Hansard, 1959-11-25

The following Member has, under the provisions of subsection (2) (g) of section 42 of the Singapore (Constitution) Order in Council, 1958, obtained from the Speaker, permission to be or to remain absent from sittings of the Assembly: Madam Sahorah Binte Ahmat (Siglap) - for two weeks from 23rd November, 1959.

I have received a message from His Excellency the Yang di-Pertuan Negara dated the 17th November, 1959, informing me that, in accordance with the provisions of section 55 (1) of the Singapore (Constitution) Order in Council, 1958, His Excellency had that day assented to the following Bills: (i) Singapore State Arms and Flag and National Anthem Bill; (ii) Transfer of Powers Bill; (iii) Transfer of Powers (No. 2) Bill.

asked the Prime Minister whether he is aware that all the flats on the first two floors of the Pasir Panjang Power Station Flats belonging to the City Council, with the exception of two, have been reserved for occupation by Parliamentary Secretaries to the various Ministers, and whether he will state the terms of letting of these flats and the rents to be charged therefor.

No flats in the Pasir Panjang Power Station Flats belonging to the City Council have been reserved for occupation by any Parliamentary Secretary. The question presupposes that the facts were true; they are not. The Member for Farrer Park could do well in not wasting the time of this House by first ensuring that the malicious questions he put are not based on false premises.

Order. I do not think the Prime Minister is in order in alleging that anything said by Members in this House is malicious. I ask the Prime Minister to withdraw that expression.

Very well, Mr Speaker, Sir. Perhaps the word "tendentious" may be less objectionable.

Mr Speaker, Sir, in view of what the Prime Minister had said in reply to a previous question of mine in this Assembly, I see nothing tendentious in this question.

Order. Honourable Members must understand that at Question time only supplementary questions after the main question can be permitted.

asked the Prime Minister what is the present average daily consumption of water; the present safe capacity of the water supply and the annual rate of increase in the consumption of water; and what steps the City Council is taking or proposes to take to ensure the maintenance of an adequate supply of water.

The present average daily consumption of water is 62.5 million gallons. The average safe capacity for water supply is 65 million gallons per day under favourable climatic conditions as at present. The annual rate of increase is 3.5 million gallons per day. There are immediate plans to increase the output from the Tebrau Waterworks which would take care of the additional water demands until the Johore River scheme is completed.

Could the Prime Minister give an indication to the House when the Johore River scheme will be commenced?

I require notice for that question, Mr Speaker, Sir.

asked the Prime Minister to state how many bus shelters have been erected by the City Council from 5th December, 1957, to 31st October, 1959; how many of such shelters have had to be repaired or require repair due to faulty construction; and the cost of such repairs.

The number of bus shelters erected by the City Council from the 5th December, 1957, to the 31st October, 1959, is 222. Three shelters have had to be repaired due to faulty construction at a cost of $5,720, and 22 shelters have had to be strengthened as a precautionary measure at a cost of $7,700.

If there is negligence which is responsible for the additional cost, will the Prime Minister see to it that the necessary action is taken to have the City Council reimbursed?

I am sure that, if proof can be found for negligence, the proper legal remedies will be set afoot.

asked the Minister for National Development what is the total cost of the Nicoll Highway Promenade Development; what are the cost of materials used in the development and the cost of labour employed in connection therewith; and whether the cost of the development has been or is being charged to a City Council vote or a Government vote, or to both.

Mr Speaker, the total cost of Nicoll Highway Promenade is estimated at $192,088. comprising: $ C. Materials . . 147,225 52 Labour . . 29,535 05 Transport . . 15,327 60 Materials: broadly classified, - nearly one and a half miles of concrete rails and assemblying, $32,577. -; erection of shuttering and placing of concrete, $2,810.25; laying topsoil and turfing, $3,833.07; mild steel, cement, sand, timber, concrete slabs, ready-mixed concrete and other sundry materials, $81,035.04; outstanding bills for materials, estimated at $24,000; floodlighting, $2,970.

16. Labour: $29,535.

05. Transport; comprising transfer items of City Council vehicles, $14,470.79; hire of outside lorries, $856.

81. The total cost, Mr Speaker, is being charged to City Council votes.

Can the Minister say whether any part of the cost for labour cited by him went to the payment of any member of the National Construction Corps?

Yes, Mr Speaker. The National Construction Corps was paid an allowance of $3 a day for their expenses. I have not got full details of the number of days they have worked on the Promenade.

asked the Minister for National Development what is the total cost of the Old Kallang Airport Park Development; what are the cost of the materials used in the development and the cost of labour employed in connection therewith; and whether the cost of the development has been or is being charged to a City Council vote or a Government vote, or to both.

Mr Speaker, the total cost of the Kallang Park project is estimated at $503,903. - comprising: $ c. Materials 347,275 29 Labour 141,255 29 Transport 15,372 78 There are more than 50 items of materials, but I have classified them under a few broad categories: $ c. Purchase of bricks, 86,850 12 cement, concrete slabs, sand, grass-cutter, plants, trees and various other materials $ c. Payment to contractors 144,329 84 for laying sub-mains, construction of bathing pools, railings, public conveniences, turfing, etc. Sundries, like hire of 3,510 33 portable latrines from City Council, repairs to machinery, etc. Street lamps 77,585 00 Outstanding bills for 35,000 00 materials estimated Labour is classified into two categories: City Council and P.W.D. 135,306 37 labour which is transferred to this Kallang project Outside labour 5,949 02 Transport:- City Council lorries, 11,068 56 which is a transfer item to this Vote Outside lorries 4,304 22 Mr Speaker, the total cost is being charged to City Council votes. The expenditure of nearly half a million dollars, out of which $150,000 are transfer items, which is not the real cost, leaving a total expenditure of $350,000, compares favourably with the $3 million estimated by the previous City Council for the development of the former Kallang Airport into a public park and recreational space. This project had been discussed by the old Government since 1955 and (there is a big file in my possession) no work had been done. The files and correspondence have been built up for four or five years, and it is only when the P.A.P. Government came in that work was started immediately and completed.

2.42 p.m.

Mr Speaker, Sir, I beg to introduce a Bill intituled "An Ordinance to amend the Pineapple Industry Ordinance, 1957 (No. 15 of 1957)". Bill read the First time.

Second Reading, what day?

Now, Sir. Mr Speaker, Sir, I lay upon the Table a Certificate of Urgency signed by the Yang di-Pertuan Negara in respect of the Pineapple Industry (Amendment) Certificate of Urgency handed in.

The Certificate is in order. Are typed copies of the Bill available for the use of Members?

Yes, Sir. Typed copies of the Bill handed in to the Clerk and distributed to hon. Members.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Subsection (3) of section 7 of the existing Pineapple Industry Ordinance does not make provision for the functions of the Malayan Pineapple Industry Board to include the grant of financial assistance, whether by way of subsidy or otherwise, to the industry as a whole or to any section thereof, and the Governments of the State of Singapore and the Federation of Malaya consider that this provision is essential in the light of past experience. The reason for the urgency of this amendment is to enable the Malayan Pineapple Industry Board to assist any section or sections of the industry in the event of a crisis which is expected in December 1959. Similar amending legislation is being taken through all its stages in the Federation House of Representatives. The amendment of subsection (1) of section 8 of the Ordinance is to enable the Minister, in consultation with the Board, to make an order for the imposition, collection, variation or cancellation of a cess or cesses on the exportation of canned pineapples, instead of doing so only on the recommendation of the Board. This may be necessary in order to raise funds for the assistance of any section or sections of industry. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole Assembly. Assembly immediately resolved itself into a Committee on the Bill- [Mr Low Por Tuck]. Bill considered in Committee; reported without amendment; read the Third time and passed.

Order for Second Reading read.

Mr Speaker, consideration of this Bill on the 10th of December.

So be it.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, That the Second Reading of this Bill be postponed to 10th of December.

No motion is actually necessary. Second Reading deferred to the 10th of December.

2.52 p.m.

Mr Speaker, Sir, I beg to move, That the Assembly approves the financial policy of the Government for the year 1960. In ordinary times, the presentation of the budget by the Government of the day is always an important occasion. For the budget sets out in detail the Government's proposals for the coming financial year. It describes the ways in which the Government intends to raise its revenue. It gives a blue print of expenditure by each department of Government. This occasion, however, holds even greater historical importance than one normally attaches to Government budgets. This is the first budget of the People's Action Party Government elected under the new self-governing constitution of Singapore. On this occasion, therefore, it would be appropriate for me to do a wider survey of events and to venture further afield than is the normal practice of Finance Ministers when presenting their annual budgets. We are a democratic socialist Government and our purpose, within the five years of our stay in office, is to produce at the end of it a more just society in which the democratic institutions and practices would be more firmly rooted. An elected Government which enjoys the support of the mass of the people must have objectives basically different from the Government that it replaced. It will strive to remove those glaring injustices which still remain in our society. It will seek to eliminate the forms of exploitation of men by men which the exploiters, through being tolerated over the years, have come to regard as customary and, indeed, normal. It will strive to bring for the ordinary man the full fruits of his labour. And in so doing it must resolve also those conflicts of interest which inevitably will arise within our society and which may threaten to disrupt the orderly progress of social adjustment. In the nature of things, these objectives take time to attain. For we are committed to the democratic process by which changes are made through the processes of law and carried out by the administrative machine which we inherit. There is, therefore, the need, whilst making these changes, to retain some continuity with the past. And the process of national budgetting illustrates this very clearly. The preparation of a Government budget is a lengthy and involved process. The original proposals on which this budget is based were initiated early this year, months before the P.A.P. Government assumed office. It is not possible to scrap all these proposals nor, within the time at our disposal, to introduce new procedures and start completely afresh. The establishment scales of Government Departments have to be carried forward and such adjustments to it as are being made are marginal ones. To do otherwise at this stage would be to invite a breakdown of the machinery. To this extent, therefore, the budget which I have the honour to present to the Assembly is based to a considerable extent on the administrative practices and policies which have been built up over the years. It is customary in presenting the budget for the Finance Minister to make a brief review of the economy and to assess prospects for the year to come. In Singapore, we have an open economy and the level of business activity is conditioned not so much by what we ourselves do as by economic conditions in neighbouring territories. Federation of Malaya A review of the general position outside Singapore must begin with our closest neighbour, the Federation of Malaya. 1958 has been a remarkable year for the Federation. The decline in the price of rubber which began in 1957 and continued steadily ever since was arrested in this year. Before this, the Federation had several anxious moments when an enormous budget deficit loomed over the horizon because of the decline in the revenue on the export duty on rubber. Happily the world economic expansion caught up with the total available supply of rubber, both natural and synthetic, and as inevitably happens, the price of rubber increases. At first, there was hesitation owing to the uncertainties of the rubber stockpiling policy of the U.S. Government. When, however, it appeared that stock releases, both in America and the United Kingdom, were insufficient to fulfil the needs for rubber, especially of the higher grades, the spectacular rise in rubber prices followed. Thus the Federation's threatened difficulties disappeared almost overnight. The way was open to them to prepare a prosperity budget for 1960. Prosperity in the Federation inevitably brings with it an increase in business in Singapore so long as the two territories are agreed that they should work as one economic unit, whatever their political divisions may be. The Federation Government, through its prudent action in laying aside substantial sums of money for replanting of rubber, has assured that its economic strength, which today still rests principally on rubber, will continue in the years to come. It has also set in motion a very successful programme of industrial growth. There is a major building boom in Kuala Lumpur today and all these, together with the high targets set for development expenditure in 1960, will ensure a steady expansion of the economy. One or two developments in the Federation give cause for concern in Singapore. There is, for instance, the valuation on a new basis of branch transfers between Singapore concerns and their branches in the Federation. This recent move by the Federation Government is being studied by Singapore and it is hoped that, whatever the merits of this particular action, the Federation will not pursue any policy designed to isolate Singapore whose port and commercial facilities have served her so well over the past years, to the mutual advantage of both territories. Indonesia I now turn to our second great neighbour, Indonesia. Our trade with her is of importance. Through numerous little ships, we supply the scattered islands of the Indonesian Archipelago with much of their basic needs. In return, our traders bring back the many varied tropical produce of these islands and, after processing them, export them to the great markets of the world. On this trade and its allied services, such as transportation, handling of cargoes, processing, finance and insurance, depends the livelihood of large numbers of our population. What happens in Indonesia has therefore immediate and direct economic consequences to us. For this trade is of benefit to both parties. On our side we hope that the Indonesian Government will not look upon Singapore as a parasitical centre of traders living off the fat of Indonesian primary producers. I shall later give figures to show that the Indonesian economy derives substantial benefits from our trade. We are an entrepot and we survive because we offer the best prices which the primary producers around us, both in Indonesia and the Federation of Malaya, can obtain. Through our efficient shipping and banking facilities, we make it easier for these producers to dispose of their products in the great commodity markets of the world at the best prices possible and we of Singapore wish for nothing more than to see Indonesia overcome her economic difficulties and bring about those conditions under which honest traders can conduct their business on a stable and permanent basis. But I would not attempt to Whitewash Singapore completely. Unfortunately, in the past this country has given refuge to elements hostile to the present Government of Indonesia. We have thereby incurred their displeasure and quite naturally so. The P.A.P. Government cannot be held responsible for the acts of its predecessors. We have made it abundantly clear to the Indonesian authorities that we wish for a new basis and a new approach to our mutual problems. Our relations with Indonesia have immensely improved since the advent of our Government. We shall continue our efforts to improve upon them. We have undertaken not to allow any action to proceed in Singapore which is directed against the security of the Indonesian State. This assurance we shall fulfil. As part of the improved relationships with Indonesia, there is the trade agreement recently concluded between the Governments of Singapore and Indonesia on the supply of raw cotton to our spinning mills for processing and return in the form of yarn to Indonesia. This is a small symbol of the new spirit of mutual respect which we all hope will grow in the years to come. I am sure that members of the Assembly will join me in congratulating our Deputy Prime Minister on the success of his efforts to promote better relationships between the two territories. Singapore in 1959 For Singapore, the year 1959 had been a period of some uncertainty. The first half of the year was notable for a general attitude of wait-and-see adopted by business enterprises. It was a period of comparative stagnation. The reason was of course the impending general elections, scheduled to take place in May. It is, however, possible to exaggerate the extent of the trade recession. The total trade for the first half of the year stood at $2,787 million as against $2,960 million for the first half of 1958. The decline was less than 6 per cent. After the Government assumed office, trade has picked up somewhat. The value of imports for the period July to October this year averaged $261.5 million per month as against $255 million for the first half of the year. The value of exports increased to a more marked extent. Exports in the last four months ran at $236.3 million per month as against $211 million per month for the first half of the year. We can therefore see that the scare about the decline in business generated by the cuts in variable allowance was largely unfounded. Even the Singaporean's capacity to enjoy himself showed no decline in the last few months as the receipts on entertainment duty and liquor revenue plainly show. As compared with the similar period last year, recent trading conditions showed an improvement of about 10 per cent in respect of imports and nearly 30 per cent in respect of exports. These more favourable trade figures result principally from the higher prices of rubber and so long as the present state of the market can be sustained, we can look forward to an increase in incomes in the months to come. Indonesian trade, however, witnessed a grievous decline in exports from Singapore. In the first nine months of 1958 exports to Indonesia totalled $276.2 million. For the corresponding period this year, the total dropped to just over one-third of this figure, $107.5 million. This decline was due to the severe restrictions on imports introduced this year by the Indonesian Government. As against the decline in exports, imports from Indonesia showed a substantial increase, from $662.7 million for the period January to September 1958 to $837.6 million for the same period this year. These figures show that Indonesia derives considerable benefit by way of foreign exchange earnings in their trade with Singapore and it was Singapore's trade lines that made it possible for her to have disposed of so much quantities of produce through the ready made market of Singapore. There is therefore every justification for Singapore to ask for a relaxation on the controls on Singapore exports of consumer goods to Indonesia. The building trade in Singapore, however, went through a difficult period. The statistics on the number of buildings completed this year for the period January to August are misleading. They seem to indicate that the level of activity in the building and construction trade was at least as much as that for the same period last year. Figures on the production of local building material are probably better indicators as they show a considerable decline in 1959 as compared with 1958. The production of bricks for the first eight months fell from 51 million in 1958 to 38 million this year. The production of broken granite dropped from 391,000 cu. yds, to 243,000 cu. yds. Local industries were adversely affected for a variety of reasons. The local soap industries, sago flour production, coconut oil and rubber footwear registered declines. The reasons were varied. The local rubber footwear industries suffered from overseas competition, primarily from Japanese sources. The coconut oil industry is plagued by a shortage of copra imports. The rubber re-milling industry, however, saw more activity this year as imports of rubber increased consequent on higher prices. The biscuit industry maintained an active tempo. The consumption of electricity and gas both for domestic and industrial purposes continues the rate of increase shown in the last few years. The consumption of petrol and liquor maintained the normal expected rate of increase. In the case of cigarettes, the revenue declined, but this was principally due to a switchover from imported cigarettes to local brands. This developed such a threat to the revenue that it was necessary to introduce last September changes in the import duties on cut tobacco and the cheaper brands of cigarettes in order to arrest the decline in tobacco revenue. Common Market From the foregoing review of trade and production figures, it is clear that a special effort must be made to stimulate business activities in Singapore. In the case of trade, much depends on the prosperity of our neighbours. I have already dwelt on this in my remarks on conditions in the Federation of Malaya and Indonesia. The problem of promoting the growth of industry is one to which the Government is paying constant attention. This has both its long term and short term aspects. In the long term, whether or not the country will survive as a going concern depends on the extent to which our attempt to industrialise the economy succeeds. In the short term, the immediate problem is to stimulate the basic demands for products already being produced. As I shall describe later, the prospects for so doing next year are excellent. The long term policy of creating new industries, however, is a more complex one. It is clear that the domestic market limited by a population of our size will attract only a small range of industries. If industries established in Singapore could be assured of a more extensive market, e.g. that of the Federation and Singapore combined, we can look forward with greater confidence to industrial expansion. This brings me immediately to the question of a common market with the Federation. It has been one of the major points in our election programme to achieve this. And this may be the appropriate moment in which to give a broad outline of the proposals which we have made to the Federation Government for the establishment of a common market. It is not possible to go into great detail as the matter is under consideration by the Government of the Federation of Malaya. When one talks of a common market, one usually has in mind two varieties following the practice in Western European countries. The first is a customs union in which the territories proposing to form a common market attempt, within a given period, to set up similar customs duties against imports from outside the area. In other words, if we were to have a customs union with the Federation, we shall impose on our imports the same duties as the Federation does, while permitting the free movement of goods between the two territories. The other form of a common market is the free trade area. Under this arrangement, each partner retains independence of action as regards customs duties on goods coming in. There is a same duty-free movement of goods between partners. It is clear that neither of these systems would be acceptable both to the Federation of Malaya and Singapore. A Custom's Union may ruin Singapore's entrepot trade which is based on duty-free imports of such goods as enter the entrepot trade. On the other hand, a free trade area may give a preponderant advantage to Singapore. We have therefore thought out a third hybrid which, in good conscience, we believe to be attractive enough to the Federation of Malaya without at the same time incurring the risk of destroying our entrepot trade. This is a modified form of a Customs Union. It is proposed that the list of goods be agreed between the two Governments on which similar duties would be levied in both territories against imports from overseas. These goods will not be charged with customs duties if they are produced in either territory on entering the other. This form of common market may be called a commodity common market. The commodities to be included would naturally be those which offer good prospects of local production either in Singapore or the Federation. They would not include goods which enter extensively into our entrepot trade. As a corollary to the commodity common market, it would be necessary to integrate the industrialisation programme of the two territories so that, in lines of production where one production unit is sufficient to cover both markets, there would be arrangements for the zoning of such units. This would enable more efficient and more competitive industries to be established and further would avoid the danger of having excess capacity installed in relation to consumer demand. We have made our proposals to the Federation Government and these are being examined. We have also requested that the proposals submitted be examined by a Joint Committee of Officials. This Committee could go into great detail on the implications of the system proposed and report back to the respective Governments what are the differences that still remain to be resolved. It is clear from the foregoing account that an arrangement of this kind accepts the fact of the economic unity of the two territories. Whatever the political divisions, it is obvious that they must co-operate in economic fields and it would be injurious to both countries to take an independent and competitive line of action in promoting industrial growth. From the point of view of the prospective manufacturer, the attraction of investing in Malaya would immensely increase. A Federation investor, for instance, would be assured of a protected market not only in his own country, but also in Singapore. Similarly, a Singapore manufacturer would not have to surmount the tariff wall which the Federation now places against Singapore products. It is therefore hoped that an early decision would be reached. Any delay in reaching a decision would merely mean that prospective investors may be induced to adopt a waiting policy. Singapore's attraction as a partner to the common market is much greater than the comparison of the population figures of the two territories would suggest. While the Federation has more than four persons to one Singaporean, the purchasing power of the two territories by no means follows this ratio. This is because a concentrated urban population has a higher purchasing power than a dispersed rural population. In 1958 separate figures of foreign trade were published for the first time which would give an indication of the potential market in manufactures in the two territories. In Singapore the imports of manufactured goods for domestic consumption for 1958 was $489 million. The corresponding figure for the Federation was $630 million. The disparity in purchasing power is therefore considerably less than the ratio of population. Of course, this gives the overall totals and there would be considerable variation in respect of individual commodities. At the same time, it is well to remember that Singapore has an enormous re-export market in manufactures which an efficient industrial concern can penetrate. The re-export of manufactured goods from Singapore in 1958 was $293 million. I give these figures to show that the integration of the two economies would produce benefits which are not as one-sided as some people may think. On the contrary, the access to a protected market in Singapore for Federation manufactures must be a factor which would increase considerably the attractiveness and profitability of enterprises in the Federation. Financial Review of 1959 The Budget for 1959 which this Government inherited was framed on a standstill basis. This meant that only sufficient provision was entered in the Estimates for works and services which were considered necessary to maintain the existing Government machinery. New services and development expenditure had to be provided to meet the expansion in educational and medical services demanded by the growing population. A total expenditure of $269 million was envisaged in the Ordinary Estimates as against a total revenue of $265 million. The last Government budgetted for a deficit of $4 million. The Development Budget was planned at $42 million. This was to be financed by $20 million from the Ordinary Estimates, $18 million from the General Revenue Reserve and $4 million from other sources. The total deficit in the Ordinary and Development Estimates combined was therefore of the order of $22 million. However, before the general elections in May, supplementary provisions were voted for, totalling $10 million. This further increased the expected deficit to $32 million. At the same time the revenue from tobacco began to fall in an alarming way due to the transfer of consumer choice from imported cigarettes, on which the duty was high, to locally manufactured cigarettes made from cut tobacco, on which the duty was kept low. A shortfall of $10 million on the tobacco revenue was expected. If events were allowed to take their course, we will find that our deficit, taking both ordinary expenditure and the development estimates together, would eventually amount to $42 million. That is to say that this would be the total decline in the General Revenue Balance. The position would be unacceptable to any prudent Government and consequently economy measures were introduced. This was especially necessary as the substantial surpluses accruing in the boom years and amounting to $325 million had very largely been spent. While it is true that some of these had been converted into concrete forms, such as new school buildings, new S.I.T. houses, improved roads and so forth, this however provides a very scant consolation to the new Government which had its own ambitions in the way of a development programme. The economy measures which we introduced are so recent that it is not necessary to recapitulate them in detail. Briefly they fall under three main headings. There was the cut in variable allowances; there was the cessation of development projects which had not been commenced and, finally, there was the freezing of vacant posts and uncommitted special expenditure. Action had also been taken to bolster up the declining revenue from tobacco. While increasing the tobacco duty to check the severe decline, opportunity to the same level as that obtaining in the Federation. At the same time a tax on the hiring of films was introduced, was also taken to bring the petrol duty. All these measures, though they failed to bring revenue to the estimated total of $265 million, nevertheless, had the effect of bridging what, at one time, threatened to be a most serious gap between revenue and expenditure. About two months ago, I reported to the Assembly that the effect of these measures, together with prospective increases in taxation, would mean that we should just about balance our budget at the end of the year. The latest revised Estimates show that total expenditure will amount to $257 million and revenue to about $258 million, leaving a surplus of about $1 million. If the Government had not acted as promptly and as decisively as it did, we would have ended the year in the red. The deficit on the Ordinary Estimates would have been at least $20 million, consisting of $12 million by way of reductions in expenditure that would not have taken place, $4 million in revenue shortfalls plus the original $4 million deficit. The exertions of the Government, unpleasant though some of the consequences were, had achieved the objective of placing the finances of the State on a sound footing. Nothing could be more disastrous for this Government than to find in the first six months of its term of office that serious inroads had been made on the financial reserves as a result of a very large deficit. Ordinary Budget I now come to the 1960 Ordinary Estimates. As I mentioned before, the process of budgetting is a continuous one. Hardly had the budget for one year been approved by the Assembly then all departments and Ministries begin to think and plan ahead for the Estimate proposals for the following year. In the case of the Ordinary Estimates for 1960, the present Government was confronted by what was really a fait accompli. The first cast of the Estimates which was presented to me was so dismal in outlook that I asked for an immediate reconsideration of expenditure items. Members of the House have been constantly assailed by the spectre of budget deficits and may by now have been persuaded that the whole thing is a bogey conjured up by the Finance Minister with some ill intent in mind. I assure Members that this is not so. Let me say a few words on the trends of revenue and expenditure in the last few years. Ten years ago revenue collection totalled $180.8 million. Expenditure was then $94.3 million. In 1953 we reaped the full harvest of the post-Korean War boom and revenue collected totalled $238.5 million. From 1954 to 1957 revenue varied between $207.3 million and $241.5 million. The high figure for 1958 of $271.4 million included a windfall of $20 million from the sale of Christmas Island. Increases in Income Tax rates introduced for 1959 brought a slight revenue increase but it is now becoming clear that the revenue had lost the buoyancy of the immediate post-Korean War years. We had reached the plateau in revenue yields. But in the meantime, expenditure went up relentlessly. In particular the expenditure on social services seemed to have an independent momentum of its own. By 1958 it became apparent that the natural growth of expenditure had reached the tax plateau and was continuing to forge ahead. It is not so much that the Civil Service had been accustomed to lavish and extravagant standards of expenditure but that we are now paying very dearly for the enormous birth rates that had been the feature of post-war Singapore. The large number of babies born every year may be a welcome testimony to the virility of the population. But it sets in store problems of nightmarish proportions for the Finance Minister of Singapore. For with the increase in population in Singapore, there must follow inevitably increases in expenditure on education, health and the social services. We may, as we are now doing, take severe measures to keep expenditure within available resources, but however ingenious we can be, the growing population exerts its inexorable pressure. Where population increases are not matched by increases in the national income, the country will inevitably head for a breaking point. For there is a limit to the tax capacity of any economic system. I am not saying that we have reached this limit in Singapore. But it is obvious that unless the national income can be increased as fast as the growth in population, we shall be faced either with the scaling down of the volume of public services or we must undertake further reductions in the cost of these services. It is therefore of paramount importance for the future well-being of Singapore to ensure that the national income grows as fast as the population and where this growth is not possible, due to circumstances beyond our control, we must make every effort to slow down the rate of population growth. Let me give a simple but graphic illustration of the effect of the population growth on Government expenditure. I shall take the expenditure on education not merely because this is most immediately affected by the growth of population but also because the increases in expenditure can be foreseen and calculated with accuracy. The school children now attending the primary schools consist of those children born between the years 1946 and 1952. During these seven years, 318,000 babies were born. Seven years from now the children attending our primary schools would be those born between 1953 and 1959. The number of births in this period was 423,000, an increase of exactly one-third. In 1960, we shall be spending a total of $87.2 million on education, $65.3 million being the running cost and $21.9 million being the capital expenditure on new schools. We can assume that the increase in the number of children in primary schools in 1967 will be at least one-third greater than the number now. If - and I stress this - we were merely to maintain the present ratio of children of school going age to children attending school and not increase on it we shall have to spend one-third more on education than we now do. Allowing for the decline in infantile mortality rates, we can expect at least a 40 per cent increase in children of primary school age in seven years' time as compared with now. By 1967, therefore, we shall have to spend not less than $122 million a year on education, that is if we are satisfied only to maintain present standards. If we want to give every child a place in school and if we want to increase the number of children receiving secondary and higher education, the figure may well be 50 per cent greater. In other words, by 1967, if we want to make strides in our education programme, we shall have to spend in one year, some $180 million on education alone. And this sum is nearly 70% of the total Government revenue as it now stands. It covers the whole yield of Income Tax and Customs duties on liquor, petrol and tobacco. If anybody were to say that the increases envisaged here are improbable, I would refer them to the increases in expenditure on Education between 1953 and 1960. These increases were much greater proportionately than what is set out above. To return to the first cast of the Estimates; there was no other way but to call for further reductions in expenditure and accordingly a circular was issued informing departments that unless they could offer offset savings, no new items or increases of expenditure will be entered in the 1960 Estimates, other than those resulting from commitments approved by this Government. It was possible to reduce the expenditure by $10 million in this way, but at the last moment, however, the Ministry of Education submitted late proposals for a further increase of $4 million. There was no way of avoiding this expenditure. With regard to new appointments these have been kept to the barest minimum. 1,109 new posts will be created in 1960 as against 885 in 1959 and 1,622 in 1958. Of the 1,109 new posts all except 80 are for the Ministries of Education and Health. The majority of these 80 new posts have been created against deletions of existing posts. The total expenditure, including revotes, now stands at $275.3 million as against an expected revenue of $269.2 million, leaving a deficit of $6.1 million. Ordinary Expenditure I have described some of the steps taken to keep expenditure within distance of estimated revenue. I shall now describe some of the more significant items of expenditure. There is, of course, the re-grouping of departments into Ministries and the creation of two new Ministries, and the abolition of one. There is further the measures initiated to integrate City Council departments into the Central Government Ministries. I shall refer to this at a later stage. The re-grouping of departments and Ministries is now familiar history and I need not expand on it. The estimates themselves show in detail how departments have been re-allocated to Ministries. Most departments show less expenditure in 1960 as compared with the previous year. Special mention may be made of the Police who in 1960 are expected to spend $1½ million less than in 1959, a most welcome reversal of past trend of mounting Police expenditure. The Police expenditure had increased from $8.2 million in 1950 to $24.4 million nine years later. No one would deny the need for having a strong arm of the law. Nevertheless the reduced expenditure on the Police should not bring about any deterioration in efficiency, for with the support of the public which a popularly elected Government can rally round the Police, there is every indication that the efficiency of their work would be enhanced. The efficiency of their recent action against gangsters proves this. As a result of the economy measures undertaken, most Heads of Expenditure show reductions for 1960 as compared with 1959. Of 47 Heads of expenditure, 25 show reductions, one head of expenditure, namely, Head 43 - Film Censorship, shows an identical amount as between 1960 and the revised estimates for 1959. 24 heads of expenditure show increases of varying degrees. The Ministry of Finance shows a saving of $2.3 million in 1960 as compared with the revised figure for 1959. I would like to believe that this results from a more Spartan degree of self-denial on the part of the Minister. This however would not be wholly true. The reasons are more mundane. The savings are principally due to accounting transfers. Repayment of War Damage Interest Free Loan of $1.5 million has been removed to Head 23 - Charge on Account of the Public Debt. The task of luring tourists to our shores - formerly my responsibility - now falls on the broad shoulders of my colleague the Minister for Culture. The reductions of expenditure under other heads are principally the effect of the cuts in variable allowances. Of the Heads of expenditure which show substantial increases, those heads of expenditure which provide the social services continue to increase. Head 21 - Health shows an increase from $33.3 million to $35.2 million, an increase of $1.9 million. Head 37 - Social Welfare shows an increase from $11.3 million to $13.6 million, an increase of $2.3 million. There is also the perennial increase in expenditure on Public Assistance which in 1960 is estimated at $7.5 million as against $6.7 million this year. I have already referred to the increase in the running cost of Education which in 1960 will reach $65.3 million, an increase of $3.8 million over 1959. The above represents the increases in expenditure on the social services which must be regarded as unavoidable. In the next group of heads of expenditure which show increases, the reason is that these relate to departments which provide commercial services of one kind or the other to the public and to business. The Marine Department and the Marine Surveys Department show slight increases in expenditure. No one would grudge the increase in the expenditure on Postal Services and Telecommunications which are necessary to keep up with increased demand for these services. These, by and large, pay for themselves. Similarly the Survey Department and the Trade Marks Registry provide services to the public and to the trading community and the cost for these must be met. Head 8 - Civil Aviation, however, is a different proposition. There is an increase of half a million dollars in the estimated expenditure in 1960 as compared with 1959. Much as we prize our Airport, the time has come to consider whether it is justified to subsidise the operations of the Airport by an amount exceeding $2 million a year. It is hoped that ways and means will be found to increase the earnings of the Airport, improve its efficiency and reduce the cost. The remaining items of major importance which show sizable increases are either statutory payments such as Head 23 - Charge on Account of the Public Debt and Head 24 - Pensions, Retiring Allowances and Gratuities. The latter expenditure goes up from $16.8 million to $18.6 million in 1960, an increase of $1.4 million. These are statutory payments and nothing more need be said about it. The Charge on Public Debt is also a statutory payment and shows an increase of $6.6 million in 1960, the expenditure being $13.3 million as against $5.7 million this year. The principal increases appear on page 208, Subheads 4 to 7. These provide for the payment of interest on short term Treasury Bills and Treasury deposits which it is proposed to float next year. There is a demand for Treasury Bills by banks and other institutions which have surpluses of cash which they want to keep in interest-bearing short term liquid assets. It is also intended that an approach be made to the small savers who may want to set aside their savings in the form of bonds and savings certificates. All these are measures which the Government proposes to take in 1960 with the object of mobilising domestic savings and putting them to productive uses. Subhead 11, O.C.A.R. under Head 23, Repayment of War Damage Interest Free Loan - $1.5 million is merely a transfer item referred to previously. The Rural Board shows an increase of $4.9 million in 1960, the estimated expenditure under Head 19 increasing from $3.2 million to $8.2 million. This is purely an accounting transfer resulting from the integration of Local Government into the Central Government. Revenue The estimated revenue for 1960 is $269.2 million as against a revised estimate of $259.2 million for 1959. The estimated revenue shows an increase of $10 million as against 1959. These estimates are based on the same rates of taxation in all fields. There are, however, considerable variations in a few individual items, though for the most part items of revenue have been taken at substantially the same level as 1959. Some of these changes are principally due to changes in the accounting system consequent upon the integration of the District Councils into the Central Government. For instance, the Rural Board Revenues which were formerly shown as an appendix in the Estimates are now in the Estimates itself. This accounts for a total of $6.5 million of the extra yield of $10 million. The net real increase in revenue is therefore $3.5 million only. Of the principal items of revenue, income tax is estimated to yield $65 million for 1960 as against $76 million in 1959. The decline is due partly to the less favourable trading conditions in 1959 as compared with 1958. It is expected that incomes and, hence, the tax on incomes, would be lower this year as compared with last year. There is also the fact that in the course of the year several companies transferred their headquarters from Singapore to other places, principally the Federation of Malaya. Their operations in Singapore, however, continue as before, but the transfer of Head Offices would mean, under the provisions of the Income Tax Ordinance, a deferment of tax payment which would, accordingly, reduce the amount payable in 1960. The recent increases in the rates of petroleum and tobacco duty are expected to have an effect on the yield of these duties next year. Petroleum is expected to yield $40.4 million in 1960 as against $35 million this year. The duty on tobacco goes up from $34.2 million to $43.1 million. But this item needs close watching. It is based on certain assumptions about consumer preferences between locally produced cigarettes and imported cigarettes. It remains to be seen whether these assumptions will, in fact, be justified. The expected yield of revenue from all sources clearly demonstrates the point I made earlier that we have reached the tax plateau given the present basis of personal incomes, consumer expenditure and tax structure. Such marginal adjustments as have been made in the past year or two as well as those that are contemplated for next year will not produce the spectacular revenue increases which were witnessed during the period 1950 to 1953 when the total revenue more than doubled in four years. That was the period during which the post Korean war boom tools place and brought about both rapid increases in incomes as well as a considerable amount of capital accumulation. The initial impulse was, of course, external and we benefited largely in a fortuitous manner. If we want to bring about a similar expansion in the economy, it would be too risky a policy to wait for a repetition of such a stroke of good fortune. This may well come about, but we cannot stake the future of the country on chance occurrences, such as international conflicts. City Council A moment ago I referred to the City Council. The integration of the City Council into the Government has already commenced under the direction of the Prime Minister. Initially, City Council Departments have been allocated to appropriate Government Ministries for guidance and decisions on policy matters. The Departments still retain their separate identities, hierarchy and organisational procedures. In particular, the financial accounting of City Council Departments will remain separate from the Government. Establishments and staff have, in general, not been merged into a single uniform organisation with Government Departments. The process of integration must be carried out in stages. The first stage, in which only policy directives are issued from Government Ministries to City Council Departments, has already been undertaken. The other stages which remain to be carried out must be completed in an orderly process. There are numerous matters of great complexity standing in the way of complete and final integration. It would be quite possible to carry out the complete integration scheme ourselves, using the personnel available in the Government and the City Council. This would, however, mean that the best administrative, legal and financial brains will have to be set aside for a fairly long period to handle these problems. The Government has decided that, in view of the heavy pressure of work found at the upper echelons of the administration, it is desirable to invite overseas experts to advise the Government on the many problems of integration. Accordingly, we have approached, under the Colombo Plan, the Government of Canada for a team of experts in the fields of finance and budgetting, establishment and staff matters, and local government legislation. It is expected that the team of experts will arrive early next year to assist the Government in this heavy and complicated undertaking. Until the recommendations have been received and considered, the budgets of the City Council Departments and the Central Government will continue to be made separately. A consolidated budget is not possible until all issues have been finally resolved, staff and departments fully integrated, the Public Utilities Board set up, loans and assets distributed as between the Government and the Public Utilities Board, and many other complicated problems solved. It can well be imagined that a task of this magnitude will take several months to complete. Development Estimates The development projects entered in the Development Estimates fall into two groups. In the first group is included those projects which were in the process of construction in 1959 and had therefore to be carried out to completion. They were all projects which formed part of expansion programmes worked out in the past and awaiting completion. The total of continuing projects carried forward from 1959 amounts to $28.0 million. Education and Health lead the field with $7.7 million and $5.8 million respectively. These are items in the construction and extension of schools, hospitals and hospital services. Continuing projects have therefore been entered and assessed in detail. They will be carried out to completion next year. The other, and by far the larger part of the Development Estimates, consists of new proposals initiated by this Government. In this sense therefore the Development Estimates have much more of the imprint of the policies of this Government as compared with the Ordinary Estimates where continuity with the past had to be preserved. It is in the nature of things, with the short time available and the pre-occupation of immediate tasks, that the new development proposals are more definitions of targets and objectives than projects which had been processed by architects, engineers and other technicians to the required degree of finality. This being the case, two consequences follow. The first is that the amounts are entered in the Estimates in round numbers. The second is that they are all subject to Treasury control. This latter step is necessary to ensure that no expenditure is made before the project has gone through the detailed screening by the technicians. It may be that, taking into account the vast amount of planning and preparation that will be required in relation to the availability of engineers, architects and others, there will be some difficulty in completing all the works envisaged. Nevertheless, every effort will be made to bring into fruition the intentions of the Government in regard to these capital development projects. A detailed study will be made by the Commission of Enquiry recently appointed on the capacity of the building industry. This will enable the Government to put the development funds to the optimum use. In 1960, the value of the development proposals add up to $105.8 million. The expenditure of money of this order of magnitude will give a strong stimulus to the economy. As will be apparent from the details, it will have more than just a pump-priming function, necessary though this may be at this stage. The development projects will add to the permanent accumulation of wealth in this country and strengthen the sinews of the economy. I will now give a brief account of what these new projects are and what they hope to achieve. The largest single item in the Development Estimates goes to the Ministry of National Development. A sum of $27.4 million has been allotted to that Ministry. The details appear on page 477. There is a loan of $25 million to the Housing Authority which will be established next year. There is also a sum of $800,000 allotted for rural development projects. This will consist of various schemes designed to increase the productivity of farmers and fishermen, as well as to extend the areas under cultivation. The Ministry of Education stands second in the demands on finances provided by the Development Fund. A total of $21.9 million has been allotted to them of which $7.7 million is for continuing projects and $14.2 million for new development. I have already referred to the need for money to be spent on education, both on teachers and on building new schools. The sum of $21.9 million is not as much as the Minister for Education would like to have, but this is all that we can spare in 1960. I am certain that the present Minister, with his long business experience, will be able to put this money to far more effective uses than his predecessor who had to make an untimely exit from the political scene. Some of the schools sited by the previous administration show an astonishing degree of incompetence and lack of foresight. Anyone who passes through Jurong Road will be astonished to see two large and modern buildings sited in the middle of nowhere. The Ministry of Finance has made a claim for $20.5 million. $500,000 consist of the second instalment of a $2 million loan to be made to the Singapore Government Officers Co-operative Housing Society. $20 million has been allotted to the Economic Development Board, which will be established next year. This is a long awaited event and I wish to take this opportunity to say something about it. Economic Development Board The establishment of the Economic Development Board is related to the Government's plan of accelerated industrial growth in Singapore. The intention to establish such a Board was announced during the election campaign and accordingly this proposal in the Development Estimates has the mandate of the electorate. It is envisaged that the total resources of the Board will reach a figure of $100 million if the Board were to make any significant contribution to industrial growth. In 1960 the first draft from public funds would be made and an initial sum of $20 million has been set by. The first draft of the Bill to establish the Board has been completed and it is under close study by the Government. A number of important issues still remain to be resolved. Without attempting any precision in definition, I may be permitted to discuss the principal functions and objectives of the Board. The Board will act, in the first instance, as an industrial bank and will make available to industrial concerns loans on both short and long terms. The Board will also be charged with certain executive powers in carrying out the Government's programme of industrialisation, particularly in regard to the planning and preparation of industrial sites. The Board will have a staff of economic planners and industrial technicians with which it will be equipped to discharge its functions within the framework of general Government policy. It will also be able to offer both industry and Government technical and expert advice and services. An undertaking of this nature is one not lightly to be embarked upon. Its necessity is apparent to all. But great care has to be taken to ensure that the large sums of money placed at its disposal would be spent to the maximum advantage and not frittered away in unprofitable ventures. The Government has approached the International Bank for Reconstruction and Development for assistance in recruiting the top executives of the Economic Development Board. In so doing, we are not departing from our previous pledges to the electorate. I say this because there may be criticism from certain quarters that the policy of overseas recruitment may run counter to the general principle of Malayanisation which this Government supports. We have stated in our election manifestos and other pre-election documents that there is not the skill and experience in this country which can cope with the immensely responsible and complex duties which the Economic Development Board will have to discharge. It was stated then quite clearly that local talent and experience not being available, we shall have to recruit from overseas. In the era of Asian revolution, this step which we adopt may appear to be distasteful to some and retrograde to others. To these people, we can say with perfect candour that members of the P.A.P. political leadership are not lacking in talent, vigour or self-confidence. A combination of these qualities, however, may well lead to recklessness bred out of arrogance and ignorance if it is not tempered with a sense of realism. Singapore is an open city exposed to the business and political currents coming from all parts of the world. As such, we are more cosmopolitan in outlook than perhaps any other country in Asia. While we passionately believe in nationalism in its fine and creative sense, we must desist from those forms of economic nationalism where these militate against our interests. The proposal to recruit the top executives of the Economic Development Board from overseas is therefore a measure which should find general support in this country. It is fitting that we should approach an agency of the United Nations, namely, the World Bank, for assistance in this matter and if we succeed in attracting the best talent available, this will be all to the good of Singapore. We have also made applications to the United Nations through the U.K. Government for assistance in a technical study of investment possibilities in Singapore. In 1960, with the establishment of the Economic Development Board and the full use of the technical and advisory services available through the United Nations agencies, we shall see the beginning of an energetic plan to promote a rapid growth of industries in Singapore. In this connection, I wish to reiterate the broad outlines of our industrial policy. We have stated in our election manifestos that in the stage in which Singapore finds itself today, the primary responsibility of industrialisation must rest on private enterprise. This being the case, we should do everything possible, consistent with the wellbeing of our population, to attract to Singapore the maximum amount of overseas capital and overseas technical and managerial skills and do all that we can to induce local enterprise and capital into the establishment of new industries. The consequences of this policy must be understood by all. Business people do not embark on new ventures for political objectives, such as the defence of the democratic system. They do so on a calculation of profits and if we want to induce them to develop new industrial enterprises, we must make the economic setting suitable for the promotion of these activities. Coming back to the Development Estimates, the next substantial item is an amount of $7 million allotted to the Ministry of Labour and Law, Head D.34, at page 484. This sum of money is intended to be used on capital development so as to alleviate the grave problem of unemployment now facing this country. The basic solution of course is not to be found in relief projects but in the expansion of the economy, particularly in the way of establishing new industries to provide for greater employment. The effect of the new development expenditure would be to inject a sufficient stimulant in the economy to raise it from its present state of stagnation. Greater prosperity engendered in the price of rubber would also contribute towards economic recovery in this island. It is likely, however, that there will still remain a residual of unemployed persons, particularly the young looking for work for the first time. It is to provide useful activity for these persons that the Government has allotted a sum of $7 million to be spent on unemployment relief works under the direction of the Minister for Labour. It is the intention of the Government to organise unemployed youths into work brigades. They will be grouped in residential units to be stationed in various parts of the island where useful construction activity can be carried out by way of land reclamation, road building, irrigation works, reclamation of swamps and so forth. Special attention will be paid to the spiritual and moral wellbeing of these youths organised in these work brigades. They will be taught the value of social discipline and the meaning of social responsibility Their needs in the way of cultural enlightenment will not be neglected. These are important matters for we must avoid the atmosphere of spiritual demoralisation which could creep into poorly managed and badly conceived relief works projects. It is expected that this sum would be sufficient to provide for the employment of at least 5,000 persons. Rates of pay would below, considerably less than those paid to the present detachments of unemployed persons now engaged in construction work of one kind or another At present these persons are paid $3 a day, with provision in some cases for overtime. Such rates of pay are higher than what people in fulltime occupation in some trades are earning, and it would therefore be a misnomer to consider such projects as properly falling under the relief of unemployment. A considerable amount of detailed planning remains to be done as regards the organisational structure of the work brigades, and the engineering and construction details on selected sites. Accordingly, this whole item of expenditure has been made subject to Treasury sanction. The sum of $5 million under Head D. 9 - Marine - represents really a token provision for port improvement. For some years now the Government has been considering plans to improve the deplorable condition of the Singapore River which is a vital artery of our entrepot trade. This river is very congested; river traffic is subject to stoppages at low and high tides, and parts of the quays on private land are in a state of sad disrepair. The Marine Department has made a proposal for the deepening of the inner harbour opposite Beach Road and the construction of a new breakwater. Detailed planning and expert evaluation of this project have still to be made. Nevertheless, these projects have been entered in the Development Estimates even though the final decision to embark upon them will have to be taken by the Port Authority as was recommended by the Milbourne Commission. The inclusion of this item, if it does nothing else, serves to underline the Government's keen interest in maintaining and promoting the efficiency of our port services. It also indicates the Government's willingness to approach overseas governments or United Nations agencies for loans to finance these projects. The last item of the Development Estimates on which I wish to comment is the sum of $2 million allotted under Head D. 40 to the Ministry of Culture for the extension and development of radio, information and publicity services. It is intended to introduce next year commercial broadcasting in a somewhat diluted form. For all these, a provision of $2 million has been made, the expenditure of which is again subject to Treasury sanction. The Civil Service The Ordinary Estimates show a deficit of $6 million - and this after the most strenuous efforts had been made to reduce expenditure. There will be further claims on the revenue next year by way of applications for supplementary Votes. There is, for instance, the question of Government contribution to Nanyang University. The question of a grant to Nanyang University will be decided after due consideration has been given to the Report, only just received from the Commission of Inquiry under the chairmanship of Dr Gwee Ah Leng. Accordingly, this item has not been included in the Estimates, and I prefer that reference be made to it in the Budget statement. One other item can be foreseen - and this is the payment for the Scientific and Professional Allowances, which the Government has declared itself willing to introduce. Negotiations with the Associations representing technical and professional officers have not gone as smoothly as desired. The doctors, for reasons not clear to me, considered the present moment opportune to make claims for a revision of basic salary. It is, of course, not possible to accede to this request. I now wish to take this opportunity to announce the amount of technical and professional allowances which the Government is prepared to offer its technical and professional employees with effect from the 1st January, 1960:-

I second the motion.

The Question is, "That the Assembly approves the financial policy of the Government for the year 1960." In accordance with the provisions of paragraph (1) of Standing Order No. 69A, the debate now stands adjourned. Debate to be resumed, what day?

December the 10th.

4.32 p.m.

Mr Speaker, I beg to move, That this Assembly do now adjourn to the 10th of December, 1959.

I second it.

Question put, and agreed to. Resolved, That this Assembly do now adjourn to the 10th of December, 1959. Adjourned accordingly at thirty-three minutes past Four o'clock p.m. to Thursday, 10th December, 1959.