Hansard, 1994-03-17

asked the Minister for Finance if he will exempt from tax alimony received by spouses.

Mr Speaker, Sir, alimony is maintenance payment made by a husband to his ex-wife under a deed of separation or by court order. The ex-wife can take legal action against the husband to recover the sums due if he defaults in payment. Alimony is therefore a stream of payments legally provided, and is income liable to tax under section 10(1)(e) of the Income Tax Act. Other countries, including Malaysia, the United Kingdom and Canada, also subject alimony to tax. Some have argued that the current tax treatment for alimonies amounts to their being taxed twice. Let me point out that the taxability of a receipt is independent of whether or not it comes from after-tax income. This is a fundamental tax principle. For example, doctor's fees are income to the doctor, notwithstanding that the fees came from the patient's after-tax income. This is the same for alimony. Alimony should also not be exempted from tax. By its nature, it is no different from other types of "unearned income" like interest, annuities and rentals. Finally, I wish to point out that, as a concession, maintenance payments to support children are not deemed to be income under section 10(8) of the Income Tax Act. The court usually awards maintenance payments to support children separately from alimony payments to maintain an ex-wife. If, however, both payments have been lumped together, the tax authority will request the taxpayer to have them separated.

Sir, is the Minister equating the maintenance for an ex-wife similar to employment service? He mentioned the fact that it is just like a taxpayer having to pay for the services of a doctor, ie, maintenance for the wife is equated to employing the ex-wife as such.

Sir, I assume the Member is asking whether or not such a treatment is reasonable. But there are other forms of unearned income which are subject to tax, for example, interest, annuities, rentals and so forth. These are also subject to tax.

If that is the case, will the Minister of State say that such payment to the ex-spouse should also attract Central Provident Fund contribution as well?

Sir, I think that is quite a separate question. If the Member feels that this is a subject which he wants to raise, perhaps he can raise it with the Ministry of Labour.

Sir, may I ask the Minister the same point that Mr Chng brought up, but in another way? Income is taxed when it is revenue received for providing a service or for a sale of goods. But alimony is a transfer payment. Does this mean that the equation is the same? The Minister is now saying that tax is liable on a transfer payment too. There is no service involved.

Mr Speaker, Sir, the tax is based on the fact that alimony is a form of income, and not whether it is a transfer payment or not, and it is a form of income in the same way as other unearned income, such as interest, annuities, rentals and so forth.

Sir, I just want to establish a matter of principle for the Government to consider. My next question really is very simple. If the couple had remained married and the husband gives a regular transfer payment to the wife, should this not also attract tax in that case? After all, you need to pay your wife to maintain herself and the children.

Sir, alimony is different in that it is a stream of payments that is legally provided and there is recourse for the wife if the husband does not make such payment. At this point, I might also want to point out to the Member that with the latest income tax changes, a non-working ex-wife will only need to pay income tax if her alimony exceeds $17,000 per year. This is already quite generous.

asked the Minister for Finance whether tax exemption will be allowed for donations to school fund-raising activities without deducting the cost of the activities.

Mr Speaker, Sir, under section 37(2)(c) of the Income Tax Act, only outright cash donations to the Government and approved institutions of a public character will qualify for tax deduction. This means that the donations must be given without any benefits accruing to the donors. However, from time to time, schools raise funds through various projects, such as dinners and concerts. Persons making contributions to these projects enjoy something of value in return. The contributions will strictly not qualify for tax deduction. However, in recognition of the fact that the amount paid for such an event invariably has an element of donation, the school is allowed to issue a tax exempt receipt for the contribution after deducting the value of the benefits enjoyed by the donor. If, however, a donor turns down the benefits offered, he can claim a tax exempt receipt for the full amount donated.

Sir, the Minister of State is clarifying that if a person who takes part in a golf tournament and refuses to play, he can claim for a full tax exempt receipt. Is that correct?

If he does not partake of the benefits, then he claims full tax exemption.

Sir, will the Minister of State clarify whether all these fund-raising tournaments are really necessary if the Government has provided full funding for the schools and other charities?

I think that is quite a separate principle from whether or not income like this is brought to tax.

Sir, I beg to differ. They are all related. The point is whether the Minister of State will confirm that not all participants in all these activities really enjoy the benefits, because they had enough of dinners and golf tournaments. But because of insufficient financing from the Government they feel that it is their social duty to take part in these tournaments. I do not see the need for the income tax department to be so petty on such an issue. Perhaps the law should be revised.

Sir, the two issues are quite separate. Whether or not Government funding is sufficient or not is a separate issue from whether or not income or donations should be exempt from tax. The principle for exempting donations from tax is based on whether or not any benefit is derived from such a donation, and the deduction of the benefit derived from the donation constitutes the amount that is tax exempt. That is a fair principle.

Order read for consideration in Committee of Supply [6th Allotted Day].

Head S (cont.) - Resumption of Debate on Question [16th March, 1994], "That the total sum to be allocated for Head S of the Main Estimates be reduced by $100." - [Encik Othman bin Haron Eusofe]. Question again proposed.

Sir, with regard to the recent announcement by the Minister for Labour on the adjustments to be made to the Minimum Sum Scheme, I am in full support of the adjustments. I am also in support of the requirement to have the CPF members set aside at least half of the value in cash even if he has a property. Sir, I would like to raise two concerns by CPF members. One, the impact of the increase in CPF Minimum Sum on the use of CPF for purposes like housing, investment and Share Ownership Top-Up schemes. A CPF member has about 40% of his gross salaries each month in his CPF account. We know that there are sub-accounts in his CPF balances. May I know from the Minister how is the 40% monthly contribution being allotted to the various sub-accounts? Will there be any effect on the CPF members with regard to its use? The second question is that there may be elderly persons with children who have got substantial CPF balances in the children's accounts. Is it possible for the Minister to consider allowing the children to transfer the accounts to their parents so that the parents can withdraw the money that they have and to use the children's accounts as their account.

( In Mandarin): Sir, I support the raising of the CPF Minimum Sum because this is consistent with the basic objective of CPF, ie, to ensure that there is protection for the members after their retirement. Moreover, with increase im the average lifespan and extension of retirement age, we must make preparation for a rainy day and to protect ourselves against any adverse effect that may result from the aging population. With inflation, the present Minimum Sum of $34,600 may not be adequate to sustain a basic living 10 years from now. Therefore, I would like to ask the Minister for Labour what is the inflation rate, in percentage terns, that has been used in calculating the Minimum Sum. During the debate on the Presidential Address, I reported that in a dialogue session held on 12th January, 1994, the vast majority of the participants agreed, in principle, to the raising of the Minimum Sum. Some of them also made some suggestions, for example, raising the interest rate for CPF deposits and specifying the components of the Minimum Sum. These suggestions have been accepted. I hope that the Government will also consider the other suggestions, for example, allowing part of the Minimum Sum to be used to pay for insurance premiums and allowing tax incentives for topping up the parents' CPF accounts. I also agree with Mr Chng Hee Kok's suggestion yesterday that the tax incentive be extended to topping up of the spouses' CPF accounts. From the feedback received, most people are concerned with three points in its implementation. First, the lower-income members are worried that they may not be able to accumulate the $40,000 cash component within the next 10 years. I hope the Minister will accept the recommendations of Dr John Chen and Encik Othman Haron Eusofe, ie, to provide a top-up scheme for the lower income group in respect of the Minimum Sum. Second, some CPF members who are close to 55 years are unhappy with the new measures. They are unhappy because they have already made plans for the amount that they are going to withdraw at the age of 55. With this new measure, they can only withdraw half of their CPF savings. Third, for the higher income group, they are not happy because they feel that the Government has been interfering too much, and assuming that they are unable to manage their own money. I hope that the Minister will reply to these three points. Furthermore, some people are again worried that the CPF withdrawal age will be extended. Others are harping on the same tune that the CPF Board has no money and hence, the Minimum Sum needs to be raised. I hope the Minister will give his assurance and clarification on these concerns. 1.45 pm

Sir, our CPF scheme has many strengths but its Achilles' heel is that the present CPF scheme allows the retiree to take out almost all his nest-egg in one lump sum a full five years before his retirement and almost 20 years before he dies. No country does that. Most countries operate a pension scheme which allows a pensioner to withdraw his pension on a monthly basis from age 55. Sir, many of us think that we are our own best fund managers. We feel safe with our money. If that were so, why is there a proliferation of so many private bankers whose jobs are to look after our retirement nest-egg over the last decade? The fact is that many of us over-estimate our ability to manage funds. Often greed, temptations and boundless optimism make us victims of our own misfortune. Sir, the CPF Minimum Sum Scheme is one remedy towards healing our Achilles' heel in the CPF scheme. The scheme works in the interest of the worker by balancing short-term needs of fulfilling a retirement dream and providing long-term needs for peace of mind. The scheme does not affect professionals and managers who will not be adversely affected by the $80,000 Minimum Sum. So the champions of the professionals and the managers appear to be barking up the wrong tree. Critics of the Minimum Sum Scheme point to the fact that CPF is their money. So they have a right to claim it at 55 years, if not earlier. These critics think that they hold the moral high ground with this argument. In fact, this argument puts them in a corner. Yes, half the CPF, that means the 20% contribution from the employee certainly belongs to them. It comes from their salary. But these critics appear to have forgotten how the other half, that means the other 20%, has come about. The other 20% is the employer's contribution and this amount is made possible because Government has legislated the employer's contribution towards their share. Since Government has decreed that employers pay this amount to employees, I think it is only right that the Government has some say over how and when the other half should be disbursed. In short, Government has somehow created the other half of the CPF, and it is the Government's job to safeguard it for us. I have looked at the CPF Minimum Sum in detail because my workers are rather concerned. When I meet them in my union meetings I have to explain how it will benefit them or how it will adversely affect them. My earlier concern was whether the scheme will kill dreams and dash hopes when a person reaches 55. The Minister has made it quite clear in his statement that a person can take out at least half the cash or $5,000 when he reaches the age of 55. I am satisfied that my earlier concern was unfounded. In other words, nobody would have his or her dream of doing something at 55 destroyed. I think this is an important principle because keeping half the cash is also consistent with the fact I said earlier on that half of the CPF actually belongs to the employee while the other half is kept in custody by the Government for us. Also with high interest rates, higher than the commercial bank rates anyhow, it makes sense to keep some money in the Retirement Account. But I have one question for the Minister. In his statement he has said that how much each member would be able to draw out depends on how much he has in the Minimum Sum when he or she reaches the age of 60. Details are yet unknown. I fear that a small percentage of my workers might not be able to meet the $40,000 Minimum Sum when they reach 60 years old. My question is: how much exactly can they draw monthly if they reach 60 and do not have the minimum $40,000?

Dr John Chen is not here. Mr Zulkifli.

Sir, like my other colleagues, I applaud the decision to revise the CPF Minimum Sum upwards. Whatever the perceptions may be, I am convinced that it would be better for the long-term good of our citizens, in particular those in the lower income bracket. It is a known fact that the majority in this category have little or no savings at all, apart from their CPF savings, which also may not be that much. Sir, speaking of the lower income group, they look forward to withdrawing their CPF money upon reaching 55 to make their outstanding financial commitments and other uses. For example, paying up the housing loan, children's education or, for the Muslims, some look forward to use the money for their haj pilgrimage. With the raising of the CPF Minimum Sum, they fear, whether rightly or wrongly, they will be deprived of this opportunity to withdraw their meagre savings. In this connection, Sir, I would like to seek the Minister's assurance that the concerns of the lower income workers will be addressed thoroughly. Could the Minister perhaps inform the House what additional measures the Ministry would take to alleviate their anxieties and fears?

Sir, I would like to argue against the raising of the Minimum Sum. The CPF Minimum Sum now is fixed at $34,600. In my mind, it is high enough and need not be raised further. Singaporeans roughly can be divided into three classes: the poor, the middle class and the rich. The majority of the workers in Singapore are in the poor category. These people shall have virtually no CPF savings left after purchasing a 3-room HDB flat. So the quantum of the Minimum Sum is really of no concern to them. This is equally true of those in the lower end of the middle class, depending on the type of HDB flats they purchase. If they purchase an HDB executive flat or executive maisonette, they too may have no or very little CPF savings left at age 55 years. For those people, the CPF Minimum Sum is also high enough at the present level. As for Singaporeans in the upper end of the middle class and the rich, they certainly are educated enough or have enough good judgment on how to use their CPF savings when they retire and they would have other savings of their own. They really have no need of the Government to spoon-feed them or to tell them how to use their savings. They are quite capable of taking care of their CPF and other investments. That point was vividly pointed out by NMP Assoc. Prof. Walter Woon during the Budget debate. If we examine the issue closely, we can see that there is no need to raise the present level of the Minimum Sum. Therefore, there must be other reasons why the Government wants to raise the Minimum Sum eventually to $80,000. Is it to withhold excess CPF to delay the payment out or is it to prevent inflation by mopping up cash so that they cannot reach the hands of the public?

Sir, most Singaporeans welcome the CPF Share Ownership Top-Up Scheme. Of course, there are those who feel that $300 is too little, but there are others who are concerned about the social consequences of the Share Ownership Scheme. They observe that investments in the stock market may promote a "get-rich-quick" syndrome and encourage speculation and gambling. What we want is a share-owning society, and not a share-speculating society. Hence, they suggest a public education programme on investment in shares. Will the CPF Board and the next privatised GLC consider this suggestion? My next point is this. Currently, CPF members can use their CPF savings for investment under the Basic Investment Scheme (BIS) or the Enhanced Investment Scheme (EIS). One basic difference between the two schemes is that EIS is for members who have higher CPF balances in excess of $50,000 as compared to the balance in excess of the current Minimum Sum of $34,600 under the BIS. Different investments are also specified under BIS and EIS. Logically, investments under BIS should be less risky than investments under EIS. However, some relatively low-risk investments, such as Government bonds and bank deposits, are under EIS and not BIS. May I know from the Minister what are the criteria used in identifying investment under both schemes?

Sir, there were numerous calls to extend CPF for tertiary education at overseas universities. They were rejected for various reasons. I am bringing this issue up once again and question some of the reasons offered for its rejection. Since the approval to use CPF for education some six years ago, many changes have been made to our CPF. New directions are being charted for our economy and, in particular, Singaporeans are encouraged to go overseas to do business and invest. In the field of education, we have set new guidelines as to where you can go overseas to do your law and medicine, if you want recognition. In the light of all these changes, Government should do a re-thinking on the matter of extending CPF for studies at overseas tertiary institutions. The development of a second wing for our economy requires investment in human resources. In other words, we must build up our pool of graduates, both from our own tertiary institutions and abroad. Most Singaporeans want their children to study at NUS or NTU. If our local institutions do not meet the demands of our young Singaporeans, then they will want to study abroad. There is always a risk when students go overseas to study. They might not return. This risk factor has always been used to argue against this request to use CPF for studies at overseas universities, but now I am no more swayed by this stand. This risk factor is again weakened by two developments: (1) venturing abroad, where risk taking is a norm: (2) the Enhanced Investment Scheme. This scheme encourages Singaporeans to invest their CPF money on stocks and shares. There is a bigger risk element here. Therefore, there are risks in whatever we do. At the end of it all, we must give Singaporeans a choice to decide. To weigh the pros and cons of whether to risk the CPF on their sons' and daughters' education, local or overseas, or risking it in the stock market. I used to subscribe to the belief that Singaporeans who left Singapore usually cut off their links with us. But of late, I have come across Singaporeans who emigrated to Australia and elsewhere playing the role of a catalyst in business. If we continue to have an open policy on immigration, we will not totally lose them. There is also less chance of our students not returning as our environment, business and otherwise, is very different from 10 years ago. Not only are our opportunities and job prospects better now, but a whole social, educational and physical environment is changing for the better year by year. There is a plus side to studying overseas, and that is the experiences gained of learning and living abroad, making new friends and establishing ties that would carry them through their university and working life. These contacts build trust and possibly strong business links later on. These should put such Singapore students in a better position to accept overseas postings in future and thus giving more thrust to our move to create an additional wing. 2.00 pm Another argument against its extension for overseas education was the problem of having to list universities qualifying for CPF funds because it amounts to not recognising those not listed. But with the listing of the universities approved for the study overseas of medicine and law, this argument is no longer valid. The other factor is cost. How much CPF money would you allow for withdrawal, considering the varying tuition fees for different tertiary institutions abroad? At this point, I want to make it clear that I am asking for tuition fees, not travel allowance or accommodation. I would like the Ministry to consider this formula. I suggest that the amount to be withdrawn should be the same for a similar course of study in our local tertiary institutions. In other words, there is a cap on the amount to be withdrawn. For example, if a Science course tuition fee for local university is, say, $1,000, then the overseas student can only withdraw $1,000 for a Science course overseas. The rest he has to top up himself. This arrangement will also be fair to the overseas student who should be given the same opportunity as the local student on the use of CPF for tertiary education. Let us be fair to these students. At present, there is no such opportunity. They should not be deprived because they are studying overseas. Our tertiary institutions cannot cater to the aspirations of all our young people, whether in terms of the number of places or in a variety of disciplines. In deciding how to allow the use, we must not be too strict when we match courses here against overseas courses. We must be as broad as possible in our classification, for example, classifying Science, Arts course, rather than subject classification. The new direction in our economy will open a whole new field of opportunities for Singapore graduates. This new direction in our economy demands that we have sufficient tertiary graduates to meet the challenges of overseas assignments and postings. Exporting expertise means getting qualified people to organise, to manage and to sell. Graduates have a better starting position and especially if they have overseas experience and contacts. I hope the Ministry will consider my request in the light of these changing needs.

Sir, with your permission, I will address the points that were made on the CPF Minimum Sum Scheme first and then later on, the Minister of State, Mr Goh Chee Wee, will address some of the other points. First, I would like to thank all the Members who have spoken up and supported the revision of the Minimum Sum scheme which was announced on 11th March. Many Members have raised questions on details, on how the revision will affect various groups of people, and how it will be implemented. I will try to address all the points that were raised by hon. Members. Let me start off by answering Mr Othman, Chairman of the GPC for Labour, who, apart from expressing his strong support for the Minimum Sum Scheme revision, asks whether my Ministry would consider setting up a separate body, a separate statutory board, to manage the savings of CPF members that have been transferred to their Minimum Sum or Retirement Accounts. His argument is that if you have a separate body, then it can focus on looking after the needs of the elderly or the aged. My response is that CPF Board is the statutory board charged with the responsibility of implementing schemes to help Singaporeans save for their old age. The various CPF schemes are all inter-connected or inter-related. So changing the operating condition or criteria of one scheme, whether it is the Minimum Sum Scheme or the investment schemes, usually results in making parallel changes in other schemes too. For instance, when we make changes to the Minimum Sum Scheme, we will also have to make changes to the investment schemes because the qualification and the criteria will change. Likewise, we also have to make adjustment to the CPF education loan scheme. Because of the high degree of inter-dependency between the various schemes operated under the CPF, it will pose problem if the Minimum Sum Scheme is managed separately from the rest of the CPF funds. Furthermore, many of the schemes share a common database. In today's information technology age, we depend a lot on databases to manage and to provide timely response and to provide a good service to CPF members. If we pull out a section of the CPF's responsibility and put it in another separate organisation, it could result in duplication and wastage of scarce manpower. My Ministry is not in favour of setting up another organisation to just look after the Minimum Sum or the Retirement Accounts of Singapore workers. Nevertheless, we will ensure that CPF Board continues to provide a high level of service to CPF members, despite the increasing complexity of the Central Provident Fund system. Also, CPF Board will continue to work with other Ministries in order to improve its service quality and in order to improve its services to the members. Mr Chng Hee Kok asked what will happen to some of the older employees who are unable to work up to the statutory requirement age. There will be a gap before they can withdraw from their Retirement Account, in other words, make monthly withdrawal from their Minimum Sum. At present, a member, who sets aside his Minimum Sum at the age of 55, can start withdrawing it at the age of 60. This is the present arrangement. I would like to reiterate that with the raising of the Minimum Sum, the withdrawal age of the Minimum Sum for monthly payment will be pegged to the prevailing retirement age when the member sets aside his Minimum Sum at the age of 55. For example, if the prevailing retirement age in 1995, after 1st July 1995 when we implement the change, is 61, when a member sets aside the Minimum Sum at the age of 55, he will be allowed to make monthly withdrawal from his Retirement Account at the age of 61 in the year 2001. Sir, the Minimum Sum Scheme allows members to withdraw at least half of his CPF savings at the age of 55. Since the member can continue working, he will not need to use this lump sum withdrawn at the age of 55 for his living expenses. If he should stop work four or five years before the statutory retirement age, his lump sum withdrawal made at the age of 55 can be used to breach the gap until he can actually start making monthly withdrawals from his Retirement Account. At present, a CPF member below the age of 55 may apply to withdraw his CPF savings if he is physically or mentally incapacitated and is unable to ever work again. We will consider allowing members to begin withdrawing from their Minimum Sum earlier than the statutory retirement age if they are placed in similar unfortunate circumstances of being incapable of working to the prevailing retirement age. Sir, Mr Chng had also suggested yesterday that the CPF members should be allowed to contribute or top-up their spouses' Minimum Sum. This suggestion is an extension of an existing provision in the Minimum Sum Scheme. We already do allow children to top-up their parents' Minimum Sum amount in their parents' CPF accounts. If Mr Chng's suggestion is to allow spouses to use cash top-up, then there should be no problem. Whether such cash top-up would be tax-exempt is an issue which I will take up with the Ministry of Finance. I will ask the Ministry of Finance to consider whether such cash top-up for spouses should be granted tax-exempt status. My Ministry will separately study the implication of allowing a CPF member, a taxpayer, to top-up his or her spouse's CPF Minimum Sum account, using his own CPF savings. We will consider the implication and at a later stage we will report to the Member. Mr Loh Meng See asked whether in implementing the revised Minimum Sum scheme it will have an impact on members' use of their CPF savings and how will the total 40% CPF savings be distributed to a CPF member's account. Let me assure him that the distribution of the 40% CPF will not be changed as a result of the revision to the CPF Minimum Sum Scheme. The Ordinary Account will continue to receive 30 percentage points of the total 40%, the Special Account will receive 4 percentage points, and the last 6 percentage points will go towards the CPF member's Medisave account. So the CPF member will continue to have full access to his savings in the Ordinary Account to meet his home ownership requirement. As I have just explained a moment ago, children are already allowed to top-up their parents' CPF Minimum Sum using either the children's own CPF savings or tax-exempt cash contribution. In the case where the children want to use their CPF savings to top-up their parents' Minimum Sum account, they should have at least twice the prevailing Minimum Sum. That is the current requirement. Dr Ow raised a number of questions on the public perception of the recent changes to the Minimum Sum Scheme. He also asked what is the inflation rate that we have used in calculating or projecting the Minimum Sum requirement for aged Singaporeans in 10 years' time. As I have said in my statement, we have assumed that the present trend of controlling inflation, of keeping inflation low in Singapore, will remain for the next 10 years. So we have worked on the assumption that inflation will be kept at about the 3% level for the next 10 years. He has also asked whether we could raise the interest rate on the CPF savings. The Minister for Finance has already announced that the interest rate for the Special Account will be raised. He has also raised another point on whether the Minimum Sum can be used for paying insurance premium by a CPF member. The answer is yes. In fact, at the age of 55, when the CPF member withdraws his CPF savings, and I want to reiterate this point -I have made this point several times already - that, in fact, the CPF member can withdraw every cent in his Ordinary and Special Accounts at the age of 55. He can withdraw everything, including his Minimum Sum. All he needs to do is to take the Minimum Sum component and leave it with an approved bank which will pay him a monthly amount from the age of 60 equal to or better than what the Minimum Sum will pay him. That is all we require of him. He can also withdraw every cent in his Minimum Sum and use it to buy an annuity from an insurance company. He can buy a life annuity or other forms of annuity, so long as it provides the CPF member with a monthly payment which is equal to or better than what the Minimum Sum Scheme will enable him to receive. So there is no prohibition against them using the Minimum Sum to buy such annuities. 2.15 pm Dr Ow also expressed the concern that some of the low-income wage earners may be concerned that they are unable to accumulate sufficient CPF savings to meet the Minimum Sum requirement. I have already stated in the statement on 11th March that, in fact, we have increased the Minimum Sum progressively over a 10-year period and this will create minimal disruption to all Singaporean CPF members, including the low income group. Our projection, in fact, shows that most CPF members in the low-income group should be able to meet the Minimum Sum requirement. And as I said on 11th March, about 72% of active CPF members who are citizens and who are reaching the age of 55 next year, when we make the first adjustment to the Minimum Sum Scheme, will have total CPF savings which exceed the Minimum Sum requirement of $40,000. And about 90% of the active CPF members will have more than double the $4,000 cash requirement under the Minimum Sum Scheme by next year after we implement the first adjustment to the Minimum Sum Scheme. So, in fact, nearly all Singaporeans will be adequately provided for even after the Minimum Sum Scheme has been revised. He also sought reassurance that older members would be able to withdraw some of their CPF savings. I have stated this before that the revision of the Minimum Sum Scheme will still enable CPF members to withdraw at least half of their cash savings at the age of 55 so that those who are planning to make use of part of their CPF savings when they reach the age of 55 can continue to do so. Dr Ow also sought reassurance that the Government will not make further adjustment to the CPF withdrawal age. Let me reassure Dr Ow and Members of this House that the Government has already considered the various options available to make provision for a longer retirement period for most Singaporeans. And we have come to the conclusion that, with the revision of the Minimum Sum Scheme, we do not need to take the more drastic step of raising the CPF withdrawal age. Mr Koo Tsai Kee asked how much exactly can a CPF member withdraw from his Retirement Account, especially if he does not set aside sufficient CPF savings to meet the Minimum Sum target. The amount that a CPF member can withdraw monthly, under the revised Minimum Sum Scheme, will, as I said earlier on, be based on the amount that they actually set aside. However, this monthly withdrawal amount will not be lower than the subsistence level which is provided for at present. Sir, assuming that the low inflation continues, CPF members who set aside the full Minimum Sum of $80,000 at the age of 55 by the year 2003 will be able to withdraw a monthly amount of about $450. However, if the member only manages to set aside $60,000, then he will be able to withdraw a monthly amount, which is 75% of $450, in other words, about $340 a month. So it is in proportion to the amount that he has set aside. For those who have set aside less than half the Minimum Sum required, they will be assured of withdrawing a monthly amount that is equal to the subsistence level, that is, $230 at the present moment. But this $230 will be adjusted for inflation in the future. Mr Zulkifli also supported the revision to the Minimum Sum Scheme and sought assurance that the CPF members will be allowed to withdraw part of their savings at the age of 55. I have already given the assurance. They will continue to withdraw at least half of their cash savings at the age of 55. Mr Chiam has asked what are the reasons for revising the Minimum Sum. Is it to withhold the CPF, to delay payment, or is it to prevent inflation? What are the reasons? The reason is, as I have stated in the statement which I made on 11th March, that we want to ensure that all Singaporean employees make adequate preparation for their retirement since the lifespan is getting longer in Singapore and people are going to be in retirement for a longer period. It is only wise and prudent that, at this point in time, we should put in place some mechanism to ensure that, in the future, aged Singaporeans will be able to look after their own interest and needs so that they will not become dependent on public assistance for their survival. He said that $34,600 is already adequate. But $34,600 which is the current Minimum Sum requirement is only barely sufficient to meet the subsistence level of living. I do not think that is adequate for most Singaporeans. With this revision of raising the Minimum Sum slowly over a 10-year period to $80,000, CPF members would be able to look forward to a retirement saving, a Retirement Account, that can afford them a slightly better than subsistence level of living. And I think that is what most people would expect rather than just living at a subsistence level after they retire. As to whether it is to delay payment, or withhold CPF, of course, Members know that it is not true. I have just explained that, in fact, a CPF member is fully entitled to take out the Minimum Sum amount at the age of 55. All he is required to do is to leave it with an approved bank or buy an annuity from an approved insurance company. If he thinks that these two avenues give him a better return for his Minimum Sum, by all means do so and the CPF Board actively encourages CPF members to do so. Dr Ow also asked about the differences in the Basic Investment Scheme and the Enhanced Investment Scheme, and why different instruments are placed in Basic Investment Scheme and others are placed only in Enhanced Investment Scheme. Let me explain. The investment instruments under the Basic Investment Scheme and the Enhanced Investment Scheme were classified using the following criteria. What we did when we liberalised the CPF Investment Scheme was to take all the investment instruments allowed under the previous CPF Approved Investment Scheme into the Basic Investment Scheme. In other words, the Basic Investment Scheme was the reincarnation of the Approved Investment Scheme. So there is no change except that we allow non-trustee shares to be included under the Basic Investment subject to a 10% limit, as in the case of gold. For all the other new investment instruments, we put them into the Enhanced Investment Scheme. I agree with Dr Ow that fixed deposits and Government bonds are relatively safe instruments. However, they are new instruments to be used for CPF savings and the CPF Board has deliberately chosen to be cautious by including them under the Enhanced Investment Scheme. We have also to take into account that by including these fixed deposits and Government bonds in the Basic Investment Scheme, we may be encouraging the shuttling of small amounts of savings between the CPF Board and the banks under the Basic Investment Scheme. This would not be productive because the CPF interest rate is already pegged to the average of saving account rates and one-year term deposit rates of the big four local banks. So any such shuttling of small amounts of funds between the CPF accounts and the bank would not be productive. Only those with very large CPF balances may find it worthwhile to invest in Government bonds and fixed deposits in this manner. But we will review the position later in the light of experience. I now come to Dr Tan Cheng Bock's long and passionate appeal for the use of CPF savings for overseas education. Sir, we have allowed the use of CPF savings to meet tertiary education fees in Singapore. This is because tertiary education in Singapore is heavily subsidised and the fees paid by students are relatively low. On the other hand, overseas tertiary education is very costly. As foreign students, Singaporeans will be charged higher fees, full fees in some instances. Tuition fees alone can be as high as $30,000 per academic year for medical students compared to $12,000-odd for medical students at NUS. Even for a non-laboratory-based course, the tuition fees can amount to $10,000 per academic year compared to less than $4,000 at NUS. Apart from tuition fees, students also have to bear substantial living expenses. These can range anywhere from $7,000 to $14,000 a year. This means that an overseas education can cost anywhere between $50,000 to $150,000. I note that Dr Tan has recognised that even if we extend the CPF Education Loan scheme for overseas education, members should be able to borrow only a small proportion of the total expenses from their CPF savings. This is because, as Dr Tan himself has pointed out, the Education Loan scheme is based on fees charged by our tertiary institutions. So in any case, the CPF member will still have to use his own cash savings to meet the bulk of the expenses. And I am very pleased that the hon. Member is not suggesting that we allow CPF savings for the living expenses of overseas students. Hence, I believe that it would be better if parents intending to send their children overseas for study should sit down and work out their own finances carefully. Because the CPF Education Loan scheme, even if it is available to them, will only meet a small fraction of the total expenditure. Therefore, they should sit down and work out their own financial capability carefully. Allowing them to use their CPF saving just for a small part of the tuition fees may entice some parents to embark on ventures which they are unable to see through to completion because of the unexpected turn of events. Also, allowing the use of CPF savings for overseas education may lead to greater pressure being brought to bear on parents to send their children overseas. This may turn out to be unwise since there is always the possibility of the inability to complete the studies leading to difficulties in repaying the loans taken from CPF. Here, I want to remind Members that the CPF Education Loan scheme is a loan. The loan must be repaid in cash on completion of the study, not from future CPF contribution, but in cash. So if the loan cannot be repaid for whatever reasons, this would have serious consequences for the parent's retirement savings. And in view of our recent revision to the Minimum Sum scheme, this is particularly relevant. Sir, finally, not all foreign universities are of equal quality. We are not in a position to monitor the quality of all foreign institutions which Singaporeans may wish to send their children to. As of now, parents already do send their children to institutions for courses of study of varying quality and economic value. They do so with a clear understanding that it is their own decision and at their own risk. If CPF savings are allowed, we will have in some way, even if it is wrongly assumed, accepted some of the responsibility of ensuring that precious CPF savings are not frittered away on courses of studies which are of dubious quality. This cannot be objectively achieved and may end up causing greater dissatisfaction among CPF members. 2.30 pm Sir, to meet the rising expectations of Singaporeans to have a tertiary education, the solution is not in opening up the CPF to greater use for overseas education. The solution is to expand our own tertiary institutions where there is a clear-cut demand, where there is a national interest to provide for such additional places at our institutions of tertiary education.

Sir, I will answer the questions raised on labour-management relations, labour legislation and foreign domestic workers. Mr Othman spoke about the importance of maintaining good labour-management relations. I agree with the Member that good labour-management relations laid the foundation for our economic success and that we cannot take our harmonious industrial relations for granted. The Ministry does monitor the state of industrial relations closely. Through the system of dispute settlement and the provision of preventive mediation and conciliation services and with the cooperation of employers and the unions, the Ministry has been able to help preserve and promote a peaceful and harmonious industrial relations climate in Singapore. Mr Othman expressed concern about the impact of regionalisation, company restructuring and relocation, as well as technological changes on the employees and labour-management relations. With increasing international competition, rapid technological and market changes, companies need to adopt appropriate strategies to remain competitive and seize new opportunities. This may result in companies restructuring and relocating their operations which would affect their employees. And in the process, some workers may have to be transferred to other jobs, reassigned new duties, be posted to work overseas or may even have to accept being retrenched. If employees and the trade unions are not given the necessary information so as to prepare themselves for the changes, labour-management relations in the company would inevitably be affected. So it is essential that employers share information with the employees and the unions on company restructuring and relocation plans which would have repercussions on the employees' future. Mr Othman stressed the importance of employers' commitment in training and suggested the inclusion of a training clause in the collective agreement. Training and skills upgrading of workers are of critical importance in our efforts to improve the quality of the workforce and to maintain Singapore's competitiveness. In line with the objective of raising the skills level of our workforce, I am in full agreement with the Member that there should be greater commitment by employers to train and upgrade the skills of their workers. The Member's proposal to have a training clause in the collective agreement to register employer's and union's commitment to training is a good one and should be supported. In order to encourage employers to view the proposal positively, I am of the view that unions should adopt a long-term perspective on this matter. As a start, unions should perhaps get the companies to make qualitative commitment on the training of workers in their collective agreements. The training clause could commit the employers and unions to a joint effort to raise the skills level of the workforce through continuous training and upgrading. And when employers and unions have more experience working together on training and skills upgrading of workers, they could then consider working towards a numerical target for a certain percentage or certain amount of the company's budget to be set aside for training purposes if the two parties so decide. Mr Othman also touched on the proposal made by Mr Robert Chua. He suggested that instead of withholding the 1% CPF contribution in a special education account as proposed by Mr Chua, employers could consider making additional contribution to the employee's CPF account to support training. I must stress that this year's 1.5 percentage point increase in the employer's contribution rate is to restore the CPF contribution rate to its long-term rate of 40% with equal contribution by employer and employee. It should not be withheld or diverted away for other purposes. Training of workers is a subject which merits consideration on its own, but it should not be tied to the CPF which is an old-age savings scheme. There are already a number of schemes in place to support workers' training such as the Skills Development Fund. But it is up to the employers to consider the merits of Mr Othman's proposal to make additional contribution over and above the 20% employer's contribution rate for the purpose of encouraging and supporting training. This subject can be discussed, as suggested by Mr Robert Chua, by the NWC. Mr Othman and Dr John Chen asked about the plan of the Ministry to review the various labour legislation. Review of labour legislation to ensure that they continue to be relevant and updated is an ongoing process. Over the last three years, the Ministry has updated and made amendments to a number of labour legislation, including the Employment Act, Workmen's Compensation Act and the Trade Unions Act. Currently, the Ministry is undertaking a further review of the Employment Act. We have set up a tripartite review committee comprising representatives from the Singapore National Employers Federation (SNEF), NTUC, the Ministry of Labour and the Economic Development Board. The terms of reference of the committee are to review the provisions of the Employment Act which have become irrelevant and not kept pace with changing needs of employers, workers and the economy and to review provisions in the Employment Act which cause rigidities in the labour market and hinder company restructuring. One of the key issues which the committee will be examining is the transfer of employees in the company restructuring exercise. With increasing global competition, our companies may need to restructure their operations. And as a result of restructuring, employers may need to transfer their employees to a subsidiary or associated company. Currently, the Employment Act is silent on whether the employers have the right to transfer their employees to another company which is registered as a separate legal entity. The committee is reviewing how companies could be given the flexibility to transfer their employees to a subsidiary or an associated company while at the same time ensure that workers' interests are safeguarded. Another key area which the committee is reviewing is the question of whether allowances, besides the basic pay, should be included in the payment for overtime work and approved leave. Presently, the law is ambiguous and this has given rise to different interpretations by the employers and the unions. Apart from the issues which I have elaborated, the review committee will also update some of the other provisions of the Employment Act. The committee is expected to complete its review in two months' time and release its findings and recommendations subsequently. Mr Othman expressed concern about industrial safety and asked about the updating of the Factories Act. I wish to inform the Member that, with a view to improving safety standards at the workplace, the Ministry will be introducing amendments to the Factories Act. The amendments will include: (1) expanding the scope of the Act to cover more workplaces and other hazardous activities which are currently not covered under the Act; (2) increasing the maximum penalty for violations in order to enhance the Act's deterrent power; and (3) bringing the safety and health provisions of the Act up to date. The Ministry is finalising its review of the safety and health provisions for shipyards. A new set of safety regulations for the shipyards will be ready for gazetting soon under the Factories Act. Incorporated in the regulations will be the recommendations of the "Stolt Spur" and "Indiana" Committees of Inquiry. In addition, the regulations will cover other hazards such as those arising from the use of scaffolding, lifting equipment and electrical installations. So we hope to improve the industrial safety for all the workers by regularly reviewing and updating the legislation. Dr John Chen asked a number of questions about the Industrial Relations Act. First, section 16(3). Section 16(3) of the Industrial Relations Act prohibits representation of managers and executives by a rank-and-file union. Dr John Chen suggested that this prohibition should be removed. The Ministry has studied the matter and concluded that it would not be necessary to amend this particular provision of the Act. Our existing legislation does allow junior management personnel and front-line supervisors to join a rank-and-file union, although the more senior management staff and executives are excluded because of conflict of interest. To help determine the eligibility of front-line supervisors and other junior management staff to join a rank-and-file union, the Ministry of Labour has formulated a set of guidelines in consultation with SNEF and NTUC in 1992. Since the implementation of the guidelines, a total of 90 cases of disputes involving some 2,500 front-line supervisors and junior management personnel were referred to the Ministry for conciliation. Of these 90 cases, 96% were amicably resolved through conciliation based on the guidelines. The remaining 4%, only 3 cases, are still under processing. So far, not a single case has been referred to the Industrial Arbitration Court for arbitration. This shows that with the adoption of the guidelines, unions and employers have been able to resolve their differences in a spirit of cooperation and consensus. As regards section 25, this section stipulates that certain industrial undertakings in their initial years of operation shall not provide better terms and conditions of service than those contained in Part IV of the Employment Act without the approval of the Minister for Labour. This provision essentially applies to annual leave and sick leave entitlements. The rationale for this provision is that such new industrial undertakings are important to our economy and being infant companies, it would not be advisable to subject them to excessive employment terms in their initial years of operation. Excessive employment terms could jeopardise their smooth start-up and end up detrimental to the job security and prospects of the workers working in these undertakings. Notwithstanding this restriction, the Ministry does not prevent any such industrial undertaking from granting more favourable terms than those provided in the Employment Act if they are prepared to do so. In fact, we have never rejected any application by employers and unions. So, as the provision of the law has not prevented employers from granting more favourable terms in their collective agreements with the unions, we are of the view that there is no need to make changes at this juncture. Finally, let me come to the question raised by Dr Soin. Dr Soin asked if the Ministry can establish a minimum standard of welfare for foreign domestic workers. In my view, the establishment of a standard contract to specify minimum welfare for foreign domestic workers is impractical. I am not sure when the Member talks about minimum welfare, whether she means to include minimum salary. A worker's salary is dependent on the nature and the volume of the job. It will be impossible to specify a minimum salary across the board or even for specific industries. It is for this reason that Singapore does not have a minimum wage rule. The absence of a minimum wage rule has not held back the incomes of some 1.2 million Singaporean workers. So to try to specify a minimum salary for a foreign domestic worker would seem contrary to this principle of allowing the labour market flexibility in setting wages. 2.45 pm All employers are expected to treat their domestic workers fairly and humanely. It is not possible to lay down exhaustive rules regarding the minimum welfare that a worker is entitled to. Dr Soin mentioned rest days, hours of sleep and meals. Sir, apart from asking the employers to provide adequate meals, rest and sleep, I wonder how could the Government possibly regulate the number and quantity of meals, hours of sleep, or number of rest days. Some domestic workers may prefer to have a number of off-days in a month while others may prefer to have less of it, opting instead for more pay. A standard contract specifying minimum welfare is not only impractical, it is also not a guarantee against abuse. The few bad employers who have the intention to abuse their foreign domestic workers would do so regardless of the existence of a contract. Sir, while it is impractical to lay down a minimum welfare standard, my Ministry strongly encourages employers and their domestic workers to have written private employment contracts which spell out their agreed terms of employment. This will be for both parties' protection in the event of a dispute. In fact, some employment agencies do have employment contracts which their clients must sign with the domestic workers placed by them. My Ministry strongly encourages the adoption of such a practice. In any case, when disputes arise over the terms of employment, my Ministry offers a conciliation service which foreign domestic workers and their employers can turn to for help in settling such disputes. This service is available free of charge.

Sir, earlier on, I inadvertently forgot to answer a question raised by Mr Robert Chua, who is not in the Chamber. He raised this yesterday. Sir, with your indulgence, Mr Robert Chua asked whether my Ministry has any plans to review the foreign worker policy and, if so, can the Ministry inform the private sector in advance. My Ministry is constantly monitoring the situation, that is the labour market, through industry visits and reviewing the policy on foreign workers to ensure that it remains relevant to the economy. From time to time, we adjust the guidelines in response to changes in demand from the various sectors. For example, in November 1992, we increased the dependency ratio for the construction industry from 1:3 to 1:5. This was to enable the construction industry to cope with exceptional growth in the short term. The marine sector's dependency ratio is 1:2. It is still sufficient for the industry's need despite positive feedback that 1994 will see an upturn in this sector. In the case of the manufacturing sector, it has done well last year, although some jobs were lost. The manufacturing output increased by 9.8% for the year. In fact, this sector achieved double digit productivity growth for 1993 - 12.9%. This trend is entirely in keeping with our long term strategy of going for higher value-added investment, enhancing productivity and reducing our dependency on foreign workers. We have also observed that the manufacturing sector experienced employment growth in November and December 1993, after 19 consecutive months of decline since April 1992. At the moment, 91% of all the manufacturing firms are still within the 45% dependency level for the upper tier levy. At the lower tier levy, 80% of all manufacturing companies are below the 35% dependency level. We will be watching this situation closely to ensure that demand for foreign workers does not run against our long term objective. In the meantime, my Ministry is not proposing to revise any of our foreign worker policy. In considering new investments and expansion, employers should not base their decision on an unlimited supply of low wage foreign labour to meet their immediate needs. Rather, they should think longer term and invest in automation and other labour saving technologies to make their production processes more efficient and optimise their use of Singapore's scarce manpower resource. Workers should also be trained to upgrade their skills. This will help us to be more productive and competitive in the longer term. Sir, Mr Chua also asked whether the Ministry is prepared to waive the foreign workers' levy for companies which bring in workers from their overseas investments for training in Singapore and whether we can waive the 10% ceiling that is allowed presently. Sir, the Government introduced a regionalisation training scheme on 1st March 1993 to facilitate Singapore-based companies which have investments overseas. The scheme has made it easier for Singapore-based companies to train their foreign workers in Singapore and subsequently send them back to their home country to support the Singapore company's overseas investment. Under the scheme, companies can bring in foreign workers for a training period of up to six months at any one time. They can also apply to the Economic Development Board for a grant to offset the foreign workers' levy for a maximum period of six months. In addition, foreign workers under the scheme are excluded when my Ministry computes the foreign worker dependency level of the company. The number of such foreign workers in each company is, however, limited to 100 or 10% of a company's total workforce in Singapore, whichever is lower. This is to ensure that proper training is provided and the local operation is not disrupted by the presence of excessive foreign trainees. Sir, from March 1993 to January 1994, the EDB supported applications from 41 companies to bring in 1,165 foreign workers under the regionalisation training scheme. It also offers grants amounting to $714,950 to 26 companies to offset the foreign workers' levy. As of February 1994, my Ministry received 691 work permit applications from 32 companies under the scheme. My Ministry approved 667 or 96.5% of the work permit applications. Sir, the 10% limit is adequate since only 3.5% of the work permit applications were rejected. It is also a one-time requirement. Companies which need to train larger numbers of foreign workers in Singapore can bring in their foreign workers in batches so long as the number in each batch does not exceed 100 or 10% of the limit.

Sir, I would just like to say something. I think all the concerns expressed by the Minister concerning the use of CPF for overseas education have been anticipated by me and I raised them in my speech. I would therefore ask the Minister to give more thought to what I said and perhaps give a better reply the next time. He mentioned risk. I have already put forward all the arguments about risk. I do not want to go through it. He mentioned about the difficulty of listing of universities. But we have set a precedent. We have listed universities for medicine and law. He talked about costs. Yes, I understand the high cost. That is why I only asked for tuition fees. I have even set out the formula for him. All that the Ministry needs to do is just give the same amount of tuition fees that a local student has to pay for his science course, for example, to a student doing the same course overseas. Finally, there is the question of fairness here. We should be fair to tertiary students studying overseas and also to those studying here. Both should benefit from the scheme and I think we should not penalise those overseas students.

Sir, may I get a clarification from the Minister? He said that on 11th March he made a statement that 72% of the active CPF members would have CPF savings exceeding $40,000. Can I clarify whether or not they would still have this $40,000 on reaching the age of 55? Secondly, whether they have purchased an HDB flat or other private properties?

Sir, I will of course consider the points raised by Dr Tan. But if the question is raised again, maybe I will give a better answer, but it need not necessarily be the answer that he is hoping for. In regard to Mr Chiam's question, what I said in my Statement on 11th March was this, and I quote: 'About 72% of active CPF members (citizens) who reach the age of 55 in 1995 (in other words, they are at an age when they can withdraw from their CPF) will have Special and Ordinary Accounts savings (including amounts withdrawn for housing) [that means they have bought a HDB flat or some other housing] which exceed the Minimum Sum requirement of $40,000.' The details are contained in Table 6 which was distributed on 11th March.

Sir, perhaps it is too early to consider the proposal for a separate authority to manage the Minimum Sum. In a way, I think the Ministry is not averse to it because they are allowing banks and financial institutions to manage the Minimum Sum. That means the member can withdraw. Maybe in future the Minister can consider this proposal again. I thank the Minister and his Minister of State and beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

Amendment No. (2), Mr Chew Heng Ching.

I am not moving, Sir.

Sir, I beg to move, That the sum to be allocated for Head S of the Main Estimates be reduced by $10 in respect of Code SA 1500. Sir, I welcome the Government's intention to pay the extra 1.25% interest on the Retirement Fund and the Special Fund. More importantly, I welcome the Government's explicit recognition that certain parts of the CPF fund should be paid a higher return than what members are currently getting. However, since these funds which are locked up in the CPF are very long term in nature, I think the Minister should consider pegging this additional 1.25% against, for example, three years' fixed deposit rate of the bank rather than on the savings' rate, which, of course, is very short term in nature. Alternatively, the Retirement Fund which is set aside perhaps should be managed or invested separately by the Government instead of being loaned to the HDB. In this way, if these funds are managed separately and invested in instruments with higher returns, I think members will get much better return on their CPF funds than what they are currently getting. By getting a higher rate of return on this Retirement Fund, it will also help the Government to achieve the aim of getting more Singaporeans to meet the new Minimum Sum. At a wider level, I should also like the Minister to consider giving this higher rate of return to all CPF members who are risk-averse and not inclined to speculate in the stock market. I know the Minister's stock answer and I hope he would give a better reply this time. He has always challenged members who are not happy with the CPF rate of return to put their money into the stock market if they want a higher rate of return. I do not think this is necessarily a good suggestion, by just challenging all members to put their money in the stock market. Not all CPF members are fully apprised of the workings of the stock market. The recent downturn in the stock market in January has hurt a number of CPF investors who are not familiar with the workings of the stock market. If the Minister is prepared to pay a higher rate of return in this way, it will also go towards some way of rewarding certain groups of Singaporeans who are more conservative in nature and are mindful of making sure that their Retirement Funds are not easily squandered or lost in the stock market. I express this concern because by encouraging more members to go into the stock market without sufficient knowledge is not necessarily a good political move. The recent downturn in the market has shown this to be the case.

Mr Tong is not here. Dr Lee.

Sir, the CPF Board is the guardian of Singaporeans' old age savings. It has therefore adopted a conservative and prudent investment policy. The Board invests CPF members' savings in Government bonds which are risk free. In return, the Government pays interest on the bond at a rate that is pegged to the average of the savings and the 12 months' fixed deposit rate of the big four local banks. In addition, the Government guarantees CPF members a minimum interest rate of 2.5% per annum, even if the market rate should fall below this level. In fact, the CPF Board is currently paying the rate of 2.5% as guaranteed by Government, although the bank's interest rate is below this level. 3.00 pm Sir, the CPF interest rate is a reasonable rate of return for savings in the CPF Ordinary and Medisave accounts as these savings are not really long-term funds. Mr Chng said that CPF savings are long-term funds and therefore the interest should be pegged to the bank's three-year fixed deposit rate. But the bulk of CPF members' savings in the Ordinary and Medisave Accounts are not long-term funds really. This is because they are withdrawable on demand to meet the members' housing, investment and other needs, such as medical expenses. Only savings in the Special and Retirement Accounts are long-term funds as they cannot be withdrawn for any other purposes except for old age. For savings in these two accounts, the Minister for Finance has already announced that Government will pay higher interest rate at 1.25% above the prevailing CPF interest rate, that is, 1.25 percentage points above the prevailing CPF interest rate; in other words, 50% more interest on the savings in the Special Account compared to the savings in the Ordinary or Medisave Accounts. This will take effect from 1st July next year. The Minister for Finance has also explained that this 1.25% premium for the really long-term savings held in the CPF account is comparable to what other long-term investments on the market would yield, on average, ie, above the savings deposit rate. Sir, the funds obtained by the Government from the sale of bonds to CPF Board are mainly invested overseas. The objectives of the investment are to ensure capital preservation because we have to guarantee the capital plus a minimum rate of interest and also to ensure a reasonable rate of return to meet the interest payment for the CPF members. In this way, the Government underwrites the risk of the investment and shields CPF members from any risk of losing their old age savings. The Member brought up this appeal for higher interest rate for CPF members who do not want to risk their savings in the stock market. What is the alternative, if they do not want to make investments in the stock market, apart from, of course, using their CPF savings for owning a house or a HDB flat? If you leave it in the bank as a bank deposit or long-term fixed term deposit, the CPF formula for working out the interest for the Ordinary and Medisave Accounts has already taken into consideration the local bank's interest rate for this term deposit. As I said earlier on, it is an average of the interest rates of savings deposit and the one-year term deposit. So it makes very little difference to a member to leave it with CPF or to leave it with a bank. And if, in fact, he feels that the bank's interest rate is not sufficiently attractive, or the CPF interest rate is also not sufficiently attractive, then he is, of course, free to invest his CPF savings through any of the other mechanisms that are available in the investment scheme. He need not go into the stock market. He can always buy government bonds or insurance policy, which is also allowed. So there are many other opportunities available to the CPF members to optimise the returns on their CPF savings, if they feel that the Board's interest rate is not sufficiently attractive.

Sir, the Minister has just mentioned a moment ago, in reply to Dr Ow, that some funds are too small for this to be allowed. In other words, he is encouraging members of small balances in the Ordinary Account, not in the Medisave (I have never intended to talk about Medisave at all), to invest in, say, a three-year fixed deposit with a bank. If he allows it, will he make amendments or changes to the Basic Investment Scheme then?

Sir, in responding to Dr Ow, I said that we have decided to include all the new investment instruments under the Enhanced Investment Scheme rather than the Basic Investment Scheme. But in the light of experience, we will be reviewing whether some of the instruments in the Enhanced Investment Scheme can also be allowed for those in the Basic Investment Scheme.

May I beg your indulgence, Sir. In other words, as long as this is not changed, right now CPF members have no choice. On that note, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

Sir, I beg to move, That the sum to be allocated for Head S of the Main Estimates be reduced by $10 in respect of Code SH 1500. Sir, in large factories and workplaces, Safety Committees, comprising management and workers' representatives, are established with the key function to promote cooperation for the purpose of achieving and maintaining a safe and healthy working environment. I would like to ask the Minister how the Ministry measures the effectiveness of these Safety Committees. Do the Ministry of Labour officers attend the Safety Committee meetings, from time to time, to provide guidance and assistance to the Committee members so as to enhance their effectiveness? Sir, some Safety Committees may need help to enable them to assume a more proactive approach to maintain a safe and healthy working environment. Safety Committees should also monitor training of workers on safety and health issues. We should continuously impress on workers and management that no matter what the circumstances are, there should be no short-cut or any compromise of safety standards and requirements. I would like the Minister's response, please.

Sir, I wish to reiterate that the labour movement views with deep concern the spate of shipyard accidents that took place in 1992 and 1993, and also the most recent one on 8th February this year. Sir, the Ministry of Labour is aware that in recent years, and in particular in 1992, industrial accidents have been on an upward trend. I hope this does not reflect that there is a slackening of enforcement and surveillance. Sir, I share the sentiment expressed by my colleague, Mr Othman Haron Eusofe, regarding safety at worksites. I would like to know the Ministry's assessment of the current situation on industrial accidents. Is the Minister satisfied with the existing measures to monitor and contain industrial accidents?

Sir, Mr Othman, Chairman of the GPC for Labour, asked for an explanation on the workings of Safety Committees in factories. Sir, factories employing 50 or more workers are required by the Factories Act to form Safety Committees for the purpose of promoting safety and health at the workplace. The role and functions of the Safety Committees are prescribed in the Factories (Safety Committee) Regulations. Among other things, Safety Committees are required to conduct factory inspections, investigate accidents, report on unsafe conditions discovered during such inspections and investigations and also to recommend measures to rectify them. Safety Committees are required to meet once a month to discuss these and other safety and health matters. Proceedings at the meeting must be properly documented in the minutes of the meeting. Safety Committees are required to submit the minutes of meetings to the Department of Industrial Safety (DIS). Officers of the Department will gauge the effectiveness of Safety Committees by first checking the minutes of meetings of Safety Committees. They check on whether the Committee has been carrying out the functions and activities, as required by law, and whether there is quick follow-up action on safety and occupational health problems identified by the Committee. Where a Safety Committee is found to be ineffective, the Department of Industrial Safety will give written instructions to improve the working of a Safety Committee. Let me give you an example. In the last two months, 17 such instructions were given to factory occupiers. In addition, during regular inspections of factories, the Department of Industrial Safety officers discuss the work of the Safety Committee with the Committee's Chairman and Secretary and, where necessary, DIS officers participate in Safety Committee meetings to provide on-the-spot guidance and advice. Sir, I agree with Mr Othman that Safety Committees can make important contribution to industrial safety and can help to ensure that workers comply with safety requirements. My Ministry's Occupational Safety and Health Training and Promotion Centre provides training for Safety Committee members to cover this and other aspects of the work of Safety Committees. Last year, a total of 256 Safety Committee members were trained by the training centre. Sir, we will continue to train, support and supervise the Safety Committees in large factories in order to improve the industrial safety for all workers. Mr Zulkifli expressed concern over the trend of industrial accidents. He said that industrial accidents have been on an upward trend. I do not think that is an accurate reflection of the position because the total number of accidents reported to the Department of Industrial Safety fell by 9% from 4,698 in 1992 to 4,257 last year. In terms of frequency rate, it fell from 3.6 accidents per million man-hours worked in 1992 to 3.2 per million man-hours worked last year, that is, a drop of about 11%. Hence, the overall incidence of industrial accidents is not on an upward trend. However, there has been a rise in the number of fatal accidents, particularly in the shipbuilding and shiprepairing industry and the construction industry. In 1993, there were 66 fatal accidents in the two industries as compared to 55 in 1992. This is a matter of serious concern. My Ministry has been stepping up its enforcement action. In 1993, officers of the Department of Industrial Safety made a total of about 8,870 inspections of factories. This is an increase of about 11% as compared to 7,950 inspections made in 1992. In 1993, the DIS prosecuted and fined 504 factory occupiers for violating the law as against 437 the year before. Sir, therefore, there is no slackening of surveillance and enforcement and, on the contrary, we are more vigilant and more proactive in our actions against disregard for workers' safety. Sir, my Ministry's Department of Industrial Safety will continue to concentrate its efforts on the prevention of fatal accidents and other accidents in shipyards and construction sites. For the shipyards, the Department of Industrial Safety will conduct a thorough review of the safety performance of all shipyards. Enforcement action will be stepped up. In addition to carrying out the regular inspections, our inspectors will be conducting special enforcement exercises on shipyards with bad safety records. These enforcement exercises will be focused on the specially dangerous areas and hazardous work such as hot-work. Our inspectors will check for strict compliance with safety measures, especially the hot-work permit system. If the shipyard fails to comply, it will be ordered to stop work until they have rectified the safety management system. As for the construction industry, the DIS will focus its attention on the prevention of fatal accidents arising from workers falling from a height and workers being hit by falling objects. This is because these two categories of fatal accidents account for more than 50% of all fatal accidents in construction worksites.

Sir, I would like to commend the Department of Industrial Safety for its good work and I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. 3.15 pm

Sir, I beg to move, That the sum to be allocated for Head S of the Main Estimates be reduced by $10 in respect of Code SL 1500. Sir, I would like to touch on the Safety Instruction Course (SIC). While I understand that the syllabus is wide enough, I would like to suggest that it be improved from time to time to keep up with developments in the industry. In my opinion, the use of solvents for chemical cleaning, proper control and storage of chemicals should be given greater emphasis. My question is: does the existing syllabus provide sufficient emphasis on the handling of chemical substances? Finally, Sir, still on the subject of safety, I would like to ask whether the Ministry has considered introducing a training programme designed for the intermediate category of safety personnel, such as safety supervisors. I believe such a programme will go a long way towards enhancing the safety environment at the workplace. I would appreciate the Minister's comment on this matter.

Sir, I need about two minutes to answer Mr Zulkifli's questions.

Three minutes.

Sir, my Ministry's Occupational Safety and Health (Training and Promotion) Centre conducts the Shipyard Safety Instruction Course (SSIC). It is a one-day course to familiarise workers on the hazards in the shipbuilding and repairing industry and the precautions to be taken to prevent accidents. The course covers various topics relating to the safety in the shipyards, with emphasis given to the prevention of fire and explosion and the permit-to-work system practised in shipyards. Sir, following the "Stolt Spur" fires which were caused by the ignition of flammable solvents used for the cleaning of a boiler, instructors of the SSIC have been emphasising safety measures on the use of solvents in chemical cleaning and proper control and storage of such chemicals. Sir, the Training Centre is currently working with the shipbuilding and repairing industry to develop a special training programme for the intermediate category of safety personnel, such as safety supervisors, as recommended by the Committee of Inquiry. The training programme will train such safety supervisors on safety, particularly on the gas-freeing and monitoring of environmental changes in confined space. This is to address the hazards of fires and explosions in confined space. The training programme is expected to be finalised soon.

Sir, I thank the Senior Parliamentary Secretary for his answer and beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $39,230,400 for Head S ordered to stand part of the Main Estimates. The sum of $5,976,400 for Head S ordered to stand part of the Development Estimates. Head I -

Head I - Ministry of Communications. Amendment No. (1), Mr Goh.

Sir, I beg to move, That the total sum to be allocated for Head I of the Main Estimates be reduced by $100. Sir, we need to move towards a more comprehensive and sophisticated public transport network because I think the present network is too simple to meet the very complex needs of the commuters. At the moment, there are three main modes of public transport, namely, bus, MRT and taxi. They form the backbone of our public transport system. All of them are not able to meet adequately the needs of the commuters. For buses, because of the integration exercise, many routes are changed or withdrawn. We have also heard of frequent complaints on the frequency of many bus services. MRT only has two lines, East-West, North-South. Taxis are not as easily available as in the other cities, like Hong Kong and even major cities in China today. Sir, I think there are many service gaps to be filled. That is why I said that we need to move towards a more comprehensive and efficient public transport network. And to do this, the Government must be prepared to be more flexible, to enable private operators to provide services to supplement SBS, TIBS, MRT and the taxi services. Private operators are able to respond much faster to the needs and demands of the commuters. For example, the mini-bus system can be considered to offer feeder services both within HDB towns and between the estates and MRT stations, and private hire buses or school buses can also be given a bigger role to play. This will help them to also upgrade their fleet to a better or air-conditioned one. Finally, we should improve the MRT system faster and use part of the COE revenue collection to build more MRT extensions.

Sir, Singaporeans who have travelled abroad to other major cities in the region often recount their horrific experiences of being choked for hours in the seemingly endless traffic congestions of those cities. Driving in those cities is a nightmare and I doubt our countrymen would like to own a car to get around those cities. So it is always a pleasure to return to our clean and green city state where our roads are also free from congestion. I commend the Government, especially the Ministry of Communications, for its ability to keep our roads congestion-free. However, because traffic is smooth and the road network is excellent, the Singaporean's dream is to experience the thrills of driving his own car along the free flowing highways and by-ways. I guess the Minister for Communications shares this dream with all Singaporeans, provided it remains a dream. It is when everybody wants to turn his dream into reality that the Minister's dream turns into a nightmare. On the other hand, this nightmare has somehow turned into a sweet dream for the Minister for Finance, who must be laughing all the way to the Treasury to consolidate the billions of dollars collected from COEs and other vehicle-related taxes. Singapore is already a 'fine' city. Fined for this and fined for that. We are told, and most people accept, that such fines are necessary to create a disciplined society and a clean and relatively crime-free environment. But now, Singaporeans are also told to tender. Not tender loving care, but tender for this and tender for that. Tender for telephone numbers, tender for car registration numbers, tender for residential land and, of course, tender for the unpopular COEs. We should be a tender loving and caring people but we should guard against becoming a tendering society where everything must be tendered for. The argument for tendering or bidding has always been that it is a fair means of allocating scarce resources and the tender prices represent their true market values. Tendering also means that if you say you need it more than the other guy, be prepared to pay more for it. There is some truth in all these arguments but we should understand the different impacts such a system can have on business and on the individual. High tender prices increase business costs which are usually passed on to the consumers as price increases. However, the tender system is regressive when applied to the individuals because the rich is affected to a lesser degree than the less rich by higher tender prices. In other words, the rich will always be able to afford a car whatever its COE price and regardless of whether he needs it or not. But the average person who may genuinely need the car for his work, or profession, cannot justify his need just because he cannot afford it. To say that if you need it, you must be prepared to pay for it is too simplistic and ignores the regressive nature of the tender system. I suggest that the Government should review its transportation policies and, for that matter, all other Government policies, which propagate the use of tender as the only means of allocating limited resources, whether it is for COEs or land. I suggest for the Minister's consideration that some portion of the COEs, or any other limited resources, may be allocated at a lower fixed price by balloting or the luck of the draw. The rest of the COEs can be tendered out as before. This way the system will not be seen as favouring only the rich and depriving the less rich of ever owning a car. At least, if someone should lose out in the draw, he can attribute his inability to own a car to his lack of good luck and not just blame it all on the Government. Such a system will also help to dispel any notion that Government policies are always aimed at boosting its coffers without tendering any loving care for the individual.

Sir, in the 1950s, we had about a dozen or so bus services in Singapore. When the PAP came into power, the transport system was revamped and restructured resulting in a duopoly now. The purpose of the restructuring and revamping of the transport system was to improve efficiency, better service and to prevent duplication. It was more a case of service-oriented than profit-oriented. Of late, the bus company in Singapore has been either re-routing or taking off a number of routes which have been scheduled for quite some time. And there were cases where a normal one-bus route had been changed into a two-bus route. In other words, before the change, a passenger travelling from destination A to B would need to take only one bus, but now he has to take two buses which, invariably, increase his bus fares. I wonder whether this is due to the fact that we have a duopoly in Singapore. Monopoly, or duopoly, invariably leads to exploitation. When there is no competition, the commuters are left to the mercy of the bus company running the services here. I am quite sure that Members here would have noticed that, especially during the rainy days, there are more cars on the road. I suspect this is due to the fact that in the dry weather, these commuters would normally be taking the MRT or bus service. But because of the rain, and the inconvenience of having to carry umbrellas, they have to travel from their homes to the bus stop or bus interchange, resulting in congestion of the roads. 3.30 pm I would suggest that the transport committee inquire into why certain bus services have been taken off and causing inconvenience to commuters. And if the bus company is in no position to cope with the situation, then more licences should be granted to private bus operators to fill the lacuna and to operate bus services from housing estates to the city area.

Sir, Singaporeans have responded enthusiastically to the Government's call to have more than two children. Many of my friends and colleagues now have three, four and some have five children. I think the Government should be happy that the scheme has succeeded to a large extent. With more children, life is becoming more wholesome, but there are also some minor irritations. And one of these, I think, can be fixed by the Minister for Communications. Sir, I refer to the seating capacity of taxis. Presently, the ROV prescribes that taxis can carry only four passengers and there are good reasons, because almost all the taxis plying our roads today are family sedans with a safe carrying capacity of four passengers. This means that for a family of six, there is no way they can travel together in one taxi without running foul of the law. And no taxi driver in his right mind will pick up a family of six. Of course, the family can call two taxis. But here, it is not just a question of additional cost, but it is at the agony of trying to call a second taxi. This little thing adds to life's accumulated stresses. Sir, as I was writing this small speech for this cut, a friend of my PA was relating her family's problem to my PA on the E-mail. She said and I quote: `Last Sunday, I encountered a taxi driver who did not want to fetch me and my family for the reason ROV says three adults, two parents and one maid, and two children violate the law.' And she went on in the E-mail: `So how are we to travel together? We can't afford a car. We don't want to buy a car.' Sir, the problem of this office worker is not an isolated one. In fact, I have been asked to raise this problem by several workers. For a worker, getting a family to go out for a taxi ride on a Sunday is a family treat and we should try and get the family together, especially in this International Year of the Family. Sir, I suggest the following solutions. There are already many family sedans which are designed to carry 6-7 passengers. These family sedans come in various names. Americans call them family wagons. The Europeans and some Japanese companies call them space wagons. I notice that two MPs in this House already drive space wagons with their family. To solve the problem of limited carrying capacity, the ROV should insist that taxi operators like NTUC Comfort perhaps should stock a certain percentage of family wagons to be used on call by these families. By getting more commuters to ride in family wagons also reduces the demand for cars. Hopefully, the price of COEs will float downwards. I think these family wagons are not extraordinarily big. They are smaller than some of the luxury cars. So in terms of space, they do not hog the road space. I would like the Ministry of Communications to seriously consider this proposal.

Thank you, Sir, for allowing my tables to be distributed. When the Government introduced the COE, it came out with the rationale that it was because of the car population and congestion. That was the problem. And revenue raising was not the problem. In fact, our PM, DPM, Finance Minister, Communications Minister and many others mentioned the philosophy that car ownership was all right, so long as it did not cause congestion. But if we look at the tables that I have distributed, Tables 1 to 3 show all the various categories of costs. As it stands now, car ownership is not all right. Therefore, I beg of the Minister to review all these charges relating to motoring costs. Many of the charges then introduced were for specific reasons. Probably some of the reasons may no longer be valid, now that COE has been introduced. If we look at Table 4, we could see that the total revenue collected on the revised basis in 1993 came to over $4 billion, relating to motor vehicle expenditure. I include the petroleum products. I guess most of the money was collected on charges of petroleum, car usage, motor vehicle import duties, ARF, road tax and so on. The licences and permits, I reckon, are mainly COEs with a little ALS and things like this. If we look at the fourth item, licences and permits, from $662 million in 1991, it almost doubled to $1.2 billion in 1993. When the Government introduced the COE, it did say that it was not a revenue raising measure and they would review all the other taxes related to importations, ARF and so on. So what has happened to that thinking? I ask the Minister to give the motorists a break. The $4-plus billion represents over 40%, not 30%, as mentioned by Mr Heng the other day, of Government expenditure of less than $10 billion last year. The credibility of the Government is also being questioned. In fact, because the credibility of the Government is being questioned, a lot of schemes that the Government brought forward have been laughed at - the pay-and-pay, the Poor Also Pay, to Pian Ah Pek, when you introduced the SOTUS scheme. When the Government is not truthful in its revenue collection and the payment is not reasonable, we must remind the Government that such payment angers the people. And as Mr Robert Chua said earlier, everything is on tender and whether that itself solves the problem. If we look at page 1 of the tables, the question here is company registration versus private registration. There was a reason at one point in time when we did not want companies to give cars to their employees that easily. The escape clause is "benefit in kind". So we have the company registration. Now, with COE, is there a need for this double cost for companies, double COEs, ALS and so on? Is there a need for higher road tax for cars that are over 10 years old? They are being inspected yearly. In fact, motorists are worried that if they grow old in future, probably the medical costs will also be higher simply because they are old. Then what about road taxes by categories? With the COE, is there a need now to tax by categories, ie, the higher the engine capacity, the higher the road tax? Does it make sense any more? The rationale then could be because of the oil crisis and we did not encourage high fuel consumption. But now with the COE, it seems to favour the bigger cars. So more bigger cars are on the road. And if we really want to keep the cars small, then I buy the idea that we should ballot for small cars, and not tender. So that people who need cars and cannot afford expensive COEs can ballot for them. But tender should be for the bigger cars. There is no more need, I believe, in charging road taxes by capacity. If they consume more, they pay a higher petrol price anyway, because the petrol tax is very high. And they pay higher prices for COEs anyway. So my appeal to the Minister here is to look at all the charges now that we have the COE. The COE has doubled to over a billion dollars. Surely it can be returned back to the motorists in other forms. And a lot of charges may no longer be valid.

Sir, various measures were introduced to dampen the growth of the car population - the ARF, high road tax and parking fees, especially the $60 fee for a private parking lot. And there is the ad valorem duty on petrol, culminating to COE. Now that the car population has been brought under control, the Government ought to reduce road tax as well as ARF. In my view, to regulate the increase in the car population, the Government should put in practice the pay-as-you-bid system. This has already been mentioned by a number of my colleagues. Next, the MAS should regulate car financing. The Prime Minister has mentioned the fact that despite high COE prices, people could still afford to buy cars. He is suggesting that this shows that Singaporeans are very affluent. I beg to differ in this respect, simply because it is not so much the affluence that people are able to purchase cars, it is more a case of the ease with which people can buy cars. Because most of the finance companies in Singapore now give 100% financing. You can pay $8,000 or even less to drive away a brand new car. Therefore, the increase in the COE makes no difference whatsoever to the people intending to buy motorcars, simply because they do not have to put a heavy downpayment. They put an initial small sum, there you are, they can drive away a car. It is more or less like a hiring basis. They pay on a monthly basis and when they are unable to meet the hire purchase instalments, they just give up the car. If you work out the transport and communication costs in Singapore, I doubt you will lose very much on that. Singapore is slowly becoming a hire purchase and instalment payment society. You can pay for everything by instalment or by hire purchase, from electrical appliances right up to a house. So it is not affluence. You can only say affluence when you can pay a lump sum to purchase a property, not when you can pay $20 and get a fan or $10 for a washing machine. It is not affluence. Therefore, I suggest the pay-as-you-bid system. At the same time, the MAS should step into the picture and regulate car financing. Anyway, MAS has already done in respect of credit cards. At one time, if your income was $1,500, you could get an ordinary credit card. If your income was $2,000, you could get a gold credit card. MAS has stepped in to impose a minimum income before you can get all these things. Why not introduce this in respect of car financing? Because it is not only that you can get 100% financing for hire purchase, but the period of repayment has been extended to 10 years. In the past, it was between two and three years, depending on whether the vehicle is new or second hand. But now, for a second hand car over 10 years, you can even get a 10-year repayment scheme. It is no wonder that COE keeps going up and you get more people buying cars. 3.45 pm The MAS should step in and impose a minimum income before a finance company can give a loan to a motorist. If you want to buy a car, you must be able to pay at least 50% of the purchase price, including the COE. Therefore, those who are going for status symbol, they pay for it. It will make Singaporeans more prudent. They will seriously consider whether they are in a position to buy a car. Before they decide to buy a car, they will look into their coffer to see whether they have enough money to pay for the downpayment. That would restrict those who do not seriously need a car, but rather as a status symbol. I hope the Minister would look into this aspect. With the reduction of the road tax and the ARF, and the MAS stepping in with this restriction, the price of COE will come down because there will be less takers bidding for it. And with the pay-as-you-bid system, the price of COE will come down. This is what will happen with the pay-as-you-bid system. I would also suggest that the Government do away with COE for taxis. I have read some reports that the taxis also cause obstruction. But COE and private cars are a different kettle of fish here because taxis are doing a service. It is a service-oriented form of communication, unlike a motor vehicle which is used for pleasure or business. So I would therefore urge the Minister to consider doing away with COE for taxis. With the increase in the price of COE, the next step is that the taxi driver who hires the taxi would have to pay more hiring fee and he would pass that on to the commuters, resulting in the commuters paying more for the taxi fare. It would only enrich the Government's coffer. They are indirectly asked to pay to the Government.

Sir, I would also like to join in the debate on the issue of COEs. However, as I listened to Mr Ling, I did get a bit confused. So hopefully my speech will be more coherent. Sir, the objective of the vehicle quota system is to control the number of vehicles on the road. I would like to congratulate the Ministry for successfully implementing this very innovative system, being the first in the world. Its success can be attributed to the fact that Singaporeans by and large accept the rationale for the quota system. Despite the many complaints about the escalating quota premiums, there are actually very few complaints about the need for a quota system to keep our roads free. However, as the speaker before me has said, the quota system did not start off as a means for the Government to raise revenue. I would also echo Mr Chia's point here that an increase in transportation cost is a burden to everyone, directly or indirectly. It raises the cost of doing business in Singapore. It is a sponge that soaks up the liquidity in our economy. Over the past 12 months, more than $800 million in COEs has been collected. With so much money mopped up by COEs, it is not a surprise that there is actually very little money left in people's pockets to spend. This could be a major contributing factor to the poor performance of the retail industry in 1993. Another major complaint about the COE system is actually the very rapid ramp-up of the COE quota premium, in particular, the increases experienced during the second half of 1993. During that period, the increases were in the order of $5,000 per month. Since then, the bid prices have turned downwards giving motorists a temporary respite. Nonetheless, the March 1994 COE prices which have just been announced still exhibit significant variations and volatility. To me, Sir, this volatility illustrates that under the current Dutch bidding system, the quota premium is very responsive, maybe too responsive, to market demand. From the motorist's point of view, this fluctuation is undesirable. I believe it would serve the interest of all buyers of vehicles that speculative meddling of the bidding system be minimised. I would urge the Minister to reconsider the merit of converting back to the pay-as-you-bid system. If we do a mental experiment, it is very easy to see that bidders of COEs under the pay-as-you-bid system will be more conservative in submitting their bids resulting in a more orderly and less volatile market. Over the long term, Sir, it does not matter which system we adopt. On a steady state basis, the quota premium will be determined by supply and demand. However, by dampening the rapid movement, I think the speculative element can be removed. The fundamental justification of the COE, as I said, is to control the number of vehicles on the road. However, by making the COE system a completely free tendering system, the end effect is that for the senior citizens in our country who have got used to owning a car in the past, they have been priced out of the market place. So I would also ask the Minister whether in the COE system that is being implemented, can we make a special provision for people, like our senior citizens who have retired, to give them a special place in this bidding system? In conclusion, I would like to urge the Minister to try his best to moderate price fluctuations. We should give the pay-as-you-bid system a try. Sir, the next topic I would like to speak on is liberalisation of the telecommunication services. Sir, Singapore Telecom is now a private company. As a private company, its obligation to its shareholders, first and foremost, is to maximize profit. Therefore, to ensure that there is a balance between price and services, competition in the telecommunication service sector must be brought to bear. I urge the Minister to speed up liberalising the market for various telecommunication services and open the market to other private operators. This indeed can be very easily achieved in the area of mobile and wireless services like pagers and handphones. I find it hard to learn that in Singapore there is only one pager service whereas in a city like Hong Kong there are many pager companies. In the case of mobile telephones, even Kuala Lumpur has more than one system. I believe they have three systems. Furthermore, the service level of the Singapore Telecom mobile service can be improved. I have received many feedback complaining about the poor coverage of our mobile phone system with many blind spots as one travels around the island. I believe Singapore Telecom can give many, many technical reasons to explain away the problems. However, I believe that if we allow competition in this area, the service level will improve by leaps and bounds. Sir, I think it is time to provide our people with a choice and a better service in the telecommunication area.

Order. I propose to take the break now. Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Order. I suspend the Sitting and will take the Chair again at 4.15 pm. Sitting accordingly suspended at 3.55 pm to 4.15 pm. Sitting resumed at 4.15 pm

Debate in Committee of Supply resumed.

Head I (cont.) -

Sir, I would, first of all, like to respond to the concerns expressed by both Mr Robert Chua and Mr Chia Shi Teck about the impact of our land transport policy on business. I think the point was made that in some way the land transport policy has raised cost which, in turn, has made it more difficult to do business in Singapore. Statements like these coming from two very prominent businessmen, I think, should not go unchallenged. Sir, what is the objective of our land transport policy? Is it to raise business cost, as alleged by the hon. Members? Surely not. Our objective is to keep our roads free-flowing so that goods and people can move about with minimum hassle and minimum cost. And roads that are free from congestion, they are very much a part and parcel of the infrastructure that we want to provide. It is as important as a world-class airport, a world-class port, good telecommunications. So the point I want to make is that our land transport policy serves to enhance, not stifle, our economic competitiveness. It serves to minimise, not raise, the cost of doing business in Singapore. I think all businessmen realise that you do not get paid until your goods actually reach the customers. The longer the goods take, the slower you get paid for delivery, and sometimes you do not get paid at all. I came across an article in Asiaweek recently. It quoted a story of an Indian garment maker who had to deliver 10,000 blouses to Zurich in two weeks. So he had his workers, 300 of them, working round the clock. They finished everything in time, in 10 days. But, unfortunately, a traffic jam outside Bombay meant that a three-day journey became five days, and the next available flight out was in two days' time. So the Swiss factory cancelled the order. Congestion is a problem faced by many cities. We are not unique. It is a problem of success. It comes with rapid growth and development. Previously, the cities that faced such problems were London, Tokyo. Now, we have got Seoul, Bangkok, Kuala Lumpur, Jakarta and, I believe, it is now a problem in Shenzhen and Shanghai. And I dare say that very soon, it will be a problem in Ho Chih Minh City and Hanoi as well. So the authorities in these cities understand and realise what needs to be done. They are aware of the tremendous cost that congestion imposes on their economy and on their citizens. I think there are many studies that have been made on this subject. I just pick one that was done recently, and this was by the Confederation of British Industry. They estimated that traffic congestion adds something like o15 billion annually to industrial cost in the United Kingdom. So I did a very rough back-of-the-envelope calculation. The UK has something like 60 million people, so for every man, woman and child in the UK, you are talking about something like S$600. Sir, the point is that congestion is very costly; it is not cost-free. And preventing congestion in Singapore does not come cheap - that I must admit. Because we are short of land, we are short of resources. It is like clogged arteries and heart disease. I think the Prime Minister made an analogy once that our roads are like the arteries, congestion is like clogging of the arteries. This comes with a rich diet. It is a rich man's disease. So what is the cure? Surely you do not stop eating. You adjust your lifestyle, you make sacrifices, you watch your diet, you change, you take your medicine like the doctor advises you to. But as the doctor will also tell you - prevention is better than cure. And hon. Members, this is the message: that to tackle our traffic congestion problem we must be prepared to take our medicine in order to prevent the disease, rather than later on try and cure it. Many cities have found out that once you get into that position, it is extremely difficult to cure it. Recently, I heard Mr Goh Choon Kang in Parliament talk about the need to have policies that both dam as well as dredge. I thought it was a very apt analogy. I wanted to take this opportunity to assure him that in the formulation of our land transport policy, we do not just dam, but we also dredge. As I said, Singapore is not immune to this rich man's disease. Every year, our workers, our managers enjoy higher pay, they enjoy good business, and some of them even made a killing on the stock exchange, and they all want to buy a car. Contrary to what Mr Ling How Doong said that Singaporeans do not have money, I came across this quote. It so happens that I have it here with me. It was in the Business Times. If I may, Sir, in Singlish, quote what this car dealer said: `For some people, no car is like no legs. You got no money, you can't say anything. But Singaporeans got money. So?' I thought it captured very succinctly what the whole problem is all about. So if we want economic growth, if we want our managers and our workers to continue to enjoy higher salaries and good bonuses and, at the same time, enjoy a good quality of life, then we must not only be able to meet his transportation needs but we must also be able to meet or manage his aspiration for his car or his motorbike, his own set of wheels, all the while bearing in mind that we need to keep congestion under control. So, first of all, we start off with town planning, we have a good network of roads, we have efficient public transport and, last but not least, we manage the growth and usage of vehicles. We do this, as Members are now well aware, through a judicious mix of both usage as well as ownership restraint measures. By having more usage measures, we are able to release more COEs for cars. Sir, there have been many suggestions from Mr Ling, Dr Wang and Mr Heng Chiang Meng who made a very innovative, although a bit complicated, suggestion about COEs. But the point of it all is that, at the end of the day, no matter what system we use, ultimately, so long as people want to buy a car, so long as people can afford to buy a car, and so long as this desire or demand outstrips overwhelmingly the supply that we are prepared to release in the form of the vehicle quota, then surely no matter what system we use, pay-as-you-bid, two-category system, or Heng Chiang Meng's system, it is the supply and demand that will determine the prices. Sir, Mr Chia Shi Teck asked for a review of the vehicle taxes. He distributed a table which shows that there is a whole series, or categories, of taxes, both for ownership as well as usage. I do agree with him that these taxes had evolved over time and that we should have a review of these taxes. My Ministry will be doing a review of such taxes, bearing in mind the fundamental principles that we want to maintain a congestion-free environment and bearing in mind that those who contribute to congestion, whether it be private car, taxi, or goods vehicle, must bear a proportionate share of that cost that they impose on the community. So the more congestion you impose, it is only fair that you bear a higher price in terms of taxes. How we package those taxes, whether it be in the form of ARF or import duties or in other forms, is really a matter that we can discuss. However, when he mentioned about the review of some of the taxes, I just thought I would mention that some of those taxes have a road transport objective to them. For example, the question of why extra tax for old cars. I think this is a point that has been brought up in this House several times. I just wish to mention that our records show that old cars do have a higher breakdown rate on the roads. They do demonstrate that they are less roadworthy even though they go for regular vehicle inspections. So there is a basis for my saying that old cars actually have the potential to create problems on the road - congestion, disruption to traffic flow and so on. And this is the reason why the Ministry has imposed this extra burden on the owners of old cars. But, as I said, there are other taxes which we are currently reviewing, including this question of double fees for "Q" cars. Sir, I must mention also that the other pillar of our road transport policy is public transport. I want to bring public transport into this debate because I think it is very obvious to all of us that we cannot continue to impose this heavy burden or to restrict the growth of cars to manage the aspiration of people to own cars without giving them a reasonable alternative. I am not saying a complete one-for-one alternative, but a reasonable alternative. So we now have a range of public transport services provided on the one hand by the taxis and on the other by buses and MRT. And I want to make this point to Mr Ling that taxis, although they form part of the public transport system, are equivalent, for all intents and purposes, to private cars and, in a certain way, they are actually better than private cars because you get chauffeured around. If taxis are like private cars, if they create the same amount of congestion on the road, then surely there is no reason for us to either exempt them from COEs, reduce taxes, or whatever. The proper solution must be to price them correctly and then make sure that they find the balancing mechanism in order to make a good living on the roads. The solution is not to reduce the taxes. The solution is certainly not to exempt them from COEs. I just want to make this point clear first. So "basic" bus and MRT services, as the word says, mean basic services. It provides affordability and accessibility to many people who do not have an alternative. And to keep bus and MRT fares affordable, Government subsidises, bears a heavy cost of the public transport infrastructure - bus stops, interchanges and, of course, the MRT network itself. 4.30 pm Mr Heng also suggested last week in the Budget debate that, perhaps, the Government should use some of its revenue from COEs to subsidise unprofitable routes. I believe Mr Goh Choon Kang, just now, also suggested that we should use some of the COE money to subsidise the MRT routes. As I indicated earlier, the Government will pay for the cost of infrastructure, but it will not subsidise unprofitable routes. The trouble with subsidising unprofitable routes is very simple. You really do not know where to stop. In our present system, we use the PTC to control the fares and we use PTC as the arbitrator to make sure that the bus operators and MRT are reasonably profitable and they operate a whole package of both profitable and unprofitable routes. It is far better, I believe, to spend the COE money, which is public money, to subsidise infrastructure on the condition that the operators are prepared to run the service without subsidy. This is the best assurance that the public's money is spent in a most cost efficient manner and is not poured down a black hole, as it were. Mr Goh Choon Kang and Mr Ling also expressed unhappiness, perhaps unhappiness is an understatement, over bus route changes under the MRT-bus integration programme. I know many Members in this House are very disturbed about some of the changes and they have communicated this personally to me and to my Ministry. Let me take this opportunity to explain again why my Ministry and the PTC supported and approved these changes. The PTC has been entrusted with the responsibility of making sure that the interest of commuters are looked after. At the same time, it has to make sure that the operators remain viable. This is the cornerstone of our public transport policy. So a major responsibility of the PTC is, therefore, to keep the fares affordable and, at the same time, make sure that the operators are financially viable. The PTC has made it clear to the operators that it will not simply approve fares. It wants to make sure that the operators are operating with maximum efficiency, maximum productivity, so that wastages are eliminated from the operations. So it will simply not allow operators to pass on the increased costs to the commuters without making any attempt to offset such costs through higher productivity. The operators accept and understand this. The bus companies, in particular, I must say, have been singularly successful in this respect. First, they introduced the feeder service concept. Then they have the OMO concept which has resulted in the fares being held constant for almost 10 years, from 1981 to 1990, and this was the period when manpower cost and other costs were shooting up. So what happened when the MRT was introduced? There was a sudden quantum jump in capacity. We suddenly had virtually a doubling of capacity. If we had done nothing, if the operators had done nothing, the bus routes were left running in parallel with the trains, what would you get? You would be getting buses running half empty and trains running half empty. If both buses and trains were to survive without increasing fares, they had no choice. Either they raise fares and keep on running, or they had to start to integrate their operations. And in the process of doing so, they had been able to save buses and drivers from one area. Yes, services were taken away. But these were redeployed to other areas to serve other commuters. In the process, productivity went up because you are now using the same number of buses in order to serve more people. So what I am saying is that the restructured bus network that has been put in place will pay off by keeping fares low, by minimising fare increases. Sir, the issue is not competition, as Mr Ling tried to point out. There was competition in the 1970s. There were 11 bus companies in the 1970s running services all over the island. Then when the 11 bus companies found that they could not make a go of it, they merged and they coalesced into four, from four they went into three, and finally into one. I ask Mr Ling: was the service level of the buses better than when there were 11 companies? Many Members in this House would have been familiar with the conditions then. I can state categorically that the service conditions were no better than today. In fact, I say that they were much, much worse. So competition is not the answer, it is not the solution per se. I am not saying that competition is bad. But I am saying that, in this particular case, it is not the automatic solution to the problem. Hong Kong is well known for adopting laissez-faire economics in solving and managing its affairs. In the area of bus services, it has a regime of controlled competition, not free for all. Kuala Lumpur has many bus companies and recently they put up a proposal to put all the various companies into one holding company in order to improve the level of service. So we must improve, we must keep on trying, we must continue to improve the public transport service. But we must not trot out solutions which had been tried before and have not succeeded just for the sake of arguing. Sir, the Member for Braddell Heights, Mr Goh, mentioned just now that we should allow some private buses to operate scheduled services. Sir, I am agreeable to this. I am open to this suggestion. The PTC is also open to this suggestion because I know that they have, in the last few years, approved many of such applications. I have a list of them here. They tell me that they have approved shuttle services into private estates and condominiums. They have approved sightseeing bus services for tourists, and so on. These services will be supplementary to the basic bus services of the public transport system, the backbone, as he calls it. Yes, it is an idea worth looking into. And, in fact, the PTC, together with ROV, is presently looking into extending the scope of these special services to meet the demands of commuters who may want a better level of service, better than the current basic bus-MRT service that they are getting, and they are prepared to pay for it. So currently, as he has indicated, there appears to be a gap in the range of public transport services that are available. It is either taxis, bus or MRT. So I hope that this scheme which Mr Goh had raised and I support, and I have called it the Bus Plus in a recent interview, can effectively fill this gap and will help to supplement the basic bus-MRT service, and maybe even help to alleviate the demand for taxis. I must make it clear, however, that Bus Plus will not be part of the basic bus service. It will have no universal service obligations and it will be given maximum flexibility in route planning. It will offer better quality service at a premium, if there is a demand and if the commuters are prepared to pay. So the fares will have to reflect the full operating costs of such a service. It will not enjoy cross-subsidies from the current bus-MRT network. Sir, Mr Koo Tsai Kee asked whether my Ministry would encourage taxi operators to run a space wagon type of taxis. I do agree with him that these vehicles are a boon to large families. I myself drive one of these vehicles. So I can vouch for what he has said just now. Sir, ROV does not specify what type of taxis the company can put on the road. The carrying capacity that is currently licensed is according to what the manufacturers say. If there is a demand for such high capacity taxis, I am sure the taxi operators would take note of it and would respond accordingly. This demand, by the way, can also be met by mini buses. So this possibility could also be examined under the Bus Plus scheme that I mentioned just now. I have a few other minor points I want to address. Mr Ling How Doong was asking whether we should regulate financing. First of all, he says that people go for hire purchase because it is easily available, but the people really cannot afford to buy a car. The people are not really affluent. I thought finance companies lend on the basis that they are going to get their money back. They do not give money away. So if they are prepared to lend 100% and if they are prepared to stretch the repayment for as long as possible, it seems to me that they have confidence in the ability of their clients to repay that loan with interest, with high interest I presume. So I do not see the logic when he says that Singaporeans cannot actually afford to buy a car and it is only financing that makes them able to buy a car. Mr Ling suggested reducing road tax and ARF to make it cheaper and more accessible to buy cars. How will this lower COE prices? I would have thought that by making it cheaper and encouraging demand, you are actually raising COE prices, not lowering it. Dr Wang Kai Yuen suggests that we should have special consideration for senior citizens. I think we should always find ways and means of rewarding senior citizens. However, I think it is difficult to find a mechanism which will allow us to reward senior citizens in this way without creating a whole host of new problems for us. Why senior citizens? What about the young graduate who has just come out from the university? What about the businessman who needs a car badly? What about the handicapped and the disabled? I think all of these categories and more, if one were to think about it, would have equal, if not greater, justification for special consideration. 4.45 pm I think it is much easier if we just stick to our current system and everybody has a fair go, tender for it rather than ballot, as Mr Robert Chua suggests. Because in the process, anybody who wants it, who can afford it, will be able to get it. If you ballot for it, the lucky ones will get it. If you tender for it, yes, the Government collects a lot of money from COEs, but this money goes into consolidated revenue and it comes out again in the form of expenditure for education, health, public housing and so on. Balloting it, the money goes into the pockets of a few people. Is that a better system? I do not think so. Finally, Sir, if I may just address very briefly Dr Wang Kai Yuen's point about liberalisation of the telecommunications market in Singapore. I agree with him that we should liberalise. And indeed, even before April 1992 when TAS hived off Singapore Telecom, we have actually started to liberalise. All the customer premises equipment like telephone sets, mobile phones, PABXs, value-added networks and so on have all been liberalised. Yes, we can do more. However, in introducing competition, I just want to sound a word of caution, ie, we need to ensure that there will always be long-term benefits to Singapore. So we must maximise the use of our scarce natural resources like land, like radio frequencies which are a limited resource. So better customer choice, on the one hand, has to be weighed against the possibility of wastage, of duplication in services. Yes, we are adopting a policy of liberalisation and we will do so progressively to allow both the regulator, which is TAS, as well as the operators to adjust to operating in a competitive environment. Once the initial adjustments are made, the pace of liberalisation can pick up. Although Singapore Telecom has been granted exclusive rights to operate basic domestic and international telephone services until the year 2007 and cellular and paging services until April 1997, TAS has already introduced further competition in some selected areas like coin-operated telephones, mobile phones, rental services and so on. The liberalisation process will be accelerated this year. Later this month, TAS will be calling a tender to invite applicants to provide public mobile data and location tracking services. These are services which can be used to track delivery vehicles, courier vehicles and so on. The next step is the liberalisation of cellular mobile telephone and radio paging services when Singapore Telecom's exclusive rights in these areas expire in March 1997. TAS plans to invite prospective operators to submit proposals to provide these two services by the end of this year. The plan is to award the tenders for these licences in 1995, in order to give sufficient lead time for these operators to put up their infrastructure to set up their network, so that they will be able, come April 1997, to offer commercial services. In order to ensure that competitors can come in and compete on a level playing field with Singapore Telecom, TAS will define the principles of access by a second or third operator to ST's network. And they will also regulate the interconnect charges to be imposed by ST on competitors. The details will be announced when TAS calls for the tender later this year.

Sir, thank you for allowing me to join in this debate. The Minister mentioned that during the Budget debate, I came up with some suggestions. Sir, on the Minister's argument for a free flowing road system in Singapore, I do not think anybody argues with that. It has already been amply answered by the acceptance of the vehicle quota system, and nobody really argues with that. The Backbench accepts that. The public accepts that. But what is not acceptable is this. Is the current COE bidding system the best sub-system under the vehicle quota system? That is the point that I raised earlier and by most of the Backbenchers earlier this afternoon. Sir, it basically means whether the current COE system is producing the most efficient price system for the road transportation system in Singapore. Even if it is so, why not try other sub-systems within the present vehicle quota system? If the Minister says my suggestion is complicated, I think it is less complicated than the CPF system and the HDB system that we have. Just one more point. I beg your indulgence, Sir. I just want to ask why does the Ministry not say so if the policy is that, in addition to the vehicle quota system to keep the roads free flowing, the secondary object of the Ministry is to collect as much revenue as possible. I think the Minister should let the House know that this is the case.

Sir, I am glad to know that the Member has accepted that the vehicle quota system is an effective solution and it is here to stay. The COE system that we have implemented is part and parcel of this quota system. I do not think there is any evidence that the system that has been proposed by Mr Heng Chiang Meng or the pay-as-you-bid system that has been championed by many Members in this House is superior to the current system. An hon. Member: Why not try it?

Why not try? If it does not work, do we go back to the old system? What happens to the people who are affected by the current system? What about their opinions? What about the person who does not find himself comfortable with the pay-as-you-bid system, the person who is unfamiliar with the system, the person who would be disadvantaged by the system? Sir, I think at this point in time, I would just like to mention the fact that although not many people have championed the current system in this House, there have been ample studies done, including academic thesis in the local university, that at the end of the day, whether it is the pay-as-you-bid system or whether it is the current system, you cannot run away from the fact that if many people want to bid for very few licences, the COE prices are going to go up. And is this not why Mr Heng and others are championing the pay-as-you-bid system? That in some way, it is going to lower prices of COEs. Really that is what we are talking about. Sir, if we wish to, I think we can probably have another full debate on this. I do not think that at this stage your indulgence should be stretched any further.

Sir, just one clarification. I did not suggest using COE revenue to subsidise MRT fare. What I suggested was to use part of the revenue to build more extensions of MRT lines. Is it all right now for the Minister to say yes?

Sir, the two are quite unrelated. If there is a need to build more MRT lines, if the new MRT lines will serve areas which will make it viable to operate, the Government will build the MRT lines and justify it on that basis. It has spent $5 billion for the first line before COE monies came into the picture. It is now doing so for the Woodlands line, and it will continue to do so. The next line probably will be the north-east sector line and thereafter many other areas in Singapore, if the demand justifies it. There is no point saying that because we have got all these monies coming from COE, therefore we should start to build MRT lines all over the place. The two are simply just not connected.

Sir, I guess I just have to wait for another sitting to raise the same question. Sir, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

Amendment No. (2), Mr Chng is not here. Amendment No. (3), Mr Teo Chong Tee.

Sir, I beg to move, That the sum to be allocated for Head I of the Main Estimates be reduced by $10 in respect of Code IC 1500. Sir, SBS should play a more significant role in encouraging commuters to leave their cars behind and use public transport. It almost has the monopoly in running the bus transport in Singapore. Therefore, it must bear the responsibility of providing efficient and adequate bus transport for all, besides making money for its shareholders. SBS has not totally fulfilled its obligations to help improve the public transport system in Singapore. How can it, when it refuses to serve the less lucrative routes. Being unwilling to ply the less lucrative routes, a great number of Singaporeans will be greatly inconvenienced. The Ministry of Communications must look into this anomaly and intervene. I have earlier appealed to the Minister to request the SBS to reinstate bus services 149 and 390 to Changi Airport. But in spite of my repeated requests, SBS's position is that those were service duplications and withdrawals were part of a package to revamp bus services to the Airport. There are about 30,000 workers and most of them need fast and efficient bus services, as the nature of their jobs require them to be punctual. But now the travelling time is longer. To revamp the bus services to provide better services is one thing. But to use it as an excuse to cut down costs with utter disregard for the commuters is another, and thus cannot be accepted. Many people are still coming to see me, especially those doing shift duties and working at odd hours, to get SBS to reinstate the services terminated. It is quite understandable for them to get angry at the SBS as a result of the withdrawal of such essential bus services to the Airport, because they are the people who have made Changi the best airport in the world. Yes, Changi Airport has won many accolades. It will soon win another one, ie, the number one airport with the poorest public transport - no train, no bus! Over the past few years, SBS has also withdrawn some bus services to my constituency, Changi. The standard reason it gives is that it is part of the overall network integration for MRT and buses. Has SBS taken into consideration, in the process, the number of people it has inconvenienced? One example, many residents who live in Simei Estate, which is in my constituency and who work in Changi Airport have been asking SBS service 27 to ply Simei Estate for their convenience, but to no avail. The only response from SBS was distributing to Simei residents the so-called survey forms, which were so complicated and tedious. Only the literate could complete. Many such forms were thrown into the junk mail box at the void deck. 5.00 pm Commuters have no quarrel with the integration of MRT and buses. But SBS should not use the integration process as an excuse to withdraw services from all unprofitable or low demand routes. If SBS cannot satisfy the travelling needs of Singaporeans, the Minister should seriously consider allowing public tender of these so-called unprofitable or low demand routes. A moment ago, the Minister had said that he was prepared to give it a go for small scale operators to operate. Small scale private transport operators may find it viable. They may be more responsive to the needs and demands of the commuters. Perhaps, the planners could also study the Hong Kong public transport system and see whether or not it is practical for it to be introduced in Singapore. Sir, once again I make this appeal to the Minister for Communications to look into the needs of the bus commuters in Singapore.

5.02 pm

Sir, many Members have pointed out the deficiencies in our land transport programme. Although we do not have an ideal one, I think Singapore does have a good land transport system. Those who dispute it need only to travel outside of our country to appreciate what we have. Our roads are not choked with paralysing traffic jams and we have some form of public transport 24 hours of the day. Take the United States, for example. In many cities, the people do not have a good public land transport and the car has become an almost essential means of transportation for most people. In the United States, the debate is whether it is because of the availability of cheap cars that the public land transport cannot be developed or, whether in the first place, it is because of a poor public land transport programme that the car has become essential. For obvious reasons, we cannot have this situation in Singapore. Our land transport system must be an integration of both the public and private transport services in a complementary role. Car ownership in Singapore, we have heard, does not come cheap. Consider this: a prospective car owner has to pay almost a dozen taxes or levies of one kind or another before he can start to enjoy driving it. To begin with, he has to pay income tax, because cars are bought with after-tax money. Then comes the COE, followed by Customs and Excise duties, ARF, registration fees, road tax, insurance, ALS and soon the GST, and later on the ERP. Singaporeans are very practical people and will not unnecessarily part with a huge sum of money for a car when this same sum of money can buy them an investment property elsewhere. So the car, to some people, has become a necessity, and not just a show of wealth. This implies that we have to further improve our public land transport programme. Our land transport programme is a symbiotic one which involves the MRT, buses and taxis. Because of the availability of alternatives to the commuters' advantage, no operator of any one type of public transport can raise his fare to a self-destructive level. This was clearly demonstrated by the boycott of taxis in 1985 when fares went up because of the diesel tax hike. The public just went for the buses. On the other hand, operators of public land transport cannot be expected to run at a loss. We have heard the reasons for this, just given to us by the Minister for Communications, why some bus routes which are loss-making have to be removed or re-routed in the rationalisation of the service through its linkage to the MRT. By reducing the subsidies to the less lucrative routes, the price for a ride on a more profitable one need not be raised. Sir, this has caused much unhappiness in our commuters whose buses have been affected. Many MPs, the most vocal of whom, of course, is the Member for Changi, have come back with feedback on this to the House. There have also been many complaints in our newspapers about this. There is a way to address the problem. Mr Goh Choon Kang has alluded to this and several other MPs as well. This is to introduce an alternate bus system using mini-buses. I would like to elaborate and give my suggestions on this. We can retain our larger buses and convert them into express commuters linking the new town bus interchanges, MRT stations and places of public interest. They should run on fixed schedules along only major routes and have fewer stops, and only then at restricted points. This would then shorten the travelling time and lessen congestion due to frequent filtering into and out of bus stop bays. The mini-bus service, on the other hand, should be as flexible as possible with regard to routes, drop-off and pick-up points within its area of operation. It could even be a door-to-door service and the whole island can be divided into different zones. Each mini-bus service is given a zone and it can only operate within its designated area. Mini-buses can then be linked to the arterial bus routes and MRT stations to enable travel across zones and into the central business district. In order to improve service, competition should be involved and the mini-bus services should not be run by TIBS or SBS. The Town Councils, for example, could run these services. Sir, with the public bus service improving, some car owners can be persuaded to leave their vehicles at home and we will achieve what our Minister for Communications wants to do, the objective of not restricting car ownership but controlling its usage.

Sir, we have heard a lot of arguments on COE, unhappiness expressed by those who are affected by re-routing of some bus services and the call for the construction of more MRT lines. But, in all fairness, transportation in Singapore is one of the most efficient in the region and far better than many throughout the world. This fact few can dispute. But it does not mean that we cannot have more ideas to be tested to improve the system. I understand that the park-and-ride scheme has been revived by the SMRT, HDB and URA on 1st October 1993. Car parks are provided at MRT stations at Pasir Ris, Simei and Eunos on the Eastern Line, Clementi and Buona Vista on the Western Line and Yio Chu Kang, Bishan and Toa Payoh on the Northern Line. However, I believe that not much active promotion has been given since this scheme was introduced. At the present moment, the scheme is for the car owner to get a monthly parking disc of $30 to park in the car park near the MRT stations. In addition, he has to get a $40 MRT stored value ticket, which is valid only for that particular month for travelling on the MRT, and no refund will be given for any unused value on the ticket. I do not know whether it is because of the lack of publicity or economically not attractive enough that the scheme is not as successful as it is intended to be. I would therefore like to suggest to the Minister to consider reviewing the scheme by lowering the monthly parking charges to a more attractive amount, say, $10, or even free. Yes, "free" is a very unmentionable word in our Singapore context. Also, they should not impose any restriction on the $40 MRT stored value ticket to encourage more car owners to take part in this park-and-ride scheme. For a change, the Minister should perhaps consider the use of incentives to encourage car owners not to drive into the CBD rather than have disincentives and charge them for going into the CBD. I hope that the SMRT, HDB, and URA would refine the park-and-ride scheme taking into consideration my suggestions. If the scheme is proven successful, they should consider extending the scheme to more locations to reduce the number of cars going into the CBD. Perhaps, then, more cars can be made available for the aspiring car owners.

Mr Chew Heng Ching, can you speak on your two subjects together.

Sir, the whole-day Area Licensing Scheme (ALS) has been in operation since 1st January this year. When the ALS scheme was introduced many years ago, many people greeted it with scepticism. However, with the scheme being in force now for a good number of years, I think one can see the improvement in the traffic situation during the peak hours in the CBD. Sir, the whole-day ALS is an extension of the ALS. In theory, traffic congestion in the CBD during the non-peak hours should ease with the introduction of the whole-day ALS because people will not drive into the CBD unless it is really necessary. But, Sir, I ask this question: how long will this last? There is always a tendency that after a while motorists will not be swayed by the imposition of a $2 licence for entering the CBD during non-peak hours. Indeed, I am of the impression that this has already happened since on the many occasions in recent weeks when I entered the CBD area during lunch hour, I notice that the traffic seemed to have worsened since 1st January. May I therefore ask the Minister this question: if the whole-day ALS scheme has not been effective in reducing traffic flow in the CBD so far, and if the survey conducted to-date shows that the scheme has not been effective after all, what modifications will the Minister make to the scheme? The scheme is also extended to 3.30 pm on a Saturday and with many companies operating within the CBD area working on a 5-day work week, and increasingly more Singaporeans are shopping in the CBD on Saturdays, will the Minister consider lifting the ALS on Saturdays from 10.15 am onwards? Sir, I move on to the next topic. One cannot argue that among the numerous measures implemented to-date to control our vehicle population growth, the COE method, however unpopular, is the most effective. It determines the number of cars allowed on the road based on our projected road capacity. Sir, based on the Government's long term development plan to improve the road network and increase road capacity, will the Minister tell us the projected number of COEs to be issued per year in the next five years or at least up to the introduction of the Electronic Road Pricing system? How do these projected figures of COEs compare with the number of COEs issued each year in the past few years, since the COE system was implemented? Sir, I ask these questions because I think it is useful for Singaporeans, particularly those aspiring to be car owners, to know that the Government is consciously expanding road capacity to allow more and more cars on the road without aggravating our road traffic situation. This will be borne, hopefully, by the projected number of COEs to be released in the future.

Dr Wan, can you speak on your two subjects together.

Sir, I would like to speak on the validity period of the COEs for taxis. But first I would like to declare my interest as the Chairman of NTUC Comfort (Pte) Ltd which runs a fleet of 8,500 taxis in Singapore. 5.15 pm At present, taxi COEs, which are not transferable, are valid only for six months. However, it takes about five months from the point an order for a taxi is made to the time it can be put on the road. Should there be any delay due to production, shipment or administrative problems, the entire process may take more than six months, by which time the validity of the COE would have lapsed. Taxi suppliers generally do not find it economical to keep an inventory of taxis, unlike private passenger cars, because, firstly, the taxi market is much smaller and, secondly, the taxis are "custom-made" in that a blue taxi can only be sold to Comfort, a red and white one to SBS, a yellow taxi to Singapore Commuter, and so on. This is very much unlike private cars, which can be sold to any buyer, and for which there is also a much wider demand. Given the short taxi COE validity period and the fact that taxi companies do not find it economical to keep an excess taxi inventory, the taxi companies sometimes find themselves in a situation where taxi licences issued by Government are not translated into actual taxis on the road. To exacerbate matters, there are also times when taxi companies have taxis available but no COEs to register these taxis. I come to know that some companies have more than 100 taxis but there are no COEs for them to put the taxis on the road. With a longer validity period for these taxi COEs, this problem might not arise as taxi companies might be prepared to take a longer term view when they bid for COEs. This will ensure that they have sufficient COEs when their taxis are delivered by the suppliers in Singapore. Further, since these taxi COEs are non-transferable, there is no need to impose a tight schedule on their validity. I would, therefore, suggest that the Minister for Communications consider favourably extending the validity period of the taxi COEs to, say, nine months or even one year. This would make it operationally much easier for both taxi companies and the taxi suppliers. Sir, I now wish to speak on the taxi fares and taxi drivers' earnings. In a table which I have already distributed to the House, which is a comparison of taxi fares in selected countries, I have compared taxi fares in Singapore with other major cities like Tokyo, London, New York and, closer to home, Bangkok and Kuala Lumpur. For a more meaningful and fairer comparison, I have also looked at the country's per capita GNP of these cities. The GNP per capita figures roughly reflect the relative standard of living in these countries. Sir, the table gives us an interesting picture. Japan has a per capita GNP which is 80% more than Singapore's, but the taxi fare in Tokyo is 7 1/2 times the taxi fare in Singapore for a 6.9 km trip. Similarly, the United States' GNP per capita is only 50% higher than Singapore's, but taxi fare in New York is three times that of Singapore. The taxi fare in London is also three times higher than Singapore's, although the per capita GNP of United Kingdom is only 13% more. Hong Kong's GNP per capita is comparable to Singapore's, but their taxi fare is 1 1/2 times more than ours. Taxi fares in Bangkok and Kuala Lumpur, at first sight, may appear to be cheaper than in Singapore. But, taking into consideration each country's per capita GNP, it is not so. For instance, Thailand's GNP per capita is much lower than Singapore's, about one-eighth, but the taxi fare in Bangkok is about the same as ours, and not, as would be expected, about one-eighth of ours. Sir, these taxi fare comparisons point to one conclusion: that taxi fares in Singapore are relatively low compared to those in other cities, and, I would say, very affordable to our commuting public. This, I believe, is the main reason for the excessive demand for taxi services which sometimes causes long queues of commuters for taxis. The solution, however, should not be simply to put more and more taxis on the road while maintaining present taxi fares. This is because taxis, being users of roads, also contribute to traffic congestion. I do not want to choke the road with taxis. In spite of what I have said, I would like to inform the House that during the last three years, NTUC Comfort has put a total of 2,235 taxis (brand new taxis, excluding replacement taxis) on the road - 804 for 1991, 896 for 1992 and 535 for 1993. Sir, at this juncture, it would be pertinent for me to touch on a related topic, that is, the income of taxi drivers. At present, the average net income of a taxi driver is about $1,500 per month. In order to earn this income, a taxi driver must work 8 to 10 hours a day, 30 days a month, 365 days a year. Unlike other workers in Singapore, in addition to working very long hours every day, they enjoy no annual leave, no medical leave, no off-days, no extra pay on public holidays and no CPF. And when they are sick or have an accident, they are on their own and receive no income. Sir, the last taxi fare revision was carried out in October 1990, that is, about 3 1/2 years ago. During these 3 1/2 years, our Singapore workers have received good salary increase every year: in 1991, 9.8%; 1992, 8.1%; and 1993, 8.1%, a total of 26%. It would not be fair to deny our taxi drivers a fair increase in wages as well. Taxi drivers are also workers and I think taxi drivers, like all Singaporeans, deserve to improve their standard of living as the country prospers. In short, Sir, given the two points I have made, namely, the present low taxi fare and the plight of the taxi drivers, I urge the Government to be more sympathetic when taxi drivers ask for a revision to the existing taxi fares. Maybe the Minister should instruct the PTC to be a little bit more sympathetic and would ask the public to be understanding enough to accept a moderate increase in taxi fares. Perhaps, Sir, the solution to most of the problems which I have highlighted above is to permit market forces to operate freely and, therefore, to determine the number of taxis in Singapore as well as the taxi fares. This will also indirectly have the effect of adjusting the incomes of the taxi drivers. In other words, I am asking the Minister to consider deregulating the taxi trade. By deregulating the taxi trade, the artificially high demand which exists in Singapore will undoubtedly be lessened. Further, in addition to the benefit of enabling the taxi trade to find an equilibrium between supply and demand, deregulation will also increase competition among taxi companies and, indirectly, improve the quality of services rendered by taxi drivers. Sir, the Minister for Communications declared last year in this House that he favoured the deregulation of the taxi trade. Unfortunately, on 28th February this year, the Minister announced that the deregulation of the taxi trade would not take place until the Electronic Road Pricing (ERP) system is in place. This was a disappointing turn of event. Sir, the ERP system is scheduled to be effective only in 1997, which means that the economic disequilibrium in relation to the taxi trade and the disadvantaged position of the taxi drivers will not be corrected at least for another three years. Perhaps the Minister could explain the reason for linking the deregulation of the taxi trade to the ERP system. Further, I should like to ask the Minister what plans the Government has to improve the situation in the interim period.

Sir, from 1992 onwards, the ROV requires all new petrol cars to be installed with a catalytic converter and at the fuel tank a restrictor has also to be installed. These measures have made significant contributions towards the control of air pollution from the mobile sources. The installation of a restrictor at the inlet of the petrol tank is to prevent any leaded petrol from accidentally getting into the petrol tank which could cause a serious damage to the catalytic converter. By implementing this measure, it implies that, in future, all the petrol stations must be installed with different nozzle sizes for the petrol dispensers, ie, a bigger diameter nozzle for the leaded petrol so that it will not get into cars with catalytic converters, and a smaller diameter nozzle will be used for cars specifically using unleaded petrol. So far, until today, even in the newly-renovated petrol stations, we still do not see dispensers of different nozzle sizes so as to differentiate between the leaded petrol and unleaded petrol. I would like to ask the Minister whether in the near future there is any plan, working in conjunction with the Ministry of the Environment, to require all petrol stations to have different dispenser nozzle sizes, so that the leaded petrol and unleaded petrol will be clearly differentiated, and the car user will not be mistakenly pumping leaded petrol into a car which is supposed to use only unleaded petrol. Sir, the next issue I would like to touch on is the exhaust emission from diesel vehicles. Despite the regular inspections required for diesel vehicles in Singapore and also the tightening of the diesel soot emission standard by the ROV, we still can see from time to time vehicles emitting excessive amounts of diesel soot. I travel quite often along Woodlands Road, Choa Chu Kang Road, which is in my constituency, and also the Jurong areas. Almost every day, I could spot diesel vehicles emitting excessive amounts of diesel soot. Some of these vehicles are foreign registered. I would like to ask the Minister whether we apply different emission standards of soot emission for the local and foreign registered vehicles. Sir, at the present moment, the ROV is using a bulky soot meter to check diesel vehicles at different check-points. This method is actually not very effective because the drivers could communicate among themselves in advance. They can easily spot the check-point and they will avoid the check-point, thus avoiding the vehicle from being checked. May I ask the Minister whether he would, taking into consideration the advancement in technology, adopt smaller portable and equally effective soot detecting meters to check on diesel vehicles? By doing so, the traffic police from the ROV can easily carry the equipment in their motorcycles and they can test and check vehicles which fail the emission requirement. I believe that by doing so, we should be able to control the emission of soot on the road more effectively.

Sir, Singapore has pioneered many innovative practices. Let us continue this trend by being one of the first city in the world to start the use of electric cars. Singapore is an ideal place where the use of electric cars can make both economic and environmental sense. The electric car is a noiseless, no-emission vehicle that runs on electricity instead of petrol and, thus, causes less pollution for every unit of energy produced and it is also energy-saving. An electric car fitted with the largest sensible conventional battery can have a range of 120 km and a top speed of 80 km per hour. This is ideal for our small island nation as an average day driving rarely exceeds 80 km and we want to discourage higher speeds from a safety point of view. 5.30 pm Electric cars are already being manufactured locally for off-road use, but the push has to come from the Government before there is a commercial take-off for wide-scale manufacture and use of electric car. The Government's role can be effected in various ways: (1) By providing tax incentives to promote the use of electric cars. (2) By providing recharging facilities for electric cars and car parks owned by the HDB, URA, etc. (3) By promoting the use of electric cars in its Government departments and statutory bodies. California has gone a step further by introducing legislation that 2% of all new cars sold in the state in 1998 have to be electric cars and this percentage has to go up to 10% in the year 2003. We could also introduce similar legislation. Sir, I am very keen to hear the Minister's views on the use of electric cars in Singapore in the near future.

Sir, Mr Teo Chong Tee made a very impassioned plea for bus services to the Airport. I have responded to his point previously in this House and also in private correspondence. The point that I made earlier is also relevant, that is, these changes are really part and parcel of a whole island-wide integration exercise, in the process of which some areas have their services removed and other areas have new services added. In the case of the Changi Airport bus services, there was a whole package of services that was put up. Some of the applications were accepted and some were rejected. Suffice it to say that if there is any good ground for a further review on the part of PTC, I will be more than happy to bring these new facts before the PTC. But as far as I know, up to this point in time, the PTC has considered all the relevant information put up by the operators as well as Mr Teo and many other people, and they support the changes that have been made. So I cannot at this stage offer any further solace to Mr Teo. I just want to mention that the Changi Airport workers do make a useful contribution to the Airport. Unfortunately, we are not able to completely cater to their requests all the time. Nevertheless, it does not mean that the subject is closed but that there will be a constant review of the services to the Airport, including MRT services, as and when the time is ripe. Dr Toh Keng Kiat talked about the integration of public and private transport services and he made a very detailed suggestion about the possibility of using mini-buses. I will ask the ROV and the PTC to look into his proposals in the context of the Bus Plus study that they are now doing. Mr Kenneth Chen wanted us to do more about the park-and-ride scheme. Yes, I would certainly like to see more people taking part in the park-and-ride scheme. Maybe there was a lack of publicity in the early stages when HDB, together with PWD, launched the scheme in 1990. Since then, however, the scheme has been revised, and the attractiveness has been improved by offering the monthly concession pass but, as he said, it may not be good enough. I also want to inform him that it is a question of economics. If it is more convenient and cheaper for a person to drive all the way from home to his office in the CBD, pay the area licence fee and pay the car parking charges, then I think he will do so. If he finds the charges prohibitive, for example, if he has to pay a very very large amount to park in the CBD, then I think the park-and-ride scheme will become more attractive. So it is a question of comparable cost. But, nevertheless, I have asked the SMRT to persevere in this, to keep on publicising the scheme and to see how the scheme can be further improved. I thank him for his concern in this area and it is an area which I share his view wholeheartedly. Mr Chew Heng Ching asked about the whole-day ALS. How long will these restrictions last? Has it been effective, if not, what are we going to do about it? The Area Licensing Scheme has been very successful. The whole-day Area Licensing Scheme is an extension of that. We think that it will work. We started off with a pricing package which we thought would be sufficient to reduce the number of people from entering the CBD. In the long run, of course, the ideal situation is to have an Electronic Road Pricing System. But until then, this is one of the few interim steps that we can take to have a road pricing in Singapore. And what we are really attempting to do is to have more usage measures to allow us to relax the quota for motor vehicles, in other words, to introduce more COEs. In the case of the whole-day ALS, as the Member is aware, the Government has announced that if the scheme is successful, we are going to introduce more COEs. The PWD has done some preliminary surveys. The system has not fully settled yet. I think he is well aware of it. But, so far, the preliminary studies show that there has been a drop of something like 10% in the traffic and traffic flow has evened out throughout the day. The full extent of the improvement, of course, can only be ascertained after it has reached steady state which I think is going to be in a few months' time. Then we will look into making the necessary changes to the system, and consider some of the proposals that Mr Chew has mentioned earlier. However, in the meantime, the Government has decided to allow an additional half a percentage point increase, from 3% to 3 1/2% point increase, in the growth of vehicles for this coming quota year, in other words, from May 1994 to April 1995. This is a direct result of the whole-day ALS scheme. This half a percentage point increase works out to an additional 2,850 COEs for the coming quota year. I have also announced earlier this year that we are going to freeze the number of unused motorcycle COEs, convert them, and reallocate them to the other categories. So we will do this also for the coming quota year and for the next few years. There are 5,157 unused motorcycle COEs that have been frozen since early this year. We will convert them to passenger car COEs only, on the basis that motor-cycles are a form of private transport. So we will convert them to another form of private transport. They will be converted to car COEs at a ratio of 10 motorcycle COEs to 7 car COEs based on traffic studies that, under free-flowing traffic conditions, 10 motorcycles occupy roughly the same road space as seven cars. So it is on a traffic engineering basis. The 5,157 motorcycle COEs will, therefore, be converted into 3,610 car COEs at a ratio of 0:7. But because there will be an additional 2,850 COEs due to the whole-day ALS in the coming quota year, the Government has decided that we will spread the release of these converted motorcycle COEs equally over the next three years. In other words, there will be an additional 1,203 COEs per year. The reason behind this is very simple. We do not want to have too many COEs coming in all at once and to avoid any sharp fluctuations in the supply of COEs from year to year. So what all this means is that there will be an additional 4,053 additional COEs to be released for the coming quota year. This is over and above the replacement COEs, ie, COEs that are due to vehicles that have been scrapped in the past year, which come to 29,622 as well as 17,000 COEs which are to cater for the 3% growth. So if you add all these numbers up, the total quota for the next 12-month period, from May 1994 to April 1995, will be 50,675. This represents a 9% increase for all the vehicle COEs, excluding motorcycle COEs, because motorcycle COEs would distort the comparison. And if you just take cars alone, just categories 1 to 4, there will be a 15% increase in COEs over last year. We will continue to monitor the traffic situation in the CBD and, when necessary, we will extend the principle of congestion pricing to other areas. And we will then review the extent of the increase in vehicle population that can be allowed from year to year depending on the current traffic situation prevailing then. Sir, Mr Chew also asked about the projected number of COEs in the next five years. Apart from being unsure about what the traffic situation would be then, we have already committed, on the basis of new roads being built, to this 3% net growth in vehicles. So this will be the minimum growth in vehicles. If the situation improves, or if we are in a position to implement the congestion pricing in other areas which will result in a freer flow of traffic, then we will be in a position to issue more COEs. But the base minimum will be the 3% growth which has already taken into account the road building programme which PWD has in place over the next century. Sir, Dr Wan asked about extending the validity period of COEs for taxis. Yes, if there are good reasons for it, my Ministry will consider this favourably. However, I just want to make a point that for replacement taxis, in other words, those who already own a taxi and want to replace their taxis, they are in a position to actually pre-plan the replacement programme. So I am reluctant to extend the validity period for those taxis which are replacement taxis. He also asked about deregulation of the taxi trade and about increase in taxi fares. He has made a very strong case for the increase in taxi fares. I hope that he will make a similarly strong case to the PTC which is meeting soon, I believe, to discuss this matter. And if he is as convincing as he is today, then I think the PTC will be favourably disposed. There is only one point I want to make. He circulated a comparison of taxi fares in selected cities. I am not familiar with all the numbers but I do not see the relevance of this chart to the case that he is going to make for taxi fares. The fact is that the taxi fares in the other cities may not be relevant to his case. He has also asked about deregulation of the taxi trade. Yes, I argued for deregulation in this House last year. I still believe that that is the way to go. However, I note that there were many commuters and also many taxi drivers who are rather apprehensive about the proposal to deregulate. Commuters were afraid that fares will get out of control. Operators were afraid that there will be other taxi operators coming into the market. I understand their fears but I do not think that these fears are justified in the long run. Nevertheless, I want to inform Dr Wan that Government will deregulate the taxi service, but we will do so cautiously. And we will do so only after the ERP has been in operation and we know how taxi drivers and taxi commuters react to the ERP. Because do not forget that when the ERP comes into operation, the whole operating environment for taxis is going to be very different from what it is today. So we have to wait and see. 5.45 pm Finally, a very quick response to Assoc. Prof. Low Seow Chay about the fuel pump nozzles. I am surprised by what he mentioned just now, because I thought that all the petrol stations have already converted to the new pumps. In fact, the oil companies assured my Ministry that they have different pumps for different grades of petrol. So I am very surprised by what he said. I will ask them to check. As far as diesel vehicles are concerned, no, we do not have different standards for local and foreign diesel trucks. Yes, we will look into the use of the smaller smoke detectors that he is recommending. Finally, Dr Soin's plea for electric cars. Yes, my Ministry is monitoring the development of such vehicles in other countries. I understand that at present there are no electric vehicles that are commercially available. When they are commercially available, we will certainly look into their use in Singapore, subject, of course, to our normal rules on construction and use.

We have seven more speakers and seven replies from the Minister. Mr Teo, can you please withdraw your amendment?

Sir, I thank the Minister for his reply. But the reply is a disappointment not only to me but all those who are affected by the withdrawal of the bus services to the Airport. Nevertheless, I have heard from the Minister that the subject is not closed. And since it is not closed, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

Amendment No. (4), Mr Charles Chong, please make your point.

Sir, I beg to move, That the sum to be allocated for Head I of the Main Estimates be reduced by $10 in respect of Code ID 1500. In view of the limited time, I will just take my first cut and ask one question. I understand that the PSA may be contemplating a tariff revision in the very near future, most likely an upward revision of its rates. Could the Minister enlighten us on the rationale for this tariff revision, its possible impact on local traders and the competitiveness of our port?

Sir, PSA plans to revise its tariffs with effect from 1st July 1994. The revision is aimed at recovering its higher cost of operations and to encourage a more efficient use of limited resources such as berths, container yards and anchorages. Although operating costs have been rising and PSA has been making very large investments in the last few years, tariffs have not been revised for 10 years. The proposed changes affect primarily transhipment containers with little impact on local containers. For example, things like free storage period for transhipment containers will be halved to 14 days. This merely means that shippers will not be encouraged to use the port's land as a free parking lot. The impact on local traders is therefore minimal.

Sir, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

( In Mandarin): Sir, I beg to move, That the sum to be allocated for Head I of the Main Estimates be reduced by $10 in respect of Code IE 3100. Sir, I think public transport is very important to the ordinary citizens. The Public Transport Council has cut down on bus services to the public. Why is it that so many bus services have been cancelled? He says that so long as it is profitable--- 5.50 pm

It is guillotine time. The sum of $50,380,620 for Head I ordered to stand part of the Main Estimates. The sum of $900,676,200 for Head I ordered to stand part of the Development Estimates. Head M -

Head M - Ministry of the Environment. Amendment No. (1), Dr John Chen.

Sir, I beg to move, That the total sum to be allocated for Head M of the Main Estimates be reduced by $100. Sir, the action programmes of the Singapore Green Plan were finalised in October last year. They cover six areas which are important to our continuing socio-economic development in an increasingly environmentally conscious world. The six areas are: environmental education, environmental technology, resource conservation, clean technologies, nature conservation and environmental noise. These programmes reflect the progress we have made as a nation over the last 30 years. Our environmental concern in the early years was mainly pollution control and we have concentrated in building the regulations and the basic infrastructure for such environmental needs. Today, our environmental agenda ranges from concern for the problems of excessive wastes generated by an increasingly affluent population to how we can contribute as a member nation to global environmental issues. Sir, I am glad to see that clear steps and bold targets have been set forth in the action programmes. I must commend the Ministry for their vision and effort in preparing us for the year 2000 and beyond. What we need to do now is to turn these programmes into reality. This is by no means easy. The programmes are multi-dimensional. Their implementation requires the concerted effort of various Government Ministries, corporate bodies and Singaporeans at large. Could the Minister tell us what mechanism he has set in place to oversee, direct and coordinate such efforts? Such ambitious programmes also require, needless to say, adequate funding. I am therefore interested to know how much the Ministry is expected to spend to carry out the entire programme. Sir, I now come to a few specific points on the recommendations of the action programmes. On waste minimisation, I noted that the Ministry aims to reduce domestic and trade waste from a current per capita rate of 1.1 kg per day to 0.9 kg per day by the year 2000. For industrial waste, recycling targets for the year 2000 have been set at 40% of wood and timber waste, 60% of paper and cardboard waste, 50% of plastic waste and 20% of construction and demolition debris. All these are ambitious targets. On domestic waste, I asked last year whether the Ministry was considering introducing measures such as tying refuse removal fees to the amount of refuse discarded to discourage waste generation. The then Minister answered that he was considering two alternatives of a volume-based fee: the pre-paid bag system and the variable bin system for landed properties. May I ask the Minister what his Ministry's decision is? Are we going ahead with a volume-based fee? And, if not, what other measures does he have in mind to ensure that we meet the target of 0.9 kg per capita per day? On recycling of industrial wastes, the recommendations in the action programme are only confined to such words as "encourage" and "promote". I know that the recycling industry cannot be forced to grow because economic considerations are important. But much remains to be done for the Ministry to come up with actual ways and means and incentives to influence the growth of the industry. Otherwise, the targets that we set would not be achievable. Does the Minister agree with me? Sir, environmental audits are increasingly being adopted by companies in the developed countries. They enable management to evaluate and improve the environmental performance of their organisation. The resulting benefits are: compliance with regulations, conservation of resources and energy, minimisation of wastes and a better public image. The Ministry has taken the approach of persuasion rather than legislation in environmental auditing. I agree with this approach. However, the rapid development in this area in the developed countries has resulted in increasing demand for the formation of and adherence to industrial standards. The International Organisation for Standardisation (ISO) has formulated the ISO TC 207, Technical Committee on Environmental Management. Soon, internationally agreed standards may come about for environmental auditing, in the same way that such standards have come about for quality management. We must be prepared for this. Is the Ministry, therefore, working out some guides, perhaps in conjunction with SISIR, for our industry to follow? Sir, let me turn to the last point which is on environmental technology. Countries in the Asia Pacific region are undergoing rapid economic development. There are tremendous needs for projects to safeguard their environment. This is partly because of international pressure and partly because of increased environmental awareness. Whatever it is, there are tremendous business opportunities for environmental companies. Singapore is well poised to take advantage of such opportunities because of our experience in environmental protection. I have come to know of many such opportunities in Malaysia, Indonesia, China and Vietnam. Many Singapore environmental companies told me that such ventures are profitable, but they face the one most important problem of funds. One company told me that it had recently bid for an Indonesian project and was told that it would be given the contract because its price was the lowest. But it was told later that the contract would be given to a Swedish company because the Swedish government was financing the project through a loan scheme designed to help their companies to venture overseas. Sir, I noted that the Singapore Government has recently taken a one-third stake in a $1.2 billion investment fund called the AIG Asian Infrastructure Fund. I wonder whether the Ministry can play a catalytic role in getting such funds to take a closer look at environmental projects. The local environmental companies need project financing the most as they venture overseas. I would appreciate the Minister's response to my queries.

Mr Mah, you have three minutes.

Sir, firstly, I want to commend Dr John Chen for his support of the Green Plan. He is correct in saying that the most urgent task now is really to turn vision into reality. We have come together. We have put up this comprehensive document, whose objective is to make Singapore a model green city in the year 2000 and beyond. Now, how do we turn all these words into action? First of all, it requires the active involvement of all the people, all the sectors of the economy, the public sector, private sector, ordinary citizens, large corporations. The action programmes that have been put forth have been documented. There will be a steering committee which will be set up to oversee the plan. This steering committee will ensure that the target dates are reviewed, that it will remain realistic as the Green Plan is progressively implemented. Yes, we need funds to implement the Plan. In fact, we have targeted a sum of about $3 billion to be spent on environmental infrastructure under the Singapore Green Plan. It includes the upgrading and the covering up of our sewerage treatment works. It includes the development of Semakau which is our new landfill site, development of our fourth incineration plant as well as improvement of our waterways to make it more aesthetic and more user-friendly. The Member also asked about waste minimisation. Yes, we intend to bring down domestic and trade wastes from 1.1 kg to 0.9 kg per capita. This is actually, I must say, quite a stiff target. We have been considering measures such as those that he has mentioned just now, the use of pre-paid bags, payment by weight and so on. However, there are many implications involved in these systems and we still have not sorted out these implications yet. In the meantime, we will pursue programmes to encourage, eg, minimal packaging on the part of manufacturers, recycling of paper, recycling of construction waste, wood waste and so on. At an opportune time, we will announce our proposals regarding the usage of other measures such as pre-paid bags to bring down waste.

Order. Moment of interruption. Thereupon Mr Deputy Speaker left the Chair of the Committee and took the Chair of the House.

Sir, I beg to report that the Committee of Supply has made further progress on the Estimates for the financial year 1994/1995, and ask leave to sit again tomorrow.

So be it.

Resolved, "That Parliament do now adjourn." - [Mr Mah Bow Tan]. Adjourned accordingly at Six o'clock pm.