Hansard, 2010-08-16

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 (2010) To (2010) Dr Balaji Sadasivan 22 Jul 24 Jul Mr Tharman Shanmugaratnam 22 Jul 23 Jul 26 Jul 28 Jul 03 Aug 05 Aug Mr Teo Ser Luck 25 Jul 31 Jul 03 Aug 05 Aug Dr Ahmad Mohd Magad 26 Jul 26 Jul Mr Charles Chong 27 Jul 29 Jul Mr Liang Eng Hwa 28 Jul 01 Aug Assoc. Prof. Dr Yaacob Ibrahim 29 Jul 30 Jul Mr Lim Swee Say 30 Jul 31 Jul 19 Aug 22 Aug 30 Aug 04 Sep Mr Seng Han Thong 30 Jul 31 Jul Mr George Yong-Boon Yeo 31 Jul 05 Aug 06 Aug 06 Aug 17 Aug 19 Aug Dr Vivian Balakrishnan 31 Jul 04 Aug Mdm Cynthia Phua 01 Aug 03 Aug 30 Aug 04 Sep Mr Zainul Abidin Rasheed 01 Aug 02 Aug 03 Aug 04 Aug 04 Aug 07 Aug Dr Ng Eng Hen 02 Aug 06 Aug Column: 847 Mr Ang Mong Seng 03 Aug 05 Aug 30 Aug 04 Sep Mr Arthur Fong 05 Aug 08 Aug Assoc. Prof. Koo Tsai Kee 10 Aug 10 Aug Mr Lim Biow Chuan 13 Aug 15 Aug 21 Aug 22 Aug 20 Sep 25 Sep Mr Yeo Guat Kwang 13 Aug 15 Aug Mr Cedric Foo Chee Keng 14 Aug 24 Aug Mrs Yu-Foo Yee Shoon 15 Aug 17 Aug Assoc. Prof. Ho Peng Kee 16 Aug 19 Aug 24 Aug 27 Aug Ms Joscelin Yeo 16 Aug 16 Aug Mr Seah Kian Peng 19 Aug 23 Aug 31 Aug 03 Sep 17 Sep 19 Sep 26 Sep 29 Sep Ms Grace Fu Hai Yien 22 Aug 29 Aug Mr Lim Hng Kiang 23 Aug 28 Aug Mr Alvin Yeo 24 Aug 28 Aug 16 Sep 18 Sep 27 Sep 29 Sep Mr Khaw Boon Wan 30 Aug 02 Sep Mr Wee Siew Kim 03 Sep 03 Sep 04 Sep 12 Sep 14 Sep 16 Sep 21 Sep 21 Sep 23 Sep 23 Sep 27 Sep 27 Sep Mr Wong Kan Seng 03 Sep 12 Sep Ms Denise Phua Lay Peng 04 Sep 10 Sep 19 Sep 24 Sep 12 Oct 12 Oct

ABDULLAH TARMUGI Speaker Parliament of Singapore

The following Bills were assented to by the President of the Republic of Singapore on the date stated:

2nd August,2010 (1) Smoking (Control of Advertisements And Sale of Tobacco) (Amendment) Bill (2) Housing And Development (Amendment) Bill

ABDULLAH TARMUGI Speaker Parliament of Singapore

[Mr Speaker in the Chair]

1. Dr Lim Wee Kiak asked the Minister for Transport in light of the dataset error resulting in miscalculations in the bus fares between North Bouna Vista Road and Commonwealth Avenue (a) whether there are errors in the fare structures in other locations; (b) how many commuters have lodged refunds for being overcharged; (c) what is the estimated total amount overcharged before the error was rectified; and (d) what are the measures taken to ensure that this does not recur.

2. Dr Lim Wee Kiak asked the Minister for Transport with the unhappiness expressed by various commuters following the recent introduction of the distance-based fares: (a) what is the Ministry doing with the feedback given by the commuters; (b) when can the public expect a further review of the current distance-based fare structure; and (c) whether the Ministry will consider having the transport operators return a portion of the profits to the commuters through a rebate or loyalty scheme.

3. Er Lee Bee Wah asked the Minister for Transport following the implementation of the distance-based fare

system (a) why do commuters have to pay more for single bus or train ride when these services are designed precisely for such single trips; and (b) whether commuters should be rewarded with lower fares for choosing longer and more inconvenient routes.

4. Ms Irene Ng Phek Hoong asked the Minister for Transport in view of the travel patterns of the elderly in Singapore (a) what will be the impact of distance fare on them; and (b) whether the maximum long-distance fare for the elderly can be lowered as they may find it physically taxing to make bus-MRT-bus transfers to enjoy the benefits of distance fares.

5. Dr Lily Neo asked the Minister for Transport (a) what is the percentage of senior citizens who have to pay more for their public transport since the introduction of distance fares; (b) what is the percentage of such increased fares; and (c) whether he will consider implementing measures to reduce their burden.

6. Mr Zaqy Mohamad asked the Minister for Transport (a) whether the Ministry has conducted any formal surveys on the actual percentage of commuters who have had increases or reduction in their fares since the distance-based fare system was introduced; and (b) what is the impact on senior citizens.

7. Ms Sylvia Lim asked the Minister for Transport (a) whether the new system of distance-based fares will increase travel stress during peak hours by encouraging more commuter transfers and creating more congestion points; and (b) prior to implementation, what assessments were made of its impact on specific groups of commuters, such as senior citizens.

Mr Speaker, Sir, may I have your permission to take Question Nos. 1 to 7 together?

Yes.

Sir, Members have raised several issues on distance fare. Let me start by explaining the rationale for distance fare.

Distance fare is a fairer fare system. Previously, commuters making transfer journeys were effectively paying more to keep the fares lower for commuters who take direct journeys. The Public Transport Council (PTC) has now removed this cross-subsidy or transfer penalty so that all commuters pay the same fare for the same distance travelled. This way, commuters can choose the best way to reach their destination without having to worry about paying extra fare if they make a transfer.

The concept of distance fare is therefore a good one. The issue now is in the implementation. In this regard, the PTC had to consider how to distribute the costs associated with implementing such a system. PTC sought to reduce the burden on commuters by having the operators bear the lion’s share of the costs. Dr Lim Wee Kiak asked if the operators would consider returning a portion of their profits to the commuters. The operators are in fact already bearing the larger part, about two-thirds, of the costs of the transition to distance fares. Overall, the operators have borne a permanent reduction in fare revenue of about $88 million per year, as a result of distance fare.

For the remainder of the cost, the PTC had the unenviable task of distributing it amongst the various commuter groups – between direct and transfer travellers, short and long distance travellers as well as adults, senior citizens and student/child travellers. If the PTC lowers the costs for one commuter group, another commuter group would have to pay more. Thus, if fares were to be lowered for commuters

travelling long distances as Er Lee Bee Wah and Ms Irene Ng had suggested, it would mean that the fares for another group of commuters who travel shorter distances would go up. To find the appropriate balance, PTC followed the principle of benefiting as many people with lower fares as was possible. However, as distance fare corrects the earlier inequity of fares between direct and transfer journeys, the fares for some direct journeys have to go up in conjunction with lower fares for transfer journeys with the removal of the transfer penalty.

In studying the impact of distance fares on commuters, the PTC used actual travel data from the fare system, which represented the prevailing travel patterns of commuters. This is far more comprehensive than a survey, as the data is derived from actual fares paid by the entire population of commuters using contactless smartcards. The PTC’s projected impact analysis showed that 63% of all commuters would see fare savings in their weekly public transport spending under distance fares compared to the restored fares upon the expiry of last year’s temporary rebate of 3%. As for the commuters who do not see immediate benefits in terms of lower fares now, they may benefit in the future as their travel patterns may change and new rail lines and connections open. We are already seeing this happening with the opening of the Circle Line from Dhoby Ghaut to Marymount.

Mr Zaqy Mohamad asked if surveys were conducted to validate the projected impact analysis since the distance-based fare system was introduced. The PTC has indeed conducted a post-implementation validation exercise, not based on just a survey but using the actual fare data collected in July under distance fare. In all, PTC took data from 24 million

journeys made over a one-week period for this analysis. The exercise confirmed that the impact of distance fares on commuters is very close to what PTC had expected. Overall, 68% of all commuters saw average weekly fare savings under distance fare, slightly above the 63% originally projected. This may indicate that some commuters have already started to optimise their journeys by taking advantage of the flexibility under distance fare to choose less circuitous routes to their destinations.

Ms Irene Ng, Dr Lily Neo and Mr Zaqy Mohamad have asked about the impact of distance fare on senior citizens. For senior citizens, the PTC had in fact tried to do as much as possible to ensure there is a clear majority who would benefit from distance fare. Under distance fare, senior citizens enjoy a 25% discount from adult fares. To reduce the impact on senior citizens travelling long distances, the fares were set such that they do not have to pay any additional fare for journeys longer than 7.2 km. The outcome was a fare structure that would provide seven in 10 senior citizen commuters (70%) with fare savings. Again, these projections have been validated by the actual fare data collected in July, which show 74% with fare savings and 26% with fare increases. At the extreme ends, 5% of senior citizens save more than $2.30 weekly, while 5% see an increase of more than $0.77 weekly.

Ms Irene Ng mentioned that the elderly may find it physically taxing to make transfers to enjoy the benefits of distance fare. It is a misconception that commuters need to make transfers to benefit from distance fare or that the PTC is forcing senior citizens to make transfers. What the PTC has done in introducing distance fare is to ensure that transfer journeys do not result in higher fares than equivalent direct trips. There is therefore no financial incentive under distance fare for commuters to transfer if the direct journey

is of the same distance. However, if a commuter is able to shorten his travelling time or distance by making transfers, distance fare gives him the option to do so. This increases the flexibility for commuters rather than reducing it.

On Ms Sylvia Lim’s question on whether distance fare will increase travel stress during peak hours by encouraging more commuter transfers and creating more congestion points, our assessment is that the opposite would occur. Commuters would now be incentivised to choose the shortest distance possible – be it a direct or transfer journey – to get to their destination, thus, making the most efficient use of public transport resources.

Dr Lim Wee Kiak has asked about the extent and impact of the distance discrepancies and the measures taken to prevent such errors in the future. Given the scale of the exercise in introducing distance fare, it is inevitable that there would be teething issues during implementation. LTA has acted on commuters’ feedback and made the necessary adjustments to the system. To date, errors have been found in the distance data for 13 bus stop pairs which represent 0.2% of the total number of bus stop pairs in the system. These were due to errors in the dataset caused by ground changes, such as road diversions. Most discrepancies were in the range of 0.2 to 0.3 km, which is only a fraction of the 1-km fare band. The number of commuters affected by these errors is likely to be small as only journeys that cross over to the next fare band as a result of the discrepancy are affected.

As at 9th August, TransitLink has provided refunds for a total of 38 claims due to distance errors. Going forward, the PTC has put in place a regular review process to ensure that the fare system is updated and reflects the changes that occur on the ground.

Dr Lim also asked whether there should be a review of the distance-based fare structure. This initiative was previously debated in this House and there was strong support for it as a fairer system for all. The distance fare system is a sound concept that will serve us for the long run. As PTC Chairman Mr Gerard Ee has said, it would take time for people to get used to it and feel the benefits. We recognise that there are adjustments involved in the transition to distance fare, and that some commuters have to pay higher fares because of the change. However, we ask for commuters’ understanding as we are moving towards a fare system which is fairer for all.

For low-income families including senior citizens who may need assistance with fare increases under distance fare, the Government will continue to assist them through various community-led initiatives and work support schemes under the Community Development Councils and the CCC ComCare Fund.

Mr Speaker, I thank the Minister for his comprehensive answer. I guess this is a hot issue on the ground. The commuters are usually at the shorter end of the stick when dataset errors occur. One of the issues is: can the Minister make the refund process less onerous? To claim 20 cents, they have to go on the Internet to fill in a form and so on. With the smart card system, can this be done automatically?

Secondly, the PTC is going to review the dataset. I would like to ask how often will this dataset be reviewed and what is there to ensure accuracy? My other question on distance fare is: during the initial assessment, how did PTC come up with the statement and the conclusion, and what were the assumptions that were made? Now that a review has been done on the actual fares collected and given the

discovery that there is a slight difference, could the Minister share the detailed results with the public to allay fears that fares are going up?

I would also like to ask if PTC took into account the expiry of the 3% rebate that was introduced as a temporary measure during the recession. If that was taken into account, would all the assumptions still be valid? As for senior citizens, the starting fare is now lowered to 53 cents compared to before –

Your question is too long, Dr Lim.

Can the Minister provide the percentage of senior citizens who are travelling less than 5.2 km and, hence, will benefit from the new fare structure?

I would appreciate it if Members could keep their questions short, please.

I think the Member has taken the full allotment for the year for supplementary questions. Let me take the questions one at a time.

First, can the refund be made less onerous? I think TransitLink has tried its best to make it as simple as possible. For commuters who want to claim a refund because of this error, they can do so in three ways: they can call, they can go online and they can go to the ticketing office. After verification of the claim, TransitLink would then send each commuter two vouchers for two single trip rides, regardless of distance. On average, the claim for distance discrepancy is about 10 cents. The operators have given the commuters a voucher which is higher than that value and, with that, the commuters can hop on not just the basic bus services but also

the express and premium bus services. Can this refund be done automatically? The current system does not allow that. We need to look at the issue in perspective. The occurrence is 0.2 % of all the bus stop pairs in our system. I do not think what TransitLink is providing now is onerous. There are different ways of claiming – call, go online, go to the office. And they will post the vouchers to the commuters. Commuters do not have to go back to their office.

Second, the review process going forward. PTC has instituted a review process. Whenever there is a permanent change to the system, the operators are required to report that every quarter. The Land Transport Authority (LTA), being a third party, would run audits on the system.

Third, the post-implementation validation results and sharing the information with the public, which I have just done so. I have spoken in Parliament – this is quite a public platform. It will be taken note of that this is where we stand now.

Fourth, the 3% rebate. PTC took the period after the fares had been restored as the starting point for the fare system. This is the correct position because the 3% rebate was just temporary. Regardless of whether PTC had implemented distance fares or not, the fares would have been restored. They took that as the position and benchmarked it from there.

The last question: how many senior citizens had benefited, ie, those travelling less than 5.2 km? If Members look at the data that we have, 75% of senior citizens take at least one journey per week that is less than 5.2 km. They would benefit. This is not the only thing. Senior citizens who take transfer journeys will also benefit. The latest data we have – ie, post implementation – is that 64% of the senior citizens would take at least one transfer journey a week. When we

combine this information and look at it on a weekly basis, we have about seven in 10 senior citizens benefiting with distance fare.

Thank you, Mr Speaker. I would like to ask the Minister whether it is correct to say that about one in three senior citizens has to pay more for his or her public transport since the introduction of distance fares. Therefore, is this policy not affecting the group that can ill afford the fares hike, some as much as 20% to 30%? Is the Minister aware of the frustrations and anger of many being voiced loudly and clearly on the ground? Therefore, should there not be a review to assist this group?

Sir, the Member is right that some senior citizens would face significant fare increases. That is right. The PTC agonised over this but it had to make a decision on what is the best fare structure that will benefit commuters as a whole. I mentioned earlier in my main reply and I think it is worth explaining to Members again the sort of fare structure they have decided upon for senior citizens. In the past, in the old system, if a senior citizen was to take two bus trips to complete the journey from A to B, he would have to pay the same flat rate twice. So there is an additional penalty in there. If he was to take two bus trips to complete the journey in 2007, the fares would come up to about 109 cents, ie, before the transition to distance fare. Today, they will pay a maximum of about 86 cents. Previously, because it was not distance based, even if he travelled a short distance, he paid 109 cents the minute he took two bus trips. Now they pay up to 86 cents. If distance is less than that, they would not pay 86 cents. So that is the first thing for senior citizens when they make transfers. The other thing the PTC did, which I mentioned earlier in response to Dr Lim Wee Kiak's question, is that for shorter distances, they have

brought fares down. If you look at where the starting point was previously, it would have been 72 cents after the fares were restored. This is the starting rate for senior citizens. Now it is 53 cents when they take an air-conditioned bus service. And if they take a feeder bus service, they pay 53 cents regardless of distance travelled, whether to the market or within the neighbourhood. The third thing which the PTC did was to cap the maximum distance for senior citizens. They capped it at 7.2 km, that means anything above 7.2 km, they do not pay an additional charge. This means that the discount is higher than 25%. They have this base of 25% less than adult fares, but the minute they cross 7.2 km, the discount actually shoots up, higher than 25%. This is what the PTC has done. As I have said, the PTC deliberated over this at great length because they understood exactly what the Member said that some commuters would be affected. Nevertheless, we recognise that senior citizens are a diverse group and some would, indeed, like she said, have difficulty coping with this fare increase. Rather than adjust this balance, which I have just described, which benefits about seven in 10 senior citizens, the way to proceed to help senior citizens who have difficulty coping with the fare increases is through a more direct and targeted way. Members, please use your welfare fund or ComCare Fund to help them – as what Mr Gan Kim Yong did in Chua Chu Kang. That is an option.

Questions for the Minister. I understand that when we embarked on this, the fare structure was predominantly based on distance. Last week, in a media interview, the PTC came out to say that they also took into account time travelled and waiting time. I was wondering if the Minister could clarify whether these are the only two factors or are there also other factors involved in the fare structure.

This question actually relates to the MRT network. The way our system works is if you go from A to B, you zap in at A and when you go out at B, you zap out. The system cannot track how you get from A to B. It cannot postulate whether you took this or that way, the interchange where you hopped on. It will not know as it cannot track your route. So the PTC had to make an assumption for a case like this. The working assumption they take is that, by and large, when commuters get into the system, they try their best to find the fastest way to get from A to B. So they said, "Okay, the fastest way. So what is the fare for the distance travelled in the fastest way?"

Thank you, Mr Speaker. I would like to ask the Minister how many students would have to pay more after the implementation of distance-based fare. I read in TODAY where one writer mentioned that from the same bus stop at Ang Mo Kio MRT station, he took three different buses and was charged three different fares. If this is totally distance-based fare, how is this possible?

I do not know the details of the specific case that the Member brought up from the TODAY paper. We can look into that. But the earlier question is one I can answer when she asked the balance of benefit for students. I will give Members the impact based on the data tracked after 3rd July. For students, 76% saw weekly savings and 24% saw an increase.

Thank you, Sir. Can I ask the Minister for an assurance that, given that distance fares are based on the distance travelled on the fastest route, which includes walking time and waiting time, senior citizens are not unfairly penalised for being less mobile and less savvy about the routes to take? Can I also ask the

Minister: given that the Minister is encouraging the constituencies to buy public transport vouchers to give to the needy who cannot afford the increase in public transport fares, can he encourage the public transport operators to pick up the charge of printing and handling the public transport vouchers because then it will reflect the true dollar value of the vouchers to our residents from our welfare fund?

The first question is really the issue of the mobility of senior citizens. We are concerned that they are less mobile and whether this system would unfairly penalise them. I think it is useful to make a few points here. I said this in the main reply but I think it is worth repeating. Dr Lim Wee Kiak tells me this time round, I have to go very slowly and explain this. So I am going to do this. First, it is not the intention of distance fare to penalise those who are less mobile. What distance fare does is to ensure that if a commuter travels the same distance either by a direct or a transfer journey, he pays the same fare. As the fare is the same, distance fare does not force us to make transfer journeys in order to benefit. Instead distance fare allows us to choose the best way to get to our destination without worrying about paying extra if we do make a transfer. Thus, the aim is to make the fare system fairer rather than to force commuters to make transfers. The second issue about senior citizens – senior citizens are a diverse group. Senior citizen concession card holders start at the age of 60. Yes, some do not make transfers, but many others do. Prior to distance fare, 62% of senior citizens took transfers at least once a week. The PTC took this into account in its decision to implement distance fare for senior citizens. The feedback they received in the run up before the implementation of distance fare was that senior citizens who took transfers felt that they were being unfairly penalised as the fare system

required them to pay more to keep fares low for other senior citizens. The PTC decided that a fairer fare system is for all senior citizens to pay the same for the same distance travelled. After distance fare, the latest July 2010 travel data showed that 64% of senior citizens now made at least one transfer journey a week. Similarly, just as there are senior citizens who take long direct journeys, there are others who take shorter journeys who have benefited from the lower fares which I mentioned earlier, in answer to Dr Lim Wee Kiak. Just as I mentioned in my reply just now, the PTC had to find an appropriate balance here. Lowering, say, the maximum fares on long distance journeys would benefit transfers and long distance travellers, but those who make shorter journeys would have to pay more as a result. I know for a fact that if the PTC could have benefited all commuters, they would have done so, 100% of commuters. Mr Gerard Ee, the PTC Chairman, said as much but as he pointed out, this is not possible. If PTC lowers the cost for one group of commuters, another group or groups would have to bear this cost. Of course, different people may have distributed the cost differently, as it is a matter of judgment what the appropriate balance is. But the outcome of any judgment will involve some groups seeing immediate benefits and others paying more in this transition to a better and fairer fare system. Under our public transport framework, we have entrusted this decision to the Public Transport Council. I believe that they have tried their best. On the Member's second question of whether the public transport operators will pick up the tab for the vouchers, it is a commercial decision. It is something that we can put to them, and it is something that they have to consider.

Mr Baey, last question.

Thank you, Sir. I would like to ask the Minister to clarify if the flat rate of 60

cents per trip for senior citizens is applicable only after 9.00 am. Therefore, does the same time condition apply for the new cap of 86 cents for a journey of two bus trips? If so, can that condition be removed or reviewed? I remember the Ministry's answer about that being a decision made by the commercial transport operators. Given the fact that PTC is now playing the role of balancing how the savings arising from the waiver of transport penalties are being distributed across the different commuter segments, can the PTC make a decision to extend concessionary travel for senior citizens at all times in order to promote a more elderly friendly society?

I personally am sympathetic to this. The concession hours start from 9.00 am. But under our structure, the Member is quite right that the public transport operators have to make this decision. It is part of their business decision because any decision that they make on concession means that somewhere else in the system that cost will have to be borne. So this is where we are. The PTC will take in all these relevant feedback. I think the next time when they review the fares, they will look into all these feedback.

8. Mr Laurence Wee Yoke Thong asked the Prime Minister whether the Government will consider doing away with retirement age and, if so, what measures will the Government take to change mindsets and promote continuing education among the different cohorts of older people.

9. Mdm Ho Geok Choo asked the Prime Minister what is the Ministry's position on doing away with retirement age.

Mr Speaker, may I take Question Nos. 8 and 9 together?

Yes, please.

Mdm Ho Geok Choo and Mr Laurence Wee asked about Government's position on the retirement age and whether we should remove it. Prior to 1st July 1993, we did not have legislation defining the retirement age. The generally accepted retirement age was 55 years because that was the age when employees could withdraw their Central Provident Fund (CPF) savings, and this was similar to most countries where the age for drawing down on pensions defined the retirement age. In 1987, we introduced the Minimum Sum concept into CPF. Account holders could withdraw all of their savings above the Minimum Sum and draw down on the Minimum Sum only when they reach 60 years. Trade unions negotiated with their employers to raise the generally accepted retirement age to 60 years and were successful. However, this was not the case for non-unionised companies. Government then introduced

the Retirement Age Bill which Parliament passed with effect on 1st July 1993. On 1st January 1999, the retirement age was raised to 62 years. With increasing life expectancy, we are encouraging older people to work for as long as they can and for as long as they want. When I first raised this prospect in the 1980s, many workers were unhappy with me. They felt they deserved to enjoy their retirement. They were also unhappy with the pay cut as our wage system was too much seniority-based. But gradually, there has been a change. By the early 1990s, some older workers were appealing to me to help them continue working, and they even volunteered to take a pay cut. They knew they did not have enough savings to maintain their quality of life. Today, many older workers want to work as reflected

by the steady rise in the employment rate of workers in the 55-64 years age group. Now the question arises as to whether we should do away with the retirement age.

The United States is the only country I know that has specifically legislated to disallow discrimination in employment on account of age. While this sends a signal that people should be allowed to work for as long as they want, the reality is that people do leave the workforce. Some retire because they feel they have enough to retire on. Others found themselves involuntarily unemployed because their employers terminated their services on legally acceptable grounds. Some years ago, I asked US unionists whether there was age discrimination in their country as their legislation specifically forbade it. I was given an emphatic "Yes". Are more older Americans employed than Singaporeans? The employment rate in the 54-65 years age group was 61% in the US in 2009; higher than the 57% in Singapore. But this is due to the relatively lower female employment rate in Singapore. The male employment rate for the same age group was 74% in Singapore, much higher than the 65% in the US. The overall employment rate of those age 65 and above was 16% in Singapore, comparable to the 16% in the US. This shows that our approach works well, even though it is different from the US. Experience tells us that we cannot merely mandate or legislate labour issues without making sure the ground is ready. Therefore, just doing away with the retirement age will not bring about more employment opportunities and higher employment rates for older workers. We have therefore decided to adopt a practical step-by-step approach to move beyond the current minimum statutory retirement age. It is not enough to send a signal. We must make it happen through a higher employment rate. The work started years ago. We first moved away from the seniority-based wage system. We also developed a flexible wage

system. These measures not only make businesses competitive, they also make older workers more competitive and attractive to employers in good times and in bad. We are now working on the next significant step, which is re-employment beyond the current retirement age of 62.

Re-employment provides greater flexibility for both businesses and workers than a straightforward mandated rise in the retirement age. Employers have real concerns about cost burdens. More so, if they do not have the flexibility to re-deploy older workers to jobs more suitable for them as they age, or adjust salaries and benefits in line with individual workers' productivity and contributions. Older workers need to be flexible in their attitudes, and be willing and able to take on modified jobs and go for skills upgrading or retraining as necessary. When the law comes into effect in 2012, employers will be obligated to re-employ their older employees from the existing retirement age of 62-65, and later, to 67 years and beyond. Both employer and employees will be able to work out a re-employment offer that is agreeable to both parties, taking into account the companies' requirements and needs of older workers. Unions will play their part to ensure that the agreements reached are fair to older workers, even as wages and benefits are adjusted to reflect the value of the jobs and the contributions of their employees. In this way, companies remain competitive and employees can continue to earn a regular income. The re-employment obligation is only up to the age of 65 but employers are encouraged to continue to retain their older employees beyond 65 as long as the employees can continue to contribute to their organisations. To see re-employment materialise, we must address what Mr Laurence Wee has raised, namely, measures to change mindsets and promote continuing education among different cohorts of older people. These are crucial points. We are putting in place several measures

to reinforce positive attitudes towards re-employment. First, the Tripartite Committee on Employability of Older Workers has launched a re-employment ready campaign to reach out to employers and employees, in the lead-up to re-employment legislation. The tripartite partners have also implemented the tripartite guidelines on re-employment of older employees. There is also the ADVANTAGE! Scheme to incentivise companies to modify job specifications and operations or redesign work for older employees. Workers must do their part to prepare for re-employment including continuing education. Last month, we introduced the Workfare Training Support (WTS) for older low-wage workers. They must keep their skills relevant to maintain their performance so as to benefit from re-employment.

Apart from employers and older workers, we are beginning to look at co-workers and supervisors. The Tripartite Alliance for Fair Employment Practices (TAFEP) released the "Harnessing the Potential of Singapore's Multi-generation Workforce" report this year. The good news is that all generations in the workforce hold a common belief that a diverse workforce comprising different generations has a positive effect on the overall performance of the company. However, the report pointed to the different communication styles needed to gel a multi-generational workforce. We need to take steps to address this. All I have said so far are laudable and necessary measures at the workplace to make employment of seniors a reality. But the mindset change needs to extend beyond the employment sphere and also goes beyond what the Government alone can do. In the 2005 National Survey on senior citizens conducted by the Ministry of Community Development, Youth and Sports (MCYS), the single largest problem faced by older workers was health and strength related issues. Sixteen percent did not feel as strong as before, while another 15% cited feeling tired easily. This is why we have launched the

wellness programme at the constituency level to encourage older persons to have a health and wellness orientation, go for medical check-ups and exercise regularly.

We have also promoted three major exercise platforms for older persons namely, brisk walking,taichi andqigong through the Seniors for Physical Activity programme. All these exercises have been proven to have health and strength benefits for older persons. We can only provide the platforms. We now need older people themselves to respond. As a society, we also need to change our mindsets. Many well-meaning grown-up children want to see their parents put up their feet and enjoy a happy retirement. However, for many of us, work gives meaning to our lives and a sense of self-esteem and worth. A Japanese study found that the elderly attained greater sense of well-being and social engagement through employment. A 2008 Council for the Third Age survey found that respondents aged 55 years and above cited the median retirement age of 65 years old as ideal – this is for Singaporeans. In the same survey, half the respondents, 51%, indicated they wanted to continue to work either part-time or full-time beyond 62 years old. Therefore, more and more older people themselves want to work and we should support them.

Coast): Thank you, Minister, for the comprehensive response. Sir, newspapers reported that the Head of the Civil Service and Permanent Secretary of the Ministry of Foreign Affairs (MFA) will be retiring at the age of 56. In many countries, many careers are launched at this age or even later. Benjamin Franklin at 70 helped to draft the Declaration of Independence; Albert Einstein at the age of 59 advanced major achievements in the General Theory of Relativity. Sir, how do we ensure that

these capable and knowledgeable people stay past this artificial expiry date to contribute to the nation especially in the private sector? How can the Government facilitate such germination in the private sector?

The Public Service leadership programme is aimed at enabling younger people to take up senior positions. When the senior civil servants retire, they can be deployed to do other things, as many of them have done. We continue to tap on their knowledge and experience in performing other duties.

10. Dr Ong Seh Hong asked the Deputy Prime Minister and Minister for Home Affairs (a) what are the facts and circumstances of the arrest and handcuffing of the Lianhe Wanbao chief photographer over taking of photographs of the flood in Bukit Timah on 16th July 2010; (b) what are the guidelines for police officers when dealing with journalists and the general public taking photographs at public places where there are floods or other accidents; and (c) what are the guidelines for handcuffing them.

Mr Speaker, Sir, the case in question happened in the morning of 17th July 2010, along Bukit Timah Road near Maplewood Condominium. It was raining heavily and the rain had caused a road divider, which had been excavated, to be flooded. Usually, the construction work would have been surrounded by safety barriers but unfortunately in this case the safety barriers had been washed away due to the floods. Motorists driving along the road were not able to see the depression. As a result, three cars landed in the depression.

Under these difficult conditions, the Lianhe Wanbao photographer had stopped his car illegally along the road at about 7.40 am to take the photographs, causing an obstruction to other motorists. There was clear danger not only to the photographer but to other motorists as well. A police officer at the scene therefore asked him to move away, which he did after he was told a second time. However, the photographer returned shortly after and stood on the covered manhole within the flooded central divider to take photographs. This was dangerous as there was moving traffic on both sides of the divider. The police officer therefore advised him to move to the pavement where it was safer for him to take photographs.

According to the police officer, the photographer moved off only after repeated advice. The photographer, however, recalled only being told to move off once before he complied. Be that as it may, when he moved off from the central divider, he did not go onto the pavement but instead walked along the road next to the flooded divider and continued to take photographs. The police officer advised him against doing so again. He did not heed the advice. Up to this point, he did not have his media pass on nor did he identify himself as a reporter. The officer decided he had to intervene directly. The officer went up to him and held his arm with a view to stop him from continuing to walk along the central divider and to move him to the pavement. However, the photographer struggled free and the officer handcuffed him on one hand to restrain him and take him into custody. Upon reaching the pavement, the photographer had calmed down and produced his media pass for verification and identified himself as a photographer from the media. He was uncuffed after his identity was verified.

The Member asked about guidelines for police officers when dealing with journalists and the general public taking photographs at public places where there are floods or other accidents. The Police generally do not interfere with the media or members of the public taking photographs of floods so long as it does not obstruct Police operations and so long as this does not pose a danger to others or themselves. In this particular case, the issue was not about the photographer taking pictures of the flood but about public safety. The Police had taken action as, in its judgement, public safety was involved.

The Member also asked about the guidelines for the use of handcuffs. Police officers are trained to assess the situation when exercising discretion in using handcuffs. Depending on the officer’s risk assessment, handcuffs may be used if a suspect is violent or if there is flight risk, or if a serious offence had been committed. In this case, although it was not intended to be an arrest, the police officer assessed that it was necessary to use handcuffs to restrain the photographer and stop him from continuing an action which the officer felt posed a danger to others and the photographer himself. The moment the need for such restraint had passed when the photographer had ceased such an action and had been moved to the safety of the pavement, the officer rightly removed the handcuffs and decided not to arrest the photographer for obstructing a police officer in the course of performing his duty after it became clear that the photographer was from the media and was trying to do his job.

Both the Police and the media have important roles to play. While the Police respect and understand the role the media has to play, the Police have a duty to ensure public safety and security. We cannot allow our officers on the ground when performing their duty to ensure

public safety and security to have their directions ignored. Anyone who disagrees with or feels aggrieved by any such directions by a public servant doing his job can make complaint later and it will be thoroughly looked into. But he must first comply with such directions or be liable to face arrest and possible prosecution.

Looking at this incident with the benefit of hindsight, I think both parties could have handled the situation better. Nevertheless, I am glad to know that the Police and the media have discussed the incident dispassionately and have amicably resolved it.

Sir, I thank the Minister for giving this detailed account of what happened because there were discrepancies in the newspaper reports in the accounts by Mr Goh as well as the Police. However, I would like to ask the Minister how does the Police ascertain whether personal safety is being compromised. In this incident, the photographer is someone with experience. Although he did not display his journalist pass, he probably would have taken all the necessary steps to protect himself from falling into the water. How was this judgement made on the ground? I think people are worried that they may be stopped unnecessarily by the Police.

Secondly, I would like to find out what are the steps or measures that have been taken to prevent such incidents from happening again to prevent misunderstanding and unhappiness in the public as well as the media.

Sir, if I could take the second question first. As regards misunderstanding and unhappiness, as the Member would appreciate, it requires both parties to behave appropriately. There will be misunderstanding and unhappiness if a member of the public does not listen to

sensible directions given to him or her by the police officer, as in this case. The primary function and duty of the police officer is to ensure public safety, security, smooth flow of traffic, all of which they were trying to do. But as I have acknowledged, I think both parties could have handled it better.

As regards the first question and whether there would also be actions taken to prevent such future incidents, the Police has clear guidelines on when restraint can be imposed and the guidelines are known throughout the world, more or less in civilised Police systems: you stop a person and you restrain him if there is a flight risk or a possibility of danger to either himself or the other members of the public, or if a serious offence has been committed. In this case, the Member would appreciate from the facts that I have set out, there was a flooding, there were cars which were being blocked and there was a manhole that was covered with water. Unless the photographer has prescience or omniscience, it was entirely possible that he could have fallen into it. And, he was walking along a divider with cars on both sides, not the best of situations. The police officer was perfectly correct to have advised him to go onto the pavement, not to stop him from photographing. I think the issue has been mischaracterised. There was no question of stopping him from taking photographs. First, direction was given to get him to move his car and not to block others, which he should not have done in the first place. Second, to get him on to the pavement and protect himself – I do not think that was wrong.

As the hon. Minister has highlighted, there has been a misrepresentation of sorts. This incident has caused a fair bit of concern on the ground, and I appreciate the Minister's explanation which comes across fairly

reasonable. My question is why was this explanation not provided until now?

Sir, the Police came out with their statement, setting out the facts immediately. Perhaps it did not receive the kind of prominence it should have, and I cannot answer the Member's question beyond that. [Laughter.]

11. Ms Sylvia Lim asked the Deputy Prime Minister and Minister for Home Affairs whether he will provide an update on the Home Team's manpower situation and workload and how the Ministry has attended to the findings of the Human Factors Study commenced in 2008.

Sir, Parliament has been informed that in July 2008, the Ministry of Home Affairs formed a team to study the human factor situation within the Home Team and the findings were reported to this House in 2008. Since then, we have implemented a number of measures to address the findings, in particular, we have placed emphasis on ensuring that the quantity and quality of manpower resources are sufficient to handle the rising workload of the Home Team and optimising the deployment of our limited resources.

We made a concerted effort over the past two years to increase manpower resources in the Home Team. The Singapore Police Force (SPF) and the Immigration and Checkpoints Authority (ICA), for instance, recruited some 1,150 and 830 officers respectively in 2009. This compares with 440 and 360 officers recruited respectively by the two departments in 2007. Overall, the Home Team’s operational force has increased

from 15,000 officers in end 2007 to 17,000 officers in end 2009, a 13% increase.

The additional manpower has been deployed in areas which were found to be most taxed in the Human Factor Study. These include frontline policing in the Neighbourhood Police Centres, to which 410 more officers have been progressively deployed since 2008 with an additional 180 to be deployed by the end of this year, and the Checkpoints, to which 820 more officers have been deployed, with 200 more to be deployed by the end of this year.

As a result, staff well-being indicators have improved. For example, as compared to 2008, the percentage of police officers who forfeited vacation leave in 2009 dropped from 41% to 23% for senior officers, and from 19% to 11% for junior officers. The call-back rate for frontline shift police officers, which is the percentage of officers who are recalled back to duty on their off-days more than twice a month, declined from 3.7% in the first half of 2009 to 1.6% in the second half. In ICA, the average amount of overtime performed by each officer declined by about 20% since 2008, even as contraband detection improved by about 40%. ICA has also been able to re-open the old Woodlands Checkpoint to better cope with the increase in travellers, conveyances and goods over the years.

However, recruitment is only one side of the coin. Retention is the other. In recognition of the need to attract and retain better calibre officers, particularly those with Diploma qualifications, we announced in May this year enhancements to the career path for Diploma holders in the uniformed services in the Home Team. We have also developed a Home Team Specialist Scheme for those with special skills and training and who prefer to grow within the Home Team as specialists.

The majority of Diploma holders who join us can expect to progress to senior officer ranks by the time they are due to retire. These Diploma holders will increasingly be an important group in our frontline force. With the experience gained from exposure on the ground and rising through the ranks, they will form a critical core in raising the competency and professionalism of our frontline operational force.

As a result, our resignation rates have fallen. Amongst senior officers, resignation rates have declined from 3.2% in 2008 to 1.7% in 2009. The resignation rates for junior officers have declined from 3.5% in 2008 to 2.5% in 2009. Our manning levels have gone up and the workload situation has improved. Whether we can sustain this trend or even see pressures reversing it in the light of an improving economy remains to be seen.

Notwithstanding the improving situation, we have to be realistic that fatigue will always be an issue faced by our officers. Functions performed by Home Team officers are 24/7 and may require officers to respond urgently in the event of contingencies or operational needs. While we will ensure that our officers get enough rest by rostering them and scheduling off-days, the exigencies of service are such that our officers may nonetheless be required from time to time to put in extra hours or to give up their leave days. If left unchecked, fatigue can lead to a degradation of the performance of our officers. Thus, apart from shoring up our manpower resources, fatigue management measures have been another part of our response to the Human Factor Study. First, we have introduced electronic focus groups to collate feedback and learning points from officers on the

ground. Unlike traditional face-to-face focus groups, electronic focus groups are conducted online to provide officers with anonymity and a safe environment to provide their honest and frank feedback of events. Electronic focus groups were used in the Asia-Pacific Economic Cooperation (APEC) last year to conduct pre-APEC ground readiness sensing and post-APEC operations reviews. This year, they will be used for the Youth Olympic Games (YOG) operations, and will continue to be a regular part of fatigue management strategy for large-scale deployments in the future.

Second, we have also rolled out a series of programmes to educate Home Team officers on individual and organisational fatigue management since February last year. Targeted at officers holding leadership and supervisory positions, these programmes run by the Home Team Academy’s Behavioural Studies Unit (BSU) covered various topics ranging from individual signs and effects of fatigue to organisational strategies on fatigue management. Selected officers were also equipped with the knowledge and resources to conduct in-house fatigue management training for their respective departments. Additionally, to maintain Home Team officers’ awareness on operational fatigue, the BSU also designed and disseminated informational posters and cue cards and calendars containing tips on fatigue management across the Home Team.

I have given a snapshot of what we have done thus far to address the gaps identified in 2008. However, demands on the Home Team will continue to increase over time given the growth in the numbers of people and activities in our country, and the growing complexity of the security and law and order environment. Resources, on the other hand, are finite. The challenge is thus not just to ensure that the Home Team is adequately staffed, but to also inculcate

an understanding within our society – the larger public as well as other stakeholders – not only on the limitations of resources used to maintain security, law and order, but also the fact that we can never entirely eliminate human error. No country can guarantee its citizens that it can prevent an attack. Indeed this is precisely why countries know they must cooperate to share intelligence against the threat of terrorism. This is also why the strategy must always be that while we should do whatever is practicable to prevent an attack, we must at the same time assume that it can happen. We must, therefore, prepare ourselves to deal with its consequences. This is why we have invested so much energy in contingency and consequence management, including shoring up the resilience of our people through the Community Engagement Programmes.

In this connection, we have benefited from strong community support for our Home Team agencies, without which the high level of safety and security we enjoy today would not have been possible or sustainable as our manpower-to-population ratios for the Home Team are low compared to similar jurisdictions abroad.

On our part, we will continue to take care of the well-being of our officers, as only with each and every Home Team officer putting in his best will we be able to make Singapore a safe and secure best home for Singaporeans.

Sir, three supplementary questions for the Minister. Firstly, could the Minister tell us in the Human Factors Study that was conducted, whether there was actually an optimum number of officers recommended and, despite the manpower increase, have we actually reached that number?

Secondly, it was reported in the Straits Times today about the Public Transport Security Command (TransCom) that the unit comprised 400 officers,

mainly full-time NSmen. I am wondering whether that indicates that there is a shortage of full-time officers as compared to NSmen to go into the unit and how do we ensure that the NSmen are properly supervised when they deal with the public on public transport.

Lastly, Sir, as pointed out, if the workload continues to increase, all these measures will still not be enough. Does the Government actually moderate the number of major events that are held in Singapore every year to ensure that we can actually cope with the demands?

Sir, the aim of the study was to identify what would be the kind of stresses and situations that the Home Team officers can bear, what sort of, say, cancellation of leave is acceptable, how many hours continuously should they work and not beyond that. Those were the aims of the study and to also understand what were the stresses and fatigue that they were facing and how these can be dealt with. As to what would be the optimal number, there is an interplay not just of the issues I have identified but also of externalities, including population ratios, issues like the number of incidents you can expect, depending on the type and nature of the population. So, that is a combination which the Police Force as well as Home Affairs Ministry would continuously be looking at. We were under-staffed – there is no doubt about that – and that is why I gave the Member the figures as to how we are increasing staffing, and we will continue to do so. But we have to be mindful that you can put in a lot more resources but really the way to go is to make sure that the Home Team's core focus is not diluted, which is safety and security, and that is a two-way process not just for us to have focus but for the public to understand it as well. For example, the Police Force should not really be involved in snake catching nor should it be involved in settling disputes

between neighbours. We refer more and more of these disputes to mediation. You do not need highly-trained police officers to deal with these situations. But if the public expects that, then we will need infinite resources, which is not good for society and not good for us. The focus has to be moving into technology. Of course, you are going to need the frontline officers. We will need more officers - we are working towards it – but, again, the type and quality of officers needed for the Home Team have to be of a certain cut. So, we will continue to employ and we have not reached the optimal number, but that is a dynamic process. Certainly, we are working very hard at the specific issues that were identified by the Human Factor Study. As indicators and proxies, I give the Members issues like how much leave was cancelled, how many times they have been called back, what are their responses and feedback, and so on.

The second question is about TransCom. The Member has read that it comprised mainly of NS officers. She asked: does that indicate that we do not have enough officers and do the NS officers have the adequate training to deal with members of the public? TransCom has been one of the main recipients of the officers who have been recently recruited. But we only deploy NS officers if we believe that they have the adequate training and they can deal with members of the public. NS officers are deployed not just in TransCom but in many other operational areas for years and years and years. So far, as Members know, by and large, there have been no issues. But we will make sure that our NS officers are given the best possible training. In any kind of organisational human contact, you must expect some issues to arise and it is not always the fault with one party or the other. In a dynamic interaction, it could be due to the situation and circumstance.

We have to deal with it by training and also with the public becoming more understanding of what is happening on the ground.

As regards the third question, if I got it right, the Member was suggesting that, perhaps, there are many mega events which are imposing increasing strains on the Police Force and should the Government be doing anything to moderate them. I am not quite sure if the Member is suggesting that perhaps we should reduce the number of mega events. So, should we not have Youth Olympic Games or is the suggestion that we should not have APEC in Singapore? We have to do an assessment. Does this benefit Singapore? We showcase Singapore, and we make it an international and a global city. Economically, it is very important; politically, it is very important. And it is an important event to put Singapore across on the global stage. So the approach has to be that all of Singapore should come together to promote and make sure that these events are a success. Not quite sure we take the approach that the Home Team's resources are limited and therefore we should not go into these events.

Sir, one clarification and one supplementary question. The clarification is regarding the deployment of NSF in TransCom. My question actually was relating to the report that it is made up mostly of full-time NSmen. Of course, I am fully aware that NSmen are present in other units but usually they will work together with the regular officers. So, that is the clarification.

Sir, regarding the issue of major events, I understand that for the YOG, for example, right now, there is a force-wide leave freeze on officers during this period. My question is: how many times in a year would be reasonable for us to have that kind of deployment order to be fair to the Home Team? I would like to know

whether the Minister agrees that there would be a limit to how far we can have such force-wide leave freezes every year.

Sir, I think the main thrust or bulk of my entire answer was focused on the fact that we cannot expect Home Team officers to have leave cancellations and leave freezes at the same level that we had in previous years. For example, I pointed out that from a cancellation of 41% in 2007, it had come down significantly in 2009 to about 20%. So, that was the whole purpose of the Human Factor Study, ie, to identify what is the optimal level at which people can work, what is the maximum stress that we can impose on them, and what kind of sacrifices we can expect. I entirely accept the Member's point. But I do not think, therefore, one can draw the conclusion that since there is a force-wide leave freeze for YOG, do these events impose major strains? Of course, they impose major strains, but the way to deal with it is to see what kind of resources we need and to make sure the officers can recover from this particular leave freeze. That is the approach we take. For that, we need adequate manpower resources. We also need to focus more on our core activities, as I pointed out. The expectations the public have on the Force have also got to be modified to better understand what the Police Force's core objectives are. And for us, it is to use more technology.

12. Ms Sylvia Lim asked the Minister for Transport (a) whether he will elaborate on the Government's announcement that some longer bus routes will be discontinued; (b) what is the impact of such discontinuance on the bottom lines and financial positions of public transport operators; and (c) how the Government will address the adverse impact of such discontinuance on elderly and disabled commuters.

Mr Speaker, Sir, I would like to assure Members that the Land Transport Authority (LTA) has no intentions to undertake a blanket exercise to phase out all long bus routes. Trunk bus routes will continue to play an essential role in our public transport system as they provide comprehensive connections to all parts of Singapore, particularly areas that the MRT does not reach.

The issue of possible splitting of some of the long bus routes arose through LTA’s bus route planning consultations with the different constituencies. LTA had during these consultations received feedback on the poor reliability of certain bus services that ply long routes. Because of their route length, such services are understandably more susceptible to delays caused by poor traffic conditions, which affect their ability to keep to their schedules and arrival times. LTA is considering various options to address this feedback. The option of splitting long bus routes will be studied together with other proposals and will only be considered when it is sensible to do so.

In studying any changes to bus routes, LTA will have to consider many factors carefully, and weigh the trade-offs. LTA looks into factors such as available travel alternatives, ease of transfer, overall journey times and fare implications as well as the special needs of particular communities of users including the elderly and the disabled.

As for the impact on public transport operators, any changes should bring about operational improvements and result in better use of resources. Any efficiency gains from bus route planning in general, including any splitting of long bus routes, will be ploughed back into the system to benefit commuters. For example, if

improvements in operational efficiency mean that fewer buses are required to run a particular route, these resources would be transferred to another route where they will be used to improve the service level.

Mr Speaker, Sir, in deciding on any route changes, be it to meet community requests or for better service reliability, the guiding principle for LTA is to make these changes only if the overall benefits are significant and they address the concerns of the communities.

Sir, three supplementary questions for the Minister. First, I would like to ask the Minister to confirm whether the reports from the press on 29th March were correct when she was quoted as saying that the Government was moving away from the old system of providing long bus routes and studying which ones could be split into two. Was that accurate?

Secondly, could the Minister confirm her answer earlier that the cutting of the longer bus routes is likely to result in profitable results for the public transport operators?

And, thirdly, I would like the Minister to elaborate on the review that is going to be done in terms of determining which bus routes are unreliable. What would be the criteria used, what kind of timings are we talking about? And does she not agree that even though a bus route arrival time may be somewhat unpredictable, it still serves the needs of certain groups of the community such as the elderly and the disabled?

Mr Speaker, Sir, let me set the context in which my comments were made and reported on 29th March. This was in the context of an update on the consultations that we had

undertaken. The comment was made because there were many specific pieces of feedback about poor reliability on certain long bus routes. The second context was that with the intensification of the rail network, more and more parts of Singapore will be more accessible and, therefore, the need to introduce new cross-country buses, as I had called them then, would be greatly reduced, and this is especially so for those along the MRT corridors. So, that was the context in which I made those comments.

As for the splitting of the long bus routes, there will be many factors to keep in mind, and the operational improvements will just be one of the considerations. As I said, commuter benefits would also have to rank high on the list of trade-offs to be considered.

Let me also explain some of the considerations. There are really no strict criteria on, for example, what defines a long bus route. From the perspective of LTA, a bus route would be considered unduly long if the demand profile clearly shows that the majority of the passengers do not travel on that particular route for a substantial distance. So, if they do not travel on it for a substantial distance, then that particular route will be considered unduly long. And the routes that have been singled out by the constituencies are typically routes which pass through the city centre near the mid-point.

Some of the bus routes that have been highlighted from the ground would range from a one-way route length of 20 km to 37 km. So it is really quite a range. But it does not mean that all routes of these distances will, therefore, be automatically considered unduly long routes. Let me give Members an example. A 35-km bus route that connects commuters from Woodlands to the airport, for example, via the expressway, will not be considered unduly long

because it would have served the majority of the people for the bulk of the journey.

The review would take into consideration all the different aspects, as I have mentioned in my reply. In particular for the elderly and the disabled, if there is a particular bus route that bears that potential based on the ground feedback, LTA would first identify the elderly passengers from the ticketing data to find out the travel patterns and to see whether they have alternatives. Likewise, for the disabled, LTA can contact their public transport operators to identify any regular passengers who commute in wheelchairs and see whether there are alternatives. Before LTA decides to split the bus route, LTA will factor in the travel patterns of these groups of passengers and see whether there can be mitigating measures for them.

13. Mdm Halimah Yacob asked the Minister for Trade and Industry whether he can give an assessment of the impact of the European sovereign debt crisis on Singapore's economy, including our employment situation.

14. Mrs Mildred Tan asked the Minister for Trade and Industry (a) what is his Ministry's assessment of the financial crisis in Greece and whether it has shown signs of spreading to other EU countries; (b) what will be the impact on the Singapore economy if it is not contained; and (c) what plans are needed to be put in place to ride out any volatility.

Mr Speaker, Sir, may I have your permission to take Question Nos. 13 and 14 together?

Yes, please.

Sir, the sovereign debt crisis in Europe was felt most acutely

in Greece, but, in fact, reflected broader concerns over the sustainability of sovereign debt in a few other southern European economies as well. To date, we have not observed signs of the crisis spreading to the larger economies in Europe. Forceful policy interventions by the European Union (EU) and the International Monetary Fund (IMF) as well as the results of the recent bank stress tests have reduced overall financial market volatility. While the situation remains fragile, investor risk sentiments appear focused on the southern European economies rather than the EU as a whole.

Given Singapore’s limited trade and financial exposures to the southern European economies at the centre of the crisis, the developments in these economies have not materially affected the Singapore economy so far. In particular, our exports to the EU as a whole continued to register strong growth in recent months.

As announced by my Ministry last week, preliminary estimates indicate that Singapore’s GDP grew by 19% on a year-on-year basis for the second quarter of this year, following a similarly strong growth of 17% in the first quarter. In tandem with the economic recovery, the labour market has also improved strongly, with the seasonally adjusted overall unemployment rate declining from a recent peak of 3.3% in September 2009 to 2.3% in June 2010.

In view of the exceptionally strong economic growth in the first half of this year, my Ministry now expects the Singapore economy to grow by between 13% and 15% for the whole of 2010.

However, the expectation of strong growth for the year does not imply that the macroeconomic risks from Europe have fully subsided. Financial instability due to the sovereign debt crisis remains a significant downside risk that could

dampen growth in our financial sector, with negative spillovers to other sectors of our economy. Moreover, the implementation of fiscal austerity measures in some European economies, combined with the weakening of the Euro, could further weaken EU domestic demand. As announced by the IMF last month, the Euro area as a whole is projected to see a very mild growth of only 1% in 2010. These developments could affect Singapore’s export performance, given that the EU as a whole accounts for 12% of our domestic exports.

Given the small size of our economy and its outward orientation, Singapore will always remain susceptible to volatility in the external economic environment. It is not possible for us to fully insulate ourselves from the impact of any economic or financial turmoil.

Nevertheless, we can mitigate the negative impacts of economic volatility. We did so during the recent global financial crisis, because of our sound financial management and fiscal prudence, which helped to keep our financial system stable, maintain investor confidence in our economy, and provided us with the resources and the confidence to introduce various measures to ride out such difficult times.

The Government will, therefore, continue to monitor the developments in Europe and to assess the risks of contagion, and we stand ready to respond when appropriate.

Sir, supplementary question for the Minister. The IMF had warned the Asian countries of possible shocks from the Euro zone crisis and the excessive capital flows into the region. Could the Minister comment on this and also whether there is a danger of a double dip recession? I note the

Minister made some general comments of a positive outlook but also made very qualified statements towards the end, and we also know that the unemployment situation is still quite critical in both Europe and in the US. So, is there a danger of a double dip recession affecting us?

I think, basically, we all have to recognise that the second half of this year will see lower global growth but the situation is different in different regions. The G3 economies, of course, will see much lower growth whereas for much of the emerging economies, the risk, in fact, lies in higher liquidity and the risk of an asset bubble. So as highlighted by IMF, for the emerging economies, higher liquidity, inflationary pressures and asset bubbles remain something that we have to worry about. The consensus so far among the economists is that a double dip recession is not a significant risk for the moment. The growth prospects have turned downwards but we do not expect to see a double dip global recession.

Mr Speaker, can I ask the Minister for an update on the EU-Singapore Free Trade Agreement (FTA) discussions? Have these been impacted by the situation in EU?

Our FTA negotiations with the EU are progressing well. We have had two formal sessions and the third session is in September, and that is on track.

15. Miss Penny Low asked the Minister for Trade and Industry (a) if he will elaborate on the objective and target number of visitors to the Singapore Pavilion at the Shanghai World Expo and whether it has been achieved; and (b)

what is the investment amount and how it is funded.

16. Mr Teo Siong Seng asked the Minister for Trade and Industry (a) what has been the general feedback from visitors to the Singapore Pavilion at the Shanghai World Expo; and (b) what actions have been or will be taken to improve the Singapore Pavilion.

Mr Speaker, Sir, can I take Question Nos. 15 and 16 together?

You have five minutes left.

Thank you, Sir. Participating in the Shanghai World Expo allows Singapore to share on an international platform the sights, sounds and experiences of Singapore. In line with the World Expo theme "Better City, Better Life", the Singapore pavilion also provides a platform to share Singapore’s achievements in the area of sustainable urban development. As Expo 2010 is held in China, the content of the pavilion was also geared towards attracting Chinese visitors, in addition to international tourists.

The total cost of the project, including the design and construction of the 3,000-square metre pavilion as well as its operation, is about S$30 million. This amount is comparable to what other countries have spent on similar-sized pavilions. The Government provided the vast majority of the cost, with a contribution of about S$2.3 million coming from corporate sponsorship by Singapore companies. For the 2005 Aichi World Expo, the total cost incurred by us was about S$13 million, for a pavilion that was about 40% of the size of the current pavilion of the Shanghai World Expo.

Since its opening on 1st May, the Singapore Pavilion has enjoyed strong

interest among the World Expo visitors, receiving an average of 15,000 to 20,000 visitors per day, with constant queues of visitors forming outside our pavilion. This represents about 4% of the 400,000 to 500,000 daily visitorship at the Expo where more than 260 pavilions are showcased. The larger pavilions such as the Japan and German Pavilions, which are twice the size of the Singapore Pavilion, receive between 20,000 and 25,000 visitors daily. The Singapore Tourism Board (STB) has polled visitors to obtain feedback of their experience in our pavilion. The feedback received has generally been positive. The pavilion has also been reasonably well-received by the Chinese audience, with close to 2,500 media reports commenting positively on the pavilion and its contents. The pavilion theme song, "Every Touching Moment", performed by local artistes comprising Stefanie Sun and JJ Lin among others, has also done well in popular music rankings in China.

At the same time, STB has received feedback from some members of the public on how the pavilion’s exhibits can be improved. Specifically, the feedback indicates that we should see more content showcasing Singapore’s achievements and, in particular, our multi-racial harmony.

STB has taken these suggestions on board and made improvements to the pavilion. These include the introduction of a video showcasing Singapore’s urban development to be screened in the pavilion theatre; the expansion of existing exhibits to showcase our pioneers, our ethnic costumes, festivals and national events; the re-design of various exhibits to improve visitor experience; as well as the re-calibration of the corporate messaging within the exhibition zones. In addition, STB has increased the number of guides by 50% to provide visitors with a better understanding of Singapore. The

pavilion will continue to host a series of short-term exhibitions to showcase different aspects of Singapore’s culture, history and industry.

These enhancements were in time for the Singapore Pavilion Day celebration on 7th August, where STB also took the opportunity to showcase Singapore through cultural dance performances and a music concert held at the Expo site.

It is encouraging that Singaporeans have displayed a strong sense of ownership over the pavilion, and are keen to share their ideas for improvements. STB welcomes such feedback and will continue to make improvements to the pavilion to showcase Singapore in an impactful and meaningful way.

Miss Low, you have one minute left.

Thank you, Minister, for your reply. I am heartened to know that the pavilion has been well received from the reports that he received. But the feedback that I got was a little bit more contrary to that. I had both grassroots leaders who had visited as well as international visitors and press who said that –

Miss Low, you only have one minute left.

Yes, Sir. They said that the pavilion was bare and it was more dry and statistical than something that really showcases Singapore to the best. So, I wonder if Minister has heard such comments and whether he thinks that we should have done a better job.

You have half a minute for your answer.

As I have indicated in my reply, we have received comments,

both positive as well as some which are more critical, and STB, of course, has taken these comments on board and tried to improve the exhibits in a more meaningful way.

3.00 pm

Order. End of Question time.

[Pursuant to Standing Order No. 22(3), Written Answers to Question Nos. 17, 21, 24-29, 32-33, 35-36, 38-40 and 42-45 on the Order Paper are reproduced in the Appendix*. Question Nos. 18-20, 22-23, 30-31, 34, 37 and 41 have been postponed to the next available sitting of Parliament. ]

*Cols. 965-998.

"to amend the Road Traffic Act (Chapter 276 of the 2004 Revised Edition) and to make related and consequential amendments to the Land Transport Authority of Singapore Act (Chapter 158A of the 1996 Revised Edition) and the Private Security Industry Act (Chapter 250A of the 2008 Revised Edition)",

presented by the Deputy Prime Minister and Minister for Home Affairs (Mr Wong Kan Seng); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to establish an enhanced framework for the regulation of real estate agents and their salespersons, to form a Council for Estate Agencies and to make consequential amendments to the Appraisers and House Agents Act (Chapter 16 of the 2000 Revised Edition) and certain other written laws",

presented by the Minister for National Development (Mr Mah Bow Tan); read the First

time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to establish the National Productivity Fund and to establish the Productivity Fund Administration Board for its proper administration",

presented by the Second Minister for Finance (Mrs Lim Hwee Hua); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Property Tax Act (Chapter 254 of the 2005 Revised Edition)",

recommendation of President signified; presented by Mrs Lim Hwee Hua; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to give effect to the Convention on the Civil Aspects of International Child Abduction and for matters connected therewith, and to make consequential amendments to the Legal Aid and Advice Act (Chapter 160 of the 1996 Revised Edition) and the Legal Profession Act (Chapter 161 of the 2009 Revised Edition)",

presented by the Minister for Community Development, Youth and Sports (Dr Vivian Balakrishnan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order for Second Reading read.

3.03 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill, when passed, will give effect to the International Convention Against the Taking of Hostages. This Convention is part of a corpus of 13 universal conventions and protocols against terrorism, developed under the auspices of the United Nations and its specialised agencies.

Sir, the underlying aim of the Convention is to ensure that perpetrators of hostage-taking are brought to justice. The Convention enables us to put in place the necessary mechanisms with which to secure the cooperation of other States Parties. There will then be a legal framework for international cooperation in the investigation, prosecution and extradiction of people who engage in acts of hostage-taking by establishing a system of universal jurisdiction to punish this crime. This is especially important, given that such crime are often transnational in nature and, consequently, effective prosecution and enforcement will require international efforts. No single country, government or agency can fight such crimes alone. Being a party to the Convention will provide Singapore with another effective means of dealing with the multi-faceted and ever-evolving terrorist threat, and facilitate international cooperation against terrorism.

Hostage-taking offences

I will now touch on the key provisions in this Bill.

The Convention requires states to introduce national legislation to criminalise hostage-taking offences. While section 364A of the Penal Code can largely be used for offences covered by the Convention, it does not sufficiently give effect to the Convention. In its current form, section 364A of the Penal Code does not expressly cover offences against governments of another state and international inter-governmental organisations.

The wording of the section also suggests that it applies only when there is an intention on the part of the kidnapper to move the victim from one place to another, ie, the mere detention of a person in-situ would not trigger it. This is a technical anomaly which this Bill seeks to address. In addition, the Penal Code does not provide for extra-territorial jurisdiction over hostage-taking offences. Hence, section 364A of the Penal Code will be repealed with the enactment of the Hostage-Taking Act.

Clause 3 of the Bill makes it an offence to seize or detain any person and to threaten to kill, injure or continue to detain him, unless a third party does or abstain from doing any act. The third party may be the Singapore Government, the government of another State, an international inter-governmental organisation, or any other person.

Upon conviction, a person found guilty of a hostage-taking offence against the Government, the government of another State or an international inter-governmental organisation will be liable to be sentenced to death or life imprisonment. A person found guilty of a hostage-taking offence against any other person will be liable upon conviction to be sentenced to imprisonment for a term of up to 15 years. In both cases of punishment with imprisonment, the person shall also be liable to be fined or caning. The severity of the penalty imposed reflects the gravity of these offences and is intended to serve as a deterrent.

Extraterritoriality

Clause 4 of the Bill provides for extraterritorial jurisdiction over hostage-taking offences. Any person who commits an act outside Singapore, which if committed in Singapore would constitute

a hostage-taking offence, will be deemed to have committed the act here. If taken into custody in Singapore, the person will be charged, tried and punished accordingly.

Withholding information

In relation to a hostage-taking offence, early intervention is critical. Clause 5 of the Bill requires any person who has information that can prevent the commission of a hostage-taking offence, or which is useful to secure the apprehension, prosecution or conviction of a perpetrator of a hostage-taking offence, to come forward and provide information to the authorities.

While it is not an obligation under the Convention for Singapore to criminalise the act of withholding information on hostage-taking, anyone who possesses such information should logically disclose it, given the possible grave consequences of the offence, if committed. We included the same provision when we enacted the Terrorism (Suppression of Financing) Act in 2003, and the Terrorism (Suppression of Bombings) Act in 2007. Hence, the insertion of this provision in the Hostage-Taking Bill is precedented and is a way to deal effectively with hostage-taking offences.

There are adequate safeguards for a person who provides the information in good faith. He will be protected against any civil or criminal proceedings. Conversely, failure to disclose such information will render a person liable to a fine not exceeding $50,000 or to imprisonment for a term not exceeding five years or both.

Powers to freeze bank account, to order inspection of customer information, and to obtain information

Clauses 6, 7 and 8 of the Bill provide the Public Prosecutor with the powers to make orders to prevent the payment of

ransom money and to investigate or prosecute offences under the Bill. Specifically, clause 6 empowers the Public Prosecutor to order the freezing of a bank account, if he is satisfied that money for paying a ransom is likely to be paid out of it. The Government does not encourage the payment of ransom money to hostage-takers. Ransom payment does not guarantee the safety of hostages and may even have an adverse effect of encouraging hostage-taking activities. To deter potential hostage-takers, the payment of ransom money is made difficult so that there will be no certainty of gain for the hostage-takers. Failure of a bank to comply with an order under this clause will render it liable to a fine of up to $20,000.

Clause 7 empowers the Public Prosecutor to authorise a police officer to inspect any book, account or other document kept by a bank if he considers that any evidence of the commission of an offence under the Bill is likely to be found in the document. Under clause 8 of the Bill, the Public Prosecutor is empowered to obtain information for the purpose of any investigation or proceedings for an offence under the Bill. These provisions have been included to facilitate investigations into the offences under this Bill. A failure to comply with the Public Prosecutor's orders in these aspects, or providing false information in purported compliance with an order to provide information, will render the person liable to a fine not exceeding $20,000 or to an imprisonment to a term not exceeding two years or to both.

Extradition and mutual legal assistance

Sir, the Convention requires Singapore to make hostage-taking offences extraditable. Clause 14 of the Bill provides for hostage-taking offences to be deemed as included in the list of extraditable offences under the First Schedule to the

Extradition Act. This is to facilitate any extradition request made by the countries who are parties to the Convention.

Where there is no extradition treaty in force between Singapore and a Convention country, or if the existing treaty does not provide for the extradition of persons accused or convicted of hostage-taking offences, clause 14 provides that the Minister for Law can issue a notification in the Gazette under section 4 of the Extradition Act, to apply the Act as if there was an extradition treaty between them.

To facilitate mutual legal assistance between the State Parties to the Convention, clause 13 of the Bill provides that a foreign hostage-taking offence shall not be deemed to be an offence of a political nature. This also applies to an extradition request. This is to prevent anyone from blocking mutual legal assistance or extradition on the ground that the offences in question are politically motivated.

Sir, we are obliged to provide mutual legal assistance in relation to an investigation or criminal or extradition proceedings, if requested by a country which is party to the Convention. However, any request for such assistance will have to be consistent with the principles of sovereign equality, territorial integrity and non-intervention in our domestic affairs. Singapore will render assistance within what is allowable under our domestic legal framework.

Sir, the threat of terrorism is a real one. Singapore condemns all forms of terrorism and I ask for Members' affirmation of the needs for perpetrators of any such acts or violence to be brought to justice.

Acceding to Convention and implementing the new Hostage-Taking Act will strengthen existing counter-terrorism

cooperation between Singapore and like-minded countries. It ensures that the perpetrators of hostage-taking acts will have no safe haven and complements domestic legal instruments already in place to deal with terrorists. Through these international and domestic instruments, we reiterate our commitment to combat terrorism and our unequivocal condemnation of their methods of violence.

Sir, I beg to move.

Question proposed.

3.14 pm

Mr Speaker, Sir, thank you for allowing me to join this debate.

Hostage-taking is an event which most Singaporeans associate with foreigners in areas of conflict far, far away. However, this sense of security was shattered two years ago in November when one of our own, a young Singaporean lawyer, was held hostage and subsequently killed by militants in Mumbai. Ms Lo Hwei Yen was only 28 years old then.

Acts of terrorism can hit anyone, regardless of age, gender, religion, race and nationality. While hostage-takers may or may not be perpetuating acts of terrorism, the fact is that terrorists use hostage-taking as one of their tactics to achieve their goals. Both hostage-takers and terrorists seek to accomplish their objectives by threatening harm; and, in the case of hostage-takers, by continuing to detain, injure or kill someone unless a third party accedes to the requests of the hostage-takers.

All too often, innocent parties totally unrelated to the conflict are caught in the crossfire and pay the ultimate price with their lives.

Ms Lo's tragedy underscores the importance of international cooperation to combat the threat of hostage-taking. The Bill seeks to enable Singapore to ratify and give effect to the International Convention against the Taking of Hostages adopted by the General Assembly of the United Nations. State Parties are to establish jurisdiction over these offences and make them punishable under their domestic laws. They are also required to either extradite or submit for prosecution persons accused of committing, attempting to commit, or aiding in the commission of the offences, and to assist other State Parties in connection with criminal proceedings brought under the Convention.

Where the punishment provision in relation to a person found guilty of a hostage-taking offence is concerned, I am of the view that we should not have a cap of 15 years. Would the Deputy Prime Minister consider giving the judges more leeway and flexibility to decide on this depending on the severity of the crime? In future, could the Ministry of Home Affairs (MHA) consider raising the cap of 15 years imprisonment to a life sentence? The judges can then factor in the duration the victim was detained, physical and psychological injuries inflicted, and corresponding harm to related parties to decide how many years up to a maximum of life imprisonment the offender deserves.

Under clause 5, failure to disclose information which can prevent the commission of a hostage-taking offence, or which is useful in securing the arrest, prosecution or conviction of a person for hostage-taking offences, is punishable with a fine not exceeding S$50,000 or to imprisonment for a term not exceeding five years or to both. Would MHA consider raising these caps if it needs a larger deterrent effect on the behavior it seeks to prevent?

In conclusion, Mr Speaker, I would like to state my support for clause 13 of the Bill which provides that a foreign hostage-taking offence shall not be deemed to be an offence of a political nature. The same requirement also applies to an extradition request. This is a positive feature of the Bill as it prevents anyone from blocking extradition or mutual legal assistance on the basis that the offences are politically motivated. This will ensure sovereign equality, territorial integrity and non-intervention in our domestic affairs.

Sir, the Bill is timely, and I support it.

3.18 pm

Mr Speaker, Sir, I would like to speak in support of the Bill.

Hostage-taking is a particularly heinous crime. It is calculated at putting hostages in fear of their lives and, in so doing, to pressurise governments or other persons and to force them to do what hostage takers want.

In the context of hostage-taking where the demands are aimed at a government, it is frequently the aim of the hostage taker to put the relevant government in a no-win situation. The intention is that no matter what that government does, it will not be able to get it right. You are damned if you do and you are damned if you do not.

Rejecting their demands could mean the deaths of the hostages which in turn could have a public backlash on the government in question. It also inflicts terrible psychological scars on the hostages’ families, their friends and, often times, their fellow countrymen. They have to deal with the emotions of fear, guilt, pain, grief, loss and the sense that they and their loved ones will never be safe

again. These scars remain long after the incident is over. On the other hand, acceding to hostage-takers’ demands will inevitably undermine confidence in the government in question, as that government will have bowed to the demands of the hostage takers and will be seen to be weak. Once a government gives in to such demands, hostage-taking will be seen as a viable way to coerce governments into doing what hostage takers want and it will only encourage other hostage takers to do more of the same.

It is no less heinous when the demands are aimed at persons other than governments or international governmental organisations, because the intention is still the same, which is to use psychological fear and emotional blackmail to compel another person to bow to objectionable and unlawful demands.

Given its vicious nature and widespread impact, hostage-taking must be countered by the international community taking a united stand against it, and by means of international co-operation.

International co-operation would reduce the hostage takers’ ability to find sanctuary, and increase the prospects of them being brought to account for their actions.

This Bill is, therefore, timely as it ratifies and gives effect to the International Convention against the Taking of Hostages adopted by the General Assembly of the United Nations on 17th December 1979. The Bill makes hostage-taking an offence, and allows our Government to prosecute the offence of hostage-taking wherever the act may have occurred, whether in Singapore or elsewhere.

This is one of the rare instances where our law provides for extra-territorial

jurisdiction for a criminal offence, but given the nature of this offence, it is right to do so.

I, therefore, support the provisions of the Bill and the general approach adopted. However, there are three issues arising from this Bill on which I would like to seek the Deputy Prime Minister’s clarification.

The first is on clause 3. Clause 3 has two parts. The first part describes the act of hostage-taking; the second part of it deals with the target of the demand. The first part of clause 3 of the Bill describes hostage-taking as the act of:

seizing or detaining any person; and

threatening to cause death or hurt to the person or to continue to detain such person, or giving rise to a reasonable apprehension that such person may be put to death or hurt, or may continue to be detained, or causing death or hurt to such person.

That is the first part but the second part of it deals with who the hostage-taker is trying to compel – first, the government or an international inter-governmental organisation; or secondly, some other person. And if the person sought to be compelled is a government, then the penalty is death or life imprisonment together with fine or caning. But if the person sought to be compelled is a non-government entity, then the penalty is only imprisonment of up to 15 years and fine or caning.

I appreciate that it is usually more serious when you are trying to force a government to do something than when you are trying to force someone else into doing something. However, I am curious as to why the punishments would be

different, when the acts committed against the hostages could be the same.

For example, a hostage-taker could threaten to kill a hostage unless the CEO of a private organisation complies with certain demands. Given that in today’s globalised world, many organisations carry on businesses which have a global reach and impact, issuing a demand to such a non-government entity could also have serious consequences. For example, many telcos, transport companies, media companies, oil companies, banks and internet service providers are private businesses but they are global in nature, and their businesses can have a strategic significance. What if a hostage-taker takes someone hostage and tries to compel such an entity to do something which could have a strategic significance? The entity may not be a government or an international inter-governmental organisation, but the consequences of giving in to such a demand could still be very serious with widespread consequences. It seems anomalous to have different punishments depending on whether the target of the act sought to be compelled is government or non-government. I would, therefore, be grateful if the Deputy Prime Minister could explain the thinking behind the difference in penalties.

I also note that the definition of the offence of hostage-taking includes a situation where death is caused to the hostage. And this would be the equivalent of murder unless it can be shown that the causing of death was accidental or unintentional (though it is very difficult to see how it could be accidental or unintentional in a hostage situation).

In Singapore, the penalty for murder is the death penalty. Under clause 3(1)(b)(i) of the Bill, if the demand is aimed at the Government and if the hostage is killed, then the prescribed penalty would include a death penalty. However, under clause 3(1)(b)(ii) if the demand is aimed at a non-

government entity but if the hostage is nevertheless still killed, then the maximum penalty is only imprisonment of up to 15 years and a fine or caning. There is no provision for death penalty in that situation. This is again inconsistent and I would be grateful for the Deputy Prime Minister’s clarification on the rationale behind the difference in penalties of the two situations.

A third point which I wish to seek clarification is clause 5 of the Bill. Clause 5 of the Bill imposes an obligation on anyone who has information which he knows or believes to be of material assistance in, amongst other things, securing the conviction of a person for the offence of hostage-taking and to inform the Police. Failure to do so will be an offence.

I would support this approach in general but I have a concern about this provision in one very specific scenario. I would like to ask the Deputy Prime Minister whether it is intended that under clause 5 to take away the protection of legal professional privilege in a situation where the hostage taker is being prosecuted and he is being defended by counsel? Hostage-taking is a heinous crime and should be prosecuted robustly. However in Singapore, we respect the rule of law and one important aspect of the rule of law is that when a person has been charged in court, he is entitled to put up a defence. A corollary of this is that an accused person must be able to instruct his counsel with the assurance that what is said to his counsel is protected by legal professional privilege. In the course of taking instructions for the defence, the counsel may come into possession of information which may be of material assistance in securing the conviction of his client, and this information may not be in the hands of the prosecution. But, at the same time, he is duty bound to defend the client and is bound by the rules of privilege. This

section makes it an offence for the counsel not to disclose the information which puts the counsel in a very difficult position. I, therefore, wish to ask the Deputy Prime Minister for clarification as to exactly how clause 5 is intended to impact on information that would normally be protected by legal professional privilege, so that defence counsels will know the exact scope of their obligations if they ever have to defend a hostage-taker.

With that, Mr Speaker, I am fully in support of the Bill.

3.26 pm

In the current climate of terrorist and hostage activities that we see today, it is essential to remain vigilant. We live in an age where increased global travels, with increasing numbers of people venturing into high-risk and exotic areas for activities such as missionary work, humanitarian work, work-related travels and even holidays. It is thus very timely to debate on this Bill.

The motives of terrorist acts vary. Hostage incidents may involve demands for money, recognition, property, and so on.

Mr Speaker, Sir, I stand in support of this Bill.

I support the forms of punishment set forth in the Bill, and especially the call to freeze bank accounts involved.

Sir, I would suggest further that we do not put a cap at 15 years but allow for the limit and the ceiling to be decided on a case-by-case consideration as deserving of each unique case, its consequences as well as its effects.

On the issue pertaining to "extra-territoriality" (clause 4), can the Deputy Prime Minister please clarify if there is any

difference for the "person who commits" if he is a citizen of Singapore versus if he is not a citizen?

In the event that a non-Singapore citizen is arrested for such an offence, pertaining to this Act, what will be the relevant procedures and processes he has to go through, in getting in touch with representatives of his State? This becomes relevant because we know that once a citizen of another country has been arrested or detained here for such acts, it is often inevitable somehow that the adequacy of human rights issues and the legal measures of our nation will be thrust into the forefront, to be reviewed or even dissected by others.

In such cases, Sir, I believe our principles of sovereignty and integrity must be respected and upheld at all times. Also, what happens if the hostage-taking incident happens in an aeroplane, or on a ship? Will it then be that the person will be convicted and treated based on which country’s airspace or waters the incident happens in?

Sir, with this Act, can I also ask what will happen to the United Nations Convention adopted by the General Assembly of the United Nations which stipulates that any person who has committed an act of hostage-taking shall either be prosecuted or extradited? Does one override the other in specific instances and circumstances?

(In Malay): [For vernacular speech, please refer to Appendix A*.] Mr Speaker, Sir, with the passing of this Bill, it is my wish to see more training and awareness programmes being carried out for the public and community. One good example we have is the NorthStar exercise involving multiple stakeholders. We need to augment their understanding and the teamwork between agencies working

together in these specialised circumstances. We need to educate and inform all levels of society, from school children to senior citizens, on the importance of their commitment and their buy-in as individuals. Finally, Mr Speaker, preparedness and awareness is indeed crucial as a first preventive step.

*Cols. 1013-1014.

Sir, I wish to thank Mr Christopher de Souza, Ms Indranee Raja and Assoc. Prof. Fatimah Lateef for supporting the Bill. They have raised some specific questions and I will attempt to deal with them as far as I can.

Mr de Souza asked if the Ministry of Home Affairs (MHA) would consider raising the penalties under clauses 3 and 5 of the Bill.

Well, we agree that the penalties for the hostage-taking offences must commensurate with the severity of the offences committed. To this end, we have been very careful in calibrating the penalties for hostage-taking offences vis-a-vis the other penalties that we have under our other laws. The proposed penalties are consistent with those for other serious offences under existing legislations. To provide some points of reference, the penalty of 15 years imprisonment of acts of hostage-taking to compel any other person mirrors that in the current section 364(a) of the Penal Code. The penalty for failure to disclose information is also consistent with the penalties provided for in the Terrorism (Suppression of Financing) Act and Terrorism (Suppression of Bombings) Act.

Ms Indranee has asked about the differentiation in penalty between the hostage-taking act to compel the Government and to compel any other persons. While we recognise that the threats made to other persons can be serious, we must ensure that the harshest penalties are reserved for cases where such penalties are justified. In the case of acts against governments, we need to send a very strong signal, a deterrent

signal, that hostage-taking cannot be used as a means to unduly influence or manipulate a government – any government for that matter. Nonetheless, we will review this in the future and we will see whether the penalties for acts against other persons are sufficient or not. If not, we will see how they can be further enhanced.

Ms Indranee has also asked for clarification on how clause 5 of the Hostage-Taking Bill affects the information that is given or protected by the legal profession's privilege. Clause 5 is not intended to override the legal profession's privilege. If a person confesses to a lawyer that he has committed hostage-taking with a view to engaging the lawyer to defend him, then this information is protected from disclosure by privilege. However, legal professional privilege does not protect any information or fact revealed to the counsel that furthers any illegal purpose; eg, information on an impending hostage-taking offence. This provision is also not intended to require the defence counsel to disclose other information he obtains in the course of defending his client, the accused person, as this would make it, in practice, very difficult for the accused person to get representation by counsel. However, if the lawyer chooses to disclose the information, he would be protected by clause 5(3) of the Bill against disciplinary proceedings.

Assoc. Prof. Fatimah Lateef made mention of the United Nations Convention adopted by the General Assembly of the United Nations. Indeed the Hostage-Taking Bill, when passed, will give effect to the International Convention against the taking of hostages. Under the scheme of the Bill, any person who commits an act of hostage-taking shall either be prosecuted or extradited, as provided for by Article 8 of the Convention. The course of action taken will, of course, be dependent on the circumstances of each case. Ultimately, the underlining aim of

the Convention is to ensure that the perpetuators of hostage-taking are brought to justice.

Assoc. Prof. Fatimah Lateef also asked for clarification on the issue pertaining to extraterritoriality, specifically whether there is any differentiation between cases where the hostage-taker is a Singaporean or a non-Singaporean, and in cases when the hostage is a Singapore citizen. Assoc. Prof. Fatimah Lateef has also asked what would happen if the hostage-taking incident takes place in an aeroplane or on ship.

The Hostage-Taking Bill does not differentiate between cases where the hostage-taker or the hostage is a Singaporean or a non-Singaporean. If the alleged offender is found in our territory, we will have to investigate and arrest the alleged offender and then determine whether to submit the case for prosecution or to extradite him to a requesting state which has claim to jurisdiction. This is to ensure that a state party does not let an alleged offender go free because the offence was not committed within its territory. Therefore it does not matter where the incident has taken place. If the offence happens on-board a Singapore-flagged airplane or ship which is in the international airspace or waters of another country, it may be possible for both Singapore and the other government in whose territory where the offence occurs to concurrently have jurisdiction over the offence. The alleged offender will then be dealt with under the laws of whichever country that exercises jurisdiction. If Singapore wishes to exercise jurisdiction over the offence, then the Bill gives the Government power to either prosecute or to seek extradition of the alleged offender from another country, where appropriate.

With regard to the arrest of a non-Singapore citizen for offences under the Hostage-Taking Bill, Assoc. Prof. Fatimah

Lateef asked what are the relevant procedures and processes for the individual to get in touch with the representatives of his state. A non-Singaporean who is arrested here for such offences will be subjected to the normal criminal process; as a foreigner, his Embassy or its representative will be notified and he can then seek consular assistance from that government. In the case where Singapore has no extradition treaty with the country that is also a party to the Convention, I have already said that clause 14(2) of our Bill allows the Law Minister to gazette that country under section 4 of the Extradition Act to apply the Extradition Act to that country as if such a treaty existed. However, this gazette notification would only apply to hostage-taking offences. There is no obligation under the Convention to extradite an alleged taker to a non-Convention country.

Sir, this Bill is a key instrument supporting our counter-terrorism efforts. As mentioned by Members, we also need to raise the community's awareness and their involvement in counter-terrorism. The Government has worked very closely with the community to sensitise them to threats of terrorism and to encourage them to take greater ownership of their own security. And the response so far has been encouraging. People across the various domains and institutions including the banks, large foreign business corporations, retail, hotel industry, grassroots, schools, and even taxi drivers, have attended the numerous security briefings, talks and discussions organised by our security and enforcement agencies. The NorthStar exercises conducted by the Home Team also showcased our collective determination to not just a whole-of-Government perspective but also a whole-of-nation perspective to prevail over the threats of transnational terrorism. We will continue to invest our resources on this

front as it is an effective way of raising awareness and preparedness in our community.

Sir, I believe that I have dealt with all the questions or points raised by the Members.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Wong Kan Seng]

Bill considered in Committee; reported without amendment; read a Third time and passed.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.00 pm.

Sitting accordingly suspended

at 3.40 pm until 4.00 pm.

Sitting resumed at 4.00 pm

Order for Second Reading read.

Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time".

The Goods and Services Tax (Amendment) Bill 2010, or the GST Bill for short, comprises nine amendments. The first three amendments give legislative effect to the GST initiatives announced in the 2010 Budget Statement, while the other six amendments have arisen from our ongoing review of the GST system.

The draft Bill was released for public consultation in June 2010 and has been revised to incorporate feedback from the public.

Budget 2010 GST changes

Madam, let me first touch on the provisions in the Bill that give legislative effect to the GST changes announced in the 2010 Budget Statement, which collectively serve to reduce compliance costs for businesses.

Simplification of GST accounting rules

First, with the amendment, businesses only need to account for GST upon the issuance of invoice or receipt of payment, whichever is earlier, and will no longer need to track the delivery of goods and services for most transactions. This simplifies GST accounting for businesses. Clause 3 of the Bill provides for this change. Clauses 11, 12 and 13(a) and (b) of the Bill are consequential amendments.

Zero-rating for marine and aerospace industry

Second, to simplify GST compliance for businesses supporting the marine industry, GST zero-rating is extended to:

Firstly, pleasure and recreational ships wholly used for international travel;

Secondly, goods supplied for use, installation or for retail sale on all ships qualifying for the zero-rating treatment; and

Thirdly, transportation of goods or passengers via a ship to or from international waters even if the ship does not call on a port outside Singapore (for example, cruise-to-nowhere packages).

In tandem with the new zero-rating treatment for the marine industry, GST zero-rating is also extended to stores and

fuel supplied to and merchandises for retail sale on an aircraft qualifying for zero-rating treatment. Clause 6 of the Bill provides for these GST changes.

Import GST Deferment Scheme

Third, the Government will introduce a new scheme to allow approved businesses to defer import GST, currently payable on their goods at the point of entry into Singapore, to the point of submission of their GST returns. Approved businesses will in effect enjoy a credit period on their import GST of up to two months, similar to what businesses can enjoy for their local purchases. The scheme will be open to GST-registered businesses with a good track record and operating on the monthly reporting system. Clause 7 of the Bill provides for this initiative. Clauses 5, 13(c), 15 and 16 of the Bill are consequential amendments.

Non-Budget 2010 GST changes

Let me now move on to the non-Budget 2010 GST changes. As I mentioned earlier, the remaining six amendments to the GST Act have arisen from our ongoing review of GST policies and administration. Let me highlight three of these amendments for the benefit of Members.

Approved Contract Manufacturer and Trader scheme

The first change concerns the Approved Contract Manufacturer and Trader (ACMT) scheme which enhances the international competitiveness of qualifying businesses by allowing them to disregard GST on value-added services performed for their overseas clients even if the goods are treated or processed in Singapore.

Refinements have been made to the scheme to allow approved businesses to self-assess the eligibility of their

transactions under the scheme instead of having to seek approval from the Inland Revenue Authority of Singapore (IRAS). To support the refinements, the legislative amendments allow the Minister to make regulations to:

Firstly, empower the Comptroller of GST to publish the names of approved businesses and impose penalties should goods imported under the scheme be delivered by these businesses to non-approved persons; and

Secondly, require approved businesses to account for GST on behalf of the overseas principal when the finished goods are delivered to the customers of the overseas principal.

Clause 10 of the Bill reflects these changes.

Widening scope of electronic services

The second change relates to electronic services. Currently, the GST Act allows the Comptroller of GST to provide electronic services only for the filing or submission of any return, declaration or document. The Act will be amended to broaden the scope of electronic services that can be provided by the Comptroller of GST. This enhancement is provided under clause 14 of the Bill.

Exemption of residential properties

The third change pertains to the exemption of residential property. Currently, the GST Act provides that properties approved exclusively for residential purposes under the Planning Act are exempt from GST. While this allows for GST exemption for most residential properties, it may not be clear if the same treatment can be applied to other places of residence such as homes

for the aged, workers’ dormitories and students’ hostels. The GST Act will thus be amended to clarify that the policy intent is to exempt from GST these properties that are used principally as a place of residence. The GST Act will also be amended to empower the Minister to gazette an Order on the list of residential properties that can qualify for GST exemption. Clauses 17 and 18 of the Bill provide for this change.

Madam, I beg to move.

Question proposed.

4.06 pm

(In Mandarin): [For vernacular speech, please refer to Appendix A*.] Mdm Deputy Speaker, first, I would like to declare my interest as a board member of the Maritime and Port Authority of Singapore, President of the Singapore Shipping Association and the Managing Director of Pacific International Lines Private Limited.

Today, I would like to talk about what the marine industry expects from the Bill.

The maritime industry is a very important sector for Singapore, accounting for 7% of the country’s GDP and employing over 150,000 people. Singapore has already achieved the status of becoming an international maritime centre for Asia and the world.

Prior to this Amendment Bill, the zero-rating for qualifying ships included most commercial ships (including oil rigs). Ships for recreational or pleasure use, including those licensed under the Maritime and Port Authority of Singapore (MPA), were excluded.

After the amendment, the definition of "qualifying ship" will now be widened to include ships for pleasure and recreational

use. Zero-rating relief has also been granted to ships sailing between Singapore and international waters and it would no longer be necessary for them to call on a foreign port outside Singapore to qualify for zero-rating. "Cruise to nowhere" is one such example. Usually it will depart Singapore and sail to international waters for a few days and return to Singapore without calling on any foreign port. Some leisure crafts are doing the same, returning to Singapore without calling on foreign ports.

The marine industry welcomes these changes. However, even though the qualifying scope is widened, there is still a need to maintain the relevant export documents such as delivery orders and these must be certified by the Ship Master or Chief Engineer that goods and equipment on the ship are intended for export. Quite often, as the ship's duration in the port is short, the Ship Master or the Chief Engineer is too busy to get the documentation done on time. Therefore, documents are not ready by the time the ship leaves the port, and both the supplier and the customer have to track closely the documents thereafter.

Ideally, we should work towards having a similar treatment enjoyed by the aerospace industry, where there is a standard list of qualifying components. When purchasing such components, no signatures are required from the Ship Master or Chief Engineer. This would streamline the whole documentation process.

Hence, I recommend that IRAS forms a working committee comprising the Association of Singapore Marine Industries (ASMI), Singapore Shipping Association (SSA), Singapore Association of Ship Suppliers (SASS) and other relevant stakeholders from the maritime industry to study the feasibility and benefit of identifying a list of ship parts that are unique to the industry. This list can then

be used as a reference for the purpose of identifying "qualifying ship parts". This will not only save human resources and GST compliance cost, increase the productivity of the marine sector, but also facilitate the business development of the marine suppliers and improve Singapore’s image of being an international cruise centre.

I believe that greater relief can be provided in this respect so as to enhance Singapore's status as a maritime hub and further underscore the Government’s pro-business policy.

In conclusion, I support the amendment to the Bill.

*Cols. 1015-1016.

Madam, let me first thank Mr Teo Siong Seng for his support for the changes which will be extremely helpful to the marine sector.

Mr Teo has suggested that the Ministry consider extending the same relief granted to the qualifying aircraft parts to the marine or the shipping equivalent and that doing so would further enhance Singapore as an international maritime centre.

Before I go on to respond to Mr Teo, perhaps I could just explain to Members the incentive that we incorporated in Budget 2009 for the aircraft industry. In Budget 2009 we had extended GST zero-rating to any local sale and repair of aircraft parts and components if they are for use on an aircraft deployed wholly for international travel. With this zero-rating, the aircraft parts and components need not be immediately exported after the sale or repair. And also businesses need not keep track of export documents, thus easing compliance for the aerospace industry.

I wish to assure Mr Teo that, indeed, the Inland Revenue Authority of Singapore

is keen to see if such a similar treatment can be extended to the shipping industry. In fact, IRAS has been studying the implementation issues in detail. In its earlier review, IRAS has noted that unlike the aerospace industry, unfortunately, the marine sector does not have an internationally recognised certification process for ship parts and components deemed exclusively for use by ships in international travel. Because of this lack of international certification, it makes it very difficult for IRAS to verify if there is a specific class of ship parts or components that can be zero-rated upfront in the absence of the relevant export documents.

As I understand, certain ship parts and components may also have alternative uses. For example, a ship engine may also be used in power plants, leading to potential revenue leakages if we do not have certainty. Nonetheless, IRAS remains keen to review the extent to which GST zero-rating can cover ship parts and components while minimising the need for supporting export documents and for the review, IRAS will be very happy to work with the relevant players in the marine sector, including the associations suggested by Mr Teo, to develop a workable solution for the industry.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mrs Lim Hwee Hua].

Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

4.15 pm

Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time."

Madam, the Bill before this House provides for the implementation of a new rail financing framework in order to achieve the objectives as stated in the Land Transport Master Plan (LTMP), namely, to facilitate the future expansion of the Rapid Transit System (RTS) network in a financially sustainable manner and to inject greater contestability into the rail industry. At the same time, we are augmenting the Land Transport Authority's (LTA) regulatory powers to enhance integration, to safeguard the continuity of rail operations and to enhance security.

Rail financing framework to support future expansion of rail network

As our population grows, we need to expand in tandem with our RTS network which serves as the backbone of our public transport system. While the Government is committed to expanding the rail network, we are mindful that rail infrastructure is increasingly costly to build and maintain.

To ensure fiscal prudence, hitherto, we have always required new RTS lines to be both economically and financially viable before a decision is made to build the line. Government has funded and will continue to fund in full all the infrastructure costs for building new lines as long as they are financially viable thereafter. This means that each new line must be able to generate enough revenue to cover its operating costs so that

Government does not have to provide any subvention to ensure it is viable.

The current evaluation of the financial viability of a new line is conducted on a line-by-line basis. As we expand the rail network, new lines will become more costly to operate and maintain as they will mainly have to be built underground. At the same time, as they serve the less mature corridors with lower ridership, they will be less profitable initially than existing lines. Yet, when new lines are added, they generate positive externalities which benefit the rest of the existing RTS network. Under the existing framework of line-based financial evaluation, these network benefits are not recognised.

Such network benefits should really be taken into consideration when evaluating the financial viability of future rail lines. Such an approach will help bring forward the implementation of new rail lines that may fall short of being financially viable on their own, but will fulfil the viability criteria when evaluated on an overall network basis. This is an important refinement which we feel is now appropriate to be made as we have had over two decades of operating the MRT and are better able to project the network effects of the rail system. What is unchanged, however, is our basic financial discipline of not providing subsidy for operating costs for rail operations as a whole.

To inject greater contestability in the RTS industry

Madam, in order to enhance the level of efficiency in the rail industry, we will be injecting greater contestability into the RTS industry. The current duration of 30 to 40-year licences issued to the operators is too long to provide an effective threat of contestability to the incumbent operator. As is the experience elsewhere, the duration should be shortened to introduce contestability to the industry and compel the incumbent to

improve its efficiency, cost competitiveness and service levels. Such competition will help to drive better performance and efficiency, which in turn will bring about higher service standards and productivity.

Even as we are making changes to the rail financing framework and possibly the industry structure through greater contestability, one key aspect of public transport will remain unchanged – the regulation of fares by the Public Transport Council (PTC) in accordance with the fare adjustment formula, based on macroeconomic factors, national inflation and wage increases, rather than the operators' specific costs.

Features of new rail financing framework

Going forward, we will enhance the rail financing framework by introducing the following features: first, we will adopt a network approach so that new lines can potentially be introduced based on the overall network viability. The new network financial evaluation approach would be applicable to the next round of rail expansion plans beyond those that have already been announced under the LTMP, such as Downtown Line, Thomson Line and Eastern Region Line, which were all financially viable under the old criteria of individual line evaluation. We will carefully study which new corridors would require new rail lines as part of our integrated land-use and transport planning process under the on-going Concept Plan 2011 exercise. With this new rail financing framework in place, we can then consider how best to implement this for future lines, while continuing to ensure that the overall network remains financially viable.

Second, to effect greater contestability, the licence period for new RTS licences will be shortened to about 15 years. To facilitate the new financing approach as well as the shorter licence periods, LTA will take over the ownership of the

operating assets and lease them to the operators instead. By taking on ownership of all RTS operating assets, LTA will be able to undertake integrated and holistic long-term planning for the RTS network, including planning of new lines and effect the timely purchase of more assets, such as trains, to enhance carrying capacity. Under the new arrangements, operators will be required to follow a rigorous set of Asset Management Requirements (AMR) for maintaining the assets leased from LTA, failing which the operators will be penalised accordingly.

Madam, we are implementing the new framework for RTS licences, starting from the next major RTS line – the Downtown Line (DTL). We will adopt a gradual approach and limit the tender to our two existing operators, SMRT and SBS Transit. This will allow us to phase in the changes before we consider opening the sector to new players in the future. Some may argue that by limiting the tender to the two existing players, we will not be able to enhance the level of contestability in the RTS industry. The issue here is really not about the number of potential players in the industry. Rather, the intent is to increase the level of competitive pressure in the industry by issuing shorter licence periods and ensure that the incumbent operator will have to face the prospect of competition at the end of their licence term. The shorter licence period would also allow LTA, as a regulator, to re-set and refresh licence conditions as appropriate, to take into consideration changes to the operating and business environment.

Key provisions of the Bill

Madam, let me now elaborate on the key provisions in the Bill.

Under the new financing framework, LTA will collect from the operator a

licence charge payable for the right to run and generate returns from the revenue service. The licence charge may comprise fixed and variable components, with a certain portion to be determined through competitive bidding. The design of the licence charge is intended to ensure that there is an appropriate level of risk-sharing between the Government and operators, given the nature of new RTS lines which will start off with relatively high fixed costs but whose revenue will steadily improve over time. This element of risk and reward-sharing in new licences is a key feature of the new RTS licence, and would enable LTA to also pool the licence charges received and decide on the best use of this money to improve the network capacity, such as purchasing additional or replacement trains.

To allow LTA to collect a licence charge, a new section 13A of the RTS Act has been added and related amendments will be made to the LTA Act to provide for the creation of a special purpose Railway Sinking Fund for the licence charges or grants to be paid into. The Sinking Fund will be used to fund any capital operating equipment such as trains, signalling systems and other operating assets for operating the RTS. The Sinking Fund monies will be ring-fenced for the purposes of purchasing new or replacing operating assets to meet demand.

Madam, as new lines are added, it is important to ensure that the rail infrastructure is properly integrated with overall transport facilities and surrounding developments. Each station is in effect a transport node through which thousands of commuters pass each day. To effect this, we have added a new section 11A to set out the general considerations to achieve an adequate, sustainable, safe, secure and integrated railway transport system in Singapore. Section 15 and section 18 are also amended for the purpose of ensuring integration of

transport services and facilities as well as enhancing passenger services, in line with our vision for a people-centred land transport system.

The next part of the Bill deals with the continuity of RTS operations. Section 15 is amended, and new sections 16A and 16B are added to safeguard the continuity of RTS operations and provide further clarity and transparency to the conditions which LTA may impose. These include operational obligations to operate extensions and stations that are added to existing lines, facilitating the transfer of contracts and manpower in the event of transition from one licensee to another, the surrender or assignment of licence and the voluntary winding up by licensee.

The new Part IVA provides for Railway Administration Orders, allowing the Minister for Transport to appoint a different person to manage the company to ensure the security and reliability of the railway system, and to allow the transfer of undertakings from an existing licensee to a new licensee. This can be effected if the existing licensee is unable to operate the railway, such as in cases where there are insolvency concerns or for reasons relating to safety, security or public interests. This is not unlike the provisions in the Civil Aviation Authority of Singapore (CAAS) Act where the Minister for Transport is empowered to make a special administration or other orders if there are serious contraventions of the airport licence or of the Act or if the licensee is unable to pay off its debts.

Section 19A of the Bill provides an alternative to regulatory action in the event of default by a licensee. It allows LTA to make provisional orders before securing compliance with the conditions under the licence. This gives the licensed operators an opportunity to be heard and allows them to rectify minor breaches or contraventions.

To enhance security, there is a need to augment LTA's powers and empower it to impose licence conditions, issue, approve or modify codes of practice and issue directions relating to the security of persons on the railway system. Section 23A is also added to empower authorised personnel appointed by the LTA to search baggage and property brought into the railway premises.

Mdm Deputy Speaker, the Government is committed to investing in and developing the rail network in a timely and financially sustainable way. The proposed amendments are necessary in order to effect the new financing framework, to allow for greater contestability to be injected into the RTS industry, as well as to ensure security and continuity of the RTS operations.

Madam, I beg to move.

Question proposed.

4.28 pm

Mdm Deputy Speaker, thank you for allowing me to participate in the debate of this Bill.

The ancient civilisations were all situated where transportation facilitated their growth. It is no wonder why most centres of civilisations are near major rivers, deltas and coastal regions where transportation by water makes rapid growth and development possible. Transportation is a major enabler and catalyst for growth of all activities. Hence, it is important that our transportation infrastructure development should lead our national development rather than lag it. I support this Bill as it enables our Government better control over our rapid transit infrastructures so that development can be hastened to lead and not wait for commercial viability for too long before developing new rapid transit lines.

Our Government has done well for the past 45 years in providing for the basic needs of the people such as security and safety, housing, education, healthcare and transportation.

These are the basic requisites for continual stability, growth and prosperity. The Government expenditure on security and safety, healthcare, education and housing is very visible and very much appreciated by the people. However, the expenditure on transport infrastructures seems to be less visible and we often hear people lamenting high public transport fares. The Government’s position of not subsidising operating costs of our public transport and the reported annual profits by our public transport operators have also reinforced the public views and perceptions that the Government is doing less for transport than other key areas. I would like the Minister to clarify the following:

Over the past 25 years since the first MRT has become operational, how much has the Government invested in developing our MRT network? How will this change with the new amendments?

What is the current cost to the Government in maintaining and providing the MRT services to the public? With the new financial arrangement, will this cost be increased or reduced?

What is the public's share in paying and maintaining the MRT system? Is the total revenue collected by our two existing MRT operators sufficient to offset the operational, assets and parts replacement costs?

I support the principles highlighted in the Bill on rail financing framework and the network-based financial evaluation approach. I also support injecting greater contestability in the rail industry by shortening the licence periods so that the incumbents do not get too comfortable

with a long 30-40 year licence. However, I do have concerns arising from contestability.

Competition in principle is good as long as commuters benefit from lower fares and better services. We are all worried about competition that becomes irrational and that may end up with commuters paying more. Will competitive bidding become destructive just like the telcos bidding for EPL screening rights? Will public need to pay more if the bid prices go up?

One of the virtues of our public transport system is that it runs on commercial terms with commercial efficiency. Because our rapid transit system is not run by a Government agency which may become overly bureaucratic and inefficient, the current system runs well to maximise utilisation. The danger is the over-utilisation of assets to maximise returns and the neglect of maintenance. Long-term planning and development may also be compromised in view of the shortened licence period.

By Government taking over the assets as well as procurement, it will solve the latter, but will the replacement and upgrading now become slower, because it is not commercially driven?

Another area of concern is the quality of service. Our current public transport operators are in a privileged position. They are like the big US banks, and are too important for the Government to allow them to fail. Knowing this fact, the management may take more risks than it can handle and also cut cost to maximise returns. Will service quality drop since they know the commuters do not really have any other choice or options? What is the safeguard against unrealistic bidding and service failure?

Lastly, this Bill also spells out security arrangements. It empowers the public

transport operator with the right to check all bags and properties carried by the commuters on the system. I guess public will be concerned about the following:

When will all bags be checked on our rapid transport system?

Will the operator disallow commuters to bring drinks and food onto their trains? Can the operator unilaterally enforce such actions since commuters now face a fine if they get caught drinking or eating?

Will the current amendment be applied to existing operators? What are the expected additional security measures that existing operators will be putting in place with this amendment?

Will commuters pay more due to increase in security costs?

In conclusion, I support the visions spelled out in the Land Transport Master Plan and I look forward to the doubling of our current rapid transit system by 2020. The amendments spelled out will facilitate and enable faster development of our rapid transit system, so all Singaporeans can continue to enjoy a cheaper, faster, better and safer ride.

With that, I support the Bill.

4.34 pm

Madam, there are some provisions in the Bill which are aimed at enhancing security on public transport. I take it that this is a response to the recent security breach at SMRT Changi Depot and a belated realisation that both the Government and the public transport operators (PTOs) need to take a more active role. This is overdue.

On a separate point, I have a concern about the increased cost burdens being placed on the PTOs by this Bill, in particular clause 5. Clause 5 amends section 15 of the Act to provide that the Land Transport Authority can impose

more conditions on the licensee of the railway system, such as to maintain infrastructure outside the MRT stations, like overhead bridges, cycle stalls, carparks and even drainage systems. The rationale stated is that such infrastructure can be considered to enhance the transport node. However, is it justifiable for the Government to pass the responsibility of maintaining such infrastructure to the PTOs? How much cost would the PTOs incur to maintain such infrastructure? If the PTOs have to incur large cost to do so, will they be tempted to cut cost elsewhere, leading to a drop in standards of delivery to commuters? Since such infrastructure is of general public use, should the Government not maintain them, instead of literally passing the buck?

4.36 pm

Mdm Deputy Speaker, the amendments proposed in the Rail Transport System Act (RTSA), in my view, represent another forward-looking approach to put in place a holistic transport framework. This is important as with Singapore's small size as a city state, we need to optimise the use of our land use resources. With the expected future expansion of the rail lines, the challenge is to manage the space within our land-constrained city state through careful and considerate planning bearing in mind our current resources and meeting the travel needs of our growing population.

I am pleased that the Ministry is committed to expanding the rail network, and is mindful of the high costs of building and maintaining the infrastructure. The benefits these new lines bring in serving and connecting the less mature corridors are tremendous as it would bring more new commuters to make use of the expanded network and drive the economy further.

It is in this spirit that I would like to state my support for the Ministry’s proposal towards a network-based financial evaluation approach to expand our rail network. In taking over the ownership assets of the network holistically, it provides LTA with greater room and flexibility to manage our rail transportation system, strategic asset and to expand the rail network further in the future.

Mdm Deputy Speaker, in doing so, therein lies impending issues and concerns in the details of this proposal. As such, I would like to raise the following points during this reading for further discussion.

Firstly, has the new rail financial framework been implemented elsewhere? If so, how successful has this model been and whether this approach has attracted the right strategic investors and benefited the commuters?

Secondly, with the shorter rail licence periods proposed, LTA will take over the ownership of operating assets, and lease them at an appropriate charge. The first question that came to my mind was what will be the impact of the new framework on the existing operators who run via the existing framework? Are there options available to them to operate under the new framework?

In addition, with a shorter licensing period under the new financing framework, there are issues being raised on how the LTA will ensure that the new operators preserve and retain the competency and competitiveness in operating and maintaining the system and its fixed assets. This is especially so during the transition period from one operator to a new one.

Thirdly, the intent to shorten the licence periods of the rail operators would

also mean injecting greater contestability in order to enhance efficiency and maintain cost competitiveness and enhance service standards to benefit commuters. However, will greater contestability in the RTS industry cause operators to bid aggressively to operate the service? Should it lead them to financial distress due to failure in business and investments, would the Government have to bail them out?

The purpose of LTA owning the operating assets was to realise an adequate, sustainable, safe, secure and integrated railway transport system in Singapore. However, I would like to know if the future expansion of the rail network will consider integrating the bus system into the framework. This is imperative as the two networks, if integrated, will fully optimise the economies of scale of the transport network and ensure greater connectivity and efficient travelling time for the majority of Singaporeans.

Mdm Deputy Speaker, the next issue that I would like to raise is that in land-constrained Singapore, it would be imperative if we fully optimise the space of our assets. I would like to know if the licensing of our rail network includes the operation of other land uses such as retail space at the RTS facilities. Besides adding to the vibrancy of the RTS facilities, I feel that this is important as the other land uses form an integral part of our integrated land use approach and, thus, would help to enhance our optimisation of the use of land resources in Singapore. In addition, this may attract a greater pool of competitive investors to bid for the licences as they are motivated to reap the benefits of operating a rail network and the potential returns from the retail space and other uses.

A related amendment to the Act is the creation of a Sinking Fund to procure any capital equipment such as trains and other operating assets for the operation of the

RTS. I would like to know if LTA would make the guidelines and processes on the use of the Sinking Fund transparent to ensure greater accountability in its use to ensure its competitiveness in managing the whole rail network.

Mdm Deputy Speaker, in summary, the proposed amendments will provide for LTA to bring Singapore to the next phase of our transport and urban development. I am certain that it would drive the competitiveness of our economy and raise the productivity of the people. The key concern of the people as always would be the bread and butter issue of whether these amendments would enhance their quality of life. I would like to strongly encourage the Ministry to constantly communicate its purpose to the people to understand their needs, how the amendments will benefit them and bring Singapore to the next level of development.

Mdm Deputy Speaker, on that note, I support the Bill.

4.42 pm

Thank you, Madam, for this opportunity to raise my thoughts on this Bill.

Specifically, I would like to draw attention to the section of the Bill which augments the LTA’s power relating to security of the rapid systems. My main concern with this Bill is clause 12 which introduces a new section, section 23(A).

Section 23(A), which relates to the security of rapid transit systems, empowers an authorised officer to inspect and search, without giving any reason, the belongings of a person on the railway premises. An authorised officer may also require any person who refuses to permit his belongings to be inspected and

searched to leave the railway premises. Any person who refuses to comply or to leave the premises at the authorised officer’s instructions can be fined up to $1,000. This clause grants an enormous amount of power to the authorised officer. While I appreciate the importance of and the need to ensure security in our current climate, I am also concerned that Singaporeans should continue to enjoy personal privacies and be able to utilise public transportation without concerns about over-enforcement. When I read this Bill, I was reminded of my personal experiences during the SARS period, where over-enthusiastic enforcement of temperature screening by over-zealous personalities made it extremely unpleasant to enter certain buildings.

My question is focused on the training of these empowered officers in recognising perceived threat, and what safeguards are in place to protect innocent individuals. I strongly believe that there must be a good balance between issues of privacy versus protection of strategic facilities. Both are equally important, especially in public transport which facilitates our everyday life and which all Singaporeans depend on. Can the Minister assure us that with this additional clause, privacy and respect of innocent Singaporeans will be protected? And that innocent passengers will not be treated as potential suspects? Will the Minister consider adding a sub-section that states that an authorised officer exercising power under this new section 23(A) is acting under "reasonable suspicion"? This will serve to assure Singaporeans that the normalcy of everyday life will not be disrupted, and it also offers reprieve to the innocent who may be adversely affected.

First of all, I would like to thank the Members for their support of the Bill. As the questions have

been raised under various categories, allow me to address the questions under the following broad categories: first, the role of Government in public transport; second, the impact on the operators; third, the impact on the commuters; fourth, some of the specific issues under the new rail financing framework; and fifth, the all-important issue of security.

Dr Lim has raised many questions on the role of Government in public transport. Let me just recap that based on the 1996 White Paper principles, the Government would bear the capital cost of transport infrastructure, including the first set of operating assets. Government has also committed to help pay for the inflationary cost increases for replacement of operating assets, so as to help to keep MRT fares affordable.

Madam, these principles would remain unchanged with the new rail financing framework. Maintenance and operating costs will continue to be borne by the public transport operators. Therefore, the cost burden on the Government will remain unchanged under the new framework.

The difference, however, under the new arrangement is that LTA, instead of the operator, will now own the operating assets and be responsible for the replacement which will be funded from the to-be-created Railway Sinking Fund and, in return, the operator will pay for the use of these operating assets through a licence charge.

Dr Lim has also asked about Government's investment and expenditure in the transport infrastructure over the past 25 years. Inclusive of the Circle Line, Downtown Line and Boon Lay extension, Government has spent over $33 billion in the past 30 years to build up the current rail network. Regardless of the new rail financing framework, the Government remains committed to invest in the

development and expansion of the rail network which will see close to a doubling of the rail network in the next 10 to 15 years, with new lines such as Thomson Line, the Eastern Region Line as well as Tuas extension and the North South Line extension to Marina South. The objective of the new framework is to enable the timely implementation of future rail lines in a financially sustainable manner.

Madam, let me now move on to the impact on operators. The new rail financing framework will be applied to new licences, starting with the Downtown Line operator licence. As for the existing licence operators, we will allow the licences to continue to run on the current licence terms until expiry unless there is mutual agreement to replace the existing licences with new licences.

Dr Lim has also asked about the allocation of the costs in maintaining the MRT system. As I mentioned earlier, the operating and maintenance costs of the RTS system will be borne by the operator and recovered from fares, as well as other non-fare revenue such as commercial rental and advertising collected by the operators. In assessing our rail infrastructure, the Government takes into account the economic benefits and costs as well as the financial sustainability of the lines. On this basis, the total revenue collected by the operators should be sufficient to offset the operating and maintenance costs borne by the operators.

Next, moving on to the impact on commuters, specifically whether there is a need to raise fares. Dr Lim has asked whether the competitive bidding would become destructive and cause the public to pay more. Madam, let me assure the House that fares will not be affected by the transition to the rail financing framework. Public transport fares will continue to be regulated by the Public

Transport Council with the fare adjustment formula based on the wider macro-economic indicators such as national inflation and wage increases and, therefore, will have no bearing on the specific operator's costs.

Let me address now some of the specific questions raised with regard to the new framework. The first relates to contestability. Let me elaborate just a bit more about the safeguards against overbidding. In structuring the tender, we will place emphasis on both the quality and the financial value and sustainability of the tender proposals. This will ensure that the tender bids are competitive and, at the same time, realistic and provide us with the assurance that the operator that wins the tender will be able to ultimately deliver the service as expected.

The service standards on the RTS will continue to be prescribed via the Operating Performance Standards (OPS) in the RTS licensing regime. There will also be stringent maintenance requirements on the operator and key performance indicators that they will have to fulfil so as to ensure that the operating assets remain in good working condition at all times. LTA will also maintain pre-emptive regulatory oversight by closely monitoring and enforcing compliance of the operators' operating maintenance and financial performance.

And, finally, should any operator fail in spite of all these safeguards, the Government has the powers to step in to terminate the operating licence and take the necessary actions to ensure that the RTS network continues to service the needs of our commuting public.

In arriving at this new rail financing framework, we have closely studied models used in many other cities around the world such as London and Melbourne where rail licences are similarly short. For profitable lines, the operators will bid in

the form of an annual contract payment to the government. Likewise, for lines which are expected to be loss making, the government will ask the operators to bid for the subsidy which they will require from the government. Typically, there are also risk-and-reward-sharing mechanisms in these licences.

Our financing model has been adapted from the lessons learnt around the world to suit our own local conditions and cost principles between the Government and the operators. The framework has been set up to maximise the benefits of contestability with sufficient regulatory oversight and safeguards to ensure the long-term sustainability of our system.

Specifically on the questions of the Sinking Fund: the sources and the use of the monies in the Fund have been spelt out clearly in the Bill. LTA has the statutory obligation to ensure that all monies meant to enter this Fund are separated from the other general monies held by LTA.

Dr Lim is concerned that with the Government taking over the ownership of the assets that replacement and upgrading might be slower or might suffer. I would like to assure him that this will not be the case because as asset owner, LTA will be responsible to monitor the status, the serviceability and the adequacy of operating assets. It will put in place an asset management framework to ensure timely and cost effective replacement and upgrading of assets. And by taking on ownership of all the RTS operating assets, LTA will be able to undertake integrated and holistic long-term planning for the entire RTS network, including planning of new lines, and effect the timely purchase of more assets such as trains to enhance the carrying capacity of existing lines. LTA is also in a better position to plan for the long-term needs as it will be privy to much of the planning data as part of its strategic transport planning function.

As of today, the operators are already responsible for the operation and maintenance of the operating assets and under the new financing framework, this responsibility will not change regardless of the ownership. As I said, LTA has in place a rigorous set of asset management requirements to be complied with by the operators, failing which they will be penalised. But, really, the interests of the owner and the operator are closely aligned. The operators, who have to run these trains 18 to 19 hours a day, seven days a week, 365 days a year, will continue to have a huge stake in ensuring that they continue to do a good job in maintaining the assets for their own reliable rail operations.

There is certainly scope for integration considerations. In fact, the Bill provides for LTA to take into account system integration when exercising its powers and statutory functions. LTA, as Members would know, has taken over the role of the central bus network planner and, therefore, can take a holistic approach when planning the bus and RTS networks. Network efficiency will be optimised from the commuters' viewpoint by ensuring seamless transfers and shorter overall journey time.

Madam, let me now move on to the last section on security, a point which several Members have raised. Dr Lim has asked when all bags will be checked. In a normal situation, bag checks will be conducted on a random basis. However, if there is heightened alert, both the deployment of transport security officers and the frequency of bag checks will be increased. He also asked whether commuters can bring drinks and food onto the train. They are generally allowed to bring drinks and food onto the train but they are not allowed to consume them. Under the RTS regulations, the operators have the right to prevent any items which

they deem to be a nuisance or are offensive to other commuters from being brought into the train. An example of this will be durians.

Let me now move on to the other aspects about whether the amendments to the security provisions would be applied to the existing operators as well. Yes, this will be the case. In fact, as of today, the operators already have in place extensive security measures on the ground and this amendment will not add undue additional security burden on the operators. In any case, fares, as I have mentioned earlier on, are regulated by the PTC and commuters will not be required to pay any more for any increase in security costs.

Assoc. Prof. Straughan has asked whether there are safeguards in place to protect innocent individuals from the effect of this new section. Let me assure her that there are currently safeguards in place. Firstly, bag checks are conducted in the open view of the public and in areas which are under the surveillance of CCTVs. Secondly, transport security officers are required to document details of the checks conducted: the time, the date, who they have checked. Thirdly, LTA, the Public Transport Security Command (TransCom) and the PTOs themselves also conduct regular checks and audits on the transport security officers to ensure that they are performing the duties correctly and professionally. I should add also that the transport security officers who conduct bag checks at the RTS premises are licensed security officers who have undergone the Security Workforce Skills Qualifications' training and certification programmes, so they are sufficiently well-trained and will be professional.

Let me now move on to Ms Sylvia Lim's comments. I would like to correct a point that she has asserted. Firstly, I would like to state that the legislative

changes are not a belated response to the breach at the Changi Depot as asserted by her. In fact, since 2004, the provisions have already been in place. Transit security officers have already been deployed at MRT stations and bus interchanges since mid-2004 to enhance security and to deter potential attacks. The reason we are making these changes is really to ensure that emphasis is given to powers granted to authorised persons to conduct bag checks at MRT premises. It also serves to highlight the serious nature of these offences and to this end, the maximum penalties for these offences have also been raised from $500 to $1,000.

As to whether the enlarged coverage will lead to increased cost burdens: this is currently the case where the PTOs are already maintaining these facilities, so there is no real material change except a formalisation of what is already in place. These facilities that I mentioned are really integral to the connectivity to the station as they provide access to the commuters. It is therefore justifiable for the PTOs to maintain them. In the event that there are new requirements, then the inter-agency Public Transport Security Committee will study carefully the cost implications and the allocation of costs across the public agencies, the operators and the other stakeholders.

Madam, I believe I have answered most of the questions.

Thank you, Mdm Deputy Speaker. I am sorry to belabour this point but I thought it was important to follow up on the bag checks. We live in an era when we are so used to bag checks now but still I think the way it is done is so important. I want to ask the Minister if the proposed checks will be random, where every hundredth person will be checked, or based on some

kind of profiling. That is what I am concerned about. Generally, we live with these kinds of inconveniences now because we accept that we are not picked out unnecessarily. There are two modes of doing bag checks. Sometimes, it is just random and you know that every fifth or tenth person would get checked, and so you just play along. Or sometimes, checks are done for every person, and so everybody complies to facilitate the process. What I am worried about is if there is some kind of selective profiling that goes on behind the scenes. That is where we need to handle it with sensitivity. The officers must be trained adequately. As the Minister mentioned, checking would be done in public so public humiliation is something that I am very concerned about.

Madam, I take the Member's point about the need for checks to be done professionally, and indeed this is the case, and that is why the officers would be sufficiently trained to conduct these checks in a professional manner. As to the frequency, as I mentioned earlier on, under normal circumstances, this will be conducted on a random basis. But if there is heightened alert, the pattern will necessarily have to be changed. I would like to assure her that there are safeguards in place, including the audits.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mrs Lim Hwee Hua].

Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

5.03 pm

Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time."

Madam, this Bill will amend the Central Provident Fund (CPF) Act to provide for the full implementation of the CPF LIFE scheme in 2013, and to facilitate the disbursement of CPF assets to beneficiaries, as well as to streamline the administration of the CPF.

CPF LIFE

CPF LIFE was made available in September last year to allow older members, in this case those who turn 55 before 2013, to opt in to the scheme. Younger members turning 55 from 2013 onwards with at least $40,000 in their Retirement Accounts will automatically be included into CPF LIFE. While members with lower balances will not be automatically included, they can still opt-in.

Between age 55 and their CPF Draw-Down Age (DDA), members’ CPF balances typically continue to grow due to property refunds, top-ups, interest income as well as employment contribution if the member continues to work. Members who are not auto-included at age 55 due to low balances may be able to increase their CPF savings significantly by the time they reach their DDA. I had announced at the Committee of Supply (COS) debate earlier this year that we will also auto-include those with $60,000 in their Retirement Accounts when they reach DDA. Section 27K of the CPF Act will be amended to provide for this.

For members who are already on CPF LIFE before DDA, we should similarly include any additional monies received in their Retirement Accounts between age 55 and their DDA for the members’ CPF LIFE, so that they can have a higher monthly LIFE income. We are, therefore, amending section 27L to do so.

Disbursement of CPF assets to beneficiaries

Madam, we are also refining the disbursement of CPF assets of deceased members. Currently, CPF savings have to be disbursed directly to the nominees upon the death of a member. Some members have requested for their CPF savings to be transferred directly to their nominees’ CPF accounts instead so as to help provide for their healthcare and retirement needs. I think this is a sensible request. Therefore, sections 15, 20 and 25 will be amended to offer members this option. This option will become available from 1st January 2011 onwards.

Madam, the next area of change concerns unclaimed CPF monies. This includes monies of deceased members which have not been claimed by the beneficiaries, which the CPF Board is currently required to hold indefinitely. This is not desirable as the assets should be disbursed to beneficiaries as far as possible.

We are, therefore, amending sections 15 and 20 to allow the CPF Board to automatically disburse a member’s CPF monies to his nominees, once it is notified of his demise. CPF Board will no longer need to wait for nominees to apply for the bequeathed monies before they can be disbursed. Nevertheless, some CPF monies may continue to remain unclaimed for various reasons, for example, nominees with incomplete or inaccurate details on record may not be contactable. We will streamline how such CPF monies are managed.

The amendment to section 13 will allow CPF to transfer all unclaimed monies in the subsidiary accounts into the Ordinary Account (OA) of the member six months after his death and they will earn the OA interest rate. Since the member has passed on, we should cease paying the higher interest rates of the Special, Medisave and Retirement Accounts and the extra 1% interest, which are meant to improve the member's retirement and healthcare savings. The deceased member’s CPF monies will be kept in their respective accounts to facilitate claims up to six months after his demise, as some claims, such as hospital bills, are usually made only after his demise.

If monies are still left unclaimed seven years after the member’s death, these monies will be transferred into the general monies of the Fund, as unclaimed monies of deceased members should not accrue interest indefinitely. Section 6 will be amended to provide for the cessation of interest on the unclaimed monies once they are transferred to the general monies of the Fund.

A similar arrangement will also be applied to dormant CPF accounts. A CPF account is deemed dormant if a combination of factors is satisfied, including: firstly, if the CPF records show that the member has attained a prescribed age; currently, that is set to 100 years. Of course, I know, some do live beyond 100 years and, therefore, there are additional conditions that have to be satisfied. Secondly, if the member does not respond to notices from the CPF Board or advertisements placed in the newspapers to satisfy the CPF Board that he is still alive. Thirdly, if there has been no account activity for the last 10 years. Even then, in the event that the CPF Board subsequently learns that a dormant member is still alive, the CPF Board will restore the monies to the member’s original accounts with interest. The

amendments to section 13 enable the CPF Board to do so.

Besides CPF monies, the CPF Board is also currently obliged to hold unclaimed Special Discounted Shares (SDS) of members who died without nomination. The SDS programme was introduced under the National Share Ownership Scheme in 1993 to give Singaporeans a greater stake in the economy. CPF members purchased these shares with their OA monies. We will also streamline the administration of unclaimed SDS by amending section 26.

To reduce the number of unclaimed SDS cases, a new section 26A will empower CPF Board to sell the SDS of members who died without nomination under the instruction of the legal representatives of the deceased’s estate, and to pay them the proceeds of the sale, along with any dividends and proceeds from capital reduction exercises accumulated following the members' demise. These legal representatives refer to the representatives appointed to administer the estate through the Grant of Probate or the Letter of Administration.

In the absence of such legal representatives, the CPF Board may receive instruction from the next-of-kin to sell the shares and pay him the proceeds. This will be less costly and more convenient for the beneficiaries as they no longer need to obtain the Grant of Probate or Letter of Administration in order to claim the SDS.

Upon a member’s death, dividends and proceeds from his unclaimed SDS will be held in a non-interest bearing account. Since these dividends and proceeds are received on assets held on behalf of beneficiaries as part of the member’s estate, they should not attract CPF interest. The same treatment will be applied to the SDS of members whose accounts have been deemed dormant.

Unclaimed SDS of members who have been deceased or dormant for seven years will be sold with all proceeds and dividends transferred to the general monies of the Fund to ease management and treated as unclaimed CPF monies, as I explained earlier. I want to assure the House that valid claimants can approach the CPF Board at any time to claim the monies that are due to them. The changes relating to unclaimed CPF monies and SDS will come into effect on 1st January 2011.

Streamlining the administration of the CPF Act

Finally, this Bill clarifies and streamlines the administration of the CPF Act in a few areas. First, it is a long-standing practice of the Public Trustee, which disburses CPF monies of deceased members without nomination, to reimburse reasonable funeral expenses from the CPF monies to persons who would have been entitled to receive the CPF monies. Section 25 will be amended to formalise this administrative practice that the Public Trustee has been carrying out as a service.

Second, some Licensing Agencies (LAs) currently assist the CPF Board in enforcing Medisave contributions by self-employed persons (SEPs). The LAs will not approve the applications for renewal of their licences, should they default on their contributions. As some LAs may move to an auto-renewal licensing regime and self-employed persons may no longer need to apply for the renewal of their licences, section 13A(1) will be amended to empower such LAs to continue enforcing Medisave contributions, even when no application to renew a licence is required.

Third, the Board allows the withdrawal of CPF monies of a member who is "mentally disordered and incapable of

managing himself". Sections 2 and 15 will be amended to allow the CPF Board to adopt the standard of "lack of capacity" within the meaning of section 4 of the Mental Capacity Act (MCA) to bring the CPF Act into alignment with MCA.

Lastly, section 16A(1) will be amended to permit Medisave withdrawals with respect to psychiatric and other treatment or services approved by the Minister for Health. This will update the CPF Act and bring it in line with the current policy.

Madam, the amendments in this Bill will refine the CPF system to better serve our members.

On this note, Mdm Deputy Speaker, I beg to move.

Question proposed.

5.14 pm

Mdm Deputy Speaker, our CPF scheme is an important social safety net that has served Singaporeans well by enabling us to take care of our three critical needs, ie, retirement, medical and housing. The introduction of the CPF LIFE further strengthens our capacity to plan and provide for our retirement better. While there continues to be criticisms from some quarters that the CPF LIFE is yet another device for the Government to retain the members’ CPF monies, by now Singaporeans know that the CPF LIFE is in their own best interest and the Government’s actions, demonstrated yet again during the last recession with its Jobs Credit, SPUR and other schemes to help Singaporeans, clearly show that it has consistently put people’s welfare before anything else. With a rapidly ageing population, it is imperative that the Government puts in place a sound retirement saving scheme, which will not only provide a reasonable retirement income but is also sustainable from the perspectives of both the individual and the economy.

One of the biggest challenges facing many countries today, whether developed or developing, is providing for the retirement needs of their people. In the developed world, the sustainability of the pension scheme is a big concern due to budget cuts and weaker growth. In the developing countries, the weakness and inadequacy of the retirement scheme is the problem which causes untold miseries to many. So, in my view, the measures and refinements suggested in this Bill will further strengthen our social safety net and retirement income to meet our future needs.

However, as some of the changes seem to be quite significant, especially those concerning the CPF LIFE, I think Singaporeans do need a clear understanding of these changes which are important to their own well-being. Therefore, I have a few clarifications to seek from the Minister on this Bill.

The changes to the CPF LIFE scheme seeks to do two things. First, it provides for a second auto-inclusion of members who were excluded because they did not qualify as they do not have $40,000 at the age of 55 years in 2013. With the amendment, such members will now be automatically included if they have $60,000 when they are 65 years old. Although this appears to be a logical development viewed from the perspective of the CPF LIFE as it aims to be a comprehensive retirement scheme, and its objective of protecting as many retirees as possible is laudable, it does nevertheless give the impression that CPF LIFE is rather arbitrary. After first rejecting those members without sufficient funds, it then seeks to subsequently auto-include them the second time after they have come into some monies. While some members may welcome this move as they are now given a second chance, others may prefer to be given a choice instead of being compulsorily included when they thought that they were already excluded.

So, could the Minister clarify the rationale for this second auto-inclusion and whether such members should be given a choice of whether or not to join the CPF LIFE, instead of being compulsorily covered? Could the Minister also give an idea as to how many people will be affected by this change?

The second change to the CPF LIFE scheme allows the Board to make use of additional funds that a member accumulates in his Retirement Account after joining the CPF LIFE but before the Draw-Down Age, to top up his LIFE plan so as to provide for a higher monthly LIFE payout. I think that this is also quite an important change. While the objective may be good, that is, to provide a higher retirement income for members, some members may not welcome the move as they would already have made their choices on which of the four LIFE plans to choose from, based on the amount that is available when they turn 55. There is certainty when members know exactly the amount that would go into their LIFE plans at the time they turn 55. So the new amendment will add some element of uncertainty as it allows additional monies accumulated in the Retirement Account after they join CPF LIFE to be used as premiums for their LIFE plan. In other words, members who are covered by the plan will not have a definite idea as to how much will actually be used for their LIFE plan as the amount can increase after they have joined the plan so long as they have monies in their Retirement Account.

Could the Minister clarify what is the basis and why this change is being effected and why was it not included in the original law when the scheme was first discussed, so that members have a clear idea on their financial commitments under the LIFE plan? Could the Minister also provide information on how many of those currently on the LIFE plan did not meet the Minimum Sum requirement?

Madam, I welcome the idea of allowing CPF members to bequeath the CPF monies directly to their nominees’ CPF accounts, as this would better provide for the healthcare and retirement needs of their nominees. This is certainly a good move. As this is a purely voluntary decision on the part of the member, members can decide based on their own needs and in their own interest and it is not a controversial change. In fact, it would help to enhance the CPF savings of surviving members of a deceased member.

On the amendment with regard to the unclaimed CPF assets of deceased and dormant members, could the Minister provide information on how many people will be affected and what is the total amount involved? On a further point, could the Minister also enlighten this House as to who will be considered as dormant members and what steps will be taken to locate the beneficiaries before the funds are transferred to the CPF general fund? Could the Minister also provide some information about what will happen to the monies of the deceased and dormant members that are transferred to the general fund, how will it be used and who will benefit from it?

On the amendment to allow conditions to be imposed upon the grant, renewal or reinstatement of any registration, licence, certificate or permit, without any application being made for that registration, licence, certificate or permit, I assume that this refers to the Medisave contributions for self-employed persons. The purpose of this amendment is likely to catch those situations where the licence once issued need not be renewed any further. With this amendment, the relevant Government agencies will now have the power to have a licence terminated, suspended or revoked if a self-employed person has not been paying

his Medisave contributions. Whilst the intention of this amendment is good, as we also want to make sure that those who are self-employed have enough Medisave savings to take care of their medical needs, I would like to urge the CPF Board to put in place a system where the self-employed will be informed in advance before his licence is suspended, revoked or terminated as this affects his livelihood, and we all know that the self-employed faces greater income volatility compared to normal employees. They normally default when they are faced with other pressing immediate needs which they had to settle, such as the children's school fees or housing arrears, which may then affect their ability to pay their Medisave contributions.

Mdm Deputy Speaker, other than these comments and clarifications, I support the Bill.

5.21 pm

Madam, I would like to seek two clarifications on the Bill.

First, as regards the definition of "dormant account", the new section 2(1B) defines dormant account as one where a member has reached a prescribed age, prescribed circumstances exist and he has not responded to the Board to confirm that he is alive. According to the new section 13(7B), this dormant status would trigger a count-down towards a transfer to general monies, where the member’s monies will not attract interest payments.

Madam, there will be some concern about ensuring that elderly and frail CPF members, including those with stroke, dementia or who are illiterate, are not unfairly deprived of interest because they did not respond to the Board's request. What sort of due diligence will the Board exercise before making the transfer to the general monies of the Fund? Would there

be a link-up to nursing homes, welfare homes, etc, to account for those in care? Would there be personal visits by CPF Board officials to the member's last known address?

Secondly, Madam, under clause 16(a), the new section 27L (1A) provides that CPF members who have already paid premiums for CPF LIFE annuities when they reach 55 will be required to pay additional premiums just before they reach Draw-Down Age (which eventually will be 65 years). These additional premiums will only be told to them two months before they reach the Draw-Down Age. Madam, at age 55, the member would have made his selection of the CPF LIFE annuity plan based on the premiums and projections told to him then. To require him to pay additional premiums just before Draw-Down Age seems to be a retroactive requirement, since he cannot change his annuity plan unless he gets special permission then. Should the member not be given a choice whether or not to pay the additional premium?

5.23 pm

Mdm Deputy Speaker, first, I would like to commend the Ministry for improving the clarity of the provisions in the CPF Act. I would also be focusing on a few of the proposed amendments.

Currently, CPF LIFE will apply automatically to those who turn 55 from 2013 and have at least $40,000 balance in their CPF Retirement Account. Those without that amount are left out. With this second auto-inclusion point, this group will now be included automatically, should their CPF savings increase to $60,000 by the time they turn 65. I would like to commend the Ministry as this amendment addresses the problem for which CPF LIFE was intended to be in the first place – which is to provide for those who may

not have enough funds after their retirement.

Many CPF members have been invited to join this scheme. However, I would like to suggest that more specific guidelines be given on how to select one of the four CPF LIFE options available. This is because members cannot change it once they join the scheme, nor are they able to withdraw except under certain conditions. It is also important to emphasise and educate members that they should not depend entirely on CPF LIFE to meet all their retirement needs as the payouts may be insufficient. An all-encompassing approach should be adopted to help Singaporeans plan for retirement and this includes education on other options other than relying purely on this scheme.

Clause 2(g) amends section 2 by inserting a new subsection (5) to clarify that where a reference is made to the Board being satisfied that a person lacks capacity within the meaning of section 4 of the Mental Capacity Act, the Board must be satisfied that the person’s lack of capacity is likely to be permanent.

Madam, I would like to seek clarification on how this permanence is to be tested and defined. According to section 4 of the Mental Capacity Act, it does not matter whether the impairment or disturbance is permanent or temporary. Would it be too strict for the CPF Act to exclude, for example, severe impairment in the functioning of the brain, which lasts for a period of time but with a chance of recovery? How will it ensure that the monies paid out will reach the intended member, who has been deemed to lack mental capacity?

I welcome the new sections, 26A to 26D, where the distribution and disposal of shares of members who died before 1st January 1996 is addressed. Automatically disbursing monies to the nominees is welcome but the issue of dormant CPF accounts raises concerns. If a member is

found to be still alive, the monies due will be paid by the CPF Board. In a modernised and automated environment, how does this misinformation come about? How does such a situation arise and how many such "orphaned" cases does the Board handle per year? What has been the payout and what are the causes for such lapses or rather situations?

Madam, the number of unclaimed monies is a cause for concern. I would like to know if the public outreach programmes by CPF are sufficient and that if they are, how could we further fine-tune the outreach to ensure that the message reaches the CPF members and the public at large that nominations are necessary to ensure that monies due to members will reach their loved ones. And as a matter of concern, is it possible for the CPF Board to provide the figures for the amount of unclaimed CPF monies over the past 10 years, the causes and how has the Board gone about in settling the unclaimed monies due?

With that, I support the Bill.

5.27 pm

Thank you, Madam, for this opportunity to share my thoughts on this important Bill.

Over the years, the Central Provident Fund (CPF) has evolved into a comprehensive social security scheme that provides for, among others, retirement, healthcare and home-ownership needs of Singaporeans. This Amendment Bill, as with previous amendments, serves to further refine the provisions in the CPF to better meet the needs of Singaporeans. On behalf of all Singaporeans, I would like to thank the Minister and his staff for their hard work in sustaining this important scheme that we have come to

depend on for economic and social security.

There are two aspects of this Bill which I would like to highlight. The first relates to clause 7 which amends section 16A(1) to allow withdrawal from a deceased member's Medisave account to pay for "psychiatric or other treatment or services" rendered to the deceased before his demise. This serves to expand the eligibility of Medisave beyond just "medical treatment".

On this note, I would like to ask the Minister what "other treatment or services" covers. Does the expansion include all health and care-related services rendered to the deceased before his death or only to what was originally authorised to be deducted through Medisave? Given the fast greying Singapore population where healthcare costs for elder care are of primary concern, will the Minister consider extending Medisave coverage for palliative care, step-down home care services for example, as well as institutional care services for the elderly? If so, this will certainly ease the financial constraints on caregivers, and render Medisave a more robust and comprehensive healthcare savings scheme.

I understand that the conditions under which Medisave can be invoked are kept stringent to minimise risk of premature depletion of the account. However, in the case of the deceased, I think we can afford to be more generous in our definition of eligibility so that faithful caregivers will be fairly compensated for their services.

The second aspect of this Bill I would like to draw attention to is the amendments to the CFP LIFE scheme. Once again, I am reminded that only those with active CPF accounts stand to benefit from this important scheme. The group that stands out as being at risk for omission is the ageing homemakers.

In my very first debate in this House last July, the Minister had assured us that there are processes in place to facilitate regular contributions to CPF accounts of loved ones. I would like to ask the Minister to share with us the data on the proportion of Singaporeans who are still without active CPF accounts as well as the number of Singaporeans who are nearing 55 years old but do not have the minimum sum required in their CPF Retirement Account. What is the profile of this group and what efforts have been made to help them meet the eligibility requirements for inclusion in the CPF LIFE scheme?

Mdm Deputy Speaker, I want to thank Mdm Ho Geok Choo, Ms Sylvia Lim, Mdm Halimah Yacob and Assoc. Prof. Paulin Straughan for their support of the Bill. Let me respond to their comments and questions.

Assoc. Prof. Straughan asked about those who might not have $40,000 in the CPF Retirement Account. Currently, two-thirds of all working age resident CPF members are active members. The CPF Board projects that for the first auto-inclusion cohort in 2013, around 70% of active members will have at least $40,000 in their retirement savings account. Therefore, all these will be auto-included in CPF LIFE. This ratio will improve and become higher for younger cohorts, because they would have a longer time to accumulate savings and benefit from interest income.

However, Assoc. Prof. Straughan may be under the impression that there is a minimum savings level in the Retirement Account to qualify for CPF LIFE. I assure her that this is not so. Let me reiterate that there is no minimum balance needed to qualify to participate in CPF LIFE. Members with lower CPF balances can still opt-in to the scheme, as I mentioned in my Second Reading speech.

On top of that, we have several schemes to help members with low balances. First, we help them work and save more. The Workfare Income Supplement scheme encourages older low-wage workers to continue to work and to save for their retirement. We are also introducing re-employment legislation which was highlighted by my colleague, Minister Lim Boon Heng earlier today. This will also encourage them and provide more opportunities for older workers to continue working to build up their retirement savings. Secondly, the Government provides the L-Bonus, or CPF LIFE bonus of up to $4,000 for those born before 1963, to help them to have more savings for CPF LIFE. Thirdly, we have gradually liberalised the minimum sum topping-up scheme over the years, so that by now, besides family members, even employers and friends can also top up the Retirement Accounts of members with low balances.

During the Second Reading of the CPF Act last July, Assoc. Prof. Straughan had suggested introducing a GIRO system to facilitate top-up for CPF members. She will be happy to know that we have taken her suggestion on board and CPF Board has started offering this service since April this year.

All these measures will help CPF members increase their retirement savings in order to participate in CPF LIFE. The rationale behind having the second auto-inclusion at the Draw-Down Age that Mdm Halimah asked about is to help include those who have missed auto-inclusion at age 55, but who have accumulated more savings by their Draw-Down Age. For the first auto-included CPF LIFE cohort, the participation rate among active members is projected to increase from 70% to over 80% with auto-inclusion at the Draw-Down Age.

Mdm Halimah and Ms Sylvia Lim asked about the additional premium at

Draw-Down Age (DDA) for those who are already participating in CPF LIFE. Let me clarify, this is no different from the current practice under the Minimum Sum Scheme, where all the balances in the Retirement Account, up to the minimum sum, will have to be set aside until DDA, including contributions and interests received between age 55 and DDA. The member will then receive a payout for 20 years from DDA, under the Minimum Sum Scheme. Hence, it is necessary and appropriate for CPF LIFE to similarly take in such additional monies in the Retirement Account between age 55 and DDA.

This intention is not new. This intention was also stated clearly in the report of the National Lifelong Income Committee in 2008. We had not amended the Act for this purpose last year, because the earlier amendments last year were meant to facilitate older members to opt-in. It was meant as an opt-in scheme. As it is an opt-in scheme, the second premium was incorporated as part of the scheme design. So it was already in the CPF LIFE scheme for the opt-in cohort. Now we are making this amendment in the Act to build it in as a feature for the auto-included cohort.

I agree with Mdm Ho Geok Choo that public education is important to help members understand how to select the plans. Since last September, the CPF Board has sent direct mailers to every eligible opt-in member with information on CPF LIFE. The Board has also reached out through various media channels, the CPF website as well as regular talks and roadshows on CPF LIFE. Members can also approach the CPF Board directly for help and advice. When choosing a plan, members should consider whether they prefer to have a higher payout and provide less for their beneficiaries when they pass on, or they prefer to leave more for their beneficiaries and accept a lower payout.

These are trade-offs for them to decide. Once they have decided, they should then select the CPF LIFE plan that would best suit their needs and criteria. We have simplified CPF LIFE into four plans. Many members have found the materials provided to them helpful in understanding and selecting the plans. I also agree with Mdm Ho on the importance of helping Singaporeans plan for retirement. The CPF Board has a member education programme which promotes retirement planning. The Board produces education materials and runs events such as talks for CPF members reaching 55 years of age to promote these messages. The Board also has a dedicated financial planning website, IM$avvy. The Board is also an active member of MoneySENSE, the National Financial Education Programme, led by MAS. The Board will continue to help its members plan for their retirement.

I will now address Mdm Halimah's queries on disbursement of CPF assets to beneficiaries. In the last five years, the CPF Board has been able to locate and make payment to nominees in 98% of all such cases. Two percent of the cases remain outstanding, despite the Board's efforts to locate the nominees and disburse the monies. These include cases when nominees either did not respond to the CPF Board letters or could not be located because of insufficient or inaccurate information provided by the member on the nomination form, or some nominees might have relocated overseas.

Over the last few years, we have on average about 280 cases of beneficiaries not coming forward to claim the monies of deceased members, involving about $2.4 million each year. As for Mdm Halimah's question on when a member will be considered dormant, I have explained that in my earlier speech. Firstly, this is if the record shows that the member has attained a prescribed age, which is now set at 100 years. For some

who live beyond 100 years, there is a second condition, and that is if the member has not responded to any notices that the Board has sent to them or advertisements that we placed in newspapers to ask them to come forward. If they do not respond to these advertisements, the third condition is that there has been no account-activity for 10 years.