Hansard, Friday, 21 February 2014

1 Mr Zainal Sapari asked the Deputy Prime Minister and Minister for Home Affairs (a) from 2012 to date, what is the number of notices of traffic offences that are issued to motorists by Traffic Police or LTA after more than one year from the date of offence; and (b) what are the reasons behind the delay in the issuance of such notices.

Mdm Speaker, in 2012 and 2013, the Traffic Police issued a total of 614,000 notices of traffic offences to motorists for violations committed within this period. About 0.15%, or 900, of such notices were issued more than a year from the date when the offence was committed. The majority involve complex cases where protracted investigations were required to determine the appropriate action to take against the parties involved.

Delays in the receipt of traffic notices may also arise where they were not successfully delivered to the offender in the first instance. This could be because the registered vehicle owner or the offender did not report a change in his address thereby necessitating further checks, or the registered owner did not furnish the Traffic Police with the particulars of the offender in a timely manner.

Madam, I thank the Senior Minister of State for the reply. It can be quite frustrating for motorists who receive a very delayed notice of offence, especially after they might have thought it had all been forgotten. Would the Ministry consider setting a two- or three-month deadline for the issue of notice of offence from the date the offence was committed, after which the offence should be considered as void or a letter of advisory issued instead. I believe, given today's technology, there could be greater efficiency on the part of the Traffic police to issue timely notice of offence.

Mdm Speaker, 98% of all offences would have the notices issued within seven days. The rest of them would have to be issued quickly but, unfortunately, for this very small number – the 900 of them,

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or 0.15% – could not get to the offender as quickly as possible. Unfortunately, the Police has no power to forgive the offence and, certainly, this discretion should not be given to them. They will have to consult AGC, or by legislation, in order to waive such an offence.

Madam, just one more clarification. What about cases where the driver cannot remember what happened at the time the offence was committed or if someone else was driving the vehicle?

Indeed, these are the kind of cases that cause the delays. Sometimes, there are disputes as to what happened, a dispute as to whether he himself was driving or he disputes that he was actually driving. That is why it becomes protracted. Fortunately for us, this makes up a very small percentage of such offences.

2 Ms Faizah Jamal asked the Minister for National Development (a) whether AVA and its contractors follow a set of protocols with regard to monkey-trapping activities; (b) if so, what are these protocols and approved methods and how are they enforced; and (c) whether trappers who are recently found using rubbish bins as traps at nature reserve borders are trappers given permits by AVA.

Mdm Speaker, all contractors engaged by AVA must comply with AVA's guidelines on the capture, handling and transportation of the monkeys. They can only carry out control operations at designated areas and use methods and equipment approved by AVA. During these operations, they must be on-site to monitor the trap and to remove the trapped monkeys as soon as possible. AVA also conducts random checks on its contractors to ensure their compliance to the guidelines.

AVA is investigating the case involving its contractor who used rubbish bins as monkey traps, as reported in the media. AVA allows the use of rubbish bins as traps as they do not cause any harm to the monkeys during the capture. The bins are no different from other equipment, such as cages, and could be more

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effective in capturing monkeys which have grown wary of cages.

Mdm Speaker, I have three supplementary questions. Given the fact that the recent incident actually happened near Upper Pierce Reservoir, which is a nature reserve, whereas the actual reason for culling is meant for residential areas, does it mean then that the permit lacks clarity as to what they can and cannot do? Perhaps, they are to be given proper oral instructions from AVA?

If I could get some clarification as to how much does AVA's each trapper cull and if there is any indication that I can get on how many monkeys have been culled over the last year. Finally, what is the long-term strategy that AVA is planning instead of culling? Particularly, in this case, where if you think about it, rubbish bins are actually a lot more cruel than cages, which at least have some kind of ventilation, and which provides some safety for the animal as well as for the public at large, who happened to be passing by these public areas.

Madam, I think there were several questions there. First, on the safety of the animals and the bins, the bin is one of the approved methods and that is not the only one that has been used in Singapore; we use cages. As I have said, monkeys do get familiar and cages are a lot more apparent to them when you put the baits around the cage. The bin traps are also used by the authorities in Hong Kong and they have proven to be effective.

AVA gives clear guidelines to its contractors and there are guidelines for the capture, the handling and transportation of the animals. We try to minimise the discomfort to the animals when the animals are captured. The contactors are expected to be on-site. The moment they set up the traps, the way the bin trays work, is that the spring is at the bottom of the bin. We put baits there and when the animal goes in, and they press on the string, the cover is closed. The contractors are nearby. They are supposed to immediately bring the monkeys to the AVA for inspection.

We are very mindful of the welfare and the well-being of the animals. At the same time, on the question on where they site the traps, the Member is right. We do not send them to the nature reserves. Some of these monkeys are very fast. The contractors are giving the site where the feedback was given, and oftentimes, this is near the residential areas. They will not go into the nature reserves but they set up traps where there are feedback of the sighting of

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monkeys and the nuisance that has been created by the monkeys.

To the question of how many has been captured by AVA, I think in the region of about 500 has been captured. In 2013 alone, AVA received about 1,800 feedback from the public related to monkeys. I do not think that is a small number. On average, that is about five feedback a day. I think we take it quite seriously.

We want to strike a balance between the nuisance that is created by monkeys and the way we treat the monkeys, in relation to how do we manage the co-existence of the monkeys and human beings. We hope that they continue to be in the nature reserves and continue to be there. The more they come out of that space and intrude on the space of our residents – and our residents are giving us those feedback – we get concerned about that.

In the longer term, we have to try to work with animal welfare groups to ask for their cooperation also to help us mange some of these challenges. Our residents need to also understand how to manage the monkey nuisance but, really, it is very tough. We live in an urban environment. Many of our youngsters grow up in an urban setting, not quite used to such intrusions, if I may call it.

The Member also asked about the long-term plans of AVA. AVA looks at it on both perspectives: looking at the welfare and well-being of the animals, at the same time, understanding the concerns and responding to the feedback that I have received by the residents when it comes to the monkey nuisance.

3 Mr Png Eng Huat asked the Minister for Education from 2010 to 2013 (a) what is the total amount of tuition grants given to international students in the Polytechnics and publicly-funded Universities who defaulted on their agreement to work in a Singapore-based company for three years upon graduation; and (b) what actions are taken to recover the tuition grants.

Mdm Speaker, International students who receive tuition grants are required to work in a Singapore-based company for three years upon graduation to supplement our

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labour force.

For those who graduated between 2010 and 2013, about eight in 10 international students who received tuition grants in our Polytechnics and Autonomous Universities had either started serving their tuition grant bonds promptly upon graduation and contribute immediately to Singapore's economy, or have been granted approval by MOE to defer their service obligation to pursue further studies. This does not mean that the remaining international students are in default. Some did not start work immediately upon graduation as they have gone overseas for further study but did not seek deferment approval from MOE, some are in the midst of seeking deferment approval, and some are still seeking employment.

MOE has in place bond tracking and enforcement measures to track tuition grant recipients for bond fulfilment. However, the current tracking and enforcement efforts need to be tightened to facilitate more immediate and closer tracking of tuition grant recipients who had not yet started work upon graduation, or who have not sought formal approval for deferment. As MOE is tightening the processes and tracking is still in progress, the final figures are not currently available.

Action will be taken against those who default on their service obligations by pursuing liquidated damages from these individuals. Where liquidated damages cannot be recovered, their status as bond defaulters will be taken into consideration should they subsequently apply to work or reside in Singapore.

Mdm Speaker, two in 10 translates to 20% who did not seek permission from MOE for deferment and they did not start work. Is this correct, since eight in 10 seek MOE's permission or work immediately? So, two in 10 based on the figure given by the Minister works out to about 780. I would like to ask the Minister how much was recovered to-date.

I thank the Member for the supplementary question. As I have said, the two in 10 does not mean that they are in default. Some did not start work immediately upon graduation as they have gone overseas for further study but did not seek deferment approval. Some are in the midst of seeking deferment approval. And some are still seeking employment. Therefore, the other question about how much is the amount is not relevant.

Thank you, Mdm Speaker. I would like to ask the Minister is there a bond for the international

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students that seek deferment and is there a maximum duration that is allowed for these students to have their deferment.

The question on if there is a bond: they are required to come back to fulfil the tuition grant bond, so the answer is "yes". The second question is how long is the deferment: it depends on the nature of the course that they are pursuing. If they are doing a PhD, for instance, the deferment would be longer. If they are doing a Masters programme, for instance, then it would be shorter. It varies on a case-by-case basis.

Assoc Prof Eugene Tan, next question.

4 Assoc Prof Tan Kheng Boon Eugene asked the Minister for Trade and Industry (a) if he will provide an update on the negotiations for the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP); (b) what are the prospects for China to be included in the TPP and the USA in the RCEP before negotiations are concluded; and (c) what Singapore can do to facilitate making the RCEP and TPP more inclusive.

Mdm Speaker, both the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) are envisioned as high-quality agreements to deepen regional economic integration. They serve as possible pathways to an eventual Free Trade Area of the Asia-Pacific (FTAAP).

TPP negotiations started in March 2010 and there have been 19 formal negotiating rounds to-date. The last TPP Ministerial Meeting was held in Singapore in December 2013. The Ministers had a good discussion on the potential way forward for many outstanding issues in the text. TPP ministers will be meeting again this month from 22 to 25 February 2014 and we expect further progress to be made.

The RCEP negotiations only commenced in May 2013. The third round of negotiations was recently held in Kuala Lumpur from 20 to 24 January 2014. Negotiations on a broad range of issues under the scope of the proposed agreement are thus still at a relatively early stage. The fourth negotiating round

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will be held in China in April 2014.

Both the TPP and RCEP are designed to be open and inclusive agreements. Any APEC economy interested to join the TPP, including China, will have to initiate and complete bilateral consultations with existing TPP Parties and secure a consensus agreement for its membership. However, as negotiations intensify and TPP Parties focus on finalising the agreement, prospective members will have less time to conclude those consultations. Nonetheless, as the world's second largest economy and a key link in the Asia Pacific's supply chains, China can contribute to regional economic integration should it decide to join the TPP.

As for RCEP, negotiations currently involve ASEAN and its FTA partners – namely China, South Korea, Japan, India, Australia and New Zealand – in the first instance. Other interested economic partners will be able to join the RCEP following the conclusion of negotiations.

Singapore plays an active role in the negotiations to secure our economic interests. We also contribute where we can to facilitate the process. For example, Singapore hosted the TPP Ministerial Meeting in December 2013, and over the next four days. We also hosted some of the earlier negotiating Rounds – Round 16 in March 2013 and Round 6 in March 2010.

Singapore meets with interested countries to share about the TPP and RCEP process. Indeed, the TPP started out as the P4 FTA, otherwise known as the Trans-Pacific Strategic Economic Partnership (TPSEP), comprising Singapore, Brunei, Chile and New Zealand. Singapore, together with the founding members, actively brought onboard other like-minded countries, starting with the USA in 2008. Today, there are 12 members in the TPP.

Both the TPP and RCEP are important agreements that will further liberalise trade and facilitate regional economic integration, promote growth and create jobs. As we work expeditiously towards their conclusion, Singapore remains firmly guided by the need to ensure that these plurilateral FTAs contribute towards strengthening the multilateral trading system. In this way, we reaffirm rather than detract from the primacy of global free trade.

Mdm Speaker, I thank the Minister for his reply. Could the Minister elaborate on how relevant TPP is given that you have the absence of Korea, Taiwan, and China? The second question is, will the TPP and RCEP be successful if there is the

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mutual exclusion of China and the US respectively? I know there is avenue for them to join at the later stage but, given that the rules would have been set by the founding members, would that make admission difficult for these two major economic powers?

Speaking from Singapore's economic interests' point of view, we have already bilateral FTAs with China, Korea and Taiwan. As part of ASEAN, we also have FTAs with Korea and China. So, it is not that we do not have preferential trade access to these countries. Similarly, for RCEP, China is in it. The US, so far, has not expressed interest in it. So, we must look at RCEP and TPP as separate but sometimes overlapping plurilateral agreements.

5 Mr Zainal Sapari asked the Minister for National Development (a) what is the current number of coffeeshops located at or near HDB flats that are allowed to operate 24 hours; (b) what is the current number of supermarkets and convenience stores located within HDB housing estates that are allowed to operate 24 hours; (c) what actions are taken to minimise the inconvenience and noise to residents caused by these 24-hour operations; and (d) whether HDB can consider curtailing such operating hours to reduce the noise and inconvenience to residents living within close proximity to these premises.

There are currently about 250 coffee shops and 170 supermarkets and convenience stores located within HDB estates which are operating 24 hours a day.

To minimise potential inconvenience and noise, HDB will engage such operators to put in place appropriate measures before they begin operations. These include restricted times for delivery of goods by suppliers, restrictions on unpacking activities at night and switching off vehicle engines during loading and unloading of goods. Coffeeshop operators are additionally required to operate their outdoor refreshment areas only within the hours of 6.00 am to 11.00 pm. HDB conducts regular inspections, including late night and early morning inspections to ensure that the operators adhere to the specified

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measures.

Generally, the operators will cooperate with HDB and adhere to our advice. In situations where there are repeated complaints, HDB will work with the relevant Government agencies to ensure that these facilities do not generate noise and inconvenience to surrounding residents.

Mdm Speaker, I would like to ask the Senior Minister of State this: before HDB approves such operations in the estates, how does HDB engage grassroots leaders or other stakeholders to seek their opinions and also to discuss how to mitigate any inconveniences to residents? The Senior Minister of State talked about restrictions on delivery times: can he elaborate what are the times that are allowed for these operators to receive supplies of their goods?

Mdm Speaker, generally, HDB does not specify or restrict the time of operation of business establishments in the estate. That is the general rule. In other words, businesses are free to operate in the hours they deem fit, but for certain areas such as the Outdoor Restriction Areas (ORA), HDB will consult the advisors and grassroots organisations to ensure that the ORA operators operate within the specific hours, such as stopping operations before 11.00 pm.

We also should realise that 24-hour shops and supermarkets exist for a purpose: there is demand and they cater to workers who work night shifts such as taxi drivers and healthcare workers. Some of them, indeed, serve to cater to that demand.

In balancing the needs of the residents, we have to take a balanced approach. Yes, there have been complaints but the complaints are rather small in perspective. For example, last year, HDB received 60 cases of feedback on noise disturbances from 24-hour coffee shops. This is about 5% of the 1,200 coffee shops that there are altogether. There is less than 1% complaints about 24-hour supermarkets. These are manageable. But we also realise that for specific stores and supermarkets, there may be repeated infringement. In those cases, we really got to work very closely with the advisors and grassroots organisations to ensure that the business owners know what are the requirements and HDB will enforce those requirements.

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6 Ms Faizah Jamal asked the Minister for Transport (a) what steps does MPA take to bring parties responsible for oil spills in our waters to task; and (b) whether reports of the actions taken against such parties may be open for public scrutiny.

(for the Minister for Transport): Mdm Speaker, MOT and MPA take a serious view of any oil spills in Singapore waters. Under the Prevention of Pollution of the Sea Act (EPSA), MPA will take the necessary enforcement measures to bring the responsible parties to task if investigations require that an oil spillage resulted from a culpable act or an omission under the Act. Depending on the circumstances of each case, the responsible parties may be prosecuted. Such offences carry a fine of up to $1 million, imprisonment for a term not exceeding two years, or both.

Most recently, MOT and MPA have worked with various stakeholders to take swift action in cleaning up the oil spillages caused by the collisions of three vessels on 29 January 2014, 30 January and 10 February 2014. MPA is conducting thorough investigations to determine the circumstances leading to the collision and the subsequent oil spillages, and will take appropriate actions against the responsible parties.

In accordance with Singapore's international maritime obligations, MPA submits its marine safety investigation reports to the International Maritime Organization (IMO). MPA also shares the findings of the investigations and the lessons learnt from such investigations with the shipping community. MPA will continue to reinforce the importance of preventive measures so as to minimise the risks of such incidents.

I have three supplementary questions. I thank the Parliamentary Secretary for saying that the reports will be given to the shipping community. What about them being made public as well so that there will be better cooperation between, say, MPA and the volunteer nature activists who have been down on the ground looking at what is happening?

Secondly, does MPA have rapid environment monitoring response teams to conduct Environmental Impact Assessments (EIAs) on the marine habitats? The press releases seem to show that whilst the ships have been contained and

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there seems to be no harm to the public, there is no response or no indication of what it does to the marine coastal environment.

Lastly, the fact that three collisions happened in a span of about a couple of weeks: does it mean that our waterways are stretched beyond their sustainable capacity, and so would MPA consider using other methods beyond dispersants? As I understand it, a study showed that this method where oil and dispersants are mixed together is actually 52 times more toxic when combined. Is MPA doing any other studies to overcome this kind of problems?

Madam, I thank the Member for the questions. Firstly, I would like to share with the Member that every incident is reported to the IMO, so members of the public can keep track of the developments through the IMO. Secondly, we work very closely not only with IMO, but with other organisations and countries that also promote marine life and looking at the environment. So, I want to assure the Member that we certainly would take that into account.

We want to not only keep our waters safe, but also keep our waters clean. It is most important that we keep the waterways safe so that there will not be any incidents that will affect marine life.

I would like to assure the Member that we have the Port Operation Control Centre (POCC) which advises vessels on how they can safely navigate in our waters. For all the instances that we have, the POCC has been able to provide advice to the vessels involved. Even for the three recent collisions that we had last month and early this month, we were able to provide advance traffic information to the vessels.

I would like to assure the Member that while investigations are on-going, we have taken interim measures. First, we have conducted briefings to the shipping community to reinforce the importance of safety of navigation in Singapore waters. We had the first briefing on 13 February. We are also promulgating the Port Marine and Shipping Circulars to the shipping and hovercraft communities, emphasising the importance of navigational safety and maintaining vigilance while navigating. The POCC also broadcasts messages to these vessels at any point in time, when necessary, to remind them of safety aspects while navigating. At the same time, we are working with a few organisations and countries to develop a safe passage guide for all mariners navigating in the Straits of Malacca and Singapore. These efforts will make our waters safer for navigation and we will keep on bringing home the message

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that safety is key. As soon as our investigation findings are ready, we will share it with the shipping community.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair at 3.30 pm.

Sitting accordingly suspended

at 3.00 pm until 3.30 pm.

Sitting resumed at 3.30 pm

[Mdm Speaker in the Chair]

Mdm Speaker, I beg to move, "That Parliament approves the financial policy of the Government for the financial year 1 April 2014 to 31 March 2015."

Our Budget for Fiscal Year (FY) 2013 is expected to record an overall surplus of $3.9 billion, or 1.1% of GDP, for FY2013. This is higher than the surplus of $2.4 billion, or 0.7% of GDP, that we had budgeted a year ago.

A few factors led to this higher surplus. On the expenditure side, we had temporary delays in the implementation of public infrastructure projects. For example, there were unexpected delays in the construction of the Downtown Line due to the insolvency of one of the contractors.

Our revenues were also boosted by higher vehicle quota premium collections, resulting both from a higher-than-expected number of vehicle de-registrations and hence more replacement COEs being issued, as well as more commercial vehicles being renewed. Secondly, stamp duty collections did not fall as much as expected.

The stronger fiscal surplus in FY2013 was mainly due to cyclical factors. They will not last and we should see a tighter budget position in the coming

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years.

The Singapore economy grew by 4.1% in 2013, up from 1.9% a year earlier, supported by a gradually improving external environment and strong domestic construction growth.

The global outlook for 2014 is uncertain. The advanced economies are gradually recovering, while the emerging economies are slowing. However, the odds are against a sharp slowdown in the global economy. MTI, hence, expects the Singapore economy to grow by 2% to 4% in 2014.

Our labour market remains close to full employment. The unemployment rate for citizens fell to 2.9% in 2013. Job vacancies significantly exceed unemployed workers1.

Wages have continued to pick up. The wages of the median Singaporean worker increased by about 5% in real terms in 2013. Wages also grew for many lower income workers, with those at the 20th percentile of the income ladder seeing real wages go up by around 7%.

Consumer Price Index (CPI) inflation was lower in 20132. However, higher wages, together with other increases in business costs, are expected to contribute to a slight uptrend in CPI inflation in 2014.

Besides CPI inflation, we have been concerned about property prices, which have risen sharply in recent years. The Government's successive rounds of market-cooling measures are working, with both the HDB resale and private residential prices stabilising. In the meantime, HDB BTO prices have been stable because we had delinked them from the resale market.

Our cooling measures have been aimed at moderating the market, so as to prevent property prices from getting too far out of line with incomes. We are not engineering a hard landing. But neither are we able to eliminate cycles in the property market, with upswings in prices in some years followed by corrections. Given the run-up in prices in the last four years, it is too early to start relaxing our measures. The Government will continue to monitor the property market and adjust our measures when necessary.

Our businesses have also faced rising rental costs in the last few years, especially in industrial space. Fundamentally, this has reflected the growth in demand for space, which has exceeded new supply. However, a very large

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quantity of industrial and shop space is entering the market, and should have a moderating influence over the next few years.

We have embarked on new directions in our economic and social strategies.

First, we are going for quality growth: growth based on innovation and deeper capabilities, that will enable us to sustain rising incomes for Singaporeans. It will also allow us to avoid, indefinitely, expanding the foreign workforce.

Second, we are building a fair and equitable society, with stronger support for those who start off with less, where everyone has a real chance to pursue their aspirations and earn their own success. We are strengthening social safety nets, and mitigating inequalities. And as our population ages, we are keeping quality healthcare affordable and strengthening community networks to help our seniors enjoy active and fulfilling lives.

Achieving quality growth and an inclusive society go hand-in-hand. Together, they will help average Singaporeans as well as those with lower incomes improve their standards of living over time; ensure a caring hand is always there to help those who run into life's inevitable difficulties; and enable everyone to contribute to Singapore in meaningful ways.

Budget 2014 will reinforce and build on these new directions.

We are transforming our economy to create higher value industries and quality jobs for Singaporeans in the next decade and beyond. We are investing in new manufacturing capabilities, to make use of advanced robotics, new sensor technologies and networks of Internet-enabled devices. We are developing an ecosystem to exploit Big Data and open promising new services opportunities. And we are taking advantage of the huge demand in Asia and other parts of the emerging world in fields where our companies are strong, such as in urban solutions and a whole range of services for Asia's growing middle classes.

There is no lack of demand for what Singapore can offer. But we are also changing how we grow, in a fundamental way. We must adapt to the permanent reality of a tight labour market, and transform every sector of the economy to achieve higher productivity and skills. This is the only way we can sustain higher incomes for Singaporeans.

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Incomes have grown. Among citizens, median wages have increased by about 9% in real terms in the five years to 20133. This is significantly better than in the other Asian NIEs – Hong Kong, Korea, Taiwan. [Please refer to Chart 1]. Real incomes at the 20th percentile of our income ladder rose by a similar amount

4. We have avoided the problems in many advanced economies, where median wages have stagnated or even fallen over much longer periods, while unemployment has gone up.

The tighter labour market and increase in wages that we are seeing are part of economic restructuring. However, we can only sustain wage increases if we succeed in boosting productivity. Let me put this in another way. Without good productivity growth, if we try to push wages up, we will end up with either higher consumer prices, or squeezed profit margins that hurt both businesses and, ultimately, jobs. Firms will either pass on higher wage costs to consumers through higher prices, especially in the domestic service industries, or else they will become less competitive. It becomes a zero-sum game between business

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profits and wages, that no one benefits from.

That is why raising productivity is at the centre of our economic agenda. It is the only way we can raise our living standards in the years to come.

To reach advanced country incomes, we must develop advanced country capabilities – the corporate and managerial skills, the ability to translate Research and Development (R&D) into commercial opportunities, and deep skills and expertise in the workforce.

It is a major, multi-year undertaking. We cannot transform our economy and achieve major, innovative breakthroughs in every sector in only a few years. Indeed, while productivity has increased by 11% since we began the restructuring journey four years ago, this was entirely due to the strong cyclical recovery in 2010, with little improvement since.

However, we are now seeing progress on the ground. Mature, SME-dominated industries, like precision engineering and food manufacturing, are retooling and experiencing significant productivity growth. More companies are sharing services. Restaurants are using shared services for food preparation and dishwashing, and hotels for laundry services. And in several sectors, individual players are now introducing game-changing innovations – altogether new ways to grow their businesses.

Mindsets have also changed. Whereas two years ago the predominant mood amongst businesses was to call for Government to slow down or postpone tightening of foreign worker inflows, most have now accepted the reality of a tight labour market, and are seeking assistance to upgrade, bring in new techniques and grow internationally. Many more firms are taking advantage of our schemes to invest in productivity and to expand abroad.

We will aggressively support every form of upgrading by firms – whether through R&D, automating business processes, creating new design and brands, or enriching the skills of their employees.

Budget 2014 will strengthen support for early adopters of new technologies, and for SMEs that are going beyond the norm in their upgrading efforts. We will also promote wider adoption of high-impact productivity solutions, beyond the early adopters to a larger group of firms in the industry. This will include a major effort to scale up the use of Infocomm Technologies (ICT) by SMEs.

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The Budget will also enhance funding schemes to help catalyse growth enterprises, and support SMEs in their expansion abroad. In addition, in the construction sector, we will tighten upstream rules on developers to encourage manpower-saving designs, and give contractors stronger incentive to invest in the skills of their workforce.

Taking all our productivity support schemes together, we will be flowing back to businesses more support than the additional foreign worker levies collected from the policy tightening in recent years. However, we are not recycling monies indiscriminately, or seeking to benefit all firms equally. Our schemes will still favour the more dynamic and efficient players. Any company that invests in order to save manpower or achieve innovative breakthroughs gets Government support, as long as it has its own money in the game.

However, transforming our economy is not just about technology, and productivity is not ultimately about the dollars and cents of upgrading. It also means changing our social norms.

We need a workplace culture where employees' views and contributions are valued, up and down the line. When employees are engaged and empowered, productivity goes up. Some of our firms, including SMEs, are good role models in this regard. Many more have to get on board.

Second, we also need a culture of mastery of the job. As individuals or companies, and as a society, we have to take pride in developing expertise and flair in every vocation, seeking not just competence but excellence, throughout people's working lives. Employers have to support this too – doing the job well is what counts, not long hours on the job.

Third, and importantly, we have to change our habits as consumers. Quality service comes in many forms, and need not mean having service staff constantly waiting on us. We must also feel at ease with self-service technologies, such as at check-out counters in supermarkets. We are well behind many other cities in these respects.

These other cities were not always that way, but their social norms evolved. We, too, must make these shifts, in order to avoid a growing dependence on foreign workers, and to create quality jobs.

There is no reason, for example, why restaurants and cafes in Singapore cannot be like those in Europe or the US, which operate with fewer service staff,

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each taking more responsibility and getting better pay; where customers treat staff with respect and the staff wear their uniforms with pride.

We must all make the effort to change our social norms, in order to raise productivity and pay. Restructuring our economy will, ultimately, succeed if, at its heart, it is about these changes in our social practices.

Budget 2014 also takes forward the major strategies that the Prime Minister spoke about at last year's National Day Rally, aimed at ensuring that ours is a fair and equitable society.

We are building on the broader initiatives we have taken in the last five years: in education, work, housing and healthcare. The changes reflect the new phase that we have entered as a country: with incomes rising less quickly, and disparities between different groups becoming a greater concern; and with a growing population of older Singaporeans, often with fewer children to support them, needing security and assurance in their retirement years.

Our thinking has shifted in this new phase, and our initiatives are helping to level up our society and mitigate inequalities. These policy interventions also help to explain why, taking into account Government transfers and taxes, Singapore's Gini coefficient was lower in 2013 than it had been in over a decade.

We take seriously the challenges faced by our lower paid workers, and are helping them through both our economic and social strategies.

First, and always, we must have a competitive and vibrant economy: that is the only way we can have good jobs and rising incomes for average and lower income Singaporeans. Jobs are the most important safety net, and the most meaningful way we can keep society inclusive.

Second, we are mitigating wage disparities, by using tax revenues to top up the wages of those in the lowest 20% through Workfare. Wages for these workers are, in fact, going up, as I mentioned earlier. With Workfare, and the Special Employment Credit, the average older lower wage Singaporean will receive wages at least one quarter higher than what their employers will pay.

The three-year Wage Credit Scheme (WCS) that I introduced in last year's Budget is also working well. Wages for lower paid Singaporeans have, in fact,

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improved the most rapidly, helped by the WCS.

Our third strategy has been to tackle the problem of cheap-sourcing. It is a specific problem that has required a more interventionist solution, worked out among the tripartite partners. In industries such as cleaning and security, cheap-sourcing has held down pay and also led to high attrition, making it difficult for workers to acquire skills and upgrade themselves. The Progressive Wage Model (PWM), which will be a licensing requirement for companies in both these industries, will ensure that cleaners and security guards, too, enjoy significant upgrades in their basic pay, and have a pathway to improve their skills and wages over time.

We are making progress, but there is more work to do. We cannot change the realities of global competition and technological advances that put pressure on less-skilled workers all over the world. But we can do much more to improve the lives of lower income workers, and to give their children the best chances to do well, so that disadvantage is not passed from one generation to the next, and our society preserves a sense of equity and opportunity.

Let me now summarise the major social planks of this year's Budget.

We are giving special recognition to our Pioneer Generation through a package that assures them of affordable healthcare. The Budget will also set aside funds today to meet the full cost of the Pioneer Generation Package in future. By doing so, the Government is assuring the Pioneer Generation that the commitment we are making today will be met, regardless of future economic and fiscal circumstances. By taking advantage of current resources to provide fully for this special package for our pioneers, we will also allow future Budgets to focus on the needs and challenges of the future, such as in education, transport and the healthcare needs of all Singaporeans.

The Budget will continue with our efforts to support social mobility, and to build a strong and sustainable social safety net.

First, we will boost education subsidies, starting with the early childhood years. The earlier we intervene to help children who start with a disadvantage, the better their prospects for achieving their full potential in life. We will also strengthen support for the middle income group, especially in tertiary education.

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Second, we will continue to enhance healthcare subsidies for both the lower and middle income groups. Besides enhanced Government help, we will increase employers' CPF contributions so as to increase the retirement savings of workers.

Third, we will buttress schemes to help the disabled, from young. Their difficulties are the greatest, and often their courage, too. They deserve greater support.

Taken together, our initiatives of the last five years, plus the further steps in this Budget amount to a major programme to support lower and middle income Singaporeans – in fact about 2.5 times compared to what it was 10 years ago

5. Both for lower-income and middle-income Singaporeans, if we add up what we have introduced in the last five years, plus in this year's Budget, we are now providing them support over their lifetimes that will be 2.5 times compared to what it was a decade ago. So, it is a major shift.

Let me illustrate what this means for a typical low-income couple, at the 10th percentile of the income ladder, through the major episodes of their life.

First, the couple buys a home of their own. They receive $60,000 in housing grants to buy a BTO 2-room flat, and need pay only from their CPF, nothing from their take-home pay. Later on, if they upgrade to a new 3-room flat, they receive an additional $15,000 in Step-Up CPF Housing Grant.

Every step of their children's education will be heavily subsidised. Childcare fees will typically be just $3 a month. Then, through their children's school years and if they go on to polytechnic, for example, financial assistance will cover 75% of their total fees. If they go on to University, they get further support.

Workfare tops up their pay by up to 30%. And if they face set-backs along the way, such as losing a job, ComCare will help.

As the couple gets older, healthcare needs become more important. They will get subsidies of 70% to 80%, whether in in-patient or outpatient treatments, and for long-term care. And if they still have difficulty with their healthcare bills, Medifund will help.

Taking these episodes in their life together, the couple will receive significant help from the Government. Government transfers, net of the taxes

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they pay, will in fact exceed their lifetime incomes.

However, what is critical is not just how much we spend and redistribute resources, but how we do so.

Our approach to uplifting the poor and levelling up society can only succeed if it supports a culture of personal responsibility – the desire to learn a new skill and work for a better living, and to make the effort to look after our own families. We know this from the evidence of half a century of major social interventions around the world, such as in the US and the European countries.

We cannot leave people to face life's uncertainties on their own. That is not our approach. But as we strengthen our social support and safety nets, our whole approach must be to encourage a compact between personal and collective responsibility, where each reinforces the other. It is the best way to sustain a vibrant and equitable society, where everyone plays a role in making Singapore a better place.

Let me now go on to the first major plank of the Budget: to deepen incentives for restructuring to enable innovation to pervade the economy.

Our basic approach has been two-fold. First, we have been tightening foreign worker policies in progressive steps since 2010.

As a result, foreign workforce growth has slowed significantly in the past two years. We can expect further slowdowns in the next two years, particularly in the Services sector, as the Dependency Ratio Ceiling (DRC) cuts that were previously announced take full effect by July 2015.

The Construction sector has been the exception. While we are not making further moves to tighten foreign worker inflows for the economy at large in this year's Budget, we will make further efforts to encourage the Construction sector to retain skilled workers and to implement manpower-saving technologies. I will speak more on this later.

The second prong in our restructuring strategy has been to provide firms with strong support for every investment that can improve productivity.

This year, companies will continue to benefit from the three-year Transition Support Package that we introduced last year. It is a major package of support,

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now estimated at about $7.3 billion over the three-year period. It has been very well utilised in the first year of rollout. In particular, strong wage increases over the past year will boost the payouts under the Wage Credit Scheme (WCS) at the end of March 2014 to around $800 million, significantly more than originally estimated.

We are also seeing higher take-up rates for the existing Productivity and Innovation Credit (PIC) scheme. Two out of three SMEs with turnover of more than $1 million have claimed benefits.

Besides these broad-based measures, we are also providing targeted help to firms investing in innovative ideas through the Innovation and Capability Voucher (ICV) and Capability Development Grant (CDG) schemes.

As I mentioned earlier, change is happening on the ground. Even within our "old economy" sectors, individual players are doing things quite differently. They show us that change is possible and how, if we scale up such changes across whole industries, we can achieve a major impact in overall productivity. I will give just three examples of such firms, each of which is operating in industries which have had relatively low productivity.

First example is in security: Oneberry Technologies. Using its proprietary system of intelligent cameras and surveillance software in place of traditional security guards, Oneberry provides security cover with no manpower on site. Instead, staff at its central command centre receive instant alerts when there are intrusions and respond with alarms and warning announcements on-site, or by alerting the Police. This helps Oneberry's clients to significantly cut down on security manpower. SCAL Kim Chuan dormitory, one of its clients, managed to save $300,000 in three years as a result. This technology-driven business model has also enabled Oneberry to more than double its revenue with only one-third increase in manpower.

Second example: Marcella, a menswear retailer. Marcella has used technology to produce bespoke shirts at off-the-shelf prices. It developed software to enable its sales staff to translate customers' measurements automatically into draft designs. As more customer data is collected, the software makes constant improvements in creating fitting designs. This has reduced the need for alterations. Marcella also uses laser technology to cut fabric to precision in its factories for better accuracy and to reduce wastage. With this cost-efficient business model in hand, Marcella is opening its first

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retail outlet abroad, in New York, in the middle of this year.

Third, moving on to the F&B industry, let us now look at Genki Sushi. The Singaporean-owned franchise has invested in a system that has reduced the number of staff serving tables by about 85%, and cut waiting times for orders by half. Orders are placed using iPads and conveyed directly to the kitchen. "Trains" shaped like the Shinkansen are then used to serve food straight to its diners' tables. In addition, every table has a mechanised plate-clearing system which allows customers to slip empty plates into a slot to be sent directly to the stewarding area. The technologies have not only reduced the need for staff but have become a novel dining concept that attracts more customers.

These are different examples from different industries, but each shows us what is possible. We must spread this willingness to innovate and make breakthroughs.

We will, therefore, provide sharper incentives in this Budget to support significant efforts in business transformation and upgrading. Our support for companies will be along five thrusts:

First, we will extend and deepen support for businesses to invest in innovation and skills so that they can sustain and step up their restructuring efforts.

Second, we will give a stronger and more specific push to the piloting and scaling-up of ICT solutions that can help transform whole sectors.

Third, we will catalyse investments in growth enterprises to facilitate their growth and expansion.

Fourth, we will support companies in their efforts to internationalise and grow their brands in the global market.

Lastly, for the Construction sector, we will put in place a series of measures to help players meet the challenge of raising construction productivity.

The Productivity and Innovation Credit (PIC) scheme is due to expire in Year of Assessment (YA) 2015. There have been many calls for its extension. I have decided to extend the PIC scheme for another three years until YA2018. This

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extension will cost the Government a total of $3.6 billion.

I will also introduce a "PIC+" scheme for SMEs, to help firms that are making more substantial investments to transform their businesses. Under the current PIC scheme, the expenditure cap is $400,000 per year for each qualifying activity and the cap can be combined to a total of $1.2 million across three years. I will raise the expenditure cap for SMEs to $600,000 from YA2015. This means that SMEs can now claim tax deductions for up to $1.8 million6 in expenditure. [Please refer to Annex A-5.]

To illustrate, take the example of a medium-sized logistics company planning to invest in an automated storage and retrieval system at a cost of $1.6 million. Under existing PIC rules, the company can claim enhanced tax deductions on the cost capped at $1.2 million. With the new PIC+, it can now enjoy deductions on the full $1.6 million expenditure that give total tax savings of about $530,0007. That is a large subsidy: $1.6 million expenditure, a $530,000 subsidy in effect.

To continue encouraging private R&D, we will extend the 50% additional tax deduction on qualifying R&D expenditure for another 10 years till YA2025, and the further tax deduction administered by the EDB for another five years till 31 March 2020. [Please refer to Annex A-5.]

We will also extend the writing down allowance for cost incurred to acquire qualifying Intellectual Property Rights for another five years till YA2020. [Please refer to Annex A-5.]

We will create new industrial spaces that cluster companies within the same industry. SMEs will benefit from lower costs through the consolidation of operations, pooling of resources and aggregation of demand for delivery and other services.

For instance, JTC's Food Hub concept will feature an integrated cold room-warehouse shared facility operated by a third party provider who will also provide logistics services. This will not only lower the capital investments needed by SMEs – as they no longer need to invest in their own cold rooms – but also enable them to benefit from more efficient supply chains.

In addition to these cluster strategies, we will continue to encourage individual businesses to maximise land use. We will renew the Land Intensification Allowance (LIA), due to expire next year, for five years to 30 June

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2020. We will also extend the LIA to the logistics sector as well as to businesses carrying out qualifying activities on airport and port land. [Please refer to Annex A-5.]

We are undertaking a major review of our Continuing Education and Training (CET) system to support the up-skilling of our workers on a continuous basis and the transformation of our economy. The review will be completed later this year. As more funds will be needed for the expansion of our CET system, I will top up the Lifelong Learning Endowment Fund (LLEF) by $500 million, bringing the total fund size to $4.6 billion.

Our second major thrust is to catalyse the adoption of ICT, especially in our SME sector.

ICT is transforming almost every industry internationally. While the Public Sector and our larger corporations have been actively leveraging ICT, we have to help our SMEs step up adoption of ICT solutions.

We will give this a major push over the next three years. We will launch an ICT for Productivity and Growth (IPG) programme, comprising three key initiatives which I will elaborate on briefly in turn.

The first concerns proven ICT solutions. Over the past three years, IDA has worked with trade associations and the ICT industry to develop and deploy sector-specific solutions under the iSPRINT scheme. In F&B, for example, more than 50 F&B operators have adopted a wireless integrated restaurant system that has relieved their service staff from manual and repeated tasks.

We target to extend the reach of these sector-specific proven solutions from the existing 500 SMEs to another 10,000 SMEs over the next three years. We will subsidise 70% of the costs of ICT products and services under this scheme. [Please refer to Annex A-2.]

Second, we will encourage first movers, who can pilot emerging technology solutions that have the potential to transform businesses. These can, for example, include innovations in sensors, data analytics and robotics.

Over the next three years, we will support 80% of the qualifying costs for firms that are implementing innovative solutions that are new to Singapore. The support will be capped at $1 million per participating firm. [Please refer to

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Annex A-2.]

Third, we will promote high-speed connectivity for SMEs. It is difficult for SMEs to take full advantage of cloud computing and data analytics solutions without high-speed Internet access.

We will subsidise SMEs' fibre broadband subscription plans of at least 100 Mbps (Megabits per second) and provide support for them to implement Wireless@SG services at their premises. [Please refer to Annex A-2.]

We will also ensure that more buildings have facilities to bring fibre broadband to their business tenants. We will subsidise building owners for up to 80% of the costs of new in-building infrastructure, capped at $200,000 per building. [Please refer to Annex A-2.] When you want to take the fibre up to the tenants, there is a fair bit of building renovation involved.

As this is not a permanent measure, building owners are strongly encouraged to take this up within the next three years. IDA will consult the industry and building owners to determine the most optimal way to structure the subsidy.

These initiatives together will cost $500 million over the next three years.

The third thrust in our efforts to promote industry transformation will catalyse financing for companies at various stages of growth so that they can take full advantage of opportunities.

SMEs in the growth and expansion stage often need a boost in financing to achieve sufficient scale and become globally competitive. In 2010, the Co-Investment Programme (CIP) was launched to catalyse patient growth capital for Singapore-based enterprises, through co-investing with the private sector.

The Government set aside $250 million for the first phase of the programme, of which approximately $160 million has been deployed. This has already catalysed over $500 million of investments from private sector players, or over three times of the Government's outlay.

In view of the good take-up to date, we will launch the second phase this year with the Government providing an additional $150 million to match private sector investments. The CIP will continue to focus on investing in growth-

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oriented Singapore SMEs and providing the patient capital to help SMEs that need more time to execute their expansion and internationalisation plans. [Please refer to Annex A-3.]

The additional capital will be allocated to two funds.

First, the SME Co-Investment Fund II. Similar to the existing SME Co-Investment Fund, this second fund will make direct equity investments into companies alongside other private equity investors.