Hansard, 2003-09-01

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: NameFromTo (2003)(2003) Mr Lee Kuan Yew 1 Sep1 Sep Mr Lim Hng Kiang3 Sep6 Sep 16 Sep18 Sep 21 Sep25 Sep Mr David T E Lim16 Sep18 Sep 12 Dec28 Dec ABDULLAH TARMUGI Speaker Parliament of Singapore

The following Question stood in the name of Mr Zainudin Nordin - 1. To ask the Minister for National development (a) how effective is the Ethnic Integration Policy; (b) how many appeals have been received by the Housing and Development Board for waiver of the policy on the grounds of (i) sales due to divorce, (ii) acquisition of new flats and (iii) financial difficulties; (c) how many of such appeals have been successful; (d) whether there has been an increase of such appeals; (e) what is the assistance that HDB renders to these cases; and (f) whether there will be a further review or refinement of the policy in the near future.

Question No. 1, Sir.

Mr Speaker, Sir, the Ethnic Integration Policy (EIP) was implemented in 1989 to promote racial harmony in public housing estates. The policy maintains the proportion of each ethnic group within certain neighbourhood and block limits. The EIP has improved the ethnic balance in HDB estates. In 1989, 28% out of the 125 neighbourhoods had at least one ethnic group which reached or exceeded the neighbourhood limit. Now, there are 25% of such neighbourhoods, although the number of neighbourhoods has grown from 125 to 165. Between January and July this year, HDB received 181 appeals for waiver of EIP for resale of flat. The flat sellers appealed for waiver of EIP to widen their base of potential buyers in order to secure higher selling prices for their flats. Most of them were selling their flats to buy another HDB flat or private property while some indicated financial difficulty as the reason for the sale. Only 7% appealed to waive the EIP for resale of their flat due to divorce. As the EIP is very important in maintaining racial harmony in Singapore, we have to apply it consistently. Waiver is granted on a very exceptional basis. The EIP has worked well in forging ethnic integration and harmony among HDB residents. We will regularly review and refine the policy if necessary.

Order read for Resumption of Debate on the Prime Minister's Statement [28th August, 2003]. Question again proposed.

Thank you, Mr Speaker, Sir, for allowing me to join in this discussion. I have a few points to make on the recent announcements on the CPF and I hope I will not repeat too many points here. Firstly, I am of the opinion that the cut is not deep enough if we are really trying to meet our objective as spelt out in the Prime Minister's speech and that of the NTUC's chief, Mr Lim Boon Heng. If our reason is to make our workforce a more competitive lot from a wages' point of view, then I personally think that the cut could be deeper. A three percentage point cut can save employers about $1.3 billion a year. The bulk of this saving will be appreciated by the biggest employer, the Government and the Government-owned companies. The Government, as the Deputy Prime Minister has said, will save $175 million through this cut. Employers are mostly grateful but also cynical that these cuts will significantly reduce job losses or bring in foreign investments or stop the outflow of investments. If this is the reality then, is this only a half measure? It would be a sorry day if employers bite the bullet only to make sacrifices for a short-term breather, a glitch on the globalisation radar screen. If we are seriously trying to lure MNCs back and be a serious contender against China and India, this CPF cut will only buy us a bit of time and slower the pace on retrenchments. But whether it will make us attractive enough is a moot point which I hope there will be further clarification on. Secondly, on the issue of land costs, DPM has already reassured that prices have fallen since 1994 by as much as 41%. But are we still cost competitive with other countries around us? We have already lost big clients to Malaysia and the very example cited by Minister Lim Boon Heng of Philips having moved its manufacturing plant to Batam is also another case in point - cheaper land and labour costs in Batam. Land costs, I think, need to be buffered differently for different industries here. As our retrenchments are most deep in the manufacturing sector then it is equally important to see how land costs can be reduced for such industries to carry on their work in Singapore and provide jobs. Another example is that if we aim to be the fashion centre of the east, then the retail sector needs a helping hand too. A Straits Times article last March showed that land costs for SMEs soaked up between 5% and 10% for the manufacturing sector while the bill for the retail sector was between 40% and 50%. Yes, land costs are coming down but we need to do more and be more creative too. We cannot afford to have any more white elephants if we can help it. An example in point would be to help small businessmen who are looking for cheaper rentals. Might it not be a better idea to rent out the old HDB HQ at Bukit Merah at a much reduced price or to also help the 49 aspiring business enthusiasts from the NTU's Technopreneurship Centre that Mr Raymond Lim spoke about last week? These are individuals who need a start-up hand or a helping hand with cheaper rentals. This Centre in Bukit Merah - right now I am not sure whether it is white or cream-coloured - can become a bustling centre, perhaps even called the Creative Business Centre, and who knows, in time to come, we might have a Sim Wong Hoo emerging with all credit going to HDB. Next, I would like to comment on the $1 billion relief package. It brought on a great sigh of relief that we do know that in spite of the cut, the people in different sectors will be taken care of. The Cut Waste Panel is an excellent idea and I hope the terms of reference here will include looking at processes and schemes and not just the smaller items, though they are equally important. Competition between health clusters and among hospitals has driven costs up, especially sometimes in terms of salary packages for clinicians. Competition among schools has also led to much out-doing of each other in terms of event management or brochure-ware to `sell' the schools. Competition among departments and across Ministries has also driven small launches into mini-stellar events. The argument then that they are sponsored, in my opinion, by corporate sponsors' money, does ring hollow at this point in time when this valuable money should go into the coffers of Community Chest or any other charity that is crying out to help the less privileged in our country. I am heartened that the civil service salaries will be reviewed as it is hard to know right now which market is driving up whose salaries - the private driving up the public or the public driving up the private. A clear example has been given by Minister Lim Boon Heng last week on the benchmarking across different work groups in that international table that he shared with us. On training, while we inject money to give more training for the vulnerable and the unemployed, may I also suggest that we redesign the job scope for Human Resource Departments. HRM and HRD (human resource development) in many companies are sometimes functioning as separate entities or entities with very loose links. HRMs need to be agile, imaginative and visionary. Often, they are still functioning quite primarily as hirers and firers when globalisation demands a new order that ought to include personalised career planning portfolios, constant job-redesigning and training. They need to be ahead of the curve like UPS and Hewlett Packard who have constantly redesigned jobs and offered the right kind of training so that retrenchment becomes hardly, if ever, necessary. It is an irony that our only natural resources - the human being, the worker - are led by HRMs that are sometimes not fast enough on the move and do not themselves have a clear job description on personnel enhancement, processes and outcomes and to remain ahead of the curve. On the aid schemes that were spelt out, I share Mr Iswaran's deep concern on attitudes towards people in need. He has expressed his views so eloquently that I will just add this to the discussion - that as we render aid to people in need we need to suspend our own judgment or sense of values. None of us will ever know what it is like unless we walk in the other person's shoes, as what Atticus said in the book "To Kill a Mockingbird". I think that is a lesson we can all remember when, through our frustration, we start passing on some of our value judgments to the person in need. Secondly, it is vital to implement aid schemes well, with consistency and with expertise. Mr Ahmad Magad has already spoken on this need to have financial counselling. I would just push it a bit further to ask that it be a one-stop financial planning and counselling service to families in need such that what needs to be done can be mapped out against a time-line and all the aid schemes that are being offered and pegged to the training that they should be getting, plus what I am calling unofficially a "de-tox programme" to get rid of the problems that are stifling them or making them more dysfunctional year by year. With this time-line and constant monitoring, I think we will be able to get quite a number of our various aid schemes under a proper system of implementation which eventually should have an outcome that the family must move on and be better off. Thirdly, a query on the help schemes. The HOPE and the Small Families Interim Assistance Schemes have left the single parents in the cold. Then we ask why many among the single mothers do remarry and sometimes go on to have more children with their new spouses. Most of them, as data would show, are in the low income group. Many are also home-makers. Empowering such women takes time, training them for jobs will take longer when there is a conflicting demand on their time to look after the children. They also have a strong patriarchal mindset that men are the ones who should look after them. Given all these, it would be timely as social workers and VWOs work and get on with the educational programmes for these single parents. We should also back this with political will to help them to understand that people do come from different circumstances and not just review such cases on a case-by-case basis. In short, to me, the HOPE scheme and the rental policy do lack the vision in helping such families to get on and break out of the poverty cycle. I now turn to the two most vulnerable groups, in my opinion, who are in our midst. We need to think more long-term for them so that they do not become a social cost to the nation and their self-esteem is not compromised. I thank the Ministry of Manpower for giving me a very comprehensive reply to my Question on active and inactive CPF holders. From that data, there are 1.1 million inactive CPF account holders, of whom almost two-thirds are women. Among the active account holders of 1.3 million male members, there is a gross balance of about $110,000 while women have about $80,000. Women tend to live longer than the men and they have much less in their CPF. Many have dormant CPF accounts as a result of unemployment or being employed in the informal sector or being home-makers. We need to look into the CPF scheme to prop this up with various schemes that have been mentioned by Dr Jennifer Lee so that we can help these women and help them through the later years of their life. I would also like to ask if the CPF Board would like to consider perhaps an acknowledgment for this group of women who hold inactive CPF accounts that they be notified that their husbands are about to retrieve their retirement package so that at least they are aware how much money their husbands have accumulated and also plan with them, such that Batam becomes a figment of their imagination. The other group of people that I think we need to pay a little bit more attention to are the men and women in their late 40s to 50s - the sandwich generation is what we sometimes call them. They have been responsible family members taking care of their children, parents and, in some cases, grandparents. The data from the Manpower Ministry shows that men and women above 55 have an average net balance of about $30,000 and $23,000 respectively. I wonder what is going to be left for them to see through their retirement and old age. Inter-generational transfer of CPF savings has led to its own erosion for this group of account holders. The savings of this group of people too need some kind of shoring up so that they can tend to their health concerns as well as retirement. Lastly, I would just like to say that in this whole CPF phenomenon, there is a whole group of people who have upgraded themselves constantly and may be caught in a jam. There have been reports in the papers of some of them earning about $2,000 vying for or living in a 5-room flat, and wondering how they are going to cope. While we try and put in these packages, etc, for the current group who is coming in, I think the financial counselling at the HDB end and at other various ends needs to be propped up so that people are very much in the know. As Singaporeans, we too have to realise what is the value system that we are holding on to that has just led us to upgrade and upgrade, and now we are caught in not so wonderful a position, in some cases.

Thank you, Mr Speaker, Sir, for allowing me to join in the debate. Today, I would like to address the issue of whether we have a real plan to address our economic woes and also how radical have we been in trying to address our economic problems that we are seeing right now. The Prime Minister mentioned that the CPF changes are the most radical ever made for a long time, but, with all due respect, Sir, I do not see the radical part of the changes. The lowering of the CPF rate by 3 percentage points is but a minor adjustment, in my opinion. Sir, the real issue is one of total cost. I would like to take up the analogy used by the Deputy Prime Minister, and that is, of the frog in the boiling water. What we have done with the CPF reduction by 3% is just like reducing the heating device a little, but it is hardly the cutting of all energy sources which are boiling the water. What we need are bold moves which will allow the frog to be energised to jump out of the pot of water. Or what we need is to cut off all the energy sources that are boiling the water so that the water never gets hot, and the frog will never die. The changes announced will just prolong our problems, in my opinion, because along with the CPF changes we need to do many other things. The much needed radical changes are nothing new and have been brought up by many Members before and also in the House over the last few days. These are: (1) the various Government charges and fees; (2) the cost of restructuring and retrenchments, which can discourage companies from wanting to set up base down here. And this is relevant because before companies come down here, they want to look at the whole life cycle and the day that they have to leave if they have to put up 24 months of retrenchments, it could discourage them from coming into Singapore; (3) rentals, utility charges, and many hidden taxes that I have talked about many times; and (4) the cost of regulatory compliance. Sir, on the way back from USA yesterday, I read about DPM's comments that the Government has already adequately addressed these cost issues. While I agree that something has been done, the changes are however not radical enough. What signals are we giving to employers and potential investors about the Government's resolve to address the total cost issues in Singapore when we do not go far enough in reducing the costs related to the factors that I mentioned earlier. Let me just take the cost of government as an example. The cost of government directly affects the Government charges and fees and also sets the stage for cost of doing business in Singapore. The Government is only now realising that there needs to be a cut waste system to cut waste in Government. In my opinion, cutting waste is not good enough. Waste, of course, should have been cut long time ago. We also need real cost reductions across the Government and its agencies, and not just in the area of waste. Even if it is just waste reduction, it shows that cost can be brought down some more. I am confident that if we look at the other factors, we probably can find opportunities for more cost reductions. I would like to relate my personal experience so that everyone would know that I am not just talking theory down here. I have started a number of companies. The first major one was a semiconductor company which I started in 1998. It is a manufacturing plant that employs about 1,000 people in Singapore right now. When I started it in 1998, I believed that Singapore could still be competitive in that industry. That company which I left, because it was already successful in its own right, is still around with about 1,000 employees but it is struggling to be competitive right now. In the year 2001, I started another semiconductor company. It now employs 1,500 employees but of these, only 11 are in Singapore right now; 350 in the USA, and more than 1,000 in the Philippines where we run our production, and about 60 in India where we do our design work. I tried my best to justify the setting up of a production facility in Singapore, but the other alternatives like Thailand, the Philippines and Malaysia were more compelling. I still hope to create another 1,000 jobs in Singapore, but it must make sense and it is not about National Service for us, because we have to be alive for a long time and the competition is fierce and the cost can be a killer in Singapore. Had my management team made the wrong decision of forcing ourselves to set up a site in Singapore, we may not have been around today. So, if the Government can address all the cost and regulatory issues, I am confident that operating a large manufacturing site in Singapore for quite some time to come is possible. I know we can do it, if the Government gets the right formula implemented for cost reduction. Sir, the second issue is one of CPF, whether it should be compulsory or voluntary. If we look at countries which have gone through the same situation as Singapore before, particularly the developed countries that made their transition from not developed to being developed, I am sure we can get some good ideas, and one of them is a real radical move to make CPF less compulsory. Perhaps we can take the first step of breaking the CPF into two components - the first, compulsory; and the second, voluntary - supported by Government incentives to encourage employers and employees to voluntarily save for their retirement. At a 40% compulsory saving rate, employers have the flexibility to adjust only 80% of wages, which is what the employees take home. Also, about one-third of an employee's wage is compulsorily saved, thus reducing the amount available to drive the consumption part of our economy. I therefore suggest that we should move away from forcing Singaporeans and their employers with the statutory and compulsory saving regime. By all means, we should encourage savings for the future and for retirement, but let us make this a market-driven practice and the Government can play its part, not by forcing, but by incentivising. The truth of the matter is that while the 3% CPF cut is welcomed by companies, but when the companies faced the crunch over the last few years, they had already taken more aggressive moves like reducing wages by 10%, 20% or some, even 30%, depending on what it took them to survive in Singapore. This is the flexible part of the wages, while the CPF is the most inflexible part of the wage system because it is dictated by the Government. My opinion is that this issue of high forced saving rate is what is deterring companies from investing in Singapore. We have to change and follow what other developed countries do, and that is, to get away from this high forced saving rate and, therefore, reduce the Government's dominant role in determining the wage levels here. The market should be driving the decisions. Let us really cut the apron strings. Let us do away with the Government determining wages. Let us do away with the National Wages Council, which is another way of Government playing a dominant role in determining wages. Let it be market driven. It worked in the past, but it is not going to work in the future, in my opinion, for the changes that we are trying to make. The sooner we learn this new paradigm, the more successful we will be. Sir, the next issue is whether there is a plan for us to solve all our economic problems. Why is the Government pulling its punches? Half-hearted and piecemeal changes will prove counter-productive. We need the right mixture of ingredients to produce the right medicine which can be administered in the right dosages to cure our unemployment and economic problems. In my opinion, the CPF changes are but just one of the component ingredients and are not the final medicine which is so greatly needed right now. And if we think that CPF changes are going to solve all our problems, we are going to be mistaken. Sir, I fear one thing - two years down the road, after we have implemented the CPF changes, we will still be in the same position as today, because we did not make the other necessary changes. If we do not progress by then, Singaporeans will feel betrayed that the Government gave away their wages with no significant gain in return. Can we risk this happening in Singapore? The answer must surely be no. I hope that the Government is right. Time will tell if I am wrong about my assessment, and I hope I am wrong in this case. I urge the Government to reassess the situation with a much open mind. Please start believing the people and the private sector more, and I hope that we will find all the answers when they give their feedback. People ask me: does the Government really have a plan to get Singapore out of the current set of problems? Many feel that there is no real plan because CPF changes alone will not fix our problems. This is the feedback I have been getting from the ground. In this respect, can I ask the Prime Minister to share with the House the reasons why companies are packing up and leaving Singapore? Surely, it is not because the CPF is just 3% too high. I am sure that there are many more factors which are forcing companies to pack up and leave. What are these factors and what are we doing about them? I know of a few multi-national companies which are still planning to exit Singapore today. They are still here, but they are planning their exit. The momentum of companies leaving Singapore has not slowed down and unless and until we address the cost factors adequately, we will continue to shed jobs and lose companies. If the Government can share with all of us what these exiting companies are saying, perhaps we can be convinced that there is a good plan in place and that we can solve all of our problems. Currently, there are many sceptics - they are not yet convinced that we have a plan that will work. Sir, in conclusion, I would like to urge the leaders to come up with a convincing plan which can assure and also inspire the people of Singapore to rally around the Government to solve all our economic woes. It is not just about waiting and seeing the outcome a few years from now, but to give confidence to everyone that we can do it. I am convinced that if we take all the necessary radical steps, we can do it. But I have not seen all the necessary steps personally. We need the Government to be bold and more entrepreneurial than what they have done before. I hope that we will not be disappointed and that the economy recovers fast enough so that jobs remain in Singapore and the unemployment situation gets resolved quickly. The Minister of State for Defence (Mr Cedric Foo Chee Keng) : Mr Speaker, Sir, thank you for this opportunity to join in the debate. I would like to share my views, especially from my perspective as Chairman, SPRING Singapore. Many Members of this House have pointed out that the broader challenge confronting Singapore is not just about the retuning of the Central Provident Fund but how Singapore can continue to be competitive in the global marketplace. It is about our ability to create good jobs so that Singaporeans can chase their Singapore dreams. Let me briefly discuss the CPF changes. The 3% CPF cut and the lowering of the CPF contribution ceiling are significant to tackle our wage rigidity to respond to our immediate challenges but of greater significance are the changes that we are making to the withdrawal rules and Minimum Sums. The benefits of these CPF changes we are making now will largely be felt 10 years from now. For the first time, the CPF and Medisave Minimum Sums will be adjusted for inflation. They will provide a basic level of financial security for retired Singaporeans. Mr Inderjit Singh suggested that perhaps a part of the CPF contribution should be made voluntary. However, in reality, it is not so simple. Singapore's Total Fertility Rate (TFR) is at a 26-year low of 1.

38. Soon, a small base of young Singaporeans will be supporting a very large group of retirees. This "inverse pyramid" will be very unstable unless we require that every Singaporean put aside sufficient funds for his own healthcare and retirement needs. Otherwise, the burden on our future generations will be untenable. And at that time, taxes will have to increase. Singapore can no longer be an attractive place to work or live in. Many of our more capable youths will be drawn to countries offering lower taxes. The changes to withdrawal rules and Minimum Sums will underpin Singapore's competitiveness for the long haul and it is more significant than many have thought. Let me move on to discuss what else may be needed for Singapore to enhance its competitiveness. Lowering wage cost with a new CPF rate is a necessary but insufficient condition to regain our overall competitiveness. From the perspective of labour cost competitiveness alone, the odds are stacked against Singapore. The Prime Minister and Minister Lim Boon Heng have cited the wages of a manufacturing worker in Singapore compared to other emerging and competing economies. To top it all, the number of registered unemployed in China's cities alone is 8 million people. The US State Department estimates that the total number of unemployed and under-employed in China is a mind-boggling 350 million people! These unemployed will act as a buffer against any future wage increases in China. So China will remain wage competitive for a long, long time. There is no way we can match our wage cost "dollar for dollar" and "cent for cent" against these developing countries. And as DPM Lee has said, neither do we want to regress to such wage levels. In fact, our long-term objective should be to raise the real wage of Singaporeans and to keep the Singapore dollar strong. These are ultimately the drivers that would determine the quality of life in Singapore. But we cannot blindly push up wages unless it is supported by higher productivity relative to competing economies. Without which, Singapore cannot retain or attract enough investments to sustain our wage premium and to achieve full employment. Productivity improvement is the key to a nation's competitiveness. And it is a marathon without a finish line. Yet, we cannot let up. Some have suggested that we use our foreign reserves to prop up the economy and support our high living standard. But for how long? Our reserves are finite and can be depleted. The way I see it, productivity improvement is the only sustainable way for us to support a higher quality of life. In the face of recent retrenchments in Singapore, most notably SIA and PSA, many Singaporeans are understandably concerned about loss of jobs. There is widespread belief that productivity improvements and employment creation runs counter to each other. It is argued that higher productivity leads to job destruction. On the one hand, it is true that one of the direct effects of productivity improvements in an industry is that fewer workers are needed to produce the same amount of output. But this view is too simplistic. In reality, in a competitive environment, lower cost of production, as a result of higher productivity, will lead to lower prices for the products and will stimulate higher demand and therefore more products are sold. Soon, higher capacity is needed and more jobs are created. Even if the productivity surplus were distributed to shareholders, such surplus will be invested in other sectors of the economy or end up as higher consumption. All these lead to higher employment overall. The economic development in the US bears this out. In the 1990s, productivity and total employment were both growing in tandem at high rates. For Singapore, productivity growth rates averaged 3.5% per annum throughout the 1990s. During this period, total employment increased from 1.54 million in 1990 to 2.09 million in 2000. Singapore companies have performed commendably in their productivity quest. Let me just cite two examples, one in the 70s and a more recent one. In 1975, SBS introduced computerisation of the ticketing system and did away with bus conductors. They went One-Man-Operation (OMO). Productivity doubled. You need only the driver. Then they went on to operate double-decked buses with twice the capacity but with the same one driver. Productivity doubled again. Trans-Island also operates the "bendy" - a stretched ultra-long bus with higher labour productivity. If not for their productivity efforts, the recent transport fare increases would be much heftier. The other example concerns our cinemas. In cinemas of the past, at least one usher was used for checking tickets at each entry point. All employees were single-tasked. One is either the cashier, or the usher, or the snack bar attendant. In new multiplex cinemas, the layout is designed for only one ticket checkpoint for all cinemas and it is located near the snack bar. So that the jobs of ticketing, ushering and snack bar tending can be combined into a single category. These changes have enabled Golden Village to save about 40% in labour cost. Productivity can be achieved in two basic ways. Firstly, companies can reduce input for a given output, which means consolidating to leverage on scale or improve operational performance. Secondly, companies can increase output with a given input; which is a less travelled path. This means selling higher-valued and more innovative goods or selling more goods to increase capacity utilisation. When manufacturing cost index is adjusted for productivity, Singapore companies fared rather well. Singapore compares very well with the competing economies. The World Competitiveness Yearbook 2003 puts Singapore (with index of 100) as more competitive than China (with a manufacturing cost index adjusted for productivity of 113), India (122) and Malaysia (156). However, Singapore still lags behind Thailand (which has an index of 70.4). Among the measures announced by DPM Lee, SPRING Singapore will administer the $45 million Domestic Cluster Development Fund. The primary objective of the fund is to raise the productivity of our domestic sector. The fund will provide assistance for the engaging of consultants for Business Process Re-engineering, training, the purchase of equipment and intellectual property rights costs. It will help innovation diffusion within cluster, thereby raising overall industry productivity. One of SPRING's current priorities is to see how we can create jobs for Singaporeans through work re-design, which Ms Braema Mathi talked about. As Minister Lim Boon Heng said, Singaporeans may need to take up some of the jobs currently performed by foreign workers. If we merely replace a foreign worker with a Singaporean, we are unlikely to succeed. The job content currently performed by the foreign worker is low and these jobs typically pay low wages. I can understand that Singaporeans will not take up such jobs as they do not pay enough even for meals and transport. Well, why not just pay the Singaporean more for the same job? If we do so, we will be paying more for exactly the same job content, which means that the productivity level has fallen. Someone has to pay for it; either in terms of higher prices by consumers or higher taxes by taxpayers. A better solution would be to redesign the jobs, possibly with the application of technology. If we can enlarge and value-add to the job, these jobs can then command higher wages and be attractive to Singaporeans. One good example is the cleaner's job at the upgraded Zion Riverside Food Centre. Our National Environment Agency (NEA) has redesigned these jobs. The cleaners there now draw between $1,000 and $1,400 a month (with overtime) which is much higher than the $800 that cleaners usually earn. These cleaners had been trained under the National Skills Recognition System. They wear smart uniforms, use specially designed trolleys and the plates and utensils are washed at a centralised location. We could also use dish washing machines to enhance the efficiency further. Although each stall now contributes $200 a month, instead of $150 a month, towards cleaning, the centre now serves about 500 customers a day compared to 150 customers previously. Stallholders appreciate the faster cleaning cycle and customers enjoy cleaner tables and plates. We believe that there is scope to redesign work in other domestic sectors, like food and beverage, retail, healthcare, domestic/commercial cleaning and construction. The Domestic Cluster Development Fund will be used to seek out such opportunities. SPRING also administers the LETAS (Local Enterprise Technical Assistance Scheme) and LEFS (Local Enterprise Finance Scheme) to help small and medium enterprises in Singapore improve their productivity. Since the programmes' inception in 1986 and 1976, respectively, SPRING has given out $481 million in LETAS grants and has helped local companies raise $8.6 billion of loans through LEFS. SPRING conducted a survey of Singapore SMEs recently on their views towards the announced changes in the CPF. An SME, Aceford (a vegetable oil manufacturer) indicated that they are prepared to channel the CPF savings back to employees. Many SMEs, like "The Lighting Centre", said that they were prepared to help their employees should they face financial difficulties as a result of the CPF changes. These companies see the need to continue to reward talent. They understood that successful companies pay attention to all stakeholders (shareholders, suppliers, managers, employees and the community at large) rather than narrowly focusing on short-term shareholder value. Many of the SMEs remarked that their staff should not be overly concerned with the CPF changes. In fact, they said that the impact of the CPF cut is minimal because they already have in place reward systems that are linked to performance. Thus, when the company performs well, contributing employees will end up with significantly higher income, despite the CPF cut. Such performance-linked reward systems are to be encouraged as they ensure that wage growth lags productivity growth. On the other hand, companies with seniority-based wages are at risk of becoming marginalised. A prominent Singapore businessman recently visited a DVD factory in China and recounted his observations. This factory produces 8% of the world's DVD output. To his surprise, the factory is fully automated with the latest technology comparable even to those in the developed world, like the United States. The factory produces a small number of good jobs but have avoided employing a large number of production line workers, even though labour is cheap and in abundance in China. The factory owners did not merely resort to cheap labour but have set their sights much further, for much bigger and more sustainable growth. The jobs created by this factory will pay well and will continue to be around for much longer than traditional labour intensive production lines. The productivity level is very high and the consistency of high quality DVDs assured through the application of modern technology. And this is happening even in China! We live in a harsh economic world made harsher through globalisation and as we speak, insurgents are drawing out plans to out-do the established players and unless companies in Singapore, including our leading companies, continue to innovate and up their productivity, more Singaporeans may lose their jobs. I call on employers to work with SPRING to improve the industry's productivity. And, if retrenchments are inevitable, the Government, as DPM Lee has assured, will re-double its efforts to help place retrenched workers in new jobs. Workers, on their part, must adjust their expectations and be prepared to help themselves. Some jobs will never return, so continuous lifelong learning is the only guarantee of continued employability. We have already heard a frog story from DPM Lee on Friday. I have another story about frogs which is adapted from a movie, "Catch me if you can". Two frogs fell into a deep cream bowl. One was an optimistic soul, but the other took the gloomy view. "We will drown," he lamented without much ado, and with a last despairing cry, he flung up his legs and said, "Goodbye." Quote the other frog with a steadfast grin: "I cannot get out but I would not give in. I will just swim around till my strength is spent, then I will die the more content." Bravely, he swam to work his scheme, and his struggles began to churn the cream. The more he swam, his legs a flutter, the more the cream turned into solid butter. On top of the butter at last he stopped, and out of the bowl he gaily hopped. The going will be tough and it is difficult to predict how long we would have to keep swimming. But, Singaporeans must have the same indomitable spirit as the second frog. Our fortitude and strength in adversity will see us through these trying times. We will not drown like the first frog. Some may need help to swim. The Government will provide the life jackets, but Singaporeans must continue to churn the cream. Despite our competitive lifestyle, Singapore is still held up as a compassionate society. In Singapore, no one will go homeless, no one will be denied healthcare, and no child goes without an education. If we press on with the CPF changes and productivity improvements, we will soon hop out.

Mr Speaker, Sir, the Prime Minister has spelt out how the CPF system will be restructured for Singapore's long-term economic competitiveness. Last Friday, the Deputy Prime Minister announced the package of assistance measures to help individual Singaporeans cope with those changes. Today, I shall be elaborating on the details of the measures under the purview of my Ministry, namely, those on public housing and the construction industry. But, first, let me give an overview of the impact of the CPF changes on HDB flat owners and buyers. This was the result of a study which HDB did after the CPF changes were announced. First of all, the impact on existing mortgagors. There are roughly 800,000 HDB households - to be exact, about 795,000. Out of these, 530,000 have outstanding mortgage loans with HDB. Of these, 82% service their loans using CPF funds. Before the cut in the CPF contribution rates, there were about 200,000 households with shortfalls. In other words, their monthly CPF Ordinary Account (OA) contributions were not enough to meet their monthly housing instalments. With the CPF cut, this number will increase by 45,000 to roughly 245,000. The large majority will be able to cope using their accumulated CPF savings. However, about 35,000 or 4.5% or thereabouts of all HDB households may not have enough CPF OA and Special Account (SA) contributions and balances to completely service their HDB housing loans beyond a year. So, these households, ie, about 4.5%, will have to top up a small percentage of their repayments using other savings or cash. That is for the existing mortgagors. What about new flat buyers? The cuts in CPF contribution rates will have a minimal impact on new HDB flat buyers, especially the younger households. HDB estimates that the time required for new flat buyers to accumulate the 20% down payment using their CPF savings will increase by six to eight months, after the cuts. The total time required to accumulate the down payment remains at about four years. There will also be minimal impact on the ability of new flat buyers to service their mortgage loans. Those below 50 will need to use about 19-23% of their monthly household income to service their mortgage loans. This is quite close to the revised OA contribution of between 18-22% for this age group. So, 19-23% of their monthly income, after the cuts, compared to the CPF contribution of around 18-22%, ie, roughly about the same. Short-term assistance and downgrading measures Sir, while these numbers show quite clearly that the impact on both existing HDB owners and new flat buyers will be minimal, I can understand the sense of unease and anxiety among them. After all, the HDB flat is, to a large extent, probably the single largest purchase and asset of many Singaporeans. So, their concerns have been voiced by many MPs in this House - Mr Zainul Abidin, Mr Nithiah Nandan, Mrs Lim Hwee Hua, Mdm Ho Geok Choo, among others - who have all asked how HDB can help them. First of all, HDB lessees having trouble servicing their monthly loan instalments due to the CPF cuts can apply for several existing financial assistance measures. These include: 1) extending the mortgage loan repayment up to a maximum of 30 years, subject to the age limit of 65; 2) conversion to a Reduce Repayment Scheme, ie, mortgagors can apply to temporarily pay a lower monthly sum ranging from 50-75% of their normal instalments, and this will help their cash flow; 3) they can opt for short-term deferment of the payment of the loan instalments; 4) they can apply to pay their loan arrears by instalments; and 5) they can apply to include other family members as co-owners, so that these family members can help them to service the mortgage loans. Secondly, apart from the financial assistance measures that I have outlined, HDB lessees affected by the CPF cut can also draw on their SA savings to meet the shortfall in repayment after their savings in the OA have been depleted. Since 1999, when these schemes were put in place, HDB has assisted a total of 83,000 households under its various financial assistance measures. Over the same period, 92,000 individual HDB flat owners used their SA savings to finance their housing loans. Let me now turn to the issue of downgrading. Many MPs have argued in this House that this is a sensible option for lessees who are in financial hardship. They can sell their existing flat and they can downgrade to a smaller flat. I agree. However, they have to occupy their flat for a minimum occupation period (MOP) before they can do so. Several MPs have asked HDB to waive the MOP period for resale. I want to assure Members that HDB will do so for deserving cases. Some Members like Mr Yeo Guat Kwang have also asked HDB to facilitate downgrading for those in financial hardship. Today, the policy is not to grant a second HDB concessionary loan to those who are downgrading to a smaller flat. The purpose behind this policy is to limit the amount of subsidised loans given out, as these downgraders would usually have sufficient funds to finance the purchase of the smaller flat. I say "usually", and this is generally true. And HDB does not intend to change this policy. However, the HDB will exercise flexibility and grant a second concessionary loan to downgraders who are in severe financial hardship arising from certain circumstances. These include retrenchments, severe pay cuts, business failures, prolonged illness or death of the sole breadwinner and so on. The quantum of the concessionary loan will be capped at the outstanding loan for the existing flat. So, if they currently have an outstanding loan, that quantum will be the quantum of the new loan, or it will be 80% of the value or purchase price of the next flat, whichever is the lowest. This temporary measure will help lessees cope with the CPF changes and the economic downturn during this period. Sir, on the subject of flexibility, please allow me to take a little detour at this stage and comment on a case which seems to have attracted a little bit of attention recently. I refer of course to the case of this car wash company whose application to set up a car washing business in HDB high-rise carparks was initially rejected. And last week in this House, Ms Indranee Rajah cited this case, arguing for the use of common sense by Government departments. She noted that HDB rejected the idea because "It had not been done before". She added that if we use that kind of reason, we will never be able to do anything new. I agree with her. I thought this was quite out of character for HDB, so I checked. Now, I am pleased to set the record straight and inform Ms Indranee that HDB did not reject the idea because "it had not been done before"; rather, it had valid environmental and safety concerns. For example, there were concerns over the improper discharge of chemicals and washing detergents which, if not properly handled, would have ended up in our reservoirs. As Members know, there are certain bays in HDB multi-storey carparks where the discharge goes into the sewage system instead of into the open drains. So, this was one concern. There were also concerns that the prolonged washing in the HDB carparks may affect the flooring, which is not properly waterproofed, and may affect the structure of the carparks. But once HDB was satisfied that these concerns could be properly addressed through certain measures, it issued the licence for the car-wash company very expeditiously. So, it had a happy ending and I thought, far from illustrating a tardy, inflexible HDB, the episode did show a careful, practical and flexible approach to administration. Let us come back to mortgage loans. There have been other suggestions by members of the public on how we can help homeowners with their mortgage loans, and I thought I should also take this opportunity to address some of them. One suggestion was for HDB to reduce its concessionary interest rate of 2.6%. As Members know, HDB gets the funds for its concessionary loans from the Government at the CPF Ordinary Account interest rate, which is currently at the statutory minimum of 2.5%. The additional 0.1% is to defray HDB's cost of administering the loans. So, if we want to cut the HDB concessionary loan interest rate, we would, first of all, have to cut the CPF Ordinary Account interest rate. This would mean lower retirement savings for all members, regardless of whether they have outstanding HDB loans. And I think Members will agree that this is not a good idea. Another suggestion was for homeowners to stretch the tenure of their mortgages. Under current financial assistance schemes, HDB mortgagors can already extend their mortgage loan to a maximum of 30 years, subject to a 65-year age limit. So, the question is whether we should allow mortgagors to extend their loans beyond 30 years. Sir, I do not think this is either necessary or helpful because, in the first place, there are already many ways to assist HDB mortgagors who are in financial difficulty. As I have explained earlier, we can allow them to pay a reduced loan instalment, we can even allow them to temporarily defer their loan payments, which is really tantamount to stretching the mortgage payments. Secondly, of course, if we were to really give them a longer loan repayment period, this would mean additional interest cost for them and, in some cases, it would actually mean a higher mortgage instalment payment. I would like to reassure the House that HDB will do whatever it can to help existing mortgagors who will be affected by the CPF cuts. No HDB flat lessee who is in genuine financial difficulty will lose his flat just because of the cut in CPF rates. HDB will work closely with them to advise them on the appropriate measures to help them service their mortgage loans. Long-term measures Mr Speaker, Sir, what I have outlined are the short-term HDB assistance measures. I would now like to talk about the long-term measures in the HDB policies which have been announced by DPM last Friday. One of the main social objectives of the CPF scheme is home ownership. Our public housing programme has given Singaporeans a good home, and a strong sense of community. This year, in our National Day goody-bag, we received a little book entitled, "Things that make us Singaporean". It is an inspiring little book. It captures the feelings of Singaporeans about Singapore and what they feel connects them to this place. Let me read to you two of my favourites. On page 16, Mr Andrew Bok said, "Being Singaporean is when I say, 'Let's apply for a flat' and my girlfriend knows straightaway what I mean". I do not think you can say that in any other place in the world. On page 21, below a picture of an NS man sitting in a 3-tonner, Mr Lau Wai Leong, a pharmacist, said: "Looking out from a 3-tonner at the night lights of a HDB estate, and thinking: it's worth doing this for my country and my fellow Singaporeans." The HDB flat and National Service - these are two of the most enduring experiences of being a Singaporean - aptly captured in one sentiment. Sir, many Members have suggested that the Government re-look its public housing policies, like universal home ownership and upgrading. I agree that we should regularly review our policies. Indeed, I have explained many times in this House that my Ministry has been reviewing various HDB policies to ensure that our public housing programmes remain relevant to meet the needs of Singaporeans. At the same time, it must be in line with the Government's overall direction to restructure the economy and remake our society. But, even as we do so, we should be mindful of the powerful role that it has played in nation-building, and giving Singaporeans, like Mr Lau, a stake in our progress and prosperity, and something worth fighting for. I shall now outline some of the changes arising from these reviews. Subletting of whole HDB flat First, we are relaxing the subletting rules for HDB flats. Let me explain the rationale. Our economy and society are changing. In the new economy, there will be more workers who are on short-term employment, entrepreneurs without a steady income stream and young couples who are not ready to commit to a property purchase. As our people become more educated, they want to take greater responsibility, to make their own choices and be self-reliant. This is to be encouraged. And with greater individual responsibility, rules and regulations can also be relaxed. For many Singaporeans, their HDB flat is their single most valuable asset. However, we know of the often-quoted syndrome of being "asset rich" but "cash poor". Some flat owners really feel this. As flat owners grow old, they want to have more flexibility to convert their housing assets into cash to provide for retirement. Others may want to seek to generate income from the flats because they are in financial difficulties as the economy restructures. My Ministry has been studying how we can help Singaporeans better monetise cash out on their flats, while ensuring that there is no abuse of Government subsidies - do not forget HDB flats are very heavily subsidised - in order to promote home ownership. In January, we introduced bank origination of HDB market rate loans, another way to give HDB lessees more choice. And, at the same time, we relaxed the subletting rules for HDB flat buyers who took these bank loans. We have decided to further free up the subletting rules. From 1st October 2003, lessees of all HDB flats, who have occupied their flats for 15 years or more, will be able to sublet them, irrespective of whether they are resale flats or subsidised flats with or without outstanding loans from HDB. In addition, those who have occupied their flat for 10 years can sublet their flat immediately if they do not have any outstanding HDB loan. This move will make about 250,000 flats, or about one-third or 30% of all flats, eligible to be rented out. Some may ask why this restriction of 10 or 15 years? Why not 5 years? Why not remove the restriction altogether? We must bear in mind that the Government sells subsidised HDB flats for owner occupation. It is not for speculation. It is not, in the first instance, for income generation. So the minimum occupation period of 10 or 15 years serves to maintain the long-term owner occupation principle of our home ownership policy. With the relaxation, lessees will be able to generate income from their flats, without having to sell them. Retirees will be able to rent their HDB flats to generate cash to supplement their monthly income from CPF. If you look at the current rental rates, even if we allow for some reduction in the rental rates, the rentals can form a very significant part of their retirement income. We are talking about anything from $800 to $1,500 to rent an HDB flat. Then again, those who are in financial difficulties can also generate some income to tide them over their problems. Apart from the assistance to HDB lessees, this move will also enlarge the rental market for HDB flats and keep rentals reasonable. It will open up another housing option for those who are either not ready to buy or who are not able to afford a flat or who do not wish to be tied down by a mortgage at a certain point in their lives. To preserve the good environment of our housing estates and to minimise nuisances that may arise from subletting, HDB will apply certain guidelines and conditions for subletting. It will also work closely with grassroots organisations and residents to ensure that subletting does not impact negatively on the living ambience of our HDB estates. Extending the Public Rental Scheme The Government has always encouraged near universal home ownership and it has been successful. 85% of our people live in HDB flats, 95% of them own their homes. However, as our economy restructures, there will be some low-income households who may have difficulty sustaining home ownership. For them, subsidised rental housing may be a better option until such time that they are ready and can afford to buy an HDB flat. Today, the monthly household income ceiling to rent subsidised HDB flats is $800. Many Members, including Dr Maliki and Ms Irene Ng, have asked for the eligibility criteria to be expanded so that more can benefit from subsidised rental housing. As DPM announced last Friday, from 1st October 2003, the monthly income cut-off for the Public Rental Scheme will be raised to $1,500. The rents charged for this second tier of households earning $801 to $1,500 will be higher than those earning $800 or less, but they will still be very heavily subsidised and very affordable. For this second tier, the rents are between $90 and $110 for a 1-room flat and between $120 and $150 for a 2-room flat. This roughly works out to around 10%, or between 9% and 12% of the average household income of those who are eligible for these flats. While this move will make subsidised rental housing available to more people, we must be careful that rental subsidies are given to those who need them most. Tenants whose financial situations have improved should be encouraged to take up a home ownership flat instead. This will then free up more rental flats for the truly needy and will also prevent tenants from becoming entrenched in subsidised rental housing. This is a real problem. If you go to Hong Kong, you will see many tenants who have lived in their subsidised rental flats for many, many years, and inside their flats you can see plasma TVs, and we are told they own Mercedes Benzes, and so on. They have simply got so used to rental flats, because they are so cheap, and they just stay on and on. We have to guard against this entrenchment problem. HDB therefore intends to convert all existing tenancies to term tenancies and to implement income-based rentals. HDB will take into account the economic conditions before deciding when to do so, and any adjustment will be done in phases to allow people to gradually acclimatise to this. Mortgage financing policies for low-income families In addition to the option of subsidised rental flats, HDB has the Special Housing Assistance Programme (SHAP) to assist low-income families to buy their flats. Today, households with monthly incomes of $2,000 and below are exempted from credit assessment and are granted loans of up to 100% of the flat purchase price. While the intention is well-meaning, this has led to some lessees buying flats beyond their means. I agree with the sentiments expressed by many Members that Singaporeans should be careful and not over-extend themselves when buying property, whether HDB or private housing. Therefore, to encourage greater financial prudence, HDB will extend credit assessment to this group of flat buyers from 1st October 2003, just as it does today for all other flat buyers. HDB will also cap the quantum of mortgage loans according to the flat type purchased. I hope that these prudential measures will ensure that low-income families buy flats when they are financially ready and not over-commit themselves. I also want to assure that HDB will continue to assist this group to own their flats by selling flats at subsidised prices and before they do so, to give them financial counselling. HDB will announce more details on the various policy changes to be introduced later. New flats will continue to be affordable Sir, I wish to assure Members that the Government remains committed to providing affordable public housing to Singaporeans, especially to first-timers. HDB flats are priced below their market values to enable many Singaporeans to own a flat. In fact, we peg the prices such that 90% of Singaporeans can afford to own at least a 3-room flat. Many Members, like Mr Iswaran and Mr Ang Mong Seng, have asked many times whether HDB will build 3-room flats, either as entry-level housing or to meet the demand from downgraders. Today, first-timers earning $2,000 or less can walk in to HDB and buy a 3-room buy-back flat at subsidised prices. They can literally, if they are not fussy, actually walk in and get their keys. There are about 150 units of such 3-room flats offered for sale every month. The demand is about 90 per month on the average. There are sufficient flats available for those who wish to buy a 3-room buy-back flat if they are earning below $2,000. For second-timers, those who are downgrading, they can buy a 3-room flat from the open market. There are roughly 220,000 3-room flats available in the open market. I can assure the Members that there is currently no shortage. However, HDB will monitor the trends closely and review the need to build new 3-room flats, if necessary. For a start, we can consider building some 3-room flats in our SERS (Selective En-bloc Redevelopment Scheme) replacement precincts. As for new 4-room flats, we will be offering such flats for sale. There is a build-to-order (BTO) exercise coming up this month. These flats will be in Punggol, Sengkang and Sembawang, and they will be priced affordably. We have worked the numbers, we have done the sums and, roughly, households with an average monthly income will probably need to use about 20-22% of their monthly income to finance the purchase of these new flats. Again, just to remind Members, this is below the revised CPF OA contribution rate of 22%, and well within the 40% guideline which HDB and most financial institutions use as a basis for credit assessment. Sir, let me now turn to private property owners. Many have expressed concerns about the impact of the CPF changes on their mortgage payments. When we cut the CPF by 10 percentage points in 1999, we implemented various measures to help people to cope with these changes. Firstly, CPF members could use their Special Account to top up any shortfall in the mortgage payments after they have made use of their OA balances. And then those who still had a shortfall could apply for a bridging loan. Very few people actually needed this extra help, but the schemes gave comfort and reassurance to many. These schemes will still be made available. Based on our experience in 1999, the mortgage repayments should not be a major problem, as the cut is smaller, 3 percentage points instead of 10. Nevertheless, we will make sure that help is available to everyone who needs it. I am also pleased to read that private banks have expressed that they will also exercise flexibility and restructure their mortgage loans to help borrowers cope. So, these schemes will further minimise difficulty for borrowers. Mr Speaker, Sir, let me now turn to measures to help the construction industry. The construction industry is currently under a lot of stress. It has borne the brunt of the economic downturn. Annual construction demand has fallen from a peak of $24 billion in 1997 to $14 billion in the last two years. We expect that demand is likely to fall further this year to about $11.5 billion. As demand drops, competition becomes keener, more intense. Many contractors are cash strapped. Some have become insolvent. Sub-contractors are now complaining that they do not get paid or payments get delayed. Several public projects have been affected by work stoppages because contractors run into financial difficulty. On the average, about 60% of total annual demand in the construction industry is from the public sector. The Deputy Prime Minister has announced that Government will bring forward about 60 public sector projects worth more than $600 million in FY 2003 and FY 2004. This will help to boost demand, safeguard jobs and revive business confidence in the industry. Our records show that 92% of public sector project contracts valued between $10-$30 million were awarded to local contractors. As most of the projects to be advanced will be less than $30 million in value, we expect that local contractors will stand to benefit directly from this move, and it will help them to tide over this difficult period. We will also be fine-tuning some of the Government procurement policies in order to help to further improve the situation for contractors. In the last three months, the Building Construction Authority (BCA) has been in serious discussion with public agencies as well as the industry on how we can fine-tune the system in order to help the contractors. First of all, we will tighten the Contractors' Registry System (CRS) to better reflect the financial standing of contractors tendering for public sector projects. What we try to achieve with this is more timely financial health reporting which will then assist public sector agencies to select contractors who are capable of undertaking projects within their financial capacity. And, hopefully, this will minimise work stoppages and also the downstream problems of payment to sub-contractors and to suppliers. Secondly, BCA will relax the track record requirements for construction firms to renew and retain their CRS grades. I remember that some Members in this House brought up the issue of suicide bids and we had this very lively exchange as to whether contractors actually do go in for suicide bids. Nevertheless, the point is that in order to minimise the possibility of them being pressured to make such suicide bids, BCA will extend the qualifying period from three years to five years, as well as include some ongoing projects, rather than just the completed projects. Hopefully, in this way, construction firms will be able to secure their place in the CRS system, and not bid at any price just to secure jobs and to satisfy their track record. Measures under consideration to improve the payment system are also being considered. In consultation with Government and industry stakeholders, BCA will see how we can improve the payment system right across the value chain, and the aim is to improve the cash flow which, we all know, is the life-line of the industry. One measure being studied is to legislate a security of payment system, and the intention is to provide a fast and low-cost system of resolving progress payment disputes by adjudication. This is a complicated matter. It is not something that we will rush into. We have to consult closely with the various parties in the industry to ensure that all relevant factors and views are taken into account. A multi-agency task force is also reviewing the Public Sector Standard Conditions of Contracts (PSSCOC). And for those contractors who are involved in public sector projects, I think they will know exactly what this is all about. Under this contract, all payments to main contractors are governed by certain clauses. The proposal is for payments to main contractors to be made known to sub-contractors, so that main contractors cannot then say that they are not being paid in order to avoid or delay paying the sub-contractors. This is a common complaint of sub-contractors. We are seeing how we can address this. We are also looking to speeding up the valuation of variation works for faster progress payments and for settlement of final accounts. Again, another common complaint is that the Government agencies take too long to settle the variation orders and therefore progress payments are delayed. So, we will see whether we can expedite this. Further, the current clause which provides for withholding payments to contractors in order to recover liquidated damages and debts is also being reviewed. In other words, we will see whether we still need to consider a set-off clause whereby we hold back some monies that are owing to the contractors because they owe the agencies some money. This set-off clause currently is causing some difficulties to contractors. Sir, I will announce details of these measures in October. But let me stress that while we can take all possible measures to assist the viable industry players cope with the present difficulties, I must caution that, in themselves, they will not be sufficient. Companies must continue to improve their skills, consolidate their resources and upgrade their competitiveness. Those who are ready must seek opportunities overseas, and I am pleased that some of them are already doing so with some success. Hopefully, we can multiply this success further. We will help our companies break into markets overseas, like India and China. And as our economy recovers, so will the construction industry. Mr Speaker, Sir, let me say, in conclusion, that the CPF changes that the Government is making are necessary to save jobs in the immediate future. And in the longer term, they will enable our businesses to be more competitive and to position our economy for a period of renewed growth when the external economic conditions improve. The measures, which I have outlined, will help Singaporeans and businesses, in particular, HDB residents and the construction industry, adapt to the changes. Sir, thank you for letting me join in this debate.

Sir, may I seek a clarification from the Minister?

All right.

Sir, earlier on, the Minister said that there are some 35,000 households who do not have enough funds either in the CPF Ordinary Account or the Special Account to service their mortgage loans after the CPF changes. Can I know what is the profile of these 35,000 households and what is their room type?

I am afraid I do not have the profile at this point in time. I will be able to get it for him if he files a Question.

Sir, first of all, I would like to thank the Minister to allow the residents ---

Mr Ang, are you speaking?

I just want to check about the deferment period. Usually, the HDB allows for six months or one year. But if a resident, within one year, is not able to secure a job, can the HDB extend the period a second time or even a third time?

Sir, I think it was the Deputy Prime Minister on Friday who said that "HDB is forbearing to a fault." I think those were his exact words. I am sure that if a case like that comes up and if the lessee is genuinely unable to service his mortgage loan, HDB will bend over backwards to see how it can help him.

Sir, nobody likes to take bitter medicine. But then if you have been to one great and long party, a strong dose is probably what you need to sober up. As far as I am concerned, the party for Singapore ended in 1998 when we first felt the impact of the Asian financial crisis. Years of strong economic growth came to an end, and that was the day the music died. Then, two years of economic growth - in 1999 and 2000 - masked the fact that fundamental weaknesses remained unresolved, and that all was still not well and, for a while, many of us thought that the good times were back. Many companies thought it was all right to go on a hiring binge. I read, for example, that SPH Holdings recruited as many as 1,000 new staff in the year 2000, only to find that it had to inflict painful job cuts in less than two years. Likewise for Singapore Airlines, whose handling of its retrenchment exercise this year, exemplifies how a company ought not to handle industrial relations. Sure, it may have lost $200 million in April, but nobody pointed out that this was a company that also made near to $5 billion in the past five years, and, in all probability, might still make money this year. I have no quarrel with a company getting rid of workers if it is going to be financially crippled, only that in the modern day parlance of human resource managers, they cleverly called it a "pre-emptive lay-off" or they now use the term "rightsizing". They do not even call it downsizing because rightsizing allows the employer to lay off older and more expensive workers even when they are still doing all right, and then hire new, younger, and obviously cheaper workers. One of the bitter lessons workers have, therefore, learned in recent times is that loyalty to their company no longer counts. Even as we tell them that in this era of globalisation, no job is guaranteed for life, companies then must also come to realise that the workers of the future would no longer have the same kind of commitment, dedication and emotional attachment they used to have. Today, the bitter pill the Singapore worker has to swallow is the cut in the CPF. Two questions linger in this debate: is the cut itself enough to save jobs, and, if not, then what? Secondly, many Members have asked, how about doing more to make life more bearable in Singapore? Sir, the first concern is understandable. We have seen how companies, after cutting wages and even compelling their workers to take no-pay leave, still end up firing people. So if we make this cut now, can we still save jobs, not to mention create new ones? I do not think even the Government can give us a definite answer on this one. To be certain, no investor comes here purely with the aim of giving us jobs. They come because they believe that we can provide them with the means to enable them to make profits, and only then do they give us the jobs. So this cut in the CPF, as has been put up by the Government, is a signal of the Government's recognition of the competitive environment that we are now in and that we are prepared to be flexible and nimble. But is this a strong enough signal? Many businessmen do appreciate the savings that they would derive but they ask, why settle now for a range that will fluctuate with the economic cycle. In fact, this would be no different from what we had been doing in the past, where the CPF rate was adjusted along with the ups and downs of the business cycle, and what was missing was the certainty that businesses needed to base their long-term calculations. Sir, another view to this question has also been raised by some economists. The Government has said that the CPF cut would save employers $1.3 billion a year. I read that some economists have pointed out that the biggest beneficiary of this cut will, in fact, be the Government. This is because the Government and its GLCs form the single largest employer in Singapore, employing what they estimate to be 40% of our workforce. This means that the Government is, in fact, saving $520 million. With the increase in GST next year, the Government will rake in - it has been estimated, I do not know how correct it is - another $400 million. So if you add this $400 million to the $520 million, you get a total of $920 million that will actually be transferred out of the system back to the Government, and that leaves many of the economists to express the concern as to whether what is left in the private sector would be meaningful enough to create the new jobs that we badly want. Now, Sir, if past cuts in the CPF rate have still not solved our dilemma, then it must beg the question of what else. Like many other Members, I too share the view that Government can do much more to bring down costs. Sometimes, I believe that the problem with this whole issue of Government costs may lie in the way Government does its costings. How else can you explain why the Government charges 2% of the value of a car when you want to transfer ownership? And this value of your car is not its market value, not the price you sell and someone buys it, but a value determined by the LTA, which then, of course, turns out to be much more and, as a result, if you buy a second-hand car, you end up paying hundreds, and sometimes even thousands, of dollars to the Government just to register it. Now I bring this up because many SMEs buy second-hand vehicles for their operations as they cannot afford new ones, but they do not know why they have to pay so much just to have someone at the LTA press a few buttons on the computer and register them as the new owner. Then, last year, during the debate on the Medical Registration (Amendment) Bill, the House heard that it costs between $170,000 and $250,000 to train a doctor in a university in Sydney, Oxford or Cambridge - I think it was Dr Lily Neo who pointed this out - but educating one medical student at our own NUS costs about $400,000. Now this again begs the question of how Government arrives at such a cost, and how do we end up being double that of a world class institution like Oxford? Now, what about the point of making life more bearable in Singapore? Many of us do appreciate that Government has done a lot to lower various charges and given us rebates and Economic Restructuring Shares. But judging from what I have heard in the past few days, it seems we have not done enough. To make deep cuts that will make a meaningful difference to costs will mean re-examining the philosophies behind some of our policies. Sir, many of our policies were formulated to achieve certain social needs and while some may have succeeded in achieving the social needs, they have also turned out to be valuable cash cows for the Government. But if it is a cash cow for the Government, it translates to a burden for the people. Take for example the foreign maid levy which was introduced to moderate our reliance on foreign domestic workers. But each increase in the levy has added to the burden of many tens of thousands of households - and we still have not been able to curb the rising demand. Another example - transportation policies. They have always been controversial ones. We took fiscal measures to prevent our tiny island from being clogged with vehicles enmeshed in gridlock. But, in the process, we gained the dubious honour of being the most expensive place in the world to own and drive a car. In our desire, Sir, to have a world-class transportation system, we may have overlooked the fact that all that the Singaporean wanted was a system that could get him from point A to point B, without any of the frills that have actually resulted in higher fares. So, Sir, quite often it is this pre-occupation with wanting to be world-class in many things that sometimes has me worried. Sure, we do not want to be in the backwaters of nations but we also do not want to end up with a world-class cost of living, as a writer to the Forum page said last week, that is comparable to New York, Stockholm or Frankfurt. He was quoting from a cost of living index survey conducted by The Economist Intelligence Unit. Someone - I cannot remember who, but someone in this House - said that if you want the quality of a Jaguar, then do not expect to pay Toyota prices. Well, I think under the present day circumstances, Singaporeans will not mind being a bit more humble, and if we really want to be nimble and travel light, perhaps a ride on that nifty little Toyota will do just as well. Maybe it is not so classy, but if it does the same job, I think we can be quite happy. All of us - Government and people - have to have less expectations of one another. But were we all, in fact, everyone of us here, not responsible for asking Singaporeans to pursue the ownership of properties like there was no tomorrow? 3-room flat not enough? Well, upgrade to 4- or 5-room. HDB flat not good enough? Buy private property. One home not enough? Well, buy 2 or more, if you can afford it. And now we are even asking the Minister to release more flats for rental! Sir, this is going to be a rough ride ahead, but I think the people will accept the cuts even if it is with reluctance. They are prepared to take this journey with the Government, out of the valley of gloom to the promised sunny highland. Nobody likes to have his wages cut, particularly when we cannot even promise any restoration. So, I must say that while the announcement that a further cut in salaries of the political leadership and of top civil servants recently does show that we are prepared to lead the way, perhaps we should not be too hasty to say that this cut is only for one year. Why only for one year? Why not just leave the cut alone? I think at a time when we are asking everyone to tighten his belt, we should not be too fast in talking of restoring our own pay until we really reach that sunny highland. Sir, I believe that when the chips are down, the Singaporean is willing to face up to the difficulties. The party may be over, but we have not switched off the lights in Singapore yet, and someday, I hope, not too long, the music will start to play again.

Mr Speaker, Sir, I do not want to lament the past, like my good friend Mr Tan Soo Khoon. I want to see the future. I want to make sure that Singapore succeeds. According to a survey by the Feedback Unit, 70% of Singaporeans have accepted the need for the CPF cut. Now this figure of 70% was before DPM announced the help package. So the figure could have been higher. And I do not intend to bore this House with the reasons why we need to cut CPF any further. PM, DPM and Members of this House have given reasons why this cut is necessary. This debate is about the livelihood of Singaporeans today and the future. It is about labour market flexibility. Are we prepared to change to meet the new challenges of doing businesses in the world? It is also about capability and cost. Are we competitive? But above all, this debate is about jobs and job creation. To the Singaporeans watching us on television every evening, what they are looking for is whether we are able to provide them with jobs, and if they have got no jobs, they want to know what help lines are we giving them. And this is where I will approach this whole issue. These are very serious thoughts in their minds. The House is very familiar with the movement of white-collar jobs, from the US to India, especially in the area of IT outsourcing and business process outsourcing. These are very modern terms but these are very, very important terms for the business world. Other countries are having a slice of this business because of this outsourcing. And, therefore, we see countries like the Philippines and India having a slice of this business cake. Let me tell you, in the Philippines, Proctor & Gamble has already processed its payroll, travel, invoice processing and other work at offices in Manila. While it would be best if such works have been assigned to the Singapore office, like what Citigroup is doing with their cash, securities, and credit cards, Singaporeans may have to go and work in offices away from home. In other words, our share of the service business pie is getting smaller, and moreover competition from China has also affected our manufacturing side. Now what do we do? Surely we must do something to prevent this loss of jobs. We have never sat idly by. We have faced problems before, and only recently we fought SARS extremely well and gained worldwide recognition for our efforts to contain SARS. This debate would send clear signals to investors that the Singapore Government is seriously urging its people to stand up and face the new realities. The Government has got practically everybody involved - grassroots organisations, unions, employers, politicians like us, all together. And judging from the feedback, this wave of change in mindset, in attitudes, and even in our ego, is beginning to sink into the population. And this would bear well for our country. The pain that many will face is cushioned by the help package that DPM announced last Friday. It may not please all. But it must be managed well at the ground level, by our own grassroots organisations and by our CDCs. So everyone who needs help will be helped. Singaporeans want to know where the jobs are created. So looking at the help package of $1 billion, a substantial sum of $600 million comes from some 60 public sector infrastructure projects. These are mostly small projects, like development and improvement works for roads, schools, community clubs. These would definitely benefit the local contractors. But will the jobs find Singaporean takers? I hope so, especially in these bad times. We will have to wait and see because this sector of the economy has been primarily taken by foreign workers. The relaxing of the subletting rules will help some families, as this will provide some older Singaporeans another source of income. The $40 million Work Assistance Programme will help and encourage low income unemployed Singaporeans back to work. Tourism forms an important source of revenue for our country. And tourists bring a lot of income for the retail sector, the hotels and the tour agencies. This sector suffered tremendous loss during the SARS period. I was part of the "Cool" team that tried to help the tourism industry. I can tell you my first meeting at the "Cool" team was so depressing. The hotels were reporting 10%-20% occupancy rate. The retail sector was down. Tourist companies, tour agencies, were closing down. So I think the present $100 million Tourism Fund that has been allocated to them will definitely help the industry, at least to bring back the tourists and the jobs that have been lost. We have no choice. If we cannot find jobs in Singapore, we must go out to find them. With our brand name "Singapore" and an internationally recognised disciplined labour force, we have to chase for the dollar outside Singapore. So an understanding of world business practices by young Singaporeans is very important. Being educated, young and mobile is helpful. The MNCs now work differently. They are outsourcing IT, and world business practices have changed a lot. And this would require a lot of mindset change among our young Singaporeans to understand how they work. Big companies, as you know, are outsourcing to India, Thailand and the Philippines. And even our local banks, like DBS, also do a lot of outsourcing. So this International Enterprise Incentive scheme, which was proposed last Friday by DPM, will go to help local companies build the capabilities to venture abroad and thus provide more jobs. Mr Speaker, Sir, I read very carefully one interview that was given, and there was an exchange actually between our Minister Lim Swee Say and the IBM boss. It appeared in the Straits Times and, in that page, it included a column on the warning by IBM. There were a few tell-tale words that kept cropping up and I know they were meaningfully and carefully crafted words. The first word is "reconstruct", meaning simply change. The second is "deconstruct", meaning remove the old ways of doing business. And the third is "re-deploying" the supply chain. But two words captured my attention and also captured the headlines of the Business Times - capability and costs. The emphasis given to costs, especially in this economic climate, is very telling. This interview encapsulated the essence of how and what the MNC business strategy would be like and young Singaporeans entering the job market must fully understand this and be prepared to do overseas assignment. Singaporeans must have faith and confidence in the Government. The way we handled SARS was admired by many. It revealed a disciplined people with a strong will to overcome the odds. But we are in a better position today than in 1965. This was pointed out to us by the Senior Minister. This time we have assets in the form of our reserves. The reserves reveal our high standing internationally and that capability to tide over, if the worst happens. And, two, our FTAs. The FTAs would generate and guarantee us tax- free access to the United States, Australia and those countries who have FTAs with us. Many countries, in the earlier times, criticised us for all these FTAs. But I think they realise the importance of the FTAs and we must make full use of the FTAs. They are already beginning to negotiate for FTAs, but we have a headstart. So Singapore companies, especially our SMEs, must take advantage and leverage on the FTAs to help them better understand this very important premium. We should organise seminars and even set up a special bureau accessible to our SMEs and local companies to exploit our FTAs to enhance our business and to create jobs. Mr Speaker, Sir, there is one area which I share concern with Minister Cedric Foo. He spoke this afternoon about productivity, and I fully agree with him. I think our productivity has got to be looked at again. Minister Lim Boon Heng's chart on productivity revealed that we are not that productive, especially in our services side. Two things that MNCs are looking for, as I said earlier, are capability and cost. How capable is our workforce? I know we have a disciplined workforce, as I said, but this is not enough. We must have high productive workers, or what is so different between a Chinese worker, a Malaysian worker, or a Thai worker. We must have that premium. Our workers must be really productive because we cannot compete with their workers on cost. Productivity in services, as shown by Mr Lim Boon Heng in his chart given to the House, is significantly lower than in many countries with a population of less than 20 million. We are ranked 20th. I remember the strong emphasis by Senior Minister Lee Kuan Yew many years ago in one of his National Day speeches. It was, I would recall, a landmark speech. Because he emphasised the importance of productivity for Singapore's future. I think we must revisit that speech because it lays out the reasons why we must have a very productive workforce to meet the challenges. That was many, many years ago and yet to see the chart that we are ranked No. 20, I think, is a disappointment. I am not saying that we have not done enough about productivity. Minister Cedric Foo had highlighted what SPRING has done and all the productive work that they had put into getting Singaporeans to be more productive in so many sectors. But I still think much could be done. Let me give you an example that we are all very familiar with. Look at our construction site. It is always messy, noisy and housekeeping is poor, with materials thrown all over the places. I was having a holiday in Perth, Australia, and I was staying in a relative's house. The first day, I noticed a vacant plot of land adjacent to this house. The second day, three or four workers came and started working on it, and there were only three to four workers. But by the seventh day, I could see that at least the bottom half of the house was already constructed. No noise, yes, I could hardly hear any noise. The materials were well-stacked and put neatly away. Of course, they used a great deal of prefabricated items, and there was hardly any mess. The few workers seemed to know exactly what to do and no one seemed to get into each other's way. Later, I discovered that each of the workers is actually a professional builder and he reads the house plan. I think if you are able to read the house plan, you will not get into each other's way because you know what to do. But, unfortunately, for our workers, I do not think they even know how to read the plans. And that is why we get such shoddy work in our homes. So if Singaporeans want the jobs back in the construction industry, they must be more productive for the construction company's boss to hire them. They are no match against the foreign workers, in terms of pay. They must be more than just simple workers. They must work smart. They must be able to read the house plan. They must be multi-tasked people and can be paid higher for their job. When I was renovating my house, it took the local contractor four times to fix my wash basin. I thought his workers were all foreign workers. But when I heard that they were all Singaporeans, I was very, very disappointed. They are not even Malaysians. They are all Singaporeans. After the second time, I asked his worker whether he was proud of the job. His reply was, "Every one also does like that." But I said, "I am not every one. You do it again." And I told them, "Don't blame the Government if we approve more foreign workers because you are only as good, but more expensive. And that is not enough." After the fourth attempt, I was satisfied. So I asked them what they thought of the final result. They liked it. They agreed they should have done it at the first attempt, if they took the trouble to read and understand the instructions, and not assumed that they knew how to fix a wash basin, because some wash basins can be a little different. My point, Mr Speaker, Sir, is so much time was wasted and productivity was zero. Similarly, you walk into a restaurant and you try to get information from the menu. The waiter will be probably walking three to four times to the Captain about the items you have asked or enquired. This is bad, unproductive service. Can we blame the waiter? I think the manager is also to be blamed. Singaporeans shun such jobs. But if proper upgrading is done in this services industry, more Singaporeans will work. How? DPM Lee again has announced the Domestic Sector Productivity Fund last Friday. We have got to use this fund to develop systems, guidelines and workflows, because no one, no matter how good he is, if we have a lousy system, he can never perform. So, productivity is linked with the way we do things, the way the company plans the job work. We have to empower that individual with knowledge to be able to be productive. So, let us get this fund to improve the image of our services sector, so that the jobs now taken by foreign workers will eventually go back to Singaporeans. Of course, this is only one sector I have highlighted. I am sure there are many, many sectors which were also highlighted just now by the Minister of State for Defence, Mr Cedric Foo, and we should all look into them in more detail. Finally, Mr Speaker, Sir, this time round, the expectations of many Singaporeans have been dented. Egos have been hurt, but there is no shame in enjoying a lower cost of living, a lower level job with a less than expected salary, a different lifestyle. But all is not lost. We will bounce back. We must use this rough patch in our economy to consolidate our position, internally and externally, so that we can weather the future with even more confidence. We have done it with SARS. Surely, the team that fought SARS well will also bring us out of this jam. We must have confidence in them. But we must also have confidence in ourselves, so that we can try to put everything into shape and move on. I believe this team can make it. Mr Speaker, Sir, I support the Prime Minister's retuning of the CPF. Mr Ong Ah Heng (Nee Soon Central) (In Mandarin): Mr Speaker, Sir, ever since the Prime Minister's announcement of an impending CPF cut in his National Day Rally speech, the NTUC has spared no time in meeting with its affiliated unions to discuss this problem. The union leaders are very rational and they are bold enough to face the facts. They have agreed to the cut in the employer's CPF contribution rate to lower business cost, so that workers' jobs could be safeguarded. It is hoped that the savings as a result of the CPF cuts could be used to augment production facilities to expand their business and to safeguard the jobs of the workers, and even to create new jobs. They also appeal to the employers to have a conscience, and not to put all the savings in their pockets and have a fling in life. They should share these savings with the workers. Trade union leaders are worried about members not being able to cope with mortgage payments, healthcare, transport, utilities and conservancy charges, and they hope that the Government can empathise with their plight and lend them a helping hand. The $1 billion assistance package has brought a sigh of relief to the workers although these measures cannot satisfy everybody. This is understandable. Why do I say this? In my chit-chat with the constituents in the coffee shops, they would invariably tell me, "Heh, do not be too depressed. In this age, it is difficult to be a God. It is even more difficult to be the Government." They also said that, if it rains every day, housewives will grumble that their clothes will not get dried. If it does not rain, workers who are working under the hot sun, find that the wages they earn are not enough to buy the drinks needed to quench their thirst. Clerical staff who work in the office complain that the air-conditioner is blowing hot air and not cool air. It is not easy to be the Government. No matter what the Government has done, the people will find some fault with it. I asked them what they thought of the assistance package. They said, "Very good, what more can we ask for? Unless someone can bless me with a winning number so that I can strike the 4-digit lottery." Mr Speaker, Sir, an old friend, a transport union official in Taiwan, told me over the phone: "Mr Ong, your workers are wonderful. They are very adaptable, whether in good fortune or adversity. They are even prepared to suffer wage cuts and CPF cuts. Your Government is remarkable - so much subsidies (assistance measures)!" I asked him how was the situation over in Taiwan. He said, "Over here, who cares? The government is busy with the presidential elections next year." Mr Speaker, Sir, it is not easy to be a good government, because the better the government, the higher would be the expectations of the people, and more people will complain. A bad government finds it easy to run a country because the people would have got used to it. What can you ask for? Consider yourself lucky if you do not starve to death. If you ask him why he does not look for a job and earn a living for himself, he would reply, "Do you think it is so easy to find a job? You must have money to get a job." In contrast, Singaporeans are very fortunate. If they work, they can get money. There is no need for them to use money to buy jobs. The Government has worked out a Work Assistance Programme to help the retrenched workers and to help them find new jobs. Older people do not have to worry, because the Government has set up a "job matching and training scheme" for them. As a trade union leader, I am proud to have a Government that is so concerned about the welfare of the workers. DPM Lee also stressed the need to cut waste in the Government. The Acting Minister for Health has also said that hospital charges will not be raised. However, the Singapore Sports Council (SSC) has decided to raise admission charges to public swimming pools. With effect from October 2003, charges for those under 18 years of age will be raised from $0.50 to $0.80 and by July next year, they will be further raised to $1.

10. As for adults, the present fee of $1.00 would be raised to $1.50 with effect from October 2003, and then to $2.00 from July 2004. For senior citizens, the admission fees will be raised from $0.50 to $1.

00. During weekends, the $0.70 for under-18 will be raised to $1.10 and by July 2004, to $1.

50. Adult fees will be raised from $1.30 to $2.00, and then to $2.

70. As for the senior citizens, the fees will rise from $0.60 to $1.10, and then to $1.

50. Mr Speaker, Sir, those who live in condominiums are already having swimming pools at their door-steps. Those who are well-off can go to their clubs to swim. The Singapore Sports Council has more than 20 swimming complexes, spread over the various housing estates. These are for the middle and lower income groups to use. At present, if a grandfather takes his two grandchildren to the swimming pool on a week-day, he pays $1.

50. By October, he has to pay $2.40, an increase of $0.

90. During the weekends, he will have to pay $1.30 more. Those who live in the vicinity of the swimming pools told me that the swimming pools are idle during weekdays. According to SSC, the increase in fees is aimed at balancing the cost and revenue. What I worry is that when the fees are increased, the swimming pools will be idle and they will become breeding grounds for mosquitoes. To balance cost and revenue, I have a novel idea. There are two swimming pools in each complex. We can rent out one pool to Qianhu Fish Farm, a tropical fish company, to breed their fish. Therefore, with this rental income, there is no need to raise the admission fees. Is this not good for the people? While swimming, we can also watch the tropical fish! Is this not wonderful? Mr Speaker, Sir, while the people are supporting the Government's reform programme, what has the SSC been doing? Reforming the CPF is a painful decision. It is also painful to the people. However, what is most important is that we should change our mindset to face reality, to be pragmatic and to face life honestly. Let me quote from my bus captain. The bus captain told me that we were lucky that we had the CPF to be cut. If we do not have any CPF to cut, then it would be pretty bad for us, because it would mean that we do not have a job. Therefore, we should face the CPF cut calmly. Though poor, we should be contented and happy. When one is wealthy, one should be compassionate towards others who are less fortunate. If the Government is compassionate, and we are united, our future is bright, and Singapore will be a place where people would like to live and work in. When winter comes to an end, spring will be around.

Order. I suspend the Sitting and will take the Chair again at 4.05 pm. Sitting accordingly suspended at 3.42 pm until 4.05 pm.

Sitting resumed at 4.05 pm

Debate resumed.

First of all, let me thank Members for supporting these changes. In crafting these new policies, many civil servants who helped formulate these changes not only used common sense, but more importantly, compassion. They were mindful of the pervasive and painful effects that would result. Varied scenarios and computations were examined. Staff pored through reams of printed data and tables. They tried their best to minimise the pain and recommended spacing out or phasing in changes while still achieving our political, economic and social objectives. Ms Indranee Rajah will be pleased to know that common sense indeed was used in plentiful dollops. The reactions from Members and Singaporeans have reassured me that they have succeeded in some measure. But, as many Members in this House who rose to speak on these CPF changes have realised and expressed, larger and more fundamental issues underlie these CPF changes. For while the reasons for and pace of CPF changes have been accepted by the majority, this moment at the crossroads has occasioned all Singaporeans to wonder about our future, our needs and our fates. There is even fear among some Singaporeans. They are asking if these changes signal an end to the Singaporean dream; a relegation from our first world status; an end to some aspirations and hopes. I would like to address these concerns as well as specific queries from Members of Parliament. To me, there is the greater significance of character and nation-building in this exercise. Our responses to these changes should be seen in this context as it signals a people's - a nation's - resolve, to want to chart and better their destiny. There are some who believe these measures would not work. They say cutting CPF will dampen the recovery as consumer expenditure falls and the property market softens due to reduced purchasing power. A deflationary cycle will follow. Other similar pessimists say that it is too little - it would not make a difference. We are so uncompetitive that whatever we do, companies will continue to pull out or bypass Singapore. The avalanche of cheaper manpower has overtaken us. Singaporeans need not be despondent or insecure or believe these futilitarians. Mr Tan Soo Khoon quoted some reports about these measures. I did not read the reports but it occurred to me, while he was speaking, that they are conjectured that this was a convoluted way for the Government to make money. They give us more credit than what it is due. He said, and he can correct me if I misheard him, that the CPF cuts would save Government and GLCs $500 million, that the GST would give Government $400 million. I am not sure why, if you are the major employer, you save $500 million; when the GST increases, you also make money. Perhaps someone else can explain the mathematics to me. On top of that, Government now gives a $1 billion package to help citizens and end up with a budget deficit. If indeed this is a convoluted way of Government making money, then Government has immense capacity, more than what people think. I agree that the future is uncertain and success is never guaranteed. But that is quite different from saying that we are beaten as a nation, and we had best just lie back and play the vanquished. Singaporeans must have greater mettle and be fully confident. To me, accepting these CPF changes is a decisive response that shows the resolve to do what is needed; to be nimble and to adjust, as Dr Tan Cheng Bock said. It signals a nation on the move, willing to make sacrifices to survive. It is not only about what needs to be done, but that we can do it at all. As Mrs Fang Ai Lian said, the key significance is that we can execute. Even if some other calamity befalls us tomorrow and sets these efforts back, this nation will bounce back and do more, if that is what is needed to improve our lot in life. Many Members have asked for a clear economic plan. The Prime Minister will elaborate on this tomorrow. But as many Members also know, where it comes to matters of business, as it does affairs of the heart, it is not so simple. It is not so completely deterministic. There is no magic formula. But we can learn from others. There are some general ingredients for success. History is replete with examples of countries that were content to lie in the present, resisting change and landed on the slippery slope because they chose not to confront their problems and new realities head-on. On this, I agree with Mr Inderjit Singh that we have to tackle our problems head-on. China has a particularly venerable history. It boasted inventions such as printing and paper in the ninth century, gunpowder in the 11th century, the compass, porcelain. The Chinese invented machines to spin hemp in the 12th century, some 500 years before the Industrial Revolution began in England. China had the knowledge capital and advantage over many countries. With its inventions, it could have been the first to print books for the masses to accelerate learning. It could have experienced its own industrial revolution. With gunpowder, it could have revolutionised the science of propulsion for industry or military gains. It could have but then China - the self-absorbed Celestial empire - closed its minds to progress and its own strengths and opportunities and became insular. From the 15th century, other nations pulled ahead. So for the last 500 years, China lumbered along, living on past glory. But the dragon has stirred and all in its wake felt the pounding of its steps when it threw open its doors and chose to engage the modern world. Japan's income rose from 20% of the United States' in 1950 to 75% by 1998. It is a rise unparalleled in recorded history. This phoenix rose miraculously from its atomic ashes and dazzled the world with its manufacturing prowess. But in the last two decades, when faced with much lesser challenges, it lacked that same resolve to pull itself out of its quagmire. From 750 to 1100 AD, Islamic science and technology far surpassed that of Europe. In their golden years, the world's greatest scientists wrote in Arabic. Indeed during that period, many Muslims taught science to Europeans, especially at the frontiers like Spain where intermixing occurred. Then something went wrong. Religious zealots denounced Islamic science as heresy. These nations regressed as they chose a parochial emphasis on religious conformity. Any group or nation - no matter how mighty - that discards knowledge, prefers form over substance, sacrifices future needs for present comforts, resists change, erects barriers to progress, is doomed to fail. Ultimately, these barriers are self-destructive. Economic historians, such as Stephen Parente and Edward Prescott in their book "Barriers to Riches" tell us that the differences in living standards have little to do with natural resources - or levels of investment. Rather, they see the differences in the intensity that various countries make of the world's existing stock of know-how. Countries that are open to the flow of ideas - and whose laws, customs and institutions encourage wealth creation - can catch up with the old-established "industrial" economies. Japan, Korea and recently China are outstanding examples of this catch-up. In other words, while all countries will walk through hills and valleys, some walk right into ravines or get mired in swamps. Others stay still and get hemmed in and suffocated by the overgrowth. Those that erect barriers, both physical and mental, will be overtaken. Only those who choose to engage progress wholeheartedly, expand their minds and economic space, survive and thrive. What about the million dollar question that many MPs have asked? Even if Singapore is willing to change, will these changes be enough? Who does fortune favour? While history teaches us that nations that do not change are often overtaken, it also shows us that "fortune favours the well prepared." Tenacity, diligence, boldness and a cohesive spirit have helped nations, in more dire circumstances than Singapore is today, pull themselves out of the rut. I will give two examples and use city-states for comparability. Take Ireland as the first example. In 1840, the Irish population was nine million but, a decade later, it was halved: over a million died of starvation; most emigrated; a quarter of those who boarded the ill-fated coffin ships to America died in transit. After emerging as the Irish Free State, it promptly plunged into a civil war that lasted until 1923. At that time, the population included fewer than three million people and was still dwindling. In other words, they lost six million people in 80 years. To demonstrate economic "self-sufficiency" as well as political independence, Ireland adopted inward-looking, protectionist policies - high tariffs, bans on majority foreign ownership in industry, the establishment of state-owned enterprises in areas such as power generation, shipping, banking and insurance. These policies were pursued well into the 1950s, with increasingly perverse results. The economy stagnated, emigration soared even further, as more than 400,000 people left Ireland between 1951 and 1961. In the mid-80s, the unemployment rate reached 17%, the government's finances were in shambles, and submission to a draconian International Monetary Fund (IMF) programme was considered as a means of getting the economy back on track. But something happened. At the end of the year 2000, Ireland could look back on 14 years of uninterrupted economic growth, which had accelerated to nearly 10% annually. With this growth came markedly lower inflation, one of the lowest unemployment rates in the European Union, and a growing government-budget surplus. Most dramatic, however, was the return to Ireland, a country which had seen emigration over 100 years, of young workers in increasing numbers to fill new jobs awaiting them at home. How did they reverse their terrible plight? It was not just due to the luck of the Irish. In the 1960s that tenacious Irish spirit rallied. The government and people decided to adopt low corporate tax rates to encourage foreign investments. At a time when they could least afford, they spent more on educating their people better and establish high-tech industries, especially in info-technology and telecommunications. Ireland joined the European Union. In the 1990s, true to the aphorism that "fortune favours the well prepared", a technological discontinuity, which brought about plummeting costs in telecommunication services, was the chance element that helped start an economic boom in Ireland. My second example is Finland. Finland is another example of a tenacious people that refused to be beaten down. Tucked away in the northern-most corner of Europe, five million dedicated Finns continue to demonstrate the fierce nationalism that has enabled them to survive an unforgiving climate as well as a turbulent history. It is a land repeatedly fought over through the centuries. Finland underwent a transition from frozen isolation along the Arctic Circle into a centre of high technology, with a population both technologically literate and politically sophisticated. Twice in the 20th century, Finland had been written off as lost: first, in the "Winter War" in 1939 when the Finns were left alone to face invasion by a Russian army 50 times its size, and again at the end of World War II when Finland was given over to the Soviet sphere of influence. In the early 1990s, the Soviet empire fragmented and the Rouble collapsed. Finland's economy, which was closely tied to that of the Soviet Union, also shrank sharply and unemployment rose. Yet, it has managed to come out of its troubles. How? Government and industry made dramatic efforts to surge into the world's new information technology, supported by one of the most highly skilled labour forces in the world. Finland, today, is rightly called the telecommunications laboratory of the European Union, with an exceptional hi-tech infrastructure. Many of us know as we use their Nokia phones. This, in addition to industrial production ranging from complex instrumentation for meteorological and environmental sciences, to medical diagnostic equipment, to automated wood-harvesting machinery, to innovative icebreakers and luxurious cruise ships. In the late 1990s, Finland's economic growth rate was one of the highest of the industrialised countries. Will Ireland and Finland expect to prosper indefinitely? No one knows, and no guarantees exist for any state. All economies are subject to the vicissitudes of cycles and providence. Ireland and Finland face similar problems like Singapore, as a result of slowdown in global economic demand. As do many other countries. We are not alone. We need not be narcissistic. We can commiserate. Who will emerge to prosper depends on how each nation's people respond. Singaporeans' response to these CPF changes has renewed my confidence. Members of this House should not under-estimate the disasters that await us if we had chosen to stay on our previous course. Neither should they under-estimate the impact and the signals that these CPF changes have achieved. We should not downplay. It is not a simple exercise. These CPF changes herald a critical turning point for the better. Retirement adequacy will wreak economic and social havoc on those that will not, cannot or have not provided enough. Minister of State Cedric Foo commented on this, and I agree with him. I will elaborate. The International Herald Tribune on 22nd August this year carried this article under the sub-heading, "The looming clash of generations". I quote: "Four issues are coming together to create a "perfect storm": birth rates below replacement level, longer life spans, holes in private pension funds and massive government fiscal deficits. The aging generation has been promised much more than can be delivered without dramatically damaging the prospects of future generations. This will be a political battle, a new form of class warfare over scarce resources. Demographic decline is especially apparent in Europe [and I would add, Singapore]. In most countries fertility is far below replacement levels.

Neither the state nor the private sector is in a position to meet the promises made to the aging generation. Tax and deficit levels are already high and would have to rise by huge amounts to fund pension promises. Tough political decisions will have to be taken to change expectations.

Yet such measures are essential to avoid crippling taxes on the declining percentage of people in work. Ideally the state should be reducing tax burdens on young families and taxing pensions for the able-bodied. Whether the long-spoiled baby boomers are willing to concede that such measures are necessary is another matter. They have the votes to defeat any government that would introduce them." In other words, unrealistic expectations, longer life expectancies, medical advances, demographic trends have set up a perfect storm that threatens to disrupt the social fabric as one generation is pitted against another. Let me illustrate this with an anecdote which occurred in Germany. In August this year, a furore erupted when a young 23-year old German politician, Philipp Missfelder, head of the Conservative opposition youth outfit, criticised politicians from all parties for "betrayal", saying Germany's social system favoured the elderly at the expense of the younger generation. He suggested, among other solutions, that those above 85 years - you heard me right, 85 years - should not expect the national system to pay for their hip implants. He being 23, I assume he said, "Well, 62 years more, if I don't break my hip within that period, and if I break it after that, then I should pay for it." Older Germans, even those within his own party, threatened to "spank the youngster." The humorous response did not mask the resolve of the older generation to protect their perceived sacrosanct rights, despite this being an untenable situation. This road has led Germany to the `gloomy valley'. They are stuck! It explains why Chancellor Schroeder chose to wade into the political minefield of pension reform and proposed the biggest shake-up since the current system was set up in 1957. We should not under-estimate these changes. The CPF changes we are making now will ensure that this Singaporean generation and future generations will remain nimble, still able to respond quickly to fast changing circumstances. We would have averted the perilous situation where one generation's needs can only be met by another's unwilling sacrifice. We would have behaved responsibly by not expecting the next generation to shoulder our burdens by providing for our needs now. Let me now address specific queries from Members during this debate. Some Members have asked why not fix the rate at a lower level, instead of a range. I acknowledge that a variable rate creates uncertainty, as expressed by Dr Chong, Mr Iswaran, Ms Irene and Mr Tan Soo Khoon, and it disrupts long-term planning. We accept that. But global economic shifts have accelerated and impacted Singapore almost instantaneously. In this fluid environment, we need flexibility, even for the statutory component. It will come under pressure the moment you fix it. And when you are compelled to lower it, the psychological effect is greater. Remember also that even when we had fixed it at 40%, it also caused uncertainty. While we were at 36%, investors and employers calculated decisions based on that higher target rate. Workers based aspirations and lifestyles also on that number, assuming it would be restored. What this exercise and what this debate have done very successfully is to reset, retune and refocus mindsets to the floor rate. We have shifted focus from the ceiling rate to the floor rate of 30%. So, now investors and employers know that there is potentially some refuge in reduction. We read over the weekend how Singaporeans now plan their homes and spending patterns on 30%. Very quickly, the message has sunk home. Anything above that is an added bonus. I reiterate that we will give as long a lead time as possible if future CPF rate changes are required. It is not envisaged that rates will be changed from year to year. There is a range but the CPF rate is a blunt tool. We agree. It will be reset when a systemic adjustment is required. It does not have the sensitivity to calibrate according to performances of different companies. Indeed, many Members of Parliament have called on companies doing well to pass on profits to workers in the form of bonuses or other variable components of wages, and help avoid retrenchments, mentioned by Mr Leong Horn Kee, Dr Ong Seh Hong, Mr Heng Chee How, Mr Nithiah Nandan, Mr Andy Gan, Dr Ong Chit Chung and Mr Ng Ser Miang. I endorse this sentiment, although I would not push for rigid formulas. But I do want to emphasise the point made by Dr Ong, Dr Gan See Khem, Ms Irene Ng and Mr Arthur Fong that our overall wage structure needs to be more flexible, allowing individual companies to vary their wages according to business circumstances. Companies' wage structures should differentiate performance and reward individuals accordingly, and address the structural rigidities created by seniority-based systems. The Government has initiated a Tripartite Task Force on wage reform chaired by my Permanent Secretary to assist companies in implementing flexible wage structures. I will ask this Task Force to study the suggestions by Members - Mrs Yu-Foo, Mr Chew Heng Ching and Mr Ng Ser Miang - of using tax incentives to encourage companies to reform. The Task Force will be presenting its recommendations at the end of the year, and will consider other proposals which Mr Inderjit Singh brought up this afternoon on retrenchment cost. Let me now turn to adequacy for retirement and the Minimum Sum. These issues were raised by Mr Chew, Mrs Lim Hwee Hua, Mr Andy Gan and Mr Ahmad Magad. Having adjusted expectations to 30%, can we still meet the aspirations of Singaporeans? It is a key question. Can Singaporeans still own homes and take care of their medical and retirement expenses? Why not, as some Members suggested, give flexibility in how much we force Singaporeans to save? In other words, tailor savings according to income level. Dr Ong Seh Hong and Ms Irene Ng said we should calibrate savings based on pre-retirement income and income groups. Mr Chew Heng Ching said the increases are too fast and should instead be pegged to Consumer Price Index inflation. Dr Gan See Khem and Dr Jennifer Lee, though disagree, said it is not enough as costs are rising. Mr Inderjit Singh also said not to make it compulsory. The implication in all these points is that perhaps we should give up some dreams, even home ownership for some Singaporeans. The Minister for National Development has eloquently defended the policy and I will add by saying we need not. The vast majority of Singaporeans can, and should, still hold on to their dreams and homes. I will ask the Clerk of Parliament to now distribute a table (Cols. 2981-2). Adequacy of CPF at 30% CPF Contribution Rate (2981 - 2982) This is a useful table as it gives a helicopter view of how our current CPF system provides for various needs. I have kept it simple and I want to focus on it. It gives a helicopter view of how our current CPF system helps meet various social needs. I would like us to pay attention also to the quantities in the various accounts, in other words, the Ordinary, Special and Medisave Accounts. In these two columns I have put the 25th and the 50th percentile worker to illustrate, but we should just focus on the 25th percentile worker. The 50th percentile is for Members' reference. As the table shows, for a 25th percentile worker with a starting pay of $1,100 and an ending pay of $1,000, we factored in a number of assumptions, including wage deflation plus some periods of disruptive unemployment - this is not continuous employment - that 25th percentile worker would have accrued $109,000 in his Ordinary Account, Medisave Account of $41,000 and a Special Account of $55,000. So as this table shows, even at the 25th percentile, the wage earner can own a 4-room flat if he chooses. I have put the price range for the 4-room flat in the footnote. On top of that, he would have accrued enough in his lifetime and set aside adequately for his basic medical and retirement expenses. I agree with Members of Parliament that we should set our CPF scheme to cater to basic needs, not frills. The Minimum Sum must be linked to anticipated consumption and life expectancy. So even at the new Minimum Sum of $60,000 cash component, the annuity payout per month to last for 18 years is $433. It is not a princely sum and we are not over-providing. But note, as some Members pointed out, that if consumption for medical expenses from the Medisave Account is reduced or if a member chooses to live in a smaller flat, even if he could afford to buy a bigger one, substantial spillover can result into the Special Account. The key column is to look at the Medisave Account and the Special Account. In other words, even with our rules changed, if he does not consume from the Medisave Account, the 25th percentile worker could still withdraw $11,000 at age 55, having put aside enough for his Medisave and Special Accounts. He would have enhanced his Special Account, so more can be withdrawn at age 55 if the Minimum Sum and the Medisave Minimum Sum are met. This is a sensible system which caters to the majority of Singaporeans with varying consumption patterns. There is rigidity for the base requirements but there is flexibility for those who choose to be prudent in housing and medical expenditure. I disagree with Mr Tan Soo Khoon that we encourage blatantly people to choose bigger houses. People did it because they knew that if there was some asset inflation they would reap benefits. And, in case we are being misunderstood, we have all said, "live within your means". How can we help Singaporeans meet these Minimum Sums, a point which Mr Heng Chee How asked. Structurally, the new changes, the reductions in the Ordinary Account and corresponding increase in the Special Account facilitate this, which means that if members are sensible in their housing commitments, it is likely that some 80% of future CPF members can meet the $120,000 Minimum Sum requirement at a contribution rate of 30%. Let me emphasise that this is not 33%. This is at 30%. It follows then that when we retune the use of the CPF towards the three objectives of retirement, healthcare and housing, we should not further expand the role of the CPF to be used for unemployment as suggested by Dr Wang, or other purposes such as starting a business, as suggested by Mr Chiam See Tong. Nevertheless, we can explore the idea of voluntary unemployment savings scheme, as suggested by Dr Mohamad Maliki. Providing better for retirement Several Members have asked for greater returns from the accumulated sums or to obtain different income streams - points raised by Mr Chew Heng Ching, Mrs Lim Hwee Hua, Mr Low Thia Khiang, Dr Ong Seh Hong and Mr Ng Ser Miang - I agree. Housing is the biggest asset for most Singaporeans and the Minister has announced relaxation on rental rules and it should help. We have explored reverse mortgages before, but the major roadblock has been that insurers are only prepared to offer "fixed term" reverse mortgage. This runs the risk of the elderly lessees being evicted from their flats should they outlive the tenure of their reverse mortgages, which is a likely possibility. Nevertheless, we can always revisit the issue. The other option is for Singaporeans to sell their properties. It is an option that is available to them today and it will be made easier with alternative housing available in the increase in rental flats. In other words, people say, "Well, they have more than 200,000 rental flats available. Why do I not sell and then rent?" They could. But do we want to actively push this? I am not so sure. We should be cautious as it may result in some being homeless as they sell their homes. All of us, who have meet-the-people-sessions, know the individual stories of some parents being abandoned by children whom they have been persuaded to part with their money. Members talked about interest rates. Can CPF increase interest rates? The Ordinary Account (OA) rate is currently determined quarterly based on the weighted average of the one-year fixed deposit rate (80% weightage) and the savings account rate (20% weightage) of the three major local banks. It is a basket of weights. But we have protected members under the CPF Act by subjecting this to a floor at 2.5%. Let me quote one example. DBS Bank pays only 0.8% for a one-year fixed deposit of more than $50,000 and 0.25% for savings account deposits. So, if we use this formula, I should be paying OA rate of less than 1%. Hence, the OA rate of 2.5% gives a better return to CPF members at present. What about the Special Account (SA) rate? In this regard, CPF members are getting more than a fair deal because the Special Account guarantees risk-free at 4%. One year Singapore Government Treasury bills are yielding 0.9% whereas 15-year Government bonds have been yielding less than 4% for the last 12 months and only begin to yield more than 4% recently. So for a person who makes SA contributions over a 30-year period, the 15-year Government bonds are a good benchmark as 15 years would represent the average tenure of his savings. Going forward, the CPF Board is studying two initiatives. Firstly, the Government has already said that in the long term, the interest rates on CPF savings will have to be pegged to market rates. We need to study this carefully. What benchmarks to adopt will also have implications for HDB housing loans, which are currently pegged at 0.1% above the OA rate. Whatever benchmarks that are adopted must lead to a sustainable interest rate paid on CPF savings. But I agree though that new models will have to be adopted to maximise retirement returns for Singaporeans so that we can better provide for retirement needs - points raised by Mr Andy Gan, Mr Ahmad Magad and Mr Chew Heng Ching. In line with the ERC's recommendations, the CPF Board has begun to explore the role of private fund managers to get better efficiencies. This was suggested by Mrs Lim Hwee Hua, Ms Irene Ng and Mr Ng Ser Miang. The intention is to pool savings to achieve economies of scales so as to lower cost of investments for members, achieve higher returns and greater certainty of income. The CPF Board is currently working to implement low-cost privately-managed pension plans (PPPs) as an additional option under the CPF Investment Scheme. This would give members a better chance of higher long-term returns by investing in a well-diversified portfolio. These PPPs should not require members to make complicated decisions. In other words, we do not envisage a buffet menu. We will keep it simple and understandable. This is to cater to the majority of CPF members who are not investment-savvy. I also agree with Dr Chong, Mr Ahmad Magad and Ms Indranee Rajah that the CPF Board must educate Singaporeans as part of its mandate. The Board intends to start a process of investor education for its members, structured according to a member's life events. In other words, instead of waiting for you to log on to the CPF Board, we will track and push you information roughly before your marrying age or before the age that you will buy a property or start work, and tell you that these are the sums that you need to calculate. It flags up. It causes you to focus your mind on a particular financial aspect. These modules will be made available to members through the web. In addition, the CPF Board is working with the Monetary Authority of Singapore as part of an overall effort to educate investors because our surveys have shown that while awareness is there, the majority of CPF members are still not taking concrete steps to plan for retirement. With the ageing population, longer life-span and the retuning of the CPF, it is now even more important for Singaporeans to take retirement planning seriously. This includes the promotion of the use of the Supplementary Retirement Scheme, as suggested by Mr Ahmad Magad and Dr Mohamad Maliki. For specific groups, women and homemakers, suggested by Ms Irene Ng, Dr Jennifer Lee and Ms Braema Mathi, we will explore ways to improve their retirement adequacy. For part-time and casual workers, the point brought up by Dr Gan See Khem, the CPF Board has already implemented the ERC's recommendation to raise the floor for CPF contribution from the earlier threshold range of $200-$363 to a new threshold range of $500-$750. But I agree with Mr Zainudin Nordin that we should facilitate collection of CPF dues. The late payments form less than 1% of all accounts, but we can still improve by collecting CPF through electronic means. We will expedite this. Retaining Jobs, Job Redesign, Placements and Training I agree wholeheartedly with Mr Nithiah Nandan, Dr Wang Kai Yuen, Mr Heng Chee How, Mr Yeo Guat Kwang and Mr Ang Mong Seng that we should use these sacrifices that workers have made to translate to more jobs. The CPF changes will position us well for job creation. At the margins, it already has positive signals and, again, we should not diminish our efforts. For example, Venture Corporations and Philips Electronics Singapore both welcome the changes. Venture Corporations told our staff that together with their efforts to improve their employees' capabilities and skills, these CPF cuts will "give a boost to migrating more businesses and investments to Singapore". But in the meantime, we must redouble our efforts to place Singaporeans in jobs. We have to work faster to develop sectors that Singapore can be competitive. Secondly, all of us must do more to place Singaporeans in jobs that are available today - points brought up by Dr Warren Lee and Mr Ang Mong Seng. They said that we should raise again the importance of local workers being willing to take menial tasks. I agree. But we have also seen good evidence of worker attitude changing in the past half year. And I agree with Mr Nithiah Nandan that not all workers are choosy. We must not tar all workers with the same brush. For instance, many cleaning companies have told us that they can now hire locals for cleaning jobs and they do not need to ask for so many foreign workers. This is good news. But there is much more that we can do. We have come to a point where MOM goes down to the ground - you should allow your policy instruments to do that - but we recognise this is a transitionary period and we want to get a better feel of the ground. During one of our dialogues, a unionist told me that some Singaporeans dare not work in hotel kitchens because they feel isolated, as they are the only Singaporeans there, or that the supervisor is a foreigner and is perceived to be partial to hiring more foreigners. It is unlikely to be true, but it is a perception. We must and will break these psychological barriers down. My Ministry has been working closely with the hotel sector to better understand how to successfully place Singaporeans into jobs in this sector which has so many vacancies. The hotel management assures us that they are committed to help make this happen. In parallel, I have asked union leaders of NTUC unions to get their members to mentor new workers. In other words, let us accept the insecurity and the uncertainty. So, from the over 400,000 members that NUTC has, members can perhaps find mentors that stay in the same estate with the new workers, travel, eat together in the same company so that during the earlier adjustment period, it will tide them over and help them to stay in the job. And, yes, we should improve the efficiency of job matching and information provision. The Workforce Development Agency (WDA) will be launched soon to give this greater focus. As suggested by Mr Seng Han Thong, we will have to make sure that training is more effective. And I agree with Dr Tan Cheng Bock that we have to upgrade our skills in our construction, retail and restaurants. Some Members have asked that we look for solutions, in terms of social safety net in force. But when we are in a situation where there are large numbers of foreign workers and jobs available that Singaporeans do not want to take, I believe that we should focus on the message of getting people into jobs, not subsidising people for not working. And the measures that DPM announced on Friday, such as the Training for Employment scheme, the People-for-Jobs Traineeship Programme, the Work Assistance Programme, hold to this philosophy. I agree also that employers must play their part. And I am glad that the Singapore National Employers' Federation and the Singapore Business Federation have come out in strong support for these cuts. We all understand that the business climate is competitive. But there are many employers that we have come across that are competitive and, yet, treat their workers well. As Mr Ahmad Khalis says, retrenchment should be minimised. There should be less discrimination against older workers, a point raised by Mr Nithiah Nandan. The cost of hiring mature workers would be less because of these CPF changes, and older workers bring value through their experience and networking. They are also likely to stay longer on their jobs. We have good employers in Singapore. You may have read about Murata Singapore. It has been in Singapore for over 30 years. I visited them at the National Day Observance Ceremony and they told me they had not retrenched a single worker for the last 30 years. I thought they got it wrong. I asked, "Are you sure?" They said, "Yah, we don't. We have not retrenched a single worker." So, in good times, a company rewards the workers well with additional bonuses. But in bad times, they adjust various flexible schemes. Ms Braema Mathi brought up a point about United Parcel Services (UPS). And she is right. It is a good company with enlightened human resource practices. UPS, led by Singaporean Managing Director, Mary Yeo, has encouraged multi-tasking and emphasised career development for their van drivers. During SARS, workers willingly worked flexible hours. Mrs Yu-Foo Yee Shoon has highlighted that we should tailor our solutions for older workers to upgrade their skills and find jobs. We agree. Companies must play their part to accommodate older workers who may be able to do the job very well. One HR manager told us that her company had problems with production in some of the plants. This is on a productivity issue. But this observant HR manager noted that workers were standing because of the height of the production line, and that shorter workers had difficulty doing the work because the line was too high for them. Minor adjustment was all that was needed to raise productivity. This sounds simple, but simple things are often not done. So this story should cheer Mr Seng Han Thong who called on companies to help local workers through job redesign. We all agree, and more can be done. But apart from wages and jobs, at the end of this debate, the question that will still remain in our minds is: will Singapore prosper again? Mr Tan Soo Khoon said that the music had died for him in 1998. Will Singapore prosper again? It depends. It depends on whether Singaporeans think our way of life is worth preserving. It depends if Singaporeans think this place is worth fighting for, not with bullets of steel but with steely resolve, an innovative spirit to capitalise on our strengths, diligence and determination. Is the Singapore Dream dead? As Mark Twain said, the news of the demise has been grossly exaggerated. Far from it. This doctor has examined the patient and found it well. The patient is not sick. She only needs to shed a few pounds. Too many good years and over-indulgence have added girth. Some weight trimming is necessary and may not be bad for overall health. Even with the contribution rate at 30%, the majority of Singaporeans can own homes and retire adequately with their medical and retirement needs taken care of, if they are prudent. As I earlier showed, even the 25th percentile worker can still afford a 4-room flat and would have provided enough for his medical and retirement needs till 80. How many countries can achieve that? Almost every child born in Singapore today can be certain of 12 years of solid education. Mr Ong Ah Heng joked that perhaps the Government should just kelong and give 4-D tickets to Singaporeans. In fact, we have. Let me tell you why. Every student is subsidised about $4,000 for each year in primary school, $6,000 in secondary school, $8,000 in ITE, Junior College or polytechnic, and $11,000 in university. This means that every child born in Singapore receives at least $60,000 in education subsidies. This is not including the housing subsidy. 70% will obtain higher education that is the passport anywhere in the world to further his study. Access to good medical care will continue to be available to the masses, not only to the privileged or the rich. Here, in Singapore, you walk the streets feeling much safer than in many other countries. Children grow up well here. We, the adults, spend half the time debating why we spoil them, and the other half asking why we stress them. The same debate will be continued by our children when they become adults. Why do I believe so emphatically that Singapore will not only overcome but that we will prosper further? The music has not stopped. Because Singaporeans will not falter. Years of nation building have bonded a people with unique characteristics. Shared pains and gains have created a uniquely Singaporean way, that is, a way of life that is worth preserving - with all its quirks and eccentricities. I agree with Dr Tan Cheng Bock that Singaporean can do. His ingrained beliefs in hard work, justice, integrity are universal premiums. I travel frequently and I meet many Presidents of Ivy League universities in USA. They tell me that there is only one thing wrong with Singaporean students - that there are not enough of them. They say this even though Singapore students form the largest contingent from any state, including the states of the United States. They want more of us. They wax lyrical about how they wish every freshman performed like our Singaporeans. Of course, in typical Asian humility, I respond by saying, "Well, we have some strengths, but many weaknesses too." But, inwardly, when they tell me this, I swell with pride. CEOs of multi-national corporations here in the biopharmaceutical and process industry sectors tell that we have among the best technical workers in the world. They have one wish - that Singaporeans would be less driven, because many of them leave to further their education, not content to stay still. But I like this drive. Singapore companies tell us that two positions, when they go overseas, must be occupied by Singaporeans, ie, the manager and the financial controller. Why? No prizes for those who guess the reason - because they trust Singaporeans. Despite the catch-up of other countries, like China and India, we can still hold our own in technical and engineering skills. Our efforts in educating Singaporeans still stand us in good stead. Do not under-estimate these strengths nor our ability to read these changes. Am I overly optimistic? Do I not fear the tiger of globalisation, the challenges that Members paint and the companies tell us? Well, when a tiger is chasing you, you need not be the fastest to survive. Just run fast enough so that there is one other person for the tiger to satisfy his hunger. We have built up our strengths in these past years to run well. With these CPF and wage reforms, we would have further lightened our loads. We are well positioned to avoid hazards and pitfalls. If we continue on this new road, expand our minds to see possibilities and capitalise on our strengths and opportunities, we will prosper.

May I seek a clarification from the Acting Minister?

Yes.

Sir, I refer to the table distributed by the Acting Minister. It shows that the 25th percentile of workers should have no problem meeting their housing, Medisave and retirement needs, at the CPF contribution rate of 30%. I wonder why the Acting Minister has chosen the 25th percentile of workers, as I understand the CPF covers from the 20th to 80th percentile of workers. So what is the situation at the lowest 20th percentile? Are they able to meet their needs?

These calculations hold, which means that even at 30%, 85% to 90% of Singaporeans can own at least a 3-room flat. I have just used the 25th and 50th percentile. If I have put the 10th, 20th to 80th percentile, it will confuse us. But if the Member wants the details, we can distribute it from every percentile at 10 points.

Mr Speaker, Sir, thank you for allowing me to speak on this topic of retuning the CPF pursuant to the Prime Minister's Ministerial Statement on 28th August. The legislative history of the Central Provident Act dates back to the Central Provident Fund Ordinance of 1953 (Ordinance 34 of 1953) and it commenced on 1st July 1955. "Provident" means seeing beforehand and providing for the future; being prudent, thrifty and frugal. Our CPF Act and its predecessor legislation, during and prior to the PAP coming into power, have, in some way, made compulsory saving of citizen's moneys to form the Central Provident Fund and out of which authorised payments are made. On the whole, it has brought a great deal of advantages to our citizens and working population in Singapore. It has also brought a large amount of money to our Government and, hopefully, it has been used to invest and reap some good returns. It would be ideal if these, or some of these returns, could be ploughed back to CPF account holders as a whole. The website of CPF Board provides that the mission of CPF is "to enable Singaporeans to save for a secure retirement". And its vision is that of "a world-class social security organisation providing the best national savings scheme for Singaporeans to enjoy a secure retirement". The emphasis has always been savings for our retirement. Our Government must guide our people to ensure that, as far as possible, the retirement needs of the majority of our citizens would be met. It would be in the Government's interest to ensure this because, if there is a great shortfall in this CPF scheme, the Government, being a responsible one, would have to lean towards a more "welfare-oriented" and socialist political system which the PAP Government tries to avoid directly as far as possible. The corporate philosophy of CPF is, and I quote: "a social security savings scheme jointly supported by employees, employers and the Government. CPF members are employees and self-employed persons in Singapore. The basic purpose of the CPF is to help members meet primary needs like shelter, food, clothing and health services in their old age or when they are no longer able to work. Benefits offered are to help meet one or more needs of the CPF member in his retirement. They include withdrawals by the member for retirement, permanent disablement, home ownership and medical care. The amounts available depend on how much the member has saved in the CPF. The CPF Board is the trustee of members' CPF savings. They seek to protect and preserve the value of the savings. They provide fair market returns at minimal risk, while opening avenues for members to seek higher returns on their own after carefully considering the risks involved. The guiding principle is prudence. Any return should contribute towards the member's well-being in his retirement." Sir, it would appear that the above stated philosophy may need to be modified in difficult economic times. The Prime Minister touched on globalisation and how it has continued to affect our economy. There are advantages and disadvantages in globalisation. The two giant nations, China and India, with over 2 billion people, are and will be, population-wise and business-wise, forces to be reckoned with in the premier league of nations in the global economic arena. Singapore can try but realistically would find it very difficult to be in the premier league because, in terms of population base and business base, production of goods and services, invention and information technology, manufacturing of high-end technological products, production of university scholars, scientists, inventors, engineers, doctors, architects or any professional groupings, political leaders and tertiary professors and, in many other respects, touching on economic and other considerations, it is realistically impossible. However, Singapore must and will no doubt do its level best to survive comfortably and progress in the face of all the competition from near and far. And since we have reached first-world standard, economically speaking, our citizenry would expect that standard of living in the years to come. Singaporeans would have a tough time trying to aspire to reach this target as the years go by. We have a disciplined and hardworking population that will fight hard to advance as the years go by. We have a good Government, civil service, judiciary, rule of law, caring nation with many voluntary and Government-sponsored community of volunteers. All these good institutions have served us well the last few decades and will continue to do so. But is it sufficient in the future? The Government should have and must have known all this was coming many years ago. The citizens knew and constantly talked and complained about the high cost of business in Singapore. This is not new at all. On hindsight, perhaps the Government should have acted earlier, even before the General Elections in 2001. At least, we are now trying to make amends. It is never too late. Let us all work together as Singaporeans. I believe our Government is trying hard, but more needs to be done by one and all. Temporary measures require us to be cost-effective. This means we have to cut down on CPF and all other forms of cost-cutting measures. We have to be lean and fit for a race that is going to be very competitive for the next few years. CPF cuts alone would not be a great help in bringing in more investments from abroad and locally and, therefore, more employment for our people. However, it is a strong signal to the world looking at Singapore, as a country to invest in, that our Government is trying to cut down on business costs. More cost-cutting measures must be put in place sooner than later. And this is essential and is an emergency, as a lot of businesses from Singapore and the ASEAN countries are going especially to China and India. And it is well possible that there would be even more competition in the business world, as Malaysia and other ASEAN countries move on progressively to catch up with the rest of the world. It is a race between premier league nations, Divisions 1, 2 and 3 and amateur teams, with the same set of rules and there are no handicaps given to small nations. Singapore must find innovative ways to be in the top league. How do top premier league players stay on top? They devise various means, including looking at the world's best players and managers, training them professionally and paying them well. We also need to look at not just the best companies and top-notch entrepreneurs, but also the potential nations as business and economic partners. Our Cabinet Ministers and top Government officials have to be much more innovative henceforth and come up with revolutionary ideas, which is possible only if they are willing to think out of the ordinary and long-practised ways of dealing with the business of governing Singapore. I trust they are looking into various possibilities, as we have a Government that is pragmatic and is a long-term planner. Citizens must assist in this regard by giving innovative ideas, which may be idealistic and/or practical. It is our duty as citizens to help our Government to lead it to the right path of progress. Our mindset and tactics must, if found necessary and essential, change in order to survive well, to be competitive and to create jobs in Singapore. We are a small nation geographically and population-wise. We do not have natural resources. There are a lot of disadvantages in that sense, compared to many nations in ASEAN, Asia and the world. What can we do really? Let us think out of the box. Theoretically speaking, one could therefore ask whether being a sovereign nation called the "Republic of Singapore" is the ideal state of affairs in, say, 20 or 30 years. Can we survive as a small nation when ASEAN countries like Indonesia, Malaysia, the Philippines, Vietnam and Thailand are forging ahead at a different pace of economic progress? They are hungry for economic progress, just as we were hungry in the 1960s to the 1990s, and we progressed at a faster pace during this period, as we had to survive, which definitely was an added and essential impetus to survive as a young nation. I am sure we can and will survive as a nation for another decade or two comfortably. However, would we want to consider, and do we have a new vision of joining forces politically, geographically and economically with some ASEAN countries? Is it possible to work together as ASEAN neighbours and let us share the pie as a joint venture company of nations? We were once part of Malaysia from 1963 to 1965. We became a sovereign republic on 9th August 1965. What would we have been if we had remained in Malaysia? We can only speculate. Historians should write about it and explain to the citizenry. Let us now speculate and perhaps give deep analytical thought on having Singapore, Malaysia and perhaps even some other ASEAN countries merge in some form to create a United States of South East Asia, if not absolutely, then at least economically, and all of us in ASEAN work together and share part of our assets, manpower, time and expertise. It is like forming a holding company, and each participating country being a subsidiary, and all working together in harmony and all reaping the benefits of our collective efforts to benefit all as a family. Team effort is what is required to match the premier league players. Additionally or alternatively, we should all put on our thinking caps and consider the possibility of joining, in an economic sense, the premier league players like China and India. Our closest relationship as a nation to nation is of course Malaysia, and then comes perhaps Indonesia. At first thought, everything might seem impossible, what with the history of political leadership having had their problems, especially in the 1960s. However, today's generation of political leaders must bury the old differences, even if some of the current leaders in Malaysia, Indonesia and Singapore might be related to the older leaders of these countries. The business community and citizens of Malaysia, Indonesia and Singapore would, I suspect, want as close a relationship as possible, both in terms of political, economic and family ties. Would it not be important, therefore, for the political leaders, especially from these three countries in ASEAN, to work harder and more productively towards this goal of merger as ASEAN has existed for more than three decades. Let us take advantage of the common factors like race, language and way of life amongst our peoples. We have Malays, Chinese, Indians and Eurasians, just like in Malaysia and Indonesia, and also in China and India, as far as the Chinese and Indians respectively are concerned. I know it may be idealistic and even unrealistic to think of such a possibility today, but we sow the seeds of such thoughts in our young leaders and they have to explore all avenues to survive, and who knows what may come out of this way of thinking for our future generations of citizens, who would be more global in outlook in the years to come. Mind you, this does not mean people who think this way are disloyal but, rather, I believe it is the citizens who dare to think boldly that would make the difference for the betterment of Singapore in 20 or 30 years. If we want to survive for the next few decades, we need to open up space - have dual or multi-citizenship, and have multi-national partners in business and as nations doing business, and not just companies and Government-linked companies. Politicians need to be more innovative, just like company directors have for the last 30 years or so. Companies are going global. Governments should consider at least going regional politically. The political system needs to be relooked and a new system adopted for discussion at least. Our Government has done well for our citizens and the nation for the last 40 years. We need to do much more, and it is going to be more difficult, because the competition is much keener. It is getting more difficult to grow since we are a first-world nation, and to maintain that in the midst of keen competition is going to be that much tougher. Article 6 of the Constitution of Singapore states that there shall be no surrender of the sovereignty of Singapore as an independent nation unless it is supported at a national referendum by not less than two-thirds of the citizens who can vote. Academically speaking, for a start, we may wish to consider this in the long-term remaking of Singapore. If the Government has not thought about it, or has done so but it is of the view that it is definitely not possible to have such thoughts to come to reality, I would urge that we get the reasoned paper on why it is not possible in the long term. I know the CPF issue is in the spotlight, but what I have mentioned is food for thought to try and, hopefully, resolve our larger problem of survival economically as a nation. I suppose these must, for the time being, be left aside, but I do sincerely hope that our Government and leaders in the business and academic community would address these issues at some stage in the near future. For now, let us all unite and come up with cost-effective measures to ensure creation of more jobs and secure reasonable remuneration and contribution into our citizens' CPF, so that all retirement needs, payments like housing and medical care, can be met. Equally important, sacrifices must be made by the State, Government and civil service expenditure, cooperation from banks and financial institutions, to be more compassionate and not to exercise their legal rights without some care and concern for the plight of citizens. The lifelines to be given by the Government to the poorer sectors of our society who may be most hard-hit by the CPF cuts are to be welcome. This is the usual "Robin Hood" approach of taking - some might call it "robbing" - from the rich and distributing it to the poor. It is noble and should be palatable to Singapore society as a whole. However, the Government should, once in a while, take note of and be caring and compassionate, even if it is to be lip service, to the lower-middle and middle class of citizens who may be complaining that they are often left out. Land costs, rentals, utilities charges, GST, licensing charges, income tax, property tax, etc, must be reviewed and lowered. Let the State suffer together with citizens. Let us all share in the financial burden. My colleagues in Parliament have addressed these issues several times during the last two sittings last week. The CPF Board should also consider investing CPF monies wisely and grant members better interest rates. Mr Lee Han Shih, a freelance journalist, had mentioned in his article in Today on 28th August 2003 that the CPF Act should be amended so that members can enjoy higher interest rates by allowing computation of interest on a daily, rather than on a monthly basis. The CPF should look into this and explain why it has not done so. Overall, I am of the view that cost cutting must cover a wider ambit than CPF cost cutting alone. A holistic approach must be taken to reduce business costs. However, this move to cut CPF rates at this stage is a good sign to investors to have added confidence to remain here and for fresh investors to come to invest in Singapore. Mr Speaker, Sir, I do support the Prime Minister's call to cut the CPF rate in order to create more investments in Singapore and more jobs for our citizens.

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. - [Mr Mah Bow Tan].

Debate resumed.

5.12 pm

Mr Speaker, Sir, thank you for the opportunity to join in the debate. The Government should be applauded for coming out with a comprehensive and directed dosage of measures to help those who are affected by the adjustment in CPF contributions, and also for the additional package to assist businesses, particularly the construction, tourism and SMEs. DPM Lee's announcement, in fact, does address many of the concerns of the people and businesses. It is a reflection of our commitment to look after the interest of the country and the people. The measures introduced will have very long-term benefits for our workers. Yes, they have to tighten their belts now, relook their financial planning, but their future will be better secured. The measures will help the workers to stand up and proudly move forward. It is our policy to teach and equip a man to catch his own fish, rather than to give him fish every day and he does not know how to fish. However, there are a few concerns on the Work Assistance Programme for the unemployed, and the People-for-Jobs Traineeship Programme for older workers. Many do have family problems that come along with unemployment for a period of time, eg, family violence, potential legal proceedings for traffic and parking fines, credit cards, utilities bills, or even bankruptcy suits. We need more than a case manager to assist the unemployed and the older workers. We need a comprehensive network of social services to deal with these family matters. And I suggest that the localised Family Service Centres, with the support of the CDCs, work together with the case manager to extend professional guidance to these families. Secondly, these schemes should also look into providing additional financial schemes during the period of training. For example, get them involved in the child/student care financial assistance scheme, where they can put their children in the child/student care centres, and parents would be more willing to go for skills upgrading knowing that their children are taken care of. As for the setting up of the Public Transport Funds for the lower-income families, I would urge the Government and NTUC to extend this help to the marginal groups of families which hover between the low and middle income. I have in mind especially the cases where the breadwinners are in the older age group and they are hardest hit by the CPF adjustment. These families tend to have children in the teenage group, where they are socially active and need public transport to move around, and many of these families have also supported the Government's call to have more than two children. We sincerely hope that the qualifying family income level eligible for the transport fund assistance be realistically set to readily help those who need help, rather than by an exception to the prescribed guidelines. On the Government's help for businesses by extending the statutory lifespan of omnibuses and taxis, may I also ask the DPM to consider extending the 10-year cap for motorcars to 12 years so that the man-in-the-street need not scrap his car within a short period of time. Often, Singaporeans take good care of their cars and with improved technology, the cars are still roadworthy after 10 years. It is an argument that DPM has used for the extension of the lifespan of buses and taxis. It is a waste to have to scrap the cars. A change in this 10-year cap will help many people, who need a car for their businesses and work. This has also been thoroughly argued by Mr Tan Soo Khoon earlier on the high cost of owning a car. I am particularly pleased to note that the Government is setting up a Cut Waste Panel. A lot of Members have said why not a No Waste Panel. I believe that the coverage extends to the civil service and statutory boards. Government Ministries and statutory boards should not lose sight of their basic objective, that is, what is their mission. Their task is to provide a very noble service, ie, to provide public service at an effective cost. One arena is the development cost of public offices, which includes the buildings, fixtures and fittings to house the Government offices and the other is the operating and running costs. "The Seven Wonders of Singapore" were stated by Mr Tan Soo Khoon in this House before and we have to ask: can an efficient public service be delivered without spending millions of dollars on buildings, fixtures and fittings in the offices? Looking at our Government offices now, many are in first-class buildings, with extensive glass curtain walling, granites and marbles, with high-grade fixtures and fittings. They cost millions of dollars to build, and they have to spend just as much to maintain these dazzling glasses, marbles and granites. It is not to say that Government and its related agencies must always be housed in run-down looking buildings. By all means, progress and advance by having modern Government buildings, but this should not be extravagant. Last Thursday, while waiting for DPM Lee to arrive at Dhoby Ghaut station in the NEL train, I was marvelling at a five-storey high glass atrium and was wondering if the atrium had been lowered, would it help lower the charges of the NEL fare? We can have brilliantly sculptured stations, but if they cause transport cost to go up, it would leave commuters with a painful souvenir. Remember also there is a high depreciation cost for all this infrastructure which has to be paid annually. The important thing to remember is practicability. Does it make sense? Look at the Corrupt Practices Investigation Bureau. It is doing an effective public service but it is humbly housed in a recycled school building in Cantonment Road. Can these development costs be made more transparent for the public? I was searching through the HDB's annual reports for the current construction cost of HDB flats to ascertain a feedback given to me that the construction cost of a HDB flat has risen from about $40,000 in the 1990s to about $80,000 now. But I could not ascertain the cost from the annual reports. These are cost figures that the Cut Waste Panel should regularly monitor. HDB should also go back to the drawing board and ask what is its basic function. If its role is to provide good, quality public housing, then do so. Do not try to compete with the public sector and incorporate luxury into public housing. We have just recently debated in this House and spent time asking why the tempered glass shower screen cracks but we still have no answer. We cannot beat the private sector, because the prices are different and it is also for a different target market. Worse, we give luxury that is not luxurious, and the new flat owners hack out what we give and replace them. It is a waste of public funds. It only raises the cost of housing. Each Government department must look into how it has to manage its budget by cutting wastage, job enlargement or simplifying procedures. Do not look for easy solutions, for example, like closing down the swimming pool because you cannot cover overheads, especially during the SARS epidemic, or argue on the basis that there was no crowd, or intending to raise the entrance fees for use of sports facilities because of smaller Government grants. This intention to raise the entrance fees has been passionately argued by Mr Ong Ah Heng just now. The questions are: have you given enough publicity before you act? Did you carry out sufficiently good programmes to attract the crowd? Maybe, MCDS should adopt Mr Ong Ah Heng's suggestion to co-use the pool by fish and man. There may be no need for the change of use because it is a co-location. It does not mean that because the swimming pool has been in existence for a long time and the people are aware of the existence of the programmes that they are running. Passing on costs or making up for the shortfall in income by reducing the service and squeezing the public is not the way to deliver public service. I sincerely hope that the end result would not also be the ultimate Cut Waste Panel's review result too. Please do not give our people additional pills to swallow for the provision of public service, especially in this hard adjustment period. Competition is good in business and society. We all know that. It is meant to encourage efficiency and keep a check on prices. But sometimes competition can also have its bitter pill. Take the case of the healthcare services in Singapore. We have competing groups, each jealously guiding its own turf. The result is that each group has to invest heavily on infrastructure and equipment when, in fact, it would have been more cost-effective if these expensive high-tech equipment could be commonly shared. Take, for example, if SGH has an expensive specialist equipment, patients who are in NUH cannot benefit from it because of the cluster. So, NUH has to duplicate SGH and buy its own equipment. This is another area where the Cut Waste Panel could look into. Service in public health must not be allowed to suffer because of competition. This feedback is given by the medical profession. The second example is the running of the NEL line. Yes, we wanted competition for the operation of the MRT lines. Has the competition brought in lower cost and better transport service for the people? Where is the benefit of the integration of the bus and MRT lines? Is there no such thing as affordable fare after we have privatised our transport services? Do we need more transport companies for competition or should we revert to one company for the train and another company for the buses? If this review is not under the Cut Waste Panel, maybe another committee should be set up to review this basic infrastructure on competitiveness of our public services that are no longer considered as state provisions. I applaud the Government on the early release of infrastructure projects to boost the construction sector. However, on productivity, the construction sector must seriously look into how their productivity can be improved. Where are they lacking compared with developed countries? Why? How can these be improved? We have also seen some local construction companies going bust doing Government infrastructure projects. Why? Are we administering the contract effectively? Have our civil servants been too kiasu and added to the latent cost? I am very glad that Minister Mah had informed the House that BCA is looking at improving the payment procedures to the contractors doing public sector works, including the progress payments, the variation orders and reviewing the withholding payments for liquidated damages. I have been told of this by two contractors consecutively. A contractor is required to prepare for at least three to four, and sometimes five, inspections in the course of handing over a completed HDB project. I understand that the cost to prepare each inspection is about $10,000 and hence five inspections would be $50,000. It was argued by one of the grassroots leaders that this is the latent cost which is not even an open Government administrative cost. Another example is that one minute scratch, which is not a crack, would require a change of the whole piece of glass, regardless of the size. This is how costs have escalated! We have to examine all these issues and address them. The success of our future lies in our hands today. The seeds we plant will germinate and grow, for us to harvest on a sunny day.

5.27 pm

Sir, thank you for allowing me to join in this debate. Hon. Members will be pleased to note that after so many of them have spoken and covered so many points, my speech is now reduced to a single point. Indeed, I cannot even claim credit for such a point for it is phased in a discussion with some young working Singaporeans about the CPF changes. Sir, Mr Inderjit Singh earlier spoke on the need to make the CPF more voluntary, both from the point of view of business and employees. I also want to echo this call but for the purpose of encouraging Singaporeans to be more independent and responsible for their own future. Several of the young people I spoke to were, in fact, dismayed at the increase in the Minimum Sum and at the abolition of the right to withdraw 50% at 55. Many in fact said that they have no interest in what happens when they are over 70 or 80. They see the new rules as Government's kiasuism and some even suspect that the Government wants to keep their money longer for reasons unknown to them. They argued that if the Government wants to cultivate an attitude of financial independence, prudence and entrepreneurship amongst young Singaporeans, this is not the way to do it. Very simply, Sir, these young Singaporeans want a more flexible CPF system after the Minimum Sums have been accumulated. No one objects to the principle behind the CPF. As the Prime Minister says, it is our only social safety net. Everyone welcomes the DPM's speech on measures to help needy families tide over the problems caused by the cuts. But what the young Singaporean wants to see is whether he or she can be responsible for the use of his or her money after the Minimum Sums have been accumulated. It is suggested that once the Minimum Sums have been reached, an option should be given to the member to either reduce his contribution rate, withdraw the sums in excess of the Minimum Sums, whatever his age, or to choose not to continue with the CPF contributions altogether. Some already think that the current rule of withdrawing 50% at 55 is too restrictive. They see the current uses allowed as far too restrictive. For example, it cannot be used for starting a business or for retraining themselves or educating their children. As Mr Inderjit Singh said, they want more discretion on how to use their earnings. Sir, many young professionals feel this way and I think they deserve an explanation as to why the rules are the way they are. Otherwise, as one of them said to me, "Why stay in Singapore to work where nearly 40% of your salary is not within your control?" I hope that as we retune the CPF to be more responsive to business conditions worldwide, we will also tune in to be more responsive to members' concerns. Sir, I support the measures introduced to retune the CPF.

Thank you, Sir, for allowing me to join in the debate. The Straits Times of 30th August carried an article by investment guru Dr Marc Faber, also known as Dr Doom. The gist of his views is as follows: (1) The Singapore Government should allow firms to fail and set up new sectors; (2) A more effective move to reduce cost and increase competitiveness would be to move all manufacturing operations to low cost countries, even at the expense of job losses here; (3) That it is desirable that wages decline and that the price levels in Singapore decline, but he feels that the Government should not interfere in the market to cut wages; (4) That Government intervention in wage levels may lead to unhappiness and create an unfriendly social climate to the extent that it creates a bigger divide between the have and have nots. I would like to comment on the longer-term application of his views. I am concerned on his short-term do-nothing prescription which may send the wrong signals to Singaporeans. Sir, the Government is responsible for Singaporeans' well-being and the country's progress and has been proactive in charting Singapore's path to recovery, cutting costs of doing business and sustaining Singapore's competitiveness. As the custodian of a country, if the Government did nothing and allow companies to move away at the expense of more and more job losses and let nature take its course, Singaporeans are bound to doom. That the Government should do nothing at all is untenable. Singapore is a small nation and our cohesiveness is our strength. The Government is right in setting the tone and form for the longer term perspective of our CPF system which will allow wages and prices to move down and, ultimately, to allow market forces to determine future wage and price levels. All these are in line with Government's effort to re-make Singapore and to lessen direct Government's involvement in the marketplace. Sir, I am more concerned with Dr Faber's observation that Government's intervention in the wage debate is causing unhappiness and social divide. While this is a reality not to be taken lightly, I am also happy to note that Government has always shown compassion and care to help the weak and those who are badly affected by economic circumstances. I agree that wage cuts alone are not enough, but the move to retune our CPF is to give the lower income and above 40 Singaporeans time to sharpen their capabilities to ride the global economic landscape. Being in the first world, Singapore and Singaporeans will have to increasingly contend with the challenge of investments going into cheaper operating environment, jobs being lost to another individual who is better equipped and can offer value add contributions at the same or cheaper wage cost. It is in such a flux that the Government has to put in place the path finding process that will ultimately give us the right strategies and formula to continue to compete and sustain our economy. In fact, Dr Faber's recommendation that Government should stay out and not interfere with the wage situation reminds me of an article that I came across. The article, written by Adam Cohen, is entitled "When life offers a choice between the White Wall and the Brick Wall". The story goes this way: When Bartleby, the scrivener, is asked by his boss to help with some law-office drudgery, Bartleby says, "I would prefer not to." Despite his employer's attempts to change his mind, and to learn his reasons for turning down assignments, Bartleby never says much more. "Why do you refuse?" his boss asks. "I would prefer not to," Bartleby replies placidly. Melville wrote Bartleby, the Scrivener 150 years ago. This novel has what all great literature has: timelessness, and a depth that allows readers to find new things when they come back to it. When Adam Cohen first read Bartleby, with the 1960's faintly lingering in the air, it struck him as a meditation on freedom, against oppressive social structures. But re-reading it now, in a world full of bad options, it feels like a cautionary tale. Bartleby's approach to life is pure, but untenable: simply because, even when our choices are bleak, we have a duty to make the best ones we can. The grim options offered by Bartleby's office begin with the views: a white wall "deficient in what landscape painters call 'life'", and "a brick wall that offers at least, a contrast, if nothing more." His job of scrivener, since made obsolete by the Xerox machine, involves copying legal documents by hand. When he is not duplicating other people's words, he and his fellow scriveners are reading their copies back to one another to check for errors. Even Bartleby's stodgy boss concedes that it is "very dull, wearisome, and lethargic" work that to people with "sanguine temperaments" might be "altogether intolerable." At first, Bartleby completes his assignments energetically. But before long, when his boss asks for help with a small legal document, Bartleby responds with the phrase that will become his mantra, "I would prefer not to." Before long, he refuses to leave the office at all, and starts to make it his home. Rather than fire his recalcitrant employee, the boss keeps trying to persuade him to get to work. In time, the boss moves his law firm out of the offices that Bartleby haunts day and night. When a new lawyer moves in, Bartleby is taken away to the Tombs, New York's aptly named prison. Bartleby continues his calm resistance there by refusing the food. "I prefer not to dine," he tells the cook. His passivity eventually kills him. Sir, the story of Bartleby truly reflects the essence of our times. In this globalised economy where change is the only certainty, Singaporeans must be responsive and be flexible, as that is the only path to survival. To remain apathetic and do nothing, as Bartleby did and as Dr Doom prescribed, would be like the contented frog who dozed off and was eventually boiled to death, that DPM Lee spoke about. In this impending change and high unemployment situation, Singaporeans and Singaporean companies can either do nothing or make good of the opportunities that the Government is offering on a platter. In today's world of bleak alternatives, Bartleby's story is a sobering reminder that what life requires is remaining engaged, ie, preferring and acting on those preferences. Contemplating Bartleby's sad end may give us some strength, as we continue to stand up for painful policy options and settle for long-term victories and vote for the lesser of the two, or more, pains. It is in this light that proactive organisations took upon themselves to engage in the developments around us. Therefore, the likes of SIA and many others carried out a review of their operations to better sharpen their competitiveness, and the review was premised on restructuring for relevance and performance. In the process, redundancy arose. However, every effort was made to compensate and reskill the excess employees to be employable again. This, I know, was well managed by SIA and the likes of HDB. I would like to share that, generally, the state of human resource and industrial relation practices in Singapore is above global average index. If IR and HR practices are deemed responsible for the stories we hear, it is because the story is often told half truth, or is half told. Sir, I ask to be excused for my impertinence to cite this example as an illustration. If I were to say that I saw Mayor Heng Chee How at Desker Road last night, it tells one story. But if I were to go on to say that he was at Desker Road last night carrying out his duty as Mayor of Central CDC where Jalan Besar happens to fall under, and he was there to check out on certain complaints, it tells another story. So, it is important to tell the whole truth. Sir, our vision is to create a future where Singapore, embedding the physical, intellectual, social and spiritual spheres, continues to remain attractive to stakeholders. These stakeholders include the investors, talents, both local and foreign, as well as the old and the young in this multi-religious and multi-racial society. The Government's tenacious job is the ability to balance the Chinese weighing scale. Pull it one side higher and tip down the other side, you upset those on the bottom of the scale. In this whole debate of making it affordable for businesses and possible for the Singaporean competitiveness, the Government has shown its astute capability of striking a balance and, more importantly, its compassion and humane touch. The announcement by DPM Lee of the other cost saving measures that the Government will embark on, in particular, cost of doing business with the Government, has reinforced the gotong-royong spirit that all stakeholders must possess. He has also driven home the message that it is through thick and thin that we will go through together as a team. And I agree here that we should extend beyond pre-emptive lay-off to pre-emptive motivation that DPM Tony Tan spoke about. At this point, Sir, I would like to make some observations with regard to the CPF retuning and the relief package and urge the Government to do more for Singaporeans, especially the PMETs. Sir, I have asked for permission to distribute a table to illustrate my point. [Copies of Table distributed to hon. Members.] Prime Minister Goh spoke of the PMETs who constitute 43% of the retrenched employees. They seem to be the more vulnerable group and, for the above 40s, they also take a longer time to be re-employed. By and large, the above 40s PMETs are the ones who would be financially squeezed with prospect of no or lesser CPF contributions to service their mortgages and other mid-life commitments. The retuning exercise will hit this group most drastically and hence they are deserving of help. The illustration that ensues explains clearly. For a person aged above 50 but below 55 now, the effective CPF cut is 3% per year over the next three years. However, a person who is 48 years old now and on reaching the age of 51, will see a 6% cut in CPF on reaching 51 years of age. Sir, this group at 48 and below will face a double whammy when they reach age 51. The Government has put in place various relief packages and assistance schemes for the lower income groups. It demonstrates PM Goh's and DPM Lee's promises to assist every Singaporean affected by this major wage restructuring process. What about Singaporeans from the professionals, managers, executives and technical group (PMETs) with salary ranging from $3,000 to $6,000? This cohort has been growing since the shift in our economy to a more knowledge-based one. The feedback from many in this group is, "Why are we always left out? Many of the schemes are targeted at the lower income groups. We are the new poor Singaporeans." From experience, we know that this group is capable of making short-term lifestyle adjustments according to their individual financial circumstances. They have managed and weathered well in the past financial crisis without much help, living largely from their savings. This time the circumstances surrounding them are different. Like all other major economies in the world, jobs are lost to comparatively lower cost countries. We agree that professionals, managers, executives, even businessmen and the self-employed should be more capable of taking care of themselves. Nonetheless, we have to take cognisance of this difference from previous downturns this time round. What recourse do professionals, managers, executives, businessmen and self-employed have besides seeing their MPs to pour out their predicament? Sir, the relief package is clear on schemes such as WAP to assist the lower income group but silent on its eligibility for PMETs in similar plight as the lower income group. The PMETs, mostly in their 40s and 50s, constitute a substantial segment of the workforce, and the remote chance of reemployment in the next 6 to 12 months spell anxiety and despair for many of them. I urge the Government to spare them a second look and specify how they can be helped and consider extending assistance schemes to the more deserving ones. I also urge for more assistance to be extended to not-for-profit outfits, like SPEC, that was the first to champion the cause of PMEBS when it first encountered symptoms of their challenges and plights. SPEC had, since 1997, been engaged in facilitating the employability and addressing the concerns of PMEBS, together with MOM. Of the several schemes announced by DPM Lee, there is only one that has direct bearing on PMETs, and that is the People-for-Jobs Traineeship Programme. For the others, it is unclear how PMETs can benefit. Sir, another scheme that throws hope for the PMEBS is the $90 million International Enterprise Incentive Scheme to help Singaporean businesses venture abroad. These businesses would need expertise and experienced PMEBS. I would like to urge the SMEs, together with IE Singapore and the SWDA, to explore jointly setting up a scheme to encourage and facilitate the employment of the unemployed PMEBS in these operations overseas or locally. Besides the SMEs, I understand that many of our GLCs are also considering investments in overseas operations and I urge that they too would draw on the pool of unemployed PMETs for their overseas operations. Sir, this scheme could be like the Training for Employment Scheme (TFES). As it stands, TFES is silent on its applicability to convert unemployed PMEBS for expert contribution and gainful employment. Sir, I have been told that CareerLink at SPEC has a database of some 5,000 PMETs registered, looking for job opportunities, and this could be the starting point for SMEs and GLCs to offer jobs and tap on their expertise and experience. An important consideration is streamlining and integrating job creation and employment opportunities with the relief package and needs of the SMEs respectively, as well as that of the GLCs. Besides the impact of a double-whammy CPF cut for those who reach 51, gainfully employed PMETs, with outstanding mortgage loans, could be sitting on two potentially possible financial time-bombs. The first potential financial time-bomb is their job security and pay package. If ever retrenched, these PMETs face the prospect of being unemployed with no pay or re-employed at a lower pay. When that happens, their ability to service their mortgage and other family commitments would be further eroded. No doubt, Sir, Minister Mah Bow Tan has assured that assistance schemes are available from HDB for mortgagors, but the fact is that the financial ability of these PMETs is eroded. The second financial time-bomb is the prospect of future increase in mortgage rates. Interest rates are at their all-time low and the prospect of increase is real. Those vulnerable to an increase in mortgage rate would be those who have maximum financial commitment to a mortgage loan based on the current low mortgage rate and are at their best ability to service the loan. The illustration that follows clarifies this. For example, for every 1% increase in mortgage rate, the home owners who take a 25-year $360,000 mortgage loan would have to incur an additional monthly cash payment of about $200 in interest payment. Sir, there may be nothing much that HDB could do here except again to further extend its assistance scheme. Sir, from these two illustrations, we recognise that the financial plight of the PMETs cannot be glossed over. Their financial burden would require a bit of a lifting by extending the scope of some of the assistance schemes to them. Sir, the Government's relief package on accelerating the infrastructure projects to the tune of $600 million is the largest item of the $1 billion package. Would this translate into jobs and more business opportunities for Singaporeans? How can the Government and the relevant agencies ensure that unemployed Singaporeans are targeted at? I am encouraged by Minister Mah's assurance that many of the projects would be eligible to local contractors based on the scale of the projects. I would also urge that for the bigger scale projects where foreign contractors' expertise is necessary, then we should facilitate a local partnership so that local partners will continue to have a place. Sir, it would be beneficial to put in place a tracking of the numbers and types of jobs created and of the numbers of unemployed Singaporeans taking up the jobs and the issues encountered in the process. This should similarly be done for the tourism industry where the Government will be pumping in $100 million in the Tourism Recovery Fund. Sir, we are indeed encouraged by PM's compassion and understanding of the need to restore the cut CPF to Singaporeans during better times. This is important as we must never look at this round's CPF cut as a permanent cut. Singaporeans have already accepted the fact that going back to the 40% contribution rate, which the Government had supported in the past, is a foregone conclusion. We have, in our midst, realistic Singaporeans who are flexible and prepared to sacrifice for the long term good of the country and cost competitiveness of the economy. Giving up the 40% CPF contribution is a gesture of sacrifice on the part of the employees. Keeping to its promise to restore CPF to 36%, when in prosperous times, is a commitment that we must not fail our Singaporeans. There has been much talk that there is no longer trust and loyalty in organisations today with the shift to bottom-line driven objectives. I would argue that the pursuit of such commercial objectives does not mean doing away with loyalty and trust. Sir, I am heartened by what DPM Tony Tan has said, as reported in the newspapers, that we should start looking at companies like Walmart whose corporate culture has bred trust and loyalty. As MOS Cedric Foo has reinforced, productivity and preparedness of employers to review their operations through work redesign will facilitate value-add contributions of employees, and convince employers to look at their employees as an asset and not as a cost of doing business. Sir, man sacrifices for his belief when he can see and experience the trust and loyalty. On these fundamentals, in the last 38 years, our political leadership has nurtured a nation that is imbued with the motivation to overcome challenges and set ourselves ahead in every competition. Sir, the Singapore spirit has pulled us through several crises in the last 38 years and we have found that the formula was going through thick and thin as a team. I believe Singaporeans will have the resolve to support the Government's move to regain our competitiveness through this same formula of going through thick and thin as a team. Trimming the CPF waistline down from 36% is a healthy exercise. And, on this note, I support the motion.

Sir, last week, my honourable colleague, Mr Nithiah Nandan, spoke of his meeting with union members to discuss proposed changes to CPF. I too was at that meeting. There was a general consensus at the meeting that we need to retune our CPF in order to enhance our competitiveness and to ensure the continuing survival of our country. I need not say that the prospect of further cuts in our CPF was no morale booster for the workers and, in fact, after a string of bad news over the last six months relating to corporate restructuring, the weak economy, SARS and Iraqi war, the proposed changes to the CPF have been seen as yet another blow in the stomach. But, Sir, like all good citizens, the workers understood the need for these changes in order to preserve jobs and to keep the economy going. I can feel the concerns of the workers at a time like this. There is much uncertainty which hangs around them as there is no guarantee that reducing CPF contribution by 3% is going to assure them their jobs and future employment. I am glad, however, to learn of last week's announcement by DPM Lee of the package of measures to mitigate the harshness of the proposed reduction to the rate of CPF contribution. Any form of relief will always be welcomed at this time and will certainly be appreciated. Sir, we have always spoken of the need to bond with the workers in order to ensure their commitment and loyalty. This need to bond with the workers is perhaps, in part, a reflection of a broader need on our desire to want to bond the people to the country. Whether you like it or not, a reduction in the salary, a restructuring, or a retrenchment exercise is always an emotionally traumatic experience for the workers. If you believe, as some companies do, in the principle that the employees of any organisation are the most important assets, then how you manage the process of bonding with the people will be critical to the outcome of the organisation. Sir, the truth of the matter is that even in this economic climate, not all companies are equally affected by weak economic conditions. Some have been able to ride through this tough time better than others and have, in fact, out-performed themselves in the past. For these companies, I hope that they would not use the excuse of the present CPF restructuring exercise to increase their profitability further at the expense of the workers. Such measures are opportunistic and I am sure will be made obvious to the employees in no time. I certainly hope that the employers in this category will find a way of ploughing back the savings from the CPF to the employees for their benefit. At the same time, there is another category of employers who are genuinely suffering. Although the reduction in CPF contribution cuts across the board for all employees who are CPF account holders, the question which we have to address is whether or not more could have been done by way of cost reduction to ensure that that pain is fairly borne by all. Let me explain. For the very high income earners, cutting the CPF by 6% does not matter very much as compared to one who, say, earns $1,000 a month. Our present rule does not require anyone to contribute that part of the salary beyond $6,000 into the CPF account. So if your pay is $30,000, your CPF take-home will be $960 from your employer and with a cut of 10%, it will be just $600. What difference is this $360 to someone who is looking at about $28,000 cash flow a month. But for a worker who earns $1,000, a 6% cut will be quite substantial indeed in terms of cash flow. While I do not expect any regulatory intervention to lower the salary of these high income earners, it will be good if companies and managers can take a serious view of their own salaries and are prepared to voluntarily take a deeper cut in order to sustain viability of the company and also the employment of others. At a time like this, if the workers can perceive that their managers are prepared to bite the bullet with them, and to take the tough journey together, then I am very sure the bonds between the managers, the owners and the workers will be better established and this will augur well for the company in the longer term. Sir, the Government has spoken of the need to restructure to face the demands of the changing times. While I can understand the need to reorganise to help companies improve their profitability, there is a question which remains as to whether or not this is a good time to reorganise public agencies that are not similarly motivated by the same concerns of profitability. The workers can understand if Motorola and Seagate have to lay-off workers to remain competitive and profitable. But, at a time like this, when jobs are so scarce, one questions whether or not it is appropriate now to trim the size of public agencies. On one hand, we hear the cry of Government for more jobs to be created in Singapore for the workers, yet, on the other hand, I am given to understand that many public sector jobs are being made redundant because of outsourcing. We have a contradiction on hand here, a situation of the Government calling for more jobs to be created and yet, at the same time, have many Government agencies outsourcing many of the job functions to others. This is not a problem if these outsourced jobs go to Singaporeans but, unfortunately, many of these outsourced jobs go to foreigners in the process. Sir, in case you get me wrong, I am not against the principle of hiring foreigners who can contribute to this country. What I am saying is the timing judgment by these non-profit oriented public sector organisations to undertake restructuring exercise presently, knowing full well how scarce jobs can be particularly for those who are in the middle age group. Let us not forget that these middle-age workers are the ones who carried the economy on their backs at a time when we were industrialising and trying to build up this country. It is to them that we owe our gratitude and these are the people whom we must not abandon in this hour of need. I would, therefore, urge the Government that, if they are thinking of further downsizing involving redundancies or outsourcing, such plans be put on hold until such time when the economy and employment situation have significantly improved. With that, Sir, I support the Prime Minister's statement enunciating the Government's policy on CPF changes.

Mr Deputy Speaker, many Singaporeans are indeed relieved by the light touch the Prime Minister has applied to the CPF retuning and also generally pleased with the good dose of pain reliever prescribed by DPM Lee. It seems that the Cabinet has taken note of the anxieties at the ground when the subject of CPF retuning was first broached and offered a finely balanced policy package. While some analysts have expressed disappointment that the changes do not go far enough to cut costs and bring in or, at least, retain investments and jobs, the social dimensions of the CPF retuning must not be forgotten. Before commenting on the details of the CPF changes and the aid package, I would like to comment more broadly on our wage cost. After all, an uncompetitive wage structure has been identified by the Government as the key reason for the current changes to the CPF system. Mr Deputy Speaker, Sir, complaints by local and foreign businesses of our high cost of doing business have been bandied around for some time now. As DPM Lee reminded us, back in 1985, CPF rates were seen as one of the main culprits for our economic predicament then. Eighteen years on, the Government has again named it as a major source of our economic woes. DPM Tan recently brought to attention a PERC report dated 2nd July 2003 on "Comparing Business Costs in Asia". In this report, Singapore is not only perceived to rank as the fourth highest labour cost country among the expatriates surveyed, its labour cost is also rated higher than those of Australia and US, which is the largest and strongest economy in the world. To quote DPM Tan, ". When according to PERC's calculations, it is more expensive to hire a worker in Singapore as compared to hiring a similar worker in the US, or Australia, we have a major economic problem." Given PERC's high standing in international circles, I have no reason to doubt that their conclusions would likely bear up to MOM's scrutiny. But, for this very reason, Mr Deputy Speaker, Sir, I am deeply troubled by this latest revelation. This is so even though Minister Lim Boon Heng has clarified in his speech on 29th August that, according to the IMD's World Competitiveness Yearbook 2003, it is in specific managerial, executive and professional jobs in engineering and human resource, etc, and not manufacturing itself where the Singaporean worker's wages are comparable to first world levels, but without the corresponding levels of productivity. The question troubling me, and I am sure many others, is: does the Government not keep close track of our labour costs in comparison with those of our international competitors in order to ensure that we do not price ourselves out of the market? To reiterate, was not high labour cost one of the chief causes of our recession in 1985/1986? To quote Prime Minister Goh in 1986, when he was then First Deputy Prime Minister, he had said during the debate on the Presidential Address regarding a cut in the CPF contribution that ". When confronted with the sobering thought that our wage costs are so high that we are going to lose our international competitiveness, we have no choice but to thaw our position." The position then DPM Goh was referring was the sacred cow of our high CPF contribution rates. Sir, history seems to have come one full circle. How is it that we have now, 18 years later, come to this belated conclusion that CPF is the same culprit causing mischief, so much so that we need again to take such drastic measures as to cut CPF rates? Sir, I appreciate DPM Lee's explanation as to how events unfolded so quickly and unexpectedly that the Government had to agonise over the decision for two months, and led to a major rethink. Nonetheless, Sir, I believe that wages and wage levels do not change overnight and the levels we are at today not only reflect the good economic conditions of the past but also the consequences of previous actions and policies. Sir, I and, no doubt, many other Singaporeans would like to know how the Government keeps track or intends to keep track of Singapore's labour costs to ensure that these are not out of sync with our competitors. Does not the National Wages Council also have such information? How else would it make recommendations about wages if the Council does not have access to such information? This is especially important in Singapore as, over the years, the pervasive civil service and statutory boards' pay structure has become the barometer of wage levels for the private sector. The private sector has to compete with the public sector for employees and can only attract the best talent, all else being equal, if they pay comparable salaries. Going forward, Sir, I urge the Government to keep a close watch on our wage and other costs to ensure that Singapore remains competitive, if this is not already being done. Better still, MOM can publish this information for our workers at different levels and in key sectors (as some HR and recruitment agencies do and as what MOH plans to do for health costs) so that they are aware of how we fare against the competition. In supplying such information periodically, MOM would be able to moderate the unions' and workers' salary expectations. We can then avoid having to jam our brakes suddenly again in future and throw everyone else off balance. Now, I will comment briefly on three points related to implications and concerns of CPF changes and the relief package. Firstly, the floating CPF rate. Using the CPF as a macro-economic cost cutting tool is not new, as this was first done in the 1985/1986 recession and then, again, in 1999. What is different this time is that the Government has decided that the CPF rate would be a range, instead of a single target rate. Although it gives rise to uncertainties, I concur that this is a good strategy as it gives more flexibility to our overall wage system. After all, the mantra for success in this era of shifting global competition, fraught with uncertainties, must be "Flexibility, Flexibility and more Flexibility" - agility and deftness to adjust to the rapidly changing circumstances. In the past, analysts, economists and businessmen have commented that the CPF rate cuts lagged behind the broader economy. For instance, by the time the CPF cut was implemented in 1986, the US economy was already in recovery mode. This again happened in 1999. Analysts noted that the market recovery had already started way before the CPF cut was announced in 1998. Of course, I believe that the Government should never rush into such changes, given the many and complex linkages between CPF and the major social needs of the population, like housing, healthcare and retirement. Any tinkering will have ramifications on all of these, in ways we may be unable to foresee. But notwithstanding this, it is vital that future adjustments, which PM has noted, will only be made when necessary, should be made as timely as possible, and in this regard, inputs from the private sector, who are closer to the ground, would be helpful. Like my parliamentary colleague, Mr Inderjit Singh, I urge the Government to pay heed to private sector feedback and not do so only when a crisis occurs. Hence, in view of this, I would propose that the Government look at having a panel comprising mostly private sector businessmen and economists to review the CPF rates on a periodic basis so that it can more accurately and in a more timely fashion determine the need for any rate change. The CPF Advisory Council can then make the appropriate recommendations to the Government for consideration, much like what the NWC does. My second point relates to the aggrieved middle aged, middle income workers. Sir, as my parliamentary colleagues before me, Mdm Ho and Mr Sin Boon Ann, have noted, the aid package announced by DPM Lee, in terms of utilities rebate, public transport funds, etc, would soothe the pain of the lower income earners and unemployed. Businesses, particularly those in the construction, tourism and transport sectors and SMEs, in general, will also welcome the reprieve. But the group that will have to bear the brunt of the CPF cuts are the middle aged, middle income earners, particularly those aged 50 years and above. This is the baby boomer generation who have lived through the tumultuous 50s and 60s, and who perhaps have contributed the most to the economic progress we have enjoyed. But this is also the group who will see their CPF contribution rates fall from 33% to 27% in 2006 with the possibility of falling even further to 24%. They are also likely to be the ones with the heaviest financial commitments - school-going children, some in tertiary institutions, housing mortgage commitments, car loans and ageing parents taking a bigger and bigger chunk of their monthly budgets, and eating into their own Medisave accounts. Many could be living in 5-room HDB or private properties and are thus unlikely to have benefited, if any, from the utilities rebate, GST top-up or New Singapore Shares. Many of them are probably white collar workers who are also subjected to increasingly higher risk of retrenchment if they have not already been retrenched. This is small wonder why a recent Straits Times survey found that the older Singaporeans aged 45 years and above are least confident about the future of Singapore. In fact, of late, they are quite a disillusioned lot, judging from the feedback from my residents and friends who are in this age group and income level. As a recent feedback session participant lamented, "Becoming old is becoming a sin in Singapore!" Thoughts of migrating also seem to be most acutely felt by this group of Singaporeans. With the proceeds from selling their assets, they are able to migrate to countries, such as Australia and New Zealand, which have a lower cost of living. In fact, I personally know of two of my grassroots volunteers whose wives and children are living in Australia with no thoughts of returning, and at least three friends who have recently migrated to New Zealand. All of them are in the age 45 years and above category and are professionals. Sir, I am pleased that DPM Lee has announced that older workers will get extra when the Government gives back surpluses to the people in the future. This is what I raised in my Budget speech regarding the ERC's proposed CPF changes in July 2002 that older workers be given special treatment in the next wealth sharing exercise. While this would go some way to mitigate their anguish and sense of betrayal many middle-aged, middle-income earners are feeling, more tangible and immediate measures should be considered to address their concerns, help them cope and lift their spirits. After all, the proportion of workers in the 50 to 59 years age group, which has been increasing over the years from 9.3% in 1991 to 14.5% in 2002, is set to increase further as our population ages. This, coupled with the fact that, as at the end of 2002, professionals, managerial, executive and technical staff comprise approximately 42% of the total workforce, implies that there is a sizeable middle aged, middle class workers category who is bearing the brunt of the recent wage cut, retrenchment and CPF cut regime. The older worker phenomenon is here to stay, both as a demographic reality, and as more and more Singaporeans are compelled to work beyond 55 to support their own retirement. As analysts have rightly pointed out, while CPF cuts hurt every Singaporean directly, the relief package is targeted, comes with strings attached and may not benefit all. This leads me to my next and final point, that is, lowering costs. For the middle aged, middle income workers, what would be a more concrete and effective relief would be to try and lower the cost of living to offset the fall in income they are currently facing. Reducing the cost of living is a point which many of my parliamentary colleagues before me have urged the Government to look into. According to the latest EIU report, Singapore remains one of the 15th most expensive cities to live in. We are ahead of many highly-regarded cities, like Sydney and Melbourne and even several American cities, like LA and San Francisco as well as Stockholm. Furthermore, there are genuine worries that the Government's plan to proceed with the increase in the GST by a further 1% in 2004 may raise the cost of living, and could even be contractionary. I am comforted that DPM Lee has announced that the Ministry of Finance has launched a civil service-wide Economy Drive to review all discretionary expenditure. Furthermore, the civil service strives to cut waste through a Cut Waste Panel. While these are laudable efforts in response to calls for the Government to do its part to cut fees and charges, to make a real, tangible difference to the people on the ground, these efforts must translate to actual reduction of costs to workers and businesses. Hence, the Government should, in tandem, also review its fees and charges, such as ERP charges, taxes on cars, licences and even maid levy with a view to realigning them to what would now be tantamount to a lower wage regime. This would go some way to lowering our cost of living and doing business, which would benefit all. To illustrate, the current maid levy was set during a period of strong wage growth. Since the CPF cut is de facto a wage cut, the maid levy could be cut in tandem, even though we all understand the aim of the levy was to employ a market mechanism to regulate the foreign maid population with its attendant social problems. Another example would be for the Government to further review its vehicle ownership policy. For instance, one of my grassroots recently told me that now only businesses are allowed to buy panel vans. He says that this is against the move to encourage entrepreneurship. This is because whilst registering a company is relatively inexpensive, it is all the attendant additional regulations and compliance costs that come with registering a company that pose a hindrance. Sir, I realise that there are major fiscal implications if many statutory charges, such as maid levy, etc, are reduced, and this could well worsen the budget deficit, but following the principle of equal misery, this might well be the price the Government has to pay in order to signal its empathy with the people. Sir, some of the measures announced go even beyond the ERC recommendations which were only released about a year ago. The mantra then was "re-focusing" the CPF. Now, it is "retuning". What is evident though is that the CPF is destined to remain a major plank of Singapore's social as well as economic policy, a sacred cow slaughtered, but also resurrected in a slightly modified form. That some austerity is called for now will inflict pain on the population and even a sense of betrayal on the part of workers, especially the middle aged and middle income workers, although I must add, a sense of relief as well that the cut in the CPF rate was not as much as feared. Sir, while I fully support these changes which the Prime Minister has announced in order to restore our competitiveness, I urge the Government to exercise great compassion and understanding, and to be sensitive to the people's concern and feedback. I note that this is precisely what has been attempted both by the announcement itself as well as the help package DPM Lee has put to this House. Sir, I therefore support the changes. 6.15 pm

Mr Deputy Speaker, Sir, I would like this House to revisit the policy set out in 1994 on "asset worth" and "asset enhancement" with regard to "encouragement of home ownership for Singaporeans". At that time, the emphasis was on enhancing the assets of Singaporeans, increasing their commitment as Singaporeans and seeking their support for the political, economic and social systems which make owning these assets possible. Today, however, it would seem that Singaporeans will support policies on the basis of security of their jobs and on whether the Government that they have voted for will give them peace of mind concerning their present and future livelihood, not on whether they can own their homes quickly or whether they can upgrade to bigger homes. Today, 92% of Singaporeans already own their HDB flats, and Singapore is tops in the world in terms of home ownership percentage. In the early 1990s, Singapore's growth rates were often more than 9%. This phenomenon has passed and the expected growth rates for Singapore will be much lower in the years to come. It would therefore seem that the 1994 policy needs to be moderated, especially for young couples. Notwithstanding DPM Lee's announcement last week that encouraging home ownership remains a fundamental objective of the Government's Public Housing Policy and a key purpose of the CPF, I feel that retuning this policy will be timely under our present circumstances. I am suggesting that Singaporeans give up this dream of ownership mentioned earlier by the Acting Minister for Manpower, but I am saying that there is no hurry. It is timely for us to look at the following issues as examples where we should adjust according to our present needs in addition to what had been announced earlier today by the Minister for National Development. Young couples should be able to have the choice of rental flats rather than buying new flats. Less commitment in the early days of joining the workforce means greater flexibility in the ability to adapt to the working environment, which can be very fluid in these times of a globalised economy. They are also less bound by commitments and, therefore, are able to take more risks, should they want to venture out on their own. This augurs well, especially amongst our young, for our strive towards being a more entrepreneurial nation. It has been argued that HDB rental flats are very heavily subsidised, and are meant only for those who are in dire need. Those in difficulty should continue to be subsidised heavily through means testing. Flats catering to the needs of young families should be made available for rental, so that they have that choice of renting HDB flats until such time when they are more sure-footed with their commitments. Presently, there are only about 60,000 rental flats available, and there is a long waiting period for an allocation. It would be good if more HDB flats are built to cater to the rental needs of young couples. Moreover, the choice of starting a family should be encouraged, and this priority for young couples should be assisted. Some Singaporeans may have to downgrade now because they are unable to meet the monthly instalments resulting from a reduction in CPF, pay cuts or uncertainty of job prospects. More than 5,000 families moved to smaller flats in 2002, a 23% jump from 2001. This trend is unlikely to ease soon when the economic growth forecast for this year has been slashed to between 0% and 1%. The granting of HDB loans to downgraders is not permissible presently, although the Minister for National Development said earlier that his Ministry would consider on a case-by-case basis for those in great difficulty. I would like to urge for a change in this HDB policy. Those who want to downgrade are being prudent here and should be helped. Mr Deputy Speaker, Sir, I feel that it is now time to relook and revamp another of our "sacred cows". Sir, I mean our Medisave accounts. In our heavily human resource-dependent economy, our economic health has to go hand in hand with good health of our people. The present Medisave system, where we save and pay as we go, financing for healthcare, is becoming less adequate to serve our needs, especially when our society is fast aging and people are living longer. By retirement age, healthcare costs are expected to be higher. Medisave has a low rate of return within the CPF mechanism and has inadequate real growth to be sufficiently available when needed in old age. We need to make drastic changes here and now for a better tomorrow. Risk pooling in health care finance is a good consideration. Currently, we have individual medical savings accounts (Medisave) with no risk pooling, and a national catastrophic illness insurance scheme (MediShield) which covers prolonged and expensive treatment which does pool risks but minimally. In addition, there is a complex system of co-payments and deductibles, which involves direct out-of-pocket private payments. It is timely to convert savings in the Medisave into more risk pooling insurance schemes with co-payments. Mr Deputy Speaker, Sir, Japan has achieved the lowest infant mortality rate and the highest life expectancy in the world. Long-term observers of the Japanese healthcare system have concluded that Japan achieved these healthcare outcomes at a comparatively small price: "Japan's healthcare system helps to keep its population healthy at an exceptionally low cost. They rate the Japanese system as excellent in cost control and access, and very good in equality." Universal health insurance coverage has been key in bringing about these results. Japan started its health insurance expansion in 1961. Today, Japan's healthcare system has universal health insurance coverage that covers the entire population. The World Health Organisation defines risk pooling as "the practice of bringing several risks together for insurance purposes in order to balance the consequences of the realisation of each individual." Risk pooling is the health system function, whereby collected health revenues are transferred to purchasing organisations. Pooling ensures that the risk related to financing health interventions is borne by all the members of the pool, and not by each contributor individually. Its main purpose is to share the financial risks associated with health interventions, for which there is uncertain need. Risk pooling is required because of the large uncertainty in the magnitude and timing of an individual's healthcare expenditure needs. It implies the redistributive functions from the healthy to the sick, and from the productive to the unproductive stage of the life cycle. The arguments in favour of risk pooling in healthcare reflect equity and efficiency considerations. The World Health Report 2000 puts emphasis on the role of government in terms of "stewardship" of the health sector. According to this report, this attractive vision of a far-sighted and public-spirited regulatory capacity is hard to envisage in the absence of a strong risk-pooling function, which is a necessary one for a wider range of health service functions that we associate with developed health systems, such as rising health expenditure, demographic change and technical innovation. Sir, the role of preventive care and keeping healthy cannot be over emphasised in any healthcare issues. In our health insurance expansion planning therefore some incentives should be incorporated to rally Singaporeans towards keeping fit and healthy. The other issue in health insurance expansion is to also ensure coverage for Singaporeans when they are in dire need, such as when they are without jobs and in between jobs, in view of our present and future trends of unemployment. The two key features of Japanese healthcare financing are: Firstly, universal coverage that is achieved through a multi-tiered insurance system with varying degrees of subsidisation according to the perceived economic vulnerability on the part of the population insured; and Secondly, on the provider payment side, healthcare financing in Japan is characterised by reimbursement according to a nationally uniform fee schedule. It is the combination of universal coverage with strict enforcement of the uniform fee schedule - preventing balance billing, etc - that has been critical in avoiding some of the problems of cost inflation observed in other countries. The Japanese experience thus indicates that the main risks in healthcare insurance, "incomplete coverage of the population and rising costs", may be manageable. Sir, I would like to conclude that good health insurance expansion encompasses a national coverage involving the entire population with dependable coverage year after year, and stable premiums and benefits. We should, therefore, explore ways to achieve these objectives. I beseech Prime Minister Goh and Deputy Prime Minister Lee to set on this path of embarking on health insurance expansion.

(In Mandarin): Mr Deputy Speaker, Sir, thank you for allowing me to speak on the "Retuning of CPF Rates". Firstly, the Government has decided to lower the employer's CPF contribution rate by 3%. I believe many Singaporeans would feel a sense of relief because this is lower than the expected 6% cut. However, some employers may be disappointed. The issue is whether the 3% reduction is sufficient. This is like taking antibiotics. If you need a dosage of 6 ml, but you take only 3 ml, it is not going to work. Whether the 3% reduction is sufficient is really dependent on what the objective of the adjustment is. If it is just to ease the burden of the businesses so that they can stay afloat, then the 3% is certainly helpful. However, if the adjustment is to fundamentally enhance our national competitiveness, then the answer may not be that obvious. In fact, this may not be a question of numbers after all. Let me elaborate. First, even with the CPF adjustment, our wage system remains rigid. Perhaps, we can take this opportunity to push ahead with fundamental changes in our wage structure. Since our people are psychologically prepared for the 6% adjustment and the actual reduction is only 3%, is it possible for us to transfer the other 3% to the Monthly Variable Component (MVC)? In that way, we can give MVC a headstart. Secondly, the Prime Minister announced that the long-term target for our CPF contribution rates should be between 30% and 36%. By giving it a range rather than a fixed rate will undoubtedly give the Government more flexibility. However, this will lead to uncertainty. People will be concerned that the Government may adjust the CPF rates from time to time. It would therefore be difficult for the people and the businessmen to make financial planning. For example, when the economy picks up, some employers might not be willing to raise the salaries of their employees for fear that the Government may raise the CPF contribution rate later. I think it may be better if we can set a more definite CPF rate, and allow the businesses and the people to make their own adjustments. Thirdly, some employers are concerned that this 3% cut may not be effective. Compared to labour cost in the developing countries, this 3% seems to be insignificant. Obviously, we cannot compare our wage cost with that of China and India. In fact, be it 3% or 6%, it is not going to bring our wage cost anywhere near that of these countries. The issue is not about the quantum of the adjustment. In fact, we should not look at these countries as our competitors but as strategic partners. While they compete with us, they also offer us new opportunities. Therefore, I feel that we should have a comprehensive strategy, not just to lower our business cost, but also to enhance our macro-economic environment. We must build a strategic network with these economies so that we can play a significant role in their economic growth. I believe it is necessary for the Government to explain this strategy to the public, so that the people will have more confidence in the Government and will not lose heart. Now, let me move on to the relief package. The $1 billion relief package announced by DPM Lee last week was most reassuring. It is an indication that the Government is aware of the difficulties faced by the people, and that it is willing to extend a helping hand whenever necessary. I would like to highlight three areas for the Government to look into. First, education. Many low-income families may have difficulties meeting the cost of their children's education. Other than the school fees, other expenses such as books, miscellaneous fees, school bus, uniforms, etc, can be quite costly too. I hope that the Government would consider providing schools with more bursaries or welfare funds, and make appropriate adjustment to the qualifying criteria for such subsidies. Secondly, I believe that the adjustment to the CPF contribution rate will also result in some savings to the Government. I hope that the Government can pass on some of these savings to the people through reduction in tax rates and fees. DPM Lee has confirmed that the GST will go up as scheduled next year. Although we are somewhat disappointed, we can understand the Government's position. However, we hope that the Government will consider lowering some of its charges, such as the conservancy and service charges for the HDB flats, so as to send a signal to the people that the Government is willing and prepared to share weal and woe, joys and sorrows, with the people. Thirdly, I am glad to see that the Government has proposed a $600 million package to pump-prime the domestic economy, specifically for smaller-scale projects, so that our local contractors would have the opportunity to participate. What I am worried is that many local contractors are already financially stretched. They may need more time to prepare the tender documents and raise financing. Some may even have to be restructured first. I hope that the relevant departments will take these problems into consideration, when they call for tender. Now, with the lowering of our wage cost, we have no choice but to bring down our standard of living and our expectations. As we adjust, we must be prepared that there will not be without pain. Let me conclude my speech with 3Cs. First of all, we must have "Confidence". Our battle against SARS has strengthened the confidence and bonding between the people and the Government. I believe that Singaporeans now have greater confidence in the Government's judgement and decision-making. Only when we have confidence in the future, will we have the courage to face the challenges ahead. The second C is "Commitment". We must be committed to implementing strategic measures. To endure a short pain is far better than to suffer a long agony. We must act fast to reform our wage structure and to turn our economy around. The third C is "Common goal". In order to effectively resolve our economic crisis, we must stay united as one people and one nation with a common goal and move towards a common direction. If we have the confidence, commitment and a common goal, we will be able to bring our economy back on the road to recovery, create more job opportunities and bring back prosperity. Then, we can all truly feel relieved.

Mr Deputy Speaker, Sir, I support the CPF changes as proposed by the Prime Minister. These changes are indeed drastic, but are necessary to prepare Singapore for its future challenges. Faced with increased competition and a fast ageing population, the proposed CPF changes will provide an impetus to sustain economic growth in Singapore. The CPF changes and relief measures sent out three clear signals to boost the confidence of our potential investors, our existing businesses and our people. To the potential investors, it shows that our Government is always prepared to take tough measures to keep our business costs competitive. This will attract more investments, thus creating more jobs for Singaporeans. To the existing businesses, the three-point CPF cut will provide an essential lifeline for businesses to improve their capabilities to sustain their businesses. This will save jobs and allow businesses to source for more business opportunities. As for Singaporeans, the changes will boost their confidence in terms of better job security and more job opportunities. At the same time, it sends a clear signal to all Singaporeans that we must save more for our retirement, and be more prudent in our financial planning. Sir, Singaporeans understand and support these CPF changes, although it means a reduction of their CPF savings. These are painful measures which affect their quality of life. But Singaporeans are confident that the Government will lead them out of the present unemployment situation. With lesser CPF savings, I hope the Government can do more to help Singaporeans "stretch the dollar value of their CPF savings". In this regard, I would like to suggest three areas where the Government can help Singaporeans. First, CPF for housing. Sir, to overcome the situation of Singaporeans being "asset rich but cash poor" upon retirement, we need to review the HDB housing policies. These include the development policy for different flat types, pricing formula for new flats, debarment periods for those who sold their flats, and also the rental flat policy. We must provide more housing options for retirees to liquidate their assets and cash out their savings for retirement. We must give retirees more options to either own a smaller flat or rent a flat at affordable prices upon retirement. The relaxation of HDB rental policy to allow those who own their flats for 15 years to rent their flats is a welcome move. But with the present string of restrictions by HDB, it may not be easy for these flat owners to find cheaper alternative accommodation if they were to rent their flats. As such, only a small fraction of the 250,000 flat owners will be able to benefit from this relief measure. Sir, we must also review the affordability criteria and pricing formula of HDB flats. The pricing of HDB flats should not be on the basis that 90% of Singaporeans could afford a 3-room flat. HDB has stopped building 3-room flats since the 1980s. As such, I do not know what is the price of a 3-room flat, which the formula adopts to work out the affordability index. Since HDB flats are liberalised, we should adopt a market pricing mechanism whereby HDB flats are priced not according to affordability, but on market prices with Government subsidy. For example, a new 100 square metre 4-room HDB flat with a 99-year lease can be priced close to a private apartment without condominium facilities of the same size based on its location, design and floor height. Thereafter, the net sale price shall be determined after deducting the market price with a prescribed Government subsidy for 4-room flats. This would better reflect the Government subsidy and the market value of new HDB flats. With a growing ageing population, it is crucial for the Government to plan and provide more housing options for the elderly. Elderly couples with grown-up children prefer to live near their children, but may not be able to purchase a 4- or 5-room flat based on market prices. Today, the 4- and 5-room housing mix, especially in our new towns, does not facilitate elderly couples to stay near their children. Thus, I would urge the Government to consider developing a better housing mix of different flat types (1, 2 or 3 bedroom flats) as in private condominiums to offer more housing options for Singaporeans. To help retirees to liquidate their assets, HDB should explore reverse mortgage schemes. It should also provide more rental housing flats for the elderly. With lesser CPF savings, young couples may take a longer time to save for their HDB flats, especially if they face certain periods of unemployment. In order to encourage more young Singaporeans to form families earlier, HDB should reduce the downpayment for new flats for first-time applicants. This is especially so for 4-room flats which are within the means of the working class Singaporeans. Second, CPF for healthcare. Sir, I fully support the efforts by the Health Minister to lower health costs in Singapore. Many Singaporeans, especially the heartlanders, are indeed concerned about healthcare costs. The risk of individuals or family members depleting their Medisave accounts is high if one of their family members falls critically ill. The safety net for medical expenses is presently inadequate. We need to keep medical costs affordable and encourage more Singaporeans to save for their medical needs, as they grow older. Sir, I support the adjustment of the Medisave Minimum Sum of $25,000 to cope with the inflation of health costs. I would suggest that the Government should develop an inflation index to measure and monitor health costs and healthcare expenditures of Singaporeans closely. The Health Ministry should also adopt a holistic approach to promote healthy lifestyle among Singaporeans more aggressively. We should provide more facilities or avenues for Singaporeans to keep fit. In this regard, I hope the Government would accelerate the development of park connectors, upgrading of sports complexes and provide more support to encourage grassroots organisations to organise more keep fit activities, such as brisk walking, tai-chi, qigong or silat for Singaporeans. Third, CPF for retirement. To many working class Singaporeans, the CPF saving is probably their only saving for retirement. Singaporeans earning less than $2,000 will not be able to save much if they need to pay for their housing, medical care and support their children. As such, the Government should help Singaporeans to increase the returns of their CPF savings. The CPF Board should adopt clear performance benchmarks and invest in a wider portfolio of investments to maximise the returns of its funds. The returns to CPF savings should also be based on a formula, which is regularly updated, so that CPF members can benefit more from their savings. Sir, based on the CDC's experience in helping Singaporeans to find jobs, we find that three groups of job-seekers have much difficulty in finding jobs. They are: (1) Singaporeans who are medically unfit or require regular medical treatment, such as kidney dialysis treatment; (2) those suffering from mental illness; and (3) those with criminal records. I would urge the Government to do more to help these people to make a decent living. The Work Assistance Programme may not help these Singaporeans to secure jobs as employers are not keen to employ them. I hope the Government can consider creating some jobs to help these Singaporeans. One area which the Government can create jobs, and at the same time improve its customer services, is to remove the automated telephone system for all public agencies and the Ministries. These automated telephone systems are often inaccessible or engaged at all times. To promote excellence in public services, the Government should consider training Singaporeans to be customer service officers, manning these frontline operations, at least during office hours. This would not only create jobs but also improve the image of Government agencies. It will also enable many people to make enquiries through the phone instead of wasting time to come down to the various Government agencies. Sir, I support the CPF changes.

I intend to stop here. Mr Wong.

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

Resumption of debate, what day?

Tomorrow, Sir.

So be it.

Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng].

Adjourned accordingly at Fourteen Minutes to Seven o'clock pm. Adequacy of CPF at 30% CPF Contribution Rate (2981 - 2982)