Hansard, 2002-12-05

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated: FromTo Name(2002)(2002) Mr Charles Chong28 Nov1 Dec Dr Amy Khor2 Dec- 6 Dec18 Dec Mr R Ravindran3 Dec7 Dec FromTo Name(2002)(2002) Mr Arthur Fong3 Dec6 Dec Ms Olivia Lum Ooi Lin5 Dec- Ms Indranee Rajah5 Dec11 Dec Mr K Shanmugam5 Dec- A/P Low Seow Chay`6 Dec10 Dec 19 Dec23 Dec Mr Gan Kim Yong8 Dec22 Dec Dr Tony Tan Keng Yam9 Dec11 Dec 27 Dec31 Dec Mr Ahmad Khalis bin Abdul Ghani11 Dec15 Dec 18 Dec23 Dec Dr John Chen Seow Phun12 Dec27 Dec Mr Ahmad Md Magad14 Dec19 Dec Mr Yatiman Yusof16 Dec26 Dec Mr Chay Wai Chuen16 Dec27 Dec A/P Ho Peng Kee18 Dec31 Dec Dr Lee Boon Yang23 Dec31 Dec ABDULLAH TARMUGI Speaker Parliament of Singapore

asked the Minister for National Development, if the Lift Upgrading Programme (LUP)'s main objective is to provide barrier free access to all residents in light of our ageing population, will his Ministry consider (a) extending the Programme to all HDB blocks without the need to vote; (b) if voting is insisted upon, setting it at a simple majority rather than the current "YES" vote of 75%; and (c) if the 75% "YES" vote is insisted upon, conducting a re-poll of those blocks with lower than 75% as this may not have been reached not because of "NO" votes but because some residents have not voted.

Mr Speaker, Sir, the Lift Upgrading Programme (LUP) was introduced in 2001 to provide flats in high-rise HDB blocks built before 1990 with direct access to a lift, as long as it is technically and economically feasible. It was implemented in response to requests from Members of Parliament for more and earlier lift upgrading works to provide greater convenience to the residents, especially the elderly. As lift upgrading is very costly and heavily subsidised by the Government, one of the requirements is that all benefitting residents must vote and co-pay for the programme. This is to give HDB residents a sense of ownership of the programme and ensure that those who stand to benefit consider carefully the need or the desirability for the upgrading works in their block. The same principles have been successfully applied to the Main Upgrading Programme. It is important that the Government has a clear mandate from those who benefit and have to co-pay before proceeding with the upgrading works. Under the Housing and Development Act, the legal requirement is to have at least 75% of those who are eligible to vote to agree to the lift upgrading works before they can be carried out. This is clearly indicated in the LUP brochures given to eligible households. As every single vote is important, all eligible HDB residents are encouraged to come forward to vote during the LUP polling. Those who cannot be personally present during the exercise can cast their votes through a proxy. However, those who choose not to vote, even though they are advised to do so prior to polling, will have their votes registered as a "No" vote. In the event that a polling falls short of the 75% mark, the outcome of the polling exercise must be respected and safeguarded. There are no legal provisions under the Act to allow for a re-poll.

Sir, is the main objective of LUP not to provide 100% barrier-free access for our residents in view of the fact that our population is ageing? Therefore, if that is the main reason, is there really a need to have 75% support or "Yes" vote? Would the Ministry consider lowering this requirement because, at the end of the day, what we want is 100% lift access for our population which is ageing?

Sir, there are actually two points. Let us deal with the first point about 100% barrier-free access. In my earlier reply, I said that we would aim to provide convenient access where it is technically and economically feasible. I do not believe it is tenable to aim for 100% access at all costs and disregarding the technical aspects and indeed the preferences of the residents in any particular block. You must understand that HDB blocks have been built with a variety of housing forms. Not all blocks are standard blocks with common corridors. There are blocks with staggered configurations, in which at the time they were built the priority was given to privacy. It is not a simple exercise of saying that there will be 100% access for everybody at all costs regardless of the preferences. There are still residents in some of these blocks who prefer not to have a new lift shaft. Some of them claim that it obstructs their view and some of them do not feel that it is an essential item. It is a convenience and not something which they are willing to pay that amount for. The next figure, which is the second point, is the 75% level. I think we can argue whether it should be 51%, 65%, 75%, 90% or 100%. But the point is that once Parliament has passed a law, in effect, setting a certain threshold, then that threshold has to be respected. If you say that we should make it 74.5%, then you set a new threshold. But once that new threshold is set, that threshold has to be implemented and implemented exactly, fairly and transparently. I empathise with the residents in the block concerned. But there are clear legal principles involved here which I think should be best adhered to.

Sir, as I see it, LUP and MUP are quite different. Under MUP, we add in extra rooms, etc, so as to enhance the value of the flat. But under LUP, for those blocks of flats which are technically and economically feasible, should not MND consider looking at the policy to see whether there is a need to set a "Yes" vote at 75%, because the objective of LUP is quite different from MUP? The objective of LUP is to improve accessibility. So for blocks of flats which are technically and economically feasible, maybe a simple majority would be good enough for LUP.

Mr Speaker, Sir, in both MUP and LUP, we have set a 75% threshold. So there is no difference in that respect. I think it is important to understand why we have set a 75% threshold. Once a poll is conducted successfully, even those who are not in favour of upgrading, whether it is MUP or LUP, will have to pay for it. This is not a trivial exercise. We believe that there should be polling so that this reflects the desire of the vast majority and they will then have a sense of ownership and a stake in the decisions which are being made by the community. I think this is the correct direction. But having said that, you want to ensure that that majority is a significant majority because their decisions will have a financial impact on the minority who may not be in favour of upgrading. For those reasons, I think it is safe and reasonable to set it at a significantly high level and 75%, as far as we are concerned, is the right level at this point in time.

asked the Minister for Manpower (a) whether labour suppliers who have been permitted to bring in foreign workers for one job can be permitted to deploy them for another; (b) if deployment is not permitted, how many such breaches have his Ministry dealt with in the past three years; and (c) are there plans to step up enforcement actions against such breaches.

Mr Speaker, Sir, work permits are issued to foreign workers to work for the employers stated in the application. Employers of work permit holders are not allowed to deploy their foreign workers to work for another employer. Employers who breach this work permit condition will be prosecuted under the Employment of Foreign Workers Act. In the last 3 years, we have prosecuted about 730 employers or individuals who have illegally deployed or abetted in the illegal deployment of work permit holders. We take a serious view of such breaches of the work permit conditions and will continue to take enforcement actions against such employers.

Mr Speaker, Sir, may I ask the Minister what are the key reasons that these employers cited for redeploying these workers?

Sir, if the Member is referring to those who were prosecuted for illegally deploying their work permit holders, the main motivation is to get around the work permit regulation. They have brought in workers supposedly for their own jobs and perhaps they have brought in more workers than they need. They have overstated their demand or after bringing in the foreign workers they find that they may not have jobs that last long enough to keep them fully employed. There may well also be a demand from the illegal employers of such redeployed workers who hope to get illegal workers without having to pay for the levy because they can get the original employer to palm off these workers to the establishment without having to pay the work permit levy for such foreign workers. In fact, there are many reasons why people try to get around this provision but we will continue with our enforcement action against those who are trying to illegally deploy their work permit holders. We will also remind employers that they can employ a foreign worker if they have applied for a work permit for the foreigner. Just because a foreigner holds a work permit does not mean that he is entitled to work for anybody in Singapore. The work permit is specifically issued to a foreigner to work for a particular employer.

Sir, I understand that these foreign workers had to incur a very high cost to come over here for employment. If our employers are not sure that they can get jobs that can last long enough to fulfil the two-year employment period, then something has to be done, to be fair to these workers who have come all the way from their home country to work here and contribute to our economy. I think the figure of 730 employers being prosecuted is quite a big number. Would the Ministry consider enhancing the penalty so that the employers would not abuse the system?

Sir, the Work Permit Department has introduced criteria such as the value of work on hand, particularly for the construction sector, and also the duration of the available project. For instance, a contractor who applies for non-traditional source workers must have at least six months of contract work available before the application will be considered. We will look into the current regulation to see how we can further tighten the procedure to prevent abuses and to minimise exploitation of the foreign workers. Enhancing the penalty is certainly one of the options that we will consider.

asked the Minister for Manpower (a) how does his Ministry ensure that employers provide decent and reasonable living conditions for their foreign workers and (b) in the past three years how many cases of employers, who failed to provide the required accommodation, have been investigated and dealt with.

Mr Speaker, Sir, under the conditions for the issue of work permits, all employers of non-traditional source workers have to provide accommodation and maintain their foreign workers during their stay in Singapore. However, some employers have resorted to housing their foreign workers in overcrowded and unsafe living conditions. The problem is particularly pronounced in the construction sector which is also the largest employer of non-traditional source of foreign workers in Singapore. To arrest this problem, the Government has announced in June this year that construction companies housing their foreign workers off-site would have to house them in approved and purpose-built dormitories. From 2004, this will be spelt out as a work permit condition. I understand that the BCA is currently working on setting basic living standards for on-site housing for construction workers. Although the new work permit requirement will only be imposed in 2004, construction companies should take immediate steps to regularise the housing condition for their foreign workers. During the interim period, the URA will conduct inspections to detect workers who are not housed in approved premises. Construction companies caught housing their foreign workers in such premises will be warned to take remedial action. Recalcitrant employers who continue to house their foreign workers improperly will not be allowed to recruit new foreign workers. Since June this year, 26 construction companies have been caught housing their foreign workers in unapproved premises and were issued with warning letters.

Mr Speaker, Sir, in the Budget Statement in May this year, I announced tax changes to support our economic restructuring and to secure economic growth. We must bring down direct taxes to stay internationally competitive, attract investments and create jobs. And to make up part of the loss in revenue, we have to raise indirect taxes; in other words, the GST. We have cut corporate and top personal income tax rates to 22% for the Year of Assessment 2003, and we will lower them further to 20% within three years. At the same time, we announced that we would raise the GST rate from 3% to 5% on 1st January 2003. To help Singaporeans adjust to the higher GST, the Government implemented a comprehensive offset package. This includes the Economic Restructuring Shares (ERS), rebates on rental and service & conservancy charges (S&CC), plus full absorption by the Government of GST for subsidised healthcare and state education charges. A full listing of all the assistance measures is provided to Members as an Annex (Cols. 1987-1988) to this statement. I have left copies on your seats. And you can see that the offset package costs $4.1 billion, and is enough to offset the additional tax that nearly all Singaporeans have to pay for at least five years and, in many cases, 10 years. Annex - GST Offset Package At the time of the Budget Statement, expectations were that the US economy would pick up this year, and the Singapore economy would also complete its recovery from the sharp downturn in 2001. As events have turned out, both the US and the Singapore economies have done less well than expected. The US economic recovery has been weak and below expectations, even though the US has avoided entering a second recession. As Alan Greenspan recently said, the US economy was "going through a soft spot". Likewise, the Singapore economy is now projected to grow only by 2-2.5% for 2002 as a whole, at the low end of the 2-4% that we had projected in May. Going forward, prospects for 2003 are still uncertain. The risks are not only economic, but also security and political, eg, the impact of another major terrorist attack, or of a war in Iraq. The EU and Japanese economies are slowing down. In the US, most analysts expect a gradual recovery, supported by steady growth in consumer spending and a more substantial pick-up in corporate investment in the second half of 2003. In recent weeks, US economic indicators have improved, and the mood has become more optimistic. However, some respected analysts still worry that the US could yet experience a second recession next year. Singapore has been affected not only by the slow US recovery, but also by the problems in Southeast Asia, including the terrorist attack in Bali. Hence the downward revision of this year's growth estimate to 2-2.5%. However, early indications are that we will enjoy positive growth in the fourth quarter. Our exports to key markets are growing, albeit slowly. Non-oil domestic exports rose by 6% in October, and improved further in November, according to preliminary estimates. The manufacturing sector has also continued to grow. Output rose by 12% in October, similar to the 11% in September, driven by an increase in semi-conductors, petrochemicals and pharmaceuticals. On a month-on-month basis, manufacturing output increased by 1.3%, the first increase since May 2002. For 2003, MTI has forecast growth of 2-5%, although we cannot yet be certain how things will turn out. From a fiscal point of view, the tax changes announced in May remain appropriate despite the less vibrant economic conditions today. We should not hold back on our restructuring on account of the adverse climate; indeed, this makes it even more important for us to press on and strengthen our competitiveness and resilience. To individuals, because of the ERS and other rebates, the GST increase should not cause hardship to any Singaporean, or result in consumers cutting back on spending. To the Government, the combination of direct tax cuts to 22% and a GST increase to 5% plus the first tranche of the ERS shares together result in a revenue loss of $1.2 billion in the first year (2003). Therefore, the overall effect of the tax changes and offsets on the economy is expansionary, rather than contractionary. Some have suggested that the Government should defer the GST increase completely for 12 months or longer. But this approach risks leaving the Government with insufficient funds for urgent needs, especially in education, healthcare and defence. And if later we have to defer the increase again, the Government may wind up with a structural deficit, which would have serious consequences for the exchange rate, for inflation, and for the value of Singaporeans' CPF savings. I have therefore decided against deferring the GST increase. However, I am also mindful of the current mood of apprehension and uncertainty among Singaporeans, because of the economic troubles this year and the security concerns in the region. MTI's recent downgrading of this year's growth estimate, and the NWC's recommendation to extend the wage freeze for another six months, also contribute to the sense that things are not yet back to normal. We do not want to add to the burdens and worries of Singaporeans at a difficult time. The psychological impact of the GST increase could result in consumers cutting back on spending and business putting off investments. The uncertainty over economic prospects for next year, as to whether and how soon the US and the Singapore economies will recover, reinforces the need for caution. Although, on balance, another downturn does not appear likely, the possibility of one occurring still cannot be ruled out and it would be prudent to be cautious. I have therefore decided to phase in the increase of the GST rate, and implement it in two steps instead of one. The GST rate will go up from 3% to 4% from 1st January 2003, and then from 4% to 5% from 1st January 2004. I believe that a phased introduction will have more impact than proceeding with the full tax increase to 5% and enhancing the offset package. Many Singaporeans have not made the link between the benefits they will receive from the offsets, and the additional GST they will have to pay. Phasing in the tax increase is a more direct and easily understood signal. Despite the phased introduction of the GST, I have decided to maintain unchanged the offset package announced in Budget 2002. I am happy to announce that Singaporeans will receive the original amount of Economic Restructuring Shares in January 2003, and the same schedule of rental and S&CC rebates as announced earlier. I have also decided that the increase in the Public Assistance rates and the Singapore Allowance paid to Government pensioners will proceed in January 2003 by the full amounts originally planned. The details will be announced next week. The lower GST increase will cost the Government $163 million in FY2002 and $488 million in FY2003. Effectively, the Government will be putting an additional $650 million into the hands of Singaporeans. As a result, the Government is not likely to have any budget surplus in FY2003. At best, we will be able just to balance the budget. All Ministries will have to economise on spending and trim back on non-essential programmes. I hope the phasing in of the GST will lessen the burden on Singaporeans, and help them cope with the uncertainties that we are now facing. This change is a fine-tuning to the original tax restructuring plans. The Government is making a tactical course correction while still heading for the same destination. We remain committed to bringing down top direct tax rates to 20% within three years, and to offer a more attractive business environment to bring talent and investments to Singapore. Mr Speaker, Sir, I am now submitting an amendment to the GST (Amendment) Bill, to provide for the GST rate to be raised in two steps, from 3% to 4% from 1st January 2003 and from 4% to 5% from 1st January 2004. I will ask the House to consider the amendment in the Committee Stage of the Bill later this afternoon.

Mr Speaker, Sir, I am very pleased to hear from the Deputy Prime Minister and Minister for Finance that he has decided to phase-in the increase in GST from 3% to 4%, and after one year, from 4% to 5%. I believe this decision will be well received by the people and this House. Even with this phased-in approach of a 1% increase, may I ask the DPM whether it would still have a dampening effect on the economy, in view of the fact that the economic prospects are currently uncertain. I am very concerned whether a GST increase would have a further dampening effect on the economic downturn. My second question is with regard to the point made by DPM that there will be deficit budgets for the following two years. I think that was what he said. Would it also impact the Government's coffers, and how does the Government intend to deal with the deficit budget? Is it going to come from the national reserves? Thirdly, I would like to ask a question that I asked previously in this House, whether the Government would consider reintroducing the Economic Downturn Relief Scheme that had been stopped at the end of November. This scheme is useful because with the continuing economic downturn, more people will be facing unemployment. With the scheme re-introduced, there would be some form of relief for them.

Mr Speaker, Sir, Mr Leong Horn Kee asked whether this 1% increase in GST will still be a dampener. I do not believe so because, if you look at the sums, it is quite clear that, in fact, far from dampening the economy, we are administering a major stimulus to the economy. First of all, the reduction in personal and corporate income taxes is going to pump $1.3 billion into the economy. This will be offset by the GST increase, which will now only raise $650 million. On the other hand, we are going to put into the economy, through the Economic Restructuring Shares on 1st January 2003, about $1.2 billion. So, actually on a net effect, if you add up these sums, we are putting $1.8-1.9 billion into the economy next year. Far from dampening the economy, the overall impact is highly expansionary and stimulative. Secondly, if we have a deficit, how would it be funded? I think, best of all, it is not to have a deficit, then we do not have to worry about funding it. I did not say that we would have a deficit. I said we are not likely to have a budget surplus and, at best, we would be able to just balance the budget, and we will try hard to do so. Thirdly, should we re-introduce the EDRS? The EDRS was introduced last year as a one-year programme specifically to deal with the very sharp economic downturn. People were out of work. They needed help. It was something of an emergency. We had a package to deal with that. As Members know, over the last few months, applications to the EDRS have tailed off significantly. I think the most urgent cases have already been seen to, and people have other sources of assistance available to them - from the CCCs, CDCs and welfare organisations. So the EDRS demand has tailed off and we decided, at the end of the one-year, that we should let it lapse. Because if we do not let emergency programmes lapse, when emergencies pass, the next time we have an emergency, we have to pile on additional programmes, and eventually end up with more and more items meant to deal with previous problems. As the position stands now, we are not in a recession. Our economy is growing. It has been growing in the second quarter and third quarter. I think it is growing in the fourth quarter, and people are being looked after. Going forward, we will monitor the situation. If we have another sharp downturn, another economic crisis, we will look at the need for an EDRS. But, as of now, I do not believe that we need one.

Mr Speaker, Sir, first I think the new announcement would be most welcomed by the people and the business sector, and I believe this is a very clear and unmistakable signal that the Government is hearing the voice of the people, and addressing the people's concern. Not only is the phasing in of GST, it is also having the offset package remaining. I think it is a double blessing, and I believe it will boost public confidence and market confidence as well. We should congratulate the Government for making such a bold move and I would ask whether the Deputy Prime Minister would continue to monitor the situation and adjust, if necessary, with other measures to move the business sector, and have more money in circulation in the market.

Mr Speaker, Sir, we will continue to track the state of the economy very closely. This is a time of considerable uncertainty. It does not mean that all the signals are black. Two or three weeks ago, I think, the mood was significantly gloomier, but looking at what has been coming out, the data, the indicators from America, there has been a significant pick up in performance and in sentiments, and similarly in Singapore, from our own indicators. How it goes forward next year it is very difficult to say. Normally when the Ministry of Trade and Industry puts up a forecast for next year they plus or minus 1% and you more or less know where it will arrive. This year, they set 2-5%, which means it is really a very wide uncertainty and it is an educated guess of how things will turn out, because it just does not depend on the economic trend, but also on the security situation and political developments. So we will keep on tracking what is happening very closely, and if there is a need to make further adjustments, you can be sure that we will not be slow in noticing it and doing so.

Mr Speaker, Sir, first allow me to applaud the Government's decision to stagger the GST increase. In fact, the views and concerns of workers have been adequately addressed. At the same time, I am also glad that the ERS shares will be paid accordingly as announced earlier. But I have one other request, which is that the Government will consider and monitor the economic conditions. And, if there is a need, make a further review whether there is a need to introduce GST further to 5% in 2004, but definitely the economic condition in 2003 has to be taken into account. I am also glad that the workers' views and points have been carefully considered by the Government and I do not think they have been put aside by the Government. They are very happy and I wish to thank, on behalf of all workers, the Government's decision and to bring about a relief to workers during these difficult times.

Mr Speaker, Sir, I thank Mr Nithiah Nandan for his full support for this move. Next year is 12 months from now, but we have to plan on the basis that we are going to proceed with the second phase of the increase because next year the increase would already be twelve months late. But I understand his concerns. We will track what is happening in the economy next year, very closely, and if need be, we will make many adjustments to the economy to keep it on track. But the GST programme, we have made rephasing, and we have to be very careful that the rephasing does not become an indefinite postponement, which would cause us a lot of trouble.

Mr Speaker, Sir, first I would like to congratulate Deputy Prime Minister Lee for having taken this approach. In fact, there was some betting going on that, knowing the character of the Government, it would be quite out of question for the Government to actually consider any relent of the decision already taken. But the very fact that this phase-in had come in, I think that for some people who have gone on to this bet, some are going to win and some are going to lose. The phase-in only demonstrates that we are really remaking Singapore and that we are mindful that the audience is a very different audience, and the Government is actually putting the ears to the ground to really respond to the needs and calls of the people. Having said that, I am very happy to note that the full package of the enhancement will be implemented with effect from 2003. But if the economy does not turn around for the better, say, in 2004 and the other 1% has to be phased in, and there are cries for another enhancement package to offset the additional increase of 1%, would the Government consider the request?

Mr Speaker, Sir, first of all, I would not advise anybody to bet against the Government. Secondly, on the hypothetical question, we will have to wait and see. We are not magicians who can show you empty pockets and put our hands in it and produce more money, but we will have to wait and see what the state of the economy is next year. As always, making an adjustment to the GST increase would be our last choice. We will try to do many other things first before we consider that.

Mr Speaker, Sir, I just have two questions in relation to this revised package. There was a story in the papers about the VWOs and how GST is imposed on the funds raised. I would like to know how, since 1999, the Government grant has stopped to offset such GST hikes on the donations raised by the VWOs. In this current climate when I think the charity dollar is stretched even more, how can the VWOs be helped where GST is concerned? Secondly, is it possible, perhaps in the year 2004, to consider splitting the GST into taxes on essentials and non-essentials, similar to what is practised in Britain? I am also looking at the offset package grant to CCCs - $15 million spread over five years, which means about $3 million - for quite a number of people. There is already a lot of generosity, but I still wonder whether in the current climate it is perhaps still not too sufficient.

Mr Speaker, Sir, I think the VWOs is a separate issue. The transitional arrangement was made for them when we first introduced GST and this transition arrangement is phasing out. If we need to assist the VWOs it is best for us to assist them directly with grants and other forms of assistance, rather than putting it into the tax system of the GST. That is what we have done with the foreign worker levy because we used to exempt them from the foreign worker levy, now we subject them to the levy but we give them a grant, and it is up to them whether they want to employ a foreign worker or they want to get a labour-saving equipment, or whether they want to find a Singaporean and do double the work, it is up to them. So I think that should be our approach to VWOs. On whether to split between essentials and non-essentials, this is an issue which we have discussed many times when we first introduced the GST and again when we raised the issue of GST this year. And we have taken the approach of having the GST applied to all products in Singapore, whether essentials, non-essentials, goods, services, high-end, low-end, everything. And there is a reason for this. The reason is that we want to find the best way to help the lower income people bear the tax and to make ends meet in Singapore. We impose the GST, it imposes a burden on them. What is the best way to help them ease this burden? It is to identify who the lower income groups are and target the assistance at them. So the ERS, the S&CC package, plus the rental package, if you add it all together, in fact, the people living in the one and two-room flats get the most, three-room a bit less, and four-room, and so on. Essentials are not just bought by poor people. Everybody buys essentials. Let us say food. Poor people buy food, middle income people buy more food, rich people buy even more food. So if you decide to exempt food, for every one dollar which helps the lower income, you have to spend nine dollars helping the non-lower income. So the expense of this tax expenditure is much more and the result is that revenues are less, and the result of that is to keep your revenues even, we will have to push the GST rate, instead of being 5%, it will have to be 6%, 7%, 8%, or if you take the British example, because you said the British have such exemption, 17% GST. So it is not a good way to help lower income people. Therefore, we have decided we will have a GST which covers everything and if we have target groups which need assistance, let us help them directly. I think that is the best way to do it. Ms Braema says why not be a little bit more generous. ERS is good, more is better. Well, more is always better but, in fact, we have been quite a lot better already because although we say ERS is five years' worth of GST for everyone, actually for the lower income it is, in many cases, 9-10 years' worth of GST. So, in fact, you are well looked after, and if you are an old person, 10 years is a long time. So, this is something which we have already seen to. If it is still not sufficient because conditions are very hard, I think we can do more, but we should target it specifically rather than go on the basis of essentials and non-essentials.

Mr Speaker, Sir, first of all, I would like to take the opportunity to applaud the Deputy Prime Minister, Mr Lee, for this phased increase in GST. I had actually hoped for a full deferment until the economy recovers or for at least one year but, as the saying goes, "if you cannot get a big fish, at least ikan bilis is still better than nothing." In a sense, it is better than a full increase of 2%, and I think many Singaporeans will appreciate that, especially those from the retail sector. However, I want to say also that we from the Opposition do not mean that we are always opposing for the sake of opposing, and in this case if the Government had actually listened to the people and deferred it, we would be very appreciative and support it. If the economy turns for the worse next year, and if things become worse, I hope that the Minister would consider cutting the increase back to 3% or even lower, or to have additional off-budget measures to help Singaporeans to tide over the difficult period next year.

Mr Speaker, Sir, I would just thank Mr Steve Chia for his support for my $650 million ikan bilis.

Mr Speaker, Sir, let me join my other colleagues in thanking the Deputy Prime Minister and Minister for Finance and the Government of Singapore for listening to the voices of the people in asking the Government to take into consideration the current economic downturn and the hardship that they are faced with. I can quite agree that it is not really ikan bilis, it is a lot of money that the Government has to forgo in terms of the budget as a result of this 1% increase. I would like to ask, and I am sure, Mr Speaker, Sir, that the small businesses, the retailers, are the people who would be very happy because now, with the smaller increase, their sense of consumers not buying enough would be somewhat abated. But I would like to ask the Government to continue to look into this area: how to help the small businesses and retailers. And, in particular, I would like to ask the Deputy Prime Minister and Minister for Finance that for those who are having transactions with the Government, or who provide the Government with goods or services, or do any form of construction or public works for the Government, the Government could also consider expediting payments for them, for instance. I am not suggesting that payments are slow but, I think, many are faced with cash flow problems and for those dealing with the Government, if the payments are made much more promptly, that will certainly help them.

Mr Lee, can I suggest that we take all the questions at one shot?

All right.

Mr Speaker, Sir, I had said previously in the House that one of the ways for the Government to ensure that the Budget is properly balanced is not merely to increase tax, but also to watch out for its expenditure. I was heartened to hear from the Deputy Prime Minister earlier that he would take steps to ensure that the expenditure is properly controlled. But I think it takes more than reassuring words from the Deputy Prime Minister to ensure that this is carried out. I am afraid that years of strong economic growth and years of strong surpluses may have set the free and easy mentality in some of our Ministries. I do not wish to repeat what I said during the Budget debate because I have no new seven wonders to reveal today. But I was quite taken aback, like many other Singaporeans, when we heard that the Land Transport Authority was building a $500 million headquarters and I think because of the public ruckus, the whole project has been shelved. But I was also very concerned last month when I read that for the opening of the Esplanade - Theatres on the Bay, we spent something like $13 million and was all blown away in 23 days. And yet, on the other hand, the Government announced the increases in hospital charges, raising more money from the sick to the tune of $12 million a year. So I want to ask: sometimes have we got our priorities correct? Therefore, I would like to ask the Deputy Prime Minister, in spite of what he has told us and his reassurance to the House, what concrete steps can really be taken by the Government to ensure that the cost of Government is well controlled and, if not in a crisis, can it be reduced even further? Because, like all businesses, when we are faced in a difficult situation, one of the things that all businessmen do is to cut back on expenses.

Mr Speaker, Sir, may I respond first to Mdm Halimah. She talked about the problems of small businesses and retailers. We are very much aware of it. I think it is not just because of the GST increase. Even this year, without any GST increase, they have been having quite a slow and difficult time. It is partly a structural problem because there are too many of the businesses which are in HDB estates, ie, there are whole rows and many of them are selling similar goods. It is partly a matter of change in habits and customs of our younger generation. Instead of people with two-income households, instead of shopping in the wet market every day, they will shop once a week in the supermarket and put the stuff in the freezer, and they are going for a different range of goods and different range of services. Or they may even go to JB, or some place, to shop instead. So it is a structural problem and it is one which is being studied by one of the Economic Review Committee working groups. They have some ideas to ameliorate the difficulties. But I do not think there is any quick solution to make the sector bloom and prosper again overnight. As for transactions with the Government and expediting payment, I agree with Mdm Halimah that it is important that Government be a prompt paymaster. I am not aware of any complaint that the Government has been slow. If Mdm Halimah, or any of the Members, comes across any such cases, please let me know and I will look into it. It is our practice to administer and pay promptly. It is most important to our reputation that we do because, if we start paying slowly, then whoever is providing the services will start factoring in that and the interest cost in his next tender to us. Then we will have a problem. I was just discussing with my staff yesterday evening and they told me that in fact many of the companies prefer to do business with the Government, precisely because of this reason, they can be sure to pay you and they would not drag the matter. Whereas if you do business with the private partner, if he runs into financial difficulties, you have a problem. And they have confidence that the Government will not run into financial difficulties, and it is my job to make sure the Government does not run into financial difficulties, which is why we are proceeding with the GST increase to four percentage points. I agree completely with what Mr Tan said, that it is not just what I said, but also how we practise it and how the civil servants internalise with the need to be parsimony and to be careful with money, and to spend as if it is effortless for MOF to produce the next dollar, and we are in different circumstances and we have to be very careful. As I said, we are going to have a very tight Budget next year and the Ministries are going to cut back both on substantive programmes as well as on frills. On education, for example, they have been planning on a certain percentage of GDP to spend. But we have also been expecting a certain rate of growth of GDP, that if you have 5-6% growth per year, therefore, education will have 5-6% more to spend per year, plus extra percentage on that because we think this is a priority area. Now, our base has shrunk. The GDP is growing less rapidly. Educational need has not shrunk. Your children still need good schools, computers, laboratories. You still want more people to go to university and more people can benefit from going to university. All these cost a lot of money. How can we afford as much of this as possible while living within our means? They will have to cut and it will be things like travel and perks, and non-essential things, that is, when you renew your computer, and so on, every two years, it may be every three or three and a half years. When you are renewing your school building, instead of 20 years, it may be 25 years. We will have to live within our means. These are adjustments which we have to make. When they opened the Esplanade building, they also have to live within their means and decide what they are going to do. The Esplanade, which Mr Tan raised, is an issue. Before we had the opening ceremony, we considered this matter and we discussed it carefully with MITA because, in fact, we are doing this at a time when the economy is down, the mood is down. We do not want to be extravagant because we cannot afford the money. Anyway, it is a wrong signal to send to the people. And MITA understood this. On the other hand, they said, "We are making a very big step. We spent a lot of money building it. It is a long term investment. The purpose is not just for Singaporeans but really to register ourselves internationally." So we become one of the spots where people believe and know that there are cultural activities and it is a place which people want to come to perform. Therefore, you need a series of events to launch the theatre as well as the concert hall and to make ourselves known to Singaporeans and internationally, and it costs money. The fireworks cost money, yes. I would have preferred far fewer fireworks. But it is not the fireworks which are the most expensive thing. If you want to have Jose Carreras here, that costs money. If you want orchestra here, that costs money. A lot of it is sponsored, but some of it are operating cost. And that is why it costs a certain amount to have the festival which went to the opening ceremony. But Mr Tan's point is well taken and it is a message which the Ministry of Finance reiterated to all Ministries, including ourselves, regularly, and especially before next year's Budget.

Resolved, That, notwithstanding the Standing Orders, the second and third readings of the Supplementary Supply (FY 2002) Bill for FY 2002/2003 may be proceeded with immediately after the conclusion of the proceedings on the Supplementary Estimates of Expenditure for FY 2002/2003. - [Mr Lee Hsien Loong].

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

1.25 pm

Supplementary Estimates of Expenditure for the financial year 1st April, 2002 to 31st March, 2003, contained in Paper Cmd. 10 of 2002. Question, "That the sum of $1,200,000,000 for Head Z stand part of the Supplementary Main Estimates", put and agreed to. Question, "That the sum of $1,200,000,000 shall be supplied to the Government under the Head of Expenditure for the Public Services shown in the Supplementary Main Estimates of Expenditure for the financial year 1st April 2002 to 31st March 2003 contained in Paper Cmd. 10 of 2002", put and agreed to. Resolution 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 resolution. Resolution reported. "That the sum of $1,200,000,000 shall be supplied to the Government under the Head of Expenditure for the Public Services shown in the Supplementary Main Estimates of Expenditure for the financial year 1st April 2002 to 31st March 2003 contained in Paper Cmd. 10 of 2002", put and agreed to.

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

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

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 provision for additional expenditure of $1.2 billion to fund the first allocation of the Economic Restructuring Shares. As announced in my Budget Speech in May this year, the Government is giving out Economic Restructuring Shares to help Singaporeans adapt to the structural changes in the economy, especially the increase in the GST rate. Depending on the annual value of a person's home, each eligible Singaporean will receive $400 or $200 worth of the Shares in 2003. Additional shares on a one-off basis will also be given to those serving or who have served National Service. The Shares will earn tax-free dividends each year in the form of bonus shares, payable every year on 1st March from 2004 to 2008, when the Shares will mature. The dividends will be at a rate of 3% plus the real GDP growth rate for the previous year. There will be three annual allocations of the Shares. The first will be on 1st January 2003. This Bill is required to provide the funds for this allocation. Sir, I beg to move.

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

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. 1.30 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill will amend the Goods and Services Tax Act to give legislative effect to the following measures: a) To change the GST rate; b) To provide for the transition from the existing GST rate to the new rate on 1st January 2003; c) To zero-rate co-location web-hosting services and managed services; and d) To make explicit the Comptroller's powers to obtain information and records kept in electronic format or alternative media. Sir, I shall now explain the main amendments in the Bill. Increase in GST Rate I have earlier stated the Government's intent to amend clause 3 of the Bill to effect the amendment to section 16 of the Act to increase the GST rate from 3% to 4% for the year 2003, and from 4% to 5% for the year 2004 and subsequent years. I shall now explain the more technical points in the Bill. Transition to Higher GST Rate In view of the increase in GST rate, there is a need to provide transitional rules to prevent businesses from circumventing the time of supply rules. Under the time of supply rules, businesses may account for GST at the lower GST rate of 3% by issuing tax invoices to customers before the GST rate increase, even though the goods are delivered or the services are performed or the payment is made only after the GST rate has been increased. Hence, clause 5 amends section 39 of the Act to provide for the circumstances in which a tax invoice, issued before the date a change in rate comes into operation, ceases to have effect. Businesses will be required to issue a new tax invoice in these circumstances. Zero-rating of Co-location Web-hosting Services and Managed Services In a co-location arrangement, a service provider will generally require the customers to bring in their own server platforms and place them at his facilities. Where a local service provider provides web-hosting and managed services to an overseas customer in such a co-location arrangement, the services are standard-rated if the server belonging to the overseas customer is located in Singapore, and zero-rated if located outside Singapore. Zero-rating the entire web-hosting services and managed services provided to an overseas person, regardless of where the server is located, will promote Singapore as an e-commerce hub. Hence, clause 4 amends section 21 of the Act to provide for zero-rating of the supply of services to an overseas person in relation to computer server equipment belonging to that person which is co-located in Singapore. Clarification of Comptrollers' Powers Increasingly, business transaction information and data are stored in computers, electronic media and other alternative media. However, the Comptroller of Goods and Services Tax's powers to access and to seize such electronic records may be limited based on the interpretation of the current legislation. Therefore, clause 7 amends section 84 of the Act to clarify the powers vested in the Comptroller to access and seize such records kept in electronic and other alternative media. Sir, I beg to move. Question proposed.

Sir, I would like to put on record my support for the Government on the phased-in approach to the GST implementation. This phased approach to increase from 3% to 4%, and then from 4% to 5%, will lessen the impact on the lower income group and lighten their burden - the so-called psychological impact on the people. It also took into account the changing economic conditions and reflects the Government's sensitivity to our people's plight. Sir, I would like to join the other hon. Members who have spoken earlier in congratulating the Government and the Deputy Prime Minister for adopting this phased approach. I see great value in the sensitivity and financial prudence of the Government. It gives confidence to the people when dealing with Government bodies. In particular, I like very much the Deputy Prime Minister's message that Government bodies would have to cut back on their spending, so that the Government can maintain a balanced Budget. This financially prudent policy of living within our means is an excellent one to adopt. This is a very clear signal of the style of the Government: that it is a level-headed and clear-minded one which is at the same time sensitive to the worries of the people. It will strengthen the public's confidence in the Government. At the same time, the decision to retain the entire relief package, while only phasing in the GST increase, shows that the Government is also very generous in this instance to retain the measures to help the poorer people. Therefore, the Government has a feel for the poor. Sir, I would like to conclude by reiterating my support for the proposed amendment and the choice of the Government to adopt the phased-in GST approach. I am very gratified to note with pride that we have a rational and responsive Government in charge which is also closely attuned to the plight and worries of the people.

Mr Speaker, Sir, let me first, like other hon. Members of this House, thank the Minister for Finance for having listened to the people and modifying the planned GST hike. Mr Speaker, Sir, like education and many other issues before this House, the GST hike, which is what the Bill is concerned with, is, in my view, not "if" but "when" and "how". On the "if", the Minister for Finance has already given this House and the people of Singapore several reasons for the need to raise GST, such as the need to attract and retain talent, as well as the fact that we are increasingly facing an ageing population and that the tax base will diminish concurrently as the burden on public finances to fund health care rises. These factors, coupled with the anticipated slower economic growth in the medium term, produce compelling reasons why Singapore needs to broaden its tax base and increase indirect taxes like GST whilst reducing direct taxes. Sir, I would also like to note that with the increase in GST from 3% to 5%, our rate remains one of the lowest among nations that have implemented GST. For instance, the standard GST or VAT rate is 17 1/2% in the UK, 12 1/2% in New Zealand, 10% in Korea, 5-10% in Taiwan, 5% in Japan, and 7% in Thailand. The hike to 5% is, thus, not misaligned from this perspective. In fact, it is clear that almost all agree that the GST rate would have to go up. No question about this. The question is when. On the "when", coming after a series of price hikes in transport fares, utilities, parking charges and even garbage collection fees, the ground feel is naturally one of consternation, sharply heightened by the poor economic conditions and the spectre of even more unemployment in the streets. Although the Government has said that the offset package will more than cover the increase in GST and that it will be expansionary, many Singaporeans remain unconvinced, as the Minister for Finance has noted earlier. One Singaporean, in an unpublished letter to the press, noted that whilst more than a million CPF account holders have withdrawn their New Singapore Shares, stallholders have at the same time reported a drastic drop in businesses by up to 80%. Hence, he is sceptical that the offset package will be expansionary. In fact, I have had quite a number of residents who have asked me to appeal to the Town Council and Singapore Power, amongst others, to ask for deferment of payment until they have encashed their NSS or ERS. Thus, many lower income residents are in fact using the NSS and ERS as a lifeline to tide over their financial difficulties, and pay for essential household bills, school fees and textbooks. The expansionary impact of the GST offset package is thus likely to be less than expected. I note the oft-cited view that there is never a good time to raise taxes. Indeed, they say that death and taxes are the only two certainties in life. One argument for a 2003 hike is that foreign investors will lose confidence in the Government's ability to keep its word, since the hike was already announced in the 2002 Budget Statement as part of a package of measures to restructure our tax regime. Therefore, any delay could be construed by the international community as succumbing to people pressure against the long-term interest of the country. And because the Government is not populist, we will have to do what we say we will do. Sir, this Government is not one that reneges on its word. But I am proud to note that when the GST was first introduced in 1993, this Government promised to hold the GST rate at 3% for five years and it has kept its promise. On the other hand, breaking a similar promise now, ie, deferring the planned hike, would be easier to do because of the political backlash of being a promise-keeper. Nonetheless, Sir, I am delighted, and so are many other Singaporeans, that after habitually saying "The answer is no" and "The answer is still no" on many occasions, this Government is now finally saying "Let us consider because of the changed circumstances" and, indeed, it has modified the planned hike. I do not think that this means the Government is bowing to populist pressure. Rather, it shows that the Government is not afraid to bend, if it is satisfied that there are good reasons to do so and, indeed, there are good reasons. Sir, I believe that the votes - and, as Mdm Ho noted earlier, the bets - were split as to which of the two options was preferred. Nonetheless, I feel - and I think the Government feels that too - that there could be a tilt towards the phased-in scheme, which I am pleased the Minister for Finance has announced the Government has opted for. Phasing in shows that the Government is firm in its policy, yet flexible in responding to the economic and political environment. Most would welcome some reprieve, real or imagined, from the full increase in rate. As one retailer noted, "every bit helps". However, I would like to highlight that some businessmen, particularly those who are not registered for GST, feel that due to the poor economic conditions and strong competition, they may be forced to absorb the 1% increase in GST, thus further squeezing their already razor-thin margins, as their clients would say, "Since it is only 1%, you should absorb it." In fact, a few businessmen actually told me that their preference was for the Government to increase the rate to 5% straightaway, and then provide additional help to those in need. They feel that there is not much difference between a 1% and 2% hike, and we might as well take the pain straight and face up to the realities of the harsh economic conditions and aggressive competition ahead. But the option of increasing the GST to the full 5%, but with more help to low income families, could have a higher political cost, since there would be groups who will not benefit significantly or directly from any offset package. Additionally, the current experience has shown that even though theoretically many individuals should not be worse off due to the two-percentage point GST increase as the relief package should cushion the blow, many are still upset as they perceive this to be yet another hike. Many also tend to divorce the GST hike and relief package, and feel that the two are separate matters. I am pleased to note that the Government has taken heed of these sentiments. On the "how", as the Government has chosen the phased-in scheme, I urge the Government to give careful thought to mitigating the pain, especially on two groups: 1) smaller businesses which do not benefit from the lower direct tax regime and will find themselves squeezed by consumers because of weak demand to absorb all or part of the increase; and 2) lower income groups struggling to eke out an existence. The Government must continue to find ways to help small businesses to lower their costs, as many which are yet to be profitable would not benefit from the corporate tax cuts, while those who are struggling and making marginal profits will also not benefit significantly from the new tax regime. Rental rebates, lower property taxes, grants for upgrading the businesses, or even attractive financing packages, could be further extended to such businesses which are struggling in the current economic conditions but which are otherwise fundamentally sound. The lower income group is struggling due to the poor economic conditions as well as the structural change in the employment landscape which renders many who are unskilled redundant in the labour market. They will continue to need help as long as the economic outlook remains bleak. As noted earlier, many are in fact using their NSS and ERS as lifelines to tide them over the financial difficulties. We need to continue to help this group remain employable through retraining as well as through job creation. At the end of the day, Sir, the groundswell against the GST hike stems most acutely from the fact that we are in the midst of a recession, and the livelihood of ordinary citizens are at risk. There is really never a good time to raise taxes, but the people of Singapore will need to take a calm and rational look at the grim economic realities affecting the long-term future of our country that is at the core of the Government's tax policy. But the immediate pain, though alleviated through the phased-in approach, still cannot be lightly dismissed. I would urge the Government to consider additional off-Budget relief measures to help Singaporeans and businesses tide over their cash flow difficulties if the economy worsens. Modifying the when and how of the GST implementation would clearly help to restore the people's faith in the Government and, barring any other Government policy announcements, will be a good note on which to end the year. It will certainly add cheer to the Hari Raya festive season tomorrow.

Mr Speaker, Sir, there has been a great deal of debate by the people of Singapore and politicians about the proposed increase in the Goods and Services Tax from 3% to 5% as proposed in clause 3 of the Goods and Services Tax (Amendment) Bill which seeks to amend section 16 of the Goods and Services Tax Act. The Hon. Deputy Prime Minister has kindly proposed an amendment which I am sure is most welcomed by this House and the people residing in Singapore. The original proposal of an increase to 5% is substantially more than 66% increase and the general sentiment coming from our citizenry is that of unhappiness. Now, it is an increase of 33%. Unfortunately, the economic climate in the recent past, present and in the immediate future is bleak and therefore the difficulty in being able to support such a proposal. In a recent local radio survey, around 80% of the listeners were against the increase in GST at this time. Only 20% supported such a proposal. The psychological impact of the proposed increase is one of hopelessness on the part of citizens once the Government decides to go ahead with an increase in any form of taxation. The spirit of the people and the nation is down and our Government must take serious note of this and not just pay lip service to it, as perceived by many people. Today, as a result of the amendment, the Government would be perceived to be more caring. The political leadership must be compassionate and must feel for the sentiments of its people and not be too logical and pragmatic all the time. Even a logical and pragmatic Government, as seen today, may not, when analysed in future, turn out to be correct and accurate in their decisions. The Government's main argument in support of the proposed increase in GST is that it needs to balance the budget. It is easy and convenient to say that the budget of the nation needs to be balanced. The issue is whether that is a top priority when times are bad. This move may cause the budgets of the other sectors of our society, namely, that of lay persons, retailers, manufacturers, service providers, etc, to have difficulty in balancing their respective budgets. Which then is to prevail? Only the Cabinet can decide this. They have the power to do so, not the citizenry. Cabinet members would have, hopefully, given serious and independent thoughts to this proposed increase, be it 1% or 2%. Was it an unanimous decision or were there differing views amongst Cabinet Ministers and even senior civil servants? It would be interesting to get a revelation of the minds of different Cabinet Ministers on this topic of GST increase. It may not be the practice to give individual Cabinet members' views but such a practice could be revealed to see how the Cabinet works and how they came to the conclusion that there should be an increase, albeit it is now in two phases of 4% in 2003 and 5% in 2004 and subsequent years. Our Government may want to balance the national budget purely to have a clean record of never having failed to have balanced budgets these past few years. However, it may be preferable not to have a balanced budget in a year where the nation has fared badly economically. Citizens generally are taking home less this year. So should not the State too take home less? It would assist the spirit of the citizens for them to know that our Government does care and is not a government that is purely and coldly efficient, especially during poor economic times. We must give a boost to our national spirit and not create unhappiness with more taxes when there is sadness and gloom facing our society. The Cabinet has decided, the people and Members of Parliament can debate in detail all the pros and cons of an increase in GST. However, it makes little difference. All I can do is register my point for what it is worth. I propose that the clause proposing an increase in GST be deleted from the proposed amendment and let there be a review of an increase in GST only if times are better, and only in the second half of 2003. Besides this reservation, Mr Speaker, Sir, I support the other proposed amendments, namely, clauses 2, 4, 6 and 7.

Mr Speaker, Sir, when the Second Reading of this GST (Amendment) Bill was postponed last week, I, like many others, felt that something was brewing. While I would say that there were some of us, including myself, who were hoping that the increase of 2% would be fully deferred for at least six months to a year, I must say that the change in plans to increase it by only 1% next year and another 1% in 2004 come as a pleasant surprise to us. While I would not say that what the Government is forgoing is ikan bilis, I would like to say that perhaps we should be grateful for little mercies that do come our way sometimes from the Government. Sir, a lot has changed since the Government first announced the GST increase during the Budget debate. Unemployment has now reached an all time high of 4.8% and this is expected to rise to as much as 5.5% very soon. There are therefore now more Singaporeans without jobs than in March. Without jobs means without any source of income. Like every one else, all the people who are unemployed have to face the other increases such as the bus and MRT fares, hospital charges, utilities bills, car park charges, etc, that we have to put up with this year. Sir, the employed are of course not much better off. If they are not already faced with uncertainty of losing their jobs tomorrow, they have now been told by the NWC and the NTUC to be prepared for further wage cuts. We still do not know what the economic outlook will be like next year. Our forecasts for economic growth are as reliable as the weatherman's, and had to be revised several times this year. Singaporeans are therefore tightening their belts and they want to save whatever money they can save for a rainy day and for some, that rainy day has probably arrived. Sir, I am a bit concerned whether in fact there will be a kind of retraction of the economy even though we are told that the Government is pumping in more money during this difficult period. We must not under-estimate the impact of a negative multiplier effect on the economy. Our retail sector has already been suffering for several years. Whether you are a big store in one of our Orchard Road shopping malls or a shop in an HDB estate or a market stall, you would, in all probability, have been suffering from a declining business. If we just take a look at the frequent changes in the tenants of shops, we can get a feel of how difficult it must be for each previous tenant. If Singaporeans now tighten their purse strings further, the situation is likely to worsen in the months ahead. Sir, I want to make the point that one million people have already cashed in their New Singapore Shares and they did so in spite of knowing that they would be forgoing an annual 3% Government-guaranteed dividend, even more if there is strong economic growth. This to me, Sir, is a pity. We can empathise with them because, if what we know on the ground is correct, many did so because they need the money today to pay for household expenses or to settle their arrears such as their utilities bills and other expenses, in other words, to pay for very basic needs. It is a reflection of how tough life must be for them. A lot of the money which was given out would eventually go back to Government, in fact, very quickly. So I am really concerned whether in fact there would be any expansionary effect on the economy in spite of the Government giving away the amount that it has announced that it is giving. Lastly, I would urge the Government to consider again reinstating the EDRS very quickly, in spite of what the Deputy Prime Minister told us that in a difficult situation, we need to give out such schemes, but if the emergency is no longer there, we need to withdraw the scheme and reinstate it at a later date. What I am concerned is the fact that we do have 100,000-odd people who are unemployed now and there is no guarantee that the employment situation is improving. I would therefore strongly urge the Government to consider reinstating the EDRS because I am sure that there will still be a lot of unemployed people who will be coming to MPs during their meet-the-people sessions looking for help.

I do not have very much to add other than to just expand on a few points. I thank the DPM for what he has spoken about as far as the amendment in the Bill is concerned. Like some Members of the House, it would have been good to defer the 2% and review the whole thing in the year 2004, the reason being that for quite a number of us, we are not savvy enough to totally understand how increasing GST by 2% can improve the economy or help to balance the budget, and why that becomes very pertinent. Perhaps, there is a greater need to try and be more communicative to the population at large so that they can be in sync with what Government's intentions are and understand why the 2% is important, and now the reduced rate of 1%. I know it has been said many times but I think I am quite naive in this area of money matters and I am sure there are many others out there like me. It would be good to have a greater and clearer explanation. Coming back to the point that I raised earlier on the VWOs, I appeal that we do reconsider the situation where they are concerned, especially when they have big item expenditures and are no longer entitled to the Ministry of Finance's grant to offset the GST. From 1994 to 1999, they have been receiving a $2.7 million grant. This has helped about 42 to 60 VWOs. What a GST imposition really means is that for recovering $7 million in terms of donations, it can come up to $200,000 in GST, which can stall quite a number of their programmes as well as plans. So I appeal that we do not forget the VWOs in this instance. The second point is that, as I mentioned earlier, it is not that I am asking for a more generous package. There are quite a number of people in crisis. I have asked earlier in the House about the number of people who are receiving aid for the period from April 2000-March 2001. The figure that was given - thanks to the Ministry of Community Development and Sports - was 5,265. For the same period, April 2001-March 2002, it has already gone up to 14,950. For that year, about 15,000 people have received $15 million in different aid packages. It is good that they are already receiving quite a lot of help. Nevertheless, add into this, like what Mr Tan has mentioned, 100,000 people are unemployed who are not sure when they are going to get the next job, I think these are the people in crisis. Although it is an increase of only 1% and in, real terms, it may not be very much, I think we need to monitor how they are affected, and to work out how the criteria schemes that we use currently to help these people can perhaps be broadened and to monitor the situation. There are some programmes on the ground such as IUP, etc, that are perhaps imminent in some constituencies. In this present situation, I think people will be quite perturbed to have new initiatives coming where they have to take money out of the pocket and perhaps have to face the GST hike which will be incorporated into such programmes. Perhaps it is also a good time to review whether it is necessary to go ahead with such programmes. Lastly, it is wonderful that institutions like NTUC Fairprice will absorb the GST, but it also begs another question. What about the small-time retailers in the HDB heartlands? They may not be in a situation to absorb the GST hike. Maybe we need to keep an eye and also see that they too can survive.

Mr Speaker, Sir, as I have said earlier, I applaud DPM Lee for the steps taken to phase in this GST increase. However, I would like to state again that I still believe that the GST should not be increased totally, not even by 1%. But, as I said, it is still better than a 2% increase. Sir, I applaud the efforts and plans to cut Government expenditure and spend wisely. I think this is a very good move and a great emphasis has to be done. As DPM Lee had said earlier, the economic recovery outlook was fair when this idea was first proposed and debated in May. The assumption was that the ERS and offset packages will more than neutralise this GST increase of 2%. However, instead of looking brighter, the economy may be turning for the worse and getting uncertain. This is probably the worst economic period we are going to see since independence. Everyone is affected by this economic slowdown. But, like what Mdm Halimah said earlier, the groups that are most affected are the SMEs, the retailers and the small business owners, and their continued survival will impact on the level of unemployment and wealth creation in this society. With a drastic decline in consumption power and still very high business cost, the retail industry is the worst off and hardest hit in this instance. Therefore, I appreciate the Government's plan not to increase the GST fully to 5% now. The upturn in the NODEX does not indicate a change of business sentiment for the better. Even as we speak, the economic indicators in the US are beginning to turn down again. On balance, the Government has not put additional and undue burden of 2% increase at this difficult time on our small retailers. I can only hope that this 1% increase in GST will not be the straw that breaks the camel's back. This additional cost of doing business will have to be absorbed most likely by the small businesses that are not GST-registered. This may cause some of these small businesses, especially some of the new businesses which are already suffering, to consider closing down and cause higher unemployment. I appreciate DPM Lee's understanding of the problems in the retail sector. The retail sector is very fragile. Consumer confidence is very fragile. There are many retailers still struggling to survive and many are seriously thinking of closing shop. If forced to survive in this harsh environment, many will be forced to review the one area of expenditure over which they have some measure of control, and that is labour cost. With the retail sector employing more than 75,000 workers, any untimely increase of the GST to 2% during this period of economic recession will definitely lead to further job losses and cause more unemployment. Maybe to the Government and civil servants, this is just an increase in the statistics. But to the person who is retrenched, it means job loss, financial insecurity and lots of bills will go unpaid. It affects not just the employee but his immediate family and friends who will then pull back and tighten their belts even further. And, irrationally, the retrenched worker will remember that he is jobless because the company is forced to cut costs, because times are bad and GST is still increased. But, now, I am happy to say that the Government has listened to the cries of the people. My only hope is that the GST rate will stay at the 4% level. To help the economy and save jobs, demand should be stimulated in this difficult time. Thus, keeping the offset packages and giving out the ERS shares is one step in this right direction. It is expansionary and will help to boost the economy. The priority in this uncertain time should be, first, saving existing jobs and then creating more of others. I thank the Government for not forgetting that this is what it pledged to the people at the November elections last year. It does not help that the economic tax restructuring may create some new high-tech jobs but, in the process, cause many more traditional jobs especially in retail, to be lost. As it is, there is already a high job/skill mismatch in Singapore. Let us not make it worse by causing more traditional jobs to be lost for Singaporeans, while more foreign workers are employed to fill the high-tech new jobs. Sir, though not completely satisfied or ideal, I will reluctantly support the Government in phasing in this GST increase and hope that it will be reviewed after one year.

Thank you, Sir, for allowing me to speak. I was not here when the Minister for Finance announced that the full 2% increase in GST will not be implemented, but rather to phase in 1% increase first, and the other one percentage point I do not know when. An hon. Member: 2004.

Anyway, with the 1% increase, I still think that the majority of Singaporeans shall be entering the New Year with long faces. If there is no increase, then it will be a big welcome for the New Year. Even now, many Singaporeans are already suffering hardship. The curious thing is that if the Government is not very certain whether to increase it by 2% or 1%, why does it want to go on with the increase at all? The Government complains that it would lose revenue. I think it is something like $1.3 billion from the reduction in corporate and personal income tax. But now, probably it has changed its mind and said that it can absorb some of the losses. Therefore, not a 2% increase but only 1% increase in GST. In any event, the Government has got huge surpluses and it is definitely not in deficit. But as Jennie Tay, President of the Retailers' Association, has said, the people and businesses in Singapore are already in deficit. In fact, during my meet-the-people sessions, many of the residents have come to tell me that they have lost their jobs and that they cannot pay their children's school fees and their utilities bills. As a result, their lights and water supply were cut off. I am certain that there must be many others with a similar fate in other constituencies. Those families, with lights and water supply cut off, are not living in the first world, as the PAP has touted. But they are still living in the third world without the benefit of electricity and running water from the taps in their homes. At least, when Singapore was in the third world, residents could still go to the roadside standpipe to take water. These days, there is no public water supply. They must go to their neighbours for water which can be very embarrassing to them. Sir, I am happy, of course, that the 2% GST increase has not been implemented, but only 1%. Still, 1% is 1% more than is really necessary. Many people in Singapore have lost their jobs. It was reported in the papers that about 4.8% or about 100,000 of our workers are unemployed and the economic situation does not look good and the situation is not improving. There is talk of double dip this year. The war in Iraq is looming and oil prices may rise drastically, which does not help the US economy at all, and which is not good for us because our businesses are dependent on the US economy. The economies of the region are also in dire straits and, in the circumstances, they do not help us either. Many people have written to the press and say that this GST increase does not help us at all. In fact, in this difficult time, the people must be encouraged to spend and not save. And if the GST increase is implemented in full, there will definitely be price increases in goods and services. With higher consumer prices, of course, people will spend less. In these hard economic times, people should be encouraged to spend so as to revive the economy, and not to spend less. It would appear that if the GST were to be increased by 1%, the Government is, in fact, making things worse and not better. Nearly all of our retailers, from statistics taken by the Straits Times in a recent poll, complained that businesses are poor and the rentals are high. The Government, being the biggest land owner in Singapore, is not setting an example of lowering rentals of business premises. In fact, the Government's policy appears to me to be just to accumulate wealth for itself. The question is: what is the point of accumulating so much wealth when it does not use it in time of need for the people? The people are definitely in need of assistance now and the Government should show some care and compassion. And I would advocate that the Government not only continues with the various relief programmes, pay out the ERS, and as announced now, it has put on hold 1% of the GST increase, something of course is better than completely nothing, so 1% is some improvement on the 2% increase. I believe that if the 2% implementation of the GST was postponed for one year, it would definitely help the economy, and especially the retailers will be the happiest people in Singapore. If there is a hike restraint, to a certain extent it will ease the flow of Singaporeans to Johor Bahru to do their shopping. To some extent the Government has heeded the plea of the people this time, but the point I think I made earlier is that if the Government is unsure of itself, why does it want to increase the GST at all? 2.18 pm

Mr Speaker, Sir, I thank the Members for their contributions. May I now pick out some of the points which they raised. Dr Amy Khor talked about small businesses and the need to give them rental rebates. I agree. These are things which are being done by JTC and HDB. It is separate from the GST package. Mr Chandra Mohan talked about why balance the budget. I think this is quite a fundamental point. Why do we need to live within our means to balance the budget? The Government's fiscal stance is one which we have to fit to the state of the economy and to our circumstances. We can live beyond our means for a time or in an emergency, but eventually the chickens come home to roost and we have to pay for what we have spent. When the economy is in a recession, and there is a major downturn, then it is right for us to run a budget deficit because you cannot raise the same amount of taxes, you are going to squeeze businesses, you need to stimulate the economy, get it going again. When the economy is at an even keel, it is not in a recession, if you routinely run a budget deficit, you will have a very serious problem because soon you will be borrowing money, your credit will not be worth what it says it is, and as I have explained just now, your Singapore dollar will go down, inflation will go up, your savings, the value will go too, because your CPF is in Singapore dollars, and if the dollars are worth less, your savings will be worth less. So when we live within our means, and try and maintain a balanced budget, say, next year, it is because we think that is about the right level to manage the economy and to provide the stimulation which is needed, not more, not less. This year we are not running a surplus, contrary to what Mr Chiam said. We are running a deficit this year. We also ran a deficit last year. But next year, I think, at best, we can do a balanced budget, if you have heard what I said. I said I do not think we are going to get a surplus, at best, we aim for a balanced budget. We try, but we will have to see the circumstances in order to do it. If we go on the basis that we can spend because we have reserves, I think the reserves will soon be gone, and Singaporeans will be much the sadder for it. So we do have to be sympathetic and we have to feel with our hearts as well as think with our minds, but it is necessary to be logical and pragmatic and I am sure Mr Chandra Mohan, as a lawyer, will agree that logic is not irrelevant, and that is why we have to work out a package which makes sense, which is what we have proposed - to phase in the increase but not to postpone it altogether. Mr Tan Soo Khoon was generally supportive of the change we made and I am grateful to him for skipping many pages of his speech. We too know how to be grateful for small mercies. I should like to correct one point which Mr Tan made which was that unemployment is up 4.8%, it is a record, and it is 100,000 people. First of all, it is not a record because we have been more than 4.8% before, for example, in the 1985/86 recession, we went all the way up to 6%. Secondly, it is not 100,000 unemployed. It is 72,000 people unemployed. 4.8% is a seasonally adjusted percentage, but the actual number of people is 72,000 unemployed. Mr Chiam also quoted 100,000. 72,000 is more than we would like to have, but we should not exaggerate the extent of our problem and talk ourselves into a gloom and a funk. The saving grace for us is that even though people are unemployed, the work is still available, jobs are still available. We still have foreign workers here because employers are unable to find Singaporeans to go and do the jobs. And particularly the smaller and medium enterprises who would like to do business on a small scale, they find it very hard to get Singaporeans to go and work for them. Maybe the hours are a bit irregular, maybe the wages are a bit low, but if you are unemployed, and a job is available, then better to have the job rather than not to do it at all. And I think our solution for the unemployment problem, while we have to help those who are in a desperate state, at the same time, we have to encourage all of the people who are out of work to look for work and to take up the jobs which are available and some of them which they can do, even if it is not ideal. So although Mr Tan talked about reinstating the EDRS, as I had explained earlier, I think that we do not need to do it for now because we have enough means to help the unemployed and the people who need help. But if there is another crisis we will examine the situation and, if it is necessary, we will re-introduce the EDRS. Ms Braema talked about reviewing the HDB upgrading programme because that would be additional expenditure by people at this time. I think it is something which the Minister for National Development will be considering and which many MPs will be considering when the propositions are put to them because finally to do the upgrading, main upgrading or lift upgrading, the residents have to vote for it and have to agree to want it. And if they do not want it, it does not proceed. If the MP says it is not necessary even to put it to the residents, you do not proceed. But some residents still want it, and if you will remember earlier this afternoon, we were talking about lift upgrading and some MPs were pressing us to proceed even though the residents did not vote for it. So I think there are contradictory pushes in different directions, but overall we will have to see how many of the upgrading programmes we can afford because it is not just money from the people, it is money from the Government, and in tough times we have to consider how many we can afford. Ms Braema, Steve Chia and other MPs talked about the small retailers and their problems. I think Dr Amy Khor also made the same point. As I had explained earlier, they do have a structural problem which will take some time to be worked out. The Members are concerned that the extra one percentage point on the GST will affect them. I think it may, to some extent, but on the other hand, they are not totally negatively affected. Let me explain why. The 1% applies to all businesses - big and small. The big ones have to pay, the small ones have to pay, most of it, but not all of it. And the reason is because the small ones whose turnover is less than $1 million do not pay GST on their own part of their business. They are GST exempt. So in fact when you raise the GST by one percentage point the big shops are affected more severely than the small shops. So, relatively speaking, it is better off for the small shops than before. Of course, everybody would feel happier if we did not have to do this at all. But if we do have to do it, in fact, the burden on the small shop is less. I was not quite sure how Dr Amy Khor intended me to respond when she said that 1% they cannot pass on, 2% they can pass on. Does that mean she prefer to have a 2% increase and that would solve the retailers' problem? I do not think so.

Some businessmen prefer that.

Some businessmen prefer that! Well, if she thinks that is a better solution, when we move the amendment in the Committee stage I think we can look into the matter. She might want to express her views again. We could even take a vote. But I think 1% is better than 2%. There is some inconvenience. The businessmen have also expressed it, that they have to adjust their settings, their pricings, twice, but it cannot be helped. These are trade-offs they have to accept. Finally, Mr Chiam talked about showing care and compassion and how the poor in Singapore are not living in the first world. I think Mr Chiam will know that while we need to improve the conditions for all Singaporeans, and especially for poor Singaporeans, somebody living in Singapore, however poor, is in a much, much better position than somebody living in China poor, or in Indonesia poor, or in India poor, or poor in nearly any better part of the world, including in America. We have gone into this before. You may not have your running water every day if you do not pay, but you do have your running water available. You do have a house over your head. Your children have schools. You have medical care provided for you. You have a Medifund if you cannot afford hospital charges. Your MP looks after you and come New Year, the MPs and the residents arrange, and you have hong baos and hampers, and I am sure Mr Chiam also arranges those. We have a community in which the poor are part of our community and we look after them and we carry them along with us and help them to upgrade as the rest of Singapore upgrades. So when we say that this system has failed, I think we should look at the reality and do a reality check rather than just read off some speech which does not correspond to what is happening on the ground. We have made a significant move to phase out the GST - 4% this year, 5% on 1st January 2004. I would not hold out hopes to Members that come 1st January 2004 we are going to have a rethink and reconsider again. I am sure the subject will be discussed, but I should put down my cards clearly to Members so that there is no misunderstanding. This is an adjustment which we are making this time so that we will take it in small steps. 1% is a small step next year. 1% in 2004 is another small step. We have to do it. We will have to adjust other things if there are difficulties in the economy next year, but this is a structural change which will help us to get out of this problem, which will help us to create more jobs, and which will help us to recover and to grow in the long term. That is why I ask Members to support this policy and to support the amendment I am going to propose.

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 Lee Hsien Loong].

Bill considered in Committee. Clauses 1 and 2 ordered to stand part of the Bill. Clause 3 -

The Deputy Prime Minister and Minister for Finance has given notice of an amendment to this clause. The notice of amendment has been circulated to hon. Members. As inadequate notice has been given of this amendment, it is subject to the consent of the Chair and the general assent of Members present. I give my consent. Is it the pleasure of hon. Members that the amendment be moved? Hon. Members indicated assent.

Sir, I beg to move, In page 2, line 12, to delete "5%" and insert "4% for the year 2003 and 5% for the year 2004 and subsequent years."

I have earlier explained to the House the reasons for the change and I am relieved that the Members have given me their general assent. Amendment agreed to. Clause 3, as amended, ordered to stand part of the Bill. Clauses 4 to 7 inclusive ordered to stand part of the Bill. Bill reported with an amendment; read a Third time and passed.

Order for Second Reading read. 2.30 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Introduction Sir, this Bill amends the Registration of Criminals Act to establish a Deoxyribonucleic Acid (or DNA) database of criminals. The Bill also makes several amendments to update the Act. The Registration of Criminals Act provides for the registration of criminals. The Act enables the Police to record into the Register of Criminals, registrable particulars such as the photograph, finger impressions, and conviction records of persons convicted of serious crimes like robbery, assault and housebreaking. The Register of Criminals is a very useful tool which aids Police investigations. The registrable particulars are especially useful in helping the Police to identify suspects. For example, finger impressions lifted from crime scenes are matched against finger impressions recorded in the Register, thus helping the Police to narrow down the list of suspects. The court also makes use of these criminal records when sentencing a repeat offender. Setting up of DNA Database Why do we want to set up a DNA database? Sir, the setting up of a DNA database of criminals will greatly enhance the Police's investigative capabilities. The probability of two persons having identical DNA profiles is extremely low, and could be as remote as one in a billion, depending on the race of the person. Body samples, such as blood, semen and tissue samples, found at the crime scenes can be used to profile the DNA of the person to whom the body sample belongs. Through a DNA database of criminals, Police will be able to determine if a body sample found at the crime scene belongs to an ex-criminal. When a suspect is found, it will also enable the Police to match the DNA profile with that of the suspect to help narrow down the list of crime suspects. This is especially useful in investigating crimes with very few leads for the Police to work on. The use of DNA profiling to enhance forensic capability in solving crime is not new. Foreign law enforcement agencies, such as those in the US, UK and Australia, have been using DNA profiling for many years and DNA databases have been set up in these countries to aid police investigations. Clause 5 of the Bill gives effect to the establishment of the DNA database and the taking of body samples for the purpose of DNA profiling. Clause 5 also specifies the purposes for which the collected DNA information may be used, namely, for forensic comparison with other DNA information and for any proceedings for any offence. Definition of Body Sample What is a body sample? Sir, a body sample is defined as a sample of blood, head hair with follicle and a swab taken from a person's mouth. Clause 5 empowers the Minister to prescribe the taking of any other body samples, such as saliva and skin cells. This is to cater for instances where it is not possible to obtain any one of the three types of body samples from a person because the person is a haemophiliac and suffering from severe mouth ulcers or is bald. However, there would be very few cases where we would not be able to take any one of the three types of body samples from a person. Persons whom Body Samples may be taken from Who can Police take body samples from? Clause 5 also empowers the Police to take a body sample from a person who is arrested and accused of a crime specified in the Act. This ensures that Police is able to compare the accused person's DNA information with the DNA evidence found at the scene of a crime. A body sample may also be taken from a person who is convicted of a crime or is currently serving an imprisonment term. However, those who have completed their sentences when the Act comes into operation will not be included as the Act will not apply retrospectively to this group of criminals. Who can give a Body Sample Voluntarily? Clause 5 also provides for persons who were at the scene of a crime, or are being questioned in connection with the investigation of a crime, to give body samples voluntarily. In practice, this provision would apply mostly to Police investigators who work at the scene of a crime and is intended to eliminate their DNA from the DNA found at the scene. The DNA from Police investigators would also be stored in the DNA database even after the case is closed. This is because Police investigators would invariably investigate new cases and it is not cost efficient or effective to re-take body samples from Police investigators for DNA profiling. Who can take Body Samples? Clause 5 also provides that only trained persons, such as a registered medical practitioner or an authorised officer, who have received training in taking body samples, can do so. In practice, all Police officers would be trained on the proper and safe taking of body samples. For example, Police officers would ask a person whether he is suffering from any blood disorder or blood-related disease. If the person informs the Police officer that he is a haemophiliac or suffering from other blood-related disease, the Police officer would take either a sample of the head hair with follicle or a swab from the person's mouth, rather than a blood sample. Currently, the Act makes it a duty for every person legally bound to submit to having his photograph and finger impression taken to do so. Any such person who refuses to have his photograph and finger impression taken shall be guilty of an offence. The Act also empowers the Police to use necessary force to obtain the photograph and finger impression. Clause 5 extends these provisions to make them applicable to the taking of body samples as well. Consent for the taking of Blood Samples Must consent be sought before the taking of blood samples? Yes, consent must first be obtained before a blood sample may be taken from a person who is arrested and accused of a crime. However, there is no need for consent to be obtained before head hair with follicle or a swab from a person's mouth is taken for the purpose of DNA profiling. The difference in treatment is because the taking of blood from a person is more intrusive than taking of a head hair or a swab from the person's mouth. If a person refuses to give consent for his blood to be taken and offers no good reason for the refusal, the court may order the person to give the blood sample. The court may also draw inferences from the refusal and treat the refusal as corroboration, or amounting to corroboration, of any evidence against him. Persons Acquitted or Discharged What happens to the body samples of persons acquitted or discharged? Currently, the Act requires the Registrar of Criminals to destroy the photograph and finger impression of a person acquitted or discharged within three months from the date of acquittal or discharge. Similarly, clause 5 requires the Registrar to remove the DNA information of a person from the DNA database within three months of his acquittal or discharge. As the DNA information is stored in electronic form in the DNA database, removal of the information from the database is equivalent to the destruction of a physical record like a photograph. Sir, let me now move on to the other amendments to fine-tune and to update the Act. Other Amendments relating to the Keeping of Records New Definitions Clause 2 of the Bill introduces several new definitions, namely "authorised officer", "other particulars" and "photograph". Currently, only police and customs officers may exercise the powers under the Act. This arrangement is not satisfactory because immigration officers have to seek Police's assistance to take registrable particulars of immigration offenders arrested. Also, as the Health Sciences Authority will be commissioned to operate the DNA database, officers from the Health Sciences Authority must also be allowed to take body samples. The new definition of "authorised officer" has thus been amended to cover the police, immigration, customs and other law enforcement officers, and a person so appointed by the Commissioner of Police. While the power to take registrable particulars and body samples would be extended to all immigration officers and officers from the Health Sciences Authority, in practice, only those officers tasked with the responsibility to take registrable particulars and who have received the proper training will be allowed to do so. Sir, currently, "registrable particulars" means the particulars of any conviction, sentence, banishment, expulsion or deportation, and any name, description, photograph, or finger impression of any person so convicted, sentenced, banished, expelled or deported, as the case may be. However, the Act also empowers prisons officers to record a more detailed description of the prisoner convicted of a crime, such as his sex, age or apparent age, bodily appearance, height, distinctive marks on his body and any other available information that helps to identify the prisoner. Such information is very helpful in identifying a person, especially when a victim is trying to identify the culprit. For this reason, a new definition of "other particulars" is proposed to enable the authorised officers to record information other than the registrable particulars. Also, a new definition of "photograph" is proposed to enable the authorised officers to take photographs, including distinguishable body marks, such as tattoos and scars, which would be very useful for identifying criminals. Upgrading of Automated Fingerprint Identification System Police is upgrading the Automated Fingerprint Identification System, or AFIS in short, to allow for electronic capturing of finger impressions. When upgraded, the new AFIS will enable Police to search and match finger impressions more quickly. Currently, sections 8, 9 and 10 of the Act make reference to the sheet of paper upon which the finger impression is made. When the new AFIS is implemented, finger impressions will be captured electronically, instead of onto a sheet of paper. Clause 3 repeals and re-enacts sections 8, 9 and 10 to do away with the reference to the sheet of paper upon which the finger impression is made. Increase in penalty for refusal to submit to taking of photograph and finger impression Sir, the current penalty for refusing, without reasonable excuse, to submit to the taking of photograph and finger impression is a fine not exceeding $250 or a maximum imprisonment term of one month. This has not been changed since 1949 when the Act was first enacted. Clause 4 therefore increases the fine to a maximum of $1,000 to take into account rises in income level and to maintain the deterrent effect. No change is proposed for the imprisonment term. Removal of registrable particulars of persons aged 100 years or more Currently, the Registrar would remove the registrable particulars of persons whose death is registered under the Registration of Births and Deaths Act. However, as foreign offenders who die do not register under the Registration of Births and Deaths Act, the Register still contains records of foreign persons who may have passed away. For example, the Register now holds 18 names of foreign persons who are over 100 years old but the police is not able to determine if these foreigners are still alive. Clause 6 therefore empowers the Registrar to remove the registrable particulars from the register of criminals and DNA information from the DNA database of any person aged 100 years or older or whose death has been registered under the Registration of Births and Deaths Act. Sir, technology advancements have opened new ways for us to fight crime. The police must harness these technological advances to enhance its capabilities to stay ahead of criminals. The DNA database and the upgrading of the AFIS will go a long way in improving the police's ability to fight and solve crimes. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, this proposed Bill, as the Minister stated, seeks to amend the Registration of Criminals Act. That seems to be an innocuous enough Bill. But the proposed amendments in the Bill actually go beyond mere registration. It has provisions that affect those who may be only suspected of a crime, but not yet charged, tried or convicted. It involves criminal procedures to obtain blood samples and other body samples from suspects, as distinct from convicted persons. Given the application of the provisions to suspects, the title of the Act is somewhat misleading. My reaction to this is one of unease, because in provisions relating to criminal procedure, it has always been the practice to enact those provisions in the Criminal Procedure Code, where there is a comprehensive code covering all aspects of criminal procedure and investigation. It is therefore somewhat inappropriate to find matters of criminal procedure dealing in an Act which has a very innocuous title called Registration of Criminals. In any case, if someone asked what does that suggest to a layman, it suggests registration of convicted criminals, not of suspects. So, I hope that the opportunity will be taken to re-enact such provisions and to take them out of the Registration of Criminals Act in due course. Second, naturally I would want to express my support in the setting up of this new DNA database as a means to combat crime. I think it is a good idea. But there are a couple of concerns that I hope the Minister can address. First of all, the Minister has already explained that in the case of blood and body samples, which involve an invasive procedure in obtaining such samples, the consent of the suspect must be obtained. But, of course, he then went on to say that if the consent is not forthcoming, the suspect can then be taken to a magistrate and, there, the court can order the sample to be taken. With that I have no objections. However, there is the additional sanction provided in the Act which is that if the suspect did not consent, adverse inferences could be drawn against him in terms of his liability or his guilt relating to the taking of such samples. In the past, drawing of adverse inferences, especially those laid down in the Criminal Procedure Code, requires a warning to be given to the suspect that if he did not give an explanation or a good reason, the court may draw adverse inferences against him. But in this particular proposed amendment, there is no such warning enacted, as can be found, eg, in the CPC (section 122). Therefore, a suspect may not really know what is going on. There would be no means of putting him in a position to be informed that adverse inferences could be drawn against him. So I hope that in the enacting, not so much of this Bill, but in the enacting of the rules concerning this Bill, the Minister would take the chance to put in provisions relating to warning, as far as this consent element is concerned. Next, I wish to raise a matter which I hope would have been dealt with in the Bill but which has not so far materialised. In the Budget debate earlier this year, a number of hon. Members, including myself, had brought up the issue whether people who are convicted of minor crimes should not, after a period of time, have their particulars removed from the Register of Criminals. The reason is that there have always been problems for them finding jobs, and they were hardly given a chance by employers and who are always, it seems to me, adversely affected by the stigma of having been convicted of a crime, no matter how minor. The Minister had explained that the removal of particulars from the Register today in the Bill only relates to those 100 years and above, and do not really take into account this category of persons who have just been convicted of minor offences. I hope the opportunity will be taken to amend the Act relating to this group in future. Sir, with those concerns, I support the Bill.

Mr Speaker, Sir, the Registration of Criminals (Amendment) Bill introduces the deoxyribonucleic acid (DNA) tests into the criminal law. The DNA information, ie, the genetic information derived from the forensic DNA analysis of a body sample is being introduced to assist the law enforcement agencies and the prosecuting authorities to investigate and obtain evidence against accused persons. There is also a provision in the proposed section, ie, section 13(C)(3) which provides as follows:- "Where it is shown that the appropriate consent required under subsection (1) for the taking of a sample of blood from a person was refused without good cause, the court, in determining -

whether to commit that person for trial in connection with the crime of which he is accused of committing; (b) whether there is a case to answer against that person; or (c) whether that person is guilty of the crime with which he has been charged,

may draw such inference from the refusal as it thinks proper and, based on such inference, may treat the refusal as corroboration or amounting to corroboration of any relevant evidence against that person." In this regard, I am in agreement with Assoc. Prof. Chin Tet Yung who made the observation that this is a matter of concern. There is therefore the introduction here of an almost or close to the concept of "presumption of guilt" in a sense, if the accused does not cooperate in giving his DNA sample. Because of these powers being conferred, the enforcement and prosecuting authorities must ensure there are enough safeguards and proper checks and balances so that there is no opportunity for potential abuse to the detriment of accused persons, and to ensure that there is proper administration of justice according to the rule of law. It would therefore be prudent that proper warnings of adverse inference be administered to the arrested or accused person along the lines of section 122(6) of the Criminal Procedure Code about adverse inference and, in this case, with the appropriate modifications of course. Section 122(6) provides as follows: "Where any person is charged with an offence or officially informed that he may be prosecuted for it, he shall be served with a notice in writing, which shall be explained to him to the following effect:

'You have been charged with/informed that you may be prosecuted for ...' and the charge is set out."

And the question will be asked: "Do you wish to say anything in answer to the charge? If there is any fact on which you intend to rely in your defence in court, you are advised to mention it now. If you hold it back till you go to court, your evidence may be less likely to be believed and this may have a bad effect on your case in general. If you wish to mention any fact now, and you would like it written down, this will be done."

So this is a precautionary measure that is very useful, and the courts would take into cognisance this fact whether the accused did give his defence or not. Perhaps, Mr Speaker, Sir, clause 3 relating to section 10(b) of the Act could also be modified as follows:- "(b) the Registrar shall cause the finger impressions, photographs and registrable particulars that he had received in respect of that person under section 8(c) to be destroyed ..." and I would add these words: "... and the Registrar shall notify in writing to that person within 14 days".

This is to ensure fairness to that person who has been acquitted or discharged without a conviction being recorded against him. It is also to ensure the efficiency of the Registrar of the Register of Criminals, and to ensure that he complies expeditiously with the duties under this Act. I would also suggest, as an alternative, that a provision be added to require the Registrar to return the record of photographs and finger impressions and registrable particulars to the person concerned. If he or she does not want them, then the Registrar shall destroy them. This was the case when the Registration of Criminals Act was passed in 1949 in the Legislative Council of the Colony of Singapore. Clause 5 gives far-reaching powers to the "authorised officer in charge" to take body samples of persons arrested and accused of a crime, or convicted of a crime, or is serving his term of imprisonment in connection with a crime of which he has been convicted. These are provided for in the proposed section 13B of the Act. The accuracy of the DNA tests and the proper and competent management of the samples taken must be observed carefully, and it is the responsibility of the relevant Government authorities that there is absolutely no abuse. Are we absolutely sure that DNA tests are accurate enough? Do we have enough competent officers, both scientific and law enforcement officers, to carry out these tasks? There must be proper training for these officers, so that the system is respected. I do hope that investigating authorities would still rely on the age-old tool of proper and thorough investigation in any case, big or small, to arrive at the truth of any case. Mr Speaker, Sir, I now refer to clause 6 (section 13H), which provides as follows:- "The Registrar shall remove from the register and from the DNA database the registrable particulars and DNA information of any person -

who, the Registrar is satisfied, has attained 100 years of age."

This so-called concession is really of very little value to the person whose registrable particulars and DNA information are kept by the said Registrar. I would propose that for the details about the "registrable particulars" the age should be reduced from 100 years to, say, 55, or use a different criterion, namely, to remove the "registrable particulars" 10 years after the date of conviction by a court of law (for non-custodial cases) or 10 years from release from prison. Most human beings do not live beyond 80 years of age and, therefore, 100 years is not a practical age. The proposal I am suggesting will give a more realistic approach to wanting to give a clean slate to the convicted person and to remove the stigma and bad image that is connected to any form of criminal record. Everyone deserves a second chance in life and hopefully through such amendments, the State is seen to be compassionate and caring to its citizens who may have committed some crime at a younger age.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.20 pm. Sitting accordingly suspended at 3.00 pm until 3.20 pm.

Sitting resumed at 3.20 pm

Debate resumed.

Mr Speaker, Sir, the issues raised by Prof. Chin Tet Yung and Mr Chandra Mohan can be classified into the following areas: One is whether it is more appropriate to have this procedure to take body samples or even other particulars like finger impression and photograph in the CPC. The second is whether when consent is not given by the person, then should an appropriate warning be administered. The third is whether we have competent persons to handle this and whether the procedures are tight to make sure that there will be no abuses and that proper procedures are followed. The fourth is regarding the purging of records of people who are registered on the Register of Criminals. Let me deal with these issues. On the procedure part of it, what we are doing now is not different from what is provided for in the Act. For example, in the case of finger impression and photograph, these are clearly laid out in the Registration of Criminals Act. What we have added in the Bill is the taking of body samples. By body samples, it could be head hair follicle or a buckle swab in the mouth. For these two body samples, they do not require the consent of the person. The Police could just do it, just like what they do now for finger impression and photograph. It is only when the Police want to take a body sample, like a blood sample, then consent must be sought because we consider taking of blood samples to be a bit more intrusive. But, in practice, it is not like the case where you need to see a doctor, and he puts a syringe into your vein and takes out whatever millilitres of blood. It is just like what you do for blood grouping, where the nurse uses a little needle to prick your finger and take a little sample of blood. That is all that is to do it. It is not that bad. For those who do blood grouping, and I am sure many of them would have done so, this is not going to hurt them a lot. But if the suspect refuses to give that consent, he can be brought to court and the court may order him to provide the blood sample. And if he still refuses, of course, appropriate warning will be given and inferences will be drawn by the court for his refusal to provide that blood sample. But if the blood sample is not taken, there are two other methods, for example, the head hair follicle or the buckle swab, or if not, it could be saliva. It could also be skin cells. So let me settle this question first. Next is whether the procedures are tight enough. The procedures will certainly be very tight. For example, for the taking of a blood sample, it will be properly recorded. It is sealed in a box and it will be stored properly and brought to HSA. Only HSA officers have the key to open that box and they will compare the list of blood samples with the names provided by the Police as recorded by the Police. As I have said earlier, the people who need to take the samples will be trained. It is not a very difficult thing to do. As to the purging of records, I have said before that we are reviewing the Registration of Criminals Act to see how we can consider some records as spent. Then the court may no longer take cognisance of them and Police may not use them. But this is still under review and therefore I will not be able to give an answer today. But at an appropriate time, when the review is completed, I will share more of that review. As to returning the record of persons who are subsequently acquitted, as raised by Mr Chandra Mohan, this need not be done. The records are stored by electronic means. So, the only way is to delete them. I do not see how they can be returned. The Police will take action to delete the record when the person is acquitted. The question was also asked by Mr Mohan whether DNA test is a good test. I have already explained that DNA test provides the probability of an identical DNA only in the case of one in a billion. In fact, depending on the number of multiple markers used, it can be one in 250 billion. It will be much more accurate than that of a finger impression.

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 Wong Kan Seng]. 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." The Bill will amend the Economic Expansion Incentives (Relief from Income Tax) Act, or the EEI Act, in short. The Bill gives legislative effect to two tax changes which were announced in the 2002 Budget Statement, as well as the implementation of the Technopreneur Investment Incentive Scheme. It will also make consequential amendments arising from other changes to the Income Tax Act. These changes serve to enhance the attractiveness of existing tax incentives, and make them more flexible to better meet the needs of businesses. They will also support the development of the technopreneurial sector in Singapore. I will now describe each of the proposed amendments in turn. Amendment to Development and Expansion Incentive Tax Rates First, clause 6 of the Bill amends the relevant section of the EEI Act to reduce the tax rate under the Development and Expansion Incentive (or DEI in short) from not less than the current 10%, to not less than 5%. The DEI was introduced in 1996 to replace the post-pioneer incentive. Currently, a company that qualifies for the DEI is taxed at a rate of not less than 10% on income derived from qualifying activities. The reduction of the DEI rate to 5% would allow our economic agencies greater flexibility in administering the DEI. For example, a company may currently have a mix of DEI and Pioneer incentives for different projects at 10% and 0% tax rates respectively. The company may now apply to EDB to convert its current incentives granted on the project basis to a single tax rate of, say, 5% DEI, on a company basis instead, for all its qualifying activities. This will obviate the need for the company to keep separate accounts for different incentives awarded for each qualifying activity, thereby reducing the compliance costs for businesses. It will also provide the company with greater certainty of the benefits when it invests in Singapore. Unlimited Flow-Through of Tax-Exempt Dividends Second, clauses 2, 4, 7 through 10 and 13 of the Bill amend the EEI Act to provide for unlimited flow-through of tax-exempt dividends for incentives granted under the EEI Act to the final shareholders, without any minimum shareholding requirements. Currently, for example, a company receiving tax-exempt dividend income under the EEI Act is able to pay an exempt dividend out of such income to its shareholders only if: (a) it holds not less than 50% of the shares of the dividend paying company (unless a lower threshold is approved); and (b) the exempt dividend is paid on shares of a non-preferential nature. In most instances, the second tier holding company would not be able to flow through the exemption to its shareholders. With the tax change, such dividend would now flow through as tax-exempt dividend to all tiers of shareholders, regardless of shareholding level. This tax change enhances the tax benefits available under the various incentive schemes and simplifies the compliance requirements under the schemes. The unlimited flow-through of exempt dividends applies to all credit balances in the exempt dividend account of companies. Apart from the above unlimited flow-through of tax-exempt dividends, these clauses also treat payment of exempt dividends as having been distributed to the shareholders in accordance with the proportion of their shareholdings in a company. They also provide for dividends paid on shares of a preferential nature, to be deemed as interest income in the hands of shareholders and, in certain circumstances, as interest expense in the hands of a company. Technopreneurship Investment Incentive Scheme I now move on to clause 14 of the Bill. It inserts a new Part XIIIC, comprising sections 97S to 97Z, which give legal effect to the implementation of the Technopreneur Investment Incentive (TII). The TII eases the difficulty faced by high-tech start-ups in obtaining capital investment in their initial phase of growth, by providing investors of qualifying start-ups with tax write-offs for qualifying losses incurred. Qualified technopreneur start-ups which are accorded TII status may allot shares to their investors, so long as the total amount paid to the company for all qualifying shares by eligible investors does not exceed $3 million. When eligible investors incur a loss from selling qualifying shares or from the liquidation of the start-up within the eligibility period, they are entitled to deduct their loss amount against their taxable income, subject to terms and conditions. Consequential Amendments Finally, the Bill seeks to make consequential amendments to the EEI Act arising from changes to the Income Tax Act. Clauses 3, 5 and 12 relate to the amendments to sections 37, 37B and 37C of the Income Tax Act. Clause 11 relates to the amendments to sections 13H and 43P of the Income tax Act. The above consequential amendments are to provide for the following: (a) allowing the carry forward of unabsorbed donations; (b) extending the application of the adjustment factor under section 37B of the Income Tax Act to income of the company subject to tax at different tax rates; and (c) expanding the definition of "concessionary income" under the provisions governing investment allowances. Mr Speaker, Sir, in all, the above EEI Act amendments will enhance our tax incentive regime, and make Singapore a more attractive place for doing business. Sir, I beg to move.

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

Order for Second Reading read. 3.37 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill seeks to make amendments to the Medical Registration Act (Chapter 174 of the 1998 Revised Edition). Background The Medical Registration Act provides for the establishment of the Singapore Medical Council (SMC) to register and regulate medical practitioners. The amendments to the Act are needed to set the requirements for continuing medical education when doctors renew their practising certificates, to address the limitations that the SMC faces in its disciplinary processes and to keep pace with international developments in professional regulation. Mr Speaker, Sir, let me now highlight the major amendments that are being introduced in this Bill. Compulsory Continuing Medical Education (CME) The pace of change in the practice of medicine is rapid, driven mainly by the dramatic advances in biomedical research and technology. At the same time, there is greater acceptance of evidence-based medicine, ie, medical practices that are supported by rigorous and comprehensive analyses of the relevant body of clinical research or trial data. This helps doctors to ensure that the care given to patients is necessary, beneficial and of good quality. Our patients and the general public also have high, and rising, expectations of the quality of healthcare that they receive. It is imperative, therefore, for all doctors to maintain the currency of their professional knowledge and to stay abreast of developments in medical science and practice. Continuing Medical Education (CME) is a well-accepted mechanism to achieve this. There is a long history and tradition of CME within our local medical community. Two years ago, the SMC launched an on-line CME system for all registered medical practitioners and worked with the College of Family Physicians, the Academy of Medicine and the Singapore Medical Association, to establish a voluntary national CME system so as to better meet the needs of the different groups of medical practitioners through the provision of a diverse variety of accredited CME activities. However, not all doctors have demonstrated participation to a satisfactory level of CME. Notifications by medical practitioners to the SMC's voluntary CME system showed that only 39% fulfilled the minimum CME requirements of 25 points per year in 2000. The situation improved to 49.5% participation rate in the year 2001. It is likely that there were some doctors who participated in CME but failed to notify. Nonetheless, the voluntary participation rate is far from satisfactory. Many developed countries, in fact, have made CME compulsory in their jurisdictions, eg, most states in the USA, some states in Australia, New Zealand, the Netherlands and Hong Kong. Canada and the UK are actively looking into doing so as well. We have therefore decided to make CME compulsory for all medical practitioners from 2003. This Bill proposes an amendment that allows the SMC to prescribe conditions for the grant and renewal of a doctor's practising certificate, including mandatory participation in CME. The SMC has decided that doctors should accumulate at least 50 CME points within a 2-year cycle before they can renew their practising certificates. Strengthening of SMC's Disciplinary Procedures Mr Speaker, Sir, the SMC plays a critical role in the regulation of medical professionals and medical practice in Singapore. SMC has established an Ethical Code and Ethical Guidelines that set the standards of professionalism expected of all doctors in Singapore. SMC also has a well-established disciplinary procedure to assess and to deal with doctors who have been referred to the SMC. In the main, these procedures are working well and have allowed the SMC to maintain high standards of medical professionalism in Singapore. However, there are a number of limitations that the SMC faces in its current disciplinary processes. These will be addressed in the amendments to this Act so that SMC will be able to carry out its regulatory duties more efficiently and effectively. Interim Orders Committee (IOC) Because of the complexities of medical practice issues and the time required to gather and review all the relevant evidence, inquiries into disciplinary matters may take up to two years to complete. During that time, the doctor under investigation is still able to practise. In some situations, there may be compelling reasons to suspend a doctor from practising, even before the outcome of his disciplinary enquiry is known, in the interests of public safety. We therefore propose that a new provision be created to allow for the establishment of an Interim Orders Committee (IOC). The IOC will be vested with the power to summarily suspend or restrict a doctor's practice before the outcome of an inquiry is known. This inquiry could be held either by the Disciplinary Committee (DC) which looks into the professional conduct of the doctor or the Health Committee (HC) which considers the physical and mental fitness of the doctor to practise. I would like to assure the House that cases will only be referred to the IOC when there is compelling evidence that the doctor's continued practice poses a threat to public safety. Such evidence could include psychiatric reports and court convictions. Based on the experience of the IOC in the UK, examples of cases that could be referred to the IOC would include cases like failures of care that indicate a serious lack of basic medical knowledge or skills; or doctors with serious health problems that would affect their ability to practise medicine, such as severe mental illness, alcoholism or drug addiction. I would like to highlight that a number of provisions have been built into the Act to safeguard the rights of the doctor who has been referred to the IOC. For example: (1) The members of the IOC will not participate as members of any other committee that is involved in looking into the complaint against that doctor. (2) No interim order shall be made by the IOC unless the doctor in question has been given the opportunity to appear before the IOC and be heard as to whether such an order should be made in his case. The doctor also has the right to be represented by legal counsel. (3) Any doctor whose registration has been suspended or made subject to conditions by the IOC will have a right of appeal to the High Court. (4) The IOC is required to review its interim order after 6 months to determine if it should be revoked or amended. After this first review, the order is subject to further review every three months until the matter is settled, or the IOC decides that the order is no longer necessary, or 18 months after the initial issue of the order. Any extension of the order beyond 18 months will require approval by the High Court. These amendments to establish the IOC and to provide safeguards for the rights of the doctors are closely modelled on the current legislation and system in the UK. Let me now highlight some other amendments to the Act that are intended to strengthen the current disciplinary process. We will empower the Complaints Committee to inquire into matters of professional conduct that were discovered in the course of investigations, but did not form part of the original complaint. The Complaints Committee will also be allowed to continue an investigation even if a complaint had been withdrawn. This is consistent with the powers vested in the Inquiry Committees under the Legal Profession Act. The SMC will be authorised to refer, by its own volition, any information regarding the criminal conviction of a registered medical practitioner to the SMC's Complaints Panel, without first having to receive a formal complaint against this practitioner.

Mr Lim, could you pause for a while to let the Whip move the exempted business motion?

Resolved, That the proceedings on the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Dr Lee Boon Yang].

Debate resumed.

Mr Speaker, Sir, as I was saying, we will allow the SMC to refer any information regarding the criminal conviction of a registered medical practitioner to the SMC's Complaints Panel, without first having to receive a formal complaint regarding the practitioner. This will ensure that doctors who have been convicted of offences in the criminal court are also reviewed by the SMC to determine if there had also been breaches in professional conduct. The title of a specialist is currently not protected by law. A new amendment will allow the SMC to institute disciplinary proceedings against doctors who falsely hold themselves out to be specialists. Mr Speaker, Sir, let me now highlight the amendments in this Bill that seek to streamline the registration processes of the SMC. First, currently, any Singapore medical degree holder is entitled to full registration. A proposed amendment will ensure that only those who have completed their housemanship satisfactorily can progress to full registration. If the SMC is of the view that a particular doctor has not fulfilled the requirements for full registration but is safe to practise under supervision, the SMC will be given the discretion to award conditional registration for such cases. Singapore degree holders who complete their housemanship overseas would also be granted conditional registration in the first instance. Second, foreign degree holders seeking registration will be required to either complete their housemanship locally or produce a certificate of experience that is recognised by the SMC as evidence that they have satisfactorily completed their housemanship overseas. The SMC will also be allowed to impose conditions on the restoration of a doctor who has been struck off the register, such as placing him under conditional registration rather than restoring him to full registration right away. Another amendment is to allow the SMC to release information to prescribed persons or Government organisations for policy planning and other purposes. Such information includes names and biodata, information on professional qualifications, as well as employment data. This is consistent with the provisions made in the Private Hospitals and Medical Clinics Act. Before closing, Mr Speaker, Sir, I would like to take this opportunity to touch on two related matters: Firstly, the Schedule of the Medical Registration Act, which lists the basic medical degrees recognised for registration in Singapore, and secondly, the one-third quota placed on the female medical student intake into the National University of Singapore. Several Members have asked for these two policies to be reviewed. I am happy to announce that the Ministry of Health has decided to expand the Schedule, which lists the foreign universities and medical schools whose medical degrees are recognised for registration in Singapore. Also, the one-third quota on the intake of female medical students into NUS will also be lifted with effect from academic year 2003. I would like to thank Members who have raised this, including Mrs Lim Hwee Hua and Dr Lily Neo, and to thank them also for their patience when raising these two issues for review. Good things come to those who wait. In conclusion, Mr Speaker, Sir, the proposed amendments to the Medical Registration Act would allow the Singapore Medical Council to maintain the high professional standards of the doctors practising in Singapore. This will help ensure that Singaporeans will continue to enjoy a good quality of medical care and to continue to have full confidence and trust in the doctors whom they consult. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I would like to declare that I am a General Practitioner and I stand to speak in support of the Medical Registration (Amendment) Bill. First of all, I must say that I welcome the good news that the quota on the admission of female medical students to our university is to be removed at long last. The public and many Members of Parliament in this House, myself included, had spoken for the regulation to be rescinded. Sir, I am indeed heartened that our Government has responded to the people's wish and that the Backbenchers in this House had not spoken in vain. Today's announcement removes the quota of 33% on the admission of female students into the Faculty of Medicine which NUS introduced in 1979. The reason for introducing the quota for female medical students was that the attrition rate for female doctors then was 16-19%. Of course, this reasoning is not valid anymore as, currently, the attrition rate for male doctors is 2.8% and for female doctors is 4.2%. This announcement thus removes this rejection of entry to qualify people on the basis of gender, and will go a long way towards our vision of making NUS a "first world" university. Sir, Singapore prides itself on being a meritocratic society and the long overdue removal of this quota is definitely a right step forward for Singapore. The 1993 policy of not recognising the degrees from over 176 previously recognised foreign universities will be reversed. However, I believe that not all the previously recognised universities will be reinstated for recognition. Why is the Ministry of Health half-hearted in reversing this policy? As Singapore is emphasising the importance of life-sciences, and as we will need many doctor-researchers, would it not facilitate our future needs better by recognising all of the previously recognised medical schools? Sir, the Ministry of Health's projections for ideal numbers of doctors have been less than satisfactory so far. How sure are we that the Ministry of Health has better projections now to take into consideration our changing needs and trends? It is a known fact that there has been a shortage of doctors in the public sector for many years and this policy change will certainly help solve this urgent problem. Not only can we have the chance to get those Singaporean doctors who have graduated from these foreign universities to come home, we can also very likely attract other non-Singaporean doctors from these reputable overseas universities. This is especially significant when the cost to train a doctor in Singapore is so much higher in comparison to medical schools overseas. Yes, it apparently costs at least $400,000 here as compared to about $170,000 to $250,000 at the universities of Sydney, Oxford and Cambridge. Would the Ministry of Health be circumspect in assessing the shortage of doctors and solving the problem at the root cause of the shortage? Finding and attending to the reasons for shortages would be more effective than merely increasing the numbers of doctors. There is now an uneven distribution of doctors, with an abundance of doctors in the private sector and a shortage, especially of junior doctors, in the public sector. Junior public doctors have been facing problems like unsatisfactory work-terms, long and tedious working hours and poor career path developments. Sir, their morale is low and they often leave for private practice as a last resort. And, even if we increase their numbers, more junior doctors in the public sector will still leave in spite of poorer prospects outside if these causes are not addressed. I would like to suggest that, with the new policy in place, our public hospitals should stop employing doctors from non-traditional sources like Burma, Indonesia, China and so on, whose medical degrees were never recognised in the past. Singapore is known for its medical excellence and this had been built upon through years of excellent training of our doctors from the best centres. This prestige status must be preserved at all costs. To me, public hospital's reflex response to recruit doctors in the last few years from these non-traditional sources and to save costs is not acceptable. Sir, may I ask the Minister for Health whether the hundreds of doctors from the non-traditional sources presently in our public hospitals are being tracked and monitored continuously in terms of their performance? On the new regulation concerning Compulsory Continuing Medical Education, most physicians in Singapore are in general concurrence that the desired goal of CME is essential to improve medical practice. But many grouse that this has to come in the form of compulsion. The proportion of doctors who are already keeping themselves updated is definitely higher than the quoted figure of 49.5% for the year 2001 of doctors obtaining the minimum CME points. This figure refers to those who have officially documented their CME activities with the Singapore Medical Council. The CME programme has up till now been entirely voluntary and, hence, many doctors do not formally record or report their efforts in CME to the Singapore Medical Council. The fact is that continued medical education is part and parcel of a doctor's life, and when one takes up medicine, continuous learning becomes an inherent life-long practice. I dare say that all doctors do practise CME in some form or other and in varying degrees as a matter of necessity in the course of their clinical practice. Yes, we want medical excellence amongst our medical profession but we must still retain some degree of respect and compassion for human expectations and limitations. For doctors in the public institutions, the CME requirement is fairly easy to achieve. However, for some private practitioners, especially the solo HDB doctors who work long hours on days and nights, the timing and format of CME become an issue. We have to spare a thought and cater for their difficult situations. I hope the Ministry of Health can be the body that facilitates and formulates CME for them and ensures that professional bodies cater to their needs. May I also beseech the Ministry of Health to ensure that the implementation of this programme on CME is flexible, realistic and achievable. Formal CME lectures may not be as effective as it was believed to be. Interactive CME sessions that enhance participant activity and provide the opportunity to practise skills may be more useful to effect change in professional practices. High quality professional learning opportunities online should be readily available for self-directed learning. CME programmes to meet the needs of the nation should be incorporated. For example, in view of our ageing population, there should be programmes to better equip the medical profession here for the care of the elderly in the community and, in their own homes, so that the elderly can avoid tertiary institution as much as possible. May I ask whether the Ministry of Health will set a certain budget for this Continuing Medical Education yearly? At the end of the day, the quality of CME will depend on the resources put in. Although the pharmaceutical industry may be very willing to generate goodwill by helping the providers of CME with the costs of educational programmes, the curriculum content and the educational event are often-times influenced by the financial support and the quality and value of such CME activities may thus be closely linked with the marketing of a particular pharmaceutical product. May I ask the Minister if there is a provision for doctors who, due to unforeseen circumstances, cannot fulfil the required points of CME in the prescribed time? Will the Minister elaborate on the circumstances allowed in such cases? Mr Speaker, Sir, the Interim Orders Committee (IOC) amendment seeks to put in place an IOC to suspend or order a restricted registration for a doctor under investigation. This amendment applies to a situation when the Complaints Panel, Complaints Committee, Disciplinary Committee or Health Committee refers the matter to the IOC. However, it does not address the issue as to under what circumstances the matter can be referred to IOC. Furthermore, there can be a possibility that the doctor in question had been suspended but the eventual finding of the Complaints Panel, Complaints Committee, Disciplinary Committee or Health Committee is in the negative. On the other hand, as suspension or orders had been granted by the IOC, the Complaints Panel, Complaints Committee, Disciplinary Committee or Health Committee may be under pressure to make a positive finding. As such orders to be dished out by the IOC have grave implications on the doctor in question - being seen guilty even before the finding has been concluded, standing to lose patients and practice and living with the stigma attached to the order - such a provision ought not to be introduced in the first place. The truth is that the circumstances on the charge may be difficult to ascertain and controversial. For example, a doctor that is accused of repeated poor performance may not be entirely at fault. It may be because the doctor was frequently getting bad cases that were not curable. In the event that such a drastic suspension measure has to be taken by the complainant, the matter can be referred to the High Court for an injunction against the doctor in question. An injunction will attract an undertaking from the complainant to pay damages to the doctor in question, if the Complaints Panel, Complaints Committee, Disciplinary Committee or Health Committee, after its investigation, arrives at the finding that there is no misconduct or incompetence on the part of the doctor in question. This will ensure that there is no frivolous application for injunction, or suspension. As per the amendment, the IOC majority vote will be sufficient to make an order. This may not be equitable given the grave implications. If the IOC is to vote for an order, it should be by way of an unanimous decision. The amendment also gives the IOC the power to vary the order if the Complaints Panel, Complaints Committee, Disciplinary Committee or Health Committee recommends the same. This again seems to be inequitable. If a variation is required, the matter ought to be moved to the High Court for a decision and not remain within the IOC Complaints Panel, Complaints Committee, Disciplinary Committee or Health Committee level. Amendment to section 20 (clause 7) proposes to amend that only those who have completed their housemanship satisfactorily can be granted full registration. Sir, under what circumstances would housemanship be deemed unsatisfactory? This could be very subjective and there are assessors with different expectations and standards to demand of their housemen. In any case, I would have expected that doctors coming out of NUS, deemed a world class medical school, would have produced high quality doctors. There is also no stipulated maximum period for this conditional registration. So housemen can be forever in the same position for as long as his seniors think they are not satisfactory in their performances. By the way, will hospitals that are short of doctors now use this regulation to tie these doctors to ease their shortage? How will the Ministry of Health ensure the avoidance of such high-handed unfair practice? What kind of recourse can these housemen seek? Furthermore, the amendments do not address how the Medical Council is going to decide on the procedure of granting conditional registration. Will there be a committee? Who will be on the committee? Is it the whole Medical Council? Will a meeting be convened? There are lots of uncertainties as to the procedure. Sir, now that Singapore Medical Council is to be given sweeping powers, we must ensure that there is a fair representation of doctors from both the public and private sectors and from as many disciplines and groups. We must also ensure that the members of the Council are of a high calibre. Could the Minister elaborate on how this is being ensured? Sir, these are some of my concerns and I hope that the Minister for Health would address them in this House.

Mr Speaker, I did not give notice to speak. But having heard the Minister and also Dr Lily Neo, I thought I want to say something. In particular, I am very concerned about CME. I remember 20-odd years ago, when I was in the College of General Practitioners, we mooted this idea of CME. I am indeed glad that it has been adopted now. 20 years is a long time. But, at that time, we set out the format for doctors to undergo this CME training. It is true that doctors should stay abreast of science and also the practice of medicine. However, I can see some problems now because many practising doctors, especially general practitioners, are trying to find time to attend all these lectures and talks. At the moment, I notice that there are also drug companies trying to participate in these CME exercises, and I remember this has stretched as far as 20 years ago when we started this, where they invited a lot of practitioners to attend the talks that were given by drug companies and the lectures were given by doctors and specialists. I thought that was very good. In the year 2000, as stated by the Minister, 39% managed to fulfil the 25-point requirement, and in the year 2001, 49.5% fulfilled. I hope that the Ministry, or the people who are in charge of this CME, would find some easier format for the hardworking doctors, both practitioners outside and also in the institution, to be given the time to participate in this CME exercise. In other words, like Dr Neo said, it must be flexible and achievable. I am sure the Minister would take note of that and make those recommendations to the people who are formulating all these CME exercises. When I first read the Bill, there is one particular clause that caught my attention and, that is, the new sections 49A and 49B which actually call for the interim suspension order. And like Dr Neo, I was a little bit worried because we might be actually prejudging a doctor and subjecting him to some sentence before he is actually found guilty. But having heard the Minister, I am quite comforted now. He said that this particular interim order will only be used when there is compelling evidence. And he also cited compelling evidence like doctors who may be of unsound mind. After some time, we doctors, through years of practice and ageing, may also have undergone mental changes. Some of them may also be a bit of schizophrenic. When you get all those cases, I would agree with the Minister that you had better suspend these doctors first before you put them back into practice, or even wait for the lengthy procedure that usually takes place when we investigate a doctor who is subjected to disciplinary procedures. He also mentioned about the safeguards for the rights of doctors, and I do not want to elaborate on them. The other point was this full registration of doctors or housemen who are Singapore degree holders. I honestly do not see much change. In the past, it was also the same. The doctor who has completed six years of medical school, goes through one year of housemanship and then he gets registered. Of course, he must subject himself to a review by his peers to make sure that he is fully qualified because passing an examination is one thing, but doing the practical aspects of medical practice is another thing. Therefore, I agree with the Minister too. The other point is that he also mentioned that there will be more women being allowed to enrol into medical school. I know that the original reason why they did not allow was that many women, who took up medical studies, finally did not end up practising, and that is a sure waste of manpower. I remember also in the old House, we had a lot of discussions on why women, who want to take up medicine, should have a little less priority. But through the hard work of Dr Lily Neo and many Members in the House, the Minister has changed this. The other point is enlarging the list of overseas medical colleges and universities. Yes, we had actually many cases of very bright students who could not get places in the universities here and they had gone into some of the overseas universities which were very good. But, unfortunately, they did not get recognition. Dublin, Adelaide, for example, are very good universities. But they did not fall into that list and the students who graduated from those good universities failed to get registration. And that is a pity. So I hope that list would include such good universities too. With that note, I support the Bill.

Mr Speaker, Sir, I thank the Members for their comments. Let me respond to them. First, on the schedule for recognising the universities and the medical colleges. Dr Lily Neo asked why not just recognise all 176 universities in the pre-1993 list. It is already 10 years since 1993, and we have asked SMC to take a look at all the universities from a fresh approach and recommend to the Ministry which universities and medical colleges should be put into the schedule for recognition. There are two aspects to it. One is the quality of the medical schools and the universities. And secondly is the compatibility of their training and curriculum to our practice here. So not being on the list does not mean that the universities are not good. They could be good, but we also want the way they teach their students and the way they organise their curriculum to be reasonably compatible to ours. There is really no need to have such a long list, because our projection is that we would need to supplement our local output of doctors by between 50-80 doctors who are foreign-trained, whether Singaporeans or foreigners. We really do not need such a long list of universities. If we look at the pre-1993 list, the bulk in the list are American universities. We do not really get many graduates from the American universities. SMC should look at the list and identify those universities and medical colleges that we are likely to have Singaporeans or where we are likely to be able to recruit foreign talent. So, it is with a clearer objective in mind. On the shortage of junior doctors, I agree with Dr Lily Neo that we should look at the root causes of the shortage of junior doctors. I think the way to approach it is really to restructure the whole process in the hospitals and in our clinics. In the past, our hospitals and clinics had got used to using junior medical doctors, because they were bonded to us for a number of years and, when the numbers fluctuate, then the establishment is not filled. We have asked the hospitals to actually look at the processes and to look at employing experienced medical officers and not just use these people who are with us for the period of the bond, but use experienced doctors who may not want to go on to a specialty but who are quite happy to have a career working in the hospitals as very experienced medical officers. So, they have done so and they have a resident physician scheme and it is becoming quite attractive. In the meantime, the hospitals have recruited doctors from some non-traditional sources. They have been very careful to make sure that these doctors are of very high quality, and all these doctors are practising in an institutional set-up. They are closely supervised and monitored, and they add value to our healthcare system. So, it is not just a matter of cost and lowering cost. I know Dr Lily Neo says we must preserve quality at all costs. But I am sure the next time I come here and ask for a fee increase, she would be the first to jump up and argue against a fee increase. So, we have to be quite clear. It is not just a matter of lowering cost; it is complementing the range of expertise and experience that we have in the hospitals. On CME, I take both Dr Lily Neo and Dr Tan Cheng Bock's comments. We have tried this on a voluntary basis. Other countries and jurisdictions have gone on to make it compulsory. I think we should follow suit. Our requirements are not that stringent. 50 points over two years is not an overly difficult hurdle to cross. I recognise that those working in the restructured hospitals or institutions will find it easier, whereas those who are operating solo practices out in the heartlands will find it more difficult. And that is the reason why we have worked very closely with the College of Family Physicians and the Singapore Medical Association to work out mechanisms, whether it is online or self-directed, to make sure that the private sector general practitioner can have access to CME. Both the clusters have extended schemes to the private sector general practitioner under the partnership scheme, where GPs actually work with the clusters as partners, referring to the specialist clinics and vice versa. Therefore, this link-up will allow the private-sector GPs to attend the CME classes run by the clusters. But I must say that in the end the private-sector GP must make an effort. We do run these classes in the evenings and on weekends, but they must make the effort. My view is that 50 CME points over two years is not that big an effort to make. But I take the comments of Dr Lily Neo and Dr Tan Cheng Bock that we should make sure that this is flexible, realistic and achievable, and that we will work together with the various professional organisations to make sure that this is so. In the end, the professional organisations must run CME on their own budget. The Ministry of Health has given them a transitional budget to help set up the online processes, working out the curriculum. But it is not our intention that this fiscal support should be in the long term. So, beyond the transitional grant that the Ministry of Health has given them, our intention is that the medical profession must stand on its own feet. On the points made on the Interim Orders Committee, as I explained in my speech, we know this is a very delicate balance. We need to protect public safety. At the same time, we need to recognise the rights of the doctors. Therefore, if we ever have this order to suspend a doctor's practice, I can assure the House that this would be done very, very selectively and, when there are compelling reasons in order to protect public safety. We have modelled this after the UK. Let us try this out. We have put in all the safeguards that we have researched on. But I think we need to strike a balance. We cannot just give the doctors a blank cheque to say they must practise, whatever the circumstances. At the same time, there are issues of public safety involved, especially if the doctor is a very severe alcoholic or has a drug addiction problem or a very severe mental illness problem. So, I assure the House we will do this very selectively, and only when there are compelling reasons. On the registration of housemen, today graduates from our local universities go for housemanship and, at the end of housemanship, they are given full registration. But in one, two or three cases every year, the panel of assessors and the Dean would have been happier if the doctor underwent a longer period of supervision. The system here is that we allow the doctor, after the one-year housemanship, to go and practise solo. This is a very high burden. If I may use the analogy of a private pilot's licence. You may know the theory of how to fly a plane. You may be able to fly a plane with the instructor next to you, to land and to take off. But to fly solo, you need a certain exposure to the different circumstances that may arise. You need experience and judgement. In a few of these cases, the panel of assessors and the Dean would rather that the doctors not go solo in the HDB heartlands, but that they spend another three months, six months or another year under supervision. Then, I think, we will be more confident that the doctor can fly solo in the HDB heartland clinics. This provision is to allow the panel of assessors and the Dean to have this flexibility of awarding conditional registration, so that the doctor still continues to practise, but practise under supervision. Then, after a period of review, when the panel is confident, then the doctor is given full registration. Again, I will assure the House that when we implement this, there will be proper checks and balances, as we do whenever we assess the capabilities of the doctors. On the representation of the SMC, the Act allows for the SMC to be constituted, some appointed by the Minister, for which we have certain criteria to make sure we have a cross-section from the private and public sectors, people from different specialties. But the bulk is elected by the doctors themselves. This is the essence of self-regulation by the SMC. Here, I think, we would expect the doctors to exercise good judgement in electing a professional body to look after their professional interests and who will be in charge of regulating them. So far it has worked well. We will continue to monitor the SMC. Over the years, it has built up a strong reputation. It has the support of all the doctors and I am confident it will continue to do so.

Mr Speaker, Sir, I would like to seek a point of clarification. The Minister did not answer my points on whether there is a provision for doctors who, due to unforeseen circumstances, cannot fulfil the required CME points within the prescribed time. Will he elaborate on the circumstances allowed in such cases? Also, is there any recourse for a houseman to take? The Minister said earlier that the non-traditional sources of doctors are of high quality. Is he implying that there is no need to recruit doctors from reputable universities now, and that there is no necessity to send our doctors to the reputable universities and the best centres to train? Where is our medical health heading then? Is he not risking throwing away the prestige of medical excellence that we have painfully built up over the years? What kind of confidence can we get from our own Singaporean patients and foreign patients, especially from the region?

Mr Speaker, Sir, as I mentioned just now, 50 points over two years should not be such a difficult hurdle to cross. Many of these points are accumulated just by self-reading, answering questions. We are talking about 50 CME points over two years. I do not see that being difficult to achieve.

No, should the doctor be hospitalised, for example, due to unforeseen circumstances.

If the doctor is immobilised for two years, then I am sure the SMC would take that into account. On recourse by junior doctors for the housemanship, this is the usual process: we have interviews with the housemen, they go through three supervisors and are supervised by the Dean. So, there are a lot of feedback channels for the housemen, if they think that they have not been properly assessed. The Director of Medical Services takes a very personal interest in all the housemen. This year, for example, one houseman came to my office and asked to see me, and I saw her. We keep a fairly open-office policy in the Ministry of Health. So, I think there is enough recourse. Of course, if they find all these unsatisfactory, they will make a beeline to see her! On the quality of doctors, I think we are still maintaining the very high quality of our doctors. The main strategy is really our Health Manpower Development Programme (HMDP). This has been on for many years. Our doctors go to the best and most reputable centres around the world, funded by the Government. This is how we keep up with the latest. The HMDP programme is our key in keeping this quality. At the same time, we do face a shortage of doctors. With the expansion of the schedule, we will be able to recruit both Singaporean as well as foreign doctors from the foreign universities. After 1993, when the list was restricted to 28 and then, now 24, our avenues of recruitment were limited. So, with the expansion of the schedule, obviously we have more choices. But I would not rule out completely and insist that our clusters are not allowed to recruit from universities not on the list. Why do we want to constrain them? As long as they make the assessment that these doctors meet the quality standards and these doctors practise under close supervision, they add to our capability. And many of these doctors may later on continue to take up specialist courses and join our system. Why do we want to restrict ourselves and restrict recruitment from some of these good universities, even though they may not appear on the schedule? They come, work for us for two years, we assess them and, if they are good, we encourage them to go for specialist training. They add to our talent pool. I do not see why we should cut them off.

Now that the Minister condones such a practice, I am sure our public community hospitals and even the private hospitals will take in more doctors from the cheaper non-traditional sources for the benefit of saving costs, but not necessarily to the benefit of the patients and the nation. Mr Speaker, Sir, I just want to register one more point to my disappointment over this response from the Minister, because I feel that this is definitely a soft option and not preserving the prestige of medical excellence in Singapore, and changing the position of our healthcare service.

Mr Speaker, Sir, can I just seek a point of clarification from the Minister? This is a matter concerning CME and registration. Must a person be a practising doctor before he can do his CME? For instance, there are quite a number of doctors here in this House, eg, Dr Balaji Sadasivan, Dr Vivian Balakrishnan, who are no longer practising. They also need registration but they are non-practising doctors. Can they get registration also, without having to go through, say, the CME, because they are in this particular position, and let them take the CME later, say, when they have finished their political career and they want to go ---

You have made your point, Dr Tan. Mr Lim.

You mean, to get registered?

Right. I hope you get what I am trying to say.

When the doctor comes up for the renewal of his practising certificate, he must demonstrate that he has at least 50 points over the last preceding two years. If they do not want to practise and they are not seeking a renewal of their practising certificates, they are temporarily exempted from doing the CME. But if they want to practise at some point in time, if they want to renew, then they must take the CME.

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

Resolved, "That Parliament do now adjourn to a date to be fixed. " - [Mr Mah Bow Tan].

Adjourned accordingly at Twenty-seven minutes to Five o'clock pm to a date to be fixed. Annex - GST Offset Package