S. Dhanabalan
Singapore
“Mr Speaker, Sir, on a point of clarification. I said in my intervention on Tuesday that the general election is the right forum to determine the electorate's support because it puts the issue in a total and correct context.”
“Mr Speaker, Sir, with hindsight, of course, we can be very wise. But since one of the three islands was excluded, it was a substantial reduction in the scope of works. The assessment then, which I agreed with, was that if you called for a re-tender, you would get a substantially reduced tender.”
“To the extent that we can, we should work with countries that have a common interest, to come together and form economic groupings targeted at trade liberalisation. We have started this process within ASEAN under the AFTA Scheme. Economic linkages in groupings like APEC are also growing in significance.”
“Mr Speaker, all these questions make a lot of sense when the events are finished, and you look back. But the officer looking at the case at that time had to deal with the facts as they were at that time.”
“ASEAN countries agreed to publish all the Inclusions and Exclusions lists, as well as the full list of actual tariff reductions. The ASEAN Secretariat had since followed up and released, as scheduled, on 1st November 1993, the publications showing these lists.”
“Kallang Theatre was closed for five months in 1992 for cyclical maintenance and upgrading costing $3 million. This included a major upgrading of the toilets, recarpeting the auditorium, rewiring and repainting.”
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“There will be some unsubsidised wards, Class A wards, not exceeding 11% of the total beds in these hospitals. These will be for patients who want more personalised care, creature comforts and non-essential services, and are prepared to pay the full cost for them. Patients in Class A wards pay the full cost not only of the extras, but also the full cost of the basic essential medical care. I know that some people are uncomfortable that patients in Government and restructured hospitals can get medical care beyond the basic package by paying more. They are especially unhappy that in the same Government or restructured hospital, patients in Class C wards should have spartan facilities, while others in A Class wards enjoy more privacy and creature comforts. They prefer everyone, rich or poor, to have exactly the same standard of medical care. This is a natural, egalitarian, human instinct. But, unfortunately, complete equality of treatment is neither realistic nor desirable. Logically, there are only two ways for everyone to receive exactly the same medical treatment: either the Government must not allow anybody to obtain more medical treatment than the basic package, or else the Government must provide everyone with all the medical treatment he or she wants, without limit. The first is an unnecessary and unjustifiable infringement on the personal freedom of individuals. The basic package only defines what the Government will subsidise and make affordable to the population as a whole. If a patient wants medical treatment which the Government does not consider basic, and the Government will not pay for, why should we stop the patient from getting it if he is prepared to pay for it? What moral right do we have to stop him?”
“More supply and more competition does not always lead to lower cost or better services. More supply can actually increase demand and cost because of the nature of the consumer. The consumer who pays the bill, that is, the patient or a member of the family, is usually worried, under great emotional stress and is in no position to weigh the advice of doctors and make a rational choice based on the likely efficacy of the treatment and on his ability to pay. The consumer is often uninformed or misinformed, and naively believes that the more expensive the doctor, drug or procedure, the greater the likelihood of a cure. If the family is paying, their love, filial piety, and loyalty can be called into question if they do not agree to order the most expensive or latest procedures. This situation opens the door for health care providers to order more tests, procedures and expensive drugs. Often the patients or relatives themselves may request for these because they have read somewhere or heard from someone about these new medical developments. It is not mere chance that countries with more doctors, especially specialists, tend to spend more on health care. Government must therefore not only define the basic medical package. It also has to prevent over-supply of medical services by regulating the supply of doctors, specialists, beds in subsidised hospitals and the establishment of specialist and sub-specialist disciplines and the purchase of expensive high-tech equipment. These are described in the White Paper. In keeping with the primary mission of subsidised hospitals to provide for the lower- and middle-income groups, all subsidised hospitals will have C Class wards to serve the most needy Singaporeans. A minimum of 65% of the beds will be B2, B2+ and C Class beds.”
“Experimental drugs not of proven value and other high cost investigations and treatment where effective cheaper alternatives are available, will also be excluded. Doctors have treatment protocols to guide them in treating individual patients. In some situations, ordering more investigations and treatments will not improve the patient's quality of life significantly or change the outcome. Examples are treatment of incurable diseases where there is no chance of survival, or using life support systems to prolong death. Under the basic package, patients in these situations will be treated humanely, be relieved of pain and suffering, made comfortable and allowed to retain their human dignity. The basic package cannot be fixed for all time. The Government will continually review and revise the basic package to take into account medical progress such as new drugs, procedures and equipment, and social and economic progress. A large part of basic health care will be provided in the polyclinics and by hospitals which receive Government subsidies. All subsidised hospitals will compete with each other on price and quality, even though some of them will have specialist departments which the others will not. When hospitals are not subject to market forces, the potential for waste and inefficiency is enormous. Competition will improve their services and make them more responsive to market signals. But free competition alone will not guarantee us an optimal health service. Health care is an example of market failure. The Government must intervene directly to regulate key aspects of the health care system to prevent over-supply of medical services and dampen demand. In health care, supply creates its own demand.”
“In broad pragmatic terms, the basic health package is what is already available in the polyclinics and the B2 and C Class wards of Government subsidised hospitals. But the exact type of treatment available will vary from illness to illness and the stage of the illness. A full description of what is basic health care package would fill a volume on its own. A few fundamental principles will shape the basic package:- First, it will incorporate good up-to-date medical practice. Second, it will give patients medically essential and cost-effective treatment of proven value for illness. Third, the treatment will be delivered without frills, that is, the use of space and other physical amenities will be very economical and the nursing staff to patient ratio will be adequate. Fourth, the treatment will be by trained personnel of qualified doctors, specialists and other medical staff working as a team. Fifth, the treatment will use appropriate diagnostic and treatment facilities; drugs provided will be from a standard list which is more extensive than that recommended by the World Health Organisation. And lastly, the treatment will include use of intensive care unit beds. Intensive care unit beds are not classified by classes and are open to patients purely according to medical need. This basic package will not include treatment for certain conditions. For example, it will not include cosmetic surgery or cosmetic dentistry other than for burns and injuries or those that are required on medical grounds. It will not include sex change operations, IVF treatment, organ and bone marrow transplants (other than kidney transplants). These excluded treatments account for less than 0.1% of the cases dealt with in the unsubsidised wards.”
“Regardless of how health care is financed, it is the people who ultimately pay for the health service. A person can buy an insurance policy to cover his medical needs. The premium that he pays will reflect the full cost of health care shared among all those in the scheme. The more he uses the insurance cover, the higher the premiums will be. A worker can get his employer to pay for his medical benefits. But the employer will pay them out of the total amount that he is prepared to pay for labour, so it comes out of the wages of labour. If the Government pays, it comes out of the taxes paid by the people. Ultimately, the people pay. We cannot avoid linking the standard of health care to affordability of the individual and society. The Government undertakes to provide every citizen with the health care that he needs. However, this cannot be an absolute right or an unconditional entitlement. It must be subject to certain conditions. Among them: (1) It must be confined to a defined basic health care package, and not cover unlimited amounts of medical services. (2) It will not be for free. The citizen must pay for at least part of the health care he uses, unless he and his family are absolutely destitute and unable to do so, despite having contributed to Medisave and participated in MediShield. (3) It must not prevent those who want more health care than the basic package, and are prepared to pay the full cost themselves, from obtaining it. Members in this House in previous debates have asked for a clear definition of what is meant by good basic medical care. What is in the package and what is not in the package? The basic health package will be defined by the Ministry of Health. It is difficult to list in detail everything which goes into this basic package.”
“Otherwise, we too would be sucked into the same problems of exploding health costs faced by the United States and the countries of Europe. In Singapore, primary health care is provided by our general practitioners in the private sector and by our Government polyclinics. Private sector GPs cater for 75% of the demand for primary health care. They charge reasonable rates which most people can afford. Patients who cannot afford GPs can turn to Government polyclinics where charges are even lower, or where the truly indigent receive services free. Singaporeans are quite satisfied with the level, quality and cost of primary health care. Their health concerns centre around what will happen to them when they fall acutely ill and need to be hospitalised or need other special attention. The White Paper deals mostly with secondary and tertiary health care, though it also covers other aspects. Most of the concerns of people centre around the affordability of secondary and tertiary health care - affordability of the individual, the family, the employer and the community at large. I know many people feel that it is wrong for a person to be only allowed the medical care that he or she can afford. It offends their sense of equality and humanity. They would rather the same medical treatment be available to all regardless of income. This is a compassionate and understandable sentiment. But however compassionate we are, we cannot wish away the cost of medical care. The Government accepts that health care should not be a commodity that is available only to those who can afford it. But neither is it a public good that should and can be provided without limits and without regard to affordability.”
“Mr Speaker, Sir, I beg to move the Motion* standing in my name. *The Motion reads as follows: That this House endorses the principles and approaches set out in Paper Cmd 16 of 1993 on "Affordable Health Care" as the basis for Government policies to contain health care costs and to keep good basic health care affordable to all Singaporeans. Sir, we have a healthy population. Our health education and disease prevention programmes include measures to maintain high standards of water, food and a clean environment. These have resulted in a people whose health measures very favourably with those of the developed countries. Because we have put our efforts in the right areas and put the emphasis on personal responsibility in health care, we have attained high standards of health by spending only 3.1% of our GDP on health care. This is low compared to the US which spends 14% of GDP on health care, Germany which spends 8%, and Canada 9% of GDP. However, the pressure for health expenditure to increase in the future is very strong. Between 1980 and 1990, expenditure on health care grew at 12% per annum compared to the GDP growth of 10%. Our population is getting more affluent. Expectations are rising. People are putting more emphasis on the quality and value of life. At the same time, the population is ageing. All these must lead to demand for better and more medical services. We must get our philosophy on health care right and pursue national health policies which prevent over-supply, dampen demand and keep cost increases in check. We must build upon our present sound approach to medical services and health care costs and reinforce the system to cope with the pressures of an ageing population, rising manpower costs and advances of new expensive medical technology and drugs.”
“Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr S. Dhanabalan]. Bill considered in Committee; reported without amendment; read a Third time and passed. MISUSE OF DRUGS (AMENDMENT) BILL Order for Second Reading read. 2.00 pm”
“To be eligible, the company must be at least 50% owned by Singapore citizens and permanent residents. Additional Changes In addition to the four changes that I have just described, there is a need to fine-tune the existing pioneer incentive. There is a distortion in the treatment of capital allowances for pioneer companies under the present Act. Under the Act, as presently in force, a pioneer company is deemed to have permanently ceased its old trade or business at the end of its tax relief period and to have commenced a new trade or business on the next day. Thus, for a pioneer company whose tax relief period expires in the middle of the year of assessment, it must set off one year's full capital allowance against its pioneer income for that year of assessment. Companies have made representations that this distorts the income of the pioneer company in its final year of tax concession and also the income of the company in its first year after the tax concession. There is a tax disadvantage for them. Clause 2 of the Bill thus inserts a new subsection to permit companies to apportion capital allowances in the year of assessment in which their pioneer status ended in the midst of the year, as if the old trade or business had not been deemed to have ceased. In other words, if the pioneer period ends on 30th June, then only half needs to be accounted for, and the other half will be taken up in the post-pioneer activity. Mr Speaker, Sir, the proposed amendments to the EEI Act will enhance and provide new incentives to facilitate overseas investments by Singapore companies, and also improve and update existing incentives for the inflow of foreign investments into our domestic economy. Sir, I beg to move. Question put, and agreed to.”
“However, any such gain in excess of the losses already deducted will not be taxed. To put it in simpler terms, since we are allowing the losses to be offset, then the profits will also have to be taxed. But they will not be taxed in excess of the losses already allowed. Introduction of the Overseas Enterprise Incentive The fourth change is the introduction of a new incentive called the Overseas Enterprise Incentive. This Incentive will be given to encourage more Singapore companies to venture abroad to develop the external dimension of the economy. Currently, income derived from overseas investments may be exempt from tax under the Income Tax Act on a project-by-project basis. The new Overseas Enterprise Incentive will grant an approved enterprise, called the Overseas Enterprise, up to ten years of tax exemption on the basis of its qualifying income from qualifying activities. In other words, we define it by activities, not by projects. So there can be a number of projects under the same activity and if it is an approved activity, then it will enjoy tax exemption. This will facilitate the Overseas Enterprise's overseas investment decisions and the remittance of foreign income. It will give companies greater tax certainty in planning their overseas ventures because it need not obtain approval for each and every overseas project separately. Clause 6 introduces a whole new Part XIIIB to the EEI Act to effect this new Incentive that I have just described. It will allow the Minister to approve a Singapore-incorporated and resident company as an Overseas Enterprise if he is satisfied that the overseas investments or projects of the company will enhance the economic or technological development of Singapore.”
“It does not also provide any incentive for the company to expand further after the initial incentive period is over. Therefore, the EEI Act is being amended to allow the Minister to extend the tax relief period by further periods of up to five years at a time, subject to such terms and conditions as he may impose, and this is in clause 4 which inserts a new subsection in the EEI Act. Modification to the Overseas Investment Incentive Third, modification to the Overseas Investment Incentive. This third change is an amendment to the Overseas Investment Incentive. This particular Incentive is aimed at encouraging investments in approved overseas investment companies for the purpose of acquiring technology for use in Singapore or for gaining access to overseas markets. It allows the capital losses incurred by an eligible investor in an approved overseas investment, after two years and before the 9th year, to be deductible against the investor's domestic income. One requirement under the present law is that every overseas investment must be done through a Singapore-incorporated company specially set up for the purpose. Investors' feedback is that this requirement of setting up a company specially for this purpose is cumbersome. Therefore, clause 5 of the Bill will insert a new section in the EEI Act to provide for the deduction of losses incurred by an approved eligible investment company on the sale of any share or in the liquidation of an overseas investment held directly by it. Under this additional arrangement, any gain from the disposal of shares or liquidation of the overseas company made after two years and before the 9th year will be treated as trading income and be subjected to tax if any capital loss had been allowed deduction.”
“The tax reduction is therefore $27 since the normal tax rate is 27%. When you have a loss of $100, you get a reduction of $27, instead of $10 because, in fact, that loss was incurred at the time when the company was enjoying a 10% tax rate. So in fact he should only enjoy a $10 loss. Therefore, as announced in the Budget Statement, an adjustment factor will be applied whenever unabsorbed losses and capital allowances of a post-pioneer company under one tax rate are used to set off against the income under another tax rate. This adjustment factor is equal to the ratio of the first tax rate to the second, and this is introduced in clause 3 of the Bill. The effect of such apportioning by the ratio will be in the example that I just gave, that the tax reduction will be $10 instead of $27. A similar provision has recently been introduced in the Income Tax Act, in respect of companies granted tax incentives under the Act and thus have incomes which are taxed at different rates. Extending the Tax Relief Period for Warehousing and Servicing Companies Incentives The second change relates to extending the tax relief period for Warehousing and Servicing Companies Incentives. This second change is to make extendable the tax relief period under the Warehousing and Servicing Companies Incentives Scheme. The incentives currently provide for a fixed tax relief period of five years for a warehousing or servicing company intending to incur expenditure of not less than $2 million in fixed assets. During the five years, half of the company's qualifying income will be exempt from tax. From past experience, however, the EDB has found that five years is not long enough to encourage the company to make such large capital investments.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill will amend the Economic Expansion Incentives (Relief from Income Tax) Act, which I will refer to as EEI Act in short. It is to put into effect four tax changes which were announced in the 1993 Budget Statement. I will describe each of the tax changes in turn. Use of Accumulated Losses and Capital Allowances The first tax change, on how much accumulated losses and capital allowances may be used, will apply to post-pioneer companies. These are companies which have two types of income after their pioneer period tax exemptions have expired and these two types are income taxed at a concessionary rate under the post-pioneer incentive of the EEI Act, and other incomes taxed at the normal corporate tax rate. In other words, pioneer companies, after their pioneer incentives have expired, may enjoy a post-pioneer incentive for some part of the activity, in which case they will have two types of income, ie, income under the post-pioneer incentives as well as the normal income which will be taxed at the normal corporate tax rate. The two types of income are accounted for separately since they are taxed at different rates. Losses and capital allowances which are not absorbed during the post-pioneer tax concession period are at present allowed to be carried over in full after the tax concession period. For example, if a post-pioneer company enjoying a tax concession of 10% has, by the end of its tax concession period, accumulated a loss of $100 in its approved trade, it can use that $100 loss to offset $100 of its income after the tax concession has expired, and that income after the tax concession period has expired, of course, will be taxed at the normal 27% corporate tax rate.”
“Because of this, Traffic Police has scaled down investigation of such minor accidents and the insurance industry is aware of it. What is important is that in such accidents, the parties should exchange particulars and then report the accident to their respective insurance companies to pursue their insurance claims. This is the position in many other countries, including Australia. The Traffic Police will, however, still investigate accidents where there is clear evidence of breaches of the law, incidents of criminal behaviour, such as road bullying, drunken driving, and reckless driving. SINGAPORE TELECOM SHARES (Banks undertaking responsibility of stockbrokers) 3. Mr Chia Shi Teck asked the Minister for Finance whether banks are legally permitted and sufficiently equipped to undertake the role and responsibility of stockbrokers for the Singapore Telecom shares and, if so, whether the precedent is set for banks to deal in more ``selected privatised'' shares in the future.”
“Sir, all our measures to try and persuade our manpower to go into areas which are useful to our economy are aimed at both the men and women and I want to assure the Member that, having been to the National Science and Technology Board, there is a very high representation of women involved in research. MINOR TRAFFIC ACCIDENTS (Investigations) 2. Mr Choo Wee Khiang asked the Minister for Home Affairs (a) whether the Traffic Police investigate cases of minor accidents not involving any injury where there were no independent eye witnesses and Police were not at the scene; and (b) whether the Police can determine which party is at fault, based solely on the reports later made by those involved in the accident. The Parliamentary Secretary to the Minister for Home Affairs (Assoc. Prof. Ho Peng Kee)(for the Minister for Home Affairs): Mr Speaker, Sir, many motorists are still under the mistaken impression that even for minor accidents where there are no injuries or serious damage, they are required to lodge Police reports. This is not so. (For such minor accidents, the law does not require a police report unless the parties fail to exchange particulars.) As a result, Traffic Police are inundated with tens of thousands of reports of such minor accidents. In 1992 alone, there were 52,471 of such reports. Motorists making these reports expect the Traffic Police to make judgments and allocate blameworthiness and issue summons based purely on these reports. But in most of these cases it is almost impossible for Traffic Police to draw conclusions which will be fair. The reports are made after the parties and vehicles have left the scene and there are no independent witnesses. Almost always, each side making the report categorically asserts that the other is to blame.”
“Sir, as in all areas, we recruit purely on merit. If there are any women who have been rejected because they are women, though they have their merits, I will be very pleased to hear and take action. But I think the Member would agree that we should not lower the standards in order to recruit women into R&D manpower.”
“Therefore, to supplement our local pool of RSE manpower, particularly in areas where there are insufficient researchers with the required expertise, the National Science and Technology Board works together with EDB to assist companies to recruit from overseas. These well-qualified, experienced researchers bring with them knowledge and skills that we would take years to develop on our own.”
“Mr Speaker, Sir, for research and development to bear fruit, the critical success factor is undoubtedly the human factor. It is thus essential that we have sufficient trained and expert manpower. Under our National Technology Plan, we aim to have a ratio of 40 research scientists and engineers (RSEs) per 10,000 labour force by the year 1995. From the 1992 R&D Survey, we now have 37 RSEs per 10,000 labour force. The National Science and Technology Board is continuing its efforts to strengthen and develop our R&D talent pool. It does this through programmes to increase public awareness of R&D, the funding of postgraduate study grants, research training and exchange programmes and facilitating the recruitment of foreign R&D talent. Whilst our local universities are our main sources of RSE manpower, we need to encourage more of our graduates to enter into research as a career. During the Technology Month held last September, the National Science and Technology Board published newspaper feature articles on our R&D achievements, and conducted seminars, workshops and exhibitions on R&D, together with our universities, polytechnics and research centres and institutes. Many of these events were for students, aimed at stimulating their interest in R&D as a career. In addition, the National Science and Technology Board jointly funds, with private companies, study grants for postgraduate courses in R&D work and technology management, and research training and exchange programmes. These schemes are meant to help companies upgrade their existing R&D workforce, and to encourage companies to train new staff for R&D work. Our local universities cannot fully meet demand for researchers by the private and public sectors.”
“I did not accuse the population about doing anything or that they are wrong in wanting to aspire to something better than what they have now. What I said was that when people complain about rising costs, they are not complaining that what they used to enjoy is costing more today because their lifestyle today is much better than their lifestyle in the past. And what they are saying is that today's lifestyle, which is much better than in the past, is costing them more today. It must. What they are also saying is that they want to enjoy an even higher lifestyle and that is going to cost more. It must cost more. There is nothing wrong with aspiring for better lifestyle, to enjoy a better lifestyle today than in the past, as long as people are prepared to work hard, work smart and earn more. There is nothing wrong with that. But I am trying to pinpoint what is the actual nature of their unhappiness. It is not as if prices have skyrocketed and that people's real incomes have gone down. That is not the problem. As long as people aspire to things which are realistic and are prepared to work hard, I think Singapore will continue to do well.”
“We should keep the subsidies to the minimum for all and then identify those who require special help and have special schemes to help those people. The Government has a sound approach to helping the weaker members of our society and we should not let the difficulties, sometimes temporary, of a small group to cloud the overall picture of a better life for the vast majority. We have continued to enjoy economic growth because we have followed sound policies, including a conservative fiscal policy and a policy of heavily investing in our people. These policies have been well tested and are now generally accepted as pre-requisites for growth, whether in the developed countries trying to unwind their welfare systems or in developing countries wanting to break out of poverty. We should stick to fundamental policies which have served us well. Mr Deputy Speaker, Sir, in conclusion, after putting under the microscope for one year, I hope that Singaporeans are now better informed about the facts. I do realise that facts would not satisfy everybody emotionally. But there should be enough common ground for us to work as a team, to do what is most important for our long-term prosperity, that is, compete in the world economy and make a comfortable living. [Applause].”
“There will always, of course, be people who may not be able to afford even the low fee that is fixed in relation to the affordability of the general public. But I think we need to have a balanced perspective of what is happening in our society. Neither the rich at the top nor the poor at the very bottom are representative of the average. We do have some very poor at the bottom - old folks with no jobs and no children to support them, people with physical or mental problems who cannot hold on to a job, and so on. We do have such people. But we should recognise two facts about such poor people. First, they are decreasing in numbers and in proportion. Second, even the very poor are not so badly off as they used to be in the past. Let me substantiate this by reciting just one fact. The very poor now live in 1-room HDB flats with running water and electricity. They used to live in crowded and unhygienic slums on tenements in Chinatown. So we should not get so immersed in the problems of the very poor that our entire perspective gets distorted. Even worse, the better off should not use the plight of the poor to advance their own concerns about the prices of cars and private properties. The really poor, we will always have with us. Government accepts that such people must be given special help. That is why there are various schemes tailored to meet specific needs - schemes like Medifund, the 25th Anniversary Charity Fund, Small Families Improvement Scheme, and so on. It is more cost-effective to have specific assistance schemes to meet the needs of a particular section of the population than to make services cheap for all, including those who do not need subsidy. We should not just give subsidy to all.”
“The Government will subsidise such services, and even subsidise them heavily, provided the budget can afford it. But even these services like basic health care, education and housing, should not be provided totally free. Wherever possible, we should charge a fee, even if the fee covers only a small part of the cost. This serves two very useful purposes. First, it makes clear to the public that there is a cost incurred in providing the service. Second, it helps ensure that the service is only used when really needed. Let me give an example. For a long time, Government outpatient clinics dispensed medicines free of charge. Patients often did not use the medicines as seriously as the medicines that they paid for when they visited a private general practitioner. They either accumulated the medicines in the cupboard at home or simply threw them away. When the PAP first formed the Government in 1959, it introduced a $1 fee for a week's supply of a particular medicine. Immediately, patients not only regarded the medicine as more effective because they had to pay for it, but in cases where they still had supplies at home they told the clinics, "Please don't give me the medicine. I have some at home." To make services like health and education available to the population at large, the fee must be fixed at a level that the overwhelming majority can afford to pay. Let me repeat that - the fee must be fixed at a level that the overwhelming majority can afford to pay. This will naturally depend upon the income levels and affordability of the majority of consumers and not on whether the Government has a budget surplus or not. That is completely irrelevant.”
“Therefore, we get a situation where parents willingly fork out anything from $60 to $130 per month for three hours of private kindergarten classes, but they complain loudly about $70 to $200 fees for independent schools, because independent schools are associated with Government; private kindergartens, that is another matter. There is an illogical assumption here - that Government should not only subsidise services, but entirely offset any cost increases. People forget that subsidies are financed by taxes and that if we do not keep subsidies under control, taxes will rise inexorably. There is also a related argument that a little more subsidy will not hurt since the Government runs a budget surplus. Whether the Government has an overall budget surplus is a separate question from whether the Government should subsidise a particular service which it provides. For some services, like telephone services or PUB utilities, there are no good social reasons for subsidies. The individual who uses the telephone or consumes water and electricity is the one who benefits directly from these services and he should therefore pay the full cost. But in the case of other services, like basic health care, education and housing, there are good social reasons for the Government to make them available to the whole population. When a citizen is healthy, not only is he himself and his family better off, but others are also less likely to catch, for example, diseases from him. When a person is well-educated, he contributes to society more than what he himself earns in wages. When the citizens own their own HDB flats, the resulting sense of ownership and social stability benefits everyone.”
“These and other food items which in the old days could only be found in the Orchard Road stores, like Cold Storage or Fitzpatricks, can all be now found in the HDB neighbourhood shops. What does that mean? Shops are not just displaying these as museum pieces. People are obviously buying them. There is nothing wrong with drivers wanting air-conditioned bedrooms or for people wanting to eat exotic fruits. If they work smarter, harder and earn more, they have every right to improve their standard of living. There is nothing wrong with the rising aspirations. But we must be clear that when people complain about rising cost, it is not because the same lifestyle which they enjoyed cheaply in the past costs more today. That is not what they are complaining about. It is really because the higher standard of living which they now enjoy costs more than their old, simpler standard of living which they have left behind. That is what they are complaining about. Furthermore, they fear that what they aspire for the future, which is even higher than what they enjoy now, would remain out of their reach. That is their fear. So it is not as if costs are going up and they cannot afford to maintain the present lifestyle or the lifestyle that they used to enjoy. They are complaining about something quite different. On reading the CRC Report, it is also clear that much of the public unhappiness is centred on prices of services provided by the Government. People somehow expect services provided by the Government to be different - that the Government services should be exempted from cost increases; that the Government service level should be high and improving, but the charges should be low and preferably fixed.”
“Maybe they are putting on too much weight! The CRC has identified the reason for the perception gap. There is a misunderstanding about what the CPI is supposed to measure. The CPI is designed primarily to measure price changes, with changes in lifestyles and tastes being captured in periodic revision of its weighting pattern. But people expect the CPI to show large cost increases that come with more expensive tastes or a more expensive lifestyle, or with lumpy expenditures, like buying a house or having a big hospital bill, to be reflected in the CPI when, in fact, it must be averaged over a number of years. Let me give Members an example. An acquaintance of mine told me that his driver had been complaining about his increasing cost. The reason is not that the driver is unable to afford to pay for his children's school fees or to put food on the table. His complaint about rising cost is that he cannot afford to run his air-conditioner every night and it is very warm. He complains about the unfairness of PUB's electricity bill. How can one expect to have a small electricity bill if the air-conditioner is on every night? The CRC Report has an interesting chart (Chart 1.3 on page 20) which shows electricity tariffs falling but consumption rising. Bills are higher not because cost per unit has risen, but because people are buying and using more electrical appliances. One has only to walk into any HDB neighbourhood or town centre and look at the goods on sale to realise how much people's consumption habits have changed. People do not eat only bananas, as Mr Maidin says, or ikan bilis. They want hami melons from China, musk melons from Japan, XO brandy from France, abalones from Australia.”
“Average. Even for the lower income. But if he says the lower income group is not having the same kind of things that the Swiss or the Germans have, that is another matter. We have not come there yet, admittedly. But, certainly, people are not tightening their belts, as he alleged. Mr Low Thia Khiang: It is still tight.”
“But my point, and I think Mr Low has admitted, is that, in fact, wages increase more than the costs. That is the point.”
“Thank you, Mr Low. But that was not what Mr Low said in the speeches in the Elections. He did not say Singaporeans are not enjoying Swiss standards of living. That was not what he said. But I am glad that he has now admitted that, in fact, everybody is better off. Of course, the wage increases of those at the bottom are less. But the important thing is: are they better off? Wage increases of everybody cannot be the same. But is everybody better off?”
“Okay. I will give him a chance to reply.”
“If so, should he not publicly apologise to Singaporeans for misleading them and creating unnecessary alarm? I think Singaporeans have a right to know. Would Mr Low like to reply?”
“In another speech in Hougang, he said, "What has happened to people's life? What has happened to the people's life after Singapore achieved growth in the economy? Why are the prices of commodities all gone up?" He has looked at the figures of basic essential prices. What is his view? He quoted a Chinese poem, "There is a goose in the sky. PAP has money, but the people, no money. PAP has levied too many taxes, and the people have tightened their belts to the extreme." What does he now say? He has had a year in this Committee. He has asked for figures. The Statistics Department and others have produced figures. He has looked at them. What is his view? What has he done? The Government has given him full access. He has had all this time to study. He has failed to substantiate his wild allegations. The only thing I find in his report is that the CPI does not measure the COL. He picks on items like rentals and other little things like that. I think Mr Low should explain to this House and to all Singaporeans why this has happened. Perhaps, after all these studies in the Committee, he now realises that his earlier views were mistaken, that there are some technical problems with the CPI, but basically the CPI is a true measure of price changes; people's incomes have gone up higher than prices and the wide array of statistics in the Report, I hope, convinces him that Singaporeans have benefitted. Even the very low income groups, their possession of consumer durables, which is also indicated in the Report, if we had used only one measure, is more than enough to prove that in fact people's lives have improved. Does he agree that, after studying the matter in the CRC, incomes have in fact gone up more than prices?”
“His implication is that if we compute a true Cost of Living Index, it would show that the Cost of Living in Singapore has gone up by much more than the CPI. Mr Low is right that the CPI is not a true Cost of Living Index. But he is wrong that if we computed a true Cost of Living Index, it would show things to be worse. As the CRC Main Report points out, and as I mentioned earlier, the CPI over-estimates the true increase in COL. Even if we did compute a COL index, it would show that inflation in Singapore is even lower than the 2.4% increase in CPI. Mr Low is shaking his head. I have asked him to come out with his methodology. He has not been able to do so. The Committee gave him a lot of time and he was not able to do so. As I said just now, it is no point saying this is his view. The view must be based on sound arguments and facts. And he has not produced sound arguments and facts. There is no point saying this is his view, that the COL has in fact had a higher inflation rate than the CPI. You have got to show that it is so. In the 1991 General Election, Mr Low argued repeatedly and forcefully in election rally speeches that costs were sky-rocketing in Singapore, and that people could no longer afford basic necessities. Let me quote some of the things that he said. In a speech he made on 22nd August 1991 in a rally in Bukit Merah, he said this in Mandarin and I assume the translation is correct: `Only the Government benefits from the country's prosperity. The people do not, because prices have been increasing, but their salaries have increased only marginally.' Mr Low has sat in the Committee. He has seen the price increases. He has been shown figures of wage increases. Does he still hold on to this?”
“To have a feel of what this means, compare the inflation experience of Singapore and Hong Kong, which I have distributed in Annex B (Cols. 877 - 878). Hong Kong's higher overall inflation rate translates into a rising cost of daily living. In the last five years, HongKongers saw significantly higher increases in prices of fresh pork, fresh poultry, seafood, vegetables, cooked food, water and electricity charges, bus, MRT and taxi fares, and costs of health care. Singaporeans did not face the same increases. Even in the sensitive areas of bus fares, MRT fares and health costs, our increases have been lower than Hong Kong. Annex B - COMPARISON OF PRICE CHANGES PER YEAR IN HONG KONG AND SINGAPORE, 1988-1993 (Cols. 877 - 878) More importantly, wages have been rising consistently faster than prices in Singapore, so that real standards of living have risen. Compare the 2.4% price increase with 8.9% per year rise in nominal wages during the period 1980-1992. Even a casual observer who has not studied the wide array of statistics in the CRC Report can see the improvement in living standards for himself, in the quality of our housing, in our possessions and in our lifestyles. Yet some people choose not to believe this, pointing instead to defects in the Consumer Price Index. The CRC, after 10 months of careful deliberations, has concluded that the CPI is sound. This has to be so, not because the CRC members (including Mr Low Thia Khiang) are simply mouthing the Government's stand, but because the CPI is computed in accordance with international convention and sound international practice, accepted by economists and statisticians. Mr Low has complained in his minority report, which I have discussed earlier, that the CPI is not a true Cost of Living Index (COL).”
“There is no evidence that paying 25% of the cost will deprive anyone who qualifies for a university education from in fact having a university education. There are sufficient scholarships, bursaries and loan schemes to ensure that anyone who gets a place in the university can afford the fees. If a case can be made out that the repayment of the loan is too burdensome in the first years of working life of a graduate, I am sure the Minister for Education and the Minister for Finance will be prepared to make further adjustments to ensure that they can afford to meet the repayments of the loan. On Goods and Services Tax, the Government accepts the Committee's recommendations. I have already explained during the debate on GST the actions we will take to ensure that prices do not increase unreasonably. I would now like to make some general comments on the issue of rising costs. Rising cost of living: Is it a myth or a fact? The Prime Minister appointed a Cost Review Committee. It deliberated for a year and has produced this very detailed Report. The debate here in this House and the reports over the next few days will be so extensive that anyone who is new to Singapore, or a visitor coming to Singapore for the first time, may very reasonably come to the conclusion that Singapore is in the throes of sky-rocketing prices and that inflation has seriously eroded Singaporeans' living standards. A visitor would be very hard put to understand all this emotion and excitement in the light of the fact that inflation in Singapore has been low in the past 12 years and the average inflation rate over the last 12 years (1980-1992) was only 2.4% per year, among the lowest in the world.”
“If experience shows that Alexandra Hospital is able to provide the same level of service at lower cost than the restructured hospitals, then obviously we will not restructure this hospital. But if restructured hospitals are more efficient, then retaining a Government hospital will not help to keep costs low. On the extension of visiting hours of Government outpatient clinics, private clinics and the A&E services in hospitals are sufficient to meet demand and we do not see the need to extend the hours in Government outpatient clinics. On the subject of housing, the Minister of State for National Development has already dealt with it and given Government's views on the CRC's recommendations. On education, the Government cannot freeze the subsidy rate for university education at 79%, as recommended by the Committee. All of us, I am sure, accept that university students form a minority of students and that after graduation they can earn good incomes, much higher than those who do not go to university. It is entirely equitable that university students pay 25% of the cost of their education. However, despite this, the Government will be able to keep future increases of university tuition fees moderate, because the actual subsidy rate for undergraduate courses is now at 76%, ie, close to the target of 75%. The 79% that the Committee used in its Report is the overall subsidy rate for both undergraduate as well as postgraduate courses. There has been some cross-subsidy from undergraduate courses to postgraduate courses, which are more heavily subsidised. So the fees for graduate courses will be progressively adjusted to reach the target of 75%, but this should not affect the majority of university students.”
“Sir, the CRC Report is a balanced and thorough analysis of the question of rising costs. I think many Members here have admitted so. The Committee has not shied away from pointing out some very hard choices facing Singaporeans. Its measures to keep inflation low are sound, and the Government will definitely continue to make low inflation a priority. The CRC has made recommendations in six specific areas. The Government's detailed responses are given in a paper (Annex A (Cols. 867 - 876)) that was circulated earlier in the day. I will now highlight some of the key responses. Annex A - GOVERNMENT'S RESPONSE TO RECOMMENDATIONS OF THE COST REVIEW COMMITTEE (Cols. 867 - 876) Firstly, on the CPI, the Government accepts the Cost Review Committee's recommendation to compute different CPIs for different income groups. On health, the Government accepts five of the seven recommendations. Further details on how the Government proposes to keep health care affordable will be released in a White Paper containing the recommendations of the Ministerial Committee on Health Policies. A number of Members have spoken extensively on health and have asked questions on how do you define basic health and so on. Please bear with us. When the White Paper comes out, we can have a full debate on the subject of health. On the recommendation to retain at least one Government hospital, ie, Alexandra Hospital, it is in fact the only Government hospital that we expect to retain over the long term. Changi Hospital will be closed and the Communicable Diseases Hospital will be combined with Tan Tock Seng Hospital. At the present moment, the Government does not have any plans to restructure Alexandra Hospital.”
“Thank you very much. Thanks for the clarification.”
“Is it a fair assumption, based on past experience?”
“I understand you now. He has divided the impact over two periods, the first five years and the next five years. In the first five years, the CPI will over-estimate the impact of GST. In fact, the GST impact is less. Because for the lower income group especially, the GST will be completely offset or, in fact, more than offset by various subventions, grants, rebates and so on. In the first five years, the CPI will, in fact, show more than what is the actual impact of GST. Mr Low accepts that. For the next five years, if the Government withdraws all these concessions and the Finance Minister has already said that it will not automatically be withdrawn, there will be a review, but assuming for the moment that it is withdrawn in five years, does Mr Low think that in the light of what has happened over the last 10, 15, 20 years that we can safely assume that there will be a real income growth of about 4% a year for the next five years? In fact, it may be higher, but at least 4%.”
“Yes, of course. It under-estimates for the higher income group, yes. There is another point. I really like to understand Mr Low's thinking. I think it is important for me to understand because he might represent some people who really do not understand these things. He makes the point about the CPI and the GST. It is in page 188 of the Report. I like just to understand what he actually means. It is on "The Need To Have A Cost of Living Indicator". In that Report, he said: `... CPI, given its limitation as a macro indicator, will not be able to fully reflect the impact of the broad based GST on households.' That is the point that Mr Low makes, Sir. Am I right in understanding that Mr Low means here that the CPI would not show or would under-estimate the impact of the GST on households? In other words, the GST has a greater impact than what the CPI shows. Is that what he is trying to say?”
“Thank you very much. That was the point I was trying to get at. Nobody said that the lower income group does not suffer from inflation. The allegation was that the CPI is not accurate in reflecting price increases and we had the Cost Review Committee go into this whole matter. The point we want to establish is this. In fact, if it is at all not accurate, it over-estimates the inflation for the lower income group. That is the point I want to make.”
“That is precisely why the Committee tried to make a separate calculation for the 1-roomers. Agreed, the CPI is an average, overall macro indicator. But what we are trying to ask ourselves is whether this indicator over-estimates or under-estimates the inflation for the group that Mr Low and others are concerned about, ie, the lower income group. First of all, my point is that the lower income group's expenditure and income are very close. In fact, they coincide. Second, in the case of the lower income group, the weightage of items like food is very high. In fact, the prices of those basic essential items have gone up very little. Therefore, the actual inflation suffered by the lower income group is lower than the CPI and that was shown by the Committee's calculations on the 1-roomers, 2-roomers, 3-roomers and 4-roomers; and the impact on the 1-roomers was the least. Mr Low participated in all the discussions. If he did not agree, did he challenge? Did he come out with alternative figures? Mr Low Thia Khiang: In terms of CPI as an indicator, it is a macro indicator and, of course, you cannot measure exactly what it is about. For the lower income group, yes, to a certain extent, it might actually be below the rate. But that does not mean that they do not suffer from inflation because their income is lower.”
“But the impact is less. Because the Committee did make another calculation to show the impact of CPI on the 1-roomers, 2-roomers, 3-roomers and so on. And it showed that the CPI for the 1-roomers, if we assume that they have a lower income, was in fact lower. Therefore, I want to ask Mr Low: does he accept that the CPI, as published, in fact, over-estimates the inflation for the lower income group?”
“The significance of the items will be determined by the weightage in the basket. That has already been determined. The point I am trying to make is, at the end of the day, even when you try to reflect the rentals more accurately, the impact on the CPI is very minor. Therefore, the CPI does not skew or does not inaccurately reflect the actual price increase. That is the point I am making. The other point, I think, Mr Low made, which I would also like him to clarify, is that he says the CPI is based on expenditure and not on income. I assume that his concerns are more with the lower income group. Would he agree that in the case of the lower income group, the expenditure will in fact reflect quite accurately the income? Because the lower income group tends to spend all that they earn.”
“I did not say it was not higher. But I said the impact was insignificant. Of course, it was higher. But the overall impact on the CPI was not very significant. That is the point I am making. Does he accept that?”
“All right. That is why the Committee asked him to suggest a methodology. There are people who are well versed in these matters. They have attempted to do a study and came out with a conclusion. He does not accept it. He does not accept the methodology. I assume he or the think-tank that is behind him should be able to come out with a methodology. It is no point just saying he wants a COL. Every country in the world which tries to adjust various things in order to take into account inflation uses the CPI, not the COL. The second point is that he has picked on small items to question the veracity or the accuracy of the CPI. For example, he says the housing rental component is not reflected accurately. I think Mr Low knows that the Committee did make a simulation and asked the Statistics Department to do a calculation to reflect market rentals. And it showed that, in fact, the impact on the CPI was very small. Does he accept that?”
“What is the relevance of that? We are talking of CPI and COL. No country in the world is called Singapore. So what? Is that relevant?”
“Mr Deputy Speaker, Sir, before I speak to give the Government's response on the recommendations of the Cost Review Committee, I would like to ask Mr Low some clarifications. He has said earlier in response to Dr Hu that he has listened and understood what has been said, but that he still holds certain views. I assume these views are based on sound arguments and on facts. In the case of the CPI, he has made the point that the CPI does not measure the cost of living. I think the Report does admit that it is so. And the Committee did ask various people to try and work out a cost of living index. In fact, one such index worked out by a university lecturer showed that the inflation in the cost of living index was even lower than the CPI. I assume that Mr Low was there. He must have participated in the discussions. He was told that no country in the world has a COL index and he was asked to suggest a methodology. Has he got the methodology or does he accept the discussions in the Committee? I would like to get a clarification on that first.”
“Mr Deputy Speaker, Sir, it is quite clear that Mr Chiam does not really want to look at the true position on inflation.”
“We are not asking Mr Chiam to give answers to the Government or to support the Government. All we are asking is that he should also, as he requests of the Government, tell the truth. If he does not know the truth, he should search for the truth. In the case of the perception of the public about inflation, if he is serious about searching for the truth, then he should at least read this Report in detail. I think the problem about Mr Chiam and others whom he has quoted, like Mr Chua, is that, you want to hold to a position and you are saying, "Please, do not confuse my prejudices with facts." Please search for the truth, and I think you should, like your request of the Government, speak the truth. Are you convinced, on the basis of this Report, that the CPI is accurate, that there is no attempt by the Government to skew the picture of inflation in Singapore, that this does not try to paint the wrong picture? But perhaps people's perception may be different. I am not saying that is not so. But is Mr Chiam, as somebody who wants to know the truth about the inflation in Singapore, satisfied? If Mr Chiam is not satisfied, what is Mr Chiam going to do in terms of trying to find out the truth?”