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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“I do not think that this is an issue. As far as I am aware, the Australian Government has not raised any reservation about the deal. The only question is whether the use of the US satellites might impinge on problems of security. But SingTel has said that these discussions are proceeding smoothly and they do not expect any particular problems. In the case of Hong Kong, I believe the Hong Kong monetary authority supports the deal. VISIT OF HON. DATUK MOHD SHAFIE BIN HAJI APDAL, DEPUTY CHAIRMAN OF THE COMMONWEALTH PARLIAMENTARY ASSOCIATION, MALAYSIAN BRANCH, AND DELEGATION (Presence in Gallery)”
“SingTel has already announced the package alternative which is a mix of shares and cash, and I do not think I need to go into it because the Member can always find it from the publications. On the question of the price of purchase being in US dollars - indeed I believe it is in US dollars - and whether it will have an impact on the Singapore dollar, I do not think the amounts are sufficiently large to move the Singapore dollar in a significant way although there may be short-term perturbations which MAS will surely take into account.”
“I am not aware of any significant changes. I think SingTel has said that negotiations are proceeding smoothly, including the issue of strategic use of the satellites. So I am not aware of any change that would make it necessary to review the deal. So far, this is based on their public announcements.”
“I thought I had answered these questions. SingTel put in a bid for Optus because they believed that a long-term investment in a major telecommunications corporation in Australia is in their strategic interest. It would give them a large footprint in Australia to be linked up with SingTel's own operations both in Singapore and elsewhere in the region. They are taking a strategic interest and not so much concerned about the immediate impact on their share prices or short-term profitability based on Optus' historical results. Similarly, DBS Bank has taken a strategic look at where they want to go offshore and Hong Kong is clearly one market which, for obvious reasons, is a must for DBS Bank if they are going to be a regional player and because of the potential of entering China sooner or later. The observations of analysts, as I have explained earlier, tend to take a relatively short-term view on what the impact of the acquisition, whether it is three-times the book value or otherwise, may have on the immediate profitability of DBS Bank. When you buy a controlling share in a large company, generally, you have to pay a substantial premium. The size of the premium is a judgment which the management has to take and it is not in Government's interest to try and challenge that decision.”
“The Singapore Government has for long encouraged local companies, both GLCs and non-GLCs, to grow beyond the confines of the Singapore economy. Singapore Telecom's acquisition of Optus and DBS Bank's acquisition of Dao Heng are such moves. They enable SingTel and DBS Bank to tap regional opportunities and become more than Singaporean companies. Both SingTel and DBS Bank are listed on the Singapore Exchange (SGX) and fully subject to the discipline of the market. Like all GLCs, they operate strictly on a commercial basis. The Government does not interfere in the commercial decisions of GLCs. Their managements are supervised by their own boards of directors. The boards in turn are accountable to all shareholders, and not just to the Government through Temasek Holdings, which holds the Government's shares in the companies. The purchases of Optus and Dao Heng are long term strategic business moves. Their soundness has to be judged over time by the performance of SingTel and DBS Bank, and not by the immediate reaction of the stock market as reflected in their share prices. It is up to the managements of SingTel and DBS Bank to satisfy themselves of the strategic and financial merits of the acquisitions, and convince their boards of directors and their shareholders that overall the deals will benefit the companies and their shareholders. As a shareholder, Temasek Holdings has full confidence in the competence and judgment of the managements and boards of SingTel and DBS Bank. SingTel and DBS Bank are able to undertake these transactions only because they have been successful in their operations, and hence have the financial resources to pursue such opportunities.”
“Mr Speaker, Sir, with your permission I would like to take Question Nos. 1 and 2 together as they are related?”
“The overall amount of remuneration paid to Cabinet Ministers and Ministers of State in Financial Year 2000 was $27.8 million. This comprised $18.0 million in the basic salary package, $4.5 million in non-discretionary allowances (ie, the Car Allowance, the Special Allowance and PSL Allowance), $3.0 million in Performance Bonus and $2.3 million in GDP Bonus.”
“Sir, I beg to move, "That the Bill be now read a Second time." The Bill seeks to amend the Treasury Bills Act to reduce the nominal denomination of new issues of Treasury Bills ("T-bills") from $10,000 to $1,000. Sir, having a large and diverse investor base is important to increase Singapore's attractiveness as a funding hub, and for the development of an active secondary bond market. Financial intermediaries have alluded that they see much latent potential in the retail sector whose savings can be channelled towards securities investments. The liberalisation of the CPF Investment Scheme has further enlarged the pool of potential funds for investment in securities. The proposed reduction to S$1,000 will align the nominal denomination of Treasury Bills with the nominal amount for Government securities. This should facilitate greater retail participation in the Treasury Bill market and is in line with the Government's effort to promote the Singapore Government Securities market. Parliament is requested to allow that every new Treasury Bill issued by the Government be for the sum of $1,000 or a multiple of $1,000. 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. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed. SINGAPORE BROADCASTING AUTHORITY (AMENDMENT) BILL Order for Second Reading read.”
“Conclusion Mr Speaker, Sir, water is a strategic resource. Technology advances, both in seawater desalination and in the treatment and recycling of used water, have enabled us to considerably enhance our water strategy. These developments open up more choices and allow us to diversify our sources of water. The restructured PUB will be able to take advantage of these developments and deliver to us a more robust and secure water supply in a holistic and optimal way. Sir, I beg to move. Question proposed.”
“It will also regulate the construction, maintenance and improvement of sewerage and land drainage systems, and the discharge of sewage and trade effluent. The existing powers of the current PUB to regulate and implement the supply of water for human consumption are retained in Parts IV and V of this Bill. At the same time, more stringent measures over water service installations are being introduced in view of the experience gained from the recent water contamination incident in Bukit Timah Plaza. Currently PUB requires water installations to be checked once every year by licensed plumbers. This measure will remain in force. The Bill will in addition require such installations to be inspected by a professional engineer and certified fit and safe once every five years. Any party convicted of contravening this requirement will be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 12 months, or to both. The Bill will also hold parties responsible for causing contamination to water supplied by PUB. Responsible parties will have to ensure regular and adequate checks on their water installations. The penalty for contravening this requirement is $50,000 or to imprisonment for a term not exceeding three years, or to both. Transfer of Assets and Protecting Terms and Conditions of Service for Staff In restructuring the PUB, we will need to ensure the proper transfer of staff, properties, rights and liabilities related to the Sewerage and Drainage Departments of ENV, to the PUB. Clauses 60 to 66 provide for the transfer to the PUB of property, assets and liabilities and of employees in the Sewerage and Drainage Departments and the protection of their terms and conditions of service on transfer.”
“261) to be re-enacted as the Public Utilities Act 2001. The re-enacted Act will enable the Sewerage and Drainage Departments of ENV to be integrated with the Water Department, forming the restructured PUB. The responsibility for the restructured PUB will then be moved from MTI to ENV with effect from 1st April 2001. The Water Authority The restructured PUB will become the sole water authority in Singapore. The Bill retains, with modifications, the provisions of the existing Public Utilities Act with regard to the functions, duties and powers of the PUB in relation to water. The Bill will also empower the restructured PUB to directly administer the Sewerage and Drainage Acts, which were hitherto administered by ENV. The functions and duties of the restructured PUB will include providing an adequate supply of water, regulating the supply of piped water for human consumption, supplying industrial and treated used water, and operating the public sewer systems and storm water drainage systems. Main Provisions in the Bill Mr Speaker, Sir, I shall now touch briefly on the main provisions in this Bill. Clauses 6 and 7, together with the Second Schedule of the Bill, set out the functions and duties of the restructured PUB. Briefly, it will provide, construct and maintain the infrastructure for the collection, supply and use of water for public and private purposes; secure and provide an adequate supply of water for Singapore at reasonable prices; and regulate the supply of piped water for human consumption. It will act as an agent of the Government in the management and maintenance of public sewerage systems, public sewers and storm water drainage systems, drains and drainage reserves belonging to the Government.”
“Meanwhile, water treatment technology has advanced considerably, making it economical to treat and recycle used water in a significant way. The used water from our wastewater treatment plants can today be treated to standards much higher than the WHO's drinking water standards, even meeting the stringent requirements of those industries requiring ultra-pure water, as in the wafer fabs. This has enabled us to construct a robust water supply system by tapping on several economically viable sources, thereby diversifying our water sources. Thus, even as we continue to develop more of our local sources of water and buy water from Malaysia, we are also exploring buying water from Indonesia. And with the opportunity now available through advances in technology, we will also develop seawater desalination plants and recycle used water more. In order that we can fully exploit our domestic water resources, we cannot continue to manage the water cycle under separate agencies. To reduce wastage and to exploit synergies, we need a PUB that has the mandate and the resources to manage the entire water cycle optimally; in other words, we should integrate the separate agencies together into a sole water authority for Singapore. The Government has therefore decided to merge the existing PUB Water Department and ENV's Drainage and Sewerage Departments into a restructured PUB. The restructured PUB will then be placed under ENV. At the same time, the electricity and gas regulatory functions of the existing PUB will be taken out to form a new statutory board, the Energy Market Authority of Singapore or EMA under the Ministry of Trade and Industry. Mr Speaker, Sir, to effect these changes, this Bill which I move today seeks to repeal the Public Utilities Act (Cap.”
“Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. PUBLIC UTILITIES BILL Order for Second Reading read. The Acting Minister for Trade and Industry (Mr Peter Chen): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In 1995, the electricity and gas functions of the Public Utilities Board (PUB) were corporatised as a first step towards introducing competition in the electricity and gas industries. PUB was then restructured to regulate the electricity and gas industries, while retaining its responsibilities for ensuring safe and reliable water supply in Singapore. Currently, PUB comprises two parts: the electricity and gas Regulator and the Water Department. But the PUB Water Department is not the only agency dealing with water. The Ministry of the Environment (ENV) also deals with water, through its Drainage and Sewerage Departments. This Public Utilities Bill is to respond to the changes in the water industry. Allow me to explain. In the early days, drainage systems were meant to drain away rainwater quickly to prevent flooding. At the same time, sewerage systems were put in place to control pollution in order to protect public health. Hence the Drainage and Sewerage Departments come under ENV. Today, pollution is well under control in Singapore and all our water catchments have been cleaned up. All used water is now channelled into our sewerage systems and all solid wastes are collected and treated before disposal. With clean catchments, our drainage system is no longer just for flood prevention but has, in selected areas, become means to channel rainwater into our reservoirs.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to make final 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, 2000 and the Supplementary Supply (No. 2) Act, 2000. The additional sum has been presented as Second Supplementary Estimates which have been considered and approved by the House as Command Paper No. 2 of 2001. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. SUPPLEMENTARY SUPPLY BILL Order for Second and Third Readings read.”
“Sir, I beg to move, "That the Bill be now read a Second time." In accordance with Article 148(1) of the Constitution, heads of expenditure to be met from the Consolidated Fund and Development Fund, other than statutory expenditure, have to be included in a Bill to be known as the Supply Bill. The purpose of the Supply Bill before Members is therefore to give legislative approval for the appropriations from the Consolidated Fund and Development Fund to meet expenditures in the financial year 1st April, 2001 to 31st March, 2002. The heads of expenditure and the sums that may be incurred in respect of each head are shown in the schedule to the Bill. These have been approved by the House in the Main and Development Estimates of Expenditure for the financial year 1st April, 2001 to 31st March, 2002, and appear on pages 24 and 25 of Command Paper No. 3 of 2001. The Supply Bill, when approved, will empower me to issue warrants, authorising expenditure up to the amount for each head as shown in the Bill to be paid out from the Consolidated Fund and the Development Fund. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“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. SUPPLY BILL Order for Second and Third Readings read. 2.02 pm”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. First Resolution reported - Question, "That the sum of $32,318,858,720 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Main Estimates for the financial year 1st April, 2001 to 31st March 2002, contained in Paper Cmd. 3 of 2001," put and agreed to. Second Resolution reported - Question, "That the sum of $19,606,584,900 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Development Estimates for the financial year 1st April, 2001 to 31st March 2002, contained in Paper Cmd. 3 of 2001," put and agreed to.”
“I agree with Prof. Toh's concern. There is this small group of people who are often left out because of our allocation criteria. It is very difficult to produce an allocation system which takes care of all groups. I will look at this problem in detail and see what we can do perhaps next time round, because I recognise that there is some unfairness. Although there is a provision where they can go to their CCCs or the CDCs to ask for help, they may feel reluctant to do so. We will have to look at the problem to see what can be done. Assoc. Prof. Toh See Kiat: Sir, I thank the Minister for his response and beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $12,878,000,000 for Head Z ordered to stand part of the Main Estimates. Head T -”
“Sir, the role of the Auditor-General is separate from the Internal Auditor. Currently, about half of the Ministries have internal audit units. Since October last year, the Accountant General's Department has been encouraging all Ministries to set up internal audit units. Audits by Auditor-General's Office focus on both the process as well as the outcome. However, the Audit Report, which is submitted to the President who in turn tables it in Parliament, tends to focus on the outcome, to demonstrate the effect of some of the control weaknesses. Control weaknesses and recommendations are reported separately to the Ministries in management letters that are sent out after each audit project. In FY1999/2000 audit, more than 700 control weaknesses were reported to Ministries for improvement. With regard to auditing the highly wired up Government environment, there have not been impediments to the Auditor-General's ability to audit and take into account the risk of losing access to or abuse of information of Government networks. Hence, there are no plans to amend the Audit Act. To deal with the increasing use of technology, the Auditor-General's Office has stepped up training of its auditors in computer-assisted audit techniques. It has also equipped its auditors with notebook computers with sufficient capacity to examine and carry out tests on financial data downloaded from its auditees.”
“Sir, I think I have answered most of the questions raised.”
“Mr Zulkifli is quite right that our objective should be to get our successful GLCs to act as a mother hen, so to speak, and try and help our SMEs to develop, particularly overseas. And this, in fact, is the objective of Temasek Holdings, which is the holding company responsible for monitoring the performance of our GLCs. Undoubtedly, some of our GLCs have made wrong investments, as pointed out by Mr Inderjit Singh. They have made mistakes and they have taken their punishment, so to speak. But mistakes are bound to happen, hopefully, not very frequently. But because what has happened, Temasek Holdings is now imposing quite a strict policy to ensure that GLCs do not go into areas outside their core competencies. They should focus on expanding overseas and bring our SMEs along. What is past, I think we will have to accept. But from now on, we recognise that the purpose of our GLCs is not to kill our small SMEs, but to help them, and to compete against the big foreign companies which, whether you like it or not, because of the open style of our economy, will want to come here. I think Temasek Holdings is already doing quite a good job. So I do not think we would want to set up another private sector body to monitor the performance of GLCs. Let Temasek Holdings do its job. We will review the position from time to time. And if we have problems of SMEs facing unfair competition, let us know and we will do everything we can to ensure that SMEs are not disadvantaged. I can assure you that the GLCs do not receive special preferences from Government. They operate as commercial entities and you can see that quite a few have been quite successful. Companies like SIA, DBS, PSA are top companies in their fields, and they are commercial companies we should be proud of.”
“GIC is a very large fund manager and its performance is comparable to the performance of any large international fund management company, which manages a portfolio of funds spread around the world, in a variety of assets and currencies. I can assure Mr Low that the returns of the GIC are more than adequate. Next year, the reserves figures will not be in the Budget book, for the reasons I have explained. As regards the problem of GLCs, the complaints are not new. We have given the same answer many times and I do not want to go through it again. I think the problem is one of perception. GLCs are generally large, and they are large because they were started by Government at the time of our independence, when there was a shortage of private sector funds, technical know-how and so forth. They have now become quite successful and large, and they are large compared to SMEs. If it is a problem of size, would you prefer that GLCs did not exist at all and have foreign companies doing the same job? That will be far worse, I would assume. So our GLCs, which compete in various sectors, must be strong enough and as efficient as the foreign companies who are free to come in. I will give you an example. One of the corporations, NTUC FairPrice has always been the target of a lot of complaints, because it is seen to be competing against the mama and papa shops in HDB housing estates. It has become very efficient and its prices are competitive and, generally, low. It has to compete against a supermarket chain like Cold Storage, which is owned by a Hong Kong company, Dairyfarms, who runs a very large chain of supermarkets. Would you rather that NTUC FairPrice get out of the supermarket business and let our SMEs compete directly with Cold Storage?”
“Sir, first, on Mr Low Thia Khiang's question. I will give him the figures that he asks for. He also said the NII figure for the year 2000 was very high. This is because in that year there was a very large payment from Temasek Holdings which will not be repeated this year. This accounts for the big difference. Also, the published figure for NII in FY2001 is low because it only includes 10% of the NII which is available to Government for use. If you recall, the amendment to the Constitution provides for up to 50%, but we only notionally include a figure as 10%. It is not that we are going to use the 10%. But rather than put a zero there, we have put 10%. That is why it looks small. As far as Government's return on investment is concerned, Government's investments are divided into three groups. One comes under Temasek Holdings, which is a holding company for GLCs, and its accounts are available to Parliament. The other is MAS which manages quite a substantial proportion of Government reserves. Again, the results are published annually. So you can look at MAS' annual reports to see how they are doing. The final amount, which is a large part of our reserves, is managed by the Government Investment Corporation (GIC). This is not an asset owning company. It is simply a fund management company, which manages the remaining amount of Government reserves. This company does not publish its results. We have explained why we do not publish the results because they contain information which our competitors would love to have. But its accounts are available to the President and to the Auditor-General.”
“To be successful as a nation, we must build a cohesive society that leverages on our collective strengths in forging a future for all Singaporeans. This Budget gives a boost to businesses and entrepreneurs, shares with all Singaporeans the fruits of our good economic performance, and offers help and hope for the lower income earners. I wish to thank all Members for their contributions to this process. [Applause.] Question put, and agreed to. Resolved, That Parliament approves the financial policy of the Government for the financial year 1st April, 2001 to 31st March, 2002. ADJOURNMENT Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng]. Adjourned accordingly at Sixteen minutes to Six o'clock pm. Committee of Supply - Estimates of Expenditure for the Financial Year 1st April 2001 to 31st March 2002 (Cols. 281 - 286)”
“How much, when and how to share depends on factors such as how the economy has performed and, more importantly, how the foreseeable future looks like. Fundamentally, our policies aim at, first, to keep tax rates competitive; second, maintain Government expenditures that are necessary to provide good public services today and to invest in infrastructure for tomorrow; and third, ensure that we preserve and grow the value of our reserves. What is left after meeting these core goals, we can share out. Some Members have also suggested that having budget surpluses mean that we are probably collecting too much revenue. Well, if we can be certain that we will have sufficient sources of funds in future to service all the demands like education, healthcare and looking after the elderly, even as our population ages and the economy continually restructures with globalisation, then of course we can consider collecting less, and further lower our tax rates. But who can be so certain about the future? To act like the future is a simple projection from the present is to invite disaster. The alternative of not planning for any surplus is to have a system where taxes go up and down each year depending on the state of the economy. The Government rejects this alternative, as it will introduce enormous stress and uncertainty in the lives of our people. Mr Speaker, Sir, the Budget I have presented for fiscal year 2001 contains measures to help everyone adjust to the challenges of the new millennium. This debate has served to ensure that our policies are robust in both the short term and the longer term. It is of critical importance that we move together as a united people.”
“How much and how fast to change really depends on how fast the world moves. Several Members have asked if the corporate tax rate cut is the beginning of a trend towards even lower corporate tax rates. We have not set a new target for income tax rates in the medium term because tax rates globally are in a state of flux. Our commitment is to keep our rates at a competitive level. We are a price-taker and not a price-fixer. We thus have to be alert and agile enough to adjust to the price movements in good time. As we make these adjustments, we want to be able to provide some certainty to businesses and individuals. Unlike other countries where Budget is a time when people begin to wonder whether taxes will be raised in order to meet expenditure needs, we believe in assuring predictability, so that businesses and individuals can plan their finances better. When we cut tax rates, we do not expect to raise them again, unless it is part of a total tax structure revamp or unless some fundamental changes have occurred which require a basic change in strategy. The cuts therefore indicate our assessment of future global trends in tax rates. Where we are not ready to make tax cuts, we offer rebates when we can afford them. Tax rebates and budget "share-outs" will be available so long as the economy performs well and we set aside enough reserves for contingencies. They are our way of sharing the nation's prosperity with everyone and recognising Singaporeans' efforts in working together successfully. Several Members have suggested that the Government should have a formula for the distribution of budget surpluses. This is unrealistic. Government will continue to share the surpluses with the people whenever it is able to.”
“7 million from Government to pay for their manpower and other operating costs. From FY2001, the Government will raise CDCs' recurrent budget by $3.3 million per year, an increase of 28% over the current funding level. The increased budget should allow the CDCs to employ more staff and enable them to take on a larger role in the social service delivery functions. In line with the delegation of the social assistance schemes to the CDCs with effect from 1st April 2001, the funding for social transfers amounting to $98.2 million is also transferred from MCDS to the CDCs. Besides the recurrent budget for CDCs, Government also provides an annual grant of $1 per resident as well as a matching grant of $3 for every $1 of cash donation raised and $4 for every $1 of donation through GIRO. This is based on the principle of co-funding, which encourages community involvement and induces discipline in the management of resources. Easy availability of funds without co-funding tends to lead to loose spending and a "buffet syndrome". Individuals and corporations qualify for tax deductions on donations made to all CDCs and also to funds set up by other grassroots organisations, such as CCCs and CCMCs, for specific programmes like building, scholarships and welfare funds. In total, Government is giving about $140 million to the CDCs per year. Government also provides grassroots grant to CCCs, RCs and Neighbourhood Committees at $2.6 million per annum. The grants help the CCCs, RCs and NCs organise more community development and neighbourhood enhancement projects to promote neighbourliness and social cohesion. Conclusion Mr Speaker, Sir, this year's Budget is about repositioning Singapore to ensure our continued survival and success in a constantly evolving global environment.”
“Mdm Claire Chiang has raised several issues relating to family and social services. MCDS has already some programmes in place. The Minister for Community Development and Sports can elaborate on these programmes during the Committee of Supply Debate on MCDS' budget. Education Mr Chiam See Tong has proposed that the Government spend $2 billion of its surplus to improve our education system. Mr Chiam's proposal is commendable. He should be pleased to note that the Government is budgeting to spend $6.3 billion next year on education. This is an increase over the FY2000 budget. Our education budget is second only to that of defence. We cannot be allocating funds to education on the basis of whether there is a surplus, or how large the surplus is in a particular year, as Mr Chiam wants to recommend. The Government has always invested heavily in education and training. It is an investment that has paid off handsomely, and puts Singapore in a good position for the knowledge-based economy. Dr Teo Ho Pin has asked for subsidies for pre-school education. Government has subsidised pre-school education by providing capital grants to eligible kindergartens. The childcare subsidies given by Government also help offset the cost of sending children to childcare centres with kindergarten programmes. In FY2001, the Ministry of Education will continue its pilot programme on pre-school education to develop new materials and train teachers, and study how effective they are in actual classroom application. We have to assess the results of the study before thinking of further subsidies for pre-school education. Dr Michael Lim and Mr Leong Horn Kee raised the issue of funding for CDCs and RCs. In FY2000, CDCs were allocated a recurrent budget of $11.”
“As the Minister for Manpower informed this House last month, the CPF Board will conduct a survey to find out why nearly 200,000 Singaporeans did not come forward to participate in the CPF Top-Up despite all the publicity and encouragement. We should wait for the results of the survey before deciding on what else needs to be done. Family Mr Ang Mong Seng has asked for more support to be given to three-tier families through a Senior Citizens Bonus. The Government supports and promotes the extended family as a means to foster inter-generational cohesion and provide an informal support network for childcare and aged care. There are already several incentives in place to encourage children to look after their parents and grandparents. For example, the tax relief for adults who live with aged parents has been increased to $5,000. The CPF Top-up Scheme, under which taxpayers enjoy tax reliefs for cash top-ups to their parents' retirement accounts, is extended to include grandparents. HDB has also in place the CPF Housing Grant Scheme to encourage young couples to stay near their parents. Under the scheme, young couples who buy a resale flat from the open market to stay near their parents are given a housing grant of $40,000. Besides monetary incentives, there are other ways to promote three-tier family living. MCDS is working with community agencies to promote grandparenting skills and 3-generation bonding activities. Where possible, childcare facilities will be co-located with facilities for senior citizens and students. MCDS will continue to work with the relevant agencies to identify policies and programmes currently targeted at the two-tier family, which could be extended to the three-tier family.”
“For the CPF Top-Up Scheme, Mr Ang Mong Seng has asked that Government do away with the requirement for a $100 top-up for certain categories of people. I should point out that co-payment is an important principle of governance, where the Government joins together with the individual to look after his or her well being. In the case of the CPF Top-up, the co-payment serves to underline the importance of individual responsibility in saving and planning for one's future and retirement. Removing the need for a $100 co-payment would undermine this objective. The responsibility of making the co-payment to qualify for the CPF Top-up lies with the individual and the family. For senior citizens who are unable to make the $100 co-payment, the children or other family members should come forward to help by volunteering to contribute the $100 on their behalf, so they can get the top-up from the Government. Community groups such as Citizens' Consultative Committees and voluntary welfare organisations have offered help to those without family. Dr Vasoo has said that steps should be taken to ensure a higher take-up rate of the CPF Top-Up Scheme. To put matters in perspective, I would like to point out that the latest participation rate of 91.2% compares very favourably with previous exercises. The participation rate for the three runs of the Share Ownership Top-up Scheme in 1993, 1995 and 1997 was 74%, while the Pre-Medisave Top-up for the elderly given from 1995 to 1998 had participation rates ranging from 65% to 73%. Nevertheless, the Government will work towards getting more Singaporeans to enjoy such top-ups.”
“Utilities Save is therefore limited to households in 1- to 5-room HDB flats. About 75% of households will benefit from it. However, the Government recognises that using HDB flat size as a proxy for income levels is not perfect. The ideal solution would be to disburse the rebates in accordance with the financial needs of the households. Such an approach will be more equitable, but it will require a comprehensive means test for individual households, taking into account the income levels, number of household members and dependants, the assets owned by them, and so forth. This will make the system very complex and intrusive. There are close to 700,000 HDB households in 1- to 5-room flats alone. Mr Yeo Guat Kwang and Mr Ong Ah Heng have asked the Government to slow down the progress of adjusting the water and utilities levies. Electricity and water charges make up the bulk of utilities charges for households. Our electricity tariffs are reviewed quarterly, based on fuel oil prices at the time of review. Fuel oil prices have increased steadily from US$11 per barrel in 1998 to a high of US$28 per barrel in October 2000. Fortunately, fuel oil prices have since eased to about US$22 in recent months. If fuel oil prices continue to fall, electricity tariffs will also drop. In the case of water, the Government has, in July 1997, introduced a series of revisions on water tariff, water conservation tax and water borne fees to reflect the strategic importance and scarcity of water. These were phased over four years, from 1997 to 2000. The last revision took effect on 1st July 2000. As of now, there is no plan for further revision of water tariff.”
“I believe this is not necessary as there already is a National Manpower Council chaired by the Minister for Manpower to develop, monitor and coordinate policies on developing our workforce. The members include the Minister for Trade and Industry, Minister for Education, Chairman of the Public Service Commission and senior officials from many other agencies, including the NTUC, Prime Minister's Office, Ministry of Finance, Mindef, Economic Development Board and National Science and Technology Board. The wide representation in the National Manpower Council will help to align the various training schemes with the present and future needs of the economy. I am sure the Ministry of Manpower will take into account the comments by Prof. Simon Tay and others on the use of the fund. Mr Sin Boon Ann has proposed giving tax rebates for companies which employ older or retrenched workers. Employers are already paying lower CPF rates for older workers. Singapore runs an open market economy and distortions to the market must be kept as low as possible. We have to offer additional help to older and retrenched workers by way of training, retraining and re-skilling. What companies pay their workers must be a reflection of their productivity, taking into account their capacity to do the job, their reliability and their loyalty. Mr Ang Mong Seng and Mr Yeo Guat Kwang felt that Utilities Save eligibility should not be confined to 1- to 5-room HDB flats. Utilities Save is meant as a way of sharing the budget surplus, and not as a means of shielding Singaporean households from the effects of fuel price increases. It is targeted at the lower and middle-income groups, as the higher income group would benefit from other budget surplus sharing measures such as income tax rebates.”
“By being more customer-centric and integrated in the way we deliver services online, we make it easier for members of the public to switch from traditional modes of service delivery to electronic service delivery, such as the one-stop eCitizen Centre. As we move forward in e-Government, we will also need to make sure that people's attitudes keep up with the changes. Hence our second prong is to provide ICT training to our citizens so that they are better able to seize the benefits of the new technologies. The IDA has therefore set aside a $25 million budget spread over three years to run various programmes targeted at the elderly and others who are on the wrong side of the digital divide. Our CDCs too have taken the lead to implement their own district IT plans and to bring IT training to the doorstep of residents. In addition, we need to encourage Singaporeans at the school and community levels who can handle Internet transactions to help those who cannot. Such community-based efforts are essential to bridge the digital divide. Mr Seng Han Thong, Mr Harun Ghani, Mr Hawazi Daipi, Mr Ibrahim Othman and others have spoken about the importance of keeping our workers relevant in the new economy. The Government recognises the importance of training and retraining for our workforce. This is necessary to keep the Singapore economy competitive and to help our workers remain employable and to enjoy good wages. The Government will spend more than $30 million this year on the Manpower Development Assistance Scheme and other initiatives to help the workforce upgrade. The Government will also contribute another $500 million in FY2001 to bring the Lifelong Learning Endowment Fund to $1 billion. Mr Seng has suggested setting up a coordinating committee for workers' training.”
“The family and the community must also do their part in looking after their elderly family members and the needy. Mr Thomas Thomas, Mr Chew Heng Ching, Dr S Vasoo and others have asked that more be done for our pensioners. Pensioners receive the same benefits as other Singaporeans, such as the CPF top-ups, rebates for S&C charges, Utilities Save, Pre-Medisave Top-ups and MediShield Scheme for the Elderly. In addition, they are eligible for generous medical benefits. Pensioners have also benefited from the ex-gratia payments given in 1996 and again in 2000, of between 6 and 13.5 months of pensions, depending on the date of their retirement. Pensioners with low pensions are also given the Singapore Allowance which is reviewed from time to time, the last revision being in 1997. With effect from 1st April 2001, the Singapore Allowance will be increased by a further $10 to a total of $150 per month, and the gross pension ceiling raised to $1,050 per month. This increase took into account the cumulative inflation of 3.2% since the last revision of the Singapore Allowance. Mr Chng Hee Kok, Dr Tan Boon Wan and Mrs Lim Hwee Hua have asked for more to be done to bridge the digital divide. I agree that Singaporeans need to embrace info-communications technology (ICT) to take advantage of the availability of e-services. However, not all Singaporeans are familiar with ICT and are able to transact over the Internet. The Government's response is therefore two-fold. First, the Government will continually enhance the user-friendliness of its own electronic services.”
“The widening income gap is a reflection of globalisation and the transition into a knowledge-based economy. Salaries at the top end will be globally determined, as countries compete for talent. Skilled workers will also be able to command good salaries. This is something we cannot avoid. However, the income difference in itself is not the fundamental problem. The issue is whether those with low incomes can make ends meet, and whether they are given help to lift themselves out of their circumstances. Government continues to assist the lower income group through various measures like the S&C rebates, Utilities Save and CPF Top-ups, where those with lower incomes receive more. Just as critically, Government has invested heavily in the provision of formal education, offering quality primary and secondary schooling at very low fees. Schools have schemes to help those who cannot afford even these fees. Children from the lower income group will be able to go as far up the education ladder as they can go, and be assured of a good future. Mr Loh Meng See, Dr Lily Neo and Mr Thomas Thomas have asked the Government to do more for the elderly and the sick. Besides the subsidies and assistance offered through the Ministry of Health and the Ministry of Community Development and Sports, the Government has also set up and grown the Medifund and the ElderCare Fund, which help the elderly with their medical and nursing needs. The Government believes that this is one area where it is important to have joint responsibility. The Government will do its part to ensure accessibility and affordable services. The individual must also contribute by leading a healthy lifestyle and planning and saving for retirement.”
“On the other hand, in most established companies, stock options do not form a major part of the annual compensation for most employees. The two schemes are therefore structured differently. Mr Iswaran also wanted to know how the 50% rule would apply to Singapore companies which employ many staff in their overseas factories. In such cases, companies with production factories overseas can still enjoy the CSOP scheme as long as the conditions have been satisfied by their Singapore operation. Goods and Services Tax Mr Thomas Thomas has asked for GST to be reduced in view of our surpluses. Our GST rate of 3% is the lowest in the world. There is therefore no reason to reduce the GST rate. Mr Sinnakaruppan has also asked if the cuts in income taxes would lead to a higher GST rate by the end of next year. The answer is a simple "no". Mrs Lim Hwee Hua is concerned that the cuts in personal income tax will shrink our tax base and eventually limit the effectiveness of income tax adjustments as a fiscal tool in future. There is no reason for immediate concern as all the tax changes announced in this year's Budget will only narrow our tax net marginally by 2 percentage points, from the current 32% to 30%. I share her concern, however, that we should take care not to narrow our tax net by too much. Hence, I am not supportive of Mr Chew Heng Ching's and Mr Noris Ong's proposals that we should introduce more generous personal tax reliefs. Doing so will shrink our tax net even further. My preference is to cut tax rates directly as this will benefit all taxpayers, and not benefit special groups selectively, unless there are overriding reasons to do so. Dr S Vasoo and Dr Jennifer Lee and others have expressed concern over the widening income gap and the plight of the less well off.”
“New Corporate Tax Regime Dr Wang Kai Yuen, Mr Iswaran and Mrs Lim Hwee Hua have asked whether the cut in our corporate tax below 25% will trigger off anti-tax haven measures. With other countries, such as Germany, United Kingdom, Australia and Ireland reducing their corporate tax rates, we see the need to reduce our corporate tax rate to maintain Singapore's competitiveness. We need not be overly concerned with the anti-tax haven measures of other countries as most anti-tax haven rules are triggered against passive income and not active income. We have always encouraged foreign companies to set up operations in Singapore with substantial real activities in Singapore and not just use Singapore as a base for booking activities. Mr Sinnakaruppan has asked whether the Government will put in place regulations to prevent companies from splitting up into smaller companies to enjoy the three-tier tax exemption scheme. The exemptions were given to help mainly the smaller and less profitable companies. It is, of course, possible that profitable larger companies may break up into smaller entities in order to enjoy larger tax savings. The Government will monitor the situation carefully and if abuses are found, tax rules will be put in place to curb such abuses. Company Stock Option Scheme Mr Iswaran said that the Company Stock Option Scheme (CSOP) should enjoy the same tax exemptions as the Entrepreneurial Employee Stock Option Scheme (EESOS). I would point out that in the case of start-ups, stock options are the main tools for attracting and retaining talent as they are not able to pay competitive salaries. It is therefore necessary to provide the start-ups with more incentives.”
“Although NII contribution is above-the-line, we will not, as in the past, make use of this income stream until there is a need to. Tax revenue and fees and charges will continue to be the primary source of revenue for Government. For FY2001, we see no need to make use of any part of the NII contribution as normal revenue streams alone will be more than sufficient to pay for all planned expenditures. How much NII to keep available for spending, subject to using a maximum of 50% of the NII earned from past reserves, is something that the Government will have to decide on annually, taking into consideration budgetary needs. The real budgetary pressures of a rapidly ageing population are not upon us yet. The proportion of elderly aged 65 years and above is projected to increase from the current 7.3% to 13% by the year 2020 and to 19% by the year 2030. This will mean more expenditure looking after the elderly and the sick in the future years. At the same time there will be a downward pressure on revenue as our tax base narrows. There will therefore be greater calls on our NII in the future. We must, therefore, be conservative in our spending now and plan wisely for the future. Dr Wang also pointed out that the NII contribution expected for FY2001 is lower than that for FY2000 and questioned whether this is due to the poor performance of the Government of Singapore Investment Corporation (GIC). I would like to assure Dr Wang that this is not so. The investment income for FY2000 is higher due to special dividends received by the Government from Temasek Holdings. Discounting the special dividends, the investment incomes for the 2 years are comparable.”
“9% compared to the original estimate of between 4.5-6.5%. This vast change in economic growth is typical of an economy like Singapore, which is heavily dependent on exports. It is extremely difficult to forecast how our export partners' economies will do. In the case of development expenses, actual expenditure was lower than forecast because tender prices were low and there were delays in implementing several development projects. Endowment Funds Dr Wang also asked for the various endowment funds to be subject to parliamentary scrutiny. All the endowment funds were set up through Acts of Parliament and the administration of the endowment funds is subject to the provisions of the Acts passed by Parliament. The annual reports, financial statements and auditor's reports for the endowment funds are also presented to Parliament annually. In addition, Members can raise queries about the use of the endowment funds during the Committee of Supply proceedings, and can direct parliamentary questions on them to the respective Ministers at other times of the year. Net Investment Income Dr Wang Kai Yuen also touched on the treatment of Net Investment Income (NII) in the FY2000 and FY2001 budget presentation. He said that Government is mixing up new and old money by having NII contribution as an "above-the-line" item. I would say that Dr Wang is mistaken. NII contribution is the portion of NII that remains as current reserves under the amended Constitution. It is thus new money and the issue of mixing new and old money does not arise. The inclusion of NII contribution as an "above-the-line" item does not represent any sudden change in the Government's fiscal policies.”
“Low Seow Chay and Dr Teo Ho Pin have expressed concerns about the construction industry. I should point out however that the contraction of construction output has moderated in year 2000 and the growth rate of the construction sector could turn positive this year. The key issue for construction is productivity improvement and Government is pushing on with the Construction 21 blueprint to help construction firms to upgrade. Government-linked Companies Mr Inderjit Singh, Mr Kenneth Chen and Mr Simon Tay have raised concerns over perceived unfair competition by Government-linked companies (GLCs) in the domestic market. I would reiterate that GLCs operate on a commercial basis. They do not receive any subsidies or preferential treatment from the Government, and are subject to the same regulations and market forces as private entrepreneurs and SMEs. Temasek Holdings, the holding company of the GLCs, will continue to drive GLCs to focus on their core competencies in Singapore and to expand into the region. GLCs will also undertake commercial investments that enhance Singapore's economic and business infrastructure. These investments may be in new technologies and capabilities where the risk is too high for private funding or where private enterprise is lacking. They can contribute to projects that complement the efforts of other Singapore companies and economic agencies, and partner local companies in their regionalisation efforts. Let me now turn to issues relating to tax and budget presentation. Accuracy of Estimates Dr Wang Kai Yuen has commented on the differences between the estimated and revised revenue and expenditure forecasts. Operating revenue in FY2000 was higher than forecast because real GDP growth in 2000 turned out to be much higher at 9.”
“Although the property market is facing a period of lacklustre performance, the residential price index of 132.8 for the fourth quarter of 2000 is currently well above its trough of 100 in the fourth quarter of 1998. Help for Small Businesses Mr Ong Kian Min, Mr Ahmad Magad, Mr Noris Ong and Mr Lew Syn Pau have stressed the importance of giving SMEs a fighting chance to survive in a rapidly restructuring economy. The Government has implemented a host of programmes and financial schemes to help SMEs grow, expand and regionalise their businesses. EDB, PSB, IDA and other Government agencies offer more than 60 programmes for local companies at different stages of development. Furthermore, the tax exemption scheme that I am introducing to the corporate tax regime this year is specifically designed to help small companies and start-ups grow by allowing them to plough more of their profits back into their businesses. Mr Noris Ong asked for a small companies tax rate, saying that the $100,000 exemption threshold may not be enough. I believe that the measures we have introduced in this Budget are sufficient for now. Two-thirds of small companies will have their taxes reduced by more than half. Incentives for Businesses Mr Inderjit Singh has called for more incentives for businesses and entrepreneurs, and a Lifeline Fund to help businesses. There are already existing schemes in place, such as the Innovation Development Scheme and Overseas Enterprise Incentive Scheme, to help companies improve their productivity, to regionalise and to bring in new activities. The Ministry of Trade and Industry will address other points on the SMEs in greater detail, including the specific proposal for a Lifeline Fund. Help for Construction Industry Mr Chay Wai Chuen, Prof.”
“If US growth should turn out to be substantially lower, our forecasts will have to be adjusted downwards, but it is still too early to tell. Should the economy really falter, Members can be assured that the Government will take whatever measures needed to stabilise the economy. We did so in 1998 and we will do it again if the need arises as we have the resources. Property Sector Dr Ker Sin Tze and Prof. Low Seow Chay want the property tax rate to be cut by more than 2% because they said that the property tax rebate will be withdrawn after June. The property tax rebate was introduced to help ease cost pressures on companies during the 1997/1998 crisis. With improved economic growth in 1999 and 2000, rental markets have improved considerably, so an extension of the 25% property tax rebate is no longer justified. However, to help reduce business costs in the longer term, I have cut the property tax rate by 2%. Unlike a rebate, a permanent tax cut provides businesses with certainty. Dr Teo Ho Pin has suggested that the Government remove property tax altogether, especially for owner-occupied commercial properties. I should point out that property tax is still a significant and stable source of Government revenue. It can be reduced but not eliminated altogether, otherwise other taxes will have to be raised. Also, it is wrong to make a distinction between owner-occupied and let-out commercial and industrial buildings. Removing property tax only for owner-occupied commercial properties distorts business decisions by making rental properties more expensive than owner-occupied premises. Prof. Low Seow Chay and Mr Noris Ong have asked for the removal of property market anti-speculation measures to help the property sector. I feel that there is little justification for this.”
“Actual expenditures on defence have consistently hovered around 5% in recent years. Secondly, we are increasing the total education budget for FY2001 by $480 million, more than the $390 million for defence, which is, in turn, only slightly more than the $370 million increase for health. This demonstrates that the Government sees education and health as matters of national priority. Mr Jeyaretnam also decries that we are not spending enough on healthcare. He is not seeing the total picture. In FY2001, the Ministry of Health's budget is increased significantly by 30% over FY2000. In our public hospitals, very substantial subsidies are provided - 80% for Class C, and 65% for Class B2. These subsidy rates apply to all costs, including medicine. Primary healthcare treatment is also heavily subsidised in our polyclinics. In addition, patients can use their Medisave to pay for the balance of their hospital bills, and to take up MediShield to help them should they contract catastrophic illnesses. Patients who are not able to pay for their share of the medical bills can apply for assistance from the Medifund. The recipients of Public Assistance are given free medical treatment in our public hospitals and polyclinics. Healthcare is therefore accessible and affordable for all Singaporeans. Economic Outlook and Off-budget Measures Mr Inderjit Singh, Mr Peh Chin Hua, Mr Chew Heng Ching, Mr Ong Ah Heng and others have expressed concern about the economic outlook this year. Some have asked if the Government is ready to consider off-budget measures if the economy takes a turn for the worse. The Government's growth estimate of 5-7% for 2001 takes into account the consensus of US growth forecast of 2-3% for the year as a whole.”
“Secondly, Mr Low must know that a large proportion of everything that we consume is imported. We cannot control the prices of imported goods, but the MAS has been quite successful in minimising imported inflation through its management of the Singapore dollar exchange rate. The Government's policy has, therefore, been to keep inflation as low as possible and through productivity improvements, ensure that wages increase faster than the cost of living. This way, living standards will rise for everyone. Over the past 10 years, the cost of living in Singapore, as measured by the Consumer Price Index (CPI), increased by 1.7% per annum. On the other hand, average household income from work increased by 4.9% per annum. The average household income has therefore gone up by 3.1% per annum in real terms. Today, households are therefore much better off in income terms compared to 10 years ago. Mr Jeyaretnam has made numerous comments on a broad range of topics. He should take up such details during the Committee of Supply. But I have to comment on his references to the education, defence and health budgets. Mr Jeyaretnam quoted only the Ministry of Education's operating budget of $4.9 billion. This forms only part of the total budget for education. The total Ministry of Education budget is, in fact, $6.3 billion, which is almost a third more than the figure Mr Jeyaretnam quoted. Mr Jeyaretnam also compared the MOE budget with the defence budget. First, there is no need for us to be apologetic about our spending on defence. Without safety and security, all our hopes and dreams will vanish. Mr Jeyaretnam should not misdirect Singaporeans with his naivete. The defence budget is capped at 6% of our GDP. It is an insurance premium.”
“More importantly, ample help will also be given to those who are not doing as well, through various means, such as the Manpower Development Assistance Scheme, and the Lifelong Learning Endowment Fund. But before I proceed to address major issues raised by Members, I would like to correct several misleading statements made by Mr Low Thia Khiang and by Mr J B Jeyaretnam. Mr Low claims that the personal tax rate cuts mainly benefit the rich because their savings in dollar terms are higher than lower income persons. I hope that he is not naive enough to believe that this is a legitimate complaint. He must know that the tax cuts are structured so that higher income persons will receive lower tax cuts in percentage terms than lower income persons. It is not feasible to devise a tax cut in which lower income taxpayers receive more tax savings in money terms than higher income taxpayers. He also conveniently forgets that nearly 70% of economically active persons in Singapore no longer pay any personal income tax, and the taxes paid by the remaining 30% ultimately appear as part of the budget surpluses used to pay for the CPF top-ups, S&C charges and utilities rebates given to the lower income persons. For the 70% who do not pay any income tax at all, they benefit directly from the CPF top-ups, the S&C charges rebates and Utilities Save. As these payments are made in money terms, we have structured the payments to give more to the lower income persons. Mr Low also says that the Government should guarantee that the cost of living in Singapore would not go up. It is not possible to give such a guarantee. First, the main contributor to domestic inflation is the wage increases of workers. I hope that Mr Low is not suggesting that workers' wages should be frozen.”
“9% last year, and Unit Business Cost of manufacturing also declined, by 1.1%. We should distinguish between temporary difficulties, for which short-term cost-cutting measures are helpful, and more fundamental changes, which have to be confronted directly. We cannot meet the new challenges ahead through rebates and cost subsidies. As we enter the new global economy where knowledge, creativity and innovation are the key competitive advantages, the challenges brought about by globalisation can only be met by upgrading our capabilities. The Government has therefore introduced a slate of measures in Budget 2001 to reposition ourselves for the future. The Budget this year is aimed at creating a framework for businesses to flourish, and maximising the potential of all Singaporeans. The package of revenue measures will increase our competitiveness. A preliminary study indicates that they could enhance our economic growth by around 0.2% this year and by a further 0.4% next year. As the tax rate cuts are permanent, they provide companies and individuals with the certainty they need in business planning. Whilst we push ahead in sectors that are growing rapidly, the Government recognises the need to help slower sectors upgrade or restructure. Where the economic fundamentals of the business have changed, it may be necessary for some to shift to industries offering better prospects. The Government will extend help to them in making these adjustments. At the same time, our social cohesion must remain strong. The economic fruits of our success have to be shared with all segments of our population. This year, we have therefore designed a progressive package of Budget "share-outs".”
“Mr Speaker, Sir, let me first thank all Members of this House who have spoken on the Budget on Monday and this afternoon. Because of time constraints, I will focus on the major issues raised by Members; where they have raised points of details, I will have to leave them to be discussed in the Committee of Supply. In last year's Budget debate, some Members commented that the Government was too quick to withdraw the cost-cutting measures introduced during the 1997/1998 financial crisis, even as we emerged from the crisis with a respectable growth of 5.9% in 1999. This year, despite a stronger growth of 9.9% in the year 2000, Members have again expressed similar concerns. These calls for help are a reflection that economic growth has not been evenly spread out in Singapore. Although SMEs in the knowledge-based sectors and those servicing the multinational companies have done well, and have benefited from the strong external demand in the past two years, other SMEs in the domestic sectors have not done as well. The Government understands the cost pressures these SMEs are facing. Therefore, although the one-off cost-cutting measures were meant to help tide them over the temporary financial difficulties, the Government has not withdrawn all the cost-cutting measures. For example, the employer's CPF contribution rate has not been fully restored to 20%. JTC is still granting a rebate of up to 10% of its customers' contracted rents. The HDB is also extending its rental rebate until the end of this year at half the original quantum. The gradual phasing out of the cost-cutting measures has not resulted in any substantial rise in business costs. In fact, Unit Labour Cost for the economy has continued to fall, by 0.”
“We are cutting individual income tax rates significantly, giving a one-off 10% tax rebate on individual income tax, continuing with rebates on S&C charges and rents, and helping HDB households through the Utilities Save scheme. This package of measures has been intentionally designed to be progressive, to benefit the less well-off more. While we focus on enabling the economically active to adapt better in the new millennium, we do not want to forget the others. This is the reason for allowing the tax deduction of shares donation to IPCs to encourage philanthropy, as well as the Government's contribution of $250 million to the ElderCare Fund and $100 million to the Medical Endowment Fund. There is a place for everyone in Singapore, and everyone will benefit from good governance. It will take effort and even a fair amount of difficulty to reach where we, as a nation, want to get to. This Budget serves to encourage everyone to stay united and succeed together. [Applause].”
“This is why we are encouraging productivity and entrepreneurship, through the new corporate tax structure favouring small enterprises and start-ups, a more favourable treatment towards stock options for employees of all companies and not just start-ups, and raising the tax exemption limits on voluntary CPF contributions by the self-employed. At the same time, we will help our companies to move up the value chain and into growing industries by our $868 million spending in R&D and the Economic Development Assistance Scheme, and give assistance to local enterprises as they adapt to changing market conditions. Though businesses are important, even more important are the people. This is why we are investing nearly $7 billion in the education of our children and continuous training of our people, through our investment in educational institutions, the Manpower Development Assistance Scheme, and the Lifelong Learning Endowment Fund, among many other ways. At the same time, the Government will continue to create the conditions to attract and retain talented Singaporeans and foreigners to live in and contribute to Singapore. The objective of this year's budget at a micro level is, as I mentioned earlier, to help everyone in Singapore make a successful transition into the knowledge-based economy. Education and re-training are key. Adjustment takes time and effort. The lowly skilled are in greatest danger of losing their jobs. The lower-paid need the most help, but most of all they must want to help themselves. The Government can lend a helping hand in the process. We are therefore implementing a slew of measures to ease the financial burden on individuals, and share the economic surplus that we enjoyed in year 2000.”