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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“In order to minimize abuse, such deductions would, however, be subject to a maximum of $100,000. This incentive would take effect in respect of modifications undertaken from 1st January 1989. INDIVIDUAL INCOME TAX I move on to individual income tax. As the corporate tax rate has only been lowered by 1%, I do not propose to make any changes to the rates of personal tax as they are already low compared to many other countries. We have a graduated tax scale which starts at 3.5% at the lower end and rises steeply before levelling off at a maximum rate of 33%. This, combined with a scheme of tax allowances, ensures that the better off carries a fair share of the tax burden, whilst adequately rewarding effort and enterprise. In this connection, Members may wish to note that under our system of personal taxes, less than 10% of taxpayers (accounting for some 6.5% of economically active persons in Singapore) pay nearly three quarters of the total personal taxes collected. Instead of adjusting personal tax rates, I propose to revise a number of reliefs in support of family formation and Government's call to families to care for their aged and handicapped dependants. The following reliefs will be revised with effect from Year of Assessment 1990. (a) Relief for handicapped dependants who are either siblings or children of the taxpayer will be raised from $750 to $2,500. This relief will be allowed so long as the handicapped dependant does not have an income of more than $1,500 in the year. (b) Aged parent relief will be raised from $1,000 to $2,500. (c) Wife relief will be raised from $1,000 to $1,500. (d) Normal Child Relief for the first, second and third child will be raised from $750 to $1,500 each.”
“Extension of One Year Accelerated Depreciation to Other Automation Equipment The 1982 Budget Statement provided for the one year accelerated depreciation allowance to be given to capital expenditure incurred on the purchase of robots and other types of automated equipment. This has so far only been extended to robots, CAD/CAM and certain other office equipment. In line with our current automation thrust, as well as to take into account technological advances made in the area of automation equipment, I have decided to extend the one year accelerated depreciation allowance under section 19(A)(1A) of the Income Tax Act to a number of other automation equipment. These include the following: - Automated Machining Equipment - Automated Guided Vehicles - Automatic Testing/Inspection Equipment - Automatic Retrieval and Insertion Devices The concession will apply to all capital expenditure incurred on qualifying equipment during or after the basis period for the Year of Assessment 1990. Tax deduction for computer equipment donations to approved educational and research institutions To help upgrade and maintain the quality of training in Information Technology, I propose to allow deduction for the donations of computer equipment by companies to approved educational and research institutions with effect from Year of Assessment 1990. This scheme will be administered by my Ministry. Tax Incentives for Building Modifications for the Disabled To facilitate the employment of our disabled, I would like to encourage employers to make modifications to their working environment so as to accommodate disabled workers. In this respect, I am prepared to consider allowing a once-off deduction against income for expenditure incurred in building modifications to cater for the disabled.”
“TAXATION Corporate Income Tax I propose to reduce the corporate tax rate from 33% to 32%. This is a modest reduction, but is indicative of the direction in which corporate taxation will move if economic conditions allow. It will also ensure that our corporate tax structure remains one of the most competitive in the world. The 32% tax rate will take effect from Year of Assessment 1990. As a corollary to the reduction, any dividends paid on or after 1st January 1989 would carry a credit of 32%. The revenue loss is expected to be $55 million a year. I now move on to other corporate tax changes. Withholding Tax Exemption on Swap Transactions As financial markets become more internationalized, corporate borrowers have access to various innovative financial instruments and arrangements to reduce their borrowing costs and exposure to fluctuations in interest and exchange rates. One such financial arrangement is swaps. These transactions have gained importance in major financial centres such as London and New York. In order to enable banks in Singapore to be competitive in providing financial packages to their international customers, I have decided to exempt such transactions from withholding tax provided:- a) the transactions are carried out between Asian Currency Units and non-residents; and b) the transactions do not involve the Singapore dollar. I hope that with this concession, banks in Singapore would be able to offer their clients such facilities at competitive rates. This measure is part of the Government's efforts to further develop our capital market. It will take effect from 1st April 1989.”
“In previous Budgets, I have mentioned that in the longer term, we will need to introduce some form of comprehensive indirect tax on consumption to complement our system of direct tax on income. Such a broadly based consumption tax will provide a stable source of revenue which is less sensitive to economic fluctuations. The revenue from it will become necessary if we had to reduce direct taxes to remain internationally competitive, or if the Government has to increase its expenditures substantially, for example on health or social services. In determining what sort of comprehensive consumption tax will best suit Singapore, whether a Value Added Tax or a general sales tax, we will need to consider its effects on all income groups, and on our exports and tourist trade. So far, such a consumption tax has not proved necessary because economic growth has been strong, tax revenue has been buoyant, and expenditures have been kept well under control. However, as future growth is likely to be lower, and competition for investments and markets is bound to intensify, I believe we should begin now to put into place a framework of indirect taxes. The Government does not expect to draw large sums from them for many years but if and when larger revenues are needed, the system will already be well established. I am proposing to take the first step in this direction this year, by partially restoring certain consumption taxes, such as the taxes on Public Ulitities Board and Telecoms bills, which were suspended during the 1985 recession. We will also actively examine the scope for introducing other forms of selective consumption taxes. With this note, I will now turn to the tax changes proposed for FY89.”
“We expect that 1989 will see the beginning of a new phase in our economic development as we move into a period of more moderate growth, representative of a more mature economy. Even at these lower rates of growth, Government intends that sufficient revenue from taxation and other sources be collected to cover recurrent and development expenditures in future years without the need to draw down on our reserves. Direct taxation will remain a major source of Government revenue. However, high taxes do not necessarily mean more revenue because beyond a certain level, they stifle initiative and effort and drive businesses to more hospitable shores. Countries around the world have come to recognise this and have lowered direct taxes to create an attractive fiscal environment for investment and effort. This year, there is some scope for sharing the gains of a buoyant economy with the private sector. However, I would point out that our corporate tax rates are still competitive and the economy is not in need of a stimulus, so that any adjustment will be modest and largely aimed at off- setting some of the cost increases that the corporate sector has had to absorb in the past year. It will also be in line with Government's philosophy of taxing the factors of production as lightly as possible. Domestic demand remains strong and increased consumer spending may exert upward pressure on prices and demand for services, thereby aggravating an already tight labour supply situation. There is therefore no immediate need to adjust personal tax rates, which are already low compared to most other countries. Instead I propose to augment certain income tax reliefs designed to support Government's policy of encouraging family formation and procreation and to ease the cost of home ownership.”
“There is no reason why the Government should not pay civil servants the market rate for their abilities and their responsibilities. It can afford to, and doing so is only being fair to the officers concerned. Although salary is not the only factor influencing the career choices of young graduates, it is clearly a major factor. Able young people opting for public sector careers should not have to make large financial sacrifices. If they do most will simply not join, and those who are already in service will leave. The Committee has therefore recommended substantial salary revisions for the key services, particularly the Administrative Service and to a lesser degree the Professional Services. The Government has accepted these recommendations. The Minister for Trade and Industry will announce the details in a statement to the House during the Budget session. SECTION III - REVENUE AND TAX CHANGES I now turn to Government's revenue position. Tax revenue for FY89 is projected to increase by 14% to $7.9 billion over the revised FY88 collection of $6.9 billion. The increase is due to the better than expected performance of the economy in 1988. Consolidated revenue for FY89 is also expected to rise to $10.3 billion, an increase of 5% over the revised FY88 estimate. Taking into account the budgeted expenditure for FY89, an overall surplus of $639 million is expected. This happy position is the outcome of a buoyant revenue position and prudent expenditure policies pursued over the past years. Although our fiscal policy is to achieve a balanced budget each year, this should not preclude us from generating budget surpluses in good years. 1988 was a good year which saw the economy recover fully from the recession of 1986.”
“Members will notice that the format of the budget document presented to this House has been modified to include workload and performance indicators of major programmes of the ministries. The additional information should, I believe, help Members when they discuss the budget requirements of ministries in the Committee of Supply. CIVIL SERVICE MANPOWER For the Government to implement national programmes properly, the Civil Service and Statutory Boards must have dedicated and able officers at all echelons. Top civil servants carry heavier responsibilities than any private sector executives. They must be of equal calibre, if not more capable than top bankers, lawyers or industrialists. A fair share of the most talented university graduates must join the Civil Service each year. The actual Civil Service manpower trends in recent years, however, cause grave concern. With high economic growth, private sector incomes have risen rapidly, but the Civil Service has not kept up. The Administrative Service and some of the Professional Services have found it particularly difficult to recruit enough fresh talent into the service. Many promising young officers have left for the private sector. This problem is not new, but it has grown acute since the last pay revision exercise in 1982. A Committee on Civil Service Careers and Scholarships, chaired by the Minister for Trade and Industry, has been studying these issues since November 1988. The Committee has proposed that, as a fundamental principle, the public sector should match its salaries and promotion rates to the practice in the private sector as closely as possible. The Civil Service can and should offer able young men and women joining it careers no less challenging and rewarding than the private sector.”
“A significant exception would be the Ministry of Education whose share will increase from 3.5% to 3.8%. This reflects the high priority Government places on investment in education and training to provide the skilled manpower needed for a growing and increasingly sophisticated economy. The Ministry of Trade and Industry's share of GDP is also expected to increase substantially, from 0.5% to 0.9%, because of stepping up of industrial promotion and assistance activities. Our aim is to ensure that total Government expenditure does not grow as a percentage of GDP. In particular, the share of GDP taken up by recurrent expenditure must be trimmed, but at the same time high standards of public services maintained. Ministries will have to ensure that there is no let-up in efforts to improve productivity. Redundant activities and red tape must be eliminated. There must be better use of manpower and more extensive computerization and mechanization. Where it is cost-effective, services should be contracted out or privatized. The Management Services Department (MSD) of my Ministry will help other ministries improve their productivity and cost-effectiveness. MSD will be expanded and will assist ministries set up in-house management services units to review and improve systems, procedures and regulations. The new block vote budget allocation and control system which has been introduced recently will enable ministries to better manage their resources. The new system provides considerable flexibility to ministries in using funds and deploying manpower to achieve their targets. Regular performance monitoring is a key aspect of the new budget control procedures.”
“Development expenditure is projected to be about $4.32 billion in FY89 - almost the same level as in FY88. The projected outlay of $4.32 billion includes a contingency amount of $336 million for new development projects that are likely to be approved and implemented in the course of FY89. A further contingency amount of $100 million has been set aside for R&D projects of ministries and statutory boards. The long-term plan is to increase Government outlays, recurrent as well as capital, on R&D to about 1% of GDP. Excluding the contingency amounts for new projects and R&D, development expenditure by ministries would drop because of the completion or near-completion of major development projects such as the MRT, roads and expressways, and the reduced scale of public housing construction. The share of total Government expenditure and of GDP taken up by capital investment has been declining in recent years. From 38% of total expenditure in FY87, development expenditure is expected to fall to 37% in FY88 and to 34% in FY89. As a proportion of GDP, the drop is more significant. The development expenditure to GDP ratio in FY89 would be about 8.2% as compared to 12.6% in FY87. The decline is of some concern as the private sector might not be able in the short term to make up for the reduction. My Ministry is, therefore, giving priority to bringing forward the implementation of major new development projects of ministries and statutory boards to make up for any investment shortfalls. Of the projected total outlay of $12.63 billion in FY89, statutory commitments such as pensions and debt servicing costs take up about $l.9 billion or 3.6% of GDP. The relative shares of GDP taken up by the various ministries will not change very much in FY89.”
“The total authorized manning level of ministries and government-funded statutory boards will be reduced by more than 2,720 posts or 2.4%. The reductions are due to the deletion of long-standing vacancies and implementation of mechanisation, automation and computerization schemes, organizational reviews and changes in work procedures. The majority of ministries will be able to maintain zero-growth in their actual staffing level. The total manpower estblish-ment for FY89 would be slightly more than 111,700 posts, some 3,000 posts or nearly 3% higher than the long-term zero-growth target of 108,700 posts. While there are establishment decreases in most ministries, staff increases are supported for critical areas such as schools, junior colleges and the courts where there are clear shortages and redeployment from other areas is not possible. Other Operating Expenditure is projected to rise by $113 million or 16%. The increase is due to expansion and upgrading in the education sector, strengthening of civil defence capability, and the expansion of public sector R&D programmes. Grants-in-Aid to statutory boards and other institutions will go up by $186 million or 21%. A significant part of the increase is to meet the deficit incurred by Singapore General Hospital (Pte) Ltd on subsidized patients. The balance is largely to meet the higher operating deficits of the tertiary and technical training institutions whose enrolment will increase and also due to a new provision for operating subsidies to town councils. Expenditure on pensions is expected to rise by $22 million or 9.3% to $264 million because of the larger number of retirees. Debt servicing costs are project to rise by $225 million or 16%. The increase is mainly to meet interest payments on new domestic loans.”
“An overall budget surplus is projected. Capital investment levels will be maintained and more funds channelled towards education and manpower training. Government expenditure as a proportion of Gross domestic product and the manpower establishment as a proportion of the total workforce will be reduced, but without any sacrifice in the quality of public administration. Total Government spending is projected to rise from $11.81 billion in FY88 to $12.63 billion in FY89, a 7% cent increase. As a proportion of GDP, total expenditure would drop from 24.4% to 24.1%. Of the projected outlay of $12.63 billion for FY89, recurrent expenditure accounts for $8.31 billion or 66% and development outlays for $4.32 billion or 34%. Recurrent expenditure is projected to increase by 835 million or 11%, marginally lower than the 13% average growth over the FY83-87 period. About 31% of the increase is due to Defence requirements. Recurrent expenditure of the other ministries will go up by $328 million or more than 9% to reach $3.73 billion. Of this, $l.85 billion or 50% is for Expenditure on Manpower, $0.80 billion or 22% for Other Operating Expenditure and $1.07 billion or 28% for Grants-in-Aid to statutory boards and other institutions. Expenditure on Manpower is projected to rise by $29 millon or 1.6%. The relatively low increase is due to the reduction in manpower costs of the Ministry of Health following the restructuring of the Singapore General Hospital. Excluding the Ministry of Health, the manpower costs of the other ministries would go up by $88 million or 5.9%. The increase is due to filling of essential vacancies, normal salary increments for existing staff, and contingency provisions for possible variable bonus payments and an increase in the employers' CPF contribution rate.”
“We believe that the growth in 1989 will be slower than in 1988. Due to resource constraints, our long term growth rate is still expected to be between 4% to 6%. Moreover, the general consensus is that while a world recession is unlikely in 1989, world economic growth will be slower. The policy adjustments announced in November 1988 on CPF and foreign workers were made on the basis of slower growth. Our estimated growth for 1989 is between 6% and 7%, closer to our long term growth rate of 4 to 6%, and also to what the other NICs expect for 1989; South Korea, 8.5%, Taiwan, 7% and Hong Kong, 6%. SECTION II - THE FY89 BUDGET I shall now move on to the Budget for the coming financial year. BUDGET POLICY OBJECTIVES In formulating the annual budget, we have been guided by three basic objectives. First, the need to maintain an overall balanced budget over the long term. Second, to continue investing for the future. Third, to foster growth of the private sector. In order to meet these policy objectives, we must ensure that the share of national resources taken up by the public sector is contained and gradually reduced in favour of the private sector. Growth in the recurrent expenditures of Ministries and statu- tory boards will have to be kept to a minimum and this means that the quality and efficiency of public services will have to be maintained through higher productivity and better use of existing resources. Development expenditures for building up our economic and social infrastructure will continue to be supported and this will require continued investment in physical infrastructure, education and manpower training. THE FY89 BUDGET ESTIMATES The FY89 Budget reflects the good progress made in achieving our long-term policy objectives.”
“Foreign Worker Levy The robust growth last year and the tight labour market saw a strong inflow of foreign workers. In manufacturing, more jobs went to foreign workers than to locals. To dampen the demand for foreign workers and to prevent them from growing beyond what is necessary to maintain a buffer, the foreign worker levy was increased to $220 with effect from 1st January 1989, and to $250 per month with effect from 1st July 1989. The maximum dependency ratio for foreign workers has also been reduced from 50% to 40%. Skills Development Fund With the shift in Skills Development Fund focus to worker training since May 1987, there has been a marked increase in the training of rank-and-file workers. SDF will continue to invest in worker training so that we will be able to keep up with the rapidly changing skill requirements to meet technological changes. Based on current SDF levy collections, there are sufficient funds to meet projected SDF disbursements this year. Therefore, it will not be necessary to increase the SDF contributions in 1989. OUTLOOK FOR 1989 Overall growth in 1988 would have been higher if the manufacturing sector had not slowed down to 9% in the fourth quarter, from about 20% in the first three quarters. The slow-down was confined to the manufacturing sector, due mainly to external demand factors such as the world wide over-capacity in the disk drive industry and lower demand in the petroleum industry. The latest, first quarter 1989 survey of business expectations, suggests that the slow-down in manufacturing will continue into the first half of 1989. Respondents to the survey from the services sector were also less optimistic about business prospects in the first half of 1989 than in the last survey.”
“Our challenge now is to sustain the economy on a path of steady, balanced and sustainable growth. To do so we cannot artificially depress costs as that would distort the price mechanism and result in misallocation of resources. At the same time, we need to be vigilant over our competitiveness. We must not push the economy into a recession as a result of loss of competitiveness. For an open economy like Singapore, competitiveness is vital. Barring a world wide recession, we will continue to grow if we remain competitive. PUBLIC SECTOR RATES AND CHARGES With these principles in mind, we have tailored our policies to fit our economic recovery. Last year, the uncertainties of the stock market crash prompted the Government to move cautiously in adjusting the concessions granted on Government rates and statutory charges in 1985 and 1986. Fortunately, a world recession did not materialize. Our economy recovered and enjoyed above average growth. We cannot sustain a growth rate of over 10% in the long term. The Government has made the necessary policy adjustments. We will continue to act circumspectly, and give full consideration to the effect of new policies on our international competitiveness. Long-term CPF Rate Adjustment We have increased CPF contributions incrementally towards the long term contribution rate of 40%. We have also announced that the employer's CPF contribution rate will be raised by up to 4% and the employee's contribution rate reduced by up to 2% in 1989, subject to the economic performance of the first quarter of 1989. By giving early notice of the adjustment, the Government hopes that both employers and employees would take the higher CPF rates into account when negotiating their wage settlements.”
“Our strong international competitiveness, particularly in manufacturing, enabled us to benefit from the buoyant OECD and regional economies which are our key export markets. Domestic demand also expanded by 7%. This was due to the strong 13% growth in private consumption expenditure and the 27% increase in private fixed capital formation. Our competitiveness, EDB's promotional efforts, and favourable external developments such as the strong Yen, boosted foreign investments. Manufacturing investment commitments totalled a record $2 billion in 1988. As a result of the strong economic growth, 65,900 jobs were created in 1988, mostly in the manufacturing sector, compared with 66,000 jobs in 1987. But many of the jobs in manufacturing went to foreign workers. It was the increase in foreign employment that enabled us to exceed the long term growth rate of 4 to 6%. The contribution to overall growth from productivity was 4.4% while local labour contributed 3.8%. Foreign labour contributed the remaining 2.8%. However, the strong inflow of foreign workers carries a high social and political cost, especially in the longer term. To prevent excessive dependence on foreign workers, policy changes, including increases in the foreign worker levy, were announced in November. MANAGING SUSTAINABLE ECONOMIC GROWTH The state of the economy today is totally different from what it was when the Government implemented various cost cutting measures in 1986 to help bring the economy out of the recession. The expansion in 1984 was largely fueled by the boom in the construction sector which accounted for only 10% of the economy, but contributed one-third of GDP growth. This was unsustainable. Growth is now more broad based with manufacturing and services providing the twin engines of growth.”
“Mr Speaker, Sir, I beg to move "That Parliament approves the financial policy of the Government for the Financial Year 1st April 1989 to 31st March 1990". SECTION I - REVIEW OF THE ECONOMY ECONOMIC PERFORMANCE IN 1988 In my last Budget speech, I announced a recovery across all sectors of the economy, with the exception of construction. Overall in 1987, we registered a better-than-expected growth rate of 8.8%. However, I was more cautious in my outlook for 1988. The world was then lingering in the sombre shadow of the worst stock market crash since the Great Depression. The US index of leading indicators which had been shown to precede activity in our own manufacturing sector, was then on a downward trend. Even our surveys of general business expectations in the manufacturing and services sectors reflected a possible slow-down in 1988. As it turned out, however, expectations of a post-crash recession dissipated as the US economy continued on its longest post-war expansion into the sixth consecutive year. Even the major OECD and regional economies continued to perform well. Today, I am glad to note that the broad based expansion of the Singapore economy had continued into 1988. Overall, the economy grew at a stronger pace of 11% in 1988, the highest annual growth in this decade. Most major sectors did better in 1988 compared with 1987. Construction continued to decline by 5%. As in 1987, strong external demand was the main impetus of growth, contributing 90% of the growth in total demand. Total exports of goods and services rose by 29%, compared to 11 per cent in 1987. Non-oil domestic exports and total re-exports grew by 41% and 35% respectively.”
“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. CORRUPTION (CONFISCATION OF BENEFITS) BILL Order for Second Reading read.”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. Resolutions reported - "That the sum of $173,677,540 shall be supplied to the Government under the heads of expenditure for the public services shown in the First Supplementary Main Estimates of Expenditure for the financial year 1st April, 1988 to 31st March, 1989, contained in Paper Cmd. 6 of 1989." "That the sum of $287,135,500 shall be supplied to the Government under the heads of expenditure for the public services shown in the First Supplementary Development Estimates of Expenditure for the financial year 1st April, 1988 to 31st March, 1989, contained in Paper Cmd. 7 of 1989."”
“Mr Speaker, Sir, the Ministry of Finance has reviewed the question of medical benefits for dependants of female officers and has decided to adopt a liberal approach in granting such benefits to female officers who are sole supporters of their families. This means that female officers who are divorced, widowed or granted a decree of judicial separation will in future be automatically granted medical benefits for their dependants. The benefits would also be granted in other cases where the female officers are the sole supporters of their families, as in cases where the spouses cannot work for health reasons. CHILD CARE CENTRE IN SIMEI HOUSING ESTATE 7. Mr Teo Chong Tee asked the Minister for Community Development whether a child care centre will be set up in Simei Housing Estate.”
“I do not have the percentage figure in hand. The principle is not so much whether it is a small percentage or large percentage. As long as we are responsible for the disbursement of public funds, I think we have to draw the line somewhere, the principle being that if we extend on these grounds for one category of requests, it would be very difficult not to do the same for others. MEDICAL BENEFITS FOR DEPENDANTS OF FEMALE PUBLIC SECTOR EMPLOYEES 6. Mrs Yu-Foo Yee Shoon asked the Minister for Finance what is the present stage of the feasibility study carried out by his Ministry on medical benefits for dependants of female employees in the public sector.”
“Mr Speaker, Sir, as I have mentioned before in this House in 1986, medical benefits are extended to the pensioner and his wife because of the continuing relationship between the pensioner and the Government as his former employer by virtue of the pension payable to him. When the pensioner dies, his pension stops and his eligibility for medical benefits for his wife will also cease. Since April 1986, all appointments in the Civil Service except those in the Designated Services are made non-pensionable in order to reduce the long-term burden of Government. If we were to provide medical care for the existing number of around 6,500 pensioners' wives for approximately five years, which is the estimated period whereby females might outlive the males, the estimated cost to Government could exceed $40 million. In view of the cost which ultimately must pass on to the taxpayers, there is a limit to which the Government can continue to take care of the welfare of pensioners and their family members. Therefore, the Government is not able to change the long established rule that the wives of Government pensioners do not enjoy medical benefits after the death of the pensioners.”
“Theoretically, that is possible and, in fact, some countries operate that. But in discussions with these countries, most of these countries in fact regret having done that. The reason for this is that the collection of taxes in the hands of the unit holder is extremely complex. As you realize, there are thousands of people involved and the investors buy and trade these units. Therefore, the collection process is very complex and often impossible to enforce. As you know, the unit trusts, the units bought by investors, can be held by trustees, for example. So tracking down ownership would involve administrative enforcement of a type which the Income Tax people feel is almost impossible. Therefore, the declaration of profits from such transactions to the unit holder and experience has been that often many of these transactions would not be declared. Therefore, enforcement and collection become impossible. It is far simpler administratively to collect at the trustee level.”
“The answer is yes, provided they continue to operate as they do now. Unit trusts are not taxed because their managers, in order to avoid the risk of tax, have been very conservative in their trading transactions, so the majority of the shares or securities they have bought have been held for sufficiently long periods to qualify for capital gains. So if they continue to operate the way as they do now it ought not to attract tax under the new Act.”
“Even many countries in Europe and countries around the world are actively trying to encourage them to invest in their countries. So the incentives we have introduced have brought us considerable economic growth. They bring capital, they bring jobs and they bring markets which would not otherwise be accessible to us. On the question of whether levies are regressive - I believe the levies he is talking about refer to the maids levy, to the levy on foreign workers - I should point out that these were not introduced for revenue purposes but were introduced for the purpose of controlling potential social problems and therefore have no relevance in terms of revenue generation. Of course, it generates revenue in the process because the Government has found that financial control is simpler and more effective. The alternative would be to impose a method of rationing which I think Members will understand raises equally difficult problems.”
“I do not think we could agree to such a blanket sanction. Each case of course will be examined on its merits but to allow this would open the door to likely abuse. But companies which are on the borderline I think could be considered administratively for special treatment. I think that will be a safer route. Finally, this question from the NCMP. Mr Speaker has already ruled that some of his questions were irrelevant. Nevertheless, I would like to say that in regard to the reduction in income tax which was introduced in the previous budget, the reduction was not from 44% to 33%. It was from 40% to 33%. It was introduced at a time when the country was going through a recession and it was a measure to assist companies to improve their after-tax profitability in order to help the economy come out of the recession. Tax changes of this sort where corporate income tax and personal tax are reduced are essentially allowed as a means of stimulating productive enterprises. Income tax levied on companies is a tax on production. In fact, if reduces productivity and we believe in this and we will try to ensure that companies which are engaged in productive enterprises will have strong incentives to operate in Singapore and this tax concession applies equally to foreign and local companies. As to the special tax incentives granted to foreign companies, these are granted to attract companies to come here to start industries for which there is no local capability. In other words, they are to attract the high-tech industries which would not otherwise come here. Companies with this expertise, with their markets, have many alternative places to go to. They could go to Thailand, they could go to Malaysia, Indonesia.”
“It is not true to say that they are not taxed at all. The second question by the Member is in regard to clause 13. He asked for consideration of widening the definition of those who qualify for carrying forward of losses. I think we can look into this to see whether there is merit. Turning now to the question from the Member for Cheng San GRC about the effect of the amendment on Neptune Orient Lines and whether the amendment would have retroactive effect. The answer is that it will have no retroactive effect. If NOL feels that there are shares which have already been issued and on which there is uncertainty, I would ask them to make their case to the Ministry of Finance and all requests or appeals would be considered sympathetically. The Member for Marine Parade GRC, again on clause 13, has asked that all companies be allowed even for reorganizations, even those that involve tax matters to be allowed this tax privilege. Is that correct? Mr Choo Wee Khiang: Point of clarification, Sir. I was trying to say that if you were to read subsection (2A), it says: 'The Minister may, where there is a substantial change in the shareholders of a company and he is satisfied that such change is not for the purpose ...'. I suggest that instead of "is not for" maybe we should consider "is not directly for the purpose of deriving tax" because any reorganization will somehow have tax implications in any case.”
“The Member has also said that unit trusts ought not to be taxed because they act as conduits for the investments of small investors. Theoretically, when small investors buy or trade shares on the stock market, they are not liable to tax because the gains they make would be considered capital gains. However, even if an individual investor transacts in large volumes and frequently, he could be liable to tax as a trader. So it is not true to say that the small investor is not liable to tax at all. But by and large they have not been taxed because their level of activity has not been of a scale which suggests that they should be taxed. As to the notion that unit trusts are conduits for the small individual investor and therefore ought not to be taxed, up to now it has been the case that for many unit trusts the investors are small individual investors. However, this does not, in fact, stop many large institutions from buying unit trust securities. There is always the risk that if tax exemption is given to unit trusts preferentially, it might be used by institutional investors as a conduit to secure tax-free privileges. This would be quite unacceptable because it means that the unit trust financial activity would be given preferential treatment as opposed to, for example, investment in banks' CDs for which the interest attracts tax. So I do not think it will be equitable to treat unit trusts preferentially. The Member has also said that other countries do not tax unit trusts. That is not quite true. Unit trusts in the United Kingdom, Australia and the United States are taxed at the unit holder level. Therefore, they are subject to tax if they receive dividends and gains issued by the unit trusts. But it is true that they are not taxed at the trustee level.”
“Mr Speaker, Sir, I will take the questions as they were addressed. The first question was from the Member for Tiong Bahru GRC. He wants to know why unit trusts which were previously not taxed are now being included under the amendment to the Bill in which they are liable for tax. First, I would like to clarify that up to now unit trusts have always been liable for tax except that no tax has actually been levied because their mode of operation has been such that the income tax authorities consider them not to be trading. Therefore, they were not subject to normal trading tax. Instead the authorities treat the profits made from selling and buying of securities, stocks and shares as capital gains. Under the existing arrangements investors are taxed for the dividend and interest received in their financial securities. But they have always been liable for trading tax on transactions. But because their mode of operation has not attracted tax so far, therefore they have not been taxed. So the amendment does not really introduce anything substantially new. What has happened is that unit trusts have been under some uncertainty as to their tax liability because there is no specific exemption of their activities in buying or selling shares from tax. So the purpose of this amendment is to allow them to elect to be taxed under a schedule of holding periods for which if they conform, like fund management companies, they would be able to have certainty on the tax liabilities. They can, of course, continue to opt to maintain their present method of operation in the hope that it would not attract tax. So it really is up to the unit trust to decide which they will prefer, to opt for certainty or to continue operating with some uncertainty as to their tax liability.”
“This has resulted in shipping companies raising capital through preferential shares and redeemable preference share issues instead of through a loan, as to avoid tax. Clauses 6 and 7 amend the Act to prevent this as well as to be consistent with the provisions in the Economic Expansion Incentives (Relief from Income Tax) Act, whereby dividends paid on shares of a preferential nature are not given exemption in the hands of shareholders. The law as it stands requires taxpayers to render a statement of dividends paid to the Comptroller of Income Tax at the end of each year of assessment, failing which prosecution action could be undertaken. To give taxpayers a reasonable period of time to comply with this requirement, clause 17 amends section 44(8) of the Act to allow a time limit of three months from the end of each year of assessment for taxpayers to furnish the required statement. This would also be consistent with other sections of the Act pertaining to submission of annual returns and estimated chargeable income for which a time limit of three months is given. The next amendment provided by clause 19 amends section 94(2A) of the Act to apply the penalty under that section in respect of continuing offences, to offences for failure to comply with sections 44(7) and (8). Sections 44(7) and (8) require every company to render to the Comptroller a statement containing particulars on the balance in their section 44 account after the payment of each dividend and at the end of the year of assessment respectively. Effectively, section 94(2A) imposes an additional penalty for those who pay up the original penalty but continue with the offence of not submitting the required forms to the Comptroller. Sir, I beg to move. Question proposed.”
“The existing legislation allows companies to carry forward allowances and deduct trade losses incurred in one year against profits in subsequent years only if there are no substantial changes in shareholders. This may unintentionally penalize companies whose restructuring is beyond their control. To avoid this, the Comptroller of Income Tax will now be given the discretion to allow companies with substantial shareholding changes arising from reasons unconnected with tax considerations, to carry forward all allowances or deduct trade losses against profits from the same trade or business. To effect this, clause 13 inserts a new subsection (2A) to section 23 of the Act and clause 14 inserts a new subsection (8) to section 37 of the Act. The sixth budget concession limits the highest effective tax rate imposed under Part B of the Second Schedule of the Act to 33% with effect from Year of Assessment 1988. This ensures that those who are taxed under the existing Part B marginal rates, such as management corporations, will not be taxed above the effective corporate tax rate of 33%. Clause 16 inserts a new subsection (5) to section 42 of the Act for this purpose. The seventh budget concession allows approved investment holding companies and unit trusts to elect to have their profits from stocks and shares or other marketable securities taxed according to the length of time for which the securities had been held. Clauses 4, 8 and 11 amend the Act to provide for this. I now move to the other amendments. Presently, under section 13A of the Act, dividends paid out of exempt shipping income on shares of a preferential nature are exempt from tax in the hands of shareholders.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment) Bill 1989 gives legislative effect to seven income tax concessions announced in the 1988 Budget Statement. Opportunity is also taken to include three other amendments to the Act. The first budget concession allows the following selected services to deduct twice their approved research and development expenses incurred on any research and development projects: (a) computer software; (b) information services; (c) agrotechnological services; (d) laboratory and testing services; (e) medical research services; and (f) any other prescribed services or activities. Clauses 2, 9 and 10 amend the Act to provide for this concession which will take effect from 1st April 1988. The second budget concession extends industrial building allowances to approved companies in the following industries with effect from the Year of Assessment 1988: (a) agrotechnology; (b) horticulture; (c) aquaculture; and (d) other approved services with specialized structures. Clause 12 amends section 18 of the Act to provide for this. The third budget concession provides for 90% tax exemption on incomes of an inventor or author from an approved invention or approved product innovation. Clause 3 inserts a new subsection (10) to section 10 of the Act to give effect to this. The fourth budget concession extends the period of tax exemption granted to the Singapore International Monetary Exchange from 5 years to 10 years. Clause 5 amends section 13(1)(z) of the Act to provide for this. The fifth budget concession relates to the deduction of trade losses and carry forward of allowances by companies.”
“Legal Officers are also heads of several government departments and are therefore also directly involved in policy formulation as well as the administration of these departments. It is therefore imperative that the Judicial and Legal Services attract an adequate share of able law graduates each year. FOREIGN WORKERS' LEVY 6. Dr Wong Kwei Cheong asked the Minister for Labour (a) what is the total amount of the levy on foreign workers collected in 1988 and estimated to be collected for 1989; and (b) for how many years will the rate of $250 per worker be maintained.”
“Mr Speaker, Sir, remuneration and career development in the Judicial and Legal Services is one of the issues being studied by a Committee on Scholarships and Civil Service Careers which was recently set up by the Government. The Committee is headed by BG Lee Hsien Loong (Minister for Trade and Industry and Second Minister for Defence (Services)). Other members include BG George Yeo (Minister of State for Finance and Foreign Affairs), Mr Mah Bow Tan (Minister of State for Trade and Industry and Communications and Information), Dr Cheong Siew Keong (Second Deputy Chairman of the Public Service Commission), and Dr Andrew Chew (Head of the Civil Service) and other senior public servants. The Committee has been given broad terms of reference to review and recommend improvements to the present system of public sector personnel management to ensure that the public service continues to attract and retain the best talent in Singapore. It will examine present organizational arrangements, scholarship terms, promotional policies and salary scales. Details of the Committee's terms of reference have been distributed to Members. The Committee should be ready to recommend whether to raise starting salaries in the Judicial and Legal Services by the Budget in March, although other recommendations will come later. I can assure the Member for Toa Payoh GRC that the Government will review salaries and service conditions of the Judicial and Legal Services to ensure that they are attractive to good legal minds in Singapore. Government is aware that officers of the Legal Service play an important role in the public affairs of Singapore. Judicial and Legal Officers man the courts and the Attorney-General's Chambers.”
“The CPF Board which is supervised by a Chairman and 10 Board members. It is responsible for the administration of the CPF system, housing loans and other investment schemes. Its balances are invested in Singapore government bonds. Government-owned companies. Government also owns substantial assets in fully or partly-owned companies. These are held through three holding companies, namely, Temasek Holdings, Sheng-Li Holdings and MND Holdings. These holding companies are chaired by the Permanent Secretaries in the Ministry of Finance, respectively responsible for Revenue, Budget and Public Services. Finally, Mr Deputy Speaker, Sir, I have no hesitation in supporting the need for the constitutional changes to create an elected President with the necessary powers to oversee the nation's savings and assets and to safeguard the country's key institutions. With such a President in place, citizens of Singapore will assuredly sleep more peacefully and future generations of Singaporeans would not be born to find that their government has hung a huge financial millstone over their necks.”
“This combination of powers is needed for two reasons - to exercise control over the use of reserves and borrowing powers directly through the Budget process and to ensure that the right people are placed in charge of the key public sector financial institutions. I believe that Presidential assent for appointments to key positions is necessary because the management of large sums of foreign assets is a complex process, and control over these assets by incompetent individuals or persons of doubtful integrity could easily lead to loss of assets before there is even a chance to spend it. The key public sector financial institutions involved are, firstly, the Government Investment Corporation (GIC) which is responsible for the management of Singapore's longer term external assets. It is overseen by a Board of 10. The Prime Minister is the Chairman, and the Board includes four other Cabinet Ministers, the Deputy Chairman and Managing Director of the Monetary Authority of Singapore and three members from the private sector. Secondly, the Monetary Authority of Singapore (MAS) which is responsible for the management of Singapore's cash and short-term external assets. It is also responsible for the supervision of all financial institutions in Singapore. It has a seven-member Board chaired by the Minister for Finance. Thirdly, the Board of Commissioners of Currency (BCCS) which is responsible for the issue and printing of Singapore currency notes and coins. Under the Currency Board system every dollar of Singapore currency or notes issued must be backed by one dollar or more of gold or convertible foreign currencies. BCCS is supervised by a six-man Board which includes four private sector bankers and is chaired by the Minister for Finance.”
“Although the size of Singapore's savings and reserves I have described would appear to be large, the need to preserve these assets must be seen in the context of Singapore's complete lack of natural resources and its very limited land resource. We have nothing to fall back on in the event of a severe and prolonged world recession. We cannot grow our own food or find our own oil. We cannot even collect enough water for our own needs. Practically everything has to be imported and paid for. Our financial reserves are our safety net and should therefore only be drawn down to tide us over periods of severe economic downturn. In addition, the Government's large holdings of external assets underpin the stability of the Singapore dollar and lends credibility to Singapore's status as a financial centre. The Government's healthy balance sheet also provides foreign investors with the assurance that the value of their investments will be preserved. Citizens of Singapore will also be reassured that their savings will not be debased in the future. Mr Deputy Speaker, Sir, I believe there is no general disagreement by Members over the need to introduce constitutional safeguards to protect Singapore's savings, although there is some difference of opinion on how it should be done. My belief is that an elected President with clearly defined powers provides the most effective route. These powers need not be large nor extensive but should include Presidential assent for the following: Budget proposals to draw down on reserves and to borrow externally and appointments of the Chief Executive and members of the Board of key public sector financial institutions which have responsibility for the management of public sector funds.”
“This consists essentially of CPF balances not paid out to retiring members who have reached 55 years or otherwise withdrawn for the purpose of purchase of housing and other approved investments. Current CPF balances are around S$31 billion. (2) The Government's own reserves or savings consisting of the accumulated Budget surpluses of past years and the earnings from investment of these surpluses in assets in Singapore or overseas. (3) The surpluses and assets of statutory boards and government-owned companies. Because of prudent management, all three components of the public sector savings have grown substantially over the years. As a result, Singapore's liquid assets per capita are amongst the highest in the world, exceeded only by the richest industrial nations and a few oil-rich countries. I would also like to clear up some common misconceptions over what we mean by Singapore's savings and reserves. The $31 billion in CPF funds is often spoken of as if it were the totality of Singapore's public assets. This is not so, as the assets of the Government, statutory boards and government-owned companies are entities separate from the CPF balances. Singapore's officially published foreign reserves of around $31 billion are also often mistakenly thought to represent Singapore's total external assets. Since the two figures are so coincidentally similar, they are often thought to be the same. This has led to the confused belief that either the Government or the CPF has no funds. I should point out that money is fungible. The CPF's assets are invested in the form of loans to other Government institutions and in Government bonds. These bonds are backed by the Government's assets in Singapore and overseas.”
“I would suggest, Mr Deputy Speaker, Sir, that this is precisely the situation faced by many existing governments who have two Houses where they have the President together with the Prime Minister and they have learned to live with it and a form of accommodation exists. So it is not something which is totally unique or unparalleled in this world. There are many precedents existing in forms of legislature where of checks and balances are introduced which indeed may well slow down the passage of legislation. But it provides the necessary checks and balances. Perhaps we have, as a result of many years of peaceful PAP rule, become so used to a system of government whereby a responsible Government has been able to manage without the necessary checks and balances. But can we be certain that this will continue forever into the future? I think this merits serious consideration. Because of the large size of our country's savings and assets which have been accumulated, future governments may be seriously tempted to tap part or all of these resources in the face of popular pressure. The risk of this happening will be greatly increased if the government of the day has only a tenuous majority. Although it would appear that there is little risk of this happening in the near future, it can be argued that this is precisely the best time to introduce the necessary safeguards as it can be done in an environment free of immediate pressures. At this time I would like to digress by describing the scope of the savings and reserves we are seeking to protect. Singapore's public sector savings consist of three components: (1) Public savings held in the CPF Board.”
“Instead I will confine myself to an explanation of the financial and other safeguards needed to preserve the accumulated savings of Singapore. I think it might also be helpful to Members of this House and to the public at large if I give some background on the nature of our savings and assets which need to be protected, the institutions which manage these reserves and savings and the key people who run these institutions. I will also in the process give my views on why I think Constitutional changes are needed to protect our reserves and why an elected President is the most efficient way of achieving this objective. Under the unicameral parliamentary system which we now have in Singapore any elected government of the day with an effective command of 51% or more of the votes in Parliament will have unrestricted powers to spend the State's funds and to sell the country's assets. It also has unlimited powers to borrow and to enter into contractual obligations which will commit future generations of Singaporeans. There is no separate Constitutional institution available to check the powers of the Executive and Parliament, such as is available in the Upper Houses in Malaysia, Australia, the United Kingdom, the Congress in the United States, the elected President of France and so forth. Members have expressed concern that the change from our present parliamentary system will lead to endless conflicts between the Prime Minister and the President leading to paralysis of government and dictatorial imposition of his will by the President under this proposed change to our Constitution.”
“Mr Deputy Speaker, Sir, I rise to support the motion proposed by the Member for Braddell Heights. Although Members who have spoken this morning have expressed reservations about the proposal set out in the White Paper, my general impression is that, of the Members who have spoken so far, most have supported the need to introduce additional Constitutional safeguards to protect the reserves and savings of the country and the integrity of the civil service. Where contrary opinions have been expressed, these have generally been confined to questions on alternatives to an elected President and on the need for the President to be involved in as much detail as might seen to be required under paragraph 45 of the White Paper. I do not propose to enter into a debate on the merits or demerits of the alternatives proposed although my personal view is that the most efficient way to achieve our objectives would be via an elected President, one of the considerations being that it places the least call on our limited resources of qualified people. I will also not touch on the general question on what powers should be vested in the elected President and details on the areas which require Presidential assent, as I am sure that the views which have been expressed by Members will be taken into consideration in the drafting of the final legislation. I am also confident that a modus operandi can be worked out whereby the responsibilities of the President and the Prime Minister do not conflict. Even now under existing legislation Presidential assent is required for a range of matters, including a matter as mundane as a need for Presidential approval to alter the list of foreign countries in which the Monetary Authority of Singapore's external assets can be held.”
“Sir, the Member for Whampoa has asked whether CPF will be used in future to adjust for wage cuts necessary in order to sustain the competitiveness of our economy. The whole idea of the Government's intention to change to a flexi-wage system is to try and avoid using the CPF component of wages in order to sustain our economic competitiveness in the future. Sufficient flexibility ought to be built into the wage system, both by the private and public sectors, to allow basic wages to adjust itself to the actual economic condition in each year. That is the whole basis for the Government's wish to encourage not only the public sector but also the private sector to move to a flexi-wage system. It is recognized that during the last cut in CPF, some problems were encountered by house owners who were using funds from CPF for their payments. But I think, by and large, these were overcome by adjustments. 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. HOMES FOR THE AGED BILL Order for Second Reading read.”
“Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill is to give effect to the new flexible wage system introduced in the public sector. In January 1987, a Task Force comprising representatives from Government and the public sector unions was set up to consider how the recommendations of the National Wages Council's Sub-Committee on Wage Reform could be adopted in the public sector. The Task Force's recommendations have been accepted by Government for implementation on 1st July 1988. The flexible wage system recommended by the Task Force will make it easier for Government to adjust wages up or down depending on the performance of the economy. Under the flexible wage system, the 1982-1984 NWC wage increases are converted into a monthly variable component (MVC) and the 13th month non-pensionable annual allowance (NPAA) becomes variable. The basic wage is retained and a new component by way of a variable bonus (VB) will be built up when justified by economic growth and productivity increase. The 1984 NWC wage increase has been made variable by virtue of the Public Service (Variation of 1984 Annual Wage Increases) Act 1987. The Bill is introduced to make variable the entire MVC (that is, the NWC wage increase for all the years 1982 - 1984) and the NPAA. The Bill will at the same time repeal the Public Service (Variation of 1984 Annual Wage Increases) Act 1987. It will not involve Government in any extra financial expenditure. The Bill will cover all employees in the public service. Sir, I beg to move. Question proposed.”
“Such a move would be subject to the availability of suitable sites elsewhere and the planning horizon is unlikely to be before the early 1990s. CPF CONTRIBUTIONS FOR OLDER WORKERS (Implication of changes) 7. Dr S. Vasoo asked the Minister for Labour (a) if he will state (i) the number of workers between 55 and 59 years and between 60 and 64 years affected by the recent changes in Central Provident Fund contributions for older workers and (ii) some of the long-term implications of these changes to both older workers and their employers; and (b) whether older workers will face any difficulties in their public housing loan repayments.”
“Mr Speaker, Sir, the Member for Bukit Timah has asked three questions and I will answer them in order. First, the structures on the Bukit Timah Racecourse include the grandstands, carparks, officials' residences, staff quarters and stables. Some of these structures are more than 20 years old and are almost fully depreciated. The net book value of these structures as at 31st March 1988 was $35 million. The second question relates to the plan of the Singapore Totalisator Board for the improvement of the race course and its costs. As announced earlier, the Board is considering proposals to make better use of the race course, which is located on prime land and sprawls over an area of 135 hectares, adjacent to a major trunk road. 135 hectares is equal to roughly 300 acres and, for his elucidation, this is equivalent to roughly 1,000 bungalow lots of about 10,000 sq ft each. This includes the provision of facilities for sports, social and recreational purposes. It is premature to estimate the cost of the facilities until the development plans are firmed up. The Board is also placing priority on improvements to the road system in and around the Racecourse. The traffic congestion on weekends is a real problem to residents and road-users. The Board's aim is to be able to make the necessary changes to alleviate this problem as quickly as possible. The final question is on the planning horizon of the Tote Board. Improvements which can be introduced without substantial capital outlay will be implemented as soon as planning decisions have been decided. In the longer term, however, it may be desirable to find an alternative site for the race course.”
“A court may make a confiscation order in respect of the benefits derived by such absconders from corruption if the court is satisfied that the person has absconded and the court is also satisfied that there is sufficient evidence to convict the offender in respect of the offence under investigation. In short, Sir, the Bill will provide a more effective mechanism to deprive an offender of the fruits of his corruption. Sir, I would also like to touch on some of the points which have been made recently in the Sunday Times' article and in a regional publication. But perhaps I should first give Members who wish to speak an opportunity to express their views before I go into that. I also do not propose, Sir, to go into the details of the Bill because it is the Government's intention to refer this Bill to a Select Committee of Parliament. This will enable organizations and individuals to make known their views and suggestions on this Bill. Sir, I beg to move. Question proposed.”
“Such a statement, if accepted by the defendant, would provide a conclusive way of determining the amount of the confiscation order. The defendant can, however, still of course dispute this statement and he may tender his own statement. Sir, the Bil provides for the defendant to be liable to imprisonment where any confiscation order made by the court is not satisfied. The periods of imprisonment in default of payment of the confiscation order is in accordance with a progressive scale depending on the amount involved. To ensure that the assets derived from corruption are not disposed of by the defendant before the conclusion of the court proceedings, the High Court can make what is known as restraint orders. Such restraint orders, like an injunction, will prohibit any person from dealing with any realizable property of the offender. It may be made only on the application of the Public Prosecutor and the effect will be to freeze the property and assets which may be needed later to satisfy a confiscation order. Sir, safeguards for the interests of innocent third parties are provided in the Bill. The court may not enforce a charging order or authorize the realization of any property subject to a restraint order unless a reasonable opportunity has been given to persons holding any interest in the property subject to an order to make representations to the court. Sir, the Bill also contains provisions to deal with absconders, ie, persons who are the subject of investigations by the CPIB or who either die before conviction or who, at the end of six months after the commencement of investigations, cannot be found or are out of Singapore and are not amenable to extradition proceedings.”
“Britain and Australia are among the countries that have legislation for the confiscation of property and assets which were illegally obtained. The provisions of this Bill before the House are modelled on the United Kingdom's Drug Trafficking Offences Act of 1986 with modifications and adaptations for our purposes except for clauses 21 and 22 which are adapted from the Australian Proceeds of Crime Act, 1987. For the information of hon. Members, I have distributed a comparative chart (Cols. 1781 - 1786) showing the United Kingdom and Austrlian provisions from which we have borrowed and adapted or modified. chart - COMPARATIVE TABLE (Cols. 1781 - 1786) Under clause 4, Sir, where a person has been convicted of a corruption offence and the Public Prosecutor makes an application to the court, the court shall make a confiscation order against the defendant in respect of benefits derived by him from corruption. The safeguard is that the court must be satisfied that such benefits have been so derived. A person is deemed to have derived benefits from corruption if he holds or has held assets disproportionate to his known sources of income, the holding of which he cannot explain to the satisfaction of the court. The onus of explaining assets which are disproportionate to the defendant's known sources of income is placed on him. This is fair since it will only apply after he has been convicted of a corruption offence and that he is in the best position to explain how he derived those assets. Clause 5 provides for the assessment of the value of the benefits derived by the defendant from corruption. Clause 6 will enable the prosecution to tender a statement to the court as to any matters relevant to the determination of the benefits derived by the defendant from corruption.”
“It strikes effectively at the unexplained assets of persons convicted of corruption offences. Under the Bill, the courts can make confiscation orders in respect of such unexplained assets and can restrain their disposal before the court proceedings are concluded against such persons. This will be in addition to other penalties which the court may impose under existing law. I think Members know that we already have the Prevention of Corruption Act. However, this existing law is not sufficiently adequate to deal with the confiscation and recovery of corruption benefits. Under the present law, a person convicted of a corruption offence is ordered to pay by way of penalty only a sum equal to the amount of the gratification which he has received or the value of that gratification. This payment of penalty, it may be noted, is confined to the value of the gratification received for the offence for which he was convicted or for other offences for which consideration was taken into account. But let us take the case of an offender who has been corrupt prior to that particular offence for which there was discovery and for which he was charged. He may have assets which are clearly disproportionate to his known sources of income and for which he can give no satisfactory explanation. Such assets, under existing law, cannot be confiscated unless it is proved that he has actualy derived those assets by corruption. But these are matters which are specially within his own knowledge and it would be difficult, if not, impossible to obtain evidence concerning them. The Bill, therefore, provides new powers for tracing and freezing the benefits of corruption and for confiscating those benefits. The principles in this Bill are not new.”
“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. CORRUPTION (CONFISCATION OF BENEFITS) BILL Order for Second Reading read. 12.33 pm The Second Minister for Law (Prof. S. Jayakumar): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Government's determination to stamp out corruption is well-known. Our tough stand against corruption has earned a special reputation for Singapore internationally. Within Singapore everyone - no matter whatever position he holds - knows that if he is corrupt, the law will deal with him firmly. We have been able to do this because of, first, the Government's consistent and firm position against corruption. Secondly, because of our laws, especially the Prevention of Corruption Act, and thirdly, because the laws are implemented fearlessly and effectively by a CPIB that is thorough and impartial in its work. Members would recall that the Commission of Inquiry into the late Mr Teh Cheang Wan stated, and I quote: 'Singapore has an enviable reputation for the honesty and integrity of its public institutions. This reputation is a hard-earned national asset which should be protected and preserved.' But how do we protect and preserve it? We can say of the prevention of corruption as Jefferson said of liberty - "eternal vigilance is the price of liberty". Methods of corruption are always undercover and very difficult to detect. Corruption is cunning in hiding its tracks over a long period of time. Therefore, we must be prepared to adopt any new legal procedures which will serve as further deterrents against corruption. This Bill provides an effective new weapon in dealing with corruption.”
“Mr Deputy 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 Clause 2 of Article 145 and Clause 2 of Article 147 of the Constitution of Singapore for additional expenditure in excess of the provision authorized by the Supply Act, 1987. The additional sum has been scheduled as a Supplementary Main Estimates which has been considered and approved by the House as Command Paper No. 3 of 1988. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”