Toh Chin Chye
Singapore
“--- And meet their friends. I do not know. How do we go about it? Supposing we have an impasse. We cannot find anyone who is willing to take on the job of the President. It is a lonely job, yes. I have no ambitions to be called "His Excellency".”
“28 also provides that if the Government is going to change the Constitution in order to modify the powers of the President, he must go and seek a mandate from the people twice (not once, but twice) - first,in a general election and win a two-thirds majority, come back to this House, change the Constitution, and then take the amendment bac…”
“The Minister has not made it quite clear what is tax avoidance, what are the examples of tax avoidance that he would like to close. The Comptroller of Income Tax no doubt has many cases on his hand. If the public, who are paying taxes, are given to know what is legitimate and what is illegitimate, then I think they would be more at ease.”
“It will be invidious for special legislation to be passed for companies that provide essential services so that Government control over them can be maintained.”
“For a whole family to lose their property just because of the act of one is unjust. It is similar to what happened during the days of the Emergency in Malaya when whole villages were resettled because a few were deemed to have collaborated with the Malayan Communist Party. It is exactly the same principle.”
“And, of course, on the HDB side, its accounts will show a deficit because it has to pay high interest, or vast amounts of money in terms of interest, back to the Government. Yesterday the Member for Rochore pointed out to this House the sum of $8.8 billion which was loaned by the Government to the HDB.”
The complete record
Every one of 563 lines we hold for Toh Chin Chye, in date order, each linked to its source. Free to read, in full, without an account. Page 2 of 12.
“Mr Speaker, Sir, may I ask the Minister of State a question so that we can find what the nature of the problem is? Who decides which patient is an emergency case or not?”
“Mr Speaker, Sir, it has occurred to me that since the SES is a market for both Singapore securities and Malaysian securities, has the Minister for Finance consulted his counterpart in Malaysia in moving the Securities Industry Act?”
“Is the Minister aware that there is a penalty for late payments directly payable to the CPF?”
“Sir, I thank the Minister for his statistics. In view of the downturn in the economy, does the Central Provident Fund Board have any plans to make payments much easier? Could the Minister also state what are the fines that have been imposed on late payers?”
“May I ask the Minister, as a corollary, whether he will impose an exit tax?”
“Sir, I am glad that-the Minister for Finance has laid put to rumours that have been published in the newspapers. If the Minister had earlier come out with a statement, I think great unease -”
“I accept the suggestion given by the Minister. LEVY ON SINGAPORE VEHICLES ENTERING SINGAPORE 19. Dr Toh Chin Chye asked the Minister for Finance and Minister for Health whether it is the intention of the Government to impose a levy on motorists or vehicles that enter Singapore at Woodlands.”
“Sir, it is wrong for me to raise this question solely on my own interest. I am asking this question on behalf of the consumers in Singapore.”
“Mr Deputy Speaker, Sir, I am not sure whether the Minister for Finance has been reading his own PUB bills. But I have been studying my bills and I can assure the Minister that, whereas the PUB would credit over-estimates to actual readings, on the other hand, Government tax has never been credited at all. It remains on the estimated bill.”
“Mr Deputy Speaker, Sir, may I then direct that question to the Minister for Finance.”
“Mr Deputy Speaker, Sir, on a short-term basis, will the Minister consider a 20% discount on the pump price of petrol? He will remember that in two years he has increased the price of petrol by 50%.”
“Mr Deputy Speaker, Sir, I am obliged to the Minister for his figures. May I ask the Minister what measures does the Government have to alleviate the effects of the current recession, apart from reductions in rentals by the HDB and JTC?”
“Three applicants for the job of general manager were being interviewed. One was an engineer, the other accountant and the third an economist. At the interview, the company chairman put forward a question to them."How many is one plus one?"The engineer replied, "Two". The accountant answered, "11". When it came to the turn of the economist, he turned to the chairman and asked, "Sir, what figure do you want?" The economist got the job. [Applause] 3.46pm”
“The exercise of decimating the Ministry of Culture has made no savings on expenditure. Only the bureaucracy has been reshuffled, and it is a mystery to me how information or propaganda has been thrown in with the operations of the Telecoms Authority, the Airport, the PSA, the ROV, and the MRT. In 1979, Government expenditure including transfer from the Consolidated Fund to the Development Fund was $6,803 million. This will balloon to $10,621 million in 1985, an increase of 7.7% compounded annually in spite of the fact that the average rate of inflation was only 4.9% in the last five years. Another way of looking at the problem of Government expenditure is to see their bearing on direct and indirect taxation. In 1979, direct and indirect taxes amounted to $3,401 million but this is estimated to grow to $7,058 million in 1985, or at a rate of 12.9% compounded annually. Can we keep on going at this rate? In 1983, I urged the then Minister for Finance to set up a committee on tax reform. Now, once more I urge the new Minister for Finance to set up a Committee on Administration Reform with the objective of cutting down expenditure and revenue. The Government hopes that the private sector will be the engine of growth in future years. But the private sector is running out of gas. This hope will remain a pious hope if the Government does not first set its house in order. By raising operating costs, overheads, taxes and levies, they are killing innovation and entrepreneurship, discouraging foreign investment and crippling our ability to compete in world markets. Mr Deputy Speaker, I take consolation that I ventured into a foreign area from this story that I have plagiarized from Dr Albert Winsemius. Perhaps Members would like to share this story with me.”
“This will buy time for business to fight off liquidators, solve their cash flow problems and they can live another day. I suggest that there is need for a physical reform, and the idea of local governments to handle the problems of HDB estates is a good one from the political point of view. But I would strongly caution, in the light of the experience of this recession, against this move as the bureaucracy will swell and HDB residents will have to pay for the costs of local government. I do not live in an HDB estate. I see no reason why I should pay to an HDB local government. But if there is going to be a transfer of funds from the central government to local governments, then all taxpayers are inviting for more taxation one way or another. Take heed. In 1984, the Ministry of Social Affairs had a staff establishment of 738, with a budget of $40 million. In 1985, this year, that Ministry has grown into the Ministry of Community Development with an establishment of 1,319 staff, and a budget of $84 million. In 1983, I questioned the Minister for Social Affairs then, why it cost $4 to give out $1. I have not worked out at today's 1985 prices. I should take some time to do that. In 1979, the expenditure for the Ministry of Defence was $1,000 million. In 1985, the costs of defence of Singapore will escalate to $2,411 million, making us one of the most expensive in per capita spending and, unfortunately, giving rise to wrong perceptions of the role of the military, In 1979, the cost of education was $581 million. In 1985, it will be $1,942 million, although the numbers to be educated are already tapering off. The baby boomers have gone through the SDU and have got married. They do not need to be educated any more.”
“I got a tutorial from the Member for Leng Kee! I thank him very much for enlightening me. On the other hand, let us suppose all households try to increase their rate of saving, as is the case in Singapore under the CPF scheme. It would mean that there is less money for consumption. It results in a reduction of income for the next person and the third person, all the way down the line. And because there is less wealth generated, there is also a decrease in saving. Buyers are sellers; sellers are also buyers. Am I not right? But if there are no buyers, there will be no sellers. That is what we are seeing. In the shopping complexes, consumer spending has been contracted both by a significant drop in tourists and by excessive savings in the CPF. I have earlier indicated that 25% less in take-home pay has reduced what the economists call "propensity to consumerism" - it is a very long word, I prefer to use what the layman understands "disposable income" which I understand is incorrect, either for spending or for saving in the POSB. How can we increase consumer expenditure without further raising salaries and wages and contributing to increased operating costs? I suggest a solution is to reduce CPF contributions. As a first step, it should be reduced from the present level of 50% to 40%. I know that those who are on high salaries and working in institutions of higher learning and statutory bodies would not like it. This will mean that their take-home pay will be increased by 6.7% and payroll costs will be decreased by 4%. 6% of CPF locked into Medisave is too high. The Minister for Health would want to check whether it is true that in Australia an employee pays only 1% of his income to Medicare. In this way, hopefully, consumer spending will increase and sales will improve.”
“In fact, this is already happening in the case of teachers who give private tuition. Students do not contribute to the CPF! An hon. Member: No income tax. Dr Toh Chin Chye: I would not want to agitate the Collector of Inland Revenue. Proposal No. 2: There is a paradox to thrift and savings. We originate from an immigrant population which practises thrift and savings, but this generation is probably the most spendthrift - abolishing cars that are still service-worthy and running on the roads, We are really asking for more cars to come on to the roads. So what is one person's spending becomes another person's profit or income, call it what you like. This, in turn, is spent on a third person's income. As more income is generated, there is some left for saving. This is what the Member for Leng Kee or the Member for Whampoa would call "the Multiplier Effect". I took a tutorial from them.”
“We are not one of the G7 countries, but we are enjoying surpluses. How do we manage to go against the trend when these G7 countries are supposed to lead the Third World countries out of their recession? I suggest that only a sweeping reform of Government expenditure and revenue structures can prevent private sector companies from going deeper and deeper into the red. In fact, I have several supplementary questions for the Minister for National Development, except that I was interrupted by the Member for Whampoa and I lost the trend of my thought. However, I would not use this occasion to bring up these supplementary questions, but may I make two proposals which the Minister can examine, tear them apart, and maybe consider them ridiculous. But I would like to make these two proposals very seriously in order to ease the difficulties, particularly of the small businesses and the consumer. Proposal No. 1: Housewives normally feel that their first duty is to home and family and they are not going to be coaxed to work on a part-time basis. The Economic Survey shows a large proportion of housewives who are not in the work force. Housewives are not going to sacrifice the welfare of the family if, in going out to work part-time, their take-home pay will be slashed because of CPF contributions. On the other side, employers are reluctant to employ part-time workers on the same terms as full-time workers because part-time workers do not guarantee stability in the workforce. They are here with you today, they are away tomorrow. And for these reasons, I would suggest that wages and benefits for part-time work be a matter of negotiation between worker and employer, and not subject to compulsory CPF contributions.”
“The pity of the Budget statement is that it disregards the fact that on the average three companies are being liquidated every two days. It does not address itself to the reasons why, how, Our economy has encountered air pockets and has fallen into recession. The Minister has chosen to remain silent on this burning issue of the day. The deficits that the private sector are facing are caused by structural and not cyclical factors. These deficits have taken some time to show up because of the euphoria over the building and construction boom. The Minister for National Development recited to us this morning a number of URA projects that were being thrown out in the last seven years. We appeared to prosper but not understanding that in reality we were living on expectations of future earnings. We have been living on credit, as it were. With a fall in consumer spending and demand, these earnings have not materialized. Capital has been locked into fixed assets but they are not generating enough income even to pay interest. And as the Second Deputy Prime Minister too just now reminded us, empty concrete buildings are a loss. In fact, the Member for Leng Kee perhaps could confirm whether that means it is inflationary - having empty buildings in Singapore. The deficits in the private sector have been paying for successive surpluses of several billion dollars in the Government budget. And it is only a matter of time before the accumulated weaknesses in Government policies of the last five years would show up as it has done now. Or to put it in another way, if you like, what would have been Government deficits if they had been transferred to the private sector? Today, the G7 countries, the seven top industrialized countries, have governments that are in budget deficit.”
“How many new cars have been registered because of cheap car loans to civil servants, employees of statutory boards and educational institutions? Tackle the problem at the roots. Motor vehicles already on the road must use petrol to carry on daily business. I do not see how increasing pump prices can take them off the road. It will not, and I do not see how the car population can be checked by punishing existing motor vehicle owners. Indeed, operating expenditure of business will instead go up and this will be passed down to all consumers. It is inflationary, as the Member for Leng Kee has explained to us. He is a professional economist, so we take his words seriously. The pity of it all is that the Minister for Finance and the Minister for Trade and Industry have been unable to convince the Minister for Communications of the dangers of a one-track mind. I was reminded of that this morning. In reality, he will ask me to put it up in one sentence - short, brief. I would say this. The policies of the Government are more suited to an inflationary environment but the rest of the world is charted on a course of disinflation. World-wide, inflation is low - 4% in the United States, 5% in Britain, 4% in Germany, 4% in Japan, 4% in Singapore - and therefore there is a downward pressure on prices. The prices of commodities, gold and crude oil have been deflated. Who ever thought that gold which was selling at $850 per ounce in 1980 could fall to $295 today? But Singapore prices are forced upwards because of Government policies on income, statutory payments and other levies. On the one hand, the Government advises the private sector to reduce over-heads. The other its actions are designed to inflate overheads.”
“Obviously there has been a break in the communication link. As a car owner driver, I sympathize with all car owners Who drive to work because of the increase in the price of petrol from $1.20 per litre to $1.50. I commiserate with travelling salesmen, tour operators, service men and the like. I know what it will cost me next time I ask a service man to come to my house to repair my television set, or to ask a doctor to pay a call on me at the house. As a consumer of goods and services, I share the anger of housewives and wage-earners who will find that prices in the market have gone up because the costs of delivering goods and services have increased. The last time in 1983 when the price of petrol was increased by 20 cents, although the cost of oil was going down, the Consumer Price Index for transportation went up by 5.2%. The Minister for Communications, or is it the Minister for Finance, never learns from experience. The obsession with zero growth population for motor vehicles more than matches the obsession over family planning. Imagine what Singapore would be like if the Registry of Births and Deaths imposes an ARF on every new-born child, a consumption tax on mother's milk and infant food, and a burden tax on the cost of education! But we do not do all these things because there are alternatives. There is the choice of the con dom, the pill, sterilization or abortion. 3.27 pm [Mr Deputy Speaker in the Chair] Has the Minister for Communications thought of abortion? What I mean is: has he thought of giving incentives for car owners to get rid of their cars? Can the Minister tell us how many motor vehicles belong to Government ministries, the MID, statutory boards and Government companies?”
“This year it will increase by $875 million. 56% of this is due to operating expenditure. What the Minister gives away in payroll tax and entertainment duty, on the one hand, it is neatly taken back by increased road taxes and duties on petrol on the other. Now you see it, now you don't. So really nothing is lost. He is no Santa Claus. The catch -and that many of us have missed - is that the extra burden of the budget will have to be financed somehow. Will the Minister assure this House that there will be no surprise customs or excise duties on consumer goods after the budget session? I must praise the Minister for Finance in that he has been bold this year in bringing up the problem of an increase in petrol price as well as an increase in taxi fares at the budget meeting. I dislike intensely inter-budgetary taxation because I cannot budget for myself. I do not want to go over old ground which the Member for Leng Kee has very expertly covered this morning. I am no taxi driver. I do not think the Minister for Communications is a taxi driver either, or has been one. I do not understand the economics of the increases in taxi fares and the cost of road tax for diesel-powered taxis. But we all listen to taxi drivers. All you have got to do is to go to the back seat and chit-chat with the taxi driver. You get feedback, boy! I know for sure that the next time I travel by taxi to the airport, it will cost me 21/2 times what I paid only two months ago in January. It defeats the purpose and the efforts of the STPB to woo tourists who, already aware that Singapore is expensive, will discover on arrival in Singapore that Singapore has become more expensive. There must be communication between the Minister for Communications and the Minister in charge of STPB.”
“6% of savings on payroll. But this will be cancelled by increased transportation costs due to the increase in the price of petrol. If sales do not improve in the next six months - I give six months - you will find that more businesses will face cash flow problems. The problems of the recession did not begin on 1st January 1985. The downturn began in 1983 with the shipping industry, with the oil-rig building industry, with ship-repairing, ship-building, drop in property prices, drop in tourism and the retail trade. We are now into 1985 and the Government has not woken up to the fact that that is a massive problem to tackle. I would suggest to the NTUC, however unpleasant it be, that the abolition of the payroll tax should not be used as an excuse or as a leverage to increase NWC payments for this year. Otherwise it will be a zero sum game for business and the choice is very stark for workers. If his company goes into liquidation, the worker is going to face retrenchment. I know for sure there are partnerships that have told the staff, "If you want an NWC increase, bonuses, then please resign. If you want to stay on to your job, then please remain as you are." For the Government, what does it mean? If companies face a loss and close down, the Government loses sources of tax collection, and indeed income tax collection for 1985 is expected to be no more than for 1984. With the economic down-turn growing deeper, I cannot understand how the Government can budget another surplus of $2,261 million for 1985, particularly when the allocation for Development for 1984 will be under-spent by $1,127 million. A surplus in the budget means a diminution of total demand. It adds to the recession. Recurrent expenditure relentlessly climbs upwards.”
“In 1984, last year, when the contribution rate rose to 50%, employers defaulted on the payments when their companies went into bankruptcy. I think it is an exercise in futility to blame companies for defaulting on their employees' CPF payments when we do not try to seek the reason why. In the last five years, CPF contributions have increased by 207%. In 1979, it was 15.9% of GDP and in 1984, it rose to 39% of GDP. At this time when our economy is in recession, property taxes have doubled. The costs of buying utilities from the PUB have increased by 70% in five years. The Minister for Finance in his Budget speech promised that there would be no increase in income tax but property taxes will help to finance the budget. I hope the Minister will clarify in his reply whether it is his intention to raise property tax. It is quite right that the property tax is being placed at 23% of the annual value but the annual value keeps on changing and in the end, in absolute terms, you are paying more property tax, not less. There are certain sectors of the industry, particularly the hotel industry, that are hurt by finding themselves paying a 100% increase in property tax when tourism is down. There seems to be no relationship between taxation and the state of the economy. Successive budget surpluses of over $2,000 million add up to the operating cost of the private sector. The cost advantage that attracted foreign investors and tourists to our shores in the 1970s has fast disappeared. In the retail trade and the tourist industry, sales have dropped markedly down. The high costs of operating a business are very much felt. The gains that the Minister for Finance has given from the abolition of payroll tax and the reduction of the Skills Development Fund by 2% really amount to about 1.”
“If this can be said of the Government, worse can be said of the private sector because the private sector, in addition to basic wage, has to pay Central Provident Fund, Payroll Tax and contribute to the Skills Development Fund, plus other perks for workers. In the private sector, I would not be wrong if I were to say that payroll has doubled in five years. At full employment, the Government was stimulating the economy through successive URA projects and its own building programme - construction of the Airport, Expressways and the MRT. This was inflationary, leading to abnormally high wages. Neither in the Government nor in any sector of the economy had productivity increased at a rate to justify a doubling of payroll in five years. It should come as no surprise that investment commitment by new foreign investors has fallen from 50% in 1980 to 30% in 1984, as the Minister for Finance said. CPF contributions at 50% have become a burden to both employer and employee. The problem of the CPF has been raised by the NTUC when it discovered that employers have defaulted on payments. With 25% less in take-home pay, employees feel the pinch, and unions negotiate not on gross wages but on take-home pay. What is it I get now? As CPF contribution rates have gone up, the growth of savings in the POSB went down from 49.3% in 1982 to 18.8% in 1984. There is now less money to save and to spend. The burden of CPF contributions is reflected in the increasing number of late-payments. In 1980, when the contribution rate was 38 1/2%, the number of cases of late-payment into the Fund was 20,000, in round numbers. This number rose to 35,000 in 1983 when the rate of contribution was 46% .”
“I would suggest that the Survey in future should incorporate a consolidated report on statutory boards and Government corporations, together with an economic classification of their revenue and current expenditure. It will help us in this House, as Members of Parliament and as representatives of the people, to understand how budgetary policy oils the many wheels of the Government economic machine. And also what it means to taxpayers. May I go to the area of operating costs. I think it was in Washington last year, if I recollect clearly, that the Minister for Finance woke up to the realization that we had overpriced ourselves out of the market. Price is related not only to supply and demand but also to operating costs. The Government as the single largest employer sets the benchmark on wages, not the private sector. The Government imposes statutory payments, ie, indirect taxes, tariffs and fees, and the public buys utilities and services through statutory boards that are run by the Government. The cost of government is being supported by the private sector. And in the last five years this cost has ballooned. Recurrent expenditure per capita was $1,796 in 1979. This increased to $4,097 in 1984, representing an increase of 128% although the consumer price index rose only by 26.6%. Defence rose from $376 to $831 for every man, woman and child. Education rose from $194 per capita to $507, and Repayment of Public Debt from $543 per capita to $948. If you look into the Economic Survey, you will find that Government's salaries and wages, including CPF contributions, increased by 95% in the last five years.”
“There was the sorry affair of Keppel Shipyard, the Monetary Authority of Singapore and Jardine Fleming. It is hard to believe that Keppel took over Straits Steamship without seeking the approval of the Government when the acquisition involved several hundred million dollars. There is now worry over the Singapore Petrochemical Corporation in which the Government has a 47.5% shareholding. Government loans to the company have been converted into equity. It means that interest earnings have been forgone and the payback period is uncertain. There is the case of Multi-pak, another Government company, that has closed down after being in business for only six months. Then there was the attempt by two Government companies, Keppel and Intraco, to buy into a private commercial bank, although Keppel had already bought over a finance company. This time, fortunately, the MAS aborted the aggressive expansionist scheme of Keppel. I raise this point not to be critical of the Government for the sake of being critical but to hope that the Government will learn from the experience of other countries. The crisis of the Philippine economy today, as admitted by Prime Minister Virata of the Philippines, has been due in no small measure to the expanded role of the public sector in various sectors of the Philippine economy. And, worse still, there was a lack of accountability of government corporations. In the end the Philippines had to go cap in hand to the IMF and be chastised. The Economic Survey of 1984 is the most readable of the Surveys that have been presented to Parliament. Its authors are to be commended, but I hope it can be written with less jargon if it is intended for a wider readership.”
“Mr Speaker, Sir, this Budget Session will be most memorable for the popularity of the Minister for Communications in this House and his unpopularity outside the House. So I do not propose to go over ground which has been covered by the Member for Leng Kee and the Member for Anson, excepting that I am trying to use this occasion to see whether there is a connecting thread for the downturn in the different sectors of our economy. In 1983 I warned the former Minister for Finance of the dangers of allowing statutory bodies, Government companies, wholly or partially-owned, their associates and subsidiaries, to encroach into private sector economy. I am glad that the Minister for Finance today has now resolved to solve the problem of burgeoning Government intervention in the economy and to keep a surveillance over the operations of the statutory boards, and government companies in addition. Public sector finance is not truly represented in our annual budget discussions, as the Budget excludes reporting of revenue and expenditure of the statutory boards and government companies which have been financed by Government loans that in turn are raised from taxes. Government enterprises, with the knowledge that they are government-backed, are tempted to flex their corporate muscles. Besides the statutory boards, there are 89 companies and an unknown number of subsidiaries and associate companies. They, if unchecked, can so dominate the private sector until Singapore's economy will resemble a centralized economy. None of us in this House, not even the Minister for Finance or the Cabinet, can guarantee the future performance and behaviour of statutory boards and Government companies.”
“A last supplementary question, Sir. Does the Minister not consider that there is a contradiction in his campaign to conserve energy while at the same time Orchard Road and Chinatown are being lit up?”
“Mr Speaker, Sir, to beat the clock, may I ask the Minister, very quickly, what dividends have been paid by the PUB to the Consolidated Fund considering the fact that the Telecommunications Authority of Singapore is expected to pay $40 million this year? Dr Tony Tan Keng Yam: Mr Speaker, Sir, I do not have the information at hand, but I will give it to the Member subsequently.”
“I have, Sir. Mr Speaker, Sir, will the Minister, first of all, assure us that, in view of his Budget speech, there will be no increase in water rates?”
“Is the Minister saying that there is no central body to organize the building of Government buildings? Perhaps the responsibility should be shared between the Ministry of National Development and the other Ministries and the Ministry of Finance. But are these prices which the Minister has given building prices, or do they exclude land cost?”
“Sir, may I take up the second part of the question which the Minister answered just now. He has given us the estimated cost of several Government buildings. May I ask whether the costs of these buildings are covered by the Development estimates? How are they financed?”
“Mr Speaker, will URA be able to sell Marina Land to finance the development of the MRT?”
“Mr Speaker, Sir, I am amazed that successive sales were carried out annually from 1976 to 1982. Has the URA any master plan in putting forth these sales which thereby determine whether so many pieces of land should be put out in any period of time? Or are these sales dictated by the need to earn revenue from land sales?”
“Mr Speaker, will the Minister assure us that in future URA sales, the URA will publish the prices of tenders which have been won, and the price of land tendered for will be published?”
“Mr Speaker, Sir, I am a bit puzzled. In the 11th sale in 1982 the ratio of land price to total investment was 60%, meaning that the remaining 40% was due to the cost of building. Could the Minister explain why the ratio has suddenly doubled from 32% in 1981 to 60% in 1982?”
“Can the Minister elucidate the great variations in the ratio of land price to total investment?”
“If you say they cannot withdraw until 60 or 65, their children had it. It is as simple as that. With these words, Mr Speaker, I pass the debate to abler Members of the House. [Applause] Resolved, "That the debate be now adjourned." - [Mr E. W. Barker].”
“I have withdrawn mine. But in fairness to my constituents and to others who have not yet reached this age, I ask "Do you wish me to speak, or do you wish me to be dumb?" They say, they are against this. So I have to explain to them the problems that they will be facing and, most importantly, some of them tell me this. They are not going to squander their money on world-wide trips to see Mickey Mouse in Disneyland. Some married late. By the time they retire at 55, their children are due to go to junior college or the university. Many of them are banking on this sum of money to cover the cost of their children's higher education. Some hon. Members: Hear! hear!”
“" Does that mean that the Government is really supporting all these aged? On the one hand you say, "No, no, it is the family members who are supporting the aged parents." So where does the CPF come into play? This is why this document - it should be a green paper, not a blue paper - would have been better if minds had been applied to the whole problem, so that we are set at ease about your thinking. Or are you trying another fast one? Mr Speaker, as a senior citizen, I am beyond the decision of the Committee whether my withdrawal age should be 60 or 65.”
“This is the nub of the problem - the credibility of the management, gradual encroachment into the purpose of the CPF which was instituted really to provide for retirement. Again, there are many permutations on how people retire. Assuming that the CPF is like a vast insurance company, and then it hands out an annuity. I am old. It may well be that at 60 or 65 I am no longer employable. I may be senile, nobody may want to employ me. So the argument of the Member for Kebun Baru is weak there. It does not mean that employers, by just raising the retirement age to 60 or 65, will find that there will be increased productivity. The man may be a menace to the company! There are many of them in Woodbridge Hospital. I am not really convinced on that score. You have, again, other types of contributors to the CPF. You have got expatriate workers, you have got Malaysian workers. Nowhere in this Paper is it spelt out what will be the fate of the balances of expatriate and Malaysian guest workers. Will Malaysian workers, who are now eligible to withdraw at 50 and 55 years old, be affected if, assuming today, we agree that the withdrawal age will be raised to 60 or 65? I think your mind must be applied to see the problem as a whole, and how this problem affects others. The aged guest workers are not going to stay here. So let them take their money when they go home. If that is permissible for expatriate workers, why should it not be permissible for your own workers? That is where I see the contradiction in the management of the CPF. I am not against the Minister for Health spelling out future problems, but I would like to ask him, "Is it true, really, looking at these statistics, the dependency ratio is so many percent?”
“The statistics show very clearly that 43% of your senior citizens preferred to live with son and daughter-in-law and only 12% with daughter and son-in-law. But we are at the same time pursuing a family planning campaign. So if you have two daughters, you had it. Your chances are reduced to 12%. So do you understand now why the Chinese persist in having a son? Mr Speaker, I think fundamental principles are being breached. The fundamental principle is this. The CPF is really a fixed deposit or a loan to Government, which can be redeemed at a fixed date when the contributor is 55 years old. If I were to put this sum of money in a commercial bank and, on the due date I go to the bank to withdraw the money, the manager says, "i am sorry, Dr Toh, you will have to come next year", there will be a run on the bank! It is as simple as this, that the CPF has lost its credibility, the management of it. This is fundamental. You were taken by surprise by Medisave. Then they say, "6% of your Special Account will be kept for Medisave and you cannot withdraw that, even if you were to die." Now I ask the Minister for Health, and I asked him last time, whether his word is binding on future Ministers. Neither will the Minister for Labour's word be binding on future Ministers for Labour. Can any Government or any Minister guarantee that in future years a law will not be passed that will say, "All Special Accounts in the CPF cannot be withdrawn until you die"? Your Special Account now is up to 10%; 6% Medisave, 4% for what? So unless you use the CPF to buy property, your money is in real danger of being kept under lock and key by others, not under your own lock and key.”
“As the deposit in the CPF grows and grows, our balances in the CPF will grow, and when we withdraw that sum of money, will we suddenly have overnight millionaires as retirees? How many of them are there? Will it generate inflation? I do not think it will be, because if two-thirds of the balance are withdrawn for purchasing houses and only one-third for retirement, therefore it is less of a concern that raising the age to 60 or 65 will mean that we will be controlling consumption by the private sector. What is irksome is this: that the Government is using people's savings and telling them how to spend their savings. That is the nub of the problem. I think everybody recognizes there is a problem for the aged. The Minister for Health says so. Only they do not believe in his methods of solving this problem. There are homes for the aged. I have a kongsi for the aged. One of my members who was a worker in the PSA had withdrawn his CPF, but it was so small that even if he were to spend $100 a month, it would have vanished in three years. It was that small. This was the reason why he is living in my kongsi for the aged. We need to clearly define the boundaries within which the CPF will be used for retirement. We must spell that out. You just cannot say, "Let us raise the withdrawal age to 60 or 65." It must be 60. It must be 65. Now, at which age? This Paper does not contain any calculation at all to say what will happen if it is withdrawn at 60, or what will happen if it is withdrawn at 65. If I were a person who has no relatives, if I were a widower with no children, all the assumptions made by this Committee - that you will be looked after by your children - then I do not qualify under any of these grounds.”
“The burden on the employee is that his take-home pay becomes less, and since his take-home pay becomes less it is an issue for union bargaining, (house-unions now) to bargain with the employer for more pay. The Minister for Finance is extremely concerned with the amount of money being locked into CPF, reducing the liquidity in commercial banks. I think that is a very genuine concern which, as the Minister for Finance, he ought to be very worried out. He should not allow his Minister for Health to dip into the CPF or to increase the CPF, because this is a social problem that is popping up. It must be thought out in breadth. We must have a vision which encompasses breadth. Do not have tunnel vision. I would like to know that we have got telescopic vision. But, Mr Speaker, I have never had the problem of tunnel vision, and that is, looking at a problem along just one line without bothering, or researching in depth, the impact on other areas. Let us look at the problem in general. Over the last five years, 1979 to 1983, an average of 8.4% only has been withdrawn from the balance due to members who contribute to the CPF. Only 8.4%, that is if they retire at 55. I would like to put this question to the Minister for Health or the Minister for Labour who is responsible for administering the CPF. What would this percentage be if the withdrawal age were raised to 60 or 65? Of this amount that was withdrawn, two-thirds were spent on buying houses, mainly HDB flats. So only one-third was spent on retirement. In 1983, $1,718 million were withdrawn but only $374 million were spent on retirement. So the problem we should ask ourselves is this.”
“" But here, he came across a hornets' nest. It is because, Mr Speaker, the problem is that those who attempt to seek a solution to the problems of the aged are civil servants who draw pensions to which they do not pay anything. They get a gratuity, two-thirds, and pension, one-third. So it is quite easy then to handle other people's problems by touching their savings. Pensions do not come from savings. Supposing, if we did convert the entire cost of running the civil service on taxes and savings, I believe you would have a different report today. There are many countries that are facing this problem. It is not unique in Singapore. No political problem is new for Singapore. And this is a problem that has been encountered by bigger societies and bigger economies than ours. They have employed devious ways of how to allow those who are ageing to retire gracefully and in security without becoming a pauper. Why, in America, there is even a scheme in the private sector which permits a retiree to donate his entire savings to a company and he is posted to a village where he can retire until he dies. That is a very expensive village. It is not meant for those with small CPF savings. This problem of touching the CPF should be related to the use of the CPF, the management of the CPF and the contribution of CPF. I have repeated, time and again, that the CPF, having risen now to 50% of wages, is becoming a vexatious burden, not only to the employee but also to the employer. The employer is now paying 25% of salary towards the CPF, plus 2% payroll tax, plus 4% Skills Development Fund. That makes 31% cost on payroll alone. Of course, if there is an increase in salary from NWC recommendations, all these taxes go up.”
“Mr Speaker, Sir, I believe, as a senior citizen, I am qualified to say a few words on the CPF. The Member for Kebun Baru has given an exposition from the viewpoint of the NTUC, and I do not wish to cover the ground that he has already made. There is no doubt that we should be aware that there will be a problem of the aged in the years to come, whether in the year 1990 or the year 2000. But it is important, therefore, that we should try to divorce a proposition that has been put forward by the Minister for Health, trying to explain to us what the size of this problem will be and the means to solve this problem. Unfortunately, the Report of this Committee on the Problems of the Aged has tried to solve this complex problem by touching on the Central Provident Fund as if that were the only solution, very much the way that the Minister for Health went about trying to solve the problems of the sick by using Medisave and taking off 6% from the CPF to collect monies which is spent by patients in the hospitals. The reason for all this uneasiness on the problems of the aged is related to the CPF. The problems of the aged have been forgotten because you are touching people's savings. I related in the debate on Medisave how the Government could cover the cost of the entire operations of the Ministry of Health from revenue earned by the Ministry of Health plus the 2% payroll tax, without touching on savings. You have created a precedent. You have touched savings for Medisave. I abstained from the vote. Others have agreed. So the Minister for Health says, "Well, I have got one nut. Now I can get two nuts. How do I solve the problems of the aged? There was no great opposition to touching the CPF. Now I shall solve the problems of the aged by dipping into the CPF.”
“Mr Speaker, Sir, I thank the Second Minister for Law for his assurance that he will re-examine section 125A. I am aware that section 125A(l)(a) has been cast from British practice. But if I were right, reading page A43 of the submission given by Dr Pillay, it is very clear that under British law it is a particular person who is debarred from becoming a director and who is disqualified because of the nature of his practice in the company. But under our section 125A(l)(a), the burden in fact is imposed on even blameless directors who are now obliged to apply to the court for leave to be a director or to participate in the management of a company. I think there is a vast difference between the two. I accept the fact that this is copied from British law. But I think there is a distinct difference between British law and our version of the British law.”
“I think this is a very fundamental idea which may be new to Singapore but which is not new in other Parliaments, and it may well be worth thinking about. Apart from this suggestion, I would urge the Minister for Law to withhold implementation of section 125A until further consideration has been given to the implications of this section.”
“I may be a director in a pig farm. It is not my fault that my farm is now being closed. It is Government policy. My company has been liquidated by the Government. At the same time I may be a director of a feed-mill which supplies feed to my pig farm as well as to other pig farms. But because all the pig farms have been liquidated by Government policy, I am held responsible and, therefore, I can no longer be a director of any other company for five years. Where is the equity? In law, you need to have equity. There is no equity at all under section 125A. The Minister himself has admitted. It is not an exact law. But laws are supposed to be exact, accurate. I cannot say with greater vehemence than now that it is absurd for Parliament to be presented with this piece of legislation which will come into law today when so little time and publicity had been given to what was going on in the Select Committee on the Companies Act. The news media have been full of news about the Central Provident Fund. Yes. But there has virtually been a silence on the Companies Act. Singapore is built by companies. It is astonishing, really astonishing that thousands of directors and thousands of little companies in Singapore have no idea that their fate and future are being decided by this piece of legislation, all simply because of the lack of publicity in the newspapers or appalling ignorance of the media of what is going on. If the media is permitted to report and cover proceedings of the House, I would advocate that the media equally be allowed to cover proceedings of Select Committees as they do in the United States where Congressional and Senate proceedings are open and faithfully reported so that the population are educated in the process of law.”