Hansard, 2009-02-03

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 (2009) To (2009) Mr Cedric Foo Chee Keng 03 Feb 03 Feb Er Lee Bee Wah 16 Feb 19 Feb Dr Ong Seh Hong 01 Mar 15 Mar

ABDULLAH TARMUGI Speaker Parliament of Singapore

1. Mdm Ho Geok Choo asked the Prime Minister in light of the report on Population Trends 2008 which indicates that approximately one in three persons in Singapore is not a citizen (a) whether this will increase further based on Singapore's foreign talent recruitment policies; and (b) what measures and programmes are in place to further strengthen communal bonds in anticipation of a greater divide between Singaporeans and the new immigrants.

Mr

Speaker, Sir, as of June 2008, Singapore citizens accounted for 65% of our total population and permanent residents (PRs) accounted for 10% of our total population. Our non-resident population, comprising transient foreigners working, studying and living in Singapore, made up the remaining 25%, or slightly above one million people. Foreign manpower accounts for the majority of our non-resident population.

Singapore's foreign manpower needs are highly dependent on the economy. The demand for foreign manpower fluctuates with the growth of the Singapore economy. The increase in the non-resident population over the past few years reflects our strong economic growth, especially in labour-intensive industries such as the construction sector. As we enter into a period of economic contraction, our non-resident population is unlikely to grow at the same rate as in the past. The current proportion of non-resident population of 25% may decline.

As our Total Fertility Rate is low, currently at 1.29, we will need immigration to boost our population. This is done on a selective basis, taking into consideration the contributions or potential contributions of the immigrants to our economy. Over the last five years, we have added about 58,000 to our stock of citizens, and 242,000 to the pool of PRs. It is important that we integrate these new citizens and PRs into our society so that communal bonds will be fostered and social cohesion enhanced. There are existing efforts to facilitate the process of integration in our schools, at the workplace and in the larger community. These efforts also reach out to potential PRs and citizens.

In our schools, the Ministry of Education facilitates the integration of new citizens, PRs and foreign students in

Singapore through structured activities and programmes, which are open to all students, for them to interact with local students, familiarise themselves with our culture and participate in community service. Home stay and host family programmes designed for foreign students also give them a chance to experience Singaporean family life.

The workplace is another important platform for integration. There are several ongoing efforts by companies to familiarise new citizens, PRs and their foreign staff with the local culture. These include organising familiarisation programmes to orientate newcomers on the key aspects of living in Singapore and celebrating key festive occasions such as Chinese New Year. Companies do this because they recognise that an integrated and motivated workforce is a more productive one.

In the community, the People's Association (PA) facilitates the integration process at the grassroots level through their 600 Integration and Naturalisation Champions (INCs). These are grassroots leaders who initiate and lead integration and naturalisation programmes in their communities to help new immigrants settle in and become rooted in our community. New citizens are also given the opportunity to learn more about Singapore through the PA's National Education Experience Programme.

Successful integration cannot be achieved solely through Government efforts. It is a two-way process. Singaporeans should support and welcome new immigrants into our community. New immigrants will need to make an effort to integrate among us. There will be inevitable differences between new and native-born Singaporeans, but together, we can strive towards a common future as Singaporeans. Existing platforms in our schools, workplace and the community will allow potential immigrants to better

integrate into our society and allow Singaporeans to have a better understanding of the needs of the potential immigrants. But more can be done.

Strengthening communal bonds and integrating native and new residents is an unending process which requires everyone to play a part. The Government is open to ideas and suggestions on what more we can do to facilitate integration, and on ways to strengthen existing programmes. We are working out a proposal on how we can further facilitate the integration of new and locally-born citizens. The Minister for Community Development, Youth and Sports and I will say more about this during the Committee of Supply Debate.

Thank you DPM for the comprehensive clarification. Just one supplementary question. On the employment scene, how and what specific programmes are there to address the growing fears and concerns of Singaporeans, with respect to increased job competition from foreigners, especially in this current situation?

Sir, the Acting Minister for Manpower has dealt with this question about fears of Singaporeans of foreign labour competition. For the Government, Singaporeans’ interests must come first but excluding foreigners from coming here to work when there is a legitimate need for companies to hire them will be against our long-term interests. In fact, for Singaporeans, there are a number of programmes which the Government has instituted to help them. The Workfare Income Supplement (WIS) scheme is one that helps to supplement the income of our Singaporean low-wage workers. Our SPUR programme is specifically targeted at Singaporeans to help them upgrade and improve their skills. The Jobs Credit Scheme recently announced by the Finance Minister is one that helps Singaporeans keep their jobs by

helping employers to pay part of the Singaporean workers' wage costs.

Companies also adopt flexible working hours and arrangements so that workers can continue to work without being retrenched. We have to consider all the factors, in order to keep Singapore's economy competitive. We are not the only one that attracts foreign labour. Many countries also depend on them and, of course, different countries will adopt different policies during difficult times like during this recession. We cannot follow what other countries do blindly. We have to adopt policies which will suit our long-term interests, without sacrificing the interests of Singaporeans. Telling foreigners that they should go first is not going to serve the interests of Singaporeans, particularly when companies continue to need manpower in order to keep their businesses going and when competing with foreign companies and they also need to keep their products cost-effective and so on. Therefore, all our programmes must ensure that our companies can continue to survive in their business so that Singaporeans can continue to find work.

2. Dr Loo Choon Yong asked the Minister for Finance whether any Government-linked company (GLCs) or agency has directly or indirectly invested in the business of Las Vegas Sands, its subsidiaries, associated companies or associated entities.

(for the Minister for Finance): The Government does not disclose specific investments made by its agencies. GIC and Temasek make their own investment decisions on a

purely commercial basis. Temasek, however, makes it a practice to disclose all investments of significance, and its listed subsidiaries are required to do so by regulations.

If the Member is asking whether the Government has directed or suggested to any of its agencies or companies linked to it, that they should invest in Las Vegas Sands or its subsidiaries and associated entities, the answer is a categorical, "No".

3. Dr Loo Choon Yong asked the Minister for Finance (a) whether he is kept informed of the real or potential contingent liabilities of all Government agencies, Government-linked companies and investment entities; and (b) whether his Ministry keeps a register of all such contingent liabilities.

The Ministry of Finance (MOF) monitors the financial position, including any contingent liabilities, of all Ministries and Organs of State, statutory boards, as well as holding companies which are owned directly by the Government.

MOF compiles annual returns from all Ministries and Organs of State on any guarantees they have provided, promissory notes issued, outstanding contributions to international organisations, as well as statutory obligations under the Acts. Any guarantees provided by the Government must be approved by the President.

MOF also requires all statutory boards to submit their annual audited financial statements. Any contingent liabilities of the statutory boards would either be

provided for in these financial statements or disclosed within the notes to the financial statements. These financial statements are presented to Parliament.

As for the holding companies which are owned directly by the Government, they are managed independently by their respective boards. As with the private sector, these companies submit to its shareholder, in this case the Ministry of Finance, regular reports on its financial position and performance, including contingent liabilities, if any. MOF does not micro-manage the liabilities or contingent liabilities of the companies.

Is the Senior Minister of State aware that there are known-unknown and unknown-unknown, meaning that there are contingent liabilities or options given by Government agencies or Government-linked companies that they themselves may not be aware that there is a contingent liability. How do the external auditors, auditing based on letter of representation, make sure that the known contingent liabilities and the unknown contingent liabilities are surfaced and be provided for?

Mr Speaker, Sir, I do not know specifically what the Member is referring to but I would give him the assurance that this is done on an annual basis and in full compliance with the accounting standards, which are established against international benchmarks. The accounting profession keeps pace and reviews the assessment of the different contingent liabilities. Any new revisions would be watched carefully by us and adopted, where appropriate. So where there are new developments, which have been accounted for or adopted by other jurisdictions, we in Singapore would, likewise, follow very carefully whilst at the same time, we would do our own assessment as well.

Will the Senior Minister of State please look deeper into this because there are situations that she mentioned – guarantees and all that – which are known liabilities? But very often, when people hedge with the intention of protecting their positions they actually end up with open positions. Big companies' operations, seasoned investors in the region, have gone into these sorts of situations and got their fingers burned, where they lost more than the principal. They are indebted because of the position that they have taken and these are open positions. For example, products like –

Dr Loo, no speeches, please.

Yes, thank you.

Sir, I understand what the Member might be concerned with. Ultimately, the Government would track all the entities that are directly accountable to it. As for the companies that are the subsidiaries of the holding companies, then the boards and the management teams would be held accountable and the Government would expect them to do the appropriate due diligence, have the understanding and the risk assessments, before they take on these investments.

4. Mdm Ho Geok Choo asked the Minister for Community Development, Youth and Sports given the strategic aim of the Kallang Sports Hub project to broaden future growth and employment opportunities for Singaporeans, whether the Government will prevent any further project delays and make credit more readily available to the Singapore Sports Hub Consortium.

Mr Speaker, Sir, the Sports Hub Project is a public-private-partnership (PPP) project, where the consortium that has been awarded the project would tap on the financial markets to provide the necessary funds to build the infrastructure and carry out the programming.

The Government would, in turn, pay the consortium for delivering and operating the facilities, through annual payments over a five-year period. Given the current conditions in the financial markets, the consortium has found it difficult to raise the necessary amount of funds to start the project.

The Government is in active discussion with the consortium to address this and options on how to move the project forward. Discussions are still on-going. When ready, we would make an announcement on how we intend to proceed with the project.

Just two supplementary questions. One, does the Government have any final deadline beyond which the Sports Hub Project cannot be further postponed? And if so, when that would be?

The second question: can the Ministry provide an analysis of the potential lost revenue from deferred or lost sporting events because of these delays, which currently total two years, from the original completion date of 2010, to 2012?

Mr Speaker, Sir, may I answer the supplementary questions?

Yes.

Sir, I hope Members will appreciate that the negotiations are still ongoing, and I do not want to make any public announcement on deadlines or on analysis of losses, because that will compromise our negotiating position.

"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 2009 to 31st March 2010",

recommendation of President signified; presented by the 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 2009/2010, and to be printed.

"to provide for making supplementary provision to meet additional expenditure for the financial year 1st April 2008 to 31st March 2009, both dates inclusive",

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 2009/2010; and to be printed.

Order read for resumption of Debate on Question (22nd January, 2009),

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2009 to 31st March, 2010." – [Minister for Finance].

Question again proposed.

12.18 pm

Mr Speaker, Sir, I rise in support of the Budget 2009/2010.

First of all, I want to say that the $20.5 billion Budget before us is a good budget that attempts to balance short and long-term issues while having the right intent of assisting companies, retaining jobs as well as building long-term competitiveness. The Government's reaction so far has been one of prudence, recognising that there are more bad news to come and has indicated that it has some cards in reserve, to deal with when the time comes. But the question is: should we be prudent or aggressive with the Budget?

Sir, the 1% cut in the headline corporate tax rate will mean little to companies facing losses and cash flow crunch. Similarly, incentives to invest in R&D may not be first on the wishlist of CEOs facing pressure to shrink their operations, lay off staff or find financing for work in progress. These measures have their place, and will work to strengthen our economy in the long term. The challenge, however, is to ensure that when these measures start to kick in, we will still have many more players in the economy that we now have. These measures could have waited until we have stabilised and helped companies survive first. Then we can quickly introduce the same initiatives in which, I believe, we would still be ahead of the curve and better-placed to benefit from them, perhaps one year from now.

In the short term, our well-intended long-term moves may only have a marginal impact on our economy. The real downside to unveiling these now is that it distracts us from the current problems that all of us are facing.

Sir, in a downturn, there are no heroes, only survivors. So, in this year's Budget, I do not think we will be rewarded or thanked for doing so much for the long-term competitiveness of our economy. We must be focused on helping Singaporeans and companies in Singapore survive, leaving the long-term planning later. What we need is a survival-focused budget.

We have built an economy on strong foundations, but today these foundations are under pressure. Worldwide, banking and financial systems are failing or foundering. Confidence and demand are at a low ebb, and cost competitiveness has become a major issue. We should bring ourselves back to the basics today with a survival Budget, as our founding fathers did when Singapore became independent.

So what does a survival budget look like? First and foremost, a survival budget must carry with it a mindset that extraordinary times need extraordinary actions. Most of us alive have never seen such a synchronised melting down of the global economy. It is a downshift of epic proportions. This is not time for business as usual.

Sir, I would like to applaud the Government for taking the extraordinary action of digging into the reserves to help defend our economy in times like this. The reserves, as we have been educated, are meant for a rainy day and it cannot get worse than this day, and it cannot get worse than this day. I still remember the lesson I learnt in this House from Minister Mentor Lee during my first term as an MP, "that the reserves are not for the past, neither are they for the present but are meant for the future." And today, we are talking about surviving the future. We must thank all the past Governments for operating with this principle because had we been too quick to dig into our reserves in the past downturns, we would today

have less to help us when we really need it. The fact that we are able to use our reserves today to help us, gives us greater confidence that we have enough resources to weather the storm that is coming our way. Had we depleted our reserves in our early years, today we would be losing hope, and hope is something Singaporean cannot afford to lose in this environment.

I support the Government's move to use the reserves for only extraordinary one-time actions and not to fund ongoing operating needs. This is the principle that has been clearly laid out. We cannot get into that habit of spending it for operating needs because if we do, in no time we will deplete all our reserves and erode our capability of defending ourselves from future turmoil. For all other Government expenses, we had the foresight to change our Government revenues from the reserves from Net Investment Income (NII) to Net Investment Returns (NIR) last year. I believe that by using the NIR approach, we should have more than enough to fund the future needs and also to support the needs that we have right now. If the NIR becomes insufficient, instead of digging to the reserves again, we should question if our reserves are well-managed by GIC and Temasek and change the way they operate to make sure that we get the returns that we need to help the Government operate in the future. This is an issue that I will raise again during the MOF Committee of Supply.

While I am happy about the Government's boldness to use the reserves as an extraordinary action, I am afraid the approach taken by some Government agencies and Ministries appears to be business as usual. The standard operating procedures (SOPs) used in the past, we must understand, will not work and may even hurt us in our efforts to try to recover quickly from this downturn.

Sir, the Nobel-prize winning economist Paul Krugman explains that when depression economics prevails – I am not so sure whether we are in a depression yet but it looks like it – the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly. We must take this to heart right now.

Let me explain with three good examples of how some of the Government agencies are operating like business as usual. First, in the 4th quarter of 2008, JTC, HDB and SLA were still increasing rentals effective 1st January 2009. I can understand that they operated based on lagging indicators of market rates, but such agencies should have taken the lead by stopping any increase in rentals as early as possible. They may even have been applying the well-intended 15% rent rebate based on the new increased rent, which would nullify the purpose of this measure - the 15% rental rebate. As lead agencies, they should have stopped rent increase; in fact, even reduce it as early as the 4th quarter last year.

The second example of business as usual seems to be the one on financing schemes. They first announced some changes in November to help companies have better access to financing. In an ordinary downturn, these measures would have helped. I have looked at this many times while I was doing work on financing. They would have helped in ordinary downturns. But in a downturn like what we are seeing, these do not seem to be effective. Therefore, the Government-supported lending schemes had to be tweaked two times; once, after November and again, during this Budget. In an extreme financial meltdown, we should have been bolder from the start to do it all the way, rather than doing it three times.

Similarly, with the area of training. After first announcing SPUR, the Government had to announce two more enhancements in two months, indicating again that we were too conservative in the first place. We will need to be bolder than this to survive. Sir, I am not criticising all of these things that we have introduced. The SPUR and the financing initiatives are all very good initiatives. What I am saying is that we should have been bolder and done more right from the beginning, and take it seriously that the environment ahead of us is a lot tougher than what we think.

Sir, the Budget should have focused more on survival than longer-term issues, as I mentioned earlier. We should have perhaps call it a "survival and building resilience package", which will immediately shift the focus to the pressing need for survival.

The Economic Restructuring Committee of 2001 was convened in response to a series of downturns and the Government felt that we needed to find a more sustainable model for growth as we developed as a nation.

Today's challenge is perhaps as severe a test as we had faced since our independence. By the time the world comes out of this downturn, the global landscape would have shifted drastically. Old models and development strategies will have to be significantly altered. We need to anticipate this and do what it takes to succeed in this new world order that is about to come.

The Government has been quick to say that this downturn is not caused by structural issues in Singapore. In part, I disagree. Some of our costs issues have been neglected for some time in the boom years of 2006/2007. In the restructuring effort, we should be open to, as far as possible, correcting the policies that may

have created these issues. We will then be better able to compete and pull ahead when things are back to normal. I urge the Government to take the lead to quickly convene a 2009 Economic Restructuring Committee. I think it will do us good to help us survive and also to prepare for the future.

So, what should be our policy priorities during this downturn? As I see it, there are three main areas that require our urgent focus: demand or income for households; costs for all; and, lastly, cash flow, which is mainly for companies but also for households.

Let me first begin with demand. It seems counter-intuitive to be thinking about stimulating demand in such an open economy as ours because of leakage of import payments. However, although our growth is built largely around external demand, we can rely on domestic demand to contribute to overall GDP growth. Even if it will have a small impact, it will still be useful. How can we do this?

It appears to me that the most effective way to stimulate local demand would be to temporarily cut GST by the 2 percentage points that we had introduced in 2007. This will be more effective than the additional GST credits announced in this Budget. A recent article in the Straits Times by an economics professor explained that for Singapore's GDP, the 2% GST increase in 2007 resulted in 1.5% increase in CPI, and therefore, eroded the real value of assets by the same proportion. This was computed to be about $6.6 billion of capital spending loss for a GDP of our size. The additional GST credits of $580 million appear small compared to this loss. The GST increase has produced a negative effect on spending and if its cutback can produce even a modest stimulus to consumption, it should be considered.

Tourist spending should also follow the same pattern should we temporarily

roll back the GST increase. Every small stimulus must be explored and the benefits of a temporary GST roll back are worth our effort. In one to two years, we can restore this, so that we do not overly compromise our long-term fiscal restructuring and the tax structure that we have put in place.

Sir, I applaud the Government's plan to spend more to boost demand. We should, however, diversify the demand throughout the economy. Most of the infrastructure projects that have been announced, as I have read from the papers, which is close to about $11 billion in value, will benefit mainly the construction sector. The surge of projects now will keep construction costs high, but may lead to a huge drop in the future for this industry as projects for the future are brought forward. In fact, the pipeline of projects for the construction industry are already full for the next couple of years. So adding more may not be effective. It may be better to spread projects over a longer period of time.

The same Government dollar should, in fact, be spent in a diversified manner to spread the benefit to other industries. For example, spending on the IT and energy sectors could additionally lead to future savings, especially if we work on renewable energy type of projects.

Sir, Government agencies should tweak their procurement policies to give more businesses to local SMEs. This will be the fastest way to boost demand for many companies. I am not suggesting protectionism but instead to level up the playing field so that our smaller companies can get a greater pie of the Government's business. This change made now will go a long way in helping companies survive this downturn.

Sir, the second survival issue is one of cost. High costs are now a problem that would have hurt us even had the

recession not come. In the two years preceding this downturn, our "growth at all costs" policy led to structural cost issues in Singapore. This will worsen the impact of the recession for our companies and households.

At the recent Singapore Perspectives Conference, organised by the Institute of Policy Studies, one of the consensus items that came up was that Singapore's cost structure should be reviewed. Living and doing business in Singapore need not necessarily mean putting up with high costs. High costs do not have to be inevitable here. We now have a unique opportunity to fix and decide what is the right structure for Singapore's economy is for the next 10-20 years. Sir, the 2009 ERC is convened to make this its priority.

We can also implement meaningful cost-cutting measures now. But what I really like about the Budget this year was the savings that were achieved through the job credits. This, in addition to being a wage saving for employers, was also a move to save jobs. This key initiative is timely and helpful. I do not agree with some who had commented on this, who prefer a CPF cut as a blunt tool to lower wage cost for companies. I think CPF is already insufficient for retirement for most Singaporeans and I believe it is at the right level now and we should not touch it. The NWC has announced recommendations for wage cuts and, together with the Job Credits Scheme, we should try to make things work and incentivise companies to retain jobs. I notice, however, that President Obama in the US had recently dropped a similar US$3,000 per worker annual Job Credits Scheme. We need to understand why the USA dropped their scheme so that we can strengthen ours and ensure that our Job Credits Scheme is effective as intended.

Sir, aside from wage costs, we need to deliver additional cost savings to

employers and to companies. Assuming that the Job Credits Scheme saves about 9% of costs for companies, which is about the effective CPF savings, that is 12% of job credits, they will still need higher cost reductions to survive because, for many businesses, the demand has dropped by up to 50% in some cases, and not just by 10% or 20%. I believe we could have reduced costs in a number of ways. The proposed temporary GST cut will lower costs for companies and households across-the-board. In fact, I favour a 2% to 3% GST cut more as a lever for cost reduction than as a demand driver although it should achieve both. The UK has responded in a similar way as they have cut their VAT by 2.5 percentage points. Additionally, the impact on revenue of a GST rate cut will be negligible if one considers the savings from not having to give out more GST credits and the expected increase in spending by individuals and companies had the GST been lowered by about 2%.

I applaud the move to help reduce rentals by giving the property tax rebate. If fully passed to the tenants, the rentals savings are expected to be around 3-4%. There is, however, much concern that the property tax rebates given for commercial properties may not translate to lower rent for tenants. This has been part of the experience in the past. We did give this kind of tax rebate to landlords who mostly did not pass it on to their tenants. And I fear that the tenants may not see the full impact of this property tax rebate. And if this were to happen, we will not help companies save costs and could even lead to companies not able to survive because rents are already very high. I therefore suggest that the Government modify the scheme to give rental rebate coupons directly to tenants who could then use these coupons to pay part of their rent to the landlords. The landlords will in turn encash these coupons from the Government as part of their property tax

rebate entitlement at the same level that was announced.

Of course, another way to ensure that the benefit is not swallowed by landlords would be to pass an edict to landlords to reduce rentals - and this was a move recently taken by the Dubai government. I do not favour this. I prefer the first approach. But we could do that to help our tenants.

Also, we could have taken a more bold measure in cutting Government fee charges instead of just freezing them. A good place to start will be to look at all the rates and charges that have been increased over the past two years, and peg them back to, say, 2005 and 2006 levels. This will help de-escalate the cost increases imposed by Government agencies over the past two to three years.

What else could the Government do to help reduce costs to companies and Singaporeans? Well, we could have, perhaps, for Singaporeans, introduce foreign maid levies for the next one to two years. We could have given U-Save rebates to companies like what we did for individual households. And I think the Public Transport Council (PTC) could have been fast to recommend reduction in transport charges. We could have reduce ERP temporarily. There were a list of 18 cost increases that were announced last year. I will not go through the 18 reductions this year. But the point is: we could have done a lot more and all of them may have had a minimal impact, but if taken together, they would have been very significant for businesses.

I feel that the cost, as an issue, has been underestimated as a problem by the Government. I hope to see the cost issues dealt with more urgency in any off-budget measure the Minister may be planning, and I hope it happens soon. I point out that cost reductions will also have the

effect of increasing available cash in many cases. This, if spent, will circulate in the economy.

The survival issue 3 is on cash flow and this is especially for companies, but also for households. To ensure that our companies survive this crisis, we need to increase their cash flow, and to help them increase it. Not every company can be saved, but there are companies that still have viable businesses and, through financing, can remain alive. For these deserving companies, we must ensure they get the financing they need. Other companies that are weak, unable to compete and without visibility of demand returning back soon, may not be worth saving.

Sir, despite the two enhancements made since November last year, banks are still not lending the way we want them to. These measures did not address the core problem that banks' lending patterns have changed.

I hope that the SRI announced in the Budget 2009 will make things better. Although the Government has avoided direct lending, this is increasingly being seen as the only way to get liquidity out and flowing again. In UK, for example, the credit guarantee schemes did not work and Prime Minister Gordon Brown is now considering direct government involvement in lending. In Japan, the government is almost directly involved by providing 100% guarantees on loan losses. This is targeted specifically at SMEs, who have seen among other things a significant drop in profits. Loans of up to about JPY 280 million (which is about S$4.75 million) per company is available and the Japanese government had put aside 6 trillion yen for this scheme. This is as close as the government lending directly but is done through banks.

While I can understand why the Government is sticking to tried-and-tested

methods to lend money through the financial institutions, we must be mindful that the banks and financial institutions are all facing restructuring issues and will not go back to being aggressive lenders very soon. In fact, lending to companies whose profit is dropping is anathema to private lenders. Even though I support market-driven lending, and I have said it many times in this House, we cannot wait for the banks and the financial institutions to get their act together to restart lending to companies. There is a strong case for Government being more actively or even directly involved in lending.

Sir, in today's world, many countries, including developed nations like Canada and Taiwan, still have government-owned banks and institutions involved in lending to companies, particularly to their small and medium enterprises. In our early days, when the banking system did not work in Singapore, we had a development bank to help finance companies. Today, our financial systems also do not seem to work. We may have to go back to the basics again, but whether we start a SME bank or do it another way, the way the Japanese government did, I am sure that we can all come up with a solution that is equivalent to it. The goal is that all deserving companies must get the financing that they deserve.

Sir, there are also companies that have strong capabilities that Singapore should keep but which, because of the extraordinary situation that we are facing right now, may not survive, even if we extend to them short-term loans. As an example, the semi-conductor industry, I believe, is about to see an unprecedented number of failures. The Government, I suggest, should set aside a rescue fund to rescue such companies by investing directly in some of them. Any Government rescue package, which may involve both direct investments and

lending, should be tailored to allow the stakeholders, especially the entrepreneurs, to earn back their ownership, with the Government's return on investment being revenue neutral, if possible. In this way, we will encourage the stakeholders and incentivise them to remain in the trade. Otherwise, they will exit the trade and the core competence that we have developed over the years may be lost and it may be very difficult for us to rebuild these things again. I understand that the Government is not the best judge of which companies to lend to or to invest in or to rescue. I therefore suggest that we set up a Corporate Rescue Task Force to assist the Government to decide which companies to rescue. This kind of groundbreaking measure will be appropriate for the challenges that we are facing. Sir, corporate rescue is going on all over the world and I think we have to start thinking of doing down here too.

In fact, Temasek, which has suffered significant losses in the past few years investing overseas, could perhaps be tasked to help rescue local companies and re-focus locally, a role that it has traditionally excelled in.

Sir, what about households? For households, particularly the middle-income, I had wished that we had removed the $2,000 cap on the tax rebates that we had given. We did it last year when times were still good - we did give a $2,000 rebate. But in this extraordinary time, I think we should not have done the same as what we did before. I think it is a right time to let such households have more cash in their pockets, whether to help them save for a rainy day in case they run into trouble with their jobs or to spend as necessary.

Sir, one of the biggest worries I have is the foreclosures by banks, especially on HDB flats. I would like to propose that HDB consider deferring the principal mortgage payments of homeowners who

lose their jobs. Private lenders should also be tasked to do the same, ie, the banks who are lending on the HDB properties. This will relieve the unemployed Singaporeans from their single largest drain of income, and they will only need to pay interest payments, and this will help them a lot. Any foreclosures, whether by HDB or private lenders, should be reviewed by the Government at this stage to ensure that the people who are coping with the sudden job loss, do not also lose their homes undeservedly. To assist the private lenders, the Government perhaps would like to consider insuring some of these loans as we are doing for the corporate loans.

Sir, the best way to help Singaporeans is to help them secure a reasonably well-paid job. We must tweak our employment rules to help Singaporeans become preferred employees. This was an issue we discussed during Question Time just now. In the last two years, we have gone a bit too far in allowing many foreigners to take up jobs that Singaporeans could do. This has also eroded the wages for such jobs as foreigners are able to live with a much lower wage. We need to curb the rampant influx of unskilled and semi-skilled foreign workers so that we keep wages for such jobs attractive for locals who can also do these jobs. I am not saying that we reverse on the foreign talent policy. I agree that we need to have foreign workers and foreign talent but when you have a petrol pump attendant who is a China national versus a job that was done by our senior citizen, I would have preferred a senior citizen to do that job, even if the service is a bit slower. So we need to think about how we can reserve some of these jobs for Singaporeans.

Sir, in conclusion, I think that the Budget is both pro-business and pro-people because cash flow issues have been addressed and the Jobs Credit will

help save jobs and it goes some way to help reduce cost. The Budget could have been even more pro-business had the Minister placed greater focus on cost reduction. It could also have lowered the cost of living for all Singaporeans with additional help for the middle-income, making it even more pro-people. Sir, we must address all the three key areas of demand, cost and cash flow if we want to be resilient and come out stronger. While the real issue of the whole meltdown in the world is demand and loss of confidence and the collapse of the financial industry, cost and cash flow are starting to be very important factors that we also have to look at. Sir, we need to be bolder and be prepared to err on the side of being too aggressive than of being too safe.

Sir, as I mentioned, on the whole, the Budget is a good one. I support the Budget and I look forward to more off-budget measures to address some of the issues that I have raised.

12.45 pm

Mr Speaker, Sir, thank you for allowing me to speak on the Budget. I rise in support of the Budget Statement FY 2009 presented by Finance Minister Tharman.

Let me first say that the Budget is well thought through. I personally thought it was thoughtful, decisive, innovative and simple to understand. The focus of this year's Budget addresses the immediate challenge of helping viable businesses keep their employees in jobs, support businesses facing cash flow issues, as well as help them stay competitive. This will prevent the situation from getting worse, as rightly pointed out by Minister Tharman. Keeping people employed will increase confidence during these troubling times.

The measures proposed are innovative and bold to address the current economic conditions that we are facing. I must commend that the jobs credit really was something I thought was really very thoughtful, as it was direct and simple. I hope that as we execute it, it will also be simple in terms of ensuring that the impact is felt.

Early feedback from companies that I have spoken to has been that many of them, large and small, are actually very impressed as well as keen to see the impact, and how direct it is to their bottomline and therefore helping businesses and, more importantly, helping people stay in jobs.

I would also like to say that the focus, apart from just looking for more measures or to be more extensive is really about execution. I think the focus needs to be on execution to ensure that we achieve the intended impact. We talk about confidence. We talk about demand generation. I think decisive execution will build the confidence. Whatever measures that are in the Budget, I think what is important now is that we ensure that it is executed and the impact, whether we are talking about rental rebates or whether we are talking about jobs credit, really go where they are intended for.

Sir, I think the continual focus, as my colleague, Mr Inderjit has talked about, is on cost, I am not going to elaborate more on this because he has covered quite extensively on the possible areas to further address the cost challenges. I think this is real. It is not an easy area to solve but it is real for companies operating in Singapore. We have had feedback and this is an area, I hope, that there will be continued focus to ensure that we address and continue to improve the cost of doing business in Singapore, as this will not only help drive confidence for

businesses operating in Singapore but also encourage more investments.

Sir, we recognise the grave economic conditions we are facing today and that they are unprecedented, given the impact, not just locally but world wide and globally. Hence, the decision to draw on the past reserves is justified. However, as much as I would like bold measures to be taken, I want to say that I am also concerned about whether this is going to set a precedent. I do want us to ensure that prudence will be exercised, as it previously has been, to safeguard the reserves and ensure that this does not become an easy option for future challenges that we face.

The Budget seeks to enhance business cash flow and competitiveness through the tax measures, grants, jobs credit and training. Besides helping viable businesses weather the storm, the primary focus seems to be, to some extent, on maintaining the current businesses. The bias seems to be on keeping jobs. But is this sufficient if demand is not forthcoming?

Sir, striving to maintain the status quo, despite some challenging times as well as waiting for the economy to recover, is not going to be good enough. We do not know how long and deep this downturn will last. So, while we must do what we can do to preserve jobs, we must also create jobs. We must find new ways to drive new markets and increase confidence and spending. Companies will still need to reinvent. The question many ask is: can Government intervention help drive demand in consumption and spending, apart from the infrastructure projects, and can these be sustainable? Will giving subsidies or giving vouchers or having more tax cuts encourage spending and sustain demand? Will people increase consumption if they had more cash or would they be more inclined to save during these tough economic times?

Sir, I think one of the ways is – again, I go back to the question of confidence – building confidence so that we ensure that there is confidence in our workforce, our companies and our goods and services to stay attractive, and hence attract investments in Singapore and therefore drive demand.

I must also comment that the current daily dose of bad news does drive the reality of the severity of the recession. I think many of us have recognised that and it is registering in all aspects of the Singapore economy. I think it is time that we also drove hope and confidence in this climate, while maintaining a sense of realism of the current situation.

Sir, I support the fact that the Budget looks to keep people in jobs, as I believe that this will help the confidence for spending and hence drive demand, which is necessary to sustain the economy, as I have touched on earlier. The Budget does have a strong emphasis and bias to those in the workforce, and to keeping people in their jobs. This is understandable as people, by staying employed, will be able to continue to support their families. The jobs credit, however, cannot be expected to keep everyone in their jobs. Businesses must, however, remain viable to keep their workforce.

We have to also keep in mind that there are those who are not in the workforce, eg, retirees, new job entrants. We have many university and polytechnic graduates who will be coming out, raring to go, looking for jobs. I think that this is an area that we really need to seriously consider as to how we are going to address this segment, because it is not just about keeping those in the jobs, but it is how do we ensure that there is sufficient demand and that there will be jobs for the supply that is coming out.

Sir, let us now switch gears. A point that I would like to touch on is about

resilience. I am glad to see that the Budget also looks at investing and building for our future. As we continue to build for the future and the heartware of the Singapore society – I think we have also touched on that in the Budget about building the software of our society – I also hope that we build the hardware of our society. The Budget speaks of efforts to enhance quality of both education and healthcare. I think it is important that efforts in these areas be focused more, not just on the expertise and the technicalities of education and healthcare, on quality of education and healthcare and also include the experience of the patient as well as of the student going through the education system.

For the patient, quality care is about getting the right treatment. However, the well-being is more than just receiving the right medical treatment. It is also dependent on how patients receive the care. Let me give Members a very stark example. If a patient is left to wait for treatment without information or attention while waiting, this not only can be upsetting for the patient but, more often than not, can cause stress and anxiety and affects the end outcome of the well-being of the patient. So, as we look at the hardware and the software, let us also make sure that we look at the quality of the care that is given and that the Budget be put to look at that as well.

Similarly, for education, while we strive for excellence and a well-rounded education, how do we ensure that it is inclusive and that it helps reach as many students as possible? Let me just use a sports example to illustrate this point. The emphasis of excellence in sports can, at times, limit the reach. Say, if students want to take a CCA, given limited resources and the emphasis on excellence, they have to go through trials in order to qualify for the CCA. What this means is that those who are not exposed earlier to that particular sport but may

have the aptitude but never got the chance to take the CCA, would never be able to contribute or learn the sport.

I would like to share an example from my own secondary school days. Netball was a popular sport in my school. Although resources were limited, both in space and in the netball courts that we actually had, those who wanted to play the game and take it as an ECA – at that time, they called it the ECA and I am dating myself here – were given the opportunity to do so. This has had a positive impact on enlarging the talent pool and the appreciation for the sport. The sport and the resources were not limited to only those who play the game well or who made the school team. At the same time, our school team competed and still did well. This analogy applies as well as to the school system and the curricular. So, as we look at building the character of individuals in schools, I hope that we also look at enlarging that reach, not to limit the numbers that we are able to reach, given limited resources.

Just to emphasise the point, let me just use another analogy of the marathon. The thing about the marathon is that everyone, no matter how slow or how fast a person runs, he gets the ability to run his own race. I hope that as we move forward in looking at how to survive in these difficult economic times, we do not just look at saving the few, but we take as many along as we can, because when the economy does recover, that will stand us better in terms of being able to also ride the new wave.

Sir, the Resilience Package is not just about resilience of jobs and employment, we must also look at the resilience of a society. We must move from the individual and independence to interdependence. Independence is necessary but there must be a fabric of

interdependence in our society. Do we ask the question of what is in the Budget for me versus what is in the Budget for Singaporeans and the Singapore society? Resilience is more than keeping the economy going, but keeping the Singapore society going. This calls for more than the Government and the Budget making an impact and difference. It calls for all Singaporeans to come together to make a difference, especially in the challenging times that we face with the recession and the uncertainty of when we see recovery, all the more it is important that we are inclusive. With this, we will, as a society, be able to drive greater impact with our limited resources to build capability for Singapore and ensure that we have a deeper change to come out of this even stronger.

Sir, with that, I support the Budget for FY 2009.

12.57 pm

Mr Speaker, Sir, I rise in support of the Budget.

For many of us who have gone through previous crises before, this is probably one of the worst. I would not say probably, I think it is definitely one of the worst. The speed at which things have unravelled and the severity are clearly unprecedented. And I want to tell Members that that is probably the single most common words that we frequently heard when we spoke to companies.

Only a few months ago, we met a number of big electronic MNCs to discuss with them about the future growth of their companies, and almost all explained to us their plans in order to grow their companies. But, today, the same MNCs that we spoke to are facing severe capacity problems. Many of them have seen their volumes gone down a lot – in some cases, almost 70%. What is even

more worrying is that many of them were not even sure when the upturn will take place. Some even shared with us their difficulty in making projections for this year, as there were no orders coming in.

Workers, too, have been badly affected by this recession. Many have had to take pay cuts. Overtime, which constitutes about 20% of total wages of workers, has been slashed. And about 20,000 workers in the electronics sector, for instance, are now on shorter work weeks and others are affected by either temporary layoffs or by rescheduling of their work. As there are about 90,000 workers in the electronics sector, this represents about one-fifth of the entire workforce. From the last quarter of 2008 to the end of March 2009, companies have projected that the total man days lost will be about 189,000.

But we need not lose heart because we hear so much of gloom and doom everyday, like Ms Jessica Teo mentioned, in the newspapers and in this House as well. I think we need not lose heart. We are entering this recession, in my view, with a lot more of gunpowder and ammunition compared to the recessions in 1997, 2001 and 2003. Why do I say that we are entering this recession with a lot more gunpowder and ammunition? It is because of the two very important Budget measures, and that is the SPUR programme and the Jobs Credit Scheme. These are two very important key pillars under this current Budget and which will help us a great deal in terms of helping us to save jobs as well as to overcome the recession.

But that alone is not sufficient. If we were to compare to the recessions in 1997, 2001, 2002, 2003, our training infrastructure was not so well developed. But this time round, we have the Employability and Employment Institute which is meant to train workers and to help them find jobs, as well as to help those who are already employed to continue to reskill, upskill and keep their jobs.

Our unions and companies are also better placed now as we have a clear process on how to deal with excess manpower partly because of the tripartite guidelines on managing excess manpower that were reached by the tripartite parties.

Our message to companies is clear. Retrenchments must be the last resort. So, when companies approach us, we would first ask them to look at the alternatives and we then sit down and work out with them on how to cut their costs without having to retrench workers. So, we explore various options such as rescheduling working hours, shorter work weeks, temporary layoffs, or non renewal of the foreign workers employment contracts. We also expect companies to cut other costs as well such as unnecessary travels, entertainment, replacement of cars, to name a few. Also, when top executives take the leadership in pay cuts and show that they too are prepared to sacrifice, such as the case of Chartered Semiconductor where the senior managers took up to about 20% pay cuts, it is a lot easier for workers to accept cost-cutting measures, as well as even to accept retrenchments if this is necessary. We also remind companies that wage cost is but one component of the total cost of production, so they need to see things in perspective and examine other costs as well. We have a Japanese company that cut their costs by invoking more kaizen activities, which are really small directed teams aimed at improving productivity which utilise the workers in core groups. And this particular company also leverages more on their just-in-time production so that they do not have to incur huge storage and inventory costs.

Companies and workers have reaped tangible benefits from our cooperative approach in facing the downturn. For example, by working closely with Hitachi

Chemicals, we helped them to cut costs and save at least $3.5 million. These cost-cutting measures were achieved through a shorter work week, non-renewal of the contracts of 55 foreign workers, 10% cut in the pay of the senior managers and placing the workers on the SPUR programme.

Mr Speaker, Sir, let me now touch on the Jobs Credit Scheme which is the centerpiece of this year’s Budget. It is, in my view, an excellent scheme, and is frankly much more than I had expected out of this Budget. The Jobs Credit Scheme serves two purposes. It aims to make Singaporeans more attractive to employ and retain, and it also protects our CPF. No matter what help the Government provides, nothing can replace the certainty, stability and security that a regular, monthly income provides to workers and their families and that can come only from having a job. Once workers are out of a job, it would be a lot harder to get them into one. And the whole family suffers too especially if the worker is the sole breadwinner. Hence, the focus in this Budget on helping companies to stay afloat and to incentivise them to keep their workers is absolutely crucial. So, in my view, yes, the Jobs Credit Scheme is pro-company because it helps to defray part of a company’s wage cost for one year. But, to me, helping companies is not an end in itself, it is only the means for this Jobs Credit Scheme. The ultimate objective of the Jobs Credit Scheme is saving jobs and it is therefore a very pro-worker move. By taking on part of the cost to employers for keeping excess workers, the Government helps to reduce the pressure on companies to retrench workers. So I do not agree that the Jobs Credit Scheme is pro-business. It is truly pro-worker and the union leaders whom we have spoken to, discussed with, are very highly reassured by the Jobs Credit Scheme.

Sir, I must really congratulate the Government and the Finance Minister for coming up with the Jobs Credit Scheme. It is indeed an innovative scheme. And I note there are similar schemes in Canada and Australia but they apply in a very limited aspect to workers with certain disabilities or only to workers who find it difficult to continue in employment or to get employment because of their low skill levels or low education levels. We have also spoken to some electronic companies to gauge their feedback as to what is their sense about the Jobs Credit Scheme. One electronics company which produces hard disk drive data storage peripherals told us that in this global downturn when pressure to cut costs from their HQ is high, the Jobs Credit Scheme would give the Singapore plant an edge over their other plants overseas. This company employs 2,500 workers, of which 1,750 are production workers and 750 are office staff.

Let me just quote the Human Resources Manager of the company who talked about the Jobs Credit Scheme. He said, "Yes, it does help. We have been under tremendous pressure from HQ to trim headcount, especially for the directs group (meaning the production operators) which is very volume dependent, and have been struggling with all ways to try to hang on to our 200-300 excess headcount as it is quite a tough situation for them to lose their jobs now. The Jobs Credit Scheme is a very good move for our Singapore site as our sister sites in Thailand, China and the Philippines have all begun resources actions or are seriously considering them. This may not be a long-term solution but it helps to delay the actions at our site."

Sir, the Jobs Credit Scheme, viewed from the perspective of this MNC that I have just mentioned, gives Singapore a certain comparative advantage especially when global companies decide where to

trim their workforces. We may not be able to save 100% of the jobs that are currently on the line as this is really not realistic to expect of the Jobs Credit Scheme. A case in point is Chartered Semiconductor which is affected by a double whammy. The semiconductor business was already not doing well even before the global financial crisis struck in September, and of course the crisis made their situation worse. They had seen a significant decline in orders and little prospect of turning around over the next few months to help keep the workers even with a 12% cut in payroll. After working with the union on various other alternatives, the company then decided to retrench as a last resort. But there are other companies struggling with cashflow problems where the Jobs Credit will provide good relief. Most of these companies want to keep their skilled and experienced workers but this can be quite painful for them if they are bleeding at the same time.

The Jobs Credit Scheme is also clearly pro-Singaporean workers. I think this is the point raised by Mr Inderjit Singh on the need for the Budget to be more pro-Singaporean. The Jobs Credit Scheme is clearly pro-Singaporean workers because it favours companies that employ a significant number of Singaporean workers. Let me cite to Members the example of Fujitec Corporation Singapore Ltd where they employ about 760 workers, 76% of whom are Singaporeans. With the Jobs Credit Scheme, Fujitec will be able to save $125,000 a month which comes to about $1.5 million a year. Now, even for Fujitec, this is a very significant amount because as Mr Sugumaran N. Pillai, the Regional Director of the company, said that they are also facing intense cost pressures, and therefore the Job Credits Scheme which helps them to save $125,000 a month – because they employ a significant number of Singaporeans – is clearly helpful.

The second most important point about the Jobs Credit Scheme is that it helps to save us from CPF cuts as it consists about 9% of the employers' CPF contributions. This was the biggest and most important worry among our workers and our union leaders since the onset of this recession. They are worried because any cut in the CPF would affect our workers’ retirement income as well as their ability to pay for housing and medical needs. We already see MPS cases where we see families coming to us for help in paying for their HDB loan instalments. We had a big debate on CPF LIFE Scheme last year and we acknowledged that there is a need to help Singaporeans save more of their retirement income. Therefore, any further cut in the 14.5% employers’ CPF contribution rate would, in my view, be particularly painful for our workers. So our unions are very relieved that we are saved from CPF cuts because of the Jobs Credit Scheme. Indeed, I would also argue that an across-the-board cut in CPF rates would be a double whammy for our workers, many of whom are already suffering from pay cuts due to slashed overtimes, shorter work weeks or temporary layoffs. In situations where companies do not cut executive pay, any CPF cut would have a bigger impact on lower-income workers as executives are not paid overtime. Also, unlike previous recessions, our pay today is a lot more flexible, as about 30% of the total pay is now tied to a company’s performance. Hence, in a downturn when companies are not making money, performing poorly, workers’ wages would already have been adjusted downwards. I am of the view that clearly there seems to be limited scope today, compared to before, to invoke the CPF as a quick cost-cutting measure. I am not trying to pre-empt the Minister for Finance in case he comes out with any off-Budget measures, but this happens to be one of the strongest wish on our part. So I am really glad that our Government has protected workers’ CPF

by introducing the Jobs Credit Scheme. I want to urge companies, particularly those that are non-unionised and are still dragging their feet and have not introduced the flexible wage system, to do so quickly although a recession is certainly not the best of time to introduce any flexible wage scheme because the company is not performing well and workers' wages are tied to performance of the company.

I would also like to congratulate the Government for being very fast in responding to companies and workers’ needs by allocating $600 million for the SPUR programme even before Budget Day. In fact, when I was discussing with some of our foreign trade unionists, they were quite amazed. They did not expect any government to come up with such a quick allocation. The allocation was made in December, even before this Budget announcement. And they were also quite surprised at the extent of the amount allocated to such a programme.

The SPUR programme is a very important complement to the Jobs Credit Scheme. The Jobs Credit Scheme and SPUR are two critical engines, in my view, to help companies stay afloat and continue to employ workers. In the electronics sector, for instance, about 470 workers are already attending classes under SPUR. Companies have committed to send another 2,000 workers for training. So the SPUR Programme is not just something that is good to see but not so easy to touch, but actually it is something that is very relevant, practical and doable. The cost savings for companies utilising SPUR are very significant. In the case of Delphy System Singapore Pte Ltd, which is sending 352 workers for SPUR training in batches, the savings will amount to $560,000, which is a very significant amount as this

company supplies parts to General Motors in the US and is consequently affected by the troubles facing the automotive giant. When Delphy approached the union sometime in December last year, they were not aware of how to tap the SPUR programme to deal with their excess manpower. So we introduced them to our specialists in e2i who then helped them to develop a training programme tailored to their needs. This is the value adding of e2i which now has the capabilities which we did not have in the past to quickly assemble training programmes that are not just generic types but also can be more targeted for the needs of individual companies. So I see the refinements to SPUR – the two refinements referred to by Mr Inderjit Singh – as not an indication that our Government is not farsighted enough, but as an indication of their responsiveness. Because when you are doing training programmes, it is not possible to be able to conceive of every situation that can apply because there are different types of companies and workers with different skill sets and capabilities. So we really need to refine the programme as we move along and as these programmes are implemented on the ground, we take into account the needs of individual companies and workers.

Sir, I also welcome the increase in the WIS payment by 50%. This would be a great help to our low-income workers and is really beneficial to them. However, although the timing may not be so opportune, as a matter of principle, I would still like to ask the Government to consider excluding the overtime payments and bonuses from the computation of the income threshold of $1,500. I have raised this on a number of occasions before and the answer was that the Government would review this at the relevant time. With the increase in the WIS payment, it has become even more painful for our low-income workers who do not qualify

simply because they are hardworking and their overtime pay puts them out of the scope of WIS.

We must not forget that even in this downturn there are still sectors that are doing well and where the workers are doing overtime. So I urge the Government to review this.

Sir, as the Health GPC chair, I am indeed very pleased that the Health Budget has been increased quite significantly. The increased Budget will be used not only on infrastructure development but $500 million will be allocated to help in dealing with the long-term care needs of our elderly Singaporeans. A rapidly ageing population will, of course, pose very serious challenges to our healthcare system and we need to be adequately prepared. Otherwise, by the time the problem hits us it will be too late. However, I was expecting the Finance Minister to announce some Medisave top-ups this year as health care costs have been going up and we have just introduced means testing. In the current climate, where people are losing their jobs or are suffering from pay cuts, a Medisave top up would have provided some relief particularly for older Singaporeans. Although health care is highly subsidised, especially for the C and B2 class wards, there are costs that individuals still have to pay and not everyone qualifies for Medifund. And now that Medisave can be used for some outpatient treatments, the Medisave savings scheme is even more important in helping Singaporeans pay for their medical care. So, Sir, this is actually one small disappointment that I have with the Budget, which I also want to register with the Minister for Finance.

Sir, aside from the measures to save jobs, the $2.6 billion set aside to help families, particularly with doubling of the GST credits, are a welcome relief particularly for our low income families. Even as we focus strongly on how to turn around the economy, we must also help

Singaporeans to cope with the current crisis. Families will be struggling with pay cuts and job losses, not to mention the high cost of living that still affects many. We have to make sure that Singapore's social fabric remains strong, despite this recession, and we must continue to focus also on long-term issues.

The recent household income survey showed that for the first time in many years, the income gap is narrowing. This is also partly because of the huge budget surplus package last year for low income Singaporeans. Even then, the average per capita household income of the bottom docile of employed households was only $340. Now that we are in the recession, the income gap may widen again. This is a long-term issue that we need to tackle and one major contributing factor is the low pay of the low skill and unskilled jobs. One way, which the NTUC in partnership with the WDA e2i, is vigorously pursuing in order to tackle this challenge is to recreate these jobs so that with greater productivity wages can go up. But this process will take some time and there is also some inherent limits in terms of how far we can upskill some of these jobs. The Budget has provided a number of measures for low income families and the support is now more comprehensive and sustained. However, I urge the Government to continue to monitor the impact of this recession on our low income Singaporeans as many are still struggling with the high cost of living.

Sir, I am glad that the Government has taken bold and decisive steps in order to address the concerns of both companies and families. I support the use of our past reserves as I think that the situation that we are in is truly exceptional and nothing like what we have seen in past recessions. We should not wait until companies are flat on their backs or Singaporeans are truly suffering before we consider it prudent for it to use our past reserves.

Having said that, I also understand that there are some concerns as to what constitutes exceptional circumstances, that is, where is the threshold point when we start dipping into our reserves. Some have also raised the question of whether there is really a need to dip into our past reserves, considering that we have enough surpluses to pay for the $4.9 billion needed to fund the Jobs Credit and the Special Risk-Sharing Initiative for bank lending. As these are important points, I hope to hear the Finance Minister's clarifications on them.

Perhaps the Finance Minister could also explain how the Jobs Credit of 12% of wages is derived at, as some feel that the amount could have been higher to be truly effective in helping companies stave off retrenchments. The figure of $2,500 is clear as it is pegged to the median wage but how the 12% is derived at is not so clear. It would also be useful for the Minister to clarify why companies are being reimbursed only once every quarter and not monthly as some, particularly the SMEs, are facing severe cashflow problems and may not be able to keep the workers for three months without any assistance. I also urge the Government to continue to examine all other cost of doing business in Singapore so that our companies can remain competitive and our workers can benefit from strong job creation.

In conclusion, Sir, although we are one of the first Asian economies to enter into a recession, there is a strong sense that the Government is proactive and doing everything possible to help Singaporeans and companies ride through this recession, and equally important, continue to develop our capabilities to capitalise on future growth.

The BBC this morning reported a completely different scenario in Europe

where tensions are mounting in many countries. In France, about two million people have taken to the streets to demonstrate against what they consider as poor government-handling of the crisis. The General Secretary of the British Trades Union Congress, John Monks, summed up the general sentiments of the people when he said that anger is mounting in the European Union as there was a sense that people have been shortchanged by their governments. He stressed that it is important for governments in the EU to respond decisively and sympathetically.

In Singapore, Sir, our Government with a huge budget of $20.5 billion has indeed responded decisively and sympathetically to assist both companies and families. The NTUC and our unions will leverage on our unique tripartite relationship to fully utilise SPUR and the Jobs Credits Scheme - the twin engines - to save jobs and save our CPF. But we also need all Singaporeans to rally behind these initiatives and to do their part too to help us upturn the downturn, as we have done so, in so many recessions in the past.

With that, Sir, I support the Budget.

1.22 pm

(In Mandarin): [For vernacular speech, please refer to Appendix A*.] Mr Speaker, Sir, this Budget can be said to be the most generous one I have come across since I became an Member of Parliament 13 years ago, and it is one that is really customising the remedy for the case. Singapore is now facing the most severe economic crisis since Independence. The Budget presented by the Government this year contains several “breakthrough” features, setting five new records.

First, the $20.5 billion Resilience Package can be said to be the largest

budget that the Government has ever presented. Second, the $8.7 billion budget deficit is also unprecedented. Third, the $5.8 billion in enhanced Risk-Sharing Initiatives (RSI) seeks to help the SMEs seek financing, to alleviate their problem of capital shortage. Fourth is the $4.5 billion for the Jobs Credit – this is the first time that the Government makes use of the past reserves to ensure that the companies could survive and the workers will have their jobs retained. Fifth, the $2.6 billion Family Supplement Plan with increased GST rebates and bonus for the elderly, the 20% personal income tax rebate and the additional Service & Conservancy Charges and rental rebates, provide help to everybody.

I think this is a very comprehensive, pro-business and pro-people Budget that wins praises from all the people. I would like to use a very delicious traditional Lunar New Year staple – the pen cai – to describe this Budget. The pen cai contains of a lot of delicious ingredients, such as abalone, sea cucumber, fresh prawns, dried scallops, oysters, roast pork and fish. They are visible and edible; everybody can enjoy it. My residents have given me feedback that they would like to compliment the Finance Minister for giving us a warm and happy Lunar New Year. Thank you very much, Finance Minister.

Mr Speaker, Sir, at the moment, many SMEs are affected by the global economic tsunami. They have lost a lot of overseas markets and are having problems with their cash flow. The Government has made a prompt decision to adopt a bold and resolute policy, setting aside $5.8 billion for the Special Risk-Sharing Initiative (SRI) and also raised its loan risk sharing percentage from 50% to 80%, and the loan ceiling from $500,000 to $5 million. I think, this is very timely help to the businesses so that they can survive, and the rice-bowls of their employees can

be retained. This is really a good policy that suits the remedy to the case.

As I know, there are about 140,000 SMEs in Singapore and from what I know, about 15%, or some 20,000 of the SMEs, have the problem of cash flow shortage. They needed facilities from the banks to help them tide over this difficult period. Otherwise, in order to save costs, they may have to retrench workers, suspend their business or even close down the business. This will result in about 300,000 to 400,000 workers losing their jobs. As I have said, this programme that is launched by the Government, is very good news to the people. It gives companies new hope and new confidence. Many SMEs reflected to me that they have faced difficulties in applying for bank loans. Whenever they approached the bank, they will be asked a lot of questions such as, who are your competitors, what are your prospects, and many other particulars and information. Some of this information is just not available to the SMEs. As a result, they are turned down by the bank, and they are left without the necessary capital to carry on with their business. It is said that water from afar cannot put out the fire in front of you. The President of the Singapore Manufacturers Association is quoted as saying the banks were moving very slowly and the companies were crying for help. This was reported in the Lianhe Zaobao.

If the bank is too careful, these companies will not be able to secure financing and many of them would have to face even more severe economic crisis. It is just like an asthma patient going to a doctor. He has an attack and he went to his physician. The doctor does not give him the medicine but asks him a series of questions like: Why do you have asthma, if I give you the medicine, can you guarantee that you will recover? After your recovery, will you be more healthy than others? Why is it that you have asthma and others don't have? As the

doctor keeps asking all sorts of questions, the patient will get more and more angry. I think even before he gets the medicine he would have died of anger.

As reported in the Lianhe Zaobao, the boss of CSS Industrial Company which employs about 50 workers, spent a few months going to more than 10 banks before he could get a loan of about $60,000. A lot of time and a lot of efforts were wasted. At this critical time, the company should be pooling its resources to seek out new markets, look for new customers, or develop some new products to boost its business rather than spending time looking for loans from the banks. I think many SMEs are facing the same problem. I suggest that the Ministry of Finance set up an independent loans committee, with representatives from SPRING Singapore, the SMEs and the trade associations as well as the banks and finance companies, to look into all the loan applications and the processing of such applications. If they can meet the basic requirements, the committee could issue them a loan certificate which is like a "loan COE". With this certificate the company can go to any bank or any Government-appointed finance company to secure the loan. You save time and also meet the needs of these SMEs, and this would also help the Government to reach its ultimate target of helping these companies.

Of course, granting loans is risky. But in whatever we do, there are always risks. Even as Members of Parliament, we face risks. But we would still have to meet our people, visit them and participate in community activities, go to coffee shops and markets to listen to their grievances and problems, and then come to Parliament to reflect their views. This is our spirit – to serve the people.

The banks should also play their part to serve their clients and the nation. In

order to make help these SMEs survive the crisis, the banks should be more positive, they should not adopt this attitude of lending out the umbrellas when the sun is shining and taking it back when it starts to rain.

At the moment, many retail shops, department companies are also affected by the economic crisis. Their sales are seriously affected, particularly after the Lunar New Year festive season. I think for the next few months, many of these companies will be facing problems with very low sales. For this, I suggest that all the retail associations get together and organise some sales promotion activities for a period of six months, and make Singapore a shopping paradise to attract more tourists. Then, our tourist spots, food and beverages industry, transport industry as well as our retail shops will all benefit. This campaign will also let our people buy things at competitive prices, and it would stimulate our consumption market. This would be a very positive support for our retail market. But, to consume, we need more cash. I suggest that the Government consider an off-budget measure of issuing some "consumption coupons" to the people. If everyone gets $300 of coupon, then there will be a total of about $900 million. These coupons must be spent within six months. Except for the purchase of tobacco and alcohol, these coupons could be spent at the departmental shops, hawker centres and restaurants. This will breathe some life into our retail shops by giving them more business.

Finally, on behalf of my constituents, I would like to thank our Finance Minister Mr Tharman for this very bold and resolute Budget to help our people ride over this troubled time. I hope with our people working together with the Government, we would emerge even stronger after the crisis.

Majulah Singapura!

*Cols. 1575-1580.

1.34 pm

Mr Speaker, Sir, I welcome the initiatives of Budget 2009 to help viable businesses stay afloat and Singaporean workers stay employed. I also welcome the decision for not using CPF as a tool to cut employers' cost in this downturn.

The Resilience Package of $20.5 billion, though unprecedented in scale in the history of modern Singapore, is not an unusual fiscal response. All over the developed world, economic stimulus plans put forth by the respective governments run into hundreds of billions of dollars, providing tax cuts for individuals and businesses, relief for people who have lost their jobs or homes, and money for infrastructure projects to stimulate domestic demand.

What is unusual of our Resilience Package is that the Government will be using our past reserves to fund two main components of the package, the Jobs Credit Scheme and Special Risk-Sharing Initiative.

The Government has made the case to the President and the Council of the Presidential Advisers to draw down $4.9 billion of our past reserves to fund the Jobs Credit Scheme and Special Risk-Sharing Initiative.

Past reserves are a strategic asset meant for use in times of need, especially when the Government faces financial constraints due to unprecedented circumstances which require the Government to respond in the interest of the nation.

Hence, I am surprised that the Government has chosen to set a precedent in asking the President for approval for a drawdown of our past reserves when it has enough savings from the current term of Government to fund

the entire Resilience Package and the resulting budget deficit which the Finance Minister has estimated at $8.7 billion, or 3.5% of our GDP.

The Finance Minister in his Budget speech on 22nd January 2009 said that "The Government has sufficient savings built up during this term of government to fund the measures we are taking and the resulting budget deficit. Nevertheless, we have decided instead to fund the two extraordinary measures within the Resilience Package from our past reserves."

I would like to know why the Government is using the reserves to fund the Resilience Package when it has more than enough money in the current reserves to do so. What is wrong with waiting till new initiatives are needed and the current reserves are insufficient to fund them before asking for the use of the past reserves?

Past reserves are supposed to be protected by a two-key system. The Government holds one key while the President holds the second key but the speed at which this two-key system can unlock the past reserves is too fast for comfort.

I would like to know when was the request for the $4.9 billion drawdown made? How long did it take the President to give the in-principle approval? Does the President or the Council of Presidential Advisers know for certain what the Government intends to do with its substantial current reserves before allowing it to draw down on past reserves?

The Finance Minister has stated that this drawdown on reserves is to pre-empt the severe consequences that this economic crisis could have for our

economy and society. Can a pre-emptive spending rationale be a compelling reason for the President to unlock the reserves?

The unlocking of our reserves, as witnessed by this House in the past three to four months, is fast becoming like a non-event. Surely, Singaporeans deserve to know the full rationale of the drawdown by the Government despite having a healthy kitty.

Next, I would like to touch on the Jobs Credit Scheme that is designed to encourage employers to keep their workers on their payroll.

The National Wages Council has recommended that companies may implement a wage freeze or wage cut to remain competitive. In addition, workers are already being asked to accept lower bonuses, no-pay leave and shorter work-weeks. There is also the flexi-wages scheme which the Government has been promoting under the tripartite system for years to enable employers to cut wages of workers during a downturn.

All these measures are designed to help employers cut costs. The Jobs Credit Scheme pays employers a cash grant incentive of 12% of the first $2,500 of the wages of each employee who is on the CPF payroll. The cash grant is payable every quarter beginning March 2009. The scheme seeks to reduce the costs of employing Singaporean workers for businesses during the crisis.

The question is, how effective would a cash grant of 12% of wages be in times of such uncertainties? When confronted with declining sales and demand, the most logical thing to do for most businesses, especially SMEs, is to cut wages and bonuses. If sales eventually cannot sustain the overhead costs, I

doubt a 12% cash grant on wages will help to prevent retrenchment.

Sir, between waiting three months for a $900 cash rebate from the Government versus saving $7,500 immediately by retrenching a worker, which choice does the Government think a struggling employer will make?

On the other hand, the Jobs Credit Scheme will indirectly favour big companies which may be still profitable and have no intention to retrench workers. The Straits Times' article on Budget 2009 published on 24th January reported that Sheng Siong Supermarkets will receive $567,000 a month or $6.8 million a year in cash grant under this scheme. I am sure NTUC Fairprice, with a staff strength of about 6,000 and a no-retrenchment policy, will benefit even more. Are we using our reserves to increase the profits of profitable companies in this downturn?

To save jobs for Singaporeans, the Government must put in place policies that put Singaporeans first at all times. Opening up the economy here to cheaper foreign labour without first taking good care of our own people will make Singaporeans the first to go in a recession. Is Jobs Credit not designed to make Singaporean workers more affordable so that employers will have an incentive to keep them, instead of foreigners, on their payroll?

In the longer term, the Government should contemplate to devise some schemes which will make Singaporean workers more competitive on the job market and incentivise the employers to employ Singaporean workers. The current system of foreign workers quota works when the economic cycle is long with a tight labour market, but it could be a problem if the future economic trend is one with shorter cycles of ups and downs.

Sir, I understand that SMEs account for six out of every 10 Singaporean jobs, as mentioned by the Finance Minister in his Budget speech. Many SMEs experience cash-flow difficulties beyond what the Jobs Credit Scheme may help. If we were to conduct a poll for SMEs to vote which they would prefer, Jobs Credit or Credit Facility, I believe SMEs will choose the latter.

Apart from enhancing the SME loan schemes in November 2008 by increasing the Government's share of risk to 80% and introducing a Bridging Loan Programme for working capital loans with the Government taking 50% of the risk, there is no new measure in this Budget to help SMEs secure the much-needed credit facility to survive in a shrinking economy.

The Finance Minister has said that it is too early to assess the effectiveness of the enhancements made to the SME loan schemes last November but time is of essence in this economic downturn. Some businesses may not have enough resources to wait long for the banks to get back to them on their loan applications, as mentioned by Mr Ang Mong Seng.

Under the Special Risk-Sharing Initiative announced in Budget 2009, the Government will increase its share of risk on the Bridging Loan Programme from 50% last November to 80% now. Can we infer from this increase that the banks are still not lending enough?

Sir, if the Government can see the need and urgency to increase its share of risk for the Bridging Loan Programme in a short span of two months, just to stir the banks from its credit slumber, think about the stress and anxiety SMEs must have endured trying to secure credit lines since the collapse of Lehman Brothers in September 2008.

I urge the Government to work fast with the banks to free up the credit

market. It was reported in the Straits Times that bank lending fell for second consecutive time in December 2008.

This is a fast shrinking economy. It is natural for banks to worry about lending money to companies with weak business models or plans. Then, again, would any bank believe a rosy business plan in this economic climate? This is why the Government must come in to resolve the issue. When more SMEs fail, more Singaporeans will be out of a job. It is a loss-loss situation for all.

Sir, if the banks are still not lending in the coming months, what other measures are there in place to keep credit flowing for SMEs? I believe this is a time for Singapore to get innovative and, perhaps, even bold in dealing with the credit crunch. The Government must take the lead to unfreeze the credit market if all the prodding on banks yields no tangible results.

Sir, I will now move on to the budget for supporting families.

Out of $20.5 billion in the Budget, $2.6 billion or 12.7% is earmarked to support families. However, this Budget does not extend enough help to retrenched Singaporeans. The new initiative in the Budget announcement for Singaporeans who lost their jobs in 2008 or face retrenchment in 2009 is an extension to allow them to pay their income tax in 24 instalments, instead of 12. People say death and taxes are the only things certain in life. How true.

Sir, this is not a decisive pro-family Budget for an economy that is expecting retrenchment numbers to surpass the 29,000 level of the 1997 Asian Financial Crisis. Why is the Government not making more provisions in the Budget to help this group of people since it expects retrenchments to escalate after January?

Retrenched workers have families to feed too.

The Government must be prepared to accept that schemes like Jobs Credit and SPUR may not stave off retrenchment after all. I urge the Government to look into more ways to help retrenched Singaporean workers and their families.

This economic downturn has affected almost every level of the economy. The Government asks everyone to play a role to ride out this recession. Workers are facing more than just a wage freeze, bonus cut or a wage cut. They are staring down at the prospect of no-pay leave and retrenchment. Belt tightening for workers is inevitable.

The Government should take the lead in tightening its belt wherever possible and spend generously and wisely in a focused manner to ride out the recession.

I noted that the budget for political appointments across all 14 ministries and the Prime Minister's Office is reduced by just 1% from $61.8 million in revised FY2008 to $61.4 million in FY2009 estimates. This does not square with what Minister Teo Chee Hean disclosed in this House that the MR4 salary will drop by 20% compared to 2008.

With no change in headcount at each entity, five Ministries and PMO registered 5% to 12% increase in the Political Appointment budget estimates, six Ministries remained almost unchanged, three Ministries registered a 4%, 12% and 29% drop from the revised 2008 budget.

Are we sending a mixed signal to the people? How can the Government ask Singaporeans to tighten their belts when it fails to restrain its own salaries estimates?

Expenditure estimates for all Ministries are revised upward except for one Ministry – the Ministry of National

Development. I can understand why Health, Education, Transport, Community Development and Home Affairs are amongst the top spenders but do we really need to increase the expenditure for Defence by $644 million over FY2008? I would imagine MINDEF would be able to buy more for the same dollar in a recession. The expenditure for Defence for 2009 has grown to $11.5 billion, or 26% of total budget allocated for all the Ministries.

Sir, since the Asian Financial Crisis in 1997, we have seen shorter economic cycles of ups and downs and with each cycle, the workers were the hardest hit. The lifestyle of Singaporeans was also disrupted by the cycles in economy and on top of that, the increases in GST, in between the cycles and high food and fuel prices have contributed to increases in the cost of living. We only got a short reprieve from anxiety in 2007 and part of 2008, and we sank into a recession again.

The Government has now asked employers to think, before they retrench workers because it has schemes to help them lessen the burden of keeping Singaporeans employed. Does the Government ever wonder why Singaporean workers are so costly to keep in the first place? Are we really that uncompetitive or has our high cost of living eaten into our competitiveness?

In the 2007 Report on Wages in Singapore, it was reported that 'all occupational groups enjoyed wage gains over the past decade except for the group of cleaners, labourers and related workers whose medium gross wage was almost unchanged.' To make things worse, the wage differential between the various occupational groups relative to the lowest paid group of workers widened from a decade ago.

Sir, 10 years is a long time to get stuck at the bottom of the economic

chain. The Work Income Supplement Scheme may have lowered the Gini coefficient slightly but we have to ask ourselves what is wrong with our policy planners that despite the emphasis on retraining and upgrading of skills, our lowest paid group of workers cannot enjoy the fruits of our economic growth for 10 long years.

I hope that when we get out of this recession this time, this group of workers will not be forgotten again.

Mr Speaker, Sir, both Japan and China have declared that they want to be the first in Asia to get out of this downturn. Being the first country in Asia to slip into recession, Singapore should work towards being among the first to get out of it too.

I urge Singaporeans to work together to ride out this economic storm. Looking beyond the gloom and doom, there is a light at the end of the tunnel. The optimistic side of me believes, this will not be a long tunnel.

Is the hon. Member aware that, with the savings arising from the Jobs Credit Scheme and the stable prospect of the supermarket business, Sheng Siong mentioned that they will open a few more outlets in Singapore? And is the Member aware that each new outlet of such a supermarket, will create and generate new employment of 80 workers?

Sir, this is something that is understood. The question is: how many companies, which are profitable, will still be expanding? And those who are profitable, do not need to retrench and the Jobs Credits given to them, will just add to their profits? So, how many new outlets is NTUC Fairprice adding? How many more employees does NTUC Fairprice expect to employ? Or whether NTUC is going to give out some

of the Jobs Credits as a form of wage supplement to the workers, or just add to the profit?

Can I have a clarification from the Member, Sir? Is the Member aware of the number of immediate job vacancies available, for example, through the e2i, the Employment and Employability Institute? Does he agree that the Jobs Credit Scheme will help reduce joblessness in Singapore and create an incentive for employers to look at Singaporeans first, to hire? Does he not agree that the best support for families is a job for the breadwinner? And so, does he not support the Government for going all out, to save jobs for our workers, including using our past reserves?

Sir, needless to say, I support the Government's initiative to help Singaporeans stay employed. I make it clear in my speech. But, being a government, when you are spending the past reserves, you have to consider what is the effect of the expenditure, what is your target? I have no problem with the Risk-Initiative Sharing Scheme, neither do I have a problem with the SPUR Programme which, I think, does help. But my question is: does Jobs Credit Scheme necessarily achieve the target as it intended? Can we have some figures? If not, then why are we spending past reserves to do something which is not certain?

Secondly, as I mentioned in my speech, there will be some companies that will not need the Jobs Credits. They can very well keep their workers, but you are adding to their profits. On the other hand, those small companies or SMEs, with minimum number of staff and with high cost of labour, does the Jobs Credit Scheme really help them? As I mentioned in my speech, compared to waiting three months for a $900 cash rebate, to saving costs of $7,500 immediately if a worker

with a salary of $2,500 were to be retrenched, which decision will an employer make in the downturn?

One clarification, Sir. I would like to ask the Member, when he says that the Jobs Credit Scheme is of doubtful effect, does he not also agree that when companies are facing difficulties and they have to cut pay and so on. Pay is, in fact, recognised as an important component of costs and that when the Jobs Credit comes forward to subsidise the payroll, it actually releases the pressure on the company and, therefore, reduces the risk of retrenchments and increases the security of jobs for workers.

Sir, I agree with the principle but the Jobs Credit Scheme does not do the job of really saving the wage costs of the company. Given the current circumstances, it is not so much the costs, but the demand. When the company has no demand, no business, your credit scheme is neither here nor there, the way I look at it. As what I compared, $900 in savings as compared to savings of $7,500 in three months for companies who retrench a worker. How does it work? I do not think it works.

Sir, is the Member aware that Jobs Credit is, actually targeted at Singaporeans. So, organisations – large and small – that hire Singaporeans benefit from that and Singaporeans benefit. And the other point I like the Member to know is, I have spoken to small companies and they have actually said this is an immediate relief for me to actually keep the capability. You are right – they are facing demand challenges. It is tough, but at the same time, having that relief, enables them to tide over and be able to keep the capabilities they would otherwise have

not been able to keep because the demand is down. So, yes, it does not solve the entire demand problem, it does not solve the cost problem, but it definitely helps supplement some of it. If the company is really viable, and it is interested in keeping the capability.

Sir, it does somewhat help certain companies. But my question really is, how effective is it? Why do you need to spend the reserves for something which, to me, is not really effective? I have spoken to some companies as well. They would rather have credit facilities that ease the cash flow going on to the business to keep the employees, rather than having Jobs Credits because at the end of the day, it does not really save money. Yes, it is for Singaporeans, I know. But when you are talking about using the past reserves and expanding Government expenditure, I believe it is prudent for us to look at what we want to achieve, whether the money is well-spent, to achieve the result, or is it something else.

Sir, I would like to ask the Member. Is he saying that because the Jobs Credit Scheme has not proven its effectiveness, it is better for us not to have the Jobs Credit Scheme and forget all about it?

Yes, I believe that with the SPUR and other assistance schemes with the credit facility, I think we should be able to keep those viable businesses afloat. We could have used the Jobs Credit Scheme, to help those who are retrenched. I think it is a direct help. Whatever scheme that you have now, be it Jobs Credit or tripartite guidelines – you have read the papers – there are retrenchments. We cannot stave off retrenchments.

Just want to seek clarification from the Member. Whether Member is in fact, saying that it

is better to help workers after they are retrenched, instead of having the Jobs Credit Scheme which is meant to help them before they are retrenched. Because I have heard the Member saying that it is better to help them after they are retrenched, but the Jobs Credit is meant to help them before they are retrenched.

Second point, Member may not have heard my speech, where I also mentioned about a company, an MNC which compared our position with other companies, and whether the Member agrees that that particular company said that because of Jobs Credit, they would be able to save at least 200 to 300 workers.

Sir, of course, it is good to pre-empt retrenchment and to help companies not to retrench. But how much does Jobs Credit help? Yes, to some companies, it may be helpful but eventually the effect is limited. It may help companies to keep some workers but some will still be retrenched. If there is no business, there is no demand.

Clarification, Sir. The Member has said because the Jobs Credit Scheme, in his view, is not going to able to save every job, so it is not worth having. He said that in reply to the clarification from Mrs Josephine Teo. So I would like to ask the Member if companies were to get the credit that they want, is there any guarantee that they will not retrench? There is no guarantee. Therefore, is he also saying to forget about the Risk-Sharing Scheme? Nothing except those that can guarantee you that there will be no retrenchments. Forget about all the other programmes, which we all know are aimed at helping companies survive longer.

What I am saying is that you have to be targeted and to be sure what will really help. I am not saying that you should not help at all. I am

doubtful about your Jobs Credit Scheme. How much will it help companies and whether it is justifiable to spend the past reserves to help companies in this way? Eventually, of course, we could say that Singaporeans will benefit because they can stay employed, but the figure is something that is not certain. So, can we make better use of the limited financial resources we have, by helping workers that are retrenched or other schemes that will be more effective in helping companies to stay afloat?

Mr Speaker, Sir, I just want to seek the final clarification from Mr Low Thia Khiang. Am I right to say that if the Workers' Party is in power today, if the Workers' Party is the Government, in this crisis, the Workers' Party, under the leadership of Mr Low Thia Khiang, would not implement the Jobs Credit Scheme. And that between implementing the Jobs Credit Scheme versus having Singaporean workers to take the 9% CPF cut, the Workers' Party would implement a 9% CPF cut rather than to introduce the $4.5 billion Jobs Credit Scheme, to save jobs. I would like to seek that clarification from Mr Low.

Sir, I thought I made it clear in my speech that I welcome that CPF is not used in this downturn as a tool to cut employers' costs. If the Workers' Party is the government, I would rather use the money, if there is a need to save employers' costs, to pay directly to the CPF accounts of the members for companies which are in difficulty, rather than a Jobs Credit Scheme that give companies, regardless whether they are profitable or not, the payment.

Secondly, I also doubt whether it is effective in helping companies cut wages.

If the choice is between implementing a $4.5 billion Jobs Credit versus a 9% cut in CPF – it is

either you introduce a Jobs Credit or you take the CPF cut – if that is the situation, which option would the Workers' Party go for?

Our position is that we would never cut the CPF. But the question is whether or not, must it be Jobs Credit? Could it be other forms to help employers to cut costs? There may be other forms but, to me, Jobs Credit, as it is, I do not think is effective.

2.01 pm

Thank you, Mr Speaker, Sir. I ask myself what exactly is this Budget debate about. Is it about being more pro-business or pro-worker? Is it about CPF cut versus Jobs Credit? Is it about cutting the corporate tax by 1% versus 2%? Is it a debate about the use of past reserves? Sir, I would just like to share that for the vast majority of our workers, they really have two priorities and they want to see this Budget centred around saving jobs because the best support for the family is a job. And they also want to see us finding ways to minimise the impact on wages. In this House, we should not be debating who is getting a bigger slice of the pie. To the workers, it would be much more useful and productive if we focus our minds and apply all of our energies to saving jobs by keeping businesses going.

Sir, on the point of the CPF cut versus the Jobs Credit Scheme, I would just like to take the opportunity to remind the House that CPF is used by hundreds of thousands of Singaporeans to pay mortgages, support medical bills, etc. Our resident workforce is 1.8 million people. Even with rising unemployment, most Singaporeans remain at work. Let us also not forget that there are, at this point in time, 21,000 workers on shorter work-week, temporary layoffs, who are already

taking some forms of wage cuts. Any reduction in the CPF rates right now, throws thousands of such families into immediate hardship. Their cash outlay to service mortgage repayments will have to go up and this will, in turn, hurt their ability to spend. At this point in time when we most want to simulate or keep consumption levels on an even keel, we can least afford to impact the consumption ability of our Singaporeans. Compared to a CPF cut, the Jobs Credit Scheme avoids these problems, does not create the same difficulties and the bluntness that the CPF cut would create. Looking at it from the employers' standpoint, it gives more flexibility for them to move around. A CPF cut would have been blunt. For some companies, a 9% rate cut would have been too much. For some other companies, a 9% cut would be too little. So, where do we find the right level? There is also an argument being put forward that Singaporeans are aware of the severity of the downturn, so they will be willing to accept the CPF cut. I do not agree with that. I think if we implemented the CPF cut, many families would be turned topsy-turvy, and this is the last thing we want to do at this point in time. Just to also point out that the savings for long-term retirement needs will be slowed down if we did anything to the CPF rates, and unless we have no other means, I think the CPF should not be tampered with. Also, given that this could be a very long-drawn downturn, cutting CPF now for the vast majority of Singaporeans who remain in jobs, would be a painful mistake.

Sir, I turn my attention now to the Jobs Credit Scheme which, when we have discussed with the employers and the union leaders, is clearly a better alternative. And I was worried to hear the Member Mr Low suggest that because its effectiveness is not guaranteed, it is better for us to do away with it. I would like to place on record categorically in this House that the labour movement, our

union leaders and all our workers support the Jobs Credit Scheme and do not want to see it being done away with. In fact, we fully applaud the Government for being willing to tap into our reserves to help the workers in such a difficult situation.

Sir, I would also add that even with the Jobs Credit Scheme, there is no escaping the need to cut costs. In some cases, I think, it is realistic for us to expect that even wage costs have to be trimmed further. But the merit of the Jobs Credit Scheme is that it allows different companies to have different levels of flexibility. The companies must assess if they can avoid wage adjustments. The answer would be "yes" for some companies. For some other companies, the answer would be "no, we still have to make further adjustments". I think the Jobs Credit Scheme gives them this ability to manage at the individual company level and we must support it. It is also true that not all job losses will be avoided, that I agree with completely. But I would like to point out that the Jobs Credit Scheme directly incentivises the employers of Singaporeans to rethink before letting go of their workers. We are asking them to weigh the pros and cons of keeping the worker. And to every individual worker, this stop-pause-to-think time frame can make a critical difference to the worker, and we must not diminish its importance to the worker.

The most important task at hand, I think, Sir, is that we want to tilt the balance in favour of keeping the Singapore worker in his job. And for the companies that are still hiring, we want to tilt the balance in favour of them hiring Singapore workers. Sir, I asked the Member a question – whether he knew the number of immediate vacancies available in the jobs bank of the e2i. He did not respond to my question. I would like to share with him that right now, there are 11,000 immediate vacancies.

So, they are available to our job seekers whether they are retrenched or not.

Sir, I think with the Jobs Credit in place, what we are really telling employers also, of all these 11,000 immediate vacancies, is that if you choose to hire a Singaporean, there is a 12% wage advantage immediately because he is eligible for a jobs credit. I think that that serves as a powerful incentive for the companies to think about in their hiring decisions.

Sir, I mentioned earlier that although some wage cuts may still be necessary, I would also like to point out that for low-wage workers, the Workfare Income Supplement Special Payment in cash, helps to cushion the cuts. As my colleague, Mdm Halimah has pointed out, the SPUR funding would further help the companies through taking up absentee payroll thereby reducing their wage bills further. So the important thing is, in this crisis, we must tilt the balance in favour of the Singapore worker; give the companies reasons to keep and hire Singapore workers.

Sir, a company's participation in SPUR gives its workers the motivation to support the company through the downturn. Although it was launched only two months ago, there are nearly 200 companies and 10,000 workers committed to SPUR already. The faster the momentum builds up, the more we can tilt the balance in favour of our Singapore workers.

Union leaders that I have spoken to did not begrudge the fact that the Jobs Credit Scheme puts cash into the hands of employers. They took the view that it was far better to help as many Singaporeans as possible keep their jobs, than to give them cash handouts, which could at best provide temporary relief. In fact, many showed me the thumbs-up to indicate their approval of the Budget measures.

Some $5.1 billion would be needed to fund the Jobs for Singapore programme in the Budget. This is one-quarter of the entire Budget. Such a strong dose of support for Singapore workers deserves our full-hearted support. Although I was initially concerned about the need to dip into our past reserves for the first time, I have no doubt now that it will be money well spent.

Sir, at the same time, union leaders hope to see more businesses responding positively and energetically to upturning the downturn. Their sentiments could be summed up as follows: "The labour movement stands ready to do our part to help Singapore be the most pro-business economy in the world. What about our employers? Are you ready to do your part to help Singapore be the most pro-worker nation in the world?"

Sir, in Mandarin, please.

(In Mandarin): [For vernacular speech, please refer to Appendix A*.] Mr Speaker, Sir, in these very difficult times, the union leaders have seen very clearly the Government is taking resolute action to help the people tide over this crisis. We want to be a pro-business labour movement that helps the companies to survive. However, our workers need to see management taking leadership and making positive moves to overcome this crisis. Employees also want to know how they can contribute business turnaround, thereby saving their own jobs. Employers should demonstrate how they look after the welfare of the workers. Only then can Singapore be the most pro-worker nation in the world.

*Col. 1581-1582.

(In English):

Not only will workers do their part to tilt the balance in their own favour, we

call on business leaders to do their part to improve their prospects in this downturn.

Yesterday morning, a group of 45 retrenched garment workers were at e2i undergoing training to help them get a new job. They belonged to the same garment manufacturer that notified all its workers that they would be retrenched. The course was conducted in Mandarin, just 11 days after the workers were retrenched. And it took 11 days, only because there was a Chinese New Year break. It could have been faster. We expect to run more of such courses because more retrenchments in the garment industry are in the pipeline. In the last two months alone, some 700 workers have been retrenched, which is about 70% of the workforce of the three companies involved.

But, Sir, although the garment manufacturing industry is under siege, not all garment manufacturers have given up. Mr Patrick Lee, Chairman of Sing Lun Garments told me recently that he did not have plans to retrench any workers in Singapore. That might perhaps be very reassuring to Mr Low, because he told me that the Jobs Credit Scheme will help him very directly and so he does not want to consider any retrenchments right now. In fact, he is working actively with customers to use the US-FTA provisions that we have, by providing more competitive value to them. At the same time, he plans to adopt other measures to adapt and respond to the crisis, such as implementing Lean Manufacturing in a bid to reduce costs.

I asked Mr Patrick Lee, "How is it that you can avoid the fate that other garment manufacturers cannot?" Mr Lee told me that while orders had declined sharply, there were still opportunities. For example, Singapore companies have a strong track record of delivering products with consistent quality. Our strength in the areas of social compliance have

established our reputation as reliable suppliers. This puts our companies in good stead with buyers seeking to reduce the number of suppliers in order to reduce their procurement overheads. If Sing Lun could still be in the streamlined list of suppliers, the company could sustain its operations through the downturn and be ready for the rebound when it comes.

Mr Lee further pointed out that the ability to finance working capital was potentially the advantage of Singapore companies. In the current credit crunch, reducing the cost of inventory was a key concern of businesses. This was also where Singapore businesses could differentiate themselves from the competition. With the Special Risk-Sharing Initiative provided by the Government in its Budget, Mr Lee was hopeful that Singapore businesses could weather this downturn better than companies elsewhere.

There are examples like Mr Lee who does not believe that there is zero demand. In fact, his point is that there are lots of demand. We have to go out and get them for ourselves.

Mr Lee's positive orientation cheered me greatly. Mr Lee is doing all that he can to tilt the balance in his company's favour. His example is also reassuring to our workers because they want to know that the management is also doing everything they can to keep the businesses going. If Mr Lee succeeds, and I have every confidence to believe that he will, the balance will also be tilted to Singapore workers' favour, together with all the job credits and SPUR programme that we have put in place. Sir, our workers do not mind being asked to make all these adjustments because they can see when their bosses are doing it too and not giving up. Otherwise, they will wonder whether their efforts will be worth the while.

Sir, in recent weeks, we have been warned that the current global economic

recession will surpass all previous recessions in terms of scale, depth and impact. The newspapers headlines scream "the worst is yet to come". I believe these claims. I believe that we will see more business failures and as a result, more job losses. I believe that things will get worse before they can get better. The road ahead will indeed be bumpy.

And I also believe that Singapore is uniquely positioned to overcome these challenges. This is not blind faith. My confidence is derived from the sensible responses from union leaders and workers to the Budget. Even those who are retrenched, when we take them to the e2i, have kept their spirits up. They have chosen to look at the bright side of things. My confidence is based on the many business leaders who have shared with me on what they are going to do to keep their businesses going and how they intend to reposition themselves for longer-term competitiveness.

Sir, in conclusion, it is probably true that for the global economy, the worst is yet to come. But for all of us in Singapore, we have every reason to believe that the best is yet to be.

Sir, I support the Budget.

2.17 pm

Mr Speaker, Sir, I support this Budget wholeheartedly. Just six months ago, while we were celebrating National Day, we were looking forward to a growth rate for the whole year of 2008 of between 4% and 5%. The collapse of Lehman Brothers in September changed the growth story, not just for the US or Singapore, but for the whole world.

Fearful for their own survival, banks stopped lending to each other. Credit was

cut. Manufacturers could not borrow working capital for their production. Consumers feeling poorer because their property values had fallen or perhaps, they were facing foreclosures, bought less. Both supply and demand fell. Trade financing also dried up. Importers also could not get letters of credit (LC). Even if a LC was produced, whether you are accepted by the other side depended on which bank was the issuer. So orders and transactions could not be completed. World trade plunged as a result. Two weeks ago, Lloyd's List reported that they now have so many ships going empty that they will carry containers for free – just pay the bunker charges. So by December last year, our non-oil domestic exports to the US contracted by 24% compared to a year before. Exports to the EU fell by 34%. Overall, total NODEX was down 21%. When demand falls, production slows. Our manufacturing output in December fell 13.5%. The electronics sector was most affected. Output there plunged by 35% year-on-year. Many jobs were shed in these past few months and many more retrenchments are threatened in the coming months.

The near-term outlook remains poor. It will be a while more before the large international banks can get out of the holes that they have dug for themselves and regain their ability to be the sources of liquidity and confidence for commerce and trade. Meanwhile, the stark truth is that nothing we can do in Singapore can change the global situation. We just have to wait out the crisis.

But we must do it actively, not passively. That is why I applaud the Budget for its solutions to the problems we face. The crisis today is not due to price competition so a wage cut or CPF cut is not the solution. Nor is it due to technological change. So industry restructuring and anticipatory retraining of

workers for redeployment, later is not a priority. Stimulating domestic demand will not increase production of intermediate goods made for export. We can buy more potato chips but who wants to buy more computer chips? The problem is due to a breakdown between the world of credit and finance on one side, and the world of manufacturing, services and trade on the other side. We have the capacity to manufacture, export and provide services.

Our industries are competitive. Our workers are productive, skilled and relevant to the world economy. Up to August last year, we were doing quite well. Unfortunately, the world economy has frozen up and this is the new challenge that requires a new approach. In an unprecedented move, the Finance Minister is asking for $4.9 billion to be taken from the reserves to help fund the Resilience Package. Mr Tharman has explained in detail how the funds will be used and how the entire Budget will work for the benefit of Singaporeans. Within the Budget, $4.5 billion will be used to fund the Jobs Credit Scheme. It will subsidise payrolls so that employers will not have to cut jobs to lower overhead costs. Without releasing a part of the reserves for this, a Jobs Credit Scheme of this size will not have been possible. The President has given in-principle approval for the drawdown. I support the use of the reserves in the way proposed. The priority now must be to save jobs so as to minimise the number of families thrown into hardship.

But more importantly, Sir, the Jobs Credit Scheme, while itself is a short-term temporary provision, will have a much longer-term positive impact for Singaporeans. It is not merely money spent away. It will help our companies survive this crisis together with their current workforce, so that their workers will be the first to benefit when recovery comes. When their employers pick up the pace, get back into business and expand into

the gaps left by competitors that have collapsed elsewhere, our workers will be right there as part of the new growth and not be left out of it. The Jobs Credit Scheme conserves our national reserves in a different form. We can think of it as converting the financial capital reserves that we have accumulated into human capital reserves to survive the crisis. By using the financial reserves to save jobs, we are keeping intact as much of the knowledge and skills, experience and networks in the companies, instead of letting them dissipate only to have to acquire and rebuild them all over again when the upturn comes.

Through the various training programmes, we will invest in our workers higher skills and better knowledge, to be done during companies' slack time. As many as possible of our workers will be able to stay where they are, add to what they already know and are good at and thus enhance their own value in the economy. This is an investment of the reserves in our workers, not consumption that will quickly fizzle out. It ensures that the energy that is in our workers and in our companies will not be disbursed and lost. That energy stored will stand ready to push our economy back into top gear quickly in the recovery. All our workers will benefit from this strategy of conserve and regrow, especially the older workers. As individuals and as an economy, we will be worse off with a strategy of "let go and then rebuild."

Look at this from another angle. Countries who have reserves will likely be pressed to use the reserves to provide its social safety net for the citizens. Indeed, some Singaporeans may hold the view that the Finance Minister is spending so much money and yet the social safety net does not seem to get any bigger. The problem with that approach is that by the time a social safety net gets so big that it has to be funded from reserves rather than current revenues, Singaporeans will

already be falling down in large numbers. The reserves should be used to provide safety but not in this way.

Let me use an analogy. For construction workers working on top of tall buildings, we do not just spread a safety net near the ground to catch them should anyone fall. We equip each one with safety belts and harnesses and have them hooked up to anchor points at where they work so that they can work safely and comfortably, even though they are a long way from the ground. It is better to provide a safety harness for every worker than just a safety net to catch the ones who happen to fall.

This Budget, Sir, provides a social safety harness. It gives our workers greater security to continue working in their companies and protect their families from income loss. So even as the employers are going through precarious times, their workers can weather the storm with some sense of stability. This approach is far better than catching people in a net, only after they have fallen and then trying to put them back on their feet again. Of course, the Finance Minister did not forget those who will need extra help. Help will be given to those who need it. The schemes that MCYS, WDA and the CDCs operate will be flexible and responsive. The officers in the Ministries and departments will put in greater efforts to assist the social sector. The volunteer groups, the charitable bodies are already mobilising to make available additional support. Many helping hands are there extended, ready to help. Elsewhere in the world, governments, legislatures, central banks and transnational institutions are working hard to arrest the downturn and get the world economy up again. There will be pain but once the causes of the problems are resolved, we will see brighter days.

For us here, the Finance Minister has made the Budget provisions. Our

employers and our banks must now do their part. We can turn this crisis into opportunity, convert our stored reserves into new energy and position Singaporeans for the next era of growth. We have the ideals, the means and the will to achieve it and we can achieve it.

Sir, I support the Budget.

2.28 pm

Mr Speaker, Sir, this year's Budget is indeed an exceptional one for extraordinary times. The world is said to be facing the worst recession since the Great Depression, and for Singapore too, this is likely to be the worst recession in our short history.

Consistent with this anticipation, I am delighted that the measures introduced are primarily aimed at keeping the economic engine turning, with saving jobs being the key priority. Particularly of significance is the fact that the help measures were announced before the Lunar New Year to allow companies sufficient time to rethink their people strategies in favour of retention rather than separation.

Sir, the Jobs Credit Scheme has been hailed as innovative to lower wage costs of residents. In this gloomy economic outlook, it certainly provides a sense of confidence to both employers and employees. However, Sir, I am afraid it may be short-lived. Apart from labour-intensive companies with thousands of employees that will be the primary beneficiaries of the Scheme, I feel that it can, otherwise, only go as far as cushioning the blow for most SMEs, and also the knowledge and technology driven sectors which carry quite a bit more high-income earners. Ultimately, it boils down

to cash flow of the employers. With the current situation of low external demand, employers will have to watch their cash flows to ensure their very own survivability. With this downturn anticipated to a prolonged one, I believe this measure cannot hold workers till the end of the crisis. It has to be coupled with additional measures to get companies to hold on to their workers over a longer period.

Sir, I would suggest the tripartite partners come together jointly to bear this burden of helping workers keep their jobs. If the economy gets worse at the six-month point from now, I feel that the credit to employers need to be increased. This should not be a direct credit but tied to some form of compulsory upgrading programme for the workers which could come in the form of an absentee payroll subsidy of up to 60% with the same $2,500 cap as imposed for the current scheme. The subsidy has to be attractive enough to encourage companies to retain and invest in their workers for better times ahead if their business outlook continues to remain bleak in six months' time. A similar like scheme, Sir, is being implemented successfully in Germany recently.

Relative to the Jobs Credit Scheme, I would also like to ask whether the credit extended to companies under this Scheme is taxable. For it to have maximum effect, I think there should not be any tax imposed on the credit. Otherwise, there will be another case of giving from one pocket and taking it back from another.

Sir, I would like to also suggest that some form of targeted financial assistance for the retrenched and unemployed be acceded. However, to prevent us from becoming a welfare state, this help must be temporary and targeted towards those who have clearly been trying to look for jobs and have attended a certain number of upgrading and skills training courses but yet fail to secure a job – not due to a

lack of trying but because of the adverse economic conditions.

I also applaud the meaningful SPUR programme which again benefits both employees and employers. Considering again that this might be a prolonged downturn, I would like to ask the Minister for Manpower to consider extending SPUR to support longer term absentee payroll for full-time certificated skills programme subject to a certain cap. From the business side, subsidies given for SPUR are only applicable to courses offered by Continuing Education and Training (CET) Centres. I suggest that the Government extend this to all Approved Training Organisations (ATOs) so that there is a level playing field. Otherwise, I fear ATOs may be out of business because of the unfair competition as individuals and companies will seek only the courses offered by CET centres and not the ATOs.

Sir, allow me to also echo some of the sentiments from the business community and particularly from the Singapore Manufacturers Federation, which I am declaring that I am one of its Council members. The reduction in corporate income tax (CIT) from 18% to 17% is welcomed but its effective Year of Assessment (YA) 2010 does not provide benefit to businesses that could use the much needed relief in the current year.

If making it effective for Year of Assessment 2009 is not possible, a deferred tax payment arrangement should be considered for companies to ease their cash flows. Companies with cash flow problems should also be allowed to pay their taxes in instalments without any penalties.

While the 40% property tax rebate is welcoming, Sir, I feel that the Government should assist in influencing landlords and particularly large ones such as Ascendas and Mapletree to pass on the full 40% savings to their tenants in order

for the impact of the savings to flow down to companies and businesses.

At my Meet-the-People sessions, I am seeing an increased number of cash-strapped home owners who cannot take up bank loans due to their adverse credit positions. This will surely worsen during the economic crisis. I would like to know if HDB will extend its subsidised loans to such people even if they have taken two bites of the cherry for these loans. Will the HDB also consider waiving the levy for affected families who want to downgrade their flats due to huge loan arrears?

I would also like to know how long the Community Development Councils (CDCs) take to process financial cases on average and whether this will be done more speedily in tough times when people are in greater and more urgent need of assistance. Although there are other interim assistance schemes such as ComCare, I feel that the CDCs must step in quickly for people in dire need of longer term assistance.

A severe and prolonged downturn will inevitably cause some people more stress and I suspect there will be an increase in the number of people needing psychological help. I would like to suggest that the People's Association ramp up on training for our grassroots leaders as a first line of assistance before referring such residents to professional counsellors. I believe this is critical as grassroots leaders should be equipped with skills not just to spot families in trouble and people in distress but they need to also know how to render initial assistance to such cases.

I would also like to touch on the importance of solidarity in facing this crisis. I think it is important that Singaporeans do not get carried away in negative thinking even during tough times. Having an outlet to vent one's frustrations can be cathartic, but, as

elaborated by my colleague Jessica earlier on, too much negativity may kill our spirit to overcome this challenge. It is imperative that we focus on positive thinking and take proactive and constructive measures to get over this crisis together as a nation.

This is a good time as any for us to evaluate our values and priorities. While I acknowledge that as a small thriving cosmopolitan city, Singapore needs to focus on economic issues, I worry that in chasing the dollar, some of us may start to lose sight of our core values and priorities in life. During these tough times, it is important for families not to spend beyond their means as enjoying the company of loved ones can be done through simple and low-cost ways, not necessarily by budget-busting ones.

On that note, Sir, I support the Budget.

Sir, allow me to just say a few words in Malay.

(In Malay): [For vernacular speech, please refer to Appendix A*.] The economic downturn now is one of the worst faced in the world and Singapore. The Singaporean community must understand its effects on workers and society, and be ready to face this challenge.

In a crisis, several possibilities can happen. The most obvious one is retrenchments. To mitigate this effect, the Government introduced several schemes to help employers and affected workers. One of these schemes is the SPUR Scheme that encourages workers and the unemployed to upgrade their skills through training schemes. I hope the whole society, including the Malay community, will support this Scheme wholeheartedly,

as skills upgrading is important not only for the present but also for the future.

Many other side effects can also happen during hard times. Even with less spending income, some still refuse to change their lifestyles and continue their high costs of living, even though it is outside their means. This is not the time to change furniture or go for holidays using instalment schemes. This is also not the time to change to a new car, even though COE prices are low, because if you cannot afford it, monthly payments for a car will burden your families.

I hope that our Malay families will be more careful before they overspend. Try to find ways to save, even through small gestures like buying fewer cigarettes. At the same time, such actions can bring about positive changes to their health.

For those who are sick, continue getting treatments because, if not, deteriorating health will make the situation worse. If you cannot afford to pay the hospital bills, find ways and try to get help from the hospitals, Malay organisations, national bodies or by meeting your own Members of Parliament. In addition, it is important for Malay organisations to take note of the present national schemes, so that they can help Malay families more efficiently.

With that, I support the Budget presented by the Minister for Finance.

*Cols. 1583-1584.

2.40 pm

(In Mandarin): [For vernacular speech, please refer to Appendix A*.] Mr Speaker, Sir, a few days ago, at a temple dinner, I met an old man who is a leader of the Chinese community, a successful businessman. He told me a personal story. One day, the old man after eating a bowl of fish-ball noodles costing $2.50, his grandson came

home. Out of concern, the old man asked, "Grandson, would you like a bowl of fish-ball noodles." The grandson replied, "No. I have gone out with grandmother, and we had abalone noodles. For the three of us, we spent $42." Jokingly, the old man said, "Where do you have money to have such an expensive meal?" The grandson said, "It's grandmother's money." The grandfather said, "Grandmother's money, but she is not working. All her money came from your grandfather who had been working very hard all these years."

With deep feelings, the old man told me, "For people of our generation, all we wanted was simply to fill our stomachs. But now the young people are different. What they eat, where they live, for everything they want the best." Then I asked him, "Did you tell your grandchildren the virtues of living a thrifty and simple life?" The grandfather said, "Yes, but then they said, 'Grandpa, those were the days when the policemen wore short pants.' In other words, they are saying my thinking is out of date. It is obsolete." Mr Speaker, Sir, the story reminded me of a debate we had last year on education when I told the House that students nowadays were not willing to eat sweet potatoes and drink tap water, even during special training days. What makes me worried is whether our young people are willing to take hardship. This year, we will be drawing down on our reserves for the Budget. To put it in simple language, "We are using grandpa's money – public funds." I think we are going through an exceptional period and facing the most severe crisis since Independence, and that is why the Government is adopting these very unusual measures to meet the challenges. I support the Government's measures. But I hope that Singaporeans will, in terms of their mindset and lifestyle, make necessary adjustments to lower their expectations and demands.

I read in the Lianhe Zaobao this morning that many workers are receiving training to acquire new skills. But there are still some people who continue to show a lack of a sense of crisis and will to change. For example, there was a worker who had worked in the textile industry for many years. She is receiving training now. But she indicated that she was not willing to be a cleaner. She wanted to have a job in the packaging industry. Mr Speaker, Sir, I am not saying that every retrenched worker must be a cleaner. But I want to reflect that many Singaporeans are biased and are still very choosy, in terms of jobs. Sir, we must maintain our perseverance and the survival spirit. This is the spirit of the Budget this year. The English term "Resilience Package" is good. The real meaning is preseverance and ability to bounce back in difficulty. But, unfortunately Chinese translation calls this a zhenxing or "stimulus" package, losing the meaning of "resilience". Mr Speaker, Sir, like the grandfather, I hope that my children and my grandchildren, in future, and all Singaporeans will continue to afford abalone noodles, and I am sure our days would be better and better. But, my bigger wish is that the abalone noodle enjoyed by my children and grandchildren will be the result of their own hard work, and not be dependent on my money or the grandfather's money. We know that flowers will not bloom for 100 days. There are always ups and downs in life. So I hope that when days are not so good, they will able to endure hardship. They will know how to eat sweet potatoes and drink tap water, yet continue to live comfortably. Then, when the economy is good, we can survive and do better. During this crisis, let us review our life goals. Have we not over-emphasised materialistic life and forgotten about other aspects of life? Is our spiritual life full and

meaningful? This economic crisis originated from the sub-prime crisis in US, but fundamentally, it resulted from the excessive spending of Americans, who are in the habit of spending tomorrow's money for today's consumption – buying houses, buying cars which they cannot really afford. The American society is like that. How about the Singapore society? Let me give some simple statistics. From 2000 to 2008, the population of Singapore increased by 15%, but the number of credit cards issued had doubled to more than five million cards. The roll-over debts of credit cards had increased from $1.7 billion to $3.3 billion. Sir, are we not following the footsteps of Americans and becoming a society with excessive consumption? I hope that we will take this as an alarm bell and let us understand our situation. I am not against improvement in the material life. I am against the blind pursuit of materialistic welfare. We must realise that leading a simple life is a virtue. I hope that Singaporeans will cherish family life, friendship and lead a more meaningful and wholesome life. After talking about this philosophy, I would like to address some remarks on the specific measures of the Budget. Although the Jobs Credit Scheme has been announced, we still hear retrenchment by certain companies. We understand why people are beginning to worry as to whether our Jobs Credit Scheme can really protect jobs. I am glad to note that many MPs – especially our labour MPs, our colleagues from the labour movement – have clarified and explained that the meaning of the Jobs Credit, which is really to allow companies to change their thinking and to prevent, or at least reduce retrenchment, and jobs can thereby be saved. Perhaps, our Union leaders and our Government could work

harder to give the assurance to Singaporeans, so that they will understand how the Jobs Credit will assist the companies to protect and preserve jobs and, indirectly, protect the rice-bowls of the workers. We should help Singaporeans understand that the companies which are profitable will create more jobs to the benefit of Singaporeans. I would like to urge the companies to actually pass on the benefits to the workers, after receiving the Jobs Credit. Sir, Jobs Credit is different from the reduction of CPF contributions. It will affect the workers' income and their ability to service their housing loans. Nonetheless, I am still of the opinion that this Jobs Credit Scheme, like the reduction of CPF contributions, is a one-size-fits-all rough measure by the Minister for Finance. What we are facing now is not just a loss of competitiveness, but a serious global reduction in demand. Using Jobs Credit is a partial measure which will provide some help to the employers to reduce cost. I hope that we do not just depend on the Jobs Credit Scheme alone, we must look at the whole picture of the Budget. This Budget is not just about Jobs Credit, it contains many other measures, eg, helping the SMEs to obtain more financing from the bank, reducing the property tax and corporate tax for the SMEs, etc. There are many other measures to help reduce cost. This is what the whole Budget is all about! So, let us look at the whole picture of the Budget – the comprehensive measures adopted to solve our problems. Sir, my other concern is the use of our reserves. I am a conservative in this respect. In this economic crisis, even Warren Buffet could not escape from the shrinkage of his assets. What I am concerned with is that our reserves have also been seriously affected. Last year, we amended the Constitution to allow us to use the returns from the Net Investment Returns (NIR), so this includes

the returns from long-term investments. Now, we are going to use part of the principal amount of the reserves. Will our reserves not be seriously affected? I would like to ask the Minister for Finance: how long and how many more years before our reserves will be restored to its original value? For that, we must give an assurance to our people that we are not slaughtering the goose that lays the golden eggs. Sir, let me finally urge our people and the Government to have an "ox-like" resilience – working hard and helping one another, during this year of the Ox. With one heart, together, we will ride out this crisis. Sir, I support the Budget.

*Cols. 1585-1590.

2.52 pm

Mr Speaker, Sir, please allow me to speak in Mandarin. (In Mandarin): [For vernacular speech, please refer to Appendix A*.] Just now, Mr Ong said that he supported the drawing down of the reserves. I would like to ask him whether he knows that the Government has the financial capacity to pay for the expenses from its own surpluses instead of drawing down on the past reserves? However, the Government has chosen to draw down from the past reserves. Just now, Mr Ong told us an episode of abalone noodles. I would like to ask him if he has enough of his own savings to pay for the abalone noodles, would he use his grandfather's savings for that?

*Cols. 1591-1592.

(In Mandarin): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, I know that our Government is now facing a very extraordinary situation that we have to draw down from the reserves. I know that the Government has surpluses, but yet,

they have decided to draw down on the reserves because this package that the Government is introducing is very different from the traditional Budget. It is a once-off means. Of course, if you just want to draw the reserves to buy abalone noodles, then I would not agree. But, if we can keep the rice-bowls of our workers so that they would not have to resort to eating coarse food, I think, we should at least give them one decent meal.

*Cols. 1593-1594.

2.54 pm

Mr Speaker, Sir, I rise in support of the Budget.

This year's Budget was delivered early in response to the parlous state of the world economy and the need for the Government to spring into action and batten down the hatches of Singapore's own economy. I think there had been a suggestion that it would be an expansionary Budget. However, "expansion" in the current situation is the word of an irrepressible optimist. Keeping the economy afloat was really as much as any realist could have hoped for. And I believe, by and large, the measures that were announced will go a long way in doing just that. The Budget focus, therefore, quite correctly, was on preserving jobs. There is no use talking about stimulating an economy plagued by rising unemployment. But a secondary and no less important focus, was on freeing up the credit log-jam and getting banks to start lending again. Only in this way can the economy stand a chance of early recovery and getting back on its feet.

But the prospect of a rosier future also was not ignored. Attention was also paid to ensuring that the economy not only weathered the storm, but also emerged from it stronger than it went in. In other

words, the Budget kept its eye on "building for the future". In this context, there is no doubt that Singapore has a significant advantage over most of the developed nations in that the Budget measures will all be funded out of the Government's own. We will not, like many, have to resort to increased borrowing, or even worse, printing money as some countries have had to resort to. A degree in rocket science will not be needed for one to realise how this sort of behaviour can end up in a stagflationary spiral. Singapore is therefore in an ideal position to rebound quicker than most, and take advantage of the distressed state of the other slower moving, less agile economies of the world.

I turn now to my thoughts on some of the more detailed aspects of the Budget proposals.

The Jobs Credit Scheme represents innovative, bold and "out of the box" thinking by the Government in the wake of an unprecedented economic crisis. It also shows how concerned the Government is about job losses and that it is prepared to take radical, expensive and untested measures to keep Singaporeans employed during this period of uncertainty. The Scheme will certainly provide temporary cash flow relief to all companies, particularly those companies that employ large numbers of lower paid staff. But the Scheme is not without its critics, as we have heard today in this House. It was pointed out that because it is across the board and is a blunt and expensive tool, the number of jobs saved will be disproportionate to the cost of the Scheme.

In my opinion, this is a negative and overly critical way of looking at the Scheme. Because we are in a crisis of extraordinary proportions, we need measures which are extraordinary. We

must also be prepared to take some calculated risks. By devising this Scheme which is simple, transparent, easy to implement and provides a measure of relief to every employer, the Government now has every right to expect all employers to behave responsibly and in a caring manner when dealing with their employees during this crisis. The three-way partnership between the Government, employers and employees is critical during this crisis. With the Jobs Credit Scheme, the Government has put its money where its mouth is and thrown down the gauntlet to employers and employees alike to play their part in preserving jobs in Singapore. Because the Scheme is new, untested and expensive, we have to monitor its effectiveness and impact on saving jobs while being realistic of what it can and cannot achieve.

I would request the Ministries of Finance and Manpower to provide periodic updates on what impact the Scheme is having on preserving jobs, given the quantum of funds being used out of our reserves to fund this Scheme. These updates would be helpful to assess whether the Scheme is achieving its objectives and whether it should be continued beyond the initial year.

The credit crisis is a global phenomenon and Singapore has not been spared its dire consequences of stifling and choking businesses, both large and small. In fact, because we are an international financial centre with the presence of many foreign banks, the impact of the global credit crisis has hit our local businesses quicker and deeper than many other countries. Local branches of some foreign banks whose head office balance sheets have been savaged by toxic assets have not only stopped additional lending to their most loyal and sound business partners but, in some cases, have cut credit facilities under

head office instructions to prop up their balance sheets back home.

This has put additional pressure on our local businesses and our local banks. For local businesses, it is the worst possible time to start new banking relationships and for our local banks, who have already got to deal with their existing customers current and additional funding needs, taking on new customers with whom they have no relationship or track record is perhaps too much to ask. But this is precisely the problem we need to fix and fix quickly because liquidity is all about timing; if businesses are unable to gain access to cash to pay their short-term expenses, they can go under almost overnight.

The Government has recognised this problem for some time now and has introduced co-sharing initiatives such as the Bridging Loan Programme under which the Government shared up to 50% of the loan with a bank. The loan limit then was S$500,000 which clearly showed that the aim was the smaller end of the business scale. However, in recognition of the pervasive and persistent nature of the problem, the stakes have been raised in the Budget through the Special Risk Sharing Incentive (SRI) which increases the Government's risk share to 80% and the loan limit to $5 million. The SRI has also been extended to trade financing, which will be much appreciated by businesses.

But will these initiatives be enough to get credit flowing again to the arteries and veins of all businesses, not just SMEs, that operate in and from Singapore and are so critical to our economy? I have some reservations.

Firstly, the amount and reach of the SRI is limited and is aimed at smaller businesses. Even if the $5.8 billion is fully utilised, it will not meet the requirements of businesses, particularly if we are to

replace the credit being withdrawn by the branches of foreign banks.

The Government initiatives to help companies have been targeted at smaller businesses, which in itself is no bad thing but larger businesses, including MNC subsidiaries operating in Singapore, are also facing acute problems with refinancing, arranging letters of credit and working capital financing. These companies have a deep impact on our economy and their continued presence is vital to Singapore because they provide direct employment to many Singaporeans, support our manufacturing and services sector and are big contributors to our GDP.

Take, for example, the many companies in the marine sector such as the large oil rig owners and operators. These companies were attracted to Singapore not only because of our excellent business headquarter infrastructure, access to capital, general ease of doing business but also because Singapore is the leading centre for the construction of offshore oil rigs and other marine equipment. These companies place large and lucrative contracts to our local shipyards which obviously need to be financed. Credit must continue to flow to these companies which are vital to our economy. Many of these businesses are encountering obstacles and difficulties because of this unprecedented crisis and the hardened attitude towards lending and risk appetite being adopted by the banks. The Government needs to give a lending hand to these companies as well.

Governments around the world are trying to solve the credit crisis in different ways depending on their resources, political will and the environment in which they operate. What is clear is that it is not business as usual and radical steps are required. Given our agility and nimbleness, we could show real leadership to come up with solutions that work.

It is in this spirit that I would like to put forward a proposal for the Government’s consideration. I believe the situation is serious enough for the Government to set up a Credit and Capital Funding and Oversight Board (CCFOB) with its own full-time employees. The CCFOB’s charter will be three-fold.

Firstly, it will ensure that the various schemes and initiatives that have been put in place including SRI announced during the Budget Statement, actually work and credit starts flowing back again.

The CCFOB will be a dedicated "one stop" organisation that will carry out many of the pro-active steps which Minister Lim Hng Kiang referred to in his recent media briefing session on the SRI. For example, the CCFOB will look at business loan applications that are rejected by banks and if the grounds for rejection are not valid, it will revive the loan application on behalf of the applicant. With the added weight of the CCFOB, hopefully, one of the participating banks will provide the credit.

Secondly, take pro-active measures to breathe life into our capital markets which have all but dried up primarily because of the lack of credit as well as negative sentiment and poor risk appetite.

I believe every crisis presents opportunities and I believe one such opportunity during this global crisis is for Singapore to develop its capital markets even further by using its deep fiscal pocket in a smart and innovative way. Let me elaborate. For some years now, we have been developing Singapore as a capital market not only for local businesses but also for companies from around the region. We have been quite successful in attracting foreign companies to raise capital in Singapore through initial public offerings, bond issues, etc. For

example, there are nearly a hundred Chinese companies listed on our local exchanges. However, we face intense competition from other regional capital markets, such as Hong Kong and Shanghai, and have to constantly re-invent ourselves. This crisis gives us an opportunity to gain competitive advantage over rival capital markets by leveraging Singapore‘s strong fiscal position.

The global credit crisis has meant that all capital markets have come to a grinding halt with hardly any IPO activity. This is not because there is a dearth of companies with good business models and growth prospects but the totally irrational and negative sentiment towards acceptance of any form of risk and reluctance of banks and financial institutions to provide capital and underwrite share and bond issues.

This is where the CCFOB can play an important role by becoming an underwriter of last resort for IPOs that meet all the listing criteria for our capital markets but are being held back because of the credit crisis. This will generate life in our local capital markets and will help to attract good quality businesses from around the region to Singapore. It will also differentiate us from other capital markets.

Thirdly, play the role of an "honest broker" with influence and clout. We need an "honest broker" with influence and clout who can work with banks and financial institutions on the one hand and businesses, both small and large, local and foreign, on the other. I believe this is the vital missing link because presently there is no one organisation which is independent and of standing with a clear mandate to help businesses with their liquidity problems.

The CCFOB can be "this honest broker with clout" that individuals and companies can turn to when they are frustrated in

their attempts to obtain financing from banks and other financial institutions.

In today’s environment, we have to change our mindset that if a company has a credit problem, then there is something wrong with the company. Today, companies are facing credit problems, by and large, because there is something wrong with the financial system and we need to fix the financial system and fix it fast. Hence the need for an organisation like the CCFOB.

While my proposal stops short of the Government taking the loan-granting process in-house, commercial lending decisions and the related infrastructure still remain with banks, it institutionalises some of the proactive steps required to stimulate lending within a dedicated unit – the CCFOB.

The CCFOB should have full-time resources, some seconded from Government agencies while others would be recruited from the ready pool of ex-bankers and financial advisers. The job opportunities it will create, I am sure, will be welcome.

How long should the CCFOB be around for? I would say initially a two-year period. Whether it should continue beyond two years will depend on its effectiveness and market conditions.

For those who say that this is "over the top", I would quote the Nobel prize winning economist Paul Krugman. And I quote, "for now the important thing is to loosen up credit by any means at hand without getting tied up in ideological knots. Nothing could be worse than failing to do what’s necessary out of fear that acting to save the financial system is somewhat 'socialist'."

The Government continued to show its interest in fostering the fund

management industry by targeting most of the significant changes in the financial services arena on enhancing existing fund management incentives. There were really three changes. Two gave rise to sighs of relief, and one to sighs of disbelief. The relief came primarily from the new measures announced for dealing with Goods and Services Tax (GST) as it applied to approved onshore funds. Although the onshore fund scheme was an excellent initiative, it was hamstrung by the fact that the fund’s local service providers were compelled to charge it GST, which funds were, for various reasons, finding it difficult or impossible to recover. An onshore fund was therefore not operating on a level playing field with its offshore counterparts who did not face a GST charge in the first place. This is being remedied by the announcement that a substantial portion of the GST charged on prescribed services could be recovered automatically. It remains to be seen what "substantial" may mean, but it is hoped that it will be in excess of 90%.

The other good change was to now see limited partnerships as collective investment vehicles in their own right. This will significantly tidy up the information retrieval exercise for determining whether funds or their investors qualify for incentives. It also recognises the existence of one of the most commonly used forms of fund vehicle.

The real surprise was the move to allow almost free access for Singapore investors to the incentive scheme. Hitherto, the scheme had been very much aimed at bringing in foreign funds and ensuring that no (or restricted amounts of) Singapore money found its way in. However, under the new Enhanced Tier Scheme, the previous limits of 30% or 50% (in some cases) Singapore investor limit will be lifted. The minimum fund size to qualify for the Enhanced Tier is small, at $50 million (which is really subsistence

level for a manager), although further qualifying conditions have yet to be announced.

There is no doubt that the growth of the fund management industry is high up in the list of the Government’s agenda. The measures so far have not only met with a high degree of success but they also show the Government’s ability to listen to market feedback and act on it quickly and decisively. It is this sort of agility and speed to market of new ideas, that will allow Singapore to leap ahead of its rivals in this area, and it is something to be roundly applauded.

In the run-up to the Budget Speech, there had been calls on the Finance Minister to enhance the loss carryback relief scheme to allow businesses to monetise current year tax losses and get back some of the tax paid in earlier (profitable) years. The current scheme allowing carryback of $100,000 of qualifying deductions which translated (at most) to $18,000 in tax terms would hardly be sufficient to sustain ailing businesses. The following enhancements have been proposed:

Allowing carryback to three years of assessment immediately preceding the year of assessment in which the capital allowances or trade losses were incurred.

The losses carried back are to be set off, firstly, against the third year of assessment, followed by the second year of assessment, and then the year of assessment immediately preceding the year of assessment in which the capital allowances were granted or the trade losses were incurred.

Increasing the limit of aggregate qualifying deductions carried back from $100,000 to $200,000 (effectively giving a maximum refund of $40,000 when

applying the Year of Assessment (YA) 2006 corporate tax rate of 20 %).

While businesses will be glad that the losses can be carried back for a longer period, one wonders if the limit should not have been increased even further. The maximum possible relief now is $40,000 compared to $18,000 previously.

For a few years now, a certain amount of a company’s chargeable income is exempted from tax. Under the current scheme, the loss carryback would have to be set off before the exemption amount. If the enhancement of the loss carryback is to help businesses which are making losses in this recession with their cash flow, the set off should be after the exemption amount. Otherwise, we will have one incentive cannibalising another. Hopefully, the IRAS will look into this matter and change the current practice.

Sir, in conclusion, one cannot argue with the main thrust of this Budget, which was aimed at short-term survival for businesses and jobs while also trying to build for the future. There were certain areas that could have been given more attention, most notably the outpouring of our much needed foreign talent who probably felt quite hard done by. However, in a crisis of this magnitude, it is accepted that it is not possible to solve all problems at once. We shall see over the next few months the extent to which the measures announced have been successful. In particular, a very close watch needs to be kept on whether the tight credit situation is easing for businesses; otherwise, more radical steps, including the proposals that I have set out, need to be taken soon rather than later.

One thing in my mind is for sure. We will need "off budget" measures to supplement, modify and tweak policies, both existing and those introduced in this Budget, and we need to do this swiftly

and decisively throughout the coming months. Singapore’s ability to pay for initiatives out of its own pocket certainly gives it a first mover advantage and will stand us in good stead when the storm has passed over, as it inevitably will.

Mr Speaker, Sir, thank you for allowing me to participate in the debate on the Budget speech.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.35 pm.

Sitting accordingly suspended

at 3.15 pm until 3.35 pm.

Sitting resumed at 3.35 pm

Debate resumed.

Mr Speaker, Sir, this recession is not the first, nor will it be the last. But this recession is unique because it is happening in the context of the global recession on an unprecedented scale. The IMF and International Labour Foundation predicted, to horrors, that 51 million workers will lose their jobs this year. The headline news in Singapore is scary. Projected GDP growth of -2% to -5% for this year, 2009. But, Sir, the reality on the ground is not as bad as the headline suggests because we have three solid pillars of support – the family, the community and the Government.

Out of this unwelcome mayhem, Sir, at least one encouraging phenomenon has come out of this recession. And that is, how we, as a nation, have responded to the crisis vis-a-vis countries like Iceland, the region around us and indeed the rest of the world. To be sure, Sir, Singapore's recession is severe, -5%. The worst case

scenario is severe. But we are not "Iceland on the Straits". In Singapore, there is no panic and no demonstrations, no strikes and no violence. Indeed, some people think the situation is not so serious that Government should dip into the reserves.

Sir, it is interesting that the Wall Street Journal Asia's (WSJA) editorial on Friday to Sunday, 23-25 January, 2009 called "Singapore Limits", pinned the causes of the recession on the Government's policies on regulation, industrial policy and the CPF scheme. The article suggested that if only the Government had freed the reins of regulation, allowed the market to make decisions and encouraged domestic consumption (by not siphoning money into government pensions with what Wall Street Journal called "measly returns" compared to long-term investments) the economy might have been different today.

The article conveniently ignores the fact that this recession is global. No country, no economy, is immune from this global meltdown, whatever economic policies were adopted. The fact is that those countries which did the opposite from Singapore, ie, those countries which condoned financial oversight, encouraged profligate consumption and practised the "go-as-you-pay" pension schemes as opposed to our fully-paid up pension schemes, suffered even more collateral damage.

If Singapore had followed those WSJA's prescriptions, Singapore could well have become "Iceland on the Straits". But we are not Iceland, the country which is going bankrupt. It (Singapore) is not really bankrupt because of several reasons.

First, unlike Iceland, this Government does not need to go to the IMF or any other country to ask for funds. Such funds may not always be available, nor

will they come without strings attached. In the Asian financial crisis of 1997, IMF's aid to countries, like Indonesia and Thailand, came with restrictive conditions which actually exacerbated the crisis in those countries. IMF specifically forbade the recipient countries from doing what USA and Europe and many countries are doing now, ie, bailout the culprits, bailout the financial system.

Sir, when I was a younger MP, I sat in this House, over there, listening to some MPs, with good intentions, asking the Government to run only a balanced budget, never a surplus budget, because money taken away by the Government chokes off private capital – if we have more, they have less. If they have less, the economy does not grow. They argued that the Government had already enough money in the reserves. Too much money in the reserves suffocates private capital resulting in lower consumption and investments. Those MPs are not in the House today. If they were here, they would perhaps say, "thank goodness, this Government did not listen to us". If there were no reserves, Sir, the Government would not be able to guarantee the bank deposits without printing money. Neither will the Government be able to fund the deficit budget. Without the reserves, we would be like the Icelanders facing endless winters.

Sir, the second reason why the sovereign credit triple A (AAA) rating of Singapore is unaffected, is because Singapore does not print money to fund this budget deficit. Our reserves are strong and more than available to meet this and another crisis. This is not the case with many countries. The credit rating of many countries are already under review. New Zealand is one. A good sovereign credit rating is important even though we are not borrowing from overseas or issuing debt to fund this

deficit. A country's credit rating influences investors' decisions to invest in Singapore. It also tells investors that there is a future, that there is a tomorrow, beyond this crisis.

Sir, the third reason why we are not Iceland is because our financial system is strong. There is no bailout for our banks because they are still solvent and are still profitable, albeit less so than in previous years. In contrast, many of the banks in the developed countries (biggest US banks and UK banks) are already insolvent without the bailouts.

Sir, we have escaped the worst of the financial crisis because our financial regulators have done a good job. But they cannot please everybody. What I found most incredulous in the WSJA article was the allegation that 'Singapore workers and business invest a total of 34.5% of wages into the state pension fund, but receive less than a 2% return from the Government.'

Sir, I think WSJA is still living in the yesteryear world of high rates of interests, the world of Madoffs and the world of sub-primes. Investors, today, no longer ask for the 'return on investment'. Change the preposition. Investors only ask for 'return of investment'. We are lucky just to get back our capital.

In today's economic landscape, CPF returns are dream investments. Those of us with money in the CPF and not invested, get the best returns. CPF Board, I am reminded, pays a base rate of 2.5% per annum, and a higher 3.5% for the first $60,000. And there is more, of course. On top of this is the added bonus of an appreciation of the Singapore dollar vis-a-vis the global currencies. The Singapore dollar is only below two major currencies – yen and US dollar. If we measure the Singapore dollar against pound sterling or the Aussie dollar, the CPF return for the year 2008 is well over 30% for 2008.

With the weak economy and the strong US dollar, something must give way. So, I think the Singapore dollar is the best investment, for many years to come.

Sir, the WSJA also recommended domestic consumption to replace exports to balance the economy. That was the problem, going ahead, which should be more like a domestically-driven economy. Sir, this is a fallacy. Singapore is a tiny red dot. Singapore is not China. We produce very little for the local economy, for our local consumption. The Chinese economy is big and it can be self-sufficient. If Singaporeans were to spend more and more in Singapore, the leakage to the rest of the world will be bigger and bigger. It does not solve the problem.

And, finally, Sir, WSJA questioned the bureaucrats' wisdom in trying to pick winners in 'financial services', in 'biotechnology' and what they called 'gambling.' This is an old argument. Financial services, biotechnology and gambling – they say, do away with all these three.

We place our bets on everywhere. We placed a little more bets on financial services, biotechnology, not on gambling, but on tourism. In areas like financial services and tourism (what WSJA calls gambling) the results are good, even though there is a temporary setback. Once the Integrated Resorts (IRs) are up and running, the tourists will be back and the good and clean money will be in our banks.

We are a successful financial model. So, the industrial policy makers have got it right, that is why we were caught in the tail wind of this global turbulence. If we were not a financial hub, we would have escaped much of this financial turbulence. Once the global economy recovers, good money, clean money and good jobs will return to Singapore. Wall Street, as we

know it today, is a cowboy town. Fortune suggested that Wall Street should be in jail. Shenton Way is not so exciting but it is safe and the money will grow.

It is only in the area of biotechnology that there remains some skepticism and, I think, quite valid because biotechnology, life sciences are high-risk investments, and it is a high-risk industrial policy card. But, to be sure, there are many remarkable successes in biotechnology in Singapore. But we have to be realistic, Sir.

Even the world's largest pharmaceutical company, Pfizer, has had to re-assess its areas of research. The patent of Pfizer, indeed the world's most successful drug, is not Viagra, it is Lipitor. But the patent for Lipitor will end in 2011, two years from now. So, what is Pfizer going to do? Instead of spending more money to search for Lipitor II (Lipitor brings in a quarter of Pfizer's revenue of almost US$40 billion, that means it brings in almost US$10 billion), Pfizer has decided to switch research direction from cardiovascular diseases to elsewhere, because they think research in this area is too high-risk, too competitive. Pzifer is laying off hundreds of top scientists, and how much did they spend outwardly a year? US$7 billion on R&D.

Our bet on biotechnology is small beer in the world of Pfizer. I think Wall Sreet Journal Asia (WSJA) is wrong. We need to formulate our own programmes to get out of this crisis. This Budget is an excellent opportunity to showcase successful economic model and social cohesion. Few countries can do what we have done. We have the resources, we have the will and we have the social cohesion to put these two packages together. It is only in a crisis that the mettle of our nation is tested and, I think, this is the Budget that will bring us to greater heights.

3.45 pm

(In Mandarin): [For vernacular speech, please refer to Appendix A*.] Mr Speaker, Sir, the $20.5 billion Resilience Package in this year's Budget introduced by the Government will help our Singaporeans save their jobs and also help the businesses to survive in this economic recession. This Budget can be said to have looked after all the industries and people from all stations of life, particularly the ordinary folks in the middle and lower strata of societies.

Many of our Members who spoke before me had mentioned about the features of this Budget. This Budget seeks to encourage the banks to extend their facilities to the businesses, particularly the SMEs so as to increase the company's cash flow and to enhance their competitiveness. It will help the individuals and families, and also to increase expenditure in education and healthcare.

The response from the business community on this Budget is very positive. As the President of the Chinese Chamber of Commerce and Industry, Mr Chia Tian Phua, said, "This is the biggest ang pow given by the Government to the business community." He hopes that the employers will make full use of this handsome present to retain their present workforce, raise the morale of the staff so as to overcome this crisis. For the workers, the Government has also introduced a $5.1 billion package in the form of Jobs Credit. It also seeks to help the professionals, managers, executives and technical staff (PMETs) to participate in skills upgrading programmes.

To the workers, they feel that this is something that the unions have been fighting very hard for them all these years, to make sure that they have the opportunities to be trained and upgraded.

For Singaporeans, every family and every individual would benefit from the $2.6 billion package, for example, with a double GST supplement and more rebates for service and conservancy charges, rebates on rentals as well as property tax. In my constituency, most of the people are from the middle and lower income group. They are not well-educated and have no big economic theories. When I meet the people, they would tell me, "Oh, it is very good!" But, they would go on to say, "Tell the Prime Minister, we want more. The more the merrier."

Mr Speaker, Sir, what I want to say today is that we should not only look at what Singaporeans perceive of this Budget. What are the views of the people outside Singapore on this $20.5 billion Resilience Package? On 30th January, the Lianhe Zaobao carried an article originally published in Malaysia’s Nanyang Siang Pau as the editorial on 27th January. It says that this Budget in Singapore, apart from setting many new records, is also a policy which is far-sighted and beneficial to the people. It remarked that, most importantly, the Singapore Government does not resort to floating foreign loans, but makes use of the surpluses accumulated by the Government all these years to pay for this expenditure. The Government's approach of not leaving behind debts for the future generations and its very prudent financial policy enable them to make this sort of provision during a crisis like this. It says that during this sea of darkness, it is like a beacon that shows the way for the people of Singapore to move forward in the right direction. This is what a Malaysian newspaper has written about us.

I would like to quote another article which was published in Lianhe Zaobao on 14th January 2009. It was something taken from a Thai newspaper – an article written by Nitipoom Nawarat, entitled "A Comparison between the Prime Ministers of Singapore and Thailand" . He says that

politicians in Singapore, on their first day in office, are able to show their strength by the words they say. The political views expressed by the Prime Minister and his Ministers are like a compass that leads all Singaporeans to move in one direction. In his concluding remarks, he says that the purpose of his article is to let the people in Thailand make a comparison between the Prime Minister of Thailand and that of Singapore. What the Singapore Prime Minister has said, he puts it into action. But in Thailand, too much time is spent on politicking. I think Mr Low Thia Khiang should read this. He said that the Thai government has spent too much time talking about politics, but we have not seen any actual action. This is what a senior journalist in Thailand wrote about Singapore.

A friend of mine, a businessman who has just come back from Indonesia, told me that the Indonesian government is spending about 71.3 billion rupees, that is, about S$9.4 billion to stimulate its economy so as to deal with this global crisis. He remarked that Indonesia was learning from Singapore. But he said that many people in Indonesia were not happy. Why? Because Singapore, as they said, is just a little red dot with only 4 million people, yet the Government is introducing a S$20.5 billion package to help its people. The population of Indonesia is many, many times that of Singapore. How could a S$9.4 billion worth of package be enough?

Mr Speaker, Sir, when we look at the Budget, we look at it from different angles and perspectives. Opposition Member, like Mr Low Thia Khiang, has his own stand because he is in the Opposition. If his stand is the same as that of PAP, there is no need for him to be an Opposition MP. So we have different views. The poor people would have the poor people's perspectives. The rich people, the managers, would have their own views

too. But, as the Prime Minister has said, we should give more assistance to the people in the middle and lower strata. PM has told us that when the economic prospect is not so clear, the Government may also introduce some off-Budget packages to help the people.

As reported in the newspapers today, many ordinary citizens are saying that it is not enough. But the Prime Minister has given this undertaking. If the economy is really getting worse, then there will be off-Budget packages to help our people. As Nitipoom Nawarat has said, what the Prime Minister of Singapore has said, he will put it into action.

Mr Speaker, Sir, the Prime Minister worries for the people of Singapore. But he is not a medicine that can cure everything. We must work. Take the job, even it is just a simple job, one that is not so glamorous. Even then, we have to work hard. The Government, the grassroots organisations and the charitable organisations can only help you, if you help yourselves. We cannot serve you the three meals everyday. So long as you work hard, although you may earn only $800 or maybe just $1,000 a month, you will feel that it is very meaningful. You should be proud of yourself. The support from the Government and the community plus your own effort, I am sure, will be able to tide you over this problem, particularly the people from the middle and lower-income group. We should not sit there and complain about this, complain about that, and air all sorts of grievances. I think we should encourage ourselves. We must tell ourselves that we are still much better than the poor people in the other countries.

Mr Speaker, Sir, so long as the middle and lower-income people, the unemployed people, have this sort of attitude, I am sure we would be happier and much better than many of the people in the other countries. Be assured that there are

always people, the community organisations and the grassroots leaders who will be supporting you.

Mr Speaker, Sir, I support this Budget.

*Cols. 1595-1598.

3.57 pm

Mr Speaker, Sir, last year, this time during our Budget debate, we were all debating on how we were going to spend the previous year's surplus of $6 billion. There were some Members in this House who felt that the Government should be more generous with the handouts rather than saving the surpluses for rainy days. And it seems that not only the rainy days are here, a storm is here. Members were questioning the accuracy of our budgetary process and asking why there was a huge surplus. I had advised Members that we should look forward and not backward. But this year the situation is completely different. We are facing the worst global financial crisis since nation building. It shows how fragile and how volatile the global financial system today is. No matter how good a fortune teller our Finance Minister is, there is no way he could have seen this coming.

The Government has for the first time in the history of Singapore dipped into our well-guarded and well-protected national reserves to fund two unique and innovative programmes, one of which is the Jobs Credit Scheme. The Jobs Credit Scheme effectively puts all Singaporean and Permanent Resident employees in Singapore partly on the Government's payroll for the next 12 months. So everybody is a civil servant now. This unprecedented move, I believe, is the first in the world. As it is the first in the world, there are many unknowns and there are many, many queries and many, many worries on this.

Many asked whether the money is well spent or it will be like water being poured into the sand. Our sympathy is for those who have been retrenched and for them, it is like water delivered to a person who had just perished due to dehydration in the desert as it is too late. But it is better late than never as we do have other programmes such as SPUR. Hopefully, they will spur them on and they can find a job as soon as possible with "Train and Place" and "Place and Train". Even for those who are severely dehydrated now and are on the brink of death, there is no guarantee that with the water, they will survive or the water will reach them in time as some may be siphoned away by employers for their own personal gains rather than saving the businesses and saving jobs. Is the Jobs Credit too much geared towards employers? I think many members of the public have asked, "Could part of the money be used to pay for the employee's CPF instead so that the employee can bring home a little bit more bacon for support in this financial storm?" We have all learned with dismay how many billions of the US government rescue funds were siphoned away

as bonuses to bank executives, after they were disbursed in the US. How effective is the Jobs Credit Scheme in saving jobs and what is the worst case scenario? Is it 10% unemployment? Even with Jobs Credit Scheme being announced after 19th January 2009, we keep receiving news of more retrenchments in the pipeline. Will the money be well spent or will it be just water pouring into sand? This is the question for which I hope the Minister for Finance can shed some clarity.

The Singapore national reserve was painstakingly built up dollar by dollar and by the sweat and blood of all Singaporeans from the past and current generations. Being a Singaporean means you are an equal stakeholder to the reserves. As the famous quote from a credit card advertisement says, "Membership

has its privileges". Should the reserves used in the Jobs Credit Scheme treat Singaporeans and permanent residents alike? I do acknowledge the contributions by all our permanent resident employees but I do feel that Singaporeans, perhaps, should enjoy some preferential treatment if the reserves are being utilised. I would think that the Jobs Credit Scheme should have tilted slightly to the advantage of Singaporeans rather than to treat Singaporeans and permanent residents the same. I hope the Minister for Finance will help to clarify this point too.

There have been many calls during the past financial crisis for the use of the reserves to cushion Singaporeans but they were all dismissed. In fact, it is a sacred cow. I presume, unlike the past crises, this crisis is much more severe. The use of our National Reserve has brought about many questions: Under what circumstances can the Government propose to use the reserves? Were the previous crises considered as too mild? If so, why were drastic measures such as CPF cuts justified? Senior Minister Goh has highlighted some rules to the use of the reserves over the weekend. I would like the Minister for Finance to give this topic greater clarity in this House and to all Singaporeans. Should some ground rules be set so that this episode does not become precedence for the future government to use to squander away our reserves? If not, we can become another Iceland in the near future.

I am equally concerned with the health of the goose that lays our golden eggs. The National Reserves is all we have built up over the past 44 years. Should we not be extremely prudent to use the reserves only when we really need to do so? Yes, the Minister for Finance has mentioned that we can actually fund all the programmes highlighted in the Budget using this term – Government savings. But of course, we do not know how

prolonged this particular storm or tsunami will last, and it is prudent for the Government to keep some savings just in case we need to use it in the short term.

The two temporary and extraordinary programmes such as the Jobs Credit Scheme and the Special Risk-Sharing Initiative, which are to be funded by our reserves, will cost $4.9 billion. This is not a small amount. Singaporeans are concerned about the health of our reserves, especially with this financial crisis. Our reserves and investments must have also taken a hit and decreased like all asset classes in the global market. How much of our reserves is left after spending on these two programmes? Can the Minister for Finance assure the House that our goose that lays golden eggs, year after year, will continue to do so after this withdrawal and after this financial shock?

Last of all, I would like to ask the Government to consider allowing the people to share the burden with the Government. The burden of the financial storm should not be borne by the Government alone. Can the burden be shared with the people? If the Government is to be allowed to use the reserves to cushion the storm, then can the Government allow the people to use their own reserves to cushion this storm too? Can the Government temporally relax the regulations to allow people to dip into their Special and Retirement Accounts for their mortgages and other needs during this crisis on short-term basis? Similar to safeguarding our reserves so that the piggy bank is not broken, guidelines can be drawn to safeguard the excessive drawdown on our Special and Retirement Accounts. And similar to the Government, the people can continue to contribute to build up their reserves after this financial crisis is over, when good times return.

With that, I support the motion.

4.04 pm

Mr Speaker, Sir, please allow me to speak in Malay.

(In Malay): [For vernacular speech, please refer to Appendix A*.] I congratulate the Minister for Finance for outlining a comprehensive Budget this year.

Singapore is different as it stimulates the economy without using foreign loans. Even though we are now facing uncertainties and anxieties, every Singaporean must have a positive attitude, and be happy that the huge spending incurred this year will not burden us when we repay it in the future.

Although the downturn has not reached its most critical level, we must take necessary preventive measures to prevent its effects from worsening. Fighting an economic downturn is like fighting a disease. We must overcome it immediately or face the risk of needing more resources to overcome it. Hence, I support the Government's bold step to use the national reserves.

If, previously, we have not been frugal, we may not have these reserves to use. Instead, we, and our future generation, might have to face possible higher taxes and other financial burdens. I share some peoples' concern, including Dr Lim Wee Kiak's, on using national reserves. For now, it is a necessity. Hopefully, we will not take this path for the long term. And not only that, we also hope to be able to pay back what we took out from the reserves.

The implementation of the Jobs Credit Scheme is a creative and comprehensive solution. It is a move with a long-term view, compared to making use of the CPF. The speculation on CPF cuts caused many sleepless nights for my residents as

many of them depend on the CPF to pay for their homes. For that, we must thank the Minister for Finance. My constituents now feel relieved with the Jobs Credit Scheme.

I do not understand why Mr Low Thia Khiang did not support the Jobs Credit Scheme. It is important to stay employed in these turbulent times. It gives direction and dignity to a person, so as to continue living without fear and with optimism. It is impossible to provide unconditional compensation to each needy person. For the common good, we must emphasise the importance of self-sufficiency. I am happy that the Government places importance on staying employed.

Thus, the Government must do something to ensure that the flow of water and the river is not blocked. This brings us to an old problem that is linked to the way we manage the inflow of foreign workers. I would like to know if there are other measures to limit foreign workers, especially the low-skilled ones. My constituents are willing to accept jobs in places like coffee-shops but those job opportunities have been taken up by foreigners. Do we need so many low-skilled foreign workers? My constituents welcome jobs that are nearest to their homes and not difficult to do. With that, I feel that the Government must ensure that these jobs that are wanted and can be done by Singaporeans can be made available to Singaporeans.

The Budget promises to increase job opportunities through the public sector and subsidised training. However, the Budget does not offer concrete help to the elderly and those who were retrenched. Furthermore, some of those who were retrenched felt that the Skills Programme for Upgrading and Resilience (SPUR) is irrelevant as they already have the skills and qualifications. Instead, age becomes

a hindrance for them to be re-employed. They want to work but the employers do not want them.

The Jobs Credit Scheme is a good initiative to help them stay employed but it is only a temporary measure. A fishing rod is useful only if there are fishes in the water. If there is no demand for goods and services, companies will be forced to retrench workers. The Government must help those who are retrenched to get jobs again or provide temporary help for them to go through these difficult times. (In English): Sir, I will continue my speech in English.

With spendable income on the decline, personal income tax reduction would come as a considerably huge respite for many. I sympathise with the many residents who expressed their disappointment at the absence of personal income tax cut and no increment in the income tax rebate. The impact of the income tax rebate is limited in comparison to a personal income tax cut. The rebates are the same as last year's, no increase. If the recession is expected to worsen this year, it seems only logical that the rebates should be more than last year's.

Speaking of personal income tax, the tax instalment break does not offer much in reducing financial burdens for retrenched workers. Although the unemployed now have greater leeway to sort out their finances, they will still have to set aside money for income taxes, which would be a difficult task. Even if they do find a job by this year, their happiness would be short-lived as they may find themselves grappling with two income tax payments for both 2008 and 2009 next year, an equally mammoth task if the economy is still in the doldrums. Should the Government consider "forgiving" a taxpayer from the lower and middle income group if he stays unemployed for

a period of time and can prove that he has been applying for jobs, but without success? Waive the tax for this group altogether for Year of Assessment 2009!

The disparity between corporate tax and personal income tax has further widened. This puts professionals practising under LLP companies at a greater disadvantage than ever, in comparison to their corporate counterparts. At this juncture, I would like to declare my interest as my company is a LLP. We do not enjoy any tax incentive that corporate companies get. LLP companies and corporate companies are both profit-driven, in spite of having different business structures. The reduction in personal income tax will not only be welcomed by the public at large, it will also place LLP companies on the same starting line as corporate companies, consequently increasing their competitiveness.

The 1% corporate tax reduction should take place in this Year of Assessment, instead of 2010. Already, businesses are struggling to survive. An earlier tax reduction would be more opportune.

Large companies and SMEs are not the only businesses that are reeling from the recession. One of my residents confided in me his inability to maintain his small business – a problem which I believe applies also to other small-time business owners. His shop rental has increased by 20% since last July by HDB. His utilities bill for last quarter has gone up by 27% and on top of all that, he has to pay conservancy charges and cope with increased cost and lowered demand for his services.

*Cols. 1599-1602.

A 15% rental rebate for a year is simply insufficient, considering that "the worst has yet to come". I seek clarification if the 15% rental rebate is based on the new rental fees or the old rental fees. If the rental rebates are

computed based on the latter, I propose they be readjusted and lowered in accordance to this year’s cooling property market before the rental rebates are computed.

I am concerned that there is no indication of any measures that make it mandatory for landlords to pass on savings from property tax rebates to their tenants. I believe the main purpose of the 40% property tax rebate is to lower business cost by helping tenants to obtain a reduction in their rental. The Government should take on a more active role in ensuring that landlords will reduce rents for tenants. Similarly, how can we be assured that taxi operators will pass on road tax rebates to taxi drivers?

I applaud the Government’s decision to share risks in bank loans. If banks are encouraged to do their part in lending, the $5.8 billion will offer cash-strapped businesses with much needed reprieve. However, some banks are dissatisfied with the 20% risk factor that remains. In these uncertain times, the risks of lending large sums of money to companies with weak balance sheets and declining sales are magnified. If banks remain skeptical about lending money to such businesses, what can be done to allay their concerns?

Some businesses have given me feedback about the hassle of bank loan application processes. Apparently, their applications are screened and subject to approval from three bodies – the bank, SPRING and the insurance company. How long is the entire process expected to take? Time is money. Time is of the essence. This complicated multi-tiered process of loan application must be simplified. Otherwise, it is highly possible that we may encounter instances whereby when a loan is approved, the company has sunk beyond redemption and the workers have been retrenched.

(In Mandarin): [For vernacular speech, please refer to Appendix A*.] Singapore’s high growth in various aspects is something which we are proud of. We are glad that the Government, while striving to seek counter measures to cope with this global recession, has not forgotten the major objectives of sustaining our development. It is necessary for Singapore to maintain its status as a world-class education centre. More importantly, we must continue to provide affordable world-class education to our students.

The short-term study assistance scheme is an excellent idea. It can help our students overcome the obstacles brought about by the economic problems, so that every citizen will have a fair chance to study, and all our students will benefit from this scheme and concentrate on their studies without being affected by the economic recession. I would like to plead on behalf of the polytechnic students. Unlike the junior college students, polytechnic students do not enjoy concessionary bus and MRT fares. I believe that this economic recession is the best time to correct this anomaly. We must adopt a two-pronged approach to further expand the scope of this assistance scheme, to cover part of the students' transport cost. At the same time, the Government should urge the transport operators to extend the concession to polytechnic students as well. With this assistance, many parents will have their children’s educational expenses reduced substantially.

There are many pro-family measures in this year’s Budget, but there is still room for improvements. All along, the various tax rebates and GST subsidies are pegged to the size of the flats and the family income. This Budget is no exception. For example, $1,500 is the upper limit for the application for the various Government assistance schemes. Let me give an example to demonstrate how different families will cope with their income. For a

small family of just the husband and the wife, it may be barely enough if they are frugal in their family expenses. However, with just one bread-winner in the family to support his aged parents, his wife and two school-going children, the $1,500 may be just enough to cover the basic necessities in daily living. Should someone in the family fall sick, or when the electricity tariff is adjusted upwards, this family will be in a predicament, and this is quite a common situation. I have come across quite a number of such families.

For just a couple, not much space is required. A 3-room housing is more than enough. But for bigger families, a 4-room unit with bigger space is certainly necessary. Therefore, the way we measure the family financial situation by the family income and the size of the flat they live in, needs to be fine-tuned. Other factors such as the family size and other expenses such as educational and medical expenses should also be taken into consideration.

Although the Budget this year can be said to be pretty comprehensive, I would like to give a few suggestions, particularly, those that have not been covered in the Budget.

For companies that are absolutely making no profit, the 1% cut in corporate tax has no relevance at all, because they need not pay any tax at all. Undoubtedly, these companies need more help than those companies which are merely facing declining profits. The Government could grant them rebates in public utilities to lighten their burden. The savings thereof can enable the companies to be more flexible and to improve their operations. This is completely in keeping with this Budget’s objective of improving the capital liquidity of these companies and enhancing their competitiveness.

Health is wealth. During an economic recession, one way to prevent extra

expenses is to stay healthy so as to avoid medical expenses. Although medical expenses in Singapore are still affordable, they are not cheap. In these difficult times, medical expenses are still a hefty expenditure. Unfortunately, we do not have the special privilege of total immunity to all diseases, particularly illnesses that come with ageing, and chronic diseases that require long-term treatment and medication, e.g. cancer, diabetes, kidney failure, etc. Some of these patients could not afford even the basic treatment. As such, the lower and middle-income patients, particularly the unemployed, need medical assistance imminently.

I hope the Minister would consider these suggestions and solve the problems of these people.

With that, Sir, I support the Motion.

*Cols. 1603-1606.

(In Mandarin): [For vernacular speech, please refer to Appendix A*.] In a very popular Hokkien song entitled "Work Hard to Win", there is a line that says "30% depends on luck, but 70% depends on your own efforts." In this Lunar New Year period, we see a great number of politicians from various nations going to the temples to pray because of this financial crisis. But, fortunately, our Singapore Government believes more in the second part of the lyric, that is, 70% depends on our own efforts. We want to do our best to help the poor and those who need help. At the same time, we want to strengthen ourselves, so that we can be ready when the time is better. The People's Action Party is a party that works for the betterment of our people.

While we are faced with this global economic crisis, there are some people who are shooting themselves in their foot. Week after week, the International Monetary Fund (IMF) keeps adjusting the

growth forecast downwards. I think what we need is not to shoot ourselves but to put in concerted effort, with one heart and one soul, to turn the tide and reverse the course of events.

Before the crisis, just as the Teochew people were saying, "If you do not have, you complain that they have not, but if you have, you say it is stinking." In this time of crisis, it is better to have something than to have nothing. We should adopt a positive attitude. Even if the fish stinks, squeeze some lemon juice on it, it can still fill your stomach. At least, you do not have to walk around with an empty stomach.

Sir, at this time last year when we were talking about this movie "Money No Enough", many people were saying that at the end of the movie, not only money was not enough, the tissue paper was not enough. It was a very touching movie. Now, in this Budget, the Government is also saying that money is not enough. But just like the old mother in that movie, she opened up her old biscuit box, took out the money that she had been keeping for a long time, and handed it to her son, so that he could tide over his crisis. I think this type of "saving for a rainy day" attitude should be maintained. Most importantly, we have better hope that the money in the biscuit box is enough to tide us over this difficult time, and that we would be able to reverse the course of events. In the end, we will be like the brothers in that movie, we could put the money back into the biscuit box, so that it could be used again in future.

Different people have different attitudes, just as Mr Low Thia Khiang has said. He said we should cut down on our defence expenditure. I do not understand! In Chinese, there is this saying "ju an si wei" or "Be prepared for danger in time of peace". Now that we are facing a crisis,

are we talking about "ju wei si jiang", meaning in time of danger, think of lowering. The Chinese characters are very interesting. The character "jiang" or "lowering" is also the same character for "xiang", meaning surrender. So, in times of crisis, are we going to think of "jiang" (lowering) our defence budget and then think of "xiang" (surrender)? Certainly not! At this time of crisis, we must think of how to become stronger.

At this time, we hope that these packages introduced in the Budget would be of greater help to our people. There was this caption in the Wanbao which said, "$5 billion to help the bosses pay salaries". In this package, we see that the Government has put a lot of thought in it. I hope that the employers should have conscience. They should be good to their workers. The Government is trying their best to help them make ends meet so that they do not have to retrench their workers, and the workers will retain their jobs, and hence have the income to support their families.

On the Workfare Income Supplement (WIS), I am very happy that the Government is increasing it to 50%. This will further help 438,000 workers with monthly income of less than $1,500. That is, in a way, giving them a pay rise of 15%. There is this taxi driver who was reported in the Wanbao as saying "I do not know what this Budget is all about, but I do know that last year I did not get the money because I was not informed, and I did not top up my CPF account. As a result, I did not get my WIS last year." I hope that the Government will help, and the relevant authorities will be more flexible in dealing with all these applications. Even if some applicants may be late in topping up, we should not work by the book. We should help those people who need help, so that they will not be deprived of this benefit which they are rightfully entitled to.

Not just the Government, the business community should also consider the predicament of the self-employed. We know that these self-employed people have to look after themselves. We should not leave them to fend for themselves. Although they are self-employed, in this economic crisis, they are also quite seriously affected as their income could also be seriously reduced. I hope that, apart from the tax rebate and the other rebates, the Government would also look into the problems of these self-employed people and give them some form of assistance. Perhaps we could top up their Medisave account so that they would also benefit from the WIS scheme.

Mr Speaker, Sir, this WIS or the Jobs Credit Scheme have also given rise to some arguments that the benefits given to the employers may not be passed down to the workers. I remember that in my younger days when I was staying in a small kampung in the Bukit Timah area, my neighbour was a poultry farmer and he reared a lot of chickens. He told me that so long as you keep your chickens well, you would have fresh eggs to eat. So in this critical time, we are very clear that we need to have healthy chickens so that we would have eggs to enjoy. The enterprises or companies must maintain their competitiveness. If they survive, it would mean that our jobs are retained. So, if you help the businesses, you are also helping the individuals, and more importantly, we should not look at it negatively. Try to save as many jobs as possible, save as many companies as you can. That is the spirit! Just do it! As our NTUC Secretary-General, Mr Lim Swee Say, has said at this moment, to a person who is unemployed, the unemployment rate is 100%. We should help in any way we can.

The $5.8 billion Risk-Sharing Package is something which many of our companies are full of praise for and they are hoping that the Ministry of Finance and

the Monetary Authority of Singapore (MAS) would have better coordination with the various banks and financial institutions. It is often said that a classic movie may be very good but that may not be very popular. Many companies and businessmen are worried that they may not be able to benefit from this Scheme. It looks like that the banks are only giving the life-saving devices to those who have not fallen into the water and those who are already in the water, they would not be given these life-saving appliances. They will not be saved. So let us hope that we will help everybody so that this Package will be good and, at the same time, popular as well.

Yesterday, I attended the Metro Company's "Learning Journey" known as the Customer-centric Initiatives. At the function, NTUC Secretary-General, Mr Lim Swee Say, announced that a $100 million service industry Resilience Package will be launched. This is indeed a booster shot in the arm for the service industry. The Managing Director of Metro told me that every year in December, it was boom time for his company – the most profitable month of the year. But last December was the only time in more than two decades that he suffered a loss during this festive season. He told me that in this situation, in the economic crisis, we are like running on a treadmill. We run very hard but we seem to be running on the same spot. We do not seem to be heading anywhere, yet we need to keep on running, otherwise, we will fall down. If you carry on running, then you will be fit. Once the thunderstorm outside stops, you can go outside and run faster than others. I think such an entrepreneurial business spirit is something that all our businessmen should emulate. I hope that all our companies would have this sort of fighting spirit.

With the support of this Budget, we will be able to work for a better tomorrow. During the Lunar New Year, I received a very special SMS. It says our

Prime Minister has asked the various Government departments to be warm and helpful to the people. The message was: The Prime Minister's Office sends you wishes for strength and vigour as you get older; The Minister for Environment and Water Resources sends you wishes that your money will pour in from all quarters like water; The Minister for Home Affairs sends you wishes for your safety in your everyday lives; The Minister for Defence sends you wishes for peace and contentment in the place you live in; The Minister for Trade & Industry sends you wishes for good business and prosperity; The Minister of Health sends you wishes for strength and health; The Minister for Foreign Affairs sends you wishes for good relationships and connections all round; The Minister for National Development sends you wishes for happiness and comfort at home. If you want a bigger house, you can have a bigger house. If you want a smaller house, you can have a smaller house. In other words, if you want to upgrade to a bigger flat, you can go for a bigger flat. But if you want to downgrade to a smaller one, MND can be more flexible so that we could downgrade to a smaller one. Your loan repayment period can be extended, and the waiting time for a new flat can be shortened. I sincerely hope that the Minister for National Development will seriously look into how to satisfy your needs. At this time, I hope that all the Government Ministries will be more pro-business, pro-people so that in this time of crisis, everybody could be reassured and encouraged to fight together for a better tomorrow. The Minister for Education sends you wishes for good results in your studies; The Minister for Community Development, Youth & the Sports sends you wishes for good community spirit with help and support coming from all quarters; The Minister for Transport sends you wishes for smooth and easy passages to everywhere you want to go; The

Minister for Manpower sends you wishes for a good and auspicious start in your new working year; The Minister for Law sends you wishes for fewer parking tickets and less fines; and the Minister for Finance sends you wishes for plenty of money to use. As for me, I wish you good luck and success in everything you do. This is what our people are looking for too.

I would like to quote from what MP Seng Han Thong has inscribed in his personally-designed new year card, "Team Singapore, work harder. We should not give up even in a time of crisis!"

*Cols. 1607-1612.

4.39 pm

Mr Deputy Speaker, Sir, in a word, the Budget is extraordinary. In Malay, it is luarbiasa, or beyond the norm. It is no longer the SOE or the so-and-so budget for the Standard Operating Environment, but SOE as SoExtraordinary. In the spirit of the Budget highlights presented by Finance Minister Tharman Shanmugaratnam, it is now also SOEasy to appreciate where the Government was coming from to meet the challenges of the impending testing times.

Mr Deputy Speaker, Sir, I rise in support of the Budget 2009.

In the US, President Barack Hussein Obama has proposed a US$819 billion economic stimulus recovery plan, and experts are saying that it is still not enough to get out of the current mess the banks on Wall Street have left the state of the economy in America. Not a single Republican voted for it, saying it is wasteful and would not be effective, as it tilted heavily towards new spending

instead of tax cuts. Similarly in Europe, much of the bailouts seem "Money Not Enough".

In the famous five-day World Economic Forum in Switzerland this week, world leaders and economic experts grappled with what to do. The Dean of the Lee Kuan Yew School of Public Policy, Prof. Kishore Mahbubani, said, "Everybody's lost in Davos". The roundtable wrapped up two days ago in the atmosphere of doom and gloom that it began, with a realisation that the depth of the crisis is still unknown and the solution remains elusive. Premier Wen Jiabao of China called on the world to act in concert as, he said, "We are in the same boat." We sink or swim together.

What about our Budget, Sir? Have we done enough? Will it again be a case of too little, too late? These must be some of the questions Singaporeans are asking. By Singapore standards, this year's Budget is indeed a record. For the first time in our modern history, we have decided to dip into our reserves. It is unprecedented. So much so, it has left many among the more conservative and sober businessmen, worried about the signal which Singapore Government wanted to send. It must be that bad for the normally tight-fisted and prudent Singapore Government to release its hold on our national reserves, a sacred cow held dearly and closely to our hearts. Many a time, many Singaporeans had tried and pressed the Government to relent and release the reserves, including the last recessions in 1985, 1997 and 2001/2003, but let us also remember that sauce for the goose is not necessarily sauce for the gander. Let us not kill the goose that lays the golden eggs.

Even Senior Minister, Mr Goh Chok Tong, had declared that "if this is not the rainy days we have all this while built and kept our reserves for, then what is a rainy day?", only to caution, practically in the

next breath, that this does not mean "breaking the piggy bank". Yes, it does not take economic experts to know that there will be more that needs doing. While Prime Minister Lee Hsien Loong has promised "more", if and when needed, perhaps to be reviewed in six months' time, like the Budget Supplement also dished out during the last recessions, I believe it is better to do the saving in two or three steps, rather than rushing in blind. I believe there is no right or wrong answer as to what would constitute an appropriate formula for such supplementary help. Nevertheless, there are still many Singaporeans who might have been disappointed that the S$4.9 billion from the reserves was too small and too conservative a move for such an extraordinary and pressing time. And it is for this reason, I would like to urge Minister Tharman to elaborate on the basis as to how the Government decides what formula to use when deciding to dip into our national reserves. While there are always Singaporeans who would want more of the sacred cow slaughtered, there will be equally, if not more, who would urge the Government to be conservative, prudent and not to be trigger happy at dipping into the national reserves. To the latter group, this sacred cow needs careful nurturing and rearing, and to beware of the temptation to break the piggy bank. In other words, it is not halal, not allowed, to rob our own piggy bank.

Sir, I would like to applaud the Resilience Package introduced by the Government. Jobs, jobs and more jobs must be the way forward for our people , if we want to prepare our people for the realities of today's challenges. Yes, more is also given to help the needy, but we would want our people to meet the challenges with dignity rather than develop a crutch mentality. We are happy that Minister Tharman has chosen creative approaches through Jobs Credit and reskilling through SPUR for workers and professionals. This indeed is more

than the "SPUR" of the moment. I agree to the need to encourage our workers to earn their "SPURS" and sharpen their skills and competitiveness. This will stand them in good stead for the longer term, especially when the economy turns for the better and we want to be there to exploit the new opportunities that will surface.

I will not touch on the business stimulus package which Mr Inderjit has dwelled on at length but suffice to say that it will go a long way to bring about better confidence and optimism, something lacking these days in the private sector. One area which needs due attention is the support programme for families and direct assistance to households. I applaud the slew of assistance programmes announced, from GST Credit to S&CC and rental rebates, which will certainly help when many people are expecting reduced incomes and bonuses. The personal income tax rebates of 20% is welcome, although many wished that the cap could be pegged higher. Even the middle class too, Minister Tharman said, will receive significant benefits. I would, however, urge the Government to monitor this group and the benefits they receive, as many still feel the middle income squeeze and they often feel neglected. I am most happy to see more Government funding for the Self-Help Groups (SHGs) and the VWOs. The increase of $15 million for VWOs is rather small, but the total amount dished out ($220 million) is a significant support for the organisations that help make a success of our Many Helping Hands approach. Similarly, I welcome the additional $4 million to be given to the SHGs over the next two years, to a total of $9 million a year. The additional funding to the CCC-ComCare Fund to $7

million a year over the next two years will also help encourage the SHGs and grassroots organisations to play a more active role, in addition to the role played by the CDCs. As one of the Mayors, I would also like to encourage better bonding and synergy of roles between the CDCs and the GROs. The Government should incentivise that with more funding. At the NECDC, we are already extending our hands to the GROs and are working with advisers and VWOs to enhance our help to the needy, particularly in job and financial assistance. On top of national projects, the NECDC is devoting more of its resources (from $1.4 million last year to $3 million this year) to neighbourhood programmes to fill the social and service gaps, after taking into account national programmes. But this must also be done with bonding and better harmony in mind. In the early 70s, I was told that if the economy could grow at 6.5%, we should be able to take care of all our people, including the lower income, particularly the lagging Malay and Indian communities. They relatively are behind in terms of skills and income. Now, with a shrinking economy, they will most likely be affected first. To avoid income gaps growing and resources being diverted to more economic programmes, the Government must ensure that there is enough allocation of funds for bonding programmes to continue.

(In Malay): [For vernacular speech, please refer to Appendix A*.] Sir, although generally we accept that the Singapore Government is a secular one, and the Government also does not want to be seen as taking the side of any particular group, especially in religious group activities, I feel that the Government must also consider the importance of supporting programmes that promote the spirit of inter-religious harmony and inclusiveness. The Inter-Religious Organisation (IRO) is one example. The Inter-Racial Confidence Circle (IRCC) is another.

They have been making excellent progress in promoting inclusive behaviour and they deserve greater support. Recently, I was at the funeral of the late Mr V R Nathan, Chairman of the Hindu Endowments Board, and I was very amazed, happy and felt assured when I saw leaders of different faiths paying their last respects and offering prayers for the late Mr Nathan. It certainly made the family of the late Mr Nathan value the role that he had actively played in promoting life values based on IRO's ideals. Similarly, when I attended a meeting in Gujarat, India last month, I was able to visit the Gandhi Sabarmati Ashram. Gandhi, as we know, is a global figure who gave a great deal of attention towards inter-religious relations and harmony, and rejecting violence. The role played by icons like the late Mr Gandhi had an effect on me. We need to draw lessons from his life values to promote similar values in Singapore. With economic growth rates expected to decline, we must ensure that the harmonious lives that we have built together all these years through thick and thin, will be maintained and further strengthened. We have to strategise to ensure that no matter whether the economy grows or declines, it will not affect our race relations in Singapore. We hope that more assistance will be given to the Self-Help Groups and the VWOs, because they play an important role to ensure harmonious life in Singapore. As we are still celebrating the Lunar New Year, let me end with a Chinese saying, "Ren ren wei wo, wo wei ren ren " – All for one and one for all.

*Cols. 1613-1614.

4.53 pm

Mr Deputy Speaker, Sir, thank you for the opportunity to speak on the

Budget. I will essentially cover three areas; firstly, my brief thoughts of the Budget package; secondly, my position on the decision to draw on our reserves; and thirdly, the lessons we can learn from this global crisis that is unfolding before us.

Sir, a stimulus package to the tune of 8% of our GDP, chalking up basic deficits of about 6% of the GDP and requiring a dip into our jealously guarded reserves is, to use a simple description, gutsy. The task has fallen on our shoulders now to scrutinise and debate these gigantic Budget measures and, hopefully, forge a national consensus on the course of action we will take in this economic crisis, the worst of our lifetime.

Around the world, governments are also urgently coming up with economic packages to resuscitate their respective economies. For example, the US government is currently pushing for a US$819 billion stimulus package through the Senate.

In Singapore's case, the Resilience Package is no ordinary Budget package. Given its massive size and the daunting circumstances that we face, the package must pass what I call a "3-Ts Test", borrowing a methodology from a US Senator scrutinising President Obama's Stimulus package.

The three "Ts" are: Timely, Targeted and Temporary.

First, the timeliness of the package. Urgency as well as staying ahead of the curve is among the key imperatives of Budget 2009. By staying ahead, I am not only referring to the fact that we have brought our Budget forward by one month but, more importantly, the pre-emptive nature of the measures. The full impact of global de-leveraging has yet to take its course, and we may see the economy worsen in the coming months. So the sooner we prepare companies and

Singaporeans for the further fallout ahead, the better their chances of surviving and weathering the downturn. These urgent measures now, to stimulate bank lending like the SRI and subsidise wages under the Jobs Credit Scheme, combined, could make a difference as to whether businesses will decide to lay off workers or to downsize their business. We can only hope that these measures would buy them some time as they find financial leeway to keep their company solvent and viable. Speed is paramount here. So with regard to the first "T", I salute the Government for the timeliness and urgency displayed in this Budget.

The second T-test is that the package must be targeted. By now, we are clear the key focus of the Budget is about saving jobs and minimising long-term damage to our economy. The crisis started with the financial sector and has severely hit the valuations of financial markets. It has now moved on to the real economy, and companies across a broad spectrum are suffering as demand collapses. Foremost, on the minds of many businesses now, is to keep the cost low and to remain solvent. Hence, I agree with the Government that at this stage, the focus must be to help companies stay funded and incentivising them not to lay off workers. The Jobs Credit Scheme, which is pegged to each worker a company employs, will in some way slow down the retrenchment.

The Government has also correctly identified that the root cause of the present credit crunch is that banks are more careful in lending in these troubled times. It has tackled this head-on, by taking on a significant share of the lending risks of our banks. And in my view, this is the most effective supply-side measure. If countries around the world are also in a similar position to do what we have done, to offer such risk-sharing schemes to their