room Flats One month's net S&C charges, to be made on 1st October this year. The estimated cost of these rental and S&C rebates is $36 million. Rebates for Revisions in Utilities Rates The Government had earlier announced that water tariffs and the water conservation tax would be raised and restructured over three years to get Singaporeans to treat water as a precious and strategic resource. It was also announced that the Government would offset the water rate increases for the lower income households so that while they would have to pay more for water like everyone else, overall they would not be worse off. This would be done partly through providing rebates on utilities bills and partly through giving service and conservancy (S&C) grants to the smaller HDB flats. Last year, I also announced that, subject to the state of the economy, the Government would continue to grant utilities rebates to offset the increase in electricity tariffs for the lower income households in 1997 and 1998. The Government has decided to give a rebate on the public utilities bills for Singaporeans living in 1-, 2-, 3- and 4-room HDB flats. The amount will be $100 for 1-, 2-, and 3-room HDB flats, and $50 for 4-room HDB flats. The utilities rebates will be credited against the utilities bills of eligible households for the month of September which are payable in October.”
“For those who maintain their aged parents but do not stay with them, the relief will remain at $3,500. I am also proposing the following changes: increase the allowable wife relief from $1,500 to $2,000; increase the allowable normal child relief from $1,500 to $2,000 each; and relax the income ceiling condition for eligibility of parent relief, wife relief, handicapped siblings relief and child relief. The respective reliefs will be allowed so long as the dependant has income of not more than $2,000 in the year, instead of the current level of $1,500. The above changes will take effect from the Year of Assessment 1998. The revenue loss to Government is estimated to be $40 million a year. Rebates on HDB Service and Conservancy and Rental Charges Following the GST-related changes made to personal income tax, currently some 70% of individuals no longer pay income tax. To ensure that their contributions to the economy are also recognised, the Government will grant rebates on HDB Service and Conservancy (S&C) charges and rentals to citizens staying in rented and owner-occupied HDB flats. The rebates will be as follows: 1-Room Flats Two months' net rent and three months' net S&C charges, after deduction of the GST offset rebates and the S&C grant which I will elaborate later. The rental rebates will be made on 1st October and 1st December, and the S&C rebates on 1st October, 1st November and 1st December this year. 2-Room Flats One month's net rent and three months' net S&C charges, after deduction of the GST offset rebates and S&C grant to be given. The rental rebates will be made on 1st October, and the S&C rebates on 1st October, 1st November and 1st December this year.”
“In addition to existing income items which qualify for the tax holiday, I have decided to exempt from tax new income items which have arisen from the Exchange's development such as fees for the quality assurance of physical commodities, registration fees for Nominated Warehouses, fees for the processing of applications for Registered Representatives and Associated Persons, annual subscription fees from Registered Representatives and Associated Persons, locals membership processing fees, fees for the processing of leases of seats on SICOM, and proceeds from the sale of trading permits. TAX CHANGES FOR INDIVIDUALS Income Tax Rebate Despite a sluggish global electronics market, we managed to achieve a creditable 7% economic growth for the whole of 1996. This is due in no small part to the hard work and enterprise of our people. I have therefore decided to reward their effort by giving an across-the-board one-off rebate of 10% on individual income tax in Year of Assessment 1997. The estimated revenue loss to Government is $250 million. Income Tax Relief for Dependants As our population ages, care for the elderly will become an area of increasing concern. We believe that the elderly are best cared for by their children in the familial surroundings of their own homes. We therefore encourage children to live with their aged parents and to provide them the necessary care and support. Currently, there is already a tax relief of $3,500 for the maintenance of each aged parent. As a recognition to those who live with their elderly parents, I have decided to introduce a two-tiered relief for aged parents. The relief for those who live with the aged parents in the same household will be raised from $3,500 to $4,500.”
“To give a further boost to the broadcasting and telecommunications industry, I have also decided to exempt from tax payments for the leasing of capacity on satellites operated by non-resident persons. The exemption will take immediate effect for an initial period of 5 years. Industrial Building Allowances for Logistics Operators There is a growing trend by manufacturers and traders to focus on their core activities and to outsource their logistics needs. With this development, there is now an increasing demand for integrated logistics services covering physical distribution, warehousing and information management. Singapore, with its strategic location and network of comprehensive infrastructure, is well positioned to serve as a logistics hub for international companies. To promote the growth of the logistics industry, I have decided to grant industrial building allowance (IBA) to buildings owned and used for storage of goods or materials by companies providing logistics services, and which currently do not qualify for IBA. These would include companies which provide integrated logistics services covering warehousing, distribution, information management and other high value-added logistics operations. The change will apply to approved buildings with effect from the Year of Assessment 1997. Singapore Commodity Exchange (SICOM) The Singapore Commodity Exchange Limited (SICOM), formerly known as the RAS (Rubber Association of Singapore) Commodity Exchange, was granted a five-year tax holiday when it was established in 1992. This was to allow the Exchange to get off to a successful start. As the Exchange is still in its developmental stage, I have decided to extend the tax holiday granted to SICOM for another five years.”
“I will therefore be making the following changes to the OEI: reduce from 100% to 50% the shareholding required for follow-through of tax exempt dividends to the second level of shareholding; extend the follow-through of tax exempt dividends beyond the two levels of shareholding provided the 50% requirement is satisfied. Holding companies at every tier of a group corporate structure will be allowed to onward pay exempt dividends declared out of the qualifying OEI income; and waive the 50% shareholding requirement in the dividend paying company for onward payment of exempt dividends on a case-by-case basis. These changes will apply to dividends received on or after 11th July 1997. Tax Incentives for Satellite Operations Satellites play an important role in today's telecommunications and broadcast industries. With most of the world still unwired by conventional land lines, there exists a huge potential market for wireless transmission of voice, video and other multimedia content which can be exploited. To encourage companies in Singapore to launch their own satellites, I have decided to extend the investment allowance incentive to satellite operators on approved capital expenditure which satisfy certain criteria. The extension of the investment allowance incentive will take immediate effect. Having our own satellites will enhance Singapore's competitiveness as a communications and media hub by extending our communications infrastructure beyond just submarine cables, land lines and TV broadcasting stations. It will also allow service providers in Singapore to offer competitive packages to attract content creators, developers and distributors. Currently, payments to non-resident persons for the use of satellites are subject to withholding tax at a rate of 15% .”
“To encourage banks and merchant banks to increase their level of general provisions to buffer against any unexpected losses, the limit on tax deductible general provisions will be raised from 2% to 3% of qualifying loans and investments from Year of Assessment 1998. A higher level of general provisions will make for a more sound and stable banking system. The above package of tax incentives, which I have just outlined, will further enhance the competitiveness of our financial services sector. The package is designed to give an added boost to the growth of our financial market, and to strengthen Singapore's position as a regional financial centre. The Government is committed to developing Singapore into a major financial hub. We will provide every necessary support to ensure the growth of our financial services sector. I will now move on to other tax changes for companies. Overseas Enterprise Incentive - Onward Payment of Tax Exempt Dividends Out of Qualifying Income In the 1993 Budget, I introduced the Overseas Enterprise Incentive (OEI) as part of the Government's effort to encourage the development of an external economy. The OEI provides for tax exemption on income derived from approved overseas investments and projects for a maximum period of 10 years. The OEI also allows the follow-through of tax exempt dividends up to two levels of shareholding, subject to a 100% shareholding requirement. In 1995, changes were made to the Income Tax Act to allow the follow-through of tax exempt dividends beyond two levels of shareholding for foreign sourced income exempted under the Income Tax Act, provided the 50% shareholding requirement is satisfied. The new rules have worked well. To further support regionalisation, I have decided that the OEI scheme be similarly relaxed.”
“All fees earned by financial institutions in arranging offshore debt issues will therefore be exempted from tax irrespective of whether the issues are underwritten by financial institutions or not. Tax Incentive for Credit Rating Agencies The Asian debt market is expected to grow sharply in the next decade to meet the huge financing needs of Asian economies. The attractiveness of Asian debt papers to international investors would be enhanced if such papers are rated by international credit rating agencies. Singapore can play a pivotal role by attracting internationally reputable credit agencies to conduct such operations here. This would also complement our efforts to develop Singapore into a regional capital market. To encourage the setting up of reputable credit rating agencies in Singapore, I have decided to grant a concessionary tax of 10% on the income earned from providing credit rating services with respect to the issue of foreign currency denominated securities in Singapore. The incentive will be for an initial period of 5 years, and will take effect from Year of Assessment 1998. To qualify for the incentive, the credit rating agency must: have a track record in international credit rating of at least 10 years; employ at least 2 qualified credit analysts in Singapore; and incur annual business spending of at least S$500,000 in Singapore. Tax Deduction for General Provisions Made by Banks and Merchant Banks Since 1991, banks and merchant banks in Singapore have been given tax deduction for general provisions up to a limit of 2% of their loan and investment portfolios. As the financial markets become more competitive and sophisticated, banks and merchant banks are now exposed to greater risks in their activities.”
“The tax exemption will enable banks and financial institutions in Singapore to offer more competitive terms to foreign companies to list their shares on SES. This will make Singapore a more attractive centre for fund raising by international companies. Tax Exemption for Trading in Foreign Currency Shares ACUs and Approved Securities Companies (ASCs) currently enjoy a concessionary rate of tax of 10% on income earned from the trading of foreign currency denominated shares. We need to ensure a certain degree of liquidity in the trading of foreign currency shares if we are to attract foreign companies to list their shares in Singapore. To encourage the trading of foreign currency shares, I have decided to fully exempt from tax income earned by ACUs and ASCs from the trading of foreign currency denominated shares which are listed on SES. The exemption will be granted for a period of 5 years with effect from Year of Assessment 1998. Extension of Tax Exemption Scheme for Syndicated Offshore Credit and Underwriting Facilities Under the existing tax exemption scheme for syndicated offshore credit and underwriting facilities, income earned from the underwriting of syndicated offshore debt securities are exempted from tax. One of the conditions for granting the tax exemption is that the issue must be underwritten by financial institutions in Singapore. As borrowers in the region become more sophisticated and their credit standing becomes more acceptable in the financial markets, the debt papers of reputable issuers would not need to be underwritten by financial institutions. To encourage such borrowers to issue bonds and other debt securities in Singapore, the requirement that the debt issues must be underwritten by financial institutions will be removed with immediate effect.”
“Tax Incentive for the Fund Management Industry Since 1986, fund managers approved under the Tax Exemption Scheme for Fund Management enjoy a concessionary rate of tax of 10% on income earned from managing non-resident funds. Further, with effect from Year of Assessment 1996, those which manage more than S$5 billion worth of non-resident funds can enjoy a reduction in the tax rate to 5% on the incremental income earned compared with the previous year. To encourage major fund managers to further expand their business in Singapore and use Singapore as a base for their regional operations, I have decided that fund managers who have substantial operations in Singapore will be exempted from tax altogether for income earned from managing non-resident funds. To qualify for the tax exemption, the fund manager must be managing at least S$10 billion of non-resident funds in Singapore, employ at least 7 professional fund managers and analysts, and have a track record of 3 years operating in Singapore under the Tax Exemption Scheme for Fund Management. The incentive will be granted for an initial period of 5 years with effect from Year of Assessment 1998. Tax Exemption for Managing IPOs of Foreign Currency Shares In line with the objective of developing Singapore into a regional financial market, the SES has been actively encouraging foreign companies with the necessary track record to list their shares on the Exchange in foreign currencies. To further develop the Exchange into a regional securities trading centre, I have decided that income earned by banks and merchant banks from managing initial public offering of foreign currency denominated shares to be listed on the SES will be exempt from tax for an initial period of 5 years, beginning from Year of Assessment 1998.”
“There are now 161 fund managers operating in Singapore, managing funds totalling more than S$125 billion. The Stock Exchange of Singapore (SES) has also developed into a regional securities trading centre. There are now 45 foreign companies listed on the exchange and their total market capitalisation is about S$137 billion. Our financial futures exchange, or SIMEX, trades a wide range of international products with an annual turnover of 22.6 million contracts valued at US$ 16.1 trillion. Our financial services sector has come a long way. However, there is room for our financial market to grow. To further develop our financial services sector, I have decided to introduce a package of new incentives. Tax Incentive for ACU Activities At present, Asian Currency Units (ACUs) of banks and merchant banks enjoy a concessionary tax of 10% on income earned from ACU activities. They also enjoy a further reduction in the tax rate to 5% on the incremental income derived from certain high-value added activities. To qualify, the taxable income of some of these activities must each exceed S$10 million. To give a further boost to ACU activities, the 5% tax on incremental income will be extended to income derived from all taxable ACU activities if the total taxable income from all such activities exceed S$50 million. ACUs can avail themselves of either the existing incentive for selected high-value activities or the new incentive which covers all ACU activities. The new incentive will be granted for an initial period of 5 years with effect from Year of Assessment 1998.”
“It has provided the basis for Singapore's economic growth. It will remain a cornerstone of our economic strategies. We will continue to give priority to investments in infrastructure and ensure that our tax rates are competitive. We reduced our corporate tax and personal income tax rates last year. The lower rates will take effect from Year of Assessment 1997. There is therefore no need to make further adjustments to these tax rates so soon after the last revision. As it is, our tax rates are already among the lowest in the world. However, we will continue to fine-tune our tax incentives to promote activities which are of high value-add and high growth potential. We will also adjust some of the personal reliefs for income tax. The projected surplus for FY97, although lower than previous years, is still at a healthy level. Government will therefore continue to return part of these surpluses to Singaporeans. I will elaborate on the details later. Let me now deal with the tax changes for companies. TAX CHANGES FOR COMPANIES Financial Services Sector The financial services sector is one of the key sectors of the Singapore economy, contributing 12% to GDP. It is the second largest economic sector after manufacturing. The financial services sector is a high value-add industry, employing almost 90,000 people or 5% of the workforce. Singapore has successfully developed into a major international financial centre. Today, we have about 700 international banks and financial institutions from almost 40 countries operating in Singapore. We are also the fourth largest foreign exchange and derivatives trading centre in the world, after London, New York and Tokyo. The fund management industry has seen rapid growth in recent years.”
“Mr Speaker, Sir, let me turn next to the fiscal position and the proposed tax changes. III REVENUE AND TAX CHANGES GDP growth in 1997 is projected to be between 5 to 7% . For FY97, revenue collection is estimated at $28.6 billion, while operating and development expenditures are budgeted at $23.9 billion. The budget surplus for FY97 is therefore expected to be $4.8 billion, the lowest since FY92. There are two main reasons for the decline in the projected surplus. One is the slowdown in the growth of revenue collection, due largely to the cumulative tax cuts over the years. The other is the rise in development expenditure, mainly because of increased spending on economic development projects, implementation of the Education IT MasterPlan, and the construction of the North-East MRT line and the Bukit Panjang LRT. In the past five years, we have cut the corporate tax rate from 31% to 26% . We have similarly reduced the top marginal rate for personal income tax from 33% to 28% , with corresponding reductions to the other marginal tax rates. Property tax was brought down from 16% to 12% . We also abolished the stamp duty for a number of instruments and reduced the rates for others. All these measures resulted in an average revenue loss of about $2.5 billion a year. The revenue loss amounts to about one and a half times more than the additional GST collection of $1.7 billion a year. Development spending, on the other hand, has grown by more than two and a half times from $3.6 billion in FY92 to $9.6 billion in FY96. The tax cuts and higher development expenditure are in line with our policy of keeping taxes as low as possible, and directing spending to productive infrastructure which will yield lasting returns. This policy has served us well.”
“Every AA has been provided with greater autonomy and flexibility to respond quickly to changes, along with incentives for efficient and superior performance, and the wherewithal to nurture enterprise and creativity. Over the next few years, we will consolidate and fine-tune the various changes that have been introduced so that AAs can better manage their resources and achieve even higher performance. This will help us achieve our objective of creating a leaner, more efficient and enterprising public service to help Singapore succeed. Last year, some Members of the House expressed concern that financial management reforms under the BFR initiative could lead to increases in the price of public services or create a profit-oriented mindset in Government without regard to the larger goal of providing quality public services. I wish to reassure the House again that this will not be the case. Pricing of public services is a policy matter, and prices of goods and services provided by the public sector should not therefore increase on account of improvements in financial management. On the contrary, a more efficient public sector would be better placed to moderate price increases.”
“New sports and recreational centres will be built in Bishan, Bukit Gombak, Choa Chu Kang, Jurong East and Jurong West, to improve access to sporting facilities and encourage wider participation in sports for a healthy lifestyle. Older community centres are also being upgraded to meet the higher expectations of Singaporeans for better recreational facilities. Major development expenditures subsumed under the security sector include the re-development of the Woodlands Checkpoint to accommodate heavier causeway traffic, a new checkpoint complex at the second crossing at Tuas, and the building of a new Police HQ Complex. To ensure readiness during an emergency, civil defence shelters will be built in all new HDB flats and underground MRT stations on the North-East MRT Line. Funds are also set aside for the construction of a new race course complex at Kranji to allow the relocation of the Turf Club from its present site. This will free up land in Bukit Timah for good quality residential housing. MANAGEMENT AND CONTROL OF GOVERNMENT EXPENDITURE Allow me now to update the House on the progress of our efforts to improve financial management in the public sector under the Budgeting For Results (or BFR for short) initiative which we launched in 1994. Members will recall that 14 organisations were commissioned as Autonomous Agencies in April last year. Starting this financial year, another 102 Ministry Headquarters, Departments and Government-Funded Statutory Boards are being managed as Autonomous Agencies (or AAs). What this means is that practically the entire Civil Service and all Government-funded Statutory Boards are now operating as Autonomous Agencies.”
“These are further steps in our aim to develop a first class public transport system as an alternative to private car ownership. Social and community services will take up the second largest share of 32% of development expenditure, with major allocations to education, public housing, the environment and healthcare. If loans are included, the share of social and community services in development outlays rises to 70% . Education accounts for one-third of development expenditures within this sector, mainly on the building and upgrading of schools, and purchases of computer equipment to introduce IT into classroom teaching. Public housing is next, with one-quarter of the allocation, or a sum of $860 million. This includes $257 million in capital subsidies to HDB for building of flats, and a larger sum of $415 million for the main and interim HDB upgrading programmes. Environment projects include the 5-year programme to upgrade sewerage facilities and the development of an off-shore sanitary landfill off Pulau Semakau. Although small in comparison, development expenditure on information and the arts will double, while that for community development is planned to increase by nearly 50% . Our public libraries will be revamped and expanded into a new network of regional, community and neighbourhood libraries supported by a sophisticated IT infrastructure. This will improve access to books and information materials and help cultivate a well-read and informed society in Singapore. It will cost the Government over $600 million over the next four to five years.”
“Economic and infrastructural development is expected to take 41% of total development expenditure, exceeding the share of social and community services which was the leading spender in past years. While funding on social and community services continues to increase, development expenditure on economic and infrastructural development is set to double from $2 billion in FY96 to $4 billion in FY97. This shift reflects Government's determination to step up economic initiatives to woo new investments and to boost Singapore's attractiveness as an investment destination. Some of the major economic projects include land reclamation at Changi East, Tuas View and Jurong Island, the building of a road link to Jurong Island, the development of the Southern Islands, and compensation for sites in Woodlands identified last year to be acquired for expansion of wafer fab plants. To strengthen our domestic economy further, financial assistance through the provision of grants and loans will be provided under the Economic Development Assistance Scheme and the Cluster Development Fund. These will attract and nurture investments in Singapore and upgrade the capabilities of our local companies. Another $586 million in research funds is being provided to widen and deepen Singapore's R&D base under the aegis of the second National Science and Technology Plan. Funds are also provided under the Tourism 21 Masterplan to upgrade our tourism industry and to maintain Singapore's position as a tourism centre in the region. On infrastructure, a major commitment is Government's vision to build a world class transport system in Singapore. A firm decision has been taken to proceed with the construction of the North-East MRT Line, the Changi Airport MRT Extension and an LRT system in Bukit Panjang.”
“02 billion in FY96 to $1.05 billion in FY97. As a percentage of GDP, operating expenditure will decrease from 10.7% of GDP in FY96 to 9.6% in FY97. However, if we disregard the one-off compensation payment to Singapore Telecom, FY96 operating expenditure would have amounted only to 9.6% of GDP, which is the same as projected for FY97. Education accounts for the largest increase of $450 million in operating expenditure. More funds are provided to continue the restructuring of the Education Service by promoting deserving teachers and recruiting NIE trainees to the Service before graduation. Higher grants have also been provided for the tertiary institutions due to an increased intake of students. The Government will spend more to encourage reading and learning. More community and children's libraries will be built in convenient locations to promote the reading habit whilst the greater use of information technology systems in our libraries would provide easier and faster access to information from around the world. Development Outlays Total development outlays in FY97 are projected at $27 billion. This comprises $9.8 billion in development expenditure, which refers to development outlays funded from operating revenues, and $17.2 billion in loans to statutory boards. Development expenditure in FY97 is projected to increase marginally from $9.6 billion in FY96 to $9.8 billion. This is the second successive year for substantially higher development spending, considering that development expenditure varied between $3.9 billion in FY93 to $6 billion in FY95. As a share of GDP, development expenditure is expected to reach 6.6% in FY97, slightly less than the 7.1% in FY96, but substantially higher than the FY95 level of 4.8% .”
“84 million per year. THE FY97 EXPENDITURE ESTIMATES Total Government expenditure is projected at $23.9 billion or 16.2% of GDP, down from 17.9% for FY96. This is still significantly higher than Government expenditure over FY93-95, which averaged 13.3% of GDP. The increase is mainly due to higher development spending, which has risen from around 4% of GDP in FY93-95 to more than 6% of GDP since FY96. On the other hand, operating expenditure in FY97 is expected to remain in the FY93-95 range of 9-10% of GDP . In line with Government expenditure priorities, the largest share or 38% of the budget will go towards social and community services, which includes education, health, the environment and public housing as these are areas which yield lasting returns. Spending on security will take up the next largest share, at roughly 33% of the budget. Spending on economic and infrastructural development will take up 20% of the budget in FY97, which is much more than the average of 15% over the last 5 years. This includes substantial funding for economic promotion as well as transport improvements such as the building of MRT, LRT and roads. Operating Expenditure Operating expenditure is estimated to be $14.1 billion in FY97, slightly lower than the $14.5 billion spent in FY96. However, FY96 operating expenditure was unusually high, since it included a one-off compensation payment of $1.5 billion to Singapore Telecom for the early termination of its exclusive telecommunication privileges. If this is disregarded, operating expenditure will rise by 8% . This is largely due to a 9% increase in Running Costs, from $11.9 billion in FY96 to $13.1 billion in FY97. This is less than the projected GDP growth rate in nominal terms. Transfers will increase marginally by 2% from $1.”
“It is important that we do not let affluence erode our cohesiveness and resilience as a nation and society. To foster a cohesive, resilient, caring and gracious society, the Government will allocate more funds to promote awareness of our arts and heritage, and community and sporting activities. In particular, nine Community Development Councils will be set up within this fiscal year to promote stronger ties between the Government and the people. Revenue growth in FY97 is not expected to keep pace with the growth of the Singapore economy because of tax cuts introduced to maintain a low and competitive tax regime. Hence, only a modest budget surplus of $4.8 billion is projected for FY97, after providing for an increase in development spending. Some of this surplus will be used to augment Edusave and Medifund and I propose to make a final contribution of $500 million to top-up the Edusave Endowment Fund to its target figure of $5 billion. An allocation of $100 million will also be made to Medifund to ensure that affordable healthcare continues to be available to all. Singapore Allowance The Singapore Allowance is a flat rate supplemental payment made monthly to pensioners receiving a gross pension below a specified ceiling. The Allowance is currently set at $130 per month with the gross pension ceiling at $900 per month. There are currently 16,859 pensioners residing in Singapore, of which 11,827 or 70% enjoy the benefit of the Singapore Allowance. The Singapore Allowance was last revised in 1993. From 1st August 1997, we will increase the Singapore Allowance by $10 per month to $140 per month, and also the gross pension cap from $900 to $950 per month. The revised Singapore Allowance will increase the Government's pension bill of $662 million by about $1.”
“I am optimistic that Singaporeans can rise to the challenges of the new environment and sustain our economic dynamism in the 21st Century as we move up into the ranks of a developed economy. II THE FY97 BUDGET Mr Speaker, Sir, I will now move on to the Budget for Fiscal Year 1997. EXPENDITURE POLICY This Government will continue to adopt prudence as the cornerstone of its expenditure policy. As before, we will focus on the delivery of essential public goods and services, consolidate our national economic infrastructure and devote more resources towards the development of our people. The public sector will be contained to grow no faster than GDP, thus ensuring that adequate manpower and financial resources are available for the private sector to continue in its role as the growth engine of the economy. It is important that Government invest heavily in the development of our economic infrastructure and human resources in order to maintain and improve Singapore's economic competitiveness in the face of growing competition from both the region as well as developed countries. This investment will attract more high value-added and strategic industries to Singapore. In tandem with this, we will provide generous financial assistance to upgrade our local companies, train our workers and develop indigenous capabilities in high value-added skills and R&D. At the same time, we will have to cater for the rising aspirations of Singaporeans for a higher quality of life commensurate with increasing affluence. The URA will continue to develop high quality housing concepts such as Ponggol 21. A world-class public transport system is also planned for Singapore, combining a comprehensive public transport system with an efficient road network.”
“The aim is not to seek palliatives for current problems, but to identify longer-term solutions and strategies to address the deeper, underlying changes and challenges which Singapore has to overcome in order to maintain our economic growth. This is a crucial exercise. Our livelihoods will always depend on external demand as the engine that drives our economy. This remains a basic fact of life, even though our economy is now bigger and more diversified. We therefore have to focus on remaining competitive and relevant to others. We also have to monitor developments in the region and in the international economy, and position ourselves against this broader backdrop. These are the fundamental economic issues which affect our future. If we get the fundamentals wrong, day to day concerns such as the cost of living or COE prices which consume so much attention and emotion will become irrelevant. CONCLUSION Singapore has achieved economic success on the basis of few advantages and despite many limitations. We are much stronger now economically than we were a decade ago. However, the limitations of geography and size will not go away. Adapting nimbly to changes in the environment and staying relevant to global demands remain fundamental to Singapore's survival. 1996 saw growth moderating in Singapore. In 1997, we expect a gradual recovery, in line with a turnaround in global electronics demand. Over the medium to long term, Singapore can expect to continue to enjoy good growth, if we focus our efforts on staying competitive and remaining responsive to the external environment. The future is not guaranteed but it can be bright.”
“However, for Singapore to remain successful, it is not good enough to operate the system according to existing rules, trying to do what we have always done, only a little better. Although it is necessary to constantly fine-tune our existing policies, it is even more important to review the overall framework of the policies from time to time, and decide when fundamental changes have become necessary. Major changes in policy directions require a long lead-time to build up critical mass and show results. All the more we must not be slow to shift, when changes become necessary. Singapore's Asian Dollar market would not exist today if, nearly 30 years ago, Dr Winsemius had not proposed that we make ourselves the regional financial hub, to take advantage of the time zone differences between Asia and both Europe and North America. Likewise, we would not have enough engineers to support high-tech manufacturing today, if not for a decision in the early 1980s, also strongly supported by Dr Winsemius, to drastically expand engineering intakes in our local universities. Singapore has succeeded precisely because we have looked beyond the obvious and immediate, and been bold enough to take prompt corrective actions when the problem was not yet obvious. It is crucial that we continue to do so to ensure that we are competitive amidst a whole new operating environment. The Government has set up an Economic Committee comprising representatives from the private sector, academia and public sector to study this crucial issue of Singapore's longer-term competitiveness. The Committee will study trends in the global economy and fundamentally question if our existing strategies and policies that have worked for us in the past are optimal or sufficient in the new operating environment.”
“MNCs generally have more choices of where to site their projects, are more sensitive to cost factors, and are less tolerant of high prices for land in Singapore. Singaporean companies in high technology manufacturing face the same cost pressures and have the same options. These companies cannot operate in Singapore if their industrial land prices are inflated by our residential land prices. The Government has therefore taken steps to allocate adequate land for industries, especially for strategic projects, and to price industrial land realistically, considering the likely tenants, to keep Singapore an attractive destination for manufacturing investments. MEETING THE CHALLENGE AS A NATION Singapore has to adapt to the challenges of the new operating environment. Economic liberalization, globalization and the rapid rate of technological advancement have created a completely new competitive paradigm, changing the way business is done and creating new products, services and markets. We must now be even more fleet-footed and move decisively to meet this change. Fortunately, our fundamentals remain solid. We have a robust fiscal position and a sound economic framework. The Government has managed the economy prudently and accumulated surpluses during the years when the economy did well. It has invested heavily in economic infrastructure, education and training to upgrade the knowledge and skills of our workforce. We are an efficient, well-organized society, operating by transparent rules and rational principles. We uphold meritocracy and keep out corruption. These are valuable assets which we should husband and maintain.”
“The cost of hiring a production worker in Singapore, while lower than the developed countries, is much higher than our neighbours in other dynamic economies in Asia. The Government cannot artificially depress labour costs, as these are set by market forces. In any case, our aim must be to create better paying jobs for Singaporeans. We also cannot underprice our land as we have to ensure that each piece of land is used efficiently, and yields full economic returns. We also need to balance the country's needs in housing, industry, commerce and recreation. But at the same time, we must watch the overall cost of doing business in Singapore. For us to remain competitive, higher costs in Singapore must be justified by higher capabilities and performance. The Government has thus made special efforts to improve key supply side factors. In manpower, for example, we have continued to grant work permits and employment passes liberally. The Ministry of Labour has also recently cut the foreign worker levy for the manufacturing sector. In addition, we have created new schemes or customised existing schemes to train engineers and skilled workers in specific areas in the electronic, chemicals, logistics and communications industries. We are also continuing to develop competence in various high technologies sectors including production engineering and biotechnology. The Government recognizes that the cost of industrial land is a key issue for manufacturing investors. Prices of industrial land have escalated sharply in the past few years together with the rise in the residential property market. We cannot afford to let the high prices of residential or commercial land overwhelm the industrial land market, and crowd out manufacturing industries and MNCs.”
“Manufacturing The challenges of a new operating environment are not restricted to the services sector. For example, Singapore faces increasingly tough competition in the electronics industry. Both developing and developed countries understand the key importance of this sector to their manufacturing base, and are going all out to attract MNCs to locate projects there. We have had many successes, but the Economic Development Board has also seen some desirable projects slip through its hands. While Singapore has managed to maintain the manufacturing sector at about 24% of our GDP, other countries with high per capita incomes have seen their share shrink. Hong Kong, at the extreme, has practically de-industrialized. Manufacturing now constitutes only about 8% of Hong Kong's GDP. Unless we make a special effort to maintain the manufacturing share of GDP, we run the risk of weakening a key pillar of our economy and losing a primary means to generate wealth. The competitive environment, however, has changed tremendously. Unlike the past when we were one of the most liberal countries seeking to attract foreign direct investments, both developed and developing countries are now going all out to attract high-value projects, offering very generous incentives, including in some cases outright grants. Many of our competitors have the advantage of lower land and labour costs. Singapore, on the other hand, is constrained by our small size and limited resources. Industrial land in Singapore costs three to four times that in Johor and Bangkok. Even compared to Taiwan, we are more expensive. Labour costs in Singapore are high too.”
“Come Year 2000, when other fixed-line operators come on stream, Singapore Telecom will face even fiercer competition. These are, however, just signs of the turbulence sweeping the telecommunication markets worldwide, fueled by new technologies and the breakdown of old regulatory barriers. These trends are irreversible, and will affect every country. Even if governments do not proactively liberalize their telecommunications market, technological developments will de facto bring about the changes regardless of regulatory restrictions. In Hong Kong, for example, Hong Kong Telecom has a monopoly in international calls until 2006. However, through innovative sales tactics including packages offering both resale of Hong Kong Telecom's IDD service as well as call-back, other fixed-line operators in Hong Kong have managed to garner 30% of Hong Kong's international-calls market. There are reports that Hong Kong Telecom has started talks with the Hong Kong government about terminating its monopoly early in return for compensation, because the new operating environment is reducing the value of this monopoly. This is what we did in Singapore with SingTel. Singapore will not be spared this turbulence in the telecommunications market. Even if we succeed in protecting our market and insulating it from the new forms of competition, this would only be at a high and unacceptable price to the rest of the economy. We will raise business costs, stunt the growth of the telecommunications industry, and undermine our position as a regional telecommunications hub. Singapore Telecom thus has to transform itself quickly and adapt to the ways of the market. It has to move into new technologies, services and markets to tap new revenue streams.”
“Through strategic alliances with other airlines like Qantas and American Airlines, British Airways is striving to grow in the major markets of North America and the Pacific region. Notwithstanding BA's current problems with some of its unions, the company has turned around dramatically, from an overall deficit of o544 million (S$1.29 billion) for 1982, to a pre-tax profit of o640 million (S$1.5 billion) announced in May this year. The pattern of regional competition in the airline industry has also changed. The fast growing regional economies have fuelled demand, leading to more direct flights from countries in the region to other destinations in the world. This has made it harder for SIA to route passengers from the region into its main trunk routes through Singapore. In response to these changes, SIA has had to find new ways of offering better services at lower costs, and to seek tie-ups with other airlines to protect its market share. SIA also has to ensure that it continues to have first class management and strong internal consensus with harmonious relations between workers, managers and unions. Singapore Telecom Singapore Telecom's experience with the liberalization of our telecommunications sector provides another illustration of the pressures of this new operating environment. The past 3 months have seen major changes in our telecommunications market as Singapore Telecom faced domestic competition for the first time. Mobile phone and paging charges have fallen sharply. For international telephone services, even before we introduce competition in Singapore, SingTel's IDD rates have been coming down. Otherwise SingTel would have lost business to incoming calls charged at lower rates than outgoing calls.”
“However, our openness exposes us inevitably to the fluctuations of global business and demand cycles. When market conditions change, we are rapidly affected. We have no choice but to stay internationally competitive and trim, even during boom periods when opportunities are plentiful. When a slowdown occurs, we will then have the resilience to weather it, and can use the respite to consolidate our economy, preparing ourselves to rebound when market conditions change yet again. Staying competitive, however, will not be easy. International competition is becoming keener in all sectors in our economy. It is not just that we face more competition than before, but that we are now in a new and qualitatively different environment. Singapore Airlines Singapore Airlines is a good example. Twenty years ago, SIA stewardesses were paid an average of about $1,000 per month, a fraction of their counterparts from developed countries. SIA's excellent cabin service and high operating efficiency were its trademark. Today, the pay plus allowances of an SIA stewardess is about $3,400 per month. But if we add in profit sharing, inputed gratuity and SIA's CPF contributions, the total cost to SIA of employing one stewardess can be as much as $4,200 per month. This is higher than what many other airlines in the world pay. Meanwhile, the service quality and the operating efficiency of other airlines have improved tremendously, closing the gap and posing strong challenges to SIA. For example, British Airways, one of the strongest challengers, has, over the last 4 years, reduced its costs by about o750 million (S$1.8 billion) through single-minded management action.”
“Some disk drive companies are experiencing inventory build-up, with quarterly earnings ending June likely to be below expectations. This also partially reflects the traditional summer slow-down in the disk drive industry in the US and Europe. Overall, however, the disk drive industry is seeing modest growth with new orders for computers and office equipment rising by 5.6% in the first 5 months of this year. As a whole, the global electronics industry is expected to pick up towards the end of 1997. With some exceptions, the regional economies remain healthy and are expected to improve with the recovery in the global electronics industry. The US economy is experiencing unusually strong growth with low inflation. The EU is also expected to record good growth whilst the Japanese economy is picking up. The hand-over of Hong Kong to China has proceeded smoothly. US-China official relations also appear to have moved to a more constructive track. This favourable strategic backdrop will contribute to the continued growth of the region. Given these factors, the Ministry of Trade and Industry has forecast our economic growth in 1997 to be between 5 and 7%, although this figure is subject to review later this year. A NEW OPERATING ENVIRONMENT Notwithstanding the optimistic outlook, the current economic slowdown should serve as a sober and timely reminder of our vulnerabilities as a small country heavily dependent on world trade. With a limited domestic market and few resources, we have no choice but to be open and to compete in the world market to survive and prosper. We can grow faster by taking advantage of global markets and advanced technology, and by riding on opportunities including the worldwide electronics boom which has prevailed over the last few years.”
“Mr Speaker, Sir, I beg to move, That Parliament approves the financial policy of the Government for the financial year 1st April, 1997 to 31st March, 1998. I REVIEW OF THE ECONOMY ECONOMIC PERFORMANCE IN 1996 Mr Speaker, Sir, the Singapore economy slowed down in 1996 after 3 years of above-potential growth. After 3 boom years, the global electronics industry took some corrections to shed its excessive inventory. The consequential slower growth in regional countries also affected our hub services like shipping and entrepot trade. As a result, after a strong 11.5% growth in the first quarter of 1996, the economy moderated to 7.6% in the second quarter, fell to 3.3% in the third quarter, before rebounding to 5.8% in the last quarter. For the whole of 1996, we managed a 7% growth. This slowdown eased the pressures of high growth but has not adversely affected our economic fundamentals. Our labour market remained tight. Real wages grew by 3.4% , slightly lower than a year ago. Inflation was also lower at 1.4% compared to 1.7% in the previous year. Although productivity growth declined to 0.7% and unit labour cost rose by 3.5% , investors remained confident in our sound economic fundamentals, committing a record $8.1 billion in manufacturing investments in 1996, an increase of 19% over 1995. OUTLOOK FOR 1997 The outlook for 1997 is cautiously optimistic. Although growth in 1st Quarter 1997 remained subdued at 3.8% , this was partly due to the high base in 1st Quarter 1996. The semi-conductor industry appears to have turned around. According to the US Department of Commerce, inventories of electronic components in the US have been run down while new orders have risen by a healthy 17% in the first 5 months of 1997.”
“Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$1,556,100", "$80,000", "$3,176,500", "$732,000" and "$216,100", in the second column and substituting the figures "$1,779,000", "$84,000", "$3,378,400", "$819,000", and "$226,000", respectively. ANNUAL BUDGET STATEMENT 4.03 pm”
“Mr Speaker, Sir, I beg to move the Motion* standing in my name under item No. 2 on the Order Paper. *The Motion reads as follows: That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$1,556,100", "$80,000", "$3,176,500", "$732,000" and "$216,100", in the second column and substituting the figures "$1,779,000", "$84,000", "$3,378,400", "$819,000", and "$226,000", respectively. Sir, it is proposed to increase the provision for the Privy Purse from $1,556,100 to $1,779,000. This will take care of both the July 1996 and July 1997 adjustments to the President's salary. The provision for Entertainment will go up from $80,000 to $84,000 to cater for an increase in the number and costs of hosting official functions. The provision for Salaries of Personal Staff is increased from $3,176,500 to $3,378,400 to cater for normal salary increments and filling of vacancies. A provision of $819,000 is required to meet the Expenses of Household. This is $87,100 or 11.9% higher than the FY96 provision mainly to meet the higher maintenance expenditure of the Istana grounds. The provision for Special Services is increased marginally by $9,900 to $226,000. It will be used to purchase office equipment and replace a station wagon. It is therefore necessary to vary the provisions in the Schedule to the Civil List as indicated in the Motion before the House. Sir, I beg to move. Question put, and agreed to.”
“Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions." Question put, and agreed to. Resolutions accordingly agreed to. CIVIL LIST”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. Resolutions reported - "That the sum of $245,346,700 shall be supplied to the Government under the heads of expenditure for the public services shown in the Final Supplementary Main Estimates of Expenditure contained in Paper Cmd. 1 of 1997". "That the sum of $1,899,757,330 shall be supplied to the Government under the heads of expenditure for the public services shown in the Final Supplementary Development Estimates of Expenditure contained in Paper Cmd. 1 of 1997".”
“Mr Speaker, Sir, current guidelines on debarment are provided in Section B of Instruction Manual No. 3. The debarment period for withdrawal of tender after the award is made depends on the difference in the value of the tender withdrawn and the tender accepted subsequently. For example, if the difference is up to $100,000, the debarment period will be one year. The highest debarment period is five years. However, the guidelines also provide that a warning letter will suffice if the tender is withdrawn under special circumstances, due to genuine computational mistakes. For revenue earning tenders, tenderers who withdraw from a tender after award have the option to pay the difference in the value of tender withdrawn and the tender finally accepted. If they pay the difference, they do not face debarment. However, for expenditure tenders, the option to pay the difference is currently not available. Withdrawal of tender after the announcement of the tender results in additional administrative work and delay in a project. My Ministry takes a serious view of such defaults. Hence the current practice to debar offenders. However, compared to other defaults like abandonment of contract or corruption, withdrawal of tender after award is comparatively less serious. Hence we can consider the hon. Member's proposal to allow offenders an option to pay a penalty in lieu of debarment for withdrawal of tender after award is made. My Ministry will study the implications of such a proposal. CPF SAVINGS (Use for repair and renovation of properties) 7. Dr Tan Boon Wan asked the Minister for Labour whether his Ministry will consider allowing members to use their savings in the Central Provident Fund to repair, maintain or renovate properties bought with CPF savings.”
“The reason is that the present Government Proceedings Act, as drafted, only applies to the first two circumstances. This has been so decided by the High Court of Singapore in 1986. In that particular case, an SAF serviceman was injured by a Government vehicle while he was on his way home from camp. He first received compensation from the Singapore Armed Forces. Subsequently, he went on to sue the Government. The High Court decided that the serviceman could still sue the Government, although he had already received compensation, because the Government Proceedings Act, as drafted, did not apply to a serviceman who was injured while on his way to work or on his way home after work. With this amendment, the anomaly will be addressed. A serviceman who has been compensated when injured on his way to work, or on his way home after work, cannot further sue the Government and obtain compensation a second time. Section 14 of the present Government Proceedings Act also applies to members of the Singapore Police Force. A member of the Singapore Police Force who is injured while on his way to work or on his way home after work is also paid compensation under the Pensions Act. This amendment to the Government Proceedings Act will also remove this anomaly as regards the Police Force. 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. - [RAdm Teo Chee Hean]. Bill considered in Committee; reported without amendment, read a Third time and passed. COMMITTEE OF PRIVILEGES REPORT (Motion) 12.55 pm”
“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. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment, read a Third time and passed. GOVERNMENT PROCEEDINGS (AMENDMENT) BILL Order for Second Reading read. The Second Minister for Defence (RAdm Teo Chee Hean): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill seeks to amend section 14 of the Government Proceedings Act. The proposed amendment to section 14 of the Government Proceedings Act is to address an anomaly arising from payment of compensation under the Singapore Armed Forces (Pensions) Regulations. Under the SAF (Pensions) Regulations, an SAF serviceman will be provided a compensation by the Government (as a workman would similarly be compensated under the Workmen's Compensation Act), if he is injured in any one of the following circumstances: (a) in connection with the service; (b) as a result of performing his duty; or (c) when on his way to work or on his way home after work. When compensation is paid to the injured serviceman in the first two circumstances, that is, in connection with his service or as a result of performing his duty, the present Government Proceedings Act prevents the injured serviceman from further suing the Government and obtaining compensation a second time. However, in the third situation, when compensation is paid to the serviceman who is injured while on his way to work or on his way home after work, the present Government Proceedings Act does not prevent him from further suing the Government and obtaining double compensation.”
“In relation to this, clause 16 provides for the imposition of penalties for non-compliance. Exclusion of GST in the Computation of Annual Value Clause 2 amends the Act to exclude GST from the calculation of annual value to ensure that owners are not unduly assessed for GST charged on the rental of the premises. The exclusion of GST from the value to be taxed is also provided for under the Stamp Duties Act, the Customs Act and the Betting and Sweepstake Duties Act. Amendments made to facilitate the administration of the Act Clause 3 amends the Act to provide for a specific date for the submission of claims for refund of unoccupied properties. Currently, owners claiming refund of property tax on their vacant properties are required to submit their claims on prescribed forms as soon as the vacancy period ends or not later than a month after each half year period. The processing of such vacancy claims is done on an ad hoc basis throughout the year. Clause 3 amends the Act to set a specific date, that is, 15th November each year, whereby claims for refund of tax on vacant properties are to be submitted. Such claims will cover a period of 12 months. This will give IRAS time to process the claims in the remaining one and a half months of the year. Property owners will be notified of the outcome of their claims in January of the next year. Finally, clause 21 inserts a new section in the Act to allow summonses to be served by registered mail similar to that provided for in the Housing and Development Act, the Road Traffic Act, the Income Tax Act and the Companies Act. Clause 21 also specifies that documents will be served only to one owner in the case of a jointly owned property, but documents can be served to all parties in a joint ownership upon request. Sir, I beg to move.”
“To facilitate the recovery of property tax, clause 13 empowers the Comptroller of Property Tax to appoint agents to retain money in bank accounts (whether individual or joint accounts), and proceeds of sale of any immovable property owned by one or more persons as joint owners, and to pay the tax due from such amount to the Comptroller. This provision is consistent with that in the Income Tax Act and the Goods and Services Tax Act. Tax Payable Notwithstanding Objection Lodged Currently, tax is not payable for properties which are included for the first time in the Valuation List if an objection has been lodged. Such properties include new properties and properties which are leased from the State for more than three years. To discourage frivolous objections which are lodged for the sole purpose of deferring property tax payment, clauses 8 and 10 amend the Act to allow for the collection of property tax payable, notwithstanding the fact that an objection has been lodged. This is in line with provisions in the Income Tax Act. Enhancement of Penalties The current fines in the Act have not been revised since the 1960s. Clauses 6, 7, 9, 17, 18, 19, 20 and 23 revise the fines to bring them closer to those imposed for similar offences in the Vandalism Act and the GST Act. Clause 20 also inserts a new section to make the provision of false information an offence. This is also provided for in other tax legislation. Power to Regulate the Naming of Buildings and Estates Currently, the Property Tax Act only controls the naming of streets and the numbering of houses. The control over the naming of buildings and estates is currently done administratively. Clause 15 amends the Act to authorise the Minister for Finance to approve the names of all buildings and estates.”
“The Act therefore needs to be amended to make legal provisions for: i) the validity of the EVL; ii) public inspection of EVL through computer terminals; iii) the authentication of EVL when updated; and iv) the admissibility of any information extracted from the EVL in court as primary evidence. Clauses 4 and 5 of the Bill provide for this. Valuation Review Board The Valuation Review Board is established under the Property Tax Act to hear public appeals against property values or property tax. The Board is currently empowered to award costs incurred in processing such appeals up to a limit of $250 against appellants whose appeals are vexatious or frivolous. These powers are too restrictive. VRB should have the discretion to award such costs against a party other than the appellant, for reasons which could include unwarranted delay in responses, and for sums higher than $250. Clause 12 amends the Act to give the VRB the discretion to award the costs of an appeal to any party or refer the case to the Supreme Court for the awarding of costs according to its prescribed scale. This is in line with powers accorded to the Income Tax Board of Review. With regard to the tenure of the members of the VRB, clause 11 amends the Act to allow for flexible periods of appointment for VRB members instead of a fixed term of three years. This is similar to provisions in the Income Tax Act. Appointment of Agents to Recover Property Tax At present, the Comptroller of Property Tax has powers under the Property Tax Act to auction off properties to recover due tax. However, this is a drastic measure which preferably need not be taken.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Property Tax (Amendment) Bill 1996 seeks to amend the Property Tax Act to provide for the following: i) To allow the Valuation List to be prepared and kept in such medium and authenticated in the manner as determined by the Chief Assessor; ii) To empower the Valuation Review Board (VRB) to award costs; iii) To empower the Comptroller of Property Tax to appoint agents for the recovery of property tax; iv) To provide for the payment of tax notwithstanding any objection to the notices issued by the Chief Assessor and the Comptroller; v) To enhance the penalties of offences under the Act; vi) To control building and estate names in addition to street names; vii) To exclude GST from the calculation of annual value of properties; and viii) To make other minor changes to facilitate the administration of the Act. Electronic Valuation List Currently, the Property Tax Act requires that a Valuation List be prepared and updated each year. This list is printed from the electronic database of the Inland Revenue Authority of Singapore (IRAS) to enable the public to determine the owner, address and Annual Value (AV) of any property in Singapore. The printed list is voluminous, comprising 99,000 pages in 335 volumes and requires substantial effort to update. IRAS has since February 1992 implemented an Electronic Valuation List (EVL). The EVL uses the same database from which the printed list is obtained. The public can view the Valuation List from computer screens at the IRAS or from their own premises through Teleview.”
“Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolution." Question put, and agreed to. (*The decision of the President was circulated to hon. Members on 13th December 1996 and is reproduced in Annex 1 (Cols. 1031 - 1032).) Resolution accordingly agreed to. Annex 1 (Cols. 1031 - 1032) PROPERTY TAX (AMENDMENT) BILL Order for Second Reading read.”