Hansard, 2007-02-15

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: Name From (2007) To (2007) Prof. Thio Li-ann 23 Feb 08 Mar Dr Ong Chit Chung 27 Feb 27 Feb

ABDULLAH TARMUGI Speaker Parliament of Singapore

1. Mr Baey Yam Keng asked the Minister for National Development under the public rental scheme, if the HDB will consider renting three-room flats to low-income families which cannot afford a purchase flat but need more living space than a two-room flat.

2. Dr Muhammad Faishal Ibrahim asked the Minister for National Development what is the demand and supply situation of rental flats offered by the HDB and what is the average waiting time from the time one applies to the time one is allocated a rental flat.

he Minister for National Development): Mr Speaker, Sir, may I have your

permission to take Question Nos. 1 and 2 together?

Yes.

Currently, HDB has about 42,000 rental flats, of which 1,200 are vacant and available for rent. Each month, 160 rental flats are returned to HDB while 370 eligible applications are received. Given the limited numbers of rental flats, we need to ensure that rental flats are allocated to only deserving cases without alternative housing options.

The average waiting time for a rental flat ranges from two to six months, depending on location. Those who need rental flats urgently can participate in HDB's Daily Selection Scheme where flats are available for immediate selection and allocation on a daily basis.

HDB has no plans to build 3-room rental flats, as we need to focus our limited resources on meeting the housing needs of as many needy households as possible. In addition, rental flats also need to remain small so that the rent will be affordable to the families in need.

In fact, HDB plans to convert some available 3- and 4-room blocks at Boon Lay and Woodlands into about 1,000 units of 1- and 2-room rental flats. HDB will also build new 1- and 2-room rental flats in the near future starting with around 1,000 units in the next few years.

May I ask the Minister of State whether she will review the joint singles scheme for those who have lost their spouses or who have no family member or friend to share their rental flat with? Is it not very difficult for many single elderly to comply with this ruling requring them to share and to live with complete strangers?

Mr Speaker, as I have mentioned, the need for rental flats is there. We have a limited stock of rental flats and we have to allocate them carefully. From a resource allocation perspective, we would prefer to have two singles sharing a 1-room flat. HDB has facilitated the pairing up in the past. We do try to put them together and, in some cases, where it is extenuating, as the Member has mentioned, perhaps the demise of a spouse or there are some peculiar personality issues, we have made exceptions. But from a resource allocation perspective, we want to maximise the limited pool of rental flats that we have and, if possible, get as many needy people housed. For every 1-room flat that is only occupied by one person and leaving the other vacancies unoccupied, we do have another person basically to house. From our perspective, with a limited budget, having two singles paired up is the best solution, going forward.

Mr Speaker, will the Ministry consider, for families which are low-income but larger in size and who may find 1- or 2-room flats too small for their living comfort, opening up 3-room flats for those families in need? The second question is: why is it that HDB is appointing commercial marketing agents to market 3-room flats to be rented out at commercial rates?

Mr Speaker, as I mentioned in my answer, we would like to provide as many needy households that are eligible for rental flats as quickly as we can and, therefore, given the very limited stock of rental flats that we have, we would prefer to have them in 1- or 2-room flat size. To have new 3-room flats at the expense of being able to build two 1-room flats, for example, obviously it is wiser to have more 1-room flats than a single larger room flat, like a 3-room flat. So, from a resource allocation perspective again, we would stick to 1- or 2-room flats because, as much as we like to

provide a shelter for the needy, we would also like to encourage them to own their homes at some point in time, and comfort is a good reason to encourage them to perhaps start with acquiring a 2-room flat, for example.

On the issue of management agents renting out 3-room flats, that is really for us to make better use of vacant flats. They do not come under the Public Rental Scheme.

Sir, some elderly cannot rent a flat in the open market. They cannot afford to stay in their own flat and they have to sell their flat. But HDB will come back to them to say that they cannot, because they have to go through a 30-month debarment period. Not only that, some of them have purchased two flats before. But these elderly, with medical bills to pay, have no choice but to sell their flat to settle the many bills that they have. I want to ask the Minister of State whether there is flexibility given for those who have bought two flats before and those who have sold their flats and have to move on to a smaller flat, to give them this rental option.

The other question is that the Minister of State has been stressing that there is a limited number of flats. Can I ask the Minister of State whether there is any possibility of increasing the number of rental flats to meet this increasing demand for rental flats?

I will take the second question first. As I have mentioned in my answer, we are planning to construct new rental flats over the next few years and we are also in the process of converting 3- and 4-room flats into 1- and 2-room rental flats. That review is done after considering the number of new applications that we have. We are receiving about 370 eligible applications

on a monthly basis. We have a stock of 1,200 at the moment. We will be using up our rental stock quite quickly if we are not careful in assigning the rental flats. That is what we are doing. We are starting to construct and convert the 3- and 4-room flats into 1- and 2-room rental flats.

With regard to the 30-month debarment period rule as well as having sold two flats or more, I think Members would agree with me that the rental flats are heavily subsidised. For example, for those who earn $800 a month and below, we are charging them $30 for a 1-room flat and $60 for a 2-room flat. It is highly subsidised and highly attractive, and if we do not have very strict rules, I think it will be very attractive for many to turn to rental flats as an option. We should keep rental flats to those that are really in need and therefore there are rules, for example, to stop families who have just sold and received a big proceed from their sale of flat, to rent and to look at rental housing as a first choice option. Having said that, we have exercised discretion and we have granted exceptions to cases that are really deserving.

Mr Speaker, I would like to ask the Minister of State whether we can give priority to those families with many young children. I have a Malay family with four young children, aged between one and four years old, and they will be evicted by their landlord by the end of the month and she has been coming to see me about a rental flat.

We do look at cases on a case-by-case basis. As I said, we do exercise discretion.

Sir, can I ask the Minister of State for the renewal rate for rental flats? Can a group of residents who are in the income

bracket of $801 to $1,500 per household income per month be considered on a case-by-case basis because these are people who are in a very tight financial situation?

Mr Speaker, we do look at rental revisions very carefully and as much as possible accommodate them by giving advance notice as well as spacing out the increase. In this case that the Member has mentioned, for income brackets of $800 to $1,500, after the revision, we are talking about a monthly rental of $110 for a 1-room flat and $150 for a 2-room flat. I believe that for someone who is earning $800 to $1,500, this would be an acceptable amount to pay. It is actually way below market rate. The subsidy is very heavy. But obviously we would apply a principle that if you have the ability to pay, you should pay according to your earning capacity. In this case, for $800 to $1,500, we have decided to raise the rental progressively.

Having said that, we were very mindful of the impact on the low-income and that is the reason why we have capped those who are earning $800 and below at rentals of $30 and $60 for 1- and 2-room respectively for the time being.

Sir, will the Minister of State update the House on the rate of increase on the number of new supply of rental flats that are coming on board annually over the next three years and whether such a supply will be sufficient to cater for the demand of rental flats?

Mr Speaker, as I have mentioned, we have a stock of about 42,000 rental flats. If you look at it in proportion to our total public housing, that is roughly about 5% of our total stock. For HDB to set aside 5% for very

heavily subsidised rental flats, I think that is a very reasonable proportion. Having said that, we are mindful of some of the difficulties that some needy families may be going through, particularly in view of possible stagnation of income, and that is the reason for us to embark upon construction as well as conversion programmes. We are talking about 1,000 to 2,000 units being built or converted over the next few years.

3. Mdm Ho Geok Choo asked the Minister for Manpower (a) how many Professionals, Managers, Executives and Technicians (PMETs) have been re-employed in the last 9 months; and (b) what efforts has the Ministry taken to create fresh employment opportunities for displaced PMETs, especially in this period of economic growth and recovery.

4. Dr Lam Pin Min asked the Minister for Manpower (a) if there are any existing schemes or future plans to assist Professionals, Managers, Executives and Technicians (PMETs) who are bankrupts and unemployed, in job placement; and (b) if there are measures in place to minimise possible discrimination against them in their bid to look for a job, both in the private and public sector.

Mr Speaker, Sir, may I take Question Nos. 3 and 4 together?

Yes.

Sir, in tandem with the robust employment growth, the prospects for residents retrenched from PMET jobs in 2006 were much better

compared to the three years before. 83% of the residents retrenched from PMET jobs in the first six months of 2006 were re-employed by September 2006, ie, within nine months of retrenchment. This is a significant improvement compared to 2004 and 2005 where the re-employment rates were 67% and 71% respectively. The re-employment rate for PMETs as at September 2006 is also higher than the overall resident re-employment rate of 76% for the same period. Furthermore, the re-employment prospects for retrenched PMETs aged 50 and above had improved dramatically from 54% in 2004, 61% in 2005 to 86% in 2006.

Unemployment of PMETs has also fallen. The resident unemployment rate for PMETs has declined steadily from a high of 4.1% in June 2003 to 2.9% in June 2006. This is much lower than the overall resident unemployment rate of 4.5% in June 2006 and 3.6% in December 2006.

Nevertheless, we recognise that some PMETs may need help to find a job. Between January and December last year, the Singapore Workforce Development Agency (WDA) assisted some 3,800 PMETs to obtain employment through its Public Employment System (PES) and funded some 17,000 PMETs to upgrade their skills via SDF-funded programmes.

In addition, other PMET-targeted programmes have been effective in helping many PMETs find work opportunities in wholly new career areas. For example, since 2003, more than 400 PMETs have been trained and put onto new career pathways in nursing and radiography, under the Strategic Manpower Conversion Programme (SMCP) in Healthcare. A new programme introduced last year, called the Property Officer Re-skilling Programme, has helped 61 workers holding at least a diploma qualification to be retrained as property officers. 184 workers were placed and trained for the

marine and maritime industry, under the ASMI Super V programme in 2006. However, it is ultimately the buoyant economy that will create demand for PMETs, thus allowing them to find employment.

MOM's records on complaints of discrimination in hiring practices do not indicate that bankruptcy is a significant factor of discrimination. In view of this, it is not necessary to have special programmes for job seekers who are bankrupt. In any case, any programme that is targeted specially at persons who are bankrupt is likely to stigmatise them further.

Nevertheless, MOM recognises the importance of fair employment practices in the workplace. It adopts a promotional and educational approach towards employers, working with the tripartite partners. A key vehicle is the Tripartite Alliance for Fair Employment Practices (TAFEP), which is headed by Mdm Halimah Yacob from NTUC and Mr Bob Tan from SNEF. Amongst other initiatives in its first year, TAFEP has gotten more than 300 companies and organisations to endorse a Pledge of Fair Employment Practices, and has recently partnered Singapore Press Holdings (SPH) to ensure that all job advertisements carried on SPH publications conform to the Tripartite Guidelines on Non-Discriminatory Job Advertisements.

Sir, bankruptcy under the law of Singapore is not an offence and, if there is a Yellow Ribbon Project to help reintegrate ex-convicts into society, I believe there is a need for a similar initiative to give undischarged bankrupts a helping hand to move on in life. May I ask the Senior Parliamentary Secretary if there are any undischarged bankrupts who are employed in the civil service and, if so, how many are there and what are their areas of work?

Sir, I do not have the information. Indeed, undischarged bankrupts who are unemployed, just like any other unemployed, can reskill themselves in other areas which they may want to learn, to further improve their re-employment capabilities.

Sir, I do not have with me the information on the employment or re-employment of undischarged bankrupts in the civil service.

Sir, whilst it is heartening to hear that 83% of them are re-employed after nine months, may I know what is their pay like? Do they get back their original pay or is it much lower, compared to what they used to receive?

Sir, salary gains by employees depend very much on the nature of work done, so we do not have the figures about their salary. We also do not have information about whether they are employed in better jobs or jobs which are paying less, compared to their previous salary.

Mr Speaker, Sir, given that the Ministry does not track the salary figures, would the Ministry consider asking the Workforce Development Agency to track the information between the jobs that were lost and the new jobs in which they were re-employed, so that, moving forward, the Government would have a much better idea of what kind of re-employment these PMETs are getting?

Sir, we can consider that suggestion.

Mr Speaker, Sir, I have three supplementary questions for SPS.

My first question is, with the improved rate of employment among the retrenched PMETs, would the Ministry consider

actually tracking the retention of these re-employed PMETs? If not for anything, it is at least an exercise to gauge how long these re-employed PMETs will stay in employment.

My second question is that in a globalised economy, we know that retrenchment among PMETs is going to be a recurring problem, even when the economy is good. In view of this, what other kind of long-term programmes will the Ministry be looking into for the PMETs, especially also for PMETs in the service sector?

The third question I have has to do with the fact that PMETs represent a very rich pool of talents. If we do not capitalise on this talent pool, it is really a waste. Many of the skills and experience may be in demand outside Singapore, but PMETs may not be able to tap these opportunities on their own. Therefore, what plans does the Ministry have in terms of aggregating the talents and experience of these displaced PMETs in order to help them to secure overseas assignments?

Sir, I have mentioned earlier some of the programmes organised by WDA and its related agencies for PMETs. We already have programmes covering 14 industry sectors - retail, hotel and accommodation services, logistics, healthcare, marine and maritime engineering services, and so on. These are programmes which are designed to help PMETs to gain new skills, so that they are even more employable, whether for their future use or when they are seeking re-employment. We can always expand and look for new areas in which we can help PMETs to gain new skills. But I want to report that we have actually a lot of programmes already running for PMETs.

Sir, on whether we can help Singaporean PMETs to find jobs overseas, our

best knowledge lies locally. I think we have a good knowledge about local employment needs, skill needs and employment demand. It is best to focus our attention on the local market and help our PMETs and job-seekers alike to look at areas in which there are demands for workers.

As to securing overseas assignments for PMETs, as more Singapore companies operate overseas, we can widen the network and find out whether there are employment opportunities in Singapore-owned companies overseas.

5. Dr Lam Pin Min asked the Minister for Education (a) what is the proportion of Singaporean children who do not attend pre-school education; (b) whether there are any data or statistics to show the benefits of pre-school education or a direct correlation to future academic performance; and (c) whether there is a need to make pre-school education compulsory.

6. Dr Lily Neo asked the Minister for Education whether he will consider subsidies for pre-school education for children from lower-income families so as to give these children the opportunity to level up.

7. Mrs Josephine Teo asked the Minister for Education (a) if he will provide an update on the number of pre-school education providers in Singapore; and (b) if the Ministry plans to issue guidelines on the fees charged by providers of pre-school education services.

Mr Speaker, Sir, allow me to address Question Nos. 5, 6 and 7 together. The three Questions relate to

the pre-school education scene, benefits of pre-school education, and opportunities to level up.

The pre-school landscape in Singapore is diverse, with various community and private organisations providing a variety of pre-school education programmes to cater to different needs and expectations. As at 1st January 2007, there are altogether 1,210 kindergartens and childcare centres offering pre-school education. Of these, 492 (40.4%) are kindergartens and the rest are childcare centres. This diversity provides choice for parents to select the most appropriate pre-school education in accordance to their needs and preferences.

Recent international research suggests that the early childhood years are a sensitive period in which a child's future development can be influenced. Our own data at MOE indicates that pre-school education is particularly helpful in allowing children from low-income families and non-English speaking families to catch up with their peers.

Indeed, the vast majority of parents already recognise the value of pre-school education. We estimate that roughly 95% of children have received formal pre-school education. Given this attendance rate and the real choice parents have from a diversity of the pre-school options available, MOE does not see a need to make pre-school education compulsory.

MOE is therefore targeting its efforts at continuing to uplift the quality of pre-school education, particularly for children from lower-income backgrounds. Several measures to improve quality have been introduced over the years by MOE, such as developing a curriculum framework, introducing training, qualification requirements for teachers, and accrediting teacher training courses.

MOE is also working with MCYS, the People's Association and the self-help groups in a coordinated effort to reach out to the small number of families, ie, the 5% that I mentioned just now, who do not already send their children to pre-school and to persuade them to do so. The success of these joint and targeted efforts will, we hope, have a significant impact on this group of children.

MOE and MCYS provide operators with guidelines on making fee revisions, but do not control their fees. For example, pre-schools intending to raise their fees are advised to provide adequate notice to parents about their fee revision plans.

There are a variety of financial assistance schemes in place to help children from lower-income families. MCYS provides a fee subsidy under its Kindergarten Financial Assistance Scheme (KiFAS). Families which cannot afford the initial costs related to sending their children to kindergarten may also be considered for a Start-up Grant (SUG) of up to $200 per child per year. For low-income families with children enrolled in childcare centres, there is also the Centre-based Financial Assistance Scheme for Childcare (CFAC) if mothers are also working. Low-income families can receive up to $300 in childcare subsidies per month.

For those who need further help, community-based support is available through the grassroots organisations and self-help groups. For example, CDAC and MENDAKI provide additional financial assistance to needy families under the Pre-School Assistance and Support Scheme (PASS) and Education Trust Fund (ETF) initiatives respectively. Advisers and grassroots leaders can also tap on the Citizens’ Consultative Committees' (CCC)

Welfare and Education Fund, and the ComCare Fund to assist their residents who need financial support to send their children to pre-school.

Our primary schools are doing good work to help children catch up and realise their potential, regardless of their initial starting point, whether or not they have attended pre-school. From this year, the enhanced Learning Support Programme (LSP) will be rolled out to all Primary schools, starting with the Primary 1 children. The enhanced LSP provides a more customised support for children to improve their basic early reading skills. Similarly, additional support in Mathematics for P1 pupils has also been introduced in all schools this year. Many schools continue to provide customised support for children needing help in English and Mathematics beyond Primary 2. Hence, support for these children does extend beyond the pre-school years.

The rigorous primary school curriculum, coupled with support programmes, builds strong foundations for our children to go on to secondary and post-secondary education.

Mr Speaker, Sir, may I ask the Senior Parliamentary Secretary how committed is MOE in wanting to help children from disadvantaged families to get pre-school education? Has there been any evaluation done to ascertain what are the measures that need to be taken to ensure that these children do get help? Is it not very important for us to try our best to give these children a better change in life in getting out of their social status? Why is MOE reluctant to give free education for these children in order to remove one of the most important hurdles, ie, financial, for these families?

Dr Neo, please keep your views to yourself about reluctance. Just ask the question.

I will rephrase that. Will MOE consider free education in order to remove one of the most important hurdles, ie, financial assistance for these families? As the SPS earlier said that these children can tap financial schemes, such as KiFAS and others for financial assistance, am I not correct to say that these schemes are in fact limited and they only provide temporary and partial assistance and, therefore, do not solve the problems? Lastly, am I not correct to say that a $48-million opportunity fund has been set up to help children in schools to level up by paying for their co-curricular opportunities, such as going for overseas trips? If so, why can MOE not prioritise the more important and basic pre-school education for these children?

You are making speeches again, Dr Neo.

Mr Speaker, Sir, I will re-emphasise that the MOE is committed to the pre-school scene, although the efforts are directed at this point of time and emphasis is given in helping to level up the children who are needy. So, it may be indirect in the form of curriculum and teacher upgrading, where they go most, and it is also more directed to the students in need in terms of financial assistance schemes. I do not believe that the ground reflects that the schemes are inadequate. I think we need to go for more.

The Many-Helping-Hands scheme that MCYS has put in place would be adequate to meet the needs of the children at hand.

However, I believe the review to see whether these schemes are adequate or not will continue to be a process that MCYS as well as inputs from MOE will continue to have.

Sir, my views are slightly different from Dr Neo. For a start, instead of making

pre-school education free, could we consider making pre-school education as affordable as primary school education, given that the Ministry recognises the value of pre-school education, particularly for lower-income families?

Mr Speaker, Sir, my answer remains the same. It is a targeted approach. It is a question of how we target our approach, giving subsidies to everybody or giving financial aid to those who really need help. The structures and the schemes are already available through the KiFAS, the self-help groups as well as other schemes under the CCC or other conditions that may be able to help this group of children.

I would like to take this beyond the welfare portion. Where does the Government then stand on when compulsory education or even fundamental education should be funded by the Government start? Should it be at K1 or P1? The amount of resources that you are putting in seems to be moving into pre-school as well. Should pre-school education be Government-funded, the way we fund primary education, for example?

It is certainly not the same, the way funding is given. The funding for primary education is quite separate from compulsory education. Compulsory education compels people to attend school. It does not actually mean free education. So it is quite a separate issue altogether. The funding for pre-school is targeted at this point of time for the primary needs of those in need as well as to upgrade the skills of the teachers in the industry. So there have been a lot of efforts to put in resources to upgrade the teachers' skills, qualifications as well as the curriculum framework to help all children attending pre-school education to attain the same good standards for all.

8. Mdm Cynthia Phua asked the Minister for Health (a) how are our medical training programmes and facilities at hospitals oriented towards coping with the needs of an ageing population; (b) how many of our doctors are trained in gerontology; and (c) whether there are plans to set up a special centre for gerontology in Singapore.

Sir, as our population ages, the skills of our healthcare professionals and the care facilities will need to change to meet evolving patient needs. To help doctors prepare for the care of the elderly, Geriatric Medicine is now a core module for undergraduate medical training. The Ministry has also taken steps to increase the exposure of doctors to this field and to encourage more to take up this specialty. Today, there are over 40 geriatricians in Singapore, and this is double the number in 2002. In addition, we have 46 doctors who completed the NUS Graduate Diploma in Geriatric Medicine over the last five years.

Efforts are also in place to prepare nurses to take care of our elderly patients. Over the past 10 years, 177 nurses have been trained in Gerontology under the Nanyang Polytechnic’s Advanced Diploma Programme. The NUS Master of Nursing programme also offers Gerontology as an area of specialisation.

Given that elderly patients tend to have multiple medical needs, all restructured hospitals have in place geriatric departments or services which work closely with other specialties to coordinate care for elderly patients. Some hospitals also arrange for their geriatricians and other specialists to provide continued care for patients when they are

transferred to community hospitals for rehabilitation.

Besides specialist care within hospitals, there is also an important role for Family Physicians in helping society deal with the health challenges of an ageing population. A good Family Physician will know the medical history of his patient well and is in the best position to help coordinate that patient’s need for specialist care.

In this regard, MOH has made changes to the training programme for family physicians to better prepare them for an ageing population. Elderly care is now a compulsory module for all family medicine training programmes.

In addition, from May 2007 onwards, all trainees in Family Medicine will go through a compulsory posting in hospital geriatrics departments. They will also be given the option to do additional posting in community hospitals.

Finally, we are not aware of any plan to set up a special centre for gerontology.

Sir, I would like to ask MOS whether we have a section on gerontology in the polyclinics now. If not, are there plans to set up, because a lot of our residents are now going to polyclinics for such help?

My second question is: what are the three top common ailments among the elderly?

The third question is: how is the physiotherapy department coping with the demand now? If there is a shortage of these physiotherapists, what are the plans to address this problem?

Sir, on the different ailments of the elderly, you can divide them into diseases that become

more prevalent as one ages, as well as the risk associated with one's physical condition as one ages. On both fronts, we will have to put in efforts. We know that recently, the Ministry has introduced a chronic disease management programme. This one actually takes the society from the point of middle-age onwards and we have included four diseases in that programme - diabetes, hypertension, high cholesterol and stroke. The idea is to say that, as we prepare an ageing society to better take care of itself, we also organise the resources, both in the community as well as in the medical community, to gear up for this increasing need. These are not the only four diseases, but certainly, these would be diseases that we would want to care for. Obviously, as one ages, there will be other diseases, such as Alzheimers, for example, that would also become more prevalent. So there is a wide range. I do not have the exact rank order to provide to the Member. But, certainly, we will have to address that.

In terms of the risk to the physical condition of the elderly, we all know that falls and hip fractures, for example, would be one category. It is something that we can do a lot about, both in terms of how do you help an elderly person who has suffered a fall to recover, and also at the same time, what can be done within the home setting, for example, to prevent these occurrences. I want to address the concern of the Member by saying that it is not only the medical facilities that we have got to look at, but it is an entire societal effort. Certainly, within the medical side of things, the emphasis is on what we call "right siting". What do we mean by "right siting"? It means that we try to address the needs as close to the community and as close to the person as possible, rather than to wait for a deterioration and for this person to be bumped around in a complex organisation and finally ending up in acute care which is actually very expensive and perhaps too

late. So it is precisely in this connection that we have and will continue to emphasise the role of family physicians and how we can better equip them. These GPs are the best gatekeepers in helping to refer our elderly patients in a familiar setting for the help that they need. Certainly, in this regard, our polyclinics is also part of this community network and we will look at our facilities there and to adjust to the needs.

In the area of training up more manpower of the right kind to address this need, I have already earlier given some figures.

I would like to ask MOS, in line with the wish on the part of MOH to keep the elderly sick at home and in the community, are there plans on the part of MOH to intensify efforts to help caregivers take care of the elderly sick at home because the services and facilities currently available are extremely lacking?

Sir, I would agree with the Member that, as a society, much more can and should be done in the area of preparing all of us to take better care of the elderly in a home setting and in a community setting.

On the question of specific examples of what could be done, I recently visited the Jurong Medical Centre. There, I saw a particular section that has been constructed, specialising not only in showing people how they could configure the home setting in order to better provide for the safety, comfort and care of the elderly, but they also emphasise on the training of caregivers to use in the correct way such equipment and to provide such care. That is for family members. I believe that the Jurong Medical Centre is one good example, but there are other programmes in the other institutions as well.

Beyond that, I would also like to say it is the on-going participation of the community in better understanding the risks involved in the care of our elderly and how we can exchange this information and, as a result, pick up more knowledge as a society, moving forward, and improve this programme as we go along.

I am glad to learn from the Minister of State that the Ministry is looking at the right sizing of the care institutions. What I want to hear from the Minister is whether or not the Ministry is also working towards right timing because one of the concerns is that when you need medical attention, you do not need to wait nine months to see a specialist when the time comes.

Sir, just to clarify, I said "right siting" and not "right sizing", meaning as close to the community as possible.

With regard to right timing, the Ministry assures the Member and this House that first, nobody who requires medical care will be denied it on account of a lack of means and that each person will be attended to according to the urgency of his need as assessed by medical practitioners.

9. Mr Christopher de Souza asked the Minister for Health (a) if he can provide statistics on the balances remaining in the Medisave accounts of CPF members when they pass away; and (b) if further liberalisation of the Medisave scheme can be made if the statistics show that the average balance is large, such as using Medisave for payments for peripherals related to hospitalisation or serious illness.

(Mr Khaw Boon Wan): Sir, among the Singaporeans who passed away after the age of 65, their average Medisave balance was about $3,500. In fact, about 60% of all Singaporeans, and this is regardless of age, both young and old, had less than $2,500 in their Medisave Accounts at the time they passed away.

Looking at this data, my view is that generally we are not over-saving in Medisave. If anything, my concern is that most Singaporeans are under-saving for Medisave. We should therefore be careful not to allow Medisave to stray too far away from its original purpose, which is to ensure that Singaporeans have enough savings for their hospitalisation at the Class B2 or C level.

However, among the higher-income group, some have very healthy Medisave balances and are still working and contributing towards their Medisave. There is scope to allow such account holders to make larger withdrawals from their Medisave when they use the unsubsidised wards. I will announce the details soon.

(Holland-Bukit Timah): In light of the reply, will the Minister consider allowing patients who are suffering from terminal illness to use this $3,500 average more liberally, for example, for payment for peripherals related to hospitalisation?

Secondly, on the Minister's point of under-saving, I think it needs to be appreciated that when a patient contributes $100 per month to Medisave, it would have taken him three years to save $3,500. So how can this be taken into consideration in liberalising its use amongst terminal patients?

Sir, for terminal illness, there is a wide range of illnesses and, therefore, the treatment requirements vary and the consequential funds

that they need also vary. So we have to look at each case. But as a policy, we apply certain general rules. I have been liberalising, the last few months, the withdrawal quantums and, by and large, my sense is that the measures are adequate. On average, these patients, when they die, have about $3,000 in their account. You cannot drive it down to zero because we are talking about average here. If we drive it down to zero, then there will be many accounts which are below zero, that means, they run out while alive. We have to take that into account. But for patients whose hospitalisation was their last hospitalisation, I changed the rule last year to allow the whole bill to be paid off for those who died in hospital.

What is the Member's second question?

It relates to the first on the Minister's point about under-saving. If somebody had $100 per month contribution to Medisave, he would have to wait three years to accumulate $3,500. Therefore, does the Minister not think that that can be taken into consideration in liberalising Medisave for terminal illness patients?

For somebody who is contributing $100 per month, he must be earning a few thousand dollars. For such account holders, his Medisave account would have been quite sizeable, and I have been liberalising Medisave for this group of patients.

But your point is about such account holder who has a terminal illness. Are you saying he is under-saving or over-saving? I do not quite follow your point.

My point is that if it is $100 per month, you are well-to-do enough to contribute the $100 per month. Then, if you are contributing less than $100 per month, it would take you years to accumulate $3,500, which is the

average. In that sense, it cannot be deemed as an under-saving. It should be further liberalised.

We have almost three million account holders of various demographics. It is hard to generalise. But, as I said, as a nation-wide policy, I can only set broad rules that cover the majority. Whether you are under-saving or over-saving, it also depends on your health conditions. You could be from the lower-income group, but if you stay healthy, and you hardly use hospital treatment, your account may be sufficient. Or, as you said, you could be contributing $100 a month but, let us say, bad luck, you have a lot of illnesses, you are depleting your Medisave account, then you will be under-saving. The critical point for Singaporeans is this: when you work, save in Medisave. And when you have Medisave, please buy MediShield both for yourself and for your family (children and spouses), and then for those who, despite Medisave and MediShield, still drop out of the safety net, we have Medifund. And in a couple of hours' time, you will hear the fourth pillar to our social security system.

The key is to make sure that every Singaporean gets into these social security pillars. That is the key. If you are not in, you decide to stay out, then I think that will be rough for the family.

Mr Speaker, Sir, would the Minister consider the use of Medisave of the individual or a family member for respite care in a nursing home, for a short-term period, say, for example, the caregiver (the child) wants to take a holiday or take a break and the elderly person is in need of supervision in relation to medical care? Right now, as I understand, it is the policy to pay cash upfront for respite care and this is sometimes quite tough on the family caregivers.

I reminded Members just now that Medisave was designed for a specific purpose and we should not forget that. Medisave cannot solve all medical problems. It is highly focused and for it to be effective, we should stay focused. We started it 22 years ago specifically to look after hospitalisation needs and that is why the contribution rates are designed that way. If, however, you want Medisave to be also used for other purposes, then, clearly, the contribution rate of 6% has to be raised to a higher level, which I do not think is advisable. I hope that answers the Member's question.

10. Mr Seah Kian Peng asked the Deputy Prime Minister and Minister for Home Affairs whether there has been an increase in the incidence of theft of public property such as lightning strips and metal railings and, if so, what measures are being taken to minimise them.

Mr Speaker, Sir, the number of theft cases involving metals increased considerably last year. About 1,100 such cases were reported, representing an increase of some 570 cases (or about double the number) as compared to 2005. This increase can be attributed to opportunistic criminals capitalising on rising metal prices by stealing various metallic items for sale as scrap metal. Fuelled by the high demand in countries such as China and India, the price of metal is expected to rise even further in the next few years.

As to the types of goods stolen, they comprise cables and wires (44%), raw materials (9%), lightning conductors (6%) and urns (5%). These were among the most common items stolen last year.

Other items include metal pipes, bars, strips, dry-riser lugs, signs and drain covers.

Of these theft cases, items made of copper accounted for about some 62%, followed by those made of aluminium (13%). The remaining cases involved other types of metals, such as stainless steel, steel, brass and bronze. This trend reflects the price increases of both aluminium and copper compared to steel. The total value of metallic items stolen last year was estimated at about S$4 million.

Sir, the Singapore Police Force (SPF) has adopted a three-pronged strategy to combat this phenomenon, encompassing, firstly, enforcement; secondly, creating awareness; and, thirdly, prevention measures.

Towards this end, Police has stepped up enforcement efforts against both thieves and errant dealers. Hence, last year, Police arrested a total of 200 persons for committing 150 cases of metal theft. MHA also recently amended the Secondhand Dealers Act, introducing a more focused approach to specifically provide for the inclusion of "cables and wires made of copper" in the Second Schedule list of secondhand goods to be covered under the Act. Other key changes include requiring the buyer’s details to be amongst details required to be submitted by the dealers to Police, and also increasing penalties for greater deterrence. In this way, we will more effectively deal with the disposal of such stolen goods by secondhand goods dealers, otherwise known as "fencing".

To create awareness, SPF will conduct briefings and issue crime advisories to licensed scrap yard dealers to alert them of this crime trend and the consequences if they are found to have transacted in

stolen metal items. Through public education campaigns, Police intends to solicit public assistance to act as its eyes and ears to deter such crimes. In addition, SPF has engaged stakeholders, such as PowerGrid, HDB, Town Councils, Singapore Cable Vision and NParks, to improve their respective crime prevention measures. As a result of this collaboration, useful measures, such as the embossing of metal items with organisational identification, replacing of metal with alternative materials such as concrete, and beefing up patrols by their own personnel, have been implemented.

Let me assure Members that Police will do its best to keep the metal theft situation in check. Let me also urge the public to play a part by being more vigilant. Some culprits are able to steal in broad daylight as witnesses assume that they are legitimate workers engaged to remove the metal items. If Singaporeans see such suspicious activities, they should immediately call the Police or town councils for verification or assistance.

Sir, offenders who commit such crimes now are charged under the Vandalism Act, I believe. But thieves who steal lightning conductors are not mere vandals. Given the surge in such cases, in fact more than 100%, I want to ask the Ministry whether they can consider more effective deterrent measures, including making the punishment a lot stiffer.

Sir, I believe that the legislative arsenal which is now available is adequate because offenders can be charged under different sections, depending on the severity of the offence, number of items taken and whether they have antecedents. These include section 379, which is theft under the Penal Code and also vandalism, as the Member has mentioned. Under section 3

of the Vandalism Act, besides attracting a penalty of imprisonment of up to three years, it also attracts mandatory caning of at least three strokes. So I think that is pretty tough already. Indeed, those with antecedents can also be subject to the corrective training regime, and some have indeed been punished under the corrective training regime which has a mandatory punishment of five years.

Let me assure the Member that we will continue to monitor not just the punishment regime but the entire slew of measures that we have taken. The somewhat assuring news is that when this problem surfaced last year, it reached a high of about 131 cases in August, but it trended down to about 80 in December but went up a bit in January to 112. So it is not, of course, a time to claim victory. But let me say that the collective measures taken by everybody, in particular, the stakeholders, are important. So HDB has taken some measures. For example, NParks has taken measures to replace their metal bollards with concrete bollards. Community vigilance is also important because some of these things are stolen at night. If Singaporeans see these people loitering around, they should alert the Police. I think it was Mayor Zainudin who was interviewed together with Mr Seah Kian Peng in a The New Paper article who called for community vigilance. So, let us work together. Let me assure Mr Seah that, indeed, I will personally monitor the trend and see whether tougher actions are necessary.

Sir, may I ask the Senior Minister of State what is the profile of these offenders? Are they mainly locals?

Sir, of the 200 offenders who were caught last year, about half were foreigners and half were locals.

11. Ms Cham Hui Fong asked the Minister for Community Development, Youth and Sports what financial programmes are there to assist low income sole breadwinners to look after their disabled children and elderly parents, as tax relief is of no benefit to them.

Mr Speaker, Sir, the Government's ComCare social assistance schemes to assist low-income breadwinners are based on Workfare principles, whereby those who are willing to help themselves through work would be encouraged and facilitated to do so. We believe that work is the best form of welfare, and individuals should take responsibility for their own lives.

We subsidise childcare and student care to help low-income parents go out to work. These subsidies were increased under the Workfare package that was introduced last year to help low-wage workers.

In addition, through the many-helping-hands approach, we partner with Voluntary Welfare Organisations (VWOs) in the community to ensure that there is a broad range of services available to help low-income families care for their elderly dependants or disabled children, so that they are able to go out to work. For the elderly, the services range from Day Care Services to Home Help Services. For children with disabilities, these include the Early Intervention for Infants and Children Programme, integrated child care programme, special student care and special education schools for children up to 18 years of age. We have also set up the ENABLE fund last year to encourage

employers to make that first step of employing persons with disabilities.

The Government and the Community Chest help to co-fund these services to ensure that the cost of these services is affordable for low-income Singaporeans. The subsidies that MCYS provides to assist needy Singaporeans, under the ComCare last year, were about $68 million, out of which the subsidies for the elderly were $3.1 million and $4.8 million for the disabled children. The VWOs complement these subsidies with fund-raising efforts to assist needy families, for example, by waiving part or all of the fees.

We also recognise that healthcare costs can be a major expense for those who are caring for the elderly or the disabled. The Government therefore provides significant healthcare subsidies for Singaporeans. Lower-income Singaporeans who cannot afford to pay for their hospital bills despite the Government subsidies, Medisave and MediShield, may also tap on Medifund for additional help.

Low-income sole breadwinners who need more help with their living expenses in caring for their disabled children and elderly parents, can also approach their Community Development Councils for assistance.

In addition, the caregiving needs of low-income families with elderly and disabled dependants will be addressed by the newly formed Ministerial Committee overseeing ageing issues, to be chaired by Minister Lim Boon Heng, and the inter-Ministry efforts on disability issues co-ordinated by MCYS. So I urge Members to give feedback and suggestions for us to consider when we come up with a comprehensive package to solve these two problems.

I am often baffled by the numerous financial assistance schemes and different assistance schemes for the low-income families. I wonder if the Ministry can consider doing a more user-centred communication package to help the low income and possibly uneducated families make sense of all the schemes that are available to them, and that might also help the Members in this House.

Yes, I am sure the suggestion is very useful. I just want to inform the House that we are now trying to develop a package for all the advisors as well as the CCC ComCare helpers, and also to give them some training as well as to share good practices. The package will give them an idea about the three key pillars which we mentioned a few times in this House. You can divide the ComCare help into three big areas. One is self-reliance. Self-reliance includes Workfare. Workfare means anything about job or self-sufficiency which is under this pillar. The second pillar is ComCare Grow. Anything about children, KiFAS and CFAC is under ComCare Grow. And anything about the disabled and elderly is ComCare EnAble. So if you can remember these three big areas, when people come to you, you can just refer to them.

We are also trying to develop a database to see how we can help the CDCs. At the same time, we are also thinking of setting up a hotline. Of course, the number should be repetitive which is easier for the old people to remember. So I think we will look into the mechanism and how to set up this hotline. But we will announce it in a few months' time so that when an old person calls, you will not have an automatic voice answering service. We want to have a personal touch in this area.

Sir, to a certain extent, we are all actually suffering from

information overload. While all the packages that have been outlined are going to be very useful for us over the long term, I am just thinking, in the short term, whether MCYS would consider deploying some officials, whether be they from the social services or MCYS itself, to assist the grassroots leaders and advisors in the comprehension of all these packages so that it helps to facilitate a more speedier approach when it comes to dispensing all these assistance programmes.

If you read the newspapers a few days ago, all the Mayors had launched this ComCare network. The purpose is to get the Mayors to drive this platform by getting all the local grassroots organisations, for example, RCs, CCCs and VWOs of your area, together with the Advisors, to coordinate and deliver the social services more effectively on the ground. At the same time, we have announced that MCYS has come out with $1 million to train the grassroots leaders and also enable PA to hire a few more staff to help to coordinate this. So I think we need "many helping hands", like we said, and also we hope that all of us could maybe read more and simplify in our own way the key messages we want to know.

12. Ms Jessica Tan Soon Neo asked the Prime Minister and Minister for Finance whether he will consider changing the schedule on the payment, including the issue of late payment penalty, and refund of GST for businesses, to help small and medium enterprises manage the impact on their cashflow.

Sir, first, let me assure the House that the existing schedules for GST payments are not unreasonable. Businesses only need to make payment of GST to IRAS after deducting the relevant input GST incurred from the output GST collected by them. They have one month from the end of their prescribed accounting period to do so. In fact, businesses that pay via GIRO have up to 45 days to pay the net output GST that they have collected on behalf of IRAS.

Businesses can choose their prescribed accounting period to be either quarterly or monthly. Most businesses choose a quarterly accounting period. This means that they would effectively enjoy a net cash float from the output GST collected during the quarter. As GST is actually money collected by the businesses on behalf of the Government, there is no reason to extend the one-month period to allow businesses to keep GST money for a longer period. For the same reason, a late payment penalty is necessary to enforce prompt payment.

For GST refunds sought by businesses from IRAS, so far, 90% have been processed within eight days and 95% within 30 days. The 5% of cases that require a longer processing time are those where the claims have to be verified before the refunds can be made. Nonetheless, IRAS will continue to seek improvements in its current service standards. Alternatively, if businesses want to receive refunds more regularly, they can opt for a more frequent accounting period of one month, instead of the quarterly accounting period of three months. The faster turnaround under the monthly GST filings should also help with businesses’ cash flow.

Mr Speaker, Sir, it is expected that the GST rate will be

increased and I think we will find out just how much in a couple of hours.

Do not pre-empt, Mr Siew.

This will result in many more enterprises registering for GST, and they will be unfamiliar with the system. However, IRAS has announced that they will charge for tax rulings on GST. So I have two supplementary questions for the Minister of State. Firstly, what is the rationale for imposing such a charge, especially at this time? And, secondly, would IRAS consider a grace period for newly-registered enterprises where it will not charge for tax rulings? So it would be a sort of amnesty period.

Sir, as for levying a charge for advance ruling, this is, in a way, to counter the cost savings that companies would realise by having the advantage of an advance ruling. As regards the special arrangement that might come about from helping businesses to register for GST compliance, I shall leave the Member to await the Minister's statement afterwards.

Mr Speaker, Sir, I would like to ask the Minister of State, for the service industry, correct me if I am wrong, once it is invoiced, we send an invoice out, we have to pay the GST regardless of whether we collect the payment or not. If this is true, would the Ministry consider "pay when paid"?

Sir, allow me to put the situation in context. Currently, most GST-registered persons do not have difficulties in paying GST to IRAS. In 2006, 93.4% of GST-registered persons actually paid GST on time. The amount that is actually not paid on time is only about 5% of the GST collection. Having said that, for businesses that have special circumstances or experience genuine

financial hardship, IRAS would certainly help them tide over the financial difficulty by granting monthly instalments with the late payment penalties.

13. Ms Lee Bee Wah asked the Prime Minister and Minister for Finance (a) since the introduction of the "No Wrong Door" policy in 2004, whether there has been any feedback on how this scheme has worked out; and (b) will his Ministry look at ways to give more publicity to this scheme as it may not be widely known by the public.

Mr Speaker, the Public Service is a large organisation and it does have many agencies and departments, each with different responsibilities. Fortunately, most members of the public do know which are the appropriate agencies to approach if they do have a particular issue. And we have facilities like the eCitizen portal which all different Government departments can be accessed. So we do assist members of the public to approach the appropriate agencies. However, it is possible that, in spite of this, there will be particular issues which members of the public are not sure which agency to approach to have the issues resolved. So in 2004, the Public Service introduced the 'No Wrong Door' policy so that members of the public do not get referred from one agency to another when they have an issue for the Government to resolve.

Under this policy, when a public agency receives a query or feedback on an issue that does not fall under its purview, it should identify the agency responsible for the issue and put it in touch with the person who submitted the query or feedback. If the issue involves

multiple agencies, then the agency who receives the query is to coordinate and put up an integrated response. Hence, the name 'No Wrong Door'.

The key to the implementation of the policy lies in public officers being helpful and being able to make the connection and do the necessary coordination behind the scene. So when the policy works smoothly, the member of the public need not even know that such a policy exists.

For this reason, the Public Service has focused its efforts on emphasising the importance of the policy to public officers through induction and training programmes, and urging public agencies to put in place processes to implement the policy smoothly.

We have observed that most public agencies have actively implemented the 'No Wrong Door' policy although we still do get lapses. While we have not officially solicited feedback from the public on this policy, we are aware that some public officers have been commended by the public for helping to put them in touch with the relevant agencies to solve their problems. We will continue to remind all public agencies and officers to practise the policy consistently.

Then, when the policy does not work properly, we also get to hear about it pretty quickly. Of course, there are some complex issues and sometimes not clear where the issue falls under, and the 'No Wrong Door' policy may not work well. But overall, the policy has brought convenience to members of the public and the Public Service will continue to try and improve and do better all the time.

Sir, I have three supplementary questions. First, does this 'No Wrong Door' policy also extend to those residents in the private estates who need help for their environmental

problems, such as mosquito breeding, no one cleans the road, drain or prunes the trees?

Question 2: what can the residents do if they call the Government agency and were told off very rudely by the person who picked up the call just because he had called the wrong number or department?

And question 3: will the Ministry take into consideration the effectiveness of the civil servants when it comes to salary increments, that is, for those who are not service-oriented or those who introduced policies that incurred cost for no good reason will not have any pay increment, and vice versa?

Mr Speaker, Sir, supplementary question 1, does it apply to residents of private estates? Certainly, it does. It applies to all members of the public, including those who live in private estates. Secondly, what can they do? If they do encounter rude civil servants, I think there are hotline numbers which they can call to complain, or they can go and see their Member of Parliament and complain; sometimes, they came to see me too. These are avenues which are possible, which are open. And certainly, the approach that the officers take towards members of the public and how they deal with members of the public is one factor which is taken into account in their overall assessment.

If an officer, whose duty is to interact with the public and serve members of the public, is unable to do so properly, obviously the officer will not be assessed very highly.

Sir, may I ask the Minister whether the Government can consider setting up a national hotline on Government services, so that all Singaporeans and people in Singapore can call if they want to enquire on Government

services, ie, a phone line, not E-Citizen Portal.

As I said, Mr Speaker, most members of the public do know where to approach. For example, the previous question from the Member, even if we have a mosquito problem, I think most Singaporeans know that if you call the NEA, these are issues that will be addressed. So if you have one hotline for which all the calls go to, it will create an enormous bottleneck, which may not achieve the purpose which the Member is after, which is improved service.

14. Ms Sylvia Lim asked the Minister for Transport if he will give an assessment of the efficacy of Electronic Road Pricing in alleviating traffic congestion along the Central Expressway.

Mr Speaker, Sir, the implementation of ERP along the northbound and southbound CTE has helped keep average speeds within the optimal range of 45-65 kph during the morning and evening peak period. The average speeds on the alternative arterial roads are also within the threshold speeds of 20-30 kph.

While traffic may still be heavy on the CTE, the average speeds are better than before ERP was imposed. For example, before evening ERP was implemented, average speeds were about 25 kph during the period from 6.30 pm to 7.30 pm when traffic flow was heaviest. With the ERP, the speeds have crossed 45 kph, which is within our optimal speed range. If we had not implemented evening ERP, we would expect that average speeds would have gone down to well below 25 kph by now, possibly resulting in a gridlock situation.

However, the situation is never static, as the improvement in travel speed will wear off over time as the car population grows and more drivers feel that it is worthwhile paying the charge for the reduction in traveling time. Hence, the LTA needs to constantly monitor the traffic situation and make timely adjustments to deal with it.

Sir, I think if we look at the history of the ERP rate adjustments along the CTE, we can see that there has actually been a steady increase from 1999 to-date. In fact, for some gantries, the rates have gone up from $2 to $4, and it has actually been particularly acute from August last year to February this year when there was the latest round of increase. So, Sir, it appears that the cars are still coming back onto the CTE. And because of this, I have a few supplementary questions.

The first is that it seems to me that the residential population in the north and northeast of Singapore will continue to grow, based on the fact that there are still empty flats in some housing estates, as well as new condominium developments. So does the Minister agree with me that we can expect further demand to use the CTE city-bound, and also in the evenings coming back towards the north?

Secondly, Sir, all car users receive the same rebates for the implementation of ERP. And I wonder if the Minister would agree with me that users of the CTE, paying the highest rates, actually are bearing a disproportionate amount of the road charges for living in the north and having to work in the city.

Thirdly, Sir, can the Minister tell us if there are any plans to control the car population, whether by way of COEs

available or, perhaps, reviewing the financing rules on vehicle ownership?

I think it is useful to look at this issue in perspective. When it comes to the problem of urban transport, there is no single solution. So you often need a holistic approach to solve it. The issue with the CTE is that, basically, you have demand for road space during peak period where the demand exceeds the supply. It is finite - the particular road space. And how is the best way to deal with it? Well, the best way, the most direct way, is through a pricing mechanism. So you have a choice: you decide whether you want to travel during that particular period of time or change the time; to use a different mode of travel, a different route, or not to make that particular trip at all. You are given a choice. So, that is the most efficient way, but, by itself, it is not enough. You need other measures.

So, in response to her first question, developments in the north and northeast sector, do we take that into account, yes, we work very closely with MND on this, because it is really urban planning, eg, where the residential sites are, where the business centres and commercial centres are, etc, and then we build the infrastructure accordingly. So for the north, northeast sector, besides the CTE, we are going to build the Kallang/Paya Lebar Expressway, which is new capacity, and that should help to reduce congestion. And along the CTE itself, we will be widening the CTE between Ang Mo Kio Avenue 1 and Ang Mo Kio Avenue 3.

The second question she has is, if you are travelling in that particular sector, are you bearing an extra cost? It is really a matter of choice. You have to decide whether or not you want to pay the charge in order to have a faster speed of travel. It is not something which is imposed on you.

In terms of car population, that is a good question, something that we have to balance. Part of the problem is that, if the car population continues to grow, then, of course, it would put pressure on the infrastructure, and we need to strike a balance between car population growth, ERP and the amount of roads that we can put into Singapore because it is so finite. And one of the things that is worth emphasising is that we are very different from other cities. We are not a city within a country. The city is the country itself. Everything that you see in a country is within the city, whether it be business centre or military base, you cannot push it out, it is all here. So the space is extremely finite. We need to use a whole range of instruments, not just ERP pricing. We need a good road network, we need to have good public transport and proper and integrated land use and transport planning - the whole range.

Sir, the Minister just mentioned that the price mechanism is, to him, the best way to solving the traffic problem in the city. I would like to ask the Minister what is his response to a motorist's comment and feeling that the price mechanism employed, especially on the CTE, serves as a means to squeeze money from a motorist and, at the same time, also face the same jam? So, you pay the money but, at the same time, you also face the traffic jam. What is his comment on that?

That is actually factually inaccurate. Since we introduced the ERP, if we look at the numbers, the revenue has actually come down. Compared to the ALS, it is down by about 20 per cent. And the pricing actually changes. So, if we look at, say, since it was introduced in 1998 till now, have ERP rates gone down? Yes, it has

gone down, various periods. In fact, in 1999 and 2003, it went down - certain periods. 2004, it went down. So it is not a revenue-raising exercise like the Member said, nor do we intend to squeeze people. We are trying to match an imbalance between the demand, as I said, for finite road space, over that period of time, and the supply. So how best to do it? And I did not say that that was the only way. I think it is the most direct way but we need other things to solve this problem. There is no silver bullet to this. So it has to be all these measures and we have to keep on adjusting them all the time to try to address this problem.

Does the Minister know that at the ERP gantry at the CTE and Braddell Road junction, there is always a traffic jam, both in the afternoon and in the morning?

You are talking before the gantry point? At the gantry point?

Yes.

Actually, it starts to thin down, because I have gone down there. You are talking before the run up to the gantry point?

Yes.

Yes, it gets congested and we are monitoring that. We have to monitor to see the speed. LTA had to make a decision where to put the gantry point. If you put it further down, where you are suggesting, then you will not catch the flow of traffic from the PIE into the CTE. So they put it further up, to catch that flow, rather than further down. But that is something that they are constantly monitoring.

Sir, I wonder if the Minister can comment on some feedback

from the public about the evening ERP on the CTE, that is, that people moving from the CTE northwards towards Yishun, for example, some are prepared to pay the evening charge in the hope of getting a smoother ride home. But they have found that after passing the evening gantry near Braddell Road, there are other motorists who are apparently wiser, evading the gantry and entering the CTE through Ang Mo Kio Avenues 1 or 3, causing a holdup at the northbound end. So they feel kind of cheesed off that they paid the charge but are facing the jam at the northbound end. I wonder if the Ministry has verified whether there is validity in this and what can we do about that.

I am not sure whether the Member is suggesting that we put up more gantries to cut it all off. As I have said, you have to decide where you want to put the gantries.

Do you want to clarify your question?

Sir, I think the point of the motorists is that when they pay the charge to move northwards, they expect that all motorists would be treated fairly if they are going in the same direction. So for people to just escape the gantry and then cause the jam further up, it is not fair to those who have paid just maybe a kilometre down.

As I have said, when we put in the ERP, we give a choice to the motorists on the different routes that they can take. If the Member is suggesting that we start to monitor all access points and then put up the gantry points at all these points, it would make it very onerous for motorists. That means, basically, it is shutting it all off. That is why I said it is better to monitor it and basically take into account the major access points into the CTE.

15. Mr Seah Kian Peng asked the Minister for Trade and Industry what is the impact of Jurong Town Corporation's decision to divest a substantial portion of its industrial property portfolio on the business operating environment and whether this will curtail the development and growth of local businesses, especially the SMEs.

Mr Speaker, Sir, JTC plans to divest all its flatted, ramp-up and stack-up factories, three multi-tenanted business park buildings, and one warehouse. The estimated net floor area of the JTC properties to be divested is 1.7 million square metres. This is less than 20 per cent market share of the high-rise factory space in Singapore. The rentals for JTC’s high-rise factories and business park buildings are already largely determined by the market. JTC will divest its properties in a manner that will promote competition in the property market. Instead of divesting its entire industrial portfolio to one owner, JTC plans to do so through a combination of real estate investment trust (REIT) as well as trade sale. This will introduce more players into the industrial property market, which should make for an even more competitive environment. There is also potential for higher quality and new types of industrial space products to be supplied to the market. SME industrialists looking for high-rise or business park space can thus enjoy more choices and options.

I would like to assure the Member that JTC’s divestment will contribute to a more vibrant industrial space market that will benefit SMEs rather than curtail their development and growth.

Sir, a lot of SMEs are very concerned with this news because I think they regard JTC as a more reasonable ---

Mr Seah, you have two minutes left. No speeches, please.

--- as a benign landlord. So they see this as something which is going to increase their operating costs. It may be competitive, but I think it will lead to higher operating costs. How do we address that?

I would like to thank the Member for his compliment that JTC is a benign landlord, but I am not sure whether that is a backhanded compliment. In any case, the whole rationale for divestment is to create a more competitive market. And with a more competitive market, I think rentals will go up if demand is greater than supply, and rentals will come down when demand is less than supply.

3.00 pm

Order. End of Question time.

[Pursuant to Standing Order No. 22(3), Written Answers to Question Nos. 17, 20-21, 23-24, 26-27, 29-34, 38-39, 42 and 44 on the Order Paper are reproduced in the Appendix*. Question Nos. 16, 18-19, 22, 25, 28, 35-37, 40-41 and 43 have been postponed to the sitting of Parliament on 27th February 2007.]

* Cols. 1451-1474.

Resolved,

That, notwithstanding the Standing Orders, the debate on the Budget Statement shall resume on Tuesday, 27th February 2007. - [Mr Wong Kan Seng].

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

First Supplementary Estimates of Expenditure for the financial year 1st April 2006 to 31st March 2007, contained in Paper Cmd. 1 of 2007.

No notice of amendment has been received. As no notice of amendment has been received, I propose to take Heads D, F, I, O, P, R, T and V en bloc.

Question, "That the sums stated for the Heads of Expenditure as shown in page 4 of Paper Cmd. 1 of 2007 stand part of the First Supplementary Main Estimates of Expenditure", put and agreed to.

Question, "That the sum of $87,068,860 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the First Supplementary Main Estimates of Expenditure for the financial year 1st April 2006 to 31st March 2007 contained in Paper Cmd. 1 of 2007", put and agreed to.

Resolution to be reported.

Question, "That the sum stated for the Heads of Expenditure as shown in page 7 of Paper Cmd. 1 of 2007 stand part of the First Supplementary Development Estimates of Expenditure", put and agreed to.

Question, "That the sum of $406,460,600 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the First Supplementary Development Estimates of Expenditure for the financial year 1st April 2006 to 31st March 2007", put and agreed to.

Resolution to be reported.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions.

First Resolution reported -

"That the sum of $87,068,860 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the First Supplementary Main Estimates of Expenditure for the financial year 1st April 2006 to 31st March 2007 contained in Paper Cmd. 1 of 2007".

Second Resolution reported -

"That the sum of $406,460,600 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the First Supplementary Development Estimates of Expenditure for the financial year 1st April 2006 to 31st March 2007 contained in Paper Cmd. 1 of 2007".

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

Question put, and agreed to.

Resolutions accordingly agreed to.

Order. I propose to take the break now. I suspend the Sitting and will resume the Chair again at 3.20 pm.

Sitting accordingly suspended

at 3.05 pm until 3.20 pm.

Sitting resumed at 3.20 pm

Mr Speaker, Sir, I beg to move,

That Parliament approved the financial policy of the Government for the financial year 1st April 2007 to 31st March 2008.

Our economy has done well. It grew by 7.9% in 2006. Both the manufacturing and services sectors are doing well. Asset management in financial services is booming. The construction industry is now seeing a resurgence.

Singaporeans have benefited from this growth. An unprecedented 173,300 jobs were created last year, with more than half of these taken up by the local workforce. The unemployment rate went down to 2.7%. Our workers enjoyed good wage increases and better bonuses, with average wages rising by 3.2%. Overall, it has been an exceptionally good year, following two previous good years.

The fiscal position for the Financial Year (FY) 2006 improved on the back of these buoyant economic conditions. I expect a budget deficit of $1.3 billion for FY 2006, much smaller than the deficit of $2.9 billion we projected at the start of the year. Operating revenues and contributions from Net Investment Income have come in higher than projected.

The outlook for 2007 is positive. Globally, the major economies are doing well. The US economy has kept up its momentum. Consumer spending has been supported by more stable oil prices, offsetting the effects of a slowdown in the US housing market. Japan is continuing to recover from more than a decade of deflation. The major European economies too, especially Germany, are undertaking reforms and showing improvement after a long period of sluggish growth.

In Asia, China and India continue to power ahead, pulling the rest of Asia with them. The Southeast Asian economies are growing, although some of them face difficult challenges. Vietnam, in particular, is stepping up its economic reforms, tapping into the forces of globalisation, and growing dramatically.

On the whole, the global picture for 2007 is positive. But it is not free of risks. A sharp slowdown in the US economy, which could happen if there is a hard landing in the US housing market, remains our biggest external risk. A disruption in global financial markets, for example, in response to America's large external deficits, is another factor that could slow down the global economy. Widening conflict in the Middle East is a significant geopolitical risk we have to look out for, which could disrupt energy supplies and force oil prices up sharply. We must continue to watch these potential threats, and stay ready to respond quickly and decisively.

Barring such shocks, I expect the Singapore economy to continue to do well. Our investment pipeline is strong.

Last year, we attracted manufacturing and services investments that will generate over $13 billion of value-added annually for our economy and we expect similar good performance in investment commitments this year. Tourism, which saw a record high of 9.7 million visitors last year, should remain strong and benefit the retail as well as the hotels and food and beverage sectors. The construction sector is set to expand further, with $17 to $19 billion worth of contracts expected to be awarded in 2007. There will be more jobs for Singaporeans at all levels of the workforce, as employment expands in the retail, healthcare and hospitality industries, financial services and across the manufacturing, marine and construction sectors.

Overall, I expect the Singapore economy to grow by a healthy 4.5% to 6.5% this year.

We are looking ahead to the next five to 10 years for Singapore. Our prospects have never been better. The key reason is globalisation. Capital, enterprise and talent are flowing to countries where government can be trusted, where the workforce is well-educated and skilled, and where the quality of life is high. These are Singapore's advantages. They explain why globalisation is working to Singapore's advantage.

We are also well-placed at the heart of a globalising Asia. China and India are the big stories, but opportunities are also opening up across Asia, from the Middle East to Northeast Asia. Competition from China and India has galvanised ASEAN to accelerate integration and forge a collaborative ASEAN Community by 2015.

Businesses large and small, home grown and foreign, are taking advantage of Singapore's strengths, and using Singapore to ride the next wave of growth.

The world is coming to Singapore

We are not just getting more large investments, but more 'first-of-its-kind' investments. Take, for instance, the chip used in the latest PlayStation3 and Xbox. A French semiconductor company, Soitec, is investing $700 million to set up in Singapore its first offshore facility to make the wafer for this chip. It is high precision, high technology. The wafers have alternating layers of silicon and insulator, unlike conventional wafers which use silicon throughout. Why did Soitec choose Singapore? Because its technology has to be well-protected, and we are the only country in Asia that it trusts well enough to set up its first manufacturing campus outside of France.

Soitec is like many other global companies which have come here because they know their investments will be protected, and we have the pool of talent and skills for sophisticated manufacturing. Like Sumitomo, which expanded its $500 million complex in Singapore only last year to make the special kind of plastic used in LCD screens and dentures. These are big votes of confidence by global investors.

But it is not just the large MNCs that we are drawing here. We are also attracting a whole new category of small and mid-sized global players. Take Bob Chandran, for example, who came from the US. He had listened to PM talk on TV about Singapore being a place with 'Asian values but Western conveniences'. He explored further, looked around, and eventually decided to move his family and his company to Singapore. It is a marine fuel company, Chem-oil. In fact, he has now taken up Singapore citizenship.

Chem-oil is listed on the SGX. And Bob Chandran just announced recently a major investment in a new fuel terminal on Jurong Island.

Another example is Johan M Karlstedt. He first relocated from Finland to the US, lived there for several years, before deciding to come to Singapore - both for his company and his family. The company that he founded, QXSystems, creates virtual offices for businesses around the world. As he puts it, with the Internet, it does not matter if you are in a small country. QXSystems now owns five companies around the world, headquartered in Singapore. Johan himself doesn't work from an office; they call it working from home. So I emailed him to ask him what it really means. He said he actually sits and works daily, for hours, in many places around Singapore. His favourites are the al fresco cafes. Thanks to widespread WiFi, he can interact with anyone around the world from any spot in Singapore for the cost of almost nothing.

Bob Chandran, Johan Karlstedt and the many others like them are here because we are a compelling home for enterprise and for families.

Singaporeans are going out to the world

Not only is the world coming to Singapore, Singaporeans are seizing opportunities abroad. Globalisation is working to the advantage of Singapore companies.

Food Empire, based in Geylang, owns MacCoffee, which has become immensely popular in Ukraine, Russia, Poland, Bahrain, Iran and Turkey. Its advertising slogan in Ukraine reads: "Every other Ukrainian drinks MacCoffee." In fact, even the advertisement won the most prestigious award in the Ukrainian advertising industry, which I presume means it's true!

Rotary Engineering is another example. It was founded by Chia Kim Piow with a few friends in the 1970s. He was like many others at the time, not much education, nothing beyond secondary four - no diploma or degree. Everything was learnt on the job. Rotary began by handling electrical installations and sub-contracting for the big oil refineries. It now builds big oil refineries. Today, Rotary is one of Asia's leading engineering companies in oil and gas infrastructure. Very active in China and India, and now moving into the Middle Eastern market with Saudi Arabian partners.

It is not just the larger Singapore players that are going abroad. We have many individual Singaporeans taking their chances and making their presence felt in their own way in global markets. They are in demand all over Asia, as trusted managers and engineers, and increasingly too as creative professionals. Like our Singapore chefs. Justin Quek is amongst our best known, having won several awards while he was in Singapore, at Les Amis, is now based in Taipei running his own restaurant - I think it is called Le Petite Cuisine. It’s already regarded as the best French restaurant in Taipei. Singaporean, in Taipei, running a French restaurant.

Jek Tan, another example, trained at SHATEC, progressed in his career - last year became Executive Chef at the Shangri-la in Dalian in Northeast China. I met him there. We have been in contact and he mailed me last week to say that he had invited over to Dalian three other Singaporean chefs. He had known them because he had worked with them in another hotel in Singapore. He invited them over for two months to run a Singapore Food Festival. The Chinese were wowed by the menu - bak ku teh, satay, beef rendang. Unfortunately, the 'rendang' when translated into Chinese

sounded a bit like "people's egg". So, one of the compliments he received was that it tasted much better than it sounded.

This is what globalisation is about, and why it is working for Singapore. Companies and individuals coming from all around the world to Singapore, and using Singapore to reach out to the rest of Asia; and Singaporeans reaching out to global markets, taking their chances, competing, seizing opportunities. And this is why the outlook for Singapore is bright.

But globalisation brings with it challenges for Singapore. We face a worsening of our income distribution and slow or no growth in wages at the lower end. Not just over the last few years or for now, but this would be with us for several years to come. It will be a key challenge for us, just as it is in most of the developed economies.

The reasons for the widening income spread are by now well known. China, India, Russia and Eastern Europe have doubled the global workforce, putting downward pressure on wages everywhere. Companies have more choices on where to invest, where to locate their plants based on where they can get the lowest cost or the best workers or the latest technology. At the same time, technology continues to advance, relentlessly. It is increasing the demand for workers with high skills and knowledge. And technology is making many types of workers redundant, especially those with low skills, and also making it easy for their jobs to be exported abroad to where wages are lower for the same skills.

The result is widening income gaps between the skilled and the low-skilled, between the young and old, between those who adapt quickly to the market

and the rest. Incomes are stretching out in the developed world, with the top rising rapidly, the middle growing slowly, and the low either stagnating or declining.

In the US, the income gap has been widening for some time, especially in the last decade. In the last five years, despite strong economic growth, the wages of production and non-management workers have grown by only 1.7% in real terms over the period as a whole. The same is happening in Europe and Japan - incomes going up at the top, but stagnating or declining at the bottom. Even in China, with an economy growing at 9%-plus, workers in the bottom 10% have seen a decline in real incomes over the last decade.

Singapore is facing similar pressures. Because we are a much more open economy, compared to the US, China, Germany or Japan, we are, in fact, more exposed to these pressures of globalisation. Over the last five years, lower-income households have seen little growth in their incomes. In fact, in real terms, the lowest 20% of households has seen their incomes per capita decline from 2000 to 2005. Fortunately, in the last year, the strong pick-up in employment within the lower-income group has reversed the decline. In fact, it has a little more than reversed the decline of the previous five years. Nonetheless, household incomes at the top end are pulling away faster.

This is a key item on our agenda. Although our economy is growing well, incomes are only increasing slowly at the lower end, or not at all and income gaps are widening. This is a problem for those at the bottom, but it is also a problem for the rest of society if those at the bottom feel left out.

The solution is not to grow more slowly, or to focus less on growth and

more on redistribution - although some people think we should do that. If we do that, it will only hurt the people we are trying to help. Slow growth will make everybody worse off, but it will have the greatest impact on those at the bottom. Jobs will be lost and incomes will fall through the floor for those at the lower end of the workforce, while at the top end, talented Singaporeans and those with the ability to seize opportunities elsewhere will up and go. Slow growth will not assure us of a more equal society, as long as we live in a

globalised world.

Our response therefore must be to focus on growth and embrace globalisation, but manage its downsides and make it work for everyone. We will do this by maximising opportunities for all Singaporeans - the opportunities to get a good education, to work or to start a business, to retrain and upgrade, and the opportunity to own a home. We must maximise opportunities for all, but we must also accept that doing so does not result in equal rewards for all. We should never reduce the incentive for Singaporeans to work and to make the most of their skills and talents, so as to get higher reward for themselves. That has to be the basis for our society, for how we keep our economy growing, and for how living standards of Singaporeans will rise over time.

Our first priority therefore is to grow the economy. We must now build capabilities for the future. We must attract new investments, grow new businesses, and create new and better paying jobs to replace old ones. We must build on our strengths and compete - not just on efficiency and low cost, but on trust and value.

As we grow the economy, we must ensure that no one is left behind and that

all Singaporeans have the opportunity to succeed. Over the years, the Government has been helping the lower-income groups through various assistance measures. Since 2001, the Government has distributed more than $7.5 billion through the Progress Package, U-Save and S&CC rebates, CPF top-ups and New Singapore Shares, to share budget surpluses with Singaporeans. In all these distributions, we have made deliberate efforts to ensure that the lower-income groups get the greatest benefits. But going forward, we have to do more to help needy Singaporeans and we have to do it more systematically. This is why we are introducing Workfare. Workfare will give those at the lower end of the workforce a stronger incentive to get a job, stay in a job, and save for their future.

We also have to prepare now for the challenges of an ageing population. Healthcare spending will rise over time, as our people grow older and as medical science advances. Our living environment and physical infrastructure will have to be adapted to meet the needs of our growing ranks of senior citizens. This is the generation that has helped to bring Singapore up from Third World to First World. We must ensure their well-being.

Building capabilities for the future, strengthening our social security system and providing for the needs of older Singaporeans will require Government to spend more in future. This means we will need additional revenues. We cannot raise direct taxes. Countries the world over are reducing corporate and personal income taxes. To continue to attract talent and investments, and maintain strong incentives for our people to excel, we will in fact have to lower our direct taxes further over time.

We will therefore raise additional revenues by extracting more income from

our reserves and by raising the GST. Because we are doing this now, when the economy is doing well, we are able to provide a very comprehensive set of measures to help Singaporeans adjust to the GST increase.

This Budget is therefore about preparing Singapore for the future and for the world. It ensures that we retain our dynamism as an economy while we take significant steps forward to preserve an inclusive society. It sets out the key changes we must make to:

Build capabilities for the future;

Strengthen our social security system;

Reduce direct taxes and raise additional revenues, including GST;

Provide Singaporeans with an offset package for the GST increase.

To build new capabilities for the future,

We will invest in our people to maximise their potential.

We will invest in R&D to move our economy up the value curve.

We will make Singapore the best place to start and grow a business.

We will make Singapore a leading centre for "high trust" services.

We will invest in economic infrastructure to build the business needs of tomorrow.

We will transform our city and living environment to build the best home for

Singaporeans.

Central to our strategy is our people. Every Singaporean plays a crucial role in an innovation-driven economy. Every worker. Education and continuous learning will thus remain a top priority for Singapore.

A first-rate education

We will give every child access to a first-rate education. In every school, we have been focusing on quality. More teachers are being deployed, leading to more time to plan for quality and to innovate in their teaching. Ideas are bubbling up in schools across the island - different classrooms, different styles and different methods, but all bringing in new quality. At Hougang Primary, for example, Primary Two students are using iPods to create podcasts of talkshows, which they then showcase on the Internet for all to hear. Having a real audience means this is not just fun, but the kids have to take their lessons quite seriously!

Post-Secondary Education Accounts

Getting a top-rate school education provides a critical foundation for every Singaporean, and we will keep improving, keep helping our children to learn better in our schools. But good schools are not the end of the story. That is why we have also made our ITEs, polytechnics and universities world class. They are widely regarded internationally as being in the top tier.

We want as many Singaporeans as possible to obtain a post-secondary education, whether it be for a certificate, diploma, or degree. This is absolutely essential in the new innovation-driven economy. To help Singaporeans pursue their tertiary education, we will create a Post-Secondary Education Account (PSEA) for every Singaporean aged seven to 20. Students can use the PSEA at our

publicly-funded universities, polytechnics, ITEs, and also at NAFA and LaSalle, our arts institutions.

We recognise, however, that some Singaporeans may miss out on an opportunity for post-secondary education. I will therefore allow the PSEA to also be used for UniSIM, which provides for an open-style university education for adult learners, and WDA-accredited lead training providers. Unused monies in an individual's PSEA will be transferred to his CPF Ordinary Account when he turns 30. I will announce later the amount of top-ups that the Government will put into PSEA as part of this Budget.

Supporting lifelong learning

We are also extending our focus beyond the post-secondary stage - beyond what we learn in school and at the post-secondary institutions. We have to do this because adult workers have to keep pace with a constantly changing economy. Lower-skilled workers are especially vulnerable to becoming displaced if they do not upgrade and pick up new skills, not just once but continuously. No matter what useful skills or knowledge we acquire in school and at the tertiary level, they will become less relevant over time.

Many more workers are in fact going for retraining, and some upgrading themselves against considerable odds. Like Madam Sabariah Bte Ahmad, who was retrenched as a production operator 18 months ago at Maxtor. Unfortunately, at age 48, and as someone who had suffered from cancer, she had difficulty getting re-employed. But she persevered, and last year, she got onto NTUC's STPT (Screen, Train, Place and Train) scheme, and that got her onto a job as a cashier at the Kopitiam at Tan Tock Seng Hospital. She earns $900 a month, and is proud to be self-reliant, despite her illness.

The Government will increase its support for lifelong learning to all Singaporeans. We already spend up to $170 million a year on adult worker training, drawn from the Skills Development Fund (SDF) and the Lifelong Learning Endowment Fund (LLEF). But this is less than what several other developed countries are spending on continuous education and less than what is necessary for our citizens to keep pace with a globalised world. We must ramp up our investment in this area over the long term.

First, we need to allow individual workers to apply directly for subsidised training opportunities. We previously operated a system that was employer-centric - we reimbursed the employers who sent their workers for training. Over the past year, we have shifted to invest more in adult worker training institutions. This has lowered course fees and made training directly accessible to the individual - so that individual can himself or herself apply for a subsidised place at these training institutions. We will keep up our efforts on this front.

Next, we will implement more Place and Train programmes, to help workers renew their skills and secure new jobs. Like how Madam Sabariah managed to get her job. The training will cover all segments of the workforce, from the unemployed, to operations staff, to supervisors, craftsmen, professionals and managers.

Third, we will encourage more adult learners to take up post-diploma courses in the polytechnics as part of lifelong learning. These comprise Advanced Diplomas and Specialist Diplomas - for example, in areas like Infocomm Security, Logistics and Semiconductor Technology. They cater to both basic diploma and degree holders. Currently, these courses

are fully self-financed by those who take them. I have decided to subsidise 80% of the cost of these programmes for Singaporeans, starting from the 2007 intake. About 1,400 students enter such courses today, and we hope many more will do so in future. The polytechnics will also expand their range of post-diploma offerings over time in response to market needs.

These are only initial plans, towards the larger goal of providing continuous learning opportunities for all Singaporeans, and encouraging them to see this as a way of life. We will study this comprehensively - how to provide learning programmes that are relevant to every Singaporean and relevant to the job market, how they should be funded and how to foster a culture that makes lifelong learning the norm. Your certificate may lead to a diploma, your diploma may lead to a degree, and your first degree may not be your last. Or after getting your degree, you might get a certificate or diploma. That will be the culture. But this is not about the paper chase, but about the continuous refreshing of the skills and knowledge of Singaporeans that will prepare us well for the future.

We will have to invest much more in Continuous Education and Training. As an initial estimate, we expect to triple our annual expenditure on lifelong learning to $500 million a year in the medium to long-term. This year, I will put another $100 million into the Lifelong Learning Endowment Fund. But we will have to fund this important ongoing initiative using not just the income from the Lifelong Learning Endowment Fund but also our operating revenues.

Our second area of focus is to invest in R&D, to build up the capabilities that will help drive our economy over the long-

term. We plan to invest 3% of our GDP on R&D annually by 2010 up from 2.4% in 2005.

This is a major commitment, both in terms of resources and talent. We are investing large sums of money. We are also gathering many very able people in the biomedical sciences and other fields of science and technology. They include Singaporeans who are doing post-graduate studies and embarking on careers in R&D, as well as globally renowned researchers who have uprooted themselves to come to Singapore because they know we are serious about our plans and ambitions, and they want to work with us on this enterprise. On top of that, we are attracting world-class corporate R&D labs and grooming local R&D firms.

We do not expect short-term returns. This is a long-term investment, and clearly there are risks. We cannot be sure of success, and even if we do succeed, many of the economic benefits are likely to be indirect. But the Government had considered this carefully, and decided that this was an investment we had to make for Singapore's future. Over time, we will build up a critical mass of top-rate researchers in Singapore, who will create new intellectual property in our research institutes, universities and hospitals, and will bring in new, technology-driven activities which will spin off benefits to the rest of the economy. Our investment in R&D is critical, for Singapore to be a leading Asian hub for high-value, knowledge-based industries, even as Beijing, Bangalore and other cities catch up.

Since embarking on this endeavour in the bio-medical sciences and other areas of R&D that we are engaged in, we have made significant progress. But we are still on the early legs of a long journey. Other developed nations, including small ones like Switzerland and Sweden, have taken decades to get to where they are.

We need to persevere in our efforts, focusing our limited resources on areas in which Singapore can make an impact. That is the framework within which the Research Innovation and Enterprise Council (RIEC) is pursuing Singapore's R&D strategies, and it will continue to guide us as we go forward.

It is too early to evaluate the results of our R&D initiatives. But from MOF's perspective, I am satisfied that this is a good use of public funds. Hence, I will inject another $500 million into the National Research Fund that was established last year. Along with other R&D related expenditure in A*STAR, the Ministry of Health, Ministry of Education and other economic agencies, we expect a total of $2 billion of government expenditure to be invested in R&D for this year. These will go towards continuing the applied and academic research in the public research institutes, universities and hospitals.

Next, we have to press ahead in our efforts to create a vibrant and supportive environment for enterprises, big and small. Our strength and reputation as a base for MNCs and leading global companies is well known around the world. We will make Singapore equally reputed for being the best place for SMEs, local and foreign, to locate, to grow and to globalise.

I mentioned Rotary and Food Empire earlier. Both started off very small but they found themselves having to extend their reach out of Singapore at an early stage, and now depend on markets abroad for most of their growth. In fact, about one-quarter of all our SMEs in Singapore now derive at least 50% of their revenue from overseas. Globalisation is there with our smaller firms.

Many of our younger local players are going out to global markets at an even earlier stage of their growth. Dextrans Worldwide Group, founded just four years ago by two young Singaporeans, already has a bustling logistics business, managing inventory for major electronics manufacturers in China like Flextronics. Heulab was started by two NUS graduates in 2002 to create educational software on tablet PCs. Over 140 schools in Singapore, Australia, Taiwan and Qatar use their products to introduce creative learning in the classroom. All this in just four years. And Heulab was selected a few days ago as a launch partner for Microsoft's Windows Vista Programme.

Dextrans and Heulab are part of a new generation of local firms: fleet-footed, unafraid to venture out to the world early, and working at the leading edge of technology.

We are also seeing the rise of a new breed of players in the form of global SMEs - much smaller than the traditional multinationals but typically larger than the traditional SMEs rooted in one place, but taking advantage of globalisation to expand rapidly. Some of them are in fact very fast-growing companies, or 'gazelles', as they are called in Silicon Valley.

More of these global SMEs are now coming to Singapore. They may not make huge investments like the MNCs, but they add vibrancy to our economy and expand the demand for financial and other business services, IT and logistics. Many are now listing on the SGX, and are expanding rapidly.

We should attract and root this new breed of global players in Singapore. I mentioned Bob Chandran and Chemoil as an example of a global SME that we have brought to Singapore. Another is LMA, a

medical equipment firm that was based in the UK but which decided to establish its headquarters operations in Singapore to manage its global regulatory affairs, quality assurance, and R&D. It has operations all over the world, and its products reach patients in over 100 countries.

OLAM, too, shifted from London to Singapore. It has a presence in 52 countries, managed from Singapore. Last week, OLAM announced that it is tying up with Chinatex, a leading Chinese state-owned enterprise. OLAM & Chinatex will jointly invest to source soybeans in Brazil. They will also invest together in the Chinese market to process and supply soybeans, and to supply cotton for the Chinese market.

That's how globalisation is being played - globalisation out of Singapore. We want to grow more Food Empires and Dextrans, and attract more OLAMs and LMAs to Singapore. We can provide the best conditions for them to start up, grow, raise funds, and reach out to markets in Asia and the world. We are already recognised as one of the easiest places in the world to do business. Each year, the World Bank compiles assessments from about 3,000-4,000 experts around the world. In its latest report, for this year, it put Singapore as the most business-friendly economy in the world, ahead of New Zealand, the US, Canada, Hong Kong and the UK. Later, I will announce how we will strengthen further this advantage we have in attracting businesses, small and big, to Singapore and growing them out of Singapore through our tax regime.

We will also develop Singapore as a centre for a range of "high-trust" services - from legal and financial services to highly specialised, niche services. Near Changi Airport, a company has set up the

Singapore Freeport, a Fort Knox-like vault to house private art collections and treasures from all over the world. Most of you would not have heard of it or seen it, and I think that's the way it's meant to be. It is an example of a niche area that plays to Singapore’s strengths.

Legal services

In legal services, we will position Singapore as a trusted centre for high-end arbitration work. We have the key ingredients in place to do so - efficiency, reliability and neutrality. We also have plans for an integrated dispute resolution complex. We will complement these efforts by introducing a tax incentive that allows a 50% tax exemption for a law firm's incremental qualifying income for international arbitration activities.

Financial services

The financial sector is a key pillar of our economy. The asset management industry has seen double-digit growth each year over the past five years. Singapore's Over-The-Counter (OTC) derivative market has also doubled in size since 2004 to US$37 billion in daily volumes, building on our role as the fourth-largest foreign exchange trading centre in the world. More finance professionals and individuals are locating themselves in Singapore.

We are also growing new niches in our financial sector. Singapore is increasingly serving as a bridge between the Middle East and Asia. More Middle Eastern banks are setting up in Singapore. We are also seeing double-digit growth in funds coming here from the Middle East, for investment in Asian capital markets and real estate. Banks in Singapore are structuring various new products, including Islamic financial products, such as murabaha investment products and Shariah-compliant mutual funds, to meet the needs of this new class of global

investors. These opportunities can only grow.

We will keep refining our schemes to anchor more activities here and keep up the momentum of growth in our financial centre. We introduced a package of tax incentives to promote infrastructure finance in September last year. We will make other revisions in this Budget to ensure our tax rules and incentives remain relevant and competitive.

First, I will remove the "80:20" rule under our tax exemption scheme for non-resident funds. This will give certainty of tax exemption to foreign investors whose funds are managed in Singapore, and also provide fund managers based in Singapore with greater flexibility in sourcing for mandates. The list of designated investments will also now include qualifying loans. Details of these changes will be released later.

I will also enhance our tax incentives relating to Finance and Treasury Centres, OTC financial derivatives, and Qualifying Debt Securities. Details of these will be in the Annex* to my Speech.

* Cols. 1491-1510.

Growing Singapore as a philanthropy hub

We will also capitalise on our strengths as a key financial centre to develop Singapore as an attractive hub for global philanthropic organisations. Philanthropy is growing exponentially around the world. More MNCs are now establishing charitable foundations and seeking to extend their reach into Asia. We can play a useful role as a centre for these organisations. Local philanthropy, too, is blossoming - witness, for

example, the very substantial donations that have been made to our universities and medical schools in recent years. The presence of more global philanthropic grantmakers in Singapore will go hand in hand with the growth of local philanthropy - injecting

vibrancy, promoting collaborative ventures and sharing best practices.

To facilitate the growing interest in philanthropy from both the local and international community, we will make a number of important changes. First, I will remove the 80:20 spending rule for income tax exemption for registered charities. This rule currently requires charities to spend at least 80% of their annual receipts on charitable causes in Singapore within two years in order to enjoy income tax exemption. International philanthropic grantmakers and local foundations, which are looking to contribute towards worthy causes in the region, apart from Singapore, perceive this rule as overly restrictive on their use of funds. Even those who are looking for causes in Singapore see the two-year limitation as too restrictive. Henceforth, I will grant all registered charities and exempt charities automatic income tax exemption. This will enable charities to optimise their activities in Singapore and in the region, and the use of their funds over time to sustain their programmes.

Second, we will relax the 80:20 fund-raising rule, which requires any organisation seeking to raise funds for any foreign charitable purpose to spend, in Singapore, at least 80% of the funds raised. This lifting of the 80:20 fund-raising rule is done so as not to hinder the efforts of reputable charitable organisations and grantmakers with an international or regional orientation, provided that the funds are raised from private donors rather than from the general public.

Currently, individuals and companies can obtain double tax deductions for donations to Institutions of Public Character (IPCs) but not for donations to foundations and other grantmakers. I will

therefore allow double tax deduction for all donations made to philanthropic grantmaking organisations, as long as these donations are subsequently channelled to an IPC in Singapore. More details on these initiatives will be released later.

Finally, I will introduce a tax incentive scheme to give income tax exemption to other Not-for-Profit Organisations (NPOs) that can bring economic value to Singapore. Our targeted NPOs include those which have links to key clusters of our economy, such as the International Bar Association (IBA) and the Joint Commission on Accreditation of Healthcare Organisations (JCAHO). EDB will administer this incentive.

Logistics, maritime and aviation services

Logistics, maritime and aviation services are key to Singapore’s connectivity and our role as a global business hub. We will develop these capabilities further.

To encourage shipping logistics companies to grow their activities in Singapore, we will enhance the Approved Shipping Logistics Enterprise Scheme by extending the incentive period from five years to 10 years.

Asia-Pacific aviation is expected to lead global growth in passenger and freight activity over the next five years. The leasing business will grow as airlines are increasingly looking to lease aircraft and aircraft engines. Singapore can position itself as the base for regional leasing activities, as we have the aviation expertise and a well-developed financial sector. I will therefore make several enhancements to the Aircraft

Leasing Scheme that is currently awarded to approved aircraft leasing operators.

I will also expand the scope of GST zero-rating for international maritime and aviation services so that logistics com-

panies here will pay zero GST when they incur expenses to service, buy or lease containers in Singapore.

Details of these tax changes too will be in the Annex* to my Speech.

* Cols. 1511-1514.

We have to invest in our economic infrastructure to position Singapore for the next 15 years of its development. These are major investments which will help support the growth of our high-value manufacturing and services economy, and catch the next wave of emerging industries.

IT connectivity

The Intelligent Nation 2015 Masterplan, estimated to cost $4 billion, is a major step forward in our economic infrastructure. We will make Singapore a centre for creating and commercialising new media technologies, as well as a whole array of digital content and services in areas such as healthcare, education, and games-on-demand. For example, one of our local players, Bridge Mobile, will be distributing ESPN STAR Sports content through mobile devices across Asia, from Singapore. We are already rolling out Wireless@SG which will cover most of Singapore. Industry players are putting forward plans for the new

National Broadband Network. The pervasive nature of our IT infrastructure will also encourage any Singaporean to take full advantage of connectivity to the world, or even to create something new and take it to market.

Enhancing our energy hub

We will build up Singapore as an energy hub for the future, expanding on our current role as an oil-refining and trading centre. To diversify our energy sources, a new billion-dollar Liquified Natural Gas (LNG) terminal will be ready

to supply a third of Singapore's gas demand by 2012. More than that, as gas catches on regionally and globally as a source of energy, it will help to position Singapore as a gas hub in the same way that we are an oil hub.

We will move ahead with the second phase of the underground rock cavern beneath Jurong Island that will be used for the storage of chemicals. The project will free up 60 hectares of surface land space on Jurong Island for high value manufacturing activities. This is an investment costing $2 billion in total.

Alternative Energy is an emerging growth industry. The global Alternative Energy market is projected to grow by 10 times, to US$300 billion, by 2015. We will seek to participate in this emerging industry, in areas where Singapore can be competitive.

Rolls Royce has already invested in a $100 million fuel cell development project in Singapore. Leading foreign solar companies, such as Conergy, Solarworld, and Solar-Fabrik, have based their Asian headquarters here. An Australian company, Natural Fuel, is investing $200 million, in what will be the world's largest biodiesel facility, in Singapore. We are positioning ourselves to ride the next wave of energy technology.

For Singapore to stand out as a global city, however, we cannot be just an economic marketplace. We must have a living environment that is the best in Asia - a city that exudes our own Singapore brand of diversity and vitality.

We will remake our city, to create a home that is distinctive and endearing to all Singaporeans. It will be a place where every family feels they own not just their flat, but their neighbourhood; where our

elderly lead active lives; and where the young can find a space for every interest and aspiration. We will transform our HDB heartlands, connect them to a more extensive and convenient transport network, and integrate them into a network of parks and waterways that will together represent a quantum leap in our quality of life.

We will make Singapore a city of gardens and waters or, as PM put it recently, a city of green and blue. The Gardens by the Bay will open in 2010, bringing further activity and vibrancy to the whole area. We will spend about $700 million on these gardens, the next phase of park connectors, and enhancements to existing parks in the coming years.

We will also make use of our extensive network of water bodies to enhance our living environment, be it in the city where we are converting the Marina Bay into a reservoir, or in the residential heartlands where we are bringing waterfront living to HDB neighbourhoods. In the next five years, the Active-Beautiful-Clean or ABC Waters Programme will cover 28 projects at a cost of about $200 million.

We will transform Marina Bay into a vibrant live-work-play destination with distinctive architecture, lush greenery, public spaces and a pedestrian promenade that will encircle the entire Bay. Our established city areas like Orchard Road, Bugis and Bras Basah will also be enhanced and refreshed.

Next, our housing estates. As the Minister for National Development announced last week, we will undertake a systematic and total "urban regeneration" of our housing estates. We will start with the older housing estates in about five years' time. This will cost us about $1 billion each year in the steady state.

The makeover of our public housing estates will be done together with the development of our public transport system so that residents can easily and conveniently commute from home to workplaces and commercial nodes all over Singapore. The Circle Line which will open from 2010, plus the new Downtown Line which we will embark on next, will allow commuters to enjoy greater convenience and faster rides. For example, a trip from Bukit Panjang to the city centre which now takes 60 minutes will be shortened to 40 minutes, ie, by one-third.

Over time, we will also have to cater for a larger population, by expanding our road network. We will have to widen all our existing highways to four lanes. New highways will also be needed. Plans are already being finalised for a Marina Coastal Expressway to serve the new business district and other developments in Marina Bay. In all, over the next 10 to 15 years, we expect to spend at least $20 billion on our land transport infrastructure.

This is the way we will transform Singapore into a world class city and provide the highest quality of life for our citizens. Modern business centres, choice residences for all Singaporeans, and attractive leisure and recreational amenities at Marina Bay, Orchard Road, Bugis and other central areas. HDB homes nestled in lushly landscaped common areas, fully fitted with elderly-friendly facilities, connected to the rest of Singapore by an efficient road and rail system, and linked into green corridors and waterways. This will be the Singapore of 2020.

We are building an inclusive society where every citizen shares in the country’s success. Since independence,

three pillars - all linked to the CPF - have underpinned our social security system. The first - the CPF Special or Retirement Account - has enabled every working Singaporean to build a nest-egg for his retirement needs. The second - subsidised public housing through the HDB and the CPF Ordinary Account - has made home ownership a reality for the vast majority of Singaporeans. The third - the 3Ms of Medisave, MediShield and Medifund - has provided Singaporeans with affordable, high-quality healthcare.

The CPF helps us achieve our social stability. We should continue to strengthen our CPF system, and include as many Singaporeans as possible in it. The three existing pillars of our social security system continue to serve the majority of Singaporeans well. Through the CPF schemes, most Singaporeans are able to save enough to provide for their own social security. However, low-income Singaporeans are finding it more difficult to save enough in their CPF. Their wages have stagnated because of globalisation, and will continue to be under pressure. For this group, we now need a fourth pillar - Workfare.

Like the existing three pillars, Workfare will also be linked to the CPF, to encourage more low-wage workers to save for their longer term needs. In doing all this, we must continue to preserve the key principles which underpin our social security system - namely, self-reliance and mutual support within the family, supplemented by the Government only to the extent necessary.

First, we will raise the CPF contribution rate for employers. It is currently 33% - 20% from employees and 13% from employers. We have set a long-term variable range of 30% to 36%. This range seeks to strike the right balance between

achieving our social security objectives and economic competitiveness, while giving us the flexibility to respond to changing economic conditions. With the economy doing well, I believe we can sustain a modest rise in the employer CPF contribution rate.

Therefore, the Government has decided to increase the employer contribution rate by 1.5 percentage points to 14.5%, starting from 1st July 2007. One percentage point will go into the Ordinary Account. It will add to the savings of CPF members, and help many of them pay for their mortgages. The remaining 0.5 percentage point will go into the Medisave Account to better provide for healthcare needs. The Ministry of Health has made it easier for Singaporeans to draw from their Medisave Accounts, and will continue to liberalise the use of Medisave.

The increase in CPF will apply to all Singaporean workers, except for the group of workers who earn $1,500 or less and are also above 35 years old. For this group of workers, we will need a different approach.

Older low-wage workers are the ones most affected by the changes in our economy. They find it harder to learn new skills and upgrade themselves, they find it harder to get re-employed if they lose their jobs, and their families find it more difficult to make ends meet. We will therefore introduce Workfare to supplement the wages and savings of older low-wage workers, and modify the CPF system to complement the Workfare scheme.

Many other developed countries have addressed the problems of the low-income group, often through extensive social welfare programmes. But Welfare has drained fiscal resources and, more

damagingly, eroded the work ethic and encouraged an entitlement mentality. The more successful model of assistance has been Workfare - which seeks to supplement the incomes of low-wage workers on the principle that the best way to help people is to help them find work and stay in work.

Wage supplements are new to Singapore, but the concept has been tried with some success in other countries. In the US, this is called the Earned Income Tax Credit. This acts like a negative income tax for low-wage workers; in other words, it supplements their earned income instead of taking away from it. The UK has a Working Tax Credit which is similar. These schemes have helped to reduce poverty and encourage work. But they are not without problems - they are not cheap, and they potentially weaken the incentive for workers to upgrade themselves and earn more. That is why we have to consider the design of the scheme very carefully and move cautiously. We introduced the Workfare Bonus as part of the Progress Package last year, to test out the concept amongst Singaporeans. We are now ready to take a step further by making Workfare income supplements a long-term feature of our social security system - the fourth pillar.

We will move in parallel on both the CPF and Workfare for low-wage workers. We will reduce the CPF contributions for these workers, while introducing Workfare income supplements for them. This will achieve three objectives. First, workers will contribute less CPF, so as to increase their take-home pay. Second, employers will also contribute less CPF, to make the workers more employable. Third, the Government will give workers Workfare income supplements, mainly into their CPF accounts, so as to help them to build up their savings. Workfare provides more incentives for individuals to work, and for

employers to hire them. With Workfare, low-wage workers will end up with more in their CPF. With Workfare, the State is stepping in to share the burden of social support with the individual and his employer.

The principal target group of Workfare will be older full-time workers aged above 45 years who earn $1,000 or less. This group will receive the highest Workfare benefits. However, Workfare benefits will also extend to a wider group - those above 35 years who earn $1,500 or less, but at a lower rate. This is so that we do not miss any deserving cases, and also so that workers whose earnings increase beyond $1,000 do not suddenly lose all their Workfare benefits. I will go through each of the measures in turn.

Increasing take-home pay

First, increasing take-home pay. Currently, employees start contributing CPF when their monthly incomes exceed $500, but at a lower rate. Their contributions are increased to reach the full rate of 20% at a monthly wage of $750. We will now increase the employee CPF contributions more gradually, so that employees only pay the full rate of 20% when they get to a monthly wage of $1,500. Workers earning $1,000 or less will have larger reductions in employee contributions and hence larger increases in take-home pay. This change in employee contributions will apply to all low-wage workers regardless of age. The contribution rates for workers above 50 years old, which are lower, will be scaled down accordingly.

Improving employability

Improving the employability of older, low-wage workers is the second reason why we are doing this. Currently, employers pay the full 13% rate for all workers earning more than $50 per month. We will now phase in the

employer CPF contributions for workers who are aged above 35, so that employers only pay the full new contribution rate of 14.5% at a monthly wage of $1,500. Again, the contribution rates for workers above 50 years old will be scaled down accordingly.

Supplementing wages and savings

These two changes will reduce employer and employee CPF contributions for older low-wage workers. The new Workfare Income Supplement (WIS) scheme that we are introducing will more than make up for this.

The Workfare quantum will be based on age. For workers above 45 and earning $1,000 and below, the Workfare will supplement their wages by up to $1,200 per year, or between 10% and 20%1. Workers aged between 35 and 45 will receive three-quarters the amount that workers above 45 will receive.

1 Workers above 45 years of age, earning between $500 and $1,000 inclusive, will receive $1,200 in total WIS, which translates to a 10%-20% increase in annual income.

Workfare will be given partly in cash, but mostly in CPF. The cash-to-CPF ratio will be 1:2.

5. In other words, for every dollar of cash we give the worker, we will also put $2.50 into his CPF. We are putting a larger part into CPF, so as to help low-wage workers better provide for their future needs.

WIS will be conditional on regular work. It will be given to workers who have worked at least three months in any six-month period in the calendar year, or at least six months in the calendar year. Eligible workers who have worked for at least three months in the first six months of 2007 can look forward to their first WIS on 1st January 2008.

Like the Workfare Bonus Scheme, the WIS scheme will be for those who live in properties with an annual value of $10,000 or less, who are mostly living in public housing.

Let me give two examples to summarise what WIS will do, coupled with the changes in CPF contribution rates. First, let us look at a 46-year-old worker who earns $800. He used to take home $640 per month. He will now bring home $57 more. What he gets in his CPF, which used to be $264, will also be slightly higher now despite the cut in employer CPF. Overall, he has received $100 of WIS, in other words, a 12.5% supplement to his wage. The employer has saved $27.

The second example - again, a 46-year-old who earns $1,000 per month. Again, he gets more take-home pay - $49 more, and in his CPF - $38 more. He gets $100 of WIS too, which is a 10% supplement to his wage. He is better off, overall, and his employerss cost of hiring him is also reduced. This is the combined result of the CPF restructuring and Workfare - more cash-in-hand, and more in the CPF. Details can be found in the Annex*.

* Cols. 1515-1524.

Helping self-employed persons

Self-employed individuals do not pay full CPF, but they are required to contribute to Medisave at the same rates as other working individuals. The WIS scheme will extend to them. Self-employed persons will receive Workfare benefits that are two-thirds the amount for employees, provided they pay their Medisave. However, unlike employees, all of the Workfare for self-employed persons will be paid into their Medisave accounts.

Presently, one-third of self-employed persons are not paying Medisave, even though they are required to do so. To encourage more low-income self-employed persons to contribute to Medisave, we will reduce their contribution rate to one-third of the full Medisave rate. They will therefore pay no more than 3%, based on the new Medisave contribution rate of 6.5% to 8.5%.

For example, a self-employed person above 45 years earning an average of $1,000 a month would have had to contribute $80 a month to his Medisave. With the new scheme, he will only need to contribute $28 a month, whereupon the Government will top up his Medisave with a further $67 a month. In other words, the Government is topping up his income by about 7% a month.

The one-third Medisave contribution rate will apply to all self-employed persons2with a net trade income of $12,000 or less a year; in other words, an average of $1,000 a month or less. The rate will increase gradually to the full Medisave rates at a net trade income of $18,000 a year, $1,500 a month or more.

2 Those with a net trade income of below $6,000 are not currently required to contribute to Medisave. However, they are encouraged to do so voluntarily.

Helping informal workers

There is another group whom we want to encourage to join the CPF system and to benefit from the WIS. These are the informal workers who do odd jobs on an ad-hoc basis. Their employers do not pay their CPF, either because they cannot afford to do so, or because the workers prefer to take their entire wages in cash.

For purposes of the WIS scheme, we will treat informal workers just like the self-employed. Informal workers will receive WIS benefits if they work and contribute to their Medisave. They must pay Medisave at the same rate as the self-employed, and they will receive the same Workfare benefits as the self-employed, in other words, two-thirds of what regular employees receive, but all paid into their Medisave accounts.

We want, however, to caution employers who avoid paying CPF for their workers. Under the CPF Act, so long as a worker works regularly for any employer, that employer is liable to pay their CPF. As we institutionalise Workfare, MOM and

CPFB will step up enforcement to ensure that payment for CPF is complied with.

WIS scheme rewards work

The WIS scheme is expected to benefit 438,000 Singaporeans3, and cost about $400 million a year over time. The numbers are likely to go up as more individuals are incentivised to join the workforce and to contribute to CPF. While Workfare is a long-term government programme, the specific scheme that we have worked out is new and will need to be tested out. We will review this scheme after three years and adjust it if we need to, to make sure that it achieves our aims.

3 Estimated numbers by imposing the housing Annual Value criterion.

The Workfare Income Supplement scheme is a major policy change. For the first time, the state will be supplementing the market wages that low-wage workers receive. But we have decided to make this change so as to help low-wage workers and encourage them to stay employed. This will strengthen social inclusion in Singapore.

Through Workfare and the various CPF changes that I have just mentioned, the CPF balances of all Singaporeans will rise to help them meet their long-term expenses, including their medical needs. However, many Singaporeans are understandably concerned about whether they will be able to afford their healthcare bills as they grow older.

Healthcare costs for the individual are rising because we are now living longer and becoming more prone to age-related diseases like stroke, diabetes and hypertension which are typically chronic and require long-term care. The elderly use more healthcare services and incur higher costs per episode of care. For example, hip fractures because of osteoporosis are common among the elderly and hip

replacement surgeries are usually required to ease their condition.

The incidence of heart disease and cancer among Singaporeans is also growing, leading to very costly hospitalisation and treatment cycles. And the expectations of Singaporeans are rising; they are demanding more medical services, better medical technologies and more effective drugs.

To cater to these healthcare needs, the Government will be ramping up our healthcare expenditure over the next five to 15 years. Over the next five years alone, we expect to increase spending to reach about $3 billion a year by 2012, compared to $2 billion today. Part of this will go towards growing the number of doctors, nurses and allied health professionals in our public hospitals. In particular, we aim to bring 4,500 more nurses into the public sector over the next five years, as they play an increasingly important role in supporting the elderly. We will also increase the number of acute hospital beds and improve

clinical services.

We will create academic medical centres in our NUH and SGH campuses, which will allow us to better marry the strengths of academic and clinical practice. Both centres will have a stronger clinical research component, with funding focused on the major diseases afflicting Singaporeans. In addition, step-down care now provided by charities will be better integrated with hospital care. We also want to better integrate patient care between GPs and specialists so that GPs can play a larger role in looking after Singaporeans' health.

Singaporeans will still have to foot their share of their medical bills, either in Medisave, insurance or cash. Some people, especially the elderly and low-income, have difficulty setting aside

enough in their Medisave for their healthcare needs. They need our help. I will top up the Medifund by $200 million this year so that it reaches a sum of $1.4 billion.

Mr Speaker, Sir, I have outlined some of the major programmes that the Government will have to embark on over the next five years and beyond, to build our capabilities for the future and to strengthen our social security system. With the Speaker’s permission, I will continue later with the changes I will make to our tax regime and how we can fund these expenditure programmes.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.55 pm.

Sitting accordingly suspended

at 4.37 pm until 4.55 pm.

Sitting resumed at 4.55 pm

Mr Speaker, Sir, the plans I have laid out for CPF and Workfare represent the Government’s commitment to address the dislocations caused by globalisation and ensure a sense of cohesion and financial security among Singaporeans. We are also making major new investments in our social and economic infrastructures. At the same time, we want to be able to reduce direct taxes to enhance our competitiveness. To do all this, we must therefore raise additional revenues. I will now map out our plans on the revenue front.

Restructuring the corporate income tax system

First, direct taxes - we will make a significant move on corporate income tax in this Budget. The landscape is now more competitive than it was, even five years ago. Globally, corporate tax rates have come down to an average of 27% compared to 31% five years ago. Hong Kong's rate is currently at 17.5%, and could go down further. Ireland's is 12.5%. The emerging Eastern European economies have become serious competitors for global investment - Czech Republic's is at 24%. Poland's and Slovak's Republic are at 19%. Hungary's is at 16%. Latvia's and Lithuania's are at 15%.

As a broad-based measure to help all companies and to keep Singapore attractive as a business location, I have decided to reduce the corporate tax rate by two percentage points, to 18%, with effect from YA2008. This will cost the Government $800 million a year. This corporate tax cut will bring Singapore more investments and more good jobs over time.

I will also do more to keep our tax regime relevant to new business structures and financial practices. Recognising that business borrowings are now taking various innovative and non-traditional forms, I will now allow all borrowing costs that are essentially similar to interest to qualify as tax-deductible expenses, with effect from YA2008. Such tax deductible costs will include certain guarantee fees and bond discounts. This will cost the Government $110 million a year. IRAS will release further details on this change.

Making Singapore the best location to start and grow companies

I spoke earlier about our intention to make Singapore the best location for companies to start, grow and globalise. Our tax regime for SMEs and start-ups is already attractive. We will make it more so.

I have decided to increase the Partial Tax Exemption threshold for companies from the current $100,000 to $300,000, with effect from YA2008. This will cost the Government $150 million. All companies will enjoy this exemption, but it will benefit SMEs the most. This will mean that almost 80% of taxable companies in Singapore will pay taxes at effective rates of less than 10%. It also means that a company with chargeable income of $500,000 will pay tax at an effective rate of 12.5%, equal to Ireland and significantly lower than comparable rates in Hong Kong.

I will also enhance our tax regime for start-ups. Start-ups currently enjoy full tax exemption on the first $100,000 of their chargeable income for each of their first three years of assessment between YA2005 and YA2009. I have decided to remove the YA2009 expiry date so that all start-ups will henceforth enjoy a full three years of exemption.

These moves, coupled with the reduction in corporate tax rate to 18%, will make Singapore one of the most competitive locations in the world for SMEs and start-ups.

We recognise that our SMEs will typically face greater difficulties in meeting the higher costs due to the CPF employer contribution increase. Therefore, I have decided to give them a rebate on their labour expenses for two years. In

the first year, this will take the form of a 2% cash rebate on the first $40,000 of total employer and employee CPF contributions of a firm. On the next $40,000 of total CPF contributions, we will give a 1% rebate. These percentages will be halved in the second year. This rebate will effectively offset up to 45% of the additional CPF cost that SMEs face in the first year and cost the Government $100 million in total. Details can be found in the Annex*.

* Cols. 1525-1526.

Keeping our personal income tax regime competitive

Personal income taxes have also been coming down worldwide, although not to the same extent as corporate taxes. We have gradually lowered our personal income tax rates, most recently with a two-percentage point cut to 20%. We aim to keep personal income taxes low. This will maximise the incentives for all Singaporeans to work hard and reap the rewards of their efforts. It will also help us to attract and keep both international and Singaporean talent here.

For most taxpayers, our personal income tax regime is already competitive, because our marginal tax rate schedule is highly progressive. Thus, individuals with assessable incomes of up to half a million dollars pay less tax in Singapore than in Hong Kong; in fact, up to about $530,000 of assessable income, you pay less tax in Singapore compared to Hong Kong. However, at the very top end, some other jurisdictions have lower effective tax rates than us, including Hong Kong. For attracting and keeping top talent, this is an issue. Therefore, we will continue to monitor the trends in personal income tax rates of competing locations. The changes to the framework for drawing investment income on our reserves will enable us to lower our rates further if necessary.

I have decided to implement other tax changes to rationalise our indirect tax regime.

Abolishing Cess

First, I will remove the current broad-based Cess that applies to F&B outlets. For those who are not familiar with this, it is the second of the three 'pluses' on the bill you get at a restaurant. This will cost the Government about $30 million a year. Cess has played a role in helping to fund the promotion of tourism. The Government will study more targeted ways to use Cess in future, where necessary, to fund specific tourism events.

Reducing road tax

I will reduce road tax by 8% for passenger cars and motorcycles. This is part of our move to shift progressively towards taxing on the basis of vehicle usage rather than ownership. Someone who owns a 2.0 litre car (eg, a Toyota Picnic) and who currently pays $1,550 in annual road tax will get about $124 in savings. Details will be announced by the Ministry of Transport.

Reducing the Foreign Domestic Worker Levy

I will reduce the monthly Foreign Domestic Worker Levy by $30 from 1st July 2007. This will benefit one in every six households in Singapore, which currently employs a foreign maid. It will be particularly helpful for families that need a maid to help take care of dependants.

I have also decided to extend the Foreign Domestic Worker Levy Concession, which currently only applies to those with young children and elderly parents, to employers with disabled family

members, in other words, where there are disabled family members, or the employers are themselves disabled and need additional care-giving support. This will take effect from 1st November 2007. The Foreign Domestic Worker Levy changes will cost the Government $75 million a year. More details on the qualifying criteria for the extension of the concession to those with disabilities will be announced by the Minister for Community Development, Youth and Sports.

Reducing the foreign worker levy

To help companies save costs, I will lower the second tier foreign worker levy for the manufacturing and services sectors from $310 to $280 with effect from April 2007. This will cost the Government about $1 million a year. The Minister for Manpower will also be announcing other measures to facilitate access to manpower in the construction sector and certain other industries that are growing very rapidly.

Extending tax relief for cash top-ups to CPF Accounts by siblings

Currently, a person can claim up to $7,000 in tax relief each year for making cash top-ups to his, his parents', his grandparents' or his spouse's CPF Retirement Accounts, provided the beneficiary is aged 55 and above. To encourage greater support from close family members and not just children, we will extend this tax relief for cash top-ups to siblings who are aged 55 and above, and who earn $2,000 or less in the year preceding the top-up. This will take effect from YA2008.

Extending stamp duty relief

Today, only limited liability companies and registered business trusts qualify for

stamp duty relief on intra-group transfers of assets. I have decided to extend this relief to unlimited companies, Limited Liability Partnerships (LLPs) where all the partners are companies, and Statutory Boards. This will take effect from today.

Rationalising liquor duties

Some liquors are taxed on the basis of alcoholic content while others are taxed on the basis of volume. We will progressively move towards taxing liquors on the basis of alcoholic content. From 1st January 2008, I will tax beer and stout on this new basis. This is a rationalisation of duties and is not aimed at generating additional revenues. In addition, we will harmonise the Customs and Excise duty rates for beer and stout. The new rates are set out in the Annex* to my speech.

* Cols. 1527-1528.

Reviewing asset taxes

We mentioned in 2006 that we will review our asset taxes, including estate duty. I have decided to postpone a verdict on this. There have been many calls also to rationalise the structure of estate duty on residential properties and other assets respectively. I prefer to take this together with the decision on whether we will retain estate duty.

Let me now turn to the issue of raising revenues to ensure long-term fiscal sustainability.

To meet our future expenditure needs and ensure that we remain competitive on direct taxes, we will raise additional revenues from two sources - income from our reserves, and GST.

Drawing more income from the reserves

First, the Government intends to amend the Constitution to revise the rule

that allocates Net Investment Income (NII) from past reserves for spending. We are studying this carefully and discussing with the President the proposed revisions to the Net Investment Income formula. We expect to be able to increase the investment income available for spending by the Government by taking in capital gains as part of this income. What we aim to do is to work out a formula that strikes a fair balance between the claims of present and future generations, because the financial security and spending needs of tomorrow are no less important than those of today.

But we cannot rely on Net Investment Income alone to cover everything that we need to spend on. Instead, we must use the additional income from our reserves to secure further improvements to our competitiveness, to make longer-term investments in infrastructure and R&D, and to top up the endowment funds that will bring value to Singaporeans for many years to come. This way, the NII will help to boost the growth of our economy over the long term. The increased expenditures that we will have to make on the social front over time should, therefore, be funded primarily by other revenues.

Raising the Goods and Services Tax rate

This is why PM announced last year that we will raise the GST rate. Doing this will broaden our tax base, and enable the Government to implement Workfare and other initiatives to strengthen our social cohesion and grow our economy.

I have decided to raise the GST rate to 7% with effect from 1st July 2007. It is prudent to implement the GST increase now, in one step, while the economy is strong. This is expected to raise additional revenues of $750 million this year, and $1.5 billion per year going forward.

I have carefully considered the alternative of spreading out the increase

in the GST over two years, and decided against it. It is better to raise prices at one go and compensate Singaporeans with a substantial offset package. By doing it in one step, it also means that no one can profiteer by raising prices in anticipation of a second step. For businesses, it also saves costs because they will not need to adjust their systems twice.

We will make it easier for smaller businesses to register for GST. SPRING will subsidise up to 50% of GST registration-related costs for Internet connection and IT consultancy and training for small enterprises. This support will be in place for two years starting from March 2007. SPRING and IRAS will also work with the industry chambers and associations to provide free automation software to businesses and help them administer the GST.

This brings me to the measures we will take to offset the GST increase. We will put in place a comprehensive set of measures for Singaporeans, with more for the lower-income. The majority of Singaporeans will get offsets that are equal to at least five years of the increase in their expenditures as a result of the higher GST. Lower-income households will get much more than five years' worth. This GST Offset Package will cost the Government $4 billion in total over the five-year period.

GST Credits

Of this $4 billion, $1.8 billion will be given out in cash, in the form of GST Credits. All adult Singaporeans will receive GST Credits in annual instalments. The amount that a person receives will depend on two factors - his assessable

income (AI) and the annual value (AV) of his home, which is used as a proxy for his wealth.

I will give lower-income Singaporeans larger GST Credits. Those who live in one- to three-room flats4 and have annual assessable incomes of $24,000 or less will qualify for the largest quantum of $1,000. This $1,000 will be paid out in instalments of $250 per year over four years. Nearly three-quarters of the population will receive GST Credits of $800, again in instalments of $200 each year over the next four years. Next, if you live in a larger home with an AV of more than $10,000 but your income is less than $100,000 a year, you will get $400 in GST Credits. The top income group comprising those earning over $100,000 a year will get $100 of GST Credits, paid one time. It is a small gesture, but recognises that the GST increase affects everyone.

4 This refers to those living in flats with AV of $5,000 or less. It covers virtually all HDB residents in one- to three-room flats.

($250 per year for 4 years)

($200 per year for 4 years)

($100 per year for 4 years)

(for 1 year)

NSmen and NSFs, including those aged below 21, will also get an additional $100 of GST Credits to recognise their contributions to national security. They will get their bonus GST Credits in the

year that they qualify. So a person who becomes an NSF in 2008 or 2009 will also get the bonus GST Credits in that year.

Singaporeans will have to sign up just once to qualify for all four years of GST Credits though the amount they get will be assessed yearly, based on their income and residence. The first instalment will be paid out on 1st July this year, at the same time as the GST increase.

Senior Citizens' Bonus

I will give senior citizens more. Many of them will be concerned about the GST increase because they have to meet their living expenses out of their savings. We will therefore provide Singaporeans aged 55 and above with a Senior Citizens' Bonus, as long as they have annual assessable incomes of $100,000 or less. Those aged 60 and above will get more, with amounts ranging from $1,000 for those in the lower-income group to $400 for those who are better off. As with the GST Credits, the quantums will depend on their income and the annual value of their homes. Two-thirds of the Senior Citizens' Bonus will be given in cash and one-third credited into their Medisave Accounts on

1st July of each year. For example, a 65-year-old retiree living in a three-room flat will get $1,000 of Senior Citizens' Bonus on top of the $1,000 he will get in GST Credits, making a total of $2,000 over four years. The Senior Citizens' Bonus will cost the Government $400 million.

($150 per year for 4 years)

($250 per year for 4 years)

($100 per year for 4 years)

($200 per year for 4 years)

($50 per year for 4 years)

($100 per year for 4 years)

Top-ups to Post-Secondary Education Accounts

We want to help families with the costs of their children's post-secondary education. As I mentioned earlier, we will open Post-Secondary Education Accounts (PSEA) for all Singapore citizen children aged from seven to 20 from next year. We will top up these accounts from time to time, when our surpluses allow, and

give more to those who are less well-off. I will credit the accounts of those in secondary school or older with $400 in 2008, and another $400 in 2009. Those of primary school age will get less as they can get more PSEA top-ups in future years if we are able to share surpluses.

The PSEA top-ups will cost $400 million and benefit around 650,000 children.

$200

$100

$400

$200

Utilities-Save (U-Save), Service and Conservancy Charges (S&CC), and Rental Rebates

As part of the GST Offset Package, I will also extend the Utilities-Save, S&CC and Rental Rebates to eligible HDB

households for five years, from 1st April 2007 to 31st March 2012. This will help low to middle-income households cope with increased household expenses that they face due to the GST increase. The U-Save and S&CC rebates will also be extended to those living in HDB executive flats. These rebates will benefit 800,000 HDB households and cost a total of $800 million over five years.

Property tax rebate

I will provide a one-off property tax rebate of up to $100 per year in 2008 and 2009, in other words $200 in total for all owner-occupied residential properties. This will benefit about one million property owners, with three- and four-room HDB flat owners paying little to no property tax in 2008 and 2009. This will cost the Government $200 million.

Assistance for low-income families with young children

To help lower-income families with young children, we will increase financial assistance for kindergarten and childcare. We will enhance the Kindergarten Financial Assistance Scheme (KiFAS) by increasing the level of subsidy from 75% of kindergarten fees, which is where it is currently, to 90%. This means that low-income families will now be able to enjoy a subsidy of about $80 a month. Subsidies for the Centre-Based Financial Assistance Scheme for ChildCare (CFAC) will be increased by between $20 and $40 a month for each child. Other enhancements to the ComCare Fund programmes will be announced by MCYS later. These enhancements will cost a total of $6 million a year.

Assistance for pensioners

The Government has decided to increase the Singapore Allowance further

by $20 per month, and raise the gross pension ceiling from the current $1,100 to $1,150 per month. The revision will give an additional $4 million a year to pensioners residing in Singapore.

Public Transport Fund

While public transport remains affordable for the majority of Singaporeans, there are lower-income families who need more help. The Government will commit $10 million, to a Public Transport Fund (PTF) in October 2007, to be given out over three years. This will provide additional help to lower-income households for their public transport costs where necessary.

Assistance through Citizens' Consultative Committees (CCCs), Self-Help Groups and VWOs

Although we have a comprehensive GST Offset Package, it is possible that some households will face special difficulties. The best way to help them is through flexible assistance from their CCCs. I will therefore top up the CCC ComCare Fund by $5 million over five years. To help lower-income Singaporean families, the Government will also provide $2 million over five years to the Self-Help Groups, and $3 million over five years for Government-funded VWO programmes. More details will be announced by MCYS.

Additional subsidies for healthcare, education and Service and Conservancy Charges

The Government will provide the restructured hospitals and polyclinics with more grants to fully absorb the additional GST on subsidised healthcare services. This will cost the Government an additional $12 million a year.

We will also absorb the GST payable on school and miscellaneous fees as well as fees and tuition grants at ITEs,

polytechnics and universities. This will cost an additional $40 million a year.

Town councils will also get an additional $10 million a year to absorb the additional GST payable on Service and Conservancy Charges.

Let me summarise the overall impact of the GST Offset Package for Singaporean households. Most households will receive GST Credits, Senior Citizens' Bonuses, PSEA top-ups, U-Save, S&CC and rental rebates, and property tax rebates. Taking these offsets alone, those living in four-room flats will receive benefits that are, on average, seven times the extra GST that they will have to pay each year. In other words, seven years' worth of offset. Even those in executive flats will receive four years' worth of offset on average. The lowest-income households will receive the most. For instance, two-roomers will receive about 16 years' worth of offsets, or 16 times the increase in their annual GST expenditure. More details can be found in the Annex*.

* Cols. 1529-1530.

Take the example of an average Singaporean family living in a four-room flat. This example is typical. If I were to choose a lower-income family, the benefits would be larger. Husband, aged 42, earns $2,800 a month. His wife, aged 37, earns $1,000 a month. They spend most of their take-home pay, or about $3,000 a month of spending. They will pay an additional GST of $57 per month or $685 per year typically. The couple has two children, one in primary school and the other in secondary school. They will get a total of over $4,200 from the GST Offset Package - comprising $1,700 in GST Credits5, $790 in U-Save rebates, about $340 in S&CC rebates, $1,200 of PSEA top-ups, and $200 of property tax rebates for 2008 and 2009. Add it all up,

it comes to six years’ worth of the GST increase in the case of this family. In addition, on an on-going basis, even after the GST offsets are distributed and over with, this family will be getting ongoing improvement in their standard of living because the wife will qualify for $900 from the Workfare Income Supplement (WIS) scheme and the husband gets an increase in his employer’s CPF contributions as well.

5 This includes the $100 NS component for the husband.

The GST Offset Package is therefore a substantial one that will help the majority of Singaporeans offset their increased GST costs for several years. Low-income households, in particular, will be well provided for, both through the GST Offset Package and the WIS. Even after the GST offsets have been distributed, Workfare will continue to provide significant support for low-income workers on a continuing basis. This is why the GST, combined with the Workfare Income Supplement Scheme, is not regressive. Lower-income workers will end up better because of this - better off compared to before the GST increase and the introduction of Workfare.

Mr Speaker, Sir, let me now summarise the FY2007 budget position. Excluding Special Transfers and tax changes, we expect a surplus of $1.1 billion for FY2007. The GST increase, reduction in corporate tax and other tax changes taken together, will increase FY2007 operating revenue by $0.3 billion. The GST Offset Package, Workfare, and top-ups to NRF and the endowment funds will cost $2.1 billion. After taking these into account, the estimated FY2007 Overall Budget Balance is a deficit of $0.7 billion. The Government will not need to draw on past reserves as the deficit can be fully financed by funds accumulated since the new Government took office in