Mr Deputy Speaker, Sir, in the last General Election, the PAP campaigned on a specific programme: The Next Lap. The Opposition campaigned on a different tack. They made great to do with "bread and butter" issues. The PAP won. The victory was a mandate for the Government to proceed with The Next Lap programme. Therefore, the President's Address outlined how the Government intended to turn this vision into reality, into immediate programmes, into plans which will leave Singapore better off by the end of this Parliament. Of course, we did not expect the debate to end there. We expected the Opposition MPs to come and argue in Parliament that the Government had not paid enough attention to bread and butter issues. After all, Mr Chiam had gone on record saying that life in the 1970s was better than it is today. So I was very puzzled when Mr Chiam made no mention of "bread-and-butter" in his speech. Instead, he talked about the Singapore Island Country Club, which is hardly a bread-and-butter problem. When Mr Low Thia Khiang moved to amend the motion of thanks in order to regret that the President's Address had not outlined the Government's response to the message from the electorate, I expected him to develop this theme. Then we could have had a full debate in this House. That is what democracy is about - a vigorous clash of opposing ideas. But, unfortunately, although Mr Low made a few passing references to the reserves, he did not expound the theme systematically. I do not think this uncustomary lapse on the part of the Opposition should deprive Singaporeans of the opportunity to have a full discussion on an important subject in this House. Therefore, let me show you some data so that we can base our discussion on facts and not on anecdotes. Can I ask the Clerk to distribute the tables (Cols. 285 - 294), please? [Copies of tables distributed to hon. Members.] Some of these data we have released before, but I think it is worthwhile repeating it, so that everybody, particularly the new Members of the House who were not here when last we discussed this subject in July last year, will be able to study and understand the significance of the figures. tables - REAL MEDIAN HOUSEHOLD INCOME, REAL GROWTH IN AVERAGE MONTHYLY EARNINGS, INCOME INEQUALITY AND THE GROWTH OF GDP IN SELECTED ECONOMIES, 1965-89, OWNERSHIP OF CONSUMER DURABLES AND ASSETS, EDUCATIONAL ATTAINMENT OF RESIDENTS AGED 25-29 YEARS, INTAKES BY COHORT, HOUSING PROFILE OF TERTIARY STUDENTS, 1990, HEALTH INDICATORS (Cols. 285 - 294) Look at Figure 1 - Real Median Household Income. How much does an average household earn in real terms after discounting for inflation, bus fares, and so on, in 1973 compared to 1990? I chose 1973 because it is more or less when Mr Chiam's mythical Master of Science Engineer returned to Singapore. You can see that his Master of Science was, by no means, from an average household, because in those days, the average income was $940 per month, for a six person household. And in 1990, it was $2,300 per month for a four person household. So the growth is 5 1/2% per year per household, plus 2% odd per year because the households had grown smaller, after discounting for inflation. Next, let us look at the distribution of the income. The median income gives the average household, but we want to know whether the poorer households are much worse off. Figure 2 gives a breakdown into the professional and administrative workers, the clerical and sales workers, which means white collar, then the production, transport and manual workers, which means blue collar. Over ten years, how have their salaries moved? The answer is: the professionals have gone up, average 3.1% per year; clericals, average 4.3% per year; blue collar workers, 5.6% per year. In other words, salaries have been going up faster for blue collar workers, people with low incomes, than for the professionals and management, the people with high incomes. There is one additional interesting feature of these figures. Although the increase for the particular vocations ranges from 3% to 5%, you see that the average is higher - at 6.1%. Why is that? It is not a miscalculation, it is a fact. The reason is that not only have incomes gone up within each group, but the distribution of the groups has changed. More people today have become professional, administrative and management workers, earning more, and fewer people are in the blue collar classes, earning less. You look at the distribution of the occupational structure, 54% blue collar in 1980, 50% today, 18% professionals in 1980, 24% today. These figures include foreign workers, who are mostly blue collar. So if you discount the foreign workers, in fact, the improvement for Singaporeans is even more dramatic. Now, let us look at income inequality. People talk glibly about the rich getting richer and the poor getting poorer. Dr Lee Siew-Choh used to say that regularly in this House. If he were here, I am sure he would say it again. But let us look at Figure 3, - from the "World Development Report", prepared by the World Bank. Income inequality is on the horizontal axis from left to right, economic growth rate is on the vertical axis, from bottom to top. Compare Singapore with other developing countries: growth is one of the highest, income inequality is one of the lowest. Who is lower than us? Korea, marginally so, Taiwan, perhaps, China, Hungary, Israel, and perhaps Bangladesh. With which of these countries would you wish to swap places? So income inequality is not a problem. The next table, Figure 4, shows how broadly affluence has been distributed. It is not just the median family which is doing well. Many families have been able to own not only their house but durable goods. Home ownership rose from 36% in 1973 to 90% today; television sets, 49% in 1973 to 99% today; refrigerators, same. My statisticians want to strike these off the statistics. They say they are no longer interesting because everybody has arrived. I say, do no such thing, because I think we should still remember that these are blessings and not be taken for granted. Washing machines, VCRs, 78%. Cars, about which great heat is generated, 17% up to 28%. So we are increasing the number of cars in Singapore, making them more affordable, not less. Air-conditioners, presumably, are not essential goods in Singapore. Personal computers, 19%, one of the highest in the world. The conclusion obviously is that it is totally untrue that poorer Singaporeans have not benefitted from growth. Yesterday Mr Cheo Chai Chen said we should not just do our arithmetic, we should look at the tree. President Yang Shangkun from China was here recently. He had a look at the tree. He went to Bishan to visit a family. Here is what he said on television. " " (I, as Chairman of China, I am not living in as comfortable surrounding as he is). And what does the family have - a maisonette in Bishan. He was not just being polite. He said it three times. If you think he was a guest, I will give you another quote. Stan Sesser is a journalist for the New Yorker magazine, a very well-established liberal journal, published in America. He came here in the middle of last year, spent more than a month here, interviewed me and several other Ministers, including leaders of the Opposition, saw a lot of Singapore. He wrote a long article in the New Yorker, which has just been published in the January issue of the magazine. He is not an admirer of Singapore. He is a liberal. This is a liberal magazine. He has very strong criticisms for many of the things we do. He thinks that we are regimented. He thinks that we should not control people the way we do. He feels sorry for Mr Chia Thye Poh. And if we had banned chewing gum earlier he would have written about it. But he has to acknowledge the facts. So let us see what he said because Stan is not one of an uncritical admirer. I read you a few quotes: "Although it began as an impoverished nation with no resources [meaning Singapore], it has managed to solve the major problems that plague almost every other large urban area in the world today - problems that threaten to balloon into crisis proportions in the United States. Singapore has virtually no poverty, no homelessness, and no begging, and little crime. Unemployment is close to non-existent. The air is clean. Cars are so strictly regulated that traffic flows freely even during rush hours. The prosperity of Singapore, where people lead lives that even many Japanese will envy, is shared widely. The same cabdriver who called Singapore dull [must have been an NTUC taxi driver] admitted after a bit of questioning that he grew up in the nineteen-fifties in a one-room "shophouse", where a seven-member family both worked and lived. His parents slept on the bed; he slept under it. Today, he lives, with his wife and two children, in a three-bedroom apartment, which they own." Then he goes on: "Today, Singapore is a city with almost no poverty. Hong Kong may have grown as rapidly, but in Hong Kong the gap between rich and poor is visible everywhere. By contrast, I never saw anyone in Singapore shabbily dressed, and everyone appeared to have at least a passable place to live. Food is cheap and plentiful. Even low-income Singaporeans have access to high-quality medical care; [note that: "low income Singaporeans have access to high quality medical care"] doctors at public hospitals in the United States might look enviously at the public wards of Singapore General Hospital." [I think Mr Ling should read the New Yorker before he speaks in the House.] Except for a recession in 1985, the boom has continued unabated, producing economic success of a sort that Singapore's neighbours could only dream. The statistics are stunning. Year after year, Singapore has achieved economic growth of around ten percent. Unemployment dropped ... Workers get fat pay rises ... Per capita income, grew ..." Then he quotes: "A young Malay guide from the STPB, who showed me the sights of Singapore, told me the story of her family. In the early nineteen-seventies, the family of ten lived in a squatters' zinc-roofed one-room hut, without even a toilet. The roof leaked, she said, and also made the room an oven during the day. Now they reside in a four-bedroom apartment. All her sisters and brothers have good professional jobs, and two of her brothers, who are married, live in five-bedroom apartments." We did not solicit this testimony. He is not a PAP Member or supporter, but he has seen, he is honest, and he has to report what he has seen. So the question for us now is: how do we continue to make this progress in the next phase? We have done well, yes. But I am rather disturbed that the discussions here have all assumed that because we are rich, money is no object. The only problem is finding out what is the intelligent way to spend it. I think the next phase is not going to be so easy. I quote you a different person, Lester Thurow, Professor, MIT. He was here last year as a Lee Kuan Yew Visitor. He gave a lecture in NTU in July. I read you his conclusion: 'It is important to understand that there are lots of economies in the world that basically reached the level of Singapore, and then have not been able to make the jump up into the developed world.' So getting here, that is easy. Jump into developed status, that is hard. Then he goes on: 'If you look at the world's wealthiest countries in 1870, ie, 120-130 years ago, and you compare them with the world's wealthiest countries today, only one industrial country in the world has made it into that club in 120 years: Japan. No other country in the face of the globe has done it; two or three natural resource countries that used to be on the list (Argentina, Chile and New Zealand) have dropped off the list; a couple of oil-wealthy countries like the United Arab Emirates and Kuwait have joined the list but the only industrial country to make it in 120 years is Japan. Of course, that tells you that it is not an easy thing to do. In some sense Singapore has the hard part ahead of it; and for that hard part, I think, the strategy has to be the human resource development strategy.' Which is absolutely right. Therefore, what do we do to make it? I think, firstly, we invest in education. Investing in education enables many more Singaporeans to upgrade, because if you learn, if you get skills, you can earn a living for yourself, far more than any welfare we can give you. This spreads the benefits of growth as widely as possible. In fact, this is the indirect way we can massage the distribution of income and make sure that we have relatively equal incomes in Singapore - by making sure that everybody with talent is able to get educated and therefore can earn a living, and that we do not have talented people, deprived of education, who are festering at the bottom of society, making revolution. If we want to become a high-tech society, a high-tech economy, then we need not just a few elite - inventors, scientists, research people - but also a large number of skilled workers. Because if you want to run a factory production line tip-top, just in time, zero defects, then every worker must master mathematics, must understand how to operate the computerised equipment, must be able to program it, and when it has gone wrong, must be able to fix it himself, instead of standing around waiting for a supervisor to arrive. So, Mr Low Thia Khiang was right when he said we want to go for a large, broad base. In fact, that is one of the reasons why the Japanese make better cars than the US, because man for man, Japanese workers are better than the US workers. And team for team, multiply better, because not only are they individually powerful, but they work together as a whole. So education is important. It is one of the bread-and-butter issues. Some people say they cannot afford to go to university, they cannot afford this and the other. Let me show you some more numbers. Let us look at Figure 5A, to show you how education has spread in Singapore. In 1980, 70% of Singaporeans - we are talking about young Singaporeans aged 25 to 29 - had, at most, primary education. Upper secondary, 8%; university, 4%. If we talk about the general population, it would be much worse, because most of the older folks never went to school. In 1990, 25-29 year-old-cohort, primary or lower, down to 38%, reduced by one-third. Upper secondary, gone up to 13% from 8%, of which polytechnic was 7%, university, gone up from 4% to 8%. In fact, the number of graduates from university doubled, the number of graduates from the polytechnics greatly increased, those who left school before PSLE, down. If you look at the people who are going to university, just leaving school, I think that gives you an even faster, sharper story, because it takes 5-10 years from the time they leave school, finish their national service, enter the work force, and get counted in the census. So let us look at the people going to university. In 1981, 3,500. In 1991, 6,900. Polytechnic, more than double, 4,800 going to 10,200. VITB, nearly triple, 3,500 to 9,000. Remember, in 1981, you are talking about 50,000 people at the age of 18, roughly speaking. By 1991, the cohort had shrunk. You are talking about 42,000-43,000 people. So more are going to unversity on a smaller base. Who is going to university? The rich? Let us take a look at Figure 6 - Housing profile, who goes to university. One- and 2-room, that means the rentals, 2%; 3-room, that means lower middle class, 30%; 4-room, 21%; 5-room, 20%; private housing and so on, add up to 27%. If you compare this to the general population, it is not that different. Polytechnics, same pattern. 1- and 2-room, 3% of the polytechnic population; 3-room, 41%; 4-room, 29%. In other words, the university is a major avenue for social mobility. Affordability is no problem whatsoever for a young man or young woman going to university. If you have the ability, you make it. So we have indeed invested broadly in education to benefit many Singaporeans. But the President went further in his Speech. He said we should invest more in the talented. And I would say we should invest more in the talented, both as a nation and also as a Government. We can do this while looking after the needs of the average and the below average students. To say that everybody should get exactly the same from the Government, and nobody should get a single jot more, even if he has some special talent, that is populist, churlish, unwise. We will progress by encouraging every Singaporean to do his best, and by rewarding those who make their contributions. Why are Singaporeans reluctant to get ahead? Well, one possible reason, which is very strong in egalitarian societies like China or Russia, is that if you get ahead, everybody says, "There you are, you are a bloodsucker, an opportunist, one of these somehow disreputably rich people," rather than an entrepreneurial man who has got ahead by his energies and is bringing people along with him. If we want to get ahead, then we cannot level down. We have got to encourage individuals to get ahead to excel, and then contribute to society, because some people are naturally more able than others and their contributions will benefit many more Singaporeans. No society is composed of zombies, every person is exactly the same as every other person. In every society you have a range of talents, those who are skilled academically, those who are skilled musically, those who are good entrepreneurs, businessmen, those who are administrators, those who are soldiers, those who are good sportsmen. It is a natural distribution of talents, it is part of the strength of the society. Societies which acknowledge this and exploit the varied talents and abilities of each one of its citizens, they do well. Those which forcibly prevent the more able from getting ahead, they fail. Let me give you some examples, because unless we look at the rest of the world and see how other people, other societies, solve their problems, I think when we discuss our own difficulties, we risk falling into a mood of navel contemplation, where you are so preoccupied with your own difficulties that you totally lose perspective on the reality. Take the British. They once had grammar schools, centres of academic excellence. Grammar schools were independent schools, not places like Eton and Harrow where the rich went, but independent schools where talented children from poor families could go and get a good education, and therefore make it into Oxford, Cambridge or LSE and succeed in life, people like Dennis Healey. But in the 1960s, because they had an egalitarian mood, Britain dismantled their grammar schools, so that everybody went into the comprehensive schools; good, bad, indifferent, they all went into the comprehensive schools, and all would be equal. It was such a strong mood that even their elite who went to places like Cambridge, after getting into Cambridge, they sought to remove privilege for outstanding academic excellence amongst themselves. If a person does brilliantly he gets a scholarship, but he should enjoy no privileges whatsoever. Mute these differences. We will be happier if we are not so different. The only result Britain achieved was to lower standards in schools and in universities, and indeed in the industries and in the economy. Its centres of excellence have weakened, including famous institutions like Oxford and Cambridge, while their comprehensive schools are not better. They cannot even agree on universal, national, achievement tests, PSLE, 'O' levels. It cannot be settled. Cambridge once had one of the best economic faculties in the world. They were at the cutting edge. Now, you read the Economist, it says, "The Tale of Two Cambridges" - Cambridge, England, and Cambridge, Massachusetts in America. MIT and Harvard have the best faculties in economics in the world. What about Cambridge, England? Well, they say, sadly, somewhere around Pennsylvania State University. That is where it has gone. Of course, they have got other problems too, but this dilution of merit and systematic discrimination against achievement has not helped them whatsoever. The Communists went further. They tried to eliminate income differences by government order. They just legislated. It does not matter what you do. It does not matter what contribution you make, you get paid the same. The Chinese say, (tie fan wan, da guo fan). That is my contribution to the Chinese quotes for the day! But when it comes to areas which are important to them, where really outstanding performance is critical - you want rocket scientists, you want nuclear scientists, you want ballet dancers for the Bolshoi, you want chess grandmasters like Karpov and Kasparov, you want champion sportsmen, sportswomen, gymnasts, going to the Olympics - you do not start on the assumption that all men are created equal. You start knowing that men are created very unequal. Then you abandon your Communist rhetoric, talent spot the children very young and send the few who have outstanding potential into special schools, special treatment, very best instruction and preparation, tutoring, pampering, so that in the end they excel, they do their country proud. And now that the Soviet Union has collapsed, they are not going to produce grandmasters any more, and you may well have a non-Soviet chess champion. So the Communists know that the propaganda is one thing, that undeniable reality of biology and of human society, that is different. You look at the Chinese. They are another egalitarian society. They established a special university programme for gifted children (an hui he fei) at the Chinese University of Science and Technology, (Zhong Guo Ke Ji Da Xue). They established it in 1978 by a special decree of the State Council. This was after Deng Xiaoping returned to power and propounded the philosophy that "if you want to catch a rat, it does not matter whether your cat is a white cat or a black cat. The question is whether it can catch the rat or not." So an egalitarian society established their gifted education programme. Every year from the whole of China, millions of children, they take 30 to 40 aged 14 to 15 - we put 100 into our GEP and we call them gifted - they go to Anhui, special classes, tutors and resources lavished on them. They study physics, electronics engineering, biology and system science. After they graduate, three-quarters go on to post-graduate programmes. QingHua University in Beijing, and JiaoTong University in Shanghai also make special arrangements to admit gifted children. So China, with 1.1 billion people, socialist, egalitarian ideology, finds it necessary to develop special gifted education programmes, and invest specially in their most talented people. We, with 3 million people, expect to do equally well without investing in our talent? Look at Hong Kong. Yes, their income distribution is more unequal than Singapore. They have tycoons, billionaires, multi-billionaires, shipping tycoons and so on. But would they be better off without these billionaires, these talents who make their economy dynamic, vibrant, and much more so than Singapore's? If we can find people like that, like Steve Jobs, or like some of the Hong Kong entrepreneurs, then I think we should invest in their education, in their success. We get one top industrialist, he creates a multi-national corporation, a Singapore MNC, that means thousands of good jobs for Singaporeans. If it makes him a billionaire, good for him. It is also good for Singapore. And if this makes the statistics of income distribution look worse, so what. Are we worse off? Would you prefer him to be doing well some place else and prospering in some other part of the world instead? So it is better for us to have such people and help the country to prosper than not to have such people and let the country stagnate. If we want to build a tall pyramid of talent, then we must start from a broad base. This means incentives at all levels. You climb up each level, until eventually you reach the pinnacle. That is how you get chess grandmasters. Therefore, we must encourage many Singaporeans to strive, not just the few. Eventually, we will produce a top team, which is a strong one. But at the same time, which is very important, we will produce superior performance throughout the economy, and the country will prosper. This is why we support independent schools. This is why we are offering scholarships for independent schools. This is why we are also offering scholarships for non-independent Government secondary schools. We want the pinnacle of achievement, but we also want people who are going to neighbourhood schools, people who are average and above average, to feel that if they make the effort, if they do well, there is something in it for them. These are not medals which are beyond reach. We should create more centres of excellence. We should not dismantle those few which we have painfully created. In fact, this is not a new principle. It is long established, but we have put it in a sharp form. Not everybody goes to junior college, or to the polytechnic, or to the university. Students who go to JC enjoy more subsidies than those who do not, because it is more expensive to educate in the JC. Those who go to the polytechnics and universities, they are subsidised even more. If you go to the university and if you study medicine, you enjoy a subsidy which is much, much larger than the total cost of training an arts graduate. Every year the Government gives scholarships to the most outstanding students, regardless of their family income. Then on graduation they come back, they serve the Government or the SAF or the Police. In fact, when the Government tries to get the university students to assume a slightly larger share of this very heavy burden, and up the school fees a little bit, there is a great outcry. So what are we talking about? Suppose we follow the opposite principle, propounded by Mr Low Thia Khiang and, I believe, today by Mr Ling How Doong, that the able should receive no more support than the less able. What should we do? Then logically speaking, if we want to be quite correct, we should remove all subsidies. We should not subsidise junior colleges, since not everybody can make it to JC. We should not subsidise the polytechnics or the universities. We should abolish Government scholarships. Then everybody pays full fees for higher education. That is being perfectly fair. Should we do that? So when we invest in the more able, in fact, we are equalising opportunities between richer and poorer Singaporeans. Look at it this way. For the student from a wealthy family, if the Government does not pay, he will go on father's scholarship, right? More and more are going on father's scholarship. They will get the education they can afford. You tell them they are not allowed to go to independent schools in Singapore. They can go to Australia, they can go to Britain, they can go to Canada. All the routes are open. All the calling cards are already available. And it is getting easier every year because the quality of our top students is recognised around the world. But if you are a bright child from a poor family, where will you go? His potential will not be fully developed. So the end result will be less equality of opportunity and a more unequal outcome, not a more equal outcome. The President's Speech makes this implicit policy explicit. I think it is an important basis of our policies and one which we should not be ashamed about. It is right. It benefits all Singaporeans whether or not they get the scholarship, and we should do it. We are not doing this as a charity, out of the goodness of our heart, but as an investment. Those who benefit from society's support have a moral duty to contribute back to society. Most do. Of course, there are a few who say, "Well, I have got nothing out of NUS. I thoroughly detest the place. No sentiments for it whatsoever." I hope that does not extend to their sentiment for their country, and also despite that, they recognise the magnitude of the investment which the country has put in them and the hopes which we have invested in them, and will, nevertheless, play their part as good citizens. So the second thing to do is invest more in our more talented. Thirdly, we should generate incentives for people to work. We should not discourage efforts through welfare. You want to draw on the reserves, it is the surest route to bankruptcy. Mr Low Thia Khiang says "Reserves of $15,000 per head. Government has money but life is hard". I am told that it sounds even better in Teochew. The reserves are actually your money. First, it is the backing for the currency, guaranteeing the exchange rate of the Singapore dollar. You look at the rouble. You can have roubles by the fistful. You look at the Singapore dollar. Every day the exchange rate goes up and regularly MPs complain about that. Why does it go up? Because it is valuable, because it is backed, because people are confident that you can spend it outside of Singapore, you can get hard currency for it. Or you can spend it in Singapore on imports, you can pay for imports with it. You run down the reserves, you depreciate the currency. It is a cheap way to finance a budget deficit. Secondly, the reserves are assets matching CPF balances. They guarantee the purchasing power of your savings. If you have money in CPF, CPF puts the money with the Government, the Government takes it and invests it overseas. How much are these CPF balances? As of October 1991, $45 billion. (zhengfu you quian, ren min ye you). $45 billion divided by 3 million Singaporeans, $15,000 per head. As Mr Low says, $15,000 per head reserves. That is your money. So Singaporeans are not poor. Thirdly, reserves are there in case of war or major mishap. We have no oil in the ground to pump. We have no uranium, diamonds, gold, opals, like the Australians to sell. Something goes wrong at GATT, the Americans cannot settle with the Europeans over agriculture, the package gets unravelled, they each go for their own trade bloc, we are out in the cold. The Japanese will invest in Europe to sell to Europe. They will invest in Mexico to sell to Nafta. They will invest in here to sell to whom? Where will you work? What will you depend on? You will depend on reserves. You want to spend them now? Well, we take the risk that we will have none when we need them. In fact, the temptation to raid reserves is quite a universal one. According to Fortune, in the United States lots of local government authorities have set up pension funds for their employees. They are obliged to pay in money to the pension funds every year so that when the employees retire they have money to take out to fund the pensions. But how much do you need to pay in to ensure that when you retire there is enough money? That depends on how profitable you declare your investments to be. So now that they are short of money, they are just declaring higher returns. Instead of earning a 2% rate of return, I shall declare that henceforth my pension funds will be better managed, 6% rate of return. So, therefore, I put less money into the pension fund, and take the money out to spend on consumption. So when the local government employees retire, and if the 6% return was not realised, that is just too bad. The Singapore Government can do that too. But in Singapore we have created an Elected Presidency to make sure that these CPF savings are safe. Fourthly, if we want to prosper, harness free markets, do not subsidise consumption. There was a proposal yesterday to divert revenues from the COEs to subsidise bus fares. It sounds good. But is it wise? Whose money is the COE money? It is the Government's money. Whose money is the Government's money? It is yours. How do you want to spend it? If we put it into bus fares, you are going to distort the price signals, and the result will be inefficiency and waste. Let me explain. To run a bus economically you must have passenger load and they must be prepared to pay for the ride. Then you know you are not wasting your fuel, your bus driver's time, depreciation and so on. If you are going to subsidise it and say, "Well, it loses money. Let us run, never mind. Two passengers. That is all right. I will pay for the rest." You are wasting money, are you not? Because it is cheaper for you to let these two people go and ride a taxi and pay for their taxi, than to run the bus service, pay for the driver, fuel and all the massive overheads of the bus line. If you do this, people will live further from the MRT stations. They should cluster around MRT stations, in high density developments. But since you subsidise the bus lines, travel is cheap, people do not have to live so close by, they will live further away, and take the subsidised bus ride into the MRT station. When residents live further away, the property values near the MRT station will go down. Property values further away will go up. Since the property value is down, you will have uneconomic property development projects - low density developments. Land is cheap, we will build two-storeys instead of ten. It is waste. Wrong price signals lead to distortions, lead to inefficiencies. The worst examples are from the former Soviet Union. They used to subsidise for all their best reasons. Milk powder is good for babies. Milk powder was cheap. So people bought it. It was very cheap. They bought it by the ton and they fed pigs with it. Children's clothing was cheap. That should be subsidised. Everybody feels a soft spot for kids. So they bought it. They used it as rags to wash cars. These are real horror stories. If you continue with subsidies, in the end it becomes a massive drain on the state's revenues. I will read Yang Shangkun again. When a communist says this, you better take note: (In Mandarin): 'We are also trying to do this (housing plans) because in the past, everything is subsidised by the government. You pay only $1 to $2 rental. But we have to go along this road so that everybody owns his own house, otherwise the government cannot support it. If we have to repair the houses for our 1.1 billion people, how can we afford it?' (In English): All belonging to the state. Two rooms, one yuan per month. All from the government. Government must build; he enjoys it, payment nugatory. Therefore, you have to reform. The government cannot bear this burden. 1.1 billion people, and you have to build houses for all of them for free. Can you? So, if you accept that, then it is better the Government takes the COE and other revenues; look after them, invest them - in education, in infrastructure. The other way we can do it, which is a valid one, is to use these revenues as an opportunity to reduce other taxes progressively, so that people will decide for themselves how they want to spend the money, what they value most. Then people have a greater incentive to work hard and create more wealth. That is sensible. But, of course, if you say, just reduce taxes, no need to levy any new ones, that is not possible. Much has been said in the last couple of days about social costs, non-economic factors, getting increasingly important. Yes, economic progress does mean change. And change is unsettling, and change makes people worry. There are sometimes difficulties, like in health care. We have a serious national problem in the long term which the Government has been candid to talk about and which we would like to resolve together with the people over the next few years. For example, we can help people to adjust through Medifund. But often the worries are totally unjustified and the social cost is only the discomfort of adjustment. Then we need to reassure people that all is well. Take time-based phone charges - tremendous alarm and unhappiness. Everybody worries that he is going to pay more. What are the figures? We have run it for a month. Price Waterhouse has gone through the December figures, and audited them. And do you know how many subscribers pay less? 73%, nearly three-quarters; even better than Telecom predicted. So the alarm was totally unnecessary. We, therefore, have to see change in perspective. And if we get agitated over every change, including those which we can take in our stride, then we are going to make slower progress. We have taken the hard-headed approach, but that is not because we are hard-hearted. In fact, we have taken the hard-headed approach because it is the more humane one. Because we invest more in the more able, therefore, all Singaporeans have progressed faster. Because we have minimal welfare benefits, therefore, we have few unemployed and destitute. Because we have depended on the free market, therefore, we have generated high growth and low income inequality. And because we have refused to subsidise buses, MRTs, and other public services, so these public services run efficiently, and even turn profits. And profits are good - not a dirty word. I am glad to see that many MPs in this debate have acknowledged that this is the right approach. We have not achieved economic success at the expense of other goals. Economic success is an important prerequisite to achieving other goals, including social and political objectives. We should bear this in mind if we wish to progress further.