Hansard, 1993-10-12

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated:- Dr Beng Kian Lam, Arthur - on 2nd September and from 18th to 22nd October, 1993. Mr Chay Wai Chuen - from 5th to 9th September, from 13th to 16th September, from 19th to 26th September and from 28th September to 7th October, 1993. Dr Ong Chit Chung - from 7th to 10th September and from 17th to 23rd October, 1993. Mr Tan Soo Khoon - from 7th to 11th September, from 19th to 23rd September, from 14th to 23rd October and from 26th October to 3rd November, 1993. Dr Wong Kwei Cheong - from 8th to 11th September, 1993. Mr Chia Shi Teck - from 9th to 10th September, from 20th to 21st September and from 7th to 9th October, 1993. Mr K. Shanmugam - from 9th to 11th September and from 12th to 14th October, 1993. Encik Sidek bin Saniff - from 10th to 12th September, 1993. Encik Mohamad Maidin B P M - from 10th to 22nd September, 1993. Dr Kanwaljit Soin - from 10th to 20th September, 1993. Mr Teo Chong Tee - from 11th to 26th September,1993. Mr Yeo Cheow Tong - from 12th to 20th September, 1993. Mr Wong Kan Seng - from 13th to 17th September, from 25th September to 9th October and from 13th to 16th October, 1993. Mr Loh Meng See - from 16th to 20th September and from 6th to 9th October, 1993. Assoc. Prof. Walter Woon - from 19th to 26th September, 1993. Mr Eugene Yap Giau Cheng - from 19th to 26th September, 1993. Mr Chiam See Tong - from 19th to 26th September, 1993. Mr Lee Yiok Seng - from 19th to 28th September, 1993. Mr Chin Harn Tong - from 19th to 26th September, 1993. Dr Lim Chun Leng, Michael - from 19th to 26th September, from 14th to 18th October, from 29th November to 10th December, 1993 and from 24th to 28th January, 1994. Mr Chng Hee Kok - from 19th to 26th September, 1993. Encik Ibrahim bin Othman - from 19th to 26th September, 1993. Assoc. Prof. Ho Peng Kee - from 20th to 26th September, from 20th to 27th October and from 25th November to 1st December, 1993. Mr Charles Chong - from 20th to 26th September and from 10th to 15th October, 1993. Mrs Yu-Foo Yee Shoon - from 21st September to 14th October, 1993. Dr Yeo Ning Hong - from 21st to 24th September, 1993. Dr Hu Tsu Tau, Richard - from 21st September to 3rd October, 1993. Dr Lee Boon Yang - from 21st to 22nd September, 1993. Mr Peter Sung - from 23rd to 29th September, from 1st to 3rd October and from 18th to 30th October, 1993. Mr Tong Kok Yeo - from 24th September to 3rd October, 1993. Mr Zulkifli bin Mohammed - from 24th September to 5th October, 1993. Dr Aline K. Wong - from 25th September to 2nd October, 1993. Dr Wan Soon Bee - from 29th September to 5th October and from 10th to 19th October, 1993. Mr Lew Syn Pau - from 29th September to 2nd October and from 10th to 19th October, 1993. Mr Peh Chin Hua - from 30th September to 9th October, 1993. Mr Heng Chiang Meng - from 30th September to 9th October, 1993. Mr Kenneth Chen Koon Lap - from 30th September to 9th October, 1993. Encik Othman bin Haron Eusofe - from 1st to 3rd October and from 9th to 11th October, 1993. Mr Ling How Doong - from 1st to 15th October, 1993. BG George Yong-Boon Yeo - from 1st to 3rd October and from 11th to 13th October, 1993. Mr Leong Horn Kee - from 4th to 8th October and from 13th to 29th October, 1993. Mr Lee Yock Suan - from 9th to 17th October, 1993. Mr Matthias Yao Chih - from 9th to 10th October, 1993. Dr Wang Kai Yuen - on 10th to 19th October, 1993. Mr Lee Kuan Yew - from 11th to 13th October, 1993. Cdre (Res) Teo Chee Hean - from 11th to 13th October and from 13th to 21st December,1993. Mr Davinder Singh - from 13th to 14th October, 1993. Mr R. Sinnakaruppan - from 13th to 14th October, 1993. Encik Yatiman Yusof - from 14th to 22nd October, 1993. Mr Chew Heng Ching - from 14th to 19th October, 1993. Mr Chua Teck Chew, Robert - from 15th to 19th October, 1993. Mr Ch'ng Jit Koon - from 20th October to 3rd November, 1993. Mr Mah Bow Tan - from 24th to 29th October, from 27th November to 4th December and from 8th to 26th December, 1993. Mr S. Dhanabalan - from 28th October to 5th November, 1993. Mr Lim Hng Kiang - from 13th November to 2nd December, 1993. TAN SOO KHOON Speaker Parliament of Singapore

The following Bills were assented to by the President of the Republic of Singapore on the dates stated: 3rd September, 1993 (i) Income Tax (Amendment) Bill 1993. 27th September, 1993 (i)Land Titles Bill [Bill No. 36/92 (Amended)]; (ii) Banking (Amendment) Bill 1993; (iii)Central Provident Fund (Amendment) Bill 1993; and (iv) Arms Offences (Amendment) Bill 1993. TAN SOO KHOON Speaker Parliament of Singapore

The following Question stood in the name of Mrs Yu-Foo Yee Shoon --- 1. To ask the Minister for Defence whether there will be more flexibility in reservist training arrangements for Singaporeans pursuing further studies or on business abroad.

Question No. 1, Sir.

Sir, MINDEF supports the Government's call to Singaporeans to venture overseas. MINDEF also appreciates the contributions of our reservists. Hence, MINDEF will continue to be helpful and make it easy for reservists to travel overseas for work or studies. The current policies which facilitate this are: 1 Reservists on overseas studies are not called up for training for the full duration of their courses; 2 Those who are employed overseas for six months or longer are disrupted while they are overseas for up to three years at a time. The disruption can be extended; 3 The SAF also gives notice of in-camp training at least six months in advance so that reservists can plan their business trips and engagements to avoid a clash with their training. Where there are exceptional reasons, the SAF will consider applications for deferment on a case by case basis; 4 To make it easier for reservists to travel overseas, the validity of their passports has been lengthened from two years to 10 years since November last year; 5 In April this year, MINDEF further relaxed the exit permit requirement. Reservists holding exit permits who are in Singapore on transit are no longer required to surrender their exit permits on landing in Singapore and retrieving it before they leave again if the period of transit is shorter than one month. In drawing up policies and guidelines on allowing reservists to be absent from training, MINDEF has to take into account the operational considerations. To be an effective fighting force, reservists must always train together in their own units throughout their reservist training cycle. When a reservist is absent from a particular training programme, the effectiveness of his unit is reduced. The reservist frequently has to join another unit later in the year for make-up training. As a result, cohesion for both units is degraded and operational readiness suffers. MINDEF therefore has two objectives to meet: one, of ensuring the operational readiness of our reservist units, and the other, of being helpful to individual reservists who have to go overseas. MINDEF will continue to fine-tune its policies to achieve both objectives.

Sir, may I ask the Parliamentary Secretary, where an exemption has been given for a reservist to be absent, will he have to make up for lost time upon his return?

Yes. There are two types of absence from training. One is deferment during the year where he postpones his training for that year. Being absent from his scheduled training, he comes back during the year for make-up training. Where a person is disrupted for a period of time, say, three years, to complete his study, then he will have to do a 13-year cycle after he has finished his study.

asked the Minister for National Development whether his Ministry will review the subletting policy for Housing and Development Board flats.

Mr Speaker, Sir, HDB flat owners can sublet rooms in their HDB flats. However, they need to seek prior approval from HDB if they wish to sublet their entire flat. HDB allows subletting of the entire flat only under special circumstances, such as when flat owners have to study or work overseas for extended periods, or when they reside in quarters provided by their employers. HDB's restrictions on the subletting of HDB flats are necessary to ensure that subsidised public housing is used for owner-occupation, and not as an investment for rental income. My Ministry reviews the subletting policy from time to time. Where justifiable, and without compromising the owner-occupation policy, subletting rules have been relaxed. I am pleased to inform the House that HDB will be relaxing its rules to allow three new categories to sublet their flats. First, HDB will allow flat lessees who are owners or tenants of HDB sold shops with dwellings to sublet their whole flats, as long as they stay in their shops to look after their business. This relaxation will bring our policy for such lessees in line with that for tenants of HDB rented shops, who are currently allowed to sublet their whole flats. HDB will extend this relaxation to lessees of HDB flats who are also owners or tenants of private commercial properties with dwellings, and have to stay in their shops to look after their business. Second, HDB will allow the subletting of the whole flat if a lessee has to go overseas for work or study, leaving behind household members, like children or aged parents, who cannot take care of themselves. Currently, the whole household has to be overseas to be eligible for subletting the whole flat. Third, HDB will allow sick or physically unfit single lessees to sublet their entire flat, if they move in with their children or relatives. Lessees of HDB flats who wish to sublet their entire flats are still required to seek approval from HDB, giving grounds for the application.

asked the Minister for Home Affairs if he proposes to introduce legislation to provide mandatory caning for molesters.

Sir, under existing laws, a person convicted of outrage of modesty can be jailed, fined or caned. The law therefore already enables the courts to impose caning if they deem it fit. The law provides for mandatory caning where outraging of modesty is committed in aggravated circumstances, for example, when the offender voluntarily causes or attempts to cause death, hurt or wrongful restraint to his victim. Mandatory caning also applies when the offence is committed in a lift or where the victim is under the age of 14. Further legislation is unnecessary at this stage because the law, as it stands, gives adequate powers to the courts to mete out appropriate and deterrent punishments including caning.

Sir, as there was some disquiet over the caning sentence on a young molester who was thought to be educationally subnormal, may I ask the Parliamentary Secretary whether the Government would consider alternative punishment such as chemical castration for molest by persons who are feeble-minded or mentally incapable? There are several reasons for this.

Dr Toh, no speeches. You have asked your question.

Sir, what the Member asked is something that is not related to caning. The Ministry of Home Affairs is always prepared to examine and study practical measures to see how we can further bring down the crime rate. Therefore, I will ask the officers in the Ministry to carefully study this suggestion and, particularly, we will look at the experiences of other countries where this has been done to see whether it has the intended impact of curbing any rise in the number of molestation cases.

Sir, will caning also apply to a SIA passenger who has his own notion about what a great way to fly is?

Sir, a person who is subject to Singapore law, and that would include a person who is flying SIA, must surely be subject to caning if it is meted out by a court of proper jurisdiction within the framework of the law.

asked the Minister for Home Affairs, in view of a recent warehouse fire at Penjuru Road and the difficulty in fighting the fire due to low water pressure, if he will assure the House that all fire hydrants, especially those in the Jurong Industrial Estate, will have adequate water pressure for effective fire fighting.

Mr Speaker, Sir, the Singapore Civil Defence Force (SCDF) conducts regular checks on all fire hydrants. The SCDF would liaise with the Public Utilities Board (PUB) to rectify faulty hydrants. In the situation mentioned by the hon. Member, the difficulty in fighting the fire was not due to low water pressure. In any case, should there be any problems with water pressure in fighting a fire, the Civil Defence can overcome it. Water supply from other sources will be channelled to fight the fire when necessary, eg, from relay pumping from distant hydrants or from pumping from open water sources, such as rivers, lakes, reservoirs, etc. For major fires, officers from PUB's Water Department are also present to ensure that the water supply and water pressure are adequate.

asked the Minister for Finance whether he will cut down Government-approved gambling activities comprising two draws per week for Toto and 4-D, race days on Saturdays and Sundays and the monthly Big Sweep.

Mr Speaker, Sir, in any society, there will always be people with the propensity to gamble. Ordinarily, most of the money will end up in the pockets of illegal gambling operators. Legal gaming facilities provide an alternative to these illegal operators, and serve to control illegal gambling in Singapore. The proceeds from legal gambling can be channelled towards educational, social and other charitable causes. The number of draws for Toto, 4-D and Big Sweep has not increased since their inception in the 1960s. Horse racing has also been conducted on Saturdays and Sundays since the mid-1960s. I believe the present level of these forms of gaming is not excessive. For instance, instances of cheating have not occurred. Any reduction in the frequency of these activities will only drive punters back to the illegal operators. If the hon. Member will give cogent reasons why these forms of gambling should be scaled down, I shall be glad to give him a hearing.

Sir, I believe the Government is against gambling. We have got heavy fines imposed on gamblers. Seventeen times a month is more than 50% of the days in a month where gambling activities are condoned or approved by the Government. The first question is: Does the Government not think that this number is in fact too large? Second, as a form of curbing gambling, will the Government carry out a campaign to tell the people that we should not make Singapore a gambling society and perhaps find ways and means to curb gambling?

I have said earlier that we do not think the number of gambling occasions is too large. As to the second question, I think it is well known that we are against gambling, but since we accept the fact that human beings are likely to gamble, providing a form of legal gambling at least ensures that the bulk of the proceeds of gambling will be drawn back into the Government system through betting duties which then go to the Consolidated Fund as part of Government revenue together with contributions to charities. I think the education programme is something which we can consider but I do not think it is realistic to expect any campaign to wipe out gambling altogether, certainly not amongst the Eastern people.

Of course, I do not agree with the Minister that 17 times of gambling a month approved by the Government is not excessive. To me, it is excessive. On top of these 17 days, in fact, people are also gambling in the stock market.

Order. Mr Chiam, could you ask your questions?

Sir, my question has not really been answered. Is the Government making any attempts at all to cut the number of days of gambling?

I said that we do not think it is excessive. So that should be the answer. It is a matter of opinion and judgment.

asked the Prime Minister if he will say why there was a seven-and-a-half hour delay before the result of the Presidential Election was announced.

Mr Speaker, Sir, in the recent Presidential Election (PE), the Elections Department estimated the result to be announced at about 1.00 am. But it could not do so until 3.30 am. The delay was 2(r) hours, not 7(r) hours. 1.66 million votes were cast in the Presidential Election. For comparison, in the 1991 General Elections (GE), only 800,000 votes, or about half the number, were cast. Members may remember that in the 1991 GE, the final result was announced at 3.15 am, only 15 minutes earlier than the announcement of the Presidential Election result. Recognising the scale of the PE and the desirability of announcing the result early, the Elections Department decentralised the counting of ballot papers. Instead of counting all the ballot papers in one central counting centre, ballot papers were divided into 369 counting stations and counted as such. Decentralised counting did speed up considerably the counting process. The largest counting station took only three hours to count. With the benefit of hindsight, the Elections Department identified two shortcomings: its procedure for progressive reporting of results to the Returning Officer for tallying was overly cautious and cumbersome and, secondly, its not providing enough fax machines. These caused the delay in the announcement of the result. The Presidential Election counting organisation had three tiers. At the top was the Returning Officer (RO). He was assisted by 12 Group Assistant Returning Officers (GAROs). Under the GAROs, there were 163 Assistant Returning Officers (AROs) who directly supervised the polling and counting of the ballot papers. Each ARO looked after up to six counting stations. The RO, GAROs and AROs were located in different places. They communicated through fax machines and telephones. The Elections Department adopted the 3-tier structure to provide supervision and control. This was the same structure used for the General Elections, except that this time, the RO, GAROs and AROs were dispersed over more counting centres. The procedure for AROs to report results progressively to the RO was as follows. When each counting station completed its counting, the ARO would fax the result on a "Record of Counting" form to his Group Assistant Returning Officer. The GARO would re-fax it to the RO for double checking. After satisfying himself of its accuracy, the RO would give his approval by phone for the GARO to print out the "Record of Counting". The GARO would then fax the printed Form to the ARO, to be signed by the ARO and the candidates' Counting Agents. The ARO then faxed the signed Form to the GARO, who in turn would fax it to the RO. This completed the paperwork for the counting station. Hence, for each counting station, the GARO had to handle five fax transactions. He received two faxes from an ARO and sent out three faxes - two to the RO and one to the ARO. The busiest GARO with 48 counting stations had to deal with 240 fax transactions. Each fax transaction took almost a minute. Each GARO was equipped with only one fax machine. This was grossly inadequate. It caused a bottleneck which delayed the transmission of the "Record of Counting" form. As the AROs were instructed to complete all the faxing for one counting station, before counting the ballot papers of the next counting station, those AROs who supervised more than three counting stations were especially held up by the faxing bottleneck. The basic problem, however, was that the reporting procedure, requiring five faxes per GARO, was too cumbersome. It was designed to maximise control and prevent errors, but was unduly cautious. The Elections Department will revise it to reduce the number of fax transmissions without sacrificing control and accountability. It will ensure that in future elections, the votes will be counted and the results available as early as possible.

Sir, could the Prime Minister say what was the time the last counting station completed the counting of votes? When did all the returns from the group counting centres come in at the Conference Hall Counting Centre?

Mr Speaker, Sir, I may not be able to answer the question exactly. But the time taken to complete the activities in terms of progressive count, 2% of the counting stations were able to transmit the faxes to the RO only after 3.00 am. By 1.00 am, some 59% were able to transmit the results to the RO. So 2% of the counting places held up the total results.

At what time did all the returns come in?

That was after 3.00 am. The last 2% of the counting centres held up the total result. It was given to me in percentage terms. There were 369 counting stations. So 2% of these counting stations made their results known only after 3.00 am.

Sir, were the returns from all the group counting centres shown to the two candidates concerned at the Conference Hall Counting Centre?

The candidates were not shown all the results of the counting centres. But the Counting Agents at each counting centre would know the results, because the Counting Agents were there.

Sir, the Prime Minister, in his reply, mentioned about insufficient number of fax machines and the reporting procedure. Was there any simulation exercise conducted prior to the counting to ensure that the procedure set out by the Elections Department and provision of fax machines are adequate?

There was no simulation exercise. Had there been one, the shortcomings would have been identified.

Sir, could the Prime Minister say whether there was a recount in some of the counting stations?

There was no recount.

asked the Minister for Education if he will provide an update on the policy of non-Chinese students opting for Mandarin as a second language in primary schools.

Mr Speaker, Sir, generally, the Ministry's policy on the mother tongue language is that pupils offer the mother tongue language of their parents. Non-Tamil Indian pupils are allowed to offer Chinese, Malay, Tamil or one of the minority Indian languages such as Bengali, Gujerati, Hindi, Punjabi and Urdu. In the case of inter-marriages between local communities, the child can offer the mother tongue of either parents, ie, Chinese, Malay, Tamil or one of the five minority Indian languages.

Sir, would the Minister agree that the learning of Mandarin could be of economic advantage to a non-Chinese? So would the Ministry of Education allow non-Chinese pupils to take up Mandarin as a second language if the parents so wish?

We do recognise the benefit of learning Chinese by non-Chinese pupils. But at the same time, we would like all pupils to know their mother tongue because that is the cornerstone of our bilingual policy. We do make exceptions when the parents insist or there are some other good reasons. In fact, in 1993, we have six Malay students and 58 Indian students who are taking Chinese.

Sir, would the Minister agree that cultural identification is not a simple function of learning your mother tongue? Considering that, would the Minister allow more latitude in non-Chinese pupils to take up Mandarin as a second language?

We will certainly allow greater flexibility if there is good reason to do so.

Would the Minister then outline what the good reasons are and what are the criteria when Mandarin can be taken as a second language by non-Chinese pupils?

There are a variety of reasons. One is what the Member has suggested earlier that if the pupil or his parents feel that learning Chinese would be very helpful to him in his future studies or career, we will consider his request.

Sir, with the push to go regional to China, I think there have been many forums outlining the economic advantages of learning Mandarin. In view of that, could the Minister then take that as a reason for studying Mandarin for non-Chinese pupils?

We do consider some of the benefits but, at the same time, we should emphasise on our bilingual policy, ie, pupils should know their mother tongue to retain their own cultures.

Sir, the pupils could be learning their mother tongue at home. What I am still not quite clear is under what circumstances would the Minister allow non-Chinese pupils to take up Mandarin?

One of the reasons is mixed parentage. Pupils of a mixed parentage can also request to study Chinese. Even for the Indian minorities who are not Tamils, they can opt for one of the five minority languages or Chinese, Malay or Tamil. Pupils in that category can ask to study Chinese.

Sir, does the Minister agree that other mother tongues like Malay and Tamil also have economic value in view of the fact that the majority of our neighbours are speaking Malay and we may have business with India also?

Yes, we apply the same reason and the same consideration.

Sir, when the Minister is considering the review, will the Minister consider the sensitivities of the minority races, lest it be mistaken to be a push for minorities to take up the Chinese language?

We do consider all factors which affect the choice of language but the main thing is that if there is a mother tongue available for the students to choose, then they are required to take their mother tongue. If there are some other reasons that warrant consideration, we will consider them.

Would the Minister consider the sensitivities of the minorities if they are prevented from taking Mandarin? Does the Minister realise that in the private sector knowing Mandarin is a great advantage and it makes the difference between getting a job and not getting a job?

I thought the sensitivity is the other way round. If we allow too many students to take Chinese, it could create some sensitivity problem.

If the parents request for it, and it is the parents' choice, I do not see how the sensitivity question can arise unless the Ministry forces it. What I am asking is for those parents who would like their children to take up Mandarin. I would like to know why the Ministry is very reluctant to do so.

We would urge the parents to consider again the usefulness of their mother tongue. Upon presentation of very good evidence that they do need to learn Chinese in their future study or career development, the Ministry does make exceptions. That is why we have 64 non-Chinese students taking Chinese.

What percentage of the total number of students does that constitute?

The percentage is 64 divided by a total number of 32,000 students. Anyone with a calculator can calculate it. (The percentage is 0.2%).

Is not that figure too small even to merit mention because obviously the policy is not flexible enough to allow more parents to exert their choice if they wish to?

This may not be true. I do not have with me here the number of parents who have requested for their children to study Chinese. But I will certainly ask the Ministry officials to give the Member the number. It will show that the number of parents who have requested for their children to study Chinese is not too large.

What discourages parents is that they have heard stories from other pupils who are refused. So could I request the Minister of State to make the criteria better known and to relax the criteria so that the parents know that they can apply if they so wish?

I will ask the Ministry officials to clarify the points when parents raise the question.

"to amend the Economic Expansion Incentives (Relief from Income Tax) Act (Chapter 86 of the 1992 Revised Edition)", recommendation of President signified; presented by the Minister for Trade and Industry (Mr S. Dhanabalan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Immigration Act (Chapter 133 of the 1985 Revised Edition)", presented by the Minister for Home Affairs (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Misuse of Drugs Act (Chapter 185 of the 1985 Revised Edition)", presented by Prof. S. Jayakumar; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Legal Profession Act (Chapter 161 of the 1990 Revised Edition)", presented by the Minister for Law (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to make provisions for fire safety and for matters connected therewith and to repeal the Fire Service Act (Chapter 110 of the 1985 Revised Edition) and certain sections of the Petroleum Act (Chapter 229 of the 1985 Revised Edition) and to make consequential amendments to the Civil Defence Act (Chapter 42 of the 1985 Revised Edition), the Consular Conventions Act (Chapter 52 of the 1985 Revised Edition) and the Diplomatic Privileges (Commonwealth Countries and Republic of Ireland) Act (Chapter 83 of the 1985 Revised Edition)", presented by Prof. S. Jayakumar; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order for Third Reading read. 1.07 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Third time." Sir, the rationale and timing of the introduction of the Goods and Services Tax (GST) and the impact of GST on the lower income groups and prices were discussed extensively during the introduction of the White Paper, the Budget and during the Second Reading of the Bill. However, despite the publicity in the media and efforts by the Income Tax Department and Members of Parliament speaking to individual groups of Singaporeans to educate them on the nature of the new tax, the reaction of the public reveals that whilst awareness of GST is high, people's knowledge of the tax is limited to certain basic facts, such as the 3% tax rate and the implementation date. This indicates that many people still see GST merely in terms of an additional 3% to prices which they have to pay. It would appear that many Singaporeans have not quite grasped the significance and the rationale for introducing the tax. Many people are also not fully aware of the tax reduction and offset package that have been introduced together with the GST. While price increase is a major and legitimate concern for everyone, it would be very unfortunate if most people associate GST only with price increases. I would therefore now like to take this opportunity to reiterate that GST is part of a broader strategy of tax reform to make Singapore's tax structure fairer and to help the country stay ahead in an increasingly competitive world. Integral to this tax reform is a package on income and corporate tax rate reduction to stimulate growth and enterprise. The lower tax rates for companies would result in lower business cost and make Singapore more attractive to foreign investments and a more competitive place to do business. This will in turn benefit all Singaporeans by providing better paying and challenging jobs and allow us to enjoy a higher standard of living. At the same time, the Government is fully aware of the effect of GST on prices and the tax burden the public has to bear. The Government has therefore introduced an offset package specifically designed to address the needs of the lower income group. This package will include rebates on rental and service and conservancy charges, property tax rebate, increased Edusave grant, increased public assistance and increased Singapore Allowance. In fact, many people, about 800,000 individual taxpayers, who currently pay income tax will no longer need to do so after GST is introduced. The reduction in individual income tax and the offset package will ensure that nearly all households will be better off after the GST is introduced than before. Indeed, in the first five years, the package of the tax deductions, offsets and rebates will exceed the estimated GST which will be collected. I have also explained why Government has decided on a comprehensive GST with few exemptions. Allow me to reiterate. The experience of most countries which exempt or zero-rate various essential items shows that it leads to higher costs not only for Government but also for traders in complying with the tax. Moreover, exempting basic items will benefit the well-off more than the lower income households as the former spend more even on basic items than the latter. Instead, the Government has decided to provide offset packages which I have mentioned earlier. This direct approach is specifically targeted at those who need assistance and hence more efficient and cost effective. Another major issue for the lower income group which had surfaced is the concern about profiteering by traders when the GST is introduced. I am glad that the Ministry of Trade and Industry (MTI) has activated the Committee on Profiteering and Inflation to work closely with other Government agencies to prevent unscrupulous traders from profiteering. The Minister for Trade and Industry will speak to the House later on the role of this Committee. Sir, I will now turn to the findings of the Select Committee. The Goods and Services Tax Bill 1993 was read a Second time on 19th March 1993, and referred to a Select Committee for consideration. The Select Committee's terms of reference are to improve the administration and provision of the Bill. The Committee received 70 representations, the bulk of which were made by businesses. Of these, 17 representors whose submissions reflected a cross-section of those received were invited to give oral evidence. The Report of the Select Committee was presented to this House on 7th September 1993. The Bill, as set out in Appendix I of the Report, incorporates various amendments made by the Select Committee. The explanations for the amendments are contained in Appendix VI of the Report. The GST is a wide ranging tax on consumption of goods and services in Singapore. Unlike income taxes which are collected directly by the tax authority, GST is a tax collected through the businesses. It is therefore crucial for Government to ensure the effective implementation of the tax and to make the process of collection clear and easy to implement for the businessmen and shopkeepers, while making it easy for the ordinary housewife and shopper to know what they have to pay. The setting up of the Select Committee is a concerted effort by Government to gather views from the public to achieve this objective. The Government has taken this task very seriously because, as observed by an international tax consultant in a Business Times' commentary recently, in some other countries where GST had been imposed without serious public discussion, it has taken them many years to unscramble the system to meet real-life circumstances. I would like to thank representors for contributing their views, many of which are helpful and constructive. The Select Committee has taken into account the representors' concerns and recommended measures to address them. The amendments made by the Select Committee will assist businessmen to streamline their operations and lower the cost in complying with the tax. This will ultimately benefit the consumers at large. In addition, to better prepare the businesses and public for the tax, IRAS has embarked on an extensive Taxpayer Education Programme since the introduction of the White Paper. The GST teams have so far conducted nearly 300 seminars and dialogue sessions with trade associations. In addition, the teams have visited 1,600 traders at their own premises. Presentations have also been conducted at the Community Clubs to explain to the public the basic concepts of the tax and how it would affect them. Such educational efforts will be further intensified nearer the implementation of the tax. IRAS GST teams will visit all traders who asked for advice and assistance. IRAS assistance programme has been helpful in explaining to the businesses how the tax would affect them and how they should prepare for it. The programme has also enabled IRAS to obtain feedback on administrative problems which the traders have. This in turn has enabled IRAS to fine-tune their procedures so as to make it easier for traders to comply with the procedures for the collection and accounting of the tax. I will now highlight the substantive amendments recommended by the Select Committee. Group Registration Many representors have asked that businesses with related companies should be allowed to register as a group for GST purposes. Allowing group registration should not result in any loss of revenue, and will reduce compliance cost by eliminating the need to account for GST on intra-group supplies. However, the Committee recognised that group registration does open up avenues for abuse. A new clause has therefore been added to allow for group registration, with the condition that the Comptroller may disallow grouping or input tax claim for the protection of revenue. Reverse Charge Where a Singapore business receives a service provided by an overseas supplier, clause 14 of the original Bill requires the Singapore business to account for GST as if it had provided the service to itself. The purpose is to place local and foreign suppliers of services on the same footing as far as GST is concerned. Many representors have urged that the reverse charge provision should be removed. The Committee agreed that it is unnecessary to apply the reverse charge to fully taxable businesses. For exempt businesses, given that a majority of the services they received from overseas have no local equivalent, and that GST is not the only factor which businesses consider in deciding whether to use overseas suppliers, the Committee also recommended that no reverse charge be imposed. However, the Minister should be given the flexibility to make subsidiary legislation to apply the reverse charge to specific services, if the need should arise. If the need does arise, the Minister would also have the flexibility to exempt certain classes of businesses from the application of the reverse charge. Clause 14 has been amended accordingly. Waiver of GST on Importation The Committee shared the view of many representors that the payment of GST on imports would create cash flow problems for traders and companies which manufacture goods primarily for export. To overcome this, Government has earlier announced that exporters approved under a Major Exporter Scheme will be allowed to import goods free of GST and to account for GST only for that portion sold domestically at the time of sale. The Committee agreed with the suggestion by some representors that those who have 51% of their supplies directly exported should qualify for the Scheme. The Major Exporter Scheme will also be supplemented by a banker's guarantee arrangement, which allows bankers' registered businesses which do not meet the export percentage criteria to have the GST waived in a similar way on importation so long as security in the form of a banker's guarantee is provided. The Bill, as it stands, gives the Minister sufficient flexibility to effect the Major Exporter Scheme and banker's guarantee arrangement by way of regulations. Zero-rating of Intended Exports While exporters approved under the Major Exporter Scheme can obtain a waiver of GST on importation, they would still have to incur the tax on supplies obtained locally and claim a refund from the Comptroller later. A few representors suggested that the local supplies be zero-rated on the basis that they are eventually to be exported by the purchaser. The Committee noted that the input tax on local purchases should not cause cash flow problems for most of the exporters because they would probably have obtained their purchases on credit. Hence, they would make payments for these purchases only after obtaining the refund from the Comptroller as exporters would generally opt for the one-month accounting cycle. This, together with the waiver of GST on importation, would solve the bulk of the cash flow problems faced by exporters. Furthermore, allowing zero-rating of local sales will complicate the administration and result in a loss of audit trail and hence weaken the policing feature of the system. The Committee was therefore of the view that sales to local parties should not be zero-rated, notwithstanding that the goods may eventually be exported. Bonded Warehousing Regime The Committee has amended clause 37 of the Bill to extend the bonded warehouse regime to imported non-dutiable goods. Under this arrangement, GST will be suspended on goods brought into the bonded warehousing regime. Any supplies of goods while they are remaining in the warehouse or transferred between bonded warehouses will be disregarded for GST purposes so long as they are not removed from the warehousing regime. This scheme will benefit traders who bring goods into Singapore for storage and minimal processing before they are re-exported. Clause 20 will also be amended to allow input tax recovery for supplies made within the bonded warehousing regime. This will ensure that our warehousing facilities remain competitive. Out-of-Scope Supplies A number of Singapore companies are engaged in procurement activities where goods are shipped from a foreign source to another foreign destination. Such third country trading are supplies that are outside the scope of our GST. Under the original GST Bill, the input tax incurred in respect of such out-of-scope supplies is not recoverable. Many representors express concern that this would erode Singapore's competitiveness as a procurement centre. As such procurement activities are essentially exports of services, the Committee has amended clause 20 of the Bill to provide for the recovery of input tax attributable to such third country trading. International Services The export of services which are zero-rated are specified in clause 21 of the Bill. Under the original provision, a service will be zero-rated only if it is provided to a person who does not have a business establishment in Singapore. Many representors felt that this was unduly restrictive. The Committee shared this view and has decided that the "business establishment" requirement be replaced with the condition that the recipient must belong in a country outside Singapore. The Committee, however, felt that for that category of services which are performed wholly outside Singapore, zero-rating should be given only to those which are physically performed and enjoyed outside Singapore. These include cultural entertainment and exhibition services. Such a restriction prevents tax planning and round-tripping by suppliers who perform services in neighbouring countries to avoid payment of GST. Clause 21 has been amended accordingly. Shipping and Port Activities Several representors suggested that the supply and repair of ships and other services rendered within the port, airport and oil terminal area be zero-rated. This is because ships and aircraft are internationally bound and hence the services provided to them are "consumed" overseas. This suggestion has been accepted and new subsections have been added to clause 21 to zero-rate the supply, including the sale, lease, charter and hire of ships and aircraft, with the exception of recreation or pleasure craft. Services provided in the port and airport area for handling them are also zero-rated. Financial Services The original Bill exempts specified financial services where it is difficult to identify the charge for services rendered by financial institutions. Where the supplies are exempt, they will not attract GST. However, the input tax incurred in making the supplies will not be recoverable. A few representors asked that they be allowed to recover input tax in full to maintain their competitiveness. The Committee disagreed as full input tax recovery for exempt supplies is tantamount to zero-rating the service. However, the Committee recommended that businesses be allowed to recover input tax on exempt supplies made to other taxable businesses. This will remove the tax cascade problem, without zero-rating the exempt services to end consumers. Under this method, the Comptroller can work out with the businesses concerned a simple input tax apportionment formula based on the proportion of the institution's business with other taxable parties. Such a system will be simple for both the financial institutions and the Comptroller to administer. The same approach can be used for other partially exempt businesses where applicable. The Committee has therefore amended clause 20 of the Bill to enable regulations to be made to allow credit for input tax attributable to supplies made to taxable persons for business purposes. The list of exempt supplies is specified in the Fourth Schedule. As a result of consultation with the financial community, the Committee has amended the Fourth Schedule of the Bill to make clear that trading in financial derivatives, for example, swaps, forward rate agreements and options, as well as the credit portion of a hire purchase or instalment credit are exempt from GST. Paper trading in commodities such as rubber, gold and oil are also exempt provided that the commodities remain unallocated and no physical deliveries take place. The Fourth Schedule of the original Bill exempts payment and collection services which are essentially fee-based. Since it is easy to identify the charge for these services, such services should be taxed rather than exempt. The Fourth Schedule has been amended to remove such services from the exemption list. Fringe Benefits Several representors suggested that GST should not apply to fringe benefits as they are an integral part of a remuneration package and are incurred in furtherance of the business. The Committee disagreed with this view. As fringe benefits are consumed by employees, GST should apply. Otherwise there may be a tendency to build more fringe benefits into the remuneration package to avoid GST. Hence, with the exception of food and accommodation, the employer would have to account for output tax on the taxable supply it makes free to its employees. In the case where an employer pays for expenses incurred for the private use of his employees, such as medical bills, recovery of input tax will be disallowed. In-house Exchange Rate The Committee has accepted the suggestion by some representors that in-house foreign exchange rate be used for GST purposes. The Third Schedule of the Bill has been amended to allow the Comptroller to determine the exchange rate applicable for a specified period or accept such other exchange rate as may be proposed by the taxable person on his supplies. Penalties In response to the concern expressed by several representors, the penalty provisions of the Bill have been suitably amended to make a distinction between innocent errors and fraudulent conduct. Under the original Bill, the penalties in relation to fraud, other than that pertaining to fraudulent refund, entail an imprisonment term not exceeding seven years. Clause 62 has been amended to extend the offence of fraudulent evasion of tax to include fraud by way of obtaining a fraudulent refund. This is to ensure consistency with the penalties for other types of fraudulent conduct. Bad Debt Relief The Committee agreed with a few representors that the proposed one year requirement for the claiming of bad debt can be shortened in cases where the debtors' businesses become insolvent. Details of bad debt relief will be spelt out in regulations made under clause 25(3). Cash Accounting and Six-month Accounting To lower the compliance costs to small traders who may wish to voluntarily register for GST, the Committee recommended that the Comptroller be given the discretion to allow smaller businesses to account for GST on a cash basis and to allow them a six-monthly accounting period. This will address the concerns raised by some representors. Clause 41 contains adequate provisions for the Minister to make regulations for cash accounting and a six-monthly accounting period. Re-zoning of Land The original Bill provides for land re-zoned as non-residential to be treated as taxable, and for GST to be accounted for by the taxable person. The Committee agreed with a representor that since GST on non-residential land is recoverable, the re-zoning of land should not be regarded as a taxable supply. Where the Government has granted written permission for more intensive developments on residential land, there should also be no GST since residential properties are exempt in the first place. Clause 10 has been amended accordingly. Free Gifts The Committee has increased the concession whereby free gifts will not attract GST from $100 to $200. Gifts of "commercial samples" will also not attract GST. The Committee is also of the view that if no input tax is incurred in the making of the gift, the supplier will not have to account for the deemed output tax. This is fair because the supplier will not be able to claim input tax if the gift is purchased from an exempt trader. The Third Schedule of the Bill has been amended accordingly. Second-hand Motor Vehicles The Committee has amended the Third Schedule of the Bill to provide for a discount factor of 50% to be used in computing the value of a second-hand motor vehicle to which the GST is applied. This will effectively reduce the GST payable by 50%. This discount factor is to correct the distortion created by the COE and ARF on the market price of a second-hand motor vehicle as GST is not levied on these components of the price of a new vehicle. The 50% discount factor will not apply if the vehicle is purchased through a margin scheme as under the scheme, GST is payable only on the profit made by the dealer and not on the sale price of the vehicle. Accounting of GST by Customers The Committee finally noted that in many other countries, such as the UK, there have been many instances of fraud involving gold, whereby the supplier absconds with a high amount of output tax collected. The Committee has, therefore, inserted a new clause 38 to the Bill to enable the Minister to make regulations to provide for the recipient to account for the output tax if the need arises. This provision covers precious metals, precious stones and land. Sir, I beg to move. Question proposed.

( In Mandarin): Mr Speaker, Sir, I support the motion standing in the name of the Minister for Finance. I would like to reiterate that, in principle, I support the GST as part of our tax reform in Singapore to enhance the competitiveness of Singapore. I also believe that the package of rebates on service and conservancy charges, tax rebates, subsidies, etc. will be able to cushion the impact of GST on the lower income groups. The Select Committee on the Bill received 70 representations. Most of them came from industrial and commercial organisations as well as individual industries. What they have said are mainly the concepts and definition in the GST Bill, and the problems and difficulties in implementation. The Minister has already announced the acceptance of certain recommendations and has made the necessary amendments to the relevant clauses, for example, group registration and reverse charges for overseas services. However, concerning the interests of consumers, there is only one representation from CASE. We must remember one premise. Whether they are companies or enterprises, they are agents that collect GST on behalf of the Government. The eventual taxpayers are the consumers in Singapore. While to improve the efficiency of the machinery of tax collection and to reduce compliance cost may be important, the protection of the consumer's interest and the public's acceptance of GST are even more important. Under this premise, I would like to ask the Minister for Finance and the Minister for Trade and Industry a few questions. First, on the interests of consumers. According to feedback from the community and trade union leaders as well as the feedback collected by the Feedback Unit after the publication of the White Paper on GST, prices have increased. I would like to ask the two Ministers: up to now, what measures has the Committee on Profiteering and Inflation taken to prevent profiteering? What will be the additional sum the Ministry of Finance will put aside for the benefit of CASE so as to enable CASE to play a more important role? What laws will be amended in order to give CASE more legal power to protect the interests of consumers? Secondly, after the implementation of GST, I believe that, apart from internal transfers, IRAS as well as the Customs and Excise Department (CED) will need to engage new staff to handle the implementation of GST. I would like to ask the Minister for Finance how much additional manpower will be required, and how many new posts will be created. In the current tight labour market, within the next six months, will the two departments be able to recruit the staff needed? Will IRAS and CED be competing with the private sector in the recruitment of accounting assistants, accounts clerks and computer programmers and thereby lead to wage increase of these categories of employees, and hence increase the burden of the private sector? Furthermore, do these two bodies require new software for the implementation of GST? If there is such a need, what will be the development cost for the software, and what will be the recurrent cost involved? On the whole, I hope the Minister will be able to inform this House what is the average cost to collect $1 of GST? What is this ratio compared with the ratios of personal income tax and company tax? Is it higher or lower? Thirdly, after the publication of the White Paper on GST, my impression is that the Government departments' publicity and education programmes appear to have been concentrated on the businesses, ie, how to collect GST and how to handle the related administrative problems. My question is how would the GST Steering Committee inform and educate the public to enable them to understand better the principle and objective of GST so that they will be able to accept this new tax? Currently, many people still have doubts and reservations about GST. As the Minister has already admitted, not many people know about GST. They remain silent probably because, GST is not yet implemented. We must strengthen our publicity and education programmes to ensure the smooth implementation of GST next year. Here, I would like to ask the Minister for Finance and the Minister for Trade and Industry whether, before the implementation of GST, they intend to speak to the public on television and radio to explain GST so that the people will have a better understanding. Fourthly, on 16th February, the Feedback Unit conducted a dialogue session. Most of the participants agreed that GST should be calculated separately from the prices of goods and services in the same way that cess is calculated as a last item. Their concern is that if every item is calculated to include the 3% GST, then the increase will be more than 3% because of rounding-off. People are concerned that retailers will not round off, but they will round in. So I would like the Minister for Finance to clarify this question. Finally, I have noted what Mr Low Thia Khiang has said in his report on the Cost Review Committee in relation to GST. Two questions have been raised. One is whether GST will be increased after five years and, second, after the rebates have been abolished, what will be the impact on the lower income group. I hope that the Minister will answer these two points so that such remarks will not mislead and confuse the public. On these two points here, I would like to make two suggestions. One, after the implementation of GST, the relevant Government department should conduct a sample survey every year, or regularly, to assess the impact of GST on the lower income groups. If necessary, rebates and subsidies should be extended. We should handle these matters sensibly. We should not rigidly say that these should be taken off after five years. If, after five years, there is an economic recession and there is adverse effect on the lower income groups, then it is necessary to extend the rebates and subsidies. My second suggestion is that the Government should, as far as possible, avoid raising the GST rate after five years. Of couse, this will be determined entirely by future economic performance and the need for tax revenue. If there is a need for adjustment, I hope that the Minister for Finance will include the adjustment of tax rate in his Budget statement for the approval of this House.

Thank you, Mr Speaker, for allowing me to join in the debate. Sir, I support the GST Bill because it will enable Singapore to be competitive and also meet the economic and social challenges ahead. These are macro issues which a lot of people may not really understand. What is most crucial is to look at how we could sell and promote GST to make the people see that it is positive. I think this is the question that we need to address. Sir, I note that the Minister has assessed that the people look at GST on the basis of the 3% tax rate. This is understandable because at the end of the day, people are going to ask whether they are going to pay more, or they are going to pay less. As a result of this, they would then view whether the GST Bill is positive or negative, and what impact this will have on their cost of living. I think these are some of the crucial issues that the Ministry will have to deal with and to reassure the ordinary working people that GST will, in the long term, be better off for them. Unless and until we can convince and ensure that the impact is minimal at the grassroots level, the people are likely to become sceptical about the overall interest and the overall value of GST itself. Sir, the GST Bill is fairly complex. It is very difficult for people to really understand the complexities of this Bill itself. The procedures are complex and, therefore, I share the sentiment that the ordinary average citizen will never be able to understand the mechanics of this Bill. So the ultimate consequence is to see how we can deal with the spillover effects of this GST Bill. The spillover effects of this GST Bill are likely to be felt at the grassroots level, ie, the ordinary households in the various housing estates. Sir, despite Government's assurance that there will be a small increase in the prices of goods and services when GST is implemented, there are some lingering doubts about this. Residents living in housing estates are now beginning to see price adjustments at various retail shops and food centres. Some of them have taken advantage of it. Some residents have brought to my attention that even before GST is imposed, some hawkers and shopkeepers have jacked up their prices by 10% to 20%. Sir, when GST is instituted, there could be further attempts at overcharging at the neighbourhood level. The blame for the steep rise in prices will be assigned to Government. So how do we overcome this? How do we explain that this is overcharging that is being made at the local level? The overcharges are expected to be further generated when GST is implemented. Sir, it is this mindless overcharging and the impact of GST at the grassroots level that we should address our attention. I would like to ask how the Ministry would go about in assessing the impact of GST at the local level, and the types of monitoring system the Ministry would have in order to help it to assess and be sensitive in terms of taking various remedial actions against overcharging. Sir, I also like to know what preventive measures that the Ministry would be taking against people who overcharge and take advantage of the GST. I know that the Ministry has announced that it will set up a monitoring unit. It will set up a section where people can complain and action will be taken against traders who overcharge. But how quickly would this be effected and how fast action would be taken against people who go on mindless overcharging? Sir, I also see that there is a need to support the formation of consumer protection groups at the neighbourhood level. Would the Ministry be providing more grants to CASE although there have been suggestions that the grants to CASE will be increased? Would CASE also be given sufficient muscle for it to act against overcharging those consumers? Sir, the second area which requires attention is the implication of GST on charitable activities. Many charitable organisations are concerned that their fund raising activities and programmes could be affected if donors see that the charities would be getting less from their donations as a result of GST. There are donation draws and various fund raising activities that are undertaken. Would these charities and their activities be affected in the longer term? How would the Ministry propose to deal with this problem? Could rebates or exemption from GST be accorded to charitable organisations? I think this is crucial because we are trying to set up a more caring community and we are trying to encourage various charitable activities and the communities to build up a better support network. I hope that various administrative decisions are taken to encourage people to contribute further and to support various community activities. Sir, the other area of concern is the group of unsupported retirees and pensioners who are getting a very small income. Many of these retirees who have less than $500 income have no other sources of support. There is quite a sizable group of pensioners whose pension has been accorded much earlier and they now would be the ones who are likely to be affected, particularly those who have no other means of support. It is this group that the impact of GST will be most felt. I would like to know whether, for this group of pensioners, adjustments and support will be given to them, particularly those who really do not live in HDB flats for which rental and SC&CC rebates would be given. As we know, there is a sizable group of retirees who are living in rent-controlled premises and other small premises of their own. For this group of low-income retirees and pensioners, there are very few recourses available. This group of people will have to be reached out fairly quickly and we need a good administrative system in place to assist and support them. Sir, on that note, I would like to thank you.

I would like to remind hon. Members that the debate in the Third Reading should be confined to the contents of the Bill. Dr Soin.

Mr Speaker, Sir, thank you for giving me this opportunity to speak. I rise to support the Bill but I would like to seek some clarifications from the Minister. Some of the points have already been alluded to by the hon. Member for Tanjong Pagar GRC. Specifically, I would like to ask three queries. 1. How can the financial cost of the effect of GST be minimised for registered persons or businesses who make donations in kind of more than $200 to voluntary welfare organisations? If this is not done, then there will be less likelihood of such donations in kind being given to voluntary welfare organisations. 2. Voluntary welfare organisations will suffer input taxes on their purchases and other services consumed where such purchases are supplied by a registered business. If the voluntary welfare organisation is not registered as a charity, then it will have to absorb the input tax suffered as an extra cost. On top of that, there will be the added one-off increased inflation rate caused by the initial imposition of GST. Are there any provisions being made to offset these additional financial burdens on the already heavily burdened voluntary welfare organisations? 3. There should be compulsory price tagging or labelling of all retail trade to prevent confusion and profiteering. I understand that this is already being done in Malaysia. If the Government is considering this, how will it be enforced?

Mr Speaker, Sir, since the Second Reading of the GST Bill, several developments which have relevance to this Bill have happened. First, the GST Select Committee called for representations. It received 70 written representations, of which 17 were invited for oral representation, including one from CASE. Also, the Estimates Committee, which I happen to sit on, have independently asked the Ministry of Finance to present its plan for implementing the GST. The Estimates Committee have also asked the Ministry of Trade and Industry to tell us how it intends to monitor profiteering when GST is implemented. Sir, CASE will work with the various Government agencies and some private organisations to monitor the prices of goods and services to ensure that profiteering does not happen and when it does, it will be highlighted. The second development is that one of the main objections to the GST, also known elsewhere as the VAT, is being reviewed by a new generation of economists. In effect, a fundamental pillar of the anti-GST camp is under attack and this has happened since April this year. It has long been recognised, or so we had thought, at least, I had thought, that the GST penalises the poor more than the rich. Why? Because the theory holds that the poor spend a higher percentage of their disposable income on consumption. Welfare economists call the GST or the VAT a regressive tax. And because of this, MPs in this House and various commentators outside this House have urged the Government to implement a package of reliefs into the GST which the Government has done, so that the poorer households will not be penalised adversely because of the GST. But in April, came Princeton economist, Gilbert MetCalf and his gang, who argued that the conventional wisdom is wrong. He argues that the poor, in fact, pays a smaller proportion of GST than richer people do. His thesis is premised on the fact that many of the so-called poor are not really poor. They are, in fact, in transition. This includes young people who make a good living over their lifetime. Others are pensioners living off accumulated assets. For example, if a pensioner lives in his house whose mortgage has been retired, he has little disposable income but he is not really poor because he is asset-rich. Conversely, if a young man has a set income but he is retiring his mortgage, he or she may not be actually rich. Thus, this economist, Gilbert MetCalf, reasoned that using GST over current income as a measure of regressivity is methodically flawed. The correct way, he argues, is to use GST over annual consumption. He called the latter "lifetime income". He confirmed his theory on 1,500 households captured in the consumer expenditure survey and found the results to be correct. So my doubt begins. If MetCalf and his crude findings are correct, then isn't the package to offset the regressive impact of GST a bonus for Singaporeans? But, nonetheless, this theory is still empirical and is still debated widely, but there is an element of truth in it. The logic is understandable. The logic is believable.

Order. Mr Koo, can I ask you to confine your speech to the contents of the Bill? You are in breach of Standing Orders.

Sir, the third development after the GST Bill had been introduced is that the Cost Review Committee has come out with its report and made several recommendations which, I think, will help Singaporeans to be more aware about how profiteering can and cannot occur, and CASE will help Singaporeans to be aware of price differences in the market. So where information is transparent, CASE thinks that profiteering is unlikely. Sir, these events, viewed in perspective, compel us to accept the GST Bill. I recognise two fears among Singaporeans: one, inflation, and the second, bureaucracy. As I said earlier on, inflation is unlikely, if information is readily available and is transparent. Secondly, I think we must tame bureaucracy. I have read the Reports from MTI and the Finance Ministry which were put up for the Estimates Committee. I am convinced that bureaucracy will be kept to a minimum. Sir, we stand on this threshold of a very important event. Passing the GST Bill through Parliament now would save future generations from carrying the burden of a punitive direct tax needed to support an increasingly aging population. We stand at the cross-roads of history, either to be praised or condemned. Sir, the decision depends on Members of this House. I have made up mine. I support the Bill.

Thank you, Mr Speaker, for allowing me to join in this debate. As a Member of the Select Committee, I have the privilege of hearing from the representors as well. I want to take this opportunity to commend the Minister for Finance and the Select Committee for the way they have accommodated the various requests from the representors, especially businessmen who are concerned about losing their competitiveness, as a result of which many amendments were made to ensure that international trade and international competitiveness will not suffer because of GST. The impact on the cash flow of exporters and manufacturers was also taken into consideration. I would urge the Minister to keep this in mind when implementing the GST, just in case something goes wrong: that our international competitiveness and trade and cash flow on exporters and manufacturers will not be negative and thus affecting our economy. There is only one concern which has not been addressed and that is exemption for an item which I think is very important, and I would like to urge the Minister to consider this. The GST is supposed to be a tax on consumption and not on investment. Yet, in Singapore we have been promoting the need to further the educational level of our people, to upgrade the skills of our workers and our human resources, which is our only resource we have in a major way. I would like to ask the Minister to consider exempting or zero-rating all educational fees or skills training cost so as to encourage this investment in human resource. I think it is wrong to tax an item which surely is an investment in the future of Singapore. I think we have overlooked this in some way and I would like the Minister to consider that this is an item worth considering for exemption or zero-rating. We are also concerned about rounding up when the GST is implemented. That supermarkets and so on will round-up, and it will not be 3% GST, but effectively more than 3%. I also agree with the Minister that public awareness of GST and its implications in implementation are not quite well known. May I suggest that more publicity be given in terms of TV programmes, video tapes, or even using high-tech multi-media and computer-based instructions, and that these be made available to individuals and companies so that the message of implementation of the GST can be easily propagated to the public. I believe, through the companies, GST can be better explained with the help of the company accountants and executives. So a computer-based instruction system would definitely help. May I suggest also that a GST hotline be set up at the appropriate time to answer public queries. I support the Bill.

( In Mandarin): Mr Speaker, Sir, GST will be introduced in Singapore for the first time next year. When we implement this tax system, there will be a lot of problems that we may not have anticipated. That is why after receiving representations from the various quarters, the Select Committee on the Bill made a 43-page amendment. The care taken by the Committee is indeed praiseworthy. On the proposals by the Committee, I have some observations. Firstly, on second-hand vehicles. The Committee proposed to levy tax based on 50% of the value of the car. I think this way of calculation is not scientific. I can give you two extreme examples to illustrate why it is not scientific. One example is this. In the case of a recently-registered second-hand vehicle, the actual price is not 50% of its actual value. If we deduct the ARF, the COE, and the import duty from the market value, the actual value of the second-hand car is about 25% of its market value. It is not 50% of the value. Another extreme example is that in the case of a ten-year old Japanese car, the value of the car is as good as the PARF. If you minus the PARF, then the actual value of the car is zero. So it is zero percent, and not 50%. From these two extreme examples, we can see that the real value of the second-hand car is something between 0% and 25%. It is not 50%. I hope the Minister will look into this matter and explain why he feels that 50% is the correct value for a second-hand car for the purpose of GST. Secondly, the imposition of GST on second-hand vehicles is unfair to the public. Why? If I buy a new car, I do not have to pay GST. When I buy an old car, I have to pay GST. Both are consumption. Why is it that for the new car, there is no GST and for the old one you have to pay GST? I think it is unfair. I hope the Minister will explain. In the Committee's Report, paragraph 12, it is said that GST is payable on club members' subscriptions and condominium dwellers' service charges. From my personal point of view, I think these two categories of services are not profit-oriented. They do not make profit. There is no value added. Whatever fee you receive will be spent on purchasing services and the GST levied on the services. So you collect tax on the one hand and pay off on the other hand. It is meaningless to collect GST from these people. There is a new problem arising out of this. For example, for some clubs or management corporations of the condominiums, they collect large sums of money in terms of the sinking fund. It is treated as a reserve. Having collected these fees, they have to pay GST to the Government. If they want to use the reserve fund years later for a major repair, they have to pay another another round of GST to the contractors. In other words, there is a double taxation. They have to collect GST twice. I think there is something wrong here. I hope that the Minister will be able to make some arrangement to avoid the unnecessary double taxation of GST in this kind of situation. Personally speaking, the implementation of GST is very wide and extensive. Some people may have some reason for not having to pay tax previously. They will be affected by GST after its implementation. In other words, they will be made to shoulder a certain amount of the tax burden. I think it is very fair. In the process of implementation of GST, some adjustment is made to the personal income tax. Those with an annual taxable income of less than $10,000 will not have to pay tax. The result is that if we have any special need to increase the GST in future, then any futher reduction of personal income tax would not benefit the lower income group anymore. So if we increase GST by 1%, then the lower income people will have 1% extra tax burden. I think it is not wise. The Minister has already agreed that within the next five years there will be no change to the GST rate. What about after five years? Will there be a need to increase the rate of GST? Why will happen? At that time, reduction in the personal income tax rate will not serve the interest of the lower income group. In what way will the Minister be able to help the lower income group, as we have done now? I hope that if, in future, there is a need to increase the rate of GST, serious consideration will be given to look after the interest of the lower income group so that they will not carry an extra burden. With that, I support the Bill.

Mr Speaker, Sir, the Bill, as amended, after the Select Committee meetings, takes into account all the various concerns of our businesses which were not sufficiently addressed in the Bill that was originally presented. As the Minister for Finance has explained, amendments have been made to ensure that our export industries, shipping, air services and the re-export trade are not adversely affected by the GST Bill. The procedures for these types of businesses to be outside the GST net will be fine-tuned in the light of experience. I think the important point that we should note is that the Government's thinking is fully in accord with that of business, ie, the GST should not affect our export competitiveness. I would like to address two issues, Sir: that relating to refunds for tourists and the concerns over profiteering. The Bill provides for exports to be zero-rated. The question is: how do we deal with exports which are in the nature of tourist purchases in Singapore which the tourists take out of Singapore? The Government has agreed, in principle, that the GST imposed on tourist purchases should be refunded. We have asked the Tourist Promotion Board to work with the retail industry on a suitable GST refund system. While the Government will facilitate the setting up of a refund system, retailers themselves will have to operate the system. Retailers have indicated that they support the GST refund system and that they will implement the system with effect from 1st April 1994, that is the date on which the GST comes into effect. The retailers propose to start with a system similar to the old United Kingdom system of refund where the tourist pays the GST to the shop and fills in a GST refund form containing details of the items of purchases and the amount of GST paid. The tourist then goes to the airport and presents the form together with the receipts at the Customs' Inspection Counter. The Customs officer at the counter will inspect the goods and stamp the form. The tourist will then drop the refund claim form into a mail box next to the counter. After the tourist has left the country, the shop would mail the refund to the tourist which - the retailers who have been speaking to us have said - would generally be not later than two weeks from the date of the tourist's departure from Singapore. The Customs Department will also be looking into the problems of heavy and bulky check-in goods which obviously they cannot carry with them into the plane, and cannot be produced after Immigration checks for verification. We will have to have a special system for that. The Customs Department is looking into how to resolve this problem. For the longer term, the retailers are studying the feasibility of setting up a company to make refunds at the airport. In other words, the tourist can collect his refund before he leaves the country. The Singapore Tourist Promotion Board will facilitate the setting up of this refund company by the retailers. The retailers have also decided that the minimum qualifying value for GST refund will be set at $500 for the refund system to be viable. Based on this minimum limit, the amount refunded will be $15 less any administrative charge that the retailers may want to impose. Some retailers have already indicated that they will waive the administrative charge for a start. To-date, about 300 retailers have indicated that they would have the system ready by 1st April 1994. These include major retailers like Emporium Holdings, The Hour Glass, Robinson, Tang, and so on. I turn now, Sir, to the question of profiteering. The Bill itself does not address the problem of profiteering for the simple reason that the Bill is a GST Bill. While the Bill itself does not address this, the Government understands this concern and would take various measures to address it. I think the fears are more psychological than real. The majority of countries which have introduced GST did not experience inflation higher than the GST rate. In a few countries where the inflation was higher than the GST rate the cause of the inflation was not the introduction of the GST itself but other fundamental economic problems such as excessive wage demands and loose monetary policy. As long as we in Singapore continue to adopt prudent economic policies in these areas, prices should increase only moderately when GST is introduced, and this increase will be a one-off increase. Fears about profiteering, I think, are over-blown. Profiteering can only exist - and I want to repeat this, because I have stated this many times before, but I keep hearing the same arguments again and again - if the seller has a monopoly on the supply of that commodity, or, if there is a real shortage. The supplier can therefore hoard whatever he has and release it only to those consumers who are prepared to pay exorbitant prices. In this situation, of course, the consumer has no choice and the seller can dictate the price. But in Singapore there is no shortage of goods. We have no problem in importing any amount of essential items that we require, and we have many suppliers and competition is very keen. The consumer, therefore, has many choices as to where he wants to buy the goods that he wants. And traders cannot take advantage of the introduction of GST to raise prices excessively because they will risk losing their customers to other competitors. The possibility of widespread profiteering as a result of GST is therefore remote. Nevertheless, the Government has to take note of the public's concerns, as well as the recommendations of the Cost Review Committee, on how to counter profiteering. Through the Committee on Profiteering and Inflation set up in MTI, we will undertake certain measures to ensure that there is price stability before and after the GST is implemented. First, we will ensure that there is adequate supply of essential goods in the marketplace, especially before the date of implementation of GST, so that any speculative increase in demand can be accommodated without exerting pressures on prices. We expect that many people would try and buy essential goods before 1st April 1994, and there is bound to be a surge in demand. And if shopkeepers stock supplies in the usual way, they will not be able to meet the surge in demand. So we will ensure that there will be adequate supplies. We already have, for example, a rice stockpile policy to deal with contingencies and sudden increases in demand or a shortage of supply. And this policy and system proved its effectiveness during the Gulf War period when there was a short spell of panic buying of rice. MTI will soon meet major importers, wholesalers and retailers of household and other consumer goods to get their support and cooperation in ensuring adequate supplies before 1st April 1994. Second, we will step up our consumer education efforts by working closely with CASE and the media to release price information to the consumers. CASE has been asked to provide a price information service to disseminate prices of common household items to consumers, while the press will be encouraged to publish price watch columns to compare prices of consumer goods across different outlets. As to the amount of Government support for CASE, CASE has been asked to put up a detailed paper on its requirements and my colleague, the Minister for Finance, has told me that the extent of Government support will be determined after the paper is studied. So we will give adequate support to enable CASE to carry out its function. Third, monitoring of prices and consumer feedback will be stepped up ahead of the implementation of GST. The Department of Statistics has already started to track more closely the prices of various consumer goods and services to see whether traders are increasing prices ahead of GST. The Department already routinely for its CPI collects prices from thousands of outlets and as part of this exercise to track the events leading to GST, it will track some of the prices more closely. There is no evidence so far of any unusual price increases. There have been reports of very sharp increases, but when we checked out on these reports, there was no foundation to these reports. Prices go up and down. For example, if there is a long rainy spell, prices of leafy vegetables go up. If the weather is good and supply of leafy vegetables increases, prices go down. We know this. And if you go to the market, or you speak to your wife who goes to the market, you will know that this happens all the time. When the price of anything goes up due to the normal seasonal reasons, people at once jump up and say it is because of GST. The tracking so far has not shown any special movement up in preparation for GST. Far from that, I think the few stories that we have been reading in the papers talked of various hawkers slashing their prices in order to compete. A price feedback hotline will also be set up in the Department of Statistics before the implementation of GST for consumers to report any instance of sharp price increases which they encounter. Similarly, CASE will also be tracking price movements more closely. Fourth, public pressure will be brought to bear on those who seize the opportunity of GST to increase their prices sharply. As I have said, I do not think this will happen. But if it does, we will have to generate certain public pressure. We will work with CASE, consumers' watch groups and the media to publicise such errant traders. Checks will be conducted on shops suspected of profiteering. In cases where licensing is required to carry on a trade, for example, a coffeeshop which requires a beer licence, we can revoke or suspend the licence, if necessary. IRAS will also be asked to conduct closer tax audits on errant traders. If necessary, we can also consider legislation to require compulsory price tagging. Finally, as a last resort, and only if the situation warrants it, the Government will be prepared to use its powers under the Price Control Act to control any widespread profiteering in any particular commodity. But I must emphasise that price control measures should not be resorted to except in very special circumstances. Singaporeans can also do their own part by being well informed and vigilant. They must know their rights as consumers, learn to shop wisely and boycott high-price outlets. Ultimately, the best possible defence against profiteering is not legislation or the threat of punishment, but the existence of abundant supplies of goods and free competition together with a well-informed public. The Government will work on these basic principles to ensure that prices remain stable in Singapore, despite the introduction of GST.

Mr Speaker, Sir, as you have pointed out, although I thank the Members for supporting the Bill, most of the questions raised in fact are not relevant to the Third Reading of the Bill. Nevertheless, as the subjects raised are of public interest I will respond to them. Dr Vasoo and Dr Soin were concerned over the impact of GST on charities. I think the request is that they should be exempted from GST. The point we have made during the Second Reading debate and the Budget debate was that if charitable organisations conduct taxable activities such as running a bookshop or a commercial shop, and these activities exceed a turnover of $1 million a year, then they would be subject to GST, like any other business. Exemption for these reasons would not be equitable because they are competing directly with other businesses. However, other non-business activities conducted by charities will not be taxable. Examples are running an old age home or a children's home where the services are provided to the poor without charge. Donations in cash to charities without any benefit or return are not subject to GST. However, if a taxable business donates its own goods to charities, then it would be subject to GST. However, in cases like this, in order to avoid discouraging companies from donating their own goods to charity, the Income Tax Department will consider accepting a low sale value for these goods. So the actual GST, although theoretically payable, would not be significant. Dr Vasoo has also expressed concern about the plight of retirees and other low income people. This question has been dealt with at previous discussions on the subject. But, nevertheless, I would reiterate that we are concerned about the impact of GST on these people and there is a special provision of funds for CCCs to help such cases when they are identified. In general, most pensioners and retirees will be covered under one or more of the rebate schemes announced in the Budget. Those with taxable incomes would benefit directly from the tax reductions proposed. Others living with their families would have their children claiming aged parents' relief. In the case of retirees who are Government pensioners, the Singapore Allowance has been increased. So they are also being looked after. But, nevertheless, I think we recognise there will be a core of people who fall between all our provisions, and special attention has been paid to them. We will certainly consider their cases carefully. Dr Ow has asked a series of questions. The first two deal with CASE and measures against profiteering which the Minister for Trade and Industry has already addressed and I shall not repeat them. He has asked some questions on the cost of implementing GST and the number of people who might be involved. IRAS and Customs and Excise have estimated that a total of 296 new staff would be required, of which 100 will be transferred from the existing IRAS staff pool, because their services will no longer be required following the introduction of the tax cuts and reduction in the taxable pool of people. Therefore, there would be a net requirement to recruit 196 additional people. There is no problem in recruiting accountants and other tax officers. These are mostly at the level of polytechnic graduates and we do not believe that these requirements will drive up the wages of accounting clerks and computer programmers. In connection with computer programs, the IRAS is not introducing a sophisticated new system of computer program for the GST system. It will be using a really straightforward simple system, because the introduction of GST is not really complicated. The estimated total manpower cost will be about $16 million. Computer cost, including development cost, will be about $13 million, while total start-up cost is $29 million. A question was also asked on the cost of GST collection relative to the collection of income tax. The estimate is that it will cost 2.3 cents to collect $1 of GST. The comparable figure for income tax is 1.65 cents per $1 collected. The reason why the figure for GST is higher is that the tax rate is lower. Dr Ow is also concerned that there seems to be not enough focus and attention paid to the education and publicity for individuals who have to pay the tax. Soon after the introduction of the White Paper, and following the introduction of the Bill itself in Parliament, Ministers and MPs gave a series of talks at community centres to explain the purpose and the implementation of GST to all the grassroots people. After this, the main concentration of effort was by IRAS and the Government in explaining the implementation details of GST to the business community who have to implement it. Nearer the time of the actual introduction of GST on 1st April 1994, there will be a resumption of publicity and campaigns via television, media talks, and so forth, targetted at consumers who have to pay the tax. Memories are short and if we try to explain these matters well before the date of implementation, they will probably be completely forgotten. So we are going to mount a new campaign shortly before the implementation of the tax and follow it through for the first few months. Finally, Dr Ow wants an assurance that, in future, all changes of GST will not be simply approved by the Minister through regulations. This is not possible. All tax changes, whether GST or corporate income tax changes, must be tabled in Parliament and approved by Parliament. Mr Robert Chua has said that his only concern is that the Government should consider exemption or zero-rating of all educational institutions' fees and training programmes. We have, in the White Paper and during the Second Reading debate, explained quite clearly why we prefer not to do this. It is because the subsidies for education are basically not a tax matter. It is a matter of social policy, ie, how much we want to subsidise education. We have said that school fees will not be increased because of GST, and that the subsidy to schools and educational institutions will be increased to fully offset the impact of GST. In future, any additional subsidies we may want to introduce, either for education in general or for training programmes, we should explicitly provide through grants, rather than through a tax relief. This is so as not to confuse tax policy with social policy. I must apologise to Prof. Low because he spoke so quickly in Mandarin that I lost touch with him half way through his speech. If I do not respond to his points adequately, we can discuss them separately outside the House. He was concerned about the formula used for calculating GST on used cars. The 50% discount factor is based on an average arrived at for different models of cars over a number of years. We are making a proportionate reduction for second-hand cars and not trying to assess the value of the second-hand cars, net of ARF and COE. Certainly, a more complex formula will be possible but it will make the administration very complex. He has also expressed concern about the so-called double taxation of condominium management committees because of the GST system. I should point out that when a condominium management committee pays GST on goods and services, it should be able to claim the GST incurred as part of tax credit. So he is not taxed twice. Condominium dwellers essentially pay GST only once on their subscription fees. If he needs any more clarification on these matters, I would be happy to discuss with him separately. Mr Speaker, Sir, I think that generally covers the questions Members have asked. I would just like to conclude by saying that the new tax is a fundamental change in the Government's taxation policy. It is designed to position our tax structure for the next century where we will have a more appropriate balance between direct and indirect taxation. It is designed primarily to ensure that Singapore remains competitive in attracting investors in the future, and to ensure that we generate jobs. Without jobs, subsidies would not help. We have gone thoroughly into these matters by introducing changes which meet businessmen's concerns. Nevertheless, I am certain that there will be snags in the actual implementation of GST but I can assure Members that in the implementation procedure, we will be as flexible as possible. Where we find a need to make changes, this will be done either through regulations or through amendments to the Act, to ensure that the new tax system does not unduly interfere in business operations nor reduce our competitiveness. I will leave the discussion on Mr Low Thia Khiang's comments on GST to the debate on the Cost Review Committee Report tomorrow and the day after.

Mr Speaker, can I ask for clarification, please? There was no response to compulsory price tagging and labelling of all retail trade.

I gave the response.

The Minister for Trade and Industry responded to that.

Mr Speaker, Sir, in the response, I said that, if necessary, we will consider legislation for price tagging, but not at the present moment.

Question put, and agreed to. Bill accordingly read a Third time and passed.

Order. I suspend the Sitting and will take the Chair again at 3.10 pm. Sitting accordingly suspended at 2.40 pm until 3.10 pm Sitting resumed at 3.10 pm

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill has two main objectives. Firstly, it clarifies the application of English law, particularly English statutes, as part of the law of Singapore and removes the considerable uncertainty that currently exists in this regard. Secondly, it makes our commercial law independent of future legislative changes in the United Kingdom - changes which we in fact have no control. The Bill is one of the most significant law reform measures since our independence. In order that Members may appreciate the compelling need for this Bill, let me explain briefly the existing legal position on the application of English statute law and why it is highly unsatisfactory. The Second Charter of Justice of 1826 introduced into Singapore (which was then part of the Straits Settlements) the common law of England, including the principles and rules of equity, as well as English statutes enacted before 27th November 1826. Whether a pre-1826 English statute was received as part of the law of Singapore depended on whether it was one of general application and adaptable to the condition and wants of the inhabitants of the land. Past judicial decisions have authoritatively held that certain pre-1826 English statutes, for example, the Statute of Frauds 1677, have been received in Singapore. However, the problem is that it is not possible to say with certainty what other pre-1826 English statutes which have not been considered by our courts remain receivable. Of those statutes which have been held to apply in Singapore, many are also inaccessible and unavailable to the general public and even to lawyers. Moreover, the language of these ancient statutes is archaic and very difficult to understand. Apart from these pre-1826 English statutes introduced by the Second Charter of Justice, a number of Imperial statutes were made applicable to Singapore as a colony by the United Kingdom Parliament. These statutes continued to remain applicable after our independence, though some were repealed and replaced by our own legislation. The Imperial Copyright Act of 1911 was, for example, replaced by our own Copyright Act of 1987. Like the pre-1826 English statutes, here again no one can identify with certainty the exact number of Imperial statutes which continues to apply in Singapore today. Quite clearly, there is a great need to clarify the position as to the applicability of pre-1826 English statutes and post-1826 Imperial statutes. I now turn to the reception of English mercantile law under section 5 of our Civil Law Act, a provision well known to lawyers and also a source of considerable legal literature. That section in the Civil Law Act was introduced into our law in 1878 and provides that in any question or issue which arises in Singapore with respect to the law of partnerships, corporations, banks and banking, principals and agents, carriers by air, land and sea, marine insurance, average, life and fire insurance, and generally with respect to mercantile law, the law to be administered shall be the same as that administered in England at the corresponding period unless other provision is made by any Singapore law. Although the section was amended in 1979, in an attempt to reduce the uncertainty as to its scope of application, that amendment did not go far enough and I think, Sir, the time has now come for the repeal of that section altogether. So long as that section remains no one can say with certainty at any point of time what our commercial law is unless he has access to the most up-to-date English legislation. Where we do not have our own local legislation in any particular area of commercial law, we may find that an English commercial statute can be held to apply under section 5 regardless, and I emphasise, regardless of whether such application is desirable or not. However, I would say that the most unsatisfactory feature of section 5 is the great difficulty of interpreting its provision to determine whether a particular English statute is applicable in relation to a particular case. There were two Privy Council decisions in 1923 and 1933, which provided different interpretations of the ambit of that section. Sir, our legal system has now attained sufficient maturity for us to repeal section 5 and to cut off the automatic reception of future English commercial statutes. Nevertheless, under the Bill, a number of very important English commercial statutes will continue to apply in Singapore so that the basis of our commercial law remains very much the same as English commercial law which up till now has been applicable under section 5. However, with the repeal of section 5, the important point is that future legislative changes in the United Kingdom will no longer have any effect on our commercial law. Let me now deal with the specific provisions of the Bill. Clause 3 is a declaratory provision of the existing legal position. It preserves the corpus of English common law (including the principles and rules of equity) that now applies or has been received in Singapore as part of the law of Singapore. It is not intended to change the legal position as regards the applicability of the common law of England, which to the extent that it continues to apply, is subject to such modifications as the circumstances may require. Clauses 4 and 5 are the key provisions. Clause 4 read with the First Schedule to the Bill authoritatively specifies which English enactments are to apply or to continue to apply in Singapore subject to the necessary modifications. A number of such modifications are set out in subsection (4) of the clause. Clause 4(3) also ensures that in the event of any inconsistency between a provision of an English enactment and a provision of a local Act, the local Act shall prevail. Members will note that Part I of the First Schedule preserves the application of three Imperial Acts while Part II specifies 13 English commercial Acts which will apply or continue to apply in Singapore. Part III of the First Schedule also effects certain amendments to the English commercial Acts to bring them into line with local legislation and local circumstances. The First Schedule does not specify any pre-1826 English statute. This is because those provisions of the pre-1826 English statutes which are still relevant and applicable in Singapore have been restated and revised in modern form and will be incorporated into the appropriate local Acts. Clause 7 and the Second Schedule provide for this restatement and revision. It may be noted that the Second Schedule contains an amendment to section 43 of the Extradition Act, a point which I will deal with later at the Committee stage. It may be noted that the Second Schedule creates a new offence of piracy to be inserted in the Penal Code. The reason for this is that such an offence at present is dealt with in two Imperial statutes - the United Kingdom Admiralty Offences (Colonial) Act 1849 and the Courts (Colonial) Jurisdiction Act 1874. Let me now deal with clause 5 of the Bill, which is also a key provision. Under this clause, no English enactment shall be part of the law of Singapore except as provided in the Bill. The effect is that no pre-1826 English statute and no Imperial Act (other than the three Imperial Acts preserved in the First Schedule) will have any force of law in Singapore. This clause will remove once and for all the possibility of some obscure English statute which no one in Singapore is aware of being one day held to be applicable here. In the event of any unforeseen difficulty in the application of any provision of any English enactment specified in the First Schedule, clause 8 empowers the Minister, on the advice of the Law Revision Commissioners, to make a modification order to modify or substitute that provision. This clause will take care of any unexpected difficulty which cannot at the present moment be fully anticipated. Sir, as I said, this Bill is a major piece of law reform, although it may not excite great public interest because of its technical nature. Nevertheless, it should prove to be of great benefit not only to the legal profession, but also to the business community and the public at large. It does away with antiquated and outmoded English statutes which hitherto apply in Singapore and will provide practitioners and those interested in the law with an authoritative and definitive list of applicable English statutes. What is more important, Sir, is that it will make our commercial law independent of future legislative changes in the United Kingdom. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I support the Bill. This piece of legislation is long overdue. I agree with the Hon. Minister that the present state of the law in relation to the reception of English law is very unsatisfactory. This is just but one step that we have taken to remedy the situation. There are other things that we have to do, and I hope that they will be done soon. I will come to that in a moment. The difficulty has arisen because of our previous position as a colony. Like other colonies, the laws that applied depended very much on the laws that were prevailing in the colonial power. In Singapore, we received laws from England in a number of ways. One way, as the Hon. Minister has described, is the Second Charter of Justice. This was way back in 1826 when King George IV decreed that the laws of England as at November 1826 should continue to apply in Singapore. Whatever the reasons, we have continued to apply that law in Singapore. It is not possible picking up a book or a statute to determine with precision which law exactly applies in this country or if any particular law has been repealed. That is an example of one law that has been forced upon us, as it were. But in addition to that, we have other laws, as a result of us voluntarily receiving English law. For example, section 5 of the Civil Law Act which was referred to by the Hon. Minister. By that section, what we have done - I think that was enacted in 1878 - is that we decided, because of our inexperience in mercantile affairs, we would import the commercial laws of England to some extent. Although the intention was clear, there was difficulty in drafting the legislation. It has been a source of constant headache, both to practitioners and Judges. For now, more than a hundred years, no one really knows the true answer to the meaning of section 5 of the Civil Law Act, and of course, that has given rise to considerable litigation and, as the Minister has said, a lot of literature on the subject. A third source of laws is what is called Imperial Acts. These are Acts which were passed by the United Kingdom Parliament designed for colonies, for example, Singapore. It is not peculiar to this country that we have had these laws or this experience. We have the Dutch laws continuing to apply to some extent in Indonesia, the French in Indochina, the United States in the Philippines. What is surprising is that it has taken us so long to deal with this situation. Hong Kong had a similar situation, but it dealt with it in 1966. They passed an Ordinance which was similarly named, Application of English Law Ordinance, to do away with this uncertainty and to specify which particular Acts which were prevailing in England would apply in Hong Kong. I think this is very much similar to what we are doing here, albeit almost 30 years later. This is a step in the right direction because it introduces a great deal of certainty, which is very desirable from a commercial standpoint. As I said earlier, today, if you ask a lawyer whether a particular Act applies in Singapore, he would have difficulty answering the question because he would need to know what is the issue that requires that answer. Because of the way section 5 of the Civil Law Act is drafted, you need to determine what issue is in question, how that issue arose, and to determine whether an English Act can apply in this country for the determination of that issue. With this Bill, all those problems will hopefully be resolved. But there are some residual areas which need to be addressed. For example, we still have Acts in this country which import English laws. One example of an Act is the Criminal Procedure Code. The Criminal Procedure Code purports to define the procedure in criminal proceedings in Singapore. But in the event of a lacuna, a gap, or an area which has not been addressed by the Act, there is a section which says that to the extent that the Act does not apply or does not deal with it, the law relating to criminal procedure for the time being in force in England shall be applied. This is very unsatisfactory. It is just one example of a host of Acts where we have similar provisions. The Criminal Procedure Code is one. The Women's Charter is one where, I suspect, because we are unable to think of all the possible situations that have arisen, we have taken this precautionary measure of saying that if the Act does not address the situation, we will apply what is happening in England. But because of the policy reasons that have been elaborated upon by the Minister, I think we will have to move away from that situation. We have to address it ourselves and decide what we want and what we do not want from England, and make it part of our own law, so that everyone will know exactly at any time they want to know it what the law is which prevails in this country.

Sir, I need only to touch on the last point raised by Mr Davinder Singh. I completely agree with him. Indeed, I am discussing with the Attorney-General the need to review other legislation, not only the Criminal Procedure Code, which may have such provisions falling back on English law. I think we need to review this with the principle which I have enunciated here, that is, we must have certainty in our laws and move away from reliance on English law, because we do not know what are the conditions and circumstances which presently shape the enactment of laws in the United Kingdom. Another good example, apart from the Criminal Procedure Code, is our own Parliament (Privileges, Immunities and Powers) Act. You will find there a provision that when it comes to any doubts as to the privileges and immunities of this House, we are to refer to the United Kingdom House of Commons. I am sure there are several other such legislation. Let me assure him that a review is being done of all such legislation and, where necessary, we shall move amendments in the future to take care of that problem.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Prof. Jayakumar]. Bill considered in Committee.

Clauses 1 to 9 ordered to stand part of the Bill. First Schedule ordered to stand part of the Bill. Second Schedule -

Sir, I beg to move the amendment* standing in my name. *The amendment reads as follows: In page 15, to leave out lines 30 to 36, and insert - "(a) by deleting the word "State" in the fourth line of subsection (1) and in the third line of subsection (3) and substituting in each case the words "or Commonwealth country"; and (b) by deleting the word "States" in the marginal note and substituting the words "or Commonwealth countries".". Sir, the amendment is to widen the scope of section 43 of the Extradition Act so that the taking of evidence under that section in respect of criminal matters pending in foreign courts may be extended to a request from any foreign or Commonwealth country. Presently, section 43 only applies to a request from a foreign state with which Singapore has an Extradition Treaty. This is far too restrictive. The amendment in the Bill amending section 43 widens the scope of that section to cover a request from a declared Commonwealth country, ie, a Commonwealth country with which we have Extradition agreements. But, Sir, requests for assistance in respect of taking of such evidence have also been received from both foreign and Commonwealth countries with which we have no Extradition treaties or arrangements. The amendment which I am moving now will enable us to accede to a request for such assistance from such foreign or Commonwealth countries. This will be done usually on the basis of reciprocity. Amendment agreed to. Second Schedule, as amended, ordered to stand part of the Bill. Bill reported with an amendment, read a Third time and passed.

Order for Second Reading read. 3.30 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Insurance Act was last amended in 1986. In view of the insurance developments that have taken place since, further amendments to the Act are necessary to ensure that it remains relevant for the effective supervision of the insurance industry. The first regulatory measure, which will take effect from 31st December 1993, deals with the allocation and distribution of profit from life insurance business. A substantial proportion of life policies sold in Singapore is of the participating (or par) type, that is, the policyholders share the profit arising from the participating life business each year. Presently, the Act requires that participating policyholders get at least 80% and the insurer not more than 20% of the total amount of the profit distributed each year. However, this "80/20" rule is no longer relevant as most life insurers now allocate 90% or more of the distributable profit to policyholders. Clause 5(c), therefore, amends the "80/20" rule to the "90/10" rule which will be phased in over a period of five years commencing 1993. The amendment also clarifies that where an insurer chooses to receive less than the maximum allowable profit in a given year, the insurer cannot seek recovery of the difference in future years. Life policies may be of the non-participating (or non-par) type. Profit accrued from such non-participating life business need not be distributed to the non-par policyholders. Clause 5(a) requires insurers to keep a separate fund for their non-par business if they do not wish to share the profit from such business with policyholders. Otherwise, the "90/10" rule will apply, that is to say, profit accrued from the non-par business will be subject to the "90/10" rule in distribution to the par policyholders. The second regulatory measure introduces the concept of the "Appointed Actuary" for direct life insurers and will take effect from 1st January 1994. Traditionally, an actuary is involved in determining the premium rates, designing insurance products, valuing policy reserves and recommending profit distribution to participating policyholders. Given the greater volatility in the economic and financial environment, and a greater concern with the financial solvency of life insurers, this traditional role is increasingly viewed as limited and inadequate. In line with the United Kingdom and Canada, the concept of an "Appointed Actuary" is adopted in which the role and responsibility of the actuary is expanded. Some of the new responsibilities of the actuary relate to the investment of assets and the assessment of capital adequacy to support new business growth and the long-term financial solvency of the insurer. Clause 8 empowers the Authority to approve the appointment of an actuary and to prescribe the duties of the appointed actuary. These two new regulatory measures have been extensively discussed and agreed with the insurance industry. To minimise the possibility of abuse and problems of conflicts of interest by the insurers, clause 9 introduces restrictions on the amount of unsecured loans given by the insurer to its directors and employees. In view of the public interest involved in the bond and guarantee business and that such activities are closer to insurance, clause 2 empowers the Authority to control persons engaged primarily in such business under the Insurance Act. Persons already licensed under the Monetary Authority of Singapore Act, Banking Act, Finance Companies Act, Securities Industry Act or Futures Trading Act will however be exempted. The Authority has found it necessary from time to time to issue directives to carry out its functions under the Insurance Act. Clause 20 empowers the Authority to issue directions via notices and circulars to insurers while clause 19(b) makes provision for penalty for non-compliance with such directions issued. With the development of offshore insurance business, two other types of insurers have merged from a market structure originally consisting of direct insurers. In view of this substantial change in the market structure and to facilitate references when drafting regulations, notices and circulars, clause 3 provides for the registration of insurers by the type of insurer, namely, direct insurer, professional reinsurer or captive insurer, in addition to the existing practice of registration by class of business. The other amendments made by the Bill do not warrant any special mention in addition to what has been stated in reference to them in the Explanatory Note. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill seeks to amend the Parking Places Act to achieve two objectives. First, to allow rules to be made to regulate the parking of heavy vehicles and, second, to allow additional deterrent measures against illegally parked vehicles in car parks. In May 1992, my Ministry, together with the Ministries of Communications and Home Affairs, announced the need for a vehicle parking certificate scheme to control the growing problem of illegal and indiscriminate parking of heavy vehicles in car parks and roads in HDB and private residential estates. The illegal and indiscriminate parking of these heavy vehicles in HDB car parks and along roads in HDB and other residential areas is hazardous to motorists and pedestrians. Traffic Police's records show that in 1991, there were 14 accidents involving stationary heavy vehicles, of which one was fatal. In 1992, there were 29 such accidents, of which six were fatal. In the first seven months of 1993, there were already 23 such accidents, of which five were fatal. Many of these accidents could have been avoided if these heavy vehicles had not been parked indiscriminately along roadsides. Heavy vehicles are also a noise nuisance to the nearby residents, especially in the early morning when the engines are being warmed up. In our high density residential environment in HDB new towns, the noise generated by these heavy vehicles warming up their engines can be very disturbing to a large number of residents. Similarly, residents in private residential areas are subjected to this noise by vehicles parked overnight along narrow streets fronting their homes. HDB and URA have provided neighbourhood and centralised lorry parks for the parking of heavy vehicles. However, many of these lorry parks are grossly under-utilised as drivers do not want the inconvenience of travelling to centralised lorry parks to pick up their vehicles. Just like others who commute to work, for example, SBS or TIBS drivers, there is no reason why the drivers of these heavy vehicles should not also commute to work. The Traffic Police has been taking enforcement actions against illegal parking. However, experience has shown that enforcement actions alone have not been very effective in solving this problem. Besides being labour intensive, enforcement actions are ineffective against indiscriminate parking of heavy vehicles along those roads which allow parking, particularly along roads in residential estates. In fact, more drivers will be tempted to park their heavy vehicles along such roads to avoid Traffic Police's enforcement action, thus aggravating problems faced by residents living in these residential estates. To address the problem, my Ministry, together with the Ministry of Communications and the Ministry of Home Affairs, will implement a scheme to require all heavy vehicles to be parked overnight at designated proper parking lots. Under the vehicle parking certificate scheme, all heavy vehicles will be required to have a proper overnight parking place. The availability of a proper overnight parking lot will be a condition for the registration and the renewal of road tax for heavy vehicles. This will ensure that all heavy vehicle owners provide for proper parking lots to park their vehicles overnight. Heavy vehicles will be required to park overnight at these designated parking lots. This is similar to the arrangement currently adopted by SBS and TIBS to provide bus depots for proper overnight parking of their buses. Following the announcement of the scheme last year, the Public Works Department (PWD) has held a number of dialogue sessions with the lorry and bus owners' associations and several transport companies to gather their comments to refine the implementation aspects of this scheme. PWD will begin licensing private heavy vehicle parking lots from January 1994. Operators of parking places will be issued with Vehicle Parking Certificates commensurate with the number of heavy vehicle parking lots in their parking places. From 1st July 1994, all owners of heavy vehicles will be required to have a valid Vehicle Parking Certificate before they can register a heavy vehicle, or renew the road tax of an existing vehicle with the Registry of Vehicles. The Vehicle Parking Certificate will serve as documentary proof that their vehicles have an authorised parking lot. With effect from 1st July 1995, it will then be an offence for any heavy vehicle to be parked unattended, between midnight and 6.00 am in the morning, at any location other than at a designated parking lot. There will be sufficient supply of heavy vehicle parking lots to meet the anticipated demand. Currently, there are about 22,000 heavy vehicle parking lots managed by HDB and URA and the private sector. Additional lots will be created by allowing car park lots in industrial areas to double up as overnight parking lots for heavy vehicles. Owners of industrial developments will also be allowed to make use of space within their premises to park heavy vehicles, for optimal use of their land. PWD will provide kerbside parking along selected roads where parking of heavy vehicles does not pose a danger to other road users. URA has also identified land for the development of lorry parks by private parking operators. Let me now turn to the second objective of the amendment. The Bill will also enhance the powers of the car park Superintendent to deal with recalcitrant motorists who repeatedly flout car parking regulations and ignore parking notices. This is to empower the car park Superintendent to fix immobilisation devices, or wheel clamps, on vehicles parked illegally in the parking places. This measure is quite commonly adopted in many other countries. For the interests of the public, it is necessary therefore to introduce the Parking Places (Amendment) Bill. Sir, I beg to move. Question proposed.

I would like to speak on the proposed section 15(1)(ii) which gives a discretion to the Superintendent to physically immobilise an offending vehicle by placing a clamp. If the rationale of the clause is to prevent the vehicle from being parked there and causing obstruction, then the actual physical clamping of the vehicle runs contrary to the rationale. A better and more civilised solution, and that will achieve the same deterrent effect, is not to do any physical clamping but to affix a traffic ticket with the bold endorsement "Vehicle deemed to be clamped". This can then be regarded as an aggravated offence of parking in respect of which no composition should be offered. This will mean that the offender will have to face the inconvenience and expense of going to court and very possibly suffer a higher fine. By doing this, a few objectives will be achieved, Sir. One, we save the time and labour of the police officer or the Superintendent, in physically clamping and unclamping the car with the attendant saving of financial expenditure of buying clamps. Two, there will not be the inevitable and needless prolongation of the time during which the clamped vehicle is parked illegally with possible obstruction to the flow of traffic. The driver of the offending vehicle may decide not to have his vehicle unclamped expeditiously. He may decide to shrug his shoulders, cool off, have a meal first and then go and have his vehicle unclamped. By not using physical clamps but notional ones, the traffic personnel can police more effectively by using his or her time and energy more productively.

Mr Speaker, Sir, we already practise notional clamps today by placing notices on the vehicles. But many times, these owners do not respond and they just throw away the notices. So the only thing that can work is not notional clamps but physical clamps. Let me assure the House that this additional measure of wheel clamps will be used only selectively on drivers who repeatedly flout the law. For offenders who are caught for the first time, the usual practice of putting a notice on the windscreen will suffice. If the vehicle is parked in a place which physically obstructs the smooth flow of traffic, we have the powers today to tow away the vehicle. So the additional power of a wheel clamp is only aimed, first, as a deterrent and, second, against those who repeatedly flout the notices. So the Traffic Police, HDB and the URA have a list of people who have thrown away such notices for 10 to 20 times. The next time when they commit such an offence, their vehicles will be clamped.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Lim Hng Kiang]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Bill seeks to amend the Road Traffic Act for two main purposes. First, it is to enable the Ministry of National Development (MND) to implement a scheme to require heavy vehicles to have a proper overnight parking place. Second, it is to enable the Registry of Vehicles (ROV) to streamline and, in some cases, to inject flexibility into its procedures on the implementation of the vehicle quota system, the deregistration of vehicles and the collection of road tax. Let me explain the provisions in the Bill. Overnight Parking of Heavy Vehicles The Minister of State for National Development has earlier explained the need to implement the vehicle parking certificate scheme when he spoke on the Second Reading of the Parking Places (Amendment) Bill. Under this scheme, owners of heavy vehicles will be required to show proof of a proper overnight parking lot for the vehicle before they will be allowed to register or transfer the ownership of the vehicle or to renew its road tax. Clauses 2, 4, 6 and 10 of the Road Traffic (Amendment No. 2) Bill are to provide for this requirement and will enable ROV to assist the Ministry of National Development in implementing the scheme. Certificate of Entitlement Under the present law, a vehicle will be deregistered once its Certificate of Entitlement (COE) has expired and is not renewed. However, in practice, ROV gives vehicle owners a grace period of up to 14 days to renew the expired COE. This is an administrative arrangement. Clause 3(a) of the Bill which provides for the late renewal of COE is to regularise this administrative arrangement. However, we also want to discourage motorists from renewing their COEs late. Therefore, clause 3(b) is to allow for the imposition of penalties for late renewals. Deregistration of Vehicles Vehicles, once deregistered by ROV, should either be scrapped or exported and are not to be used on our roads. These vehicles could be deregistered either on safety grounds or because the owners have no more use for them. In some instances, COE and PARF rebates or road tax refunds would have been granted to the owners. Currently, ROV does not require proof of the disposal of deregistered vehicles. As such, there is no certainty that these vehicles have been taken off our roads permanently. Between May 1992 and August 1993, 289 deregistered vehicles were found by ROV during its regular enforcement operation. These vehicles have been impounded. Clause 9 of the Bill is to require owners of deregistered vehicles to produce proof that the vehicles had been disposed of either through export or scrap within one month of deregistration of the vehicles. Refunds of Road Tax Prior to 1st May 1992, the period for which road tax of a newly-registered vehicle was payable would be computed from the first day of the month in which the vehicle was registered. With effect from 1st May 1992, the road tax for new registrations has been computed on a daily basis instead. As a follow-up to this, clauses 5, 7 and 8 are to allow refunds on road tax to be computed on a daily basis as well. Prosecution of Offences Currently, the Road Traffic Act only provides for the managing director or the manager of a company to answer for offences committed by the company. However, not all companies list the managing director or manager in the Registry of Companies and Business Names. Clause 11 of the Bill therefore provides for the inclusion of the director, or agent of a company, as persons liable to be punished for offences committed by the company. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Mah Bow Tan]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I name the first sitting after 1st November 1993 for the Second Reading of the Bill.

So be it.

Mr Speaker, Sir, I beg to move, *That this House endorses the conclusions of the Cost Review Committee contained in Paper Misc. 5 of 1993 and calls on the Government to accept the Committee's recommendations to contain rises in the cost of living. *The motion also stood in the name of Mr Peh Chin Hua (Member for Jalan Besar GRC). Mr Speaker, Sir, for a long time since independence, Government's statistics and published numbers and, least of all, the Consumer Price Index (CPI), have never been questioned by the public. Unfortunately, as the Cost Review Committee (CRC) has pointed out, a confluence of factors resulted in questions being raised about the accuracy of the CPI. This comes on the heels of a change in the country's leadership, and doubts cast about the veracity of Government in a key economic indicator, such as the CPI, and this cannot go unchallenged with a detailed study. The study has been completed and the accuracy and relevance of the CPI has been established. I compliment Mr Lim Boon Heng's Committee for its work. However, the value of the time and effort spent cannot be easily measured when this is viewed as another step forward in the bond building process ---

Point of order, Mr Speaker.

Yes.

Resolved, That the proceedings on the item of business under discussion be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Debate resumed.

Mr Speaker, Sir, as I was saying, the value of the time and effort spent cannot be easily measured when this is viewed as another step forward in the process of bond building between the Prime Minister's Government and the people. Hence, the Report has to be fully discussed and debated and I hope that all my colleagues in this Chamber will give a resounding vote in favour of this motion. Sir, much has been written and presented in the media on the findings of the CRC, but I understand that this debate is rather one sided. There is little or no public response. Does the public at large agree with the findings? Do they have an intuitive feel that the findings on changing life-style mirror their own lives? Will this Report put an end to this issue at the next General Election? I can only answer with some certainty to the last question and quite clearly the answer is no. The question of cost of living as measured by the CPI is a political hot potato. It is easily exploited by the Opposition and I think no government is immune. Although this is multi-dimensional in character, it is a single dimensional issue as far as some people are concerned. When a person is affected by hospitalisation or COE or housing, he does not seek to understand rational arguments. I am therefore concerned by the comments of one Mr Koh Su Haw, who was quoted in the Sunday Times on 3rd October 1993. He said: 'They came to the conclusion (meaning the CRC Report) that the CPI was accurate and that the problem was with people's perception. This was the same conclusion they started out with. It seems funny that they took a year and there is nothing new to report. The report seems to have been a political exercise rather than one in economics.' Mr Koh is a research analyst. Most probably, a graduate. Highly probable that he is earning a substantial four-figure salary. He is only in his early twenties. He is what most Singaporeans will consider to be a very successful individual. Yet, his comments, if shared by many of his peers, are indeed a cause for concern. Does this mean that some of our better educated are not able to discern between reality and perception? Worse, if this generation who is the biggest beneficiary of our economic success feels that they are worse off as a result of, say, COE. If this is part of the bond building process, I think Singapore has some way to go. Whatever people may say about the Government, I think this Government cannot be accused of fudging national statistics or whatever national statistics published. Therefore, this is a very fundamental principle and the Government has no choice but to continue to rebut any such disbeliever. On this, I must also compliment the press. All the articles which I have read so far suggest that our journalists are in fact level-headed, pragmatic and have a deep understanding of the issues involved. Reviewing the Cost Review Committee's Report, it is apparent that postponing certain unavoidable cost increases during the mid-1980 recession years fuelled public perception of sharply rising costs. Perhaps if such increases had been spread out more evenly and in smaller dosages and at more regular intervals, the perception of rising costs would have been different. In this regard, I must say that had the one cent coin been more popular, cost increases should not have been rounded up in many cases like bus fares. The one cent coin today is very fashionable in the United States, a trillion dollar economy. With the implementation of the GST next year, I think we must bring in the use of one cent coins. After all, today, the Public Utilities Board and Telecoms charge to one cent. Besides verifying the accuracy of the CPI, the next most important significant finding in the Report is that prices have, contrary to public perception, not outpaced real wage increases. In other words, our incomes are not eroded by price rises. The Committee's one-year study shows that prices of basic items have not gone up markedly. In fact, there has been negative inflation in some instances because of our strong Singapore dollar. Prices of most imported goods, ranging from essential foodstuffs to luxury items such as video cassette recorders and televisions have, in fact, gone down. I think even prices of oranges for our Lunar New Year from China this year had also dropped compared to last year. For many people, travelling abroad is certainly much cheaper today. Let me now move on to an important area covered in the CRC Report and that relates to land and labour constraints. The key areas identified for study by the CRC, which are education, health care, transportation, housing and business, are all affected by two key constraints in Singapore. Whether we like it or not, there are two realities we must accept in Singapore - labour and land shortage. These two factors will continue to have a significant bearing on the cost of services such as education and health care, and possessions such as landed property and motor vehicles. As long as our economy continues to grow at current levels, there will be a labour shortage. Hence, anything that is labour related or labour intensive will continue to cost more as wages go up. As salaries and wages improve, cost must go up and this is more marked and more so in service industries. Singaporeans cannot expect the good life and not pay our nurses and teachers high salaries. I think the question is how much should Government subsidise these essential services. I will deal with this question of Government subsidies in the later part of my speech.

4.08 pm For entrepreneurs, the cost of doing business in Singapore has admittedly gone up and will continue to do so, especially for those who require relatively cheap labour, because labour will never be cheap in Singapore relative to what one can get in neighbouring countries. It is inevitable that low value added industries must and should continue to relocate elsewhere. The other reality - and the most agonizing because there is no way out - is our island's limited space and scarce land resources. This fact will continue to make ownership of private property and cars premium possessions that are out of reach of many Singaporeans. I move now to what has been highlighted in the Report on changing life-style and I like to call it improving life-style. Materially, there is no question that Singaporeans are better off today than 10 or 20 years ago. Less than half a generation ago, many of our parents actually worked as domestic maids and washer women. But today, we employ no less than 60,000 foreigners for such services, and the numbers continue to grow. According to the Singapore Tourist Promotion Board, in 1971, nearly 80,000 people travelled by air and sea. This rose to 330,000 in 1981. In 1991, 1.6 million trips were made by Singaporeans. These figures do not include travel to and from Malaysia. In other words, our population of some 3 million Singaporeans made 1.6 million trips abroad in 1991. There are other statistics worth mentioning here which will illustrate the whole range of Singaporeans who have benefited. Despite the punitive and prohibitive taxes and other fiscal disincentives against car ownership, there was one car to every 10 Singaporeans last year. In 1983, it was 1 to 15 and this is despite the fact that our population has grown in 10 years. Today, 94% of Singaporeans in the bottom 20% income group own a refrigerator. 90% of them own a television set and some maybe with more than one television set. Another interesting indicator is Singapore's consumption of electricity. This has more than doubled in 10 years. In 1983, each person consumed 493 kilowatt hours. In 1992, this went up to 1,024 kilowatt hours, because most households can afford and have household electrical appliances and many actually have airconditioning. There are 265 telephones to 1,000 Singaporeans today. Ten years ago, it was only 194. In 1981, 39% of our population had life insurance and this rose to 59% in 1992. Eating out is a very common family affair. This is pointed out in the CRC's Report. Although not measured, more are eating out at more expensive places - for the comfort, ambience and usually as a result of our children's desire to visit modern fast food restaurants. Mr Speaker, Sir, what all this means is that Singaporeans with rising affluence have developed more expensive tastes and have acquired a life-style with more material assets and these cost more to maintain. There is this constant competition on the hard earned dollar. This competition on the dollar which we earn results from succumbing to media advertising, the whims of our children, keeping up with our neighbours and, of course, payment for essential services. In economics, this is known as a ratchet effect and demonstration effect. The ratchet is a mechanical device that turns only one way and not the other. Simply put, this means the adjusting of a life-style upward with increasing income and always the difficulty or impossibility of a downward adjustment. Is this upward adjustment of our life-style something that we need to worry about? I think the answer is both yes and no. The answer is no, as I believe it is the Government's role to promote and help our people to achieve a good life with a high standard of living. We have said so many times. The answer is yes, there is something to worry about if the public does not see the linkage between a strong competitive economy which makes a good life possible, and that there is always a price that must be paid. It is not possible to earn good salaries here and pay low prices like those in China and own a house like one in Australia, all at the same time and place. Perhaps if we adjust our mind-set, this may be possible. I must stress that this does not necessarily mean that we need to lower our expectations of the good life. It is more a change of perception of what constitutes the good life, how to achieve it and what possessions are realistically within reach, given our constraints and the environment. For instance, if you are living in a land-locked country with the sea many hundreds of miles away, and lazing by the beach every week is your idea of a good life, I think you will have to change your recreation or else you have to pay a lot of money every week just to travel to the beach. This is the same scenario as indulging in car ownership in the land scarce island of Singapore. Singaporeans should therefore reconsider their options. They should redirect their energies and aspirations, and make the necessary adjustments to get good value for their dollar without necessarily giving up the good life. Singaporeans should aspire to be international citizens. Affluence has broken down so many barriers for Singaporeans. We can earn our dollar here and spend it abroad, especially on things that cost less to produce overseas. We may be limited by scarce land in Singapore, but we are not limited by boundaries or our financial resources to purchase from abroad what is not available here or to obtain from abroad what we cannot get in Singapore. I think some Singaporeans are already doing that, eg, Singapore corporations developing golf courses in nearby countries and Singaporeans joining golf clubs in Johor and Batam. Instead of buying weekend cars, why not think of owning weekend homes that cost a fraction abroad and spend our holidays there, just like people in the developed countries with their summer homes? Many of my friends I know in Europe, who can afford it, work and live in cramped homes in the city, but they take regular trips out to the countryside where they have their summer or country homes. I think Singaporeans should treat the world as our summer home. There is much talk about exhorting our people to lower their expectations. I am afraid this is counter productive. High expectations is what motivates our people. It is the driving force behind what we have achieved today. I think a better solution is to help the public to define what is considered a good life. Right now, upgrading is the buzz word. Everybody wants to upgrade. It is almost impossible to switch gears. We can, however, in tandem, focus on widening our vistas of what is the good life. This is not unusual. The Japanese did it some three to four years ago. In the face of a US onslaught on trade protectionism, the Japanese government exhorted the people to buy foreign-made goods and work shorter hours - have longer leisure hours and enjoy yourselves. And they are doing it after four decades of sheer hard work. I think our Government has a similar role here. The vistas to a good life means travel, the appreciation of the arts, country clubs in Johor and Batam, a weekend condominium in Johor or a house in Australia or China. In other words, continue to aim high, but widen our space. I think this is very important as the problem will get more acute. With current rates of economic growth at 6-8% and growth in real incomes, in 10 years, we shall double our national income. Each time a country doubles its national income, the national psyche undergoes a transformation, it seems. We expect improved efficiency, take beautiful and clean surroundings for granted, demand to see better facilities in housing estates, better lifts, more covered walkways, buses and telephones that work, higher demand on services and lots more. In short, even higher expectations. Witness the Orchard Road Mall. Ten years ago, this would have been unthinkable. We actually spend millions of dollars to pave up a public thoroughfare with good quality ceramic floor tiles. Many developing countries today are still not able to provide adequate housing for their people, and here we actually spend money and worry about the beauty of our public roads and thoroughfares. What all this means is that the Government must start the planning process now. Just like the community clubs are different from the community centres, the community clubs of tomorrow must be no less than today's country clubs - with swimming pools and dining facilities - everything except the golf course. We need more than just cosmetic changes. Besides the local environment, the Government can do something else here. One of them is, as I said earlier, to widen our space. The Government should facilitate the building of the second causeway and the extension of the MRT line to Johor. In the long run, as long as Johor, and Malaysia continues to grow at current levels, Johor will be an excellent gateway for Singaporeans and owning a weekend home next to a golf course will be a good solution to rising aspirations. Therefore, I urge the Government to work closely with the Malaysian Government and speed up these two development projects. I move now to the issue of subsidies. Whether it is health care, education, housing or transport, the whole issue of prices rests on one word and that is subsidy. At the heart of the Report is the question of Government subsidies which I thought the Cost Review Committee should have more fully addressed. Whether it is health care, education, transportation, housing or business cost, the extent of the price chargeable to the consumer all relate to what is the role of Government and the extent of the cost to be passed on to the people. There are many questions which we can raise on Government subsidies. What is the role of Government and to what level do we subsidise the cost of education, health care, housing and public transportation? Are subsidies on education similar to that on health and housing? Have we reached a level of development in home ownership that subsidies should be scaled down and, if so, in what areas? Should an HDB upgrader be entitled to a similar level of subsidy as a first-time house owner? How do we ensure that in health care, the subsidies are going to those who need it most? These and many such questions deserve a coherent and comprehensive reply from the Government. I urge the Prime Minister to address these issues in a comprehensive manner. Government must stick to certain principles in using the market mechanism and application of subsidies. On the one hand, the Government is known to champion free market principles so strongly that the public perception is that the word "subsidy" is not in the Government's vocabulary. Yet there is a high degree of subsidy in housing, health care and education. Even when there are subsidies, the principle is not uniformly applied. On the one hand, the Government invests in our national defence and agrees to shoulder this 100% from taxes. Yet, when it comes to investment in education, the Government does not even pay fully for school extensions. Hence, there are indeed subsidies, and the issue before us is how are the subsidies being applied. To ensure that our reserves are not misallocated resulting in demand distortion, the free market is indeed the best approach. At the same time, the political and social realities are that certain segments of our population will be adversely affected and this has to be looked into. Therefore, instead of an across-the-board approach, targeting subsidies at those who are in need will prevent us from falling into the abyss which the developed countries are now facing. The mistake - and even tragedy - of heavy Government subsidies is apparent in many developed countries today. Heavy subsidies must lead to misallocation of precious resources. It is inevitable that with high subsidies, abuse sets in. Everyone wants a right to subsidised services, but nobody wants to pay taxes for it. But someone has to pay. Eventually, the entire country pays for it. Countries such as Germany, United Kingdom, United States, Sweden, Australia and New Zealand are well known examples which have highly subsidised welfare and health services and now suffer from serious structural problems, and other problems of abuse which their governments are not able to remedy. All these countries are in recession and the problems are structural - high public expenditure and subsidies in non-productive areas leading to high Government deficits, high interest rates and huge unemployment. Let me quote an example. Britain's National Health Service (NHS) used to be held up as a model for other countries. Now, the NHS system is creaking and running out of cash. One of the anomalies of the system is a confusion of priorities - first come, first served. For example, if your grandmother dislocates her hip bone, she may have to wait up to six months before she can get a hospital bed and get her ailment fixed. At the same time, NHS pays for non-essential cosmetic surgery for aspiring models who want a nose job as long as they are earlier in the queue. Excessive subsidies and welfare spending result in ballooning government deficits which can only be met by borrowing or by increased taxes. In the US, government subsidy for health has increased from 20% some years ago to 56% today on an individual's health bill. In Sweden, the ratio of total tax revenue to GDP is 52%. Sweden is a very well known example. For the average worker, it means that he hands over half his pay packet to the Government in the form of taxes. This kills his incentive to work. The alternative to taxes is government borrowing, which means the government will be mortgaging the future of our children and the country. By 1990, New Zealand had acquired a national debt of NZ$62 billion. New Zealand's population is not much bigger than ours. Cost of servicing this NZ$62 billion debt is more than what is spent on health services or education. What every citizen must realise is that the Government has no money of its own. Every cent that the Government spends comes from the people, directly or indirectly. When the Government imposes heavy taxes on businesses and workers to finance its welfare and other subsidies, a vicious cycle results. These welfare programmes and other subsidies also breed layers of bureaucracy. In some countries, four out of every 10 workers are employed by the government. If a businessman who employs a worker at a minimum salary of $1,000 per month has to pay another $1,000 in social security levies, payroll taxes and other benefits, he becomes uncompetitive. As a result, many industries in Europe find that their products are becoming increasingly uncompetitive in the world market. At the same time, a business under such conditions is loath to employ more people. Hence, young people who want to work are unable to find employment due to the employers' reluctance to employ, and they end up to live on unemployment benefits. Those who are working find themselves forking out up to half their pay cheques to the Government in taxes. They may find that with disability allowance, child support, housing and other allowances, they are better off not working. So they decide to go on welfare. This is a very common occurrence in the developed countries. An interesting example is Spain. For every person working, there is today one on welfare. The result for the nation is mounting budget deficits and rising unemployment. It is not surprising. In the OECD countries today, there are some 35 million people unemployed. The unemployment rate in the EEC countries is crossing 12%. Despite the serious recession, the governments are not able to cut back on highly subsidised health and welfare services. In some cases, the government is bankrupt and it is still not able to do that. I think no Government dares to take the risk of removing or curtailing subsidies for fear of being booted out of office. So subsidies remain, and the country grows weaker. Sir, with this backdrop, it will be a very careless and irresponsible government to increase subsidies, especially on public services as cost increased. We need subsidies, but where and which are the productive areas that we need to subsidise? In my view, only education should continue to qualify for special treatment. Education is an investment in our people and our future. The current rate should be retained as only the products of such subsidised education can contribute to our continued economic growth. Overall, education cost has gone up but is still affordable despite sharp fees at some independent schools. Perhaps, generally, some parents are feeling the financial pinch from the constant demands to participate in fund raising efforts initiated by the schools. This is one area our Government should review. If education is indeed an investment, then the Government must provide all the funding needed for developing the infrastructure. School extensions, air conditioning libraries, providing audio-visual facilities, and other so-called frills, should be fully borne by the Government. Besides diverting the energies and attention of teachers and principals away from their primary role, fund raising has the adverse effect of causing a financial burden on most parents as this adds to the perceived problem of cost of living. We know that fund raising may be voluntary, but this is never so, as I think no parent wants to see his son or daughter return to school empty-handed or being looked down as a result of a small contribution. A recent issue of the Economist magazine reported that one reason for the success of East Asian countries such as Malaysia, Indonesia, Thailand and Singapore is their investment in basic education for their people. Generally, these countries spend more than 60% of their education outlay on primary and secondary education. By contrast, they pointed out that Latin American countries usually spend less than half that amount on basic education. This is one of the factors for the unprecedented growth of these Asian economies in the last 25 years, averaging no less than 6.5%. Still, it is in Singapore's own interest to see that our students who are capable of developing further, up to tertiary level, should be given every opportunity to do so. It has been pointed out that the percentage of our workforce with tertiary education is way behind other NIEs like Taiwan and South Korea. We need to produce more graduates for the new technologies which the economies are now moving to. In a healthy and growing economy, the greater the multiplier effect the greater the value added to the economy. At the same time, we are also closing the subsidy gap and there seems to be strong social arguments for doing this. We need more tertiary graduates, but we want them to pay more for their education. There is a dichotomy here. I suggest we peg the subsidy level at current levels and do some re-thinking on this issue. We have to balance out between the necessity to invest on producing more tertiary graduates and, at the same time, ensuring that they return more to society as a result of their expensive education and high earnings potential. In Australia, there is a special tax on graduates for a certain number of years. In other words, we tax our graduates upfront. The Australian way is to tax them when they start work. Perhaps, the re-thinking will focus on a combination of both. Sir, let me move now to the question of subsidy on public housing. I applaud the Government's decision to continue building 3- and 4-room budget flats. At present, 91% of Singaporeans own their homes. Half of all those who applied for new flats in 1992 were upgrading to bigger flats. The corresponding figure in 1987 was one-third and only 4% in 1977. Still, it is necessary to ensure that everyone, and in particular, those in the lower income group can enjoy affordable basic housing. I have spoken out on a number of occasions in this Chamber on the need to review our subsidy policy on housing, particularly subsidies on the larger room flats. As a small step, and which is in line with what I have spoken on in the past, I welcome the recommendations calling for a review of housing subsidies for executive apartments to be phased out. With the high subsidies on larger room flats, there is only one way to make money, and that one way is to make sure that one applies for the largest flat possible and in the most desirable area. Recently, I come to understand that an executive flat owner in my constituency sold his flat for $400,000. This is nothing new. The only thing is that this is a new flat. And before he even moves in, he has already profited more than $200,000, and all through the generosity of the HDB and our new three-child family scheme. In other words, the five-year bar on ownership is removed when he has got his third child. That is what I understand. I am happy for that family. Unfortunately --- Some hon. Members: No.

I spoke to Mr Lim Hng Kiang today. I am happy for that family. But news of people making money on large flats is quite unsettling for those who feel that they may have been left out if they remain in their present flat. So they have to make sure that they upgrade. Now, with 91% of our people owning their own homes, the objective of a house ownership society has been met. It is time now to look at the principle and all the issues relating to subsidy in public housing. On health care, Sir, I understand that a White Paper on affordable health care will be presented soon, and I propose to leave this issue for a fuller debate. I am sure that paper will generate a great deal of interest as the question of health subsidies must be the key issue. Sir, finally, let me move down to the question of public transportation and the COE. Although the majority of the people are agreeable that the vehicle population must be controlled, they are not happy about the resulting high COE prices. Unfortunately, high economic growth and continued improvement in real incomes in the range of 6% to 8% will completely outmatch the 2% to 3% increase in car population. The result is that COE prices have gone up, and they will contine to go up. And the result is public alarm and frustration and this is aggravated by the result of monthly tenders. The monthly results on COE prices keep this issue in constant focus. The public is convinced of other less painful solutions and that the Government is not doing it because the Government is out to raise money. I say, let the Government return this money to the people via direct means through the tax system or the CPF. Although we have never matched a revenue source with its expenditure and disbursement, the yearly declaration of what I call a COE dividend will go a long way towards mitigating this political problem. This move will illustrate that the COE is not a fund raising exercise. At the same time, it rewards all users of public transport system. Somehow, we have to find an innovative Singaporean solution to this political problem which, like it or not, is very pervasive and unhelpful. Question proposed.

Mr Deputy Speaker, can I get a clarification from Mr Chng? He says that immediately upon purchasing an HDB flat, he could make $200,000. From my understanding, a purchaser of HDB flat cannot resell it until after five years.

Mr Chng, do you want to clarify?

Mr Deputy Speaker, Sir, I said "I come to understand". I will check my facts and I will answer it tomorrow.

( In Mandarin): Mr Deputy Speaker, I second the motion in the name of Mr Chng Hee Kok, Member for Tampines GRC, to endorse the conclusions of the Cost Review Committee Report and to call upon the Government to accept the recommendations. The rise in the cost of living, business cost and inflation has caused much public concern and it was also one of the main issues in the 1991 General Election. A thorough debate on the Report is therefore a good public education exercise to enable the people to further understand the contents and suggestions in the Report. Mr Deputy Speaker, Sir, I believe that the Report of the Committee, led by the Minister in the Prime Minister's Office, Mr Lim Boon Heng, is a thorough and comprehensive document. The rising cost of living and inflation rate have been carefully analysed and many practical recommendations have been made. These will assist in the future development of the country. It is a very valuable document. Another conclusion of the Cost Review Committee is that having examined in detail the accuracy of the CPI, the CRC found that the method of calculation is sound. The Committee is satisfied that the CPI is calculated in accordance with international convention and that there are no significant inaccuracies in the CPI. In other words, the average rate of inflation was only 2.4% from 1980 to 1992, which is the lowest in the world. This conclusion dispels the doubt of some people and also helps to strengthen the people's confidence in the Government and to have more faith in the future policies of the Government. It also nails the inaccuracy of the Opposition. Mr Deputy Speaker, Sir, the CRC mentioned that in discussing the problem of rising cost, it is advisable to separate lifestyle and price changes. Many people feel that the cost of living in Singapore has risen much higher than what official statistics show. This may be due to the improving standard of living. Better household income has led Singaporeans to continue expecting higher quality goods and services. This shows that our standard of living has very much improved. Although the expenditure of Singaporeans is higher, their income has also been increasing all the time and so has their standard of living. Therefore, it is better to strike a balance between our lifestyle and the changes in prices. I think it is better than to advocate slackening our pace in the standard of living in exchange for the early days of cheap prices. I believe that most Singaporeans will not want to turn the clock back to such a situation. On education, I agree with the Committee's recommendation that the Government should maintain its subsidy rate for university fees at the current 79% on recurrent expenditure instead of reducing it to 75%. The universities should also control cost. According to feedback given to me by many university students, there is no tight control in the universities' budget. The high recurrent expenditure has resulted in a rise in operational cost. I suggest, therefore, that the Ministry of Education and the Ministry of Finance jointly set up a committee to oversee the recurrent expenditure of the universities. This may include examining whether there is an over-supply of teaching staff or excessive acquisition of equipment or purchase of big equipment for minor projects, under-usage of facilities or wastage of energy. I would, therefore, believe that the setting up of a committee will control operational cost whereby the parents and students would not be troubled with the continuous rise in university fees. The school fees in independent schools should also be controlled. As long as the Government does not reduce the educational subsidy and there is proper control in educational cost, it will set the minds of parents and students at ease when there is a necessity to raise the school fees. On health care, the Committee recommended that there be at least one Government hospital to preserve the patients' option for treatment. At the same time, hospitals should improve their public relations exercises so that the public can be better informed about the availability of financial assistance. Financial counselling of patients should also be handled with sensitivity. According to my knowledge and understanding, in the early 60s and 70s, Singaporeans would only stay in hospital when they have no other choice. However, after treatment, they were grateful to the PAP Government for the medical assistance and medical care. But in the 80s and 90s, most Singaporeans would cast doubts about the medical assistance rendered by the Government when they are discharged from the better equipped Government hospital. They will be billed and they have doubts about the Government service. Mr Deputy Speaker, Sir, I agree with the CRC's recommendation to retain at least one Government hospital to allow patients a wider choice. At the same time, the Government should make available more affordable class C and B2 wards, so that people will have the same attitude of appreciation to the PAP Government as was the case in the early 60s and 70s. As long as medical subsidy is not misused, it is worth considering. After all, the conception by Asians and Westerners is different. To the Asians, it is considered inauspicious to be admitted to hospital. So, it is unlikely that Asian people like us would abuse the medical services. Therefore, I would appeal to the Government to consider giving more subsidy to the health care for our people. I agree with the Committee's recommendation that the Government should focus its building efforts and subsidies on providing affordable housing for the lower and middle income groups. The Housing and Development Board should consider building more 3-room flats for sale to the public at posted prices. Mr Deputy Speaker, Sir, the new generation of Singaporeans is brought up in a prosperous and politically stable environment. Under the stop-at-two family planning policy, our children have their own rooms to stay in and our people receive better education and better income. Naturally, they will opt for bigger and better flats and live a more comfortable life. According to the statistics from HDB, in 1992, 50% of engaged couples were opting for 5-room or Executive flats when buying their first homes. But the prices for 5-room and Executive flats are not affordable to them and so they blame the Government for the rising costs. Therefore, I would suggest that, besides building more 3-room flats for sale at posted prices, the Government should also consider changing the design of the 3-room flats. It should consider expanding upwards by re-designing the 3-room flat from the usable floor area of 60 square metres to a compact apartment with an attic with a total floor area of 100 square metres. The new-design flats with prices to be capped at an affordable range of the current 3-room flats will satisfy the needs of the new generation. This is also beneficial to Singapore which is scarce in land. Mr Deputy Speaker, Sir, the details of my suggestion of the compact apartment are as follows: Using the present usable floor area of a 3-room flat of 60 square metres, we build upwards, that is, by expanding the present 2.7-metre ceiling height to 4.4 metres. The building cost will not be very much higher and the selling price will not be badly affected. Secondly, let the buyers apply to HDB to erect their own attic in the living room, to set up a study room in the master bedroom, or an attic in the bedroom to serve as a servant's room. All these modifications would give the occupiers more living space. Attic space in the kitchen and toilet could also be set up for storage purposes. I think it will be more convenient and more acceptable to the new generation of Singaporeans. Engaged couples whose total incomes do not exceed $3,500 shall be eligible to apply for this type of flat. This will not only satisfy the lower and middle income groups but will also enable `A' level holders and graduates to satisfy their need for accommodation. This may be small but you have a lot of usage space and they do not have to look to 5-room or Executive flats which are beyond their means. The Government subsidy should remain at 30% or above and the downpayment for this type of compact apartment should be 5% instead of 20% for other types of flats. This will facilitate engaged couples who have just started their working life and the lower and middle income groups to apply for the flats. Compact apartment should be restricted to only new applicants for HDB flats because they contain a high subsidy from the Government. This will prevent misuse of Government subsidy. Mr Deputy Speaker, Sir, this type of compact apartment can be a little cosy home for the young and a haven for the senior citizens. This will be generally welcomed and I hope that the Government can consider this proposal. In short, as the Prime Minister, Mr Goh Chok Tong, has said, because the CRC has dealt with the matter openly and convincingly, their conclusions will dispel the misimpression of rapidly rising costs in Singapore and will reassure the people that the costs of living are well under control in Singapore. I believe that any farsighted Government will provide subsidy on education, health care and housing but will also prevent the misuse of such subsidies. In this competitive society, young Singaporeans should adopt the same attitude as the older generation in facing challenges. They should place the welfare of society before self. Singapore could only enter into a new era if we are more realistic. We should not emotionalise the question of our cost of living. Mr Deputy Speaker, Sir, I support the motion in the name of the Member for Tampines GRC.

( In Mandarin): From what Mr Peh has said, there appears to be a wastage in the purchase of equipment and staffing position in the university. I think this is a very serious allegation. Can the Member give us more details and information?

(In Mandarin): According to my understanding, I think there is such a situation but how serious it is, I really do not know. That is why I am suggesting that there should be a committee to look into the issue.

Resolved, "That this Debate be now adjourned." - [Mr Wong Kan Seng].

Resumption of debate, what day, Mr Chng?

Tomorrow, Sir.

So be it.

Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng]. Adjourned accordingly at Ten Minutes to Five o'clock pm.

asked the Prime Minister if he will supply the percentage of votes cast in each electoral constituency for each of the candidates for the Presidential Election.

Voting for the President is by the whole country, not by electoral divisions. The result is dependent on votes cast for each candidate in all divisions. The percentage of votes cast in each electoral division for each of the candidates is not relevant.

asked the Minister for National Development when will the Housing and Development Board embark on its programme of building 2-room flats on the lower floors and bigger flats on the upper floors to allow aged parents and their married children to lead separate lives while maintaining close ties.

In 1991, a pilot scheme was implemented in Pasir Ris to build 2-room studio apartments on the ground floor of a block with 4-room and 5-room flats on the upper floors. This was to enable aged parents and their children to stay in close proximity to each other, and at the same time retain a degree of privacy. Under the pilot scheme, 21 2-room studio apartments were built in Block 142 Pasir Ris, and offered for sale to parents whose married children had also submitted requests for bigger flats in Pasir Ris in the 3rd Quarter 1991 Booking Exercise. Only 6 parents submitted requests for these flats. Eventually, only 4 selected the 2-room studio apartments. The balance 17 units were offered for sale under the December 1992 Walk-In Selection exercise. Priority was accorded to parents or parents-in-law with a child who either had booked an HDB flat in Pasir Ris, or was a lessee, tenant or authorised occupier of an HDB flat in Pasir Ris. Of the 17 units, 11 were selected by applicants with a child in Pasir Ris, and 3 by applicants who did not have a child in Pasir Ris. The balance 3 2-room studio apartments will be offered in future Booking or Walk-In Selection exercises. As the response to the pilot project has not been encouraging, HDB has decided not to implement the programme on a wider scale.

asked the Minister for Health what are the possible causes of the higher fertility rate in our lower-income families leading to higher order births.

Lower-income families generally have a larger family size. This is a world-wide phenomenon and we are no exception. In 1992, families earning less than $1,500 have, on average, 2.3 children, whereas those earning more than $4,000 have only 1.

7. There are two main reasons for this. First, lower income families tend to be less educated. They tend to marry and start their families earlier. They also tend to rely more on children as a source of economic support and old age security. These factors lead to their preference for a larger family size. In Singapore, the desired family size among those earning less than $1,500 is 3.0, as compared with 2.8 for those earning more than $4,000. The second reason is related to the use of contraceptives. Studies have shown that the contraceptive usage rate is much lower among the lower income families although the knowledge of contraceptives is almost identical across all income groups. 58% of married women among the lower income families (earning $1,500 or less) are not using contraceptives as compared with 43% among families earning more than $4,000.

asked the Minister for Finance whether he will consider a flexible benefit plan for all civil servants instead of a fixed system of medical and other benefits.

Essentially, a flexible benefits plan allows employees to choose from a menu of various staff benefits, based on their individual needs. The concept is new to Singapore. In a survey conducted last year by the National Productivity Board and the Singapore Institute of Labour Studies, about three-quarters of the companies surveyed indicated reluctance to introduce a flexible benefits scheme. The main reasons cited for the reluctance were the lack of a model to follow, uncertainty in cost implications and a substantial increase in administrative workload. It is also necessary to mount a massive education exercise to explain the scheme to workers. Although a flexible benefits scheme contains some attractive features, practical difficulties remain and its overall cost-effectiveness is unclear. However, the Member can rest assured that the Public Service Division keeps track of innovations in human resource management and will implement new schemes which are clearly useful and cost-effective.

asked the Minister for Health (a) how much was spent on artificial reproductive technologies in 1990, 1991 and 1992; (b) what is the eventual cost of one live birth; and (c) what percentage of total health spending per year is diverted to artificial reproductive technologies.

The expenditure on artificial reproductive technologies (ART) in 1991 and 1992 by the three public sector Centres (SGH, KKH and NUH) was: 1991 1992 $2,404,600 $2,821,000 Information for 1990 is not available. (b) The cost per live birth produced through ART averaged 32,000. (c) Expenditure on ART comprised approximately 0.2% of recurrent Government health expenditure. The expenditure is fully recovered, since ART services are not subsidised.

asked the Minister for Education what percentage of students by gender were in the Science, Commerce, Technical and Arts streams in Secondary 4 for the years 1990 to 1993.

The required information on Secondary 4 Express and Special Course and Secondary 5 Normal Course students who took or will be taking the GCE `O' level examinations is given in the attached table. "BREAKDOWN OF STUDENTS IN SECONDARY 4 SPECIAL/EXPRESS COURSE AND SECONDARY 5 NORMAL COURSE BY STREAM, SEX AND YEAR" Course Sex 1990 1991 1992 1993 No. % No. % No. % No. % Arts Male 4349 33.5 4233 35.4 4345 38.0 4224 39.1 Female 8648 66.5 7729 64.6 7088 62.0 6571 60.9 Total 12997 100 11962 100 11433 100 10795 100 Science Male 7346 51.7 7250 51.3 7431 50.8 7254 50.4 Female 6850 48.3 6877 48.7 7203 49.2 7128 49.6 Total 14196 100 14127 100 14634 100 14382 100 Commerce Male 1020 30.4 1175 34.3 1288 34.2 1320 37.5 Female 2333 69.6 2251 65.7 2473 65.8 2204 62.5 Total 3353 100 3426 100 3761 100 3524 100 Technical Male 6002 89.4 5117 87.0 4873 85.2 4653 79.9 Female 714 10.6 762 13.0 844 14.8 1167 20.1 Total 6716 100 5879 100 5717 100 5820 100 Total Male 18717 50.2 17775 50.2 17937 50.5 17451 50.6 Female 18545 49.8 17619 49.8 17608 49.5 17070 49.4 Total 37262 100 35394 100 35545 100 34521 100

asked the Minister for Trade and Industry whether any new measures have been taken to increase the uptake of the 20,000 training vouchers issued by the National Productivity Board.

The objective of the training voucher scheme is to ease the cashflow problem of companies, particularly the smaller ones, when they invest in training. The scheme allows the companies to claim the benefits of SDF subsidies immediately upon registration at pre-qualified courses, without having to go through a refund procedure. However, because this involves an upfront payment from the SDF, the scheme is only applicable to shorter courses. NPB launched the voucher scheme on a pilot basis in April 1990 with the issue of 20,000 vouchers to SMEs to generate widespread publicity. The vouchers were valid for 182 pre-qualified courses. Since then, based on the experience and feedback from the pilot run, NPB has refined and expanded the scheme. The following improvements were made to the scheme to increase the use of vouchers: a) opening the scheme to all companies, regardless of size; b) increasing the number of pre-qualified courses to 300; c) introducing open-dated vouchers; and d) distributing vouchers also through the self-help organisations for them to sponsor workers for training. In addition, NPB has also organised seminars for some 500 small companies to acquaint them with its grant programmes and the voucher scheme for training and upgrading their workers. There will be more of such seminars. The results have been encouraging. The number of training vouchers used has increased from 808 in FY 1990 to 6,188 in FY 1992, an increase of more than seven and a half times. In the first half of this year, 5,303 vouchers have been used.

asked the Minister for Trade and Industry what percentage of the Research and Development Fund was subcontracted out to overseas institutions during the years 1990 to 1992.

The Research and Development Fund (RDF) was set up only in 1991. It has not been used to finance any R&D farmed out to overseas institutions. The RDF is intended to fund the development of R&D capabilities and the build up of experienced R&D manpower in Singapore, in areas which will enhance Singapore's economic competitiveness. Therefore, one of the principal conditions for RDF financial assistance to companies is that the R&D must be carried out in Singapore. The financial assistance may cover overseas attachments, but only in so far as they are for on-the-job training and capability upgrading. RDF-funded research institutes and research centres do collaborate with their overseas counterparts in joint projects, which involve the exchange attachments of R&D personnel. These collaborations provide avenues for technology transfer and the training of our R&D manpower. They are undertaken on the basis of the benefits to be derived from such collaborations.

asked the Minister for Education why Indian students were categorised into "Sikh", "Sri Lankan" and "Other Indian" categories in the 1993/94 matriculation form of the National University of Singapore while Malay and Chinese students have only "Malay" and "Chinese" categories respectively.

In previous matriculation exercise, a sizeable number of Sikh and Sri Lankan students put themselves under the "Others" instead of "Indian" category. This posed difficulties for the collation of student statistics. To facilitate the collation, the present categorization of students has been introduced. The University is reviewing the categorization to see how it can be improved.

asked the Minister for Education what percentage of students were streamed into the Special, Express, Normal (Academic) and Normal (Technical) courses in 1992.

In the 1992 PSLE, 91.2% of the pupils passed the examination. 9.6% were eligible and opted for the Special course, 48.7% for the Express course and 33.0% for the Normal course. The Normal course refers to the Normal (Academic) course. The Normal (Technical) course will only be introduced in January 1994.

asked the Minister for Home Affairs whether the introduction of R(A) films over the recent years has caused the number of rape and molest cases to rise.

Molest cases have registered an upward trend from 1987 even before the introduction of R(A) films in 1991. Police attributes this partly to the increased preparedness of victims to make Police reports in the context of increased awareness of their rights and easy accessibility to Neighbourhood Police Posts throughout the country. The number of rape cases, on the other hand, shows no discernable trend, fluctuating between a high of 111 cases (in 1986 and 1990) and a low of 74 cases (in 1991). It is therefore not possible to conclude that the introduction of R(A) films has caused an increase in sexual crimes in Singapore. Nevertheless, Police is closely monitoring the situation.

asked the Minister for Finance whether the more "market driven approach" applied by the Inland Revenue Authority of Singapore in valuation of public sector property will result in Government restructured hospitals and public health and tertiary institutions having to pay higher property tax, leading to further increases in their already high operating costs.

No. The restructured hospitals do not pay property tax because they do not own the land they occupy. Their land and buildings are on TOL, so they pay rent to the Government. The rental is at market rates, to reflect the proper costing and pricing of the scarce land resources which they are using. However, because the hospital land is zoned for institutional use, this market rental is only a fraction of rentals for commercial or residential property. In any case, the subsidies for B1, B2 and C Class patients are sufficient to cover completely their share of rental costs. Polyclinics do not pay property tax because they are part of the Government. Tertiary institutions do not pay property tax on their educational and sports facilities because they are exempted under the proviso to section 6(5) of the Property Tax Act.