6.46 p.m. The President (Dr Benjamin Henry Sheares): Honourable Members, we meet today under circumstances vastly different from those prevailing when the last Parliament was convened on 6th May, 1968. Then, the prospects were grim. We faced the stark question of survival: how to hold up the economy, to generate jobs, of any kind, to mop up massive unemployment. The will to succeed was decisive. Sheer determination, hard work and realistic planning enabled Singapore to make the grade. Imaginative policies, combined with tough measures, have minimised the economic and social dislocation. Today's continuing and controlled boom is giving Singapore that glow of success. There is a bloom which will spread from the city to the new towns, and through to the villages and kampongs in the rural areas. Now, the challenge is to maintain and continue this rapid pace of growth for continued high growth rates. Then the trend towards a better life for everyone willing to work will become more pronounced, and in more gracious surroundings. We cannot seek fame for sheer size. But we can achieve higher standards in everything, with the emphasis on quality, whether in jobs, schools, hospitals, social and recreational amenities or homes. We can become a centre for excellence in all fields important to our economic and cultural life. To achieve this, we must fulfil two pre-conditions. First, smaller families-ideally two children per family - so that more resources and care can be given to each child by the family and the State. Second, Singapore must eschew one of the characteristics of the welfare state syndrome, where everyone expects others, not himself, to work harder to carry the subsidies for services everyone wants. For us, a yet to be developed and fully industrialised society, this selfish rejection of the work ethic is fatal. On the contrary, hard work and high performance must be encouraged and rewarded. No one should get away with enjoying services subsidised through the hard work of others, without making his own contribution, to the best of his ability and capacity. After the last war, several countries in the West set out to create a more "cushioned" society. The state promised to provide for everyone, from cradle to grave. In the beginning, they promised free pre-natal and accouchement services, free medical and dental treatment, free spectacles and dentures, free education, free school meals, heavily subsidised public housing, and generous old-age pensions. The idealistic social philosophy was to cushion people from the harshness of personal inadequacies, and the sometimes cruel dispensations of fortune. But, in the course of the last 27 years, this ideal has had to be modified, because of escalating economic costs, and worse, because of the debilitating psychological consequences on the working population. Policy makers soon found out that free services led to excessive use, and much abuse. Gradually, but inevitably even under socialist governments, substantial charges have had to he imposed on these initially almost free services. But the greater damage to the spirit and morale of a people was harder to correct. A profound change in attitudes to work, and the absence of personal shouldering of responsibility, have permeated considerable portions of their societies. They have reared a younger generation who now believe that the state owes them a living, a good living. They believe the good things in life are easy to come by, by mass agitation, by strikes, and through confrontation with established authority. Quite a few of the younger trade union leaders do not believe that rewards should be equated to hard work or personal performance. They believe that all should be paid equally, the industrious as well as the indolent. Others, who they are not quite clear about, will generate the wealth, the larger part of which the state can cream off to pay for the comfort and welfare of themselves and their followers. In some countries, professionally trained men and women, instead of creating wealth, use their knowledge and ingenuity to defeat the tax collector. Many high income professionals and entrepreneurs stop trying, and even stop working, in order not to make profits just before surtax rates. Or they spend lavishly on expense accounts, and other frills, to defeat the tax collector. Some even commute to tax-free havens in the Caribbean and elsewhere, for more than six months of a year, to escape income tax on dividends from investments they made in foreign countries. Singapore's policies must not cause this kind of distortion, or the workings of the competitive, achievement-oriented society which have brought us to where we are, will fail. We must and can keep our population growth small, so that every child can be better fed, clothed, trained and nurtured. We cannot afford to get into this unhappy vicious circle, the something for nothing syndrome. We must pay for what we want. Everyone must work to earn and pay for what he wants in life. In two fundamental areas, there must be heavy subsidies. Good health and good education must be available to all. These are costly objectives. But the user must pay a small percentage of the actual cost. It is to remind him of the enormous cost the rest of society is paying for him. This nominal payment will also prevent abuse in the user of these services. My Government intends to allow wages to go up, but in a steady and orderly fashion. However, instead of increasing taxes on his increased earnings, we shall leave the worker with most of the increased income. Thus, the responsibility of what he does with this increased income will rest with each individual. He has to decide whether be wants to spend his money on luxury articles or expensive services he does not really need, or to save his money in buying a home, or putting it in the Post Office Savings Bank or investing it in Government bonds and stocks which yield interest or dividends. The principles of our taxation policies must encourage people to want to work hard and to cam more, so that they can save more. High savings lead to high capital accumulation, and, as in Japan, will enable more wealth to be generated. Taxes will fall at least as much on spending as on earnings, to encourage savings. We should not get caught in the consumer-society before we have become fully developed. Everyone will try to earn more if he is allowed to retain the major part of his earnings, to invest in sound enterprises which can further increase his income. Many a newly independent state, barely developed, that have promised to carry their voters from cradle to grave, have had their backs broken. And it will take decades to mend the damage. Even highly developed industrial societies have been beset with ever increasing taxation to meet ever higher subsidies in social services. Even the most affluent have not been able to protect the pensioner and the fixed income groups from being impoverished by inflation. We must learn from the lessons which others have paid bitterly for, that nothing in life is for free. On constitutional and security matters, the last few years have shown that some safeguards are necessary. Constitutional amendments will be made early in this session of Parliament, so that no surrender of our sovereignty, or any part thereof, by way of incorporation into, or federation with, any other country is possible, unless two-thirds of the total electorate vote positively for it in a referendum. It would be criminal negligence to allow foreign interests with large financial resources to manipulate our internal politics, by financing Singapore political parties, professional, academic and other groups, to try to beguile domestic opinion, especially if their efforts are insidiously multiplied by purveying them through mass media set up and supplied generously with funds for this purpose. No foreign interests can be allowed to take over Singapore through financing and manipulating political parties through their naive or vain, self-proclaimed leaders. Whether fools or knaves, they must be saved from their own follies or villainies when powerful groups set out to use them. However, this legislation will not prevent my Government, at present or in the future, from joining other countries inside or outside the region, in arrangements for mutual security, or for economic purposes, such as a free trade area, and perhaps, eventually, even a common market. Legislation will also be introduced to ensure that all political parties will have their party expenditure and income periodically inspected. The inspection will be done by Supreme Court Judges, with the help of accountants, auditors and other expert examiners. The purpose of inspection will be to discover whether foreign money has been injected directly or indirectly into any of our political parties. Where the Judge is satisfied that donations are genuinely from Singapore donors, their identities and all other information will not be disclosed, not even to the Government. These are present safeguards for future contingencies. For the immediate present, there are five challenging years ahead. They will not be free from the unexpected. But an alert people, in trim, and prepared to meet sudden dangers, and to respond swiftly to sudden changes, have a more than even chance of overcoming their problems. In the next five years, may the deliberations of honourable Members help us all to achieve, in qualitative terms, what, in the last five, we have achieved in quantitative terms. At the conclusion of the President's speech, Mr Speaker, preceded by the Serjeant at Arms, the Clerk, the Clerk-Assistant and the Second Clerk-Assistant, escorted the President (accompanied by two A.D.C.s) out of the Chamber, and the House adjourned without question put, pursuant to the Standing Order. Adjourned accordingly at Eight minutes past Seven o'clock p.m.