Hansard, 2009-02-10

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 Zainul Abidin Rasheed 14 Feb 17 Feb 22 Feb 26 Feb RAdm [NS] Lui Tuck Yew 16 Feb 20 Feb Assoc. Prof. Dr Yaacob Ibrahim 17 Feb 20 Feb Mr George Yong-Boon Yeo 19 Feb 22 Feb 26 Feb 01 Mar Mr Wong Kan Seng 02 Mar 04 Mar

ABDULLAH TARMUGI Speaker Parliament of Singapore

Order read for consideration in Committee of Supply [4th Allotted Day].

Head O – Ministry of Health (cont.)

Resumption of Debate on Question [9th February, 2009],

"That the total sum to be allocated for Head O of the Estimates be reduced by $100." – [Mdm Halimah Yacob].

Question again proposed.

Sir, when we are hungry, we buy food to eat; if we are looking for entertainment, we watch a movie; and when we fall ill, we go to see the doctor. However, unlike food and movies, no one really enjoys being sick. There is wisdom in the old saying, "Prevention is better than cure."

Sir, let me touch on how Singaporeans can play their part to stay healthy, detect and treat diseases early.

Our children spend up to eight hours a day in school. Besides the home, the school also lends itself as a natural setting through which we can help keep them healthy. Over the years, working closely with the Ministry of Education, we have developed a very successful and very comprehensive school health programme, comprising immunisation, regular medical check-ups, dental services and health promotion.

The result? Our school children are among the healthiest in the region, if not globally. They receive essential immunisations against conditions like polio, mumps and measles. Pre-schoolers receive vision screening annually at their kindergartens and childcare centres. In school, all students are provided with regular screening to ensure healthy growth and development. All this points to the hard work and dedication of our school healthcare professionals.

We should build on this strong foundation. Our vision is for Singapore to have the healthiest young population in the world. To this end, the Health Promotion Board (HPB) will actively engage more schools on health promotion

initiatives, such as the provision of healthy canteen food and active participation in physical education lessons and co-curricular activities. It will also focus on enhancing the mental wellness promotion programme to build the mental resilience of our youths to help them weather challenges in life.

Schools and community youth organisations can also tap on HPB's two grants for their programmes, namely, School Health Promotion Grant and Community Youth Health Promotion Grant. A similar grant has been extended to pre-schools from 2008. Exemplary schools are recognised with the Championing Efforts Resulting in Improved School Health (CHERISH) Award, which is part of MOE's Masterplan of Awards. For Dr Fatimah Lateef's information, 80% of our mainstream schools have already achieved this standard, and more will join in the ranks with these initiatives.

The CHERISH conference is another platform for engaging schools. The inaugural Conference last year gave Award winners the chance to share their success strategies and learn about international best practices in Hong Kong and Australia. For example, Princess Elizabeth Primary School shared how canteen vendors are taught to serve healthier food. The school even encourages students to play health-related games in the canteen to reinforce the health promotion messages.

At the other end of the education spectrum, the Institutes of Higher Learning (IHLs) can help the seed of health promotion sown in the earlier years grow as our youths pursue higher education. More customised health promotion programmes on various pertinent health issues, such as smoking and drinking, will be developed and extended to these IHLs. To effectively reach out and engage our youths, HPB will continue to use the new media and organise

activities that young people like, such as music, dance and sports.

Parents also play a vital role in shaping the lifestyles of their children. HPB will help empower parents to be positive role models so that they can inculcate a smoke-free lifestyle in their children, and take time to talk to them about many health issues, such as sexuality issues.

Our youths will eventually graduate and enter the workforce. Our health promotion must therefore be extended to the workplaces. Apart from improving the health of employees, these efforts would also bring down healthcare cost for both employers and employees. For example, Jurong Shipyard, an active advocate of workplace health activities saw its average medical cost per employee fall by 33% over the period 2000-2007.

This is why MOH and HPB have embarked on a multi-year tripartite effort to roll out health screening, health promotion activities and chronic disease management programmes in workplaces. I am grateful to HPB Chairman, Mr Lucas Chow and Mr Yeo Guat Kwang, our Member here from NTUC, for spearheading the work of the Tripartite Committee.

One focal area for the committee is our SMEs, as they employ more than 60% of our workforce. In these difficult times, we are exploring how we can better support SMEs to do workplace health promotion. For example, we are looking at enhancing the Workplace Health Grant so that SMEs receive more funding to implement our recommended package of health screening, follow-up services and healthy lifestyle activities.

At the same time, we cannot neglect the mental and emotional well-being of our workers. HPB will expand its workplace mental well-being programme to

help workers better manage stress, as well as strengthen their resilience to cope with change positively.

We must tackle the twin dangers of smoking and obesity head-on. We have successfully contained the smoking problem over the past 25 years, through the efforts of HPB, NEA and their partners. The incidence of lung cancer today has dropped by 20% since 1984. Similarly, the premature death rate from heart disease has dropped dramatically, by two-thirds from 25 years ago. We have one of the lowest smoking rates in the developed world, at 13.6%.

We will press on in our anti-smoking efforts this year through targeted measures. This includes enhanced regulatory measures. HSA will also continue to take action against retailers who persist in selling tobacco to minors, such as the recalcitrant Cheers outlet whose retail licence was suspended last week.

Smoking cessation programmes and campaigns will also be enhanced, particularly for under-aged smokers. Partnership with MOE, schools and the community will be key in reaching out to the youths. An opt-out smoking cessation programme for expectant mothers will also be introduced. NEA will complement our efforts by stepping up enforcement against smoking in public places.

I am confident we can control obesity too. Obesity is the second important cause of global mortality and morbidity after smoking. And both of them are preventable. This year's National Healthy Lifestyle Campaign will focus on obesity prevention and control, by emphasising the importance of maintaining a healthy body weight. We will encourage supermarkets and eateries to increase the availability of healthier food choices. The Singapore Sports Council, NParks, People's Association and its grassroots organisations will also contribute by

promoting physical activity amongst Singaporeans.

We will also tackle childhood obesity. HPB and its partner agencies will ensure that our children have access to healthier food and drinks in schools. More commercial dining outlets should join in the fight by developing healthy children's menus with guidance from HPB. Youngsters can do their part too by adopting an active and healthy lifestyle through regular exercise.

Let me now move to chronic disease management. I would like to respond to Dr Muhammad Faishal's question about the state of health of the different ethnic communities. The prevalence of chronic diseases varies among different communities, due in part to genes and environmental factors. In 2004, diabetes was most prevalent amongst Indians, affecting 15% of the Indian community, followed by Malays at 11% and Chinese at 7%. The prevalence of high cholesterol was highest amongst Malays at 23% followed by Chinese (18%) and Indians (17%). However, the Malay and Indian communities had a lower prevalence of high blood pressure at 23% and 22% respectively compared to the Chinese community at 26%.

Regardless of race, however, the treatment is the same. Patients should go for regular follow-ups with their doctor, take their medication on time, and make appropriate lifestyle changes, eg, in their diet. This will ensure that they enjoy a high quality of life despite their medical condition.

I share Dr Faishal's concerns regarding Malay kidney patients. There was a 17% increase in the number of Malay kidney patients from 2005 to 2007. Part of the solution lies in helping diabetic patients manage their condition better. From 1997

to 2006, the proportion of end-stage renal disease due to diabetes increased from 39% to about 60%. Certainly, we need to do better. The Chronic Disease Management Programme (CDMP) guides our GPs to do this, using evidence-based treatment protocols. Patients are also tested regularly to detect the onset of kidney problems early, so that we can intervene and slow any deterioration of the kidneys.

HPB has made headway in facilitating lifestyle change among the Malay and Indian communities, to prevent the development of chronic diseases. It will continue to build on this good work in the year ahead. For example, "Kebayarobics" and "Aarrokia Attam " workout routines have been started for Malay/Muslim women and the Indian community respectively. Healthy cooking classes tailored for the Malay/Muslim community have also been conducted at mosques and community clubs since 2006. This programme will be extended to Malay caterers and restaurants this year.

To encourage Malay smokers to quit smoking, HPB has been collaborating with mosques, family service centres and sports associations like the Singapore Silat Federation and Singapore Sepak Takraw Federation, to organise smoking cessation intervention programmes. In 2009, HPB will introduce a programme of talks and cessation measures to be held around Ramandan (the fasting month). Smoking cessation counselling will also be included in the marriage preparatory course for couples that smoke. As you can see, this is going to be a very comprehensive approach in helping the community to kick their smoking habit.

On the public education front, HPB has been tasked to coach the public on how to better manage their chronic diseases. As part of this effort, HPB will reach out to the Malay and Indian communities through Suria and Vasantham television

channels respectively, beyond efforts on Channels 5 and 8. It will supplement this with targeted messaging via print and online media. HPB will also be rolling out a pilot skills equipping programme to help Singaporeans at high risk of developing diabetes reduce their risk. HPB will commit an additional budget of $4.2 million over the next three years for these public education activities.

Let us not stop here. We should take a step back and spot and address problems early. Singaporeans must take charge of their own health. That is why I want to encourage more Singaporeans to go for regular health screening. MOH has already made evidence-based screening more affordable for Singaporeans through the Integrated Screening Programme introduced last June. Most Singaporeans need only to pay $8 for blood test for glucose and cholesterol. This is free for low-income Singaporeans. People's Association and its grassroots organisations promote the screening services through their pilot Wellness Programme. We have some initial success that we should build upon: about 70% of Singaporeans go for regular screening. Going forward, we need to encourage Singaporeans to go for the appropriate follow-up after screening, so that they can manage the detected conditions well. Again, this is another comprehensive approach to help Singaporeans, not only to understand their body conditions and whether or not they have chronic illnesses, but also to take measures to ensure their conditions do not worsen.

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Sir, let me now move to mental health.

The Minister for Health announced yesterday that the Chronic Disease Management Programme (CDMP) would be extended to cover outpatient psy

chiatric treatment. Beyond this, the Government is pumping an additional $35 million over the next three years, on top of the $88 million committed in 2007, to identify and treat potential mental health problems early in the community. For Mdm Halimah Yacob, Mr Zainudin Nordin and Mdm Cynthia Phua’s benefit, let me outline some of the initiatives we will be undertaking.

Other than IMH, all our restructured and some private hospitals also provide specialised psychiatric services. In the community, there are currently three psychiatric rehabilitation homes and six psychiatric day care/day rehabilitation centres. These provide rehabilitation and vocational training to help stabilised patients re-integrate into society. We will monitor the adequacy of such facilities and build more if required. We heard you yesterday and we will look into this in the future.

We will also invest in community support services. Today, the multi-disciplinary Community Mental Health Teams (CMHT), which is made up of healthcare professionals, follow up with patients discharged from IMH. The teams also render psycho-social support to patients and their families. IMH also has a crisis hotline and crisis teams conduct home visits if needed. The CMHT will achieve national coverage by 2011. Annually, about 700 more staff from our community partners such as GPs, schools, CDCs, grassroots organisations and VWOs will be trained to detect, counsel and care for individuals in need within the community.

Family members can also receive caregiver training and support under a Specialised Caregiver Support Service that MOH, NCSS and the Alzheimer’s Disease Association are enhancing. Aside from this project, we are open to supporting viable programmes offered by VWOs upon application.

Thanks to the Yellow Ribbon Project, ex-offenders are gradually being reintegrated back into the community. The same can be done for recovering mentally ill patients. One way is to help patients find and keep meaningful jobs so that they are able to regain confidence and lead fulfilling lives. IMH has started a new "Job Club" initiative to provide employment readiness training and work placement services for these recovering patients. Educational talks and forums will be conducted to educate the public on mental health issues in the workplace and general community.

Let me now address Ms Sylvia Lim’s question on the funding of essential programmes such as psycho-therapy. There are many types of psycho-therapy. IMH provides subsidised psycho-therapy to patients who need it, and needy patients can apply for Medifund assistance. As the Minister for Health mentioned, Medifund assistance will be increased to $80 million this year to assist more needy patients, including IMH patients who have genuine difficulty affording their bills. IMH offers another non-standard form of treatment called dynamic psycho-therapy as a pilot; it is currently not subsidised. Needy patients undergoing this treatment are assisted through donation funds received by IMH.

Sir, on breast cancer. I am heartened that Dr Lily Neo is concerned about the impact of breast cancer on female Singaporeans. MOH echoes her concerns. Through the various initiatives undertaken over the years, we have made significant progress in the fight against breast cancer. In 2002, HPB introduced BreastScreen Singapore, a subsidised breast cancer screening programme to make mammogram screening affordable and accessible. We have also brought mobile screening buses to the community and workplaces. The response to the

various screening programmes has been good. In 2007, 61% of Singaporean women in our target age-group for breast cancer screening went for mammograms, an increase of 27% from 1998. So all in all, 317,000 women have undergone the BreastScreen Singapore screening since its inception in 2002.

The challenge ahead of us is to ensure that women make breast cancer screening a regular part of their life. Our long-term target is for at least 70% of Singaporean women in the at-risk group to go for mammograms once every two years, up from the current 41%. We will ensure that screening is kept affordable for these women to facilitate that outcome.

Public education and awareness is also critical in our fight against breast cancer. In 2007, 83% of Singaporean women in the target age-group for breast cancer screening knew about mammogram screening, a marked increase of 36% from 1998. We can do more. Going forward, HPB and its partners will continue their proactive outreach efforts to women through media campaigns, promotional activities at workplaces and community events, and through GPs to encourage them to go for regular breast cancer screening.

On strengthening primary care, Members of the House would agree that staying healthy is about building strong relationships. Relationships with our loved ones, colleagues, neighbours, and, yes, our doctors! Every Singaporean should stick to one family physician. If you have not, I urge you to identify your family physicians and work with them to screen and manage your health. The family physician is your long-term partner in ensuring good health.

To further enhance the role of family physicians in the community, MOH has augmented the training programmes for doctors to achieve the required quali-

fications to be family physicians. In FY2008, we began to provide up to 50% co-funding for young doctors who want to take the post-graduate diploma training leading to Graduate Diploma for Family Medicine. At the same time, we also created more programmes for doctors to receive Masters level training. The College of Family Physicians will be the key content provider, with an MOH-appointed Joint Committee for Family Medicine Training overseeing these programmes.

The Director of Medical Services also shared last month that we are amending the MRA to include a Family Physician Register. This will set the standard for future family physicians. Public consultation is underway and we look forward to presenting the finalised amendments to this House in due course.

We are considering other avenues to support family care and achieve better integration within the national health system. First, we will leverage on IT to better link up polyclinics and GPs with the acute hospitals and ILTC providers to help provide patients with seamless, integrated care.

Second, we will continue to experiment with various primary care models to see which best suits Singaporean’s needs. We have conducted various pilots in the past, e.g. Jurong Medical Centre for patients and GPs to access Specialist Outpatient Clinic facilities in the community. Going forward, we are considering other initiatives like supporting infrastructural development, and incentivising GPs to come together and practise in groups.

Sir, we believe that all these enhancements will benefit patients. Four hundred and fifty GP clinics have partnered us under the Primary Care Partnership Scheme to provide subsidised care for the acute and chronic conditions of needy patients. Patients can be assured of the quality of care rendered as the GPs

are required to adhere to MOH’s treatment protocols.

As the GPs take on a greater role in healthcare management in the community, waiting times at polyclinics should shorten. In the meantime, Mr Ong Ah Heng will be pleased to know that our polyclinics are already adopting measures to manage waiting times, which may be 40 minutes or longer, depending on time of visit and other factors.

Patients can also view, among other things, the patient load at the polyclinics online so that they know when is a good time to visit the polyclinic. For those with chronic conditions requiring regular or frequent reviews, they can choose to make appointments at the dedicated Family Physician Clinics, to see their regular doctors and save on waiting time as well.

Sir, in conclusion, I have outlined the policies and systems that MOH will put in place over the coming years to strengthen the primary care sector and help Singaporeans stay healthy. I urge Singaporeans to join us as we shape the healthcare landscape – take personal responsibility for your own health and encourage your loved ones to do the same.

Human Organ Transplant Act

Sir, cadaveric organ donation is an emotional issue. And for Muslims, we must also recognise the religious sensitivity attached to organ donation. I empathise with those who are involved in handling cadaveric organ donations. Their task is a difficult and delicate one.

Sir, the passing of a loved one is always heart-wrenching and an emotional and stressful affair for the next-of-kin. Yet, we must not avoid confronting difficult questions because the benefits of

organ transplant are obvious. For some, getting a timely transplant makes the difference between life and death, or between prolonged suffering and hope for a better quality of life.

Sir, with that, I would like to ask the Minister to revisit the issue of cadaveric organ donation and see how the system can be further improved. To begin, Sir, perhaps the Minister could advise this House how many Malay/Muslim patients have benefitted since the introduction and the Amendment of the Human Organ Transplant Act (HOTA).

In line with religious obligations, we will also need to arrange for the prompt recovery of the cadaver once the organs are harvested in order to proceed with an earlier burial. Can the process be improved to minimise the time taken to recover the body of a departed loved one? I believe if this issue can be resolved, then perhaps we can allay some of the prevailing concerns of the Malay/Muslim community with regards to HOTA.

Sir, last year for the first time, Muslims were automatically included under HOTA. That was a good move as the earlier opt-in system which requires individual Muslims to opt into HOTA did not work. Could I ask the Minister for an update on the response of the Muslim community to HOTA after the amendment? How many more Muslims have benefitted from kidney transplants after the Amendment came into effect? How many more Muslims donated their kidneys after the Amendment came into effect? What feedback has the Ministry received from the community on the change to HOTA? Could I also ask the Minister, other than the law, what other measures have been put in place to actively secure the support of the community and increase their confidence in the implementation process? For example, are there now more

Malay-speaking counsellors familiar with the religious and cultural practices of the Malay community at our hospitals to effectively communicate with families before organs are removed from a donor, so as to smoothen the process? Also, do our doctors, nurses and other paraprofessionals involved in the transplants understand well the religious requirements of Muslims, such as the need for burial rites to be done quickly once death is pronounced, to enable them to refine the processes accordingly? Could the Minister also update this House on the number of Muslim patients who are now waiting for kidney transplants and whether the number of Muslims who suffer from kidney failure have increased? If so, what are the causes and whether there are any other plans to increase awareness and public education programmes for the community to address this problem.

Hospital Disinfection Measures

Sir, I understand that Singapore is currently ranked as the sixth best nation in the world for its medical advances, and the best in Asia by the World Health Organization. Hospitals and medical centres have achieved high marks in clinical indicators that equal or even surpass those in the developed world. However, it is important for us to strive to maintain the high standards and quality of our medical and healthcare services. Recently, I received feedback from my constituents that some patients who were admitted to the Tan Tock Seng Hospital were infected by a virus in the hospital and died of pneumonia. I would like to ask the Minister for Health was there an unusual increase in the number of patients at Tan Tock Seng Hospital who died of pneumonia?

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Sir, during March 2005, when SGH first identified Vancomycin-resistant

entercococcus (VRE), it decided to screen all its patients with a view to identify the carriers so that they can be properly isolated. In parallel, SGH staff was reminded to set up good infection control practices, such as mandatory handwashing in between patients, and stricter compliance of the two-visitor rule in the hospital.

According to statistics, in year 2007, pneumonia was the third major cause of death after cancer and heart disease. I would like to know how hospitals monitor whether the wards are affected by infectious viruses. Are there routine measures that hospitals take to ensure that there is no outbreak of infectious viruses in the hospitals?

Human Cloning and Other Prohibited Practices Act 2004

In 2004, Mr Chairman, MOH introduced the Human Cloning & Other Prohibited Practices Bill. This Bill was subsequently enacted.

The Act strictly prohibits reproductive cloning. However, the Act does not prohibit what scientists term "therapeutic cloning". This was back in 2004. It is now 2009. Five years is a long time in the field of stem cell research which continues to grow at a meteoric pace. We should take a fresh look at the advances in stem cell research from around the world, and decide for ourselves whether there are any more practices that should be prohibited. If yes, the Act should be amended to include these prohibitions.

One major consideration is the use of cybrids. I will just give a quick layman's summary of what cybrids are.

In "normal" therapeutic cloning, human eggs and human DNA are fused,

the egg is then stimulated, and the resulting embryonic stem cells are removed.

However, due to the shortage of human egg donations, scientists have resorted to using animal eggs. Animal eggs are fused with human DNA to create embryonic stem cells. So in essence, cybrids are a fusion of animal eggs with human DNA. Cybrids are very advanced methods in stem cell research.

The Government's bold vision of being at the forefront of bio-medical research is admirable. The desire of scientists to find cures for diseases is just as admirable. But we must also be prudent about the methods we choose to achieve these aims.

The prohibition on reproductive cloning in the 2004 Act was a wise step by the Government. The Government saw in 2004 that there are OB limits in scientific research beyond which Singapore should not accept. We are now five years down the road. There have been rapid advances in the bio-medical field in the past five years. The time has come for a fresh look at these OB markers. And I would urge that one such OB marker is cybrids.

I am of the view that the Government should not permit the use of cybrids in the therapeutic cloning for the following reasons.

Firstly, the danger of cross-species diseases. The cybrid's human-animal genetic composition triggers the danger of retroviruses migrating from the domain of the animal kingdom to mankind. Significantly, there can be no assurance that these viruses, residing within the cytoplasm or mitochondria of the animal egg, will not mesh with or integrate into the human nucleus within it. Such occurrence will significantly reduce the utility and raise the harmfulness of any stem cell line derived from cybrids.

Second, by fusing animal eggs with human DNA, a fundamental concern arises about the dissolution of the very nature of man. Our existing legislation already cautions against cross-species development.

Underlying these prohibitions, ie, against women surrogating an animal embryo and animals surrogating human embryos, is the legislation's apprehension towards cross-species tandem-development. If the Act specifically prohibits the growth of humanity in an animal, how then can the growth of human life within an animal egg be allowed?

I hold the view that the creation of cybrids is intrinsically incorrect since to create something part human-part animal at the stage of conception of life is to dissolve the very nature of Man.

These fundamental objections against cross-species development arise regardless of whether cybrids are statutorily required to be destroyed within 14 days of development.

Thirdly, there is the danger of tumours arising from embryonic stem cells. The 2005 UK Pattison Report raised the danger of tumours arising from embryonic stem cells. In contrast, the danger of tumours arising from adult stem cells is believed to be insignificant, based on the past 40 years of bone marrow transplants.

I would urge therefore – my fourth point – that the Government consider the recent scientific breakthroughs and economic benefits of adult stem cell research, as opposed to embryonic stem cell research and the use of cybrids.

A recent 2009 article – 31st January – by Mr Andy Ho in the Straits Times gives evidence of why adult stem cell

research is the more promising of the two, ie, between embryonic stem cell research and adult stem cell research.

In conclusion, in light of the meteoric pace at which this industry is advancing, it is our duty to carefully discern what to permit or prohibit on our shores. I believe for the best interests of Singapore that the creation of cybrids ought not to be allowed on our shores and an amendment to the 2004 Act should be made to list the creation or use of cybrids as prohibited practices.

Would MOH consider these proposals?

Sir, I do not know whether I have time to complete the reply but in case I do not, perhaps I will ask Mr Christopher de Souza to seek a clarification during clarification time so that we can complete the reply.

Yesterday, Mr Chiam spoke on dental care. He is not here but I have better reply to his cut first. He quoted a few examples, from his point of view, very expensive dental care treatment in Singapore. The figures sounded very high and I told him so, when Parliament was adjourned. For example, he mentioned "capping" which I presume he meant "crowning", costing $2,000 and he mentioned root canal treatment costing $3,500. So I told him he must have been to a very expensive dentist. Either that or he was mistaken. But he said maybe he was mistaken or the patient had very severe complications and actually received many more treatments and not just, for example, root canal treatment. Last night, I checked and say, in our National Dental Centre, root canal treatment typically ranges from $300 to $800 versus the $3,500 mentioned by Mr Chiam; crowning about $600 to $800 versus the $2,000 that he quoted. In any case, Chiam’s proposal was that we should subsidise dental care. And in fact we do.

You can get subsidised basic dental services at dental polyclinics. Dr Chiam mentioned filling, and a filling at polyclinics typically ranges from a few dollars to $25, depending on the condition of the cavity. For the elderly, it is further subsidised. As for specialist care, we provide subsidised services in the National Dental Centre, where typically patients will get at least 50% subsidy. So that is how we go about handling dental care for Singaporeans.

Mdm Halimah and Mayor Zainudin asked about HOTA (Human Organ and Transplant Act). Currently there are more than 100 Muslim patients on the waiting queue for kidneys. And as noted by Members, we achieved a major milestone when the Muslim community joined HOTA last August. I was very happy for the Muslim community because I have wanted to be able to do this for sometime. We knew as a fact that it will save lives but there were various difficulties that prevented the Muslim community from joining. But better late than never and it is truly life-saving – the numbers speak for themselves. Just to give an example, say 2007, this is before HOTA extension, the number of Muslim patients receiving a transplant was only 19, less than 20. Last year, and bear in mind last year was incomplete, with only five months of HOTA for Muslims, the number has already doubled to 38. From 19 for a full year to 38 for less than half a year: quite an achievement. I expect a record number this year.

Similarly, if you look at it in terms of percentage of all patients receiving transplants, the Muslim recipients have increased their proportion from 11% in the past, before HOTA, to last year 19%, comparable to the percentage of Muslims in the total population.

Whilst some Muslims have opted out of HOTA, and we respect their decision,

the vast majority of Muslims, just like non-Muslim Singaporeans have stayed within HOTA and they support organ donation. So far, over five months, four Muslim cadaveric donors have saved the lives of 15 organ recipients.

Our hospitals are very sensitive to the need for relatives to take the bodies of their loved ones as soon as possible for religious rites. Our organ donation teams work through the night to ensure that the donation process is completed within hours, certainly well within 24 hours. Adequate washing facilities in hospitals and a second sitting for Coroner’s cases are now available to reduce any possible delays. And we have prepared our hospital staff quite thoroughly for the HOTA extension to the Muslims. There are always some Malay speakers around and staff are briefed by MUIS on the religious and cultural sensitivity of the Muslims. So from my point of view, the last five months of implementation has been quite smooth. While there were a little kinks here and there, I am sure over time we will improve further.

I am particularly grateful to the support rendered by Muslim religious leaders. Last night when I met Haji Mohd Alami Musa, MUIS President, I told him so. They were wonderful. We have a list of their handphone numbers because this thing can happen anytime. We will call them if the family members require religious clarifications and they will come to the hospitals even in the middle of the night to help support the family through the grieving process and also to clarify any religious doubts. Their work, excellent work, complements the work of our medical staff and social workers. We will continue to monitor and make improvements where we can. But as noted by the Senior Parliamentary Secretary just now, the number of Malay patients struck with kidney failure continues to rise so the key is still, as Dr Lily Neo always reminds us, prevention,

prevention and prevention. It is quite preventable. Certainly the complications are quite preventable. So HOTA cannot be the key, it cannot be the full answer. Prevention is, and that means changing lifestyles for those who are on the wrong side of the healthcare divide. They have to disrupt their lifestyle as Ms Jessica Tan reminded us yesterday.

Mr Low Thia Khiang asked if there has been an unusual increase in the number of patients who died of pneumonia in Tan Tock Seng Hospital. I checked. We did not observe any unusual trend. Tan Tock Seng Hospital recorded about 600 pneumonia deaths every year. Nationwide, as Mr Low noted, pneumonia is our third killer. It is a major cause of death, just like in many other countries, probably all countries. Our national data show that pneumonia death has hovered at around 2,300 every year; it fluctuates a little bit, plus or minus. But by and large about 2,300 every year and it has been so for many years. The reason it is a major killer is because pneumonia is an outcome with many different causes. I mean there could be many other underlying causes and typically patients with stroke, with cancer, with COPD, or who are bedridden for a long time due to other illnesses, they somehow die of pneumonia as the terminal event. Some pneumonia deaths are caused by viral infection and I think SARS outbreak was a dramatic example of that.

SARS taught us many lessons and one of which is to remind us to be constantly vigilant. So hospitals have to put in surveillance systems to monitor patients with atypical pneumonia, patients with unexplained fever for more than 72 hours and relevant travel history, and sudden unexplained death cases with acute respiratory symptoms.

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All hospitals adopt strict infection control protocols; so staff are required to clean their hands regularly and correctly, infectious patients are isolated with regular environmental disinfection. And the hospital infection-control teams carry out regular audits to make sure that the SOPs are being followed.

I visit hospitals quite regularly, impromptu, and find that hospital staff requires me to do various hand rubs. I think the procedures are, by and large, in place. But I acknowledge that, globally, hospital-acquired infection is one of the complications, even in the best hospitals, partly because we are talking about human behaviour here. It is not only our staff. It is the patients and also the patients' visitors, and the weakest link will be in the weakest link, and whoever is less than careful, infections just spread. What is important is for us to constantly remind ourselves and try to bring down the rate to as low as we can. To eliminate it to zero, I think no other hospital has done it and I doubt we can ever reach that stage.

I have time for Mr de Souza's clarification. I thank him for sharing his views on therapeutic cloning and cybrid research. I heard his view that he is against cybrid research. I agree with Mr de Souza that the science on stem cell research is evolving and, of course, our law must try to keep pace. We do monitor developments globally and we are further advised by an excellent Bioethics Advisory Committee (BAC), comprising some of the top names in the world. They scan global developments and then they do very extensive public consultation before they firm up their views on what would be their recommendations and, typically, we will then review their recommendations and, where appropriate, change the law to do so. One issue for which they have been conducting public consultation is precisely on this aspect of cybrid research, or research on human-animal

combinations. I remember they did a public consultation last year. I took part in one of those discussions, and I assume Mr de Souza must have also shared his views with them.

I await the BAC's recommendations and, in due course, if we need to change the laws, we will do so. So I have not taken a position yet. Mr de Souza's view is one, but I think he knows too that there are many others who feel quite differently on this topic.

Sir, I would like to thank the Minister for his reassurances on Medifund. I would also like to seek a point of clarification. Does the Ministry have a target within which to cap medical inflation, for example, no more than 5% above general inflation? To what extent do the various initiatives, undertaken by the Ministry of Health, keep medical inflation in check?

I thank Mrs Teo for the clarification because this was a query which I forgot to reply yesterday. Not that I forgot, but I was not sure of my data, so I did not respond immediately. I heard she quoted a rather high health inflation rate of 7.4% which, relying on memory, I thought that was high. I checked and yes, I was not wrong. She talked about 2007 health inflation figure and asked me about the 2008 data. She thought 2007 was 7.4%. Actually, it was 4.1%, and not 7.4%. 7.4% could be for a particular month in a year, maybe, I do not know. And she asked about the 2008 figure. The 2008 figure was high, and it is not just in healthcare. We all know the reasons for the high inflation rate last year when oil prices went up sky high. Health inflation was high at 5.6% but it is, in fact, below CPI, which was 6.5%. So we did better from that point of view. If you take a longer period, 2005 to 2008, for example, health inflation averaged 2.8% per annum. and CPI was 2.5%. So we were just 0.3%

higher than CPI. However, the point is taken, globally everyone tried very hard to control healthcare cost. But still in every country, the health inflation exceeds the general CPI, and it is quite a challenge trying to control healthcare cost. I think our data suggest that we have been doing a relatively good job.

Sir, two clarifications for the Minister. The first is relating to my query about means testing for nursing home subsidies. I think the Minister missed my point about the difference between taking gross pay and net pay. My point was that the net pay is a more accurate reflection of affordability because it tells us how much disposable income the family has actually to pay for the nursing home charges. That was my point with regard to the means testing. I wonder if the Minister would agree with me that that is a more accurate test. The second clarification is that yesterday, the Minister spoke about the nursing home in Johor in a rather positive term, I would say. I would like to clarify whether he is actually suggesting that this should be an option for families in Singapore to consider because I think this would be quite a bad indication of affordability of our own healthcare services here and also a reflection of our national values.

Sir, I thank Ms Sylvia Lim for seeking the clarifications. No, I did not misunderstand her point about "gross versus net income". What I said was that we must be consistent. If you want to look at gross income, then you must be consistent in setting threshold criteria based on gross income. But if you prefer to look at net income, then your threshold criteria for means testing should also be based on net income. At the end of the day, we are talking about targeting subsidy and who do you want to subsidise. In the case of the nursing home, the current rule is we will subsidise the bottom 50% of

Singaporeans. You can argue about whether it should be 50%, 60%, or whatever. But that was the policy - we will subsidise 50%. So that will include all the low income plus part of the middle income as well. Having decided that it is the 50th percentile, if you decide to look at the gross income, then, of course, you set the threshold based on the gross income data. Or if you want to look at the net income, you can do so too, in which case, then the threshold criteria will have to be lowered to suit the net income. For practical reasons, we use gross income because it is harder to get the net income data comprehensively, as there are all sorts of complications. On the other hand, we have more readily available CPF data on gross income.

On the nursing home in Johor, I mentioned it in passing because I made a trip there. Actually my main purpose was to look at the hospital because Members have asked me to consider the possibility of Medisave to be used for hospitals there. I used the opportunity to look at the Iskandar Malaysia region; I have not been to that part of Johor for many years and wanted to see how the development is shaping up there. It was a very pleasant trip. I went by the Tuas Second Link, then from west to east to Pasir Gudang, ended up with a nice seafood and cheap lunch near Pasir Gudang and came back through the new CIQ Checkpoint to our Causeway. At the Iskandar Malaysia region, I also took a look at the site where I heard they have investment from a medical school from England which is coming to set up. I also went to take a look at the Legoland theme park where the land is being prepared. Sorry, for digressing.

But many Singaporeans, including many residents in my constituency, go to Johor very regularly, top up their car tanks, which many do, and also to have a

nice seafood meal at much cheaper prices. I think these are natural activities, and that is part and parcel of globalisation. In fact, this is not even globalisation; this is regionalisation, and there is nothing wrong with that. Consumers are free to choose. I know many go over to the pharmacies there to get cheaper drugs. It is not our fault. The pharmaceutical companies have a way of setting prices: Third World, they set lower prices; First World, like Singapore, they set higher prices. By allowing the flexibility of consumers walking over the Causeway, they benefit. I do not think we should constrain them from doing so. Our cost will always be higher because our wages are different. Nurses are paid very differently here compared to Johor and ditto for doctors; likewise construction cost.

I just want to point out to Singaporeans that there are options like these. In fact, it is already happening. This free flow of patients across borders, so much so that there is a term called "medical tourism". Singaporeans go to Bangkok, I know, for lasik, and vice versa. Americans come here. Russians come here. Singaporeans go to Penang and Malacca. I think we should allow that. In any case, how can we prevent it? We cannot prevent it. But in fact, by keeping the borders "open", it puts some competitive pressure on our local providers which eventually will be good for our own consumers. Because if they price themselves too high, the patients will start going across the Causeway and they lose customers.

I would like to thank the Minister for his reply and in reply to his request, I am asking for a preemptive clarification. Three points, Sir.

First, given the promise that adult stem cell research has shown, both in the US and around the world, and given the amount of resources that we are pumping

into this new biomedical field, would MOH consider a push for adult stem cell research over and above embryonic stem cell research? I ask this question because it leads to the second point. If there is such a push, then it obviates or avoids the issue of cybrids because cybrids only come into play in the field of embryonic stem cell research.

My last point of clarification is: if the 2004 Act was introduced so as to keep up with times and to immediately prohibit what we think as a Government, as a people, what ought to be OB markers? Surely, the 2004 Act must continue to be fluid and up-to-date with the times. I must confess that five years is a very long time in the biomedical field. Would more amendments to the Act be made more expeditiously in future?

I am not too familiar with the technicalities of the research on stem cell. I believe there is a lot of work on stem cell in general. Are our scientists doing cybrid research – I stand corrected – but I doubt they do. I think part of the reason the Bioethics Advisory Committee wanted to study this subject is because the researchers want clarity. Can they or can they not? They are, by nature, very conservative people. And I think, because of the uncertainty, they stay out. So the Member's point that we should emphasise more on adult stem cell and not do cybrid research, does not even arise because, as far as I know, I do not think there is anybody doing cybrid research at the moment. Meanwhile, I think we let BAC conduct their public consultation first. I attended one of the sessions and I was educated along the way, but not sufficiently to be able to do a meaningful dialogue with him today. I walked away from the session with the impression that there are strong views and similarly cogent views on both sides of the camp. So it is not as straightforward as, say, we should not clone a human being and grow it into an

adult. The law against human cloning was straightforward. But for research on human-animal combinations, there are

other issues involved. There are possible upsides, which the researchers are looking for, that will benefit mankind. That is why they want it to be discussed much more, and not put a clear-cut prohibition, which may then miss out on possible upsides that will eventually benefit mankind. That is as far as my understanding goes.

The last point is about keeping pace. Yes and no, because it is such an evolving field. Understanding of this subject and the implications of it is not obvious or intuitive. The global consensus, actually, is that the law should be slow. Do not be too fast. You may be drawing a line in a rush, and that line may be drawn in a wrong place. Then, as we all know, when you want to move the line after it has been drawn, it is typically very difficult.

I thank the Minister for his reply. I have four clarifications to seek from the Minister. It is with regards to questions I have raised which were not answered.

I asked about the low subsidy that is currently given to implants, other than the stent implants. The case I cited yesterday, where the procedure was carried out in a B2 ward. $2,457 was the implant cost, the subsidy was only $500, and the patient had to pay $1,957. For a low-income worker, that represents more than one month's salary. So I asked whether the Ministry could review this policy to provide a higher level of subsidy for implants for those in the B2 and C wards, particularly now that we have means testing, and the objective of means testing is to provide better support for those who need it and make it more affordable for those in the B2 and C class wards.

The second question I asked was the issue of affordability. Now that the general guidelines on fees have been removed by Singapore Medical Association (SMA) because it is supposed to be anti-competitive – what, then, is the alternative if a patient has a complaint about overcharging? What mechanisms are in place for the patient to seek redress? Could doctors then turn around and say that there is no overcharging because market sets the rate and a patient knows how much is to be charged? We know that there is a great asymmetry when it comes to information between patients and doctors. I would like the Minister's comments on that.

The third question I raised was on MediShield coverage for patients with mental illness. It is a very serious problem for families taking care of mentally ill people, because it is a long-term illness. It is a debilitating illness. It will break their backs if there is no insurance coverage. I would like to ask the Minister to respond to that point.

My final point is to ask the Minister whether he will also include dementia in the Medisave coverage for outpatient treatment of mental illness because that is also a serious and increasing problem. And dementia treatment does take up a lot of a person's finances.

Mdm Halimah, I am sorry that I missed out a couple of your cuts.

First, the implants – the problem is that there is a wide range of implants. It is just like drugs, medication. We, typically, set our subsidy based on generics. So we are looking for the generic equivalent of implants – which we call standard implants – versus more fanciful ones. If you set your subsidy rate too high, who will want to go for the

lower cost, even though the lower cost may be good enough? It is a problem, and hence we have to, typically, set our subsidised rates, which from a patient's point of view, more on the low side.

But for knee transplant, the example that Mdm Halimah mentioned, I have actually done quite a few things over the last few months. We have adjusted MediShield implants reimbursement rates. In fact, it is now quite substantial. Say the example of knee replacement, most of the hospital bills will now be picked up by MediShield. And yesterday, the Medisave liberalisation rules that we talked about for surgical patients will further benefit patients with that kind of operations. But, certainly, we review implant rates periodically because of inflation, and if the original cap is really too low, we will raise it in due course. It may not be immediate. But, we look at those data quite often. The bottomline is this – patients, rich or poor, can afford the essential treatment that they need. But we, certainly, cannot set subsidised rates too high as to encourage the use of fanciful stuff, which may not be necessary.

The second point is about SMA and the Competition Commission's arguments – quite intellectual arguments – on whether having fee guidelines is anti-competitive. I leave it to them to sort it out. Unfortunately, they have dragged in lawyers now, so I think that will take quite some time. But, patients who feel that they have been overcharged – maybe Mr Chiam's patient with the $3,500 root canal treatment – can complain to Singapore Medical Council (SMC) or in the case of dental, the Singapore Dental Council (SDC). SMC will review them, to see if there is gross overcharging. In fact, we have cases like that which the Committee had looked at in the past. My advice to patients is this: get a second opinion. And the best second opinion is from the public hospitals. If you are not sure if it is too expensive, just ask the

restructured hospitals and you will know their rates. Hence, with or without fee guidelines, in fact by getting a second opinion, you get a more precise advice on whether you are being overcharged or not.

Related to this point is the earlier advice that the Senior Parliamentary Secretary gave: have a family physician. The fee schedule covers tens of thousands of fee items, and the layman may not understand the details – what is it and how much does it cost. And the one to give you that guidance, really, is a family physician whom you trust and have known for years. Go to him and he will be the best one to advise you that, "you have this medical condition, you need a specialist, better go to that group of specialists. This group, I think, they tend to be on the high side, don't go". That is the best way to handle this issue of overcharging.

MediShield on mental illness – we will be moving on Medisave for outpatient mental illness. As for MediShield on mental illness, I have some sympathy. Mdm Halimah has been advocating this for a few years. I am sympathetic but, if you want to cover more conditions, then the insurance premium has to go up a few dollars. I doubt this is a time to talk about raising MediShield premiums. So the next time when we need to revise MediShield – presuming that is after the economy has fully recovered – we will put a file record for whoever is the Minister for Health, to take a look at mental illness.

In the case of private insurers who are riding on the basic MediShield, many of them already provide this coverage. But this is more for the middle-income group. For the lower-income group, they will not be able to afford. Meanwhile, the way we do this is through subsidising IMH and the psychiatric departments in general hospitals heavily. We subsidise mental illness much more than the traditional

80%, 65% for class C, B2 wards. In fact, often, the subsidy goes beyond 90%. If you look at the usage of Medifund, a big chunk goes to mental illness, where the bills are completely written off. This means a subsidy of 100%. Sometimes, quite unfortunately, the patients are just dumped onto our laps. We have to treat and house them. So this is how we handle mental illness. But, long term, I agree that risk pooling offers a way out, and at the next round of MediShield reform, we will bear this point in mind.

Medisave for dementia – I thought Dr Fatimah gave a very good prescription yesterday: step-by-step. So I am taking her prescription. So we do the biggest group first which is depression and schizophrenia.

I would like to seek Minister's clarification on the issue of mental health. We know that regular intake of medication is important in the treatment and control of symptoms of many psychiatric illnesses, such as schizophrenia and even depression. And we know that it generally is beneficial for the patients with mental illnesses to receive social rehabilitation in the community. I would like to ask how is the Ministry or IMH or the mental institutions going to monitor the recovery process of patients who are discharged from hospitals. Is there a system whereby this institution can actually track these patients, should they default follow-up?

This is important because the omission of any medication and the necessary review by the professional can actually lead to other potential complications or even pose a threat to the safety of the patient and even the community at large. We have heard cases where patients were discharged, defaulted follow-up, omitted medication, failed to follow up until something big happens in the news.

I thank Dr Lam for his comments. This is indeed a great challenge. Not just here, but all over the world for the mentally ill. How do you ensure compliance? Chronic diseases always have this problem. We all know the way to treat it is consistent lifelong low-tech treatment to avoid complications. The mentally ill presents another different aspect as, sometimes, the patients just deny that they have mental illness. At the MPS occasionally, we see these cases and some of them come to me and complain that the doctors insist they must eat this or eat that. So I learn from them how they tricked the doctors to think that they were taking the medication when they did not. The problem, I think, is well-defined, but the solution not so straightforward.

Part of my motivation for supporting Medisave for outpatient mental illness is because I want to also, through this, build up a way of monitoring how GPs, psychiatrists handle their mentally ill patients. Just as the Medisave scheme for diabetes, I now have more than a year of data on how diabetic patients are being handled by their GPs: clinic by clinic. What is the number of cases they have? What is the blood-sugar level of the patients over time? Does it improve statistically for the whole group, does it stay the same, or does it worsen? One year is a little bit too short, but as we build up the data series over the years, we will get valuable information from the data. My intention is to publish it. Not to witch-hunt or to blame, but to let doctors learn from each other how they handle diabetes, for example, their performance level versus other GPs. And I am hoping that, in the case of mentally ill, likewise – depressions and schizophrenics – if we find that there are clinics which are able to handle their mentally ill patients better than others, then they may be able to share their experience, how they are more effective than other GPs, for example, in getting their patients to comply. So, along

the way, I hope we all learn from it, and the industry improves and patient care improves as well.

Sir, thank you for allowing me to make a point of clarification.

After IMH where the patient seeks treatment, this could be followed up by the daycare centre. And then later on, more VWOs can be encouraged to come out to set up some silver ribbon centres, where the patients are cared for more on a voluntary basis. On this basis, we have more community support on the ground.

1.15 pm

I note Mdm Cynthia Phua's observation, and I think we discussed this yesterday too, that clearly we need to do more. But it is not just more resources thrown in, but to also find a way how to integrate and coordinate better. VWOs have a lot of passion to help but they may not have sufficient clinical knowledge. Our professionals know what to do but may not be able to have the same social outreach as the VWOs. So it is to get them to really work together. And like all things, we have to pilot and experiment. And this is certainly what we want to do. But let me also make an appeal to the family members: you have a major role to play as well, because talking to some of these patients and the professionals who have to manage these cases, sometimes there is just no family support and the poor fellow is just left in the lurch. The incident of the attack on our colleague, Mr Seng Han Thong, involves many issues. One of my big concerns arising from that incident was that we have been trying very hard over the years to de-stigmatise the mentally ill, and I was very worried that the case will push our efforts back several years. Then after that there was the incident involving Ms Denise Phua. And I worry that the society will group all mentally ill together as one

group. No doubt there are such patients out there who need help but mental illness is a wide range of illnesses and many are reversible if we give them a chance, if we give them jobs, if we are able to accept them in the community. If you institutionalise them, which is the traditional way of doing things in the last century, lock them up in the mental asylum, they do not improve, they just go downhill, just like in the movie "One Flew Over The Cuckoo's Nest". That does not solve the problem.

Sir, may I have clarification from the Minister on two points?

Has means testing brought any behavioural change in the way Singaporeans spend on healthcare and do we have any study on the impact of means testing?

Second point is, we have seen low-wage workers sometimes attending private clinics or co-op clinics because these are the clinics they could get benefits like the subsidies provided by their employer or NGOs. I would like to know whether they would be penalised by considering them as A Class patients just because they attend private clinics outside as outpatients. Could the Minister clarify, please?

Whether means testing has caused a behavioural change, it may be a bit too early to conclude. But as I shared with Members yesterday, less than 10% were means tested out, which suggests to me that most Singaporeans, by and large, chose the right class of ward. So the middle-income, they go Class A, Class B1. It is only a small percentage who actually can afford Class A, Class B1, even private hospitals, but they chose subsidised ward. We do not begrudge them, we still subsidise them, except what we are asking is maybe we will subsidise them less than those who

come from a lower income group than they. So far, I consider the implementation quite smooth, suggesting that there is general support by Singaporeans for this policy. Some patients, because of company benefits, end up in private GP clinics or private hospitals, but may then require subsidised care in the public hospitals, we treat and accept them and there is an avenue for downgrading. But if they do not ask for it, we will just treat them as private patients. If they express difficulties, then we would assess and downgrade them. The example of that obstetric patient who was going to deliver the second baby in KK Hospital, which I mentioned yesterday, was one of those cases. I think she paid for private sector healthcare all the time, but she wanted to reduce costs. When she came in, we treated her as a subsidised patient, and she was able to save about $2,000, according to the newspapers.

Sir, I have two clarifications for the Minister.

Sir, I refer to the Minister's earlier reply on his nice trip to Johor, which I suppose must have inspired him to contemplate new healthcare policies. I would like to ask the Minister is he now suggesting that Singaporeans who cannot afford medical treatment or step-down care here, should now consider such facilities in Johor.

Second clarification: is the Minister outsourcing the Government's responsibility to provide affordable healthcare service to Malaysia now?

A simple and robust answer is "no". Everybody can afford healthcare in Singapore, whether acute or long-term care. I think this is our pride, our healthcare system, as quoted by Mr Low himself just now, is the best in Asia and the sixth in the world. And I think we have reasons to be proud of our healthcare system. Our doctors, nurses,

work very hard. We have thought through carefully about how to bring about this very good outcome – that even if you are unemployed, or low-income group, you can afford a standard of healthcare which is comparable to the US. You look at the 40-50 million American citizens there who just cannot afford to even buy medical insurance because their insurance rate for a family of four runs into five-digit US dollars per year. Mr Baey, who is familiar with US, nodded his head. This is just for premium, let alone talking about hospital bills. You step into an emergency department in an American hospital, it is triple-digit US dollars.

But in Singapore, we make sure that healthcare of good standard is available to all – rich or poor. If you are rich, we will subsidise a little bit less. But if you are poor and if you need to write off your whole bill, we do. That is what the 3M system is all about. Yesterday I spent some time discussing with Members to think about long-term care. It is not a big problem today because we are still a relatively young society. But we will not be. I am already 57 and there are many in my generation. And very soon this Silver tsunami will come but we have 10, 15 years to prepare for this. So Minister Lim Boon Heng is absolutely correct. We have 3Ms which render this very good system that we have today, for acute care; let us make sure that we have an equivalent for long-term care.

So, no, I am not saying that if you are poor, I will put you in an ambulance, send you across the Causeway to Johor nursing home. That is not what I said and please do not twist my words. But what I am saying is for those in the middle-income group, you have choices, you are paying out of your own pocket, you decide. Do you want to have a seafood meal in Singapore or you want to have a family reunion in JB? It is up to you, this

is your own choice. Do you want to fill your car tank in Singapore or you want to drive across and have a haircut? That is up to you. You are spending your own money. And I am just sharing with Singaporeans that there are alternatives of that kind. But for low-income Singaporeans, we look after and heavily subsidise them. There is no need for them to walk across, because they enjoy a heavy subsidy here. They have to pay unsubsidised rate in JB. It will be more expensive than what they can receive in Singapore. So that is the way we do our systems and I hope to get the Member's support for it as well.

Mr Chairman, I would like to seek clarifications from the Minister. He earlier said that the Ministry of Health will invest more on the treatment of psychiatric cases and many of them do not have enough family support. He also said that, for many years, MOH has followed the policy on encouraging psychiatric cases to stay in the community as much as possible. May I ask the Minister, in view of a small densely populated state, is there a necessity to tweak such policy of discharging patients to stay in the community as much as possible. Is it to the best interest of the patients if he or she does not have enough family support or community support? Are such patients causing dysfunction to their own families and to the community they live in?

And, lastly, the Minister earlier said that many people deny their psychiatric problems. So may I ask him how many psychiatric cases are undiagnosed and untreated but are living in our present community?

I am not a doctor, so my knowledge is that of a layman, and I would not be able to discuss seriously some of the queries that Dr Neo has raised. How many are undiagnosed? I would not know. I do not know whether

there are such surveys. Probably there are. Globally, my journal readings suggest to me that this is one of their big problems as well. Even the definition of what is mentally ill, there is no consensus: you can be strict or loose.

I remember reading an article in New Zealand when I was there for a meeting, where the front page headline screamed out to say "Half of New Zealanders are mentally ill", following a survey that they have done. So I think this is a difficult problem. But whether our professional policy is to discharge mentally ill patients "as much as possible", whether that is correctly worded, I do not know. I have to check with our professionals. I do not think that is the policy. The policy is to make sure that the patients get the best care, and they have to decide whether that best care is rendered in the institution or in a community. And to be fair to them, talking to them, the impression I get is they are not just dumping the patients out of IMH. They are a bunch of very nice, passionate people. I met some of them recently when I opened a community outpatient facility that they started in Queenstown Polyclinic: a nice bunch of people, very passionate about their patients and wanting to do the best for their patients. So it is not a case of the psychiatric doctors just dumping the patients out of the hospital and leaving it to the community to sort itself out. More correctly is the other way round: that we have seen many families who dumped their mental patients into IMH and on our laps, and we have to look after them for life. But instead of accusing each other of dumping, I think let us focus on how to make sure that the patients get the best of care, and that requires cooperation from everybody all round. I am quite sure IMH's psychiatrists will be looking at how best, when they discharge patients to the community, to maintain contact with the patients, perhaps, through the GPs. I know they started a programme working with the GPs, so that there is shared

treatment. If a specialist is needed, he is always there for consultation, but the day-to-day treatment is done by the GPs.

I know this because one of my former classmates is a very good GP outside, and one day he told me about this programme. He said that it is very good for his patients who have some mental illness, and now he is able to handle them with confidence. And the patients prefer that too, again because of the stigma associated with IMH. They rather go to a GP if they can, rather than go to IMH and to report to their friends or families that they went to IMH.

1.30 pm

Sir, can I ask the Minister for a clarification with regard to long-term care? We discussed about being disruptive. What more proactive actions can be done so that chronic illness patients can get preventive and constant care, and that they do not fall off from treatment due to unaffordability? One of the ways, as the Minister touched on earlier, is technology, how patients' information and tracking allow for more proactive actions to ensure that they do not fall off, and that they can manage the cost of treatment.

The second clarification is that the Minister did not answer my question that I asked with regard to what more can be done in terms of affordability in these difficult times, specifically on long-term care and chronic illnesses. Can more be done for the cost of treatment as well as cost of medication to help patients in these difficult times?

Sir, on affordability, all my speeches yesterday and today were directed at it. That is what motivated me and that is what motivated my Ministry – how to make sure that healthcare remains affordable and of a high standard. Frankly speaking, it is easy to keep healthcare cost

affordable if the standard is not an issue. Many third-world countries achieve that – absolutely free healthcare or very cheap healthcare. But what kind of healthcare?

Mr Low mentioned JB when I discussed my trip there. Was it two weeks ago, a Singaporean had an accident in the northern part of JB? He was "semi-treated" in a hospital there, but he was dissatisfied. He called an ambulance and, I think, he was sent to Changi General Hospital or SGH. He was quoted by the newspapers to have said that it was a blessing for Singaporeans to have such a high standard of healthcare, and yet affordable.

So, to keep healthcare cost affordable is the easiest thing in the world. But to also keep it of a high standard and yet affordable, very few countries have done so. I like to believe that, while we are not perfect, we have done a fairly good job. Just a while ago, I was sharing with the Finance Minister. There is this monthly journal that the Japanese publish called Japan Echo, which has serious articles on contemporary issues in Japan. The latest issue which we just received this morning, the front page headline is about how to create a sustainable healthcare system in Japan. I was sharing with the Finance Minister that I felt very sorry for Japan because, for a long time, they had one of the best healthcare systems in the world, and they could be truly proud of that. I flipped through a few articles in the journal, they all screamed out that their healthcare system is on the verge of collapsing. On and off, we read of such stories. Just last week, there was a pregnant woman who subsequently died, and this is in Tokyo, because the ambulance had to negotiate with every hospital, "Please take this patient, urgent, dying." They said, "Sorry, full house." Or at least they gave the excuse that it was full house. After several hospitals, by the

time one kind-hearted hospital took her in, it was too late, she died. And this is in Tokyo, Japan. It is not a third-world country or rural town. It is first-world and second richest country in the world.

I flipped through the journal and one article was written by my Japanese counterpart, and I saw his first paragraph. He blamed all the problems of the healthcare system in Japan on pandering to political populist measures, which then just collapsed the whole system. Let us not fall into that trap. We are not in that hole. My job is to make sure that we do not walk into that hole, and please do not lead Singaporeans into that hole.

On long-term care, what else can we do? We have done a lot. If it is not enough, we will do more. We will certainly do more prevention, more screening. But let me just say a word of caution, which is that at the end of the day – what is the Cantonese expression – we cannot drag the cow to the water unless it is willing to, and it must cooperate. All smokers know that smoking causes lung cancer. They still smoke. It is not as if they do not know. What can I do? So, it is motivation. We organise health screening. We subsidise screening so that it is affordable. Money is not an obstacle. Lack of motivation is the obstacle because, often, after a person has been screened, the follow-up is the big difficulty. Follow up requires even greater motivation. If he is not willing to change and disrupt his lifestyle, his health will just go downhill. It is inevitable.

We still have three minutes. Any more clarifications? Yes, Dr Neo.

Sir, I just want to clarify that I did not use the word "dumping" in my speech. I agree with the Minister that the consideration is best care for the patients. The words he used were "best

care for the patients" which should be the consideration, and I agree with him totally. My only point was best of care in the community for psychiatric patients without sufficient family or community support, or best of care in having regular follow-up with psychiatric nurses and psychiatric doctors, even if it means institutional care.

Sir, first of all, I would like to thank Minister Khaw and Senior Parliamentary Secretary Hawazi for their very comprehensive and very patient responses to our questions. I would also like to thank all my colleagues who have participated in this debate and made their contributions. I am deeply reassured of the commitment by Minister Khaw that during these very difficult times, retrenched workers and those who suffered pay cuts as well as others needing subsidised care will not be deprived of affordable healthcare.

On that note, Sir, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $3,083,813,300 for Head O ordered to stand part of the Main Estimates.

The sum of $621,110,900 for Head O ordered to stand part of the Development Estimates.

Head Z – Financial Transfers

Head Z – Financial Transfers. Mr Tharman.

Special Transfers

Sir, I beg to move,

That the total sum to be allocated for Head Z of the Estimates be increased by $4,611,607,000.

Sir, the increase is for the Special Transfers announced in the Budget Statement on 22nd January 2009. Of the increase, $3.91 billion is the FY 2009 Budget provision for the Budget 2009 Resilience Package. This includes $3.38 billion in Jobs Credit to be paid out in FY 2009; $388 million as provision for the Government's share of loans lost under the Special Risk Sharing Initiative for bank credit; $100 million is the Workfare Income Supplement special payment to low-income workers; $24 million as additional rebates for HDB Rental and Service and Conservancy Charges; $7 million top up to the Public Transport Fund for low-income Singaporeans; and $80 million as additional assistance to needy families.

The remaining provision of $0.7 billion is for Transfers to the National Research Fund $400 million; Life-long Learning Endowment Fund $100 million; Eldercare Fund $100 million; and Medical Endowment Fund $100 million.

That the total sum to be allocated for Head Z of the Estimates be increased by $4,611,607,000.

That the increased sum of $14,181,655,000 for Head Z ordered to stand part of the Main Estimates.

Head M – Ministry of Finance

Head M – Ministry of Finance. Mr Inderjit Singh.

Reserves and Performance of GIC and Temasek

Sir, I beg to move,

That the total sum to be allocated for Head M of the Estimates be reduced by $100.

Sir, I want to make two points with regard to our reserves. The first concerns

the role of our Sovereign Wealth Funds (SWFs), Temasek and GIC, and the impact this has on our reserves, while the second has to do with the impact of the financial crisis on the returns of our SWFs and, consequently, on our reserves.

Erosion of Our Reserves and Availability of Funds to Fund Government through NIR

As I mentioned in my Budget debate speech, I am glad the Government had the foresight to change the way we can use our reserves by switching from the NII to the NIR computation. In effect, the Government is now able to draw more from the reserves, including using the increase in capital values of the reserves, which was not allowed in the past. This year, we will therefore be taking two bites at the reserves compared to the past, once through the NIR, and then through the $4.9 billion that was announced in the Budget. From the Budget Book, I notice that the amount available for the Government expenditure from the reserves has gone up from $3.7 billion in 2008, when we used NII, to $7.7 billion this year using the NIR formula. And I suspect this is still not 50% of NIR, which is the amount allowable after we changed the Constitution last year. However, it has recently emerged that both Temasek and GIC have suffered significant losses in the financial markets, which according to some reports I have seen, amounts to $50 billion collectively. This is significant. So the first question I have is – will the Government still be able to tap the reserve amount it needs in the coming years now that the base of the reserves has shrunk? Are we going to quickly deplete our reserves as a result?

On the NIR formula, I would like to ask the Minister how much money will be made available to the Government for the next few years. We understand what is available this year. What about the next

few years? We should know this since the formula is based on long-term expected returns and not long-term actual returns. Also, can the Minister share with the House how the process has worked out in the first year with this new formula?

Second question I have is whether both GIC and Temasek have enough liquidity to contribute to the NIR that the Government needs for this year and the coming years. My worry is that the losses suffered by our two SWFs may be paper losses, and they might still be holding to these papers as liquidation will translate these to real losses. If they do not liquidate, will they still be able to return to the Government what is due and what the Government needs?

Sir, the NIR approach defines "returns", which the Government can tap as long term expected returns and is based on a 20-year horizon. For the last 20 years, GIC had returns better than its peers around the world – a return of 5.8% before and 4.5% after inflation. I am sure that the Minister would have used this number as a basis to compute how much he can draw as this 4.5% is the basis he would have used to compute the long-term expected returns. The question I have is whether our current reserves and our SWFs managing them are capable of returning such levels in the next 20 years after the whole global landscape has been reshaped. Have GIC and Temasek come back to the Minister to propose any changes to their long-term expected returns after what has happened? If next year GIC comes back and forecasts a drastic drop of its long-term expected returns, how will it affect the Government's ability to operate with lower level of revenues from the NIR? Will the Government have to redraw its long-term development plans again? And these development plans are important for our future. I hope that we do not have to do it.

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Sir, when I raised the question of supervision of the Sovereign Wealth Funds (SWFs) in Parliament last year, the Minister responded that MOF would not like to micromanage them. However, today, we have seen a large proportion of our reserves being eroded because of the severe drop in values of the investments made globally by both of our SWFs.

This warrants a review of how MOF mandates GIC and Temasek on their roles and a system of reporting and supervision by MOF. Central to this argument is that Temasek and GIC draw from our reserves to make their investments. Since it is effectively taxpayers' money that makes up our national reserves, increasingly the public is asking for greater Government involvement and oversight of the SWFs, especially in light of the spectacular losses we have seen in recent times.

I have a few questions for the Minister in this regard. Who decides on the level of risks both GIC and Temasek can take in managing their funds? Is there a mandate from the Minister for Finance on what their expected rate of return should be and the risk profile that their funds should be allowed to operate with?

Sir, I briefly studied the Annual Reports of both Temasek and GIC and cannot help but draw a conclusion that both, organisationally as well as operationally, GIC and Temasek are operating with different sets of culture. Temasek seems to have adopted the Wall Street model and hired many people with such expertise, while GIC seems to have not changed much compared to the day they started operating and depends largely on tested people and processes. I am not sure which model will work for us in the future and in the long term. But from what we have seen recently, the way investment decisions have been made,

whether in Shin Corp or ABC, childcare operator, or in Merrill Lynch or UBS, Temasek seems to follow the Wall Street model of investment while GIC is far more conservative. Will the Minister be reviewing the approaches taken by both so that we can ensure that our reserves remain protected and are able to grow?

Sir, there has been a lot of talk at our coffee shops and also at the grassroots level and among our residents about this $50 billion loss, if the number is correct, it is huge. Compared to $300 billion reserves that has been reported in reports that I had seen, this $50 billion translates to about 17% erosion of our reserves and if you add the other assets that may have been eroded, that have not been computed, that is huge. So the question in the public's mind, would we have undone what our past generations built up for us? And will we be able to protect the interest of Singaporeans, moving forward? An important question is, can we remain confident that we have reserves to help us in the future?

GIC and Temasek

Sir, in this financial crisis, Singaporeans are naturally concerned about the health of our reserves managed by GIC and Temasek. According to reports, Temasek invested nearly US$6 billion in Merrill Lynch which is now worth about 20% of that. It has large paper losses in StanChart and Barclays. GIC's investment in Citibank of about US$7 billion may now worth also about less than 20%. Last October, the Finance Minister discussed the Government's stance on transparency of GIC and Temasek as follows: "Public disclosures had to be shaped by the SWF's characteristics as long-term investors, with the ability to ride out cycles. A short-term focus on financial disclosures would not shed light on the right areas." However, the Government is the legal trustee of the funds and the ultimate true

owner is the people. They deserve to know how this turmoil has affected our national wealth. Can the Government tell us how much paper losses had been incurred? What is the Government's assessment of how this has affected the liquidity of the funds and their ability to take opportunities in a downturn? And, lastly, does the fact that both funds invested so heavily in the financial sector, at the same time, undermine the diversification objectives of our sovereign wealth?

Returns and Risk Taking by GIC and Temasek

Sir, the source of growth of our reserves has primarily come from the surpluses of our past Governments and the investment performances of our fund managers, GIC and Temasek.

Thanks to our fiscal prudence, we have been able to generate fiscal surpluses and add to the growing pool of reserves. However, given our competitive tax regime and the increasing recurrent and developmental expenditure, this contribution from Budget surpluses to our reserves would be less likely going forward.

We will now have to count more on our fund managers, primarily GIC and Temasek, to perform their task of not only generating the required returns but also to grow the reserves.

The returns from our reserves have increasingly become an important balancing item for our annual Budget. Without the investment returns from reserves, our fiscal spending would either have to be reduced or we have to raise more taxes.

In the last 20 years, the favourable economic condition has presented tremen-

dous opportunities to long-term investors. Both GIC and Temasek have been able to very much capitalised on this bull run. And by most benchmarks, GIC and Temasek have delivered impressive returns for our reserves in the last 20 years.

However, the investment environment post-crisis is likely to be a very different one. The world economy is presently undergoing some major structural changes now. One thing that is clear post-crisis is that the new world order is likely to be a less leveraged one, financially. Gone are the days for easy credit. Here, I would like to ask the Minister how does the MOF see the long-term investment outlook and whether it is still realistic to expect similar investment opportunities and hence similar levels of returns we have seen in the next 20 years?

This has a direct bearing on our Net Investment Returns (NIR) and Net Investment Income (NII) and I would like to ask the Minister what does it mean to balancing of our future budgets.

Sir, while the Government should rightly not interfere or influence the investment decisions of GIC and Temasek, MOF should, however, review the risks we want our reserves to be subjected to vis-a-vis the pace we want to grow our reserves and use our returns.

The last thing we want to do is to go for return debt, we have been enjoying so far by taking one more risk. Going forward, should greater emphasis be placed on preserving the capital and its purchasing power, for example, instead of outperforming the indices benchmarks.

Related to this strategic view, can the Minister share some thoughts as to what the size of reserves should be, relative to our GDP and our other macro and social indicators? What would be the ideal size of our reserves that we should maintain

minimally from a national security standpoint? I ask this question knowing that I may not get any numerical answers from the Minister. But I hope that the Minister can still share the Government's thinking and philosophy behind this approach.

Usage and Security of Our Reserves

Mr Chairman, Sir, after a recent Constitutional amendment, the Government is able to draw upon our reserves in emergencies. This major recession is a national emergency and fully warrants the $4.9 billion drawdown.

I agree with Senior Minister Goh on the boundaries for its usage. But within these parameters, we must use it when necessary.

Sir, along the line of my former colleagues on the size of the reserves, while I understand the sensitivities of revealing the size of the reserves, I ask the Government to assist us to make an informed assessment on the risk of any further withdrawals, especially in light of the ongoing recession. We do not need the full disclosure, but we do need some directions.

Further directions would be the total percentage growth in our reserves over the past year to date, and the near term outlook for its growth.

Sir, news reports say that through its state-owned funds, Singapore has invested a total of about US$24 billion in Citi, Merrill Lynch and UBS over the past 14 months and S$2.6 billion in Barclays. What are the current values of these investments on an individual company basis from investment date to latest market closing date?

While GIC's investments in UBS and Citi were done through means of

convertible securities that provided a guaranteed rate of return – thus providing some downside insurance – have we considered what if these companies eventually go bankrupt? Can we recoup our investments at cost?

I refer to a recent statement from MOF which mentioned that it had invested mainly in fixed income instruments before, but had now increased its asset allocation for higher risk and higher return investments like equities and alternative instruments.

Sir, why did the funds invest in riskier assets, even if they are within acceptable risk levels? Why are we doing it now when we had not done so before? And are our reserves ultimately safe with this higher Sovereign Wealth Fund exposure to riskier assets? Riskier assets are like strong sunshine, maybe we need more sun block?

Helping Businesses Weather the Storm

Sir, I would like to raise some points on how we have proposed to help businesses weather the current storm.

Sir, the Government has decided to cut the corporate income tax rate to 17% and I understand what this will do for our long-term competitiveness and it is a good preemptive move to prepare for the future.

However, we have many international enterprises operating in Singapore, and many of our local companies have overseas operations. Our Corporate Income Tax (CIT) rate move can inadvertently reinforce perception that Singapore is a tax haven and create difficulties for these companies. President Obama has in fact recently announced that he will take drastic measures against countries that fall in his tax haven list.

This may put Singapore in a precarious position vis-a-vis the US. What is the Ministry's position on this?

Sir, I am happy that the Government is planning to shore up demand by spending more this year. I hope that the Government will divert as many purchases as possible to local enterprises. Changing the Government's procurement policies to help SMEs benefit more from Government spending will be critical for us to see the real impact to our economy. If we do not change, then I am afraid only a few large companies and many foreign ones will stand to gain from the increased Government spending. While we want to play within the rules of WTO, I am sure we can still tweak the procurement policies to find the right balance. Perhaps, the Minister can give a breakdown of how the estimated $11 billion of Government spending will be spread among the various sectors of the economy.

On the R&D and innovation initiatives rolled out in this Budget, I welcome them and I think that these will be useful for companies to restructure and strengthen themselves during this prolonged downturn. The main issue for such companies is going to be the general requirement of all Government grants for companies to spend the money upfront and then claim back from the Government later. Would the Minister consider upfront cash grants to encourage companies to do the necessary R&D or innovation work, rather than to put it off because they do not have the money upfront to do the work?

There may be some Government business opportunities which are suitable for our SMEs but they may not yet have the capabilities to take these jobs. Would the Minister consider implementing some focused initiatives where it plays a role in

helping companies build up their capabilities and capacities to take on more projects that may be available from the Government? How can the Government help companies identify these opportunities and build their capabilities to handle them? I believe in the US, some of the government agencies are doing the same. They play a developmental role to help their enterprises gain some of these capabilities. While the workers have played their part by accepting the National Wages Council (NWC) recommendations for wage cuts, should the Government too not play its part by reducing and not just freezing Government charges?

Sir, I also welcome the move to get IRAS to review the annual values of properties based on the current market conditions. My question is, when will this be completed and implemented for the property tax changes? Can I also ask MOF to direct JTC, SLA and HDB to do the same reassessment on market rentals rather than to rely on old market data? This will go a long way in helping companies.

I brought this question up during the MTI COS but was not answered. Maybe I will bring it up to the Minister here about how some of the banks are abusing the Special Risk-Sharing Initiative (SRI) by converting their existing commercial loans to SRI loans and I think this will defeat the purpose of us in trying to create new loans for companies. Can we put in some control so that this is not over abused?

Translating Policy Changes into Action Effectively

Over the past 10 years, the tax system in Singapore has undergone a comprehensive overhaul. A key motivation has been to improve the tax system, as a means of implementing tax policy, by making it more responsive to changes in the global economy. These changes are

reflected in a shift from direct taxation to indirect taxation together with a simplification of the basis of personal and corporate taxation.

To complement these changes, much has also been done to simplify the administration process such as enabling online filings and ease of payment. As a result, Singapore is ranked as one of the top locations in the world for the ease of doing business in a World Bank survey. We cannot afford to rest on our laurels. To maintain this position, it is critical to continue on the path of implementing tax policy changes but just as importantly, we must ensure that the policy changes are implemented in a simple, fair and effective manner.

Our economy is constantly evolving and our tax incentives must do likewise. We must stay a step ahead to ensure Singapore remains a competitive location from which to do business. This is particularly so as our corporate tax rates are reduced, we need to ensure we preserve the attractiveness of incentives for those areas we consider are critical to Singapore's future growth. With the reduction in tax rates by 1%, we must at the same time take care not to erode the impact of the tax incentives. Furthermore, it is important to ensure that other taxes, such as GST, do not deny potential investors from taking the full benefit of our incentives as was the case of the application of GST eroding the attractiveness of using the Singapore Resident Fund incentive. I would suggest that we need a regular review and monitoring process to ensure that tax incentives remain relevant and that we consider the interaction of other taxes to ensure that a new tax incentive does not cannibalise a previous incentive. The enhanced loss carryback relief potentially gives rise to this problem, as explained in my Budget speech.

We are also perhaps not as effective as we could be in attracting R&D investment from abroad or in encouraging indigenous R&D activity. If we wish to achieve our stated objective of winning more global knowledge-based businesses, then a re-think on tax incentives is a must. Enhancements in this area should focus on a widening of the definition of R&D and the incentives offered. It does not always happen in a laboratory and it is therefore difficult to encompass all R&D activities that could bring benefit to Singapore. It is important that we continue to encourage more IP exploitation in Singapore, for example, taking incentives further down the value chain from the current regime, which is more focused on the creation or acquisition of IP in Singapore.

We should consider more incentives for revenue generated from IP management and liberalising our foreign tax credit regime, which is not particularly user-friendly for those seeking to use Singapore as a base to generate royalties from overseas.

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Finally, a prerequisite to effective tax policy is the need for an open and transparent tax administration. The revenue has made great strides in their approach to consultation with industry and professional bodies. However, it is hoped that the revenue could find some way to publish a ruling, so as to explain clearly their interpretation of a particular position based on facts. Whilst confidentiality needs to be maintained, it is important that the positions maintained by the revenue are transparent and made available to a wider population.

Whole of Government Approach

Sir, in the focus on excellence, MOF has outlined as one of its strategic outcomes to be a high performance Government.

Can the Minister share with the House the progress of the "whole of Government" approach, which MOF has set out with the objective to create a high-performing Government that utilises its resources efficiently and effectively? What are the current processes in place to ensure the ease of access to Government service? Is there a specific focus to drive more effective service delivery to citizens and organisations that interact with the various Government agencies? If so, what are the key areas that have benefited from this approach? What is also being done to enhance the processes and upgrade skills of staff for effective and quality of services provided by the Government for citizens and organisations that interact with the various entities and agencies? How does the Ministry measure the impact of the "whole of Government" approach? What has been the outcome? What role has the partnership between private and public sectors played so far to support the "whole of Government" approach?

With the current economic climate and the intense pressure that we face in keeping pace with the rapidly changing and competitive global market, the Government needs to go beyond efficiency and create value to remain relevant for the business and financial environment that we operate in today and for the future. In such uncertain times, a framework for clear strategic outcomes and responses and the ability to act with flexibility to nurture awareness and resilience will stand us in a better position to weather the storm and come out of this stronger.

Maintaining Fiscal Prudence

Sir, I would like to make a few points to emphasise prudence in the current fiscal year. As we embark upon an expansionary budget, we need to

ask ourselves a few questions to maintain fiscal prudence and to ensure that the Government's well-intended measures are effective.

The first question is, if an expansionary budget will lead to overspending without adding much value to the "real" economy. While Governments around the world are announcing high spending stimulus packages to bail out their economies, we must be careful in not to rely on a "trickle-down economics" approach. Do not get me wrong. I am not saying that we should not spend, but we should spend it in a structured manner so that we create 'real' value in the economy. Given the current economic climate, what measures are in place to ensure that the Government spends prudently? The point I am trying to hit home here is that fiscal spending should strike a balance between the short-term needs for an expansionary budget and longer-term fiscal sustainability, while aiming to avoid any wastage in the short term.

Second question, as the Government spends more on many new initiatives, how do we ensure that a more holistic view is adopted in resource allocation across agencies, and that our spending goes towards achieving its desired targets? For example, does the Government plan to publish the Ministries' outcome indicators or the public sector's outcome indicators as a whole? It is very easy to spend money when you have it and $11 billion is a huge amount to spend in one year. Can I ask the Minister what processes he will use or has used to decide which projects get funded? Is there a minimum return-on-investment threshold which he used to decide who the resources will be allocated to? Which Ministry? Was there special effort put in to encourage inter-Ministry projects?

Third, we need to review the yardsticks used to measure the

performance of Ministers and their Ministries, which should also lead to an assessment of their compensation. The current use of GDP to reward Ministers and Ministries with higher monetary rewards is insufficient and is comparable to using a share price in measuring the performance of CEOs in the private sector, which is not a good approach.

Fourth, as we head towards uncertain times, we need to ensure that we have enough ammunition in our arsenal to fight the long battle that we are about to go through. Fiscal prudence is a virtue that we should exercise so that we are able to survive this downturn and have enough resources to restructure our economy to remain competitive in the long term. I support the expansionary Budget this year, but can the Minister assure the House that we have enough resources to battle this for the long term and not deplete our resources too quickly?

Cut Costs

Sir, the public service is the custodian of public funds. It has a responsibility to ensure a high degree of financial prudence and efficiency in the deployment of public resources to serve the public good.

In the current severe economic downturn, companies are aggressively reviewing their cost structure or scaling down on activities which do not directly contribute to the bottomline. Hence, the 2008 Auditor-General's Report highlights some disturbing instances of extravagance and waste, and also poor use of state land and buildings by some Ministries and statutory boards. To quote one example, the Singapore Tourism Board spent $1.5 million over seven years before deciding not to proceed with efforts to convert the Capitol Theatre into a performing arts venue. The Auditor-General had estimated the rental revenue foregone to exceed $280,000 a year. The Auditor-General had also observed

instances of poor handling of reserves and cash grants in some Ministries and statutory boards.

If I could give another example based on my own observations, the annual reports of Ministries and statutory boards are now getting glossier and, certainly, looking more expensive. Our public agencies seem to be competing with each other to package the best looking annual report for public consumption. Annual reports should be concise, but highly informative to give the public a good sense of the work that the public agencies are doing in order to serve their interest. I would, therefore, like to ask the Minister what measures are in place to ensure that our public agencies exercise fiscal prudence, avoid extravagant expenditure and achieve greater efficiency? How does the Ministry ensure that there is effective and proper management of all lands and buildings?

Social Report Card

Many colleagues have raised issues related to financial resilience and financial indicators. I want to talk about the other half of the equation – social resilience and social indicators.

Sir, I would like to ask the Ministers to consider, jointly, producing a comprehensive annual social report card for the people on behalf of the whole Government. This is a quick way for Singaporeans to have a feel of how the Government is doing. This report can either state and grade all the key programmes and policies that have been implemented by various Ministries and the Government, or it can simply summarise, identify and review key efforts, policies, programmes and initiatives, assess its broad impacts and then define what challenges lie ahead. Also, for this social report card to gain more traction, I would like to propose that it can be opened to

the public, to solicit feedback from those who have used the public services for their grading of the Government's performance. In other words, citizens can churn out their report card to grade the Ministries and the Government's performance.

Sir, this is not just a one-way communication from the Government to the people, but a form of public accountability tool, to draw public attention to the quality and impact of Government policies implemented by various Ministries. The NTUC has such a social report card. We found it to be useful to be accountable to our members, so I hope the Minister can give this some consideration.

CNG Green Vehicle Rebates

Sir, the Singapore Government introduced a special tax exemption for Compressed Natural Gas (CNG) vehicles in 2001 to promote the use of green vehicles in Singapore, to improve our air quality, particularly, to reduce particulate matter (PM) 2.

5. PM2.5 is a fine pollutant (2.5 microns in size), that is linked to asthma, bronchitis and other respiratory problems, including premature death in people with heart or lung diseases.

The average level of PM2.5 for Singapore was 19 μg/m3 in 2003, and 21 μg/m3 in 2005, exceeding the international accepted standard of 15 μg/m3 set by the USEPA (US Environmental Pollution Agency). There have been no public figures released for PM2.5 after 2005. I can only assume that this has been increasing, from the 2003 to 2005 trends. 50% of this invisible pollutant is contributed by diesel vehicles. Petrol driven vehicles also contribute to PM2.5, but at lower levels. However, CNG cars emit negligible amounts of particulate

matter. Because of the high cost of petrol and diesel in 2008, the LTA registered 2,196 private CNG cars and 757 CNG taxis. Two stations were opened, more are scheduled for 2009. However, in the last three months of 2008, because of the negative press coverage putting doubts whether the Government will extend the special tax incentives, the sales and conversion of CNG vehicles dropped, as there was no clarity from the Government.

Two other factors accelerated the process: (i) not enough CNG stations; and (ii) the smaller disparity between cost of petrol and CNG, because of the weakening of the oil prices. To date, this has caused the closure of more than 50% (10 out of 20), of the workshops converting petrol and diesel vehicles into CNG vehicles, and a loss of approximately 100 skilled jobs.

Sir, may I suggest, that if the main reason for promoting CNG vehicles is to protect the environment and our health, that the Minister consider: (i) extending the GVR from five to 10 years and to include these incentives to cover the conversion of petrol and diesel vehicles, bi-fuel vehicles and fleet owners of taxis, buses and trucks; (ii) to remove the tax levy on CNG up to 2015; and (iii) to provide special incentives for those who invest in more CNG stations, so as to encourage more of these stations to be built.

If we want a cleaner environment, better health and a general industry that will provide skilled jobs for Singaporeans, I would like to encourage the Minister to continue supporting this great initiative and to see it through as I think it would be difficult to value the cost of a healthier environment and the global image that will bring us to a more sustainable Singapore.

Mr Hri Kumar is not here. Miss Penny Low.

A Compassionate Economy

I declare my interest. Sir, which is a better way to build resilience in our people? By giving handouts or giving handups? The answer is obvious. For too long, we have hard-coded businesses into for-profits and charity categories. Thereby, force fitting people into jobs and welfare. This is outdated. The hybrid models of double bottomline social enterprises (SEs) can enable marginalised communities to help themselves and find sustainable solutions from within their communities. SEs build compassion and resilience, and lower social burdens in the long term. To do so, a serious push requires fundamental incentives and paradigm shifts. For a start, why not incentivise investments in the social economy?

Currently, an investor in for-profit enterprises can obtain enterprise related grants, loans, investment schemes and tax breaks. Investors or philanthropists in charities are eligible for up to 250% tax relief in charities with an Institute of Public Character (IPC) status. So it baffles me as to why investors in social enterprises, which are enterprises that help build social capital, do not receive any tax breaks, loans or grants extensions, especially in these tumultuous times. In fact, offering the same tax incentives to investors in social enterprise is not asking for any special favours, it is just asking for a level playing field that will let social enterprises prove that they can deliver financial and social returns.

An example is UK's Community Investment Tax Relief scheme which is designed to stimulate private investments in marginalised communities by providing tax relief to individuals and companies that invest in not-for-profit and for-profit seeking enterprises in or serving those communities. A different legal structure in the form of UK's CIC and US' LCCC,

both of which I mentioned last year, should also be explored. Can the Minister please give this suggestion some serious thought?

Sir, let me first thank the hon. Members for their comments and suggestions, and given the constraint of time, I shall endeavour to elaborate on the policy intent and address as many specific comments as possible. The issues that Members have raised reflect the challenges we face in this unprecedented economic crisis and centre around three broad areas of concern:

the impact of the crisis on our reserves and investment returns;

how the Government would maintain fiscal efficiency and measure the effectiveness of its programmes; and

suggestions on how we can enhance the competitiveness of our tax regime, and how we can leverage on it to achieve social and environmental policy objectives.

I will address each of these three areas, as well as related issues that several Members have raised during the Budget debate last week.

Firstly, the impact of the economic crisis on our reserves and investments. Mdm Ho Geok Choo asked about the size and sufficiency of our reserves. Likewise, Mr Inderjit Singh is concerned whether we are fast depleting our reserves and whether we would be able to tap the amounts needed under the new Net Investment Returns (or NIR) framework.

During his Budget Debate Round-up Speech, the Minister for Finance has assured the House that we have built up substantial financial reserves, with assets far in excess of our liabilities.

Sir, as we have explained many times in this House, we do not disclose the size of our reserves. It is not in our national interest to do so. Market players have had their own various estimates, and they do not doubt that the Government has substantial resources.

Mr Liang Eng Hwa wanted to know if there is an ideal size of reserves we should build up. The approach we have taken is one of ensuring that our reserves continue to grow in line with the size of our economy, by tapping on the returns from the investments judiciously, exercising fiscal prudence and augmenting our reserves in good times. In this way, whatever the crisis – natural calamity, epidemic, war, or economic catastrophe – we would be better able to deal with the damage and recover more quickly to the situation before the crisis.

Mdm Ho asked why GIC had now increased its asset allocation for higher risk and higher return investments when it had not done so before. GIC’s asset allocation strategy has evolved gradually over the years as its asset base grew and GIC developed its capabilities. GIC started out with a high allocation towards the lower-risk fixed income instruments, but has, over time, diversified portfolio risk across a wider range of asset classes. This enables GIC to achieve higher sustainable long-term returns, while keeping to an acceptable risk level.

I would like to assure Mdm Ho that consideration of market conditions figures prominently in the actual execution of GIC’s investment strategy. In fact, in 2007, GIC’s concerns about the likelihood of market dislocations led it to decide to reduce its exposure to public equity markets in favour of cash. GIC closely monitors and analyses the global environment and capital market behaviour, and takes into consideration liquidity and

capacity issues, as well as shocks and events that may impact the portfolio. Sir, Mr Inderjit Singh asked whether there is a mandate from the Government on the expected return and risk profile of GIC and Temasek. Indeed so, the Government sets the overall returns objective and risk threshold for our reserves. For GIC, the Government sets the risk tolerance limits and gives it a mandate to invest to enhance the global purchasing power of the funds under its management. Temasek’s mission is to create and maximise shareholder long-term value.

Mr Liang asked whether MOF would review the overall portfolio risk that GIC and Temasek would be taking going forward. The Government reviews the risk limits from time to time. The current portfolio risk limits are not aggressive, and are consistent with our overall objectives of our reserves to provide a key defence in times of crisis and a continuous stream of income for the current and future generations.

But I would like for us to guard against knee-jerk reactions. We set the long-term risk and return objectives, and leave it to the investment professionals to do their job in this complex environment.

Dr Loo Choon Yong, however, made a valid point during the Budget Debate that a robust risk management framework is crucial to reducing or mitigating the possibility of unforeseen risk exposures. I would like to assure Dr Loo that proper and sound risk management and governance systems, structures and processes are well in place in both GIC and Temasek. Both GIC and Temasek have their own dedicated risk management teams that regularly monitor the risk exposure of investments. The Government conducts regular reviews with GIC and Temasek on the performance of their overall portfolios. The Boards of GIC and

Temasek are ultimately responsible and accountable to the Government for the investment oversight and management of risk.

Mr Inderjit Singh asked how the current financial crisis has affected the performance of our two Sovereign Wealth Funds and our reserves. Mdm Ho has also asked if the recent investments by GIC and Temasek in financial institutions are safe.

On Mdm Ho’s question, let me reiterate my reply to a Parliamentary Question filed earlier that it is not the Government’s practice to discuss the performance of individual investment deals. It is in the nature of investments that some will lose money while others will make money. The key is to weigh the risk of each investment against its potential return, and to balance it against other holdings, so that the portfolio will do well on an overall basis. This is how the Government assesses and holds the investment entities accountable for their performance.

With regard to how the portfolio as a whole has performed, like what I had mentioned in a reply to another Parliamentary Question last week, while GIC’s investments have diminished in value just like any other institutional investors’, it has fallen by much less than the decline in global equity markets indices of 42% for 2008.

As for Temasek, which has more than two-thirds of investments in Singapore and Asian countries, its net portfolio value at 30th November 2008 was S$127 billion, or a decline of about 31% from the value of S$185 billion as at 31st March 2008. This is less than the corresponding declines in the MSCI (Singapore) of 44% and the MSCI (Asia ex Japan) of 45%, both in Singapore dollar terms over the same period.

Sir, let me now make two key points regarding the performance of GIC and Temasek: first, what the current downturn implies for GIC and Temasek as long-term investors; and, second, the impact of swings in the value of reserves on funds available for the Budget.

Temasek is a long-term equity investor and GIC is a long-term diversified investor. This is not the first major decline in markets that they have seen, and will certainly not be their last.

Sir, the last 20-year period to date has had its fair share of boom and bust. For example, in 1998 at the depth of the Asian Financial Crisis, the year-on-year decline in the STI index was at one point 56%. During the dot com bust of 2000/2001, the fall in MSCI (World) index was around 30% year-on-year. In all these situations, GIC and Temasek experienced significant reductions in asset values. In spite of these market gyrations including the current downturn, for the 20-year period to late 2008, Temasek had achieved annualised returns of about 13%. GIC, which has a diversified and more conservative portfolio, has also had creditable returns over the 20-year period. GIC would release its 20-year performance ending March each year. To recap, as at March 2008, the 20-year average return was 5.8% in nominal Singapore dollar terms. The figure for March 2009 would have fallen as a result of the decline in 2008, but will not be sharply down. Temasek and GIC are long-term investors, and should be evaluated as such.

GIC and Temasek have the ability and resources to weather the ups and downs, over multiple economic and market cycles. They do not have to sell in panic in a market downturn and are in fact in an advantageous position to invest in good quality assets at prices that are attractive from a long-term perspective during a downturn. The Government is confident

that they will continue to deliver good long-term returns within the risk limits set.

Sir, now let me move on to the impact of changes in value of reserves on the Government budget. There is a common misconception that the diminution in value or capital losses on our reserves mean a similar depletion of funds for Government spending. When the markets boom, and capital values rise, this does not lead to a surge in funds available for Government spending. Likewise, the drop in capital values owing to a market downturn does not mean a large decline in funds available for Government spending, as Mdm Ho, Mr Liang, Ms Sylvia Lim and Mr Inderjit Singh might have feared.

The amount which the Government may spend under the Net Investment Returns (or NIR) framework incorporates the expected annual returns over a 20-year horizon for assets invested by GIC and MAS, not the actual year-on-year returns. By design, this reduces the volatility introduced to the Government’s Budget from fluctuations in the NIR contribution although it does not eliminate it entirely. As a result of the downturn, the value of the asset base would invariably be smaller. However, it does not mean that NIR would fall by the same magnitude as the reduction in asset values. This is because the asset values are smoothed over the years, precisely so as to avoid volatility in NIR – in other words, to avoid a boom-bust pattern in Government spending as a result of swings in capital asset values and in the asset markets. This is similar to the methods employed by several other major endowments.

Sir, it is too premature to indicate the quantum of the investment returns that can be taken into the Budget for the next

few years, taking into account the value of the asset base. As the Minister for Finance mentioned during the Budget Debate, the Government is confident that the prudent management of our reserves – as a long-term investor in the global markets – will continue to grow our reserves, and yield us a steady stream of Net Investment Returns Contribution over time.

On the issue of liquidity, I would like to assure Mr Inderjit Singh and Ms Sylvia Lim that the Government has studied the issue of liquidity before embarking on the NIR framework. Realised capital gains, dividends and interest payments from our investment entities are but one source of liquid funds for spending. Besides our usual revenue streams, our diversified portfolio of investments includes substantial holdings in cash and highly-liquid fixed income instruments, which we can tap on for our liquidity needs.

Mr Inderjit Singh has also asked how the long-term expected real rates of return have been worked out in the first year. Sir, the process has been thorough and rigorous. The Boards of MAS and GIC have certified to the Government the expected rates of return to be applied on their respective assets, based on established methodologies in the industry and taking into consideration the latest investment outlook. The Government has studied this carefully and agreed with the Boards’ recommendations, and has proposed these rates to the President. The President, after consulting the Council of Presidential Advisers (or the CPA), has concurred with the proposed rates.

Mr Inderjit Singh asked how the economic crisis has affected the funds managed by the Statutory Boards. Let me just clarify that the Government does not rely on returns from Statutory Boards for expenditure. However, Statutory Boards are allowed to accumulate surpluses from operational savings to serve as working

capital as well as funds for capital expenditure. The bulk of these retained surpluses are placed as fixed deposits. And consistent with their cashflow needs, Statutory Boards have on average less than 10% of their exposure to equity markets.

Sir, let me now move on to the role of Temasek and GLCs. During the Budget Debate, Mr Zaqy Mohamad has suggested that the Government should have influence over the decisions of Government-linked companies that impact our social compact. Mr Inderjit Singh had also suggested that Temasek could be tasked to rescue local companies and re-focus on Singapore.

Sir, we have to maintain a clear and consistent mandate for Temasek. Temasek’s investments are made on a purely commercial basis. For the Government to micro-manage or direct Temasek or its investee companies to invest so as to fulfil some non-commercial objective would detract from the focus on maximising shareholder returns. This would also impose unfair obligations on the respective Boards of Directors, who have the fiduciary duty to act in the companies’ interest.

Mr Inderjit Singh suggested during the Budget Debate that Temasek could be tasked to rescue local companies and re-focus on Singapore. Members, including Mr Inderjit Singh himself, will remember that repeated calls have been made in the past that, as a matter of principle, Government should reduce its involvement in business and divest its stakes in local companies. We did not agree then.

It was our position then, and it remains so, that Temasek will continue to own shares or even increase its shareholding in local companies as long as it makes commercial sense, and to only divest those that are no longer relevant to its mission.

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It is unwise for the Government to alter the philosophy regarding investments by Temasek and its investee companies simply in response to fluctuating market conditions or other temporary factors. As a long-term investor, Temasek would need the assurance in the constancy of policies which would impact its strategy as well as its credibility in the markets.

Temasek and its investee companies should therefore continue to operate commercially, without interference from the Government. If Temasek is asked to undertake a national agenda, it would, in fact, validate some of the concerns over Sovereign Wealth Funds having political objectives, and may ultimately impede Temasek's ability to participate in investments internationally. However, this does not preclude Temasek nor its companies from making their own decisions to increase their exposure locally where there are attractive opportunities. In fact, from time to time, Temasek has made new investments in Singapore.

Sir, let me now move on to the Whole-of-Government Performance. Even as the Government focuses on assuring funding from investment income, it is just as important for us to monitor the public sector's performance at the Whole-of-Government level for fiscal prudence over expenditure. At the same time, we need to take a proactive approach to enhancing our service delivery to citizens and businesses.

The performance of the public sector as a whole is becoming increasingly important as issues become more intertwined and complex. What one Ministry or agency does could enhance or negate what another does. It is in this context that I would like to address some Members' views concerning the performance of the public sector.

Mr Inderjit Singh and Mr Seah Kian Peng have commented on the need to review the performance of Ministries. MOF has been working with Ministries to move towards reporting outcome-oriented indicators. This will enable MOF to see how well Ministries' key programmes are doing, and whether the identified objectives are aligned with national priorities.

MOF has been engaging Ministries to identify key strategic outcomes that the Government desires and which Ministries would share. These strategic outcomes have been set out clearly in a Whole-of-Government Strategy Map.

As a next step, we will work on how clusters of Ministries and agencies that contribute to or are influenced by the various strategic outcomes can better optimise their work on the Whole-of-Government basis.

Sir, MOF intends to introduce a Singapore Public Sector Annual Report (or SPAR) in 2010, which would provide an overview of how well the public sector would be moving towards the identified strategic outcomes across the key sectors to be shared and achieved by the different Ministries.

The strategic outcomes at the Whole-of-Government level to be tracked in this Annual Report would influence the key outcomes and objectives of all Ministries and departments. Hence, this Annual Report would encapsulate the basis for cascading the high-level outcomes and targets down to departmental, unit and individual levels. Such a report would also be useful to the identification of trends and issues that need focus or resolution vis-a-vis the strategic outcomes over time.

Sir, let me next move on to talk about how the Government will continue to

ensure effective service delivery to the public and businesses, which is a key thrust. I thank Ms Jessica Tan for her comments on this. One of the key delivery programmes is the iGov2010 Master Plan, which is a public sector wide effort spearheaded by MOF that enables us to harness innovation and technology to bring about an Integrated Government (or iGov) that better meets the needs of the public. Almost all Government services are now available online, 24/7, and are easy to use, responsive and integrated. Members would be familiar with the following examples:

Taxpayers would have appreciated the ease at filing their tax returns, including the recently introduced No-Filing Service, and close to half a million taxpayers will benefit from this.

CPF members can readily obtain their account balances, transaction and contribution history at the click of a mouse, using personalisation features at myCPF portal.

Businesses can access Government services online through one-stop portals. For instance, ACRA's (Accounting and Corporate Regulatory Authority) BizFile system enables the public to register a new business or incorporate a company in 15 minutes.

And, more recently, the Government has introduced the Unique Entity Numbers to standardise identification numbers used by some 52 Government agencies. Feedback has so far been positive. That is not all. The Government will continue to leverage on technology to further enhance access to Government e-services in an integrated manner. For instance, Web-on-the-go will put some 40 Government e-services onto a one-stop

menu on mobile phones; making it easy and convenient for transactions on-the-move. These include enquiry of Employment Pass and Work Permit status for businesses, JOBSlite portal for unemployed workers and information on weather and traffic for the general public.

The Government is mindful that a small segment of the society may be less Internet-savvy or may not have Internet access. Hence, we have also introduced CitizenConnect Centres to complement the online service channels. There are currently 28 such centres, conveniently located across the island, and serving more than 100,000 individuals each year.

Sir, MOF has a framework to identify key areas for integration and provides funding incentive to agencies to share facilities and processes for areas like HR and Finance systems for Government agencies. So far, 11 statutory boards have come together to share a system that will allow them to reap economies of scale through standardisation as well as a sharing of best practices. The Civil Service College also provides courses to equip public officers with the right skills and mindset to bring about inter-agency collaboration.

To do our jobs better, Government agencies also regularly obtain feedback on their service delivery, as suggested by Mr Seah Kian Peng. These agency-level channels include emails, direct correspondence, service counters and hotlines.

To measure the effectiveness of public service delivery, we conduct an annual customer satisfaction survey. In 2008, nine in 10 respondents were satisfied with the overall level of our e-services and would recommend others to transact with the Government through e-services. In terms of integration within Government, 16 multi-agency projects were implemented in FY2006-FY2007, with a total

projected savings of $21 million. Several other new projects are in progress and will reap more savings when completed.

There are also more organised feedback platforms, such as:

Firstly, the Pro-Enterprise Panel which works closely with the business community to foster a conducive business environment. Secondly, there is REACH (Reaching Everyone for Active Citizenry@Home) which uses a broad array of both mainstream and new media channels to engage citizens from all walks of life.

Sir, our efforts at public service delivery have not gone unnoticed. Singapore was ranked the world leader in customer service maturity in the 2007 Accenture study on Leadership in Customer Service. Singapore was also ranked top in terms of ease of doing business in the World Bank 2009 report. Sir, internally within Government, we need to continue maintaining fiscal prudence over expenditure even as we assist businesses during this downturn.

Our philosophy of fiscal prudence has enabled us to build up our reserves in years of feast so as to be able to respond speedily to any crisis, such as the one we are experiencing right now. We therefore agree very much with Mr Inderjit Singh that we need to be mindful not to overspend even as we have an expansionary budget. I would like to clarify that we have taken the opportunity offered by this downturn to bring forward worthy Government construction projects, and to advance our manpower hiring plans. The needs of these initiatives are clear and already planned for to build up our capacity and invest in new areas of need, and not to boost demand for its own sake, as that would be wasteful.

The Government has in place a number of mechanisms to ensure it stays lean and efficient.

Firstly, there are budgetary mechanisms in place to ensure effective and efficient allocation of resources within Government. MOF scrutinises the project requirements of major capital projects to assess the worthiness of the projects and ensure that they adhere to appropriate cost norms. The cashflow for these projects are budgeted and planned for on a multi-year basis. Ministries decide on the phasing of projects based on the availability of budget and on the benefits and need for the projects. MOF monitors the progress of the ongoing projects annually. Value-for-money reviews are also carried out periodically.

Secondly, we will maintain the Manpower Management Framework to ensure that Government headcount does not grow faster than the growth in the resident labour force over the medium term. The advancing of hiring plans will not lead to long-term over-manning of public sector agencies as these are intended for projects that were held back due to insufficient manpower resources, as well as to, as I have said earlier, build up additional and new capabilities in areas such as healthcare and education.

During the Budget Debate, Dr Loo Choon Yong has suggested that these new jobs be outsourced. Under the bestsourcing framework, functions that are assessed to be strategic in nature will be performed within the Government agencies, while non-strategic functions would be market-tested, and outsourced to external service providers if doing so provides better value-for-money for Government.

As a consumer of goods and services, we agree with Mdm Halimah Yacob's

view that the Government should always use its resources efficiently. Over the years, we have introduced initiatives to streamline Government processes and to minimise wastage across the public sector. Let me just recount a few. They include: The Economy Drive and the Cut-Waste Panel. Since 2003, the Economy Drive has helped instil a mindset in public officers to use resources prudently while the Cut-Waste Panel has provided a channel for the public to give their feedback on Government spending. For example, as Mdm Halimah would be pleased to know, Government agencies were reminded in October 2008 to produce their annual reports in a cost-effective manner.

Next, land and building resources. All Ministries and agencies are responsible for the effective management of land and buildings allocated to them. MOF and MinLaw have put in place various measures to ensure this, such as the Office Space Management Framework.

And finally, Demand Aggregation (DA). This initiative pools together similar purchases across agencies for economies of scale, for example, in the supply of office furniture.

Mr Baey Yam Keng's suggestion of "pseudo dollars" during the Budget Debate is a noteworthy one. We have, in fact, instituted such a practice of encouraging agencies to share and optimise the use of their resources, for example, co-locating community centres and libraries. To facilitate this, we also allow Government agencies to retain the revenue for such transactions through an inter-department charging mechanism, and this impacts their budgets in real terms. Sir, Mr Inderjit Singh asked whether Government could provide more business

opportunities for local companies, especially the SMEs, through its procurement activities.

The Singapore Government procurement regime is an open one, based on the principles of fairness, transparency and value-for-money. Consistent with Singapore's commitment to the WTO rules, we do not discriminate nor favour any supplier. Tenders are therefore awarded on the basis of greatest benefits to cost.

To help local companies, the solution is not to tilt the playing field by diverting purchases to local enterprises as this may, in fact, stymie their growth over time.

To enable SMEs to participate easily in Government tenders, MOF removed the track record requirements for registration as a Government supplier in GeBIZ back in November 2004. Further, MOF has been providing the first GeBIZ account free-of-charge since 2005. To assist our local enterprises in this current downturn, Government is lowering business costs through the Jobs Credit and the enhanced access to bank lending with the Special Risk-Sharing Initiative.

In addition, the Government has also undertaken measures along two fronts.

First, by providing pipeline of public sector demand for goods and services and enabling companies to build capacity; and, second, by helping businesses with their cashflow.

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As announced, some $18 billion worth of construction contracts will be awarded this year. Some $1.3 billion worth of smaller construction contracts, each worth up to $50 million will be advanced.

Construction projects are, by nature, big ticket items. Nonetheless, public sector procurement of IT and other goods

and services have also exceeded $3.5 billion annually since FY2006. And this trend will continue in FY2009, hence providing many business opportunities for the smaller companies.

The Public Service Innovation Framework has been in place since 2008 to provide seed funding for R&D in areas or with applications that could offer innovative solutions to the public sector. And we are also allocating $70 million to catalyse close collaboration with the private sector through the programme called "Call-For-Collaborations" on the development of new capabilities.

As I said, in addition to the several measures mentioned in the Budget to enhance business cashflow, Government, as a consumer of goods and services, is also doing its part to improve the suppliers' cashflow by making prompt and more frequent payments to suppliers, and by lowering the amount of security deposits for all tenders.

Mr Inderjit Singh also asked about the reassessment of property values and the review of rental rates for commercial and industrial properties, which will help to reduce business costs.

Sir, the Annual Value (or AV) of a property is assessed based on the prevailing market rentals for comparable properties. For 2009, IRAS will prioritise re-assessment of the properties that have seen the largest rental declines and where the market rentals have dropped below their AVs. More details will be given in due course.

As regards rental rates, as a policy, MOF requires all Government premises to be rented out at market rates. This is to avoid distorting the property market. Rentals are therefore set based on prevailing market rates assessed by qualified valuers engaged by the relevant Government agency at the grant of a new

tenancy, renewal of a tenancy or at pre-determined points in a lease contract. MOF does not intervene in the setting of these market rates.

Sir, now let me move on to the role of our tax policies in enhancing our competitiveness. I welcome the suggestions from Members on how we can further enhance the competitiveness of our tax regime.

I will address the specific points made by Members.

Mr Inderjit Singh considers our corporate tax rate cut of 1% point from Year of Assessment 2010 a good move but is concerned that some countries may perceive Singapore as a tax haven.

Sir, Singapore is certainly not a tax haven. Singapore is a "low-tax" – rather than a "no-tax" – jurisdiction. At 17%, Singapore's corporate tax rate is competitive, but by no means among the lowest in the world. For the record, Bulgaria's tax rate is 10%; Ireland's, 12.5%; and Romania's, 16%.

Tax havens are typically dependent on "mail-box" companies. Singapore is, on the other hand, a substantive, knowledge-based economy in both manufacturing and services. Companies, both foreign and local, run real operations in Singapore that compete globally on the basis of value. Any objective observer knows that this is not a mail-box economy.

Singapore also enjoys a good reputation as a trusted business and financial hub, with a strong rule of law. We do not stand for abuse of our laws to shelter criminals, including those engaged in offshore tax offences.

Unlike tax havens, we have an extensive network of 60 Avoidance of

Double-Taxation Agreements (or DTAs), and through this network, Singapore is able to provide assistance to foreign investigations of tax offences.

We regularly review our regime to ensure that Singapore remains a trusted financial centre and a responsible low-tax jurisdiction. One area currently being reviewed is the standard of the exchange of information for tax treaties.

The Organisation of Economic Cooperation and Development (or OECD) established a standard in 2005 for transparency and effective exchange of tax information. This standard has just been endorsed in October 2008, by the UN Committee of Experts on International Cooperation in Tax Matters.

Sir, Singapore agrees with the principles behind the OECD standard, which will serve to help governments address offshore tax offences in a globalised world. We will be engaging the OECD and the industry to study this OECD standard with a view to endorsing it.

Next, let me move on to Mr Gautam Banerjee's suggestions. We fully agree with Mr Banerjee on the need to continue to encourage more R&D activities in Singapore.

The Government has actually committed significant resources to R&D and innovation over the years. In Budget 2008, we introduced several new tax measures to incentivise companies to do more R&D in Singapore, including the 150% deduction for R&D expenditure and R&D tax allowance. All these contribute to making Singapore one of the most competitive tax jurisdictions for R&D.

We also revised the definition of R&D after careful study of major jurisdictions and several rounds of industry discussion and public consultation. In fact we have

a lower bar for activities that qualify as R&D for tax purposes; for example, the UK and Australia require an advancement in the body of scientific or technological knowledge while we only require novelty or technical risk.

However, we should not set the threshold too low to include activities that businesses would ordinarily do to improve their products and processes. For example, if someone were to change the colour of ties that Mr Banerjee prefers, that process cannot be considered R&D, even if Mr Banerjee were to buy more ties. But if there is a novel way of producing coloured ties arising from systematic investigation and experimentation, that would be a different matter. Nonetheless, these tax measures are new and we will monitor them and evaluate their effectiveness. We certainly welcome feedback and suggestions on how to improve the measures.

Sir, we also agree with Mr Banerjee that we should promote IP management. We currently provide incentives for IP management activities carried out as part of a company's manufacturing trade or HQ services under the Development and Expansion Incentive. In fact, our low corporate tax rate also makes it attractive for companies to operate here and earn locally sourced income, including royalties. We agree with his suggestion to negotiate lower withholding taxes on royalties in our tax treaties.

Liberalising the foreign tax credit regime may well enhance our attraction as a base to generate royalties from overseas. But we need to study this further to weigh the incremental benefits against a potential erosion of our tax base. And given that our corporate tax rate is more competitive than most places, most foreign-sourced royalties

would suffer little or no further taxation here upon remittance.

He has also suggested that we publish advance rulings to make our tax administration more transparent. Many of our rulings are for transactions that are unique to circumstances and there are also confidentiality concerns. Hence, it would not be tenable for IRAS to publish the advance rulings. But having said that, where ruling requests have a wider tax impact, IRAS will publish tax guides on them to further improve the transparency of our tax administration.

Sir, finally, on the enhanced loss carry-back relief that he mentioned during the Budget Debate, this is a conscious policy decision because the Partial Tax Exemption is a final exemption to reduce the effective tax rate for smaller companies and is not a tax deduction.

Let me now move on quickly to Mr Edwin Khew's cut. Sir, we have a whole spectrum of measures relating to vehicles. We have a mixture of upfront ownership restraint and usage restraint measures to ensure free-flowing traffic and to support environmental outcomes.

Mr Edwin Khew has suggested that we should continue the CNG tax concessions till 2015. CNG vehicles, as the House may remember, have been exempted from special tax and been granted green vehicle rebates since their introduction in 2002, taking into account their cleaner PM2.5 emissions than diesel cars. And to develop the CNG refuelling infrastructure, Members will also remember that the Government has been co-funding the start-up costs of three refuelling stations.

These measures are, however, designed to help kick start the introduction of the then newer-type of vehicle and are not meant to be permanent. To date, we have more than 3,000 CNG vehicles on our roads and we

are expecting another two refuelling stations by the end of the year. So going forward, we will gradually reduce their tax concessions to ensure that the adoption of CNG vehicles is sustainable on its own.

Fuel taxes serve, first and foremost, to price in vehicle usage. There is hence no reason to exempt CNG cars from fuel tax permanently. However, we have taken into account the difference between CNG cars and other cars with respect to the environment and therefore have introduced a rate that is at a steep discount to the equivalent rate. This rate is 20 cents as opposed to what would have been 53 cents.

Just to complete the point about giving CNG car owners sufficient notice, we have therefore extended the special tax exemption for a further two years before it is removed in 2012.

Finally on Miss Penny Low's cut on social enterprises, the divide is really profitability status and social enterprises are distinct from charities and must therefore be fully self-sufficient and profitable. They should not enjoy the benefits of tax exemption as charities, or be allowed to solicit tax deductible donations like IPCs. They should be subject to the same tax treatment as for-profit enterprises.

As regards new legal structures which have been introduced elsewhere, these key features are already accommodated within our spectrum of business vehicles right now, ranging from a CLG to a limited liability partnership.

So to conclude, Sir, we have been prudent in the management and utilisation of our resources. As a result, we have accumulated significant savings, despite the lack of natural advantages of bestowed natural resources and other

conditions. We have managed these savings well, and grown this nest egg. It behooves us to continue with this discipline. We will also continue to improve in the efficiency and effectiveness of service delivery, tapping on both the private and people sector to do better. And finally, we have put in place a system to track how our public service is keeping pace with trends and meeting the desired strategic outcomes.

Sir, on the liquidity issue, I want to just ask: Given that both Temasek and GIC have got paper losses and we are expecting the returns on NIR based on expected return whereas their real return will be lower than that in the next few years as expected, will they have enough cash to return to the Government or will they be forced to liquidate assets to realise their losses? I understand that the Government has the money and I am glad that we have the money.

Sir, on the issue of role of Temasek to focus externally, I generally agree in the refocus of Charter of Temasek to invest externally. But with the benefit of experience in the last few years, we have generally been unsuccessful in many of our overseas investments, maybe in this environment it may be a good time to reassess this and bring them back into Singapore. But I can understand that we cannot direct Temasek to invest in companies, to rescue companies. Can I then ask if the Minister will be willing to set up another fund to help rescue companies, if not through Temasek, maybe set up a special fund to rescue companies?

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Sir, as I was saying, when we were considering the whole NIR framework, we have actually considered the liquidity issues very carefully and taken stock of what we do

have. As I said, we do have substantial holdings in cash and highly liquid

fixed income instruments. So to answer Mr Inderjit Singh's question, Temasek and GIC will not have to liquidate the investments, so as to provide the stream of income. And this is the nub of the whole basis for going on to an expected return versus the actual returns. As to whether there should be another fund to rescue companies, this is an assessment that the Government will have to make over time to see whether there is a need for, almost like, a third investment company. But there are currently schemes under the EDB like SEEDS, which cater specifically to smaller companies and these are actually better equipped and are in a better position to assess the possibilities for investments in such companies.

Sir, I would like to clarify that social enterprises are called social enterprises because they are double bottomline. In other words, their profitability is measured on social and financial bottomline. So, in that light, they exist between a whole continuum from for-profits to not-for-profits. Is the Senior Minister of State aware that, currently, the problem with social enterprises is that if they are registered as not-for-profit, under the CLG, they are not availed to the schemes that are operated under SPRING. Therefore, in this time of demand and credit crunch, many of them would, in fact, face the same problem as SMEs, but without the help-lines that are currently offered to even SMEs.

Sir, our current taxation system is really predicated on the divide of profits, as I have said, and that would remain so. But there is certainly scope if the Member were to evolve the social enterprise model, such that she can segregate the not-for-profit and the profitable parts of it, certainly, that is a conversation that can be taking place. As to whether the Government is sym-

pathetic to the current problems that social enterprises or, for that matter, charities and VWOs might be having in this downturn, it is something that we are all aware of except that the Government cannot differentiate its treatment in terms of assistance to normal businesses and that to businesses which happen to be social enterprises. The treatment has to be consistent and the same.

Sir, I am heartened to hear from the Senior Minister of State about the high 95% annual customer satisfaction survey conducted for the civil service. I would like to refer to the annual Mercer's Quality of Living survey. Last year, we were ranked 32nd out of all cities in the world. This is an improvement. We were in 34th position in 2007. So I would like to ask that the Minister set a target and adopt a Whole-of-Government approach in getting Singapore to be in the top 20 list of this Quality of Living survey – the most "livable" city – and that, obviously, I hope for it to be done as soon as possible.

On a lighter note, I am also very happy to hear from the Senior Minister of State that she has agreed to adopt my suggestion that, after this Budget debate, we can all go for "SPAR" (Singapore Public Sector Annual Report). I am not sure what the rest of Members are thinking of. [Laughter. ] I would like to ask when we can look forward to this inaugural Singapore Public Sector Annual Report.

Sir, I would like to assure Mr Seah that the public sector does not live by a survey alone. It constantly tracks all the different surveys, whether it is local or international, and always attempts to find out where the gaps are, with the view to fixing these gaps and better addressing the needs.

As to whether there should be a discrete or definite benchmark to achieve,

it is a suggestion that I can bring back to the Ministry for consideration, but we generally would look at the whole spectrum of measures, rather than just one particular measure. As I mentioned, the first "SPAR" will appear in 2010.

Sir, while I agree with the Senior Minister of State that there is a long-term smoothing effect on the NIR, I would like to ask whether this expected long-term rate of return – which is determined by the boards of GIC and MAS, together with the MOF – would be lowered, going forward, given the long-term investment outlook. Indeed, that was the view publicly expressed by the leadership of GIC, where they said that the next 20 years are going to be more challenging than the last 20 years.

Also, I understand that the NII does not have a long-term smoothing effect. So I would like to ask the Senior Minister of State, together with this lower long-term expected rate of return and the likely lower NII, how does it impact the ability of the Government to balance its Budget? Also, will it affect some of these long-term programmes that we have?

To answer the second question first, the new Budget has been drawn up with all those considerations that Mr Liang has raised, in terms of the impact of the markets on the NII, as well as taking into consideration the NIR that has been determined. As to whether the rates going forward, will be lower, I will say that the rates have taken into account the projections of the outlook going forward, as well as the current market conditions.

A point of clarification for the Senior Minister of State. How does MOF correlate between a healthy environment and taxation? We

have, currently in Singapore, a situation of an unhealthy situation with regard to particulate matter. If we do not allow enough time to encourage the use of cleaner fuel to improve the situation, we will still continue to have the situation.

Sir, the incentives, as we have been discussing, in a way reflect the attention that is paid to vehicles that are more environmentally friendly. But I would like to make a point about fuel taxes because I think that is an important point. It relates to usage, rather than the question of what technology and whether it is environmentally more friendly. If I may just repeat, fuel taxes serve, first and foremost, to price in vehicle usage. Therefore, there is no reason to exempt CNG cars from fuel tax permanently. Hence, the move to go forward with a rate, which some may mistake as a regressive step of imposing something for a "cleaner" vehicle. But that is really to harmonise the system back to the original intention of pricing in usage.

Sir, earlier the Senior Minister of State mentioned that the impact of the current turmoil was to reduce the overall portfolio value of Temasek by about 31%, if I heard her correctly. Can she also tell us by how much the GIC overall portfolio has been reduced in the percentage terms, because I did not quite hear that?

Sir, I have given that reply to a previous parliamentary question, that GIC has actually registered a significantly lower reduction in value than the World Equity Index which I believe was 41% – let me just clarify that it is actually in the Hansard *.

*Vol. 85, 4th February 2009.

You want to clarify it some other time, Mrs Lim?

Yes.

Okay. Mr Singh?

Sir, on behalf of the GPC for Finance, Trade and Industry, I would like to thank the Senior Minister of State, Ms Lim Hwee Hua, for her comprehensive answers to our very difficult questions, especially those related to the reserves, GIC and Temasek. We thank you for all the answers.

I would also like to take the opportunity to congratulate the Minister for Finance on devising an innovative Resilience Package. The $20.5 billion Budget is indeed large, significant and wide-ranging. I am sure that we will see the benefits soon and we want to thank the Government for the Budget this year. I hope that we will really help the companies and the people as expected. Sir, with that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $570,816,400 for Head M ordered to stand part of the Main Estimates.

The sum of $278,692,900 for Head M ordered to stand part of the Development Estimates.

Order. I propose that we take the break now.

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

Order. I suspend the Sitting and will take the Chair again at 3.35 pm.

Sitting accordingly suspended

at 3.12 pm until 3.35 pm.

Sitting resumed at 3.35 pm

Debate in Committee of Supply resumed.

Head K – Ministry of Education

Head K – Ministry of Education. Dr Lily Neo.

Policy Matter

Sir, I beg to move,

That the total sum to be allocated for Head K of the Estimates be reduced by $100.

Sir, we are in the process of reviewing our primary education presently. I want to declare that I sat in the PERI (Primary Education Review and Implementation) Committee. The Committee had made many good recommendations that will better prepare our next generation. I hope these recommendations will be adopted and implemented soonest. The main crux is on preparing students to be adaptable, innovative and well-rounded in a holistic primary education. This is necessary in our fast changing world. This forward-looking planning with a long-term objective is essential for maintaining Singapore's future prosperity and we need to start from primary education. I hope MOE will spare no effort in getting the support and collaboration of the stakeholders, the educators and the parents.

A society organised for learning has the crucial ingredient to cope with a fast changing world of today and tomorrow. There is the need to shift how we view learning, from being able to recall information to being able to find and use information. Lifelong learning in a learning society is the way to go. We have to be prepared to bring up the next generation of people that most likely will have to switch occupations and their specialties in their mid-careers or even earlier. This calls for a review in their educational

agility. Our students should be equipped with the passion for learning from young in order to prepare them to be nimble, to cope and to change with circumstances as they progress in lives. Learning must be made interesting especially at early education to achieve this.

Primary schools should make the starting learning journey for inquisitive young children to be fun. This will inspire a love for learning. Rote learning should be replaced by learning by inquiry and questioning. There is a need to have this shift in the field of learning from a traditional, didactic model of instruction to a learner-centred model that emphasises a more learner role. This represents a shift away from the learning by listening model of instruction to one which student learn by doing. Other good learning pedagogies are learning by interacting with others, hands-on approach, exposure to real subjects and learning through applications. Our aim is to help our young to develop thinking skills and to learn life skills from an early age.

It will be contradictory if our school reward systems remain focused on only academic excellence without acknowledging the achievement of other skills. Presently, our examinations are more geared testing content mastery. In view of the shift of intended development outcome, we need to modify our assessment of students. Modular tests should be conducted regularly without giving pressure to students and parents. These tests are mainly to ensure that the students have made progress and to give timely feedback to parents. There are also other modes of assessment such as the Rubrics, which assesses the child's development in the areas of confidence, curiosity and cooperation.

Quality teachers are required to give quality teaching. MOE is stepping up

recruitment of teachers targeting at 3,700 new entrants. This is an opportune time to select the best-suited individuals who have the aptitude for teaching. This is especially so for those who want to make teaching their careers. Selection process on suitability to teaching careers should start at National Institute of Education. Admission should not just be based on academic achievement but more importantly in looking out for compassion, commitment and passion for teaching.

Teachers' training should be made relevant to effect new changes. Their training must prepare them to execute the policy of the day, eg, learning new pedagogies and new assessment methods. This is the key in determining whether we can achieve the change for the better. Many recommendations by PERI will require the commitment of teachers and principals for effective implementation. Therefore, our educators' agreement on the new targeted outcome is vital. The speed on this alone will set the pace for the change. Therefore, there is an urgency to prioritise this area.

Primary education cannot be less prioritised than secondary or tertiary education. Young minds are most impressionable. Only competent teachers that are confident in their own subjects should be made to impart knowledge and instil the love of the subjects. Presently, primary school teachers are expected to teach all subjects – language, mathematics and science irrespective of their qualified subjects of their training.

The target to have all single-session schools by 2016 will require expansion of present schools or building of new schools. This will require a postulation study on our demographic trend to ensure that the estimated investment of about $2.4 billion on infrastructure will be well-spent. Locality of schools to match the local demographic pattern is one

consideration. There are already schools that have dwindling number of students over the years, whereas there are many others where demand exceeds availability. There is a need for a good evaluation on the priority of schools to be expanded in order to maximise the outcome. MOE will need to work closely and facilitate schools in going single session.

Character development should also be our core in education. We should nurture a generation with great morality and this should start in early education. Incorporation of values in schools can be further enhanced. We want a generation of people who are caring and responsible, who have integrity and are respectful of themselves and others. This calls for a review in our civic education. Is it getting the right response from students presently or is it being treated as a trivial subject. I feel that there is a need to make this subject interesting and engaging. All educators, and not just civic education teachers, should maximise "teachable" moments to inculcate values that can be most impacting. This is the time when a student requires a correction in deeds or thoughts. It will be worthwhile even if the class has to deviate from the subject of the day to learn and share values.

During this financial downturn, inadvertently, some children may be affected by their parents' loss of employment. May I ask MOE to ensure that these children are not affected in their education and be assisted accordingly, and what are the support schemes available?

Post-secondary Education

Mr Chairman, Sir, I read with interest how the Nanyang Technology University (NTU) is organising courses to enhance their graduates' employment opportunities. In addition to the basic skill set, NTU is also organising deportment course and the art of fengshui. Sir, if our graduates can be

given help to enhance their potential, I think our students who are less academically inclined should also be given more help to prepare for the future. How then do we prepare our youth for the future, especially a future in the globalised knowledge-based economy? I think our Education Ministry should provide more opportunities to our ITE and Polytechnic students and ensure that they will meet the demand of the future job market. We should prepare our youth for the wide-ranging opportunities in a diversity of industries, such as creative industry, digital media, biotechnology, healthcare, pharmaceutical, just to name a few.

As we compete with other countries, we must make sure that our next generation will have a competitive edge over their counterparts elsewhere.

Post-secondary Educational Opportunities

Sir, although the world is now facing an unprecedented downturn, besides addressing the current recession as a united society, we should be forward-looking and geared towards preparing ourselves for the upturn in the future, so that we can provide a variety of opportunities for Singaporeans to reap the benefits of the upcoming recovery of the economy.

economy? Will there be any strategic change in the focus of post-secondary education in Singapore as a result of the current global crisis and to prepare for the upturn in the new economy?

This is especially so in the current crisis where we see many governments this week pumping in large amount of resources seeking to address the economic downturn. This would have significant impact on the types, as well as level of skills and expertise needed when the upturn arrives. I would like to ask the Minister if the economic downturn will have any effects on the enrolment of students and courses being offered at the ITE, Polytechnics and University. Further to this, are there plans to increase the enrolment at ITE, Polytechnics and Universities and courses offered to prepare for the upturn in the

Mr Chiam See Tong is not here. Prof. Mehta.

Re-examining Tertiary Education Goals

My focus is on re-examining the goals of tertiary education. I would like to declare my interest as an academic staff of the National University of Singapore (NUS).

As I examine Budget 2009, I calculated that the Government will be spending about $1.9 billion on tertiary institutions, consisting of the five major universities, including UniSIM and the recently announced fourth university, polytechnics and NIE. The allocated budget is generous, calling for a closer look at the outcome as well as the goals of tertiary education. It is relevant to share a student's remark at a class last week when the discussion was about the sources or the causes of social problems. He attributed some social problems to the prevalence of a culture which came from top-down of economic value placed on individuals. The question is, are Singaporeans valued only for their economic value? On reflection, the decreasing productivity of Singaporeans is a concern to many in this House. Are graduates then just trained primarily for providing the workforce of a nation?

Coming back to tertiary institutions' goals, I scrutinised the missions of the three largest Singaporean universities. While there exist eloquent statements about transforming the individual, reaching global standards and doing impactful research, the truth is that corporatisation

has changed the operations of our universities. They have become businesses. Following the example of many private universities, corporate goals have also overtaken the basic goals of education. Where has the ideal goal of education gone? Educators aim at unlocking the full potential of the student and to nurture his or her goals. Have the priorities of tertiary educational institutions changed? My request to the Minister is similar to the current revamp of primary school education, could our tertiary education system also be re-examined?

In terms of accountability, since it is the taxpayers' money, the curriculum as well as the pedagogy, needs regular scrutiny. In every university and polytechnic, there should be a range of social sciences, arts, humanities and science subjects for the students to choose from. The arts and social sciences give another perspective of life which the hard sciences cannot. Learning literature helps students to appreciate the eccentricities of human character, ethics, philosophy, arts, social sciences, including social work must balance engineering, design, business, particularly in the fourth university which has not been established yet. Qualities such as altruism, compassion and uprightness of character need to be built into the teaching goals and blended into the teaching style so that we do not just churn out economic clogs to serve the business world but also produce leaders with strong moral and social conscience. Recent events in the investment world have shown dramatically how important sound values, morals and ethics are in the economic and social markets today.

Finally, I wish to emphasise that the fourth university is an opportunity to expand and blend the social sciences with the hard sciences. If students are denied this interesting balance of subjects, it will reflect poorly upon the quality of students that we produce. According to the

Internet and newspapers, only business, design, architecture and engineering will be offered at the fourth university. I hope that the Minister will consider this suggestion of including the humanities and the social sciences and update the House on the curriculum and the progress of the fourth university.

Mr Ong Seh Hong, you have two cuts. Three minutes, total.

Recruitment of Teachers

Sir, in a period of economic downturn when many people are losing their jobs, it is heartening to see a recruitment drive of teachers and teaching professionals. The collective recruitment target of 7,500 is applaudable.

In an economic downturn, there might be people looking to such recruitment as temporary measure. Education Ministry needs to guard against this. However, there are many more mid-career people who genuinely and sincerely aspire to become teaching professionals and they can bring considerable benefits to the school. Their exposure and experience outside of the teaching profession could add fresh perspectives to teaching. I urge the Ministry to strive to reach out and recruit more of these mid-career teachers and allied teachers.

While MOE needs to recruit teachers and teaching professionals of the right attitude and aptitude I do hope that MOE would not make the process too tedious and turn off potential good teachers as a result.

Integrated Programmes

Sir, the Integrated Programmes (IP) and the International Baccalaureate (IB) were introduced as attempts to improve our secondary and pre-U education. These

educational changes excited many parents. If their children are admitted to these programmes, it is indicative of their children's academic capabilities. IP and IB supposedly provide a more holistic education to prepare our children for their tertiary education and future.

Since the students entering the IP are chosen from amongst the best, the creme de la creme, parents watched with both elation and anxiety.

Sir, Education Ministry had told this House of the near complete success of IP and IB. The first batch of IP had a success rate of 98.2 percent and those who do not make it either re-take as a private candidate or apply to overseas university. Several issues come to my mind, Sir. Firstly, there is no guarantee that every cohort might continue to enjoy such high score. Secondly, since IP and IB students are the top of their cohort, it is expected of them to do very well. Indeed, a score of nearly 100 percent is within expectation. Anything less than that could be deemed as poor results.

The IP was introduced with the stated objectives of the following: to give the students "a broad-based education that develops their capacities for creative and critical thinking and optimises the use of the students' time to provide them with opportunities to develop their leadership, teamwork and communication skills".

I support the IP and IB as a step in the right direction. Students of the IP and IB programmes certainly illustrate their academic competency and they are talent that we should not let waste especially since human capital is so vital to us. IP is into its fifth year now, I would like the Minister to give us an update on the evaluation of whether IP has achieved its stated objectives.

Secondary One Posting

Sir, MOE has a very efficient and systematic secondary posting process, where pupils are ranked by merit according to their PSLE results and each pupil given a total of 6 choices for secondary schools. Each secondary school has its cut-off aggregate score and the previous years' scores are published by MOE. I must credit the Ministry for the transparency in the posting system. By and large, the yearly exercise has served us well.

School principals would of course like to admit the best students of each cohort. I suppose the schools have their various KPIs and compete keenly among themselves to improve their school standing. As a result, many schools tend to adhere strictly to their cut-off points, turning away students who may have lived only a few hundred metres away even if they missed the cut-off points by a few points.

I can understand the aspirations of our school principals. However, I feel neighbourhood secondary schools should take in a mix of students and due consideration should given to those who live near the school or have elder siblings studying in the school even as the PSLE aggregate score remains the main selection criteria.

Students who live near the school save on transport costs and travelling time. The neighbourhood familiarity also helps in the studying environment besides building stronger community ownership. Having elder siblings in the same school also helps in the student’s development and provide convenience to the parents. MOE has schemes that exercise flexibility. For example, pupils from a primary school which has an affiliation are given some priority to its affiliated secondary school if they have opted for that school as their first choice. There is

also the Direct School Admission (DSA) scheme where MOE gives schools greater flexibility to admit students with a diverse range of achievements and talents. This is a more balanced approach and helps lessen the over-emphasis on academic performance.

So just like primary school affiliation and DSA, proximity to the school and siblings should also feature in the selection criteria. Perhaps, MOE can devise some credit points system to incorporate this feature – pupils staying near to the schools – into the selection criteria.

Non-traditional Approach to Running Education

Sir, MOE has often enjoyed the reputation of being progressive and is considered a trail blazer in some areas. I encourage the Ministry to continue in this direction and not play too safe as it embarks on its future plans in running the education portfolio.

I have four suggestions for the Minister to consider in MOE's future plans: (1) the concept of Education Village; (2) the Use of IT; (3) Satellite Schools; and (4) Teacher Recruitment.

Sir, in a township named Darlington in north England, a pioneering education model is receiving rave reviews. Darlington Education Village caters for about 1,400 students aged from two to 19. The Village is a federation of three schools - a well-regarded special school, a mainstream primary school and a mainstream secondary school. Except for the classrooms where most academic subjects are taught, majority of the other physical facilities are co-used by students from all three schools. All the buildings are linked by a common corridor and a kaleidoscope of primary school, special school and secondary school students

interact and transact with each other. Even if they do not study in the same classrooms, they share the same social programmes, non-academic lessons, toilets, corridor, cafe, library, labs and performance courtyards. I saw hot-dog stands operated by special-needs students coached by their nurturing teachers.

Sir, as I quietly followed two of the special-needs students around the Campus to deliver the food orders to the lecturers in all three buildings, my heart was deeply touched for two reasons. One, I saw special-needs students successfully included in normal mainstream school life and yet still learnt according to their needed styles and pace. Two, I asked myself when we can witness such a scene in Singapore, where mainstream school and special school students can all enjoy one school life, interacting daily and bonding with each other, accepting each other's differences, all under one roof. Sir, I believe, if we only dare to try, an Education Village model can build inclusiveness and tolerance in Singaporeans from young, much more powerfully than the typical yearly school Community Involvement Programme (CIP) projects or joining grassroots Community Engagement Circles in their adult years.

Suggestion two: Use of IT. Sir, I urge the Minister to help level the playing field and spread best practices throughout the education system so that the average quality of all schools, goes up. I offer four suggestions in this regard: (a) provide access to electronic education records, much like the electronic medical records, that will not just reflect one's progress but also allows a student or his family or his teachers to help manage the student's progress and take steps to close any learning gaps; (b) put core and good quality lectures online as a model for other teachers and as a resource teaching material for students; new teachers and their parents; (c) share assessment papers (or projects of good schools on the portal)

instead of having parents buy them at lobbies of shopping centres; (d) embark on a dream of making available not just one PC for Every Student, not just for those in privileged schools. Start with the secondary school students first. In addition, structure a package of PC support and coaching for needy students whose families do not have the means to supervise them or provide for PC peripherals such as ink, paper and broadband access at home.

4.00 pm

Suggestion three: Satellite Schools. Still on my call to level the playing field, let me share with the House Bill Gates Foundation's strategy to replicate the school models that worked the best. Bill Gates wrote this recently, "A few of the schools that we (Bill Gates Foundation) funded, achieved something amazing. They replaced

schools with low expectations and low results with ones that have high expectations and high results. Bill Gates shared that "these schools are not selective in whom they admit, and they are overwhelmingly serving kids in poor areas, most of whose parents did not go to college". Almost all of these schools, he said, are charter schools, much like the autonomous schools in Singapore, that have significantly longer school days than other schools.

Bill Gates' strategy to replicate the school models that worked best is one that was already tested in Singapore, I would say, albeit a modest scale in the special education sector in the form of satellite schools. I believe the idea can be borrowed and use in mainstream schools as well. Sir, if the demand for good branded schools continues unabated, the Ministry should consider the potential of starting satellite campuses for schools in borrowed or new school grounds - start an RGS satellite, for instance, in the North, South, East and West cluster. To do this, the Ministry will have to acquire

critical skills in building systems and processes that allow for scalability and consulting skills to install, implement and follow through till the desired outcomes are achieved. With MOE's track record, I am confident this is doable.

And, Sir, as Minister considers my suggestion of replicating best school models and practices, I urge him to please do not leave out the special needs children especially those in special schools run by charities. Do not treat these children as addendum items in our education plan.

Suggestion four: teacher recruitment and best sourcing. Sir, teachers are the top critical success factors in any education venture. The headline of an article in Wall Street Journal in April 2006 read, "It's the Teachers, Stupid". The article summarises the findings of Brookings Institution, one of the oldest think-tanks in Washington. It cites research that suggests that there is a huge difference in performance between students with the best teachers and those with the worst teachers. It also says that it is possible to discern in a short time if a teacher has what it takes and recommended that "weeding out bad teachers and recruiting better teachers" would be smarter than just shrinking class sizes.

I applaud the Ministry for its dedication to bring forth its hiring plan during this time. I worry, however, about the motives and the aptitudes of some of the job applicants who may perceive teaching as a job that provides the iron rice bowl, complete with holidays and hopefully, a less stressful environment than the private sector. In fact, members of the public were attracted to MOE's advertisement last December that featured a principal, teacher from MOE, decked in black leather jackets and boots. I can assure the House and Singapore that

it is way too warm in most schools to dress this way.

Instead of glamorising the profession, it makes more sense to refer potential candidates to inspiring role models such as California's Erin Grunwell who performed a great turnaround job in the school. Grunwell wrote a book in 1999, entitled "The Freedom Writers' Diary". The book is the basis of a 2007 move, "Freedom Writers", starring Hilary Swank.

In conclusion, Sir, I would like to encourage the Ministry to continue its good work. Continue to be bold and innovate. Do not play too safe. As a wise man once said, "To avoid criticism, say nothing, do nothing, be nothing."

PSLE

Sir, education is a great social leveller in Singapore. With a good tertiary education, a child from a low-income family can move up to better middle-class living. For this reason, Singapore parents spare no effort in investing in their children's education. It brings on a lifetime of worries and stress to parents. It begins with enrolling the child in the best preschool, or getting admitted to a popular primary school, all the way to their tertiary education.

Changes to our educational system usually generate stress and anxiety amongst parents. The proposed changes to our primary school education system are no difference.

Sir, I support the PERI Committee recommendations which were made with the best interest of our students. I support the intent to make learning fun and thereby, nurturing a passion in learning in our children from a very young age.

However, Singapore parents are practical people. In spite of the good intent of the proposed changes, if the end

product of the primary education is examination-based and result-oriented, parents would continue to steer their children towards doing well in the PSLE. I am afraid in the end, all our efforts to improve primary education may go to waste. I therefore urge MOE to take this into consideration to review and reform the PSLE if necessary.

Relevance of PSLE

Sir, as a parent of two young children in primary school, I find the PERI's recommendations very refreshing - the focus on well-balanced education and building confidence in children and making the learning very fun. These are the right steps to take for the future as the world changes and new skills are needed. With this new learning environment, I support the plan to have regular assessment for students in Primary One and Primary Two, without any examinations. This would help expand their learning horizons and not restrict them to a desk, "mugging" on books, and commence their journey to becoming an examination-taking machine.

Learning should be fun and you want the students to yearn to learn. But how do we sustain their interest for six years of primary school education, and for that matter, throughout their entire student life? To some students, parents and teachers, six years of primary education seems to prepare for one examination - PSLE. We have come far in developing our education in the last few years, with the focus on experimental proactive learning instead of just purely passive studying. These are milestone changes and I think the Ministry has done a great job. Such changes over the years for primary education where they are exposed to technology, group work, project-based assessments and CCAs, certainly help

them in their learning and in character development. The open and vast learning excites the child and I applaud this learning method. However, I ask: would PSLE help to enhance this learning environment or not? That a student's examinations still concern not just the students, but the parents as well. Sometimes, the examinations itself drives the behaviour of the schools, parents and children because schools become concerned about taking in students with better results and the parents end up taking the PSLE examinations instead of their children. And the students, of course, are left very stressed.

Is it possible that we have a through-train not just for "A" levels, skipping "O" levels, but also through-train programme for primary school all the way to "A" levels? Such a focus will allow time for a school-based assessment and feedback system. It will also allow time for longer term projects which will open up greater possibilities. Teachers get more time with the students, with a focus on educating and teaching them over a longer period of time. Assessment can then be done more accurately. And with a through-train process, we can better achieve economies of scale.

At the community front, every constituency already has a primary or secondary school, JC or pre-university or an institution. A student could have through-train learning process all the way to pre-university within the same community, and is determined by the location of their residence rather than by their results. It fosters a bond within the community of friends, teachers and parents. Then, we will have primary school and secondary school allocation by distance, not just by results.

PSLE has certainly become not just an examination to assess a child's ability. It is now becoming really a placement exercise for secondary schools. My

question is, it has achieved its objective in the past, but with this new learning approach, I doubt whether the PSLE examination, at the age of 12, would enhance the learning of a child and even achieve its purpose of assessing a child's ability. Does the Ministry foresee any possibility of not having PSLE in the future?

Mr Chiam, you had a cut earlier. Would you like to bring it up now before the Minister replies?

Admit More Students to University

Sir, at the moment, about 40% of places in one cohort qualifies for university places. I wonder if the Minister could do anything to increase that number because nowadays, those who do not have university education suffer a disadvantage.

One, difficulty in getting jobs. Two, even once he gets a job, his pay will always remain less than $3,000. At my Town Council, I notice that most of them who earn more than $3,000 have got a university degree. And without a university degree, a $3,000-mark seems to be a hurdle. So I hope that the Minister can increase the number of university places to let more students into the universities so that they will not be disadvantaged.

Sir, first let me thank the Members who have spoken, for their comments and questions. My apologies to Ms Denise Phua – I did not bring my leather jacket and I do not think I possess one but let me think about it.

It is clear that the financial meltdown around us has dominated this year's Budget and Committee of Supply. And as you read the newspapers, no wonder, superlatives have flowed fast and furious

about this. It has been described as the worst economic downturn since the Great Depression, and likely the century. It has caused the most rapid rise in unemployment amongst OECD countries since the early 1990s. A bank run has occurred in the United Kingdom, not seen since 1866 and the list goes on. Singapore, of course has not been spared. MTI’s projection of minus 2% to 5% makes it possibly the worst recession since its independence. The Straits Times Index (STI) has lost 50% of its value in 2008, the largest annual drop in its 42-year history. A good friend remarked that he opens the newspapers nowadays with fear each passing day, certain that more bad news would come. Indeed, we are in difficult times.

No one can be certain how long this downturn will last and it will get worse before it starts to recover, but there are good reasons that Singaporeans should remain optimistic. Despite the turbulence, our society remains cohesive and confident. We have a stable, responsive and effective Government. It is this cohesive society led by a good Government that will see us through this crisis. In years of plenty, we have spent prudently and put aside reserves, that we can now draw on for dire consequences and circumstances like the present one.

Specifically for education, there are opportunities that we can seize in this downturn to continue building a world-class education system. Let me explain what I mean. To me, three essential elements characterise such an education system. One, it is an education system that is respected for its high standards and has peaks of excellence comparable with top institutions worldwide. This not only refers to universities, but schools, ITE and polytechnics. We should aim for them to be the best in their class. So I agree with Assoc. Prof. Kalyani Mehta that we should not just look at the worth of an individual because of his academic

output. Indeed, that is not our education philosophy when we built our institutions. I do not spend less on an ITE student because I deem that he will be paid less when he graduates, than I do, say, on a JC student. In fact, in terms of resources, we spend about the same – $12,000 per year. It has never been our prevailing philosophy to spend less when we think that you cannot give out more. We spend enough to bring out the full potential and to build the institution to bring it to the best in that class.