Hansard, 1975-03-03

Under the provisions of clause 2(d) of Article 30 of the Constitution of Singapore, I have granted permission to the following Member to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which he may be appointed) for the period stated:- Mr Fong Sip Chee (Stamford), Parliamentary Secretary to the Minister for Labour - from 18th March to 7th April, 1975. YEOH GHIM SENG, Speaker, Parliament of Singapore

Order. I have to inform Honourable Members that I com- municated to the President the Address agreed to by resolution of this Parliament on the 27th February, 1975 I have received a reply from the President acknowledging receipt of the kind message of Parliament transmitted to him.

"to make provisions with respect to medicinal products and medical advertisements and matters connected therewith; and to repeal the Medicines (Advertisement and Sale) Act (Chapter 161 of the Revised Edition) and the Sale of Drugs Act (Chapter 167 of the Revised Edition) and to make consequential amendments to the Poisons Act (Chapter 164 of the Revised Edition)", presented by the Minister for Health and Home Affairs (Mr Chua Sian Chin); read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Singapore Family Planning and Population Board Act (Chapter 168 of the Revised Edition)", presented by Mr Chua Sian Chin; read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

"to consolidate and amend the law relating to the registration and enrolment of nurses and midwives; and for other matters connected therewith", presented by Mr Chua Sian Chin; read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

"to provide for the issue from the Consolidated Fund of the sums necessary to meet the estimated expenditure for the public services of Singapore for the financial year 1st April, 1975 to 31st March, 1976", recommendation of President signified; presented by the Minister for Finance (Mr Hon Sui Sen); read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

"for making Supplementary Provision for the public services for the financial year 1st April, 1974 to 31st March, 1975", recommendation of President signified; presented by Mr Hon Sui Sen; read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

2.35 p.m. Order read for consideration in Committee of Supply [Allotted Day].

First Supplementary Estimates of Expenditure for the financial year 1st April, 1974 to 31st March, 1975, contained in Paper Cmd. 2 of 1975. The summary is on page 4 of the Paper. No notice of amendment has been received.

Question, "That the sums stated for those heads of expenditure which appear in the Summary of Totals of Supplementary Estimates on page 4 of Paper Cmd. 2 of 1975 stand part of the First Supplementary Estimates of Expenditure for the financial year 1st April, 1974 to 31st March, 1975," put, and agreed to. Question, "That the sum of $22,068,400 shall be supplied to the Government under the heads of ex penditure for the public services shown in the First Supplementary Estimates of Expenditure for the financial year 1st April, 1974 to 31st March, 1975," put, and agreed to. Resolution to be reported. Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker, Sir, I beg to report that the Committee of Supply have come to a certain resolution. Resolution reported - "That the sum of $22,068,400 shall be supplied to the Government under the heads of expenditure for tile public services shown in the First Supplementary Estimates of Expenditure for the 1inan~ial year 1st April, 1974 to 31st March, 1975, contained in Paper Cmd. 2 of 1975."

Mr Speaker, Sir, I beg to move "That Parliament doth agree with the Committee on the said resolution."

Question put, and agreed to. Resolution accordingly agreed to. 2.38 p.m.

Mr Speaker, Sir, I beg to move the motion standing in the name of the Minister for Communications, namely, That this Parliament, pursuant to subsection (2) of section 65 of the Road Traffic Act (Chapter 92) resolves that the Highway Code published as Notification No. 5 8 in the Subsidiary Legislation Supplement to the Gazette of 17th January, 1975, as contained in Paper S.L. 17 of 1975, be approved. Sir, the last Highway Code was passed by a Resolution of Parliament at its sitting on 24th January, 1968. Since the issue of the last Highway Code, a number of developments have occurred on the road transportation scene. Several new traffic signs such as "Taxi Stop", "Box junction" and "Bus Lane" have been introduced together with their corresponding Rules. In view of these and numerous other changes, it was found necessary to update the Code. In consultation with the Traffic Police, the Registry of Vehicles and the Attorney-General's Chambers, the new Highway Code was drawn up. The new Code contains 114 sections as compared to 107 sections in the old Code. Eighty-two sections of the old Code were retained intact, while 21 sections were revised, and four sections deleted. Six new sub-headings have been added, namely "Keep Left", "White Lines", "U-Turn", "Following Distances", "Speed and Stopping", "Smoky and noisy exhaust". Metric units for speed and distance have also been included. The Highway Code is the code of conduct for motorists and not merely a digest of traffic laws. It lays stress on the responsibilities of road users towards each other. Close and faithful observation of the Code will lead to greater safety on our roads. Question proposed. 2.41 p.m.

Mr Speaker, Sir, of course we have to approve the motion that has just been tabled, but I would like to take the opportunity of saying one or two words about the Highway Code. The first point I would like to make, Sir, is that the Highway Code, up to the present moment, has been more honoured in the breach than in the observance. It is to avoid this amended Highway Code becoming a dead letter that I would like to say a few words. You can just take your car out on any occasion to any place where there are road users and you will find scores of traffic violations. Take, for example, The most important rule that has been given some prominence in the Highway Code, namely, that of "Keeping Left". Coming down Bukit Timah Road or Dunearn Road, the two arterial roads that lead into and out of Singapore, you will find lorries, supposedly with discs indicating their maximum speeds permissible, keeping grimly to the right side of the road and those vehicles keeping to the left side of the road are those which are trying to overtake those that are keeping grimly to the right side of the road. Another matter is that of the speed limit, which is again another point that is stressed in this Highway Code. I think the general tendency is for people to drive at least 10 miles per hour faster than they are allowed to drive. Perhaps this has been taken into account. But let us not make a hypocrite of the law, a mockery of the code, feeling we can allow people to drive faster than they should. In order to inculcate a respect for the code, one has to implement this code. This is the reason why I am making this remark that implementation of the code has not been successful. There has been a safety campaign recently with certain limited success achieved. But I think we have to emphasise in all areas, especially in the Government departments as some of the biggest sinners are the Government departments indeed - you find PUB and PWD vehicles and all sorts of vehicles belonging to the Government breaking the traffic regulations almost gaily -

Also the Police.

Yes, including the Police and the Army. In fact, yesterday when I was driving home very carefully, I was overtaken by a Police vehicle that was exceeding the speed limit.

Take down the number!

There is no point reporting the fact to the Police that one of their vehicles has exceeded the speed limit because they will say that I do not have my car properly checked for speed. So in order to make that report justifiably to the Police -

They might be chasing after somebody!

No. This vehicle had a 30 mph disc on its back. What is the use of putting a 30mph disc on a vehicle that is supposed to be chasing after other vehicles? Going through this Highway Code, Mr Speaker, Sir, just listen to this: `When being overtaken, never speed up to prevent another driver from passing.' `In traffic hold-ups, do not "jump the queue".' These are the things that are actually happening, but they are incorporated in this Highway Code as offences. You must forgive me for being a little excited, Mr Speaker, Sir,I have been coming to this House and repeating, this again and again but no action has been taken to push across the idea that the Highway Code is a very important instrument of civic education. The Highway Code lays stress on responsibilities and courtesy and it is an important instrument of civic education. I think the Government should do all it can to put across this idea of proper conduct on the public road.

Question put, and agreed to. Resolved, That this Parliament, pursuant to subsection (2) of section 65 of the Road Traffic Act (Chapter 92), resolves that the Highway Code published as Notification No. 58 in the Subsidiary Legislation Supplement to the Gazette of 17th January, 1975, as contained in Paper S.L. 17 of 1975, be approved.

2.47 p.m. Resolved, "That this Parliament, in accordance with paragraph (1) of Standing Order 95, appoints the following as members of the Committee of Selection: E. W. Barker Chai Chong Yii Chin Harn Tong N. Govindasamy Ong Teng Cheong Sha'ari Bin Tadin Sia Kah Hui." - [Mr Jek Yeun Thong].

Mr Speaker, Sir, I beg to move the motion* standing in my name under item No. 4 in the Order Paper. * The motion reads as follows: That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 52), resolves that the Schedule to the said Act be varied by deleting the figures "$56,320", "$686,720", "$220,344" and "$14,773" appearing in the second column thereof and substituting therefore the figures "$187,050", "$823,250", "$200,170" and "$13,750" respectively. Sir, it is proposed to increase the provision for the Privy Purse, which includes the President's salary, the NWC supplement and the annual non-pensionable allowance, because of certain decisions concerning the President's emoluments. The House will recall that on 20th March, 1973, the Prime Minister announced that the President's official emoluments would be raised from $4,000 per month, which is tax-free, to $12,000 per month, with $4,000 tax-free. The House was informed then that the President did not wish to make use of the increase in his salary. It has been decided, however, that as from FY 75, the President will be paid his full salary of $12,000 per month, but the entire amount will he subject to income tax. Action will be taken to amend the Income Tax Act which specifically provides that the official emoluments of the President shall be tax exempt. The increase under Class II expenditure is required largely to meet increasing expenses such as the 1974 NWC wage supplement, normal increments and the higher rate of CPF contributions for the President's personal staff. For Classes Ill and IV, however, lesser provisions are now required. Sir, I beg to move.

Question put, and agreed to. Resolved. That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 52), resolves that the Schedule to the said Act be varied by deleting the figures "$56,320", "$686,720", ~`$220,344" and "$14,773" appearing in the second column thereof and substituting therefore the figures "SI 87,050", "$823,250", "$200,170" and "$13,750" respectively.

2.50 p.m.

Mr Speaker, Sir, I beg to move, "That Parliament approves the financial policy of the Government for the financial year, 1st April, 1975 to 31st March, 1976." Sir, I have distributed in advance to Honourable Members my Economic Survey of Singapore in l974. (See Appendix, cols. 195 - 356.) This Survey and, I might add, the (Paper Misc. 2 of 1975.) Memorandum on the Estimates and the (Paper Cmd. 3 of 1975) Estimates themselves, have been the result of considerable efforts by my Ministry to improve our statistical data and to present them to Honourable Members in as complete and informative a way as possible. We are conscious of the many great defects still remaining in these documents and shall continue to improve on them. Nevertheless, they will at least have this immediate benefit, that Members need no longer hear me, even in brief recapitulation, on the statistical details of our economic performance in 1974 or of the international events which affected them. They are dealt with in extenso in the Survey and for those who have not the time or convenience to read it all at once, an adequate summary has also been provided. I need only remind Members that our real rate of growth in 1974 was 6.8%, although at current prices, it was 26.2%. Members need not be told that for a non-oil producer, a real rate of nearly 7% growth in the circumstances of 1974 is not unsatisfactory. Appendix - ECONOMIC SURVEY OF SINGAPORE, 1974 (Cols 195-356) Diversification of Economic Activities Our economic strategy puts great importance on diversification of our economic activities. We have tried to widen the base of our manufacturing sector by introducing new skills and products particularly in metal and precision engineering, chemicals, electronics and transport equipment. As a result, we have now these new industries in addition to our main manufacturing activities: shipbuilding and ship repairing (14.8% of total value added), refining of petroleum (20.3%) and electrical machinery (21.6%), resulting in an even spread with no single industrial group accounting for more than 22% of total earnings in manufacturing. Other economic sectors, notably trade and services, `have also helped in our plan for diversification. Although entrepot trade's share of GDP has fallen, its nature has gradually changed from trading in mainly traditional products to trading in capital goods, such as machinery, telecommunications equipment and industrial raw materials which in 1974 accounted for 22% of total re-exports. Domestic trade has of course gained from increased industrial production, a substantial portion of which is exported. In our trading activities, we have had also an increasing diversity of markets. This has been partly due to the multi-national companies who have set up industries in Singapore and bring with them the international markets to which they are suppliers. Partly also, this has been due to our own efforts in seeking new markets, such as those in West Asia and Eastern Europe. In the services sector, tourism has become increasingly important. The relatively slower growth of tourists from Australia, US and UK in 1974 was corn-pen sated by the high growth of tourists from ASEAN countries. In the services sector also, we have been actively promoting our financial centre activities and the centre, with foreign banks from a large number of countries, now provides an even wider range of financial and banking facilities. Construction activities which suffered a setback in 1973, due to high prices of materials, have also bounced back, registering a positive growth of 5.5%. Although private sector construction has declined, this was more than offset by the acceleration of public construction which rose substantially by 22% in real terms. As a result, the construction sector has once again contributed to the continuing health of our economy. The beneficial effect of a diversification of activities was amply demonstrated in 1974. Although manufacturing activities slowed down considerably, trade and services remained buoyant, accounting for more than half of the increase in our Gross Domestic Product. Healthy Balance of Payments Our vulnerability to external influences has also been lessened by our continuing sound balance of payments which will enable us to pay for the raw materials we need for both growth and consumption. Further, our export-oriented industries, services and tourism have all helped our balance of payments to end the year with a comfortable surplus. In spite of the openness of our economy, we have been able to implement our monetary policies effectively while at the same time maintaining a high degree of monetary discipline. Stable Employment With these advantages, we have managed to maintain reasonably full employment. As a result, unemployment so far has not yet become serious. Of a total of 16,940 workers retrenched in 1974, 79% were females who were mostly secondary wage earners and only 3% were skilled workers. Most of these retrenched workers moreover have found alternative employment, many in new industries. For 1974, a total of ISO concerns employing 9,030 persons were registered as permanent new factories compared with 190 concerns employing I 1,140 persons in 1973. As a result, our unemployment rate remained stable at 4%. In the meantime, employers began to learn how to work equally well with less labour. In addition, there is now less job-hopping. Our industries are therefore leaner and more efficient. So far we have been more fortunate compared to some major industrial countries where greater unemployment has resulted in considerable social strife. Prospects for Singapore How will Singapore fare in 1975 in the midst of international uncertainties? Most economic forecasts indicate that the major industrialised economies are unlikely to achieve any significant upturn until at least the second half of 1975. Taking into account the normal time lag before such economic revival affects the rest of the world, I would think that a marked improvement all round in Singapore's economic condition will not he apparent until the latter part of 1975 or even early 1976. However, our economic structure, strengthened by the diversification of our industries and services, should be able to withstand, as in the past year, the impact of some further recession provided the American and Western world economy does pick up by the first half of 1976 at the latest. To make assurance doubly sure, however, the recently appointed Economic Activation Committee will speed up the implementation of any anti-recessionary measures. The task is therefore one of designing policies that will help to get us out of the present recession without too much suffering while pursuing and fulfilling our long-term economic objectives. Major Elements of Economic Policy Despite the present recession, we should stick to our long-term objective of maintaining a relatively high rate of growth. We should consolidate the policies of our Economic Strategy launched in 1971. Growth should still he spearheaded by industrialisation. We should continue also to make Singapore a services centre for technical know-how, tourism and finance. Similarly, we should give high priority to the training of workers in skills needed for our future industries. Measures should, of course, he introduced to counter and mitigate the effects of the present recession. But as far as possible, these measures should be in keeping with our long-term strategy. We should take advantage of the present slack conditions to prepare for full economic recovery. High growth rates may still be achievable because the base from which we are climbing is low compared to Japan, and also because Southeast Asia, as a whole, may well develop faster as a result of increased oil prices, especially Indonesia. Industrial Development Policy Our industrial development policy would be to get industries to increase the degree of local manufacturing in their products by workers doing more and more skilled jobs. The success of the policy can be measured by the value added by each worker in that industry. Investment commitments for the past few years indicated a growing trend in the value added per worker from $14,000 in 1972 to $32,000 in 1974, reflecting the increasing sophistication and higher skills required of industries that would be set up in the near future. To meet the needs of such industries, we shall have to make sure that the required facilities (land, utilities, buildings if necessary) are developed and readily available. Our only requirement should be that such facilities are put to the best use. In times of recession, there may be a greater need for financing on preferential terms. Our efforts to promote supporting industries would be helped by such financing. I announced sometime ago a special fund to assist skill-intensive industries bearing higher risks than those normally acceptable to financial institutions. The Capital Assistance Scheme, for which $100 million has been provided in the Budget for the financial year 1975, will be administered by the Economic Development Board. The assistance to such industries will include Government taking up shares which the industrial venture partner can buy back at his option, long-term loans or Government guarantees for such loans, as well as shorter-term loans for working capital. For other industries, long-term loans are available at preferential rates from the Development Bank of Singapore (DBS). In addition, a separate export financing scheme with an initial provision of $100 million has also been set up and administered by the DBS to assist our export industries. I should, however, emphasise that such assistance is given mainly to industries which have higher skills or technology and, as far as possible, have established markets and proven performance In addition to financial assistance, we shall be making greater efforts to promote investment. The Economic Development Board has been reorganised to do this more vigorously. Our efforts will now be concentrated where they should be, at the investment centres. In addition to the nine centres already in operation, two more promotion centres are being established in Houston and Copenhagen. These centres will have top-level staff and be directed from our headquarters in New York to ensure proper attention to all investment inquiries. My Ministry is also examining our tax incentives legislation to see whether any additional incentive is required to further assist the promotion of desirable industries. One such area is the tax exemption period for pioneer status which in suitable cases may need to be extended from the present five years to a maximum of 10 years. This extension may make it sufficiently attractive to industries to set up here which require substantial investments and have long gestation periods before profitability can be achieved. It would also help to resolve a problem of our present export incentives scheme which gives an export certificate holder the tax incentive when he exports his product but not when he sells it to a local manufacturer who needs to incorporate it in an, export product. At the same time, I am removing the $1 million fixed asset requirement for pioneer status for small but especially high quality product industries to provide supporting services. The Economic Development Board has often been asked to find joint venture partners by both foreign and local parties. It will now establish a Bureau for Joint Ventures which will collect and distribute information to interested parties and provide all necessary assistance for such joint-venture projects. Export Promotion Policy Our present export promotion efforts need to be improved during this recessionary period when demand the world over has declined substantially. First, our Commercial Secretaries Service will be expanded so that the new export markets can be identified. We already have representatives in 13 countries. We shall strengthen the existing centres through more experienced staff and set up centres in new areas including West Asia and Eastern Europe to assist our manufacturers and traders to explore new markets by providing them with information and contacts. Second, the Government has agreed in principle to establish an export credit insurance guarantee scheme in conjunction with the Banking and Insurance Community. Detailed discussions on the implementation of the scheme are now being held. Third, to help our exporters, arrangements are now being finalised to enable banks to rediscount export bills with the Monetary Authority. There should therefore be a cheaper source of financing for exports. Fourth, we are studying various ways to build a stronger organisation for export promotion. Meanwhile, our usual export promotion activities will continue. These include the organisation of seminars and workshops on export promotion for our local industries as well as the organisation of private trade missions and trade fairs. It is our intention to encourage a greater degree of participation from the private sector, although the Government may still play a leading role in the organisation of such missions. Construction Policy Under world recessionary conditions, we shall step up construction activity to offset the expected fall in output and employment in other sectors. New construction will also help to meet infrastructure demands when the economy recovers fully. The major Statutory Boards and Ministries will press on with their development plans. For financial year 1975, Public Sector Development Expenditure is programmed to increase by almost $1,290 million to $3,080 million. The Government's direct development expenditure is expected to amount to $630.6 million, an increase of $193.8 million over the previous year. Special emphasis will he placed on the provision of industrial infrastructure, utilities, transport and communication and housing. As for private sector construction, the Government has so far introduced two measures to stimulate it. Banks are now allowed to include, for up to 2% of their statutory liquidity reserve requirements, amounts lent on mortgages of new properties. The restriction on the purchase of properties by foreigners has also been amended to allow them to buy flats and apartments in buildings of not less than six storeys. This in practice means the more expensive apartments for which there is less demand by local residents. Private developers should play their part to stimulate demand by lowering the present property prices which appear to be still excessive. Monetary Policy For the coming year, monetary policy will continue to be directed at maintaining monetary stability and the promotion of economic growth. Our main instruments, the variation of the minimum cash balance, which banks and finance companies have to maintain with the Monetary Authority, and adjustments in interest rates will continue to play important roles. The development of Singapore as a financial centre will continue to receive special attention. Manpower Development Policy Let me now make a few remarks on our manpower training which is by its nature, long-term. Our economic strategy recognises the need to increase skills in our labour force, to assist us in promoting industries requiring more skills, as well as to make the best use of our workforce. We should expand training and re-training programmes during a recession, when workers will be less fully employed. We should use this vacant period in the lives of our workers for more industrial training so that our labour force will be ready for more qualified tasks when the economy recovers. As a start, the Industrial Training Board has increased its industrial training capacity. Enrolment in 1975 is up at 6,890 from 5,150 in 1974. The number will be further increased later this year when we take in more trainees. Training will be improved in quality by lengthening the training period and changing the course content to meet future industrial needs. Private sector training will be similarly improved by better use ofour Joint Industrial Training Centres. In addition to the present two centres, with RolIei and TATA, the third Joint Industrial Training Centre with Philips will begin training by July 1975. The Government has provided $10.5 million for industrial training in 1975. Of this, $8.5 million will be for more industrial grants and Joint Industrial Training Centres and $1.9 million will be used to send trainees overseas. One aim in our manpower training is to change work attitudes. For the higher skill industries, workers must be prepared for longer and more intense training periods. Our workers must increase their productivity, through higher skills which can only come by hard work and diligence. We can continue to achieve more economic progress only if our workers are prepared to tackle difficult tasks with greater "value added", rather than go for "cushy jobs". The ultimate limits to our productivity are the technological standards we can achieve, which in turn means the standards of technological skills our workers are prepared to exert themselves to achieve. To promote industries requiring more skills, better wage rates will be paid by these desired industries. Wage increases must, wherever possible, be pegged to productivity. Employers should, therefore, continue to improve their methods of working, to use less labour by putting in more equipment and machinery. Productivity increases depend as much on workers as on employers. Both sides must play their parts for the Government's plans to establish more skill intensive and higher value added industries in Singapore. Concluding Remarks on Economic Policy Our anti-recessionary measures within the coming year would probably have inflationary effects. To counter these effects, we have some spare capacity at present for production to meet any additional demand for goods and services. Declining world demand has meant generally stable or lower prices for most raw materials required for production. By buying our raw materials from as many sources as possible, we can in any case ensure that we buy where we are the least affected by price increases. The Government will also continue to ensure that insofar as the domestic sector is concerned, there will be as little profiteering as possible. Our people should also conscientiously cut out wasteful consumption. The aim is for our economy to recover from recession without setting off another bout of inflation. In taking anti-recessionary measures, we shall at the same time keep to our long-term objectives and policies. We have the advantage of a diversified economy. Next our sound foreign exchange reserves position. We should still be able to achieve economic growth, though probably at a lower rate than in the years 1969-1973. The FY 1975 Budget Let me now turn to the Budget Estimates for the financial year 1975-76. These should be examined against the economic background discussed in the Economic Survey and my preceding remarks. Traditionally, the Budget outlines the Government expenditure for the year against its expected revenue and upon Parliamentary sanction, remains as the control document for the financial year. The Budget, however, also plays an increasingly important role as an instrument of economic policy. Budget proposals not only reflect the requirements of Government business. They can also respond to needs and changes in the economy. Thus, the Budget for FY 75 is counter-recessionary in its allocation of more funds for development purposes. At the same time, its usual restraint on recurrent expenditure can be exercised also to increase productivity in Government operations. The total provision for recurrent expenditure in FY 75 under the Main Estimates, excluding the transfer of $500 million to the Development Fund, is $2,146.3 million. This has increased by $326.8 million or 18 per cent over the provision for FY 74. The increase is spread between Other Operating Expenditure accounting for $220 million and Expenditure on Manpower accounting for $106.8 million, The need for the increased provision for Other Operating Expenditure is due to the increasing volume of Government business and the general rise in prices of supplies and materials. In the case of Manpower costs, the main reason for the increase is the National Wage Council award in 1974 and the consequent increase in CPF contributions. These alone account for $86 million. To offset this sizeable increase in Manpower costs, stringent control has been exercised over increases in new .posts. I have continually exhorted the private sector to increase productivity to improve our competitive position in the international market. Mindful of a similar need for productivity in the public service, I have asked my Ministry to place continued emphasis on developing greater administrative skills, adopting innovative ideas, improving work procedures and methods, and making greater use of machines wherever practicable. Admittedly, productivity is not as easily measurable in certain services as it is in others. But to enhance efficiency and performance, a simple principle is to insist always on output of a high quality. Manpower increases have been supported selectively and only in cases where the needs have been clearly demonstrated. Such increases have, by and large, been confined to Ministries and Departments with major development programmes under implementation. As a result, the net increase in the permanent establishment for FY 75 including those posts created by Establishment Warrants during FY 74 has been kept down to 1,689 posts or 2.7% of the establishment level in FY 74. In contrast, the total provision in the Development Estimates has been allowed to grow from $1,561.6 million in FY 74 to $2,188.2 million in FY 75, an increase of 4O.l%. This emphasis on development I earlier indicated as being responsive to needs and changes in the economy in the Budget's increasing role as an instrument of policy. Statutory boards and Government companies providing the main thrust of development and economic infrastructural activities take up more than 70% of the provisions under the Development Estimates. Direct development expenditure by Government Ministries and Departments also show a substantial increase of $193.8 million or 44.4%. Such increases are consistent with the policy of accelerating public development activities during the recession. The allocation of funds is, however, only the first step in the development programme. The more important step is to get the accelerated programme implemented. This will be the concern of the Economic Activation Committee which has been recently set up for this purpose. Before passing on to the next part of my Statement, I should like to comment briefly on the presentational changes that have been incorporated in the Estimates documents. Honourable Members are aware that improvements have been made to the Estimates format in the last two Budgets. Further to these earlier efforts, my officers have introduced more improvements which rationalise the way in which Heads of Expenditure are established. Each Ministry is now given only one Head of Expenditure, thereby facilitating inter-Ministry comparisons of total allocations. The subhead codes have been refined to enable Government Expenditure to be classified according to the economic impact of the expenditure. These changes should provide useful information to the Government data bank and enable a more effective evaluation to be made of the efficiency and utilisation of our monetary allocations. With these improvements in presentation, the Treasury Memorandum on the Estimates which must be considered part of the Budget documents has also been improved in coverage and analysis of each Ministry's total expenditure. As it also explains in detail the provisions under each Head of Expenditure, it makes it unnecessary for me to repeat in this Statement what has already been said. Revenue The Treasury Memorandum also shows in detail how the revised yield from individual items of revenue has varied from the estimated yield in FY 74. It also shows the yield we expect in FY 75. The total estimated revenue of $2,647.5 million for FY 75 represents a meager 5% increase over the revised estimate for FY 74. Revenue in FY 73 was 27% above that in FY 72, and in FY 74 it was 13.6% above revenue in FY 73. Members will note the appreciable slowdown in the rate of growth of revenue. The estimated recurrent expenditure of $2,646.3 million for FY 75 is 6½% higher than the revised figure for FY 74. It includes the $500 million which I propose to transfer to the Development Fun d. Apart from the $500 million to be transferred from the Consolidated Fund, the Development Fund will be augmented by the proceeds of new loans, both domestic and foreign, which I propose raising in the coming year. The Fund will also benefit from investment income and from repayment of loans made to statutory boards and companies in the past. Even so, the estimated development expenditure of $2,188 million, which is 60% higher than the revised figure for FY 74, will exceed what is available from all these sources by $245 million. This then is the gap that has to be bridged, partly by new taxation and partly by a drawdown from the Development Fund. Taxation Policy and Changes I have on many occasions, and in previous budget statements, stressed that it was the Government's policy to give priority to economic growth, which in turn would bring increased revenues to finance growing public expenditure. At the same time, we would improve our tax collection machinery so as to maximise the yield from existing taxes. I have referred to the marked slowdown in the rate of growth of revenue since FY 73. In the coming fiscal year, recurrent expenditure is expected to increase by 6½% as against a growth of only 5% in revenue. We are also approaching the effective limit for improving the collection machinery. Beyond this limit, expenditure on further improvements will not yield a commensurate increase in revenue. We thus have to introduce new taxes or increase the rates of existing taxes in the coming fiscal year. I have decided against introducing any new taxes for the time being. As for increases to existing taxes, at a time when rising world prices are forcing a reduction, or, at best, preventing any improvement, in our living standards, I am reluctant to increase taxation lest it should raise the prices of essential goods and services, especially food and clothing, public transport and housing. So additional revenue will have to come from increased taxes on tobacco, liquor and cars, not basic to life for the average family. Members are aware of the various measures introduced by the Government over the last few years to discourage smoking. During calendar year 1974, the total consumption of cigarettes showed no increase over 1973 hut there was a marked shift of consumer preference in favour of the more expensive imported brands. The duty on tobacco and cigarettes will he increased, with immediate effect, as follows: Per Kilogram From To Leaf tobacco $29.10 $32.00 Imported cigarettes $32.50 $38.00 Locally manufactured cigarettes $ 3.00 $ 3.50 Pipe tobacco $25.40 $28.00 Cut rag $27.60 $30.00 Allowing for a possible drop in consumption, which will not be unwelcome, the increased duties are expected to yield additional revenue of about $9« million. Customs and excise duties on liquors will also he increased. On beer and stout, the customs duty will be increased by 15% and the excise duty by 8%. On brandy and whisky, the customs duty will he increased by 3%. Full details of the increases will be announced by my Ministry later today. Additional revenue expected is about $6 million. The Annual Licence Fee (or road tax) on petrol-driven motor vehicles, including station wagons, will be revised with immediate effect as follows: Revised Old rate rate per cc per cc 1000 cc and under 20 cts 14 cts 1001 cc to 1600 cc 25 cts 17 cts 1601 cc to 2000 cc 30 cts 22 cts 2001 cc to 3000 cc 40 cts 35 cts 3001 cc and above 65 cts 60 cts Thus, a 3000 cc car will now have its road tax increased by $150 from $105O per annum to $1,200 per annum as against the 1000 cc car which will have its tax increased by $60 from $140 per annum to $200 per annum. Private hire cars will also be taxed on this basis, but there will be no change in the road tax payable on taxis. Cars registered in the name of companies will be taxed at twice the rate applicable to those owned by individuals. Diesel tax on private motor vehicles based on six times the road tax on petrol-engine vehicles will increase proportionately. In addition, under income tax legislation, the capital allowance allowed for company cars registered after today will be restricted to a maximum of $15000. There will, however, be no change in the Additional Registration Fee on new vehicles, whether owned by individuals or companies. Additional expected is about $26 million. The increases I have announced will yield additional revenue of only S4l.5 million, compared to the expected deficit on the Development Estimates of $245 million. Four-fifths of the deficit will thus have to be financed by drawdowns from the Development Fund. As against these tax increases, perhaps Members will welcome the slight tax concession I now propose to offer. With our rapid economic development in the last few years, it has become apparent that we need our skilled and experienced people to go on working beyond their normal retirement age. And our equally rapid development in medical facilities has made our people capable of working beyond 55 years old, the old retiring age or even 60, the new retiring age. But it must be recognised that such people will need to spend more money staying healthy and getting to work. With effect from the 1976 year of assessment, therefore, the earned income relief will be increased from the present $1,000 to $2,000 for those over 55 years old and to $3,000 for those over 60 years old. It is estimated that the cost of this tax concession will be some $4 million. Mr Speaker, Sir, I should like, in conclusion of my remarks on the financial policy of the Government for the financial year 1975, to stress once again the crucial importance of worker-management co-operation and their working in with Government policies to ensure Singapore's continued progress and prosperity. If our efforts are united, we should be able to face this troubled future with cautious optimism. Sir, I beg to move. 3.34 p.m.

The Question is, "That Parliament approves the financial policy of the Government for the financial year 1st April, 1975 to 31st March, 1976." In accordance with paragraph (I) of Standing Order No. 84, the debate now stands adjourned. Mr Hon, debate to be resumed on what day?

On 17th March, 1975, Sir.

So be it.

Resolved, "That Parliament do now adjourn to Monday, 17th March, l975."-[Mr Jek Yeun Thong]. Adjourned accordingly at Twenty-five minutes to Four o'clock p.m, to Monday, 17th March, 1975. Appendix - ECONOMIC SURVEY OF SINGAPORE, 1974 (Cols 195-356)