Hansard, 2011-03-01

Under the provision of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Member has been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which he has been appointed) for the period stated: Name From (2011) To (2011) Mr Lee Kuan Yew 01 Mar 01 Mar

ABDULLAH TARMUGI Speaker Parliament of Singapore

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

28th February,2011 (1) Amusement Rides Safety Bill (2) Private Lotteries Bill (3) Legal Profession (Amendment) Bill ABDULLAH TARMUGI Speaker Parliament of Singapore [Mr Speaker in the Chair]

Order. Pursuant to paragraph (7) of Standing Order 92, I have fixed the times for the conclusion of consideration of the heads of expenditure in the Estimates of Expenditure for FY 2011/2012 in the Committee of Supply (COS).

In fixing these times, I have taken into account the reduction of Question Time to 30 minutes on the days allotted for the COS debates and the sitting times of the Committee of Supply.

Additionally, I have notified Members that the sittings on the allotted days will commence at 12.00 noon.

The "guillotine" times I have fixed have been notified to hon. Members and will appear in the Official Report*.

*Cols. 3173-3178.

"to provide for certain matters relating to the operation of a university known as the Singapore University of Technology and Design and to make a consequential amendment to the Private Education Act 2009 (Act 21 of 2009)",

presented by the Senior Minister of State for Education (Mr S Iswaran); read the First time; to be read a Second time after the conclusion of proceedings on the Estimates of Expenditure for FY 2011/2012, and to be printed.

Order read for Resumption of Debate on Question [18th February, 2011],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2011 to 31st March, 2012." – [Minister for Finance].

Question again proposed.

12.04 pm

Sir, listening to the Finance Minister’s speech last week, I was struck by how things have changed so dramatically from just two years ago.

In 2009, we were in the midst of a severe global crisis. The future looked uncertain. Singaporeans were fearful, worried about losing their jobs and paying their bills. The Government responded quickly and decisively, putting in place well thought out programmes that would save jobs, create new ones, and provide assistance to those affected. Our access to past reserves put us in a strong position. During the turbulence, investor confidence was hardly shaken. Instead, it was strengthened because of the way we handled the crisis.

Sir, to achieve a record growth of 14.5% last year is no mean feat. For a small, vulnerable island without natural resources, exposed to the world and its unpredictable and sometimes violent winds, we have reason to take some quiet pride in the anchors which keep us secure and strong – a good Government, and a resilient and hardworking people united by a sense of common purpose and destiny. Sir, this year’s Budget reflects our continued quest for progress. It bears the hallmark of a Government that understands the challenges ahead and that is attuned to the major concerns of its people and their aspirations today. It is also prudent, returning to past reserves the amount drawn during the crisis. It promotes opportunities for Singaporeans to develop further their skills and to fulfil

their own promise. At the same time, it seeks to address the pressing concerns of the average Singaporean, particularly the rising cost of living. While I support the great initiatives and programmes in the Budget, I would like to highlight three areas of concern.

The first relates to the widening income gap. A key initiative to narrow the gap is through Workfare. Sir, I welcome the Workfare Special Bonus and Workfare Income Supplement for lower income workers. The Workfare scheme is designed to support the wages at the bottom end, especially the older workers whose pay has been stagnating and even shrinking. I had an informal dialogue with the Amalgamated Union of Public Daily-Rated Workers recently to seek their feedback. I am the union’s Trustee and Adviser. The union represents some of the lowest-income workers in the public sector – cleaners, pest control workers, landscape technicians. They were cheered by the Growth Dividends, CPF Medisave top-ups and assistance targeted at the lower-income. I had expected them to be excited about the Workfare Special Bonus and WIS. Unfortunately, some of them do not qualify. Why? Because their basic pay is so low – at about $900 usually – that they have to work overtime or take on a second job to survive and support their families. Having put in the extra effort, their income is now higher than the Workfare income ceiling of $1,700 a month.

Take for example Kamaruzaman bin Abdul Rahman. He is a vector control workman or what most of us know as pest controller, aged 59. His basic salary is about $1,100 a month. He said he could not support his family on this salary, as his wife suffers from chronic illnesses and needs medical treatment. He takes a second job as a floor polisher. He earns about $800 a month for this. He works extremely hard. For his first job

as a vector control workman, he works from 6.00 am to 2.00 pm. Then, he goes for his second job, polishing floors from 3.00 pm to 11.00 pm. That is working 16 hours a day. For his two jobs, his total monthly income comes up to about $2,000, including his allowances such as his bicycle allowance and good conduct allowance. Because of his strong work ethic, he does not qualify for Workfare. This runs counter to one’s sense of social equity.

Some Singaporeans earning the same pay of $1,000 or $1,100 per month would ask for welfare handouts to help pay their bills but there are other workers like Kamaruzaman, who works at two jobs to improve their lot. As of now, he has hit the top-end of his salary scale of $32 a day. By the way, the scale starts at $26 a day. Compare that to the $100,000 to $200,000 a day reportedly charged by a well-known surgeon. It is not uncommon for some low-income workers to put in extra overtime to earn more money over and above their regular eight hours. Because of this, they no longer qualify for Workfare which includes their overtime pay and allowances.

Sir, I would argue for a review and relaxation of this criterion – to calculate based on their monthly basic salary and nothing more. As for the low-income workers who hold two low-paying jobs, can the Minister consider a Workfare bonus and WIS for them, too? Perhaps subject to a ceiling of maybe $2,300 of the combined basic salaries of their two jobs. We should not penalise our older and low-skilled workers for working harder and longer hours, sometimes to the detriment of their own health and family life. Instead, we should recognise them for making the extra effort.

Sir, the most fervent desire of our low-income workers is to see their salaries rise. The Finance Minister's stated aim to raise the real wages of Singaporeans by

30% in the next 10 years is heartening, but how can this target be achieved for the lower-income workers in a systematic way? Efforts at present seem ad hoc. Over the years, one key problem is that employers tend to peg the salaries of Singaporeans at the lower end to that of foreign workers. The Government’s move to raise the foreign workers’ levies is therefore good news to our low-income workers. Hopefully, one effect would be to force employers to raise their wages and restructure their jobs so that more Singaporeans would want to take up those jobs, especially in the services industry. I think employers should stop saying: "Singaporeans do not want to take these jobs, so I have no choice but to hire foreign workers." Instead, they should say: "Singaporeans don’t want to take these jobs, so I must see how to make these jobs more attractive to them. Improve their pay, improve their hours, improve their conditions, improve their productivity."

Yes, it might increase business costs but now with the higher foreign worker levy, one presumes that their costs will be about as high anyway if they hire a foreign worker for whom they also have to provide accommodation and transport. At the same time, in making the shift towards greater productivity, employers can now draw from the enhanced National Productivity Fund and benefit from the Productivity and Innovation Credit. Given that these measures are new, I would urge the Government to monitor the progress of these schemes and study its effects, especially on the wages of Singaporeans on the lower end.

My second point is on social mobility. There is no doubt that, over the generations, life has improved for the vast majority of Singaporeans with better jobs, better housing and a better quality of life. We take seriously our commitment to

invest in our people and to build an open mobile society where all have a fair chance to progress. Indeed, this is evident in this year’s Budget. However, the concern remains whether the most vulnerable sectors of our society would be able to benefit from the opportunities available to the rest of society and to break out of their poverty cycle.

According to the Ministry of Education, students from lower-income families are still able to move up in Singapore. I am particularly struck by its finding that almost half of the students who live in 1- to 3-room HDB flats are admitted to universities and polytechnics. This is, indeed, reassuring but there is also evidence which suggests that children from higher-income families have a huge head-start with their ample resources and home environment which encourages learning and cultivates high expectations in their children.

Sir, we should put social mobility on the top of our policy agenda. I urge the Government to set up a national review committee to examine our progress over the years in this area and assess the contributions not only of the Government but also civil society, businesses and major institutions. W e should find out what are the barriers which prevent people from disadvantaged backgrounds from realising their potential and find ways to break that down, even as we create more opportunities for all.

My third point concerns inflation. Many countries around the world, both emerging countries and developed countries, are also grappling with the problem of inflation. The United States, Europe, India, China, South Korea and Brazil, just to name a few. In some countries, the inflation is in the double digits. The political unrest in Libya and other parts of North Africa and the Middle East have caused oil prices to spike sharply and there are now concerns that

the prices would spiral further. The Finance Minister has listed the Government’s approaches to deal with inflation, including providing greater subsidies and benefits to those who need it most. In this respect, the top-up to the ComCare Fund is most welcome.

In my constituency, as in many others, we have used this fund to purchase public transport vouchers and food vouchers and provide food items, such as rice for the needy, the elderly and the sandwiched groups who are most hit by rising prices. Just last night at my Meet-the-People session, some residents from a rental block came to see me to ask for assistance as they find it hard to cope with some prices which are going up. They do not hold regular jobs and they are hit most by rising prices, especially of food, electricity and transport. With the enhanced ComCare, we have the resources to help them and ease their fears.

Sir, it is right that we target our more immediate and generous subsidies and handouts to those who suffer most from rising prices, especially of basic items such as food, utilities and transport. Sir, I note that there are calls in this House to cut the GST which really benefits the higher income and to give even more generous handouts to all Singaporeans, regardless of their incomes. This is an easy populist call, and not very responsible nor sustainable.

By putting more money than called for in the hands of those in the high-income brackets, the handouts may only help drive prices higher by encouraging consumers to spend. If this happens, it is the lower-income who will bear the brunt.

I would like to ask the Finance Minister for his assessment of the oil crisis and how that would affect the growth of Singapore, a net oil importer. Sir, the current turmoil in the Middle East reminds us how suddenly a rich country's

fortunes can reverse and how quickly their people, once peaceful, can turn on one another.

Sir, I visited Bahrain just about three months ago, as part of the President's delegation. At first, I was envying it a little for its oil wealth – its people do not have to pay any personal income tax in Bahrain. They do not have to work so hard to earn a living. Some Bahraini businessmen told me that most Bahraini people work in the public sector, where they can take it quite easy. In fact, the aspiration of most Bahraini people is to work in the public sector – I am told by the Bahraini people themselves.

They observed that many youths have a poor work ethic and, therefore, are unemployed, even though there are jobs available in the private sector. They have a sense of entitlement to be provided for, out of the oil wealth. Unemployment in Bahrain is estimated to be around 15%.

Sir, the problem of this kingdom becomes clearer to me when the Bahraini economic planner pointed out that its oil reserves are modest and limited, compared to its neighbours and are expected to run out in 10-15 years. So, the economy needs to diversify and develop an innovative private sector as an engine of growth. However, they have a hard time persuading its own people of this imperative, as their gaze is fixed on their oil wealth. When we were there, we visited the souks and some other places, including the Pearl Monument. Life there was placid and people were friendly but, beneath that facade, there was a simmering tension along sectarian lines between the ruling Sunni minority and the poorer Shi'ite majority. Also perceptible are the deep internal divisions and rivalries within the government itself.

Sir, by the time I left Bahrain, I appreciated our political ethos, our system of meritocracy and our social cohesion a

little more. Singapore is not perfect. We take nothing for granted and constantly strive to improve.

Sir, in conclusion, I would say this is a very good Budget. A fundamental message in the Budget is how we must grow the economy so that there will be fruits to share with all, especially with the more vulnerable among us. "Grow and Share" – it sounds simple but we all know it is not. To grow bigger and higher, we must sink our roots deeper. This means strengthening our social cohesion and making sure that all Singaporeans, regardless of their race, language or religion, or social and financial background, feel that they have equal access to opportunities.

On that note, I support the Budget.

12.18 pm

Sir, I would first like to commend the Finance Minister on the Budget that was generous, yet prudent.

Sir, one of the main highlights of the Budget was about strengthening our society and how social cohesion forces must be deliberate. This is what I would like to talk about.

I have been both a participant in and a spectator of sports from young. I remember hurrying to the stadium with my team mates after training to catch the Lions play in the Malaysia Cup matches. We cheered together, booed together and rejoiced together. At the end of every match, whether it was a win, a loss or draw, there was a sense of all of us being united. United in the joy of winning, the frustration of a draw or the dissatisfaction of a loss. It was not about the result. It was about sport bringing together the average man on the street, the affluent

and the uneducated together, with the common passion for a common purpose. I still fondly remember being at the match when Singapore won the Malaysia Cup for the last time in 1994. When the final whistle blew, the crowd went crazy! We were high-fiving people we did not know and hugging random strangers out of elation, regardless of the backgrounds we came from.

A not so distant memory that evoked the same passion, purpose and unity was the Youth Olympics Games held in Singapore. What I witnessed in the stadium were people who were decked out in the national colours of red and white, with every cheering apparatus you could think of in hand, proudly singing the National Anthem. They were behind the Cubs 110%, regardless of the result. I remember the poolside and the stadium erupting when Singapore won two of our silver medals from Rainer Ng and Isabelle Li. No one thought they could do it, but buoyed by the passionate home crowd, they rose to the challenge.

Sir, sport brings together a society. It is a natural, social cohesive force. In physics, a cohesive is a molecular force within a body acting to unite its parts. Likewise, sport is a force within a society that acts to unite those from different social economic backgrounds, race, language, culture and religion.

Sir, there was not much mention of sport in the Budget Statement. The handouts to the people were good and necessary. But it is not a long-term solution or something we can expect from the Government every year. Sport, however, is something that can be a long-term and effective solution. Singaporeans will support their countrymen. However, there is something special about Singaporeans coming together on home ground to cheer on their home team. Therefore, I would like to suggest that the Singapore Government use the opportunity such as

the SEA Games, Asian Games and Commonwealth Games to play host. This is to give all Singaporeans the opportunity to stand united for a cause. As our society develops, the socio-economic divide causes division within a nation, as with many nations. We should invest in sports for the purpose of building and strengthening the social fabric of Singapore.

With that, Sir, I support the Budget.

12.22 pm

Sir, by definition, a balanced budget is one where revenue equals or exceeds expenses. But a good budget requires a lot more balancing than just revenue and expenditure. A good government budget has to balance the needs of the lower-, middle- and high-income earners' long-term developments and short-term demands, the young and the old and the various business sectors, to name a few.

For this Budget, I would say that the challenge is to balance, optimally, the present and future needs of the nation. The most pressing problem to be tackled is the rising cost of living. Our $3.2 billion "Grow and Share" package allows Singaporeans to directly benefit from our exceptional economic growth last year. It will certainly help to alleviate the pains of inflation and rising costs. As for our future growth, the Budget strategies to boost productivity and innovation will elevate the incomes of all Singaporeans.

Last year, our economy rebounded faster than expected. This is due, in no small part, to the resounding success of earlier initiatives like the Special Risk-Sharing Initiative (SPUR) and the Jobs Credit Scheme that were created in response to the economic crisis. The robust economic performance we experienced last year means that we are now able to enjoy the generous 2011

Budget that is able to meet immediate concerns and also enable us to fulfil our longer term goals. In other words, better times beget bountiful budgets. However, even as good times return, we will do well to exercise prudence in the way we employ our surpluses. Rather than spending away our surpluses readily in euphoria, we should invest wisely in our people and our corporate systems to build capabilities.

The "motherhood" statement of our Budget this year is "invest in our future". I note that the Minister for Finance referred to the "Growth and Share" package as being complementary to the long-term measures to help lower- and middle-income Singaporeans. The key word is "complementary". Although measures such as the Growth Dividends, tax rebates and top-ups will make a positive and immediate impact on the lives of many Singaporeans and allow them to share in the growth of the economy, I would like to caution that spending on consumption is only a short-term measure. It is like taking a medicine for pain relief. Within a short time, the pain lessens and disappears, but that little pill has not removed the underlying problem.

I am heartened to note that the Finance Minister has made it clear that the main thrust of the Budget is to strengthen our economy by boosting skills, productivity and enterprise growth and building our society through ensuring opportunities for all, including the lower-income group. This approach recognises that long-term investment in the future matters more than one-off measures. However, the post-Budget reaction received by the Feedback Unit, REACH, shows that the rising costs of living remains the primary concern of many Singaporeans. At this point, there seems to be little absorption of the fiscal philosophies governing the Budget Statement. Understandably, many Singaporeans

are worried that cash payouts will not cover all rising costs and they find it hard to see beyond their immediate difficulties. Nevertheless, surely more can be done to help Singaporeans understand that the Government cannot shield all residents completely from the impact of rising costs, and investing in the future with the aim to raise real incomes by 30% for this decade paves the way to better living standards in the long run for everyone. We should come up with a novel and simple way of communicating this "motherhood" statement of the Budget more effectively to the people.

Sir, I applaud the Finance Minister's responsible decision to return the $4 billion drawn for the Resilience Package into the past reserves, even though there is no legal obligation to do so. Returning the funds into reserves will strengthen our position to cope with future uncertainties and vulnerabilities. We must save and set aside money for rainy days, especially in view of the extreme weather patterns and volatile economic turns that we have almost come to expect as normal these days. The Singapore economy is sunny for now, but there are some dark clouds looming overhead.

Although we welcome the economic recovery in Asia, the global economy is not quite out of the woods yet. While Asia is charging ahead, the economies in the Euro Zone and the US are, on the whole, still anaemic, although there are some early signs of recovery. Hopefully, these economic imbalances will work out eventually without overly painful adjustments or discontent and social unrest, which can disrupt global recovery.

Meanwhile, the domino effect of unrest in the Middle East and North Africa has taken the world by surprise. First, it was Tunisia and Egypt. Now, there are protests in Bahrain, Yemen, Morocco, Iran

and Sudan. The recent events in Libya threaten oil supplies and may send prices rocketing to unseen levels, unravelling any inroads into the still fragile recovery of the world economy and sending major economies down the spiral into a double dip recession.

Further, rising food prices are casting a shadow over the household budgets of many Singaporeans. In fact, it is a worldwide predicament. If we find it difficult to cope with high food prices, in spite of our strong economy and full employment rate, I wonder how other less well-off nations are managing – grappling with hunger while fending off social discontent.

Back in 2007, I recall that prices were rising amidst the booming global economy. Compared to 1.3% rise in 2005 and 1.6% rise in 2006, Singapore's food inflation in 2007 shot up to 2.9%. The price increases did not seem to be a hindrance to the rich western economies that were borrowing and consuming like there was no tomorrow. In contrast, the world is now faced with a double whammy. Major economies are not growing while commodity prices are getting more and more expensive. The stresses on these economies may also filter over to Asia.

Another change that may shake our economy is when our currently low interest rates go up. It can only be a question of when, not if. In January this year, MAS Managing Director Heng Swee Keat warned banks not to assume that the current low interest rates will last indefinitely and to take into account potentially higher interest rates in their credit assessments. The general consensus is that the US Federal Reserves will pump in more money if the need arises, with more quantitative easing (QEs) and that low interest rates will stay for some time to come.

However, there will be a day when interest rates will go north. Businesses and the man in the street

should be prepared for it in their financial planning to avoid rude shocks. Sir, recently, anti-speculative property cooling measures were introduced to stabilise the property market buoyed by our low interest rates, inflow of hot money, high liquidity and strong economic growth. The Minister for National Development has explained that low interest rates compounded by excessive liquidity can cause property prices to overshoot economic fundamentals and lead to unmanageable capital losses should the market weaken. When interest rates rise, property owners who are overstretched financially will be caught. May I ask how long will the latest cooling measures be sustained? How will the Government determine when the market is sufficiently "cooled"? Although we should be wary of excessive speculation, we would all agree that some degree of short-term speculation is desirable or even necessary in every market as it adds liquidity, resulting in the creation of a more efficient market. Therefore, I would like to ask, at which level of interest rate or liquidity would the Government consider withdrawing the draconian measures meant to stem speculation? Sir, many are concerned about the impact on businesses arising from the 0.5% increase in the CPF contribution rate from employers and the increase in the foreign worker levy. I believe that most employers have accepted the restoration in the CPF contribution. However, the levy hike will require a more painful adjustment on the part of businesses. The fact is that there are jobs that Singaporeans refuse to take up. In January, it was reported that job vacancies were at a four-year high, with 50,200 unfilled jobs, most of which are low skilled. Businesses in the service sectors, which attract little interest from local workers, will find it a challenge to increase their productivity and still maintain their service standards.

Sir, there is never a good time to increase fees and charges. But now that the economy has improved and business is better, companies are in a healthier position and should seize this opportunity to raise their productivity and reduce their reliance on cheap foreign labour. At the same time, they may take advantage of the enhanced Productivity and Innovation Credit Scheme to raise the skills of their workers and boost productivity. Sir, onto a subject related to productivity, that is producing more babies. I was talking to a CFO of a listed company yesterday who has two children aged 4 and 2 years old. So, I asked him what would persuade him to have the third child and more. As he is an accountant by training, someone who deals with numbers and costs, I thought he would calculate the high costs of bringing up more children but, to my surprise, he said if children of families with more than two children can get priority admission into primary school, he and many in his cohort would definitely want to have more children. In fact, he would apply for six months leave, take his wife on a long vacation and work harder. Although there will be some implementation issues to be ironed out in such a policy, I think the suggestion is worth considering and it is not too dissimilar to allowing families who stopped at two children to have priority admission to school when we had the Stop at Two policy. Sir, in our drive to improve productivity, workers too must play their part. Increasing productivity can come in many ways. I would like to share the advice which Jim Rogers received from his father. Some may know Jim Rogers as the legendary investor who has now made Singapore his home. In his book, A Gift to My Children, he recounted that when he was 14, he spent his Saturday mornings working in his uncle's convenience store.

Sometimes business was slow, but he never sat idle, in part because of the advice his father gave him that "there is always something you can be doing". A few years later, he brought the same energy to his job at a local home builder. When he was awaiting deliveries of building materials or had nothing to do, he would gather up the scrap lumber or sweep up the sawdust or whatever else he could find. His initiative, energy, right attitude and work ethic so impressed his bosses that he advanced quickly in his job. Increasing productivity does not mean that one has to work longer hours. But, during the hours of work and since we are stuck having to spend those hours in that work anyway, if every worker were to do the best that he can with the right attitude and work ethics, I think we can increase our productivity many times over. Sir, no doubt, the increase in the CPF contribution from employers and the levy increase will lead to cost increases for companies which will, in turn, be passed on to the consumers. With the generous handouts this year and a healthy economy to boot, it will be no surprise that there will be many consumers who would be willing to fork out the resulting increase. This will be welcomed by businesses, but I would urge Singaporeans to be cautious in their spending on consumption and to remember to save and invest wisely in view of the uncertainties I mentioned earlier. In his Budget Statement, the Finance Minister has given us his careful diagnosis of our economic situation and prescribed appropriate short-term relief and long-term measures accordingly. Although our economy is growing healthily, the economic environment is still fraught with uncertainties and we must stand prepared.

Sir, I support the Budget Statement.

12.36 pm

(In Mandarin ): [For vernacular speech, please refer to Appendix A*. ] Mr Speaker, Sir, in the last six months, we have heard around the world one austerity budget after another. Just type the words "austerity budget" into any of the search engines, chances are that a list of countries would be thrown up – countries like Ireland, Greece, Portugal, UK, Spain and even the state of California in USA. For example, in Ireland where they have just announced their budget last December, there were spending cuts and tax increases amounting to six billion Euros. The austerity measures include cuts to child benefits, pensions, social welfare spending among others and also various tax increases as they tried to rein on the budget deficits that run as high as 14.4% of GDP. About 24,000 public sector jobs will go as well. In Portugal, their recently announced budget also aims to cut 5 billion Euros through a combination of painful cut in public spending and tax increases. In the United Kingdom, the Chancellor of Exchequer announced deep budget spending cuts and raising taxes to help the government slash its 1.3 trillion pounds of debt. These deep cuts in public spending coupled with tax and fee increase inflicted pain on their people and brought about unrest and street protests. The unemployment hit is as high as 20% in the case of Spain and others are not far behind. The people have to suffer and pay a very high price from the mismanagement of their past governments.

On the reverse, if you do a similar search on the words "generous budget"; yes, you guess it right, Singapore is the top on the list. Hence, it is actually with great pride that I listened to the Budget speech by the Finance Minister. The Budget not only dished out a generous

sharing of the fruits of our economic performances at the time where our citizens are feeling the squeeze of rising costs, it also still retains the usual hallmark attributes of investing into the long term to enhance our economic viability, for example, our single-minded focus to enhance long-term productivity.

To top it all, we still have money to return to the reserves. The $4 billion that we dipped into two years ago to fund Jobs Credit and SRI – which we should not forget – was crucial in preventing job losses in 2009. Returning the $4 billion sets a very good precedent for future governments. I fully support the Government's move and it nicely puts a fairy tale close to the remarkable financial performances for this Government in its five-year term.

Many governments would be tempted to use this additional money to distribute, especially when it is an election year. However, in Singapore's case, you can rest assured we will not be spending as if there is no tomorrow. We have set our sights squarely on our long-term future. While we share some of the surpluses, we also invest some for the long term and save some for rainy days.

We only need to look at the unrest in the oil-rich Middle East region in the last few weeks to appreciate how uncertain is the world we live in. The unstable geopolitical risk has pushed oil prices to a two-year high of almost US$120 per barrel last week. Some analysts like those at Nomura even predicted that oil price could rise above US$200 per barrel if the unrest spreads and expands further in the region. Nobody could have predicted this one year ago.

What we save will strengthen our financial position and enhance our survivability. It increases the base of our strategic reserves and the benefits will come back in the form of increased NIRs

in future budgets. To deliver such an inclusive Budget would need more than just economic growth. Crucial to all these is the consistent practice of fiscal prudence, financial discipline and competent economic management.

Besides focusing on long-term objectives, Budget 2011 did not ignore the short-term challenges we are facing, such as the fight against inflation. While the strong Singapore dollar continues to be our powerful macro economic weapon to reduce imported inflation, the direct cash assistance by way of Growth Dividends and the other reliefs offered would be of most practical help to our people faced with rising costs.

Mr Speaker, Sir, of course, no budget can please everyone. But we try to spend and benefit as many as possible in the short term and those surpluses not spent, hopefully, will benefit all in the long term.

(In English ): Sir, realistically, there is no Budget that can please everyone. But in our case, we try to spend and benefit as many as possible in the short term and those surpluses not spent now, hopefully, will benefit all in the long term.

The Finance Minister mentioned that one possible long-term benefit is to grow incomes by 30% in 10 years. This is one of the key thrusts of this year's Budget and it is always good to set targets and to rally our people towards achieving them. Higher real income is really the only way to solve the "money-not-enough" problem. Subsidies, price controls and welfare have their limits and may not sustain. Just look at Europe and we can see how the countries there landed themselves into a sovereign debt crisis. In this effort of growing incomes, while we should rightly focus on the low-wage workers, we should also not neglect helping our lower- and middle-income groups to grow their incomes as well. I

am referring to the sandwiched group who have children and parents to support and to take care. They also have lifestyle aspirations and want to live a reasonably good life.

I am glad to note from the Finance Minister's speech that the real income of the 20th percentile has risen by 8% over the decade, and that of the 50th percentile by 21%. I agree we can do better. However, the next 30% of income growth is always that much difficult to achieve than the previous 30%. As our economy enters into a more mature phase of growth of between 3%-5%, we cannot really count on high economic growth now to uplift wages.

Given our land constraints, increasingly we will have no choice but to depend on our service sector to grow our economy and moving more of our enterprises to high value service activities and helping workers to attain superior service skills. The service sector is where we should get most of the income increases. The Asian Development Bank described Singapore as a service economy with a large manufacturing sector. We can build further niches in the service sector and develop more of our service branding. If we can be world-class in airline and financial services, I cannot see why we cannot be world-class in education services, hotel management, healthcare, and so on. Singapore can be a place where we are trendsetters of best practices in the service sector. We have the comparative advantage to develop an internationally competitive service sector and export our services to the region.

*Cols. 3179-3182.

We may need to revisit the idea of having a super agency to champion the services sector, very much like how the Economic Development Board (EDB) champions the manufacturing sector and

deals with the cross Ministry regulatory issues. This services agency would not only help to cut red tape but would also plan, coordinate and execute strategies to grow the services sector and develop better paying careers.

For the economy and businesses, this year's Budget is clearly a "stay-on course" Budget, focusing squarely on executing the strategies laid out by the Economic Strategies Committee (ESC) last year. At last year's Budget debate, I commented that the $1 billion pledged by the Government to the National Productivity Fund is not significant enough given the strategic importance of enhancing productivity and the size of our Gross Domestic Product (GDP). Hence, I am really glad the Government has topped up another $1 billion, bringing the National Productivity Fund to the size of $2 billion. In addition, there are significant improvements to the Productivity and Innovation Credit (PIC) scheme, costing the Government $520 million per year. That is a strong commitment.

I am also particularly pleased that there is more assistance to groom Singapore-based Globally Competitive Companies (GCCs). This was also a key suggestion put forth by the Finance, Trade and Industry GPC to the ESC last year. The Ministry of Finance (MOF) announced details of the Co-Investment Programme last December where the Government would catalyse the supply of growth capital of about $500 million to be matched by a similar amount from private-sector capital. What impressed me about the scheme, besides the quantum of the fund, is that the bureaucracy involved to tap the programme appears to be quite minimal, at least on paper. There are only four very straightforward qualifying criteria, one of which is that the global corporate headquarters and at least three strategic decision-making functions must be based in Singapore. I think this is fair and is a necessary requirement.

With Temasek as one of the co-investors, the invested enterprise is more likely to be rooted in Singapore together with its economic value add. I have received very positive feedback from the businesses and they look forward to tapping the programme. Temasek's involvement is seen as a plus to the standing of the companies, in addition to the benefits of its financial and strategic mentorship. Putting money into the programme is probably the easier part. The more difficult next step is to find promising suitors for the programme and the question is whether we have a big enough pool of entrepreneurs and businesses. We need to do more to nurture entrepreneurship especially those businessmen with regional aspirations and those who have the ability in them to develop new niches. I suggest that a small portion of this fund be carved out to specifically nurture and support young entrepreneurs, those with out-of-the-box innovative and creative ideas. These ideas and ventures often would not involve a large capital outlay but if an idea hits on the sweet spot, it could be turned into a big commercial jackpot. We need to believe in some of these young entrepreneurs and their propositions and give them a little lift. Who knows, there could be another Mark Zuckerberg in the making.

Also, another commitment worth mentioning is the $850 million grant set up under the Enterprise Development Fund (EDF) over the next five years. Given our small domestic market, our local enterprises may not have the initial scale to compete in the region. Yet, it is also because of our small domestic market that these companies need to internationalise so as to scale up for growth and efficiency. This initial help and support at the start could make the difference and help the companies secure foothold in regional markets. If we are serious about helping these promising

companies to expand overseas, that leap of faith is important and this support, such as the EDF, is necessary.

Understandably, the enterprises or the SMEs that depended on foreign workers in their area of business are unhappy with the Budget. In our post-Budget dialogue with the Finance, Trade and Industry GPC resource panel last week, these new increases in the foreign workers levy dominated the discussions. Business people from the services and construction sectors felt that the increase of another $180 and $200 respectively by July 2013 are just too steep. While the PIC does have various schemes to help mitigate the increases in levies, my sense is that many of the businesses are not aware or have no idea how to tap the juices from these schemes. They feel the pain from the stick but many have not tasted the sweetness of the carrot or do not even know where the carrots are.

There is also this perception that they have to fulfil a long list of checklist and requirements to apply for these benefits. They felt that after going through all the effort, the benefits may not even move the needle too much in their bottomline. I suggest the respective sectoral agencies go on small-group road shows to show and sell the enhanced schemes to the businesses, hand-hold the businesses with the paper work. And perhaps for each company's first application, we should give them the benefit of doubt even if the paper work for the qualifying activities or expenses is not in perfect order.

The quick turnaround in the disbursements would certainly be helpful. I applaud the simpler and better cash conversion option where businesses can choose to receive cash payout of 30% for the first $100,000 of their qualifying expenditure. This would be a good encouragement to cheer them on and encourage them to venture deeper into improving productivity and innovation.

Perhaps the most common disappointment in this year's Budget was the absence of procreation incentives. I guess after the release of the record low Total Fertility Rate (TFR) of 1.16 last year, expectations may have build up for more assistance and incentives. In my view, the Government should continue to look at new and enhanced incentives, both financial and non-financial to help lower the demands of parenthood. It has to be of significant size to bite and to make a difference. It needs to be also packaged with non-financial incentives as well; for example, as suggested by the Member Mr Ong Kian Min, priority for schools as well as additional HDB homeownership benefits.

I suppose parenthood and Baby Bonus packages are traditionally items addressed during the Prime Minister's National Day Rally and not at the Budget. So, we would look forward to the next National Day Rally and hopefully our economic financials can support an even better package. We just got to keep trying.

Before I end my speech, I would like to ask the Finance Minister for an update on the performance of our financial reserves, particularly the performance of GIC and Temasek. Two Budgets ago, like many other investments and funds, the values of our reserves were impacted by the global financial crisis. Has the market volatility in the last three years affected the level of the expected long-term rate of returns which in turn could also affect the Net Investment Return (NIR) in our future Budgets?

Sir, we are in a different phase of our economic development. In essence, the challenge faced by the Government now is to manage an almost fully employed economy. We will experience bottlenecks, constraints and crowding out, whichever way we grow our economy. In fact,

Singapore can be a country with no domestic unemployment, buffered by the foreign labour. Socially, Singaporeans are feeling more squeezed than before. Our public transport modes and roads are more congested. But as the Prime Minister said last year, it is a happier situation in Singapore where we are managing problems of success rather than problems of failures like what is happening in Europe. The trade-offs between economic growth and social cohesion will just get more stark now and something may have to give.

The choice we are making is that we still want to continue to improve our lives and to manage the associated problems that come with it. The level of difficulty managing these trade-offs is just going to get higher and the balancing of different needs and demands is even more challenging. All the more, there is an even greater need now to have the best Government to run this tiny island, as Singaporeans simply deserve the best.

12.54 pm

(In Malay): [For vernacular speech, please refer to Appendix A*.] Mr Speaker, Sir, thank you for allowing me to participate in this year's Budget debate. Much has been said about the Budget. Kindly allow me to add my perspectives on this matter.

This year's Budget is progressive in nature which cements our Government's standing to be one that is forward looking, and embeds itself in good governance and practising disciplined fiscal policy. It reinforces Singapore's continued efforts in investing in human capital and its commitment to growing its economy through productivity as the impetus to growing incomes. With a productive economy and a quality skilled workforce that sees its incomes growing progressively, it puts Singapore in good

stead to face the ever changing challenges of the new economy.

There are two elements that struck me in this Budget. One was the deliberate element to innovate to adopt manpower practices that promote productivity. The other was the act of prudence to put back what was taken, which reminded me of the days when Singaporeans from the past generations saved to build their wealth progressively over time. These elements differentiate us from many other nations. While other countries are putting forward budgets that propagate cuts on spending for some on education, we are increasing our spending on investing in our people and infrastructure, both physical and software, while propagating productivity as a key growth strategy as well as investing for our future. Thus, I strongly concur with our approach to remain centred on opportunities, not entitlements, and focus on helping the low-income group through education, employment and home ownership.

Looking through the past Budget Statements since I became a Member of Parliament in May 2006, I could see how the Government had been responsive to the challenges of the times and had rolled out many policies, schemes and programmes to enable Singaporeans to reap the opportunities and challenges during these different periods. I have met Singaporeans, including my constituents, who have greatly benefited from these schemes and programmes.

One of them is Mdm Zaiton Binte Jantan who has recently upgraded her skills by completing a Certified Service Professional Course in November last year. Through her perseverance and self-belief, she subsequently secured employment as Library Assistant at Bedok Library the following month. She hopes to continue her education and upgrade her skills in the future to earn more income and provide greater opportunities for her

family. I sincerely hope that programmes such as the Skills Training for Excellence Programme (STEP) and possibly the Lifelong Learning Endowment Fund (LLEF), would be able to support her aspirations. Mdm Zaiton is glad that the Budget would be reducing her expenditure and making it affordable for her to upgrade her skills.

Another constituent is Ms Tan Lay Wah who had attended Workfare Training Scheme Motivational Workshop. She was able to use the learning experiences of the course to subsequently secure employment. She was initially apprehensive to go for the course but then decided to try. She found the training useful. When told of the additional schemes and programmes in the new Budget, she was heartened to note that she could grow her income through training and that this would open up more opportunities for her.

Mr Speaker, many Singaporeans welcome and are excited about our Government's plan to increase Singaporeans' income by 30% over 10 years. One resident mentioned that, "This will certainly be good for me, as my children are growing, and I would need more money to support them, especially for their education."

Nevertheless, the increase in income will not come without the effort and support of Singaporeans. Singaporeans need to ensure that they continue to remain relevant and upgrade their skills and expertise. While I have met residents who have embraced their upgrading and training routes, there are those who are still apprehensive at making these efforts. There are also those who are unaware of the options available to them, while others are yet to be convinced of such a route.

Therefore, the task ahead of us is to continue our outreach efforts in enhancing

the awareness of Singaporeans on the availability of schemes and programmes which will benefit them. We need to encourage them to participate in these programmes. I feel that we need to do more and take a multi-faceted approach in spreading the self-upgrading fever among Singaporeans. They should continue to build on their capabilities at the grassroots organisation front to engage our residents in promoting this national effort. We should showcase more role models from amongst Singaporeans who have gone on to the upgrading of skills route and have benefited from it, so that more Singaporeans can come on board this journey. In addition, informal channels, such as creating networks amongst residents and workers, can be further enhanced to excite Singaporeans about self-upgrading.

Allow me to continue my speech in English.

*Cols. 3183-3186.

(In English): Mr Speaker, Sir, I am also very pleased about the Special CPF Housing Grant which aims to help low-income families make their first-time purchase of a Build-to-Order flat. This is on top of the existing additional CPF housing grant. I believe this will certainly assist them in their quest to own a home in Singapore and is certainly the right way to go.

Sir, last week, I was on an overseas trip with my post-graduate students, a few days after the Minister for Finance read the Budget Statement. We had foreign students among us who shared with me that they were pleasantly surprised and touched that the Government of Singapore is seriously assisting low-income Singaporeans to own a flat or a home. From where they came from, low-income residents may not have the opportunity to own a home in their life time. Many spend their time

looking for homes, like in squatters, and have difficulty settling their families. To me, this represents the Government's continuous stance in promoting home ownership among Singaporeans which deepens our efforts in creating an inclusive society. While the home provides shelter for an individual, family and the society, it also plays a very important role in moulding our current and future generations. I have met residents whose families' well-being has been challenged due to the loss of their home.

Recently, I sought the views from Singaporeans about what a home or housing means to them. As expected, I received many responses. Among them, it includes this comment that, "It is a place which would provide me with a sense of belonging and rootedness to Singapore. It is a place where I can always feel secure." Others mentioned that it is a place where they can feel safe, relaxed and be away from all the stress of work or school. It is a place where one creates and builds one's family. Some call it a comfort zone, others call it a place to work and play. To some, a home also represents opportunity, aspirations and investment. Some regard a home as the greatest asset in their life, next to their family. As one of the respondents mentioned, "Housing is the most important and valuable asset to me as of now. I will use my home as a backup for my retirement plan. It provides me with financial security and is not just a place to stay."

Recently, I met a resident, whom I will call Mr X, who shared with me that he is going to sell his home as the prices of HDB flats have gone up, and he would stand to have some capital gain if he were to sell his flat now. However, upon further discussion and analysis with him, we found that he would have difficulties financing another home, which may affect the well-being of his family. Thus, he decided not to go ahead with the sale and

to focus his attention on his newly found job and develop his family. While Mr X may have saved himself and his family from facing a future housing problem which may have implications on his family's well-being, I have met many other residents who had difficulty owning a flat upon selling their flat, thinking that they would have much capital gain from the sale of their former flat. A few of them shared with me about their regret for not analysing it carefully prior to the sale.

Sir, last month, I had the opportunity to visit residents of Block 20 in Chai Chee Estate. The block was built in 1972 and I met two residents who have been staying there since then. They bought their flats for less than $10,000. They shared with me their happy moments witnessing the development of Chai Chee Estate as well as their family members. Their flats have since undergone the Main Upgrading Programme. They shared that they are happy that their children are doing well in life. And their flats, although small, have provided them with a base to pursue their purpose in life. I sense a feeling of stability and satisfaction among them. I could also feel a sense of belonging to the community where they live – a pride in owning their flats although it is a small 3-room flat. And they could also link home ownership to the success and development of their family in Singapore.

I urge Singaporeans to take the message of home ownership seriously, as I believe this effort is part of nation building, and individual and family development, and not only about the opportunity to have capital gain arising from the low actual price paid due to the generous grant from the Government. We should continue to strengthen this base among Singaporeans so that as a society, we can see this as a platform to reap the many opportunities available in the development of Singapore.

Sir, before I end my speech, allow me to briefly mention a few areas where the Government could do more in future. I have spoken earlier about promoting home ownership. The challenges faced by today's couples in this generation differ from those of my residents who bought their flats in the 1970s or even in the 1980s and the 1990s. With higher standards of living and additional costs, such as hiring a maid to look after their children, kindergarten cost, childcare cost and others, I still receive calls from young Singaporeans for additional effort from the Government in helping them to own a flat. Within our society, besides the low income, there is a growing number of Singaporeans who are handicapped, diagnosed with special needs and the destitute who would need greater support in meeting the challenges of the new economy. We also have children, young persons and orphans who may not have support from the mainstream. I sincerely hope that the Budget of the Ministry of Community Development, Youth and Sports could provide greater support for this segment of our society so that they too can benefit from Singapore's growth.

While the Budget means well, some of my residents, like Mdm Tan, have challenges in attending some of the training sessions due to time constraints in making ends meet for her family. I would like the Government to work out flexible structures for courses under Workfare to be able to meet the needs of people like Mdm Tan. I have received feedback from residents of the not-so-positive operational aspects on matters and procedures that affect some of the aspirations of our senior residents in attending training for Workfare. I sincerely hope that the agencies would go beyond the call to make the experience of our seniors a convenient one.

The direction to propel our economic growth through productivity and innovation is a sustainable strategy, as even

low-cost centres like China and India are facing rising labour costs. However, the movement to upskill and train our workforce can only benefit those who are able to learn and work in an increasingly competitive labour market. I would like to know what measures the Government can put in place to ensure that while we set aside funds to help those who can still learn and upgrade themselves, we must ensure the illiterate or the uneducated workers are not left behind.

Sir, in conclusion, this Budget resembles the Singapore way of being a forward-looking Government that continues to demonstrate its ability to deliver good governance so that people can realise their aspirations and goals, that we take no short cuts, take longer term perspectives and, most importantly, have the pulse of our citizens at heart.

Sir, on that note, I support the Budget.

1.11 pm

Mr Speaker, Sir, thank you for allowing me to join in this debate and to support the Budget.

As a trade unionist and a Member of Parliament, one of my top priorities is to see how best to enable workers and residents to make a better living. My experience on the ground taught me that achieving it really boils down to doing a few key things really well. First, do not kill the goose that lays the golden eggs. Businesses must want to come to Singapore, invest, thrive, grow, reinvest here, so that they can create better jobs for Singaporeans.

Second, grow the pie, because unless and until the pie grows, there is very little that you can share.

Third, as the pie grows, get a fair share for the workers.

Fourth, create the conditions for industrial peace, help achieve full employment, so that as many Singaporeans as possible can be in work and share the growth. Also, full employment makes clear to employers that they have to treat their workers well in order to get the workers that they need to fulfil the orders that they have, to grow their businesses and to make money.

Fifth, and finally, help workers climb the skills and capability ladder, so that the value of their jobs goes up, and their pay can also move up.

Sir, if we get these five things right, then the value-add per worker will grow with time. The productivity growth can then lead the growth of real wages, and produce a higher standard of living for Singaporeans.

I am, therefore, very glad that this year's Budget gives us even more resources to shoot for this goal. To begin with, I applaud the Government for returning the $4 billion drawn from the national reserves earlier, which was used to fund the Resilience Package, to the reserves. We must know that whatever we do, there will always be the next downturn to prepare for. Today, our economy is doing very well but it is just a matter of time in the course of business cycles that another downturn will come. Therefore, we must ready our defences and build up our store of ammunition ahead of time. This good habit of saving for a rainy day cannot be taken for granted. In Chinese, they say wei yu chou mou ( 未雨绸缪). For example, I read in the newspapers calls by some writers that in good years, the Government should take the surpluses in the Budget and share. But they were very silent on what the Government should do in the bad years

when there are deficits. So, what it tells me is that we must not kid ourselves into believing that money will come out of nowhere. We can share in good years but in bad years, where is the money going to come from? Resources to do things must come from somewhere. If we do not have savings, whether individually or in our national reserves as a country, then we can only get resources by borrowing. Many countries have had to do that in order to prop up their economies during the sharp global recession in 2009. They are now laden with debts and their current and future generations will have to labour in order to repay their national debts. Their lives are not going to get better any time soon.

Sir, I spoke of the need to save in order to build up our defences. It is like a fortress. But having a fortress and having ammunition would not be sufficient to ward off attacks, because if our troops are incapable of outwitting and out-fighting the opponents, then even with the best of fortresses and city walls, we will still be over run.

Therefore, it is critical that we continue to invest and invest in a big way in the training and skills upgrading of our workforce, and to take into account the structural shifts in our workforce such as the rising proportion and needs of the Professionals, Managers, Executives and Technicians (PMETs), on top of the continuing importance of equipping our rank-and-file workers.

Third, aside from good defences, well-trained troops, strategy and logistics. I think the outcome of battles is also heavily influenced by technology, communications and coordination. If we look at history, in war, in the battle between Carthage and Rome when Hannibal introduced elephants into the battlefield, it wreaked havoc among the Roman ranks, at least initially. So these things are productivity multipliers. If you

have a gun and the other side has a sword, you have an advantage. Technology is one thing, but if you organise your processes better, your coordination or work methods better, if you out-organise the competition, that makes a big difference. These are productivity multipliers. Economies that are able to increase the number and power of such productivity multipliers will win. For this reason, I have spoken in this House on the importance of spurring productivity, especially in the light that our productivity has been on the decline over a number of years.

Last year, our Government formed the National Productivity in Continuing Education Council (NPCEC) in order to drive sustained productivity improvement. As many of our parliamentary colleagues have mentioned, the idea is to sustain annual productivity growth at 2% to 3% a year, compound it over 10 years, and we can see a 30% or one-third improvement in real productivity levels that can then support and sustain real wage growth of around 30% over that 10-year period, and improve the standard of living for Singaporeans.

Sir, I am therefore very keen to find out what has been the progress so far, both in terms of overall productivity improvement as well as in the outcomes for the 12 sectors that the NPCEC has identified in its work. How have we been doing so far?

Sir, I also note that 2010 was a year of very strong economic rebound – 14.5% growth. But that came on the back of a recession year. So, in that recession year, we had excess capacity. And part of the Resilience Package was to save jobs and, therefore, there was also excess manpower within that economy. Part of that was being soaked up when the economy rebounded in 2010. If we were to take out the strong cyclical

productivity improvement last year because of that economic rebound and the absorption of inherent excess capacity after the 2009 recession, then what would we see as the structural improvement that we may be pinned to enjoy since last year?

What lessons have we learnt in this past year that would help us finesse our promotion support and methods for productivity? For example, what are the barriers that the different lead Government agencies have encountered in helping or nudging companies to ramp up their productivity efforts? To what extent was there a lack of know-how, management interest, availability of funding or continued easy access to alternatives, such as foreign manpower, that had hampered the fast take-up of productivity improvement initiatives? Are we sensing any of these things especially in the 12 key sectors identified? Was there any indication that some sectors or industries do not even accept that they may have a productivity challenge by international comparisons? Given the experience, would there therefore be specific initiatives that will be developed to help overcome these barriers so as to accelerate execution?

As far as the labour movement is concerned, we have been playing our role in this national push for productivity through two key programmes. One is what we call the Cheaper, Better, Faster (CBF) programme. The key goal of the CBF programme is to encourage unions and companies to work together towards higher productivity through lower unit cost of production, better quality and faster responses, ie, a higher degree of responsiveness to environmental changes, so as to improve the overall competitiveness and outcome of the companies, and to share the gains with workers in a fair way. At the end of

2010, more than 120 unionised companies have initiated CBF projects together with their unions and that has brought benefit to more than 10,000 unionised workers.

The second programme is the Inclusive Growth Programme (IGP), which targets improvement especially for the lower-skilled, lower-wage workers. The IGP draws upon a $40 million fund as part of the National Productivity Fund and is making very good progress. More than 200 companies have already signed up just in the latter half of last year and, again, benefiting many thousands of workers, ie, the lower-wage, lower-skilled workers. And our aim, in this year, 2011, is to double the outcomes and that would be our value-add to this national push.

For the CBF programme, at this moment, there is no separate funding of the programme. Instead, the companies will be urged to draw upon the funds set aside under the National Productivity Fund for each of the target sectors. In this regard, I feel that the value-add of the labour movement can be enhanced if the key unions or union clusters corresponding to the target sectors are roped in more, ie, given more information about the trends and programmes by the respective Government lead agencies. By doing so, a closer partnership can be forged with the unions or union clusters, the lead agencies and the industry bodies and they can then be in a better position to catalyse interest and attention, and help companies start or accelerate their productivity efforts.

Sir, the ultimate guarantor of a better life for workers in a small open economy like Singapore's is a heightened and an ever-improving level of competitiveness and quality that will allow us to lead the field. Only then can we hope to have jobs that attract premium wage rates that can be sustained. We should therefore leverage fully upon the budgets of the

Government each year and upon the strength of Singapore's tripartism to achieve this soonest.

Sir, I support the Budget.

1.23 pm

Mr Speaker, Sir, I rise in support of the very generous and inclusive Budget announced by the Finance Minister. This $6.6 billion Budget is not just a big bonus to impress and please Singaporeans, but one that is well-thought through, with grand plans to grow the real incomes of Singaporeans by 30% by the next decade and to strengthen our society in the long run. Its generosity is made even more significant against a backdrop of a lacklustre economic outlook in Europe and the slow economic recovery in the United States.

Sir, Singaporeans have indeed demonstrated our resilience and unity in overcoming one of the worst economic crises that besieged the world in 2009. Our ability and our resolve to bite the bullet, coupled with the excellent tripartite relationship, are all contributing factors for the rapid bounce back to a strong positive growth last year. Our national reserves which we had painstakingly accumulated over the past four decades of nation building had proven to be one of the effective weapons in helping Singapore weather this storm. Without the strong leadership of this Government and the "never say die" attitude of Singaporeans, we would not be celebrating the fruits of our economic recovery today.

However, what struck me most about the Budget were not the multi-million dollar packages designed to help the individuals, families or businesses, but the very fact that the Government will put back the $4 billion into the reserves to replace what it had drawn down in 2009 during the global financial crisis to fund the Resilience Package. This reflects the prudence and the "saving for a rainy day"

approach even in good times like these, when Singapore had achieved a sterling 14.5% GDP growth.

It also speaks very well of this Government – one that exercises prudence, responsibility and care for its people; likened to a loving parent who provides for the children. A good parent will not hesitate to do what is right and in the best interest of the child. The love of a parent is unconditional, one that is inclusive, forward-looking and generous. Parents also provide the necessary skill set for the children, with the ultimate objective of equipping the children with the right values, being independent and able to stand on their own two feet, and to eventually contribute back to society. I see these qualities reflected in the way the Government manages the country and cares for its citizens.

I am also delighted with the Government’s "Grow and Share" package, which includes cash dividends, bonuses and rebates to individuals and families totalling $3.2 billion. Rightly so, this package is tiered so that those with lower incomes will receive substantially more than the more well-off citizens. This is timely as it will help Singaporeans cope with the rising costs of living, a concern many of my parliamentary colleagues had spoken about and raised yesterday.

In addition, this package also encourages Singaporeans to adopt a positive mindset in self-reliance in the form of employment. To supplement the existing Workfare Income Supplement (WIS) scheme, there is the Workfare Special Bonus disbursed over the next three years. Lower-income workers will receive bonus payouts amounting to 50% of the full-year WIS in cash this year, and bonuses equivalent to 25% of their WIS in 2012 and 2013.

The sandwiched class is also not left out in this year's Budget. There is a one-off personal income tax rebate of 20% up

to a maximum of $2,000. In addition, the adjustment to the personal income tax regime also benefits the middle-income earners, and these changes are permanent with significant savings in the tax amount paid in the long run.

While I applaud the Government for its effort for being as inclusive as possible in this year's Budget, there are two issues which I would like to highlight and wish that the Government will consider addressing in the near future.

This year's Budget did not address the very special needs of single parents. No one would want to be a single parent if given a choice, and many are forced by circumstances. While the Government does not want to give generous assistance that encourages the growth of "undesired" alternative households and the erosion of Asian values, ignoring the magnitude of this issue will lead to adverse social consequences, affecting the opportunities of children in such families.

Regretfully, the current public policies do not address the thorny issues and predicament faced by this group. Single parents are already facing tremendous pressures from society and the current discriminatory Government policies do not make things any better for single-parent families. Employment, housing, dealing with ex-spouse and helping their children cope emotionally are just some of the other issues that they need to grapple with. Many single parents also find it difficult to seek proper full-time employment because of the lack of support from their own families and they end up having to look after their young children themselves.

Single-parent families are not specifically targeted by social security policies in Singapore. Lower-income single-parent

families have to compete with other vulnerable groups for means-tested social assistance. Even then, some assistance programmes have eligibility conditions that disqualify such families. In many aspects of public policy and discourse, single-parent families are looked upon as undesirable alternative household entities that are to be discouraged and are thus excluded from some social services that are available to "normal" two-parent families.

For example, single parents are not entitled to maternity leave and maternity benefits, including the pro-natal baby bonuses. Applicants for HDB housing must be a proper "family nucleus" – comprised a married couple – in order to enjoy the subsidies and grants. This excludes unmarried single-parent families by default and has significantly disadvantaged such families to live in subsidised public apartments.

Disadvantages are also found in tax policies. For instance, tax relief granted to married parents to employ domestic maids is unavailable to single-parent households. Thus, instead of being helped, single-parent families are often discriminated or disadvantaged by Government policies.

The current state of affairs makes it extremely challenging to bring up children in single-parent families. I personally have encountered such cases at my weekly Meet-the-People Sessions (MPS) and I really hope the Government can relook at this and extend a much needed helping hand to these families.

I am relieved that in the Government’s push for raising productivity by hiking the foreign worker levy, the foreign domestic worker (FDW) levy is not affected. However, I am disappointed that the foreign domestic worker levy is not reduced to lighten the financial burden of families, especially those who need them out of necessity, such as families with young children, elderly and the disabled.

Although there is currently a concessionary levy of $170 per month for certain employers who fulfil the eligibility criteria, this amount still constitutes about 50% of the salary of the foreign domestic worker. On one hand, the Government rationalises that the foreign domestic worker levy is necessary to manage the number and flow of domestic workers in Singapore, on the other hand, a foreign maid levy tax relief is extended to encourage married women to continue working and raise families. To put it simply, families are incentivised to hire maids through the tax relief scheme and, at the same time, the Government is trying to limit the supply of maids by imposing the high levy. To me, this seems a bit paradoxical. In addition, the expected increase in the pay of foreign domestic workers from certain sources will inevitably add to the overall financial burden faced by these families.

Mr Speaker, Sir, this policy affects the middle-income families most as the low-income earners will not qualify to hire a domestic worker while the well-to-do can afford it anyway. To help mitigate the rising cost of living, especially for the middle-income families, I would like to urge the Government to consider lowering or even waiving the foreign domestic worker levy for deserving families.

Mr Speaker, Sir, this year’s generous Budget is only possible because of the exceptionally good year we had in 2010. The Singapore economy grew an impressive 14.5% and what we are seeing in this year’s Budget is the Government’s way to share the fruits of our success and to help grow the social capital. Even as Singaporeans celebrate the success and enjoy the benefits of the generous payouts of this Budget, let us not forget some of the vulnerable groups in the society where a little helping hand may mean and matter a lot to them.

On that note, I support the Budget.

1.33 pm

Mr Speaker, Sir, I rise in support of the Budget proposed by the Minister for Finance.

Last month, this House had an extensive debate on the question of providing minimum wage for our low-wage workers to help them cope with the demands of a globalising economy. While this House is not prepared to push for minimum wage at this time, there remains a concern with the growing disparity between the top income earners and those at the bottom. In the longer term, we need to do something about this growing gap.

Sir, a wide disparity in income distribution flies in the face of equity and fairness in our democratic society. It breeds deep resentment in the minds of those who aspire to live the good life but for whom such aspirations are but only a pipe’s dream. A society that deeply divides the rich and the poor produces great tensions. Such tensions will spawn a politics of the underclass as Minster Mentor would put it. A politics that would be divisive and would distract the leaders away from the more constructive business of governance – this would not be good for Singapore.

Indeed, the Gini coefficient for Singapore suggests that at 0.425, it ranks 51 in the world compared to Japan with a Gini coefficient of just 0.249, making it one of the more unequal societies in the world at 110th position. Our relative income disparity is worse than the United Kingdom, Australia and, at one point of time, the United States, the epitome of the excesses of a free market economy.

Sir, a widening income gap in our society raises concerns about social mobility for those who make up the

underclass. As societies mature, social mobility for those who aspire to a better education and achieve a higher level of salary becomes more restrictive. Opportunities and qualifications tend to fall on the side of those born into families that are better off than the wider society. Minister Mentor recently observed this after visiting various local schools. His comment that children in the top schools tend to have parents who are graduates compared to the children from the average neighbourhood schools struck a chord with many Singaporeans. These children have better resources and a better chance of getting into good schools. They have the benefit of an environment that is structured for learning and excellence. This is a great advantage over many children whose parents may not be similarly resourced.

Just look at the tuition support that these parents give to their children. These days, many children get private tuition. For many, it is a question of the quality of the tuition and the extent of it. Rich parents will not have any problem plying their children with tuition. They spend huge sums on tuition just so that their children will be well prepared for the examinations. Tuition is a big time industry in Singapore. Recently, I saw an advertisement in our Straits Times which boasts of the number of top-scoring students that it produced. Centres like these do not come cheap, and parents must be prepared to pay to ensure good results. Now, where does this put a child whose parents are just making enough to make ends meet?

Sir, we are talking about just one obvious advantage that children of better-off parents enjoy. What about the verbal engagements or the learning exposures that these children get to benefit from, particularly the regular travels to the various places and interesting places, and

not to mention the good nutrition that they receive. I am not surprised that many of these children will end up in top schools, feeling extremely confident and articulate when compared to the other children. Quite obviously, with good schools, these children will have a better chance of getting a scholarship to go to a top university, getting high paying jobs and when they get married and have children, and perpetuate the system by putting their children through a similar process.

So they begin at a different starting point in life. How does one realistically ensure or expect a child from the heartlands to compete under such circumstances? As the social strata in our society becomes more settled, it gets harder for one to break out of his class and to work up the social hierarchy. Indeed, for many children in my constituency, the hope at school is to do well enough to get into a polytechnic. I would suspect that for a child studying in a top secondary school in Bukit Timah, going to a polytechnic instead of a good junior college may be seen more as a failure than a success.

Sir, although like many of us in this House, I am concerned about the growing income gap between the top and the bottom members of our society. I am even more concerned if we should become a nation with a rigid class strata where social mobility is limited and where your destiny is very much tied up with the family that you are born into. Such an outcome is an affront to our sense of equity and fair play. It goes against the spirit of our National Pledge which commits us as a people to build a society based on justice and equality. It also robs us of the opportunity to tap into a wider talent pool for our purpose had these children been given the right conditions and time to fully develop and exploit their ability.

The way forward in addressing the problem of the widening and rigid social and income gap is not to suppress those at the top through heavy taxation or outright denial of their achievement through a quota system, but rather to work at ensuring that mobility to success is not hindered by forces beyond the control of the person concerned.

Sir, I would humbly suggest three broad areas that I believe can help to ensure that social mobility continues to exist for the less well-off members of the society. These are broadly: better management of our educational resources and approach to bringing out the best in our children; better career prospects and opportunities in the public sector; and, finally, providing suitable incentive schemes that encourage our private sector, particularly the successful companies, to support meaningful programmes to mitigate the differences between the rich and the poor.

First, education and social advancement. One of the hallmarks of Singapore’s economic success has been the provision of universal education to the masses. In one generation, Singaporeans lifted themselves out of poverty by seizing educational opportunities to advance themselves and their skill sets. This has enabled them to earn higher salaries than before.

Education has also enabled many Singaporeans to realise the aspiration of going to top universities overseas on scholarships sponsored by the Government; something which could only be a dream for Singaporeans but for this opportunity. My brother, Boon Wah, was one such recipient when he won the coveted Singapore Armed Forces Overseas Scholarship after it was launched in 1971. The scholarship enabled him to get an overseas education, without which my father would not have been able to afford.

Scholarships like these are both prestigious and coveted. These scholarships save substantial amounts of money for the parents besides assuring a relatively high-flying career. Snaring a Government scholarship has become a sort of a trophy prize for parents and students, making it a highly coveted commodity. It has also redefined the meaning of success in the Singapore context. These scholarships have also raised the bar for competition in schools because the better schools get more than their fair share of scholarship recipients. Unfortunately, for these schools, competitive entry by examination scores does not always reflect an equitable distribution of places among the social classes.

It is not good for Singapore if places in the best schools in this country go to those whose parents are well educated or rich. Children whose parents are from the lower social economic strata of our society will not have the same resources to compete in the same national examinations. Even if they do invest additional resources in their studies, which mostly come in the form of additional tuition classes, it will come at great expense to the family.

The way forward essentially is not to ensure the equality of outcome, but to ensure equality of opportunity. Much as I wish our education system can be designed in a way as to do away with the need for tuition, which I know will not be possible, we should do more to increase the opportunities for children from the heartlands to go to top secondary schools. We should increase resources to the primary schools in the heartlands and encourage the principals to have more make-up classes after school to better prepare the students for examinations. We could invest in more IT resources to help these students understand and visualise concepts better. We should send

some of our best teachers to these neighbourhood schools to raise the quality and, hopefully, lift the performance of the students in the examinations. Putting more resources to improve the opportunities for the children from the poorer social economic background will not only improve their chances of getting into good secondary schools through a more level playing field, but will also increase the number of talents that we can throw up with every cohort of students who enters our schools.

A laudable example, I would say, of such an approach may be seen in the recent initiative taken by Raffles Institution when the school took the opportunity to go to the primary schools in the heartlands and offered scholarships to promising students who are likely to make the cut to this pre-eminent school. The scholarship, I believe, is intended to give deserving students the opportunity to make a difference so that they are not deprived of the opportunity of getting their best shot at enrolling into Raffles Institution.

Secondly, greater mobility and career prospects in the public sector. The public sector is currently the biggest employer in Singapore today. It sets the standards and the benchmarks for our human resource policies in our country. The public sector also offers the most number of scholarships to students; scholarships which will ensure employment and good careers in the public service.

Unfortunately, those who are familiar with the public service will realise that academic prowess is a necessary requirement for advancement in service. Many believe that advancement into the Administrative Service, which is the premiere and most prestigious service in Government, is limited unless you are a returned Government scholar or you have

achieved excellent results in your examinations. Government scholars are also often perceived to enjoy relatively fast promotions and wider opportunities for career advancements than those who are not. The converse is also true. It would be difficult to get significant advancements in service if you do not possess the right degree or pedigree which, in this case, is often synonymous with being a Government-sponsored scholar.

Sir, it seems that the route of advancement within the Civil Service is fairly rigid. Much will depend on the type and quality of the paper qualification you have. It does not matter if you are good on the job. There is very little hope of promotion unless you have the requisite paper qualification and background. If we accept the proposition that children of graduate parents and those from well-to-do families are going to the good schools and winning Government scholarships, it will mean that higher level appointments in the Civil Service will also be dominated by the same group of people. The poor neighbourhood kid from a lower-income family may not have a chance to begin with. I do not deny that there will be the occasional boy whose father is a casual worker and whose mother is a homemaker winning that coveted President's Scholarship and going on to a great career in the Civil Service. However, I suspect that such occurrences are becoming fewer and farther between. What we will most likely see happening is the son or daughter of some graduates or well-to-do middle-class parents going forward to receive the award from the President.

The Civil Service, being the biggest employer in our country, can and should set the example for social mobility. It should not close the doors to those who may take a longer time to get their qualifications. There must be hope for those who wish to take a longer time to

rise up in the service. Sir, do we ever recall anyone from ITE making it or joining the Administrative Service at all? The Government should be seen as an inclusive employer, giving everyone who works for it at least the hope of making it to Permanent Secretary grade if they diligently apply themselves at work. Keeping the doors open ensures that the last bus is not missed if they did not do well at the PSLE to go to a top secondary school. We will also be sending the message that going to a polytechnic does not mean limited career options, and going to ITE does not mean "it is the end". Hopefully, this message will cascade down to the private sector and will serve to encourage and give hope to all Singaporeans that their fate in life need not be tied up with the family they are born into or necessarily by the grades obtained in the school examinations.

Extending the runway for their careers ensures an element of mobility and gives much hope to those from the lower-income group.

Thirdly, we can do more to support or encourage the private sector to take up initiatives to provide opportunities to those from the heartlands who would otherwise not have such opportunities. Our Government could consider providing some tax incentives to such organisations to help the less fortunate to level up. I can think of two initiatives that our Government can consider to provide tax support for companies that undertake such activities.

The first example is funding for mentoring programmes for kids from lower-income families. Mentoring allows children from such families to be exposed to adults who can guide them and counsel them about their studies and their future. Besides, these mentors can also serve as their tutors and supervise them in their school work. Through mentoring programmes, what the children lack because of their family background is more than

made up for by the mentors. Hopefully, the wise counsel of the mentors will help to bridge the gap between these children and the children who are more fortunate.

The second initiative I can think of relates to providing more training and exposure to someone from such background through training and internship opportunities in the bigger companies or corporations. But for these internships, many of those from less fortunate families may not know what it is like working for such large organisations or have the opportunity to impress their bosses with their potential. Very often, they do not even get past the initial stage of screening in the mail. Hopefully, the first contact through the internship programme could lead to a longer term of employment with these companies or at the very least inspire these interns to strive harder so that they too can be part of these organisations. Companies or business organisations that spend money on such programmes should be allowed to claim additional tax deductions as a way of incentivising them. It should be encouraged as part of their corporate social responsibility.

Sir, all in, I would say that this is a good Budget. The Government has demonstrated yet again that it is consistent in the way in which it seeks to grow the economy and share the fruits of economy with the majority of Singaporeans. In fact, this is a Budget that many Singaporeans, especially those from the lower socio-economic group, have reasons to cheer and rejoice. And for this, I applaud the Minister for the great work that he has done.

In the final analysis, I accept that we can never build a society that ensures equality of outcome. However, what I cannot accept is a society that cannot ensure an equality of access to an outcome. Our children cannot choose which family to be a member of, but our

children can choose to be a member of the family of success. No one should have his outcome determined by the colour of his skin or the family he is born into. Ours is a society that believes in openness of opportunities. We believe that hard work and dedication to the task will bring about success and failure arises only because of inability and not want of opportunity. This is our commitment as a nation. Let us pledge to keep it that way.