Hansard, 2007-02-27

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) Dr Lim Wee Kiak 21 Feb 24 Feb Mr Cedric Foo Chee Keng 27 Feb 28 Feb Mr Charles Chong 27 Feb 28 Feb Assoc. Prof. Dr Yaacob Ibrahim 27 Feb 01 Mar Mr Alvin Yeo 01 Mar 06 Mar Mr George Yong-Boon Yeo 01 Mar 02 Mar Mr Mah Bow Tan 11 Mar 21 Mar Prof. S Jayakumar 13 Mar 17 Mar 20 Mar 25 Mar 31 Mar 07 Apr Mrs Jessie Phua 19 Mar 25 Mar Mr Wee Siew Kim 28 Mar 02 Apr

ABDULLAH TARMUGI Speaker Parliament of Singapore

Resolved,

That, under Standing Order 10(2), the business motion standing under the name of the Leader of the House as listed on the Order paper for today, be taken now. - [Mr Mah Bow Tan].

Resolved,

That, notwithstanding the Standing Orders, Question Time may continue for up to 30 minutes from the commencement of a sitting on the days allotted to the debate on the Budget Statement and the Committee of Supply on the Expenditure Estimates for FY 2007/2008. - [Mr Mah Bow Tan].

1. Mr Christopher de Souza asked the Minister for Manpower how will the Government ensure that the self-employed or contract workers who earn so little that they can barely make ends meet and hence unable to make Medisave contributions, are able to benefit from Workfare if Workfare is to be tied to Medisave contributions.

Mr Speaker, Sir, the Government recognises that low wage workers do have financial difficulties in meeting their needs. This is the reason why Workfare, as the fourth pillar and a long-term commitment of work-related social support, is being introduced. Because

Workfare will be a structural long-term feature in our system, we must be careful to start it on the right principles. Otherwise, as other countries have experienced, it can slide into welfarism and become unsustainable as costs escalate. So we have been very careful to base it on right principles.

Requiring some Medisave contribution from the self-employed or informally employed to receive Workfare benefits is designed to draw more self-employed and informal workers into the Medisave net, which is one of the fundamental pillars for provision of healthcare needs. It will underscore the principle that each individual must set aside for his own needs. It is consistent with promoting self-reliance and effort before Government assistance is sought or given. The long term goal must be to try to include every worker, including the self-employed and informal workers, into the Medisave system. This can only be achieved if each contributes to his own Medisave account, even if he is earning a little.

However, to allow more of such workers to enter the Medisave CPF system and to benefit from Workfare, Government reduced the contribution rate for the self-employed, as suggested by NTUC.

Sir, I would like to ask the Minister whether his Ministry has taken into consideration the fact that there will be some who will not be able to pay this small percentage to Medisave, and what is the percentage who will fall through the net.

Sir, I have already said that we have addressed some of that concern through reducing the Medisave contribution rate.

Let me put it in perspective. Say, a formal employee who works for a

company earns $600. He is now required to pay about 16% of his wages into his own CPF account. If he earns $600, he has to pay about 16%. If you are a self-employed earning the same wage, he used to be required to pay, depending on his age, say, 7-8%. We have increased it by 0.5%. So it is 7.5% or 8.5%. We have now reduced that rate to less than 3%. So there are significant reductions, and the scheme is designed to incentivise people to enter the CPF system. As a starting point, it is a correct one.

How do we then help those who find that they are not earning enough to meet their needs and that they find it hard to save? Sir, we can encourage them in a number of ways, but we should not, in the process of trying to address this group, then undermine the entire larger system which addresses and helps 90-95% of our employees. So I think we will have to find other ways to help them. But if you are earning $600 and pay 3% with some savings, you can contribute. And the amount of CPF you get is a few times what you put in. So I think it is a fair system.

2. Ms Ellen Lee asked the Minister for Manpower (a) if he will provide an update on the number and percentage of employers who did not make CPF contributions for their employees over the last three years; and (b) what enforcement actions have been taken to reduce the numbers

3. Mrs Josephine Teo asked the Minister for Manpower (a) how many employers or employees have been prosecuted in 2006 for not making CPF contributions; (b) whether there are employers or employees who have been convicted more than once; and (c) will his Ministry consider removing the mandatory employee contribution for those earning

less than $1,000 per month so that they can take home more money.

Sir, can I have your permission to take Question Nos. 2 and 3 together?

Yes.

Sir, the CPF Board monitors and detects each month those employers who are late in their payments. In addition, the Board also regularly audits employers’ CPF payments and wage records, and we do it in a targeted way, because we want to focus on those with high default rates - companies with high default rates such as cleaning contractors and security agencies. Defaulting employers have to pay a penalty interest on their late contributions, on top of the arrears.

As a result of these measures, the average number of employers with outstanding CPF payments owed to their employees for at least two months has fallen from 677 a month in 2004 to 559 in 2005, and now to 549 in 2006. As a proportion of all active employers, this default rate roughly translates to 0.56% for 2006. So it is less than 0.6% for last year.

Last year, we prosecuted 275 cases, and this involved 228 employers which led to convictions. The rest of the cases were either compounded, or resolved by the employers making payment before the court hearing. Employers convicted of non-payment of arrears will have to pay a court fine in addition to the arrears and interest.

The Members have asked whether we prosecute the employees. We do not, because under the CPF Act, the obligation is for the employers to pay the correct CPF contributions to their employees. In other words, even if an employer chooses

to collude with the employee and not to pay, the Act prescribes the responsibility on employers, and the employer will have to pay up his late contribution and also the contribution of the employee. The employee does get away scot free but, beware, employers who want to collude.

On the issue of removing the mandatory employee’s contributions for those earning less than $1,000 per month, this indeed has been done as announced in the Budget Speech, and we are making it easier for them to contribute less but to get more in terms of Workfare.

Sir, I would like to ask the Minister that in the light of the recent introduction of Workfare Income Supplement, some employers may want to make contributions to CPF for their employees but starting from now, and some have asked whether an amnesty period can be considered. I would like to know the Ministry's position on this.

Sir, we will always be gracious judiciously. We are not out after, say, itinerant employees, hawker assistants, coffee shop assistants. These are not the groups that we are going after. We do target those who systemically deprive employees of their CPF. As we have said, we have noted that some of these are cleaning contractors and security agencies.

For those who want to now contribute to CPF, let me welcome them and say that we will take their actions at face value and they need not fear that we will do anything harsh if they do make their contributions.

4. Dr Lily Neo asked the Minister for National Development (a) what is the plan to accommodate population growth in Singapore and (b) what is the target population growth in the next 10 years.

Mr Speaker, Sir, the Concept Plan is the long-term land use and transportation planning framework for Singapore. By "long-term", I am talking about the next 40 to 50 years. It is a rolling plan. In other words, we review it regularly, every 10 years, taking into account changing economic and population trends and the land use needs. The Concept Plan ensures that we use our land resource efficiently and effectively, so that our quality of life is not affected, and indeed improve even as we continue to develop.

In view of fast-changing developments in recent years, URA and other Government agencies carried out a mid-term review of the Concept Plan 2001. The review concluded that we have sufficient land to cater to our land needs in the future, if we use this limited resource judiciously and wisely.

With higher projected population and new growth sectors, land demand for housing, industry, transport and other uses will increase. We will need to optimise land use. We will have to explore new ways of creating space, whether it is through reclamation, building upwards, or building downwards using subterranean space. We will also need to invest in the necessary infrastructure, such as roads and rail networks, and power and utilities to meet future needs. While trade-offs among uses will intensify, we will be able to meet the needs of economic growth and a projected population of 6.5 million in future if we plan ahead and we address these potential concerns now. Singapore will then remain a sustainable, liveable

and vibrant environment that will continue to be attractive to talents and businesses by offering a high quality of life.

On the population figure, let me stress that the 6.5 million population number is not a target. Singapore does not target a specific population number or a population growth. What we are looking for is a viable and self-sustaining population profile – one which will help us to grow a bigger economic pie, and also sustain a livelier and a more vibrant society.

The 6.5 million population is what we use as a planning parameter. It is what we base our plans and methodology on. It takes into account the current demographic trend. I believe it is a realistic number for planners because they need something to base their projections and plans on, so that we are ready for future growth opportunities.

For Concept Plan 2001, we had adopted a long-term population parameter of 5.5 million as a basis for planning. If Members will recall, at that time, our population was 3.9 million. Today, our population is close to 4.5 million. It is thus timely to revise the long-term population parameter to something higher than 5.5 million. So we have decided that 6.5 million is a realistic number for the next 40 to 50 years. Whether and when we achieve this figure will depend on many factors, but our long-term land-use planning will help to ensure that we are prepared for such a population in future, if it does come about.

Sir, I would like to ask the Minister whether the URA Concept Plan 2001 to add 99 square kilometres of land is still attainable presently and at what cost. Will the tens of billions of dollars required to achieve it be better spent to develop the 40% of still undeveloped land in Singapore to accommodate growth?

I think the two are not mutually exclusive. It does not mean

that since we have vacant land, we do not need to reclaim. Or that if we reclaim, we do not use our vacant land. In fact, in the Concept Plan review, we have taken into account our future needs. So all the so-called currently vacant land, either land that is not used at the moment or land that is reserved, has been taken into account in the planning to meet future needs. We safeguard this land for industrial, recreational, commercial, housing uses and so on. Of course, such developments will not take place straightaway. They will take place as and when needed.

When I say that reclamation and use of vacant land are not mutually exclusive, what I mean is that sometimes the vacant land that we have available today cannot be used for some of the purposes that we need to reclaim for. Let me just give an example - waterfront land. We need waterfront land for some industrial uses or for industries that require waterfront access. So for such purposes, we will still continue to reclaim land, even if we have vacant land nearby. In the longer term, I see that we will still need to reclaim land

and we will continue to do so where our development needs so require. But, of course, we will always do this within our own territorial waters so that there is no question of affecting boundaries, and so on.

Mr Speaker, Sir, I would like to ask the Minister how will this population growth affect our ethnic mix and what are the steps that will be necessary to preserve our racial harmony.

I think this is a genuine concern. It is an anxiety that we all feel, with so many immigrants coming in, what will that do to our ethnic mix, our social cohesion and stability. But let us remind ourselves that this is not something new. This is not a new phenomenon. We are a nation of

immigrants. Our forefathers came from many parts of Asia and even beyond. Even today, as in the past, we keep our doors open for immigrants. In 1970, our population was around 2 million. Today, our population is close to 4.5 million. But in spite of this major influx of new immigrants as well as, of course, from natural births, our social stability and cohesion has, I submit, not been affected. In fact, it has been strengthened over the years.

There is no doubt, of course, that immigration will bring more diversity. There is no doubt that there will be a challenge for us to maintain this social stability and cohesion, and multi-racial harmony. But I think that we need to continue to remain true to our key principles - principles like meritocracy and multi-racialism. Of course, when we talk about meritocracy, we should continue to make sure that the less well-off in our society are looked after. If we continue to remain true to our principle of multi-racialism, even as we practise diverse religions, and if we continue to strengthen those institutions that promote and strengthen social cohesion - our schools, our public housing estates, our grassroots network for they also help to maintain this glue that binds us together, national service - I see no reason why, as in the past 40 years, we cannot continue to maintain a stable and a socially harmonious society even as we welcome new immigrants into Singapore.

Dr Lily Neo, last question.

Thank you, Mr Speaker. May I ask the Minister whether there has been any study done to ascertain the impact on Singapore from the rise of sea level as a result of global warming? Is there a possibility of reclaimed land being inundated as they have been reclaimed to cope with 59 cm of sea level rise whereas

there is a study that estimated the rise to be as high as 140 cm?

In the light of recent discussions about the impact of global warming on sea levels and the impact on small states, or small island states particularly, I think the Member's concern is understandable. But let me assure her that various agencies in Singapore recognise that this is a concern and are monitoring the situation. In fact, for her information, all our reclaimed land in Singapore is reclaimed to a certain level above sea level, ie, above the highest tide. I believe it is something like 128 cm. She cited some figures that, perhaps, the sea level will rise 140 cm. But based on what we currently know today, and I guess that is as much as we all know, even the most pessimistic of scientists believe that if global warming does cause the sea level to rise, the rise will be in the order of magnitude of, say, 60 to 80 cm.

Given current information and technical wisdom, we are able to withstand any such impact. But for the longer term, we will continue to monitor the situation and we also need to better understand what is going on and how the potential climate change will impact Singapore. So, for this reason, I would like to inform her that there is an inter-agency group working on this. Several agencies - including the Ministry of the Environment and Water Resources, National Environment Agency, Ministry of National Development (MND) - are studying the localised impact of climate change on Singapore. We also have another inter-agency taskforce that is led by MND and its job is to review the existing infrastructural developments in Singapore and to see how we can adapt them to any changes in the sea levels. For example, we will review our foreshore areas and work out new measures, if necessary, to address any impact of climate change.

In summary, I would like to assure the Member that the various agencies in Singapore are monitoring the situation closely.

5. Mr Hri Kumar asked the Minister for National Development from 2003 to 2006, what is (i) the number of HDB units that had been repossessed by banks and the current rate of repossession; (ii) the number of repossessed units currently being held by the banks; (iii) the average time taken by the banks to dispose of the repossessed units; (iv) the average outstanding amount owed to banks and the average interest rates charged on these outstandings; (v) the number of persons currently in arrears in loan repayments to HDB and the banks; and whether the bank's repossessed units are disposed at market prices and, if not, what is the range of discount to the market price.

Mr Speaker, Sir, as at 31st December 2006, the banks have completed the mortgagee sale of 895 HDB flats financed by bank loans. This works out to about 1% of the 89,000 HDB flats financed with bank loans since the start of bank origination in January 2003.

The rate of bank repossession has fluctuated over the past three years. In recent months, the rate is about 60 cases a month, but the number is on the decline in tandem with the improving economic condition and employment situation. The banks normally take about six months to sell off HDB flats which they have repossessed. Currently, they have about 550 repossessed HDB flats in hand. As the majority of the repossessed flats are

the smaller types which are currently popular with flat buyers, the banks have generally been able to sell them off at market prices.

As information on banks’ arrears cases, including outstanding loan and interest rates charged, is confidential, HDB does not have data on them.

As at 31st December 2006, about 7% of HDB mortgagors are in arrears of three months or more. HDB has in place various financial assistance measures to help flat owners who have difficulties servicing their mortgage loans.

Will the HDB consider being more flexible in granting concessionary loans to those who may not qualify because they have already had two such loans previously?

Sir, as Members of the House will probably know, HDB's policy is to allow one concessionary loan for every household buyer and to allow a second so-called bite of the cherry if they choose to upgrade. I know a lot of Members of the House have faced residents who have difficulties asking for second, third or fourth concessionary loan with regard to those who are downgrading because of financial situation. As I mentioned in the House previously, HDB is very sympathetic to each case. And if we look at the circumstances surrounding the case, we look at the case based on the history of the loans that they have taken and whether, in fact, the loans have been taken based on flats that were purchased direct from HDB or flats that were purchased in the resale market, and so on.

To answer the question, we will continue to be sympathetic to every case that comes to HDB for request for concessionary loan. But, sometimes, we do come across cases where they may not be capable of purchasing the flats at

that point in time and we advise them on other alternative solutions with regard to their capability at that point in time.

Sir, I would like to ask the Parliamentary Secretary, before the market was liberalised for bank loans to purchase HDB flats, what was the number of HDB units repossessed by HDB itself? And in light of this historical figure, does the Ministry think that the 1% repossession rate is acceptable?

Sir, I do not have the figures for the number of cases that were repossessed prior to bank origination. Then, all loans were with HDB, but we are glad to surface the figures if the Member is interested. Whether the 1% is acceptable or not, I think we have to look at the perspective of why this 1% happened. We have to understand the circumstances surrounding cases that were repossessed. Many of them were repossessed because they were not able to manage their loans at different points in time. We understand that what is important is for them to appreciate the contract that they come into with the banks and the policies that the banks have put in place. One of the most important things today is to ensure that flat buyers are aware of what they are getting into - be more vigilant and be more prudent in their expenditure.

For HDB loans, we have put in place new policies like the housing loan eligibility requirement where they have to ensure that they get the housing loan eligibility assessment done first. The banks are also putting forth similar parallel measures where they will have to get approval from the banks with regard to the amount of loan that they can get from the banks. What is important now is to ensure that the public is educated and informed of the decisions that they are

going to make. I think it is not to say whether it is acceptable to the Ministry because we will want to ensure that every household who purchases their flat is capable of managing their flat. But if they are really unable to do so, we will try to see how else we can assist them, ensuring that the different solutions are made available to them and for them to be able to decide on all these solutions. Some of the solutions are short term; and some are longer term. What is important is to continue to assist and educate them on what they can do.

6. Mr Siew Kum Hong asked the Minister for National Development (a) how many HDB flat owners lost their flats due to failure in making mortgage or rental payments, in each year from 2002 to 2006; (b) of this number, how many applied to HDB to obtain alternative accommodation in each year and how many were rejected for each year; (c) what were the most common reasons for rejection; and (d) whether the fact that an applicant’s household includes dependants is a relevant factor in deciding such applications.

You have two minutes, Dr Maliki.

Mr Speaker, Sir, from 2002 to 2006, 360 HDB households voluntarily surrendered their flats to HDB due to default in HDB mortgage loan payments. There were also 895 cases of mortgagee sale of HDB flats by banks, as I mentioned earlier. No tenant under the Public Rental Scheme was evicted due to rental arrears, although some have been advised to

transfer to smaller rental flats to reduce their rent.

Of the 360 households who voluntarily surrendered their flats to HDB, 200 (56%) have been allocated rental flats while the rest found their own housing arrangements. Among the 895 households affected by HDB mortgagee sale action, 273 appealed to HDB for some form of help. Of these, 131 (48%) were offered a rental flat while another 13 (5%) who met credit assessment guidelines were provided a concessionary loan to purchase another flat.

There are strict eligibility criteria for the Public Rental Scheme to ensure that our heavily subsidised rental flats are allocated to those without housing options. For example, households who sold their flats are not eligible for subsidised rental flats for 30 months from the date of sale of their flat. If they have enjoyed two housing subsidies, they will be permanently debarred from a rental flat.

However, HDB does exercise flexibility in applying these eligibility rules. The key principle is that citizen households who are truly needy and with no alternative housing option will be considered for a rental flat.

Order. End of Question time.

[Pursuant to Standing Order No. 22(3), Written Answers to Question Nos. 6, 9, 11 and 16 on the Order Paper are reproduced in the Appendix*. Question Nos. 7, 8, 10, 12-15 and 17-20 have been postponed to the sitting of Parliament on 28th February 2007.]

*Cols. 1741-1746.

"to provide for making supplementary provision to meet additional expenditure for the

financial year 1st April 2006 to 31st March 2007",

recommendation of President signified; presented by the Second Minister for Finance (Mr Tharman Shanmugaratnam); read the First time; to be read a Second time after the conclusion of proceedings on the Estimates of Expenditure for FY 2007/2008, and to be printed.

"to provide for the issue from the Consolidated Fund and the Development Fund of the sums necessary to meet the estimated expenditure for the financial year 1st April 2007 to 31st March 2008",

recommendation of President signified; presented by Mr Tharman Shanmugaratnam; read the First time; to be read a Second time after the conclusion of proceedings on the Estimates of Expenditure for FY 2007/2008, and to be printed.

"to amend the Dentists Act (Chapter 76 of the 2000 Revised Edition) and to make consequential amendments to certain other written laws",

presented by the Minister for Health (Mr Khaw Boon Wan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order read for resumption of Debate on Question (15th February, 2007),

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2007 to 31st March, 2008." - [Second Minister for Finance].

Question again proposed.

12.36 pm

Mr Speaker, Sir, in response to the Prime Minister's speech during the debate on the President's Address to this House in November last year, the Second Minister for Finance, Mr Tharman Shanmugaratnam, announced a watershed budget that will position Singapore for the future in the midst of a globalised world to create "a competitive economy and an inclusive society".

Sir, as the Minister mentioned, the Budget positions Singapore for the future by investing in the future, focusing on growing the economy, investing in Singaporeans as well as to help Singaporeans to help themselves. This, I believe, is the key for a bright future for the future of Singapore.

Sir, many good words have been used to describe the Budget - a "wow budget", a "generous budget", a "surprising budget". For me, this is also one of the best - maybe the best - Budgets I have seen since I entered this House in 1997. In one go, we addressed five main areas:

We implemented a social security net, which is a fundamental shift from our earlier operating philosophy - a permanent Workfare which is essentially a wage supplement system;

We increased the GST, coupled with a set of offset measures that will help most lower income Singaporeans and also older Singaporeans, and, of course, now we have also opened the gates for future GST increases;

We lowered the income tax rates, leaving the gates open for future rate reductions to compete as the world changes around us;

We restored the CPF contributions by employers after a very long time; and

We finally also showed that we became very serious about supporting entrepreneurship and small and medium enterprises with one of the best sets of budget measures for start-ups and SMEs.

Sir, my GPC met with a group of industry experts to get the feedback on the Budget that was announced on 15th February and I am glad to say that most of the responses have been very favourable. In fact, many were not expecting the Government to be so generous this year. In my speech today, I will reflect some of the reactions from these industry experts, and therefore my speech will be a long one.

Revenue structure for the future and related issues

The revenue restructuring measures

Sir, we are no doubt seeing a trend of shifting from direct to indirect taxes but are we moving too quickly?

In the Budget, there were several measures announced which affect the revenue for the Government. These are the reduction of corporate tax to 18%; the increase of the Partial Tax Exemption from $100,000 to $300,000 for companies; amendment of the Constitution to allow capital gains to be used as part of the Net Investment Income; and also raising of GST to 7% with effect from 1st July.

Sir, the first two measures are geared towards improving Singapore's attractiveness as a corporate destination and the industry feedback is that these measures should stimulate growth in the economy. It should also provide the SMEs with a shot in the arm. This should also help keep our corporate tax structure abreast or ahead of leading competing economies,

such as Hong Kong and some strong challenges from Eastern Europe.

Sir, the Government expects a hole in revenue of about $1 billion, I calculated, from the cut of all the taxes announced. To plug this hole, the Government plans to raise income or revenue by two measures - first, by increasing the GST, and, second, by expanding the definition of Net Investment Income (NII) to allow the inclusion of capital gains.

Role of GST as the other source of revenue

Sir, indirect taxation, such as the GST, will go, in part at least, towards helping the Government to pay for its investments in the economy and the workforce. Huge infrastructure investments are planned to help accommodate the 6.5 million population that we plan to have here in Singapore in the near term. While we understand that GST increases will help fund such expenditures, should we just depend on GST to fund these? If so, I can see the GST going up to 15% in the next 10 years and this will render Singapore uncompetitive. Equally important, is it fair then to shift, and to continue to shift, the burden of paying for these investments onto the man-in-the-street who pays GST? Is that too much of a burden to put on the ordinary Singaporean? Should not the revenue equation be rebalanced to depend more on our reserves than taxing Singaporeans?

Sir, utilising more of the reserves for funding growth is not a wrong thing to do. After all, such spending is not money spent for yesterday or today, it is for the future. And I still remember very clearly the scolding Dr Wang Kai Yuen got in this House from Minister Mentor when he suggested a few years ago that we dug into the reserves to help the plight of senior citizens as a result of the recession

that Singapore faced. In his speech in this House, he said that the "reserves are not for yesterday, they are also not for today, but they are for the future". With the redefinition of the Net Investment Income (NII), to include capital gains, we have now recognised that the reserves play and indeed must play a key part in facilitating investments made now into the economy to safeguard its future. Expanding this definition is a positive move as it will allow the allocation of more resources from our reserves to make strategic injections into the economy.

We have already modified the amount that the current Government can use from the income from our reserves two times. This means that we have been too conservative on allowing spending of our reserves up to now.

I am waiting to hear what the new definition of NII is, but what I think we really need is a formula which gives certainty to the Government as to how much it can spend each year. One suggestion I have is how the USA university endowment funds utilise their reserves. Many USA universities have spending rules which peg the spending to a certain percentage of the current value of their endowment fund. In other words, spending is not limited only to the returns made but also to the total value of the fund. It is quite typical for them to spend between 4% and 6% of their fund value. Whether or not the actual income from their funds for the year is lower or higher, the spending is not affected. I hope that the Government will consider this approach and not just depend on returns for the year, which we now practise. This way, the Government will have better visibility and will be able to forecast what is available to spend each year. This will also give a constant flow of income for the Government, thus not having to rely on significant GST increases in the future.

GST exemption for certain items

Next, on GST. Whenever GST increases, people will feel the impact by way of increased expenditure and therefore the increased financial burden on families. This is the reason why the Government has given out GST offset measures when introducing and then increasing GST. Offset measures, however, are ad hoc in nature and quite unsettling as everyone knows that there will come a day when the relief that they provide will come to an end. There is a need for something more permanent than offset measures. One possible solution is to zero-rate or GST-exempt certain basic products and services, such as food items like rice, flour, salt or sugar; education expenses at all levels; healthcare and medical treatment, and perhaps even HDB purchases and rentals.

The Government may say that exemptions are difficult to administer. But the Government is already introducing $4 billion worth of offset measures with a very complex set of implementation measures that will cost the Government significant money to administer anyway - considering the variety of reliefs that are being provided, ranging from things like U-Save, SC&C rebates, CPF top ups, to cash payments. If despite this, there is still a difference in views about whether we have found the right balance of who gets what and whether we have distributed enough to certain categories of Singaporeans, then I suggest implementing a zero-rated GST system or GST exemption system for certain categories of products and services, which I have mentioned, without the complexity of administering that comes with it.

Considering that GST exemption is already practised for certain types of businesses and that this year, in fact, the Minister further allowed zero rating for the

service, purchase and leasing of containers, the argument on difficulty of administration is therefore not tenable.

Another argument may be that the higher income will benefit more. To this, I say, "So what?" We know that the higher-income spending public spends more and therefore will benefit more from the GST exemption. But my question is, "So what if they do benefit?" Along with them, the low-income spending public would also benefit significantly too. So why not such an exemption for basic items?

I think it is worth considering such a GST exemption system to give comfort that the long-term impact of any GST increases will be manageable and will not depend on how generous the Government is with offset measures or when the offset measures expire. This will eliminate the need for ad-hoc subsidies and rebates from the Government each time GST increases are implemented. The net effect will be peace of mind and a feeling of assurance that future GST increases will not price essentials out of reach.

Moving away from a crutch mentality

Frankly, by giving out offset measures in the form of subsidies and rebates almost continually since we first implemented GST in 1994, we have developed in Singaporeans an entitlement or subsidy mentality. I do not think that this is a healthy situation for the country in the long term. I would rather have a system where Singaporeans do their own calculation of what the impact of GST will be for them and they manage their spending. Knowing that certain important items are GST-exempt will give them the comfort that they will be able to manage comfortably as long as they do not overspend on non-essentials. I am sure that the income loss from the GST exemption system will be much less than the $4 billion or other such sum of offset

measures that we give out each time the GST goes up.

Middle income insecurity

Sir, another issue to consider is that the offset measures were targeted mainly at the lower-income. The middle-income group received little attention in this present Budget. This is the sandwich group of Singaporeans. We have been struggling to find a way to equitably offset the impact of GST for this group and have not been successful so far. By zero-rating certain items, this group of Singaporeans will have the comfort that they will also be able to manage at least some of the impact of the GST increase. I think that if we zero-rate some items from GST, the middle-income or the sandwich group will come out better overall in terms of deflecting the full impact of the GST increase. This will also address some of the insecurity that they typically feel whenever things like GST increases happen.

Budget for SMEs and businesses

Sir, let me now shift to the impact of the Budget on the SMEs and businesses. The financial services sector has welcomed the removal of the 80:20 rule which was restrictive for non-resident funds. This will no doubt make Singapore a much more attractive place for such funds. As has been the case for the past years, the financial services sector again received many enhancements for incentives which will go a long way to entrench Singapore as the main financial hub of this region.

Without doubt, this Budget is one of the best for small and medium enterprises, with many measures to help SMEs become more competitive. We have the 18% corporate tax reduction, the partial tax exemption threshold rising from $100,000 to $300,000, rebates on CPF contributions for two years, and the

lowering of the foreign workers' levy by $30. Even the Workfare Income Supplement (WIS) scheme will help SMEs. They are, therefore, all pleased that the Government is now paying special attention to them.

Now that we have come up with some good fiscal measures, we need to therefore shift the focus on the need to restructure the way the Government supports SMEs, and many Members of this House have spoken about the one-stop local enterprise champion agency that will be able to better support companies, and I will elaborate more on this during the Committee of Supply on the Ministry of Trade and Industry.

But, Sir, today, companies start to globalise the day that they are started up and they need a more wholesome support from one agency instead of having to go to three different agencies, eg, EDB, SPRING and IE Singapore, which may not necessarily be the right approach for them.

Issue of cost-competitiveness

Sir, while the Budget measures announced this year are far-sighted, there are, however, issues on cost-competitiveness that the measures do not address. I will consider these here. As in the past, when the economy was booming, we inevitably allowed cost to increase on a broad base, sometimes making Singapore relatively uncompetitive for certain businesses. This has happened to us before. In fact, it happened to us twice in the 1990s and, when that happened, the Government had to form the Cost Review Committee in 1993, followed by a Cost Competitiveness Committee in 1997, and this was to address the cost increases over the years when the economy's performance was good. Then again, in 2001, we had the Economic Review Committee to evaluate our competitiveness and cost was also one of the major issues at that point of

time. We therefore cannot allow cost increases to again derail our economic growth.

We are, in fact, already seeing what I call a triple whammy for cost increases for businesses. First, rentals have gone up and continue to rise. Second, wages have gone up, plus the additional one-and-a-half percent increase will also impact the cost of labour for companies here. Third, input costs will also go up as a result of the GST increases, and this is more significant for smaller companies that are not GST-registered. Over the past year, we have also seen cost going up in the areas of utilities, transport, stamp duty and many others. We need to slow down this trend of cost increases. Let us look at two areas in particular.

Higher rentals

First of all, high rentals. One of the issues that came up strongly during the discussions with the industry groups we had was the inflated rental market that is hurting businesses and individuals. In fact, the lack of space is an issue for them too and, therefore, cost is going up. There is also a worrying trend for SMEs of JTC looking like it will exit the business of being an industrial landlord. JTC has fulfilled a key role in providing leases of industrial land at rentals that are comparable to industrial space costs in competing economies. The divesting of assets by JTC to commercial entities, eg, to REITS, would generally mean higher rentals in the future. If we leave it to market forces, inevitably, because of land scarcity, industrial land will get outpriced. Certain activities might still be viable here, if not for the price of rentals and land. I suggest that the Government re-look at JTC's plans.

Labour cost

Sir, labour cost remains a key concern

for businesses. In addition to the increase in CPF, tightness of the labour market has also resulted in increasing wages. The sectors badly affected are the construction, food and beverage as well as the hospitality industries.

A big factor behind the labour shortage are the regulations in place determining the proportion of foreign workers to local workers, as well as the source or country of origin of the workers. I suggest, therefore, that the labour rules need to be changed to give greater flexibility to companies in selecting their sources of labour, instead of depending on the Government to dictate which source is traditional and which is not. I understand the need to balance this liberalisation to keep wages at acceptable levels for Singaporeans too, but we need to keep in mind the larger picture of keeping industries here in the first place.

Introduction of Workfare

Sir, this is definitely a positive move, and my comments are as follows.

First of all, we have seen from the results of the data published by the Department of Statistics that wage levels of Singaporeans rose marginally in 2006 and, this, after two years of good economic growth. However, wages are almost stagnant, and that too, when Singapore is experiencing good growth and a tight labour market. It is therefore clear that there are many Singaporeans who need their wages to be supplemented to achieve or maintain an acceptable standard of living and lifestyle, especially as costs continue to rise.

We have finally come to the point where we recognise the need for some subsidy for lower-income workers to keep their wages at an acceptable level. This is good. But it is also a sign of the times to come. We may need to expand Workfare, especially when it comes to

delaying the departure of important industries and keeping these sources of employment here in Singapore. Sir, globalisation has levelled up the labour marketplace. If we price our labour too high, companies can easily relocate elsewhere in the region. So, wage levels are very much not in the Government's control. We have little choice but to put in place a wage or income supplement measure. Under these, we will allow companies to pay what they are willing to pay for a certain category of job, with the Government coming in to supplement the wages to allow Singaporeans to support a certain lifestyle and to cope with the cost of living. That the Government has done so is recognition that it is able and willing to re-examine even sacred cows when the need arises. This, I think, is good news for us. It is a fundamental shift in the Government's thinking on welfare.

Sir, now I move on to discuss the issues that were left out of the Budget.

First, as expected, some of the participants during our feedback session expressed disappointment that the Government failed to address two areas which, if addressed, could have made the Budget cover all bases.

No cut in individual income tax

First, is the cut in personal income tax. This was one of the most anticipated changes for individuals which did not materialise this year. I can understand the Government did not see a need to do so, especially in a good economy. I thought that it would have been something that we could have done not just for Singaporeans but also to attract more high-income earning foreigners to take up residence here.

We all know that there is a global competition for professional talent and it is heating up, and it is a race by many countries to attract the best to their

shores. The reduction of the personal income tax to 18% would have been very useful in our quest to attract talent. We may have lost the opportunity to attract some of these professionals who may now choose to locate themselves in Hong Kong.

The second issue created by this differential tax rate between the corporate tax and the individual income tax is this, ie, individuals at the 20% top bracket will now have to pay an additional 2% tax on the franked dividends received in 2007 and beyond, if the tax changes do not happen. So, the net effect for the higher-income earners in Singapore is that they will end up paying higher income tax, higher than the 20% level that they had paid in the past.

Estate duty

Sir, the second disappointment was the estate duty. The Government has been considering this for some time, but has again decided not to decide. This surprised and disappointed some among the high net worth Singaporeans as well as foreigners resident here, because, last year, when the Prime Minister delivered the Budget speech, he indicated that, after two years of deliberation, he will make some changes to the estate duty this year. At least, this is the impression that all of us have.

Sir, many countries have already abolished estate duty. Aside from Canada, India, Australia, New Zealand, Italy and Sweden, among others, our nearest competitors, such as Hong Kong and Malaysia as well as Macau, have done away with it. Many arguments have been made in favour of abolishment of estate duty and I will not repeat them here.

I feel that we have a case to abolish estate duty again, not just for

Singaporeans in Singapore but also as we try to attract many more high net worth individuals to form the 6.5 million population that we are targeting. These high net worth individuals will be paying higher taxes and will spend here and therefore contribute towards higher GST collections by the Government and, if we add all these together, they may just outweigh the loss in estate duty tax collections.

Sir, in conclusion, the Budget this year is a significant milestone for Singapore, one of the boldest in a long time. This Budget will be remembered for two significant changes in the Government's mindset. First and foremost is the introduction of social safety nets for lower-income Singaporeans. Social safety nets were almost a taboo in Singapore, but now we have the WIS. The second reason why this Budget will be remembered for a long time is because of its particular focus for businesses, especially for SMEs. SMEs many a times felt left out in past Budgets. The Budget this year will go a long way in making Singapore a competitive economy and an inclusive society. I am sure every Member of this House will wholeheartedly support this Budget. So far, we have not heard any complaints actually about the overall Budget that has been announced for all Singaporeans and for all quarters of society.

Sir, I therefore support this wonderful Budget that the Minister delivered.

12.58 pm

Mr Speaker, Sir, I rise in support of the Budget Statement for financial year 2007/2008 presented by the Second Minister for Finance, Mr Tharman Shanmugaratnam.

I believe that many will agree with me, as well as from the feedback received, that this Budget Statement for financial year 2007/2008 is a focused one that is targeted at ensuring that Singapore is investing and positioned for growth. It is also trying to provide for all segments, as our colleague, Mr Inderjit Singh, had alluded to earlier, while benefiting the lower-income earners to address the widening income distribution gap.

I must congratulate the Second Minister for Finance for a Budget that while introducing tax changes to drive growth and operating revenues, it is one that gives equal attention to addressing the impact of these changes for both individuals and businesses. For example, the impact of the 2% GST increase is cushioned with the GST offset package comprising various credits and rebates. What is significant is a fundamental change in the Government's policy on addressing the widening income distribution gap through Workfare Income Supplement (WIS) scheme. This is not a one-off scheme to support lower-income workers but one where, on a continuing basis, assistance is provided for those with income below $1,500. I do hope that this however is not viewed as an end in itself, as it is really meant to be complemented with growth. Workfare, while providing support for the low-wage earners, will enable them, where possible, and must enable them where possible, to participate in the areas of economic growth, thus enabling them in the longer term to earn higher wages.

The Budget is also one that promotes building capabilities for Singapore's future. Through additional investments in R&D, promoting new sectors of economic activity, enhancing the economic infrastructure, eg, connectivity,

building Singapore as a global hub, education for both the young and continual learning.

One area, however, that I feel will continue to need attention as we drive for

growth is that of people. To have sustained and quality growth for Singapore, people and talent are key. Globalisation presents opportunities and challenges for Singapore. Technology advancement enables new business models and shifts our behaviour. Unconstrained by size or geography, people now interact across geographical boundaries, new connections, relationships, and business models are evolving. This is changing the landscape and competition for talent. Today, the industry and the labour market are already experiencing the impact of foreign talent and competition from low-cost markets. Increasingly, we are now seeing a shift and strain on the knowledge worker. As much as this will hold greater opportunity for our highly skilled and educated workforce, it will, if we are not careful, lead to a drain on our own talent beds.

The Singapore brand, as many of us know, is both an opportunity and a challenge as a Singapore talent is valued. But this very fact, in itself, is also increasing competition for limited labour and talent. With our high employment situation, where employment for resident population was at 3.6% last year, higher-value added jobs taken up by PMETs forming about 47% of resident workforce and an ageing population of 52% of resident workforce aged 40 and above, we will need to continue to ensure that we are able, as a country, to attract, develop and retain talent.

This will also call for more effective and creative Government policies and services to provide the structure and support for growth and talent. Singapore must continue to be an open and globalised economy to make it attractive for investment and talent to make Singapore a base for business and growth. With the positive economic outlook and the Integrated Resort, there is increasing concern, especially in the service sectors and expressed in the many

dialogues that we have had on the constrained labour situation here.

To share my own personal experience, in my commercial work, I face the on-going challenge of finding the right talent to fill key positions to support our business growth, both in Singapore and for the region where we have operations. So even taking day-to-day examples, I recently spoke to a friend who shared with me that her sister-in-law was asking her son to brush up on his Mandarin so that he could look at prospects of working in China. It is good that local talents are able to leverage and compete in the global markets.

It is, however, worrying if there is a net outflow of talent. The Budget does clearly encourage workforce participation. However, more can be done to develop and retain talent for Singapore. These could range from the personal income tax to quality of life programmes and more conducive work arrangements that will allow for greater participation in the workforce.

In 2006, there were one million economically inactive residents. 38% cited family responsibilities as the main reason for not seeking work. 24.5% of economically inactive residents have attained polytechnic diplomas or degrees. Having employment policies and programmes promoting flexible work arrangements will definitely help in encouraging greater workforce participation of this segment.

So we must also not forget another important segment that needs talent. The retention of talent in our public sector will also be crucial for the on-going development of key policies that help Singapore stay competitive and forward looking. With an aggressive growth agenda, we will need the right talents to set the right policies, to create and

sustain an environment that companies and individuals will want to leverage on as a base for their growth. This retention will be made all the more difficult as the competition for talent heightens in a global labour market.

The Budget measures taken to reduce costs for businesses operating in Singapore and for SMEs are viewed positively and from the many feedback which we have received, this clearly has been welcomed. But as the GST increases, with the effective date of 1st July 2007, this will mean that businesses only have a few months and will have to gear up quickly to prepare for the change and to understand the impact of the changes to their businesses, especially for the smaller companies. In our pursuit, to quote Mr Tharman Shanmugaratnam, "in making Singapore the best place to start, grow and globalise businesses, more can be done to create supportive environments to support SMEs".

A small example is the current GST filing and payment schedules for SMEs. The current filing requirements and payment terms are not really in sync with the operations of most SMEs, as most operate under 90 days to six months' payment terms with their clients. Hence, refinement to the filing and payment schedules for GST can help minimise cashflow impact for SMEs and this could prove a good win-win situation.

Although the Budget Statement does include expenditures to enhance the quality of life in Singapore with quality infrastructure, for example, the Active, Beautiful, Clean (ABC) Water Programme, the park connectors network, the upgrading programmes, etc, I must say that I was surprised by the lack of any attention on the energy consumption trends and initiatives to address the growing concerns on the impact of global

warming. I will be the first to admit that I am no expert in this area nor an active advocate. However, as a country, dependent on the global market for growth of our economy, we cannot ignore the need for more responsible energy consumption. Some may argue that Singapore is small and, hence, does not contribute much to global warming pollution and greenhouse emissions. It is precisely that Singapore is small that we need to pay attention as it will impact our living conditions with our high and growing population density. And even if we take a purely economic view on this, there is a business case as there are implications for both companies and industries with potential regulatory actions from countries and companies that we do business with internationally.

Aptly, as the theme for the Budget Statement for 2007 is, "Ready for the future and ready for the world", we must continue to be bold and compete in an increasingly global economy. We must never forget that success is dependent on people and, therefore, our focus should be on developing and retaining the people that choose to make Singapore the base for their success as well as the quality of living conditions that make us proud to call Singapore home.

With that, Mr Speaker, Sir, I support the Budget.

1.04 pm

Mr Speaker, Sir, I rise to add my voice to the chorus of support for the motion.

This festive season, there are many reasons for Singaporeans to smile. Our economy has been upbeat and this year's Budget adds to this confidence and boosts these positive sentiments further.

Budget 2007 has been generous, yet balanced in helping the lower-income

group and the elderly - as well as recognise their contributions of the higher-income earners. More importantly, I am glad to see this Budget investing heavily in growth - infrastructure, industries and people - to open up opportunities for Singaporeans to take this country, their families and themselves to the next level of development.

Mr Speaker, Sir, allow me to begin the first half of my speech in Malay.

(In Malay): [For vernacular speech, please refer to Appendix A *.] The message in the Budget this time is very clear. It is a Budget package which is far-sighted and prepares Singapore in facing the future and seizing the available opportunities in this globalisation era.

Therefore, I believe that Singaporeans will have to make full use of these open opportunities and, at the same time, put in more effort to develop our field of professionals, managers, entrepreneurs and workers who are capable and are of resolute spirit.

This Budget shows Singapore's long-term struggle for survival in a globalised economy. It affects each and every one of us - students, workers and also housewives.

For the lower income earners, it cannot be denied that Government is always concerned about them. This is clearly shown in this Budget where Government will increase the investment in training and retraining. For the needy ones, the Budget this time provides various assistance and programmes but this should not be considered as a free gift. We have to see the Budget this time as something that motivates us to up our effort and enhance our employability, to enhance our lives and family. To seize various opportunities, our workers have to develop their capabilities so that they will

be able to perform value-added jobs and participate in new industries.

I hope young Singaporeans will also take advantage of the opportunities as this Budget has placed emphasis on education. They will have more opportunities in education which is an important investment for the future.

Through this Budget, the Government will intensify efforts to attract more investment and create more jobs for Singaporeans. Therefore, we have to develop ourselves so that we will be more competitive and think globally.

For the Malay/Muslim community, we have to move out of the comfort zone. We should not be afraid to face stiff competition. In fact, we have to be prepared to face it. I believe the Malay/Muslim community can do it. This is because, among the community, there are those who have succeeded. Professionals, entrepreneurs and military officers have emerged as the best in the international arena. They have flown our national flag and made us proud. I believe many more will succeed.

At the same time, for those who have succeeded, we hope that they will contribute back to the community. We cannot allow differences in the community. If there are differences, each group will develop at their own pace. Let us be one class, first class citizens in a first-world country.

I would like to end my speech by reciting a quatrain which says that we should not wait or delay. Instead, we should reap the benefits of the opportunities so that we can progress together.

(In English ): Mr Speaker, Sir, allow me to proceed with the rest of my speech in English.

Resilient workfare, relevant to global demands

Sir, I appreciate the Budget's investment in our people, particularly in education and skill development. However, I believe that we can do more to provide for the middle layer of our workforce - the professionals, managers, executives and technicians (PMETs).

I believe that more can be done to develop the potential of this segment to take Singapore to the next lap. The PMET segment is key to the growth and success in each of the business industries that they come from, yet this same group was also one of the hardest hit during the recent downturns.

We have upped our efforts to re-skill our blue-collared workers, and the industries, no doubt, today, already recognise the value of talented senior managers whom they court and talent spot locally and globally.

Sir, today, many mid-managers and skilled specialists in their 40s and 50s are still having difficulty finding employment. Many were told that they were over-qualified for jobs. Many others have found it difficult to swallow, having to take severe paycuts when they change their line of work. So is this the way forward for PMETs in the future?

Today, many employers I have spoken to still feel that Singapore does not have enough local PMETs with skills that are relevant to the industries of the day. But, however, on the overall, PMETs, they say, are still in demand to run their sales and operations here. The availability of mid-segment talents is often a deciding factor if they should expand their bases here or they need to relocate because of better business environments elsewhere.

Therefore, many employ foreign talent to fulfil their middle-segment workforce requirements, requirements that drive business and growth and these include mid-management talents in sectors such as trading houses, info-communications, hospitality and the retail sectors. And many such foreign talents here are attracted by the relatively good pay packages in order to attract them to Singapore.

So the question I have is: why are we not putting in as much effort to develop our PMETs to take on these high-value skills and responsibilities? We have done a lot to ensure the relevance of our blue-collared workforce, emphasised more on training and subsidised employers for workforce development. Can we do as much and give as much emphasis to the PMET segment?

I believe that agencies involved in the workforce development need to do more than certification of technical and professional skills. To ensure that they remain relevant and value-add to the economy, we need to equip them with high value skills such as management in a cross-cultural, multi-national setting, brand development, an international outlook on problem-solving and sales and customer-facing skills.

For employers, the Government needs to do more to promote talent development and especially for PMETs. I believe that this component is often missing, particularly in the SME segment which employs almost 50% of our workforce. Many do not have the luxury of time or money to invest in high-value training. I will cover more on this topic in my COS cuts.

In the long term, I believe that this investment in high value-add training and talent development for the PMET segment will bring about greater industry growth, make Singapore more attractive to foreign

investments - be it corporates or global SMEs. In turn, we may have a viable long-term solution to develop a middle-income segment that will be more resilient, more capable and more relevant to the global economy so that they and their families will enjoy better salaries and better quality of living.

*Cols. 1747-1750.

Investing in our future, investing in our social fabric

As a young Singaporean, the Budget makes me feel confident about our economy and I applaud the Government's efforts to invest heavily in our future. While we invest in our industries, infrastructure and human resources, we should invest just as much in strengthening our social fabric, especially as we embrace globalisation, the influx of foreign talent and the free flow of information through the new media.

We must continue to strengthen our social cohesion because religious and racial conflict can and will destabilise the foundations that this Budget is trying to build for our future.

Today, besides being a trade hub, Singapore is also a hub for information and, today, with the Internet, we get as much information as misinformation. I do not know about my colleagues, but I have seen a lot of cartoons right after the GST announcement. We have elite cartoons and the works. I can tell Members that the Malay community has not been spared either. Among the Malay media, this is my recent favourite. I think some Members may have seen it - the Malay Master Plan. Some conspiracy theory says that the guy with the guitar in this cartoon is a left handed guitarist - and we all know that the Minister in charge of Muslim Affairs is left handed!

Back to a more serious topic, racially insensitive productions are readily available on the Internet today, such as

the "RK Prata" podcast on YouTube recently. The clip recorded a conversation between two apparently Chinese customers asking for pork dishes at a supposedly Indian-Muslim restaurant, with the Chinese customers mocking the Indian-Muslim server's reactions to their requests.

Many post-65ers, like myself, may not have experienced the racial riots of the 1960s. But we can surely learn from history, such as the Maria Hertogh riots in the 1960s which were started by a single picture published in a newspaper. Today, modern communication technologies have greater potential to create such tension with swift and dramatic effect, with technologies such as video MMS. For those Members who are not familiar - remember how Tammy the polytechnic student became infamous - clips that can easily incite racial conflict can be circulated pretty quickly, and we are not even sure if the incident was staged like the "RK Prata House" podcast.

Therefore, as our young become more globalised, we need to pay serious attention to issues that can divide us, and divide the country. Moving forward, with inflows and outflows of talent, radical ideologies, tensions within religions, such as between the Shi'ite and Sunni Muslims in the Middle-East, and even influences from the caste system practised by foreign ethnic groups may find its way into our social fabric.

So, let us not take our harmonious social fabric for granted because the alternative may be too painful to endure. This is one pillar of success that we must continue to invest in, especially as we embark on our next lap of development.

Closing questions

Mr Speaker, Sir, I support the Government for taking the bold move of presenting a holistic Budget – one that

invests in its people, their talents, its infrastructure and technology – that is focused on our continued competitiveness and survival as an economy.

Before I end my speech, I would like to leave two concerns with respect to the Budget for the Second Minister for Finance.

What measures does the Ministry of Finance have in place to ensure that market forces will not counter the intended objectives of the Budget? For example, as raised by Mr Inderjit Singh earlier, (a) the impact of steep rises in rental rates on business costs, despite corporate tax cuts and incentives; and (b) stagnation or reduction of gross salaries of low-wage workers, given the Government's implementation of the Workfare Income Supplement scheme.

What measures does the Ministry of Finance have in place to ensure that the increased Government revenues through the GST and NII will not result in increase in upscale infrastructure or projects - I think, years ago, we remember the seven great wonders - that will diminish the Government's efforts in the past few years to improve cost-efficiency in the Civil Service?

Mr Speaker, Sir, with this, I support the motion.

1.20 pm

Mr Speaker, Sir, following the Budget Statement on 15th February 2007, I asked fellow union leaders for their feedback. This year's Budget has been dubbed a "3G+3C" Budget. The 3Gs refer to the Budget being "great, generous and gracious". Indeed, from a worker's perspective, there is very much to cheer about.

First, our low-wage workers will be given a leg-up through the Workfare Income Supplement Scheme. Union leaders were happy that Workfare would not only become a regular part of our social safety net, they were also happy that it would be extended to cover workers earning up to $1,500 as well as those between 35 and 40 years old. At the same time, informal workers have not been forgotten. They may not yet be contributing regularly to CPF, but by just contributing one-third of the Medisave portion, they could get two-thirds of the Workfare benefit.

The second thing to cheer about was the increase in employer's CPF contribution rate from 13% to 14.5%. The third was the Senior Citizen's Bonus. The fourth pleasant piece of good news was the GST offset package, which many felt was quite generous.

But besides being a 3G Budget, it was also a 3C Budget. I think this is quite well known now. While union leaders appreciated that the Budget was "comprehensive" - the first C - they also gave the feedback that it was a bit "complicated" and somewhat "confusing". Their feelings are understandable, because even for MPs, it takes a while to figure out all the components of the Budget. So I would hope and I believe that one of the first priorities for all of us is to help the general public and all Singaporeans to understand how the various new schemes will help them. Therefore, I hope that the Government would work out a comprehensive communications plan so that the various initiatives are well understood.

Sir, speaking to union leaders and residents, I can see that some features of our Budget may take some time to understand. I would like to highlight just two of these.

The first is why most of the Workfare Income Supplement will be paid into CPF

accounts. The obvious question is that if the scheme is targeted at low-wage workers, does the Government not understand that for them "cash is king"? Is the Government being insincere about wanting to help? This is especially so for informal workers who are not yet contributing to CPF.

Sir, these questions are understandable. Let me share the examples of two families to illustrate why I support the use of Workfare to build up our CPF accounts. Both families live in Toa Payoh. To protect their identities, I will just refer to them as family A and family B.

When I visited family A some weeks ago, I met Mr A who is in his 40s and he had been ill for about a year. As he had been going in and out of hospital for treatment, he has stopped working. His wife can only work part time. She has to help him and they have two school-going children.

I asked how he was coping financially. He told me that though he had stopped working for some time, he still had enough money in his Ordinary Account, and he could continue to service his mortgage loan. He also has money in his Medisave to help pay for his medical treatment. His mother and his siblings visit him regularly and he is hopeful that he can get back to work in a few months. In the meantime, his wife supplements the family income.

Family A is not rich - in fact, they are quite typical - but neither do they have to worry about having a roof over their heads nor do they need to seek financial assistance from other family members, even in time of need like this. They certainly did not plan for Mr A to become ill. I think none of us plan to be ill. But the degree of financial independence provided through the CPF savings has helped to ensure that the family relations are not strained.

Incidentally, the following weekend, I met family B. Mr B is a filial son in his 50s. Besides looking after his retired father, he also looks after his bed-ridden mother. His mother is a stroke patient for more than 10 years.

Mr B's parents did not have formal education and neither were they employed formally. So they do not have CPF savings. The burden falls entirely on Mr B who unfortunately also does not have CPF savings. So here is a family basically out of the CPF net. Mr B has other siblings but they have families of their own and cannot help much. I gathered from Mr B's muted response that his siblings did not visit much, and he was left to care for his elderly parents on his own.

Sir, I am sure my fellow MPs have similar stories to tell. The two starkly different examples explain very clearly why, in the longer run, we must encourage all Singaporeans to be covered by the CPF. So, yes, even though informal workers will have to set aside some money from their salary to contribute to Medisave to enjoy Workfare, it will help them to be better prepared for unforeseen circumstances in the future.

Having said that, Mr Speaker, Sir, I do think it is necessary for us to also take concrete action to help Singaporeans who are not yet covered under CPF to make a modest start, perhaps through Medisave and eventually full CPF coverage.

The NTUC has already started to do so, working with unionised companies to help create better awareness of the issue. Through the Unit for Contract Workers, which is headed by my colleague, NMP Ms Cham Hui Fong, workers who used to be employed informally through third party labour suppliers are being "converted" into direct employees with full CPF benefits. It is not an easy journey

and we have to work very closely with companies, but slowly and surely we are persuading them and converting more. Some of these workers were featured recently in a Lianhe Zaobao article, and we hope that more will come forward and benefit from such schemes. As the estimated number of informal workers exceed 100,000, much more work needs to be done. So this is something we have to work on.

Mr Speaker, Sir, while welcoming the measures to help low-wage workers, some Singaporeans also felt that besides increasing the CPF rate of contribution, the Budget did not provide any obvious benefits to the middle income. So how then will the middle-income earners gain from this Budget? One, I believe, is the 2% cut in corporate income tax. Workers do not benefit directly from this, but the companies that employ them do. A reduced corporate tax rate makes Singapore an even more attractive investment location. It provides the impetus for more companies to relocate to Singapore, and for those already here, to increase their investments. This, in turn, creates new jobs and better pay for Singaporeans.

As a real-life example, a union leader told me that in the aviation industry, skilled workers are being offered salary increases of nearly 30% to move to new companies that have been set up. I think this is something that is positive, something that encourages all of us to have something to look forward to in the future.

Therefore, while the corporate income tax cut does not go directly into the pockets of workers, many of them will benefit from the increased profitability of their companies, as it leads to higher investments and job creation. In this way, the Budget provides real tangible benefits to middle-income earners.

There are other ways that upper middle income earners are benefiting. Over the Lunar New Year, I met an old friend. His name is Ching Meng Chew, and he has worked for over 10 years in China, and he provides a very good example. Soon after Meng Chew graduated from the Building and Estate Management programme in NUS - in fact, he told me that Dr Amy Khor was his lecturer - he decided to take the plunge to join a multi-national, basing himself, firstly, in Shanghai and then in Beijing. He was able to operate effectively in China and act as a useful interface with his non-Chinese colleagues.

Meng Chew is planning to relocate back to Singapore. The key reason is that his son is now seven years old. Meng Chew felt strongly that in the same way that he has benefited from Singapore's education system, so too should his son. So, with the help of his family who are still living in Toa Payoh East, his son has already started Primary 1 classes at First Toa Payoh Primary School, and is now the class monitor. Indeed, his son will be one of the first beneficiaries of the Post-Secondary Education Account (PSEA). I tested Meng Chew. I asked him, "Although you are living overseas, do you know about the PSEA? He said, "Yes, I am fully aware of it." So, that is good.

Meng Chew tells me that while his son was very comfortable speaking Mandarin, he is now equally comfortable speaking English. It took him just two months of being in the Singapore school system to be very comfortable with the language. This is exactly what Meng Chew had hoped to see - his son becoming bilingual like he is

and having the opportunities that he has today.

So while Meng Chew would like to relocate back to Singapore as soon as possible to join his son, much of it also depended on the availability of good jobs

in Singapore. And because many companies based here serve as regional headquarters, Singaporean executives like Meng Chew who have work experience in regional countries are highly valued. Singapore's connectivity with the rest of the world helps to anchor economic activities and jobs here. So even though the markets are elsewhere in the region, the work can be found here.

For Meng Chew, there is another benefit from the relocation back in Singapore. He tells me that, in China, he has to pay personal income tax of between 30% and 40%. He asked me not to reveal the exact percentage because that would reveal his own income as well. So I promised him, 30% to 40%.

Back in Singapore, he knows that even in the highest income bracket, he will pay no more than 20% of his income as tax. So though the Budget this year did not reduce personal income taxes, as many of us had hoped, the introduction of GST has broadened the tax base, and this has given the Government room to keep personal income taxes low. Competitive income tax rates, coupled with our efforts to transform our island landscape, will help Singapore to stay competitive in the global war for talent, as Mr Inderjit Singh has also mentioned.

More importantly, Meng Chew's example shows that many investments in our physical, economic and education infrastructure generate long-term benefits for Singaporeans, providing them with geographical mobility and enabling them to earn higher incomes.

Mr Speaker, Sir, I came to the conclusion that while the Budget does not specifically target middle-income groups, most of them will rise with the economic tide and have the opportunity to do better year after year. So the outlook for the next few years is a very bright one and

we have every reason to be confident. But like my colleague, the honourable Mr Zaqy Mohamad, has mentioned, one of our key challenges will be to help as many of our professionals, managers, executives and technicians (PMETs) ride the economic tide. And, indeed, we do need to recognise that many of our PMETs had been affected and continue to be affected by economic restructuring. Therefore, I hope to hear specific plans and efforts that we will put in place to help PMETs secure more of the new jobs created, whether they be in digital media or in hospitality industries.

Mr Speaker, Sir, please allow me now to speak in Mandarin.

(In Mandarin): [For vernacular speech, please refer to Appendix A *.] Mr Speaker, Sir, this year’s Budget has created the conditions for a brighter future for Singaporeans. In addition, the Government has also fulfilled its promise to help lower-income Singaporeans, by introducing the Workfare Income Supplement. As a representative of the labour movement, I would like to express workers' heartfelt thanks to the Government.

For middle-income earners, the most important thing is for their wages to rise steadily over time. The labour market does indeed show signs of rising wages. The economic upswing is welcome news. As the corporate tax has been reduced, there will be further stimulus to our economy. However, I believe it is also necessary for us to avoid overheating. Why do I say that?

Everybody is aware of the story: the goose and the golden eggs. In the story, the owner of the goose was impatient and killed the goose in the belief that he would get more golden eggs faster. Alas, he

was to be disappointed by the loss of both the goose and the hen. Our enterprises are like the goose, while the golden eggs are like rising salaries paid to workers. Enterprises that perform well are well-positioned to give their workers more "golden eggs". However, if we do not look after the health of the goose/geese, and are impatient for more golden eggs to be laid, we may inadvertently cause the goose/geese to fall sick, and workers are the ones who will suffer in the end.

The "geese" may look healthy now, but if wages rise faster than productivity, and operating expenses increase too quickly, companies’ profitability will be affected, and the workers' happiness (because of fast-rising wages) a short-lived one.

A better approach is to moderate wage increases, so that workers can enjoy more sustained and stable wage growth. In this regard, I hope that the Ministry of Trade and Industry and the Ministry of Manpower will coordinate closely to monitor the relevant indicators, and to take the necessary steps to avoid over-heating. This will allow workers to enjoy more steady wage increases in the next few years.

In addition, I hope that MOM and MTI will work closely together to help more Singaporeans to take up the new jobs created. As reported in the press, various industry sectors are employing more workers. Singaporeans are worried that they may not benefit from the new jobs created. To ensure that Singaporeans take up new job opportunities successfully, we must encourage employers to make longer-term plans to work with the

Government and the labour movement to invest in training and re-training. This will help more Singaporeans enter new growth sectors or to take up the challenges of new job assignments.

Through the tripartite cooperation, we will be able to help our workers to realise the benefits of the new job creation.

Lastly, I hope that our Government, in the first two years of implementing the Workfare Income Supplement, will adopt a more flexible approach and to give time to low income workers to adjust to getting coverage for themselves and their families under the CPF safety net.

Sir, I support this Budget.

*Cols. 1751-1752.

1.35 pm

Mr Speaker, Sir, I rise in support of the Budget Statement delivered by the Second Finance Minister.

I must congratulate the Second Finance Minister for a sound and balanced Budget Statement with adequate contributions from all the right anatomical parts - brain, heart and a little further down. I compliment the courage and candour of the Minister when he said that "in real terms, the lowest 20% of the households has seen their incomes per capita decline from year 2000 to 2005". Actually, a statement like this is definitely political cyanide elsewhere. But this sort of open approach to problem actually defines Singapore.

In true Singapore fashion, having diagnosed the problem and the danger of the bottom 20% being left out of our growth and prosperity, I am very confident that the various measures to be taken by the Government, eg, CPF restructuring and Workfare, will help us bridge the gap.

Last year, 173,300 new jobs were created and more than half of these jobs were taken up by the local workforce. Sir, there is still considerable concern about whether Singaporeans are getting these jobs. With a population of 72% Singaporeans, 10% permanent residents and 18% non-resident workers, it would be useful for the Minister to provide this House with a breakdown of beneficiaries of these new jobs. Hopefully, Singaporeans will be reassured that they are the main beneficiaries directly and indirectly of new job creation.

Sir, a larger question which we have to decide at some stage is really what is the optimum population Singapore should have. With technological advances, there is much less concern about adequacy of water resources and land for building flats and accommodation. However, with the total fertility rate of only 1.25%, and this rate does not seem to be improving despite all the baby bonus packages and the pro-family 5-day work week, I think we need to rely more on immigration to grow our population. And if we indeed want to grow over time to become a 6.5 million population, then I think we need to take all the steps to ensure proper integration of immigrants and minimise the attendant social costs and disruptions associated with a large immigrant population. I would certainly encourage the Government to conduct open discussions with stakeholder groups in Singapore towards determining this question. I would also point out that size matters, but not all the time, and there are successful economies in Scandinavia with population of somewhere between 5 and 8 million.

Sir, I congratulate the Government on implementing the Post-Secondary Education Account (PSEA). I see this as a small first step towards shifting our social support system from "supply side subsidy" to that of "demand side subsidy". I believe the Government should

progressively make greater use of market forces and the individual's freedom to choose, as eloquently argued by the late Nobel Laureate Milton Friedman. Perhaps, we may not have to go so far as to use the voucher system. Our account system probably works just as well. I believe that as we gradually move towards subsidising the person who needs a subsidy and less so subsidising the geographies and institutions, I think we will allow market forces to work better.

Government, as regulator and financier or co-financier of services, can ensure adequate competition as well as the availability and adequacy of information for the subsidised person to make informed choices.

Service providers will become more responsive to the needs of people they provide services to. The thousands of decisions, trade-offs, calculations and millions of transactions that take place daily will constantly adjust, review and refine the system. Surely, this would work better than relying on choices, preferences made by civil servants and Ministers notwithstanding their eminence and scholastic achievements. Besides, the Government should be better appreciated for making subsidies available to needy citizens rather than blamed for inadequately responsive social services. Even as I applaud this initiative, I would like the Government to consider extending the PSEA in future years in the following manner.

Annual top-up of PSEA

I would like to see an annual top-up of PSEA and more in time of budget surpluses. This would be a constant reminder to everyone that we, as a society, truly treasure our only resource - our people. In time, it is conceivable that the annual grants to our post-secondary institutions may be reduced as more money is put in the hands of

students and their parents. MOE's role will have to change progressively to that of regulator, financier, quality monitor and industry promoter.

Amount of top-up inversely related to family income

This will surely ensure that those with smaller family income, the poorer ones, will benefit more. And this is another way for students from poor families to have a chance to move ahead with the rest of Singapore.

Extend the scheme to cover children from birth

Yes, this will mean more money but the earlier coverage will mean that there will be more money in the pot when the child needs it.

Allow parents to make voluntary tax deductible deposits in their children's PSEA

This, together with extending coverage earlier, will encourage parents to save for their children's future education. And having saved some money for the children's future education, we hope they will be more serious about their children's education.

Allow PSEA to be used for all approved educational establishments, Government or private

Sir, I urge PSEA be allowed to be used for approved private educational establishments because this will allow more choices for Singaporeans and encourage more competition amongst educational institutions. The globalised world requires Singaporeans to quickly acquire new skills to seize the opportunities that abound. Our educational system should really be

extremely mobile and quick footed to respond to the needs of these people.

If PSEA is substantial over time, it will allow to be used for private institutions. I see more private local institutions being spawned and more foreign institutions setting up campuses in Singapore. Singapore's aspiration to become a "Global Schoolhouse" will then be realised.

I am however not supportive of allowing PSEA to be used for education outside Singapore. I believe the present scholarships, student loans and CPF withdrawal policy should suffice.

Transfer balance account to CPF Ordinary Account to be deferred to 40 years instead. With our goal of lifelong learning, extending PSEA to 40 years will enable people to take multiple courses as they reinvent themselves for the rest of their working lives.

Sir, I also like to applaud the Government's support for lifelong learning. This is a necessity for our economy to meet the challenges ahead. I also support greater promotion of this concept by employers, unions and the media for this is also one way to help our older workers adapt and upgrade themselves so that they will continue to be relevant to commerce and industry. People need to realise that, to be successful, they must be able to adapt to rapidly changing workplace, workforce, work nature and work system. We need to "reinvent" ourselves every few years. Otherwise, we will become irrelevant and extinct. The medical profession, as an example, spends the most years training and studying, compared to other professions. Yet, we realise the need to do continuing medical education if we want to keep abreast of changes and developments in our own respective fields. Some of you may not know doctors now need to be re-certified every

two years in order that they will be able to obtain their practising certificates. So as the Minister said, "We need to encourage every Singaporean to see that lifelong learning is a way of life."

Sir, another important concern I have is regarding our HDB property market. 85% of Singaporeans live in HDB flats and most of them own their flats. HDB housing is one of the cornerstones of our socio-economic success. I believe it is in our long-term interest to ensure that HDB housing serves the social needs of ensuring most Singaporeans can have an affordable roof over their heads, whilst also serving as a long-term investment for retirement. But HDB flats should never be allowed to become instruments for speculation. Those who want to speculate can take the chances with the private market.

But the private market has become more exuberant in recent times. I hope this exuberance is well founded and of the rationale kind. We have been reassured that there is no property bubble waiting to burst.

It is precisely because we are doing well that I would like the Government to re-examine the various CPF and HDB rules and ensure that we shield HDB sector from the forces of greed and speculation.

An examination of property indices showed that between 1st Quarter of 1990 and 4th Quarter of 1996, HDB resale price index rose 400%, which is an average of 57% per year! That kind of number is high by any standard. The corresponding rise in private property index was 300% over the same period, or 43% per annum. When prices of HDB flats grow too fast, owners are understandably happy as they feel richer. However, between 4th Quarter 1996 and 4th Quarter 2003, the HDB index fell 31%. Some HDB owners who bought their flats at the top of the market, or

near the top of the market, they are still in the negative equity territory. And I do not think it is a nice spot to be in.

I hope we will learn from the past experiences and put in place measures to prevent the HDB sector becoming a vehicle for speculation. Now that the economy is doing well and property and share prices are buoyant, we should have more room to move in this regard.

Finally, I also wish to support the Government's intention to grow Singapore into a philanthropy hub. I support the Minister's intention to do away with the 80:20 rule on spending and liberalising double tax deduction for donations.

The NKF saga shows up clearly the need for greater transparency and better governance for many charities. It is now more difficult to raise funds and to find volunteers to sit on boards of charitable organisations. Many well meaning and compassionate people want to help charitable causes, but they do not wish to be dragged into all kinds of investigations and become responsible for breaches by other less noble people.

Besides the creation of the office of the Commissioner for Charities and other related measures, I would recommend that our universities provide suitable courses for volunteers and directors of charities, VWOs and other non-profit organisations (NPOs).

I believe that, as our society matures, more people will be involved in this sector. I think it would be useful to have courses to train directors of charities, VWOs and NPOs on governance, procurement, fund raising and other best practices, just like the Singapore Institute of Directors holding courses for company directors so that they can do the job more effectively. Management staff of these organisations can undergo appropriate training so that they can manage charities

and non-profit organisations better. In time, there could even be degree and master programmes for these people. Others from the region can also avail themselves of the requisite training through these courses, not unlike the LKY School of Government helping to train administrators from the region.

Sir, I support the philosophy enunciated and the direction advocated by the Minister in his Budget Statement. I will continue to pay my taxes cheerfully.

1.52 pm

Mr Speaker, Sir, I rise to speak in support of the motion.

This is an excellent Budget. It is creative and it is innovative. It sets the vision of where we want to be and it outlines the means by which we are to get there. And what is most important about this Budget is that we are to get there together. The different segments of our society all reach a goal that is set out in the vision. And the idea behind this Budget is that no one should be left behind and that is particularly important when you consider the strains that are put on us with globalisation, the stretching out of incomes and the disparity between wages. That is why I am glad that much attention has been paid to levelling up for those who are less fortunate, including Workfare for low-wage workers. I applaud this initiative because it is important to encourage the spirit of self-reliance, independence and resilience of which I will say more later.

But on the issue of Workfare, this helps the older, full-time workers aged above 45 years who earn $1,000 or less as well as those above 35 years who earn $1,500 or less. One point I wanted to make on Workfare was in relation to

helping the informal workers. The Finance Minister had indicated that we want to encourage informal workers to join the CPF system and to benefit from the Workfare Income Supplement scheme, or WIS. This is a good initiative but there are practical problems in the implementation that will need to be addressed. Many of these are odd job labourers. They do not have formal employment contracts. Some of them do not even deal with the employers directly, especially in the construction industry. They tend to deal with the foreman or the supervisor. There is very little documentary record of their employment. This makes it difficult for them to prove that they are working in order to get any financial assistance that is linked to their efforts at getting work. So steps should be taken to address this so that such low-income workers will be able to benefit from schemes such as the WIS. And steps must also be taken to ensure that employers pay their CPF because, in many instances, such employers try to take advantage of low-income workers like that and not pay CPF.

One other aspect of the Budget which I wish to comment on is the creation of a living environment of the future. The Finance Minister has said that as a global city, we cannot just be an economic marketplace. We must have a living environment that is best in Asia. And with this in mind, we want to create a home where the family feels that they own not just their flat, but also our neighbourhood. So we want to transform our HDB heartlands. MND will undertake a systematic and total urban regeneration, and we will have a network of water bodies to enhance our living environment and bring waterfront living to HDB neighbourhoods. The idea is that we want a first-class residential environment. If we are going to have that, we also need to have first-class social habits which, at the moment, in some HDB estates, we do not have. When I do my walkabouts, one of the most common complaints that I

encounter is the problem of people urinating in the lifts. I know that we want a network of water bodies and to bring waterfront living to our neighbourhoods, but we do not need to have water works in the lifts as well. This adds to the cost of cleaning up. This adds to the burden of the town councils. It does not enhance our living environment. So if we want to have a really good first-class residential neighbourhood, we will have to develop good first-class social habits.

The second most common complaint that I have is littering from the upper floors. There appears to be very little consideration for those who live on the lower floors. Again, this is something that Singaporeans must understand if we want to have a good living environment. It begins with us. Government provides infrastructure, but each and every individual Singaporean living in the environment has a social responsibility to make the place environmentally clean and pleasant for others.

The other thing I noted about this part of the Budget on creating a good living environment was that there was a lot of focus on the HDB heartlands. I think that more can be done to have a comprehensive and proper programme for improvements for private estates. There seems to be an idea that the people in private estates can take care of themselves, there is less attention paid to the infrastructure for them. However, I think that it is important that those in private estates are not left out. There are things which they need, for example, linkways. They need covered pedestrian overhead bridges, they need various other forms of amenities and infrastructure which they do not have the ability to implement easily. For HDB estates, we have the town councils. The town council does this for the whole HDB estate. But there is no coordinating body for the private estates. And I hope that

this is something that the Government can look into. Because not everybody in the private estates necessarily drives a car. Many of them take buses; many of them also take the MRT. They too have amenities that they wish to have. So the Government should look into a more formal, structured way of bringing improvements to those who live in private estates. That would be very helpful.

I move now to the other aspect of the Budget Statement, which was building capabilities for the future and investing in our people. In this context, the Finance Minister mentioned the spirit of enterprise, resilience and self-reliance. Whilst this Budget addresses specific needs and specific objectives, such as GST offsets, Workfare, CPF and income tax, I think that one of the most notable things about this Budget is this underlying philosophy which is quintessentially Singaporean: i.e. enterprise, resilience and self-reliance. And the need for these qualities to ensure our progress and our future becomes clear in the light of the recent events which have taken place, for example, the sand ban. Recently, Indonesia banned the export of sand. While the ban applied across the board, Singapore is one of the countries most affected as we purchase large quantities of Indonesian sand for our construction industry. The reason first given by Indonesia for the ban was the general need to protect its environment and maritime borders. Shortly after that, however, the Head of the Indonesian Maritime Security Coordinating Board said that the sand ban was due to Singapore's alleged indecisiveness in resolving border and extradition issues, thereby linking it to the negotiations for the extradition treaty and the border talks between the two countries. This was then followed a short while later by comments from the top Indonesian Foreign Ministry official, the Ministry's Director General for Asia, who was reported in the Jakarta Post as saying that the ban was, and I quote:

"A key way of placing more pressure on Singapore

to move faster towards signing an extradition treaty and resolving the country's border spats. The ban also aims to push them [i.e., us] to resolve differences in extradition and some border negotiations."

In another report, which made the front page of the Jakarta Post, a member of their parliamentary committee on security and international affairs was reported as saying that the sand ban was not enough to push Singapore to quickly sign the extradition treaty. This was followed by a Straits Times report that reported that, in speaking to Antara News Agency, the Indonesian parliamentary Speaker had said that their government should send back our Ambassador as a sign of protest and that our land reclamation projects would affect Indonesia's maritime borders. So, two points.

As to his first point about sending back our Ambassador, it did occur to me that their government might not necessarily share their Speaker's view because, in the very same edition of the Straits Times on the very same day, there was a rather nice picture of our Ambassador to Indonesia handing over a big box of relief supplies to the Indonesian Minister of Health who received it with a very nice smile. The supplies given by our Ambassador that day were worth 200 million rupiahs. The aid was from the Singapore Embassy in Jakarta, the Singapore Association in Indonesia, and Singapore Telemedia. That picture appeared to be perfectly cordial and it did not seem to me, therefore, that their government had any issue with our Ambassador at all. Or perhaps their Speaker had not seen the photograph?

Their Speaker's next claim was that our reclamation projects could affect Indonesia's maritime borders. The answer to this has helpfully been provided by

Indonesia's own Foreign Minister. He had said that Singapore's land reclamation efforts would not affect the country's sea border. The Indonesian Foreign Minister was quoted by Reuters as saying that: "It is possible that they [i.e., Singapore] may increase their shore but that does not mean that they move the sea border, as since 1973 we have had an agreement." Basically, the issue is this: the Speaker's assumption is that the borders move when we reclaim land. But in this case, we have got a strict demarcation. So, even if the land is reclaimed, the borders do not move. His [the Foreign Minister's] reply, as I understand it, is also Singapore's position. So it is good to know that their Foreign Ministry and ours share the view that our land reclamation projects will not affect Indonesia's maritime borders. In the same report, their Foreign Minister reiterated that the sand export ban had been prompted by environmental concerns. So, it is now back to environmental reasons.

With all of these somewhat confusing signals, we are not really the wiser as to what the reason for the sand ban is, ie, whether it is for environmental reasons or to pressure us, or both. Hopefully, Indonesia will at some stage clarify which of these it is. It would be helpful for us, and I am sure it would be helpful for them too. In the meantime, though, let us take each reason in turn.

Environmental reasons. We recognise that Indonesia is a sovereign state and if it wishes to ban the export of sand for environmental reasons, then of course it is their prerogative to do so, and we will have to respect that decision. This means that, in the short term, we must look for alternative sources of sand. In the long term, we must find alternative methods of construction that would reduce our dependence on sand.

If the reason is environmental, however, then, on the bright side, it is

heartening to note Indonesia's concerns about the environment. With the environment being of such great concern, it is hoped that Indonesia will take equally firm and decisive steps to deal with the problem of the haze and the forest fires that cause such devastating deforestation, especially in the light of the anticipated El Nino effect this year. It is also hoped that the ban against forest fires will be enforced by the enforcement agencies with the same zeal and diligence as the sand ban is currently being enforced.

If the objective is pressure, then I venture to say that this is misconceived. We respect Indonesia as a sovereign state and value it as a neighbour. It should not be forgotten, however, that Singapore is a sovereign state too. Under international law, sovereign states have equal standing in their dealings with each other. There should be no place for pressure when sovereign states deal with each other, especially not between friendly neighbouring sovereign states. And if the reason is pressure, then clearly, we cannot accede. The Extradition Treaty negotiations are linked to the Defence Cooperation Treaty negotiations, and, when it comes to something as important as defence cooperation, it cannot be entered into upon anything less than equal standing between two countries, with mutual give and take.

If pressure is the reason, then we will also have to look for alternative sources of supply and alternative methods of construction. So, whichever way we look at it, whether the reason be environmental or pressure, we will still have to look for alternative sources of supply and alternative methods of construction. And that is where the underlying philosophy of this Budget comes in, because, in order to find a way around a problem, we need these qualities. We need the spirit of enterprise, resilience and self-reliance. There will be many times in the future when we will have to deal with the

vagaries of globalisation, competition, adverse economic conditions, foreign relations or other external factors that impact on us. Having few resources, we will have to be resourceful. Being small, we have to think big. We need all of those things and qualities which this Budget seeks to promote.

With that, Sir, I support the Motion.

2.06 pm

Mr Speaker, Sir, at a dialogue session with residents and grassroots leaders I conducted before the unveiling of the Budget, an elderly man stood up and said that he was worried with the rising cost of living after the Government's announcement on the impending GST hike. He was not convinced with the need for the 2% increase at all, especially that things are going well both in Singapore and in the world. I hope the explanation and offset measures in the Budget Statement have helped cast his worries aside, as they seek to help Singaporeans like him cope with the future challenges of globalisation.

Sir, Budget 2007 has been hailed for many reasons. It is a forward-looking Budget, as it seeks to prepare Singaporeans for the challenges of the future. It is inclusive in that there is something for everyone, yet it is focused, as it targets the lower-income sector and gives them the most help. This is a landmark Budget Statement, as it is the first time the Government is giving out permanent assistance to a section of Singaporeans, ie, the lower-income workers. The aim is to provide assistance while spurring them to keep on working and contributing to the economy. For these reasons and more, Sir, I would like to congratulate the Second Minister for Finance, Mr Tharman Shanmugaratnam, for presenting what a local newspaper has

simply but aptly called it a "Wow" Budget.

Mr Speaker, Sir, this Budget was presented in a year with a positive outlook, both locally and globally. Our economy has done well, and an unprecedented number of new jobs have been created, and the unemployment rate has gone down substantially. But while this is so, we cannot be lulled into a false sense of complacency and assume that the current situation will remain. Globalisation presents many challenges and, if we do not prepare our people, many of them will suffer in the future. In fact, it is precisely because we are enjoying good times now that we should start taking measures to mitigate the effects of future challenges and problems.

Sir, several Members who have spoken before me have already touched on the favourable impact this Budget has on corporate Singapore, and how the financial policies affect Singaporeans. There is, however, one area where this Budget is silent on, and this is on retirement funding.

Sir, this happens to be an area that I am particularly passionate about, considering the Government's position of steering clear of state welfare programmes for retirement. With our population ageing rapidly, we must explore various approaches to ensure that Singaporeans have sufficient funds to carry them through this uncharted phase of their lives. As I have said in my speech last year, the majority of Singaporeans have only their CPF to look up to for their retirement and for whatever little most of them might have when they reach that point in their lives. Even with the one-and-a-half percent restoration, much of it will go towards servicing housing loans. Nothing has been done to the Supplementary Retirement Scheme (SRS),

which is stifled by its own complex mechanisms and restrictions.

When this matter was raised last year by Miss Penny Low and myself, then-Second Minister for Finance, Mr Raymond Lim, indicated that it would be looked into. A year has since lapsed and we have not heard anything about it. There has been strong advocation to have existing legislation governing tax-approved schemes be widened and made more flexible so as to enhance the appeal to both employers and employees. I would like to reiterate my proposal of last year to have section 5 of the Income Tax Act be reviewed and amended so as to permit companies to establish retirement schemes that will allow employers and/or employees to contribute directly to a retirement savings plan. The US' section 401(K) scheme in the US is a time-tested and mature scheme and could be used as a basis or model for reference. Contributions to such a scheme, in addition to CPF, should be tax-exempt and that the accumulated benefits are portable. I will elaborate more on this during the Committee of Supply debate.

Let me now move on to the Workfare Income Supplement (WIS) scheme.

Sir, the Government is spot on in its approach in giving more help to lower-wage workers. The widening income gap is a global phenomenon, and Singapore is not spared from it too. While the lower-wage workers have benefited from Singapore's overall economic growth and measures have been taken to help them become more skilled, the gap continues to widen as the salary increases for the top-end workers are growing faster. With these challenges, it is unwise for the Government to let this section of the population to continue struggling, as they may get left further behind and an underclass society may develop. The Workfare Income Supplement scheme is an innovative way of helping these

workers, because it enables them to have a larger take-home pay, have more in their CPF accounts but yet remain employable, as their employers will contribute less to their CPF. But while we want to help these workers, it is essential that we do not blunt their desire to continue working. We must continue to preserve the basic principles of our social security system and encourage our people to become self-reliant.

However, Sir, there remains a concern that a crutch mentality can still develop even though WIS is not a welfare scheme. We must tell our workers that this scheme is to help them temporarily, and the ultimate objective is not just to give them handouts so they can remain in the under $1,500-a-month salary bracket but to assist them until they graduate from this scheme, earn a higher income and become more self-sufficient. This will, hopefully, give workers hope that their own situation will improve with time, effort and the initial boost from the Government.

It is imperative that we do not breed a mindset of dependence, as we do not know what the future holds for Singapore. I am worried that, should a national or global crisis occur, such as a flu pandemic, another SARS outbreak or a severe economic downturn, the proxy that is currently used for WIS may not work. In such an event, jobs may disappear rapidly, causing more Singaporeans to be out of work and in need of real help but yet are unable to qualify for WIS, as they will not be able to contribute to their CPF Medisave accounts.

Another scenario could be that, during a prolonged period of downturn, companies may take severe cost-cutting measures, causing salaries to decrease. This will result in a significant increase in the number of older workers in the salary range below $1,500. This will correspondingly increase the cost of

supporting WIS at a time when revenue collected from GST dips, as consumer confidence is affected. At a time like this, the Government will have to be more prudent with its reserves but at the same time it cannot abandon its people who may be in need of help more than ever before.

Sir, I would like to suggest that the Government adopt a more open-minded and flexible approach to the WIS scheme, as it may have to revise the salary bracket for people under WIS in the event of a prolonged downturn. The amount of assistance given may also need to be tweaked so that more people can be assisted when times are tough.

Sir, much has been said in the media before and after the Budget Statement about Professionals, Managers, Executives and Technicians (PMETs) who were affected in the last economic downturn. This Budget will give some relief towards this sandwich class through various incentives and offset measures, such as the reduction in road tax, maid levy, service and conservancy charges, as well as rebates in property tax. The GST credits will also help this group of people offset the increase, as many PMETs live in five-room or Executive flats. But many say that not enough is being done for the PMETs. Although the rate of structural unemployment among PMETs was almost halved from 1.3% in June 2004 to 0.7% in June 2006, some still continue to face challenges as they struggle to secure jobs that pay them enough. As a result, many cannot afford their HDB mortgages, as their flats were bought at a high price and can only be sold now by incurring huge losses. Consequently, many are faced with no choice

but to downgrade and they are faced with a dilemma as they are unable to secure bank loans due to payment defaults as well as their lower-income status. As many of those in a quandary are first-time flat buyers, I believe that the HDB should consider

removing the current policy requirement which states that a second HDB loan is only extendable if a resident upgrades to a bigger flat. HDB should be more nimble and have flexible policies which move with the times so that the people's needs are met.

Sir, the GST offset measures have been greeted positively by Singaporeans. There is something for everyone, and the offset packages will cover between 2 and 17 times the amount they would spend on the extra GST each year, with the lower-income and older citizens benefiting the most. While this is good news, I am concerned that the older, less-educated Singaporeans are confused with the entitlement, especially if this is considered in the context of putting it together with WIAS. It was also mentioned that Singaporeans will have to sign up once to qualify for the GST credits over four years. Sir, this will require an outreach and public education effort to make sure that no one misses out in the GST credits. I would like to urge grassroots and community organisations to be involved in this outreach effort, especially for the lower-income and elderly citizens.

In May 2005, it was reported that over 70,000 people had not indicated if they would like to qualify for CPF top-ups from the Government. These were the same people who did not qualify for the third lot of Economic Restructuring Shares (ERS) given out that year despite efforts by grassroots leaders to visit the homes of those who did not top up their CPF accounts to qualify for the ERS. We do not want needy Singaporeans to slip through the cracks and miss these offsets. There is also a need to remind the needy to try and stretch their dollar and not spend cash in a flash. It must be clearly explained that this is not merely a cash handout, but part of a wider assistance programme including offsetting

the additional 2% GST. We need to find ways to help them stretch the dollar and, through the outreach effort, citizens should be reminded to be more prudent in spending the cash.

I turn now to employment issues, Sir. The outlook for jobs in Singapore last year was bright with an unprecedented 173,000 jobs created as compared to 113,000 in 2005. While this is reason to cheer, we should not only look at the quantity, but also the quality of the jobs that are created. Although major sectors registered employment growth, many of these jobs are lower-paying ones in the retail, services and manufacturing sectors. Many in the lower-income strata are continuing to have difficulty to make ends meet. Therefore, MOM and WDA must continue to push on training and retraining to equip the low-income with relevant skills and gradually improve their income levels. The key here is to encourage them to keep on going and prepare them adequately for jobs that are in demand in the new economy.

However, there seems to be a gap between what locals say and what employers say. On the one hand, feedback from employers indicate that many are willing to hire Singaporeans over foreign workers, but are put off by the attitudes of locals who are not willing to work longer hours or do shift work, as compared to foreign workers. Residents, on the other hand, say that they have looked for jobs but employers prefer foreign workers.

Sir, something needs to be done to understand this gap and plug it. I wonder if the relatively comfortable conditions in Singapore and our increasing emphasis on work-life balance may have made our younger Singaporeans less willing to work in more physically demanding areas, such as the service industry. My GPC Resource Panel member from Giordano, for example, said that some young

Singaporeans do not see why they should serve others when they are served by maids at home. Others cannot fold clothes well as they are not used to doing household chores.

What is heartening, however, is that employers generally seem to have good experiences with older workers. MOM's survey found that they have a lower incidence of switching jobs and tend to work longer hours. The same retailer from Giordano said its older workers are able to relate to customers well. There, they are given a choice to work up to a certain time as some have to pick up their children after 7 pm. Those who choose to do so, however, have to forgo some commission as peak hours are after 7 pm. But there is a balance. This is a healthy practice and more companies should offer more flexibility to encourage older workers to work.

At the same time, older workers must manage their expectations. A recent survey by MOM indicated that willingness to accept salary adjustment was a significant factor in the employment of workers aged 60 and above. With jobs that have reduced scope of responsibilities, it is only to be expected that the wages given will be lower than their previous ones they held.

MOM's statistics also indicated that employment rates for older workers have increased. This is indeed good news but, again, most were doing low-level jobs as cleaners, machine operators and sales workers. We must remember that the elderly is a diverse group and not all will be best tapped when they are doing service type jobs. With the impending ageing process of the baby boomers, we will need to widen the scope of jobs. The elderly do not only have to perform service or cleaning jobs as there are many who have served in middle-management posts and have a wealth of skills, knowledge and experience dealing in the

past. Perhaps, jobs in consultancy or other areas could be explored for the elderly.

Sir, policy changes alone might not be enough to encourage more elderly Singaporeans to work. The tripartite movement between the Government, employers and unions needs to continue to work closely together to boost this silver industry. Since the start of the year, the Manpower Ministry had raised the sub-quota of "S" Pass workers from 5% to 10%. These are mid-level skilled foreign workers who have diploma, university or technical qualifications and can work in the professional, specialist or technician level jobs earning a minimum basic salary of $1,800 a month.

I believe that these are the kinds of jobs we must continue to train and retrain more of our people for. We need to continue matching Singaporeans for jobs at these levels wherever there is an industry need, first, before getting foreigners to fill up the jobs. It is at the lower and higher-ends that we can afford to hire more foreigners if there are Singaporeans not able or not willing to do the jobs.

With Singapore rapidly transiting into a knowledge and technology-driven economy, the top-end is particularly witnessing an increased shortage in talent. As an employer in the high-tech sector, I can certainly vouch for this. Not only am I getting lower and lower responses to job advertisements for key and professional positions, the expected compensation from those who responded has also increased significantly. The employment market has become much more dynamic and many companies are facing increased staff turnover and are struggling to retain their talent pool.

Sir, as we try to get the best from the world to come here, we must not forget that some of our own best talents are also

venturing out. While some will eventually come back, others may not. We must find ways to retain some of our best talents while we attract more from outside. We must ensure that sufficient opportunities are created for them or face the risk of losing them to foreign competitors. Top talent command global salaries and we must be prepared to match this or lose them.

In this light, Sir, I am also concerned about talent retention in the public sector. Singapore has done well to-date because of a world-class Government and a talented critical mass of public sector employees who have creatively executed the policies of the Government. With so many opportunities currently available here in the region and globally, the pull factor is very strong. I am confident that the Government is aware of this situation but would like to, nevertheless, ask what is being done to retain our key talent pool in the public civil service.

Sir, I move on to population and migration. Last month, Sir, I read an article in the International Herald Tribune about Ireland's population woes. Contrary to the kind of population issues that many developed countries in Europe and the world are facing, the kind of population problems that Ireland faces are not related to that of a population decline or an ageing society, but one of a population boom and an excess of youth. Its birth rate of 15.3 births per 1,000 residents in 2004 was the highest in Europe and it also has reached a high, in terms of immigration, with almost 87,000 migrants in the one year ending April 2006.

With this boom, the Irish are starting to feel the heat. Schools are getting more crowded, infrastructure is strained, there is a mad rush for facilities, including childcare services. One school was said to have run out of space and had to resort

to even using the basketball court as a classroom. In Dublin, housing prices are doubling and people are starting to feel the strain.

Recently, the Government announced its revised estimates for Singapore's population, from 5.5 million set some six years ago to 6.5 million people. This represents almost a 45% increase from our current population of about 4.5 million. The Government has given its assurance that quality of life will not suffer with this population increase. It has said that with proper planning, Singapore can comfortably accommodate 6.5 million in the future. Some economists have even ventured to say that it is with a population of 8 million that Singapore will have the critical mass it needs.

Sir, if you were to speak to the ordinary Singaporean, you will find that immediate concerns upon hearing this upward revision of population statistics would be overcrowding. With planning and proper use, we can maximise the use of our land and space in Singapore. But with such limited land, surely something has got to give. One only needs to visualise the cramped apartments in Hong Kong, the crowded streets in Chennai and the high property prices in central London in order to get a sense of what it is like living in an overcrowded city. While these people can choose to move to lesser populated areas, we, in Singapore, have no such option. Our Forum pages have carried letters from Singaporeans on overcrowded trains and buses at peak hours, congested roads and long queues for facilities. HDB flats may get smaller and this may become yet another factor for Singaporean couples not to have more children. If so, this can impact on our national policies aimed at population creation.

Some economists have said that a large population mass is not necessarily a

key ingredient for a nation's success. Finland, with a population of over five million people, is one of Europe's most prosperous countries and the birth place of globally successful companies like Nokia.

With our current total fertility rate of 1.25 children per resident female in Singapore, it is safe to assume that a large part of this increased projection will include foreigners. It will be beneficial if the Government will clarify to Singaporeans its rationale behind this upward revision of population rates. Is there really a need for 6.5 million people or more?

At the end of the day, the question to ask is: is this trade-off worth it? Having a large population may spur economic growth but at what price? The last thing we want is for our population and immigration policies to work well but at the expense of our own people. While we want to create buzz and spur economic growth, we must make sure that such efforts will not drive our people out in search of less crowded living areas or a more tolerable pace of life.

Sir, I was watching the programme "Building the Biggest: Underground Singapore" on the Discovery Channel last Sunday when memories of the Nicoll Highway collapse in 2004 came vividly to my mind. This accident, coupled with the accidents at the Fusionpolis Complex and Keppel Shipyard, collectively claimed a total of 13 lives. While even such painful memories fade with the passing of time, I hope that the lessons that we have learnt from such accidents will behove us to continually enhance the workplace safety and health framework to minimise and prevent loss of lives. To this end, I am glad that MOM has made a commitment to revamp the occupational safety and health framework by way of passing legislation in January last year that heralds three fundamental reforms to

improve safety outcomes. This includes expectations by employers to reduce risk at source, take ownership of OSH standards and introduce measures that would bring about a cultural change for life and livelihoods at the workplace, and holding persons accountable for their actions, including imposition of higher penalties for poor safety management.

Sir, the Workplace Safety and Health Act came into operation on 1st March 2006 and replaced the Factories Act as the key piece of legislation regulating occupational safety and health at the workplace. With the projected economic expansion, our workforce will most certainly experience strong growth in the next few years. We cannot afford to see our economic growth marred by unfortunate accidents in workplaces, especially accidents that result in fatalities. It is therefore imperative for not just the Government but all stakeholders, including employers and workers, to continue to support Singapore's efforts to make our workplaces safer and healthier. While the new Act currently covers only the riskiest workplaces, such as factories, construction worksites and shipyards, efforts must be put in place by employers in the less risky workplaces to ensure that good measures are in place for the safety of their workers.

Sir, MOM announced that the scope of the Act would be gradually extended to all workplaces in phases over the next few years. In order for industry to have sufficient time to prepare to meet the requirements under the Act, could the Ministry provide more details of the plans as to which new workplaces will be covered by the Act and timeframe for the extension of the Act? I would like to also ask the Minister for Manpower for an update on the progress made so far in improving workplace safety and health performance. What percentage of workplaces has already attended the requisite training courses on risk

assessment, and how many have now instituted risk assessments at their workplaces? Has the Ministry held accountable and taken action against individuals who failed in their responsibilities under the new legislation? Finally, has there been any significant improvement in safety outcomes since the new legislation has been in place?

Sir, I would like to continue the rest of my speech in Malay.

Dr Ahmad, you only have two minutes left.

(In Malay): [For vernacular speech, please refer to Appendix A *.] Mr Speaker, I am confident that the Malay community welcomes the various incentives that have been announced recently in the Budget Statement which is inclusive and at the same time gives special attention to the low income earners. It is intended to prepare Singapore and its people in facing various challenges which will be brought on by globalisation. Therefore, it is imperative that the Malay community seizes all available opportunities, especially schemes and incentives offered by the Government. Among those which have been announced recently is the Workfare Income Supplement scheme or WIS which will benefit many low income earners from the Malay community. Such a scheme is far better than welfare schemes because WIS encourages our people to continue working and not be dependent on Government’s assistance. This endeavouring attitude for wanting to be self-reliant is very important for the Malay community. If one is retrenched, he or she should not lose hope, instead he or she must strive to find another job. If there are jobs which require one to work on shifts or offer a lower pay, whether in the cleaning or service sector, the Malay community must seize these opportunities

while undergoing training, job enhancement or waiting for better job opportunities. This is better than being unemployed for months. I also hope that the community in general will not have a crutch mentality or frequently be reliant on Government’s assistance. Every low income earner has to see WIS as an assistance. With this, I support the Budget Statement.

*Cols 1753-1754.

2.36 pm

Mr Speaker, Sir, I join the chorus of hon. Members in congratulating the Second Finance Minister for presenting a Budget which brings about many structural changes in the way we manage our fiscal policies which will go a long way in reinforcing and strengthening our economic and social structure. As the Prime Minister had promised before the Budget was unveiled, even with an upward revision in GST, the Government has put in place many measures to cushion the impact of these taxes and protect the interests of the individuals and households across society.

The concerns of the lower income have been allayed with a long list of pay-outs and top-ups that are lined up to benefit them directly, not to mention the indirect benefits for them through schemes such as top-ups for post-secondary education, public transport fund and funding for self-help groups and voluntary welfare organisations. The middle income, or the sandwich group, is also taken care of, as they too will benefit through reduction in maid levy, road tax and the slew of benefits like property tax rebates and bonuses for the elderly, the national servicemen and GST credits. Thus, in every family and every household, they will enjoy multiple benefits.

Through a clever adjustment of CPF policies, companies are incentivised to

offer jobs to older workers and, at the same time, lower-wage workers are able to take home more pay with the Workfare Income Supplement running alongside. But in case anyone gets the idea that our Government is softening its stance on welfarism, the answer is "No". Instead, what it has done is to reinforce its current policy to encourage our residents to work and to save for the family and future. With this commitment, the Government would assist to put more into their savings and reinforce the family's ability to meet the demands of the future. This reinforcement of work is timely, as we are seeing some disturbing trend at the meet-the-people sessions where some residents readily asked for cash supplement outright. However, when asked to fill in the application forms, many refused to put in their real financial situation and supporting documents, and this resulted in a lot of our Community Development Councils' rejections. Often, grassroots leaders would turn around and say that this same person who was given some cash last week was seen carrying many more plastic bags of groceries than the grassroots leaders themselves in the run-up to the Lunar New Year. This is where I feel the grassroots, social and community organisations in the community will have to pay closer scrutiny to those who come to them to seek assistance. Grassroots leaders will have to be properly equipped with the skills to differentiate the true hardship cases from the opportunists.

Education

Talking about the needy brings me to my next topic - education. I am very pleased that we are enhancing subsidies for KiFAS, childcare and top-up for Post-Secondary Education Account. Education is the way out for those who are in the lower-income group. I think the Government should give more financial support for the needy students who are in secondary school as well.

Let me explain. Tuition fees are very high now and can cost more than $200 a month easily. While there are self-help groups like Mendaki, CDAC and other institutions running tuition classes, many students still have to go to private schools where some of these subjects are not taught. I know that the teaching methods are better and they can get better results. I do not know if there is anything wrong with our schools' programme which result in our students becoming dependent on tuition classes. In fact, tuition has become such a thriving business in Singapore that it has become a multi-million dollar industry. So those who can afford to pay high fees get the better tutors and better results. And students from needy families who cannot afford expensive tuition have to fend for themselves. Ironically, these are the children who need help most. We can often see these secondary school students performing odd jobs here and there instead of spending time with their school books. One of the reasons for this is that some of them have to help out to supplement their family income or pay for their own tuition fees or their own school pocket expenses and lifestyles. In this cycle, if they cannot cope with their studies, they will just give up their studies and then drop out. I hope the Ministry could extend the post-secondary top-up to include the upper secondary school students, and look into the increasing need of tuition classes to pass examinations. Also, are our schools teaching and guiding the students enough?

Impact of new Concept Plan on economy

One other issue I want to raise relates to the employment of our financial resources to deliver our plan to turn our country into "An Endearing Home" and "A Distinctive Global City" and its impact on our society. Occasionally, we hear gripes about how foreigners are said to be better

off than Singaporeans. In fact, a Sunday Times' survey in January 2007 found that 65% of respondents believe foreigners enjoy all the privileges of living in Singapore, but none of the responsibilities. Worse, 43% believe that the Government cares more about foreign talent than Singaporeans. This, of course, is not true as borne out by Budget 2007 and other Government policies.

But let us look quickly at this Concept Plan, which maps out the vision for Singapore for the next 40-50 years in terms of strategic directions for land use and transportation. It was reviewed in 2001 applying a long-term population parameter of 5.5 million as a basis for land use and transportation. At that time, our population was 3.9 million. This time, at a recent mid-term review by the Ministry of National Development, URA and various Government agencies, the Concept Plan, taking into account recent population trends and the strong economic prospects in future, revised the long-term population parameter to 6.5 million people. Today, our population is close to 4.5 million. I know that this is not a target population figure but a parameter used for strategic planning purposes. However, with this new parameter, it will invariably impact on the land use and land prices. There will be competing demands between land use for social, business and infrastructure projects, and this will cause a rise in the price of land. Eventually, the Gordion impact will be felt across the whole economy.

My other point is that unless our Treasury is able to take counter balancing measures, we are going to see some great impact on capital expenditure. Each Government Ministry will come knocking on the door of the Finance Ministry to ask for a higher budget for development projects.

Invariably, not all the cost will

be absorbed by the Government, but the public will have to shoulder a part of the higher cost, and this possibly through higher taxes again. So, I hope the Finance Ministry did participate in the discussion before the parameter used in the Concept Pan was reviewed and look into ways to mitigate the would-be increase of the limited land prices.

Social impact on Singapore society

Next, with the parameter earmarked at 6.5 million people, what is the impact on our society? Given our low fertility rate, obviously foreigners are the ones who will be filling the vacuum. This means we will have to continue to attract foreigners to churn our economic growth engines. The arguments for this policy are good. We do not have the people and the talents, so we attract them to come and work and live here. Just as we do not have the natural resources, so we import them, like our sand. I hope our financial planners in their pursuit of growing the wealth and prosperity for our nation also take a multi-disciplinary approach and think about the social and political implications on the fabric of our society. I know I am not alone in raising this concern. I note that a post-65er journalist in the Straits Times wrote a column on this issue and in some way pre-empted my thoughts. Before I proceed, I must stress that I am not against foreigners working here. I welcome them. I know many of them and it is good that we have them on our shores. But what I am concerned is how will the presence of large numbers of foreigners, with different cultural practices, values and upbringing, impact on our people and our cultural values. I am a very grassroots person. I work the ground and I listen to the people. As it is, I hear people talking about: "Do you realise that the Kwan Imm Temple is now beginning to be overwhelmed by Chinese nationals? Soon it will no longer be a gathering point for Singaporean worshippers." Now this is an innocent

remark, but it says a lot about what is happening around us as well as the inner feelings of the people who are used to niche areas where they are so used to call their own.

Gearing up IRCC - Inter-racial and Religious Confidence Circle

In our society, we have always been brought up with the principle of multi-racialism, that is, Chinese, Malay, Indian and others. A time will come when the "Others" will have to take a new addition and call it "Others plus plus". There will then come a time when our understanding of multi-racialism is put to a test. Our IRCC will not be equipped to manage the "Others plus plus" factor. We need to gear up our IRCC or similar groups to face these new challenges. In fact, Prof. Joel Cohen, the visiting American population expert raised the question when he was invited to speak at the Lee Kuan Yew School of Public Policy. He had asked how would Singaporeans react and what would be the effect on the multi-racial fabric of our society. Do we have the answers?

Demands on public service

Then not only one Ministry, for example, MCYS, but many Government Ministries may find themselves being put to the test. They may, for example, need to put up international signs at their public service areas to guide these foreigners, like airports do. I understand at least one private hospital has subscribed to CableVision Arab Service, and employed interpreters because they are getting an influx of people from there. Therefore, we need to also gear up all our public services from schools to Government hospitals and polyclinics to cope with perhaps an expected rise in full-fee paying students and non-subsidised patients and so forth. And I worry for the 200,000 housewives and 400,000 people under 20 who are not covered by MediShield, as

disclosed by the Health Minister, if the medical cost escalates.

Private or public?

Already, our sometimes over-taxed hospitals are now setting up "private clinics" to get a share of medical tourism and turning Singapore into a medical hub. How will this tap on the strained resources that we currently have to serve Singaporeans? Is this in line with the Finance Ministry's guidelines on public service for Singaporeans? What criteria will they use to justify these "private" businesses which are run on the premises of public buildings? So, what is next? Privatisation? No, this does not always work, as we can see in the case of our transport services. I know we should not let these concerns turn us into a community of analogue citizens living in a digital age. By all means, let us get ready for the future and for globalisation. However, it will do well for the architects of these policies to carefully check the foundations and the load factors before we start laying the bricks one on top of the other and fundamentally check if we even have enough bricks for these developments.

At this juncture, Mr Speaker, Sir, I will address my next concern in Mandarin.

(In Mandarin): [For vernacular speech, please refer to Appendix A *.] Mr Speaker, Sir, Budget 2007 has been generous and has Singaporeans at heart. Although the GST rate will be increased by two percentage points, Singaporeans will be compensated with a substantial offset package. This will help to reduce the impact of the GST increase. It is important that we look after the weaker group and make sure that they do not fall behind. I am grateful that the Government does its best to look after all Singaporeans. But what is more touching is the measure to encourage family

cohesion as well as to look after the elderly citizens and their family problems. As the Prime Minister said in his New Year message, we have to promote and enhance family cohesion to establish a strong family bonding. The mutual support given will have a positive impact on the whole society. We encourage families to live together with their parents, so that the children can look after their parents. Whatever happens, they must understand that the incentives given by the Government for taking care of the elderly are only an encouragement. Looking after our parents is the responsibility of every family. Let me reiterate this point. Looking after our elderly parents is the responsibility of each and every one of us.

When I meet the people, there are always some senior citizens appealing for my help to apply for rental flats. This is so because they feel that their children, their daughters-in-law and their sons-in-law do not wish to live with them. It saddens me to see this. I have lost sleep over these families. We would like to encourage all children to look after their parents and live together with their parents. When they were young, the parents looked after them, and have everything to give. But now our parents are old, it is our turn to repay their loving kindness, and to look after them so that they can enjoy a good time in old age. Also, there is greater warmth in the family. Therefore, it is important that we have pro-family measures in place, to be filial to our parents and to respect our parents, so that from generation to generation, our future offspring and our children in future generations will bear this sense of gratitude. In this light, I hope that the Ministry of Community Development, Youth and Sports will adopt more policies to further encourage pro-family ideology. These concepts will then become part of our

lives, and we can integrate this knowledge and apply them in the society.

Last but not least, we hope to see this tradition being passed down from generation to generation. Hence, we must take care of our parents so that they will enjoy quality life in old age. We hope that life will be more meaningful to them, and there will be love, dynamism and unity in our society.

*Cols. 1755-1756.

2.58 pm

(In Mandarin ): [For vernacular speech, please refer to Appendix A *.] Mr Speaker, Sir, the salient feature of the Budget this year is to consolidate our social cohesion and to strengthen our social safety net. The Workfare Income Supplement Scheme (WIS) will be another pillar in our social safety net. Last year, during the debate on the President's Address, I pointed out that with the restructuring of our economy and the changes in our economy, many people are worried about the new economic model. Although the economy grew, life was not easy, income did not increase and the cost of living continued to go up. If the people continue to live in such conditions, the values of the people and their attitudes will be changed and social cohesion will be put to a test. Even with economic growth, people will lose confidence in the country. It is for this reason that I support the new pillar for our social safety net. I believe that the WIS, being a permanent scheme, and not only when the Government has a surplus or to give away just before the General Election, is given on the basis of income and economic needs to help the lower-income group, and being structured as a pillar of our social safety net, should be able to mitigate the problem of income gap and the difficulty of the lower-income group to meet the cost of living brought about by globalisation and the changes in the economy.

I noted that in implementing the Workfare Income Supplement Scheme, the Government has the intention to net in the lower-income group who are eligible for the scheme to become participants of the retirement, Medisave and MediShield scheme through the CPF system. Thus, the WIS basically operates like the CPF top-up scheme. For example, the lower-income group must first top up their CPF or contribute to Medisave before they can receive the Workfare Income Supplement (WIS). The pay out of the WIS will also be largely in the form of CPF. To the low-income earner, cash is the most practical help. To expect those who are doing odd jobs, with an irregular income to maintain a CPF contribution before they can enjoy the WIS is less attractive. It seems that the the Government is lacking the sincerity. Although I understand that it will take time for the scheme to work and for the Government to assess its operation and effect, I do hope that the Government will review the scheme in due course and, in particular, consider having a higher cash component of the WIS for those who are doing odd jobs with an irregular income.

This WIS is estimated to require a yearly expenditure of $400 million and, at the same time, the Government has also announced an increase of GST by 2%. I do believe that the Government is able to finance the Workfare Income Supplement Scheme, without even increasing GST. To help the poor and to have additional revenue to help the lower-income group has become a splendid reason to justify the GST. The Government is merely using this as a convenient excuse to increase the GST. Another reason given is to increase our competitiveness so that more companies will set up their presence in Singapore and hence the need to reduce corporate tax thereby resulting in lesser revenue for the Government. Will a reduction in the corporate tax lead to an increase in revenue? We do not know. As

the Minister pointed out, in the next five to 10 years, the economic outlook is good and has never been better. With better performance of the economy, the corporate tax will inevitably increase. As such, why is there a need to increase the GST? On 26th February, the Straits Times quoted an economist saying that companies, in deciding where to establish their location, will look at a number of different factors and not just the corporate tax rate. Other observers say that Hong Kong has the advantage of not having GST, especially so for the retail industry. Therefore, it is inconclusive that this move will give us the definite economic advantage. This is especially so when we are emphasising a shift towards the services industry. Let us not forget that the retail sector is an important partner in promoting tourism. Of course, the Government will have all kinds of reasons to persuade the people to accept GST, or even to say that the GST is beneficial to the people. I am not convinced and, in this regard, let me tell the House the following facts that I know.

Firstly, although there is a deficit of $700 million in this year's budget, we do not need to use the past reserves. Since May last year, the Government has already accumulated over $700 million surplus over just a period of eight months.

Secondly, if the Government does not increase GST, there is no need for the Government to provide an offset package to the poor and the expenditure of which then becomes another reason for increasing the GST.

Thirdly, there had been schemes of the rebates and the distribution of such Progress Package in which the benefit was tilted towards the lower-income group. The budget before the last General Election was a good example. Even then, when the Budget had a large deficit, there was no need to increase GST and

neither did the Government have to make use of past reserves.

Fourthly, in the Budget this year, the Government has drawn up a list of all the expenses and it has tried to show the people that these are large expenditures. But over the next few years, whether the Government will reduce subsidy to public services for reason of the need to find more resources and to reduce expenditure, and therefore people be asked to bear a greater portion of this cost, it is still unknown.

Fifthly, when the casinos start operating, there will be an endless and constant stream of income for the Government. As such, why is there a hurry to increase GST? After the General Election in 2006, when the PAP Government has received the mandate of the people, the first step it has taken is to hurriedly increase the GST with the grand signboard announcing to help the lower income group. It seems to me that the Government is fleecing the people.

*Cols. 1757-1760.

Order. I suspend the Sitting and will take the Chair again at 3.20 pm.

Sitting accordingly suspended at 2.58 pm until 3.20 pm.

Sitting resumed at 3.20 pm

Debate resumed.

Mr Speaker, I rise to commend what is undoubtedly a comprehensive and forward-thinking

Budget. The plans and investments announced will keep our economic engine running and create wealth and opportunities for all Singaporeans. My colleagues in the House have commented on them and I will not repeat the points they have made. I share in the enthusiasm for the future.

I would however like to make a number of points about what Mr Low Thia Khiang has said. He, I am glad to say, acknowledges the significant change the Workfare is going to make to our welfare philosophy. And, in fact, he is pushing for it to be permanent. On any view, this will cause a significant increase in spending. But he does not want us to increase GST. So how do we pay for this increased spending? He gives very few details.

In fact, Mr Speaker, Sir, a major argument he makes is that the casino which will come in 2009 will bring big money and, therefore, we should wait for it. I think Mr Low is getting a headstart because he is really gambling on our future. Of course, we all hope that the casino will generate revenue for us and, if it does, I am sure the Government will share the wealth with Singaporeans, just as it had done many times in the past. In the meantime, let us not base our fiscal policy on speculative future income.

Mr Low then says that a corporate tax reduction is not sufficient to attract business. I agree that if that is all we are relying on, then that is not a good thing. But we are not relying solely on the corporate tax reduction. There is a whole slew of packages and measures and which is why we need to invest in our infrastructure, which is why we need to invest in our people and upgrade their skills so that we can attract businesses to come to Singapore. So he ignores all the other measures and just focuses on one. And all these investments require money.

So he comes to his third point which is, "Right, let's not increase the GST now. Let's wait because we are doing so well, we must be earning money. Let's wait till later." In other words, let us wait when the Singapore economy is not doing so well, then increase taxes. It is completely logical. We should have a prudent fiscal policy. When times are good, let us raise the funds we know we need to make sure Singapore takes the next step forward.

Mr Speaker, Sir, there will also be Singaporeans who are dissatisfied with the Budget because they have received fewer benefits compared to others. But the reality is that it is impossible to give everyone everything he wants and still be fiscally prudent. Nor is it sensible to give everyone the same benefits. I believe many Singaporeans support the principle that more help should be given to those who need it more, for example, low-wage earners, senior citizens and, on the corporate front, our local SMEs who need a boost to remain competitive in the face of global competition. All I wish to add is that I hope that those who administer the scheme will be given the flexibility to ensure that Singaporeans who genuinely need help will not fall through the cracks. Even if those dissatisfied remain unconvinced, we should nonetheless move forward with the knowledge that we have done the right thing. We have never shied away from making tough and difficult decisions, and doing the right things has been the hallmark of this Government and those before it.

And doing the right things is what I would like to talk about today. In considering the Budget, I was reminded of a television advertisement a few years back - I am sure Members of this House will remember it - it showed Singapore actor, Lim Kay Thong, stepping off a train in a foreign country and a porter asked him where he was from, and he replied that he came from a country known for chilli crab. A reporter then asked, "Are

you from Chile?" And the joke was that nobody in the rest of the world knew much about our island. That has since stayed in my mind because it addressed an issue which has always concerned me, and that is our national identity.

When asked about Singapore, the rest of the world often cites our clean streets, efficient transport, airconditioned malls, cheap and good food. Our best known icon is the Singapore Girl, hopefully. We are consistently ranked as a great place to do business. These are important, but is this really how we want to keep being identified? What is going to make our children and future generations proud to be Singaporeans? Do we have something more to offer the world beyond sarong kebayas and cheap and tasty food? I believe we do, and I hope the future Budgets will reflect this.

Any Budget is about choice. It is about the efficient allocation of limited resources.

How a country allocates those resources necessarily reflects its values. In a very real sense, the Budget is nothing less than an unambiguous declaration to the world stating in numerical terms what we as a nation regard as important and what kind of people we are or want to be.

For example, by providing now Workfare, the Budget sends a message that, while the state will help the disadvantaged level up, the onus remains firmly on individuals to work and improve their lives through their own efforts. Our work ethic is what makes Singapore successful, and I hope Workfare will not change that. In particular, it should not encourage lower-paid Singaporeans to allow their skills and earning power to remain stagnant in the belief that they will continue to receive top-ups from the Government. I therefore hope that the Government will marry Workfare with an effective skills retraining programme to give recipients the opportunity to step up on their own, and to review the position

of those who refuse to do so for no good reason.

But I would like to see Singapore send other positive messages, and one of the messages we should send is that we are a responsible global citizen as well. One way we can do this, and I believe Ms Jessica Tan has alluded to this, is to become a shining example to the world in the way we deal with the environment.

For many years, Singapore has been environment-conscious. Long before it became fashionable, our country paid attention to saving water and water recycling. We introduced a campaign to encourage tree-planting and set aside land for parks and nature reserves. Now, our goal is not to become just a Garden City but a City within a Garden. We were the original green party. These initiatives were born largely out of necessity. As a small young city, we knew the importance of creating a sustainable environment to live and work in and to attract investments and tourism. That is even more true today. Just as our island cannot escape the effects of globalisation, neither can we avoid that of global warming and other environmental hazards.

Today, the world is just waking up to the realisation of the damage being done by mankind to the Earth. There needs to be an urgent and radical change to the way we live, if we want to preserve the planet for our children and for future generations. We can build as many iconic landmarks as we want, but it only takes a choking haze to remind us about our vulnerabilities.

In keeping with that, we should send the message that Singaporeans care for the world we live in and will do our bit to keep it safe for our children. Although we are small - indeed, because we are small - we should place great value on

preserving our environment, and there are several ways to do this in the context of the Budget and I will just give a few examples.

We should give more and larger tax breaks or other incentives to companies which adopt green practices or which are engaged in research or businesses which help the environment. We should make it more attractive for Singaporeans and businesses in Singapore to purchase hybrid or other green vehicles. This should include altering our tax structure to make such cars cheaper and/or make environmentally-unfriendly cars more expensive. Today, despite the green rebate, a hybrid car is still far more expensive than an equivalent petrol car, in some cases, about 20%-30% more expensive. That makes it very difficult for most Singaporeans to even consider them.

All public transport should use clean energy without having to pass the extra cost on to commuters. Recently, Mr Speaker, Sir, one of the taxi companies announced that they were going to purchase vehicles which are environmentally-friendly but at the cost of a higher flag-down rate for consumers. That is not a good move, because we are equating good environmental practices with higher cost. We should also invest in infrastructure to make owning such vehicles more feasible, for example, by having a wider network of refuelling stations for CNG vehicles.

We need to invest in educating Singaporeans to instil good environmental habits, and this includes habits such as recycling. One of my town councillors lived in Japan for a few years and he says that the culture where he was living was such that, in sub-zero temperatures, even when he was feeling unwell, he would bundle up, walk seven blocks down, just to deposit his trash in the recycling bins. The recycling habit is so ingrained where

he lived that any contrary behaviour was frowned upon and simply deemed unacceptable. In Singapore, we pay lip service to recycling. We should drive the message home about its importance, especially in schools and with our children.

Mr Speaker, Sir, what I am speaking about are not luxuries. These are imperatives for our survival. There will also be all manner of tangible benefits. Any measure which makes us less reliant on oil must be a good thing. We will also need to use our resources more carefully, bearing in mind that we are now looking towards increasing our population to 6.5 million. Major MNCs are now becoming more environmentally-conscious and are more likely to invest in a country which shares their same values and beliefs. It will also be difficult for others to criticise and accuse us of being environmentally irresponsible.

Mr Speaker, Sir, Singapore is special. More than any other place in the world, if we truly believe in something, we have the infrastructure and the people who can make it work. There are many governments which shy away from doing the right thing because they fear of losing power. It has always been our philosophy that the better argument must always prevail and there is no good argument against educating Singaporeans and encouraging them to be environmentally responsible. What a wonderful opportunity we have today. Because of the sweat of the previous generations, this generation has the economic and political stability to take Singapore to the next level and we must not dither. We must become a First-World country in every sense of the word - economy, infrastructure and values.

I am confident that we can be a shining red dot not just in the region but in the world, an example to the world of the great things that can be achieved

when there is real goal to do the right thing and, when Singapore is mentioned, it will not be just for food and cleanliness but of a country others aspire to emulate and of a people proud to be Singaporean. And the next time I step off a train in a foreign country, I would love it, if people saw my Singapore passport and, instead of asking, told me that they know of Singapore because it is a model for the rest of the world.

With that, I support the Budget.

3.37 pm

Mr Speaker, Sir, the Second Minister for Finance, Mr Tharman Shamugaratnam, has indeed unveiled a Budget for all Singaporeans that is pro-business, pro-growth and focuses on building up the foundation for the future of our nation.

Sembawang Town is a fairly new town. It is up in the north where there is a lot of greenery and my residents are mainly very young. There are a lot of young couples and there is also a very good tradition whereby the folks there like to stay in the same area. A lot of them come from the Yishun and Mandai area, so big families stay together. The most common complaint I have about this Budget now is that they hope that they see the other three Ps, ie, for it to be pro-natal, pro-family as well as pro-environment.

When I was driving through Mandai Road, I always think that it is a great place for the Marathon. The Marathon is, to be exact, 42.195 kilometres. I think a few Members in this House have actually run the Marathon and are quite familiar with it. At the start of the marathon, usually all the participants group together. They start off as a huge group. But as the race goes on, at the 10-kilometre mark, at the half-marathon mark, the group will get further and further apart.

So, the distance between the first group of runners and the last group will actually get longer and longer. This year, we are progressing into our 42nd year as a nation. So we are running the first part of our marathon. It is like running the 42nd kilometre of the marathon. And now, at this part, we realise that there is a group of participants that is way ahead and there is a group that is way behind.

I think the introduction of the fourth pillar for our social security net through the Workfare plan represents a paradigm shift and it has added a new dimension to the Government’s efforts to help the lower-income workers. It is indeed a welcome move, akin to providing roller-skates as well as in-line skates to the group that is behind. They have to move on by their own effort. But we are not providing them with a travelator or a motorised vehicle to transport them along. So, by their own effort, we hope that, with the new roller-skates as well as in-line skates, the fourth pillar, they will be able to catch up with the group in front and narrow the gap.

The second part I would like to touch on is education. It is heartening to see the Government giving an additional boost to help the lower-income sector now through education and training. By providing education for children of the lower-income group, we will be able to help them to secure a berth in better-paying jobs when they grow up. Good education is like spiked shoes worn by mountain-climbers and equipment given to them as they inched their way up to the top of the mountain. These are essential equipment they need. The top-up for the post-secondary education account is a step in the right direction. It encourages the poor to pursue beyond what we call foundational education to post-secondary education and to get themselves a diploma, even a degree. It encourages

the poor to help themselves. And many may not realise it that, with the continual threat to social security, education is one of the key elements to prevent a catastrophe in today’s modern society. English novelist HG Wells was disillusioned by what he saw in Russia in 1920 and he published a book called “The Outline of History”, and how true were his words when he said: “Human history becomes more and more a race between education and catastrophe.” The main theme of his book was that the world would be saved not by revolution but by education.

Thus, I have three comments mainly on this Budget. The first is on pro-natal and pro-family, ie, promotion of the family unit. Second is the group that is frequently ignored, ie, the stay-at-home spouse whom I would call stay-at-home mums and stay-at-home dad. Third is our environment.

I was flying back from Tokyo last week and I watched a very interesting documentary on the Galapagos Island. It is a group of islands that is sited just off the Andes in South America and this group of islands is unique in terms of its fauna as well as the animals and birds. The islands were formed by volcanic actions. What is interesting is that it actually feeds off the cold stream from the Antartica as well as the warm stream coming up from the Equator. Every year, the birds on the island itself will reproduce themselves. The fertility of those birds actually depends on the condition, ie, the climate as well as the amount of fishes that are in those waters. About four to seven years, there will be a cycle of El Nino effect. When El Nino comes in, the cold stream fails to flow to Galapagos Island. As a result, the fish stock will decline, the birds will starve but automatically they actually cut down their fertility rates. So, fertility is a combination of correct inducement, in incentives in terms of providing them the

fish as well as how the climate changes. When I watched this video, I was thinking about how we did with our population and, in this particular Budget, it seems that we did not mention anything about population, anything about policies that encourage our local population in replacing themselves. I hope the Government has not given up hope on Singaporeans as it gears towards putting our focus on getting in migrations of foreign talents.

Mr Speaker, Sir, I would like to speak in Mandarin for the next section of my speech.

(In Mandarin): [For vernacular speech, please refer to Appendix A *.] Mr Speaker, Sir, I think it is perhaps right to raise this point at this time of the lunar calendar and we talk about the importance of the family unit, since this is the time of the year that the Chinese will be visiting their relatives and hosting reunion dinners to renew ties among their kins. I think it is not too appropriate for Mr Low Thia Khiang to say that the Government is treating the people as its antagonist. He should instead wish everyone a Happy New Year.

I am sure most of us are aware of this Chinese idiom “xia zi mo xiang”, ie, a blind person touching an elephant. Mr Low could be touching the rear or the elephant trunk; as such he is not looking at this Budget objectively. Sir, I believe this Budget is like the Dragon in the Chinese mythology. You will see the Dragon head but you cannot see the Dragon tail. It is only when you look closely, then you will see the Dragon soaring up into the sky.

This is the time of the year that the Chinese will be visiting their relatives and hosting reunion dinners to renew ties among their kins. The Prime Minister, in his Lunar New Year message, spoke of

the need to encourage family responsibility and to maintain a healthy, cohesive family unit as it would provide a strong base and a balance between work and family life. I cannot but agree with the Prime Minister on the importance of the family unit. There is evidence to support the point that many delinquents and drop-outs are often the fallout from homes with a fragmented family unit. There are many studies that show that the intimate nature of primary relationships, families have significant impact on their children.

While I do not encourage the Government to play nanny, I would think that it would be appropriate for the Government to consider the introduction of more programmes to encourage the growth and nurturing of strong family units. This could be done by further enhancing the current tax scheme for maintenance of aged parents. The Government could also consider special bonus schemes for aged parents who live with their grandchildren.

On this topic of children, I would ask the Government to take a cue from France which experienced a growth in its fertility rate after the government implemented a slew of pro-family measures. These include a payout of US$960 to mothers who take one year unpaid leave from work after the birth of a third child. Large families also get shopping discounts and reduced fares on public transport. French fathers are also guaranteed paid paternity leave. Most of the subsidies are income-based, thus giving low-income families the most assistance.

According to a report in the Washington Post, while birth rates are threatening to undermine economies and social stability across much of an ageing Europe, French fertility rates have gone up. France now has the second highest fertility rate in Europe, 1.94 children born per woman, exceeded slightly by Ireland

at 1.

99. The US fertility rate is 2.0 children.

On a lighter note, I am reminded of a recent New Paper report on 21st February of a photograph showing a young couple smooching, of all places, on a park bench at a Senior Citizens’ Corner at Bukit Batok. But in many European countries, according to the Washington Post, their park benches are filled with elderly residents. By contrast, in France, the parks are overflowed with boisterous children, making it an international model for countries struggling with the threat of zero population growth. Last year, officials from Japan, Thailand and Germany have reportedly travelled to France to study its reproductive secrets.

While I do not expect the Government, certainly not our transport officials, to reduce transport fares, I hope we can look at implementing similar measures using France as an example and review areas that we can fine-tune our policies. For instance, the subsidy under the Kindergarten Financial Assistance Scheme has been increased to 90% for the lower-income families but there is no assistance provided to the middle income group. Perhaps the subsidy, but a lesser amount, could be extended to families of the middle income group. This would lighten the financial burden on parents with kindergarten-going children. It would also ensure that the children get a chance to participate in a proper pre-school programme which, according to studies by the RAND Corporation, has proven benefits. The child would benefit in academic achievement, behaviour, educational progression and attainment, and even in the prevention of delinquency and crime. Here, the PAP Foundation has done a commendable job of upgrading its teaching methods and its facilities without a corresponding rise in fees. In fact, some have maintained their fees, some raised it

marginally, and a few even lowered their fees.

The cost of bringing up a child in today’s context is one area where the Government should study carefully and review the tax relief for children. The current tax relief has not kept pace with the rise in the cost of living. Similarly, I hope the Government will increase the tax relief for children supporting their elderly parents. I hope a review will be carried out sooner than later, as part of our pro-family policy.

*Cols. 1761-1764.

(In English): Sir, I will continue my speech in English.

Rewarding the stay-at-home spouses

There is one job in Singapore that does not pay CPF, does not pay Medisave, and there is no leave, no public holidays and no medical leave entitlement. It is not entitled for Workfare bonus as well as wage supplements. This is the job description of the stay-at-home spouse. I would avoid the word, just using "mums", because there are some "dads" that stay at home as well. They play a crucial role in supporting the family but their contributions are not well recognised and appreciated. These individuals are an integral part of the family unit as they are responsible for the family’s well-being. They are akin to the supporting players in a marathon - they provide the water, they provide the direction, they help to give you the sponges when you are tired and support you through the race. Their task is not an easy one. They perform selflessly in their roles - of course, they do complain sometimes. I think most of us realise their importance in maintaining the family. As such, they should reap some rewards along with the working-class.

Perhaps one way we can do this is to provide tax rebates for the working

spouse that transfers part of their CPF funds from the Ordinary Account to the Special Account of these spouses to provide them with at least some retirement funds who are home managers. Another form of reward for these home managers that can be considered are incentives, which is not dissimilar to the ones provided to NSmen as a form of recognition for their service to the nation. It is an apt provision, given that non-working spouses perform a key role in the family unit, just as our NSmen perform a key role in protecting the sovereignty of our country. So the $100 that you provide will not make them rich but, at least, it is a form of recognition.

Environment

It has been dwelt on a lot in the Forum pages over the last few days, as well as by my former parliamentary colleagues here. The Budget did not dwell much on environment. Singapore needs to contribute to the world effort to restore and maintain nature’s equilibrium. Many of us have borne testament to the sheer might of the forces of nature last December in 2006 when Singapore experienced the wettest month in the last 30 years. We witnessed the flash floods and the resulting damage that was caused by the event. Such storms, as we have seen in the US, will only increase as there is a real danger of an environmental crisis evolving, due to the recent phenomenon of global warming.

I read with interest in the media recently on Australia’s move to ban filament bulbs. It is a move in the right direction and I applaud the Australian government for their bold initiative. Our fiscal policies do not do enough to reflect our determination to defend and fight the degeneration of the environment. We have already fired the first salvo with our signing of the Kyoto Protocol of the UN Framework Convention on Climate Change (UNFCC) in April last year. Keep

in mind, however, we should not get over our heads just by signing this particular Convention. As the saying goes, we cannot run before we learn how to walk. Therefore, we should start by instituting small measures in our policies, and focus on issues with larger scope later.

Albeit the best thing that we can do now is to increase the rebates for the purchase of environmentally-friendly cars, which will help to keep prices competitive so as to increase the take-up rates, I mirror my colleague's point earlier on regarding the tax incentives and tax rebates to be given to such vehicles. Likewise, that will cut down our pollution as well. We should likewise provide incentives for petrol companies to introduce bio-diesel as a form of alternative fuel as well as for operators who convert their fleets to run on bio-diesel. This is only just the beginning. But it will send a very strong signal as to our resolve as well as demonstrate a sound example of our aspiration to become a global bio-diesel hub.

But all said, I can only pray that our neighbours will also play their part during the dry months when El-Nino decides to visit Singapore instead of Galapagos by taking a commitment not to scorch their land at the expense of choking the entire region with haze. I hope that empty rhetoric will this year give way to substantive action so that a meaningful relationship can be developed within the framework of ASEAN regional cooperation.

In conclusion, this Budget is a bold step forward. It affirms the Government’s commitment to keep Singapore competitive and ready for the exciting opportunities that await us for the next 42 years, the next marathon, as we continue our marathon from the lower segment to the higher segment of the first-world economies as envisioned by Minister Mentor, Mr Lee Kuan Yew.

With that, I support the motion.

3.57 pm

Mr Speaker, Sir, like many of the hon. Members of this Chamber, I would like to applaud the Second Finance Minister for the very comprehensive and all-encompassing Budget - one that looks after Singaporeans from all strata and walks of life, but not forgetting to ensure Singapore's economic growth and prosperity by investing in the future.

I am delighted to note that the Government is placing a lot of emphasis in preparing for the future healthcare needs of Singaporeans. This is in anticipation of the rising healthcare expenditure as a result of the ageing population, medical advances and the changing disease patterns from infectious diseases in the 1960s to chronic diseases, such as stroke, diabetes and hypertension, which require long-term medical care.

The healthcare services in Singapore have a reputation of being world-class, reliable and efficient. The combination of excellent healthcare infrastructure, availability of skilled medical professionals and the latest medical technology has made Singapore the convincing healthcare services hub in the region. Singapore's goal is to become Asia's premier healthcare hub through the attraction of foreign patients, ie, medical tourism.

The term "medical tourism" I believe, is no longer unfamiliar to most. The term has risen from the rapid growth of an industry where people from all around the world are travelling to other countries to obtain medical, dental and surgical care while, at the same time, their family members or the patients themselves may engage in sightseeing, vacationing and fully experiencing the attractions of the countries that they are visiting.

Medical tourism has, in recent years especially, risen to become a new revolution to the economies of many countries. A combination of many factors has led to this recent increase in the popularity of medical travel - the high cost of healthcare in many industrialised nations, the ease and affordability of international travel, and the improvement of technology and standards of care in many countries in the world. A great enticement to medical travel is also the convenience of obtaining prompt medical attention in comparison to that of the home countries. For example, the time spent waiting for a procedure, such as a hip replacement, can be a year or more in Britain and Canada. However, in Singapore, Bangkok or India, a patient could possibly have an operation the day after his arrival.

Sir, currently, together with countries in the region like India, Thailand, Hong Kong and Israel, Singapore is one of the most popular world-wide destinations for medical travel. Similarly, countries such as Argentina, Bolivia, Brazil, Costa Rica, Mexico and Turkey are well patronised for their cosmetic surgical care. As a leading healthcare services hub in the region, Singapore has positioned herself as a medical hub where healthcare services, medicine, biomedical research and pharmaceutical manufacturing converge.

The successful separation of the 10-month-old Nepalese conjoined twins in 2001 had elevated our medical expertise on to the world's headlines, and we have since accomplished many more milestones both in Asia and in the world arena. Our recent hosting of the first Medical Travel Conference from 12th to 15th December 2006 also attracted participants and media from 21 countries, setting the pace and platform for the development of the budding medical travel industry. Being a part of the medical fraternity, I am proud and honoured to note that Singapore had made international news for many

complex surgeries in specialities such as ophthalmology, neurology, oncology and organ transplants procedures. Our healthcare services, coupled with advanced research and development, are built on a heritage of excellent quality, safety and trustworthiness.

Currently, Singapore boasts the largest number of US Joint Commission International (JCI)-accredited hospitals in the region. Quality of medical care is ensured through accreditation from the JCI, the global arm of the institution that accredits most United States' hospitals. In time, we may look towards other European or Asian-based systems of hospital accreditation in an attempt to broaden our credibility and appeal.

With the emerging popularity of medical tourism worldwide, I think it is important that we recognise the impact that this industry has on our economy. Most of the travelling patients come from the regional countries such as Indonesia, Malaysia, Vietnam and Brunei. In addition, we are also witnessing healthy growth in patient numbers from South Asia and the Middle East. On top of that, patients from developed countries, such as the United States, also choose Singapore as their medical travel destination for relatively affordable quality healthcare services in a safe and clean cosmopolitan city for peace of mind. In Asia alone, it is estimated that there are 1.3 million medical tourists a year compared to 160 million international journeys. This means medical tourism makes up less than 1% of the Asian travel market.

According to a recent report by Singapore-based travel, supplier and ticketing firm, Abacus International, the growth potential for medical tourism is somewhere between 20% and 30% over the next few years, and Asia's medical tourism industry is expected to generate

more than US$4.4 billion by 2012. In Singapore alone, 374,000 visitors came here solely to seek medical treatment in 2005. The estimated average expenditure of a medical tourist is about US$362 a day, which is more than double an average tourist spending of US$144.

Singapore aims to attract one million medical tourists by 2012, making it a US$1.6 billion market annually. With patients travelling with families, not only for the medical industry, the economic spin-offs for the overall tourism industry are set to grow as well.

Besides Singapore, many Asian countries, such as India and Thailand, have risen to become popular destinations for medical tourists. India is a relatively newcomer to medical tourism but it is quickly catching up with Thailand. Recent estimates indicate that the number of foreign patients there is growing by 30% each year. India has top-notch centres for open heart surgery, paediatric heart surgery, hip and knee replacement and areas of advanced medicine in which India is generally considered a global leader. Estimates of the value of medical tourism in India will reach as high as US$2 billion a year by 2012. India's medical industry's main appeal is the low-cost treatment. Most estimates claim that treatment cost in India starts at around a tenth of the price of a comparable treatment in America or in Britain. For example, in April, Madras Medical Mission, a Chennai-based hospital, successfully conducted a complex heart operation on an 87-year old American patient at a reported cost of just a mere US$8,000, including the cost of his airfare and a month's stay in a hospital. The patient claimed that a less complex operation in America had earlier cost him US$40,000.

Following closely behind Singapore, India has six hospitals in the JCI

accreditation list. However, the biggest obstacle preventing the rapid growth of India as a healthcare destination is its relatively poorer infrastructure and the lack of quality hotels.

Medical tourism is also a rapidly growing segment of Thailand's tourism and healthcare industry. Lower labour costs translate into significant cost savings on procedures, compared to hospitals in the United States and other western countries. In 2005, one Bangkok hospital took in 150,000 treatment seekers from abroad. In 2006, medical tourism was projected to earn the country 36.4 billion Bahts. There is no better exemplar of the trend than Bangkok's Brumrungrad International, which looks more like a high-end hotel than a state-of-the-art hospital. In addition to having a Starbucks, a McDonalds and on-site valet parking, Brumrungrad also provides a visa extension centre, a team of well-trained interpreters to help with language problems, and 123 hotel-like rooms and suites where patients can recuperate after medical treatment.

Today, many Thai physicians hold US professional certification. A number of Thai hospitals have relationships with facilities in the United States. The US consular information gives the Thai healthcare system high marks for quality, particularly facilities in Bangkok. Unlike India, Thailand has modern infrastructure with clean and safe streets.

Regardless of its growing popularity, medical tourism has its limitations. In places like the United States where most have insurance and access to quality healthcare, modern tourism is viewed as risky. In some parts of the world, wider political issues can influence where medical tourists will choose to seek out healthcare. For example, in late 2006, some patients from the Middle East were

choosing to travel to Singapore or Hong Kong for healthcare rather than to the United States. A stable and secure Singapore will therefore serve as an additional plus point where patients want peace of mind and have to decide between our competitors and us.

The common limitations to medical tourism include the following. Government and basic medical insurance and sometimes extended medical insurance often does not pay for medical procedures overseas - meaning the patient has to pay cash upfront. There is usually little follow-up care. The patient is usually in the hospital for only a few days and then goes on a vacation portion of the trip or returns home. Complications, side effects and post-operative care become the responsibility of the medical care system in a patient's home country.

There are growing accusations that profitable private sector medical tourism is drawing medical resources and personnel away from the local population. However, some analysts argue that the biggest beneficiaries would be the domestic patients, as the cutting-edge medical technology needed to lure medical tourists and the international accreditors do prescribe detailed parameters and quality standards, benchmark and compliance norms, ensuring good standard quality for all patients. However, with an additional one million medical tourists expected in the next five years, more resources, such as medical manpower and additional infrastructure, should be built in order to cater to the increased demand anticipated.

Sir, in order to promote Singapore as a leading destination for medical tourists, we need to assure our world-wide medical travellers that we are able to counter such limitations as well as provide quality medical care and services over and above what our competing countries, such as

India and Thailand, can provide. While India and Thailand boast about their low-cost medical care and services to attract medical tourists, we need to relook at our cost competitiveness in order to lure medical tourists to our shores. It may not be feasible to compete dollar for dollar. Rather, we should position ourselves as being able to provide sophisticated and safe medical care, which is value for money. We must capitalise on our excellent pool of medical expertise and continue to attract the growing numbers of international professionals to Singapore for training, learning, sharing and networking. Investments in this area would help to ensure that our medical professionals stay at the forefront of the healthcare developments.

There is also a need to carve out special niche areas to better compete with our regional competitors. Our centres of excellence, such as the Singapore National Eye Centre, the National Neuroscience Institute, the National Heart Centre and the National Cancer Centre, offer complex quarternary care in the fields of ophthalmology, neurology, cardiology and oncology respectively. Aggressive marketing strategies should be undertaken to promote the availability of these very specialised medical capabilities in our centres of excellence. In addition, these centres should continue to engage in R&D, leveraging on the growing biomedical research in Singapore to develop new state-of-the-art medical treatments.

We should continue to engage in clinical research with the many pharmaceutical, biotechnology and medical technology companies, so that Singapore can remain cutting-edge in its healthcare services delivery. With world-class research capabilities in genomics, molecular biology, bio-engineering, nanotechnology and bio-informatics in place, we are in a good state to embark

on translational research, thereby extending our capabilities from basic research to clinical trials and, eventually, valuable outcomes at the clinical level. This would be one way of keeping Singapore's competitive edge and to enable our healthcare professionals to provide the latest innovative treatments and therapies, enhancing Singapore's reputation as the leading hub for healthcare in Asia.

As the term illustrates itself, medical tourists naturally need medical tour guides or ambassadors. Extending our services beyond medical care will naturally attract more foreign patients to Singapore. Besides quality medical services and relatively low cost compared to their home countries, foreign patients from the Middle East and other non-English speaking countries will expect to understand and be understood when they visit Singapore for both medical and vacation purposes. Although there are currently international patient service centres set up by many healthcare establishments exclusively to serve the needs of international patients, we will need to strengthen on personalised services, such as going the extra mile to learn their languages, cultures and behaviours. While most post-treatment rehabilitation and follow-up is one main concern to medical tourists, countries like Costa Rica offer residential and recuperative facilities dedicated solely to medical tourists at affordable rates. For example, according to its website, Villa Plenitude is a dedicated post-operative recuperation facility comprising 10 luxury rooms, all equipped with private bathrooms, cable television, telephone, a spa with Turkish baths, massage, aroma and physiotherapy spa, facials and beauty treatments, pool and Jacuzzi. Imagine, all these at the rate of US$100 for a standard package and US$150 for a deluxe package, which also includes dedicated professional post-operative care by trained nurses.

How are we compared to our competitors in the area of hospitality services? In order to compete regionally and globally, we need to constantly improve our services. Often-times, this requires thinking out of the box to give the oomph factor. As mentioned by Minister Tharman in his Budget Statement, the world is coming to Singapore. We are not just attracting more large investments and MNCs to Singapore. Our world-class healthcare services are also attracting many foreigners here to seek medical treatment. Globalisation is indeed working to our advantage and we must seize this opportunity to market ourselves and compete with the players from the region.

And I hope to believe that our original objective of attracting one million medical tourists by 2012 is a conservative estimate. Sir, on that note, I support the motion.

4.15 pm

Mr Speaker, Sir, by most accounts, this year's Budget is a generous one. Arguably too generous. Which government in the world would provide a GST offset package of up to 19 years? Does the Government have to go this far?

Contributors to REACH generally found it to be a “receptive” and “good and well-intentioned” Budget. It showed that the Government has listened compassionately and that concrete steps have been aken to address Singaporeans' concerns of the widening income gap and the rise in the cost of living. Indeed, to quote the gleeful boss of an SME, he said: "It’s a budget made in heaven!"

Many of the measures in this Budget, such as the two percentage point

reduction in the corporate tax rate and other tax exemptions and rebates, are bold and designed to enhance Singapore’s long-term competitiveness in the global economy. But, Sir, what is sorely missed this year is a widely anticipated cut in personal income tax. As the corporate tax rate is now lower than the top personal income tax bracket of 20%, there may be some incentives for sole proprietorships and partnerships to incorporate their businesses to avoid paying higher personal taxes.

Whilst only about 40% of the resident population pay income tax, a reduction in personal income tax rate would be welcome by the tax-paying middle income segment, many of whom lament that they contribute substantially to the state coffers and yet always seem to get the least benefits from any “hongbao” Budget.

Making the personal income tax rate even more competitive would also be an added attraction to draw high net worth foreign talent to Singapore. They are just as important to attract companies to locate here. In the same vein, many also feel that it is about time for us to see - pardon the pun - death of the death duty, which can deter wealthy foreigners from relocating and keeping their wealth here.

Aside from some of these unfulfilled wishes, there have been dissenting voices, including an audio clip by Mr Brown – he of the bak chor mee fame - of the GST increase cast in the form of a Valentine love story, which, to me at least, comes across as neither humorous nor constructive.

I now wish to highlight a number of challenges under the four headings where attention is warranted. Let me call them the 4 Bs.

The first B: Beyond Workfare

Mr Speaker, Sir, a key plank of this year’s Budget is making the Workfare Income Supplement (WIS) scheme a permanent feature of Singapore’s Budget framework. Coupling Workfare together with a restructuring of the CPF for low-wage workers, makes Singapore’s wage supplementation scheme unique. It provides the Government with the flexibility to channel more of the income augmentation under WIS to CPF as a form of compulsory long-term savings for the low-wage worker, and yet allows him to have a higher take-home pay.

Nonetheless, Workfare, which has been implemented in the US and in the UK for many years, works well in a tight labour market, since it will be easier for the unemployed to get jobs. However, in a downturn, the less educated and skilled are likely to be retrenched first, and would also have greater difficulty securing a job. There could then be pressure for the Government to create jobs for this group so that they can get back on the Workfare scheme.

In the US, for instance, many on the workfare scheme are found to be in non-productive, community service work which were probably created to get these people off welfare and into workfare. There could also be a moral hazard issue as some workers might have no incentive to upgrade since they can continue to get wage supplement, as indeed has been the experience in some countries.

Workfare thus cannot be seen as the panacea for the problems of the low-income workers. At best, it can only be an interim measure. The long-term solution must be to upgrade the skills of these workers and educate their young so that they can get better-paying jobs, get out, and stay out of the poverty trap.

Sir, whilst WIS may have become a permanent fixture of our social safety net,

those who are on workfare should be given as much help as possible to transcend the scheme and not themselves become a permanent fixture of the scheme. For the estimated 100,000 casual workers without CPF accounts, all of the Workfare Income Supplements they are entitled to, if they contribute to Medisave, will be paid into their Medisave accounts. The aim is to get these workers to join the CPF network and save for their future needs. However, some of these casual workers, who earn very low incomes and are already cash-strapped, may not join the scheme as this means forgoing the already precious little they have. Their immediate needs overshadow any lofty talk of long term-savings.

Hence, the Government should monitor the response of this segment closely and assess if the proportion that opts out is significant. If so, the Government could perhaps consider giving a small part of the Workfare in cash to offset part or the entire amount they have to put into Medisave to qualify for the scheme. As the incentive of the WIS to the casual worker is not immediately tangible, there is clearly a need to convince casual workers to get on the scheme.

The second B: Barriers to Employment

It is also commendable that the Government, through this Budget, will be allocating more training funds directly to workers instead of through employers to allow them to upgrade their skills. This would make training and skills upgrading portable, and help to mitigate the problem of older workers being overlooked for training opportunities as against their younger colleagues. Nonetheless, such measures are insufficient if there are still employers and employees who are resistant to change. For instance, as Labour Movement Minister Lim Swee Say has noted, we need to change the cheap source mentality of many customers and

employers to a best source mentality. As an example, some cleaning contractors bid for jobs at very low rates and, hence, can only pay very low salaries of about $500 for each cleaner in order to maintain their profit margin. With such pay, it would be very difficult to motivate our local workers to take on such jobs. One wonders if this is why there is an insatiable demand for foreign workers who have much lower expectations. Even if they managed to hire local workers, these workers may not be motivated to give of their best and job retention is likely to suffer. It is a vicious cycle. To break this cycle, besides enforcement and whistle blowing, the clients of these contractors themselves should also not possess this cheapest source mindset. The tenders should not be awarded solely based on price, but also on past performance and some minimum standards. The Government, as a major outsourcing client using the tender system, should take the lead in this respect.

Furthermore, we also need to get rid of any biases against older workers. In fact, the plight of the older workers may be even harder to tackle than that of the lower-income group. It is estimated that as at the end of last year more than 8,000 or 2.5% of all PMETs aged 40 to 55 are still jobless. A recent MOM study on the profile of older workers in Singapore also revealed that only 10% of those working as professionals or associate professionals and technicians were aged 50 and over. One suspects that the perception of a middle income squeeze has persisted due to the fact that many who are middle-income and middle-aged worry that they may lose their job anytime and would have difficulty getting another job that affords them a comparable standard of living.

This is a real problem as the next wave of globalisation could render many

jobs, which are currently held by the middle income, obsolete. Hence, with each restructuring and retrenchment recycle, more PMETs may find themselves redundant. We need to change the attitudes of employers to see them as a ready pool of employees with a wealth of experience to tap on, instead of seeing them as people who may lack energy and are difficult to retrain. Drawing on this pool of older workers could also help reduce our dependency on foreign labour. MOM could, for instance, incentivise employers to hire older workers, and employers who do not discriminate against age should be held up as role models.

At the same time, many of these older workers would also need to have realistic expectations and be willing to take on new jobs. For instance, in the South West CDC, we encounter many mature job seekers who do not feel confident to take on jobs which are different from what they were used to in the past.

Let me highlight another problem. MOM’s recent study on older workers has found that with the strong economic growth and tight labour market, the employment of older workers aged 55 years and above has increased in 2006. However, whilst the employment rates for men aged 55-59 years and 60-64 years are higher than those of the OECD countries, the corresponding rates for the women are significantly lower at 42.9% and 25.2% compared to 51.7% and 30.3% respectively for the OECD countries. Moreover, most of the rise in employment rates appeared to have taken place last year and more than two thirds (68%) of the older workers are employed in lower-skilled jobs such as cleaners and labourers. These clearly show that there remains significant room to enhance the employment of older workers, both in terms of employment rate and better pay, and especially among the women. These objectives should be vigorously pursued.

The third B: Beyond Foreign Talent - Babies still wanted