Hansard, 2001-03-16

asked the Minister for the Environment (a) how much has been expended so far in making Singapore free from floods; and (b) why has there been flooding whenever there are heavy downpours in spite of this expenditure. The Acting Minister for the Environment (Mr Lim Swee Say): Sir, ENV spends $60-$70 million a year to improve the drains and canals in Singapore. Since 1984, ENV has spent a total of $1.3 billion on drainage improvement works, including the widening and deepening of main drains and canals to cater for increased storm water runoff arising from new land developments. ENV is committed to reduce flooding in Singapore and has over the years, progressively implemented many drainage improvement projects to alleviate and prevent flooding. This investment in drainage infrastructure has paid off. In spite of rapid urbanisation and intensified redevelopments, the flood situation in Singapore has continued to improve significantly. There are now 238 hectares of flood-prone areas as compared to some 3,200 hectares in the 1970s, a reduction of more than 90%. The floods are less severe and are of relatively short duration. Sir, ENV will continue to improve the existing drains and canals to alleviate flooding in flood-prone areas, whenever it is cost-effective to do so. However, it is not feasible to completely rid Singapore of all floods for two reasons. Firstly, some of the areas such as those in Boat Quay and Chinatown are low-lying and are barely above high tide level. These premises remain prone to flooding, especially when heavy rain coincides with high tide. The only effective flood control measure is to raise the ground levels of these premises in conjunction with redevelopment plans. Secondly, there is a limit to which we can widen drains because of land constraints. Very intense rainfall, which may occur once every five years or so, could overwhelm the capacity of the drains and cause flash floods. Such floods, however, could be minor and of short duration. I would like to assure Mr Harun and the House that ENV is committed to press on with our drainage improvement projects to reduce flooding in Singapore, and to keep the flood situation well under control.

Sir, I was surprised when the Acting Minister for the Environment mentioned that the Chinatown area is low-lying. I have found out that many hawker centres, for example, the Adam Road hawker centre and some markets are flooded during a heavy downpour. Could ENV do something about it?

I thank Mr Harun for his feedback and I would ask my officials to look into some of these isolated cases.

asked the Minister for the Environment how successful the "Clean Toilet Campaign" has been and what further improvements can be made to ensure clean public toilets. The Senior Minister of State for the Environment (Encik Sidek bin Saniff) (for the Acting Minister for the Environment): Sir, our public toilets are cleaner now than they were a few years ago. However, there is still room for improvement. Surveys conducted annually, since 1996 when we launched the Clean Toilet Campaign, showed that there have been gradual improvements in the cleanliness of our public toilets. Members of the public interviewed during the surveys have given higher scorings consistently over the last five years. Cleaners who maintain these toilets have also consistently rated the toilets to be cleaner over the years. ENV officers participating in the surveys have also independently rated the toilets and have also come up with similar scorings. A number of public toilets in ENV and HDB hawker centers have been extensively upgraded and users interviewed have expressed that they are pleased with them. More will be done. We will continue to push for clean public toilets in Singapore and will continue to require building managements to keep public toilets in clean and good working condition. Through public education programme, we will continue to remind the public to cooperate and help keep our public toilets clean.

Sir, the Senior Minister of State mentioned that surveys were conducted. Could the Senior Minister of State give details about ratings given by ENV for the last five years?

Sir, the rating is based on a score of 0-10. On our part, we are very lucky that the scoring happens to be between 6 and 8. This score is given by three parties: ENV officers, cleaners and the users. For instance, in 1996, ENV scored 6.0; cleaners, 6.1; users, 6.

8. Recently, we have 8.1 by ENV, 8.0 by cleaners and 8.3 by users. The scoring system maintains that 9.1-10 points is excellent; 8.1-9 points, good; 6.1-8 points, satisfactory; 4.1-6 points, not quite satisfactory; and 4 points and below, poor. We will try our best to do even better.

"to amend the Parliamentary Elections Act (Chapter 218 of the 1999 Revised Edition) and to make related and miscellaneous amendments to certain other written laws", presented by the Minister for Home Affairs (Mr Wong Kan Seng); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order read for consideration in Committee of Supply [8th Allotted day].

Head M (cont.) - Resumption of Debate on Question [15th March, 2001]. "That the total sum to be allocated for Head M of the Main Estimates be reduced by $100." [Assoc. Prof. Low Seow Chay] Question again proposed.

Sir, in solid waste disposal, recycle, reuse and reduction are important issues. Most of the substances and materials that we use for our products are not renewable. We must take action to conserve the resources so that we will leave behind sufficient quantities for the future generations of mankind. Recycle, reuse and reduction will be the movement by environment lovers, and responsible world citizens to conserve our resources. From what I read, a BMW car contains a high percentage of materials which could be recycled. You can sell the car to a company for recycling when it is due for scrap. Do we have any policy, setting the constraints in the recycled contents in our new product and the contents of which could be recycled when it is scrapped? Sir, the decision for compulsory recycled contents in products has to be commercially viable. However, if nothing is done, the concept of recycling will never take place. At least, we should have some financial incentives or encouragement to include recycled contents, or increasing the recyclability of the products could be made more attractive for the manufacturers' participation. Do we have any incentive schemes to encourage people to work towards this objective? Our Government should show support to the recycle movement by imposing recycled contents in some of their own projects if cost and quality are neutral. One good example is requiring door-frames and wooden floor materials to be made of recycled wood for public housing. In fact, I have seen the product, and no layman can tell the difference. We have seen recycled bins in schools and in shopping centres, but we can hardly see any recycled products on sale in the consumer market. Even if there are, like recycled papers, greeting cards and envelopes, they do not seem to be commonly used and acceptable by the people. In fact, recycled products are still fighting a tough battle with normal products. Is there a way that the Government could help to make recycled products more attractive, in terms of pricing and to make known to the supporters of the recycle movement? If so, it requires identification of the recycled products, in other words, labelling of recycled products. Are we prepared to consider labelling all recycled products? Recycled products could only be viable if the public accepts them. Making people understand the importance of recycling to be an action towards resource conservation and environmental sustainability is the key to the success of recycling. We should have an education programme, teaching and persuading people to feel good about supporting and using recycled products. Would the Government consider launching a Recycle Campaign with the NGOs and schools to increase their awareness in support of the recycle and reuse movement?

Sir, yesterday, the Minister said that at the current rate of solid waste generation and disposal, we would need to build one new incineration plant, occupying about 7 hectares every five years, and one new landfill, the size of Sentosa Island every 25-30 years. He has put forward these statistics to show that this situation is not tenable. He said that his Ministry would look into a solution of closing the solid waste generation loop, ie, to have more recycling. I would like to suggest that he seriously consider another solution, in addition to closing of the loop, that is, the reduction of waste generation. To reduce waste generation is very easy to say but the real question is how. In this area, I am afraid that many of the Government's current initiatives are to increase prices to discourage the generation of waste. Is this really effective? Sir, like drugs, the pain of higher prices will become less effective with time and, therefore, more increases are normally needed to overcome the higher threshold of pain. The result is that we may, unwittingly, become a higher and higher cost country and become less competitive. Now, with privatisation of solid waste collection, the private collectors will be required to institute waste recycling schemes in public housing and landed properties to reduce generation of solid waste. Pushing this problem to the private sector will not resolve the problem at all. All it does is to pass the buck to the private sector on what originally was and still is a national problem. Moreover, if mandated to do so by law, I do not believe that the private sector will do a good and proper job. What may happen would be some activities to satisfy the bare minimum of what the laws require, with the higher cost being passed on to consumers. Sir, the Acting Minister has also said that currently, only about 40% of solid waste generated is recycled. Even if the figure can be increased to 50% or 60%, we will soon be reaching the limits of recycling. Therefore, the Government must do more to get Singaporeans to reduce and to reuse products, ie, the 2Rs of what we call the 4Rs of environmental care - reduce, reuse, recycle and recover. 12.45 pm Sir, right now, the preferred method in this area of reduction and reuse, as I said earlier, appears to be orientated at the end of the process. That means you charge higher and higher prices for removing garbage, in order to persuade people not to generate so much garbage. As I said earlier, I doubt this will work in the long run. Sir, I like to see the Acting Minister put more emphasis on the beginning of the process, ie, try to educate, encourage and help people to generate less garbage, which is to reduce. And where it is not possible to reduce, then individual households and companies, or those who generate garbage, should be encouraged to reuse. Sir, there are a thousand and one ways of doing this, provided the Government is willing to do so. And the money saved in building less incineration plants and landfills could be better used to provide the means for the people to reuse and to reduce. I believe that if we can come out with some form of financial incentive to reward those who generate less garbage, perhaps we will see more success in this area. Furthermore, I think there are many NGOs more than willing to provide ideas and assistance. These are the NGOS in the environmental field. Sir, the other countries have also gone a long way in this direction. We can certainly learn from their experience.

Sir, can I take my two cuts together?

Yes.

Sir, the Minister and several Members have touched on the solid waste problem yesterday and today. But few Singaporeans realise it to be such, because they take it for granted that after the rubbish has been thrown out, it is taken away by a refuse truck and they never see it again. Very few Singaporeans know what actually happens to the refuse after that. As Singapore has a very dense population with very limited land area, refuse disposal is of major concern. Although Mr Heng and Prof. Low have already touched on some figures, I would like to go into a bit more details to drive home the point. The amount of waste we produce each day is on the increase. I was informed that in the year 2000, the total tonnage of waste was 7,640 tons per day. The amount of refuse in one year can occupy about 54 football fields. With an increase of 5% per year, it would increase to a staggering 12,500 tons per day within 10 years. The Environment Ministry will have to build one new incineration plant every five years to cope with this. Currently, there are four incineration plants. By the year 2030, we will need 10 incineration plants to dispose of all our daily wastes. All in all, this will require 7 hectares of land and a cost of almost $1 billion. But, more seriously, besides allocating more land and financial resources to build more incineration plants, we also need to allocate more landfill space for the ashes and wastes that cannot be burnt. As mentioned by the Minister, at the current rate of waste generation, we will need to allocate landfill space about the size of Sentosa island at the rate of one every 30 years. It is certainly a frightening thought. I would like to know from the Minister, apart from the four plants he mentioned yesterday, what concerted effort is being taken to address this particular problem. Because, apart from the sheer quantity of waste that we have to handle, we also have to consider the pollution damage caused to our environment. I would like to propose that we should do more to educate the population of the seriousness of the situation. We should consider all measures to reduce the waste generated each day. We must change the mindset of Singaporeans that waste disposal is a problem to be solved by the Environment Ministry alone. But it is not a one dimensional problem. Even if new technologies are found for more efficient methods of waste disposal, as long as we keep on generating waste needlessly, the problem will grow bigger and one day, it may become unsolvable. Sir, on a related subject of waste disposal is recycling. We often talk about the importance of recycling, but all the talk never seems to be able to materialise into much action. It is high time we changed our mindset on recycling. Recycling has always been a major issue of environmental consideration, but this environmental consideration has always been overshadowed by the cost consideration. It is often more expensive to recycle something than simply producing it from new materials. This is the reason why recycling has never been able to take off in a big way. However, the most compelling aspect of the environmental consideration is still the necessity to conserve our scarce earth resources. It is not an immediate problem. It is often designated as low priority concern. But with the population growing at a staggering rate each year, very soon most of our resources will be depleted, and we cannot just pass this problem on to our next generation. The other equally important consideration is that recycling can be a significant way to lessen our waste disposal problem. I think many Members have already made that clear. It is time for us to rethink some of the practices in our daily life. For example, the use of disposable utensils or products made of polystyrene, PVC, plastic or such bio-undegradable materials which cannot be recycled should be minimised. Perhaps we should consider bringing back the old practice of using reusable utensils, even at the expense of having to put up with a little bit more inconvenience. I would suggest the Ministry promote more awareness on the importance of recycling, spread the message that even though it may not be cost effective in the short term, it is essential if we are to preserve our environment and resources and help towards resolving our waste disposal problem. Sir, I do not want to go into details of ways and means of re-instituting the various recycling possibilities, because there are so many. But I would like the Minister to promote more recycling initiatives and perhaps introduce some form of incentives to those individuals as well as corporations who take recycling seriously.

Sir, as I share many of the concerns of the previous speakers, I will try to reduce my points. I share the perception that we have reached a limit to technical solutions. We have built Pulau Semakau, a world's first. We are going to build another incinerator and these are big ticket items in the budget. But beyond solutions, we will need to look at the mindsets and social habits of Singaporeans. Here, I would disagree with Mr Kenneth Chen who spoke just before me. I actually think that the Ministry has done a good job in making citizens generally aware of the problem and aware of the need for recycling. Of course, more can be done for awareness. But the next step we have to take is to move from awareness to action. We have to enable action by making it easy, by allowing enterprise and making our effort effective. What I mean by ease, enterprise and effectiveness goes beyond campaigns or once in a while collecting old phone books or newspapers. We need to have regular projects in each neighbourhood or even in each house. We see in many developed countries blue bins or other systems used to collect bottles, cans and other recyclables. I am afraid I cannot understand why we do not have the same. I believe we should. The second thing about enterprise connects to the privatisation of waste collection. This is going to be difficult because eventually we are going to have to raise prices. We can, however, do this in a way that is sensitive to the needs of people, because we cannot move house, just because one company charges more than the other to collect our rubbish. In that sense, it is a very imperfect market, even if we privatise. What we can do to make the market better is to create more volume, not just by mandating it. We should create a market. Deposits on cans and bottles are a very small example of the kind of clear incentives we need to create this market, and then create the volume for recycling. Sir, more generally, I think there are many other things we can learn from other societies. We are not the first to face this problem, though it is more acute in Singapore. I would like the Minister to share his thoughts with us about closing the loop on waste.

Sir, I would like to thank the Members for speaking on recycling. As mentioned by Mr Kenneth Chen, waste generation in Singapore is on the increase. Twenty years ago, we produced about 2,500 tons of solid waste every day. Ten years ago, the amount doubled to 5,700 tons and last year, as mentioned by Mr Kenneth Chen, it has gone up by another 35% over the 10 years, to 7,600 tons. The split between the domestic sector and the industrial sector is about 50:50. In other words, every person in Singapore today generates about 0.93 kilogram of solid waste every year. If we were to compare ourselves to, say, USA, it is still lower. In USA, it is 1.97 kilograms; Germany, 1.26 kilograms; Japan, 1.09 kilograms. The good news is that compared to many of the other countries, we are still producing less than them. But the bad news is that Singapore, being a small country, faces much greater challenge and constraint - in finding enough space to dispose waste. As mentioned by the Members, every five years, we need to build a new incineration plant. Every 30 years, we need to find a landfill site as big as Sentosa island. Obviously, this is not sustainable. Sir, yesterday, I mentioned that in order to achieve sustainability in the disposal of solid waste, we need to accord greater emphasis to waste minimisation. And I thank the Members for speaking up and for their support. Yesterday, Mr Heng Chiang Meng asked why do we not focus more on 3Rs - reuse, reduce and recycle. Sir, I agree with him fully. Since 1991, the Ministry of the Environment has been promoting 3Rs very proactively. There are 130 companies in the 3Rs industry, and they deal with a whole host of recycling: wood waste, paper, scrap tyres, copper slabs, marine clay and so on. We also promote the fourth R, which is recovery. For example, all our incineration plants today recover heat from incineration of waste, and we feed the electricity to the national grid. Yesterday, Prof. Low Seow Chay asked what happens to all these materials collected for recycling. Sir, as I mentioned, the rate of recycling in Singapore today is 40%. Of the wastes that are being collected for recycling, about 50% are recycled in Singapore, and 50% for export. For the 50% recycled in Singapore, waste paper is recycled into paper products such as cardboards, and toilet papers. In the case of wood waste, companies are turning it into chip boards for furniture, wooden panels and so on. We are now using marine clay to make bricks for construction. In fact, HDB will be using some of these bricks produced by one of our recycling companies. So, on the whole, we think that 40% of recycling rate is not bad. If we compare ourselves to the rest of the world, in Germany, Munich city is 42%; Netherlands, 39%. However, the rate of recycling has stabilised at 40% since 1996, meaning that since 1996 we have not been able to increase the rate of recycling in Singapore. Therein lies our real challenge. Sir, yesterday, Mr Heng Chiang Meng said that we should encourage further recycling. I agree with him because our challenge today is to achieve another breakthrough beyond this 40% recycling rate. Mr Simon Tay mentioned that the privatisation of waste incineration would not solve the problem, in terms of sustainability. I agree with him. We believe that privatisation would only enhance our performance in the short term. But for long-term sustainability, we have to go beyond that. And that is the reason why yesterday, I announced that the ENV has set a target of achieving a 50% recycling rate over the next 10 years. Sir, I must admit that this is not an easy target to achieve. But we think it can be done. It is doable if all of us work harder together to achieve this. 1.00 pm Mr Heng Chiang Meng asked whether the Government is trying to pass the buck to the private sector. I can assure the House that that is not the intention. We look at this challenge as a shared challenge of the three "P" sectors - the Government, the private sector and the people sector. It is a common challenge facing all of us. So we are going to work together. We are not going to pass the buck to the private sector. At this moment, the recycling rates for paper, plastic, construction debris and book wastes range from 10% to 60%. We examine each of these items and our assessment is that there is enough scope for all of us to work together to increase the recycling rates for each of these types of wastes by about 20 percentage points over the next 10 years. That is why we believe that the 50% target is doable, not easy but doable, if we work hard enough, if we work together. The challenge really is how to extend recycling beyond the industrial sector. The 40% recycling today are basically achieved through recycling by the industrial sector. To extend beyond that to the domestic sector and commercial sector, we have to work both the supply and demand sides of recycling. Mr Kenneth Chen mentioned that we need to strengthen our education on waste recycling and spread the message, and we have to educate the young. And Mr Simon Tay mentioned that we have to go beyond awareness and turn awareness into action. I agree with both of them. For example, our school children today, at Primary 3, are told about the importance of recycling. My daughter came back from school one day when she was in Primary 3 and asked mummy and daddy, "How can we participate in recycling?" She also asked, "Where is the bin for the plastics and bottles? Where is the bin for the cans?" I was very shy, pretended and said that there was no such system in our home today. The point is that after a few years, my daughter never talks about recycling anymore. Why? The awareness has not been turned into action. There is no continuous reinforcement. As a result, we are not reaping the benefit of all the effort we have put into education. That is the reason why ENV decided that we must now require all the public waste collectors to introduce waste recycling to every household in Singapore so that your daughter, my daughter, your son, my son, after coming home from school, having learned about recycling, hopefully, they will be able to practise recycling on a day-to-day basis. Under our contractual agreement with these nine public waste collectors, they are required by ENV to introduce waste recycling schemes and bring recycling to the door-steps of the residents. We believe this will make it easier for each and every household to participate in waste recycling. I am pleased to inform the House that Jurong sector will be the first to launch the scheme by April next month. The other sectors will do so by the end of this year. As for recycling at the commercial premises, as mentioned by Mr Simon Tay, I agree with him. In fact, this is another challenge that we have to overcome. In the case of the commercial premises, we are going to reach out to the building managements to encourage as many building managements as possible in Singapore to introduce waste recycling in our commercial buildings. Hopefully, over time, we will be able to spread recycling beyond the industrial sector to the domestic and commercial sectors. Having taken action on the supply side, we are also taking action on the demand side, meaning that we are going to step up our promotion effort to further develop the recycling industry in Singapore. Our aim is to nurture a vibrant recycling industry in Singapore and position Singapore as a leading centre of excellence in 4Rs (reuse, reduce, recycle and recover) in this region. Mr Heng Chiang Meng yesterday mentioned that maybe we should introduce more incentives to encourage recycling, and today he mentioned that we ought to do more to promote "reduce" and "reuse". Sir, as I said, I agree with him. We are now looking at the experience of other countries and see in what way we can learn from them. I am going to make a trip to Europe in May and US sometime in July. The purpose is to see how we can learn from these countries on how they are able to implement recycling more effectively than Singapore. I am also pleased to inform the House that we have set up a multi-agency task force. It is led by EDB, comprising members from ENV, JTC and PSB. This task force, over the next few months, is going to formulate further our industry development strategies. They are going to propose new incentives, where necessary, to support and assist the industry in its development. At the same time, we will work together to nurture more companies, promote more investments, to build new capabilities and capacities in our industry for the 4Rs and, hopefully, in the process, we are going to speed up the pace of innovation in the industry. Sir, Prof. Low suggested that we should impose recycled contents in our Government procurement programme. I think we have to be pragmatic here. In the case of Singapore, many of our industries and manufacturers are basically global companies producing for the global market. So, in a way, our industry is basically an export-oriented industry. Our domestic market is a very small one. Therefore, we feel that to use our domestic market as a lever to enforce recycling contents in manufactured products may not be effective. At the same time, it may also affect our competitiveness in attracting foreign direct investment. We are not comfortable to insist such a regulation because the global manufacturers may also be constrained by the availability of recycled components. Instead of requiring them to do so, what we are trying to do is to create the condition in Singapore to make it attractive for them to do so. We believe that this will be the kind of win-win outcome we can strive for. Prof. Low also asked whether the Government can help to make the recycled products more attractive in terms of pricing and to label these recycled products. To make recycled products more attractive is a very good idea. It is something I fully agree. I spoke to many of our recycling companies. I asked them, "What is your strategy in competing for market share?" They said that their strategy is to sell their products cheaper than the non-recyclable products. However, they said that their cost of production is higher. With a higher cost of production, how to compete on the basis of low prices? Therefore, they asked me whether the Government could come in to subsidise or offset this higher cost of operation. Sir, I think this approach may not be sustainable because it would not be possible for the Government to continue to subsidise the recycling industry. But we believe that there is a lot of scope for us to speed up the process of innovation in our recycling industry so that the industry can come out with more innovative products that can command more attractive pricing in the market. In this regard, ENV, EDB and the various Government agencies are going to work closer together to support the industry through the IDS (Innovation Development Scheme), whereby we are going to co-fund the cost of developing new products, new processes and new applications of these recycled materials. In the process, I think we would be able to help them to become more viable and more profitable. Regarding labelling the recycled products, the Singapore Environmental Council has this Green Label scheme in place. What we can do is to work closer with them to incorporate this concept, as proposed by Prof. Low Seow Chay, into the Green Label scheme, and maybe to work with SEC to conduct a campaign to create greater public awareness. Mr Kenneth Chen also asked whether we should review the use of disposable crockery that are non-biodegradable. In the short term, what we are trying to do is to generate both the demand and supply sides. Because if we are not able to create the demand for the recyclable waste, at the end of the day, whether the waste is biodegradable or non-biodegradable, if they all end up in the incineration plant, it actually makes no difference. In that sense, while I note the point by Mr Kenneth Chen, I would say that the challenge really is to find a way to recycle these wastes. Because, if there is a way of using them, then I think it makes a lot of sense for us to move away from wastes that are non-biodegradable. Sir, I think I have addressed all the questions by Members.

Sir, our expressways cut across many high-rise public and private housing estates in Singapore, especially in the central area. Over the years, traffic has increased in our expressways in the city area and the outlying areas. Also, many residents find that this has caused significant noise problems for them and their families not only in the day time, but also as late as 10.00 pm, 11.00 pm and 12 midnight. Many find that the noise pollution is unbearable. Sir, many of my residents live in flats very close to these expressways. In fact, some of these flats were built way before the expressways, like CTE and PIE, were built. Due to the lack of space for the construction of these expressways, some of these expressways cut very close to the flats. For example, I know of one or two flats in Whampoa Drive area where they do not normally meet the URA's set-back guidelines, for instance, so much so that when one of these flats went through a Main Upgrading Programme, the SAI (space-adding item), which was supposed to be built, could not be built because the expressway is so close. That is how close some of these flats are to the expressways. I would like to ask the Ministry to seriously look into this. Residents, especially living probably six or seven storeys above, are the ones who feel the greatest impact of this noise pollution. I am also aware that those flats which are near the MRT tracks also face this similar problem, although those from the traffic of the expressways is even greater. I understand that countries, like Japan, have built sound barriers at strategic spots in their expressways. I am not asking that these be built across Singapore in all the expressways but at strategic points where the impact of this is felt by most residents. I know that there have been talks that this would not be aesthetically doable by some of the urban planners. But I think if it is functional and it can help many residents, it would certainly be useful. Sir, in particular, I have got several residents who have told me that they have to put up with this for many years and, in fact, they found that their hearing has actually been impaired and they have to get help from doctors. So I think it is a significant problem and I hope the Ministry will look into this.

Sir, the topic I wish to talk about is hand, foot and mouth disease. The finding of the recent hand, foot and mouth disease epidemic was related to the EV71 Enterovirus. At the peak of the epidemic, there were more than 400 cases reported a month and some children died of the disease. In October last year, drastic action was taken to break the chain of transmission of the epidemic. After things got back to normal, in late last month and early this month, the disease started again. About 100 cases were reported per month, and two children had died as a result. Sir, EV71 infected hand, foot and mouth disease has proven to be quite lethal. In the outbreak in Malaysia in 1997, 47 deaths were suspected to be due to the hand, foot and mouth disease. In the outbreak in Taiwan in 1998, at least the deaths of 80 children were implicated to be caused by EV71 Enterovirus, and more than 60,000 cases were reported. We were lucky that here the damage due to the EV71 was not as bad as other countries. The re-emergence of the EV71 epidemic in the beginning of this month prompted one to ask whether the measures taken by the Ministry are effective enough to take care of this deadly epidemic. In the first place, is the reporting system of the hand, foot and mouth disease cases by the GPs to the Ministry quick enough? Could it be that by the time the Ministry gathered all the data, the disease has already spread? I tried to find out some data or information of the disease from the Internet and I got nothing from the Singapore web-page on how to prevent and control the spread of the disease. It shows that some efforts should be put into the web and other media to help the control of the disease. Should we do more in public education so that the people are well aware of the danger of the disease and, when contracted, they know precisely what to do to contain the spread of the disease? 1.15 pm Years ago, when a person contracted a communicable disease, he will be kept in the Communicable Disease Centre to prevent its possible spread. I have not heard about such measure for quite some time. Should we rethink about the matter and see whether it is feasible to confine people contacted with the EV71, hand, foot and mouth disease, as a means to contain that disease?

Do you want to move on to your next amendment?

Sir, the next cut is odour control. In the previous year's debate in the Committee of Supply, I spoke about the necessity of the smell or odour control regulation. The reply from the Minister was that if it affects the public health, then it could be controlled under the Environmental Public Health Regulations. Though saying so, nothing much seems to have been done in improving the environment in the area of odour or smell in the air that is discomforting to the people. Without an odour standard, it is very difficult for the people to complain about the foul smell and the industries that generate the chemicals which cause the smell. It is also very difficult for the Ministry to say who is wrong, simply because there is no law to say that it is illegal to generate the smell. At present, anyone who is unhappy about something smelly, he will just make a complaint to the Ministry. The Ministry will then go to the source and tell the person not to generate the smell. Sir, in reality, zero emission standard is only applicable to the hazardous and toxic emission of harmless smell. It may seem too much if we tell the source to comply with zero emission. To be reasonable, we need to set a limit to such emission and a standard would then be needed. Take the case of the smelly bean curd shop chou tou fu. The complaint of the smell led to the closure of the premises. I am sure the authority has used other laws to request the stoppage of the business and, certainly, it was not because of the smell level that had been complained about. In the recent well-reported case about the smell from the chicken farm and from organic farming using animal wastes and fertiliser, even the consultant from the NUS did not know what standard would be acceptable, in terms of smell. If one could not set a standard, how could one know that the farmer has done his job in controlling the smell, the people may have a sensitive nose to smell even though it is of a very low and harmless content. The consequence would be to either close all the farms or resettle all the people from the affected areas. If this is the solution, it would be very unfortunate and it will certainly insult the intelligence of many people. Before things get from bad to worse due to arguments and counter-arguments about the problem of smell, it is time that we should at least set up some standards in dealing with smell, so that both the emitter and receiver will have a common ground in settling their problem of smell or odour.

Sir, I will be dealing with the questions posed by Mr Sinnakaruppan and Prof. Low on HFMD and, of course, the last one on control of smell. Sir, Mr Sinnakaruppan asked about traffic noise. Let me assure him that traffic noise comes from vehicle engines and tyres. ENV, MCIT and MND have implemented measures to control traffic noises from expressways. These measures include setting of noise emission standards for vehicles; using low noise porous asphalt material for surfacing certain stretches of expressways; siting multi-storey car parks, electrical substations or other non-noise sensitive structures to screen traffic noise from residential buildings; setting back residential buildings from the expressways; and designing layout of flats such that living rooms and bedrooms are located away from traffic noise. Sir, with increased urbanisation and widening of expressways, the noise level has gradually been increasing along certain stretches of the expressways. To address this gradual increase of traffic noise from expressways, ENV and MCIT engaged a noise consultant to conduct a study on the impact of traffic noise from expressways. The study includes a review of the existing guidelines and mitigation measures, including sound barriers. In the preliminary findings of the study, the consultants have also identified several 'hot spots'. These are blocks of flats fronting the expressways where the noise level is high. ENV and MCIT will evaluate the findings and recommendations of the consultancy study. We would also look into noise mitigation measures from these 'hot spots' especially. Sir, in land scarce and highly urbanised Singapore, some degree of noise pollution is inevitable. Notwithstanding this, we would seek to minimise the impact of traffic noise on residents living near expressways through the use of planning and other noise mitigation measures. Sir, Prof. Low asked about HFM disease. My Ministry appreciates his concern. We are also concerned. In response to Prof. Low's questions and, with your permission, Sir, I would like to put in perspective the overall situation with regard to infant fatality. Sir, from September last year to now, there were seven children below 5 years of age who died of viral infections involving the brain, lungs and heart. Four had EV71 and one had an enterovirus that is still being typed. The virus or viruses responsible for the other two could not be identified. In the last five years, there were an average of 16 deaths a year, ranging from 11 to 28 deaths, among children aged 5 and below. This puts us among one of the lowest mortality rate among children of this age group in the world. What is worth noting is that there has been no noticeable increase in the number of deaths among children aged 5 and below in recent years. In fact, the number of deaths last year, among children in this particular group, totalled 11. And this was less than the previous year which was 18. Sir, why then has there been this recent attention given to EV71? For one thing, it was only recently that developments in the diagnostic tool, known as PCR, this is something to do with the laboratory equipment that magnifies the DNA, the genes of the virus using an enzyme, known as polymerase, has enabled it to be used by diagnostic laboratories worldwide to detect EV71. Then how does EV71 relate to HFMD? Is it a potentially aggressive virus that often causes deaths? Sir, EV71 is generally not known to be an aggressive virus. In most cases, EV71 will not cause death, but instead cause a mild and common childhood disease known as the hand, foot and mouth disease. It is just like the flu virus. The flu virus does not usually attack the heart or the brain and then cause death, although it can and has been known to do so. So when will EV71 turn aggressive and lethal? The outcome would depend on the relationship between the viral agent and the host, the baby, the kid. For example, factors like the amount of virus a person is exposed to or the ability of the body's immune system to defend against the virus can make a difference. Genetic factors also play a part, some persons may possess a certain gene which renders them more prone to complications by allowing efficient virus entry into the cells. Sir, since one of the symptoms of EV71 is hand, foot and mouth disease, a good strategy to prevent the spread of EV71 is to prevent an outbreak of the hand, foot and mouth disease. We are not saying that EV71 cannot be aggressive when there is no HFMD outbreak, as we have seen it can, but preventing outbreaks of HFMD would minimise the chance of exposure to EV71 virus. My Ministry therefore monitors very closely the incidence of HFMD throughout Singapore and, in particular, in all the pre-schools. If there are signs of localised secondary transmission going on in any pre-school, ENV will move in quickly to prevent an outbreak from occurring. In the months ahead, ENV will be working with MOE and MCDS to see how best pre-school operators can be further trained in the areas of illness detection, isolation of the unwell child and preventive measures to check transmission.

Mr Sidek, "guillotine" time on this amendment is 1.40 pm.

Yes. Sir, let me assure him that the web site and the information will of course be available. We are doing that. Sir, Prof. Low also asked about odour. There are currently no standards for odour emission from industries, including poultry farms. This is because most odours are made up of many organic compounds that cannot be detected by instrument. Sir, our nose is still the best means to assess an odour. Sir, panels comprising selective individuals have been set up in some cases to assess odour. However, the panel members still use their noses to detect odour. There are odours and there are odours. We should only be concerned with odours that have health implications or are a nuisance to many. Odour emissions from chicken farms, pharmaceutical and food industries, etc, are some examples. In such cases, we would require industries to install odour control equipment to reduce the odour emission. 1.30 pm

(In Mandarin): The hawker centre is one of the most frequented places for people in Singapore when they go for food, because it is inexpensive and there is a great variety of food. It has become one of the essential parts of daily living of our people. With the convenience and good choices of food in the hawker centre, Singaporeans have, unconsciously, developed a habit of eating out. Apart from hawker centres, there are also more and more food courts now coming to the HDB estates. If we compare the hawker centre with the food court, of course the hawker centre would be inferior, as far as appearance, decoration, ambience and the level of comfort are concerned. So, when we upgrade our hawker centres, we should not just stick to the old fashioned way of doing it, ie, just cleaning, painting, and putting in some new tables and chairs. I think we should redesign the hawker centres with better lay-out of stalls, comfortable seats, and generally more pleasant environment. We should have a thorough change, so that a modern hawker centre would attract customers, whether in its outlook or comfort comparable to the food courts. Following the ageing of our people, we notice that there are many hawkers at the hawker centres who are old enough to retire. We could notice in certain hawker centres where business is not well, some stalls are not open, while some stalls are operating for only a few hours a day. Some elderly hawkers find it too tough to carry on with their trade and rent out their stalls to other people. The hawkers may be aging but their stalls still have economic value. Perhaps the Ministry of the Environment should allow these old hawkers who have been operating for many years to surrender their stalls to the Government for some form of compensation, so that these stalls could be transferred to willing new-comers, to better serve the customers. The Ministry of National Development has already mentioned that it will be compensating any neighbourhood retailer who wants to give up his shop with $48,000. Perhaps the Ministry of the Environment could also offer an attractive package to anyone who wishes to give up his stall. Upgrading of a hawker centre may take as long as one year. Some hawkers may not have enough savings to last for such a long period without income. I wonder if the Ministry of the Environment could make some arrangements to help them. Are the stallholders required to pay their rent when the hawker centre is being upgraded, and no business is conducted there? The design of some of the hawker centres, eg, the one in Taman Jurong Block 1, is very old fashioned. No matter how we upgrade, it would not be nice and presentable. Perhaps we should build a new hawker centre nearby so that the hawkers can continue to operate in the existing hawker centre, and then move into the new hawker centre when it is completed. In this way, they will not be deprived of the earnings during the period of upgrading.

Prof Low, would you like to give some time to the other two persons?

Yes, please.

Mr Low Thia Khiang.

Sir, I will just ask a few questions regarding the upgrading of hawker centres. I would like to know, first of all, after the centres are upgraded, whether the rental will be increased and, as Prof Low has asked, whether any compensation would be given to tide the hawkers over the difficult period during the upgrading process. How long does the Ministry expect to upgrade all the hawker centres in Singapore, and what is the schedule of the proposed upgrading?

Sir, over the last few days, we have heard that the Government has come up with schemes to help HDB shop retailers. There is one group of retailers who needs help, and I think this has not been addressed. I am referring to those stall owners operating in wet markets managed by the Ministry of the Environment. I have one such market in my constituency. Sir, we will recall that in the mid 1990s, the Government encouraged ownership of wet market stalls, and stallholders in these markets volunteered to buy their stalls over from the Government, and they did so. However, lifestyles have changed and, over the last five years, we have seen a shift in preference, with households preferring to shop in air-conditioned supermarkets and suburban malls. As a result, many of these wet market stall owners are facing falling business, and the fall seems to be permanent rather than cyclical, and many are also carrying very high mortgage rates, which they find difficult to sustain. Sir, I am not sure whether the Retail 21 Committee has addressed these stall owners' problems. Many are in a dilemma. By nature of their wet market environment, they have less flexibility. They cannot easily sublet part of their stalls, because the stalls themselves are very small. Neither can they change their use, nor apply productivity enhancement measures to upgrade. They offered to sell their stalls in the resale market, but there were no takers. Sir, I have three proposals for the Minister to try to solve this problem: 1. Allow these stall owners to set up a cooperative to remodel their wet market stalls into a viable modern supermarket. In so doing, the Government undertakes to help redevelop the wet market into a modern style supermarket, and let the stall operators manage and operate the supermarket; 2. Implement something like the SERS programme for residential units, ie, the Government rebuild the wet market and allow stallholders to have a choice, whether to continue to operate the stall when the market is rebuilt, or totally sell their stalls back to Government; 3. If all the stallholders are willing to quit business and sell their stalls back to the Government at an acceptable price, the Government should consider buying back all the stalls, tear down the market, and use it for something else. Sir, I am urging the Minister to address this problem and help our wet market stall owners.

Mr Chng is not moving. Mr Lim Swee Say.

Sir, as time is short, I will go directly to the points brought up by the various Members. Firstly, the issue of whether we will allow some flexibility in the design of the upgrading of centres. Sir, I am happy to say that what the Ministry will do is this. For upgrading, we will assign a standard budget, on a per-stall basis, for each project. The grassroots leaders, advisers and the market association can then decide what are the additional features and designs they would like to have. Of course, their design will be subject to approval by the ENV, HDB and JTC who are the managing agents, and the additional costs of these features will be borne by the grassroots organisations and the Town Councils. This means that we will provide them with the standard package and standard fund, and they can do the topping up. Secondly, is there any programme to enable some of the stallholders to get out, if they do not want to move into the upgraded centre? For the first-generation stallholders, they will be given $19,000. These cooked food stallholders can take the $19,000 and give up the stalls. In the case of the market stalls, they will be offered a cash grant of $15,000. So those who do not want to go into the upgraded centre, they can take the grant and leave. But these are only for those centres that are involved in redevelopment, ie, if we are going to reconfigure or redevelop the centre. As for the centres that are only meant for upgrading, ie, no structural change but just upgrading, our original intention is actually not to offer them these cash grants. But a few MPs have suggested that we should at least allow some of them, in particular, the older ones, to get out if they want to. So my Ministry has decided that we will offer cash grants to those who are more than 62 years old at the point of announcement. For example, if a centre is selected for upgrading - not for redevelopment but for upgrading - all the stallholders who are more than 62 years old can opt for these cash grants, if they want to. Whereas in the case of a major redevelopment, the cash grants will be offered to all stallholders, regardless of their age. On the question on whether there will be any change in rental after the upgrading, Sir, firstly, subsidised stalls in all centres pay a standardised base rate. For example, for a cooked food stall, today it is $160. In the case of a market stall, it is between $56 and $92. All centres today pay these base rates. These base rates are reviewed from time to time. The last time we reviewed the rental was in 1995, some 6-7 years ago. But I am happy to inform the House that my Ministry has no intention, at this moment, to revise the rental, meaning that there will be no change to these base rate rentals in the near future. However, for those centres that have undergone both upgrading and redevelopment, there will be some adjustment to the rental, to reflect the better facilities, design, layout and, in some cases, even bigger stall size. There are two types of centres. The first type is just upgrading, ie, no structural change, but upgrading in terms of better tables, stools, toilets, ventilation system and so on. For those stalls, the adjustments will be very minimal. I am not able to give the exact amounts, because the sums involved will vary across centres, depending on the condition of the centre, its location, etc. But as an indication, I am pleased to inform the House that the adjustment to the rental for the upgraded stalls will be between $1 and $4 a day. So, we are keeping it very minimal. An hon. Member: A month or a day?

A day. $1 to $4 a day, depending on the location, where they are. For some centres, it will be $1; for some other centres, it could be as high as $4. But, on the average, it would be about $2, for the upgrading of the stall. If we do a simple calculation, we will find that it will not be possible for the Government to recover the cost of upgrading through this $2-per-day adjustment, because the cost of upgrading is about $20,000 per stall. So, at $2 a day, it will take us 10,000 days, or something like 30 years, to recover.

Order. We have reached the "guillotine" time on this amendment. Prof Low.

Sir, I think Members will agree with me that the Minister has really given a very comprehensive and thorough report to almost every one of the questions asked. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Amendment No. (2), Mr Heng. "Guillotine" time on this amendment is 1.51 pm.

Sir, I beg to move, That the sum to be allocated for Head M of the Main Estimates be reduced by $10 in respect of Code MA 1500. Sir, I am glad to see that the Inter-Agency Committee on Energy Conservation (IACEC) will now be put under the Ministry of the Environment and, from what I gather, the thrust of the Government's energy conservation initiatives appear to be focused on three measures: 1. To strengthen the regulatory and institutional framework for the conservation of energy; 2. To improve the market environment so as to provide an improved platform for all to conserve energy; and 3. To use the public sector as the leading edge and show the way for all to emulate. Sir, while these are good and admirable measures, I think a very basic fundamental point is missed. Energy is used by humans and, therefore, can only be conserved by humans. Yet, the measures are not focused on how to make Singaporeans as a whole use less energy as a behavioural norm. If every Singaporean can consciously use less energy in every aspect of his daily living, such behaviour will carry over from his home to his workplace. So, if each of us can conserve only a bit, the combined effects of the total population can lead to a huge decrease in energy usage. So I would like to really suggest that the Government start encouraging more Singaporeans to conserve energy. And I am very sure the Acting Minister would agree with this motherhood statement. Unfortunately, the example of the recent rebates given on the hybrid electric car, as well as other measures or lack of measures, does not give one hope that the Government is prepared to put its money where its mouth is. We all know that the use of any new technology is expensive. Witness the prices of PCs when they first appeared and the prices of PCs now. Also, without an extensive infrastructure, motoring with a hybrid car will cause more inconvenience for the owner. And the rebates that have been given so far do not take all these factors into consideration, resulting in the estimated overall costs to be higher than that of conventional cars, despite the perhaps cheaper initial cost of the vehicle. It is, therefore, not surprising that most dealers do not expect a high demand for the hybrid cars, despite the rebates.

Mr Heng, would you like to give some time to Mr Thomas?

Yes, Sir, just one final point. Yesterday, Mr Ong Kian Min brought up this question of solar heating panels. I have brought up this issue before in previous Committee of Supply debates, and I wish the Government will give some financial rebates on this.

Sir, I am pleased to say that most of the points that I had wanted to bring up have already been addressed by the Minister. However, I would just like to ask what are the acceptable international standards for noise levels, in decibels, from expressways, and what is the general noise level from our expressways? 1.45 pm

Sir, I agree with Mr Heng Chiang Meng that energy conservation can only be effective if there is enough of public consciousness. When I mentioned that ENV would take over the IACEC, effective from April, I did also mention that we are going to expand the scope of the Committee beyond energy conservation to include clean energy as well. At the same time, I want to assure Mr Heng that the Committee would adopt a 3P partnership approach, meaning that whatever programmes we introduce, we will strengthen the partnership between the people, public and private sectors, so that together, we will be able to achieve this objective in energy conservation, as well as expanding it to clean energy. Mr Heng cited the example of the hybrid vehicles as an illustration that the Government is not prepared to put the money where its mouth is, in terms of promoting energy conservation. Sir, I beg to differ, because in the case of the hybrid vehicles, the Ministry of Communications and Information Technology has already explained that the green policy as well as the transportation policy, must go hand in hand. In our national interest, Government has to balance between the green policy and transportation policy. As far as the IACEC is concerned, I assure Mr Heng that my Ministry will do whatever we can to harness the support and participation of the 3P sectors so that together, we can move towards energy conservation.

I thank the Acting Minister for his reply and beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

Amendment No. (3), Mr Heng.

Sir, I beg to move, That the sum to be allocated for Head M of the Main Estimates be reduced by $10 in respect of Code MF 1500. Sir, Singapore, being a highly urbanised place, the noise level and noise pollution are relatively high, compared to many other countries less urbanised. Like it or not, we have to bear with it if we want to continue living in Singapore. On the other hand, I must congratulate the Environment Ministry for doing a marvellous job in keeping the noise pollution within very acceptable limits. However, what I fail to understand is why does the Ministry still allow the use of the normal percussion piling methods in construction sites when these sites are situated very close to existing residential areas. The use of such a piling method, using a heavy block dropping on the top of a pile to hammer the pile into the ground, creates too much noise for nearby residents, regardless of the measurement of noise at the point where the noise is being generated. Sir, such a method is similar to using a hammer to knock a nail into a piece of wood, except that the dimensions of the hammer and nail are now increased by 1,000-fold. Besides noise, such a method also often causes stress to structures of nearby buildings, creating cracks in the walls of nearby buildings, and very often, conflicts between neighbours. I would like the Minister to consider banning the use of such piling methods in construction sites by reducing the level of permitted noise generated from construction sites when such sites are within certain distances from residential areas. After all, there are quieter, alternative piling methods which contractors can use.

Dr Lily Neo, you have the privilege of moving the last cut.

Sir, bad air in the office buildings here makes one in three office workers feel lethargic and experience dryness of the throat, skin and eyes. A new survey by the National University of Singapore (NUS) researchers found that workers here have it worse than those in 11 European countries when it comes to 10 out of the top dozen health problems linked to "sick-building syndrome". Sir, "sick-building syndrome" refers to an excess of work-related irritation of the skin and mucous membranes and other symptoms, including headache and fatigue, reported by occupants in modern office buildings. The researchers checked 98 locations in five buildings. The buildings generally had lower levels of carbon dioxide and fine dust particles but marginally higher carbon monoxide levels than buildings in Europe. But high levels of contamination were found here in a few isolated locations in the five buildings surveyed. Yeast, mould formaldehyde and carbon dioxide also exceeded the limits in some spots. Sir, one interesting finding of the local survey was that workers were not as dissatisfied with the air quality as those in Europe, although Singapore workers showed more symptoms. Our cultural differences could explain this. It is possible that employees here are less likely to complain to their bosses, even if they suffer "sick-building syndrome", than workers in European work places. Earlier, studies here by ENV found that one in five office workers here have health problems because of poorly ventilated buildings. It is a known fact that indoor air quality is a subject of public health importance as many spend a lot of time working indoors. Studies show that most people here spend 80% of their time indoors. Poor air quality decreases productivity because of discomfort, absenteeism and sickness. A number of Australian and overseas studies have identified the high costs of poor quality indoor air. Sir, these costs included direct medical costs, loss in productivity and damages to material and equipment. Loss in productivity in the United States of America is estimated to be nearly five times that of direct medical costs. Air quality is influenced by temperature, humidity, air movement and air contaminants. There are legislation and regulations governing indoor air quality in US, Australia and New Zealand. In view of the great implications of indoor air quality, I would urge the Minister for the Environment to have regulations in place here to ensure compliance with air quality and thus ensuring healthier workers, and better productivity. Recently, the US Environmental Protection Agency's draft report concluded for the first time that dioxin was a human carcinogen. May I ask the Minister for the Environment what are the measures taken by his Ministry to control the level of dioxins emitted into the atmosphere, and whether the current levels emitted to our air atmosphere are safe.

Sir, I would like to thank Mr Heng Chiang Meng for bringing up this important issue. Our law takes into consideration the background noise of the environment. The noise measured would be adjusted according to the background noise. Therefore, the permissible noise level in a quiet neighbourhood will be more stringent, when compared to a neighbourhood with higher background noise. I agree that jack hammers or percussion hammers can pose a problem if done close to a residential building, especially caused by the vibrations which transmit through the ground. Our law restricts the noise level being generated by the piling activities, regardless of the types of equipment or machinery used during construction. Having said that, I am pleased to announce that all new construction sites, commencing work from 1st October 2001, and located within 150 metres of residential premises, will be required to observe a stricter set of noise levels at night. The decision to impose stricter noise control measures at night was taken in response to the many complaints which my Ministry has received. Last year, for example, we received an average of 33 complaints a week on construction noise, compared to an average of 21 per week in 1999. This is despite the drop in construction activities of about 20% last year. Sir, the new set of noise levels will limit work at night in two segments, the first segment, between 7 pm and 10 pm, and the second segment, between 10 pm to the next morning, at 7 am. During the first night segment, from 7 pm to 10 pm, the permissible noise level will remain at 65 decibels, but averaged over one hour, and the instantaneous noise over five minutes shall not exceed 70 decibels. From 10 pm till 7 am the next morning, the permissible noise level will be lowered to 55 decibels averaged over one hour, and the instantaneous noise over five minutes shall not exceed 60 decibels. Sir, given these permissible noise levels, noisy work, such as concreting, will not be done after 7 pm. Less noisy work, such as erection and dismantling of form work, fixing of steel bars, loading and unloading of materials may be carried out. However, after 10 pm, only quiet work, such as bricklaying, plastering and painting can be done. With the more stringent control of our noise at construction sites, we hope that residents living close to construction sites will have quieter evenings and more restful nights. Sir, Dr Lily Neo brought up the point regarding indoor air quality. Following the 1995 survey, guidelines on good indoor air quality practices were published in 1996 and widely distributed to those in the building management industry. Further studies conducted in 1997 and 1998 in offices, MRT stations, schools and underground carparks, showed that generally, indoor air quality has been satisfactory in these places, except for a few isolated locations. Laws on indoor air quality may not be necessary at this time, as standards have also not been set by WHO and threshold levels not established. In the meantime, however, ENV enacted laws in February this year to require proper maintenance of water cooling system in central air-conditioning of all public buildings. This law, when enforced, will bring down incidence of the Legionnaires' disease, caused by the legionnaire bacteria which grows in poorly maintained water cooling tanks. Sir, on the question about dioxin, as Dr Lily Neo knows, dioxins are by-products of combustion. They are also produced by some industrial and natural processes. ENV has been monitoring dioxin levels in ambient air since 1999. So far, trace levels have been detected occasionally. The levels are lower than the levels found in quite a number of developed countries, such as Germany, UK and Netherlands. Hence, the level of dioxin in our ambient air does not pose a problem.

Mr Heng, there is one minute left.

I thank the Senior Minister of State for his reply, especially the last point on noise standards. With that, Sir, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $431,048,700 for Head M ordered to stand part of the Main Estimates. The sum of $452,771,000 for Head M ordered to stand part of the Development Estimates.

I shall now deal with the remaining heads of expenditure in respect of which no amendments stand on the Order Paper Supplement. In respect of the Main Estimates, they are Heads D and G. I propose to take those heads of expenditure en bloc. Question, "That the sum for those Heads of Expenditure which appear in the last column of the Schedule of estimated expenditure under the Main Estimates on page 24 of Paper Cmd. 3 of 2001 stand part of the Main Estimates," put and agreed to. Question, "That the sum of $32,318,858,720 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Main Estimates for the financial year 1st April, 2001 to 31st March, 2002, contained in Paper Cmd. 3 of 2001," put and agreed to. Question, "That the sum of $19,606,584,900 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Development Estimates for the financial year 1st April, 2001 to 31st March 2002, contained in Paper Cmd. 3 of 2001," put and agreed to. Resolutions to be reported. Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. First Resolution reported - Question, "That the sum of $32,318,858,720 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Main Estimates for the financial year 1st April, 2001 to 31st March 2002, contained in Paper Cmd. 3 of 2001," put and agreed to. Second Resolution reported - Question, "That the sum of $19,606,584,900 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Development Estimates for the financial year 1st April, 2001 to 31st March 2002, contained in Paper Cmd. 3 of 2001," put and agreed to.

Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions."

Question put, and agreed to. Resolutions accordingly agreed to.

Order for Second and Third Readings read. 2.02 pm

Sir, I beg to move, "That the Bill be now read a Second time." In accordance with Article 148(1) of the Constitution, heads of expenditure to be met from the Consolidated Fund and Development Fund, other than statutory expenditure, have to be included in a Bill to be known as the Supply Bill. The purpose of the Supply Bill before Members is therefore to give legislative approval for the appropriations from the Consolidated Fund and Development Fund to meet expenditures in the financial year 1st April, 2001 to 31st March, 2002. The heads of expenditure and the sums that may be incurred in respect of each head are shown in the schedule to the Bill. These have been approved by the House in the Main and Development Estimates of Expenditure for the financial year 1st April, 2001 to 31st March, 2002, and appear on pages 24 and 25 of Command Paper No. 3 of 2001. The Supply Bill, when approved, will empower me to issue warrants, authorising expenditure up to the amount for each head as shown in the Bill to be paid out from the Consolidated Fund and the Development Fund. Sir, I beg to move.

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

Sir, I beg to move, "That the Bill be now read a Third time."

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

Order for Second and Third Readings read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to make final provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 2000 and the Supplementary Supply (No. 2) Act, 2000. The additional sum has been presented as Second Supplementary Estimates which have been considered and approved by the House as Command Paper No. 2 of 2001. Sir, I beg to move.

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

Sir, I beg to move, "That the Bill be now read a Third time."

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

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In 1995, the electricity and gas functions of the Public Utilities Board (PUB) were corporatised as a first step towards introducing competition in the electricity and gas industries. PUB was then restructured to regulate the electricity and gas industries, while retaining its responsibilities for ensuring safe and reliable water supply in Singapore. Currently, PUB comprises two parts: the electricity and gas Regulator and the Water Department. But the PUB Water Department is not the only agency dealing with water. The Ministry of the Environment (ENV) also deals with water, through its Drainage and Sewerage Departments. This Public Utilities Bill is to respond to the changes in the water industry. Allow me to explain. In the early days, drainage systems were meant to drain away rainwater quickly to prevent flooding. At the same time, sewerage systems were put in place to control pollution in order to protect public health. Hence the Drainage and Sewerage Departments come under ENV. Today, pollution is well under control in Singapore and all our water catchments have been cleaned up. All used water is now channelled into our sewerage systems and all solid wastes are collected and treated before disposal. With clean catchments, our drainage system is no longer just for flood prevention but has, in selected areas, become means to channel rainwater into our reservoirs. Meanwhile, water treatment technology has advanced considerably, making it economical to treat and recycle used water in a significant way. The used water from our wastewater treatment plants can today be treated to standards much higher than the WHO's drinking water standards, even meeting the stringent requirements of those industries requiring ultra-pure water, as in the wafer fabs. This has enabled us to construct a robust water supply system by tapping on several economically viable sources, thereby diversifying our water sources. Thus, even as we continue to develop more of our local sources of water and buy water from Malaysia, we are also exploring buying water from Indonesia. And with the opportunity now available through advances in technology, we will also develop seawater desalination plants and recycle used water more. In order that we can fully exploit our domestic water resources, we cannot continue to manage the water cycle under separate agencies. To reduce wastage and to exploit synergies, we need a PUB that has the mandate and the resources to manage the entire water cycle optimally; in other words, we should integrate the separate agencies together into a sole water authority for Singapore. The Government has therefore decided to merge the existing PUB Water Department and ENV's Drainage and Sewerage Departments into a restructured PUB. The restructured PUB will then be placed under ENV. At the same time, the electricity and gas regulatory functions of the existing PUB will be taken out to form a new statutory board, the Energy Market Authority of Singapore or EMA under the Ministry of Trade and Industry. Mr Speaker, Sir, to effect these changes, this Bill which I move today seeks to repeal the Public Utilities Act (Cap. 261) to be re-enacted as the Public Utilities Act 2001. The re-enacted Act will enable the Sewerage and Drainage Departments of ENV to be integrated with the Water Department, forming the restructured PUB. The responsibility for the restructured PUB will then be moved from MTI to ENV with effect from 1st April 2001. The Water Authority The restructured PUB will become the sole water authority in Singapore. The Bill retains, with modifications, the provisions of the existing Public Utilities Act with regard to the functions, duties and powers of the PUB in relation to water. The Bill will also empower the restructured PUB to directly administer the Sewerage and Drainage Acts, which were hitherto administered by ENV. The functions and duties of the restructured PUB will include providing an adequate supply of water, regulating the supply of piped water for human consumption, supplying industrial and treated used water, and operating the public sewer systems and storm water drainage systems. Main Provisions in the Bill Mr Speaker, Sir, I shall now touch briefly on the main provisions in this Bill. Clauses 6 and 7, together with the Second Schedule of the Bill, set out the functions and duties of the restructured PUB. Briefly, it will provide, construct and maintain the infrastructure for the collection, supply and use of water for public and private purposes; secure and provide an adequate supply of water for Singapore at reasonable prices; and regulate the supply of piped water for human consumption. It will act as an agent of the Government in the management and maintenance of public sewerage systems, public sewers and storm water drainage systems, drains and drainage reserves belonging to the Government. It will also regulate the construction, maintenance and improvement of sewerage and land drainage systems, and the discharge of sewage and trade effluent. The existing powers of the current PUB to regulate and implement the supply of water for human consumption are retained in Parts IV and V of this Bill. At the same time, more stringent measures over water service installations are being introduced in view of the experience gained from the recent water contamination incident in Bukit Timah Plaza. Currently PUB requires water installations to be checked once every year by licensed plumbers. This measure will remain in force. The Bill will in addition require such installations to be inspected by a professional engineer and certified fit and safe once every five years. Any party convicted of contravening this requirement will be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 12 months, or to both. The Bill will also hold parties responsible for causing contamination to water supplied by PUB. Responsible parties will have to ensure regular and adequate checks on their water installations. The penalty for contravening this requirement is $50,000 or to imprisonment for a term not exceeding three years, or to both. Transfer of Assets and Protecting Terms and Conditions of Service for Staff In restructuring the PUB, we will need to ensure the proper transfer of staff, properties, rights and liabilities related to the Sewerage and Drainage Departments of ENV, to the PUB. Clauses 60 to 66 provide for the transfer to the PUB of property, assets and liabilities and of employees in the Sewerage and Drainage Departments and the protection of their terms and conditions of service on transfer. Conclusion Mr Speaker, Sir, water is a strategic resource. Technology advances, both in seawater desalination and in the treatment and recycling of used water, have enabled us to considerably enhance our water strategy. These developments open up more choices and allow us to diversify our sources of water. The restructured PUB will be able to take advantage of these developments and deliver to us a more robust and secure water supply in a holistic and optimal way. Sir, I beg to move. Question proposed.

Sir, in speaking on this Bill, let me first declare my interest that I am a Board member of the present Public Utilities Board. I note that the new Public Utilities Bill will bring the water undertaking portion of the present PUB, together with the Sewerage and Drainage Departments of the Ministry of the Environment (ENV), to form the sole water authority in Singapore. At the same time, the current power and gas regulatory functions of PUB will be retained under the Ministry of Trade and Industry, under a new statutory board. The new restructured PUB will come under the ambit of ENV. Sir, after listening to the various clarifications on water related issues by the Acting Minister for the Environment who spoke during the Committee of Supply deliberations yesterday and also studying the chart on the future thrust of the Environment Ministry, distributed during the session, and also as asserted by the Acting Minister for Trade and Industry just now, I am convinced that bringing the water management function of the current PUB into one sole authority will provide the needed focus on all aspects of water regulation and management. Its integration with the Ministry of the Environment's Drainage Department (which constructs and maintains drainage systems for water collection and its channelling into reservoirs or seas) and the Sewerage Department (which collects and treats waste water to acceptable standards before re-use) closes the water loop which will bring about optimal deployment of resources to enable us to maximise the use from our water inventory. Among several water topics, the Acting Minister yesterday also spoke at length about how Newater is produced, employing the latest in membrane technology, Newater's future usage plan and how it will benefit the wafer fabrication industry in terms of purer water and lower cost. With only 5% of the water now being recycled and 95% discharged into the sea, we have enormous potential to do more to exploit ever improving technologies to reclaim and recycle used water from a multitude of sources. This very fact alone provides for strong justification to bring together the entire water management chain from water collection and processing to reclamation and recycling to achieve not only economies of scale but also efficiency maximisation in water distribution. However, Sir, as we move forward with new initiatives to harness our water inventory, it is important that assurance be given to the public that the water supply delivered to our homes remains of high quality as we have them today. Any major change in the elemental composition should properly be communicated to prevent unnecessary alarm. Public trust must always be maintained in whatever we do. Sir, as Singaporeans, we all know how precious water is to all of us. It is imperative that we continue to concern ourselves with finding new and innovative methods in how we can collect and re-use as much of the water as possible in our country. Doing this will decrease our dependence on our neighbours who often enough have threatened to cut our water supply or have used it as a bargaining chip when negotiating issues of strategic importance. As we discover new and cheaper techniques to do this, there must be no let-up in continuous public education of the preciousness of water. The current PUB has done a terrific job in bringing about this consciousness to the public. And it is my hope that the new PUB will continue the good work of its predecessors. Sir, while I applaud the retention of the acronym "PUB", which is indeed a familiar household name, the PUB as we know it today deals with all aspects of public utilities, not only water but also electricity and gas supplies to our homes. Could the Minister please explain why this name is retained, even though the new PUB will be concerned with water only? Also, what will happen to the PUB bills? Will we in future have separate bills for water, electricity and gas? If so, will this not make it more cumbersome for the public to deal with so many bills? Another question I have, Sir, is with regard to the water facilities in Johor, Malaysia, which is managed by the present PUB. I would like to ask the Minister whether the newly constituted PUB will embrace the entire Malaysian operation as it is, and whether it will directly inherit all the people involved in the Malaysian operation? On this note, Sir, I support the Bill.

Sir, I thank Mr Ahmad Magad for supporting the Bill. At yesterday's Committee of Supply debate on the Ministry of the Environment, the Acting Minister for the Environment had spoken at length about water, its security, and so on. So I would not touch on that now. But let me address the reason why the name "PUB" is retained. As Mr Magad has said, this is a household name today. It has got international repute and accolades from many countries as well. In fact, we have considered the alternative of, perhaps, calling it the "Water Authority of Singapore". But it would seem a great pity to consign a household name, a very well-known and familiar name, to the archives. In any case, water is a public utility and it is by no means a misnomer. I would also say that proper management of water, whether it is rainfall, used water or drinking water, is very, very much a matter for the protection of public health. This is one of the reasons why we would have also put it under the Ministry of the Environment. But although we say that water is an important resource not only for domestic use and it affects public health, the Ministry of Trade and Industry (MTI) would still continue to have a very, very strong interest in that because water is also a factor of production in the economy. We would be keeping a very close watch, as the whole of Singapore would. A question was also asked on whether the restructuring of PUB will affect the employees working in Johor now. The answer is that the Water Department of PUB would be kept intact and all the employees would not be affected.

Clarification, Sir. Can I ask the Minister what will happen to PUB bills, as we all know it today, which encompass water, electricity and gas?

As far as I know, the bills would still be consolidated, unless I am advised otherwise. I could not give him a definitive answer.

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

Clauses 1 to 72 ordered to stand part of the Bill. Clause 73 -

Amendment No. (1), Mr Peter Chen.

Sir, I beg to move, In page 38, to leave out line 6 to the end of line 18, and insert - "(6) Notwithstanding the repeal of the Public Utilities Act, as from the appointed day and for such period as the Minister for Trade and Industry may determine -

Amendment No. (2), Mr Peter Chen.

Sir, I beg to move, In page 38, line 35, after "Minister", to insert "charged with the responsibility for the environment". Sir, this is a consequential amendment to provide clarity to the authority empowered to make regulations for any transitional matters relating to the functions and duties of the reconstituted PUB, arising from the repeal of the Public Utilities Act. Amendment agreed to.

Consequential amendments will be made in page 38, lines 19, 25, 29 and 35, to renumber subsections (7), (8), (9) and (10) as subsections (8), (9), (10) and (11), respectively. Clause 73, as amended, ordered to stand part of the Bill. Clauses 74 and 75 ordered to stand part of the Bill. First Schedule to Fourth Schedule inclusive ordered to stand part of the Bill. Bill reported with amendments, read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, during the Second Reading of the Public Utilities Bill, I had informed the House that a new statutory board, known as the Energy Market Authority of Singapore, or EMA, will be established under my Ministry to regulate the electricity and gas industries and other energy-related matters, when the current PUB is restructured to deal only with water on 1st April. Restructuring the Electricity and Gas Industry In March 2000, Minister George Yeo announced in this House, the Government's decision to further liberalise the electricity and gas industries by separating at the ownership level, the contestable and non-contestable parts of the industries. I will explain the restructuring of these two industries in greater detail during the Second Readings of the Electricity and Gas Bills. The purpose of this Bill is to establish the EMA as the Regulator of the electricity and gas industries, as well as other energy sectors that it is designated to regulate. Role of the Regulator, EMA Sir, when the restructuring is completed in the second half of this year, our electricity and gas industries will be quite different from the status quo. We can expect more local and foreign industry players to participate in the competitive generation and retail sectors. It will become a more dynamic and vibrant market with generation companies competing to sell electricity into the wholesale market, and retailers bidding to purchase electricity from the generators and supplying it to the consumers. Consumers can expect greater choice of electricity suppliers. In this new competitive environment, the regulator has a critical role in ensuring the smooth and efficient operation of the markets. Like the referee of a soccer match, the regulator has to ensure that the players compete fairly and abide by the rules and regulations. He has to blow the whistle and show the yellow card on players who breach the rules; on certain occasions, he may even have to show the red card. A good soccer match is the result of the confluence of three important factors: a clear set of rules of the game, a team of strong players and a fair and alert referee. It is not unknown for a poor soccer match to be blamed on bad refereeing. Our electricity and gas sectors are being restructured into a more competitive one. The role of the regulator has therefore to evolve from one of regulating monopolies to that of regulating competitive markets. In the new regime, EMA will focus on ensuring that there is a good framework for vibrant competitive markets whilst still regulating the monopoly functions of transmission and distribution of electricity and gas. Bringing back the soccer game analogy, EMA has to be a good referee as well as a good rule maker. As referee, EMA is in the soccer field with the players, running with them, watching their play constantly and closely. The referee has to make fair and timely decisions in the soccer field to allow the game to continue uninterrupted. But EMA's role goes beyond just being a good referee. The EMA has to ensure that the rules remain relevant and fair. As the rule maker, the EMA has to be independent, open and transparent in its decision-making. Its rules must be clear and unambiguous. Its approach would be one of active consultation with consumers and industry. It justifies its policies not just on sound legal grounds but also on rigorous economic analysis. The job of the Regulator will become more complex. The EMA has four key roles. First, it must promote a competitive and well-functioning electricity and gas market, restricting market power, while at the same time, ensuring the security and reliability of the electricity and gas supply. It will need to carry out the balanced role of ensuring that market forces work in a competitive environment and yet maintaining an element of control for security and reliability of supply. It has to foster a stable market environment that will promote competition, encourage timely investment in generation and transmission capacity, and instil investor confidence. To ensure the security and reliability of power supply, the EMA will take over responsibility for controlling and operating the electricity system network from Singapore Power. This will ensure that the security of our electricity system which can potentially influence competition in the electricity market, is not affected by commercial considerations. Second, EMA will safeguard the interests of consumers, to ensure that they are provided with electricity and gas services at competitive prices and of adequate standards. Through a comprehensive licensing framework and a set of well-established market rules and codes of practices, the EMA will be empowered to act against errant companies if performance and service fall below specified levels. It can also use incentives to motivate market players to higher levels of performance and service. An important area for the EMA is the close monitoring of market behaviour to guard against the concentration of market power, abuse of dominance and exercise of anti-competitive behaviours, such as collusion and capacity withdrawal to drive up prices. We have therefore included strong competition provisions into the Electricity and Gas Bills to empower the EMA to act against anti-competitive behaviours and practices. I will elaborate on these provisions in the Second Reading of the Electricity Bill. Third, the EMA will promote the efficient use of energy utilities. As Singapore has to import all our energy requirements, we must encourage and educate the public to use energy sensibly and conserve as much as possible. The EMA will work closely with industry, consumers and other regulatory agencies, like the Building Control Authority (BCA), to encourage the adoption of conservation measures like energy audits and energy-efficient equipment and devices. Finally, the EMA will represent Singapore's interest in regional and international energy forums, such as ASEAN and APEC. This is to ensure that we will continue to have free and non-discriminatory access to global sources of energy, especially oil and natural gas. Members would be aware of the two important projects being pursued under ASEAN co-operation, that is, the ASEAN Power Grid and the Trans-ASEAN Gas Pipeline. These projects when completed will give us access to more competitive energy sources and further enhance the security of our energy supply. The success of EMA in carrying out these roles will be measured by how well the market is performing in delivering reliable electricity and gas supply to consumers at competitive prices with the best level of service. Consumers will have a host of suppliers providing electricity and gas services tailored according to their needs. There will be timely and adequate investment in new generation and transmission capacity to meet the needs of the growing economy and electricity demand. In order to perform its role effectively, the EMA has to be given adequate resources. The EMA will absorb the existing staff of the Regulation Department of the current PUB and the System Control Unit of PowerGrid, which is a subsidiary of Singapore Power. In addition, the EMA will progressively build up a pool of economists with expertise and knowledge in economic regulation, micro-economic analysis and competition policies. Key Features of the Bill Mr Speaker, Sir, this Bill serves as an umbrella Act that empowers EMA to administer the industry-specific legislation, namely, the Electricity Act 2001, the Gas Act 2001 and the District Cooling Act 2001. These legislation spell out the details for the regulation of the respective industry. I will be moving them for the Second Reading following the EMA Bill. Clause 6 of the Bill sets out the functions and duties of the EMA which I have enunciated earlier. Clauses 21 to 23 provide for the transfer of properties, assets and liabilities of the Regulation Department of the PUB to the EMA. It also provides for the transfer of employees from the PUB to the EMA and the protection of their terms and conditions of service on transfer. Conclusion Sir, energy is an important factor of production in any economy. It is also an essential utility service. Within the broader framework of keeping our business costs competitive, we have to keep our energy market internationally competitive. With this Bill, the EMA will be able to effectively oversee the development of a competitive market for our energy utilities, ensure the reliable and secure supply of electricity and gas and safeguard the interests of consumers. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I support this Bill as this new Energy Market Authority of Singapore Bill sets to liberalise the entire electricity and gas sectors. When the Bill becomes law, it will enable the Government to gradually break up the generation and production from the sale and distribution so that there will be more competition, leading to more efficiency and lower prices. Sir, the Energy Market Authority (called EMA in short) will regulate the gas, electricity and other energy-related matters. Overall, I feel that the concept and intentions are laudable and will lead to benefits to the end consumers, which are the industries, businesses and homes. It is like the liberalisation of the commercial sectors, as in banking and finance. In banking, this is called the "Big Bang". Although the concept is the same, in the energy sector, if we are liberalising this sector, we better not call it the "Big Bang". Because in a sensitive area, like energy, we have to be very careful. If wrongly ignited, a "Big Bang" of the energy sector may lead to a big explosion! Sir, I am indeed concerned that if this is not done properly, the liberalisation exercise will indeed explode in our face. I do have a worry that, if not managed properly, the breaking up of the sector could turn into a mess. Adequate Market Size Mr Speaker, Sir, allow me to explain my concerns. First, adequate market size. I have a worry as to whether Singapore is too small a market for the proper competitive environment for this energy sector to operate. Is there sufficient market size to allow several players to enter the market and remain viable and sustainable? Is there enough room for several power generation companies, each of sufficient economy of scale? Naturally, the large Government-linked Companies (GLCs) will be entering the sector. But will there be other interested parties, like the private companies and foreign MNCs? If there is insufficient number of players to become power generation companies (called Gencos in short) will it lead to inefficiencies? Will it lead to more efficiency, or in fact to the contrary, more confusion? If the number of players is small, would there, in fact, be a risk of cartelisation? Impact on Prices and Service Standards Electricity and gas coming out of the copper wire or copper pipe will be the same, since they are all pumped through a common grid. Unlike other consumer products, there is really no product differentiation for electricity and gas. Therefore, my second question is: will there be a wider number of options and choices? What will be the impact on prices and service levels? Sir, the issues and potential problems mentioned above are also applicable to the suppliers, who will on-sell the electricity or gas to the end-users. How would the EMA ensure that the suppliers give better prices and provide good service standards? If the number of players is limited, how is the EMA able to ensure that fair practices are maintained by the suppliers? Difficulty of Regulation of Several Participants Sir, the third issue is that with the sector sub-divided into several parts, would there be more difficulty in the regulation and supervision of the many participants? In the past, there was just one body, which was the former PUB, to monitor and manage. Now, the new EMA has to watch over several players. As the Senior Minister of State has said, can the EMA be a good referee? How would the EMA be able to ensure reliability of supply? And what if the players play foul? Can the EMA act fast enough? In the event of power failures, what are the fallback or urgent recovery measures? How would the EMA ensure technical competency of the power generation companies? Any power failure will not only cause inconvenience, but can also cause hazards to lives and high economic loss to industries, in terms of production and output. We are reminded of the total power loss problems encountered in places like Malaysia, California, New Zealand and other places. Public Dissemination and Explanation This fourth area is on public dissemination and understanding of the new structure. Here, I would like to urge MTI and the new referee, EMA, to conduct extensive public forums and publicity, to explain the structure of the new energy sector. For industries, it is important that they understand the mechanics of the new structure so that they can make the right decisions and select the right choices. As for small businesses and households, I would like to suggest that the transition be conducted in a more gradual manner. For these users, the need for clear and wide public explanation is even more important. For example, in some households, we may have old folks living in very small flats, or residents who are illiterate, who cannot understand the choices given to them and, therefore, are unable to understand the whole new structure. Learning from Others' Experiences My fifth point is whether there will be examples around the world where the new approach has been successfully implemented. If the new concept has been tried and tested elsewhere, can we not learn from them and avoid their mistakes? In conclusion, I would like to congratulate the Ministry of Trade and Industry for taking this bold move of revamping the entire energy sector. I support the Bill as the objectives are noble, which are to generate competition, leading to better efficiency, better service and, hopefully, lower prices for the end consumers. Sir, let us hope that it will work as planned.

Sir, I rise to support the Bill relating to the establishment of the Energy Market Authority in conjunction with the regulation of the electricity and gas industries upon liberalisation and deregulation of activity. Sir, I wish, however, to raise several issues from the perspective of the domestic consumer of electricity. Firstly, the principle of complete pass-through of costs. Sir, as I have raised earlier during the Budget debate, the intended extension of liberalisation to the domestic segment would mean free market forces will be allowed to work. Currently, owing to the monopolistic situation and the quarterly review of tariffs, household consumers are not really exposed to the volatility of, say, the fuel oil price cycle, such as the one seen recently. As such, a substantial amount of public education should be undertaken to acquaint households with this principle, that there will no longer be price regulation nor any review. Notwithstanding this, I would also like to ask the Minister separately what measures will be taken to help preserve price stability as far as possible. Also, in practice, how would EMA determine whether prices are indeed competitively set? Secondly, infrastructural costs. When the retailing function is liberalised, presumably, there will be scope for product differentiation, even on just price alone, eg, offering peak and off-peak rates. As such, there are very likely to be some changes to the supply infrastructure, eg, a change in meters. Unlike big corporate customers, individual households will not wield the same amount of bargaining power. In the light of this, can the Minister assure the House that households will not have to bear these infrastructure-related costs unfairly? Thirdly, choice available to households. Sir, the Minister has said that consumers would enjoy greater choice. But what choice would households really enjoy? As mentioned earlier, unlike big corporate customers, households, on their own, do not have strong bargaining power. Is there, therefore, a possibility of, say, Town Councils or, for that matter, the Housing and Development Board itself, functioning as a retail supplier to HDB dwellers? In this way, the aggregate buying power will be greatly enhanced. Sir, ultimately, from the domestic consumers' perspective, liberalisation or deregulation must bring forth some tangible benefits. These could be either lower tariffs on average, or more choice through the bundling of services by suppliers.

Sir, I rise to speak in support of the Government's privatisation plans to set up a regulatory authority for the energy utilities market. By injecting competition in the energy market, we are in fact allowing market forces to help ensure that the utilisation of resources will be better maximised. This is important for Singapore, as our resources are scarce. In the long run, having more players in the energy market should also benefit customers. Consumers will be given more choices. The competition should lead to better service and new products. Pricing for the use of energy utilities should also become more competitive. Notwithstanding this, Sir, the road to privatisation is not without obstacles. There are some lessons that we can learn from our past privatisation experiences. There is a transitional period that needs to be managed before multiple players establish themselves in the energy market, before the market is fully liberalised, before free market forces can operate to the benefit of consumers. There are some issues I would like the Minister to consider. We all know that energy utility is an essential service. By this, I mean that it is a service that is required by everyone. Residents of all income groups need the supply of electricity and gas to their homes. The level of consumption may be different, but energy utility is needed by the rich, the poor and the man-in-the-street. Sir, if the prices of energy utilities are not properly regulated, it will contribute to inflationary pressures and raise business costs. If services by energy companies are not up to the mark, if their infrastructural and capital investment in Singapore is inadequate, it can lead to unnecessary blackouts, inconvenience to households, and major disruptions to the economy. We may not plunge into a post-liberalisation scenario similar to the recent experiences of Californians. But we have had minor disruptions that warrant some concerns. For example, we know from experience that an upsurge of power disrupt automated banking service, wafer fab production and so on. What we must prevent at all cost is a post-liberalisation scenario where frequent glitches by energy companies lead to a crippling of investors' confidence. Glitches in energy supply should be exceptional. But when they do happen, people will start to ask why did the Government want to opt for privatisation? For example, ask any man-in-the-street or those from the lower income group for their views on their experiences following the sale of POSBank, they will lament to us that it was more convenient in the past, as there used to be more POSBank branches. They will complain to us about the long queues and waiting time that they are now subject to. They will remember the administrative charges that were waived by the people's bank. In short, Sir, some people are wary that privatised entities would be too focused on getting the best bottom line, to the extent that the basic and fundamental interests of the common people are sacrificed in the process. They are concerned that privatised entities might be too profit-driven, becoming more interested in striking up strategic alliances to be a key regional energy utilities player and forget about the average Singaporean, especially those from the lower income group. The lower income families are concerned that they may no longer be able to enjoy subsidies for energy utilities in future. Hence the regulatory body has been given a huge responsibility. They must be proactive about ensuring the best service quality and competitive pricing, rather than take a passive approach of slapping the penalties after the problem has occurred. This is a role that I hope our regulatory authorities will adopt. We must learn from the recent experience of the Californians. We must ensure that energy utility companies coming into the local market must be willing to commit themselves to make sufficient infrastructural investments. I hope that the Energy Market Authority of Singapore does not assume that, by having more players in the market, it will result in competition and, therefore, naturally benefit the consumers. That is not always the case. After all, it was only quite recently that our motorists were quite unhappy that when oil prices were falling, the petroleum companies in Singapore maintained a cartel-like grip on the local petroleum market, and were reluctant to lower petrol prices until an issue was made out of it. Should we still allow market forces to prevail, even if there is collusion between the key service providers or suppliers in the market? Is the Energy Market Authority of Singapore empowered to intervene and regulate prices? In the long run, consumers may exercise their discretion and rights by switching to another service provider. But, in the initial transitional stage of privatisation, before more players come in and establish themselves in the market, what choice do consumers have? How can the consumers' rights be protected from a privatised monopoly, duopoly or oligopoly? Sir, I hope that the Energy Market Authority of Singapore will adopt a pro-active watchdog role to ensure that the interests of consumers, especially those from the lower income group, continue to be protected in terms of pricing and service quality. The last thing that we want to see out of this privatisation exercise is another post-POSBank debacle emerging. With that, Sir, I support the Bill.

Sir, I am glad that the Government has finally decided to fully liberalise the energy market in Singapore. Like the telecommunications industry, the energy business is really a worldwide commodity and, therefore, there is little need for the Government to have such a strong control and monopoly over the market. This Bill is the basis for the rest of the Bills that we will be debating today and, as I studied the rest of the Bills, I realised that the Government is making drastic changes to make almost everything contestable, and to privatise the whole value chain of activities in the electricity and gas industries. The one concern I have is that the EMA does not have very much control over even some strategic parts of the whole supply and distribution chain. I therefore urge the Minister to consider restructuring the plans, to allow EMA to own and manage the strategic infrastructure in both electricity and gas distribution. For electricity, I suggest that EMA take over the managing of the power grid and, for gas, it can take over the gas transportation infrastructures. The fact is that these two portions of the whole supply chain will not really change from the present infrastructure. I therefore think that EMA should be the neutral body owning these assets for the following reasons: 1. These infrastructures are strategic in nature and they directly affect the consumers, whether they are commercial, industrial or domestic. We should not allow any opportunity for any non-government agency to have too much of authority and control over national strategic infrastructure which could also affect our national security. 2. The infrastructure is already fully developed by the Government, and there is no real reason to spin off these assets as they will not directly affect the intent of liberalising the generation and retail of energy sources. 3. I do not see why there is a need for developing other alternative infrastructures for distribution of electricity and gas, as the Singapore market is too small for one or a few more infrastructure players. 4. If we let a private sector run these distribution channels, there may be problems for generators and retailers of energy sources when all of them compete to use the same infrastructure. It is not inconceivable that if a private company runs the infrastructure, it may lead to some form of preferential treatment for some generators or retailers, by virtue of some business relationships that may develop over time. It is, therefore, more appropriate for an independent entity, which has the interest of the country, to own and manage the infrastructure and the Government, or the EMA as the agency, to do this. The second point I want to make on this Bill is the premise that the liberalisation of the energy sector will lead to cheaper energy sources. I hope that this will truly be the case and that all Singaporeans and Singapore-based companies will enjoy cost reductions for the utilities, which over the years, have been so high that we are paying even more than countries like the US and Japan. While we may think that the cost of utilities is small, compared to the overall cost of doing business in Singapore, the fact is that as we move to the higher technology type industries like water fab, petrochemical and pharmaceutical industries, it is a major cost component. It is, therefore, very important that we will successfully create a competitive environment that will, in the long-term, keep costs of energy low. In this respect, I hope that the Ministry will be able to create an environment that supports true market competition and not support only what seems to be a competitive landscape by licensing only Government-linked companies. One last point on the Bill is the appointment of members of the Authority. The Bill provides for up to 10 members to be appointed by the Minister. I suggest that the Minister consider having a good mix of people from the private, public and people sectors to be members of this Authority, as this will give a diversified perspective of things and also give a good representation of everyone who will be affected by the changes to come. With this, Sir, I support the Bill.

Sir, I support the Bill, subject to some questions which I hope the Acting Minister will answer. Sir, in asking these questions, I also believe this is an important Bill. There is basically a growing belief in markets throughout the world that privatisation has clear benefits. The benefits of privatisation are especially clear when things have been badly run by the Government in countries where either there is no power, no water or if some things are very bad, then you really see that markets and private companies must come in. Fortunately, or unfortunately in that sense, the benefits are not so clear in Singapore. The system is relatively good, the quality at present seems relatively assured, and, therefore, focus has tended to be on prices. A move to privatisation, therefore, has a lot to prove. Basically, we have to ask ourselves, whom do we trust. Do we trust the Government, as a provider, as well as the administrator, or do we provide trust in the markets? Sir, other speakers before me have already talked about cartels. I think there are some bad stories. There are concerns about petrol companies, as well as things like the DBS Bank consolidation with POSBank. But I would like to point out that competition and choice for consumers have worked in some other cases of note recently. Telecommunications is one clear case; similarly, supermarkets. We have gained from having foreign entrants and I would say, perhaps flippantly, on bookstores too. Borders bookstore has made a tremendous difference over Time and MPH before. In this sense, there is both a cautious optimism about allowing in foreigners and allowing more competition. Sir, this caution has to be weighed against the needs. I think if we look at the region and the future, we have concerns about energy security, not just our internal grid, but the long-term demand and supply in the region and in the world generally. If the region does go up economically, as we hope, energy needs will go up and supply may go short. Therefore, we have taken steps in the last few months to secure fixed supplies, such as the natural gas from Indonesia. Regional needs and cross-border supply and generation, I think, are the ways of the future. This would require companies in this sector to be both big and think long-term. I wonder, Sir, whether privatisation will really create these companies, or whether Government has actually got the deep pockets and a long-term vision to lead the way. Secondly, on the question of deregulation and restructuring markets, we have to be concerned about efficiencies. The crisis recently in California has been mentioned several times. I would just like to quickly share my view on why this happened. Basically, this is because consumer prices were fixed by the law. As such, when demand rose and prices rose, there was over-demand, which could not be alleviated by rising prices. Obviously, this should be avoided. We should have a market with enough players and consumers, and a sufficient flexibility in prices that will match the supply and demand. However, while I would encourage not having fixed prices, I must recognise there is a concern over rising costs, especially for households. In this light, I would like to point out one shortcoming of the drafting of clause 6 in the Bill. Looking at clause 6, the closest I can get to the question of price is that in clause 6(e). Here, it is proposed that the Bill will protect the interests of the public, in respect of the supply and use of electricity and gas and the provision of district cooling services. Sir, there is no statement about reasonable prices. In contrast, if you look at clause 6(c) of the Public Utilities Bill, which we have just passed, there is a clear statement here that one of the duties of the statutory board would be to provide supply at reasonable cost. I think this is something that the Ministry should address to assuage public concerns about cost. Basically, I have got a few points, if I may move on quickly. First, I would like to see a lower threshold for entry by suppliers to bring sufficient players to the market. Many of us have talked about the large players. Additionally, we have got to make accommodation in the grid for micro-power and micro-power suppliers. Every time I pass by the incineration plant or the refinery and I see the flare, I think that is energy we could have tapped. Secondly, the consumer choice is a concern. If we have flexible prices and competitors, this only makes any difference if households know about the differences in price and can switch. I would like to ask the Minister what would be the mechanism for alerting consumers, who is the cheapest producer, supplier, or what are the cheapest times in allowing them to switch between one supplier and another in real time, not just month to month or year to year? The third element I would like to point out is competition policy. Clause 6(1) creates and imposes upon the Authority the duty to regulate the market, make it fair and efficient, that will have effective competition and prevent the misuse of monopoly or market power. Clearly, Sir, this is going to be a difficult and a new area for Singapore law. It must be tried. Recently, in this House, we have heard that there are international trends that pressure Singapore to take on competition policy. It is a very good attempt, especially to address competition policy from a new and preferably narrow segment of the market, such as the supply of energy. But the question of how is something I hope the Acting Minister will elaborate upon. Who can complain to the Authority if he feels that there is a monopoly or an inefficient market? Is it consumers or only rival power companies? Second, will the duty be questionable in courts that the Authority has not adjudicated properly or will it only be by the Authority? And will there be public hearings? Sir, if we have to have a regulatory authority over competition, there must be a clear structure for different competitors and stakeholders, like the consumers, to be heard on this issue. The fourth issue is on efficiency. The promotion of power energy efficiency is something many of us have emphasised and the move to market is certainly one that can potentially strengthen the link to efficiency. But this is only a possibility. There is the other possibility that competition and competitors may aim only for greater consumption and profit. What safeguards will we have against this danger? The last point I would like to make is the question of consumer choice and rights, because this undergirds a lot of the things that we are doing in liberalisation and marketisation. This Government has been reluctant to give much more strength to consumer movement through a Fair Trading or other Act. If we do leave energy generation to others outside of the Government and, potentially, foreign companies, I think that this idea of consumer rights is the necessary balance we must bring into the creation of the market. The consumer must have a choice, the consumer must have rights. Only then will the markets that we are creating have much chance of being truly efficient.

(In Mandarin): Sir, the setting up of the Energy Marketing Authority of Singapore is a prelude to the privatisation of electricity supply in Singapore. Soon, electricity supply entities which are hitherto solely owned by the Government would be split into three private companies. Except for water supply, almost all the basic public services have been privatised. For a Government which is good at calculating profit and loss, the advantage of privatisation is that Government does not have to take on the responsibility of providing basic public services to the people. After privatisation, the Government is still the major shareholder. All the profits earned by these privatised companies will conveniently flow into the Government's pocket. The rationale behind the Government's privatisation effort is that these companies will be governed by market forces and, therefore, be cost-effective and efficient. There will be less wastage and the cost would be lower, so that all the services provided would enjoy better economic benefits. But the real effect is that, after privatisation, the charges for all the services will get higher and higher. In the end, it is the people who suffer. With the restructuring of the Government hospitals, health cost escalated, forcing the Government to provide the Medifund to assist Singaporeans who cannot afford the medical charges. The result of the privatisation of telecommunications is that consumers have to pay higher charges. The burden of life is getting heavier and heavier. Another wonderful effect of privatisation is that once a Government corporation is privatised, shares are sold to the people. The Government even distributes some of the shares to the people to make it as "shares for everyone". If the charges go up, the Government could justly and forcefully say, "If the charges are not raised, the company will not make profits, how can we account to the shareholders?" Prices are raised so that the company can make profits. This argument has become acceptable to the shareholding people. The Government's argument is that privatisation is a mechanism to introduce competition to the market, to make the charges for services more reasonable, and even lower. However, from the past experience of privatisation of the public services, it is apparent that the competition brought about by the so-called market mechanism is very limited. For example, the privatisation of public transport service. The present situation is two bus companies each sharing one-half of the pie, with the same fare structure. Take a look at telecommunications. SingTel is still the main telephone service provider. Residential lines are all controlled by SingTel alone. Newcomers, M1 and Starhub, can only compete in mobile phones and international calls. Yet, the main cables and telecommunications are still in the hands of SingTel. Under this type of competition, the others can only be the "also-runs". The privatisation of electricity supply is supposed to bring in more companies to enter the market competition. Just how many electricity supply companies can Singapore accommodate? Perhaps it is the major shareholders - the Government competing with itself. Then, with corporatisation, electricity tariffs are fixed with profit in mind. I doubt very much that the electricity tariffs will be really lowered in the long run to the benefit of the consumers. In fact, the real purpose of privatisation is to go for investment returns, that is, how much profit. Basic public services such as public transport, residential telephone service and electricity supply are all added with the profit element. In the end, the consumers will have to pay higher charges, and the burden of life will surely be heavier. Some people may think that I am asking the Government to subsidise public service. No! What I am asking for is that the Government does not earn the people's money from the public services. The Government should provide the basic public service to the people at its operational cost rather than profiteering from the privatisation of public services and adding on more burden to the people.

There have been many issues raised, and they are very complex issues. I would like to thank all Members, but one, who spoke in support of the Bill. From the issues raised, one basic question was: is our market too small to really support competition and how many players can there be to ensure there is real competition? I think our market is not too small. We are about the same size as New Zealand where privatisation there has been successful. We are also about the same size as a number of Australian states, so do not get away with the idea that we are too small for that. Secondly, how many players can there be, and will there be a limit to the number of players? The answer is no. There could be as many players as they could come on. Another point that has been made is a caution on the speed. Speakers have expressed concern that we may be moving too fast. We are taking this step by step. What we would like to point out, first of all, is that although we do not want to move too fast and fall on our face, there is one very important sector of our market which will be opened up soon, ie, the industrial sector which already uses 70-80% of the electricity. There is already plenty of room for competition. With regard to the consumers side, which occupies 20-30%, this would take a bit more time, because they will also need education on their choices, and there are a million accounts out there. We have also been warned of some of the pitfalls of privatisation, and reference has been made to the DBS-POSBank merger. With regard to that reference, this has already been discussed in the House on other occasions. And DBS has reiterated its commitment to continue providing banking services that are accessible at affordable prices. I think it is not a very fair point to make. It has no intention of leaving the mass market and service, and it is facing teething problems. DBS perhaps may have been able to manage these transitional problems better, but we could not avoid the most basic imperative to rationalise retail banking services and make them economically viable. Mr Inderjit Singh has questioned why do we not let EMA own and manage the electricity and gas distribution grids. He felt that the EMA should manage the electricity and gas infrastructure as well. This matter has been debated extensively when we corporatised the electricity and gas functions in 1995. There were two options. One, as indeed suggested by Mr Inderjit Singh, and the other being for the grids to be privatised. The experience in other countries shows that this infrastructure can be privately owned, but has to be tightly regulated. As private companies, they can operate more flexibly and efficiently, so that they can be as efficient as the private counterparts and be subject to a certain amount of commercial and financial discipline. And EMA will regulate this infrastructure companies. Mr Inderjit Singh also mentioned the risk of infrastructure companies who deal with generators, retailers and so on. Indeed, this is why the EMA will be empowered to prevent the infrastructure companies from participating in generation and retail, and to prevent anti-competitive behaviours. I will say more of that when we explain the Electricity Bill. To ensure security, I mentioned in my speech that the EMA will take over control of the operations of the electricity network from Singapore Power. One refrain that we have heard among several speakers is: will competition bring about lower prices? I think we have to be careful not to confuse lower prices with competitive prices. Nobody can guarantee lower prices. What competition can bring about is to ensure a framework where there is competition, where there is enough competitiveness, so that it will bring about the prices that we would otherwise not be able to obtain under other conditions. There is also concern that whatever the number of players, there could well be a situation, like some Members have referred to, a situation in retail petrol, where it is seen that despite the number of players, there appears to be some sort of arrangement. I think we cannot provide for everything but, as we have said, the EMA will have to be vigilant. As in the case of the unhappiness over what appears to be collusion among the petrol companies - this is not necessarily so, but it appears to be so - my Minister has already mentioned in the Committee of Supply debate that this is being looked at. I think one of the strong points of Singapore is that we are not rigid, and we are not governed by ideology. And where something appears not working, we will step in. And, of course, privatisation is not a panacea for everything. But where there is a need to put matters right, they will be put right. I also thank Mr Simon Tay for pointing out some of the clauses that may require some looking at. He raised the point about who may appeal, and raised concerns of a grievance. There is no restriction there. But if, in practice, when we find that it is inadequate, then of course we will take a look at it again. There is no restriction of who may or may not raise issues, and make appeals. Mr Low Thia Khiang, of course, has made his usual point concerning the cost of utilities. He made the same point that we must ensure that utilities do not become unaffordable. Again, I will give him the same answer that no amount of legislation can guarantee low cost or low price. But what is important is that competition and privatisation will bring about the financial and commercial discipline, so that everybody knows what the true cost is. If there are people who, in fact, experience hardship, then this Government has, on many occasions already, and in the most recent occasion, provided the help that is needed. It is only for those who need this help. There are perhaps other points which I may not have answered at this stage, but which perhaps will become more apparent as we move on to the Electricity Bill, because many of them are a follow through.

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

Order. I suspend the Sitting and will take the Chair again at 3.50 pm. Sitting accordingly suspended at 3.27 pm until 3.50 pm.

Sitting resumed at 3.50 pm

Resolved, That the proceedings on the remaining items on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, as I have explained during the Second Reading of the Energy Market Authority of Singapore Bill, my Ministry will move for the enactment of three industry-specific legislation before the House today. The first industry-specific legislation is the Electricity Bill. This Bill designates the Energy Market Authority of Singapore (EMA) as the regulator of the electricity industry. It empowers the EMA to: (a) set up a competitive industry structure, (b) perform licensing and regulatory functions, (c) set and enforce performance standards for and regulate prices charged by licensed monopolies, and (d) set and enforce safety standards and code of practices for the electricity industry. Evolving towards a Competitive Energy Market Sir, all over the world, electricity markets are being liberalised and made more competitive. The experience in other electricity markets that had undergone deregulation has been positive, yielding higher efficiency, greater industry innovation, wider choice and better service to consumers. Electricity markets have been successfully deregulated in United Kingdom, Australia, New Zealand, Europe and in various states in the United States. The setback in California was unfortunate. The Californian market failed because it had not been properly deregulated. It fixed the price consumers pay for electricity. When electricity wholesale prices increased, its electricity retailers ended up buying electricity at a price higher than what they were allowed to recover from consumers. This pushed the retailers towards insolvency and generation companies, not sure of getting paid, were subsequently reluctant to sell electricity to the Californian retailers. In addition, a combination of other factors such as a surge in electricity demand because of the economic boom and problems in getting new power plants approved created a situation where generation capacity was outstripped by demand. Thus, the lights went out. We have kept pace with these global developments. We took the first step towards a liberalised market in 1995 by corporatising the electricity and gas undertakings of the PUB. We established an electricity wholesale market in 1998. We have benefited from these initial steps. The wholesale market introduced competition in the generation sector initially between PowerSeraya, PowerSenoko and Tuas Power. The liberalised generation market attracted a new generator, SembCorp Cogen who entered the scene using piped natural gas as a fuel source for power. Natural gas is not only cleaner, it is also more efficient than fuel oil which we currently use. With the availability of natural gas, the liberalised market has driven the generation companies to rethink their strategies in order to stay competitive. However, our current market structure includes a dominant Singapore Power that is actively engaged in all aspects of the electricity market. New energy companies are not prepared to come in to compete with Singapore Power which is dominant in the generation sector and is also the monopoly grid owner. Further Restructuring to Enhance Competition We have therefore decided to push ahead with further market liberalisation to derive the full benefits of competition. By 1st April, the generation companies, PowerSeraya and PowerSenoko, will be divested out of Singapore Power. These two companies together with Tuas Power and SembCorp Cogen will then compete to sell electricity. A fifth company will be starting up later this year and two other generation companies are currently planning to set up generation plants in Singapore. Hence, we will have more players competing in the generation sector. We will open more customers to retail competition this year starting with the large industrial users. By end of this year, we expect to have about 70% to 80% of the electricity market opened to retail competition. The households and small consumers will be opened to competitive retailers by 2003. The EMA will run programmes to inform and help prepare all customers who are being opened to retail competition. When the market opens later this year, Singapore Power will confine itself to owning, developing, maintaining and providing services related to the natural monopolies in the industry, namely, the electricity and gas grids. The company would have relinquished all commercial interests in the competitive parts of the electricity market. It will then be attractive for new entrants to enter and compete in the electricity and gas industries. Key Features of the Bill Mr Speaker, Sir, the Electricity Bill before the House is to create a competitive market framework for the electricity industry. It will also provide for the safety, technical and economic regulation of the generation, transmission, supply and use of electricity and for other matters connected to it. I will now address the key provisions of the Bill. Clause 3 provides for the EMA to administer the Bill and to exercise its functions and duties. Control Mechanism and Protection of Consumers' Interest Clauses 6, 7, 13 and 14 confer powers of licensing to the EMA. The EMA will license generation, transmission, retailing and any other electricity business activities and deal with all matters relating to licensing (eg, procedures for the application for an electricity licence, an extension or an exemption and matters to be considered in determining whether to grant or to extend an electricity licence). The EMA will, through licensing, achieve the commercial separation of the natural monopolies from the competitive parts of the industry and hence pave the way for competition to set in. If an electricity licensee contravenes any condition of licence, any provision of the relevant legislation, or any directions issued by the EMA, the EMA can require the licensee to provide a performance bond and impose a financial penalty not exceeding 10% of the annual turnover of the licensee's licensed business, or an amount not exceeding $1 million, whichever is higher. The EMA may also revoke or suspend the licence if the licensee fails to rectify any contravention. To ensure the industry has clear guidelines to work with, clauses 16 and 46 empower the EMA to issue or approve codes of practice and other standards of performance for the regulation of activities and conduct in the electricity industry. They also allow the EMA to make the initial rules in consultation with industry for establishing and governing the electricity market. The Bill sets out the governance process for subsequent changes to the market rules and for the rules to be published in such manner as will ensure adequate publicity. The EMA is empowered under clause 41 to, with the approval of the Minister, deem categories of consumers contestable. This will enable the EMA to open consumers to contestability in phases between this year and the year 2003. Special Power to Manage Licensees Clauses 28 to 30 provide for situations in which public interests are put at risk. Under specific conditions relating to insolvency of licensees, security and reliability of supply or a public emergency, the Minister is empowered to make a special administration order directing that the affairs, business and property of an electricity licensee be managed directly or indirectly by the EMA. The interests of shareholders and creditors of the licensee have to be protected in the execution of such an order. Anti-competition Provisions The Bill empowers EMA to prohibit anti-competitive practices including restrictions on mergers and acquisitions. To ensure we have a competitive market, it will be necessary for all companies in the electricity market to trade in a way that is not anti-competitive as this will otherwise distort the market to the detriment of consumers. This principle must apply regardless of when anti-competitive practices if any, were put in place. The anti-competition provisions in Part VII (clauses 50 to 63) of the Bill will therefore have retrospective effect. Where the EMA finds that a person has acted in an anti-competitive manner, the EMA can give direction on the cessation of such conduct and impose a financial penalty on the person. The person, if aggrieved, can appeal to an Appeal Panel. Appeal Process There are two kinds of appeals provided for in the Bill. For grievances relating to market regulation, the aggrieved party may have their appeals heard by an Appeal Panel appointed by the Minister. These will include matters on modification of licence conditions and application of the anti-competition provisions as stipulated under clause 12 and Part VII of the Bill. The decision of the Panel will be final. Clauses 64 to 66 provide for the establishment, composition and powers of the Appeal Panel. For other types of grievances, eg, refusal to grant a licence and matters relating to technical regulation, the aggrieved party may appeal to the Minister whose decision is final. These are set out in clauses 15 and 98. Electrical Installations, Cable Detection and Electrical Workers The relevant provisions for the licensing of electrical workers under the Electrical Workers and Contractors Licensing Act are subsumed, with modifications, under Part IX (clauses 67 to 82) of the Bill. With the modifications, the licensing of electrical contractors will be discontinued and regulation of electrical works will be done through the licensing of electrical workers. The Electrical Workers and Contractors Licensing Act will be repealed. Conclusion Mr Speaker, Sir, the Electricity Bill sets out a broad framework that supports a competitive electricity industry. Under the new regime, market forces are expected to exert pressure on market participants to offer greater choice, better product innovation and service quality at competitive prices. The new regime will be friendly to and will not unduly impede the introduction of new technology, such as micro-power or distributed generation nearer to the point of use. It also allows market participants to play a greater role in formulating market rules and codes of practice. This would enable EMA to regulate the industry with a light-handed approach, while ensuring that energy solutions would be market-driven without compromising security and reliability of the electricity system. Sir, I beg to move. Question proposed.

Sir, I rise to support the Electricity Bill and wish to confine my comments briefly to the scope of competition to be afforded by the proposed framework. Firstly, few generation companies. As some colleagues have already raised, the scenario post-liberalisation will have a relatively small number of generation companies or Gencos. Moreover, the Government has stated an intention to divest the three big Gencos, namely, PowerSeraya, PowerSenoko and Tuas Power, which will generate the bulk of our needs. No foreign ownership limit will be imposed. In this context, how would the Minister introduce meaningful competition? How will the Minister ensure that a cartel-like behaviour, say, in setting full prices, will not develop to the detriment of suppliers and, ultimately, consumers? As is the allegation against oil companies supplying petrol to consumers which was referred to earlier on, does this structure lend itself to such anti-competition tendency? Secondly, the role of Power Supply. As I understand, Sir, the role of the incumbent Power Supply will be limited to the provision of billing and other customer services. Sir, while this is meant to bring economies of scale for consumers as a whole, it can also be an impediment to the bundling of services by potential retailers. For example, telcos who do a fair bit of household-related billing may not find enough incentives to compete initially as they have to deal through Power Supply. Therefore, I would like to ask the Minister whether there is an intention for the role to be played by Power Supply to be a permanent feature of the electricity market.

Sir, first of all, I would like to commend the Ministry for drafting such a comprehensive Bill. I went through the whole Bill and must say that many of the issues have been well covered. The thing that really needs to happen is that we create true competition for those areas which are contestable, that is, the power generation and the electricity retail parts of the whole value chain. I raised my concerns earlier about the transmission and distribution of electricity which is left to Singapore Power to manage. One issue which I have is the speed of changes in the initial phase. And if I got it right, Singapore Power will still be responsible for distribution as well as certain parts of retail of electricity. This I feel will put other retailers at a disadvantage and may just slow down the opening up of the electricity industry. The prudent thing to do is right from the beginning to spin off the two entities into two separate companies with different management control. Mr Low Thia Khiang earlier on brought up the issue of SingTel managing the fixed lines and therefore they have the perpetual advantage over other fixed line telephone operators. And this may result, again, in the electricity distribution sector if we are not careful in separating the roles. One issue I fear is also that the Ministry will end up giving licences only to Government-linked companies and thus not achieve the objective of true liberalisation. So the new Genco that came into the picture is SembCorp which is actually a GLC too. I would like to ask the Acting Minister whether there are any true private companies which have shown interest to enter our energy market. How many players does the Ministry expect in the short and long term and how many can our market really support? The number of players will no doubt determine the cost of electricity as we move forward. Another fear I have on the expectations of cheaper electricity as a result of liberalisation is whether the various generators and retailers of electricity can really differentiate to the point that they can really offer cheaper electricity to consumers. If they are not able to do so and resort to price wars to win customers, will they be able to sustain themselves in the long run by earning thin or no margins at all? One thing we must realise is that Singapore is a market which is too small for many of us to actually attract even foreign interest in our energy market. We must be prepared that our companies must be able and must be allowed to supply electricity to other countries as well as to import electricity from other countries into Singapore to provide everyone with a bigger market to compete in. In this respect, what is the Ministry's view of allowing retailers to bring electricity from our neighbouring countries, including the fact that some day, some of these may be generated by nuclear means. Sir, I would like to touch on a few specific issues on the Bill. In Part II, clause 3(3)(d) of the Bill, it mentions that prices of licensees have to be controlled. To do so, the authority will end up limiting the margins the licensees will be able to achieve. Because we will be going to have multiple sources of electricity, not all of which will be fully controlled by the Government, we will have to ensure that there is an overbooking situation where the Government will require a higher supply than the demand at any one time, just in case some of the licensees fail to deliver electricity reliability. This overbooking situation will result in higher cost for the licensees and, hence, higher prices to the consumers. How does the Ministry hope to ensure there is a good balance of demand and supply? Clause 5(2) of the Bill allows the authority to disclose information of suppliers of electricity to third parties if the authority feels that the information would not cause detriment to the supplier. I feel that this clause should be amended to also get the consent of the suppliers before the authority releases any information, unless there is a national security issue involved. This should be the case because the authority would never be in a position to fully determine the impact of such information disclosure on the business of the supplier, especially if the information goes to competition. This is an important issue if we really want to attract private sector companies to come into this field. Clause 9(7) mentions the fees payable by the licensees. Can the Minister share with the House the quantum or range of fees we expect to impose? I also feel that there is no need to license the transmission part, as I mentioned earlier, as this is not going to be subjected to competition anyway. Sir, clause 24 allows the market support licensee to disconnect the supply of electricity, including those of domestic users. I would like to suggest that we add some safeguards in the Bill against possible abuse by some licensees who may become too quick to disconnect supplies for whatever reasons. And this may cause inconveniences to our residents. Finally, Sir, I would like to touch on the issue of reliability of electricity supply. I did bring this issue up during the Committee of Supply and many Members brought up the issue of the Californian example. Specifically, we must put in place sufficient measures to hold licensees responsible and accountable when there are situations of recurrent power dips and power failures. I hope this move to liberalise the energy markets will not result in the drop of the quality and reliability of electricity supply. In conclusion, Sir, I feel that the liberalisation of electricity is a significant milestone in Singapore's development and it will change the way we do things and change the mindsets about how utilities are supplied. I personally think that this is a move in the right direction, especially if we can ensure true market competition. I am excited about this move and look forward to the successful implementation of the very aggressive plans that the Ministry has laid out. Sir, with that, I support the Bill.

Sir, allow me to thank the two Members, Mr Inderjit Singh and Mrs Lim Hwee Hua, for their support of the Bill. There are again a number of issues raised and some of them have to do with the continuing role of Singapore Power for the distribution as well as the retail of electricity in the initial phase. Opening retail to competition is a complicated process and it would take time. This has to be done in phases as the system has to be prepared. For example, meters that are able to register the consumption every half hourly will first have to be installed. About 100 large customers are already contestable and, later this year, we will open up in phases up to 70% or 80% of the electricity market to retail competition. This will number about 10,000 customers who are mainly the large industrial and commercial customers. Power Grid will indeed not be retailing to these contestable customers. The remaining customers, mainly households, will be opened up by 2003, after which, Power Grid will completely exit from retailing. Remarks have also been made whether or not there are truly private companies involved, and are they involved and also interested in entering our energy market. There are already two non-GLC private companies issued with generation licences, viz, ExxonMobil and Island Power Company. In the retail sector, Tractabel was granted a retail licence. A common refrain on this subject in this House has been how would electricity consumers benefit from the electricity industry's restructuring, and how would the liberalisation of the market lead to cheaper electricity. We must say that the benefits would be the benefits brought about through competition - choice of supply, competitive pricing, including, most importantly, innovative pricing. We have received feedback from several MNCs, such as Shell and Sumitomo, that peak and off-peak tariffs have a wider spread in liberalised markets overseas than there are here. This allows users, especially large users, to plan their work schedules to benefit from the reduced off-peak prices. We expect competition to create this type of benefits. Mrs Lim also wanted to know how would consumers enjoy different service packages and products. This is really up to the ingenuity of the retailers. Experience, again, from other countries, shows that electricity can be bundled with other products, such as appliances. Retailers could also offer electricity packages that are customised to the customers' needs at different levels of pricing. This includes lower off-peak rates, power management schemes, bundling of electricity with other services like telecommunications, and shielding its customers from fluctuations in electricity prices with financial hedging instruments. The competitive market will drive such innovations. Questions and concerns have also been asked and expressed whether there would be enough players in the market, and how are we to ensure that there is no collusion as our market may be too small. I have already explained that our market is not too small. Are we prepared to import and export electricity? Our generation capacity is 6.6 gigawatts today. Demand is growing by 4%-6% per annum. In 10 years, our system will reach 10 gigawatts. This is not a small system. New Zealand and the State of Victoria in Australia liberalised when their capacity was about 7 gigawatts each. Our market is thus of a sufficient size to allow for competition and attract more players, local and foreign. For this to occur, EMA will have to ensure a level playing field and prevent anti-competitive behaviour, such as collusion, which the Member has mentioned. Like other markets that have liberalised, we will allow electricity to be imported or exported, so long as the system's security is not compromised. It has also been asked how the licence fees are determined. The licence fees will be set to enable EMA to recover its costs of administering this industry legislation. There was also concern expressed about quality. Will the restructuring exacerbate the problem of power dips, and should Singapore Power not be made liable for causing the dips? Mr Inderjit Singh again expressed concern about this problem, as he has done so in the Committee of Supply on 8th March. We had explained the slew of measures that have been taken to reduce power dips. As for liability, it is a commercial matter between Singapore Power and the affected companies. There is also concern about how prices would be fixed and what the formula is. The current tariffs comprise a fuel component and a non-fuel component. At the moment, we allow Singapore Power to set the non-fuel tariff component at levels which allow them to earn a 7%-8% return on total assets. A price cap is applied to subsequent adjustments to this non-fuel tariff component. The price cap depends on the rate of inflation and productivity improvements, ie, the consumer price index minus a factor of "X". In other words, the non-fuel tariff component cannot be increased by more than the inflation rate minus an imposed productivity improvement factor which Singapore Power has to deliver and pass through to consumers. As to the fuel component, of course we buy our fuel from global markets, with no control over fuel prices. The pricing formula, therefore, allows changes in fuel prices to pass through but, as we mentioned several times, in order to alleviate hardship for those who may not be able to afford, the Government has already given a number of assistance schemes. Mr Inderjit Singh also refers to clause 5(2) of the Bill and suggests that consent of suppliers be obtained before any information is released. The Bill does allow EMA to disclose information of suppliers of electricity to third parties, if EMA feels that the information would not cause detriment to the suppliers. In fact, this will require EMA to check with the suppliers before divulging the information.

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

Clause 1 ordered to stand part of the Bill. Clause 2 -

Sir, I beg to move,

In page 10, line 14, to leave out "or ancillary services.", and insert ", ancillary services or any other electricity related products or services.".

The Electricity Bill defines the "wholesale electricity market" as an electricity market established by the market rules for the trading of electricity or ancillary services. We anticipate that there will be new electricity-related products and services created over time, which will add value to our market and which we would like to encourage. In some cases, we may need to set the framework to nurture the growth of such products. To ensure the EMA is empowered to promote such new products and services as our market evolves, we need to expand the definition of the "wholesale electricity market" to include such electricity-related products and services. Amendment agreed to. Clause 2, as amended, ordered to stand part of the Bill. Clauses 3 to 104 inclusive ordered to stand part of the Bill. Clause 105 - Amendment made: In page 83, after line 23, to insert - "(3) The Electrical Workers and Contractors Licensing Act (Cap. 89) and any subsidiary legislation made thereunder shall be administered by the Energy Market Authority of Singapore, and any references to the Board in that Act and its subsidiary legislation shall be read as references to that Authority.". - [Mr Peter Chen]. Clause 105, as amended, ordered to stand part of the Bill. Bill reported with amendments; read a Third time and passed.

Order for Second Reading read. 4.25 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Gas Bill is the second industry-specific legislation, which I propose to move before the House this afternoon. As I mentioned earlier, natural gas will increasingly become an important source of fuel for power generation. Currently, a small amount of natural gas is imported from Malaysia for power generation only. In January this year, SembGas took delivery of natural gas from the West Natuna gas fields in the South China Sea under a 22-year agreement with Pertamina, for the purchase of up to 325 million standard cubic feet per day (mmscfd) of natural gas. Last month, Singapore Power signed a gas sales agreement with Pertamina, to import up to 350 mmscfd of natural gas over 20 years from the Asamera gas fields in Sumatra. The Asamera gas is scheduled for delivery in 2003. While natural gas can be used for different purposes, its main use will be for power generation. The natural gas industry has to be structured such that no company can commercially advantage or disadvantage other competing companies. If this happens, it will be detrimental to competition in the electricity industry. Gas importing is a competitive business. Natural gas can only be transported from importers to end-consumers through on-shore gas pipelines. The company that owns this transport network connecting the gas importers to the end-customers is a monopoly, and can potentially wield considerable advantage over competitors, if it has competing interests elsewhere. To avoid this, we are setting up a market structure where the monopoly transporter of gas does not engage in the competitive sectors of the industry. Singapore Power will remain in the monopoly business of transporting gas within Singapore. To do this it will, through PowerGas, own, maintain and develop the on-shore pipelines that form the gas grid. Singapore Power will exit from importing and retailing of natural gas to industrial customers and power plants. We also have a pipe network which supplies town gas to domestic and industry consumers. Town gas, which is supplied by PowerGas, will not be competitive, compared to natural gas. PowerGas plans to convert the town gas network over the next five years to convey natural gas, so that domestic and small consumers will also benefit from it. Other consumers not using piped gas will still have the option of using commercially available LPG. After converting the town gas network to natural gas, PowerGas will also exit from retailing gas to domestic and small customers. There is currently a natural gas pipe network in Jurong, which was developed and owned by SembGas. As SembGas is an importer and retailer of natural gas, it would have to exit from the business of transporting natural gas and transfer its pipeline assets to PowerGas. When these various measures are implemented, there will then be competition in natural gas import and retailing. Diversifying Sources of Gas Supply We will have three sources of fuel for power generation. The primary fuels will be oil and natural gas. All the generation plants using natural gas are required to be able to be operated with diesel. Diesel will serve as a back up fuel in case of disruption to the gas supply. Looking ahead, we plan to further diversify our sources of fuel. Land has been set aside in Tuas for a Liquefied Natural Gas (LNG) terminal to allow import of LNG by LNG tankers to Singapore. With this terminal, we would be able to tap natural gas supplies from further sources such as Australia and the Middle East. A joint study by PUB, MTI and EDB is currently underway. Key Features of the Bill Mr Speaker, Sir, I shall now deal with the main provisions of the Gas Bill. The Bill is to create a competitive market framework for the gas industry, make provisions for the safety, technical and economic regulation of the transportation and retail of gas and for other matters connected therewith. Like the Electricity Bill, the Gas Bill designates the Energy Market Authority of Singapore (EMA) as the regulator of the gas industry. The functions and duties of the EMA under the Bill includes protecting the interests of the consumers, promoting competition in the supply of natural gas, regulating prices, as well as establishing and monitoring technical, performance and safety standards. Control Mechanism and Protection of Consumers' Interests Clauses 6 to 19 of the Gas Bill allow the EMA to issue licences and administer the controls related to the licensing. The conveying of gas through a gas pipeline and the retailing of gas will be licensed. A person who carries out any work on any gas installation or gas appliance will also need to be licensed as a gas service worker. If a gas licensee contravenes any conditions of its licence, any provisions of the relevant legislation, or any directions issued by the EMA, the EMA is empowered to require the licensee to provide a performance bond; and impose a financial penalty not exceeding 10% of the annual turnover of the licensee's licensed business, or an amount not exceeding $1 million, whichever is higher. The EMA may also revoke or suspend the licence if the licensee fails to comply with its direction to rectify any contravention. Clauses 62 to 68 empower the regulator to issue or approve codes of practice and performance standards for the regulation of activities and conduct in the piped gas industry. They also deal with safety requirements in relation to gas. Duties of Gas Licensees The Bill lays out the duties of licensees. Licensees are required to carry out their licensed business in such a manner so as not to prevent, restrict or hinder the development of competition in any gas market in Singapore. Special Power As with the Electricity Bill, the Gas Bill also provides for situations in which public interests are put at risk. Clauses 33 to 35 empower the Minister to make a special administration order, upon application by the EMA, directing that the affairs, business and property of an electricity licensee be managed directly or indirectly by the EMA. Anti-competition Provisions Like the Electricity Bill, the Gas Bill has similar provisions to control anti-competitive behaviour. These are listed in Part IX of the Bill. Appeal Process The Bill also provides for appeals. Appeals relating to market regulation will be heard by an Appeal Panel appointed by the Minister. These will include matters on modification of licence conditions and application of the anti-competition provisions as stipulated under clause 17 and Part IX of the Bill. The decision of the Panel shall be final. Other types of appeals, eg, refusal to grant a licence and matters relating to technical regulation, will go to the Minister whose decision is final. Transitional Provisions The natural gas pipelines in Jurong which are owned by SembGas will have to be transferred to PowerGas on commercial terms. If the parties cannot achieve a satisfactory commercial settlement, clause 98 of the Bill empowers the Minister to intervene and ensure that the transfer takes place. This provision will not be invoked unless absolutely necessary. Conclusion Sir, the Gas Bill is to give effect to the restructured piped gas industry. With this, we hope that big and small consumers will benefit from higher efficiency, more choice and better service of piped gas supply. As the regulator, the EMA will be responsible to safeguard the interests of the consumers and ensure a level playing field for the players in the industry. Sir, I beg to move. Question proposed.

Sir, I have two specific issues to raise. The first issue is whether there is a real need to separate the generating and retailing portions of the industry. From the way I look at, all we need is one type of licence for both generation and supply of gas, making use of a transport system managed by an independent authority. The second issue is one of continuity of supply. My fear is that we may have a situation of over-reliance on one or two sources of gas, especially the gas we are purchasing from Indonesia, as the Minister mentioned earlier. Are we doing enough to diversify our risk? Sir, with these two issues, I support the Bill.

Mr Inderjit Singh has raised the concern and question of separating generation and retail. Both generation and retail can indeed be performed by the same company, as Mr Inderjit Singh has quite rightly said. But there is nothing to stop a company from doing both. And the fact is that there will be companies that will choose to do generation without retailing or vice-versa. The transporter is the owner of the gas pipelines and can potentially influence the competition in the generation and retail sectors. Hence, the transporter would not be allowed to take part in the generation or retail. The transporter has to be licensed, as it is a monopoly. There is also concern expressed by Mr Inderjit Singh concerning the security of supply. Sir, I would like to thank Mr Inderjit Singh for speaking in support of the Bill and also raising this concern. The key is to diversify our sources. Not all electricity will be generated by natural gas. Oil will continue to be a significant source for power generation. In any case, our natural gas agreements are commercial agreements and international companies and organisations like the World Bank are involved. They will help to ensure that they are able to discharge their contractual obligations. In the longer term, we will eventually go to LNG as I have said. Land has already been set aside in Tuas for the LNG terminal. There is a global market for LNG and this will allow us to tap natural gas supply from global sources much further afield, as I have mentioned, Australia and the Middle East.

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

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the District Cooling Bill is another industry-specific legislation that will be administered by the Energy Market Authority of Singapore (EMA). The main objective of the Bill is to designate the EMA as the regulator for the provision of a pilot district cooling service in an area at the New Downtown at Marina South. A district cooling system supplies chilled water through a network of pipes for the air-conditioning of buildings located within the service area. The conventional method is to have individual buildings put up their own stand-alone air-conditioning plants. A centralised district cooling system has two major benefits. First, it takes up less land space, an important consideration in land-scarce Singapore. Second, it significantly reduces water and energy consumption through economies of scale. There is also an aesthetic advantage, as the roof-tops of individual buildings can now be better designed, besides being put to better use. District Cooling Systems have been successfully implemented in certain parts of Yokohama and Osaka of Japan. Based on such experience, the advice is that a District Cooling System should serve a total gross floor area of about 1.25 million square metres for optimal efficiency. URA has therefore parceled out a section of the New Downtown at Marina South for a pilot District Cooling System to be tried out. The projected saving in gross floor area in the pilot area is about 7,000 square metres. The remainder of the New Downtown can be parceled out into four zones of similar size for future District Cooling Systems, if the pilot proves successful. Given the high capital and operating cost, the district cooling system will be viable only if all buildings in the service area subscribe to it. As some building owners may be unfamiliar with this new centralised service, they may choose to stick to the conventional air-conditioning plant. This would increase the operating cost of a district cooling system. To reap the full benefits of economy of scale of such a system, it is necessary to require all building owners in this zone to subscribe to it. We have made the use of this service mandatory by specifying this in the Government land sale condition for the designated land parcels in Marina South. In Japan, the use of District Cooling System in designated areas is also mandated. Since we have made the use of the district cooling system mandatory for this pilot phase in Marina South, we must use Government regulation to safeguard the interests of building owners and users. The users of this cooling system must not be subject to high charges or poor service by the monopoly operator. EMA will regulate this service provided by an operator. The operator will be price regulated to ensure that the cost of cooling using this centralised system would be lower than that using conventional methods. This is to ensure a passing-through to consumers of some of the savings from using a centralised cooling system. Price regulation will also encourage it to improve its efficiency and productivity. Key Features of the Bill Sir, I shall now touch on the main provisions of the Bill. Clauses 3 and 4 spell out the functions and duties of EMA as the regulator of the district cooling industry. These include, inter alia, the: (a) granting of licences, monitoring licensees' performance and enforcing compliance with licences and the relevant provisions provided in the Bill; (b) regulating prices of the operator within its service area; and (c) establishing, monitoring and enforcing technical and performance standards and codes of practice. Mandatory Use of District Cooling Services Clause 7 provides for the Minister to declare, by notification in the Government Gazette, an area to be a service area wherein district cooling services are to be provided and consumers have to subscribe to the service. Clauses 8 and 9 outline the Minister's authority in connection with making changes to the service areas. Control Mechanism and Protection of Consumers' Interest Clauses 10 to 13 stipulate that any person who provides district cooling in the designated area must be authorised by a licence granted by the EMA. The provisions also provide for the circumstances where the EMA may suspend or cancel the licence. If the regulator is satisfied that a district cooling licensee has contravened any condition of its licence, any provision of the Bill or any direction issued, the regulator is empowered to: (a) require a licensee to provide a performance bond; (b) impose a financial penalty not exceeding 10% of the annual turnover derived from the district cooling services of the licensee in Singapore; (c) require the licensee to replace its management with appointees approved by the Regulator; and (d) cancel the licence. Under clauses 14 to 16, the district cooling licensee is required to comply with the codes of practice and performance standards issued or approved by the regulator. The regulator may also give direction to its licensee to observe the code of practice and keep to the performance standards. Clause 18 specifies the general duties of a licensee, which are to: (a) maintain a reliable, efficient and economical district cooling system; (b) ensure public safety with respect to the provision of district cooling services; (c) ensure that it will not do or not omit to do any act which will adversely affect the reliability and stability of the services provided to consumers. Clause 19 ensures that the prices to be charged by a licensee and which are to be paid by its customers must be in accordance with the conditions of its licence. Therefore, prices will be regulated and can be reviewed by the EMA. This clause also disallows the licensee, in fixing prices for its service, to give undue preference to or discriminate amongst its customers. Special Power The provisions under clauses 21 to 23 empower the Minister to make a special administration order upon application by the regulator. The order would direct that the affairs, business and property of the licensee be managed by any person appointed by the Minister if the Minister considers it necessary in the interest of security and reliability of the provision of district cooling services, or in the public interest, among other circumstances. Appeal Process Clause 42 outlines the appeal process. Any person aggrieved by any decision of the regulator in the exercise of its powers under the Bill may appeal to the Minister whose decision is final. Sir, the Bill will provide safeguards to protect the interests of consumers in the pilot district cooling project in Marina South. The mandatory requirement is necessary to get the pilot project off the ground. As the benefits of district cooling become better known to Singapore consumers, we hope to lift such mandatory requirement. The experience in Marina South will also help us decide if there is any need at all in future to extend such a mandatory requirement to other new developments in Singapore in order to promote the greater use of district cooling systems. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, the District Cooling Bill is introduced to enable the Minister to declare that it is mandatory for the occupiers of premises in a designated area to use district cooling. The idea of district cooling, as I understand it, is that cooling or the provision of airconditioning in an area is provided by a central facility. District cooling works on the assumption that a centralised facility will be more efficient, enjoy lower cost due to the higher economies of scale and sharing of common services. Sir, I support this Bill in view of this potential benefit of district cooling. However, I do have some concerns which I would like the Acting Minister to clarify. Sir, the concept has been talked about for several years, but this is new and untested in Singapore. My main concern is that the structure is too rigid. To make it work, the system has to be made mandatory so that everyone is forced to use it. This means that the operator of district cooling services is a monopoly in a designated area. So there are the evils of monitoring and regulating a monopoly. As it is, being the sole proprietor of a cooling facility, any failure of the system means that there will be no alternative. We may say that it is not a life threatening event if no airconditioning is provided. When the system is down, people just get hot, or hot under the collar, so to speak. However, I want to point out that in a modern office, airconditioning is very important to keep the computers cool, not the human beings as such. If the computers are down, the companies may lose very valuable electronic data. The damage may be very severe, or even irreparable. Sir, the proposed idea is to do a pilot test of the concept in the new phase one of Marina South area. I am concerned that the compulsory district cooling system there may affect the tender prices, as it is perceived as an additional cost, rigidity of the system or concerns about how the system would be perceived by prospective buyers or tenants of the premises. Sir, prospective tenants may be deterred to move into an office area if they have to incur higher fitting cost. Compared to the current situation, the tenants and owners of the premises have a varied number of choices, in terms of whether to use central airconditioning, split unit, room unit or even window unit. In district cooling, the occupiers have only one choice. It is like in transportation. You can choose to go by MRT, to take a bus, taxi, car or even bicycle. But in the case of central district cooling, we cannot do anything else but take the MRT, and MRT in itself, as a single system, although it is faster, is actually more rigid and restricted in its coverage. Sir, I am not sure how the central district cooling system would be constructed, but I would imagine that the system requires an extensive infrastructure of piping, feeding out from a central cooling plant. If an end user is located far away, there will be loss of cooling efficiency, loss of energy efficiency and maybe even higher pumping cost. Hence, I am not yet persuaded that the district cooling system can be more efficient and will be able to enjoy lower energy and other operating costs. Sir, a central facility needs more physical space, and maybe more costs for the extensive piping and infrastructure. Visually, I think it can also create aesthetic and noise problems. Ultimately, it may not lead to lower prices for the consumers. Sir, my last point is to ask the Acting Minister why the need to enact a law to specially deal with this concept. Why not just simply deal with it as a section within the new Energy Market Authority law? Finally, Sir, may I end by saying that I support this Bill in its intent, since it will bring the novel concept of district cooling for the benefit of the occupiers in the building. But may the Acting Minister address my concerns, Sir?

Sir, let me thank Mr Leong Horn Kee for supporting the Bill in the first place. Let me try to address some of his concerns. Perhaps if we look at the successful application of the district cooling system in some other countries, we might get some assurance. District cooling system has been successfully implemented in several countries like the USA, France and Japan. Some of the notable areas are Reedy Creek, Florida, Paris, France, etc. As regards alternative and fail safe systems, the EMA can specify various standards as part of the licensing conditions. Mr Leong has also raised some concerns on whether or not a mandatory imposition of district cooling system would discourage potential investors in tendering for the land sale in Marina South. This is quite unlikely. In fact, the tender for the first land sale in Marina South was closed only three days ago. This site will eventually house the district cooling system plant, which the successful tenderer has to provide space for. URA received two offers for the land parcel. And as the district cooling system is a new concept in Singapore, it will be quite natural in the beginning for potential tenderers to ask a lot of questions and inquire about the details. But the feedback is that most of the developers were receptive to the idea of district cooling services. And, in fact, some of the building owners in the existing CBD area, who plan to overhaul their stand-alone airconditioning systems, have also inquired whether they could tap from the pilot district cooling system plant. On the problem of noise and aesthetics, there are solutions to overcome them. Mr Leong also asked why do we need an Act to effect all these, and why can this not be controlled under the EMA. The Energy Market Authority of Singapore Bill serves as an umbrella Act that empowers the EMA to administrate industry specific legislation, one of which is the District Cooling Bill. The Bill is structured in this way because different industries have different requirements, and therefore require different legislation.

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

Order for Second Reading read. 5.00 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this Bill seeks to abolish rent control in Singapore. Rent control operates in two ways. First, it restricts a landlord's right to raise the rent. Second, it restricts the landlord's right to take back possession of the rent-controlled property. The history of rent control goes back to 1947, just after the Second World War. At that time, much of the basic infrastructure like roads and utilities were severely damaged. Housing was in short supply. The population had risen sharply, especially with a massive influx of refugees. Against this backdrop, rent control was introduced to prevent landlords from exploiting the situation and raising rents drastically. Why rent control is no longer needed The situation today is totally different. The Government has successfully implemented its public housing programme to provide affordable housing for Singaporeans. Almost nine in 10 Singaporeans now own their homes. Subsidised rental flats are available for those who still cannot afford home ownership. No family need go without a roof over its head. After 54 years, rental control has outlived its purpose to protect families from unscrupulous landlords. On the other hand, rent control is a disincentive for landlords to redevelop or restore their properties. The Controlled Premises (Special Provisions) Act was introduced in 1970 to allow landlords to recover their rent-controlled properties for redevelopment. However, as landlords are required to pay compensation to the tenants, some landlords have not moved to recover their rent-controlled properties. As a result, some rent-controlled properties, including those designated for conservation, remain in a poor state of maintenance. The complete lifting of rent control will give landlords additional incentive to recover their properties and to spruce them up. Paving the way to rent decontrol In April 1997, the Government announced its intention to abolish rent control in four years' time, that is, on 1st April this year. This long period of notice was to give sufficient time for tenants to find alternative premises or to reach agreement with their landlords to stay on after lifting of rent control. The early announcement in 1997 aimed to strike a balance between the interests of the tenants and their landlords. Tenants were assured that they could continue to pay low rent and stay in the rent-controlled properties for another four years while landlords were given indication that their properties would cease to be rent controlled by 1st April 2001. The 1997 decision to abolish rent control was not a sudden decision. In 1988, the Government used the Controlled Premises (Special Provisions) Act, which was introduced to facilitate the redevelopment of the Golden Shoe area in the 1970s, to accelerate the phasing out of rent control. The Controlled Premises (Special Provisions) Act was made applicable to all rent-controlled properties over four phases, between October 1988 and December 1991. This allowed landlords to recover possession of their rent-controlled properties for purposes of development subject to payment of compensation to their tenants. As a result of these measures, the number of rent-controlled properties dropped from about 7,600 in 1989 to about 1,600 in 1997. Tenants have been informed of the impending abolition of rent control. The Urban Redevelopment Authority has been sending reminders about the abolition of rent control to the tenants every year since April 1997. From April 2000, that is, last year, URA has been sending these reminders every three months. Since the Government's announcement in 1997, the number of rent-controlled premises has shrunk further from approximately 1,600 to about 700 as at January this year. Residential tenants There are approximately 750 residential tenants (and their families) still living in rent-controlled premises. These tenants can apply for public housing under the various public housing schemes. There are also two special housing schemes for people affected by rent decontrol. Under the Old Single Person Tenants' Scheme, the landlord can apply to HDB to resettle two or more single elderly tenants in a HDB rental flat. The landlord will have to pay four years' rental to HDB on behalf of his tenants. The second scheme is the Rent Decontrol Housing Assistance Scheme which grants priority allocation of HDB rental or purchase flats to families or joint singles of more than 35 years old who are affected by rent decontrol. These two schemes help to ensure that affected residential tenants will not suffer undue hardship. Non-residential tenants About 420 non-residential tenants will be affected by rent decontrol. Of these, some 68% (284) operate businesses such as coffee shops and eating places, medical halls and retail and wholesale shops selling a range of goods such as jewellery, stationery, textiles, garments, shoes and electrical goods. Another 10% (41) deal with trades and crafts such as laundry, hairdressing, photo studios, pawnshops and furniture making. The remaining 22% (95) comprise a mix of uses such as bars, lodging houses, stores as well as bicycle, motor and battery workshops. These shops and commercial tenants will have to negotiate with their landlords to remain after 1st April or look for alternative premises. The original intention of rent control was to ensure a roof over people's heads during the post-war days of housing shortage. It was not meant to provide cheap premises for commercial or other non-residential uses. I shall now go through the main provisions of the Bill and give details on the related transitional matters. Control of Rent Act Firstly, the Control of Rent Act will be repealed. This effectively abolishes rent control in Singapore. Upon the repeal of the Control of Rent Act, there will no longer be any statutory restrictions on the landowner's right to adjust rent or to recover possession of their properties through the proper legal process. The repeal of the Control of Rent Act will also dissolve the Rent Conciliation Board, established under that Act to deal with applications by landlords to adjust the rent of rent-controlled properties. This is provided for in clause 2(1) of the Bill. I will now deal with the major transitional issues related to the repeal of the Control of Rent Act, which are set out in the First Schedule of the Bill. Firstly, the repeal of the Control of Rent Act allows landlords to adjust the rent or to recover possession of their properties through the normal legal process. Therefore, with effect from 1st April 2001, any pending application with the Rental Conciliation Board will be discontinued. Similarly, any proceeding before the courts in relation to the Control of Rent Act will be discontinued. These are provided in paragraphs 3 to 5 of the First Schedule. Secondly, the status of a statutory tenant after the abolition of rent control is clarified in paragraph 6 of the First Schedule. A former statutory tenant will, on 1st April 2001, continue to hold the premises on the same terms and conditions as before the repeal of the Control of Rent Act. However, either the landlord or the tenant can terminate this tenancy by giving the same notice as required by law to terminate a monthly tenancy. Controlled Premises (Special Provisions) Act Clauses 3 and 4 of the Bill deal with the Controlled Premises (Special Provisions) Act. This Act provides a form of rent decontrol whereby a landowner is allowed to recover his rent-controlled property for purposes of redevelopment. A landowner who wants to recover his property for redevelopment may apply to the Tenants' Compensation Board (TCB) to recover his rent-controlled property. The TCB has the power to award compensation to the tenant. This compensation is determined based on the provisions of the Act and is paid by the landowner. With the abolition of rent control, a landlord no longer needs a TCB order to recover his property. The Act will, however, not be repealed immediately so as to allow the TCB to settle its outstanding matters. The TCB will therefore continue to deal with pending applications for which the Order for recovery of rent-controlled property has been made prior to 1st April 2001 and to administer the payment of compensation money to tenants. The Controlled Premises (Special Provisions) Act will, however, be amended as of 1st April 2001. This is provided in clause 3 of the Bill. From that day, the TCB will not accept any new application for recovery of possession of rent-controlled property, and any pending application for which an Order for recovery of possession has not been made will be discontinued. These amendments are set out in paragraph 1(c) of the Second Schedule of the Bill. A landowner who wishes to recover possession of his property will thus have to use the normal legal process from 1st April 2001 onwards. The Controlled Premises (Special Provisions) Act currently imposes restrictions on landowners on the use of properties recovered under the Act. Firstly, a landlord is not allowed to use the property for any other purpose except for redevelopment; he is not allowed to sell or lease the property until redevelopment has commenced. Secondly, a landlord must commence redevelopment of the property within six months after repossessing it and must complete the redevelopment within 10 years. The Act will be amended to lift these restrictions. The amendments are provided in paragraph 1(a) and paragraph 3 of the Second Schedule of the Bill. The lifting of these restrictions will put such rent-controlled properties on the same footing as any other rent-controlled property that is de-controlled by the repeal of the Control of Rent Act. This is in line with the idea of the total abolition of rent control and ensures that all formerly rent-controlled properties are given similar treatment. Clause 4 of the Bill provides for the repeal of the Controlled Premises (Special Provisions) Act. The repeal of the Act and the consequent dissolution of the TCB will take effect after the TCB has settled all outstanding matters. Therefore, clause 4 of the Bill will come into effect at a later date to be determined by the Minister for National Development. When the TCB is finally dissolved, there may still be compensation moneys deposited by landowners with the TCB which have not been claimed by the tenants. The Bill provides that any unclaimed compensation moneys will be transferred to the Urban Redevelopment Authority. Thus, a claimant may continue to claim compensation money after the TCB is dissolved. The URA will administer the compensation moneys for a period of 12 months. This is provided in paragraphs 1 and 2 of the Third Schedule. After the 12-month period, any unclaimed compensation moneys will be transferred to the Consolidated Fund. Any claims for compensation moneys may be made to a public officer or a statutory authority to be designated by the Minister. If the claim is established, the compensation will be paid to the claimant from the Consolidated Fund. This is provided in paragraphs 3 and 4 of the Third Schedule. Premiums on Leases Act Finally, the Bill also seeks to repeal the Premiums on Leases Act. In recent years, the only effect of this Act has been to deter landlords of rent-controlled properties from seeking higher rents than those prescribed by the Control of Rent Act. With the appeal of the Control of Rent Act, the Premiums on Leases Act will no longer be required. Conclusion In summary, this Bill will abolish rent control in Singapore and make provisions to wind down the affairs of the Rent Conciliation Board and the Tenants' Compensation Board. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise in support of the Bill. The abolition of the Control of Rent Act is a step towards an open market economy. The Act, which was enacted in the early 1950s, has outlived its usefulness. It was meant to prevent unscrupulous landlords of premises built before 7th September 1947 from increasing rent indiscriminately. While it had served its purpose, the Act is no longer applicable in today's market environment. Tenants now are more educated, and they know how to protect their rights against unscrupulous landlords. The success of the HDB public housing has also eliminated the need to protect tenants from being levied market rental for these premises. In fact, some tenants in these rent controlled premises have abused the Act. I learn that some tenants profit immensely through the subletting of the whole or part of these premises at market rent while paying low rental under the Act. In cases where the premises are of commercial or industrial uses, the profits made are substantial. These practices are unfair to landlords who have lost much opportunity to recoup their investment returns. The above situation has also hindered our urban renewal progress. With such low rentals, landlords have no incentive to maintain or upgrade their premises, thus leading to disrepair. These derelict premises mar our city landscape and result in under-utilisation of our limited land. In order to inject life into our city areas, the Government must remove legislation which hinder urban renewal. The abolition of the Act will provide much impetus for landlords to rejuvenate their premises thus adding more buzz to our city. Sir, I understand the plight of tenants affected by the abolition of the Act. But we have no choice as market forces determine our efforts to prepare Singapore for a knowledge-based economy. We must continue to improve our living and business environment to make Singapore a world-class city. At the same time, we will spare no effort to make sure that all Singaporeans are taken care of during this transition. I would like to commend the efforts put in by the Ministry in helping tenants affected by the abolition of the Act. The Ministry has announced in April 1997 (three years ago) that the Control of Rent Act will be repealed as from 1st April 2001. This has given tenants adequate time to make the necessary preparations and adjustments. In addition, URA and HDB have implemented two housing schemes, especially for low income and single aged tenants, who may face difficulty finding alternate accommodation. They are the Housing Assistance Scheme for families affected by rent de-control and the scheme for relocating tenants and occupiers who are single aged persons. Sir, these measures clearly show that the Government has taken a very compassionate approach to help the affected tenants although it is a private matter. Likewise, I hope that the landlords will also help low income tenants to make this transition in their lives more smoothly. Sir, I support the Bill.

Sir, a number of media reports have focused on the effects of the intention to remove rent control on some tenants, especially those with vanishing trades. Conservation of buildings and of traditional trades is a concern. A recent survey has shown that while we have been relatively successful at saving the buildings, there are gaps in trying to make sure that traditional trades continue. Like many Singaporeans, we were disturbed. But when we think about it more carefully, there are reasons to see that the Control of Rent Act has been a bit of an anomaly for which perhaps the time has passed. Because even if we are concerned about the conservation of buildings and traditional trades, we must be fair. We must recognise that there are also rights of the owners and that we must actually create incentives for the owners to value the properties, to perhaps restore the properties and we can only do so if they know that they will get some fair return. Sir, in fact, though I am for conservation, I am not for the freezing of time, like a magic wand, where the sleeping beauty is supposed to keep sleeping for 100 years. Rather, this kind of approach of freezing things, making people sleep, will tend to lead to distortion of markets, and I do share Dr Teo Ho Pin's point on the problem about subletting and profiteering by some tenants. In a sense, Sir, I was assured to hear that there will be special schemes for some of the tenants who are affected, the elderly tenants who have little choice. More than that, more generally, I would say that the phasing-in over a long transition period of four years shows that while Government sees that something needs to be done, they have sent a signal to those tenants to please do something to accommodate the changing times. For businesses, I believe we cannot save them by special privilege, by freezing them in time. We can at best prevent sudden changes, unexpected upheavals. But in the end, we should foster them to change over time to meet changing times. This, of course, is not easy for businesses. That is why there is such a thing called the free market. Some of these traditional businesses will go out of business. But when you look around us, sometimes there are stories which heartened us, for example, the Killiney Road Kopi Tiam. The fact that they have continued, the fact that they have got branches, shows them competing in a sense with the coffee clubs of today. And those were the things those of us who are conservationists, but yet who want to see a bubbling vibrant modern Singapore, have to think about. There is one point, Sir, that continues to have some difficulty for me. It only occurred to me when the Minister was reading the Bill. This is part of the Schedule that provides for the discontinuance of proceedings before the courts and tribunals. These courts and tribunals are already seized of the matter. They are hearing the issues. We seem to be actually pre-empting their decision. In comparison to that, if I am correct, the Minister has said that the Tenants Compensation Board will have a right to continue to look over the issues already before them. Could I understand from the Minister why is the difference and whether we should be discontinuing these proceedings? Sir, I support the Bill because conservation is not about freezing areas or people in time but encouraging them to move forward at a pace acceptable to all.

Sir, I welcome this Control of Rent (Abolition) Bill. It is timely now that Singapore has, more or less, solved the problem of housing in Singapore. But the Control of Rent Act, at the time when it was enacted, was a good law. It was a socialist piece of legislation. It protected the poor tenants from the landlords because, at that particular point of time, there was an acute shortage of housing, and if there were no such law to protect them, the rents would have shot sky-high and they would all have been forced out and to live in the streets. Sir, I have got only two issues. One is whether or not that will cause hardship to certain people in Singapore. I know that the Minister had already said that the Ministry is having some kind of a scheme to help people who have to move out from their rent controlled premises. They will have to move out once this abolition of the Act comes into effect on 1st April. I have no doubt that the landlords of rent controlled premises will increase their rents. They will not only increase their rents, but increase them higher than what they should be, because they feel that they are justified to do so to recoup their losses for so many years when the rentals were lost in a certain way in that they could not increase their rentals as early as 1953. Many Members, I am sure, are familiar with the rentals that the landlords are getting for their rent controlled premises. Some tenants are only paying something like $40 or $50 for a two-storey terrace house because for so many years, the landlords have been collecting such low rentals. Most of these houses are quite run down, until of course they receive a notice from the HDB to spruce up their buildings. Even when they have to spend money repainting and repairing their premises, they will lose much money because they have to take money out of their own pocket to pay first, which the meagre rents they have received all those years cannot make up. Sir, I am thinking of the plight of single persons who are not within the scope of help which the Ministry is going to give. In fact, last night, in my meet-the-people session I saw for the first time such hardship cases. A man, on behalf of his friend who is a 80-year old widow, came to see me. The landlord must have known of the abolition of the Control of Rent Act and has already got a lawyer to send this old lady a notice to quit within a week from 1st April if she cannot pay the new rental, which will be increased from $280, which she is presently paying, to $1,800. So you can see landlords of controlled premises are quick to take advantage of the abolition of the old law. The increase is slightly over seven times. The premises where the old lady lives is in my constituency which is an old building. Sir, there must have been other similar cases throughout the island. The Minister mentioned about 1,000-odd of these premises. I know HDB is doing everything they can to help these tenants. But I hope, somehow or rather, HDB rules can be amended to help accommodate single people. The other point I want to bring up has been mentioned by Mr Simon Tay. This concerns the preservation of old buildings. Sir, once the Bill comes into effect, I am sure landlords will immediately get rid of their tenants and sell the buildings to the developers who will probably pull them down. Or the owners themselves will pull the buildings down and redevelop the land. If these old buildings are demolished, Singapore will be a different place. Sir, during the Budget session, we have been debating on what it is to be a Singaporean. If all these buildings were knocked down, many of us older Singaporeans would have lost something. The old buildings are very familiar to the older generation and that is how they feel that they have a home in Singapore. If the familiar buildings are gone and, in their places, strange looking buildings are put up, Singapore would be a strange place to them. It is no different from any other city in the world. So Singapore becomes another place. It is no longer the home in which they are so familiar with. I would earnestly urge the Government to take steps to prevent the wholesale demolition of the old pre-war buildings. Greed is a great motivating factor, and we know what developers and house owners of old buildings will do when the next rise in property prices comes along, unless of course they are curbed.

Mr Speaker, Sir, I thank all the Members who have risen to speak. I believe all of them have supported the Bill. As Dr Teo rightly pointed out, rent control has outlived its usefulness. It was enacted at a time when it was absolutely necessary. As Mr Chiam pointed out, I think it was a very noble piece of legislation, and it has actually enabled a lot of the people who came to Singapore at that time, just after the war, to be able to have a decent roof over their heads. But, over 50 years have passed, and I think we all agree now that there is really no necessity for such an Act. So the question really is whether we allow sufficient time, for those tenants who have been affected by rent decontrol, to adjust. I believe the Government has given more than sufficient time for the tenants to adjust. In trying to be fair to the tenants, we also have to take into account the interests of the landlord, but I believe that we have given sufficient time for both parties to come to an amicable settlement. In fact, it is not just four years ago that notice was given. The intention of the Government to abolish rent control was signalled as far back as 1988, when the Control of Premises Act was used to start the first phase of rent decontrol. Since then, in 1997, four years ago, actual notice was given, annual notices were sent to the occupiers in all the four official languages. Last year, every three months, the same notice was sent out. So I believe adequate attention has been paid, and adequate notice has been given, to everybody concerned. More than that, of course, there have been several additional steps being taken to make sure that tenants who are affected adversely by rent decontrol would not suffer unduly. These are the several schemes that I have mentioned just now to help the tenants. One was the Old Single Persons Scheme, and the other is the Rent Decontrol Housing Assistance Scheme. So steps have been taken to make sure that the effects of rent decontrol are mitigated. It is an anomaly, as Mr Simon Tay has said, and he has also rightly pointed out that we should not just look at the interests of the tenants, but we should also look at the rights of the owners. In this respect, we have tried to balance both as much as we can. And the rights of the owners are necessary - not only the right to recognise their property rights, but also to incentivise them, to give them an incentive to refurbish and to renovate their premises. In this regard, perhaps I should reassure Mr Chiam that it does not mean that all premises that are rent decontrolled will necessarily be demolished, redeveloped or knocked down. Some of those premises are gazetted for conservation and, if they are so gazetted, they will not be allowed to be torn down. The questions of conservation and rent decontrol are two separate matters. So where they are worthy of conservation, separate steps would be taken to incentivise, as well as to prevent, in some cases, developers from tearing them down. That much he can be assured of. As for traditional businesses or so-called vanishing trades, again it is a question of how we can make sure that these vanishing trades do not vanish. If there is a need for such trades, they will not vanish. In fact, he has mentioned several of them, eg, the Killiney Road Kopi Tiam. And there are some other traditional trades which are doing very well in Chinatown, eg, medicine shops, herb dealers, the very well-known kaya toast shop which has now moved to Far East Square and, I am sure, there are many other examples. So the moral of the story is, if it serves a purpose, if there is demand, if there is somebody willing to carry on the trade and it is worthwhile for them to carry on the trade, that trade will not vanish. It is as simple as that. It is not easy to subsidise them to make sure that they carry on. And, as Mr Simon Tay rightly points out, we cannot freeze everything in time. I know some countries and some cities do that. They have got certain areas set aside where they carry on some of the trades of old, eg, shoeing horses, making nails and so on. But those are for the tourists. They are not real trades. They are actually there for the sake of, maybe, preserving a little bit of the past for the enjoyment of tourists. So I think we are talking about different things. But, certainly, for those trades which can survive, I think they will survive even after rent decontrol, because there is a demand for such trades. Mr Simon Tay also made a specific point about the discontinuance of proceedings. I think he is referring to the Control of Premises (Special Provisions) Act which we are amending. Under this amendment, what we are doing is to say that TCB will not accept any new applications for recovery of possession. All those applications that are pending and which Order for Recovery of Possession has not yet been issued, those will be discontinued. But anything that has already been settled, that is of course with the Tenants Compensation Board. If the monies have not been claimed, those monies will be set aside and, therefore, they will not be touched. I believe that is what he is referring to. Is that correct, Mr Simon Tay?

Mr Speaker, Sir, may I just clarify briefly? That is correct, Sir. But, on the other hand, if you look at the First Schedule, the savings and transitional provisions on the repeal of the Control of Rent Act, clauses 3 and 4 provide for the discontinuance of proceedings for the Rent Conciliation Board, and for the discontinuation of certain proceedings for the High Court. Sir, perhaps I can raise this issue separately with the Minister.

A final issue I would like to address is Mr Chiam's point whether there will be hardship to certain people caused by the Act. I think, yes, some people will be adversely affected by this. He cited the example of a constituent of his, a widow who is 80 years. If that person is not eligible for assistance under the two schemes that I have mentioned earlier, there are the normal HDB schemes where she can get assistance and, if not, if he would like to put up a case, we will consider that.

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

Order for Second Reading read. 5.38 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Total Fertility Rate (TFR) required to replace ourselves is 2.

1. But the last time we achieved this was in 1976. When major measures encouraging couples to have more children were introduced in 1987, the TFR rose to 1.96 in 1988. But our TFR has been on a downward trend since then. The preliminary TFR for last year did rise from 1.48 in 1999 to 1.59, but this is still low, despite the year being a Dragon year and our coming out of the recession. This is no laughing matter. Singapore is already one of the fastest ageing societies in the world. If we do not arrest this alarming trend, it will have severe implications on our survival as a nation. The family, as the first line of support, would come under severe pressure. In August last year, the Prime Minister announced that the Government would implement the Children Development Co-Savings Scheme, or more popularly known as "Baby Bonus" for short, as well as the Third Child Paid Maternity Leave benefit from 1st April this year. Sir, this is one of the measures which we hope can help arrest the trend I mentioned earlier. The "Baby Bonus" is a two-tiered scheme. In the first tier, the Government would provide $500 per year for the second child, and $1,000 per year for the third child, as direct cash grants for those born from 1st April 2001 onwards. Parents can use these grants to help meet any of the child's needs, including informal care arrangements, food, clothing, developmental needs and so on. The second tier is an annual co-payment scheme. The Government would match parents' contribution dollar-for-dollar up to $1,000 per year for the second child, and up to $2,000 per year for the third. Contributions from parents and Government would be placed in the child's Children Development Account, similar to a Trust-Minor account that can be opened for a child in any bank. Parents can only use these funds for their children's childcare, kindergarten and nursery fees. However, the funds can be used to meet such needs for any of the children that the couple may have. Both tiers of the grant would be given for six years, and we hope these measures would address some of the financial constraints that many people say they face when they decide whether to have a second or third child. The "Baby Bonus" is to help parents meet the financial commitments they have towards their children's pre-school education and other child development programmes. But I must emphasise, Sir, that the "Baby Bonus" is not meant to defray the entire financial cost of child-rearing. The third child paid maternity leave for both employed and self-employed mothers would allow working mothers to take up to 8 weeks of paid leave to be with their newborn third child. I would like to reiterate that the Government recognises that family formation is a personal decision and life choice. The measures proposed in the Bill are for those who want to have children, but anticipate financial or other practical obstacles that would deter them from doing so. Sir, this Bill, hence, provides for the introduction of a Children Development Co-Savings Scheme to assist parents in the development of their children. Clause 3 of the Bill provides for regulations to be made for the establishment and administration of the "Baby Bonus". This would enable us to fine-tune the Scheme and the required legislative framework as we progress, since the Scheme has no precedence here. Clause 4 provides for the substitution of the trustee of the Children Development Account should the trustee need to be changed. This could occur if the trustee dies, is unable to act because of unsoundness of mind, or loses the custody, care or control of the child, say, in a divorce, or in instances of child abuse. Clause 5 would protect the money paid into the Children Development Account by the Government, or the parents, from being considered "matrimonial assets" for division to the parents if they divorce, or being claimed by creditors should one of the parents be declared a bankrupt. Sir, we have a moral duty to ensure that the "Baby Bonus" is spent appropriately. We would, therefore, restrict usage of the funds in the Children Development Account to the approved centres as provided for in clause 7. The funds might be used at centres that opt to participate in the Scheme. For a start, childcare centres licensed by my Ministry, kindergartens and nurseries registered with the Ministry of Education, and pre-school programmes at schools for children with special needs would be invited to participate in this Scheme. To protect the interests of the child, and the monies in his or her Account, clause 18 would make it an offence for any person or organisation from touting itself as an approved centre. Any funds left in the Account when the child reaches school-going age would be transferred to the child's Edusave account. Clause 22 would facilitate this transfer by providing for a consequential amendment to section 7 of the Education Endowment Scheme Act, to enable any monies to be transferred from the child's Children Development Account to the Edusave Pupils Fund. Sir, clause 9 would provide paid maternity leave benefit of up to eight weeks for women who have their third child, similar to that provided for the first and second child under the Employment Act. But unlike the paid maternity leave for the first two children under that Act, the cost of the paid maternity leave benefit for the third child would be borne by the Government, so as not to increase the cost of business to employers. Furthermore, it would be extended to all working mothers, beyond those covered in the Employment Act, including executives and the self-employed. The maximum amount that could be claimed would be $20,000, including CPF contributions, and would be pro-rated if the woman takes less than eight weeks of leave. Only married women would be eligible for this benefit, so as to be consistent with our values to promote births within intact families. In addition, the child should be a Singaporean by birth, as ultimately, we are interested in boosting our citizen birth rate. This benefit would apply to women who will be on maternity leave for their third child on or after 1st April 2001. Hence, if a woman has been granted maternity leave of eight weeks prior to 1st April 2001, she would be compensated for those days that have not been completely consumed by 1st April 2001. Sir, like for the paid maternity leave for the first and second child, employers would pay their employees eligible for the third child paid maternity leave. They would then seek reimbursement from the Government, as provided for under clause 10, subject to a cap of $20,000. This would ensure that there is no break in salaries to women who make use of this benefit, and it would also involve employers as integral partners in this family-friendly measure. Sir, the "Baby Bonus" is estimated to cost about $225 million in the steady state, and the third child paid maternity leave benefit, about $13.5 million annually. The figures could go up if there are more higher order births. Adequate provisions as in clauses 8 and 11 are provided for to ensure that these funds would not be abused. Clause 16 would make it an offence for any person to make any false or misleading statement or to produce or furnish any false or misleading document for the purposes of this Bill. The penalty for such an offence would be a fine not exceeding $20,000, or imprisonment not exceeding 12 months, or both. In addition, clause 17 would make it an offence for an employer not to pay his employee if she is eligible for the third child paid maternity leave benefit. Such errant employers would face a fine not exceeding $1,000 or imprisonment not exceeding six months or both, consistent with the penalty provided for in the Employment Act for an employer who fails to pay his employee her maternity benefit. To avoid litigation for every alleged offence, clause 14 would provide for resolution of disputes, while clause 19 would provide for composition of offences for a sum not exceeding $500 for employers who fail to pay their employees the third child maternity leave benefit, and $5,000 for all other offences under the Bill. Sir, taken by themselves, we do not realistically expect them to restore the TFR to the replacement level, but taken together with the other measures announced thus far, sustained public education on the importance of family formation, and impending recommendations of the Ministerial and Working Committees on Marriage and Procreation, they have a reasonable chance of raising our birth rate. My Ministry will continue to look into ways of removing the obstacles couples face in having children. Sir, I beg to move. Question proposed.

Sir, we already have had eight days of long debate. I would be concise and you would be very relieved if all other speakers after me would be concise.

Good idea.

Sir, I support the Bill as it provides further opportunities for the development of our children. The provisions in the Bill are very generous and we are committing substantial public funds to support children in their development, and this is an investment in our human resources. It is expected that more than $250 million would be spent in this area and in future, we expect that more funds would be released if we are going to re-generate ourselves. Sir, as I see it, the better-off families will take advantage of the provisions. I hope steps will be taken for some funding top-ups for the less better-off families. This will help the less well-off children to benefit as much as possible. Would the Minister look into this issue in the process of implementing this Bill? It would also be useful if we monitor the profiles of families that would be participating in the Scheme so that the Ministry will be able to take corrective actions and other related interventions to enable all children to benefit from this Bill itself. The Bill is intended to strengthen the family and be pro-family. But from the start, on page 1 of the Bill, it is conceptualised to encourage married women to have more children. Is this a mistake or an oversight by the Ministry itself? It is, I believe, more politically correct if it should be to encourage married couples. I think that would be more appropriate because it takes married couples to have children in order to regenerate. This is an important issue and it is essential that we provide the right perspective right from the start. Without married couples, the Bill would not achieve its objectives. Decisions on family size are usually the decisions of couples, not of one partner to the marriage. All the time, we emphasise on marriage as a partnership. We also accept, as one of our core values, the family as a basic unit. It is, therefore, desirable that the wording, at the beginning of this Bill, should reinforce this value. Under clause 13, the Minister will have powers to exclude certain classes of persons. We hope that in using these powers, the Minister would exercise caution to ensure that exclusions do not create further divisiveness amongst families, but we will find various means to promote social cohesion. This is very important, as children have been our resource, and we should not discriminate in the longer term. It is essentially necessary to help us to make a society which is supportive and more cohesive. I would like to ask the Minister to identify some major social implications of the Bill on families and children, and the steps to be taken to deal with them.

Sir, I stand to speak in support of the Children Development Co-Savings Bill. Singapore's total fertility rate (TFR) currently stands at a dismal 1.59, as mentioned by the Minister earlier, which is very much below the replacement rate of 2.

1. In view of the fact that our country is small, and we have a smaller base in population to start with, this figure is indeed worrisome. It is, therefore, timely and welcomed that Prime Minister Goh, in August last year, announced the "baby bonus" and third child maternity leave, as well as the set up of a Ministerial Committee to study our declining birth rate. Government handouts and support have helped ease the burden of raising children in some of the northern European countries. Denmark has a total fertility rate of 1.7, which is relatively higher compared to, say, Italy, with a TFR of 1.

2. Sir, the level of childcare facilities and parental benefits seem to make a significant difference. Most countries on the southern rim of Europe, such as Italy and Spain, have some of the lowest TFRs on the continent. The governments there provide much less child-related allowances than the Nordic countries that have some of the highest fertility rates in Europe, despite the fact that the proportion of women in their labour force is also among the highest. In the northern countries, childcare services are widely available and are subsidised by up to 85% in some cases. Financial support is provided in the form of birth and child allowances, up to the time the child reaches adulthood in certain cases. I am confident that Singapore can achieve results, just as good, if not better, with the right incentives. Sir, the "baby bonus" incentives are applicable to babies born from 1st April this year. May I ask the Minister for Community Development and Sports whether his Ministry will be flexible in those cases where births are premature when the expected dates of delivery should have been on or after 1st April this year? It must be recognised that there are medical, as well as unpreventable conditions that give rise to delivery of babies earlier than the expected dates. Such premature deliveries are due to unforeseen circumstances through no fault of the expectant mothers. Sir, although I agree that there is a need for a cut-off date, I feel that exceptions must be allowed for medically certified premature births. I hope MCDS will consider my stand in this favourably. Families can use the moneys from the "baby bonus" to pay for the development and education of their children. Sir, development of children is indeed important, as not only do we want more children, we must ensure we get the best-developed children. For this, we need to start promoting good parenting skills. Educators and service providers have emphasised on the need for parents to learn parenting skills early to prevent problems further downstream. They have observed that parents of troubled youths typically lack parenting skills and have other problems such as strained marital relations. In light of this, I propose that equipping parents with good parenting skills should be facilitated and encouraged and we should allow some of the "baby bonus" moneys to be used for this purpose. Since clause 3 of the said Bill enables the Minister to make regulations, and clause 3(2)(h) in particular, gives discretion to the Minister to determine the purposes for which the money may be used, I would urge the Minister to consider my proposal. MCDS can always give guidelines as to the kind and the number of courses for parents that would yield maximum results. Sir, I have said before that studies have shown that very young children fare better with family-based childcare. MCDS should, therefore, encourage family-based childcare, especially for infants. The ideal care-givers for infants are, of course, the parents themselves. However, in the context of Singapore, immediate family members, relatives, neighbours and even friends can be reasonably good parent substitutes. We may like to encourage or even entice such suitable housewives and retirees to "work" as home care-givers by allowing them some income whilst staying at home. Thus, we should allow use of moneys from "baby bonus" to pay for childcare with registered and approved "home care-givers", instead of conventional nursery or childcare centres only. On reimbursement of third child maternity leave paid to employees, I hope MCDS ensures that the procedure for claiming the benefit is made as convenient as possible. It should be a hassle free experience, and there should be minimal tedious form filling. MCDS has spelt out the claim procedure for this third child maternity leave, and one of the criteria is that claims must be submitted within a month after the end of the maternity leave. Late claims will not be accepted by MCDS. On this aspect, I feel that the one-month claim period is too short. Perhaps the Minister would consider having it extended to two or three months, and giving more flexibility for later claims with valid reasons. Sir, clause 11 gives the employer and the Government rights against an employee where payment is made to the employee owing to a mistake of fact or on reliance of false and misleading statement furnished by the employee. However, the Bill does not confer any rights on the employee in the event the employer fails to pay the employee. This should be redressed in the Bill. I hope the Ministry of Community Development and Sports will consider my aforesaid suggestions favourably. Sir, I support the Bill.

Sir, the Minister has referred to the alarming trend in our fertility rate. And if the grand objective of this Bill is to encourage women in Singapore to have more children, then should the Bill not cover all women and all births? The first component in the "Baby Bonus" scheme is a direct cash payment which applies to all women who deliver the second and third child born on or after 1st April 2001. Sir, why discriminate against first birth, baby number four and after? For low-income families, some extra cash during a first baby's birth is always helpful. If this first experience is unpleasant and burdensome, then young couples will not warm up to the idea of a second conception. In short, I am suggesting that we give something for the first child in order to promote a positive psychology towards a second. For larger families, the issue of affordability is a concern. But who is to decide on affordability? Is that the only determining criterion for having children? What about the desire for children factor? If the family enjoys four varieties of dishes for a meal, and there are many others who enjoy just two dishes, maybe some families only one dish, because they want to save the money so as to have a fourth child, why do we then not encourage them? It is important, Sir, that we signal to all mothers, whether homemakers or working, that their maternity role and having children are worthy of State support. No groups will feel discriminated or left out. Instead of having one cash amount for all, the State could consider designing an earnings related scheme, so that there is not too much of a drain on national resources. And for wealthy families who do not need this money, maybe they could re-donate the money to the Community Chest, for needy causes. The second component of the "Baby Bonus" scheme is the children development co-savings scheme, whereby the Government co-pays by matching contributions from parents. Here, I again question why do we not extend this incentive coverage to include first-borns and the fourth, fifth child and so on. If parents are willing to save to do this, why do we not encourage them? For low-income families in particular, which may only have one child, the co-savings scheme will represent a significant social insurance scheme. The next family-friendly initiative is instituting a third child maternity payment for only working married women. This is an initiative which we all welcome. But if the objective of the Bill is to encourage more children, then why limit the special benefit, again, to only the third child, and not the fourth, fifth and so on? Given the trends in fertility pattern - delayed marriages, older ages on first births and smaller families - incentives, like granting maternity benefits to working women for the fourth child and above, may not invite that many takers in the first place. There seems to be a conservative measure being applied so as not to impose a significant drain on our national resources. Would it not better enhance the fertility trend if we broaden the base to extend these various schemes to all women and for all births? And what we also achieve is a consistency of social policy in upholding our recognition and support for mothers. Included in this process should be appropriate counselling programmes to help couples in making family planning decisions according to their ability to cope. This should be a role that community agencies can actively play. Sir, we must resolve our contradiction in our procreation policies. On the one hand, we want more babies and, on the other hand, public hospitals charge 150% more (from $400 to $1,000) for the fourth and subsequent births. I would like the Minister to clarify his position on this policy decision. Given the Bill, as it is, I would like to raise a number of queries. First, on the co-savings scheme in Part II of the Bill: If the child is the absolute beneficiary of the trust, at what age will the child be freed from parental or trustee control over this trust and the regulatory control implemented by the Government? The Bill appears to be silent on stipulating a cut-off age in transferring the trust to the young adult. What should be the guiding principles for the use and application of these funds? Can the parents who need money desperately, say, for example, to pay for medical expenses incurred by a third child, access this trust? Can they access this fund at all for other purposes? If, at the age of 21, the member, now a young adult, incurred gambling or business losses, can he, at this legal age, use this trust to pay it off? If it becomes a court case against the member, can the judge demand the seizure of the trust? If one parent dies before the member is 21 years old, can the trust be transferred to the other parent? Or if both parents die, can a guardian be appointed to take over the trust? Sir, I would like the Minister to help me understand these queries, because I feel that unless there are legal provisions over the structure and ownership of the trust, I am not sure Singaporeans will step forward and pay up for this co-savings scheme, or it may be subject to abuse. Moreover, do we know the savings pattern of Singaporeans? With whatever money they have, would they prefer to put them with a life insurance scheme instead? What is so attractive about this scheme, that is different from any other savings scheme, Sir? Can the money in this trust be invested for the child? On third child benefits in Part III of the Bill, Sir, would a third adopted baby by a self-employed or working mother qualify to enjoy this benefit, although it is not natural maternity, assuming that all the other conditions are met? The entitlement is only served to a working woman who absents herself from work during the period of 4 weeks immediately before and the period of 4 weeks immediately after her confinement. The provisions in Part III, clause 9(1)(a) and (b), seem to be materially similar and therefore require some editing to omit redundancy, in my opinion. What is peculiar is the provision which states that every female employee shall be entitled to absent herself from work "during the period of 8 weeks, as agreed to by her and her employer". If this Act becomes mandatory to be complied by all employers, why is there a need for employees to reach an agreement with employers to realise their entitlement? The entitlement is only given to women who have served the employer for not less than 180 days, as MCDS has explained in the papers, "the purpose is to encourage employees to stay with the same employer for a minimum of six months, which is usually the norm for confirmation of employment." Sir, what if a six-month pregnant woman had to leave a previous job to join a new company, because the company went bankrupt and she was retrenched? Would she lose the entitlement of a third child maternity benefit in the new company, which she only served 120 days before the birth of the baby? This Bill does not provide for such cases. It would seem to be that she lost out on two counts, for reasons beyond her own designs. Can we look at how we could protect pregnant employees in such situations by including further amendments to the Bill? In another extreme example, Sir, what if it is a premature birth for a new employee who has served maybe less than 180 days in a company, will she be entitled to the benefit? Or in the case of a pregnant mother who has served the company for more than 180 days, and she delivers a premature baby who survives in an incubator for the first month and dies afterwards, will she be entitled to the benefit, particularly, the four weeks benefit due to her before the accidental birth? In normal births, if a baby dies and therefore no "birth" has occurred in the literal sense, will an employee enjoy the maternity benefit and be paid regardless of the outcome? Sir, in the case of miscarriages during the third child pregnancy, would this benefit apply? The physical exhaustion and emotional torment of a miscarriage is already distressing enough. It would be doubly punitive to take away what she would be entitled to which nature has forbidden. For self-employed women, MCDS will pay them directly based on their claims. I would then ask: how does the Ministry verify the amount to be paid out to a hawker or a consultant employee who may not file accurate income tax forms in the first place? Will they accept face value declaration based on the claim forms? Sir, my last query is on Part III, clause 9(3), relating to the qualifying criteria for receiving payment. "Being married" at the time of the child's birth is a critical determining factor. What if three women in their third pregnancy during a week before their delivery due date, one found out that her husband is having an affair and decided to file for divorce; the second decided to put a stop to her husband's physical violence and filed for divorce; and the third whose husband was killed in an accident, making her into a widow during her pregnancy, will these three women be entitled to the maternity benefit? I would like to hear the Minister's position on these issues. On Part IV, Miscellaneous section, would the Minister clarify how and when will the women be paid, Sir? If the employers are the ones to first fork out the money to pay to their employees, and wait to be reimbursed by the Government, which can take as long as two months, is this not stressing some of the SMEs' cashflow situation, especially if it is higher level staff claiming legitimately as much as the total $20,000 cap? The cashflow gets tighter when more women make such claims within the same period in the same company. Can we consider the payment to be directly paid out to the employees by the Government instead, like the way we manage our own income tax claims? What is needed is setting up a special unit, or let it be part of the functions of the Work Life Unit already set up in MCDS, to attend to such claims. On the point relating to the failure of employer to pay a female employee, the Bill is silent what it will do with the money after it is recovered by the Government from the offending employer. Will the money be paid to the employee then? The present provision appears to leave the mother in the cold as there are no provisions to divert the payment to her. I hope the Minister will amend Part IV, under Miscellaneous, clause 17, to provide some protection for employees caught in these circumstances. Sir, some of these points are clearly administrative and perhaps procedural details, which will be addressed and regulated by the Minister afterwards. And I know it may be too late now to make these necessary amendments, as the Bill will be passed by the end of this session and the Act comes into force by 1st April, as already announced in the papers. I would just like to put on record these concerns, and hope, where possible, they could be scrutinised over time to help tighten up the intent and application of the Act so that we do not leave too much leeway for unclear interpretation. What is most puzzling to me, and this perhaps reflects the nature of lawmaking in having to provide policy makers an avenue to manoeuvre and adapt to the uniqueness of a situation, is the section on "exemption" in Part IV, clause 2, which states that, "The Minister may, subject to such terms and conditions as he may specify, exempt any person from complying with any requirement of this Act". While appreciating the need to give the Minister some discretionary power to exercise judgment, the mandatoriness and forcefulness of this Act became immediately diluted when it is silent on the terms and conditions under which the Minister will exempt the person from complying with the terms of the Act. I wish the legal provisions on this point can be clearer. Sir, I support the sentiment of this Bill in recognising the need to offer some financial support to mothers. Obviously, more should be done for a larger number of women to benefit. I hope this is only the beginning of a process in shaping a child development and family policy in a gradual and comprehensive manner. In that defining process, I hope the governing principles are based on upholding the worth of the child and valuing the contribution of the mother, and that it is not a numbers exercise, whether in expecting an outcome in the number of births or limiting the amount of dollars to be paid out as support for mothers.

Sir, I rise to speak in support of the Bill. I would like to urge the Minister to consider further measures to encourage married couples in Singapore to have more children. The Bill has addressed only to a certain extent the concerns young families have in regard to having more children. The Children Development Co-Savings Scheme will alleviate their concern regarding the escalating costs of bringing up children. Such costs are very real for the new generation of Singaporeans. Not only has the cost of living gone up, the standard of living has also gone up in Singapore. For example, during our time, it was quite a rarity for families to engage tuition teachers for their school-going children. This is now quite a prevalent practice for most young families and it is often a matter of how many private tutors the children have. The third child maternity leave is an overdue recognition of the sacrifices and national service performed by young mothers. It is a sacrifice because in the past, they had to accumulate their annual leave to offset their absence from work after delivery of her third child. It is a sacrifice because some employers and bosses do not take too kindly to the mother's absence as this means that they have to arrange for someone else to cover duties. In extreme cases, it may even affect the promotion and prospect of the mother. But there is more to it than just the financial concerns of raising a third child and of maternity leave. The Bill can go much further to encourage young families to have more children. I have the following comments and suggestions for the Minister to consider. The Government's policy is to have three children or more if you can afford it. This is a sensible policy because it is generally better for less well-to-do families to have lesser children, so that the parents can have the time and means to raise their children up properly. If the parents want to have many children but do not have the time and means to bring up the children well, it can be counter-productive to the family and society. Hence, it is sensible for the Government to adopt a family planning policy of having three children or more if the families can afford it. Not surprisingly then, the co-savings or "baby bonus" scheme tends to benefit the families with the means. It tends to favour families that can afford it because not all families can afford $1,000 or $2,000 annual matching contribution for the second and third child respectively. The flip side to this policy is that families from the lower income group may not be able to benefit fully from the scheme. But we should ensure that families from the lower income group are also properly taken care of. We should ensure that they are not significantly disadvantaged as a result of the scheme. For this purpose, I hope that the Minister can enlighten us on how the scheme will operate. In particular, I wish to learn whether this scheme can be extended to cover other than "baby bonus". Sir, let me now move on to some proposals I have for the Minister. Firstly, the Bill should not focus on mothers. It should not just encourage married women in Singapore to have more children. It should encourage married men and women in Singapore to have more children. Notwithstanding the sacrifices made by mothers, we must not forget the changing role of fathers in a modern family. The modern-day father is not just a breadwinner enslaved at the workplace. Increasingly, we are seeing more fathers wanting to play a more instrumental role in raising up children, in tutoring their children, in chauffeuring their children to piano and other special classes during the weekends. In a sense, the modern-day father has no choice as the wife is often also a working mother. In a sense, the modern-day father has become less chauvinistic. And I know of many fathers who can whip up excellent dishes in the kitchen. So the modern-day father has to assume his share of duty in getting the house in order and his share of responsibility in raising up the children. Given the changing role of fathers in our society, should not paternity leave be granted? Paternity leave can be a shorter period of, say, up to five working days for the first and second child. For the third child, the reimbursement from the Government can then be on the same basis as the third child maternity leave, as proposed in the Bill for mothers. The paternity leave will enable the father to help ensure that the house and children are in order when the mother is still in the hospital and in the first few days of convalescence at home. Having a new child in the family can result in a major upheaval in the family and the father has a crucial role in helping the family to adjust to the changes, especially in the initial stages. To my mind, granting paternity leave would be a fair recognition of the father's role in the family and, in a sense, encourage him to have more children. Secondly, Sir, we should extend enhanced tax relief and rebates to either parents and not just for working mothers. This is because mothers who are not in the workforce are equally doing the country a great national service by looking after their children in the crucial early formative years of children. I know of many professional women who stop working so as to be able to spend some time with their children during their formative years. We should not forget their contributions to the society when they bring up their children well. They are also the heroines of the country. Thirdly, I would like to propose that the Bill provide for special family leave of, say, up to five days each for married employees with children. This is to enable them to use it to spend time to look after their children, to coach them during the examination period, to look after them when they are sick, to enjoy parenthood and not to treat it as a big hassle that they have to balance with the demands of work. Sir, we have to understand that the values in our society are changing. We have to understand that our younger generation are willing to go out to make a mark for themselves in the office to actualise their potential. At the same time, they are faced with the ever pressures at home of having to raise their children. Added to that is the fact that in the case of most young families, both parents are working. It is not easy to raise three children well nowadays based on a single income. Our society has become competitive. Having to raise a third child with a much lesser measure of comfort, most young parents in Singapore will opt for having two children. Hence, we should recognise this and go about to help them in this regard, by giving them time to spend with their children. Fourthly, by the same token, I would like to propose that we allow working mothers with new-borns to be able to take no pay leave for up to six months on top of their paid maternity leave. This is to help the working mothers in the settling in of their new-borns in the family. The working mother after her maternity leave may decide to take up to six months' no-pay leave or she may not. If her financial position requires her to return to work after her maternity leave, it is her decision to go back. If her financial position allows her to stay at home to look after her new-born for up to six months, she can do so without the hassle of applying for it and the uncertainty of whether that leave will be approved or not. I know of some mothers who returned to work after their maternity leave and were unable to cope with the demands of work and their new-borns' attention. Consequently, they decided to leave because they were not granted no-pay leave. This situation could have been avoided. But, more importantly, by allowing them no-pay leave as a right will give parents the flexibility and therefore encourage working couples to consider having more children seriously. Fifthly, in line with most private sector practices, may I also propose that the Government consider a five-day working week to allow civil servants to spend more time with their families. Many civil servants have benefited from the current arrangement of allowing alternate Saturday off. Perhaps the Government can take a further step by considering a five-day working week. My sixth proposal concerns the tax deductibility of the foreign maid levy which only a married woman who is working gets. In line with encouraging more children and bigger families, the tax deduction should be extended to the father's income. This is because having more children is a question of choice for the couple, and the choice of having the mother stay at home to be assisted by the maid should not result in a financial penalty. My seventh proposal is for the Minister to consider allowing more creches and day care centres for children. Again, this would ease the concerns of double income working parents. In order to encourage more childcare centres near the workplace of working parents, the Minister may wish to consider giving a higher subsidy for the operators of childcare centres in the Central Business District and industrial areas where the rental of office space can be rather prohibitive. This would enable parents to send their children to childcare centres near their working place and it would be more convenient to fetch their children from the centre after work. In conclusion, Sir, besides using financial carrots to encourage working mothers in Singapore to have more children, I hope the Government will also consider other measures to address the concerns of young families. This issue has to be considered in its totality. Parents simply do not opt for more children on the basis of co-savings scheme or third child maternity leave. Sir, with these comments, I support the Bill.

Sir, I support the Bill and I agree with the Minister that, taken together with other programmes, there is a fair chance of increasing the birth rate. Earlier speakers have already come out with a long list of possibilities to widen and enhance the provisions. I have only three questions. The first is with regard to clause 6 where it states that: "On the death of a member, the moneys standing to his credit in his bank account shall be paid to the Public Trustee for disposal in accordance with any written law for the time being in force."

I am just seeking clarification that this money would actually end up in the accounts of surviving siblings. The second question is with regard to clause 9. I am glad that it has provided for self-employed women. But I can think of a class of women, which is quite common, they work especially in family provision stores and family businesses. For all intents and purposes, they contribute as much as the self-employed women but with no stature and no pay. So I am just wondering whether this class of women could be seriously considered even if it is only by a prescribed sum of money. Finally, I would like the Minister to look at the possibility of dealing with clause 9(3)(b) where a reference is made to being "lawfully married to the child's natural father". I wonder what will happen if it was discovered later that there has been a case of infidelity. Would the Government be taking legal action against the mother and claim back its contributions? Would the innocent child therefore lose out? There is also the possibility that the child could be the result of modern medicine, artificial insemination, and so forth, and either or neither one of the parents is so-called "natural". I wonder whether it is absolutely necessary to include the word "natural" in that section. 6.30 pm

Mr Speaker, Sir, I thank the Members for their comments and views. Let me first address Mdm Claire Chiang's points. Sir, Mdm Claire Chiang has been very robust in her speech. Let me start by beginning from where she ended. She said that it is not a numbers exercise, and that is precisely what this is all about. It is not a numbers exercise purely. That is why when she said why not open up to all women, open up to everybody, we have to think twice about it. It is not purely a numbers game. She questioned the structure of the Children Development Account. As I have earlier mentioned, Sir, the account would essentially be a Trust-Minor Account and when the child reaches school-going age, it will be transferred to Edusave. When the child grows up to over 21 years, it will go into his CPF account. So it is very clear. And the funds are meant for the children's development, not for emergencies. They could be used for, as I mentioned, MCDS' licensed childcare centres, MOE's registered kindergartens and pre-school programmes and special education schools, and other uses may be considered at a later stage. Mdm Chiang asked if the trustee can be changed if a parent should die. Yes, the other parent can become a trustee. I would like to assure Mdm Chiang that there would be sufficient legal provisions to make clear the structure and ownership of the Children Development Account. Mdm Chiang also expressed doubts on whether parents would opt to participate in the scheme. Sir, it would really be up to the parents whether to take up the scheme or not. And I would like to emphasise that the co-savings component of the scheme actually provides a guaranteed 100% return every year because we pay $1 for $1, and this excludes the interest paid by the bank. She also asked whether a mother who adopts a third child would be eligible for the scheme. The answer is that it would not, simply because the intention of the scheme is to raise the total fertility rate. Therefore, maternity leave is also meant for mothers who go through the pregnancy cycle and confinement. It is also in line with the maternity benefits under the Employment Act. She also asked why under clause 9(1)(b), every female employee needs to come to an agreement with the employer about the eight weeks' leave period if the Bill already makes it mandatory. Sir, I would like to point out that if the employee opts to take the leave four weeks before and four weeks after her confinement, that is a straight entitlement. But if she wants to take the eight weeks' leave starting later, she would need to come to an agreement with her employer as to which date the leave would start, and this practice is no different from the maternity leave for the first and second child as stated in the Employment Act. Sir, the reason why the six months' rule is put in place is really to prevent the possibility of women taking advantage of this scheme by joining the workforce just prior to her confinement. On the possibility of a case raised by Mdm Chiang about the company going bankrupt and the woman is retrenched, we do concede that there will be such cases, but we think they will be few and rare. Rather than amending the Bill to provide for such exceptions, it is best that we take them on a case-by-case basis and consider them administratively. That we would do. As for babies who are born alive but die after some time, the mothers would still be entitled to the maternity leave provided they meet the other eligibility criteria. If a child is stillborn or miscarried, the mother would not be eligible. She would however be given some hospitalisation leave for her to recuperate. Verification of self-employed mothers would be calculated based on the average income derived from self-employment during the six months immediately preceding the maternity leave. A self-employed reimbursement board has been set up to approve the claims, and this board is similar to the board set up to approve claims for self-employed NSmen to make up their pay claims. Mdm Chiang also mentioned a number of scenarios whereby the mother ceases to be married after the child is conceived. Yes, mothers in all these cases will still be entitled to the maternity leave because they would have satisfied the condition of being lawfully married to the child's natural father at the time the child is conceived. And why the need for the employer to pay the employees first? Sir, this would ensure that the mother receives her pay promptly. And MCDS, I assure her, has set service standards for the reimbursement of employers and, upon submission of the claims by the employers, MCDS will pay the employers within a month from the receipt of submission, if the claims are submitted manually, and within three weeks if the claims are submitted electronically. On her last point about the employer failing to pay the female employee, action will be taken against them and the Government would ensure that the mother is fully paid, as I mentioned in my earlier speech. Let me come to Dr Vasoo. Dr Vasoo has got a very interesting question about why only "married women", and not "married couples". Sir, we must accept that it is a married woman, and not married couple, who has children simply because, ultimately, it is the woman who has to decide whether or not she wants to have the child and she will be bearing the children, not the couple. But we do accept that the decision to have children will have to be something between the married couple. And we are not too sure whether we want to use the words "married couple" because sometimes, the definition of "married couple" differs from society to society. So we would rather stick to "married women" and I can assure the Member that when we say "married women", we are talking about married couples because we want to ensure that children are born within wedlock and the family is intact. He asked whether there would be any discrimination of income and whether the lower income families would be disadvantaged. The answer is no. As long as the parent or the mother satisfies the criteria, she will be given the bonus, regardless of what income group she comes from. In terms of childcare, quite apart from this, we also have what we call the centre-based financial assistance for childcare which I mentioned earlier in my speech during the Committee of Supply. My Ministry will give additional subsidy to children from low income families to attend childcare centres. Mr Gerard Ee asked whether women who work free for families would be eligible for maternity leave. The answer is no. Because the objective of the maternity leave benefit is to compensate for loss of income. Also, it is very difficult to determine the actual amount that person should be paid, whether she helps out in the hawker centre, or in the father's firm. How do you reconcile and how do you want to pay them? So we would leave it as it is and we only pay for working women. It is really to compensate the loss in income. He asked about the provision in the Bill on "lawfully married to the child's natural father". This is, as I said earlier, because we want to encourage child birth within wedlock and the family remains intact.

I just want to clarify the position. I agree with the words "lawfully married". But I am questioning the word "natural".

Yes. I know where he is coming from when he said that, because he did mention also what if the child is conceived out of artificial insemination. Sir, in such cases, if there is no paternity challenge and if the couple accept the child as their own, then they will be eligible. This is where administrative consideration will be given. It is not our intention to deny payment to that particular child. Sir, Dr Lily Neo asked whether children who are born prematurely would be considered. I am afraid not. When the Prime Minister announced the scheme at the National Day Rally on 20th August last year, he did mention that we were already being generous to the early babies by implementing on 1st April 2001. However if there is strong medical evidence to suggest that a baby was conceived after PM's announcement, but the baby arrived early, that is, premature birth, then MCDS would consider on a case-by-case basis. On the use of "baby bonus" for parenting and marriage courses, the intention is for the "baby bonus" to be used for childcare centres and kindergartens. But the families or parents are free to use the first tier for parenting courses and informal childcare arrangement. In fact, one of the main reasons for creating the first tier is to allow this flexibility by parents to use this cash amount for such programmes or projects. And the procedures for the claims, we assure her, will be simple. We would not make it complicated. We think the employers and employees have enough time to submit their claims. Even if the employee provides only a week's notice before confinement, for example, the employer has three months to submit claims as the deadline is one month after the expiry of the maternity leave. But, again, we will be flexible if there are valid reasons for late claims. In other words, we will not penalise people as it were. We want to pay them. We want to make sure that this scheme works. Wanting to have children and wanting to build a family is a very personal choice. We cannot demand it by fiat. No government can demand it by fiat. It has to be a personal choice. But the Government could facilitate and encourage by having schemes like this. Our feedback has been that families or parents who have their first child, or want to have their first child, usually do not have financial difficulties. They want to have their second or third child, but baulk at it either because of financial or other constraints, and this Bill will try to address that financial obstacle of parents. On the question of rights of employees, yes, the rights of employees are protected and, as I mentioned earlier in my speech, the Bill has provisions to punish errant employers who do not pay the maternity benefits to their employees. In fact, it is the same in the Employment Act too. Mr Noris Ong asked what the specific details are. Sir, the details of the scheme will be released soon by my Ministry. But let us start with what we have first, before we extend it to other uses. We must realise that this is something unique. There is no precedent for such an Act here, so we will have to proceed slowly, and we will have to modify and fine-tune along the way. The low-income group will not be at a disadvantage, because the co-saving principle is important to emphasise the primary responsibility of parents to care for their children. The co-saving period actually allows parents the time to save and to make deposits. For paternity and other leave, I suggest we stick to the present measures first before we review the leave provisions further and consider changes. As for subsidies for childcare operators in CBD, the Ministry actually already has in place provisions to encourage employers to set up creches and childcare centres at their workplace. For example, we give capital grants for conversion of premises, and for furnishing and equipment, if they want to turn part of their premises to childcare centres or creches. We also have tax incentives for employers who set up childcare centres in their workplace. With regard to foreign maid levy, as you know, it is being paid to the working mother, and it does not stop the working mother from using whatever savings there are from the levy, for the rest of the family. In any case, the foreign maid levy is beyond the scope of this Bill. It is not to modify, change or improve the scope of the maid levy. As I mentioned earlier, Sir, having children and raising a family are ultimately personal decisions. The Government can and will try to help to facilitate, and I can assure the House that we will be as flexible and as generous as we can. We all want children. We want children to be a joy, not just another burden to the family, and we want our children to feel wanted. Any sacrifice that parents make in raising them must be a labour of love and an expression of love. And the Children Development Co-Savings Bill, Sir, is one of the many measures and instruments that we have and would put in place to achieve these ends.

Sir, can I clarify three questions? I am still not convinced why this Bill cannot cover all women and all births. I am not satisfied with the answer. The Minister also said that this Bill precisely is not just about numbers. I wish he would clarify a little more on this statement. If it is a stillborn, the Minister said that maternity leave will be given to help the woman to recuperate. I would like to know whether it is paid maternity leave. The third question is: would the Minister influence and appeal to the public hospitals not to increase hospitalisation charges for baby No. 4 and above?

Sir, this is precisely what we are talking about, ie, it is not just a question about numbers per se, and I would like to refer to what Mr Noris Ong said, about having three or more children, if we can afford it. This means, as I mentioned just now in my speech too, that we do not want children to be a burden. We want children to be wanted, we want children to be loved. So we must make sure that children whom we bring into this world, will be children who will be loved and will not be a burden to the family. And we must make sure that the parents can cope with taking care of their children. That is what I mean by it is not a question of numbers. With regard to stillborns, I am not too sure, but I think it will be paid maternity leave. With regard to whether I would ask the hospitals to extend this to cover the fourth child, I would have to speak to Mr Lim Hng Kiang, the Minister for Health. By the way, the work group on this also includes representatives from the Ministry of Health. Mdm Claire Chiang See Ngoh rose -

One last clarification.

Sir, I am sure those mothers who have more than four children want their children because they are loved and because they want the children. Who is to decide then whether those children are loved and wanted? And if the mothers say they are willing to have the fourth child, would the state not support her?

At present, Sir, the policy is we will support up to three children.

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

Sir, I think we have all had a fairly long day today, and I do not intend to make a long speech. I will leave the best speech to the last. I just want to thank the Speaker and the Deputy Speaker for listening to the hundreds of speeches made by the MPs and the replies given by the Ministers. It has been a very long sitting. I am sure we have heard exhaustive replies concerning many issues but, despite this, MPs do not seem to get tired. Just by looking at the number of speeches made on the seven Bills, a total of 19 apart from the two Supply Bills, in addition to those by the Ministers in their Second Reading, I think we have covered quite a lot in the last four hours. So, on this note, I beg to move, That Parliament do now adjourn to a date to be fixed.

Hon. Members, during the tea break, the Leader of the House asked me if I would be having the last word. He did not exactly say that I should make a short speech, but he did mention to me that it has been two weeks of many, many speeches, and he reminded me that today would be a long day. But have no fear, hon. Members. As you are all aware, I am not well-disposed towards lengthy speeches, from me or from others. It is the tradition at the end of the Budget debate for the Speaker to say "Thank you" to all of you, and I always make it a point every year to tell you how interesting I find your speeches except that, every year, when I say this, as I look around at your faces, I cannot help but get the feeling that some of you are not quite convinced by what I said. In fact, somebody asked me a while ago why is it that your Deputy and you look so expressionless at times. I think he was trying to tell me in his own polite way, "Why do you look so bored?" But, hon. Members, far, far from it. It is just that both my Deputy and I are not, shall I say, well-inclined towards displaying visual expressions of exuberance, at least not in the Chamber. Some of you have been unceremoniously "guillotined", and I do extend my apologies for that. But some things in the House - and the Committee of Supply is one of them - have to be regulated with a kind of precision clockwork, and that is something I am quite familiar with, as you know. So, if we had to cut you down, and I know it is very painful, especially when you are just reaching that high point in your speech, to be told that time is up, again, our apologies. Once again, hon. Members, I thank you for your cooperation and for the effort that you have put in during these past two weeks. Thank you very much. [Applause.]

Resolved, "That Parliament do now adjourn to a date to be fixed." - [Mr Wong Kan Seng]. Adjourned accordingly at Four Minutes to Seven o'clock pm to a date to be fixed.