PURCHASE OF PROPERTIES BY SENIOR MINISTER - AND DEPUTY PRIME MINISTER BG LEE HSIEN LOONG
Wu Ching Liang. He is a very good man and also very bright. But please do not believe that because of my association with them, I now think like an entrepreneur or I think like them or will act like them. I believe it is a plus and I never doubted it, because I am guided by one simple principle in my life. What I am afraid to have publicly discussed, I never privately do. Whatever I do privately, I may have to keep it secret for some time. But if it comes out, I am prepared to defend myself. It has served me well and I am happy that the House is in total agreement, the Opposition and the Government, that there was nothing wrong. But what is most important is that we bring it out into the open and that the world knows the new leaders were prepared to act on the same standards. We are disproving Professor Samuel Huntington. There are a few things which I want to settle first. My daughter-in-law, Ho Ching, wrote to me this morning. She said, "Better clarify about Singapore Technologies." Otherwise, she cannot get good men. She said that she did not get much. But she, as the MD, had paid $1 million in bonuses to successful MDs of her subsidiaries. She has written this to me, so I am sure she would not mind my announcing it, because people will know it anyway. Last year, her salary was $21,500 per month. With the 13-month AWS, it was $279,500 per annum. Her bonus was $290,000, making a total of $569,500. Let me tell the Opposition. This is chicken feed compared to what the big companies are paying. This is a Government GLC. I have been urging the GLCs to follow private company practice - stock options, bonuses varying year by year. Because without that, Singapore Technologies have lost some good men. And the $1 million also caused a big row. There is no harm letting it be known. It is a difference in philosophy. She was trying to follow the market and gave $1 million. The Chairman, Dr Yeo Ning Hong, thought, "God, $1 million, better clear with me." But she thought that was the market price. But he has been in Government for so long, the idea of paying $1 million, when he was earning $300,000-$400,000 as a Minister, shocked him. I think we start thinking in different terms. It is an unfair and unequal world. If you want an equal world, you end up with the Communist system. Mao Ze Dong's salary was about 15 or 20 times that of the lowest paid worker and so everybody was on grade 1, 2, 3, 4, 5, 15, 20. But as I explained to you, when the man took his Mao jacket off, it was fur-lined. The ordinary worker had not got a fur-lined jacket and he got different perks. And the system did not work. She has been offered a higher salary of $28,000 last year. She decided, for her own moral authority over the others, to set the example and refused to take it. She stayed put at $21,000, but in April this year, Dr Yeo Ning Hong pressed her again and insisted that she takes $28,000. So I suppose she will be declaring a higher income tax. $7,000 more a month, that is $84,000 more a year. If you start paying the DPM what he was paid before it was pegged to the private sector, should he stay on? Yes, says Mr Chiam, we all should. Maybe he would. But for how long, when he can make more? Maybe he would, not wanting to make more, because his father did this and he feels he may be under an obligation. But you cannot run the system. The system will malfunction unless it is monitored and adjusted. And I say this very seriously, that the salary adjustments were part of the process of clean and honest Government. Ministers, high salaries, buying homes -- it is going to be an election issue. I am prepared for that. The Prime Minister is prepared for that. What would you have? Ministers, as in other countries, owning huge bank balances elsewhere in Geneva, Zurich, homes in California, London, Sydney? Or Ministers buying homes in Singapore, and if Singapore falls, collapses, they also are finished? They cannot buy shares because we have inside information not only of what the economy is doing, but what we intend to do to intervene. The Prime Minister asked DPM to cool this property market. He and the Finance Minister have been working on that package, together with Lim Hng Kiang for the last one month. They could have just told one little word to somebody and you sell before this package and a few hundred million dollars can be cleaned up, before the stock market went down, or people are saddled with properties which they can no longer sell. But you've got to trust them. You've got to have men who can be trusted. He owns two properties, plus three others, which now have dropped in value. So has my wife. But we take this decision. We are accustomed to taking such decisions. All my life, if I allowed personal interest to decide which way to go, we would have a different country. The value of all his properties went down at least by 15%, 20%. In fact, the package he put up with Lim Hng Kiang -- these are the young team -- they were very aggressive. And the Finance Minister says, "Okay,". When I saw this, I was most disturbed, because you can bring the market down, you cannot bring the market up. It is difficult. People must have confidence. So I was glad that we brought back Tony Tan from banking, and he minuted "This is too much". And I said I agreed. The PM was in Vietnam. I faxed him. I said, "Don't overkill. Let us go step by step." If this does not stop the speculation, there are a few other measures we can take which will stop the speculation. But we do not want to stop the growth of the property market. Honest buying and selling and the desire of the people to buy houses should be matched by the supply of land for builders, and so the decision was made, and I think it will work. It is already cooling off. By another 3-4 months, it will pick up and find a new level. No longer this fever. But Dr Lee Tsao Yuan brought up a fundamental question: the dream, is it out of reach? I have discussed this with the young Ministers, and I have put up certain proposals which startled them. Let me explain a certain philosophy of Government and a certain philosophy of society on which my old colleagues and I have governed Singapore. Men are not equal in a society. But you've got to be able to bring them together into a united whole, a sense of one nation, one society, that we share successes and we share tribulations. The other example is Hong Kong. Every man for himself, the British Government is just a referee. If you win, winner takes all. So you have seven, eight, nine, ten Rolls-Royces, house on the hill, house in town, yacht, and then you find shanty huts on the hillsides in the New Territories. We cannot do that. They do not have to defend themselves. If they had to defend themselves, and everybody has got to have a gun, that system would not work. I have a secretary now who is digging up the records, because when I have spare time I am writing up what my colleagues and I did. He produced me a document way back in 1965, immediately after independence, and we had to build up an army. Dr Goh went around, from a corporal, that was all his experience, he set out to form the PDF. So Members of Parliament, civil servants, ex-volunteers, put on uniforms, went marching and the first National Day Parade, we had some kind of an army. But immediately I said, National Service for all, build up the largest possible base on a small manpower, which means they are not going to fight, unless they have something to defend. So I worked out the CPF scheme and HDB to match. It has taken 30 years (1965 to 1995) to reach 85% HDB home ownership, 10% private home ownership. So 5% have no stake. For 95% of Singaporeans, as the properties go up, they rise with it. So a taxi driver who bought a 3-room flat for $25,000 -- $30,000, today it is worth $150,000 to $180,000, and with main upgrading, in another five years, if he just waits, it will be worth $300,000. You show me one city in Asia where that is so. You say that is social engineering. I say, yes, it was. I am not ashamed of it. It was good. Was it completely altruistic? Yes, and no. Politically, we had a vested interest, because we knew an ownerless, renting proletariat is a fickle, volatile voter. As you can watch Taipei, they voted against the KMT, you watch Tokyo, they voted against the LDP, you watch Seoul, they voted against the ruling government. Or you watch Delhi, they voted against Congress. But in Singapore, they know that if they vote against the PAP and they land up with Dr Chee Soon Juan and all the bright young men that Mr Chiam hoped to get -- I know he has learnt his lesson, but it is a little bit too late -- they may toss around a vote just to needle the new Prime Minister, but they know that the wrong vote and the property just goes right down and they are worth very little. What then is the philosophy behind it? If I can use a metaphor, I say life is a marathon. It is an unending competition, without a finishing line; you finish one, the next marathon begins. So when we started in 1959, and we fired the "go" signal, everybody thought, yes, I am going to win this prize -- just, equal society, equal opportunities for all. But we are not equal human beings. Some have great stamina, some have not. Some have great energy, and good minds to think out a strategy, some have less. So by the half-way mark, by about the 1970s, the middle 1970s, I could feel that many knew that their children were not going to win the first prize. Because in a marathon, everybody starts off most energetically, then after a few kilometres they are drenched with water and panting and so on, so they know it is better to give up. But if they gave up in life, the country suffers. So all along the way, we gave consolation prizes. You finish one kilometre, you get a prize. You give up, you do not get the second kilometre prize. So he tries and he paces himself to collect the most kilometres. That is a reality. It has to be faced. But if you say, all equal, whether you finish or you do not finish, then you will never produce a marathon winner. Do not believe that Pete Sampras and Boris Becker train every day, for what? For your enjoyment, or to win the first prize and with it millions of dollars. That is what spurs them on. You just wait, given a few years, you will find young Chinese trying to be like Michael Chang in China. I am sure they are going around looking for those with the right joints, right muscles, right height, so that, unlike Michael Chang, he would not be looking so small at the other end of the court. It is that which produces human progress. That is why the West, America and Western Europe beat Russia, the Soviet Union and China. I read a magazine article of what happened to the gymnast champion Olga in the Olympics. What was she doing? This was the London Sunday Times magazine. She had no sponsors, she was a coach with a miserable flat, husband, children, poor food, and they showed pictures of the flat. On the other hand, the American champion, Mary Lou Retton, who won at Los Angeles Olympics, beautiful costume, every gymnastic leotard or whatever, carried her name, multimillion dollars. So one succeeded, the other failed. I started life as a socialist and a near communist. So we formed up with the communists, all men are equal. But I decided that this was not true. It is against my observation and my logic. We are a close family -- three brothers, one sister. We are similar but we are not equal. Some are better athletically, some are better mathematically, some have more energy, some have less energy. My own children - they are very similar but they are also good at different things. And that is the nature of man and you have to devise a system that enables each one to thrive to his maximum. So you give prizes along the way. Now, who wins the big prizes? This is a very big problem. I choose another metaphor. If we sit around a table, let us say, 10 of us, play bridge or poker, and each starts off with 1,000 chips. At the end of five hours, I will tell you the chips will go into a big pile in front of two or three. Must be. It is in the nature of human beings. Some are good at bridge. If you meet Kasparov in chess, you have no chance. Even IBM Blue got defeated. So what chance have you got? So out of 10, three are winners. Let us say we break up into eight teams of 10. Next week, three out of 10 meet again in 10. Finally, you have what you have in the world - the billionaires. Just think that over. Why are they billionaires? Because they have that extra -- the killer instinct! Can Singapore allow that to go to its logical conclusion? I think we cannot. The British tried it -- to reverse the process -- they failed. The tragedy of the British Labour Party was they refused to admit that men were not equal. So when they implemented socialist policies, equal educational opportunities, and it did not produce equal results, they said, "class system". Those who went to public schools had the advantage. Those who went to all these county schools were out, never got to the best universities because they had poor teachers. That is not true. That is rubbish! I used to subscribe from my student days to the Fabian Society pamphlets that believe in this fair, equal, just society. When it failed and they still had people with good results, some with mediocre results, and many with poor results, they said, change the system. And what was the change? Two headmasters wrote this paper. When I read it, I thought to myself: "God! There is no hope." They proposed that you take all the best teachers who are all in the best schools and send them to the weakest students. And the weak teachers can teach the good students, and then you equalise. It is what you call a procrustean solution. If the man's leg is too long for the bed, just chop his leg off. I decided I will stop subscribing to the Fabian Society. You cannot do that. Lee Tsao Yuan has raised a very significant problem which, I think, is with us. And the solution -- there are several -- which I have put to the Prime Minister and his colleagues. They are a bit nervous because it is such a fundamental kind of solution but does not need immediate action. Way down the road, 5-10 years, they can think about it. Let me explain. The British tried to kill off the landed properties by taxing them when they die - 95% estate duty, high income tax. You re-distribute wealth. The result: the wealthy landowners, the Duke of Westminster who owns Covent Garden and the West End, put it in trust, entail. So they only have life interest and it belongs to their children, and then their grandchildren. So when they die, they only pay estate duty on themselves, their portion, life interest. And so the sons, the moment they have owned it, they entail again, and so on. So they could not get it. And you say you tax too much, they put their money abroad. So in the end, they got no change. But if you have no change, and you have great disparity, eventually you have a revolution. That is why revolutions take place. That is why the French revolution took place. There comes a time when the winners have too much and the losers say let us overturn the system, and they do. And the last time that happened in France was 1958 when they brought back de Gaulle, and he started afresh. The British never had a revolution. They went on by evolution but the problem is not solved. Their class hatreds have diminished to some extent but the underlying antagonism at the unfairness of it, of people with huge landed properties, and they with nothing. But how do we solve this? If we do nothing, our able will leave. If they cannot get good properties, they will go off to Australia, Canada. They will be second-class citizens, but anyway they will have a big house. And Singapore's economy will go down. I think we should find a solution for this. And the first solution is an immediate one which can be solved within 2-3 years, if not earlier. The private sector market will always be what it is. They are going to get the best customers to boost their properties, to maximise profits. If we had allowed the private sector to do public housing, it would have failed. Because they would be wanting to build and sell to the best-paying customers, the best buyers. We have a different target -- to give everybody, particularly those who cannot afford, a home. So we entered that market and controlled it, and today build up 85%. Now we face this little problem, or it is little in numbers, because the young executives and professionals do not decide the outcome of the election. The outcome of the election is decided in the housing estates. But I think they are an important section because they are vocal, they are the people we want to join us. So a solution must be found. I have suggested, and they are thinking about it, go in for luxury executive condominiums. We enter that market. We sell to Singaporeans, if necessary, by ballot. 3,000 a year, 5,000 a year, we can do it. We have the capacity, together with the private architects, to do that. Heng Chiang Meng will be put out of business, partially. So will Leong Horn Kee, partially. But it will be equal to any of the best that the private sector can produce because we will use private sector architects, use their contractors, their materials, but lower price, but no quick resale, because that is not the Government's duty. You say you want a home, we sell you a home, maybe 20% less than the private market. But you stay in it 10 years before you sell it to a foreigner. When you sell, you sell to another Singaporean. In other words, it is like SIA or SPH shares. When you sell it in Singapore, you know you do not get a premium. And so the SIA local and SIA foreign shares, there is a wide gap. So too are SPH local and foreign shares. In fact, as you go along, every year, the next buyer knows he has to wait less time. So the price begins to rise. That is one way, and it can be solved, and immediately you get 3,000, 4,000 or 5,000 couples less disgruntled. Another way, and maybe the private sector will welcome this -- Heng Chiang Meng, Leong Horn Kee, even Mr Dhanabalan's company -- we sell you land, but as part of the tender, we tell you beforehand that 10% of the units, or maybe 15% if the demand is high, can only be sold to Singaporeans and the strata title will stipulate that for 10 years, they can only be sold to Singaporeans. In other words, same buildings, same flats, but no free market, no foreign buyer bonus or premium. So when you bid for the land, you deduct for what you will lose, sale price. It can be done. That is a quick solution. The aim of HDB is really to scale down and not to move up, because they want to get out of it and just concentrate on the lower income. But, unfortunately, we now have a higher income group or middle-higher income group that feels that it is being priced out. I am not sure that we need to do anything much at the moment. Let us first watch and stabilise this market. Let us see what happens. In three to six months, the market will be stable. Then we will know whether it has dropped by 5%, 10%, 15%, whatever, and we keep it stable. Meanwhile, all these options can be calculated. But in the longer term, as I told you, when we play, smaller and smaller winner versus winner, the chips end up in the best winner. When Kwek Hong Png died he must have left a few hundred houses, in corporations, buildings, and so on. One day Ng Teng Fong's children will also have a few hundred houses; so will Wee Cho Yaw, and I do not know who else are in this big-owning class. I have only several, or my wife has several. I have suggested to them, think about this as one way, do not do it like the British, tax them, because all you will do is to have them unload, move out their money from Singapore, then you are left with nothing. Leave it. But when they die, you say you can have two for each child or member of the family, the rest must be sold within X number of years, like we do for foreigners. Give them 10 years, 12 years, 15 years, so the market is not suddenly depressed by a five-year sale, but over time you have to sell off. In other words, more people get a chance to buy and own good quality housing. But as DPM pointed out to me, he argued this with him, he said: But in the end, it will go back to the chaps who are the big and the best players. I agree. Some will go back, but each time we are doing a redistribution of the chips, you keep each generation, new group of young executives and professionals, being able to get into every sector. What we must not have is that those families that already have will always have and the new families cannot have. That will lead to division. I worry because my son, the DPM, his house, which his mother helped him buy for $1.5 million, at the time he bought it, I thought it was not much of a house. I am told in the market it is worth $10 million. So I did a mental calculation. In another 15 or 20 years, at the rate of escalation, it will have gone up to $20 million. How can his son ever hope to own a house like that? And he has three sons, one daughter. So only one son will get it and they've got to wait until both mother and father have left the scene. So some reshuffling of the cards has got to be thought out well before this problem becomes acute and we must have the will, the ingenuity and the creativity to think of solutions. I do not know if Mr Ling spends his time thinking about these problems, but perhaps he has his think-tank, Dr Chee, pose him these problems and let us see what his solutions are. But I urge you to believe me. We did not embark on this in jest for our personal fame, for our personal glory. We got saddled with this responsibility and there are times when I wish the coin had dropped the other way and I had not gone into politics. Then somebody would have done this job and I would be like my brother, with $60 million. As he told me, "No, easily you will make twice that amount." All younger brothers think better of their elder brothers. But we thought out the plans carefully. Not me alone. There was Dr Goh, there was Lim Kim San, quite a few of us, worked out, put the idea, lift it into shape and you have today's Singapore. But societies are not static. Technology changes and new generation comes in, new lifestyles, they also want to come up to the top. And the critical factor is to have social mobility. I will now come to the last and most sensitive of all these issues, namely, the question of what is inherited and what is trained or taught. I believe in the bell curve. I make no pretence that you get two farm horses, you get a race horse. That is not how race horses are bred. If you read how they breed race horses, you know that they all come from Arabia and that they have had race horses from all over the world. But the ones whose parenthood goes back to Arabia, Arabian horses, they win. So what happens when you have a society that begins to have education stratifying it, is that if the man is not so stupid as to go and do what some of our men are still doing, a doctor marries his nurse, or a lawyer marries his secretary, and so on, if he marries his equal, the chances are you either have a doctor or a dentist or some professional. But even the lowest, by the nature of the way human beings reproduce, they may not produce so many bright ones. But it is amazing how from some great great grandfathers, some bright great great grandson or granddaughter comes out from a very poor family. And it is the business of the Government when such a person appears to open the way for him to rise to the top. That is not what the Labour Party wanted. They wanted everybody to go to the comprehensive schools so that all come out equal. They do not even want them to go to a special grammar school where bright young poor kids are brought together for special training to send them to Oxbridge. But you see it is not a practical solution, does not match reality, so it has not succeeded. Supposing they took the other way, get all these young bright kids, train them, send them to the best schools and the universities. They will be on top. And that is the way we have gone. So when Dr Tony Tan started the independent schools, which I urged him to do, it is really not to stratify our society but to raise our level, because too many people were sending their children abroad, because they could not find quality schools in Singapore. One day when Mr Ho Kah Leong told me that his daughter had gone to school in Melbourne, I said something must be done. It cannot be. We are doing ourselves harm. Unless we upgrade the quality of our schools, there will be more daughters and sons abroad, of people who can now afford it. So by these independent schools plus the scholarships of at least 25% from those who are poor, we are able to get the best wherever they come from, whether they come from bright homes or not bright homes, equal chance. But please remember they do not start with equal capacities. If you believe we all start with equal capacities, then you will embark on policies that will not work. If we try to make our son a musician, he would have failed. I could have got him the best music teachers, he came back with his report card -- A, B, C, D, E, F -- it was always D or E for music. He cannot sing, he cannot play musical instruments. Three children, more or less the same, one slightly different, can play better than the other two, more agile. This assessment of reality and then matching policies to maximise on reality is the reason why we have succeeded. I would like to make one last important observation. Do not hesitate to face a problem head-on. Never dodge it. It is what I have done in this case. I would never run away. Not possible. You put out an SES statement, I must respond. I must go to the end of the world with you because what is at stake is what I have set out to do. It was not a one-man job, I was just the conductor and I had a good orchestra, good players in that orchestra. And I do not want the music to stop with the new conductor and new instrumentalists. It is important. But for the Prime Minister to succeed under different conditions, he has to face the conditions of 1996 and the prospect of a very different world, a booming economy, not just in Singapore. We will be in a few years less booming than many of our neighbours, including China. China will keep going at 8% or 10% because it is starting from a low base. And if we are not careful, many doing business there will find the cities becoming so improved. They can improve it, if not in 10 or 20 years. Once they start going to Chinese schools, they may never come back, as those who have gone to Australia, New Zealand, many do not come back. So in this very mobile world, we have to work out a system that will keep a certain hard core of men and women of ability who are committed to Singapore, who want to see Singapore survive, who want to keep up one little place in Asia which has blazed the trail. We went against the odds. We did not follow conventional wisdom. People said we should not have multinationals. We did not have the entrepreneurs. We will never have the kind of entrepreneurs that the Japanese, the Americans and the Europeans have. They are top men. We have one Sim Wong Hoo and he is having a hard time against the competition. His Creative Technology, you can think that 200 or 300 bright Americans, including Chinese in America, improve on it and suddenly, you have lost your market, you are out. Yes, we have to find niches for ourselves. But if we think we are going to blaze the trail to new technology, we are kidding ourselves. The Japanese can. They have got the numbers. They have got the people with that capability, 125 million of them. So they could have crystal displays, LCDs. I asked an American executive in Williamsberg, "How did they become so good? Did they learn from you?" He said, "No. We were very careful not to give them anything. They thought it out themselves." And now all American laptops are at a disadvantage. Because when they make a new one, they sell first to Japanese companies. So Japanese laptops have beautiful clear screens and then, later on, American laptops have it. Can we do that? I really doubt whether we can. Once in a while, we throw out an unusual man like Chris Tan and we bring him back and he starts our IMCB. But he is important. If we can find enough of our Chris Tans to come back and we provide him with a hard core of our own, then we can survive, we can succeed. Then we will prove to Samuel Huntington that he is wrong. And that is my ambition. It is a challenge which I think I am winning. [Applause.] 5.14 pm