Tony Tan Keng Yam
Singapore
“One of the problems which they have in Britain is that, up to recently, they have no means to stop people coming into Britain and preaching in their mosques messages of hate, jihad and violence. Here, MUIS monitors our mosques very carefully, what is being preached at Friday prayers.”
“Sir, I am not going to enter into a debate about whether the war in Iraq is justified or not. That is another issue. But I would say, Sir, that with all the measures which have been taken over the last three years since 9/11, including the war in Afghanistan, the war in Iraq, the arrest of the Al Qaeda leaders, the detention of the JI lea…”
“Sir, we are extending the CCTV coverage in our bus stations, MRT stations and other places in Singapore where people congregate. It is a part of life now. For example, at our MRT stations, all our CCTV cameras are those where the films are recorded and we can analyse them. Surveillance is one of the effective ways of deterring terrorism.”
“The Muslim community in the UK has contributed to the healing process and has worked hard with the other communities to strengthen the moderate voice of Islam.”
“I would say again, Sir, that what we should do is when you see something which is suspicious, if you see a bag which is left unattended, report to some authority. We will look into it. We have to. And I am glad that we are getting more reports today, be vigilant.”
“It could reach here. We have to live with it. We support the war in Iraq. We believe that it is good for us to join the coalition led by the US against terror. The fight against terror is worldwide. We cannot opt out by not taking part. We are in it. We must continue whatever the difficulties.”
The complete record
Every one of 1,158 lines we hold for Tony Tan Keng Yam, in date order, each linked to its source. Free to read, in full, without an account. Page 21 of 24.
“In 1960, 9% of our population were living in HDB flats. All were rented. None were owner-occupied. By 1981, 69% of our population were living in HDB flats, 25% were rented and 44% were owner-occupied. In terms of actual number of houses and flats including the public and the private sectors, I have not been able to obtain comparable figures which go back as far as 1960, but I am able to give the House some figures which contrast the situation in 1970 as against 1981. Between 1970 and 1981, the number of bungalows, semi-detached and terrace houses increased from 39,676 to 43,538, an increase of just under 10%. The number of private flats increased from 10,008 to 16,321, an increase of about 63%. The number of HDB flats, however, increased from 120,138 to 337,198, an increase of some 180%. And we are going to build a further 290,000 flats for our citizens by the end of this decade. This is why for FY 1982 we have set aside a total of $2,253 million or one-third of the entire development budget for public housing. Let me contrast our housing situation in Singapore against that of a fairly similar city state, i.e. Hong Kong. About 40% of the Hong Kong population is housed by the Hong Kong Housing Authority as compared with 70% of our population in Singapore being housed by the HDB. Most of the Hong Kong housing are on rental, and the rental charged by the Housing Authority varies. The older flats which were built earlier and which have communal toilets, not communal kitchens, are rented out at a low rental while the newer flats with its own toilets are rented out at a higher rental. The Hong Kong Housing Authority also has its own home-ownership scheme and sells its flats at its new towns at HK$480 per square foot.”
“This has risen many-fold in the last two decades. The statistics show that per capita Government expenditure on social services rose from $191 in 1960 to $1,209 in 1981, an increase of over six times. These figures have been adjusted for inflation. Domestic electricity consumption per capita is also a convenient indicator of the level of affluence in a society. In Singapore, this has risen from 109 KW-hour in 1960 to 447 KW-hour in 1981, again an increase of over four times. On a more mundane level, if we use as our measure the ability of Singaporeans to acquire consumer comforts like television sets and telephones, Table II shows that Singaporeans have benefited tremendously over the last 20 years. In 1963, when television was first introduced to Singapore, our population was 1,646,000 and there were 30,838 TV sets in the whole of Singapore, i.e. one TV set for every 53 Singaporeans. Although our population had grown to 2,443,000 by 1981, the number of television sets in Singapore had grown to such an extent that last year there was one TV set for every six Singaporeans. No wonder people no longer go to our community centres to watch television. They can now do so in the comfort of their own homes and, most likely, record on videotape their favourite Hongkong serials. Similarly, in 1960, there was one telephone for every 27 Singaporeans whereas in 1981 the ratio was one telephone for every three Singaporeans. The provision of public transport facilities has also shown a similar improvement. In 1960, for every bus in Singapore there were 1,230 Singaporeans whereas in 1981 each bus served, on the average, 352 Singaporeans. Perhaps the most dramatic indicator of the improvement in the standard of living of the ordinary man is shown in our public housing statistics.”
“20% subtract 10% (for inflation taking the rate for foodstuffs) and 4% (for increased CPF contribution) which as pointed out by the Member for Punggol still belongs to the worker, still leaves at least 6% for real income growth for the lower income group. I now turn to more serious matters. The Member for Anson has said that he will not support the Budget because the fruits of Singapore's economic growth have not been equitably shared with the workers. This is a grave allegation and would be an indictment against any government if it had any validity. It is thus all the more deplorable for the Member to seek to deceive this House and the general public by making a statement which, he must know, is totally untrue. With your permission, Mr Deputy Speaker, Sir, may I request the Clerk of Parliament to distribute an Annex (Cols. 1027 - 1028) which contains some statistics showing how the common man has fared under the PAP Government in the 21 years since the PAP came to power. [Copies distributed to hon. Members]. Table 1 shows per capita GNP, private consumption and Government expenditure on social services for the years 1960, 1970 and 1981. The figures have all been adjusted for inflation at 1981 prices and are, therefore, comparable. Members will see that the per capita GNP has risen from $2,649 in 1960 to $10,801 in 1981, an increase of over four times in 21 years. During the same period private consumption per capita rose from $2,266 to $6,317, an increase of about three times. Annex - DATA ON STANDARD OF LIVING INDICATORS (Cols. 1027 - 1028) Government expenditure on social services (i.e. health, education, welfare services, etc.) is a good indicator of the level of spending which Government has incurred to provide social benefits for our population.”
“The Member then went on to claim that, contrary to what was stated in the Budget Statement, the lower income groups did not enjoy any rise in real income and that he believed that, for many of them, real income actually declined last year. He based his claim by subtracting the inflation rate of 10% for foodstuffs and the additional CPF contribution of 4% from the rise of 14% increase in nominal income of our manufacturing sector workmen. Mr Speaker, Sir, I am truly astonished that a person, who presents himself as an alternative leader of the government, does not know the most elementary principle of economics, i.e. that you cannot subtract oranges from apples and get lemons. In the last three years, the NWC has recommended wage increases in the form of a fixed quantum plus a percentage. Last year it was $32 plus 6 to 10% and a further merit increment of 2%. The fixed quantum was intended precisely to benefit the lower income group. A $32 increase for someone earning $200 per month represents a 16% increase. Taking into account the additional percentage component of the recommended wage increase, the total wage increase for the lower income group was well over 20% for each of the last three years. A survey, conducted by the National Wages Council, shows that 90% of all firms, covering 96% of all employees in Singapore, had implemented the NWC first tier award. So, if the Member is focusing on the lower income group, he should take this wage increase of 20% instead of the 14% which represents the average for all workers, the high income as well as the lower income group.”
“So since the Government is unlikely to lose what it will not get in the first place, why not go back to the original reason for the exemption for residential properties and make sure that the family of the deceased will not have to sell the family home in order to pay estate duty when the breadwinner dies? This is what we have ensured by the concession given in the Budget. Some Members have also commented that the decision to exempt CPF contributions from income tax and estate duty will not be of much benefit to the ordinary worker. Now, unlike bank deposits or POSB deposits, contributions to the CPF are mandatory. It does not seem to me to be fair, first of all, to compel a person to contribute to the CPF and then to tax him on his contribution not only during his lifetime but also when he dies. The concession on CPF contributions is, therefore, to correct an inequity. I would assure the Member for Ang Mo Kio that before proposing this concession, I consulted the Income Tax Department and they have assured me that they are fully capable of drawing up rules to plug the type of loopholes which he has mentioned. Knowing the Income Tax Department, I am sure we can have full confidence in them. Life insurance premiums, on the other hand, are not mandatory and, I think, do not merit such generous treatment. I now come to the comments made by the Member for Anson. In his speech he has claimed that the concept of p"caring society" was first put forward by his Party in 1976. Such a claim reminds me of the story of the rooster who noticed that whenever it crowed every morning, the sun would rise, and then proceeded to deduce that its crowing was the cause of the sun's daily rising.”
“Based on the increased prices of property in 1981 when townhouses, semi-detached houses, even some flats, cost more than $600,000, we would have to raise the limit this year, say, to $800,000 or even to $1 million. This could have been made an annual concession by the Minister at each Budget debate. Looking further ahead, the question which we should ask ourselves is whether it is wise for Government to play a game of "catching up" with the property market and increase the exemption limit each time the property market goes up. On this basis, logically, if the property market should go down then the exemption limit should be decreased as well. Furthermore, how much estate duty does Government actually receive in respect of estate duty on large estates where the main asset is an expensive residential property? The answer, perhaps not surprisingly, is insignificant. For the whole of 1981, for example, the Income Tax Department had only one case of an estate where the value of a single residential property exceeded $600,000 and even then the amount in excess of $600,000 was by a relatively small amount. Perhaps this may be because the unfortunate taxpayer happened to die at the wrong time of the year. I think the hard fact of life is that, whatever be the limit which is set, whether it is $600,000 or $800,000 any taxpayer who can afford to own a home of, say $2 or $3 million should be shrewd enough to work out either by himself, or with the help of his tax advisers, a suitable tax plan so that on his death the value of his house does not come within the ambit of estate duty.”
“The Member for Thomson has also suggested that hospital fees or expenses for an individual's aged parents should be tax deductible. As I have said, we have got to be careful about increasing the tax reliefs as otherwise Pandora's box will be opened and there will be no end to the number of reliefs which can be claimed. The exemption for residential properties from estate duty of $600,000 or the full value of any one residential property (whichever is the higher) has drawn comment from a number of Members. Presumably they feel that this exemption will unduly benefit the rich and create a loophole through which Government may lose considerable revenue which could be obtained by levying estate duty on the estates of those who die leaving behind valuable homes worth say, $3 or $4 or $5 million. Let us consider some of the facts regarding the collection of estate duty. During the last few years there were on the average some 12,000 deaths each year and, roughly speaking, about 2,700 cases each year were referred to the Income Tax Department for the purpose of estimating the estate duty. Not all of these cases which were referred are liable to estate duty, and it is interesting to note that, notwithstanding the increasing affluence of our society, the total number of cases liable to estate duty has fallen steadily over the last few years, ranging from 754 in 1977 to 581 in 1980. Now, the purpose of giving specific exemption for residential properties is to ensure that every family should own its own home and, if the breadwinner should unfortunately die, then the widow and her children should not have to sell the family house in order to pay estate duty. This is why the exemption limit has been increased over the last few years to keep pace with rising property prices.”
“The total tax collected from these 69,000 individuals, who represent 16% of the tax base, was $820,000 or 0.14% of the total tax collection. On the average, each of these individuals paid $12 in tax or $1 per month. In contrast, 12,300 taxpayers had a chargeable income of $50,000 or higher. Their marginal rate of tax was 34% or higher. These 12,300 taxpayers, who constitute 3% of our tax base, paid a total of $316 million in tax, or 54% of the total tax collection. On the average, each of these individuals paid $26,000 in tax. It is thus a complete distortion of the facts to imply that our income tax puts an unduly heavy burden on those who are not well-off. We must, however, not swing to the other extreme and increase our tax rates to such an extent that individual incentive to strive and excel is extinguished. Our tax system must reward effort. Experience in a number of developed countries has shown that where personal income tax is set at exorbitant rates, workers' attitudes, initiative and incentive to work deteriorate and this contributes to the disintegration of the social and economic framework of those countries. Now, I will say a few words about tax reliefs. These are not to defray the full cost or expenses of supporting a wife, children or aged parents. They are meant basically as an indication of the Government's inclination and policy decisions. I do not think it is right that we should regard the tax relief of $1,000 for a wife as an amount which we think is enough to support a wife. There were also a number of tax suggestions which have been made by the Member for Kaki Bukit. He has proposed that contributions by RC members for community development projects should be tax deductible.”
“Tax revenue constitutes some 73% of Government's total revenue. The tax revenues go to finance Government expenditure, to provide social and economic services as well as basic infrastructure and development projects. As the scope for Government services expands, the expenditure must also increase and the increased expenditure can only be covered either by broadening the tax base, increasing the rates of existing taxes, or introducing new taxes. By and large, I believe that the most equitable way is to expand the tax base rather than to increase the tax burden of existing taxpayers or, worse still, attempting to obtain more and more tax from a smaller and smaller base of taxpayers. Income tax has always been the mainstay of our tax revenue forming just over half of total tax received. Corporate taxes contribute some 76% of the total income tax collection. There are two reasons for this: firstly, income tax for individuals has been reduced substantially over the last few years, and secondly, the success of our financial and economic policy has led to higher economic growth which has, in turn, resulted in higher collection of corporate income tax. The structure of our income tax rates for individuals is still steeply progressive in nature. Those who earn more pay more, those who earn less pay less. And many people pay no tax at all. The number of individual taxpayers in the files of the Income Tax Department comprise only 50% of our workforce. For the Year of Assessment 1981, the Income Tax Department had, up to December 1981, completed assessments in respect of 445,000 individual taxpayers and the total income tax assessed was $587 million. There were 69,000 taxpayers, with a chargeable income of less than $1,000, paying the lowest marginal tax rate of 4%.”
“How soon the wage revisions for the Daily-Rated grades will be implemented depends really on how soon the unions can submit their claims and how soon the Ministry and the unions can come to agreement on these. For Divisions II and III, as well as Division I, services, the salaries of which have yet to be revised, the Ministry of Finance expects that all these can be finalized by the end of June, barring no unexpected delays. Implementation will, however, depend on how soon agreement on the proposed revisions can be reached with the unions where the proposals are subject to claims by or negotiations or consultation with unions. New salaries which have been settled with the trade unions for any scheme of service will be brought into operation without waiting for other schemes. But it will not be possible to backdate these new salaries to 1st April, 1982. A basic Establishment principle is involved, namely, that new terms and conditions of service should be effective either on the date of agreement and approval or on the first of the month following approval of those terms and conditions. To change this basic principle is to invite complications in future salary revisions. Some Members have expressed reservations concerning the tax changes proposed in the Budget. Before I comment on the reasons behind these tax changes, I think that it will be useful to inform Members about the general thrust of Government's taxation policy. It is an unhappy but unfortunately inevitable aspect of modern life that death and taxes are the only two certainties in a person's life. Unless Government is going to bankrupt itself by issuing ever-increasing amounts of public debts to meet recurrent expenditure, taxes are a necessary source of revenue for Government to finance its outgoings.”
“6 1979 4.0 13.1 Before I go on to other matters, I would just like to make one clarification regarding a point made by the Member for Whampoa. He has mentioned the sum of $1,720 million which he said was loaned to the Petrochemical Corporation of Singapore (PCS). I would just like to clarify that this sum of money included loans given as lines of credit to DBS, the Ship-Financing Scheme as well as the Capital Assistance Scheme for the Construction industry for FY 1982. The amount which was loaned to the PCS was actually $152 million. Let me now deal with an Establishment matter before I pass on to the taxation policy of the Government. The Member for Khe Bong and the Member for Ang Mo Kio have raised the issue of the salary revision for Divisions II, III and IV officers consequent on the recent salary revision for the Administrative and Professional Services. I should like to inform them that the Ministry of Finance has received proposals from the Amalgamated Union of Public Employees (AUPE) for a new Collective Agreement to cover Division IV officers. These included proposals to revise salary scales for Division IV. Most of the claims for the new Collective Agreement have been settled and the claims on revision of salaries for the Division IV grades are now under discussion. If the Ministry of Finance and the AUPE can come to agreement on these by the end of this month, the salary revisions for the Division IV grades could also be implemented on 1st April, 1982. The Collective Agreement for Daily-Rated grades expired at the end of last year. The unions representing the Daily-Rated grades are expected to submit their claims very soon for a new Collective Agreement, including claims for wage revisions. Following receipt of these claims the negotiations can start.”
“In managing the exchange rate of the Singapore dollar, the Government has to take into account not only the impact of external monetary developments, especially large capital inflows on the liquidity of the domestic system and domestic inflation rates, but it also has to consider the adverse effects of the appreciation of the Singapore dollar on the competitive edge of Singapore's exports of goods and services. As a result, there was a lower growth in domestic money supply in 1981. Money supply (M1) rose by 12% in 1981. The increase was on the low side when compared with the nominal GDP growth rate of 15.8% in 1981. There were some large capital inflows into Singapore during the last quarter of 1981. To stabilize the Singapore dollar exchange rate, more money and foreign exchange market intervention was conducted by the Monetary Authority of Singapore. This gave rise to the higher rate of increase of money supply during the period. However, this was corrected in January 1982 when money supply grew at a more normal annual rate of 13.5%. About 23% of the increase in bank loans went to the building and construction industry. This was due to the continued expansion of that industry, which recorded a growth rate of 17% in 1981. However, it is somewhat a guess to say that loans given to professional and private individuals (16% of the overall increase) and financial institutions (20%) were mainly used for speculative purposes. In an open economy like Singapore, the link between the increase in our money supply and our inflation rate is tenuous at best. Money supply, in fact, increased sharply in those years when we had the lowest inflation rates. For example: Inflation Percentage Increase Year Rate in Money Supply 1975 2.6 18.6 1976 -1.9 18.1 1977 3.2 10.5 1978 4.8 11.”
“My colleague, the Minister for National Development, will be speaking in detail in the Committee of Supply on Government's land policy and its effect on property and construction prices, At this point I should just like to say that conditions in the first half of 1981 were somewhat unprecedented with a construction boom coinciding with a drying up of workers from our traditional sources and a temporary shortage of building materials as a result of curtailment of supplies from our regular overseas suppliers. The Ministry of National Development has taken steps to see that building materials will be in plentiful supply in Singapore this year, and with more mechanization in the construction industry plus expanded training programmes, we can look forward to more stable prices for flats and houses in the next few years. The Member for Whampoa has commented on the effect of exchange rate and money supply policy on the inflation rate in Singapore. On the whole, the Singapore dollar appreciated by about 8.6% against a basket of currencies weighted according to the proportion of Singapore's retained imports. In 1981 the Singapore dollar appreciated 28% against the pound sterling, 17% against the Deutsche Mark, 13% against the HK$, 11% against the Yen and 3% against the Swiss Franc. Also in 1981, the US$ remained fairly strong against most major currencies as a result of the high US interest rates. However, the Singapore dollar, in fact, strengthened even against the US$.”
“Prices of goods and services are at present being monitored by a special Committee on Profiteering and Inflation, whose members are drawn from various Government departments and Ministries. The Committee meets regularly to monitor the inflationary situation. The Committee pays special attention to essential commodities such as rice, sugar and other food items. When the price of pork began to rise in the latter part of last year, the Committee decided that the most effective way to ease the shortage of supplies would be to allow imports of pigs from farms in Malaysia and Thailand which could be certified as disease-free. As a result of the action taken, the price of pork has since begun to decline to more tolerable levels. The Committee will continue to keep a close watch on prices and our machinery is sufficiently effective for us to do this task without the necessity for me to have regular conversations with housewives. The primary aims of this Special Committee are to: (a) seek cheaper sources of food and other essential commodities. (b) prevent price-fixing and other restrictive trade practices by businesses and trade associations. (c) develop a more effective consumer education programme. Members will have observed that prices continued to go up until January this year because of Chinese New Year, but last month our Consumer Price Index showed its first decline. Rice, pork, fish, eggs, vegetables and sugar were cheaper in February than in January. I am confident hat this trend will continue and that our inflation rate for 1982 will be considerably lower than last year.”
“It suffices for me to say that I am in the unusual and happy position of being able to agree with both Members. To my mind, the crux of the issue is Productivity; whether we can through more capital investment (including the use of industrial robotics as mentioned by the Member for Kampong Kembangan), expanded manpower and skill upgrading programmes and whole-hearted cooperation between workers and management, achieve our targetted productivity growth of 6-8% per annum for this decade. If we can make the leap to sustain high productivity growth, then we will be able to grow at 8-10% per annum as advocated by the Member for Leng Kee but without incurring the problems of an overheated economy and increased inflationary pressures, as has been graphically described by the Member for Whampoa. If, on the other hand, our economic restructuring effort fails and we are reduced to obtaining economic growth through the production of more and more low-skilled, low value-added goods, then we will, of course, have to import more and more foreign labour with ultimately disastrous consequences for our economy and our society. The task that faces all of us, whether we are politicians, civil servants, private sector employers, or ordinary workers, is how to make ourselves more productive in our work. Then we will have a good rate of economic growth, low inflation and steadily decreasing reliance on foreign labour. This is the economic challenge that faces us in the 1980s. As we are a small and open economy, we are vulnerable to imported inflation. However, I would like to assure the House that the Government is not sitting back and doing little to control inflation. In fact, the control of inflation is one of the Government's primary concerns.”
“Many chairmen and managing directors of companies simply delegate this task to their personnel managers or to their administrative managers without giving them the necessary commitment or support. More often than not, these well-meaning executives are not equipped with the knowledge or the expertise to carry out the total training function in their companies. As a result, they fall back on random selection of short courses for piecemeal training of some staff members. Aggravating the situation is the mushrooming of such short courses, many with short or more diluted training content. The SDF has nevertheless supported some of these courses when they meet special training needs of the employees or when they represent first-time training efforts of small employers. However, employers must be cautioned against over-reliance on such courses as they will not equip the employees with in-depth knowledge and skills for business upgrading or restructuring. The training infrastructure in Singapore is weak. There is a limited availability of good training programmes and a shortage of experienced trainers and training administrators. Senior management executives are also not familiar with the key aspects of the training function, The SDF is making a special effort in meeting these areas of need. More training-the-trainer programmes and courses on staff training and development are being organized, and these will be generously funded. The Member for Leng Kee and the Member for Whampoa have dwelt on the pros and cons of Singapore aiming for a high growth rate under present economic circumstances and their positions are somewhat different. I have discussed this subject at length when I spoke at the University in December last year and I shall not repeat the arguments in detail.”
“While the multi-national corporations were quick to come forward with applications for grants in the initial stage, our local companies have now responded very well. Local companies received 65% of the $57 million awarded in training grants as at December 1981. They also make up 70% of the recipients of the interest grants for mechanization. The third grant scheme, the Development Consultancy Scheme, is solely to assist local companies in obtaining external expertise to help upgrade their business operations and their training plans. Last October, the SDF Secretariat initiated a wide-ranging dialogue with the two Coffeeshop-Owners Associations on upgrading possibilities and financial support from the Fund. The two Associations now plan to commission a study on the impact of the increasing affluence of Singaporeans on their business and possible avenues for their adaptation and upgrading. I assure Members that the study will be generously funded by the SDF under its Development Consultancy Scheme. While the SDF has now got on to a good footing after a somewhat slow start, there are still a number of areas of misunderstanding and shortcomings. Many employers still view the Fund as a refunding operation to simply reimburse the levy collections to them. The specific economic restructuring objective of the Fund is lost in the employers' criticisms at the accumulation of funds or the slow dispensation of grants. The Member for Kebun Baru has commented on the unsatisfactory state of continuing training in Singapore. I believe the basic problem is that in Singapore there is insufficient senior management's commitment and involvement with staff training and development.”
“The significance of the efficiency improvement is best illustrated by looking at the cost of electricity. If the PUB had remained at an efficiency of only 29.9% in 1981 instead of 35.7%, the PUB would have to pay S$155 million more in fuel costs. Singapore's electricity system is monitored with the aid of computers. This enables the PUB to optimize its system operations in order to achieve better efficiency. In addition, power stations are being modified to enable the use of various grades of oil. This will give the PUB the flexibility to take advantage of price differences in the various grades of oil and, in so doing, to save on fuel costs. Several Members, including the Member for West Coast and the Member for Geylang Serai, have raised queries on the operations of the Skills Development Fund. From the outset of its operations, the SDF has actively sought to reach out to companies, especially the small and medium-sized ones, through their trade and industry associations. The SDF Secretariat organizes regular talks to explain the various SDF assistance schemes to the members of these associations. The SDF is accessible to all companies and firms which are registered and operating in Singapore. They can be from any sector of the economy. Grants are based on the individual merits of each application. There is no bias towards manufacturing or production-oriented training. In fact, companies in the non-manufacturing sector received 56% of the total training grants awarded as at the end of last year. There is also a separate technical committee for this sector to assist the SDF Council in the administration of the Fund.”
“The Public Utilities Board has recently set up an Energy Conservation Centre to advise consumers on energy conservation measures and to explain how to conduct energy audits and demonstrate efficient energy use. This centre is open to the public during normal working hours and is located in the PUB Building In addition, the PUB has established an Energy Conservation Division to coordinate energy conservation efforts of both the public and the private sectors. Since its formation in December 1981 the engineers of this Division have visited and have carried out energy audits of hotels, shipyards and industries to advise on energy conservation measures and the implementation of a systematic energy management programme. The PUB is also working very closely with trade and manufacturers' associations to promote energy conservation. The Energy Diagnosis Bus mentioned by the Member for Chong Boon and which is already implemented in Japan and Canada, works on the same principle as the assistance currently being provided by the engineers of the PUB. As Singapore is much smaller than Japan or Canada, the PUB will have to study whether such an approach is of value in Singapore. The PUB is also continually striving to improve its operational efficiency and to measure its performance by comparing itself with other public utilities. The PUB's generating efficiency has improved considerably over the last decade. In 1971, efficiency was 29.9%. In 1980, it has increased to 35.4%. Last year, efficiency rose to 35.7%. In comparing improvement in efficiency over the period 1971-1980, Singapore has improved by 5.5 percentage points, against 3.3% for Hong Kong and 0.2% for Japan in the period 1971-1979.”
“The Member for Chong Boon has suggested that this is now the right time for us to undertake a bold initiative to embark on a new export drive. He has urged the Government to reassess the need for a high-powered trade promotion agency such as a Trade Development Board. He will I am sure be pleased to know that this matter has been under active consideration by my Ministry over the last several months and the Department of Trade has been discussing the setting up of a Trade Development Board with the various Chambers of Commerce and the Singapore Manufacturers Association. I hope that we will be able to come to a decision on this matter before the end of this year. I am grateful to the Member for Alexandra for his pertinent comments on tourism in Singapore. Both the Singapore Tourist Promotion Board and my Ministry are aware of the problem of rising room rates and the rising cost of food and shopping in Singapore, As for hotel room rates, I believe that it is unwise for the Government to interfere and institute price controls. What we have done is to encourage and facilitate the construction of more hotels. By 1986, there will be an increase of more than 10,000 hotel rooms. Hotel room rates should begin to stabilize before long. Nevertheless, his suggestion that we should undertake a thorough study of our tourist sector is a good one. Although we know that shopping is one of our main attractions for tourists in Singapore, it will be necessary for STPB to keep track of the changing tastes and attitudes of the tourists who come to Singapore. The Member for Chong Boon has spoken at length on the need to conserve energy because the present oil glut may not last very long. I am sure that on that point we are all in agreement with him.”
“Other suggestions brought up by the business groups involve highly technical matters, for example, problems relating to section 44 of the Income Tax Act which deals with resident companies and the use of tax credits to encourage repatriation of foreign income to Singapore. Such suggestions require very careful study to work out the economic consequences of any changes. However, I would assure the Member that these suggestions will not be simply put into cold storage but will be further studied and perhaps, at a suitable time, they will turn out to be very appropriate. The problems of trade protectionism and the importance of increasing Singapore's trade were raised by the Member for Alexandra and the Member for Chong Boon. Their comments are indeed timely. With deepening recession in our traditional markets, trade protectionism will be one of the greatest dangers which will face Singapore in the 1980s as the developed countries seek to erect tariff walls and quotas around their own markets in a mistaken attempt to protect domestic jobs. The Department of Trade presently provides export promotion services to local manufacturers and exporters. These services include the organization of trade fairs and trade missions to promote Singapore products in overseas markets. The Department also maintains a network of overseas trade offices in New York, Los Angeles, Japan, Rotterdam, and Jeddah to assist local manufacturers in obtaining more business contacts in these countries. However, due primarily to constraints in staff recruitment, the Department has not been able to carry out its export promotion services as vigorously as we would like.”
“The NTUC delegation comprised union leaders and representatives who had direct contact with the workers in the factories and on the shopfloor. As might be expected, much of the discussion at these meetings did not relate specifically to tax changes but were concerned with the general business and social environment and issues which were of importance to each particular group. Some suggestions, for example, reduction in corporate tax, had a venerable history. I am sure that they must have been put forward year after year to successive Ministers who have been in charge of the Budget. The difficulty, of course, is that if we reduce corporate tax we will have to finance Government expenditure by raising income tax which, I am sure, would be unpopular with Members and their constituents. And if we do not raise income tax, then Government can only obtain adequate revenue to finance its expenditure by pushing up property prices and thereby profiting from the high premium on Government land sales, as in the case in Hong Kong. Again, this has its economic disadvantages. On the whole I am of the opinion that our rate of corporate tax at 40% is reasonable and is not unduly onerous to business. The tax burden on companies in Singapore is among the lowest of the countries in this region. Where certain sectors of our economy require special assistance, we have a range of tax incentives and concessions, for example, accelerated depreciation, pioneer status, investment allowances, special concessionary rate of 10% for offshore income which reduce the tax burden on companies. These are sufficient for the time being.”
“Mr Deputy Speaker, Sir, I should, first of all, like to thank hon. Members for their generous compliments and for the interest which they have shown in the Budget. Judging from the numerous comments and suggestions which have been made in this House over the last two days, Backbenchers must have gone through the Budget with a fine tooth-comb. Several Members have brought up points or questions which lie more properly within the province of particular Ministries. Such matters do not strictly belong to a debate on the financial policy of the Government and I shall deal with them only in so far as they impinge on Government's general policy. I hope that Members will raise these questions or comments again at the appropriate time in the Committee of Supply, when I am sure my colleagues in the Cabinet will be pleased to answer them in detail. For convenience, I shall divide my answers into two parts. The first part will deal with the economic policy of the Government and related issues. The second will deal with the taxation policy of the Government. The Member for Alexandra mentioned that some businessmen had expressed disappointment with the Budget because they had apparently expected more incentives or concessions to stimulate business, and he wondered if I had considered the views and suggestions, which were made to me during my pre-Budget discussions, to be, as he said, not very appropriate. In general, I found the discussions to be useful in that it enabled me and my officials to obtain direct feedback from the sectors concerned. Incidentally, to dispel any doubt on the part of the Member for Anson, I did not meet only with the Secretary-General of the NTUC.”
“We must not abdicate our moral duty to look after those who are weak, old and infirm. Children must not forsake their parents and grandparents. The aged and the weak need more than material care; they have emotional and spiritual needs which only their children and their family can provide. It is the responsibility of the young to look after the aged. After all, the success of children in later life is built on the sweat and toil of their parents. Children, therefore, owe it to their parents to enable them to live out the autumn of their lives not only with pride and dignity, but also surrounded by affection and care. 1982 will be a grim year. The problems of unemployment and protectionism in the industrialized countries will not abate. Indeed, we will be lucky if these problems do not escalate. Singapore will, before very long, be buffeted by the turbulence of the international economic storm, We can go under, or we can resolve to ride out the storm. To do this, we must keep trim and be prepared to lend each other a hand when the need arises. Then, when the storm subsides we shall surge forward again. Sir, I beg to move.”
“Let me give you a few examples: ____________________________________________________________ Pension Current Current Singapore Gross Increase $pm NSA Gross Allowance Pension $pm (%) $pm Pension $pm from $pm 1.4.82 $pm 7 35 42 75 82 40 (95.2) 100 50 150 75 175 25 (16.7) 650 20 670 75 725 55 ( 8.2) 800 - 800 50 850 50 ( 6.3) ____________________________________________________________ The Singapore Allowance will benefit 97% of the 7,685 locally domiciled pensioners. Those now drawing the lowest gross pension of $42 per month will get the largest percentage gain of about 95% while those with a gross pension of $150 will gain about 17%. The Singapore Allowance will cost the Government some $2.8 million, a 10% increase in the pensions bill for the year. Conclusion Mr Speaker, Sir, this Budget reflects our economy which is on an even steady keel. I have deliberately not introduced any new taxes or raised the rates of existing taxes in order not to increase the tax burden. However, I hope that Singaporeans will not look upon this Budget as an occasion for rejoicing but rather as a respite to enable them to consolidate and improve their position. To perform better we must upgrade our present skills and seek to acquire new ones. There is no other way and we must not be deflected from this task. We have to work as a team in our homes, in our work places, in our community and as a nation. Other than a favourable location, we have no natural resources. It is only by working harder than others that we can make a future for ourselves and our children. In the process of assimilating new technology and modern management methods, we must not forget the traditional values which have served as the bedrock of our society.”
“Mr Speaker, Sir, before I commence my concluding remarks, I should like to digress a moment and make a statement on Pensions. Pensions The Ministry of Finance has reviewed the New Singapore Allowance payable to certain locally domiciled pensioners. Following this review and discussions with the Pensioners' Association, the allowance is to be revised and will be called the "Singapore Allowance". It is fortuitous that the decision to revise this allowance has been taken at a time which allows me to announce it in this Budget Statement. Let me emphasize that it is not the intention nor should Members expect that pension revisions will be a regular feature of future Budget Statements. Pensions are payable for services rendered and are based on the length of service and salaries earned during such service. They are not and should not be related to the salaries of current employees. These salaries are determined on the basis of various factors, including the market rate for the job, which are quite different from the basis on which pensions are payable. From 1st April, 1982, the Singapore Allowance, which will replace the present New Singapore Allowance, will be paid to all locally domiciled Government pensioners whose gross pensions (i.e. pensions plus New Singapore Allowance) are less than $850 a month. Those who are drawing pensions, excluding the current new Singapore Allowance, of $775 per month or less will be paid a Singapore Allowance at the flat rate of $75 per month. Those drawing pensions of more than $775 per month but less than $850 per month will be paid the Allowance on a reducing scale such that the pension plus the Singapore Allowance equals $850 per month.”
“A transaction will also be disqualified if the leasing company is specially incorporated for the purpose of leasing the assets to the related companies. It is deemed to be so incorporated if, for any of its financial years, the value of its contracts entered with independent persons constitutes less than 50% of the total value of its contracts for that year. Sale and lease-back transactions are generally not accepted as genuine lease agreements. They are treated as loans rather than lease agreements. However, the Tax Department will accept sale and lease-back transactions as genuine lease transactions if the equipment is sold to the lessor before it is put to use in the lessee's trade and the sale is made at not more than the acquisition price which the lessee pays to the supplier. The lessee must also not be given capital allowances for the equipment before its sale to the lessor. Leveraged leases will be treated on an individual basis, upon application to the Tax Department. The Tax Department will give accelerated depreciation to the lessor on equipment leased to a leskee who would be eligible for the accelerated depreciation had he purchased the equipment himself. In the event of termination of a lease agreement, the lessor can continue to claim the accelerated depreciation allowances if the equipment is subsequently leased to another lessee who is also eligible for such allowances. Otherwise the depreciated vaue of the equipment will be wrinen off on a straight line basis over the remaining statutory life of the equipment. However, the terminal payment paid by the lessee to the lessor as compensation for terminating the lease will be subject to tax.”
“The Tax Department will in practice accept an independent professional valuation for the purpose of determining the fair open market price of the asset. It is important that a distinction should be made between a sale agreement and a lease agreement. For tax purposes, an agreement will not be considered as a genuine lease agreement if it provides for any of the following: (i) The lessee is given an option to purchase the asset during the lease period or at its expiry; (ii) Where there is no option to purchase, the lessee during the lease term or upon its expiry, acquires the asset at below open market price; (iii) The rental payments during the initial lease term constitute almost all or at least 90% of the acquisition cost and incidental expenses. Additionally, either the lease term is shorter than the useful life of the leased asset, or the leased asset is not marketable and is a special purpose property, and the lessor has no intention to recover the asset; (iv) The original lease agreement provides for extension or renewal of the agreement at less than 15% of the rental in the primary lease agreement; and (v) The periodic lease payments are uneven and/or exceed the current fair rental value. Transactions involving members of a group or related persons which are primarily motivated by tax manipulations will not be treated as genuine lease agreements. However, transactions which are done at arm's length are acceptable. A transaction is not considered to be at arm's length if a member of the lessee group lends to the lessor funds for the acquisition of the asset or guarantees any debt of the lessor incurred in connection with the lease.”
“Financial Leasing The lease financing market in Singapore, although not fully developed, is growing in importance and it is appropriate to lay down the broad tax framework for its operations. Financial leasing, as another form of financing, confers upon the lessor and the lessee tax benefits. For this reason, it is not only widely practised by companies genuinely engaged in lease financing but also by others, including related parties which enter into lease agreements for tax benefits. Various representations have been made by leasing companies and financial institutions for liberalization of the present tax laws in order to promote financial leasing in Singapore. One of the proposals is that the residual value at the end of the lease period should be nominal or of a minimum acceptable value. The basic tax principle has always been that if an asset is disposed of, it must be or so deemed to be sold at the open market price. Most major developed countries have adopted the same principle. Although it may be difficult initially leasing companies in Singapore should, in the course of time, be able to determine the open market price of the asset at the end of the lease period. Indeed, the profitability of the company will hinge largely on its ability to determine accurately the residual value of the assets. I have, therefore, agreed with the recommendation of the Tax Department to adopt the basis of open market price for determination of the residual value at the end of the lease period. A balancing charge will be imposed if the open market price is higher than the written down value at the time of disposal. If the open market price is lower than the wriften down value, then a balancing allowance will be given.”
“As a modest concession towards facilitating loan syndication activities in Singapore, I have agreed to allow ACU offshore loan agreements which were signed prior to 1st April, 1980 to be repatriated to Singapore without being liable to stamp duty as from 1st April, 1982. Road Tax on SBS and CSS Buses There is a need to rationalize road tax for buses that provide scheduled services, that is, those of the Singapore Bus Service (SBS) and the City Shuttle Service (CSS). Road tax on SBS buses presently is a flat rate of $6,500 per bus per annum, irrespective of the size or engine capacity of the bus. This helps to encourage the deployment of bigger capacity buses. All SBS buses have a passenger capacity exceeding 46. The average passenger capacity is 65. In comparison, the road tax on CSS buses ranges between $400 and $1,600 per bus per annum, depending on the passenger capacity. CSS buses are smaller with passenger capacities of between 30 and 46. I have decided to harmonize the road taxes to a uniform rate of $5,500 per bus per annum for all SBS and CSS buses of passenger capacity exceeding 46 with effect from 1st April, 1982. The road taxes on the smaller CSS buses will remain unchanged. This will result in a loss to Revenue of $2.9 million per annum. Capital Allowances for Company Registered Cars Under the Income Tax legislation, capital allowances can be claimed on company registered cars. The ceiling of the capital allowances was last raised from $15,000 to $25,000 on 1st April,1979. With effectfrom 1st April, 1982, 1 have decided to increase this ceiling further to $35,000 to bring it more in line with present prices of cars.”
“The exemption limit for assets other than residential properties remained at $100,000. As a further concession to promote home ownership, the exemption limit for residential properties will be extended to include the full value of anyone residential property. In other words, the exemption limit will be $600,000 or the full value of any one residential property, whichever is the higher. In line with income tax deductibility of CPF contributions, exemption will be given on all CPF balances of the estate with the Fund. It will not include amounts withdrawn by the deceased during his lifetime under the approved schemes and not refunded to the CPF. Where the CPF balance exceeds $100,000, no further exeption will be given for other assets, except for those qualifying for the exemption on residential properties. Where the CPF balance does not exceed $100,000, the exemption limit of $100,000 for assets other than residential properties will apply to all such assets, including the CPF balance. This concession will also apply to all approved provident funds which are in lieu of CPF. To encourage offshore gold transactions as well as to further develop the gold market, gold deposits with bullion companies held by foreigners, who are neither resident nor domiciled in Singapore, will not be liable to estate duty. The above concessions will take effect from 1st April, 1982. TAX CHANGES FOR COMPANIES I now come to the tax changes for corporate taxpayers. Stamp Duty on ACU Offshore Loan Agreements Stamp duty on ACU offshore loan agreements was abolished on 1st April, 1980. However, loan agreements which were signed outside Singapore would still be subject to ad valorem stamp duty up to a maximum of $500 when repatriated to Singapore.”
“Where such contributions exceed $5,000, no deductions will be allowed for life insurance premiums and other voluntary contributions to super-annuation schemes. Where the statutory contributions do not exceed $5,000, the maximum amount deductible for all contributions to CPF and approved pension and provident funds and life insurance premiums will be $5,000. This tax concession will result in a loss to Revenue of about $10 million. Aged Dependant Relief Members will know that Government is very concerned that the young should look after their aged dependants. The growing number of one-family nuclear households is not a healthy development. The elderly and dependent should not be left on their own. Family members should look after one another. The care of the aged is a complex matter and it will take time to work out appropriate government policies to encourage children to look after their aged parents. In the meantime, where there are obstacles which can be cleared or incentives, however modest, which can be given, we should do so forthwith. I intend to make two revisions to the aged dependant relief. A taxpayer can currently claim a relief of $750 for each aged parent or grandparent living with him, subject to a maximum of two. For the relief to be allowed, one of the conditions is that the aged dependant must not have an income of more than $750 in the year. With effect from Year of Assessment 1983, the relief will be raised to $1,000 per aged dependant. As a further relaxation of the conditions for eligibility of the relief, the relief will be allowed so long as the dependant has an income no greater than $1,500 in the year. ESTATE DUTY On 1st January, 1981 the specific exemption for residential propedies was raised from $200,000 to $600,000.”
“Tax Changes for Individuals These concessions in income tax rates will be at a cost estimated at $114 million to Revenue. Nevertheless the healthy state of our finances has made it possible for me to extend an additional four concessions for individual taxpayers. TAX ON PUB BILLS I have examined the basis of the tax on PUB bills and have decided that it should be changed. The prime objective of this tax is to ensure conservation in the use of electricity, gas and water. This being so, the tax should be levied on only those items in the PUB bill that vary according to consumption. With effect from 1st April,1982, the fixed charges in the PUB bill will not be included for the purpose of computing the 10% tax. These charges are sanitary appliance fee, domestic refuse charge, rental for appliances and night soil removal fee. The tax, therefore, will be imposed on only the total of electricity, gas and water charges, and water-borne fee where these charges exceed $80. The tax will remain at 10% of the amount in excess of $80. This change will effectively mean on average a rise in the exemption ceiling of between $4 and $9. Contributions to CPF and Approved Pension and Provident Funds High CPF contributions have, over the years, come to exceed the maximum amount allowable for tax deduction under the Income Tax Act. In 1979, the ceiling was raised from $4,000 to $5,000 for statutory CPF contributions and contributions to designated approved funds which are funds in lieu of the CPF. I am extending this concession to give greater relief to taxpayers. With effect from Year of Assessment 1983, all statutory CPF contributions and contributions to designated approved pension and provident funds will be fully tax deductible.”
“TAX CHANGES The most exciting part of any Budget Statement, although in my view not necessarily the most important part, is the tax changes. For FY 1982, 1 do not intend to levy any new taxes or raise the rates of existing taxes. Since 1978, we have progressively reduced personal income tax rates in order to afford relief from inflation and to ensure that our income tax will never be so high as to deter Singaporeans from wanting to work hard and earn more. Cumulatively, the tax concessions which we have given add up to a considerable amount. Even after taking into account the rise in nominal incomes due to inflation, the effective tax rates which Singaporeans pay today are lower than five years ago. In percentage terms, this reduction in effective tax rates has been most substantial at the lower income brackets. Let me take a simple example. Consider a person who had a net chargeable income of $5000 in the Year of Assessment 1977. His effective rate of tax in that year would be 7.5%. Even if his chargeable income has increased at the same rate as inflation, his effective tax rate in the Year of Assessment 1982 would have been reduced to 4.8%. This means that his effective tax rate has declined by more than one-third over the last five years. Taxpayers in the higher income brackets have also enjoyed similar, although smaller, reductions in effective tax rates. We must continue to make sure that our rates of income tax will never reach a level where they discourage hard work and stifle talent. However, for FY 1982, 1 have decided that it is not necessary to add to the concessions in personal Income Tax rates announced in the 1981 Budget and taking effect from the Year of Assessment 1982.”
“An amount of $52 million is set aside for the computerization programme of the Civil Service. The allocation is for the purchase of hardware as well as the development of software. Computerization will improve efficiency of Government operations and, in the long run, curb manpower increases in the Civil Service. To utilize these budgetary allocations effectively, we need a competent and efficient Civil Service. As at the end of December 1981, a total of 10,613 posts or 15% of the permanent establishment was vacant. Although there are shortages of officers in a number of Ministries, recruitment is progressing and hop&ully the vacancy position will improve in the course of FY 82. REVENUE The total estimated revenue for FY 1982 is $7,639 million, which is an increase of $106 million or 1.4% compared with the revised estimates of $7,533 million for FY 1981. Income tax, as always, is the largest single source of revenue. Income tax collections in FY 1982 are expected to be high because of the economic growth in 1981. The total collection is estimated at $2,930 million, representing an increase of $330 million or 12.7% over the revised estimates for FY 1981. Corporate income taxes account for 72% of the total collection. The total budgetted expenditure for FY 1982 is $12,440 million, comprising a recurrent expenditure of $5,591 million and a development expenditure of $6,849 million. The revenue of $7,639 million estimated for FY 1982 is, therefore, insufficient to finance total recurrent and development expenditures. Taking into account Development Fund income of $1,741 million, there remains a deficit of $3,060 million to be financed by borrowings and a drawing down from the Development Fund.”
“The recurrent expenditure will be fully met by the expected revenue of $7,639 million, leaving a surplus of $2,048 million for transfer to the Development Fund to help finance development expenditure. A sum of $6,849 million or about 55% of the total budget will be spent on development projects. Outlays on infrastructural, industrial and commercial development, public housing as well as education and manpower training together account for 85% of the development budget. Expenditure on infrastructural, industrial and commercial development will take up $3,001 million or 44% of the development outlay. This includes $1,720 million for the Petrochemical Corporation of Singapore, lines of credit to the Development Bank of Singapore, Ship Financing Scheme and Capital Assistance Scheme for the Construction Industry; $354 million for the development of Changi Airport and roads in the Republic; $294 million for the development of industrial estates by the Jurong Town Corporation as well as $151 million for the Economic Development Board's Capital Assistance Scheme and Product Development Assistance Scheme. In line with the objective of accelerating the public housing construction programme, a total of $2,253 million or 33% of the development budget has been budgetted for this purpose. The number of HDB units to be completed annually will be increased substantially over the next few years. The provision for education and manpower training is $548 million. This is to cater mainly for the School and Junior College Building Programme, Third Phase Development of the Kent Ridge Campus of the National University of Singapore, construction of a new complex for the Nanyang Technological Institute and expansion of the Ngee Ann Technical College.”
“The reductions in manpower of these Ministries have been partly offset by staff increases in other Ministries. The increases have been supported selectively and only in cases where the needs have been clearly demonstrated. These have been confined to Ministries with new or expanded areas of work, such as the new Overseas Missions, Bukit Merah Branch Library, Ponggol Fishing Port, Family Day-Care Scheme, Aerodrome Fire Fighting Service and Work Permit Division. Excluding Armed Forces expenditure, Other Operating Expenditure will go up by $185 million or 42%. The increase is due mainly to the purchase of capital items, including office equipment, vehicles and vessels, interest equalization payments under the Fixed Rate Export Financing Scheme, and expenses connected with the management of Government assets. The increase in allocation for capital items is in accordance with the policy of promoting mechanization and computerization in Ministries and Departments. The balance is largely to meet higher costs of maintenance, rental, public utilities, supplies and materials. Grants, Subsidies and Other Transfers will increase by $139 million or 24%. This is due largely to: (i) annual salary increments, increase in CPF/MPF contribution and a contingency sum for the NWC wage supplement in FY 82 for the staff of statutory boards, tertiary education institutions and aided schools; (ii) a bigger provision for tuition grants to the students of the tertiary education institutions whose enrolment is expected to go up significantly in FY 82; and (iii) an allocation of $20 million for the sening up of a revolving fund for loans to purchase personal microcomputers.”
“Mr Speaker, Sir, I now turn to the FY 1982 Budget. The objectives of the Budget are to - (a) increase the supply of skilled, technical and professional manpower needed to facilitate the restructuring and upgrading of the economy; (b) step up infrastructural, industrial and commercial development so as to sustain economic growth and promote economic restructuring, and (c) accelerate the public housing construction programme to meet the rising demand for housing units. The total estimated expenditure (excluding the transfer from the Consolidated Fund to the Development Fund) for FY 1982 is $12,440 million. Of this, $7,156 million or nearly 60% is for education and manpower training; infrastructure, industrial and commercial development as well as public housing. The recurrent expenditure of Government programmes totals $5,591 million. This is 22% higher than that for FY 1981 and should be adequate to cover rising costs as well as expansion of essential functions, such as education and manpower training. Expenditure on manpower is expected to rise by $188 million or 16%. The rate of increase is moderate because of a net total reduction of 168 posts on the permanent establishment. The total number of posts on the FY 82 permanent establishment will be 68,677 as against 68,845 on the FY 81 permanent establishment. Substantial reductions in manpower have been effected by the Ministries of Environment (115 permanent and 1,817 daily-rated posts), Finance (187 permanent and 13 daily-rated posts) and Health (216 permanent posts). Less manpower is required because of increased staff productivity, reorganization of work procedures as well as mechanization and computerization of routine operations.”
“My message to Singaporeans is therefore: we must pull up our socks if we want to avoid being dragged into the quagmire of economic stagnation. The Government will govern firmly and fairly, steering our economic engine with the policies I have just presented and the Budget and tax changes that follow. Barring a major adverse turn of events, and this caveat bears repeating, because we live in a troubled world where economic disasters have become the rule rather than the exception, if we cooperate and work with the same determination as last year, we may hope &p pull through 1982 with a respectable rate of economic growth yet again.”
“Employers in all sectors, and particularly in commerce and construction whose productivity improvements have lagged behind others, must find better ways to carry out their business, using machines, computers, robots, new systems and new technology so that our scarce and valuable human resources are deployed most effectively. Managers must lead, reward their workers fairly and motivate them to give of their best. Workers must learn to work more intelligently and efficiently in their existing occupations and diligently seek to acquire new skills. Teachers and instructors must devise fresh and imaginative ways to impart up-to-date skills and the right attitude to their students so that the working population that comes out of our schools, training institutions and university will be better with each passing year. The world economy at this point in 1982 is gloomier than last year. There is hardly any economic growth. Unemployment and interest rates are high. The largest of the world economies, the United States, is in a recession. How deep the recession will be is a matter of serious concern all over the world. If the US economy shows no sign of recovery by the middle of the year and interest rates return to the record levels set last year, the world economy will go into a tailspin. Even if recovery takes place, it will be slow. Growifig trade friction between Japan and the other OECD countries have led to strident demands in the United States for legislation to unilaterally impose "trade reciprocity", a concept which'threatens the very foundation of the world's free trade system. If world trade declines, economic growth in Singapore, as well as in other countries, will grind to a halt.”
“Concluding Remarks on Economic Policy In the course of preparing this Budget Statement, I went through the past Statements which had been presented by my Cabinet colleagues. One recurring feature of Budget Statements in recent years is that each year the Statement has warned of difficult times ahead, and each year our economy has grown strongly. In retrospect, the past foreboding of difficult times has been proved to be fully justified by subsequent events. It is not a case of crying "Wolf". The GDP growth rate of OECD countries has fallen substantially from 3.8% in 1978 to 3.4%, 1.3% and 1 1/4% respectively in the following three years. Their unemployment rates have risen from 5.2% in 1978 to 7 1/4% last year. With each passing year the world economy has indeed become more difficult to live with. That we have done well in the face of an inhospitable economic environment is due to sheer hard-work, grit, determination and adaptability on the pan of our workers and managers, correct economic policies and to the good rapport built up over many years between our unions, employers and the Government. By working as a team we have synchronized the pushes and the pull on the pistons of our economic engine so that it could run smoothly along the undulating and winding road without mishap. We must, however, not allow the smooth drive that we have had so far to lull us into complacency. Once stalled in the valleys, it will require stupendous effort to overcome the inertia of the engine and to restart it. We must therefore press on with greater urgency to restructure our economic activities.”
“The Economic Development Board will help to promote such investment and will consider granting pioneer status and other incentives under the Economic Expansion Incentives (Relief from Income Tax) Act where necessary. Whether or not our construction industry can respond to the challenges in this decade depends to a large extent on our contractors. They must upgrade their expertise and management skills. They must learn to apply the more mechanized methods of construction from Europe, Japan and the United States. The cyclical nature of the industry has added to the uncertainty in contracting business and discouraged contractors from taking a long-term view. To overcome this, the Housing and Development Board has initiated a scheme to nurture a group of core contractors similar to that in Japan and South Korea. These contractors will be assured of continuous work and be given a margin of preference of up to 5% over non-core contractors. Core contractors, however, will be required to employ on a permanent basis highly skilled workers and professionals, promote skill training and adopt mechanized methods of construction. The scheme, if successful, will be extended to other public sector organizations. With these and other measures, the construction industry will have a fair chance of success in meeting the tasks ahead. In future years Singaporeans can look forward to a greater supply of homes which will be within their means. Another 58,000 public housing units will be completed in the next two years. This is nearly double the figure of the last two years which was 33,000. For those who are not eligible for HDB flats, 21,000 private and HUDC housing units will be available in the next three to four years, more than enough to meet demand for some time to come.”
“A permanent and skilled pool of local construction workers who are paid a good wage will be necessary. The Ministry of National Development has been looking into all possible measures to build up this pool of permanent construction workers, including the setting up of a special training school. Training of workers, however, takes time. Because of the aversion of our population to the construction trade, it will be some while before we can increase the local pool of permanent construction workers. With the dwindling indigenous supply of workers in general and our policy to reduce dependence on foreign workers, the only way to enable the industry to fulfil the tasks set for it in this decade is to mechanize, and to do it swiftly. To promote mechanization, the Ministry of National Development and the Ministry of Finance have implemented a loan scheme at concessionary rates of interest to finance the purchase of machinery as well as a scheme for according accelerated depreciation allowances for construction machinery. To give a further push to the pace of mechanization in the industry, an investment allowance scheme, similar to that currently applicable to certain manufacturing projects, will be made available to the construction industry. Approved fixed investment in machinery and equipment by construction firms from 1st April, 1982, to 31st March, 1987, will enjoy an investment allowance of up to 50%. The construction industry must move quickly towards prefabrication. A start in this direction has been made by the award of two contracts by the HDB for the construction of 30,000 units of public housing by prefabricated methods, More widespread use of prefabrication requires supporting investment in factories to produce the building components.”
“49 buildings which have failed to comply are paying the 20% surcharge. In line with the strategy of diversifying away from oil, the Public Utilities Board (PUB) has commissioned external consultants to undertake a study on coal-fired power stations. This study has recently been completed. The PUB is now in the process of studying the consultant's report and will then be in a position to recommend whether coal-fired power stations should be constructed in Singapore. Another energy alternative is natural gas which has been found in substantial quantities in the region. Construction Although accounting for only 5% of our GDP, the construction industry is of vital importance in our economic policy. It is the sector that builds the physical infrastructure - ports, roads, factories, offices, hotels, houses and flats - required to accommodate our economic activities and our citizens, Over this decade, the construction industry will figure even more in our economic plan because of the additional challenge it faces of having to build 290,000 new HDB flats for our population by 1990. Its performance is therefore of some concern. In the recent past, its capacity has been stretched to the limit leading to supply bottlenecks and escalating construction prices. It has lagged seriously behind the rest of the economy in upgrading. At a time when we are short of workers, the industry remains labour-intensive using the technology of yesteryear. Last year, productivity in construction actually declined. If we are to succeed in restructuring our economy so that better employment can be provided and if all Singapore families are to have homes of their own in time, the industry will have to make a marked improvement in productivity.”
“And because our industries have found ways to operate with less energy, we will be better placed than others to respond to the next oil crisis. I attribute the improvement in energy efficiency to the effects of high energy prices. Our policy of not subsidizing world market prices and allowing cost increases to be passed on as soon as possible to the final consumer was thus in the right direction. In spite of our success, we must continue to encourage energy conservation through persuasion, incentives and disincentives. In May this year, the Ministry of Trade and Industry together with the PUB and other organizations will be conducting another Energy Conservation Campaign to raise the level of energy-saving consciousness created in last year's campaign. Although the message will have to be got across to all sectors, the major emphasis of this year's campaign will be on the manufacturing industry which is the largest energy consuming sector in Singapore. Last year, the Government announced that the provision on accelerated depreciation in the Income Tax Act will be extended to cover approved energy-saving expenditure incurred by non-industrial enterprises. The guidelines for these incentives have been finalized and are set out in the Annex I (Cols. 829 - 832) to this Statement. Annex I - ACCELERATED DEPRECIATION ALLOWANCE TO APPROVED ENERGY-SAVING EQUIPMENT IN NON-INDUSTRIAL ENTERPRISES (Cols. 829 - 832) Effective from 1st January, 1982, commercial buildings which have not complied with the Overall Thermal Transfer Value (OTTV) requirement set by the Building Control Division (BCD) would have to pay a surcharge of 20% tax on their electricity bills. Since the imposition of the OTTV requirement, 155 commercial buildings have taken or will be taking measures to comply.”
“There are an estimated 44,000 experienced retired persons in the population. We must try to bring as many as possible back into the mainstream of economic life. A Committee on the Care of the Aged is looking into this issue among others. Energy Development The most encouraging trend in the world economy today is the oil glut, which has arrested the spiralling crude prices of the last three years. The oil glut will enable us to have stable prices of oil in the next year or so. The world will have a better chance of recovering from the current depressed economic condition and also be better protected against unforeseen political events that can disrupt supply. However, we must not be lulled by the atmosphere of glut and distressed prices in the oil market to disregard the need to be efficient in the use of energy. There is a glut only because demand has fallen much below supply owing to the recessionary conditions and past conservation efforts, Supply is still scarce and the long-term security of some of the sources remains in doubt. We must therefore press on with our efforts to reduce wastage in the use of electricity, oil and other fuel. In this regard, I am very pleased to report that there are indications that our economy is responding well to the call to conserve energy. Since the second oil shock of 1979-80 the ratio of growth in electricity consumption to growth in the economy has fallen steadily from a high level of 1.83 in 1978 to 0.77 in 1980. In 1981, this ratio decreased further to 0.75. It means that we are using less and less electricity to produce each additional unit of output. Our economy has continued to grow at a fast pace despite higher energy prices.”
“The National Productivity Council was formed to promote this important approach to productivity improvement. Its representatives are drawn from the Government, the business groups and the trade unions. As good team spirit at the workplace contributes to productivity, the Council is examining how workers can be encouraged to identify themselves more closely with the company they work in by means of company-based welfare benefits and other measures. On the human aspects of productivity improvement, the Government is sefting the example by formulating a five-year plan to introduce quality control circles called Work Improvement Teams (WITS) in the Civil Service and Statutory Boards. The objectives are to improve productivity, staff morale and team spirit through staff participation, involvement and contribution. In conjunction with this, the Government has also started a Welfare programme with funds allocated to the various Ministries for expenditure on staff welfare and recreation. All these programmes are inspired by the recommendations made by the Committee on Productivity. In 1982 we should see more of the Committee's recommendations come to fruition. I have mentioned that it is important to get more of our citizens into the workforce if we are not to rely on foreign labour. In 1981, the labour force participation rate among males was 81.1%. The femate participation rate was only 44.8%. We will have to be more imaginative and more determined in our efforts at retaining a large number of our womenfolk in the labour force without however endangering the upbringing of our children. The family unit is the most fundamental building block in our society and it is an institu- tion which we must cherish and preserve even at the cost of sacrificing some economic growth.”
“In the last few years, the technology for automation and robotization has made great strides and robots are increasingly being used in manufacturing industries in Japan and the United States. Industrial automation and robotization can make a tremendous contribution in raising the productivity of manufacturing. It will also ensure better product quality control, provide a safe and pleasant working environment and place our educated workforce in the forefront of automation technology. To promote the wider use of industrial robots and automated production especially by those companies that can no longer obtain workers from non-traditional sources but still wish to operate from Singapore, the Government will provide incentives for the purchase of robots or other types of automated production equipment where there is significant labour saving, if these companies are not already enjoying incentives under the Economic Expansion Incentives (Relief from Income Tax) Act. Such purchases can be depreciated over one year and will be given an investment allowance of up to 50%. Loans provided by the Economic Development Board under the Small Industries Finance Scheme will be liberally granted for the purchase of robots or automated equipment. The Skills Development Fund will also be requested to extend the maximum possible grant under its mechanization scheme to companies buying such equipment. Last year, we conducted a blitz on poor work attitudes and the need to foster team spirit at the workplace. By doing so, we have opened up another front in our drive towards high productivity growth in the Eighties. The human aspects of productivity improvement that are being emphasized will complement the expanded training programmes and increased capital investments that are undertaken.”
“In the meantime, we must ensure that the programmes provide the kind of manpower that will sustain our economic and social development in years to come. Out-dated syllabi have to be weeded out. New courses to keep up with fast changing technology have to be grafted onto existing ones. Our policy is to free ourselves from reliance on foreign labour by the end of this decade. With diminishing growth in the pool of indigenous labour in future years resulting from declining birth rates, we can only achieve high economic growth without foreign labour if we improve the productivity of our workers and get more citizens to join the workforce. We first started our productivity drive when we launched the wage-correction policy in June 1979. The thrust of this policy was to bring wages up to equilibrium level through three successive years of higher wage increases recommended by the National Wages Council. This would compel employers to disgorge unnecessary labour and invest in labour-saving equipment and machinery to further economize on the use of manpower. This policy had the desired effects. Private investment in capital equipment and machinery in the last three years (1979-81) has been substantial. It increased at an average annual rate of 25%. This augurs well for future productivity growth. In the meantime, the shock effect of the wage policy on emproyers has also caused productivity to grow at a faster rate of 5-6% per annum. There will be further favourable effects on productivity growth when students from our expanded tertiary and training institutions join the workforce in future years and when we have succeeded in retraining our workers.”
“Several exciting tourist attractions, including a Theme Park, have been proposed by international entrepreneurs. A group of investors has also proposed plans to build a beach resort hotel on Sentosa Island. As the tourist industry is labour-intensive, manpower will be a critical factor in the next five years when new hotels come onto the market. In view of our intention to put an end to our dependence on foreign labour, the industry faces an exacting challenge to find better ways of using labour without sacrificing service. The VITB, in conjunction with the Singapore Hotel Association, will begin a hotel apprenticeship scheme for middle level hotel management staff in July. Manpower Development I think it bears repeating that manpower training and development is the decisive factor in the restructuring of our economy and in achieving our objective of full, better paid and higher skilled employment. We have laid the foundations of a comprehensive manpower upgrading programme over the past few years, especially in the last two. Our tertiary, vocational and training institutions are being vastly expanded. The Skills Development Fund has widened the scope of its financial assistance under various training schemes, There are plans to upgrade the skills of existing workers on a wider scale through the establishment of an Institute of Continuing Occupational Development. The NTUC has also on its own prepared a comprehensive and commendable programme to help its members who have missed the opportunity of a basic education. Having sown the seeds, we must allow time for our manpower development programmes to grow and fruit. The gestation period for some of these programmes can be up to half a decade.”