Mr Deputy Speaker, Sir, I was amused by Mr Chiam and Mr Low Thia Khiang's loud criticism of the President's Address for its omissions, and not for what is in the Address. It is like chastising Shakespeare for not including Chinese poetry in his works. Why not challenge what is in the Address and state clearly what you support and do not support? Why do you not debate the issues? What kind of society do we want? This has been debated many times in this House, when we debated the National Agenda for Action, Shared Values, and when we debated last year's President's Address. What about the style of the Government? That was settled in the last general elections. Mr Chiam's stylus is stuck in the groove of his 78 RPM record. That is his problem. But for us in the PAP, we will get on with the serious business of government, with new ideas and fresh programmes. Our strategic vision is a developed Singapore by 1999. Our thinking, philosophy and programmes are published in The Next Lap. The President's Address focuses on the Government's programme for the next five years. It should be read together with The Next Lap. Our mission in the next five years is to implement programmes to upgrade and level up the performance of the population; let me repeat, level up the performance of the population, so that their earning capacity and therefore their incomes can rise. This would give us ever higher standards of living. Levelling up does not mean keeping down performance or rewards at the top, spreading largesse to even out rewards, or closing the income gap. It means motivating, helping and encouraging everyone to do better, the exceptionally able, the able, the average and those not so able. It means making them competitive and productive and offering a gentle helping hand, to lift up the standard of living of those who cannot attain that level on their own. Some MPs have confused levelling up with closing the income gap. The two concepts are different. One has to do with help to improve the standard of living of the bottom half; the other, an egalitarian approach, to equalize rewards. The egalitarian approach is detrimental to economic progress. Consider the normal two ways to equalize rewards or to close the income gap. One, underpay the able for their skills and expertise, and overpay those with below average ability and skill, as they do in Communist countries. The income gap between the able and less able, the skilled and unskilled, is deliberately kept small to achieve an equal society. With little difference in pay, there is little incentive to study hard or spend long years as an apprentice to acquire skills. The economy suffers. The other is to allow the able to earn as much as they can but to squeeze the rich like lemons until "their pips squeak", as one British politician once said. That was exactly what Britain did with a top marginal tax rate of 60% until Mrs Thatcher reduced it to 40% in 1988. The taxes paid by the able and the successful are then used to subsidize and fund welfare programmes. The result is emigration and massive tax avoidance by the high income earners. They can simply shift their residence to tax havens like Monaco or the Bahamas. Worse, the population, once fed on the milk of welfare, cannot be weaned away. Consumption patterns then become distorted by subsidies and resources are misused. The result, eventually, is economic decline, indebtedness and a falling standard of living relative to others. New Zealand is a prime example where the welfare society has gone wrong. It began its welfare system in 1898 with a pension of o18 a year for people 65 years and over who had led a "sober and respectable life". In 1938, the government consolidated various other measures to create the world's most comprehensive social welfare system. These included pension to those over 60 and benefits to widows, orphans, children, invalids, miners and the unemployed. Health care was free. Today, these social services cost 38% of total government expenditure, and the money has to be borrowed. The net result is huge debts, economic decline and unemployment, and what critics describe as "third-rate social services". Yesterday's Straits Times reported that the New Zealand government is introducing a "user-pay" health care system next month. Of course, the electorate is in an uproar. But as the Associate Health Minister, Maurice Williamson, countered: 'New Zealand simply cannot afford to continue borrowing money to provide health care for everybody at no cost.' Consider Table 1 (Cols. 379 - 380) which I have distributed. In 1970, New Zealand was ranked 11th in terms of per capita GNP. This dropped to 21 in 1989. Look at Singapore's. In 1970, we were ranked 33rd. In 1989, we were ranked 24th. In 1990, the preliminary data showed that Singapore had overtaken New Zealand. Just compare Singapore's 1990 per capita GNP with its GNP in 1970, nearly US$12,000 in 1990, as compared to US$920 in 1970. But, of course, Mr Chiam will still advocate that Singaporeans are worse off today than in 1970. Table 1 - PER CAPITA GNP RANKING OF NEW NEWLAND AND SINGAPORE (Cols. 379 - 380) The lesson from New Zealand is clear. If you try to close the income gap or go for welfare to achieve an egalitarian society, as Mr Low Thia Khiang advocated, and also Mr Ling, I believe, not only will the country not make good economic progress, it will end up in bankruptcy. Friedrich Hayek, a Nobel Prize winner for Economics, in the 1930s and 1940s, had the moral courage to challenge all intellectuals who believed that they were able and ingenious enough to bring about a better system of "social justice". They attacked Hayek as an enemy of the people, because he had argued that "equality of opportunity is just, but attempts for a government to create equality of result would lead to tyranny." This was the central point of an article by George Melloan in the Asian Wall Street Journal, 14th January 1992, page 6. What has happened in the old Soviet Union proved that Hayek was right. Equality of results leads not only to tyranny but also to bankruptcy. China would also have gone bankrupt. But Deng Xiaoping's open door policy and his active encouragement of the Chinese to work hard and be rich, has saved China from bankruptcy. It is better to recognise this reality. For a country to progress, let the market reward a person according to his worth, ie, his ability, performance and contribution. There will always be an income gap between the able and less able. And if the Government intervenes to make them equal, the result will be tyranny and bankruptcy. We must help the less able to increase his income, but we should never stop the able from increasing his income even higher. The gap can never be closed under a market economy. What we can do is to level up a person's standard of living, as opposed to artificially handing him more money to spend as he likes. We can do this by upgrading his competence and by spreading the fruits of economic progress. Our policy is to give more and better opportunities for the able from poor and lower income families. If they are able, they will catch up with the able from higher income families. If they are better, they will surpass the able from the higher income families. This way, we level up the population without demotivating them or getting them addicted to welfare and subsidies. I can give you a few examples of MPs who have levelled up -Lim Boon Heng, Lee Yock Suan, Tan Cheng Bock and myself. We did not come from rich or exceptional families. I came from a poor home, one without electricity and modern sanitation along Pasir Panjang Road. Like my colleagues, I depended on bursaries and scholarships to go through secondary school, to go to university and to do my Masters. Because of these opportunities, Tan Cheng Bock, Lim Boon Heng and many others in this House, have overtaken many of our classmates who came from wealthier families. This Government is moved by compassion. Because of my own experience, I know that to be successful, I must be competitive, and I want to help others in my old situation to succeed. But in a way which will make them do more, not less, for themselves. Otherwise, the help, instead of strengthening them, will weaken them. Most important of all, compassion must lead to higher performance. If a method results in lower productivity for the team, it is better not to show compassion in that way. Put in another way, all Singaporeans are members of one big team competing against many teams from other countries. Compassion for the slower performers holds the team together and this improves total team performance. When we care for each other we foster our team spirit. This is what makes the Japanese so cohesive, so united. Their successful look after their less fortunate, their managers care for their men, resulting in loyalty down and loyalty up. Japanese society has tremendous cohesion, and this helps their nation to win. It is effective altruism. But remember, to be compassionate, Singapore must first create wealth, the resources, to show compassion. Otherwise, compassion is but mere words which may fill the heart, but they do not silence the growls in the stomach. To increase our resources, to afford a higher standard of living, better schools, homes and hospitals, to have more money in our pockets, we have to be competitive. There is no other way. We have to use our labour and capital to produce goods and services at a quality and at a price which will sell against worldwide competition. In this ever smaller interdependent world every nation competes against each other. But for the sake of world peace and stability, nations also have compassion for each other, and so cooperate together to preserve stability through development programmes. The successful nation helps the less developed, partly out of compassion, but also out of enlightened self interest for a peaceful and stable world environment. But all the same, everyone still competes: country versus country, firm versus firm, team versus team, worker versus worker, and the competition goes on at every level, at the macro and micro scale. Singapore must provide the conditions to enable all firms and workers to operate optimally. That means having a political and social system with economic and social policies that will help our firms to be competitive and our workers to be productive. The old Soviet Union had the wrong political and economic system. The economy was commanded by the centre and not market driven. Prices of goods and services were decided by planners, not by the market. Wages were fixed by the state, not by supply and demand for workers. The result: an unresponsive, unproductive and uncompetitive workforce which is the reason for the collapse of the Soviet economy and the disintegration of the Soviet Union. An official who last year accompanied the Senior Minister to Alma Ata, Kazakhstan, told me this story. In the guest house where he stayed, there were no fruits on the table. But when he went outside of the guest house to the compound, he saw apples and pears growing beautifully on the trees, and more apples and pears rotting on the ground. He gave some tips to the household staff. But despite that, there were still no apples and pears on the table. Maybe he undertipped. So after each meal, they decided to help themselves to the apples and pears on the trees. I tell this story because it describes in a very graphic way the problem of the old Soviet Union. The old Soviet Union was rich, full of resources, but the distribution system was wrong. They could not get their goods to the market, or they might not even have produced the goods for the market in the first place. Why is that? It is because the workers were entitled to wages as decided by the state. So whether you worked hard or not, you got more or less the same pay. How do we in Singapore produce a high and rising standard of living for Singaporeans? The key is productivity. This is not a new message, but it is worth reiterating and repeating many times - the key is productivity. Let me quote from Michael E. Porter's landmark work: "The Competitive Advantage of Nations". He is a professor at Harvard Business School. He has concluded from an exhaustive study of many countries that the economies which are successful are those which continually upgrade itself and are competitive in the use of its resources, and not countries which have what you call "good factor endowment" or comparative advantages. I quote him: 'Productivity is the prime determinant in the long run of a nation's standard of living, for it is the root cause of national per capita income. ... The productivity of human resources determines their wages, while the productivity with which capital is employed determines the return it earns for its holders. High productivity not only supports high levels of income but allows citizens the option of choosing more leisure instead of long working hours. It also creates the national income that is taxed to pay for public services which again boosts the standard of living.' Examine the linkages. First, you must have productivity, which allows you higher wages, which in turn increase your national income, which in turn allows taxes to be collected, and from the taxes, good public services can be given, and this raises the standard of living of the people. To increase Singapore's productivity and competitiveness and to level up Singapore's position vis-a-vis other countries, let us strive to achieve the following four objectives: 1. Upgrade the average competence level of the population as well as train the able to their maximum. 2. Level up standards of living through investment in education, health, housing and infrastructure. 3. Corporatise Government services wherever possible to achieve better accountability and economic efficiency at the micro or firm's level. 4. Take a strategic long-term view of where the country should go and not a short-term view of its immediate needs. Let me deal with the need to upgrade the competence of our population first. High standard of living is increasingly becoming a function of the levels of education and training in the workforce. There is a link between education, the wage which you will get, and the general quality of the workforce. This is because the industries that pay well are skilled-based, knowledge intensive and innovation-led. Let me give you a few examples. Chemical processing industry, which comprises petrochemicals, oil refineries and other chemical products, and the manufacture of oil field equipment, these are the two knowledge intensive and high-skilled industries. The average annual remuneration level in the petrochemicals and oil field equipment industries was $42,000 and $37,000 per worker respectively, which is 2.2 and 1.9 times the manufacturing average of $19,500 per worker. The proportion of workers with tertiary education in these industries was 30% in chemical processing and 20% in oil field equipment compared to 10% in other manufacturing. This is even more interesting. The proportion of workers with 'O' level education and above was similarly 92% in chemical processing, and 94% in oil field equipment, compared to 59% in other manufacturing. In other words, the better educated you are, the higher the qualifications you have, the better the chances of your working in industries which pay you well. Let us look at Table 2 (Cols. 381 - 382) on Education Participation Rates to see how our population-educational profile compare with others. Just look at the two columns aged "16 Years" and "18 Years", which correspond to the 'O' and 'A' level respectively. Look at the ranking of Singapore, row-wise, for 1990. 83% of Singaporeans of that age were attending schools as compared to those countries listed above. And if you look at the column of "18 years", ours is 54%. We are comparable to Australia and Austria but lower than France, Germany, Netherlands and the United States. But as you move up to the tertiary level, the last column "22 years", we are ranked 13th out of 14 countries, higher only than Ireland. And bear in mind that we are comparing current data for Singapore, which is 1990 data, against out-dated data of the other countries. So our educational profile relative to the others could even be worse. Table 2 - EDUCATION PARTICIPATION RATES - % OF AGE GROUP (Cols. 381 - 382) To show that there is room for us to improve, please look at Table 3 (Cols. 383 - 384), where my purpose here is to try and compare our population having only primary or no formal qualifications against New Zealand. In our case, in 1990, 61% of our population had no formal qualifications or only a primary education, as shown in the two segments of the pie chart (primary and no formal qualifications), as compared to 38% for New Zealand. Their "no formal qualifications" include those with only a primary education. This is for resident non-students aged 15 years and over, that is, people in the workforce, housewives, retirees and others not in the workforce. Table 3 - RESIDENT NON-STUDENTS AGED 15 YEARS & OVER BY HIGHEST QUALIFICATION ATTAINED (Cols. 383 - 384) From my description of the chemical processing industry and the oil field equipment, you can see the importance of having a good education. Looking at our pie chart for 1990, three out of five Singaporeans do not have the qualifications to earn more for themselves. But more important, three out of five Singaporeans are in no position to make a significant difference to the upgrading of the economy, which is what we are trying to do over the next few years. So, obviously, we can, we must, and we will do more to increase the general competence of the population and increase the numbers of those who can make it to upper secondary and university. I understand the popular sentiment against the policy of the Government to invest more in the able than the less able. But just think for a moment of the consequences if, as Mr Low Thia Khiang suggested, we invest more in the less able and less in the more able. Those who can acquire the knowledge, at university, may never get there, and those who could have got to the polytechnic would not have made it, if we spend less on the able. The slower learners on whom we concentrate our best teaching resources, that is, if we spend more on the less able, will end up with a 10-20% increase in grades of pass, but cannot jump over to the next level. In other words, we can spend more on them but can they make it to the polytechnics, to the universities? How then do we upgrade the economy? Where do we get the engineers and managers from? The three to five '0' level students to be engineers instead of the university graduates? Where do we get our technicians from? The VITB instead of the polytechnic? Deny the able the opportunity to acquire knowledge and hold their progress back to keep company with the rest of the population, the end result must be their under-performance with disastrous results for our economy. The percentage figures for each cohort reaching university, polytechnic, secondary and primary levels would have declined instead of gone up, as BG Lee told us yesterday. Worse, many of the able will emigrate to countries where their talent and ability will be better nurtured and better rewarded. Singapore's economy will then lose its bounce. This has happened in Britain as some of their best doctors, scientists and academics have left over-taxed and underpaid Britain for the US, especially in the 1970s and 1980s, before Mrs Thatcher tried to reverse policies by reducing income tax and subsidies on welfare. You heard BG Lee yesterday. He was lamenting how Cambridge had gone down in standards as compared to the increase in standards in Harvard and MIT. I could detect great regret in BG Lee's voice. He was very worked up. There was a reason. He went to Cambridge. His father went to Cambridge. His mother went to Cambridge. So they can see and they can feel for the institution which had dropped in standard. This point on talent came across vividly in lectures by Prof. Derek Leebaert as reported in the Nikkei Weekly, and this was published in the Straits Times of yesterday. Professor Leebaert is from the Georgetown University's Graduate School of Business. He argued that "talented people are a more important resource than any man-made device or corporate strategy". Because of the US' ability to absorb the best and brightest from abroad into its universities, research laboratories and workplaces, he is confident the US will continue as a technological power-house, and thus not be overtaken by Japan. His confidence is based on the fact that the US can absorb talent from all over the place, from Asia, India, China, Singapore, Korea. Wherever you have talent, they can absorb the talent. So, heed his advice on the importance of talent. If we do not train and reward our talented, they will simply pack up and settle in the US. Why should they remain in Singapore if their talent can be nurtured further in the US and they can be rewarded? Will those without a formal or have only a primary, and even secondary education, be better off when that happens? Will there be high-paying jobs for them? Will there be jobs for them at all? When we, as a nation, invest more in the more able, it is for the wider benefit of the nation, not only for the personal benefit of the more able. We do not give privileges to the rich. Every student has to compete to prove that he is worth the investment which we put in him. Perhaps I should not dwell too long on this topic because it seems just a commonsense thing that we should invest in those who hold out the promise of a higher than average return to the nation. Every shopkeeper knows that you have to invest in a product with the promise of more sales, that is, high returns. The important thing is this competition is open to every Singaporean. It is not restricted to a few people. It is open to everyone in Singapore, whatever his family's financial or social position. It is competitive elitism at its best, not at its worst, as Mr Ling suggested. It is this principle of encouraging ability, nurturing ability, encouraging those who are able as well as the general population, to strive harder that prompted me to revise Edusave. When I first decided to put aside $5 billion for Edusave, I was driven primarily by the thought of giving everybody the same starting position, that means, we build up the funds so that each student can have $500 per year. Whether you are rich or poor, that is the sum to start with. But as I reflected over the details, I can see a flaw, a fatal flaw, in the old concept, if we do not modify it. The scheme was not tied to effort. So I have revised the scheme to ensure that every student has something, that is, a participation prize, the day you enter school, and the better ones a scholarship. The participation prize is for all, as long as they remain in school for 10 years. The scholarship for the top 25% in independent schools is to motivate the students to do well. You have equal oppor- tunity, you start at the same starting line, you do well, you enter an independent school, you are among the top 25%, youget the top prize, and that is, your fees will be paid for through Edusave scholarships. And then there will be the commendation prizes in terms of neighbourhood scholarships or merit bursaries for all the good students in neighbourhood schools. Again, to get that, you must make the effort. Ability itself is not enough. If you are able, you do not study, you will not do well in school. But if you are able and you study, you try, you have a chance to get the commendation prize as well as the top prize. And it is just as well we revise the scheme. Because when I read the letters to the press and also the editorial in some papers, I felt what has become of the scheme. Even before we have implemented the scheme, it has come to be regarded as an entitlement, what we have promised to give them, $500, that is theirs, please do not reduce the sum. Let us say we reduce the sum from $500 to $300 per year. Over 10 years, that will be $3,000. Where in the world do you have a country which gives out $3,000 to each and every student, so that that student will have that sum of money if he does not use it when he leaves school? Let me remind everyone that Edusave is not an entitlement. The $300, or whatever sum which we decide on after working out other schemes, for the student, is not an entitlement. If it does not increase the motivation to try harder and do better, Edusave will be scrapped and some better scheme will get the use of these funds. If, in future, our productivity declines, if we run into chronic budget deficits, the government of the day must pass an Act in this Parliament to dissolve Edusave. Only our students' positive results, shown in better all round educational attainments, can keep Edusave going, results which show that Edusave sharpens our competitive and productive edge. Does the scheme to award top students in independent schools benefit only the rich and the middle-class Singaporeans? Look at Table 4 (Cols. 385 - 386). I would ask Mr Ling How Doong, in particular, to look at Table 4. Look at the column, "Top 25% in Independent Schools". 63% of those who will qualify for Edusave scholarships come from public housing. They are not from rich families. They are the ones who will find this scheme very useful. They are the brightest, they will be motivated to do well to get the scholarships and the funds which they will get from the scholarships will yield results for them and for the nation later on. Table 4 - BREAKDOWN OF 1992 SECONDARY ONE STUDENTS BY SCHOOLS POSTED AND TYPE OF RESIDENCE (SINGAPORE CITIZENS ONLY) (Cols. 385 - 386) Besides Edusave, we can invest in infrastructure, like refurbishing of the older HDB estates, public transport, hospitals and recreational facilities to level up the entire society. These are practical ways for sharing the fruits of progress. The Yuppies have their condominiums. We can upgrade the bigger HDB flats owned by technicians, supervisors, teachers and others, to approximate the quality of the condominium estates. Our managers have their private clubs and private swimming pools. Our workers have their Pasir Ris Resort, NTUC Club and public swimming pools. Our businessmen and executives play golf at their private clubs. Very soon, our workers will be able to play golf at their own Orchid Country Club. The reservists will have their SAFRA Golf Club, and the public, public golf courses which we will build. In this way, by investing in infrastructure, in recreational facilities, we level up our standards of living and the quality of life without reducing the drive to work hard. Some MPs have spoken in support of the privatisation of certain Government services. But there seems to be a misunderstanding in the public mind as to the purpose of corporatising or privatising Government services. I prefer the term "corporatise" to "privatise" as it reflects more clearly what we want to do. Of course, we do not intend to sell off everything of what we corporatise, so the company will not be completely private. Many believe that the Government is after profits and people fear that charges will go up once we corporatise. They are mistaken. It is not the job of the Government to make profits out of its own people. If we want more money, if you think that we are out to make profits, we can easily collect the same amount through taxes. Corporatising is to make the organisation more efficient and more aware of costs and productivity. It should lead to higher productivity, better services and not lower productivity and poorer services. The purpose of corporatising Government services, where this can be done, is to make the organisation more competitive and efficient at the micro level. It is to subject the organisation to the rigors of the market. Recovering costs directly for the services used, and not indirectly through subsidies from taxes, will allow people to decide if they really need or want that service at that price, and so prevent a misallocation of resources, as BG Lee Hsien Loong pointed out yesterday. Subsidized prices give the wrong signal and we will have a misallocation of resources. BG Lee explained that in terms of using the Certificates of Entitlement (COEs) to subsidise bus and MRT fares. Let me take his argument one step further. Suppose we subsidise heavily MRT fares and make the cost of commuting cheap. Then Singaporeans will buy properties far away, but near an MRT station, say, at Bukit Panjang or Woodlands. They do not have to settle for one in the Central Business District (CBD). Let's say that some time in the future, the government of the day finds itself unable to continue with the heavy subsidy and it has got to raise the MRT fares, or otherwise the services will run down and the whole MRT system may even have to close. What will happen to the property values in Woodlands and Bukit Panjang? The property values of land, apartments in Woodlands and Bukit Panjang would have been high at this stage, because we have subsidised the public transportation system. It makes no difference where you are because transporta- tion is convenient. When you remove the subsidy, prices will come tumbling down. Who will compensate the shopkeepers, the HDB dwellers, the other Singaporeans who have bought their property in Bukit Panjang and Woodlands at higher prices? We therefore prefer to charge the public the appropriate price for the use of Government services. Then there will be no distortion in terms of consumption or demand for the services. That way, our economy becomes more efficient and supply and demand can respond to market signals. I come to the last objective, the fourth objective, which is to think long-term. To upgrade the economy, to raise the standard of living of Singaporeans is a never-ending exercise. It cannot be achieved overnight. Programmes take a few years to produce results. I ask you to judge my Government not by what I say or can accomplish straightaway, but by what my Government will achieve at the end of its term of office. Edusave, independent schools, Medifund, home improvements - they need four to five years to show everyone what there is in it for them. If we go for short term, small benefits, and miss the long term, big benefits, we will lose our strategic way. This will spell ruin for Singapore. We must not be like American corporations which are pressured and overly concerned with quarterly results. We must be like Japanese firms which concentrate on increasing market share which depends on fundamentals like good management-worker relations and productivity, research and development and long-term investment strategy. They take the long view. So they have beaten the Americans in almost every product they have targeted -- cameras, ships, cars, high-quality textiles. Whatever they choose to do, they do well and they beat almost everybody. In many instances, they beat everybody and they leave no room for others. If it is important for companies to think long-term, and thinking long-term has succeeded for Japanese companies. Thinking long-term is even more important for a country. MPs should never forget this. If the Government under pressure, and there will be pressure from the public, appeases the immediate appetite of voters although it knows they are against the longer term interest of Singapore, Singapore must fail. I commend Mr Koo Tsai Kee for his courage to state his political conviction early in his very first speech in this House that he is here to lead, not to espouse what voters want, when he knows that what they want are not good for Singapore. I am gratified that several MPs spoke out strongly on the need to uphold the free market and to be competitive. Singaporeans want more bread and butter and better bread and butter. We can get this provided we know that the only way is to stay competitive and productive. Many PAP MPs have also felt the electoral pressure to publicly remind the Government that they should show compassion to the poor and the less fortunate. Indeed this is something which the Government wants to do -- to be compassionate -- because if we do not care for the weak, they will weaken team unity and lower the total or overall performance. But when the desire is very short-sighted and will reduce efficiency and productivity, we must find other ways to be compassionate, and we cannot abandon sound principles, like time-based telephone charges, just to show compassion. If the results had been 75% having to pay more since lst December, we would find some other method of adjustment or compensation without giving up on the principle that if we use more, we must pay more. Mr Deputy Speaker, Sir, we must level up by raising the competence level of the total population of each and every student and worker. We will provide equality of opportunities. We can never achieve equal results or rewards, unless we want to commit economic and political suicide, like the Soviet Union. We can share the fruits of our labour through increasing the asset worth of every Singaporean who has a HDB home, and a CPF account and a POSB account. When we privatise big enterprises like Telecom, we intend to give every CPF account holder a special discount as a bonus, that is, when we float the shares on the market, the shares given to the CPF account holders can be at a discount. It cannot be free, as Mr Heng Chiang Meng has recklessly proposed. It is a popular line. But does it work? Why to CPF account holders only? Why not to every Singaporean? It is because we want to encourage savings in Singapore. If you have a CPF account, a POSB account, you are amongst the savers in Singapore and it is the savers who are the accumulators of wealth. It is their resources which help Singapore to grow and to expand. We want to expand these resources. We want to encourage those who can save, to save more, so that our economic base can be expanded. I dealt in some detail on this theme in my New Year Message. But let me just remind you of some figures. Switzerland, unlike the United States, has a huge surplus of foreign assets of US$185 billion, which is 94% of the GNP. And Swiss private overseas investments over the decades have reached, in 1989, US$237 billion, at book value, mind you, or 120% of the GNP. Singapore's private overseas investments are only US$7.5 billion or 25% of our GNP. So what we want to do when we have this scheme of special discount for CPF account holders is to emulate the Swiss, save more, expand our resources, so that these resources can be invested overseas, which means an expansion of our economic base. We are then not limited to the geographical economy of Singapore. Our economy will be much larger than the domestic economy of Singapore which is limited by the size and population of Singapore. This is what we want to do. If you give a special discount to those who cannot even save, who do not have a cent in the POSB, what you give them will be consumed very quickly. It does not add to our competitiveness, our resources, our economic base. But, first, let us concentrate on creating wealth, and that means to be competitive and productive and to save. I also want to reiterate the point of investing in people: invest in everybody, but invest more in the able. That is the way the Japanese have progressed. Every Japanese competes with all his might to get into the best primary and secondary school, and into the best university. Even after graduating from the university, they take competitive examinations to get into top ministries like Finance or MITI or Gaimusho, which is the Foreign Affairs Ministry. And they also compete to get into the best organisations, the big companies like Mitsubishi, Mitsui, Sumitomo, for life-time employment. At every stage, only the best make it. The result is a Japan which has made it to the top of the international league. Take the opposite example, Britain. Britain used to reward excellence and nurture the elite. But their class divisions caused a change in policies after World War II and they began to level down. You heard yesterday how the British dissolved their elite grammar schools and created comprehensive schools for the able, the average, the poor students, without discrimination. So in Britain today, they no longer talk of excellence and they certainly do not admire or emulate those who are very excellent in performance. And meritocracy is now a dirty word. The result is a relentless decline in British performance to mediocrity. They are now behind the Germans and the French in performance. Even the Italians, if we take into account the shadow economy, have overtaken the British. Mr Deputy Speaker, Sir, we have had a good debate on the President's Address. The PAP Backbenchers have helped to put Singapore's Next Lap in the right setting and perspective. Singaporeans have to look at the big picture. We will be reckless and stupid to abandon our basic policies, policies which over the last 26 years have got us past the half-way mark towards full-developed status as an industrial society. If we keep on course, stay a meritocratic society, be competitive and compassionate, we shall get there by 1999. I invite the Opposition MPs to play a positive role in Singapore's development. Debate our policies objectively. If they disagree, let us have their reasons. Better still, offer their alternatives, their solutions. That is what democratic politics is really about, a contest of ideas to solve our problems and to give more opportunities to every Singaporean. But let me assure you that my Government is determined to secure the long-term well-being and security of Singapore and Singaporeans. This is our paramount objective. The Government will lead the way forward. Within five years, everyone can see the results and it is results that my colleagues and I will be judged by. Thank you, Mr Deputy Speaker, Sir. [Applause].