MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE - FINANCIAL YEAR 1ST APRIL, 1973 TO 31ST MARCH, 1974
Mr Speaker, Sir, the questions which have been asked by Members cover a very wide field. Some of them perhaps are more appropriate to other Heads, e.g. Inland Revenue, in respect of income tax. But I hope that I can deal with all their queries under this particular Head. If I may take the first question raised by the Members for Sembawang and Anson, I would assure them that in regard to the rising prices of foodstuffs and commodities, the Government has always been very conscious of their effect on costs of living, and has therefore devoted considerable time and effort to try and minimise the price increases of these commodities. However, it is not always possible to do very much because of the nature of our economy. Being an entirely open economy, Singapore is heavily dependent on imports for almost all of its requirements of foodstuffs and essential commodities. In 1972, imports of foodstuffs totalled $1.2 billion. Of these imports, $570 million was re-exported. But the balance, approximately worth $630 million, was retained for local consumption. The prices which are charged for these imports must, of course, reflect the conditions of the countries from which these imports come. Our locally-produced livestock, vegetables and fruits totalled only $160 million. We process, of course, some commodities such as sugar, wheat flour, condensed milk, and so on. But the raw materials which are produced abroad are imported, and they make up more than 70 per cent of the cost. Therefore, there is not much we can do as far as this 70 per cent is concerned. 6.15 p.m. As inflation is rampant in the countries from which we buy our requirements, we can do very little to prevent price increases. However, we can try to moderate some of these price increases. For example, in the case of sugar, current world prices of raw sugar are about 100 per cent higher than they were a year ago. The price of sugar in Singapore has increased by only 16 per cent. This was possible because the Sugar Industry of Singapore, which produces all the sugar consumed locally, had the foresight to secure, over the next five years, supplies of raw sugar on a long-term contract basis at prices lower than current world prices. In the same way, in Australia, which is the cheapest source of wheat, wheat grain prices increased by nearly 50 per cent. The Government has allowed the two flour mills increases of only 25 per cent. In the case of rice too, because of our stockpile requirements which we impose upon rice importers, consumers in Singapore benefit from the imports which were made at lower than current world prices. A very sharp rise in the price of rice in Singapore has therefore been avoided. I think the figure of 50 cents mentioned by the Member for Sembawang is very reasonable in comparison with the prices charged in other countries, where there is even a physical shortage of rice at those prices. The Government will continue to be alert to any possibility of price increases in other essential commodities. However, it must be recognised that because of the great dependence on imports price increases cannot be avoided. A close watch on wholesale and retail prices to prevent any undue profiteering, hoarding or manipulation, will be maintained. If I may take the second question of the Member for Sembawang. He spoke of our very great trade deficit and asked what action was being taken to reduce such great deficits. In past Budget statements I think I mentioned the fact that deficits in our trade, while very serious, have been covered by our invisible earnings from tourism, by capital inflow, and so on, so that there is really no need for much concern. Some of the trade deficit is also due to the importation of capital equipment and goods which will in future produce a greater possibility for export of goods. Therefore, to that extent, the figures would be self-balancing. I thank the Member, however, for his concern for what he called the "ulcer in our economic bodies". As far as his question on INTRACO is concerned, the intention was that the setting up of INTRACO would help in the export of our manufactures. While the primary objects have been achieved, they are now exporting to 40 countries, including the United States, Australia, the EEC countries, ASEAN countries, and some socialist countries. The increase in our trade with the socialist countries has not been all that is desired. However, exports over the last two years have accounted for some 65 per cent of the company's total turnover. I think greater efforts will have to be made in export promotion and, while INTRACO will be one vehicle for such export promotion, it will be necessary over the next few years to develop other institutions. The Export Promotion Centre, which has been set up in the Trade Division of my Ministry, will be responsible for further progress in the drive for more exports to various countries, including the Communist countries. The Member for Sembawang then turned to the question of what he called the sharp decline in investments in the ship-building industry in 1972. My Budget statement did not, however, refer so much to the decline in investments as to the decline in investment commitments, which is something different. If he will look closely at col. 466 of Hansard, he will see that this is really what I meant: 1971 was, of course, an unusually good year as far as investment commitments were concerned, and although commitments in 1972 were by comparison smaller, our computation has not taken into account the expansion of existing shipyards which, from provisional figures, amounted to some $83.1 million in 1972. As I have mentioned in my Budget statement, there is really not very much need for concern about investment commitments in ship-building and shiprepairing because our locational advantages are such that we would expect to maintain our competitive advantage in these industries. The investments which have been made in the past and which are continuing to be made, whether by expansion or by new commitments, will ensure that we will have an output of $600 million by 1975, as I have mentioned in my Budget statement, and some $800 million by 1976. I think what we are now looking forward to is an expansion of the supporting industries for shipbuilding, such as ship equipment and machinery, and this will, I hope, upgrade our ship-building machinery. A further matter which the Member for Sembawang raised was the question of salaries of officers in Divisions IT, III and IV. In my statement in Parliament on the 16th February, I indicated that after the restructuring and realignment of salary scales, which have now been virtually completed, it will be Government's intention to consider increases for Divisions II to IV, and even for those in Division I, namely, on the basis of the guidelines issued by the National Wages Council. For the benefit of the Member for Sembawang, I would reiterate that it is Government's intention to adopt, so far as this relates or is applicable to the public sector, the agreed general guidelines of the National Wages Council for salary increases every year. I now come to the questions asked by the Member for Anson. He raised a considerable number of points over a wide range of subjects. Let me first deal with the chit funds. The last date for receiving claims against Gemini Chit Fund Corporation was the 6th January, 1973, and against Stallion Corporation Limited was the 16th December, 1972. Since then the Official Receiver has been actively processing the claims from subscribers of these two and nine other chit fund companies being wound up by the court. There are approximately 42,000 claimants altogether, and each claim has to be individually verified. No effort is being spared to expedite the settlement of these claims. I do not think a date can as yet be set for such settlement. The Member for Anson also touched on the question of the National Wages Council. I have mentioned this in another connection, but he wanted to know when they will be meeting and what is the time at which they will submit their recommendations. This is something which, of course, I am not fully aware of, but they have met since December last year, and I believe they are hoping to submit their recommendations to the Government by the middle of April. I believe some Members on the other side of the House will be able to give him more information on this. The Member for Anson also touched on the question of price control. I have already answered this to some extent in my reply to the Member for Sembawang. But let me assure him again that the Trade Division and the Primary Production Department conduct checks on prices of essential foodstuffs. The Government will continue to exercise some control on such commodities as sugar, wheat, flour and condensed milk, which are protected by tariffs and are therefore to some extent dependent on Government permission for price increases. They have to justify such price increases by giving us figures of cost. The Member for Anson made some suggestions as to how to beat the price increases. I appreciate the proposal he made for the establishment of cooperatives. This, I think, will contribute to free and fair competition, which would be the best safeguard against unfair and manipulated prices. However, such co-operatives are best managed by non-governmental organisations, such as the one established in Toa Payoh. I hope that this pilot project will prove successful and be the precursor of many other such co-operative stores. 6.30 p.m. As to price tagging, it has already been introduced by shopping centres and emporiums, and no doubt this tagging could be extended to other shops. I do not think that legislation to this effect would help to overcome the problem of profiteering by retailers. As for daily publicity of prices of essential foodstuffs, the suggestion is interesting and can be given consideration. But many prices, such as those for condensed milk, sugar, soft drinks, coffee, and so on, are fixed for long periods of time and do not really require publicity. In the case of other essential foodstuffs, prices vary from locality to locality. In the rural areas, for example, I think it may be possible to buy, say, papayas or eggs at cheaper rates than in urban localities. The Member for Anson, I think, also mentioned about terms and conditions of service in the Government sector, relating particularly to clerical officers and clerical assistants. I agree that as far as clerical work is concerned, it is very difficult to distinguish the duties of clerical officers from those of clerical assistants. The general rule is that clerical officers are given more responsible clerical duties. It is not true that clerical assistants have no prospects of promotion. In fact, a promotion exercise was held in early 1972, and out of 833 clerical assistants who were eligible for consideration, 277, or 33 per cent, were promoted to clerical officers as from 1st April, 1972. 1 have already said that Government employees will get salary increases based on the National Wages Council guidelines, and it is not true therefore that the lower grades of workers in the Government sector are totally neglected. The Member also asked about compensation for reduction of leave for officers in statutory bodies. I think this matter is being reviewed and will be the subject of further negotiations or offers by the statutory bodies. Finally the Member mentioned the question of increase in CPF contributions from 10 to 12 per cent in 1972, resulting in a lower take-home pay. This may be true if one considers just the pay for a single month. But if the pay is taken in terms of a year, then the 13th month non-pensionable allowance, which was paid last year and again this year, more than offsets the increase in contributions to the CPF. If anyone feels that his take-home pay for the other months has been adversely affected by the increase in CPF contribution rates, he can always instruct the Accountant-General to have the total contributions for the year deducted at source from his 13th month payment. This would help in alleviating some of the hardship. I would remind the Member that, apart from the deduction from the worker's pay, the increased CPF contribution is also paid by the employer. This will result in some benefit to the worker because it can be used as payment to the Housing Board, so that lime amount which is previously paid from his salary is now substituted by the amount available from the employer's contribution. The Member also mentioned the question of transferring workers from the pension scheme to CPF arrangements. The Government is thinking of transferring pensionable officers in Divisions III and IV to CPF terms when these have been improved. Details of this conversion are still being worked out, and I am therefore not in a position to say more at the moment. The Member for Anson also made a very eloquent plea for the plight of civil servants, who are retiring before 31st December, to be given the 13th month payment or a proportion thereof. He also wanted to know whether I would consider increasing pension rates in view of the rising cost of living. As a pensioner myself, I have considerable sympathy for the case of pensioners, but I am afraid I will have to say no to his very eloquent pleas. I can hold out no hope of varying the decision on these cases. He also mentioned the question of tariffs on foreign manufactured articles. The policy which Government has always adopted has been to grant tariff protection to efficient and deserving industries faced with unfair competition from foreign products, and which are able to contribute to the development of the economy. Such protection is normally given on a very selective basis so that we will be able to retain the stimulus of competition and avoid undue increases in the cost of living. The imposition of too liberal tariffs must be detrimental in the long run. The present position of manufacturing is that we are encouraging more technology-based industries, and these industries would usually have their markets abroad and would not therefore require tariff protection. Sir, another matter which the Member for Anson raised was the question of the income tax forms. He complained that the forms are in very small print and too complicated for ordinary workers to fill in. I have considerable sympathy for the Member for Anson who, like myself and other gentlemen of advancing years, find it difficult to read what they now consider small print but which they previously found quite readable. I am informed that the print used in the income tax return is of the same size as that used in paper-backs and in certain pages of our daily news- papers which are very widely read and appear to give no difficulty to the average or younger reader. If a larger print is required, then the income tax form would run into more pages and cost considerably more. The income tax form has remained the same over the last few years and there is really no reason for the ordinary worker to be confused by the requirements. But I do not blame him if, like Professor Albert Einstein, he does not find the filling in of these income tax forms easy. I am told by the Income Tax Department, and I received it with some incredulity, that from experience they found that the majority of the forms received have been correctly completed. But if there is any difficulty in filling in the forms, the Income Tax Department is willing to offer assistance and there are officials who can help taxpayers to fill in the forms correctly. I now come to the Member for Jurong who raised the question of societies registered under the Societies Act and the possibility of exempting them from income tax. I think he asked a similar question at Budget time last year, and T gave him a fairly lengthy reply. It seemed to be exhaustive enough. But if I may recapitulate: I confirm again that where the objects of a society registered under the Societies Act are wholly charitable and benefit the community at large, there is specific provision in the Income Tax Act for exemption of tax on its income. This then leaves us with societies which are not wholly charitable. Even among these societies, very few would be liable to income tax as tax is only liable if less than half of its receipts come from members. I think most of the receipts of the societies he mentioned have come from non-members and that it was rather painful that it should be lost in income tax. But as I said, the legislation enables us to give exemption to those societies which have more than half of its receipts from members. The rationale for this is that if the society is mainly dependent on its members for its funds and for its existence, it is not trading or profit-making. 6.45 p.m. On the other hand, if the contributions received from non-members of the society outweigh the subscriptions collected from its members, then it can be assumed and deemed to be carrying on business and, therefore, tax is liable on any surplus in its accounts, just like any other trading organisation.