The President (Mr Wee Kim Wee): Honourable Members: The Next Lap sets out what we want Singapore to be in the next generation. My 2Government will translate these long term goals into immediate programmes, so that Singaporeans will be better off by the end of this term of Parliament. Standards of living have risen rapidly in Singapore. Jobs have been plentiful. Nearly everyone owns his own home, complete with telephone and television. CPF and POSB savings have gone up. Standards of health care have risen. More students are making it through secondary schools, and into polytechnics and universities. All this has been achieved because sound government policies have created a framework for sustained growth, and enabled Singaporeans to progress and prosper. But we are only half way up to becoming a developed country. The more difficult half remains ahead of us. We can only get there as one united nation. Singaporeans naturally compete to do well individually and get ahead. But we must also work together to succeed as a group, and to strengthen the bonds among us. We must encourage the more able to do their best for themselves and for Singapore. But the more able also need to show concern for the others and help them to catch up. We should level up to progress, not level down to stagnate. The Government will play an essential role. It will reward drive and enterprise, and give each Singaporean the incentive to excel. It will invest heavily in education and human resources, so that each one can acquire the right knowledge and skills, be self-reliant, and earn more. The Government will also help to build up the assets of Singaporeans by upgrading and increasing the value of their HDB homes. This will give every citizen a share of the wealth we have created together, and strengthen his stake in Singapore. However, while the Government will subsidise investments like education and infrastructure, it will not subsidise consumption expenditure. To do so is to undermine the traditional virtues of thrift, personal responsibility and the will to achieve, and to weaken our economy. The experience of other countries has proved this again and again. Education Education is the foundation of competitiveness. It is not a one-off exercise, but a lifelong process, as we acquire new knowledge and skills to keep up with new technology and adapt to economic changes. School results have steadily improved as we raised teaching standards and refined the education system. Demand for higher education has increased. The Institute of Technical Education will be formed this year, to train not only fresh school leavers, but older workers who want to upgrade their skills and their jobs. A fourth polytechnic will be set up this year. NUS and NTU have increased their intakes, and will expand further as more qualified students graduate from schools. The Singapore Open University will admit students starting this year, to give adults who missed out on a tertiary education a second chance to work for university degrees. Education is an investment in our people. We must invest more in our most promising students, while looking after the needs of the less able. In schools, we need to give parents a wider range of choices, so that their children can receive the education best tailored to their individual needs. This is the rationale for the independent schools and the Edusave scheme. We need to develop the independent schools into outstanding institutions, to give the most promising and able students an education matching their promise. Admission to these schools must be based principally on merit, not ability to pay. No bright child from a poor home need lose his chance to study in an independent school. There will be scholarships and bursaries for him. Attention paid to independent schools will not be at the expense of the other schools. Instead the other schools will benefit from ideas tested out successfully in the independent schools. By demonstrating what is possible, the independent schools will help other schools to raise standards. The Government will widen the Edusave scheme to achieve these objectives. It had previously announced that every year the scheme will contribute a sum to the Edusave account of each individual student. In addition, Edusave will now fund two types of scholarships. One scholarship will be for top pupils going to independent schools. They will be chosen based on academic merit, from among the best students in the country, regardless of family background. One quarter of the pupils in independent schools will receive such scholarships, which will cover the school fees. The second type of scholarship will be for students going to non-independent secondary schools. This scholarship can be awarded on a constituency or school basis, through grassroots organisations and school advisory or management committees. In this way good students in many schools, and not just the outstanding students in independent schools, will be recognised and encouraged to put in their best efforts. Besides awarding scholarships, Edusave will also make annual grants to government and government-aided secondary schools. The schools will have discretion to use these grants, for example to hire extra specialist staff, for additional equipment like computers, or for bursaries to help needy students. They can be equipped more like independent schools. To fund these new schemes, the annual Edusave contribution to individual accounts will be correspondingly reduced. Housing Nearly every Singaporean now owns the home he lives in. The Government will refurbish and upgrade the older HDB estates, to approximate the quality of newer estates like Pasir Ris and Bis2han. Demonstration projects will be launched later this year. If they are popular with residents, HDB will upgrade other neighbourhoods which want to do so over the next 10 to 15 years. Meanwhile, we can make many improvements to existing estates, to spruce up common areas and improve essential facilities, for example by water-proofing bathroom floors. These investments will enhance the value of HDB homes, and increase the assets of Singaporeans. Many Singaporeans living in HDB flats wish to upgrade to private housing. Government will sell more land to private developers, for condominium and landed property developments. Besides homes, HDB has also built many shophouses, but so far it has only sold a few of them to the shopkeepers. As landlord, HDB has periodically needed to raise the rents of these shophouses, causing difficulties to some tenants. To solve this problem, HDB will sell most of these shophouses to the tenants. The price will be related to the market values of the properties, with an appropriate discount. This will enable the shop owners to plan ahead with certainty. Health Care One area of concern to Singaporeans is health care. As incomes rise and the population ages, the demand for medical care will inevitably go up. As wages of medical staff go up, so will costs. So will national expenditure on health care. This has happened in every country. Singapore's per capita income is only half that of the US and Japan. Yet the subsidised wards of government hospitals already offer better medical care than most Japanese hospitals. Low income Singaporeans enjoy better medical care than many American families, who cannot afford medical insurance and have no access to good hospitals. The Government will ensure that all Singaporeans receive basic medical care. It will continue to subsidise B2 and C class wards, though it will still have to revise charges for these wards from time to time. There is a limit to the level of medical care which the Government can guarantee every citizen. The state cannot afford unlimited subsidies for high technology medicine, especially treatments which are recently discovered and not yet established. Every dollar spent on these areas is a dollar less for other proven, basic, and cost effective procedures. Patients who want non-standard treatments will have to pay for them at non-subsidised rates, or depend on the private sector. Governments which have provided free medical care for their citizens, like Canada, Britain, Spain, and other developed countries more affluent than we are, all face serious difficulties. Sweden, after 70 years of state welfare, plans to reform its system of government funded free health care. Even Communist China intends to start charging government employees for medical care. No state can meet the insatiable demand for health care. The burden of the ever increasing expenditures ultimately falls back on the people. We must learn from these painful experiences of other countries. Our medical care system must create maximum incentive for responsibility, and minimumtemptation to waste. The individual has a personal responsibility to keep fit, stay healthy, minimise the need for medical treatment, and save for his own medical expenses. The first report from the Review Committee on National Health Policies, emphasised preventive medicine and healthy living. The Government has accepted this report, and will launch an annual national campaign for healthy lifestyles this year. We have restructured government hospitals to provide medical care more efficiently and economically. The trend is for the private sector to play a bigger role in providing health care and competing against Government hospitals, as it has done in obstetrics. More than half the babies in Singapore are born in private hospitals. Singaporeans who have Medisave have generally been able to meet their medical expenses, especially if they also have Medishield. But the self-employed are not covered by Medisave. The Government will extend Medisave to as many self-employed workers as possible. In the long term, the Medisave contribution rate of 6% will be insufficient. The Government will raise Medisave contribution rates progressively, especially for older Singaporeans who have already bought their homes. The Government will set up a new endowment fund, called Medifund, to complement Medisave. Income from the endowment will be used to help poorer Singaporeans whose Medisave accounts are insufficient to meet their medical expenses, and who need help as a last resort. Medifund will be an extension of the existing scheme of fee waivers for C and B2 class wards. This will provide a safety net for Singaporeans. Help from Medifund will not be an entitlement. Each application to Medifund will be assessed individually by a committee involving community leaders, to decide how much help is needed. In keeping with the principle of personal responsibility, Medifund will give priority to helping those who have consistently contributed to their own Medisave accounts. This will be an additional incentive for self-employed Singaporeans to contribute to Medisave. For older Singaporeans, who retired before Medisave was fully introduced, Medifund will be more flexible. Pace of Change The changes in Singapore society have been rapid. Sometimes people feel disorientated, and have to struggle to keep up, but the pace of change is not dictated by Singapore alone. The entire Asia Pacific region is undergoing dramatic change. Other countries like South Korea, Taiwan, Malaysia and Thailand are advancing even more rapidly than Singapore, and catching up on us. If we choose a more relaxed pace, we must be prepared to be overtaken and left behind. To stay ahead, we must constantly restructure and upgrade. Sustaining growth depends on pursuing efficient, market oriented economic policies. People sometimes criticise these policies for paying inadequate attention to social and human factors. But these are the very policies which have created the prosperity we enjoy today. The Communist countries pursued the opposite policies, ignoring market forces and eliminating income differences by government order. They created poverty and despair. Many have collapsed. The Government cannot hold back change, but it will help Singaporeans to adapt to change. It cannot protect local businesses against foreign competition, but it will help them to restructure and compete. It cannot preserve redundant jobs where technology or market demand has changed, but it can help affected workers to retrain and find new jobs. While we constantly upgrade and adjust to changing world conditions, we must not unthinkingly cut ourselves off from our cultural roots. Government policies must always enjoy the broad support of the major social groups, including the less vocal non-English speaking part of our society. Now that the economy is more developed, growth is becoming more difficult. Despite our best efforts, the economy will slowdown. Where previously 8% growth was normal, in the next phase 5% to 7% growth will be very good. While we work harder to upgrade and become more productive, we must also moderate our expectations of wage increases. In recent years, wages have increased by as much as 10% per year, but this cannot be sustained over the long term. The labour market is still tight, but eventually wages will have to slow down to match productivity and economic growth. Otherwise we will be chasing our own tails, and higher wages will cause higher inflation without improving standards of living. Civil Service Personnel Management Implementing policies to carry Singapore forward in the Next Lap depends on an efficient and professional civil service, which can attract and challenge some of the most able Singaporeans to contribute their best to Singapore. The present civil service arrangements for recruiting, promoting and managing personnel, centred on the Public Service Commission and the Public Service Division, were inherited from the colonial government. The arrangements are over-centralised and too rigid to cope with the rapidly changing labour market. They give more weight to internal civil service relativities between unrelated vocations than to what the market judges the jobs to be worth. Despite periodic salary revisions, the civil service is unable to recruit all the talent it needs and pay them market rates. In Britain, the Civil Service Commission has delegated most of its authority to ministries and departments, and retains responsibility for only 15% of recruitment. Malaysia, which inherited similar arrangements as ours, has amended its Constitution to delegate civil service promotions to ministries. The Malaysian PSC is only responsible for recruitment. We must make fundamental changes to the management of the Singapore civil service and free up its personnel administration. The public sector must become a more responsive and competitive employer without compromising the integrity and impartiality of the civil service and the statutory boards. The Next Lap We are entering a new phase of Singapore's development. We have successfully overcome the basic challenges of the first 25 years of independence - schools, housing, security, jobs, and basic health care. We have built up substantial reserves, and created an elected Presidency with powers to give some protection to these reserves. Now we face new challenges - how to strengthen national consensus despite the absence of visible danger; how to remind Singaporeans that the basics have not changed, however secure our prosperity may appear; how to remain agile and keen even though we are no longer lean and hungry; how to be a meritocratic but not an individualistic society; how to maintain the pace of upgrading so that Singapore will become a developed country, and all will be better off, by the end of the century. The new generation of Singaporeans must find fresh answers to these challenges amidst tumultuous international changes. The breakup of the Soviet Union has caused great upheavals. It will bring in its train alterations or modifications in alignments worldwide, as nations seek security and economic growth under changed circumstances. The continuing impasse in the GATT Uruguay Round negotiations will put more great strain on the multilateral trading system. As European economic integration and a North American Free Trade Area develop, the Asia Pacific economies will at the very least face stronger competition. We have to work together productively as one nation, to exploit the opportunities and avoid the dangers which these and other external developments will bring. Then we will fulfil the promise of The Next Lap. Adjourned accordingly at Nine o'clock p.m.