Hansard, 1990-03-22

ORAL ANSWERS TO QUESTIONS - NATIONAL LIBRARY AND TERTIARY INSTITUTION LIBRARIES - (Inter-library arrangements) asked the Minister for Community Development whether there is any inter-library arrangement between the National Library and tertiary institutions.

ORAL ANSWERS TO QUESTIONS - NATIONAL LIBRARY AND TERTIARY INSTITUTION LIBRARIES - (Inter-library arrangements) Mr Speaker, Sir, I am replying on behalf of my Minister. Apart from cooperation among librarians, there are several inter-library arrangements between the National Library and tertiary institution libraries. First, the National Library maintains a bibliographic database which contains titles of books available at the main National Library and its branches, libraries of tertiary institutions and other government/statutory board libraries. There are 30 libraries participating in this network. Secondly, the National Library and four other tertiary and research institutions cooperate in the cataloguing of Southeast Asian materials. Thirdly, the National Library and the libraries of tertiary institutions have an inter-library loan arrangement which enables the respective libraries to provide library materials to their users even when they do not have these materials in their own collections. Finally, in the acquisition of expensive library materials, there is regular consultation among the National Library and the three institutions' libraries.

MEDISAVE ACCOUNTS - (Use for payment of outpatient charges) asked the Acting Minister for Health whether his Ministry will allow Medisave accounts to be used for payment of outpatient charges.

MEDISAVE ACCOUNTS - (Use for payment of outpatient charges) Mr Speaker, Sir, the Medisave Scheme was originally intended only to meet the hospitalisation expenses of the average worker and his immediate family, and to ensure that they will have adequate savings to meet their medical needs in old age. Since the scheme was implemented in 1984, it has been extended to cover certain expensive outpatient services, such as day surgery, radiotherapy, Hepatitis B vaccination and renal dialysis. Further liberalisation of Medisave for payment of other outpatient services will result in faster draw down of Medisave funds and greater risk of overuse or misuse. My Ministry, therefore, has no plans to extend the use of Medisave for payment of outpatient charges.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Order read for consideration in Committee of Supply [7th Allotted Day].

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Head R (cont.) - Resumption of Debate on Question [21st March, 1990], "That the total sum to be allocated for Head R of the Main Estimates be reduced by $100." - [Mr Lim Boon Heng]. Question again proposed.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, yesterday before we broke off, we had covered all the items under this amendment except for two items, namely, that on CPF and the review of the Employment Act. I will deal with CPF first. I agree with Mr Lim Boon Heng and Mr Chng Hee Kok that as far as possible CPF should stick to its basic objectives. That is why there was so much debate concerning CPF for Education. Basically, CPF is a compulsory savings scheme to provide for members' old age needs. Over the years, the scheme has been broadened to allow members to invest in a home, other properties, trustee shares, gold and local tertiary education besides paying for hospitalisation through Medisave. Mr Lim Boon Heng has given us a timely reminder that CPF is meant for CPF members' old age needs, not for current consumption. The CPF schemes generally do meet this fundamental objective. Investment in property is likely to appreciate over the long term given our land constraint. The education scheme is a loan scheme and so the fund taken out has to be repaid to the member's account. There is a 40% limit on investment in shares and gold and only money above the minimum sum is allowed to be invested up to this limit of 40%. On the whole, these schemes have benefited CPF members, for example, through home ownership and better returns on their funds. They also enjoy tax exemption on their CPF savings. For CPF members to benefit fully from the CPF schemes, they should manage their savings carefully, both before and after the CPF withdrawal age of 55. If they are able to take advantage of the investment opportunities, fine. If not, they should leave their money with the CPF where it is guaranteed. They should also realise that Medisave is for their old-age needs and not spend it too quickly. Incidentally, Medisave is under the purview of the Acting Minister for Health. I will not extend the CPF into other areas unless it is for the benefit of CPF members. Looking back, I am convinced that the CPF scheme is better with the various changes that have been made than if it had been frozen as a purely savings scheme. This does not mean that there is no further room for improvement of the scheme. Mr Chng Hee Kok has proposed that we should place a cap on CPF savings. I think in the article in Petir he suggested a ceiling of $150,000. Let me briefly explain to Members how the long-term rate of 40% has been derived. This rate is projected on the basis that for a young worker starting work today and he continues working until the age of 60, the retirement age, he will then have by age 60 fully paid for a home commensurate with his income; secondly, sufficient Medisave funds for his old age needs; and thirdly, adequate cash balance to live on at 20-40% of his last drawn pay. Therefore, by saving at the long-term rate of 40%, a CPF member would be building up his own pension fund as it were corresponding to his own income level. Instead of a flat quantum ceiling which applies to all CPF members, the 40% rate effectively places a cap on each member corresponding to his own income. This is preferable and more appropriate. A fixed cap of, say, $150,000 would be too high for many CPF members and too low for others. For the high income groups, there are already two other limits. Firstly, there is the cap of $6,000 on ordinary monthly salary beyond which no CPF is payable. The second cap was introduced recently by the CPF Board and that is the cap on additional wages. Therefore, high income earners already contribute at less than the full CPF rate on their entire salary. The other point I want to remind Members is that CPF contributions are exempt from tax. With a lower cap on CPF, members will enjoy less tax-exempt CPF savings which they can invest in properties, shares and so forth and put aside for their old age. I think many high-income earners were painfully aware of this when the cap was recently placed on bonuses. The CPF scheme already allows CPF members considerable freedom and responsibility to manage their savings. I prefer to stay with the CPF scheme as it is. Mr Lim Boon Heng asked yesterday whether the Board is reviewing the minimum sum amount to allow for inflation. The Minister for Finance has announced in the Budget Statement that inflation last year was 2.4%. The minimum sum of $30,000 has been set based on 1986 real value. Therefore, with inflation over the years, we have to make small adjustments yearly or biennially to compensate for the inflation and to preserve the value of that sum for old age of CPF members. Therefore, with effect from 1st April this year, the sum will be increased by $700, equivalent to 2.4%, from $30,900 to $31,600. With the adjustment, CPF members who reach 55 years of age on or after 1st April 1990, will be required to set aside $31,600 in their minimum sum accounts. Those who own properties can, however, pledge their properties up to this value in lieu of cash. The amount that members can withdraw monthly from their minimum sum accounts from age 60 will also be raised by 2.4% from $237 to $243 per month. This will come into effect on 1st April 1995 when the cohort of members who reach 55 on 1st April this year reaches 60 years of age. This withdrawal rate will apply to the minimum sum accounts in the CPF or with approved banks. For those who have purchased approved annuities the amount will be determined by the terms of their annuity plans. For a married couple who are both CPF members, the minimum sum will likewise be raised from $46,400 to $47,400 and the monthly withdrawal amount from #355 to $365 per month. The new minimum sum of $31,600 will also apply to the approved investment scheme and the CPF education scheme from 1st April 1990. I think I have covered all the points raised on CPF. I will next turn to the comments made by Dr Lee Siew-Choh concerning the Employment Act. Listening to Dr Lee, I found myself wondering whether it was Dr Lee speaking or Mr J.B. Jeyaretnam speaking. I think many of us recall the heated debate we used to have in this House on similar issues. If new Members are interested in this drama, they can look up the Hansard, for example March 1982, on the debate of my Ministry's budget. The issues raised are not new. Contrary to what Dr Lee has said, the Employment Act is a balanced piece of legislation which has worked well for Singapore. It sets out the rights and obligations of the parties to the contract of service not only of employers but also of employees. It is well accepted by both workers and employers and has provided a sound basis for industrial peace and cooperation. The result has been many years of rapid economic growth since 1968 when the Act was enacted, leading to better jobs and a rising standard of living for all Singaporeans. The acid test of any legislation is whether it works in practice and benefits the nation. It is no use having the best written laws which spell out iron-clad job security and benefits for workers if the result is to force companies into bankruptcy and scare away potential investors. The end result will be high unemployment and misery. The iron rice bowl is the hallmark of the communist system. Under that system, it is impossible to sack a worker even if he is redundant and totally unproductive. That system has failed. Dr Lee Siew-Choh claimed that the Employment Act provides no protection for workers. That is completely untrue. Under section 14 of the Act where an employee considers that he has been dismissed without just cause or excuse he may appeal to the Minister for reinstatement. If the Minister is satisfied that his complaint is valid, he can order the employer to reinstate him or pay him adequate compensation. This arrangement has worked well in practice. I have ordered, for example, compensation or reinstatement of workers who were wrongly dismissed. The Act also provides for payment of retrenchment benefits although the quantum is left for negotiation between the contracting parties. It should be noted that the Employment Act, like similar Acts elsewhere, provides the minimum statutory benefits. It is up to the unions and workers to negotiate for better terms which are thus seen to be coming from the employer. This provides for a stronger employer/employee nexus. Section 17 of the Act specifically safeguards the right of employees to join and participate in unions either as officials or members. It does not say that the union has to be affiliated to the NTUC. The NTUC has succeeded in organising the vast majority of the unionised workers of Singapore because it has helped bring about a better life for all Singaporean workers. The fact that the Secretary-General of the NTUC is also our Second Deputy Prime Minister means that unions have a very strong voice in Singapore at the highest level of decision making, namely, the Cabinet. He and the other union leaders have to prove their worth to union members or they would not be elected at the NTUC Triennial General Meeting.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, I think the Employment Act should be read together with the Industrial Relations Act. If the Minister refers to unions, then I am sure he will remember that there were many independent unions that were pressured into joining the NTUC. As regards industrial peace, I think everybody wants industrial peace, but at whose expense? The Government had to institute the National Wages Council in order to protect the employers. After all, we must know that the NTUC was not meant to give extra wages to the workers, but to put a ceiling on the claims of workers.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, I would like to ask Dr Lee Siew-Choh to substantiate his statement that independent unions have been pressurised into joining the NTUC. I think he must not come here and just make general statements like that. The other point is industrial peace at whose expense. At nobody's expense. In actual fact, because of industrial peace, we have enjoyed tremendous economic growth over the years and everybody has benefitted, including Dr Lee himself.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, if the Minister were to look back into history, he would realise and find that many unions had been pressured into joining the NTUC. I cannot name the unions offhand now but, as a Minister, if he should refer to the Ministry officials, they should be able to tell him. Everybody benefits? Yes, Sir, to a certain extent.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, the problem with Dr Lee is that he keeps harking back to the old days. We are living in 1990. The world has changed. The communist system has crumbled. He should not behave like a Rip van Winkle, always bringing us back to the old days, not realising what has happened and the improvements that have come about because of our laws. At least he has admitted that we have all benefitted from this development.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, I do not know which unions are being forced or have been forced to join the NTUC. But the question today is that there are 10 unions outside the NTUC fold with less than 5,000 members. It is their right to remain independent. The issue today actually is whether the NTUC should admit these unions into the NTUC fold whenever we receive an application from such unions to join the NTUC. I think that fact speaks for itself. With respect to the benefit that workers may have, or may not have, in his opinion, through industrial peace, let me just cite one figure. I do not want to go back to the days of the 1950s and 1960s. But just from 1980 to 1989, the median monthly wage in 1980 was $409. In 1989, the median monthly wage was $764. So the wage level has almost doubled in this decade. Of course, he will say that it has all been eroded by inflation. But how high and how fast has the consumer price index risen? In 1980 the index stood at 88.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, I beg to move, That the sum to be allocated for Head R be reduced by $10 in respect of Code RA 1500 of the Main Estimates. Sir, in 1986 the Government allowed part of an individual's CPF savings to be invested in approved Singapore shares listed on the Stock Exchange. The shares bought under this CPF investment scheme have to be registered with a nominee which is a bank participating in this scheme. Sir, I would like to bring up a matter concerning rights issue which I think CPF investors are not given a fair deal in. When a rights issue is declared by a public company, registered shareholders are invited to apply for excess rights, ie, for rights not taken up by other shareholders. However, this privilege is severely restricted if the original shareholding is bought under the CPF investment scheme since only the nominee companies may apply for the excess rights. Usually these companies consolidate all the excess rights applications by the CPF beneficiaries and make one application. As this is one large application, the ratio of excess rights shares or loan stock they receive to the original number applied for is smaller than if each beneficiary of the nominee company applied for the shares individually. Thus, shareholders under the CPF scheme is at an unfair disadvantage compared to private investors. For example, recently a bank announced a rights issue of loan stock with warrants. A person, Mr A, had 1,500 shares under the CPF scheme with Bank Z and received rights to 500 loan stock with warrants. He further applied for 10,000 excess loan stock through Bank Z nominee. He received no extra loan stock as Bank Z nominee was allocated only a small portion of what they applied for. Another person, Mr B, also had 1,500 shares but they were bought and registered privately. He also received rights to 500 loan stock and applied for 8,000 excess loan stock. He was allocated an additional 1,500 loan stock with warrants. At present market prices this represents a good gain. This real life example shows that Mr A, a CPF investor, was severely disadvantaged. Sir, there are different ways to resolve this problem so that the CPF investor is put on equal terms with private shareholders. They involve varying amounts of additional administrative work for the share registrars, nominee companies or both. However, I feel that steps taken to eliminate this anomaly is justifiable on the grounds of fairness and public interest. I would like to propose one way to resolve this problem. Perhaps share registrars should be made to recognise that nominee companies hold shares on behalf of various beneficiaries. They should record a breakdown of the beneficiaries for each nominee company. This is already done for shares of banks, newspaper companies, etc., and should not be difficult to implement. During a rights issue, nominees applying for excess rights should provide a detailed list of the interest of each beneficiary. The registrars should then treat each beneficiary separately, as if they were privately registered shareholders. Another matter, Sir, I would like to raise concerns the loan stocks of some CPF trustee companies. It is found that, unlike ordinary shares, the loan stocks of these companies do not enjoy CPF trustee status, ie, one cannot use his CPF account to buy these loan stocks. Examples are UOB loan stock, ICB loan stock, Yeo Hiap Seng loan stock and National Iron Bond, etc. It is common knowledge that investments in loan stocks are far less risky than investment in shares of the companies issuing these loan stocks. I would therefore urge the Minister to consider granting trustee Stock status to the loan stocks of all CPF trustee companies.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, let me first explain to Members of the House why the shares held by these banks are in the names of their nominees. The reason is for purposes of control because we are allowing members to use their CPF funds. So when they receive dividends, for example, or when they sell their shares, the money has to go back to their CPF accounts. So normally when they buy through their banks, the banks will buy all these shares in the names of the bank's nominees. But in practice the banks already keep registers of the individual members' accounts. For example, if there were a rights issue, then the members themselves would in fact be applying, deciding whether they want to take up the rights, whether it is the rights for new shares or whatever. The point that the Member has raised concerns excess rights. I presume the excess rights are more than those taken up by the existing investors. The situation he mentioned is something which I will have to ask the CPF Board to look into because I am not very familiar with how they treat that kind of excess rights issue. But in general when a rights issue is available, I think members of the public who are shareholders as well as CPF members who have shares are entitled to certain rights. So it is up to them whether they want to exercise those rights. And if they do, then the banks which are acting on their behalf will apply for them according to their ratios, ie, the ratio of the new shares to existing shares. The other issue raised by the Member concerns loan stocks, for example, of companies that qualify for trustee status. The CPF Board has already allowed some kind of loan stocks to qualify. These are convertible loan stocks. In other words, these are loan stocks which can eventually be converted to shares. So they are closer to the nature of shares. On the other hand, if the loan stocks are purely loan stocks, I agree that they are less risky, but the principles are a bit different and up to this point in time the Government has not approved or decided whether to allow CPF funds to be invested in this category of investment instruments which are fixed interest instruments. It is because if we allow this, then we may have to consider other similar instruments, for example, Government bonds, securities, even bank deposits. So up to now, the Government has not decided whether to allow this category of fixed interest instruments. If a decision is made to allow it, it will have major implications on the financial market as well as on the CPF Board itself. But I will ask the CPF Board and my Ministry to look into this matter.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, with your permission, I will take both points.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Yes.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, I beg to move, That the sum to be allocated for Head R be reduced by $10 in respect of Code RD 1500 of the Main Estimates. Sir, the recent storm in a tea-cup over the issuance of guidelines by the Ministry of Labour on the eligibility for associate membership of unions by executives and confidential staff highlights the need for a code of practice for labour-management relations. Through careful cultivation over more than 30 years, we have the best model of tripartite cooperation anywhere in the world. However, such cooperation and industrial harmony cannot be taken for granted. The strong language used by the Singapore National Employers' Federation in response to a newspaper report shows that emotions can easily be raised. There are also examples of good labour-management relations that have gone sour through neglect by both parties - employers and unions. Also, the change of personalities can adversely affect relations. Perhaps it is time for the three parties - Government, employers and unions - to set up a code of practice that can be used as reference by all concerned. Of course, anything enshrined in written form will only work if it is practised. But with the possibility of change of managers and union leaders, I think a code of practice will be a useful point of reference. Sir, on the subject of junior executives, we have from time to time received complaints from unions that some employers deliberately change job titles, for example, they re-designate them to become Assistant Managers, even though the work remains the same, just so that a certain category of workers cannot join unions. This practice is undesirable and harmful for sound industrial relations. Employers who do so must bear in mind that if they want to have rational and objective union leaders who can see the wider view of things, then they should not deprive unions of capable union leaders. I hope the Ministry of Labour would tell such employers that they are harming our industrial relations climate by such practice. Then there are also genuine junior executives who find that they do not have a union to represent their interests, and they do need a union for such purpose. And indeed, some junior executives have formed unions and operate within the framework of our industrial relations laws. But presently, the legislation prevents junior executives from joining the same union as rank and file workers. The only way for such executives to be unionised is to form a separate union. I feel that this condition is undesirable. It is difficult for small executive unions to be financially viable. But what is more, it tends to breed sectional interest. When we want to develop teamwork at the workplace, we should encourage all workers to identify with one another. So junior executives should be permitted to join the same union as rank and file workers. My question to the Minister is whether he would consider amending the law, after due process of consultation and discussion with all the parties concerned, to allow junior executives to join the same union as rank and file workers.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, I would like to ask the Minister to look into the question of part-time employment in Singapore. Sir, while there has been mounting pressure on the Government to let in more foreign workers, there is still a sizable pool of potential Singaporean workforce which has not been fully tapped. They are the housewives, the young retirees (those who are not supposed to have retired) and others who will be prepared to enter the workforce if part-time employment is available. Compared to many of the developed countries, the percentage of part-time workers in the workforce in Singapore is relatively low. There are a number of reasons which can explain why part-time employment is not widespread in Singapore. Apart from the question of wages, part-time workers are seldom regarded as a regular and permanent workforce of a company. They are regarded as casual workers who can be dispensed with easily. There is no commitment between the employer and the employees. The employers can just terminate the service of the employees as they wish and the employees can just refuse to turn up for work when they do not feel like working. To enlarge our labour pool, I believe part-time employment can be promoted as a regular and permanent form of employment. Companies should devise work pattern and work schedule which would enable those people who cannot work eight hours a day to work, say, four hours a day. To inculcate a sense of loyalty and commitment to the company among the part-time employees, the employer should seriously examine the terms and conditions of service of the part-time employees. Presently, many employers just pay wages to the part-time workers. There are no other fringe benefits. The workers also feel that they have nothing to lose if they walk out of the company any moment. I believe something can be done to improve the situation. Sir, under the Employment Act, the employers are supposed to provide certain employment benefits to the employees. These include sick leave, annual leave, medical benefits, etc. The Employment Act actually does not distinguish between full-time employees and part-time employees. In other words, the statutory benefits stipulated in the Employment Act should also apply to the part-time workers. But so far, the Ministry of Labour does not strictly enforce the Employment Act in respect of the part-time workers. I believe it is time that the Ministry drew up some rules for the employers to follow. In principle, the employers should follow the Employment Act and provide the statutory benefits to their regular part-time workers on a pro-rated basis. In other words, the part-time employees should enjoy statutory benefits proportionate to their hours of work. The employers should also follow the Employment Act when it comes to giving notice for termination of service. I must state again that what I have said should apply to the regular part-time workers who have been in continuous employment with the same employer. I am not referring to those casual part-time workers who work one day and absent the next day. I wish to inform the Minister that a number of big multi-national companies are already providing fringe benefits, besides paying wages to their regular part-time employees. They follow the Employment Act as far as possible. As a result, the part-time workforce is stable. It benefits both the employers and the employees. Sir, as I have said, we must find ways and means to draw more Singaporeans into the workforce instead of letting in more and more foreign workers. Extending the retirement age and making part-time job available are some of the measures which we can take. Sir, I would appreciate the Minister's response to my comments and suggestions concerning part-time employment.

MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR - 1ST APRIL, 1990 TO 31ST MARCH, 1991 Sir, last year during the Committee of Supply debate on the Ministry of Labour, I suggested that the Government should provide more incentives for women to work either full-time or part-time. May I join the Member for Boon Lay in requesting the Ministry of Labour to make a study of part-time employment and the possible amendments to the Employment Act in order to protect part-time workers. I hope the Minister can now make a progress report of my requests made almost a year ago.