Hansard, Monday, 13 July 2015

1 Mr Arthur Fong asked the Prime Minister (a) whether the Electoral Boundaries Review Committee has been formed; and what are the guidelines that the EBRC will follow.

2 Mr Yee Jenn Jong asked the Prime Minister (a) whether the Electoral Boundaries Review Committee has been formed and, if so, who are the members of the Committee; (b) if not, when will it be formed; (c) when will the Electoral Boundaries Review Committee's report be published; and (d) what is the likely duration from the publication of the Electoral Boundaries Review Committee's report to the calling of a general election.

Mdm Speaker, with your permission, I would like to take Question Nos 1 and 2 together.

Yes, please.

Mdm Speaker, the Electoral Boundaries Review Committee (EBRC) was formed two months ago. I have asked the Committee in its review to:

consider the population shifts and housing developments since the last boundary delineation exercise;

have smaller Group Representation Constituencies, so as to reduce the average size of the Group Representation Constituencies below five; and

have at least 12 Single Member Constituencies.

As per past practice, the Committee is chaired by the Secretary to the Prime Minister. It is now in the midst of its deliberations and will make its recommendations to me when it is ready.

I thank the Prime Minister for the answer. I would like to ask the Prime Minister whether he is prepared to commit a minimum time period, say, at least six months from the publishing of the EBRC report to the calling of

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elections. I believe that it had been as short as one day from the report to the calling of elections in the past. A longer period would allow residents being moved out of their constituencies to be able to adjust to the changes.

The second question I have is on the composition of the EBRC for future Committees. Prior to Singapore's Independence, the members have comprised of people that are outside of the Government, including representatives from various political parties. So, I would like to check with the Prime Minister whether in subsequent EBRCs, we can change the composition of the EBRC to involve non-Government representatives or for it to be chaired by a High Court Judge, like in the case of the UK.

Finally, I would like to ask the Prime Minister: the completeness of the EBRC report seems to have been shrinking from the 1960s to the early 1970s. So, will the Prime Minister direct the Committee to provide better justifications for the changes because many of these changes do not seem to make sense to political observers and to the residents? Can the minutes of meetings of the EBRC be published so that they will be open for all to understand the decisions that have been made? Thank you.

Mdm Speaker, I think that the Committee will publish its report and to the maximum extent possible, we will make sure that there is enough time to elapse so that everybody can read the report, understand it and know where they stand before elections are called. But I do not think it is possible to say that we promise a certain minimum period, such as six months, because it depends very much on the exigencies of the situation and on when elections become necessary.

Secondly, on the composition of the EBRC, the EBRC has for many years comprised civil servants who have domain knowledge which enable them to make considered decisions on how to divide up the constituencies, taking into account, as I have said, population shifts, housing developments and also to do this in a practical sort of way so that you do not have a complete upheaval each time you have re-demarcation. If there is a need for outside expertise, I think that can be considered and they will have no hesitation to look for outside expertise. As for bringing political parties in, I am not sure that is an entirely good idea. The Americans do it with political parties, and the way it is done is that the sitting members – this is for the House of Representatives – decide on the demarcations. Usually, what happens is that they carve it up amongst themselves. It is a political deal. I think that is not a good arrangement. I think it is best we leave it to the civil servants to work at.

As for the completeness of the report and of the minutes, I think I have to leave it to the Committee. I do not believe that it is helpful to have every twist and turn in the minutes

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reported and published. I think the Committee's report is the final word.

3 Ms Foo Mee Har asked the Minister for Manpower whether the Employment Pass (EP) and Jobs Bank schemes can be further tightened to ensure that employers are required to give due consideration to applications from qualified Singaporeans first and that EP applications must be accompanied by evidence that the hiring of foreigners is only after unsuccessful sourcing from local talent pool.

Mdm Speaker, to ensure that companies give fair consideration to Singaporeans when hiring, the Fair Consideration Framework (FCF) and Jobs Bank were introduced. So far, almost 20,000 employers have registered more than 72,000 active job postings with the Jobs Bank, drawing 110,000 local job seekers to register as well.

On the whole, it has led to a fairer hiring process and easier access to job opportunities. Notwithstanding this, the Ministry of Manpower (MOM) is making further enhancements to send a clearer and stronger signal about fair consideration for Singaporeans. As announced last week, we are making further refinements to take effect from 1 October 2015. This includes publishing the salary ranges of job vacancies, closer scrutiny of EP applications for companies with a weaker Singaporean Core relative to others in their industry, and more stringent quality assessment of EP and S Pass applicants.

For example, companies with weaker Singaporean Core will be required to provide additional information, such as the number of applications from Singaporeans, how many were shortlisted, and the interview outcomes. We may also require some of them – what I call the "double weak", weak Singaporean Core and weak commitment to fair consideration for Singaporeans – to commit to plans to strengthen their Singaporean Core.

Working together in partnership with the industry, agencies and the Labour Movement, our four core priorities are (a) to strengthen our competitiveness and sustainability, (b) by becoming more manpower lean, (c) with a stronger Singaporean core, and (e) better quality foreign manpower. These are important priorities as we reposition our economy for future growth.

Mdm Speaker, I would like to thank the Minister for the slew of enhanced measures announced last week to strengthen the Singaporean Core amongst PMEs, especially the Career Support scheme. Madam, I have two supplementary

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questions for the Minister.

One, with the intention to scrutinise EP applications for whether or not Singaporeans were fairly considered, would the Minister please elaborate how the Ministry will ensure qualified Singaporeans are not passed over for jobs just because foreigners are willing to accept a lower salary and employers do not need to contribute to their CPF?

Two, in MOM's announcement, it mentioned an expectation for firms to systematically develop their Singaporean PMEs. So, that was a statement. That was great. Would the Minister please elaborate how MOM intends to achieve this and whether the Minister would consider a system where the approval of selected EPs are tied to a localisation plan, with clear commitments from the firms to invest in the training and development of Singaporeans to fill these jobs in the future? This scheme will be especially helpful in sectors currently dominated by foreigners.

Mdm Speaker, I was at Geneva last month to attend the International Labour Organization Conference. The Director-General of the ILO Mr Guy Ryder hosted a dinner for the manpower representatives of the G20 countries. We are not a G20 country but I was invited because Singapore is an observing country for this year's G20 Meeting to be held in Turkey.

The manpower representatives from these countries discussed the challenges faced in the areas of jobs and employment. My conclusion is that countries all over the world, including the G20 countries, the more developed countries, will all face three challenges. Firstly, jobs deficit – not enough jobs in many countries, leading to high unemployment, including youth unemployment. Secondly, skills deficit – not enough skills in the workforce, leading to structural unemployment; structural mismatch, again in many countries. Last but not least, quality deficit – jobs are being created but not of good enough quality; as a result, many PMEs are being under-employed. These are the three key challenges facing all countries, including Singapore.

I would say that if you look at today's situation, we are doing much better, compared to many other countries. We do not have a severe youth unemployment challenge. Unemployment rate among our PMEs is one of the lowest in the world, at about 2.6% to 2.7%. Under-employment, we have been able to create good paying jobs in sufficient number for our people. For example, if you come to our Jobs Bank, of the 72,000 vacancies I talked about, more than half of them are PMET jobs; in fact, about 50,000 of them. In other words, we do not really have the three deficits as faced by many of these countries.

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As we move forward, as I had mentioned earlier, we do want to strengthen the Singaporean Core to ensure that all sectors of the economy can sustain growth into the future. Therefore, whatever measures that we introduce, we must bear in mind, firstly, it must not weaken our competitiveness so that we can continue to create enough good paying jobs; secondly, continue to strengthen the capability, the skill profile of our local workforce so that we do not have the structural unemployment challenge.

In other words, as we move forward, we are identifying, in particular, two target groups. The first would be companies with a weak Singaporean Core relative to the rest of the industry. As I had mentioned earlier, for this type of companies, I have no choice but to make the employment of EP holders for these companies more difficult. Because if they have a weak Singaporean Core relative to the rest of industry, and at the same time, they do not demonstrate stronger commitment towards fairer consideration, I would have no choice but to make the process more difficult until they are prepared to work together with us to find ways to strengthen the Singaporean Core.

There is another consideration. We noticed that in some sectors, the overall Singaporean Core is relatively weaker than in other sectors. For those sectors, MOM will work very closely with the relevant economic agencies to understand better why is it that for these sectors, the Singaporean Core, on the whole, is relatively weaker than the other sectors. We will work with the economic agencies to see what more can we do under the SkillsFuture initiative led by Deputy Prime Minister Tharman to enhance the skills upgrading of the manpower, sector by sector. Hopefully, over time, while with one hand we strengthen the supply of local Singaporean Core through SkillsFuture, at the same time, through the Fair Consideration Framework to strengthen the demand for a Singaporean Core. We believe this is the best way forward.

Madam, I wish to ask the Minister to clarify how successful has the Fair Consideration Framework been in having Singaporeans considered fairly for PME jobs since its implementation a year ago.

Mdm Speaker, the requirement to advertise jobs with the Jobs Bank was introduced in August last year. So, it has been implemented for almost a year. The MOM has looked at the overall picture. We are happy to say that, by and large, most employers do show enough commitment, in terms of giving Singaporean job applicants fair consideration.

However, we have noticed that there is a small group of employers, as I had mentioned earlier, whose current Singaporean Core is not as strong, relative to the rest of the industry. Of greater concern to us is that they do not seem to demonstrate enough commitment to fair consideration. For example, some of them, the moment they fulfil the 14 days' commitment, within a week, they will come to MOM to submit their EP applications. So,

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these are the cases which we wonder whether they have really gone through the proper process because we do not believe that they can clear the queue of applications and interviews all within a few days.

Another very common feedback that we receive is that many of the Singaporean PMEs have this feeling that some organisations, because the HR directors are foreigners, as a result, they are giving preferential consideration to foreign PMEs especially those coming from the same countries. MOM takes this seriously. In fact, this is an area I am looking into as well, trying to identify companies where the Directors of HR are foreigners and, at the same time, there is a high concentration of EPs from the same country sources. I am not accusing them of being biased, but I would just like to convince myself whether this concern by many PMEs is founded or unfounded. If they are founded, then obviously, as I had mentioned earlier, this will be companies that we would like to work with closely to ensure that they exercise fairer and more progressive HR policies and practices.

Madam, a clarification. I would like to ask the Minister whether the Singaporean Core in a company will now be a factor in considering applications for Employment Passes.

Mdm Speaker, the answer is yes. As I had mentioned earlier, we are now targeting companies with this "double weak": weak in Singaporean Core relative to industry and, at the same time, do not demonstrate a strong enough commitment to give Singaporean workers fair consideration.

Thank you, Madam. Madam, I welcome this new initiative by MOM to consider the Singaporean Core in the company. I would like to ask how MOM determines whether a company has a weak or strong Singaporean Core and how does the new factor or framework of Singaporean Core in a company work into the application for Employment Pass and in consideration of approval by MOM.

Mdm Speaker, as I had mentioned earlier, the strength or weakness of a Singaporean Core in a particular company, on the part of MOM, we will look at it within the context of the industry. For example, if in the industry, the Singaporean Core is "x" percent, but for companies where the Singaporean Core is a lot lower than "x" percent, those will be the ones that we perceive as having a weak Singaporean Core.

Secondly, as I had mentioned earlier, before they can apply for an EP under the Fair Consideration Framework (FCF), the company will have to advertise the job and, now, including the salary as well, in our Jobs Bank. After the 14 days, Singaporean job applicants who are interested in those jobs would have applied for the jobs. What we are doing, moving

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forward, is that for companies with a weak Singaporean Core, we will be asking them questions like, for example, "How many job applications did you receive?" For example, if they do not receive enough job applicants, it could mean that either the jobs are not attractive or maybe there is a shortage of skills in Singapore. That is where, under the Sectoral Manpower Development Plan, we will find ways to strengthen the Singaporean Core. So, that is the answer.

Thank you, Madam. I would like to ask the Minister on the point that he made about being able now to identify situations where there is this "double weak". The Minister mentioned earlier that for companies with a weak Singaporean Core, MOM will monitor them and then they may be required to impose tighter EP hiring restrictions. I agree that that sounds like a very good system.

What it sounds like to me is that MOM is beginning to exploit the potential for using the Jobs Bank as an early warning kind of monitoring system so that you can see areas where there may be issues with hiring in future. One of the key challenges the Minister mentioned earlier was skills deficit. Would it be possible, do you foresee using this system to identify where a skills deficit may develop in time, even though there is not a skills deficit currently at this point in time?

Secondly, if you are able to accurately develop a system so that it can capture this kind of information for your own use, would you be expecting companies to find this information helpful in the future?

Mdm Speaker, the answer is yes. In fact, we believe that by a closer analysis of the Jobs Bank as well as the response rate, we would be able to identify any early signs of a skills deficit. When those are identified, firstly, we will share the information with the sector. We do have more than 20 Sectoral Tripartite Committees set up to look into the manpower development plan, sector by sector. So, those information will be shared with the tripartite partners.

At the same time, MOM will also be looking into how we can support those companies that are able to help us to transfer the know-how, the capabilities, to our workforce over the near term. For example, if we have identified that certain areas of skills are in significant deficit, and if we feel those sources of expertise are available out there somewhere in the world, we would like to work with companies to bring those expertise to Singapore and put in place a know-how transfer programme so that, over time, this skills deficit can be narrowed.

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Mdm Speaker, I applaud the measures that the Minister has introduced. I am equally sure that there several companies or corporations which have developed a strong Singaporean Core. So, I wonder whether the Minister could also find ways to recognise and publicise them, and also get them to share the stories of how a strong Singaporean-core has helped them in their business. I am looking more at the more positive parts as well. I think this will be useful.

Mdm Speaker, I thank the Member for this suggestion. In fact, what MOM intends to do is to, on the one hand, take firmer action against the "double weak" employers and, at the same time, exactly as mentioned by the Member, to profile companies that are adopting the more progressive, not just fair, but progressive employment practices. We do intend to conduct a series of what we call "Learning Journeys", so that the agencies, companies from the same industry, can learn from the progressive practices of the good employers, so to speak.

Mr Zainudin Nordin, last question.

Madam, I am very supportive of the Singaporean Core initiative. But on the other hand, I would just like to understand better if all these efforts of getting the EP are making the employers' job more onerous and more difficult, and whether there is a change in image about Singapore being a friendly country for investments, and also, in the long term, whether it will have an impact on us being a more competitive economy, compared to the regional countries which are also developing.

Mdm Speaker, I thank the Member for pointing this out. It is a very important point. Let me emphasise again, I mentioned earlier about making the application for EP more difficult, but it is only for the "double weak" employers. Based on MOM's observations, the vast majority of the employers are progressive and they do give fair consideration to Singaporeans. Therefore, only a small group of employers will be affected. We are also engaging them in a positive way. So far, in the last 10 months or so, we have identified about 150 employers belonging to this category of either "single weak" or "double weak", and we are working very closely with them, in some cases, through the relevant economic agencies and, in others, between MOM and these companies.

I fully agree that it is important that we continue to maintain the competitiveness and attractiveness of Singapore because, otherwise, we are going to have a jobs deficit challenge. Therefore, I want to assure the business community that we will always be friendly towards employers that adopt fair and progressive employment practices.

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4 Dr Lim Wee Kiak asked the Minister for Education in view of the recent earthquake in Sabah (a) what are the objectives of sending students on challenging overseas learning programmes like mountain climbing; (b) what are the lessons learnt from this incident; and (c) whether the Ministry will review the overseas learning programmes for students.

5 Mr Lim Biow Chuan asked the Minister for Education (a) whether the Ministry has reviewed the safety measures taken by schools for overseas expeditions; (b) whether there are any lessons to be learnt from the incident arising from the Sabah earthquake in light of the accounts given by survivors from the Sabah earthquake; and (c) whether the Ministry will consider a special award for heroism to deserving teachers, trainers or guides for their acts of bravery during the earthquake.

6 Ms Irene Ng Phek Hoong asked the Minister for Education whether he will consider giving a posthumous national award such as the Medal of Valour to the late Mohammad Ghazi and the late Terrence Sebastian Loo in recognition of the teachers' acts of bravery and selflessness in rescuing children during the Sabah earthquake in June 2015.

(for the Minister for Education): Mdm Speaker, the Minister for Education will be making a Ministerial Statement following Question Time. May we have your permission to address the issues that Members have raised in Question Nos 4 to 6 during his Ministerial Statement?

I agree. Mr Gerald Giam, next question.

7 Mr Gerald Giam Yean Song asked the Minister for Manpower (a) what accounts for the drastic fall in job growth from 28,300 jobs in Q1 2014 and 40,700 jobs in Q4 2014 to just 300 jobs in Q1 2015; (b) whether this trend has continued into Q2 2015; and (c) what implications does this have on Singapore's economy.

Mdm Speaker, after five years of strong increases, total employment fell by 6,100 in the first quarter of this year compared to the growth of 28,300 a year ago in the first quarter of 2014, and 40,700 in the fourth quarter of last year. This is due to seasonal declines and sharper moderation in employment growth in the manufacturing and construction sectors, as well as parts of the services sector: retail, real estate services, accommodation and food services.

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The moderation in employment growth needs to be seen in the context of our labour market and the repositioning of our economy. First, we have seen a sustained increase in our employment rate, to a high of 79.7% last year. In fact, at 79.7%, we are now among the highest, together with Japan. Our unemployment rate has remained low in the last few year, and, in fact, continues to be among the lowest in the world. Local workforce growth, going forward, will be slower, given that we have one of the highest employment rates and lowest unemployment rate in the world.

Secondly, job vacancies remain high and outnumber jobseekers. The seasonally adjusted ratio of job vacancies to unemployed persons remains stable at 143 openings per 100 jobseekers in March this year, compared to 142 in December 2014. In other words, we have more job vacancies than the number of people looking for jobs.

Thirdly, to sustain growth, we are moving forward towards a more manpower-lean economy. We will continue to encourage businesses to reduce their reliance on labour, especially low-skilled foreign workers. We will also focus more on upgrading the skills of our local manpower, and improving productivity and increasing the pace of innovation as the source of future growth and competitiveness.

Employment data for the second quarter of 2015 is not yet available. We are monitoring the employment trends closely in the coming quarters.

Madam, I thank the Minister for the answers. I have three supplementary questions. Firstly, the Minister mentioned that this is due to seasonal drops in job creation. But this is a 99% drop from the same period a year ago. So, how does the Minister explain this drastic drop, assuming that it is the same season a year ago? Secondly, does the situation of high vacancies, coupled with low unemployment and low job creation, indicate that many companies are not restructuring fast enough to become less labour-intensive and more productive, or what other explanations could account for this situation? Thirdly, is most of the employment creation occurring in the tradable or the non-tradable sectors? What are the proportions of job vacancies in the tradable and the non-tradable sectors?

Madam, the first point I want to emphasise is that there is a saying that a point is a point, two points make a line, three points make a trend. Therefore, I would not draw any conclusion just based on one point. At the same time, I would emphasise that even though with a decline of 6,100 jobs in the first quarter of 2015, compared to a year ago, there are still many more jobs available in the first quarter of 2015, compared to a year ago, in the first quarter of 2014. In fact, the increase over this year-on-year was about 2.7%, almost 90,000 jobs. Therefore, jobs deficit is not the issue facing us today. The job market is

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still growing on the year-to-year basis.

Secondly, the Member asked whether this is a sign that the industry is not restructuring fast enough. There is a contradiction. On the one hand, we are concerned that the job growth has slowed down and yet at the same time, we are concerned that the restructuring is not fast enough. In fact, with a faster pace of restructuring, we can expect job growth to slow even further.

Therefore, I would not adopt just one point and draw any conclusion. But over the next quarter, and over a few quarters, we will be monitoring very closely the job growth trend. From there, I would be able to draw a better conclusion regarding the pace of restructuring. But I am happy to say that having tightened the foreign manpower growth and at the same time with the high employment rate and low unemployment rate, I must say that on the ground, we have seen more sectors, more companies embarking on this journey of restructuring.

Thirdly, the question about whether these are tradable or non-tradable sectors, I would say that it cuts across all sectors. We do notice that for the manufacturing sector, which is a mainly export-oriented sector, the pace of restructuring is a lot faster. As a result, the manufacturing sector has become a lot more manpower lean, compared to the services sector. But for the service sector, both the tradable and non-tradable sectors, are taking in more manpower on the whole, not on quarterly basis; but if you look at it, over the past one year.

Thank you, Madam. I want to thank the Minister for those clarifications. I think one of the reasons why there has been so much interest surrounding those figures – a sudden drop in employment – is that it had been so sharp. One of the concerns with interested observers is whether this is a sign that we may have overdone the manpower tightening. Can I ask Minister whether he thinks that there will be enough warning signs if the overtightening has been overdone?

Mdm Speaker, as I have mentioned, I will not jump to any particular conclusion just based on one quarter's outcome. We must look at it over a period of a few quarters. The job growth in Singapore indeed was strong. As I had said, compare the first quarter 2015, compared to a year ago, there are now another 90,000 jobs available. Our manpower growth was 2.7%.

Now, is a 2.7% growth over one year overdone? I do not think so. I still remember that, in fact, as we tightened the foreign manpower quota, there was a call in this House that we should go for a complete stop in terms of the importation of work permit holders. I think

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that would be overdone. But what we have done was to slow down the growth but yet at the same time, manage the process of transition, in a way that, hopefully, will enable more and more companies, especially the SMEs, to adapt and to grow. It is not to our interest to see a sudden drop and to see a sudden decline in our economic activity in Singapore.

Thank you, Madam. I have just two more supplementary questions. I agree with the Minister's point that one point should not be used to measure a trend. So, in line with what I asked in my question, what would be the job growth figures in quarter two of 2015? Are those numbers available yet?

Secondly, regarding the tradable and non-tradable sectors, if I understand the Minister right, he was saying that the productivity growth has been more successful in the manufacturing and other export sectors. Can I conclude that vacancies are growing more in the non-tradable sectors? And if so, if there is a high number of vacancies in the non-tradable sector, how would the shortage of foreign labour damage the economy because of the shortage and the vacancies in the non-tradable sector? Because for the non-tradable sector, the demand is domestic, the demand is not going anywhere. So, for non-productive companies in the non-tradable sectors, they will be forced to restructure or they would be replaced by others who can meet that demand. So, in some ways, the disruption for the non-tradable sector, due to foreign labour shortfalls, would be self- correcting, would it not be?

Mdm Speaker, the flash estimate for employment in the second quarter of 2015 will come out by the end of this month. Right now, I do not have any information to share.

Secondly, in terms of vacancies, I think the Member is correct, that the non-tradable sectors are the ones facing greater constraints with manpower. For example, many of our F&B, many of our SMEs are involved in non-tradable sector. For these sectors, I have been in close contact with them, because to go back to the old growth formula of heavy dependency on more work permit holders is not a solution. At the end of the day, we do need to find ways to sustain our economic growth, our workforce growth in a more sustainable manner.

MOM is working with them to help them to look at where they are today, and where they think they ought to be three years from now. In other words, as we go through this economic repositioning, it should apply to all sectors, whether they are tradable or non-tradable. I am happy to say that a number of these non-tradable sectors have responded positively. Some of them have given us a proposal to say this is where we are today and this is where I want to be three years from now; and in between from here to there, what kind of support would be needed, whether it is the various financial grants and so on. MOM is working very closely with SPRING and the relevant agencies to look for ways to help them to

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go through this transition.

So, in other words, to go back to the past is not a solution because it just pushes back in our push for repositioning. Looking forward, certainly, we are going to continue to be creative, continue to find win-win outcomes for the agencies, for the companies and for the unions as well.

Mdm Speaker, there have been some proposals made by some quarters to freeze foreign manpower growth. So, I would like to ask the Minister what would had been the impact on companies and the economy if such proposals to freeze manpower growth had been implemented?

Mdm Speaker, I would not be able to give a quantitative response. But in the course of my interaction with many companies, especially SMEs, I would say that even though we have continued to allow the work permit holders to continue to grow at a slower pace, I think already, many of them are facing a lot of constraints. Therefore, on reflection, we did the right thing. We did the right thing by not freezing, not suddenly freezing the importation of Work Permit holders.

8 Mr Baey Yam Keng asked the Minister for Health whether the public using cards issued under the Community Health Assist Scheme (CHAS) and Pioneer Generation programme could be kept informed of the subsidy that they have enjoyed and the balance of subsidies for the year as a means to check against any fraudulent claims.

(for the Minister of Health): Mdm Speaker, currently, patients on the Community Health Assist Scheme (CHAS), including Pioneers, can check the subsidy that they have enjoyed for chronic medical conditions and their annual balance through the CHAS website or by calling the CHAS hotline. As the subsidy limits for chronic diseases are refreshed yearly, this enables patients to monitor their usage of the subsidy to date and check their available balance.

Each of us – MOM, CHAS clinics as well as the patients – has a role to play to ensure accountability and prevent fraudulent claims. MOH encourages patients to check with their clinics on any queries they may have on the treatment and charges and to request for itemised receipts, so that they are more informed. MOH also closely monitors the CHAS subsidy claims submitted by clinics and takes feedback on potential cases of abuse seriously. We will continue to improve the access to relevant information and strengthen our audit

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system.

I would like to ask the Minister of State, given the profile of the CHAS members and PG members, checking the website or even calling the hotline may not be something that is very accessible or something that they are used to. Is it possible, to minimise wastage or a lot of admin work, for the Ministry to provide yearly updates, consolidated accounts of the subsidy the members have enjoyed and the treatments that have been taken, so that they are kept abreast of what subsidy they have?

And in the other scenario where there are general practitioners (GPs) who put in bogus additional treatments on top of a genuine consultation, for example, there needs to be a better way to check against this and prevent abuse of the two schemes.

Mdm Speaker, I would like to thank Mr Baey Yam Keng for his suggestion. MOH is aware that there is a growing suggestion and request for other modalities to check the balances. In our review, we will take into considerations some of these suggestions that have been given to us and we will try our best to make it seamless and easy, especially for the elderly.

I would just like to ask the Minister of State: there has been a suggestion that perhaps because of a good guideline to CHAS participant clinics to add in the remaining balance on the CHAS accounts as part of the itemised bills. I note that some clinics do give some information to the patients but this is not across the board. And I was wondering whether MOH could consider giving some sort of advisory to this effect.

Mdm Speaker, I would like to thank Dr Chia Shi-Lu for that suggestion as well. There are other measures being explored to enhance the pricing transparency to patients and accountability of the clinics for their charges. While it is currently not mandatory for clinics to issue itemised receipts, MOH is looking at these suggestions to make this mandatory for all licensed clinics as part of our review of the Private Hospitals & Medical Clinics (PHMC) Act and Regulations.

9 Assoc Prof Randolph Tan asked the Minister for Health whether there are plans for a nationwide emergency preparedness exercise to strengthen Singapore's capacity to manage the disruption that MERS will pose should the contagion reach our shores.

10 Mr Lim Biow Chuan asked the Minister for Health whether adequate measures have been taken by the health authorities to ensure that all visitors from countries affected by

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MERS are properly screened before they are allowed entry into Singapore.

Mdm Speaker, can I take both questions together?

Yes please.

Madam, the Ministry of Health (MOH) has been closely monitoring the global situation of the Middle East Respiratory Syndrome Coronavirus (MERS-CoV) since the disease emerged in 2012. WHO's current assessment is that the transmission of the disease is mainly among households and hospital contacts, and there is no evidence of sustained community transmission. Nevertheless, we must remain vigilant to the possibility and the impact of an imported case from the Middle East, South Korea or elsewhere.

There has been very close inter-Ministry coordination and planning to prepare for such an incident. An Inter-Ministerial Committee (IMC), co-chaired by Minister Chan Chun Sing and myself, has been formed since late last year to oversee whole-of-Government preparedness against dangerous infectious diseases, including MERS and Ebola.

We have taken a multi-pronged approach and have put in place various measures to detect imported MERS-CoV cases and contain any further transmission in Singapore. Our first line of defence is on prevention and detection, through public education, border screening and vigilance among the medical community.

Let me elaborate on some of the measures. As part of public education efforts, MOH has a dedicated webpage on MERS-CoV and has published a set of FAQs to help Singaporeans understand the disease and advise them on the precautionary measures they can take to protect themselves.

At our borders, MOH has been issuing health advisories to travellers going to countries with active transmission of MERS-CoV including the Middle East and South Korea. In addition, travellers arriving from MERS-affected countries are given individual health advisories on the symptoms of the illness they should look out for and they are advised to seek immediate medical treatment if they have such symptoms. They are also reminded to inform the healthcare professionals of their travel history, so that proper infection control measures can be taken while they are being tested for MERS-CoV.

Temperature screening at the air checkpoints has been implemented to screen direct flights from the Middle East and South Korea. However, as MERS-CoV has an incubation period of up to 14 days, infected travellers may not have any fever when they pass through

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temperature screening and, therefore, they may not be picked up or detected at entry. Hence, our doctors and hospitals have been reminded to remain vigilant to the threat of MERS-CoV among travellers from the affected areas. Persons with symptoms of severe respiratory illness upon return from the Middle East or South Korea, and those with any respiratory symptoms and had visited a healthcare facility in South Korea or the Middle East, will be subjected to further investigations to rule out the possibility of MERS-CoV infection. They will be isolated until this investigation is completed. This year, up to 10 July 2015, a total of 62 such suspected cases have been investigated locally and all have tested negative for MERS-CoV.

However, it is a matter of time that the contagion will reach our shores. Therefore, beyond the preventive measures that I mentioned, Government agencies have contingency response plans in place should there be an imported case. Confirmed cases will be treated in isolation rooms and our healthcare workers taking care of them will wear the appropriate personal protective equipment (PPE), and they have been trained to minimise the risk of contagion. In parallel, MOH will conduct contact tracing and quarantine all close contacts, to prevent further spread. We will update and exercise our response plans regularly. Recently, we conducted such an exercise at the Changi Airport and the simulated patient was conveyed in a portable medical isolation unit (PMIU) to Tan Tock Seng Hospital. We will continue to carry out similar exercises from time to time involving not only MOH but also other agencies as well.

The public, too, plays an important role in national preparedness by keeping up-to-date with the Government's advisories and exercising personal responsibility and good hygiene practices. The People's Association recently launched a nation-wide programme to train grassroots leaders on preventive measures to handle MERS-CoV so that they in turn can share the information and knowledge with residents at the constituency level.

MOH and the Inter-Ministerial Committee will continue to monitor and assess the MERS-CoV situation. Our priority remains to prevent, detect and contain any imported case into Singapore so that its impact on the community would be minimised.

I would like to thank the Minister for his comprehensive response. What has happened to South Korea has been very difficult and very tragic. It is not possible to ignore the fact that South Korea, together with Singapore, is affected by SARS about a decade ago, so you cannot ignore the concerns. Just looking at South Korea's experience, it appeared to have been too laggard in its response. There was some initial confusion. That is what appeared to have led to an explosion of cases, which has led to a significant number of fatalities. Subsequently, as we see now, it appears to have imposed quite good control over the situation and the spread is now constrained.

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The reason why I ask about an emergency preparedness exercise is because the danger is that, regardless of how many systems we have, the population may not recall how difficult it is and how confusing it may be, when the initial signs first appear. So, I would like to press the Minister on this point whether it is necessary to have a wider preparedness exercise, maybe even involving the schools.

Thank you, Madam. Indeed, this is a very serious matter and MOH takes this very seriously. Therefore, we regularly remind members of the public and Singaporeans that MERS-CoV and Ebola, are real threats and we must take these threats seriously. We have also been sharing information as much as we possibly could with our Singaporeans as well as visitors who are coming to Singapore. That is why at the Airport, you would also see posters that are put up, for passengers who do not come from affected areas. We also want to remind them that should they have any difficulties, do consult our medical professionals. It is an area that we will continue to look at and we will consider various forms of exercises.

I think going beyond exercises, infectious diseases are something we will need to learn to live with. In the past, if you look back at maybe a decade or so ago, infectious diseases may not be so common. SARS was a major impact to Singaporeans. Before that, you may find that the threat of infectious diseases may come and go, and it happens from time to time.

Going forward, I am afraid that it is going to be quite a constant feature because of the increased international connectivity. We are going to see that different forms of infectious diseases will threaten Singapore from time to time. An example is that MERS-CoV emerged in 2012. Before MERS was over, Ebola emerged. And now both Ebola and MERS are threats to Singapore. Bird flu, on the other hand, is also not totally eliminated either.

So, I am afraid that going forward, we have to be constantly vigilant, so that we will be able to protect ourselves against the importation of these cases.

I take Prof Tan's point and we will look at how we can extend our public education, exercises and information, to as wide an audience as possible, including school children. We have been working very closely with MOE. MOE is one of the members of the Inter-Ministerial Committee I mentioned earlier, so they are very closely linked to what we are doing, and they themselves have also developed contingency plans and are carrying out education with their children.

Thank you, Mdm Speaker. Mdm Speaker, when SARS hit our shores quite a number of years ago, I was part of the constituency SARS

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Taskforce Committee. It was quite a difficult time to try to manage the situation.

Considering that there has been such a large number of deaths in South Korea, where the case started because of someone who was quite irresponsible, and considering that it has been spreading and there is a total of 36 people who have died in South Korea, would it not be better for MOH to be safe rather than sorry, and implement health screening at the Customs at the airport or Causeway? How much does it cost to implement such temperature health screening? So, two questions.

I have just explained that we do have temperature screening for direct flights from Korea as well as from Middle East, the affected areas. But it is also important to point out, as I had mentioned in my reply, that there is an incubation period. During the incubation period, the passenger or the visitor may not display any symptoms, but he may already be carrying the virus, so symptoms will develop over the period of up to the next 14 days.

Therefore, it is important for us, in addition to border monitoring and screening measures, that our healthcare institutions remain alert to this threat, so that they can identify passengers or patients who have travelled overseas. It is a matter of practice that all our doctors, when they see respiratory symptoms displayed among their patients, will ask about their travel history. It is something that we have always been reminding our doctors. We have also sent circulars to our doctors regularly to inform them of the latest development in the region as well as in the Middle East, so they are kept up-to-date of the development.

We do have border screening processes but it is not a 100% fool-proof system because of the incubation period. And some of them may have travelled through other countries as well, so they may not be directly travelling from the affected countries. They might have stayed a few days in other countries and, therefore, while it is important to have border screening, it is not the only measure that we should rely on. What is more important is to ensure that our healthcare facilities are on high alert, they are vigilant, they are aware of this threat, and they are looking out for these symptoms and the travel history of their patients.

11 Mr David Ong asked the Minister for National Development (a) whether there has been a significant number of complaints over the quality and workmanship of DBSS flats which are supposed to be of higher quality than regular HDB flats and, if so, why; (b) for these complaints, whether there are lapses in the quality audit of the housing units; and (c) whether there is an inherent mismatch in price and quality with homeowners paying

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premium prices for these "premium" flats.

12 Mr Yee Jenn Jong asked the Minister for National Development (a) what is the number of complaints that HDB received with regard to defects, poor quality or dissatisfaction with (i) new Build-To-Order (BTO) flats and (ii) Design, Build and Sell Scheme (DBSS) flats that have been completed in the last two years; (b) how has the rate of complaints changed over the past 10 years; (c) what is HDB's role in ensuring quality and dealing with complaints about quality of DBSS flats; and (d) whether a Zero Workmanship Defect Pledge can be introduced for contractors and developers to pledge their commitment to work towards zero workmanship defects.

13 Mr Baey Yam Keng asked the Minister for National Development in light of the recent issues with various projects under the Design, Build and Sell Scheme, what is the role of HDB in (i) ensuring that the developer commits to its obligations; (ii) mediating any impasse between the developer and buyers; and (iii) helping aggrieved buyers.

14 Mr Zaqy Mohamad asked the Minister for National Development (a) whether there has been an increase in complaints on quality of work in new BTO and DBSS developments in the past 12 months; (b) what is the average proportion of new residents that have complained of defects for such new developments; (c) what are the primary causes of such defects and what quality control measures does HDB have in place to check and ensure the high quality of public housing prior to the keys being handed over to the residents; and (d) what measures are in place to ensure that building contractors are responsive and have sufficient capacity to address the complaints effectively and quickly.

(for the Minister for National Development): Mdm Speaker, may I have your permission to take Question Nos 11 to 14 together?

Yes, please.

Madam, most of our new flats are sold under the Build-To-Order (BTO) programme where HDB directly influences design, construction and pricing. BTO flats are sold directly by HDB to flat buyers and HDB is fully responsible for the timely delivery and quality of the flats sold.

Despite a significant ramp up in our BTO programme over the last four years, the quality of BTO flats has not been compromised. On average, about a third of all new residents approach the Building Service Centre (BSC) for assistance after collecting their keys. Some of these requests for assistance – about a quarter of them – relate to issues, such as low water

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pressure due to the implementation of water saving measures, as well as paint stains that need to be cleaned up in their units. Other requests, about 75%, relate to defects that residents come across. The vast majority of the reported defects are surface imperfections, such as hairline cracks on walls, scratches on timber floor or uneven tile joints.

The number of defects reported has not changed significantly over the years. Such imperfections are mostly within acceptable industry norms and are also common in private developments. They can and should be rectified quickly by the contractors and do not affect the structural integrity or safety of the building.

There is an objective industry standard to measure the quality of building projects. It is assessed independently by the Building and Construction Authority (BCA) and is known as Construction Quality Assessment System (CONQUAS) score. Over the years, the quality of BTO flats has improved from a score of 79 in 2003 to 89 in 2014. It continues to rise and is comparable to that in private developments.

HDB takes the quality of its homes seriously, not just because it is a major long-term investment of Singaporeans but, more importantly, because these are people's homes and, therefore, people's expectations are rising. HDB has a system of checks in place to ensure that its flats are free of major defects. However, due to the high dependency on workmanship of individual workers, we can expect that there will be some defects. Sometimes, this could be due to differences in the understanding of what constitutes a defect. For example, some owners have given feedback on colour inconsistencies for floor with timber finishes. As timber is a natural product, it is not possible to achieve a completely homogenous look.

There is a Defects Liability Period (DLP) to allow for any defects to be rectified. HDB also requires its contractors to deploy staff at the on-site Building Service Centre (BSC) to respond to residents' requests promptly and to rectify all defects within a stipulated time-frame.

But we do have zero tolerance for defects which may compromise structural or safety standards, or which deviate significantly from what has been promised to buyers.

Besides the BTO programme, there is the Design, Build and Sell Scheme (DBSS) to give flat buyers more choice by allowing private developers to build and sell flats directly to the buyers. HDB sets the buyer's eligibility requirements and provides broad planning parameters such as the mix of flat types, flat sizes and the range of social and community facilities to be provided. Within this framework, the private developer of the DBSS project is responsible for the design, pricing and construction quality of the flat. Prospective buyers, in turn, decide if the price set by the developer is acceptable for the design and furnishings

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provided.

To protect homebuyers, the DBSS developer has to fully comply, like any other developer, with the requirements of the relevant authorities, such as the Urban Redevelopment Authority (URA) and BCA in the design and construction of the project, and the Controller of Housing in the marketing and sale of the units.

Furthermore, under the Sale and Purchase (S&P) Agreement between the DBSS developer and home buyers, the developer is contractually obliged to build the unit in a good and workman-like manner. The S&P also requires the developer to rectify any defects within the defects liability period.

DBSS projects are developed by different private developers, who may offer varying fixtures and finishes for their project. The feedback on the quality of finishes differs from project to project. Nonetheless, residents who face issues with the quality of the flats should report them to BSC managed by the developer during the DLP. If the developer fails to address them, the buyers will have legal recourse against the developer as provided for under the S&P Agreement. Although HDB is not a party to this agreement, HDB plays an active role in ensuring a fair and satisfactory outcome. When DBSS flat buyers raise concerns or feedback about DBSS units, HDB will approach and ask the developer to take the appropriate action under the circumstances.

Madam, I would like to thank the Minister of State for his reply. I have three supplementary questions. With the sizeable complaints of recent DBSS projects arising from an apparent mismatch of expectations, poor workmanship and accountability, can I ask the Minister of State on the roles which should be played in overseeing the DBSS scheme from design and construction to handing over of keys? What more can be done to ensure greater accountability of developers?

With prices between private and HDB units, and the price gap between BTO and DBSS flats narrowing, what is the Ministry's direction on such premium HDB flats moving forward?

Finally, on the corridor width of 1.2 metres, will this width pose safety and rescue concerns, especially for those in wheelchairs or with mobility assisted devices?

Madam, the Member asked three questions: first, on the role of HDB in DBSS. As I said earlier, HDB sets the broad parameters, such as eligibility, provides grants, decides on size and community services, and then with that, allows the private developer to build, finance, construct and sell. Nonetheless, as I said earlier, HDB will refer complaints to the developer and will work with the developer to ensure that residents' concerns are

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addressed. HDB upstream does actively engage DBSS developers by sharing HDB's experiences and lessons learned from previous DBSS projects and provides feedback in the areas of safety, security, durability and ease of maintenance. For example, during the early upstream stage in design, HDB will arrange for a meeting with the developer to share with them and their consultants HDB's experience on the above issues, like safety, durability, security and ease of maintenance and civil and structural design considerations, including lessons learned from DBSS' projects upstream and further measures.

As for DBSS as a scheme, MND has suspended DBSS scheme in 2011, as Members would know, and there is no plan to launch new DBSS projects in the immediate future. As the scheme is already suspended, we need not rush into deciding whether to abolish the scheme or not. We should take time to consider and review this as market conditions could be different and there may well be reasons to bring back the DBSS scheme in some form.

The Member also asked about the width of some corridors in recent DBSS projects that had been completed. That developer has chosen to restrict the width of the corridor to the safety limits as required by BCA and SCDF. Residents are concerned about this. It means that they may not be able to put anything outside the corridor. Everything has to be in the home or stored downstairs, for instance, bicycles. HDB is working with the advisers concerned and approaching the developer, along with the residents, to see how these concerns can be addressed.

Mdm Speaker, I have four supplementary questions for the Minister of State. First, I am not sure if the Minister of State had answered my question about the rate of complaints on the DBSS scheme for the flats that were completed over the last two years. I want to know also whether the complaints have been rising and, given the wide public backlash over many of the DBSS flats that came up recently, would the Minister of State say how DBSS has fulfilled its intent. And, I quote, the intent is "to meet the housing aspirations of higher income flat buyers for better design and finishes". So, do all these complaints signify that the DBSS has actually failed in its intent?

Second, I want to know what is the comparison of the number of complaints for BTO versus DBSS flats, in terms of, say, per 100 or 1,000 flats that are completed.

Third supplementary question is this: the 2007 and 2013 BCA Accessibility Code has guidelines for doors, especially manoeuvring spaces at doors. For the term "doors", I am not sure if it also includes gates, because one of the complaints, for example, at Pasir Ris ONE is that the gates at the opposite ends can almost touch one another when they are all opened.

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Mr Yee, can you please keep your supplementary question short?

So, can the Minister of State confirm whether the gates are considered as doors and whether they meet the BCA Code? Finally, the residents that I have communicated with in this DBSS, have complained that when they took up the design issues with the developers, they were told, and I quote, "Everything approved by HDB". I would like to understand what HDB does or does not approve. So, what are the areas that are approved by HDB?

Madam, let me try to deal with the questions, in turn. As for the rate, the data that the Member has asked, I do not have these figures. In any event, when we talk about the rate of defect and DBSS units, between DBSS projects, they differ significantly, because they are not standardised models. They differ in terms of their attributes; finish and the fittings that are available. So, that is not a meaningful comparison.

The second question – and this is more critical – is about whether, as the Member says, the scheme has failed in its intent. I am not quite sure what the Member means by "failed". Does it mean that it is not taken up by residents? Does it mean that all residents reject what they see after they moved into their units? It is important to also recognise in that respect that there have been 13 DBSS projects since 2005, and many, many residents have moved into these units and purchased them. They have seen it, they liked it, they moved in, and certainly like all developments, both HDB, BTO, private, as well as office and commercial, there will be defects, there will be concerns. This is not to trivialise the defects and the concerns that first-time home buyers in particular feel when they see scratches or paint marks on their units, or more serious defects. But I think we should not, as Minister Lim talked about in the context of another Parliamentary Question (PQ) on MOM, use these current few points that have been in the public eye, to condemn the entire scheme as a failure. Many people have, indeed, lived and made homes with their families in these projects.

As for whether my view is that a gate is a door as specified under the 2007 and 2013 BCA accessibility guidelines, also a technicality of the nature of this query, please allow me to go back and have a check; perhaps the Member can communicate his concerns with me. But if it is in relation to the Pasir Ris ONE project, the Deputy Prime Minister and the Member for Parliament of the constituency has visited the site. Residents have taken this issue up with him, the developer and HDB. Let us allow these negotiations to take place.

As for the claim that he heard that the DBSS developer had given approval for something or other, I think it is a bit too ambiguous as to what this is about. I think if there is some specificity about what he says has been approved by HDB, allow us to check with the background that he can provide us. As I said earlier, HDB provides a broad parameter on

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eligibility and so on, and within that, the private developer has a broad flexibility to design, build, finance and to sell.

Mdm Speaker, I thank the Minister of State for answering the Parliamentary Question that I submitted. I have one point to add. While the number of defects may probably be the same as the Minister of State had highlighted earlier, in some countries, as my residents highlighted to me, their practice is the monies to be paid to the developers or one main contractor are held back until all defects are cleared.

At the same time, for the homeowners, they also do joint inspections with the developer. So, in that sense, there is some incentive for the developer or the main contractor to close off the defects as soon as possible. This is what I noticed for two BTOs in my estate – one was three years ago and one is now. The number of defects, as compared to your studies, is probably the same, but I think the reactions to the latest one are much more severe, largely because I think the developers tend to push back some of these defect complaints or they delay the repairs and so forth, and this frustrates many homeowners.

The second question is, when you have cases where developers or contractors delay repairs or they are not able to work on them on time, would HDB consider extending the DLP or postponing the start of the payment scheme for homeowners? Basically, they start paying their mortgages later, and once repairs are completed, they can move in. When they see delays, they are frustrated, as it affects the time they get to move in, because these repairs are not done on time.

Perhaps, Mdm Speaker, may I just ask the Member to clarify. Is he asking in the context of BTO or DBSS?

Yes, BTO. Just for clarification, both estates I spoke about are BTOs.

Thank you. Madam, the Member has also spoken about an idea that was provided to him by residents about some schemes overseas.

Yes, it is in Australia. When you take over a home, you do joint inspections and the money is held in escrow until the defects are all completed before the money is released to the developer or contractor.

In the context of delays and concerns that residents get affected when repairs and rectifications are delayed, under the Sales and Purchase Agreement for BTOs, and I believe it is also the case for DBSS, these have to be reported and resolved within the one-year defect liability period. But, specifically, I believe under the S&P Agreement,

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there is a requirement for the developer to address the issue and rectify within a month, and if he needs more time for whatever reason, like gathering of materials, doing more checks, then that needs to be agreed with or informed to the buyer. If the developer or the contractor, in that case, does not resolve this within one month, then the buyer can give adequate notice to the contractor or developer to rectify, and then make a claim or reimbursement.

So, in a way, we should not have delays in rectification. Sometimes, it is because the rectification is not up to the expectation of the resident, or there may be problems along the way that need to be resolved; so, there may be some time that is needed. But, by and large, our understanding is that most rectifications, particularly hairline cracks, stains, scratches, ought to be resolved and should be resolved by the contractors expeditiously, so as not to cause inconvenience to residents.

Mr Baey Yam Keng.

Thank you, Madam. I would like to ask the Minister of State questions in three areas. First, he talked about the briefing sessions that HDB holds for DBSS developers about experience from past DBSS projects. May I ask, is there advisory given based on years of public housing experience that HDB has in terms of good design, so that the DBSS developers can refer to at the planning stage? Does HDB endorse, or is HDB even informed or briefed on the design before the project launch by the developer? So, this is question one.

The second question is about the statistics about the reported defects. The Minister of State has shared about BTO projects. Are there similar statistics about the defects received by the DBSS BSCs over these 13 projects? And is that a trend that reflects flat quality or is it just a matter of changing buyer expectations? Is there a CONQUAS score for DBSS projects as well, on top of what the Minister of State shared for BTO projects?

My last question is about HDB's role. If buyers have questions whether the DBSS developers have met the standards set by the various authorities, can HDB help to check and advise the buyers accordingly, or do we expect the buyers to pursue the matter at their own time, own effort and own cost?

Madam, the first question, I think the answer should be yes as to whether or not HDB shares its experience, built on many years of public housing with these DBSS developers. It will share its experience not in relation to past DBSS' projects, but also its experience on maintenance and the like.

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The second question is on CONQUAS scores, whether that is also for DBSS, happily the answer is yes. I do not have the scores available.

The third as to whether it is comparable, as I had said earlier, it is very difficult in the first place to compare one DBSS project with another, because one project may have different configuration, different size. It may have different finishings, and certainly, different range, type and number of fittings. So, it will be very hard for there to be comparisons. And, more importantly, the comparison with BTO is hard to draw. As I had said earlier, for BTO projects, in the last four years, about a third of the new residents moving in have approached the BSCs so we have the data for the average number of people approaching to raise concerns. And some of it, 25%, relate to questions like "There are stain marks, can you clear it up? Water pressure is low, why is it so?" So, the answer will be, it is a water-saving measure that has to be implemented. Seventy-five percent relate to defects that are perceived by these residents, because they move in, and when they look and see these scratches or these paint marks that are on the wall, the surface imperfections, and they then raised it to the BSCs.

These kinds of surface imperfections and defects constitute the vast majority of the feedback given by the residents. And this can and should be resolved quickly by the contractors. I hope that addresses the questions raised.

Timah): I agree with the Minister of State that we do have cases of surface imperfections. But increasingly, I am getting cases of real defects where there are wall cracks that come with water seepages, doors unable to be closed properly or unable to fit nicely, or tiles which are easily stained but not easily cleaned. So, these cause a lot of frustration to residents and they have to take leave to resolve, and these have caused damages to the fixtures and so on.

So, I would like to ask the Minister of State, why is it the case that there are so many of such defects: wall cracks, seepages and tiles staining? Is it an issue of supervision during construction or the sourcing of suppliers? And also, the Minister of State mentioned that about one-third, or 30% of the residents now to go BSCs but in some cases, in some of the blocks that I encountered, it is more than that. And whether the BSCs have the resources to cope with those cases and to turn around fast enough, and whether HDB comes in to push this along so that some of these defects can be rectified soonest?

In relation to the Member's first question, on his feedback that he has gotten in relation to some projects, was it a DBSS or BTO project?

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BTO.

If it is a BTO project, then HDB takes responsibility for the quality and of the construction. So, please, perhaps the Member can provide me the details as to which specific blocks or precincts, and then we can follow up. As to what is the issue with the development, whether it is tiles, whether it is doors, or whether it is the tap, toilet or whatever, and we will then follow up on that concern.

As to whether the BSCs have the capacity to deal with these concerns, HDB requires sufficient staff to man the BSC. If a BSC is found to be inadequate in terms of staffing, then it is something that the Branch Office has to provide feedback for and then we will then make sure that the staffing is adequate.

We want to make sure that the teething concerns of residents as they move into their new homes, particularly first-time home buyers, are addressed and addressed suitably. There may be some frustration as to why when things take a little longer, but it is a matter of resourcing. We will fix this.

Madam, in response to Member Liang Eng Hwa's question, the Minister of State said that in the case of BTO, HDB takes responsibility in terms of complaints of defects.

I am asking for DBSS. In the case of DBSS, does the HDB take the same responsibility like BTO projects to make sure that the defects are rectified? In his response to Mr Yee Jenn Jong's question, he said let us not trivialise the defects and complaints. Is he saying that the complaints by residents on the defects are trivial and not important?

He also spoke about imperfection of works and the defects. Can he clarify what is imperfection and what is considered a defect? Hairline crack vis-a-vis a hole somewhere? I think that will make it clear so that residents can understand what is imperfection and what is a real defect.

Madam, I understand that there is a CONQUAS score for DBSS flats. Would the Minister of State make public the CONQUAS score for DBSS flats and also for the cluster or development so that residents would know what is the CONQUAS score for DBSS and for the specific DBSS developments.

It seems that the HDB takes the approach that for DBSS flats, it is between the resident and the developer. And thereby, the resident deals with developer, whether to take legal recourse. If the developer fails to follow up with the defect complaint or take certain action

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to rectify it, then, claim against the developer. But, Madam, it is not that simple. It concerns legal matters. It concerns legal costs. We would like to know specifically what role is HDB playing in terms of residents' complaints of defects.

And, lastly, I understand that within the defect liability period, residents can make claims. But in actual fact, there are problems that residents cannot solve themselves. So, could HDB consider asking the developer of DBSS projects to extend the liability period for another year so that residents can be have more time to get the developer to rectify the problems?

And also, there are certain problems. Some residents claim that because —

Mr Low, please keep your supplementary questions short.

Yes. Because of the use of the materials, the defect may not surface within a year. Thank you.

I think Mr Low have five or six questions. First, I will deal with question two, as to whether I said I trivialised residents' concerns. I think the Member might want to review the transcript. I made it very clear that we should not trivialise residents' concerns, far from trivialising their concerns. Perhaps, there is a misunderstanding there. I hope to make it very clear that it is, indeed, not the case.

As to what the responsibility of HDB is in respect of DBSS vis-a-vis BTO, I have said it in my first reply and subsequent responses to various Members. For BTO projects, HDB is the developer. In DBSS, the developer is a private developer. HDB sets the broad parameters within which the private developer is given the flexibility and because of that, it takes responsibility for its private development works as a DBSS project. The Sale and Purchase Agreement is black and white. It is with the resident and the developer. But having said that, that is not to say that HDB entirely takes no responsibility whatsoever, does not do anything at all. That is clearly not the experience.

For example, when Minister of State Sim Ann had some issues with the Trivelis – and certainly, I am sure Mr Low had followed that with keen interest – HDB, although it is not party to the agreement, followed up with the developer, approached it, worked behind the scenes, worked closely with the advisor to make sure that as between the developer running the DBSS project and the residents, there is some resolution in sight. For example, in Trivelis, it is public knowledge that the developer has made an offer to residents. This is a matter of negotiation that is on-going.

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As to whether the CONQUAS scores for all the DBSS projects can be disclosed, I have to check; I think they may be already public for each of the 13 DBSS projects. Let me check and follow up with the hon Member.

As to whether the DLP needs to be extended, I think we do not talk about it in a vacuum or about general concerns about whether residents are able to resolve the issues expeditiously. As I said earlier to this House, the issues need to be surfaced and resolved within the one-year DLP. The developer has certain timelines that it must meet or the contractors have certain timelines that they must meet. If for some reason, any particular development is of particular concern, a particular reason for delay and if there is any basis at all for asking for the DLP to be extended, then let us look at it specifically and not in abstract.

15 Mr Hri Kumar Nair asked the Deputy Prime Minister and Minister for Home Affairs with regard to the incident along Orange Grove Road on 31 May 2015 (a) what were the security measures in place to protect the Shangri-La Dialogue from the risks of terrorist attacks; (b) what are SPF's rules of engagement to deal with vehicles that breach the security checkpoints; and (c) what steps will be taken to establish the circumstances that led to the death of the driver.

Mdm Speaker, the annual Shangri-La Dialogue is attended by Defence Ministers, Defence Officials and Military Chiefs from around the world. In the current security climate, such a major international security event is a prime target for terrorists. A high security protection level was therefore adopted for this event.

As part of the security measures to secure the event and to protect delegates and others involved in the event, Police conducted a series of road blocks and security checks on persons and vehicles at and around Shangri-La Hotel from 28 May to 31 May 2015. Six check stations for persons and five check stations for vehicles were set up.

At the Vehicle Check Stations, vehicles entering or approaching the hotel were checked to make sure that they were not carrying dangerous weapons or explosives, such as Vehicle-borne Improvised Explosive Devices (VBIEDs), which could be used to harm persons at the hotel or in its vicinity.

Mdm Speaker, according to the Global Terrorism Index Report 2014, explosives have consistently been the most prevalent type of weapon used in attacks, accounting for over 60% of all incidents globally. Past incidents in the Middle East involving the use of car bombs

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have resulted in heavy death tolls. In 2001, the Jemaah Islamiyah (JI) network had planned to use truck bombs against embassies, MRT stations and military installations in Singapore. The Bali bombings in 2002 and the Marriot Hotel attack in Jakarta in 2003 also involved the use of vehicle bombs. These are all sober reminders that Singapore is not immune to this threat.

Police adopt a multi-stage approach to deter, detect and deal with the threat of vehicle bombs when they assess that such protection levels are warranted. The Shangri-La Dialogue, for the reasons I explained earlier, was one such occasion.

First, Police deploy traffic signs in the vicinity of the affected roads and ahead of the brightly-lit Vehicle Check Stations to alert motorists to the road closures and the checks that are being conducted in conjunction with the event.

Second, vehicles approaching the Vehicle Check Station are stopped by Police officers for initial verification checks, before being directed to undergo a detailed inspection within the Vehicle Check Station. Measures are also put in place, according to what the terrain permits, to cause vehicles to slow down before approaching the Vehicle Check Station. For the Shangri-La Dialogue, the Vehicle Check Station was designed in a manner that required the driver to manoeuvre around concrete blocks to reach the vehicle inspection bays within the Vehicle Check Station.

Third, beyond the detailed inspection point, a line of concrete barriers weighing about two tons each, Police land rovers or mobile crash barriers are deployed to deter, slow down and impede drivers who may attempt to evade checks at the Vehicle Check Station and drive vehicle bombs into an event area.

Beyond this line of barriers, armed Police officers are deployed to deal with vehicles evading the Vehicle Check Station checks.

Based on Police's procedures, drivers will be allowed to proceed to the venue only after being cleared by checks.

However, if there are drivers who try to evade security checks, Police officers will respond swiftly and decisively to stop the vehicle threat. In a situation where a driver ignores Police's repeated orders to stop, and crashes his vehicle through the concrete barriers, causing an imminent threat to lives, Police's procedure, as a last resort, is to open fire at the driver of the vehicle to neutralise the threat immediately to prevent it from causing danger to the event, the delegates and others involved in the event.

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The use of lethal force is provided for under section 63 of the Criminal Procedure Code, which states: "Any Police Officer, who has reasonable grounds to suspect that any offence may be committed, may intervene for the purpose of preventing, and must, to the best of his ability, use all lawful means to prevent the commission of the offence". The level of force used should be proportionate to the threat faced.

Mdm Speaker, the vehicle and the persons in it were acting in a non-compliant, aggressive and threatening manner. The measures taken by Police were precise and their effect limited to the vehicle and persons in it. They were stopped from penetrating into and posing a danger to an event which was assessed to be subject to a high level of threat. The vigilance, alertness and composure of our Police officers in this incident reflect the high level of professionalism and skill which comes from realistic training and regular exercises to enhance their readiness and validate contingency plans.

Mdm Speaker, a Coroner's Inquiry will be conducted, as required by law, in the coming months to establish the detailed cause of and circumstances leading to the shooting and death of the driver. At the conclusion of the Inquiry, the Coroner will record his findings as to how the deceased came by his death.

MHA is also reviewing the incident thoroughly and will incorporate any relevant findings from the Coroner's Inquiry to ensure that Police's measures continue to be effective in deterring, preventing and dealing with potential security threats.

Mdm Speaker, in conclusion, the threat of terrorism is real and present. The Police will continue to do their utmost to counter security threats to Singapore and protect Singaporeans from those who wish to carry out acts of violence and destruction. We call on all Singaporeans to maintain a high level of vigilance against possible security threats and support the Home Team in our efforts to keep all of us safe.

Order. End of Question Time.

[Pursuant to Standing Order No 22(3), provided that Members had not asked for questions standing in their names to be postponed to a later Sitting day or withdrawn, written answers to questions not reached by the end of Question Time are reproduced in the Appendix.]

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Mdm Speaker, I thank Mr Lee Biow Chuan, Ms Irene Ng and Dr Lim Wee Kiak for their concern and their questions. On 5 June, an earthquake struck suddenly at Mount Kinabalu. Seven students and two teachers from Tanjong Katong Primary School (TKPS), plus one Singaporean instructor, who were on the mountain, lost their lives. We are all deeply saddened by this tragedy. Once again, I want to express my deepest condolences to the families and friends of those who were lost. Besides our 10 Singaporeans, six Malaysians, including two Mountain Torq trainers who were with the students and staff of TKPS, also lost their lives. We extend our condolences to their families and friends too.

At the same time, we are glad that we were able to bring back 22 students and six teachers safely. We are grateful to the Sabah guides and Mountain Torq trainers who helped our teachers to evacuate our students from the mountain. We would also like to thank the Royal Malaysia Police, Malaysian Armed Forces and all the other Malaysian agencies, including the Sabah state authorities, for their support and assistance in the search, rescue and recovery efforts.

Many agencies in Singapore worked with MOE to assist and support the affected students, families, teachers and staff of the school. The community, including our SEA Games athletes, rallied to offer their sympathy and support and thousands visited TKPS to pay tribute to those who passed away.

In an expression of our sympathies and condolences for the families who lost their loved ones, the Prime Minister declared 8 June a Day of National Remembrance, with state flags flown at half-mast and the observation of a minute of silence at all SEA Games venues. The outpouring of support from the whole nation brought much comfort to the families, students and teachers. I know that they, as well as my Ministry and I, deeply appreciate this support and sense of togetherness.

Before I outline what happened, let me first explain the context of outdoor adventure learning. MOE and schools conduct a variety of outdoor adventure learning programmes. This mode of learning is a proven and effective way to develop social and leadership skills in students. Students learn to lead, make decisions and work together to tackle challenging tasks in an outdoor environment. In the process, they grow in confidence and resilience.

A large proportion of outdoor adventure learning takes place in Singapore at adventure facilities run by MOE and Outward Bound Singapore. These purpose-designed facilities and

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programmes provide valuable learning opportunities and will continue to enhance them.

Our schools and Institutes of Higher Learning also organise overseas learning journeys to bring students overseas for academic, cultural and adventure learning. These overseas experiences provide learning platforms that cannot be easily replicated in classrooms, or anywhere else in Singapore. For example, overseas adventure learning programmes, including mountain trekking, challenge students to adapt to new and unfamiliar environments, away from home comforts.

As these overseas adventure learning programmes have a high educational value, some schools use them to develop leadership qualities for selected groups of students, such as student leaders as well as those in uniformed groups and outdoor activity clubs.

TKPS places a strong emphasis on developing students' leadership skills. It has designed an apex leadership programme called the "Omega Challenge" which comprises a three-day climb to the summit of Mount Kinabalu. The Omega Challenge started in 2009 and this year marks the seventh run of the programme. Two hundred and fifteen TKPS students have undergone this programme. In fact, I have met some of these students myself.

Past students and their parents have told the school how this programme has helped the students to grow in confidence and maturity in ways that exceeded their expectations. For many of the students, the experience of having to overcome the physical and mental challenges to conquer Mount Kinabalu was a metaphor for learning to conquer themselves and future challenges in life. With its high educational value, the programme is very much sought after. Students vie for a place in the Omega Challenge and take pride in being selected. They are chosen based on qualities such as their emotional maturity, leadership skills and physical abilities.

Schools that organise overseas trips and outdoor adventure learning have to ensure that these activities are suitable for participating students. They have to adhere to the following principles set out by MOE.

First, the activities have clear educational goals. Second, the activities are age-appropriate. Third, the safety and well-being of students and staff are accorded top priority in the planning and execution of the activities. Fourth, more physically challenging programmes are optional and are open only to students who meet certain requirements. Fifth, there are adequate preparations, including risk assessments and management.

Ahead of this year's trip to Mount Kinabalu, TKPS undertook the following preparations. First, the school confirmed that the activities were age-appropriate. On the official Mount

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Kinabalu website, it is recommended that children who attempt the climb be at least 10 years old. The "Via Ferrata" activities that the students were going to carry out along the slopes of Mount Kinabalu, under the guidance of professional trainers, is also graded as suitable for children aged 10 and above. All the participating students from the school were aged 11 to 13.

Second, the school recognised that this programme may not be suitable for all students and that parents' comfort levels also differ. Hence, the school ensured that consent was granted by the students' parents and also briefed them on what the overseas portion of the programme would entail.

Third, the school conducted screening processes to select a small group of 29 student leaders who were assessed to be physically fit, as well as emotionally and mentally ready.

Fourth, the school conducted three months of rigorous physical training, like endurance runs and stair-climbing to prepare them.

Fifth, the school went through a detailed risk assessment before embarking on the trip.

I will now briefly touch on what happened on the morning of 5 June 2015. The earthquake that struck Mount Kinabalu that fateful morning was sudden and unexpected. It dislodged boulders and rocks near the top of the mountain and these came crashing down the mountain slope. This happened when the students and the adults who were accompanying them had just started on an activity along the "Via Ferrata".

With your permission, Mdm Speaker, may I display some slides on the LED screens?

Yes, please. [Slides were shown to hon Members.]

To understand what happened, let me explain how the "Via Ferrata" activity was organised. The "Via Ferrata" activity required the participants to walk or climb a route that ran along the slope of the mountain, using a system of harnesses connected to a metal cable to secure them and prevent any risk of a fall. There are three "Via Ferrata" routes and TKPS chose the simplest and shortest route; which spanned 280 metres, was suitable for 10-year-olds and required about an hour or slightly more to complete.

So, if you look at this slide, the one in which the TKPS students attempted is the one in red; it is the shortest and simplest. You might have seen also pictures of this "Via Ferrata" which were on the other parts of the circuit and these were not what the students attempted. Thirty-one TKPS participants, comprising 23 students and eight school staff, attempted the

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"Via Ferrata" activity. Six students did not take part in this activity and were resting at a nearby hut. Those who participated were organised into five groups; each led by a trainer provided by the operator of the "Via Ferrata", Mountain Torq. To ensure proper supervision and control, each group was sent out a few minutes apart to avoid bunching up. Each group had up to five students and three adults, making the adult-to-student ratio approximately 1: 2.

At 7.15 am when the earthquake struck, the first three groups had already started out on the "Via Ferrata", while the last two groups were still at the start line waiting for their turn. From the accounts we had gathered, the first three groups that were on the mountain slope, were in the path of a very heavy rockfall. The last two groups that were at the starting point were less badly hit by the falling rocks and stones, perhaps the rockfall there was less heavy or because there were some trees in the vicinity that offered some protection.

Some of the boulders dislodged by the earthquake were as large as a house or a car, as Members can see from the slide. This was one of the pieces that were dislodged.

The casualties amongst the first three groups included both children and adults. Seven students and five adults, including two Mountain Torq trainers who were experienced and familiar with the terrain and safety procedures, lost their lives. For the other two groups that were waiting at the start point, they all survived, with the majority of them unhurt. Whether a participant perished or survived depended on where he or she happened to be at that time. It made no difference whether the participant was a child or adult, novice or experienced climber.

When the earthquake struck, many of the TKPS students recounted that the teachers near them used their bodies to protect and shield them from harm. Once the initial tremors subsided, the adults accompanying the students were able to quickly work together to give instructions for the students to evacuate. As far as possible, the students who were unhurt or only slightly injured were organised into groups to be led down the mountain. The evacuation was made more difficult because the paths had been damaged by the quake and there were many aftershocks that morning. Some of the adults, including those who were themselves injured, stayed on to help the students who were more seriously injured or required greater assistance.

On the same day, the Singapore Government Crisis Team responded, first with an immediate Crisis Response Team from MFA that reached Kota Kinabalu by 8.00 pm, to help coordinate the needs of the Singaporeans in Kota Kinabalu affected by the earthquake.

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By the end of the first day, my Ministry had already made plans for those family members who wanted to be in Kota Kinabalu to be flown up early the next morning. I conveyed this to the parents who were waiting at the school. We sent a multi-agency delegation, together with several counsellors and TKPS teachers, who flew together in an SAF C130 aircraft to directly support the family members. Concurrently, plans were put in place to fly home the students who were physically able to do so. By the next day after the quake, on 6 June afternoon, 19 TKPS students had returned to Singapore. Three students with more serious injuries remained in Kota Kinabalu to receive treatment. Two were evacuated back the next day and the third by 8 June.

Over in Kota Kinabalu, the MOE-led delegation supported the family members through this difficult period and worked to ensure that all the bodies that were recovered were flown back at the earliest possible moment so that last rites could be performed and the deceased laid to rest. A tribute site was set up at TKPS for the public to pay their tribute. In the days that followed, TKPS teachers and over 100 counsellors and psychologists rallied to support the participants and their family members. We witnessed the courage and resilience of the affected students, teachers and their family members as they did their best to come to terms with what had happened.

In our review of this incident, it is clear that in the planning and execution of any overseas learning journey, our schools must continue to conduct risk assessments and take all the necessary safety measures and precautions. Nevertheless, natural disasters are impossible to predict or exclude entirely. Indeed, seismologists considered the probability of such a destructive earthquake happening in the area around Mount Kinabalu to be unknown. There was no prior warning. No matter how careful our schools may be in planning their overseas trips, events that are beyond our control and prediction may still occur, whether natural disasters or otherwise.

We are all deeply saddened by the sudden and unexpected earthquake that claimed the lives of our students and some of the adults who were accompanying them. Their families, as well as their friends and colleagues, will need time to recover from this. We will therefore continue to give our utmost support to them, through counselling and other appropriate support measures.

At the same time, let us honour the spirit which our students and teachers have shown in undertaking this trip, to stretch and challenge themselves to achieve their personal best. Several parents who lost children told me, we must continue to provide high quality learning programmes for our students, including such overseas adventure learning. I am deeply moved and inspired by their conviction and encouragement.

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Like many parents, MOE is convinced of the value of outdoor adventure learning, whether conducted in Singapore or overseas. We will continue to enhance the quality of such learning opportunities, while ensuring that schools continue to emphasise safety when planning these trips and programmes. It is important that we provide effective learning platforms for our students to build their confidence, adaptability and resilience, qualities that will stand them in good stead in life.

MOE regularly looks for ways to enhance the quality of all our learning programmes, including outdoor adventure learning programmes. As part of this effort, my Ministry will form an Advisory Panel comprising local and international experts. This panel will provide MOE with additional inputs on enhancing the quality and safety of outdoor adventure learning programmes that are conducted locally and overseas.

MOE conducts annual audits of schools' overseas learning journeys. In conducting these annual audits, we look for good practices that can be shared, and provide support and guidance in areas identified for improvement. In this year's audit, MOE will look at how to improve contingency plans for events, such as natural disasters. We also note that the Malaysian government has indicated that in view of the recent unexpected earthquake, it will assess and monitor seismic movements in Sabah and review safety measures for all climbers. Until the safety of Mount Kinabalu is ascertained by the Malaysian authorities, no schools will be allowed to take students there.

The incident on the slopes of Mount Kinabalu has also highlighted the courage and devotion of the school staff and instructors who accompanied the students, as well as the efforts by the Mountain Torq trainers and Sabah mountain guides who helped evacuate our students to safety. As I mentioned earlier, we have heard accounts of selfless acts of adults who accompanied the students to Mount Kinabalu. We also know that all the teachers who accompanied the students had trained with the students for many months, and devoted much of their time and energy to carefully plan for this trip. What they did at Mount Kinabalu was a continuation of their care and devotion to our students. Their selfless acts and devotion to duty have drawn tributes from many Singaporeans and have given rise to calls for formal recognition, including calls from Members of this House.

We will honour the staff and instructors who accompanied our students to Mount Kinabalu in a manner that is befitting of their courage and sacrifice. The Government will announce further details at the appropriate time.

In addition, MOE has also launched the Sabah Earthquake Fund to help rebuild the lives that were affected by this earthquake. The donations will be a tangible way to provide financial assistance to the dependants of the two Singaporean teachers and one instructor who had lost their lives. Part of the Fund will also be passed to the Mountain Torq trainers

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and Sabah guides, as some had lost their lives and the rest have to worry about their livelihood in the aftermath of the damage caused by the earthquake. This is a meaningful way for us to show our care for those affected by the Sabah earthquake, to whom we are indebted.

In conclusion, once again, I want to thank the Malaysian authorities and the people of Sabah for their valuable assistance and friendship.

I thank the many agencies and people in Singapore who spontaneously came forward to assist and support the affected students and families, as well as the teachers and staff of TKPS. As the bereaved mourned the loss of their loved ones, our nation mourned with them. The staff of my Ministry and I, myself, have been very moved to see Singaporeans' solidarity and generosity of support during this difficult time.

Let us take this time to remember the grace and thoughtfulness of the parents and families of those who left us. Let us cherish and honour the spirit of our students, teachers and instructors. Let us be inspired by their courage, tenacity and determination to challenge themselves, brave adversity and achieve their best.

Members may seek clarifications on the Ministerial Statement. Are there Members who wish to do so? Ms Irene Ng.

Madam, my condolences again to the families and friends of those who lost their lives at the Sabah Earthquake. I thank the Minister for his reply and we support the Ministry's approach to outdoor adventure learning and its continuance.

The Minister mentioned that he will announce at an appropriate time the details on how to honour those who had sacrificed and showed courage during the incident. It has been more than a month since the Sabah quake disaster. Can I ask the Minister when will be the appropriate time and why is this Parliament sitting not a good time for this news to be announced?

Mdm Speaker, I thank Ms Irene Ng for her question. In fact, ever since the quake occurred, my Ministry's priority has been to provide as much comfort as possible to the families of those who lost their loved ones, as well as to focus on helping the students and teachers of the school who are affected by this incident to recover and to recover as quickly as possible. There are many pieces of work that we were embarking on

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and it also took us some time to ascertain the facts of the case. As you would imagine, an incident like this was chaotic, it was completely unexpected and, therefore, we were very careful in going through the details of what had happened, so that we could have a full picture of the sequence of activities and the role played by the different people who were involved.

We will certainly announce this at the appropriate time when we have decided on it. But we will certainly, as I announced earlier on, do something that reflects the courage and the selfless devotion of the teachers and adults who accompanied the students.

Mdm Speaker, I join the Minister to express my deepest condolences to the families of those who have lost their lives in this unfortunate tragedy. I want to thank the Minister for clarifying the safety considerations taken by the school as well as MOE to ensure that every student's welfare, every student's safety is paramount regardless of the kind of learning journey or programme undertaken by the students. So, I thank the Minister as well as MOE for that assurance.

Tanjong Katong Primary School is located within Mountbatten. I visited the school, I attended the wakes of some of the children, as well as the teacher who passed away in this misfortune. From the conversations with several of the students, what came out were some stories about the heroic behaviour of some of the teachers who went up and down the mountain to help the students and some who shielded the students from the falling rocks.

Whilst I appreciate what the Minister had said about the recognition, I hope that the recognition would not just be in monetary terms. I think we must go beyond monetary compensation to recognise the heroic behaviour of the teachers. And some of these teachers are survivors as well. So, may I ask the Minister to clarify that the awards that we are planning would not be purely monetary but also a kind of award to recognise that effort?

The other thing that I would like to ask the Minister to clarify is for the students and teachers who survived the tragedy, what kind of counselling would they be given because what was reported in the newspapers was that some of the children had witnessed scenes which they should not have seen as young children. For some of the survivors, there may be a period where they will undergo this guilt trip that they survived the incident. I hope the Minister can clarify what kind of counselling they would be given and for what time period because some of these may have long-lasting impact.

Mdm Speaker, I thank Mr Lim Biow Chuan for his questions. First, I would also like to thank Mr Lim for his support to the families of those who had lost their family members. Mr Lim himself attended some of the wakes with me and provided very

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good support to the school. I thank Mr Lim for that.

On his first question on the form of recognition, I would like to assure Mr Lim that no, it would not be monetary award. We have kept it separate. We started the Sabah Earthquake Fund because there were many members of the public who wanted to show their support and solidarity. We will announce details of the Sabah Earthquake Fund later; that is a separate matter.

As to the second question about the needs of the students, from the moment the quake occurred, MOE activated a very large team of counsellors from all parts of Government, not only from MOE, but also from MOH, MSF and our hospitals and KKH. There is a very large team of psychologists and counsellors who responded immediately. Many of them volunteered. I am very touched by the spirit of our people in that everybody came forward to provide support and volunteered. On the day itself, we already had many counsellors who had been counselling the students, the teachers as well as family members. As for the students and teachers, we will continue to provide the counselling. We have deployed an additional counsellor and an additional Vice Principal to TKPS so that we can look after the students and teachers well.

I am glad to say that the students are responding well. Most of them are doing fine; they are carrying on with the normal routine in school. For those who need additional help, we will continue for as long as they need this and our counsellors have been working together with them. I would like to assure Mr Lim that most of the students are responding very well.

If there are no further clarifications, introduction of Government Bills.

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"to detect, investigate, prevent and disrupt organised crime activities, to deprive persons involved in such activities of the benefits of their crime, and to make consequential and related amendments to certain other Acts",

recommendation of President signified; presented by the Second Minister for Home Affairs (Mr S Iswaran); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

"to implement the International Agreement for the establishment and operation of the Asian Infrastructure Investment Bank, to enable Singapore to become a member of the Bank and for connected purposes",

recommendation of President signified; presented by the Senior Minister of State for Finance (Mrs Josephine Teo); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

"to amend the Employment Act (Chapter 91 of the 2009 Revised Edition) and to make consequential and related amendments to certain other written laws",

presented by the Minister for Manpower (Mr Lim Swee Say); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

"to provide for a social security scheme called the Silver Support Scheme and for related matters",

presented by the Minister for Manpower (Mr Lim Swee Say); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

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"to regulate the conduct of human biomedical research, to further regulate certain restricted human biomedical research, to prohibit certain types of human biomedical research, to regulate tissue banks and tissue banking activities, to prohibit commercial trading of human tissue, to provide for matters connected therewith and to make related amendments to certain other Acts",

presented by the Minister for Health (Mr Gan Kim Yong); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

"to regulate the provision of bus services, the operation of bus depots and bus interchanges in Singapore, and to make consequential amendments to certain other Acts",

presented by the Minister for Transport (Mr Lui Tuck Yew); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

"to amend the Public Transport Council Act (Chapter 259B of the 2012 Revised Edition) and to make related amendments to the Land Transport Authority of Singapore Act (Chapter 158A of the 1996 Revised Edition), the Rapid Transit Systems Act (Chapter 263A of the 2004 Revised Edition) and the Road Traffic Act (Chapter 276 of the 2004 Revised Edition)",

presented by the Minister for Transport (Mr Lui Tuck Yew); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

"to amend the Civil Aviation Authority of Singapore Act (Chapter 41 of the 2014 Revised Edition)",

presented by the Minister for Transport (Mr Lui Tuck Yew); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

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[(proc text) Order for Second Reading read. (proc text)]

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

The Constitution (Amendment) Bill before the House seeks to include Temasek Holdings in the Net Investment Returns (NIR) framework from Fiscal Year 2016.

The current framework that governs Government spending of investment returns from Temasek is based on the actual dividends received from Temasek. The amendment to the Constitution would shift the Government's spending to one based on the expected long-term real rate of return on Temasek's net assets, including both realised and unrealised capital gains.

I had announced the Government's intention to make this change and why we are doing so now, when I addressed the House earlier this year in Budget 2015. We debated the proposed change. Several Members spoke on the proposal and were in support of it. We are now proceeding with the formal amendments to the Constitution to implement the change.

The NIR framework was introduced in the amendments to the Constitution that Parliament passed in 2008. It has three main features.

First, the NIR framework caps Government spending at 50% of investment returns. This 50% cap had in fact been introduced when the Constitution was amended in 2001 and was retained in 2008.

Second, Government spending under the NIR framework is based on real returns instead of nominal returns. This ensures that the value of our reserves is not eroded over time because of global inflation. It preserves the international purchasing power of our reserves.

Thirdly, the NIR framework is based on expected long-term returns. The expected returns include both realised and unrealised capital gains. They, hence, do not depend on

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whether investments are divested and capital gains realised.

This is an important feature. It reduces the volatility of Government spending based on investment income, as the expected long-term returns do not hinge on the state of the markets from one year to the next. It hence enables better fiscal planning.

These are the three technical features in how the NIR framework enables and caps Government spending. But they reflect the more fundamental commitments that we have made through the framework.

We are committing ourselves to sustaining the value of the nation's reserves over the long term, so that the reserves provide a defence against crises encountered by our children or any future generation of Singaporeans.

We are also committing to a fair balance between the interests of today and tomorrow – between meeting immediate needs, the future needs of the current generation of Singaporeans – and importantly, the interests of our future generations.

The NIR framework provides a significant stream of income for today's spending – already about 2% of GDP, in fact it is slightly more than 2% today, on the Government Budget – but also seeks to ensure a broadly similar stream for decades into the future.

When the NIR framework was introduced in 2008, it was intended to be applied eventually to the expected returns of all three of our investment entities – GIC, MAS and Temasek. We proceeded with GIC and MAS first.

We had deferred Temasek's inclusion when the NIR framework was first introduced and indicated that we would review this after some years of implementation. Temasek's investment strategy was still evolving then, having only begun to invest in more geographies and sectors in 2002. There were also no established methodologies for projecting expected returns for a portfolio like Temasek's, given its investment approach of taking concentrated stakes and making direct investments.

The Government is now ready to apply the NIR framework to all three investment entities. We have worked with Temasek to develop a methodology for projecting its expected returns. We have also had the benefit of the experience gained from implementing the NIR framework with GIC and MAS. Having gone through the Global Financial Crisis, which dramatically shifted the global outlook and both consensus and expert views of future returns, we are assured that the NIR framework and the processes we have in place are

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sufficiently robust.

Including Temasek in the NIR Framework will provide the Government with additional fiscal resources in the years to come. We estimate that it will increase the total NIR contribution to the Budget from about 2% of GDP on today's framework to about 3% on average over the next five years under the enhanced framework.

The enhancement to the NIR framework is not the only change in our revenues. We have also made, as Members know, changes to our domestic taxes. Our first move was to make our property tax regime more progressive and to increase property tax rates at the higher end. We also increased personal income taxes for those in the top income brackets in this year's Budget.

Together these enhancements to our revenues come as we embark on the next phase of our nation's development. We are making critical investments in the coming years in three key areas.

First, in healthcare, where we have strengthened support for both lower- and middle-income Singaporeans and are expanding the capacity of our healthcare system to cater to a progressively older population.

Second, in human capabilities, where we are making a major investment in our people through SkillsFuture, while spending more to strengthen education from the pre-school to the tertiary levels. We are also investing in R&D and innovation as the basis for future growth of our enterprises.

And thirdly, in our transport infrastructure, where we are already investing in a much larger and better public transport system. We will also be developing Changi Airport T5 and Tuas sea port for the long term.

Each of these major investments will benefit all Singaporeans, not just a particular group. It will also bring benefits for our economy and our society for many years to come. The enhancement to our revenues through the inclusion of Temasek in the NIR framework and our other revenue measures will benefit Singaporeans today and tomorrow.

I will now describe the relevant amendments to the Constitution. I can be brief because the main change is simple. The Bill seeks to amend article 142(4) of the Constitution to include Temasek's net assets in the definition of the "relevant assets" from 1 April 2016. Currently, the relevant assets are defined only for GIC and MAS.

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The term "relevant assets" is the asset base upon which the relevant entities' expected long-term real rates of return are applied, in order to derive the amount of NIR contribution that can be taken into the Budget.

"Relevant assets" refers to the net assets managed or owned by the respective investment entities, less the liabilities of the Government, which includes borrowings such as SGS and SSGS.

The other amendments in the Bill relate to technical changes to the names of Government companies currently listed at Part II of the Fifth Schedule as well as the removal of obsolete references to Fiscal Year 2000 in Article 142. These technical changes are not material.

Mdm Speaker, we are not alone in our approach of writing rules into the Constitution to bind current and future Governments to the practice of fiscal sustainability. We were an early adopter with the Constitution being first amended in 1991 to protect the reserves through the institution of the Elected Presidency. This was followed by two rounds of amendments in 2001 and 2008 to set out clear rules limiting Government spending of the investment income from our reserves.

Since then, several other countries have introduced similar measures to institutionalise fiscal prudence. It has caught on since the Global Financial Crisis especially. To give some examples, Germany made a constitutional amendment in 2009 requiring government to run budgets at, or close to, structural balance every year. To stick to this fiscal rule, the Germans are having to cut back on spending and have introduced new taxes. As a result, Germany's debt-to-GDP ratio has fallen by more than 6 percentage-points since its 2010 peak to reach 75% at the end of 2014.

Spain, which has much higher debts at about 100% of GDP, introduced a balanced budget constitutional amendment in 2011. It will be binding from 2020 onwards. But Spain has already begun painful adjustments.

The UK is another example. Its government debt is still above 80% of GDP despite the sharp reductions in public spending in recent years. The government has now proposed a "Charter for Budget Responsibility". It would require the government to aim for budget surpluses in normal times so as to reduce its debts over time.

The Swiss moved earlier with a similar constitutional amendment that requires the government to plan for structurally balanced budgets. Switzerland's debts are much lower

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than most other European countries but they want to avoid rising debts.

In all these cases, governments are trying reduce the future burden of debts on their government budgets. They want to avoid rising debt servicing costs, which squeeze out other spending, including essential spending.

Our starting point is very different. The Singapore Government's balance sheet is in a net asset position, not a net debt position. Far from having to raise taxes or cut spending to pay for debts, our NIR framework provides us with a stable stream of revenue for the Budget each year well into the future.

That is the privilege we have, because of the prudent fiscal policies the Government adopted when we were a young nation, when our population too was young and the economy was growing quickly. We ran Budget surpluses in good times and did not seek to spend surpluses just because the money was there. We invested the reserves prudently and built up professional capabilities in global investing. The approach that we have taken in the past has put us in a position of strength now, as our population gets older and as growth slows.

A transition of Temasek to the NIR framework will provide the Government with added fiscal resources to make the critical investments in capabilities and infrastructure that we need for the future. But the amendments introduced today do not alter the commitments we made when we introduced the NIR framework in the Constitution in 2008. The framework commits us to sustaining the value of our reserves and to achieving a fair and judicious balance between the interests of today and tomorrow: a balance between spending for today's needs and saving for the future needs of today's generation and generations to come. Mdm Speaker, I beg to move.

Question proposed.

Timah): Mdm Speaker, I wish to declare that I work in a company where Temasek owns a substantial stake. When the Finance Minister announced at this year Budget speech that Temasek will be included in the NIR Framework, similar to the other two investment entities GIC and MAS, my immediate reaction then was, are we again looking to the kitty under the bed to fund our ever-growing spending needs?

As I went back to read the Second Reading speech for the Constitution Amendment way back in 2008, the Finance Minister did mention then that it would be prudent to leave

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Temasek out of the new framework for the time being and to review again after some years. So, this is indeed the unfinished part or the final instalment of the constitutional changes to our returns' spending framework.

The question is what has changed in the last seven years to now justify the inclusion of Temasek into the NIR framework?

Temasek's investment mandate has largely been unchanged; which is to invest in both public and private equity including taking concentrated stakes in a number of companies. Compared to GIC and MAS, Temasek manages a more risky portfolio and its returns are a lot more volatile.

Take for example the recent volatility in the Chinese and Hong Kong equity markets that we saw in the last few weeks. Obviously, the impact will be more on Temasek than on GIC and MAS.

Given the difficulties in projecting a long-term expected real return for an all-equity portfolio, it was the right decision then to defer the inclusion of Temasek into the new NIR framework.

Deputy Prime Minister Tharman mentioned in the Budget Statement speech that MOF has since worked with Temasek to develop an approach to project its expected long-term returns, taking into account the nature of its investment portfolio.

Can the Minister share more details on the approach and how would the computing of the expected long-term real return for Temasek be different from that for GIC and MAS? Are there different risk-weightings applied and what are those?

Under the current framework for Temasek, the contributions are from dividends and interest earned – which are essentially realised cash contributions. With the inclusion of Temasek into the NIR framework, there is now a long-term returns trajectory to keep up so as to meet the Government's funding needs.

While Temasek already measures its performances based on Total Shareholders Returns (TSR) approach but contributes on NII basis, it is very different now where the actual contributions are based on expected long-term real returns. The question is whether Temasek's investment strategies and portfolio management would change as a result.

Under the framework, non-realised capital gains also constitute part of the net investment returns. In addition, actual returns would also likely be different from expected

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long-term real returns. Hence, with the inclusion of Temasek, which would require actual cash contributions to the Government, the cash flow impact would become significant. How would the Government ensure sufficient cash generation and liquidity as our Budget is essentially accounted on a cash flow basis?

Temasek holds significant stakes in companies, on behalf of the Government, that are of strategic importance to Singapore and its economy; such as Singapore Airlines, PSA, SingPower, NOL, SBS Transit, SMRT and so on. I fully support Temasek's continued ownership in these Temasek-linked companies (TLCs) as we want these companies to be firmly rooted to Singapore and to be aligned to our national interests and our long-term economic strategy. These companies account for a significant portion of Temasek's portfolio. The share prices and values of these companies do have their fair share of ups and downs; often due to external global market sentiments. There may be times when, for example, equity analysts would call for a "sell" in these shares due to perceived high valuations. Under the NIR framework, would the investment managers of Temasek now be more inclined to actively trade the shares of these TLCs so as to preserve the long-term returns of the portfolio?

I would be very concerned if, for example, they decide to sell the entire stake of SIA if they find the company's market valuation to be overly high and it is timely to lock-in on the gains.

How does the Government balance the national strategic need to hold the major stakes in certain companies versus giving Temasek the full independence to manage the valuations and returns of its portfolio?

The Net Investments Return Contribution (NIRC) has increasingly become our key revenue source rather than a Budget-balancing item; which was what it used to be and in the manner it was presented in the Annual Budget indicate that it is still a balancing item because it is always in the finer lines of the statements. But we know that NIRC is now a major contributor. Reserves are now our strategic resources and competitive advantage, and its returns reduce the need to have high taxes and allow us to invest in economic and social infrastructure even during periods of economic downturns.

However, the natural concern is whether it would lower our guard to spend prudently and sustainably, given that it is a less unpopular funding source. It may breed the mentality to always look to reserves whenever we have a major spending programme.

There may also be times when the expected long-term real returns could fall over time, during prolonged periods of economic slowdowns and market slumps.

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Therefore, the need to have a diversified source of sustainable revenues to fund Government's expenditures remains a vital necessity while maintaining the constant check and oversight on the prudence of our spending, especially those that are of long-term nature and those that are cross-generational implications.

As the election draws nearer, it is again not surprising to expect political parties in their bid to win over voters, to start dangling promises to spend from reserves' returns and even reserves itself. It is always so easy to come up with a very appealing election manifesto, listing the big popular items to spend and then say the money to pay for these items can come from the "reserves ATM". The fact of the matter is the NIR is already funding a major part of our capability investments as well as our social programmes. We need to retain and re-invest part of the investment returns just so that we can, at the very least, maintain the purchasing power value of our reserves, which is why the real returns is being used, as well as re-investing part of the returns for future generations.

Finally, while we debate over the constitutional amendments as to what we should spend, how we should spend the returns, let us not forget the Pioneers and the generations thereafter that have built up the reserves painstakingly over the last few decades and now render us available this strategic and precious option. If at any time, the Government of the earlier years were less steadfast in their position, there would be less reserves for us to benefit from today.

In my view, how we judiciously and how discipline we manage and use the reserves has a direct bearing as to whether Singapore will continue to thrive and whether we have a SG100 to celebrate or not.

The still unfolding sad state of affairs for Greece is a very relevant case study for us. We could be like Greece or even worse if we badly mismanage our finances. And we have no equivalent of the EU to bail us out. So, Mdm Speaker, I support the amendments.

Mdm Speaker, the inclusion of Temasek Holdings into our Net Investment Returns framework, first announced at this year's Budget, envisages additional monies comprising the Net Investment Returns contributions to be set aside for healthcare, transport, new Changi Terminal 5, domestic security and SkillsFuture, amongst others – all of which are aimed at improving the quality of life of Singaporeans. Including Temasek in the NIR framework allows the Government to expend the NIR for the benefit of Singaporeans. Including Temasek in the NIR framework is the right thing to do by our people who have to face a more challenging and competitive workplace and a fast-changing world

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where the iron rice bowl has become a relic of the past. Our social safety nets require constant strengthening, improvement and upgrading. A more crowded Singapore has also stressed our infrastructure. We also need to plan for new engines of growth to power the economy and to create and take advantage of opportunities in the future.

In the same breadth, the Workers' Party acknowledges that fiscal prudence must represent a fundamental aspect of the Singapore system because Singapore does not have any natural resources. While our self-sufficiency is a virtue, we must also be careful not to make this too much of a mantra, which risks Singaporeans deserving of assistance falling through the cracks. In fact, the unpredictable marketplace of jobs and the reality of looking after loved ones, one's parents in their old age and not to mention children, are more likely to make it difficult to elegantly pigeon-hole individuals who ought to qualify for the different types of assistance currently available.

I have two questions for the Minister. The first pertains to his reply at the Budget round-up speech on liquidity management should Temasek's expected long-term real returns not match up with its actual returns. The Minister informed the House in the 2008 debate on the NIR framework that with the inclusion of GIC and MAS, the Government does not foresee a shortage of liquid funds should this eventuality come to pass. Does the Minister foresee this prospect with the introduction of Temasek, given its different investment strategies and approaches, and are there specific contingencies that have been drawn up for this purpose beyond those highlighted by the Minister in the 2008 speech?

Secondly, has the Government projected the percentage of NIR it has earmarked for the next five years, in view of Temasek's inclusion in the NIR framework? Specifically, how close or how far is the projection from the 50% threshold and how much of a buffer is estimated? Mdm Speaker, the Workers' Party supports this amendment to the Constitution.

Mdm Speaker, thank you for allowing me to join this debate. The Amendment Bill comes almost seven years after Parliament debated the introduction of the NIRC framework for reserves invested by GIC and MAS in 2008. It has been long anticipated.

The intention of moving from the NII framework to the NIRC framework is to increase the amount of funds which the Government of the day can draw upon to finance its Budget. As Deputy Prime Minister and Finance Minister has just explained, the increase in amount that will become available is substantial, almost 1% of GDP.

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What I would like to do is to begin by revisiting the issue about the volatility of Temasek Holdings' returns and therefore the possibility of fine-tuning the percentage limit of returns that should be used for spending. Secondly, I would also like to take this opportunity to discuss how this Amendment Bill, even though it has every intention of adhering to fiscal prudence, seems to me, anyway, to be a shift away from fiscal conservatism.

During the 2008 debate on the constitutional amendment which first introduced the NIRC framework, the Deputy Prime Minister and Finance Minister explained that Temasek's strategy was evolving, and that it was operating very differently compared to six years before that. Since giving the strategy room to evolve was clearly an advantage, it is not entirely clear if the current Amendment Bill takes full cognisance of the potential repercussions of the commitment it may be holding Temasek's performance to.

There are a host of risks to contend with when estimating the value of returns. Even if the investments themselves perform well, there are country risks, exchange rate risks, business cycles. Then, there are the more severe risks associated with fluctuating global economic conditions which is something Singapore will always be more exposed to than others. Finally, Mdm Speaker, there is the impact of pandemics − such as the one MERS is having on South Korea at this very moment.

Over the last few decades, Temasek has proven itself more than up to the task in taking these challenges in its stride. However, as our democracy develops, the question should also be asked as to whether there could come a time when the decision we make today becomes a burden on Temasek to deliver results. Given that Temasek's investment strategy is already challenging, will there come a time when Temasek could feel pressure, no matter how slight, to meet the demands of the growing Budget?

As Deputy Prime Minister has mentioned on more than one occasion, Temasek's returns tend to be more volatile and can be quite high when times are good. For instance, the latest Temasek Review reports a one-year return to shareholder of 19.2%. The Review also tells us that the exposure to growth economies is 45%. In terms of geographical region, 42% is invested in Asia, excluding Singapore. In terms of sector, 28% is invested in Financial Services. These exposures are clearly borne out in the fluctuations of Temasek's net portfolio over the last 20 years. The record shows that while the over performance in terms of net portfolio value has been steadily improving, the dips caused by SARS and the Global Financial Crisis were both sharp.

Given how much volatility has been increasing in recent years, this is surely a cause for concern and a reason for being more cautious in tapping on Temasek's NIR. If there is recognition of the different nature of the investment remit of Temasek, should we not consider applying a different proportion of usage to the NIR of Temasek, compared to GIC?

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Specifically, would the Bill allow for a lower limit, say 40% rather than 50%, to be imposed on NIRC for Temasek?

The main concern with the switch from the NII framework to the NIR framework is that capital gains, unlike income earnings, are estimated rather than realised. It becomes a technical challenge to define what should be prudent access to gains from the reserves.

To address the fact that the value of the asset base moves up and down, I would like to ask if MOF has considered using a more conservative rule where the low end of the value in the probability distribution of the asset portfolio be used instead? Even though systems such as variance at risk are not completely reliable, they can be designed to offer more conservative estimates of value. So, my question is whether the smoothening rules that are used presently are sufficiently conservative in ensuring that a greater proportion of real reserves are preserved in the long term.

On my second point, despite the Government's reassurances that it is continuing to adhere to disciplined spending practices, I would just like to express my concern at the gathering momentum of what I perceive to be a shift away from half a century of fiscal conservatism. It is not spending itself that I am concerned with, but the inexorable shift towards large spending increases.

It is true that Singapore's spending is at a relatively low level compared to other advanced economies. For 2013, a cross-country comparison shows that among those economies for which data is available from the World Bank, Singapore ranked 46 out of 163 in terms of Government spending when measured by the General Government Final Consumption Expenditure (GFCE). It is also true that depending on which year you choose, the growth rate in such spending could be very low for Singapore − 2014 was a case in point. But a very different picture emerges, Mdm Speaker, when we consider how this has been changing over time. In particular, I would like to point to two aspects of the change: first, the change in the ratio of Singapore's GFCE compared to those of other economies; and second, the growth rate of such spending.

I have used the same database from the World Bank that I mentioned earlier and focused on those economies for which complete data is available for the period 1975 to 2013 inclusive. The cumulative annual growth rate of GFCE for Singapore exceeded those of prominent economies like Hong Kong, Australia, New Zealand, the United States and even the Nordic countries. Among Nordic countries, the highest cumulative annual growth rate in constant local currency terms during this period was seen in Norway at 2.9%. This is less than half of the 6.6% increase in average annual terms that Singapore achieved. Where others spend more, they have taken time to reach a level which I believe we should not be in haste to match in much less time. Incidentally, the comparisons I had mentioned produce

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essentially the same result regardless of whether you carried them out using expenditures measured in constant local currency units or current US dollar. So, we should ask ourselves how much faster we want expenditures to grow and whether an even more rapid pace of growth than we have seen will really bring us closer to our objective.

Every Singaporean in distress deserves help, but the reason for more social spending should never be based merely on whether Singapore can afford to. Although many of our fellow citizens still need more help, I do not think the solution is simply for the Government to enact more social spending. Ultimately, nobody wants hand-outs − everybody wants to stand on their own.

As a matter of priority, Singapore's approach should be, I believe, to expand opportunities for everyone − especially the disadvantaged − to participate in the economy, eliminate vulnerabilities to exploitation and exposure, and emphasise that a future of self-reliance supported by the state is realisable.

It is very easy to overlook the fact that the main threat to Singapore's economy remains, as it had been in the past, unemployment. If Singapore's economy loses its relevance in the global economic order, unemployment would rise and remain elevated − that is the scenario that Singapore must counter.

The main difference between the policy shifts we see now and those of the past is that we now have more emphasis on "spending increases". Spending increases − whether it is for social support or wage support − are virtually irreversible owing to the stickiness of increased reliance on such spending. You would not even be able to keep such spending increases frozen, because the calls to ensure they keep up with cost increases will be too loud to ignore.

In 2005, $579 billion was spent on "Special Transfers Excluding Top-ups to Endowment and Trust Funds". This figure grew to $4.3 billion in 2014 and is now estimated to leap to $5.6 billion in the current fiscal year. When it comes to support schemes, permanent entitlements could turn out to be exclusionary rather than inclusive. From a practical perspective, rapid increases in Government spending could lead to crowding out of the private sector, as well as cause surges in demand that the domestic supply base alone will find difficulty in meeting.

While it is true that we still have one of the lowest levels of Government spending in the world as a proportion of GDP, that is not something we need to overturn in a hurry. Indeed, it is the reason why Singapore also has one of the lowest tax-to-GDP ratios in the world. Together with all the other achievements we celebrate this jubilee year, these attributes have set Singapore apart during the turbulent post-Independence era, ensured

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that we kept pace with the leading economies of the East-Asian miracle after that, and subsequently gave us with a keen eye for external opportunities which accompanied the surge in emerging market activity after the Cold War.

Singapore was always able to do more with less. In that way, our nation carved out a unique position for itself in the region and the world. Singaporeans were always willing to do more with less, with a workforce capable of taking advantage of whatever they had at hand and learning how to do better from whomever they can. My concern is that, that is changing, and a lot of these intangible qualities which contributed to Singapore's original economic success would soon be lost.

I recognise that the Government will have to continue to expand spending to prepare for the future as well as to meet the growing aspirations of Singaporeans for more social spending. Nonetheless, I hope that, as it does so, it will not only look at how much our reserves can enable us to increase spending, but also use the lessons of how much we have managed to achieve with the fiscal discipline in the past as a core guiding principle.

To conclude, just as the early generations of nation-builders did, we should continue to focus firmly on our economic security. Despite the advances Singapore has made, there remain too many challenges in this regard. In this region alone, our position as the leading global city is the dominant concern.

Although Singapore is well-placed in the region and has had a half-century of consolidation, the possibility of displacement as the leading global city in the region is not a fantasy. In ASEAN alone, the competition is significant. The five most populous ASEAN nations are also the least urbanised and account for more than 90% of the total population of ASEAN in 2013. All of them already have leading urban metropolises. As they continue to urbanise, new better-planned metropolitan cities will be developed in these countries. Whether they become a threat or a partner to Singapore in future depends very much on how we prepare ourselves to embrace their rise.

In order to fully celebrate the achievements of 50 years of nation-building, we should also revisit the realities about Singapore's position in the world which has driven our Pioneers' sacrifices. We are competing against countries which are still able to do more with less.

The steady accumulation of Singapore's reserves has been a tribute to the toil of multiple generations of nation-builders. Any discussion about accessing the benefits of these reserves should not be too dismissive of the relevance of fiscal conservatism. Mdm Speaker,

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I support the Bill. [Applause.]

Mdm Speaker, I wish to declare that I am the CEO of Wealth Management Institute, a wholly-owned subsidiary of the Temasek Group.

Madam, I rise in support of the proposed amendment to include Temasek Holdings Limited in the Net Investment Returns (NIR) framework. This amendment will widen the sources of revenue that help to fund expected increases in Singapore's future spending needs. It is tempting to look to the country's reserves whenever we need to support an increase in spending, so it is good to remind ourselves of the strategic importance of these reserves.

As our Prime Minister said in 2008, I quote: "We have no natural resources. All Members who enter this House memorise that as a catechism – no timber, no iron, no gas, no gold – just our wits and our strength and our financial reserves which we have built up. These financial reserves give people, Singaporeans and investors alike, confidence that Singapore is sound, strong and able to cope with anything which may come its way."

Singapore's reserves help underpin confidence in our country and our ability to weather storms. Any decision to draw on these reserves must be taken with great circumspection, and we must guard against any policy that is financially unsustainable, however popular it may be.

Madam, in recent years, we have seen significant increases in spending across many areas, from social programmes, housing, education and healthcare to productivity initiatives. At the same time, the Government is projecting a lower growth trajectory in GDP, due partly to a maturing economy. We have not made enough progress in improving productivity. And an uncertain global economy will make it difficult for our Government investment agencies to sustain returns of the past. On top of that, our ageing population will increase the demand for more resources to care for the elderly. We have entered a new era of financial planning for our country. It is no longer "business as usual". As revenue streams come under pressure, our debates over spending plans should be ever more robust and informed.

For example, even as we welcome the addition of Temasek as an additional source of funds under the NIR framework, we should ensure that spending is prioritised towards investments in the country's future, or on items that will boost our capabilities and competitiveness. So, I would like to ask Deputy Prime Minister Tharman, with respect to our planning parameters, what proportion of spending is geared towards investments in national

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development? How are prospective projects assessed, not just on their financial viability but also on their impact on growing the country's capabilities? What mechanisms, disciplines and KPIs are in place to track "investment returns" of projects and to ensure that we "sweat our assets"?

Mdm Speaker, the constitutional amendment in 2008 changed the formula for computing NII, so that the Net Investment Returns (NIR) framework was applied to GIC and MAS only. Back in 2008, then Minister for Finance Tharman explained that the Government had decided not to include Temasek in the NIR framework for two reasons.

First, there were no established methodologies for projecting the long-term expected real returns on Temasek's portfolio, given its investment approach of taking concentrated stakes in companies, including direct investments.

Second, Temasek's investment strategy was still evolving, having begun a major effort to diversify its investments geographically as well as sectorally in 2002.

Can Deputy Prime Minister Tharman provide more details to the House on how the Ministry is now able to forecast the long-term expected real returns of Temasek, taking into account the nature of its investment portfolio? How has Temasek's portfolio investments evolved since 2008? Are Temasek's investment strategies expected to change in any way, as a result of coming under the NIR framework? How will the country's aggregated NIR be impacted by the inclusion of Temasek's portfolio, given that its portfolio is likely to be more volatile than those of MAS and GIC?

Madam, the NIR framework is based on a forward-looking assessment of the overall returns over the long term. The expected returns are based on an investment horizon of 20 years. I would like to ask Deputy Prime Minister Tharman about the challenges in trying to look so far ahead, given such volatile market conditions and investment climate. In today's uncertain world, many find it hard enough to forecast one year in advance, let alone 20 years. As our spending is based on expected real returns, we need some degree of confidence that the forecasting model is robust and time-tested.

Since the implementation of the NIR framework in 2008, we have also experienced an unprecedented global financial crisis with economic shocks that much of the world is still recovering from. Singapore fared relatively well, even during the darkest days of the crisis and was even considered a safe haven in the financial world, maintaining its enviable AAA credit rating. I would like to ask if the financial crisis had any impact on the NIR framework – are there any lessons we can draw from the financial crisis that could shed light on the robustness of our framework and the investment strategies of our state investment

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organisations?

In addition, I would like to ask the Deputy Prime Minister to provide a comparison of the performance of MAS, GIC and Temasek against other sovereign wealth funds or government investment entities, using relevant benchmarks.

Madam, during the 2008 Constitutional amendment, the Prime Minister explained how the Government had based their level of spending on 50% of the long-term expected real returns. I quote the Prime Minister: "It is not an exact science why we came to this number, but I think 50% has a certain neatness and feels intuitively acceptable, because it underlines our commitment to continue growing our reserves, while allowing the Government to tap on part of the investment incomes for current spending. In a sense, we have put equal emphasis on both objectives – the present and the future."

May I ask the Deputy Prime Minister: under what circumstances would the percentage of 50% be up for review? Whilst a spilt down the middle would have seemed, in 2008, an equitable balance between providing for present and future needs, future circumstances may require the Government to increase their spending, say, for social programmes or other needs. So, what signposts should we be looking out for that might signal a timely review of this percentage? How soon would the Deputy Prime Minister expect us to encounter these signposts?

Madam, in closing, as we enter an era of increasing spend and diminished growth, the NIRC will be a welcome source of revenue. We are fortunate to have the nation's reserves, but must continue on the path of prudence and sustainability, for the sake of future generations. Ultimately, the focus must be on building a strong and globally competitive economy that will continue to generate strong operating revenues to meet increasing demands for expenditure. Mdm Speaker, I support the amendment.

Mdm Speaker, I would like to thank Mr Liang Eng Hwa, Prof Randolph Tan, Mr Pritam Singh and Ms Foo Mee Har for speaking in support of the Bill. They raised some fair questions and, indeed, these are questions which we have thought through very carefully − first in 2008 when we introduced the NIR framework and again now, when we are amending the framework to include Temasek.

There are basically three sets of issues. First, how much should we be spending and how do we spread the benefits from our reserves across generations? It is a basic question of equity − equity between generations. It is a question of our obligations to current and future

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generations. So, that is the first set of issues.

The second question is, having decided on the appropriate balance between spending today and spending tomorrow, how do we ensure that we do not veer from that intended balance or inadvertently overspend beyond that balance?

The third question has to do with our investment entities themselves − Temasek and GIC in particular. How do we ensure that their strategies are not compromised or shaped by this NIR framework?

Let me address each of these briefly in turn.

First, the question of balance between spending today and spending tomorrow, what is the right balance? Our NIR framework aims to achieve a fair and judicious balance between today's needs of Singaporeans today, tomorrow's needs of today's generation of Singaporeans and the interests of future generations.

Our reserves are basically an endowment, an endowment built up over 50 years. We should get some of the benefits of that endowment today. But we should also ensure that future generations of Singaporeans benefit from that endowment. An endowment is meant to be a permanent benefit for Singaporeans − draw some today, but ensure that future generations continue to enjoy that endowment.

And it is not just about preserving the endowment so that there will always be a stream of income coming onto the Budget for regular spending. It is also about providing security for Singaporeans.

Without any natural resources, our financial assets are a critical part of our defence against any future crisis. And we do not know what crisis it may be − it could be a financial crisis, a natural calamity, or a crisis coming out of geo-political disorder. We do not know what crisis it may be, but it is critical that we allow our reserves to grow, not excessively but to be able to grow together with our economy and future conceivable spending needs.

Is a 50% cap the right balance? Ms Foo Mee Har has just reminded us of what the Prime Minister had said in 2008 when we introduced the NIR framework. There is nothing scientific about the figure 50%. It is a judgement. It is a judgement of what is a fair balance between the needs of today and those of the future.

As I had mentioned in my speech earlier, we expect NIRC to be about 3% of GDP, with the amendment to the framework that we are proposing today. The NIR framework will also

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mean that we have a reasonable chance of sustaining this stream of income for spending on the Budget for many years to come. So, we will get a lift in resources, roughly speaking of about 3% of GDP, but the framework – because of its checks and balances and its safeguards – will give us a reasonable chance of sustaining this stream of income in the Budget for many years to come, rather than seeing a dwindling stream over time because we draw too much for spending today.

The second issue is whether the safeguards are in place so that we do not risk a situation where the expected returns over the long term, which is the basis for today's spending, do not materialise and we find that in the meantime, we have drawn on too much NIR monies and inadvertently overspent. It is a fair question because there is no assurance that actual returns over the long term will match expected returns. And I would like to emphasise that when we thought through the NIR system in 2008, we paid particular attention to ensuring that the system will be sustainable, and that there is no bias in favour of over-optimism in expected returns and thus the likelihood of facing a situation where actual returns are, in fact, much lower than expected returns.

There are several safeguards in our system that will ensure sustainability, and I will go through each of them briefly. First, the 50% cap itself − ensuring that at least 50% of real returns are retained in the reserves and we do not face depletion of the reserves over time.

Second, ensuring that it is real returns and not nominal returns that we look at, so that we do not get a situation where you have high inflation globally and high nominal returns, and you spend on the basis of the nominal returns, when really what you are doing is depleting the real value of the reserves. So, that is the second safeguard.

The third safeguard, which is important, is that the spending is based on investment returns on net assets, not total assets. In other words, it is based on the excess of assets over the liabilities of the Government, which includes borrowings such as SGS and SSGS. The net assets are basically the unencumbered assets and the spending rule is based on these unencumbered assets rather than the full gross amount of the assets. We do not spend any of the returns earned on the encumbered assets, in other words, the assets that provide backing for our liabilities. And what this means is that we ensure that the full investment returns on the encumbered assets are available to cover the debt servicing costs on the liabilities.

The fourth safeguard is the smoothing of the asset base − the asset base on which we apply expected long-term returns. This means that the temporary booms and busts in the market that lead to changes in the value of our asset base are smoothed. A sudden boom in asset prices, which will happen from time to time, does not mean that we can immediately

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spend more through NIRC. So, that is the fourth safeguard − the smoothing of the asset base.

The fifth safeguard is very important. The four safeguards I have spoken about are in the design of the NIR framework. But there is an important fifth safeguard, which is in the governance processes in the NIR framework, that also ensure that we do not spend on the basis of over-optimistic assumptions about expected returns. The process by which expected long-term real rate of returns are decided has checks and balances, and is shaped by a sense of realism about the risks in the investment world.

The process involves annual review within each of our investment entities so that the Boards can make a proposal to the Government. It is not just about the Boards coming up with a number, Government ratifying the number and the Council of Presidential Advisors (CPA) and the President agreeing to the number.

It involves detailed deliberation at each stage of the process.

First, within the organisations themselves, within the investment entities – Temasek, GIC, MAS. It is a rigorous process, to project the expected rate of return over the long term, based on the views of seasoned professionals and experts. They take a long-term view, based on history as well as an assessment of the future environment and seek not to be swayed by short-term sentiments. That is an extremely important part of the culture – not being swayed by the short-term sentiments of the markets.

The Government then decides whether to accept the Boards' proposals. We consult independent experts when necessary. And where there is significant uncertainty in the outlook, the Government will err on the conservative side when it recommends the expected rate of return to the President and the Council of Presidential Advisors (CPA). The President and the members of the CPA themselves are experienced people. The CPA comprises people with very serious, proven track records in their professions and businesses. They are people who can question Government on the assumptions we are making, or the judgements we make. They can question the Government as well as the investment entities themselves.

So, the process that I have described has features which mitigate the risk of over-spending, particularly the risk of having expected returns that are above what can be realistically achieved in the markets.

What if there are persistently low actual returns, lower than expected? Well, this will in fact be reflected in the asset base, because the asset base is not based on expected returns. The asset base is based on actual returns. And if you have persistently low or negative actual returns, it will mean that the asset base grows more slowly, and that affects how much

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spending we can have because the expected returns are applied to that asset base. So, that is another check on the system and it constrains how much we can spend.

So, the system that I have described involves several layers, not just one layer, that amount to a strong structural safeguard in how we spend our reserves. The system helps to safeguard against over-spending based on over-optimistic expected returns.

Assoc Prof Randolph Tan and Ms Foo Mee Har pointed out that the Temasek portfolio, in particular,was a more volatile one. I think there were some useful questions. Let me first say that when we designed the NIR framework, we designed it for all three entities. The 50% rule and the other features of the framework were designed for all three entities, although we first proceeded with GIC and MAS.

Assoc Prof Randolph Tan had a couple of questions and suggestions. One was whether we should apply a different spending cap to Temasek compared to GIC and MAS because Temasek has a higher risk portfolio. It is a meaningful question. We have a range of investment entities with quite different risk profiles. MAS at one end, the most conservative; Temasek at the other, which takes more concentrated stakes and is basically an equity investor, which has higher risk compared to an investor with a balanced portfolio. We can, in theory, apply different caps to each of them but I think there are merits in keeping the system simple and applying a common 50% cap to all the sources of investment income under the NIR framework and being conservative in the way we go about operating the system. I am satisfied that with the safeguards we have, that conservatism will be maintained.

I should add, in relation to Assoc Prof Randolph Tan's suggestion, that we do not look at projected values of the asset base, whether it is based on value at risk or any other way of drawing a cone of possibilities. We actually use the asset base that is based on historical values. That itself is a form of conservatism. Smoothed historical values are the asset base on which we apply our expected returns to determine spending. So, there, too, is some conservatism built into the system.

Next, the impact on the investment entities themselves. Will their investment strategies be influenced by the NIR framework? Ms Foo Mee Har, Mr Liang Eng Hwa and Assoc Prof Randolph Tan had asked this question. I had mentioned this during the Budget debate and I will have to emphasise it again. Being included in the NIR framework does not change the investment strategies of GIC, Temasek or MAS. It leaves their strategies unaltered.

The NIR framework does not set a target rate of return for the investment entities. They have to be faithful to their mandates. Their mandates, particularly in the case of Temasek

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and GIC, are to invest for the long term, to aim to grow the value of their assets over the long term and to ride out short-term market cycles. They determine how much risk they can accommodate, and within that amount of risk they aim to maximise their returns over the long term.

Why are we able to take that approach of letting them focus on their mandates of investing for the long term? The reason is because our NIR framework is purely about the unencumbered assets − I explained this earlier − assets that are not matched by liabilities. And this allows both GIC and Temasek to adopt an endowment mindset − of investing for the long term and growing the value of their assets by taking advantage of opportunities that short-term investors or those who are liquidity-constrained cannot take advantage of. Overall, this approach has enabled both GIC and Temasek to perform creditably in relation to the market indices and they are both extremely well regarded amongst their peers.

What if future returns are expected to be structurally lower because of a deterioration in the investment environment? It is possible. It is entirely possible given the problems in the world today – the fiscal challenges, low productivity growth, and the possibility of disruptions in the international environment. It is possible that we have to settle for a structurally lower rate of return over the long term. If that is the case, then the Government has to adjust its spending. We will have to accept that as a reality that there will be lower expected returns, lower NIRC and we have to adjust our spending, or we have to find alternative forms of revenue through domestic sources. That is the right approach, rather than asking the investment entities to take more risks in the search for yield so that we can still get the same amount of NIRC. And that is the approach we must stick to.

Ms Foo Mee Har has asked whether we have learnt any lessons coming out of the Global Financial Crisis. I think it has been a very useful episode. The main lesson is that spending based on expected returns instead of actual returns was the right decision. We made our amendment to the Constitution in good time. Spending based on expected returns rather than actual returns turned out to be a wise decision. It helped us to avoid going through a "feast and famine" in NIRC and in Government spending.

We all know what happened during the crisis. If we look at equity indices, say, we take the MSCI World index, it declined by almost 40% in 2008 and recovered by 31% the next year – a big crash and then a big recovery. And we would not have wanted Government spending to be shaped by those sharp gyrations in world markets. We have instead been able to avoid pro-cyclical Budgets. If you spend based on actual returns and actual returns are highly volatile, it will typically mean that you are pro-cyclical; in other words, during good times, you spend more, and during bad times, you spend less. That would not be wise from an economic policy perspective.

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Liquidity is an important issue. I think Mr Liang Eng Hwa and Mr Pritam Singh had asked about how we manage liquidity within this framework. The essential issue is this − if we are spending on the basis of expected returns, and expected returns are not matched by actual returns year-to-year, where do we get the cash in order to spend? Expected returns is the basis on which the spending rule is defined, but if actual returns vary from expected returns and, in particular, may fall well short of expected returns, where do we get the cash? And that is an important question. I had addressed it in 2008 when we introduced the NIR framework and I touched on it briefly in this year's Budget debate as well, but I will explain it again.

First, to be very clear, this is not an issue about the spending cap. It is not an issue about investment strategies. It is purely a cashflow management issue. It does not have to do with the size of our Government Budget surplus or deficits. It is a cashflow management issue. The spending rule caps how much we can spend based on the expected returns of our investment entities. Having determined the maximum amount that we can spend, the question is whether we have got sufficient cash for that spending.

The Government has a variety of sources of cashflow from which it can meet its cash needs. These include our tax revenues which are coming in at different times during the year. It also includes funds raised outside the Budget, such as the proceeds from land sales. These land sales proceeds cannot, under our constitutional rules, contribute to the Budget and they do not count as Government revenues. But they are part of the cashflow that the Government receives.

There is also a healthy level of Government deposits placed with MAS. A substantial amount of Government deposits placed with MAS that we can draw on when we need it, if we need it, for cashflow purposes.

The Government basically pools all its sources of cashflow, all its sources of liquidity together and manages its cashflows as a whole through a disciplined procedure.

We have more than sufficient cash to ensure that NIRC spending based on expected returns can be met. There is, hence, no need, even when actual returns are weak or negative, to require the investment entities to divest existing investments in order to provide cash to the Government.

Finally, let me move on to a broader theme that came up in Members' comments, which is the whole issue of fiscal conservatism. I am glad that it was raised. Mr Liang Eng Hwa, Ms Foo Mee Har, Assoc Prof Randolph Tan, in particular, raised valid questions over how we should shape our spending priorities and how we ensure that we are getting value out of our

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spending.

Our aim is not and cannot be to spend all the revenues we have. Our aim is, first and foremost, to ensure that we are spending wisely, in the interest of Singaporeans today and tomorrow. And as Assoc Prof Randolph Tan pointed out, we have got to guard against an inexorable rise in spending. He noted, and I think you will see this if you were to look at the history of social spending in many countries, that social spending only goes up, it does not come down. Unless you are forced to bring it down in a deep crisis, which is what Greece and some European countries are going through in a very painful way. Not just painful adjustments in crisis but also quite inequitable, I would say, because the people who are taking the pain of budget cuts are typically the young and the poor.

So, we must avoid in normal times, an inexorable increase in spending, where promises today are layered upon promises yesterday. It is what has happened in so many countries and it is a natural tendency in society, a very human tendency for that to take place. We should guard against that and Assoc Prof Tan sounded a useful caution.

Our spending is increasing. Why is it increasing? First, because we are engaging in a major new cycle of investment in Singapore's future. In our healthcare capacity, our transport infrastructure and our human capital. It is a major new cycle of investment that I spoke about in this year's Budget, and those are the big three drivers.

We are also recalibrating and rebalancing between collective and individual responsibility, in various areas of social support – from the early years all the way to the retirement years. But the big drivers of increased spending on the Budget are healthcare capacity − because of an ageing population – transport infrastructure, and, thirdly, investing in our human capital, in Singaporeans themselves, because that is the ultimate source of strength in our society and our economy. Those are the big drivers.

We have essentially followed the life cycle of our society. Many other countries, during their younger and rapid growth years, spent the larger revenues that came up. We saved surplus revenues when there were Budget surpluses in good times and during the years of rapid growth. We saved Budget surpluses and did not spend them simply because they were there. This now puts us in a very strong position today. Because now, as our society goes through the second half of the life cycle – gradually getting older and our economy is slowing down – we are now in the position of having this endowment, which we can draw on in a disciplined fashion.

Following the lifecycle of our society has been a sensible and prudent policy that we have through the years. We should never see our aim as that of looking for new spending

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needs and then looking for the revenues in order to meet that spending. Our aim should be, first and foremost, focused on outcomes. The real outcomes we want are: a vibrant economy that provides good jobs and careers for Singaporeans; a low tax burden on the middle-income group – and it is, in fact, much lower than in most other countries; and a fair and equitable distribution of taxes and benefits in our society. That is what we focus on, rather than looking for new spending and then looking for revenues to be able to meet these needs.

And I would like to assure Ms Foo Mee Har that we do take very seriously the assessment of spending effectiveness even after we have started. Our healthcare infrastructure is a very important area, where we are putting a lot of emphasis on this – MOH and MOF – on assessing the effectiveness of spending and where it should be spent. Should it be in the acute hospitals, or should we be spending more on step-down care and primary care; how do we spend in a way that truly enhances benefits for citizens, and a critical issue - how do we ensure that future treatments, particularly as technology advances, provide real value rather than just higher costs? How do you ensure that SkillsFuture, which is a major new investment in the future, will be money well spent and not just money chasing after educational programmes? Important issue. We have got to assess our spending as we go along and ensure that they are providing value for money.

Let me conclude briefly, Mdm Speaker. First, I thank all the Members for having emphasised the need to maintain fiscal discipline. I note in particular Mr Pritam Singh's statement, that the Workers' Party supports our commitment to fiscal prudence, as a key part of the Singapore system.

Singapore has an unusual strategic advantage of having a financial endowment – the opposite of most countries' debts. For a country without natural resources, this financial endowment that we have is critical.

If we have to start from zero today, it would take us far longer to build up the reserves, and in fact, it may not even be possible at all. If we had to start today, with a population that is getting older, an economy that is slowing down and an international environment that is quite different, much less favourable than before, it would take us far longer to build up these reserves, or it may be not possible at all.

So this unusual strategic advantage that we have, and that our children and grandchildren will have, is something that we should cherish and protect. But remember, it is a result of deliberate, conscientious and continuous efforts of successive governments over 50 years.

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As Mr Liang Eng Hwa emphasised, we must never lose the values of fiscal conservatism that got us here, and the sense of obligation to both current and future generations that our pioneer leaders bestowed on us. Mdm Speaker, I thank you. [Applause.]

Thank you, Madam. I have a clarification for the Deputy Prime Minister. The Deputy Prime Minister mentioned in his speech that the Net Asset is the basis of calculation for NIRC. I would like to know what type of asset class he is referring to and how does he consider "Net".

Thank you. Well, if I could just explain this again to Mr Low. Essentially, on the Government's balance sheet, there are assets in the GIC, MAS and Temasek, and there are liabilities. Some of them have their own liabilities. For instance, the MAS issues treasury bills and Temasek issues bonds – they have their own liabilities. In addition, the Government has liabilities. It issues Singapore Government Securities. The Government also issues Special Singapore Government Securities (SSGS) to the CPF Board.

We ensure that all the liabilities are deducted from the assets, so that we arrive at net assets that are the basis of what we can spend on the Budget. This way, we ensure that the investment income on the assets that match the liabilities – that provide backing for the liabilities – are fully available to meet the debt servicing cost of the liabilities. That is the first thing that we ensure.

Second, it enables us, and it enables, in particular, GIC and Temasek, as investment entities, to take an endowment mindset. They think about how to grow the endowment over the long term, as unencumbered assets and invest for the long term. This is the privilege that we have in Singapore.

The Question is, "That the Bill be now read a Second time".

"Pursuant to Article 5(2) of the Constitution, a division is taken to ascertain that the Second Reading of the Bill is supported by the votes of not less than two-thirds of the total number of elected Members of Parliament, which is 58 Members.

I would also like to remind Members that we are taking the division call twice. First, we are taking it now, when we are doing it for the Second Reading of the Bill; and later, for the Third Reading of the Bill. So, please remain in the Chamber. Clerk, ring the division bells.

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[(proc text) After two minutes – (proc text)]

Serjeant-at-Arms, lock the doors.

[(proc text) Question put, "That the Bill be now read a Second time." (proc text)]

Take a division. May I remind Members that they should only start to vote when the voting buttons on their arm rests start to blink. Members may now begin to vote. Members are advised to look at the screens to ensure that their votes are properly indicated on the screens.

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Before I proceed to declare the results, are there any Members who wish to claim that your vote has not been displayed or displayed incorrectly on the screens? Would you like to indicate your vote now?

There are 73 "Ayes", no "Noes", and no "Abstentions". The Second Reading of the Bill has been carried by the votes of not less than two-thirds of the total number of elected Members of Parliament. Serjeant-at-Arms, please unlock the doors.

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

The House immediately resolved itself into a Committee on the Bill. – [Mr Tharman Shanmugaratnam.]

Bill considered in Committee; reported without amendment.

Third Reading

Third Reading, what day?

Now, Madam, I beg to move, "That the Bill be now read a Third time."

The Question is, "That the Bill be now read a Third time."

Pursuant to Article 5(2) of the Constitution, a division is taken to ascertain that the Third Reading of the Bill is supported by the votes of not less than two-thirds of the total number of the elected Members of Parliament, which is 58 Members. Clerk, ring the division bells.