Hansard, Monday, 25 February 2013

1 Mr Seah Kian Peng asked the Minister for Trade and Industry (a) how does Singapore fare in international benchmarks for business and political risks; and (b) whether this has changed over the past five years.

Mdm Speaker, the Business Environment Risk Intelligence (BERI) produces one of the most established reports benchmarking business and political risk, known as the Business Risk Service report (BRS).

Singapore has been ranked first among 50 countries benchmarked in the BRS composite index from 2010 to 2012, reflecting the soundness of our operating environment for businesses, political risk profile and foreign exchange and external accounts' positions. For the preceding two years from 2008 to 2009, Singapore was a close second to Switzerland.

As a component of the overall index, the BRS produces a separate index for political risk. Singapore has been ranked first for this component, which examines both internal and external sources of political risk, for all five years up to 2012.

Mdm Speaker, some supplementary questions for the Minister. Given the recent tightening in manpower policies, the slowdown in our economic growth projections, and the recent developments on the political front, I would just like to ask the Minister what is his assessment of these benchmarks going forward and, in particular, the implications for Singapore and Singaporeans.

Mdm Speaker, as Members can see, the benchmarks tend to be backward looking because they assess the situation up to now. What we need are more leading indicators or more forward-looking indices. We do not have these in a systematic way. So, what EDB and many the MTI agencies do is to collect anecdotal evidence from our discussions with companies,

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Embassies, business groups, and with business chambers and federations. They also track media reports and some analysts' assessments. These give us cause for concern because while we are having these internal debates, the discussions going on may give a wrong impression or misimpression. So, we are very watchful and continue to monitor this very carefully.

2 Ms Tan Su Shan asked the Minister for Trade and Industry (a) what is the number of international companies that have exited from Singapore or have decided to scale down their operations significantly in the last two years; (b) what were the types of businesses that have chosen to exit and what were their reasons for doing so; and (c) how do these numbers compare with the trend in the previous five years from 2005 to 2010.

Mdm Speaker, companies may choose to exit or downsize their operations in Singapore for various reasons. At the firm level, companies may restructure and consolidate their global operations as a result of changes in company strategy, business model or finances. Companies are also affected by the macroeconomic environment – for instance, companies in export-oriented and cyclical industries, such as the electronics sector, may decide to downsize during the industry down-cycle. At the industry level, the profile of companies will change as our clusters move up the value chain and undertake more complex, value-adding and innovation-driven activities from Singapore. Such economic and industry transformation has been a continual process in Singapore's economic history. MTI does not find it very meaningful to specifically track a single factor such as the number of foreign companies that have exited or decided to scale down their operations here.

MTI's key focus is to ensure that Singapore's business environment remains globally competitive, and that we continue to attract and anchor the right investments and economic activities into Singapore. We are mindful that significant changes in our domestic business environment, such as the foreign worker policy, can impact companies and businesses adversely, and will make it more challenging for Singapore to maintain its global competitiveness. Therefore, as we continue to restructure and transform our economy amidst the current tightened manpower resource considerations, we will continue to carefully pace out and calibrate the changes to ensure that the business environment in Singapore remains attractive and globally competitive. We will

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continue our efforts to build higher value and more sophisticated manufacturing and services clusters to ensure our economy provides good jobs for our people and is diverse and resilient.

Mdm Speaker, I thank the Minister for the reply. It worries me that MTI does not find it meaningful to track the number of industries or companies, foreign or otherwise, that are moving out. We have to be cognisant that there is a whole eco-system – whether MNCs or SMEs – that creates the virtual cycle of job creation. If we have SMEs and MNCs starting to move out, this virtual cycle can become a vicious cycle of job losses. My question is, how can we talk about improving productivity if all our big customers are moving out of Singapore. If we are indeed proactive, then may I ask the Minister what other forward-looking measures would the MTI take to attract these high-end industries that we want to attract here to ensure that globally we are still ahead of our game?

Mdm Speaker, I apologise if the Member mistook what I said. I said that MTI does not find it meaningful to track a single number, comprising companies that move out or exited, as that was her question. As I mentioned just now in the reply to Mr Seah Kian Peng, we continue to have broad environmental scanning to know what is the situation, both forward-looking as well as anecdotal evidence. More importantly, we track by sectors because the conditions in each sector differ. Companies may be restructuring or moving up the value chain. We do track this. We also have broad economic numbers like the number of companies that are coming in and the number of companies that are going out. But as Members can well imagine, such macro numbers are also not very meaningful because it forms a very broad number. If we are looking at these numbers, then the number of foreign companies that have come to Singapore is much larger than the number exiting. That does not give us very much comfort because we need to go down several levels deeper. We also track, together with MOM, retrenchment figures which give us an idea of which companies are exiting and closing down and, therefore, workers have to be retrenched.

We do this general awareness monitoring but the Member asked for a specific number of what companies are coming in or exiting, and which companies are downsizing. There are too many noises in those changes. So, we prefer to do so sectorally, and every sectoral division in EDB, IE Singapore, SPRING and MTI have a good awareness of what are the changes happening in that sector.

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3 Mr David Ong asked the Prime Minister (a) what is the number of citizenships that are granted in 2012; and (b) of this group of new citizens, how many had stayed in Singapore for more than five years and how many for more than 10 years.

Mdm Speaker, 20,693 applicants were granted Singapore citizenship in 2012. They include 2,735 minors, most of whom were born overseas to Singaporean parents and would have been Singapore Citizens by birth had they been born in Singapore. Excluding this group, 81% of new citizens granted in 2012 had stayed in Singapore for more than five years, and 52% for more than 10 years.

Mdm Speaker, three supplementary questions, please. Do we have a policy of granting PR or Singapore citizenship to prominent foreign citizens even before they reside in Singapore? If so, how many were granted? Question two: what is the Government's stance on foreign spouses, especially those with children born in Singapore in the event of the demise of the Singaporean husband or wife? I do see instances where the entire family, especially that of the foreign spouse and children's residency status, is in limbo following the demise of their Singaporean spouse. The last question: with the large number of PRs and foreigners residing, studying and working here in Singapore, how can the Government better engage them, their employers and schools so that they can be better integrated into our social habits, norms and culture?

Mdm Speaker, I would like to thank the Member for the three supplementary questions. If I may, I think the supplementary questions themselves are very substantive, and will probably warrant separate PQs (Parliamentary Questions). But I would like to take the first supplementary question, with regard to SC (Singapore Citizenship) – whether we grant SC before they start residing in Singapore. The answer is "no". We generally require them to have a period of residency in Singapore and become a PR before we grant SC, with the exception of some of the minors – children who may have come along with the SC or the PR who has stayed here for some time. And because the parents are granted SC, we will also grant their children SC even before they start their residency in Singapore. These are all considered as a family unit.

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From time to time, their children, wives and parents may be granted SC before they have long extended periods of stay in Singapore.

On the second question, Mdm Speaker, on foreign spouses, I will deal with this question later in a subsequent PQ. And the third question on integration, I would suggest the Member asks this as a separate PQ at another time.

Mdm Speaker, two supplementary questions, please. May I ask the Second Minister whether we have discerning criteria in citizenship approval, and are our policies robust enough to ensure that only those contributing to our society with positive outcomes – and not draining our limited resources – are allowed to stay? Secondly, could the Second Minister re-look at our policies and to tweak those that can be taken advantage of, to the detriment of Singaporeans? For example, can we review the HDB and landed home ownership granted to Permanent Residents as the present policies may encourage profit motivation among some, who only leave immediately after achieving the windfall with no intention of settling down in Singapore, right from the beginning, as has been happening more frequently?

Mdm Speaker, the first question is about criteria. Yes, we do have definitive criteria. Selection is not based on a single criterion. It is based on a whole set of criteria. We will look at the economic contributions of the persons, education levels, family units applying together, and their intentions. If you have the whole family applying for citizenship together, this will be given greater consideration. We review the criteria from time to time, making sure that they meet our immigration needs.

On not allowing new citizens to drain our limited resources, we are very mindful of that consideration. I will discuss this a little later in the second question following this, about how we deal with foreign spouses.

The other question is really about reviewing the eligibility of new citizens or PRs in buying property. Again, I think this is a very substantive question. As much as we can, we will try to differentiate the benefits between Singapore Citizens and PRs. For PRs, we do review their bases of being granted PR from time to time, especially once every five years, when their re-entry permit is up for renewal. If those bases no longer exist, then we may refuse to renew their re-entry permits.

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4 Mr Baey Yam Keng asked the Prime Minister over the last five years (a) what was the breakdown of foreign spouses of Singaporeans who were (i) granted permanent residence and citizenship; and (ii) rejected permanent residence and citizenship, in terms of female and male spouses; and (b) what proportion of Singaporeans whose foreign spouses applied for permanent residence and citizenship were not in their first marriage.

Mdm Speaker, from 2008 to 2012, an average of 4,100 new Permanent Residents (PRs) and 4,100 new Singapore Citizens each year were foreign spouses sponsored by Singaporeans. Of these, about 82% of the new PRs and 92% of the new citizens were female.

In the same period, an average of 4,400 PR and 580 citizenship applications from foreign spouses sponsored by Singaporeans were rejected each year. Of these, about 90% of the PR applicants and 86% of the citizenship applicants were female.

Each PR or Singapore Citizenship application for a foreign spouse is evaluated carefully to ensure that the marriage is stable and that the sponsor is able to support the family. Those who do not qualify for PR status may be granted a Long-Term Visit Pass or Long-Term Visit Pass-Plus for them to remain in Singapore with their families.

Statistics on the proportion of Singaporeans who were not in their first marriage and sponsoring foreign spouses for PR or citizenship are not available at this time.

Madam, I thank the Minister for her reply. If I have the figures correctly, it seems that slightly more than half of the applicants were not successful in applying for PR for their foreign spouses. For Singaporeans who have already married but do not satisfy the conditions to allow their spouses to stay in Singapore permanently, what is the Government expecting these Singaporeans and spouses to do in planning for the future? Are they expected to migrate, leave Singapore or maybe they should not marry a foreigner in the first place?

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Mdm Speaker, when it comes to matters of the heart – and marriage is one of them – it is very difficult for the Government to have rules over them. But, hard as it may, we need to have certain rules. As Member Dr Lily Neo had said earlier on, we have to make sure that the immigrants we take in do not strain our fiscal resources. Also, we have to make sure that the new immigrants have a very good chance of assimilating into our society. Many of the foreign spouses I have seen, have very good intentions of wanting to marry Singaporean men and wanting to settle down in Singapore. But they are unfamiliar with the place and the norms. Our PR and SC criteria basically encourage them to make sure that the family has the ability to support them and that they would be working to maintain a stable marriage. If they were to have a stable marriage with children, their chances of getting PR approval, and SC approval thereafter, would be higher.

Having said that, there are about 50% of applications being rejected. Usually, as I have said, it is actually a matter of time. If they show that the Singaporean Citizen spouse has the ability to support the family, the marriage is stable, the family is intact over time, their chances of attaining PR, and thereafter SC, would be better than those without family and children.

In the interim, we have the Long-Term Visit Pass and the Long-Term Visit Pass-Plus which allow them to seek employment and also to be entitled to some medical subsidies, just as a PR would. So, it actually provides a good way to tide over this period – work on their income and marriage, keep the family intact – and then they will be in a very good position.

This is to satisfy the issue raised by Dr Lily Neo. That they are not a strain on society, and that they settle down first, spend some time to understand our local culture and learn our language as well.

5 Mr Chen Show Mao asked the Acting Minister for Manpower (a) since the introduction of the ADVANTAGE! Scheme (i) how much has been disbursed annually; (ii) what is the average payout per company; and (iii) what is the amount that went towards job, work process and workplace re-design; and (b) whether the Ministry will consider extending this scheme beyond March 2013 and, if so, what will the Ministry do to improve the uptake beyond the

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companies that have tapped on this scheme since its introduction.

6 Mr Chen Show Mao asked the Acting Minister for Manpower (a) since the introduction of the Flexi Works! and Work-Life-Works! (WoW!) schemes, (i) how much has been disbursed annually under each scheme; and (ii) what is the average payout per company; and (b) whether the Ministry will consider extending and enhancing these schemes and, if so, what will the Ministry do to improve the number of companies that offer at least one form of work-life arrangement.

With your permission, Madam, may I take Question Nos 5 and 6 together?

Yes, please.

The Government has put in place various policies and programmes over the years, aimed at providing more job opportunities for locals and encouraging locals to work. The ADVANTAGE! scheme, Flexi-Works! scheme and the Work-Life Works! (WoW!) Fund form part of these programmes and are targeted at supporting the employment of older workers and economically inactives, as well as improving work-life harmony for all workers. We have worked closely with our tripartite partners to administer these programmes, which have allowed us to have better outreach and adoption.

The ADVANTAGE! Scheme was introduced in 2005 to help companies recruit, retain and re-employ mature workers aged 40 and above. The scheme offers funding support for companies to enhance the employability of mature workers through training support as well as job and workplace redesign. Over the years, the scheme has also helped companies, especially SMEs, to be ready to implement re-employment.

Close to $57 million has been disbursed under the scheme since its inception, benefiting around 3,500 companies. This works out to an average of about $16,000 per company. In particular, $24 million went towards supporting companies in their job redesign efforts, which improved the employability and productivity of mature workers. Overall, the ADVANTAGE! scheme has benefited more than 25,000 mature workers.

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The Flexi-Works! scheme was introduced in 2007 to help companies recruit economically inactive residents who want to re-enter the workforce, by supporting the costs of implementing flexible work arrangements. In total, more than $3.9 million has been disbursed, benefitting over 360 companies and placing over 3,500 residents into jobs with flexible work arrangements. On average, each company received funding support of about $11,000.

Another scheme which helps employers improve work-life harmony is the WoW! Fund. Since its introduction in 2004, over $15 million has been disbursed in total, or about $1.9 million annually on average. To date, about 860 companies have benefitted from the WoW! Fund. This works out to an average funding support of around $19,000 per company.

Through these schemes and our tripartite approach to employers, we have made progress in promoting flexible work arrangements, and supporting the employment of mature workers and economically inactive residents. In 2012, 41% of establishments offered at least one form of flexible work arrangements to their employees, up from 25% in 2007.

Nevertheless, more can be done and we will continue to encourage better working environments and more progressive workplace practices, as well as support employment for locals. We have, and will continue to work closely with our tripartite partners to collect feedback on ways to improve these schemes. We will be enhancing these schemes and more details will be announced at the Committee of Supply debates in March as part of our overall efforts to help employers and workers cope with an ageing workforce and the tight labour market.

Together with ADVANTAGE!, Flexi-Works! and WoW! Fund, the Special Employment Credit (SEC) scheme and Workfare programme encourage local workers to return and remain in the workforce, including the more vulnerable groups of the population. The support that we provide is not restricted to financial assistance alone. Our WDA career centres and tripartite partners also offer guidance and counselling workshops to help jobseekers overcome the social and psychological barriers to employment.

While we have put in place these various measures, employers also have an important role to play to create more progressive workplaces to attract and retain locals. We hope that employers will take advantage of the Government's support and play a key role in supporting local employment.

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I would like to ask the Minister of State: for the ADVANTAGE! and Flexi-Works! schemes, what is the matrix?

I thank the Member for his supplementary question. The ADVANTAGE! scheme, Flexi-Works! scheme and WoW! Fund, together with other programmes like Workfare, SEC, the re-employment legislation, as well as our outreach to employers, have helped us to make progress in promoting flexible work arrangements and supporting the employment of mature workers and economically-inactive residents. There are a few indications for this.

In 2012, as I have noted earlier, 41% of establishments offered at least one form of flexible work arrangement to their employees, up from 25% in 2007. The employment rate of older workers aged 55 to 64 has also risen to 64% in 2012, up from 45.2% in 2003. This is comparable to the standards of advanced economies. In fact, it is only 1% away from our target of 65% in 2015. The female labour force participation rate for those aged 50 to 64 has also increased from 50.9% in 2003 to 57.7% as at June 2012.

But we acknowledge that more can be done and we will continue to review and enhance the schemes by working closely with our tripartite partners, taking into consideration the feedback, as well as the many feedback we have received from MPs in this House. As I have noted earlier, we will be announcing revisions to the schemes in the coming Committee of Supply debates in March.

Mdm Speaker, I thank the Minister of State for the response. I was just wondering, as a supplementary question, whether we could also target the childcare centres. For example, in my constituency, a childcare centre has opened up specifically targeting mothers who want to go back to work, whether full-time or part-time. If they are putting their children or infants in part-time childcare for half a day, perhaps a role of these ladies could be had or drawn up, and then somehow MOM contact them to see whether or not they have broached the idea of flexible work with the employers. The point that I am trying to get at is: Employment is one thing, and childcare services are another thing, but they are complementary to each other. So would the MOM and possibly the MSF speak with each other?

Certainly. We will take the feedback and the suggestions of the Member's into consideration. In fact, MSF as well as MOM and other agencies do work together on such multi-agency and multi-Ministry issues. Childcare centres – the topic would be better posed to MSF perhaps in

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a future PQ. But certainly we will also consider what we can do to improve the range of flexi-work available to economically-inactive residents, including women.

7 Er Dr Lee Bee Wah asked the Acting Minister for Manpower (a) whether the Ministry will consider reducing the foreign domestic worker levy to help families cope with the higher cost of hiring these helpers; and (b) which countries are the Government exploring for additional supply of domestic helpers to work in Singapore.

Mdm Speaker, recognising that foreign domestic workers (FDWs) play an important role in meeting the domestic needs of families, we introduced, in 2004, an FDW concessionary levy of $250 per month to help families with elderly members or young children who hire foreign domestic workers. This concessionary levy rate was subsequently reduced in 2005 and again in 2007, and the concessionary levy was also extended in 2007 to families with disabled persons. The current FDW concessionary levy rate is $170 per month which is significantly less than the regular rate of $265. To provide more support to families who need to care for frail elderly or persons with disability, MSF has also given a $120 FDW Caregiver Grant per month to households with a per capita monthly income of up to $2,200. This is over and above the FDW levy concession for households with elderly. Foreign domestic worker employers who qualify for the levy concession and the FDW Caregiver Grant would effectively be paying $50 levy.

Today, close to two thirds of the families that employ FDWs already enjoy the concessionary levy rate. We are considering more support for families who hire FDWs for their caregiving needs.

For the second part of the question, there are currently over 10 approved sources for FDWs, including Indonesia, Philippines, India, Sri Lanka and Thailand. We will be conducting a pilot to study the suitability of Cambodia as a source country for FDWs. This pilot arose from MOM's periodic review of the adequacy of existing sources and the options of suitable alternatives based on market demand and feedback from employment agencies.

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Mdm Speaker, I would like to thank the Minister for the answer. I have come across more and more cases where my residents were referred to MSF for nursing home and they are advised to employ a foreign domestic maid to look after the elderly who are bedridden. But many of them have given feedback that they have difficulty hiring the domestic worker because of the low pay that they are drawing. They are asking for more help, in terms of grants in looking after these bedridden elderly parents. That is why I urge the Minister to look into more help.

Mdm Speaker, I would like to thank the Member for the supplementary question. We do agree that the challenges can be quite acute for low-income families, especially when they do have frail elderly to look after. That is why MSF has included a new grant. Eventually, for those fulfilling the various criteria, they are essentially paying $50 in levy. One of the challenges we have in managing this space is we recognise that there are needs in terms of helping families look after young children as well as, increasingly, the elderly. I think a lot of our elderly are healthy but at some point, sometimes, they may become frail and we need to extend our support.

What we also need to manage with the levy system is to manage the demand. There may also be other families who may not necessarily need the FDWs, but if you excessively reduce the levies, that would have an impact. It is a balance. That is why we established certain criteria to support those families in need. We will continue to review this. If there are specific concerns, those families can surface their issues to their respective Advisors and we can take these up accordingly.

Mdm Speaker, my supplementary question is whether the Ministry can look at the qualification or the eligibility of the FDW Levy Concession for Persons with Disabilities (PWDs) Scheme. It is currently based on three of the five Activities for Daily Living (ADLs). Can the Ministry look at reducing the number of ADLs? Not being able to do just one of the ADLs is already tough for financially-challenged families to cope with care-giving. So, I hope the Ministry can look into it.

Mdm Speaker, these policies are not static. Clearly, we will review these from time to time. If the Members have specific concerns with regard to which of the ADLs, we could specifically look at that again and to assess the situation. We will be happy to review it on a needs basis. We understand that ultimately, there will need to be some definitive criteria to manage this space, but we will continue to take on feedback and, if need be, we

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will revise them accordingly.

Dr Lam Pin Min, last question.

I wish to ask the Minister a supplementary question. What the Minister mentioned that the caregiver grant is only useful when the family is able to afford in hiring a domestic maid. For those families which are from the low-income bracket, the family member may have to give up the job to look after the elderly sick. So, I would like to ask the Minister to consider a caregiver's allowance to help such families.

Mdm Speaker, we will be quite happy to follow up with the Member in terms of the specifics of his suggestions. We will take a look at that accordingly.

8 Mr Gan Thiam Poh asked the Acting Minister for Manpower what plans does the Tripartite Committee for Low-Wage Workers and Inclusive Growth have to help low-wage workers.

Madam, the Tripartite Committee for Low-wage Workers and Inclusive Growth (TriCom) was set up to help low-wage workers benefit from inclusive growth.

Given the tripartite membership, the TriCom provides not only useful industry insights and ground feedback to facilitate the implementation of initiatives, but also acts as a platform to co-ordinate tripartite efforts. Let me share with Members three key areas in which the TriCom plays an important role.

The first area of work relates to Workfare. Already, the TriCom has provided its inputs to the Government's review of the Workfare Income Supplement (WIS) and Workfare Training Support (WTS) schemes. Following the review, the focus

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of the TriCom will turn to promotion and raising awareness of WTS so that low-wage workers train and have the opportunity to earn more.

The second aspect of the work is where the TriCom supports the WorkRight campaign launched by MOM and CPF Board to raise awareness of employment rights and improve compliance with the CPF Act and the Employment Act. With its understanding of ground issues, the TriCom can shape and coordinate tripartite efforts to reach out to workers and employers, in order to more effectively raise compliance levels.

Third, the TriCom will continue to promote best sourcing as a means to improve employment standards and working conditions in outsourced sectors such as cleaning and security. Following the release of the revised Tripartite Advisory on Best Sourcing Practices and the accompanying best sourcing guidebook last year, the TriCom will be rolling out a training module under the Singapore Workforce Skills Qualifications (WSQ) system to support companies in implementing best sourcing.

The Tricom's efforts are part of MOM's overall approach to uplifting low-wage workers, which includes raising wages through productivity via the Inclusive Growth Programme, helping displaced workers find work quickly, calibrating our foreign worker policies, taking sector-specific initiatives where tailored interventions are required, and so on. Helping low-wage workers is a priority for the Government, and we are pleased that the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF) have been strong partners in this mission. We will continue to seek out ways to improve how we support our low-wage workers.

I thank the Senior Parliamentary Secretary for the comprehensive reply. I have one supplementary question. May I know whether the Committee has focused on any industry or sector which is dominated by low-wage workers, to focus our strategies to help these workers earn better pay and also to enjoy better employment terms?

Madam, yes. The TriCom has worked very closely with our tripartite partners to focus on initially two key sectors, one is the cleaning sector, the other is security. I think they have made progress. We can use this experience as we plan ahead to help other low-wage workers in other sectors.

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Are there areas that the Ministry may consider amending or strengthening in the Employment Act to safeguard the interests of low-wage workers, beyond that of pay? Such as in the area of workplace safety, leave and medical coverage by the employers?

Madam, it is known to us that we can be quite effective in dealing with situations or developments in various sectors. In the two sectors I have mentioned earlier – the cleaning sector and the security sector – we have been able to work with the industry and the workers themselves through NTUC and SNEF to help raise awareness of the training opportunities, raise awareness of workers of their rights and obligations of the employers so that the workers' interests, not only in terms of possibilities of prolonged employment and sustained income, but also that their employment rights and working conditions can be improved.

Under the WorkRight initiative, we have been able to work with NTUC to raise awareness among workers. And we work with SNEF, to raise awareness among employers. Amending the Employment Act is a very important matter that cannot be taken lightly because there will be implications on the industry and the economy as a whole. But in future, if there is a need, we can consider it. We will study very carefully. As it is now, I think we are quite happy with the approach that we have taken to work with the various stakeholders and partners in the industry to target certain sectors and industries.

Mdm Speaker, the discussion so far has been on the wages and when we discuss low-wage workers, we all want to increase their wages, in earnest, we do. The unfortunate thing when we discuss about wages is that we are fixated on a numeral, on a figure. What I would find helpful for the wider population as well as those who are interested in this topic is for MOM to list down all the other measures which it takes and implements in order to increase the real wage of the workers. That can be in the form of a Medifund, in the form of Workfare, rental rebates. As a Member of Parliament, I do find that these measures are kicked in and improve lives. MOM could come out with a poster or pamphlet to show all else, besides wages, that is help for the workers.

Madam, I thank the Member for the suggestion. They are very good ideas. We can consider the details in future. But as it is now, we are not just talking about wages. We are talking about the improvement in working conditions and making sure that both the employers and employees understand their rights and obligations respectively. Through the WorkRight

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initiative, we are hoping to bring more workers into the CPF scheme. By having funds in the CPF, the workers will benefit from WIS and they will have savings for old age as well as for medical purposes. So, as it is now, it is quite comprehensive. It is not just raising their wages. It is to bring them into the CPF scheme so that they can benefit from other help schemes that we provide to workers. But we will consider the Member's suggestion in future. As to how much more information can be tagged together so that both workers and employers can understand better their rights and obligations.

Mdm Speaker, I thank the Senior Parliamentary Secretary. NTUC has been advocating the Progressive Wage Model encompassing skills, wages productivity and career elements to help low-wage workers enjoy better wages. Is it possible for the Tripartite Committee to consider working with NTUC to look at sector specific where the Progressive Wage Model can be implemented?

Madam, I will give the Member a short answer: yes.

9 Ms Janice Koh asked the Minister for Education (a) whether the Ministry is concerned about the distinct drop in "O" level candidature for Full Literature from 16,970 students in 1992 to the current 3,000 students in 2012; (b) what are the main reasons for this decline; (c) whether the Ministry has any plans to boost the number of students studying Literature; and (d) how is the Ministry supporting students who are interested in taking up Full Literature but are unable to do so due to the unavailability of classes or shortage of resources in their schools.

10 Ms Janice Koh asked the Minister for Education whether the Ministry is ensuring that all English language teachers are being trained in literary ways of reading and thinking, given the emphasis in the 2010 English Language curriculum on teaching a "rich language for all".

Mdm Speaker, may I have your permission to take Question Nos 9 and 10 together?

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Yes, please.

The decline in the "O" level candidature for Full Literature over the last 20 years needs to be understood in the context of an education system responsive to a changing social context, and which has offered increasingly more curricular choices for students over time.

MOE has increasingly provided multiple pathways for students to pursue their Secondary education. Students can now choose from educational options ranging from Junior College (JC), Polytechnic and Institute of Technical Education (ITE) to the Integrated Programme (IP). In addition, schools have more autonomy to shape their school-based curricula to suit the needs, abilities and interests of their students and to carve out niche areas for students to excel in.

To support the opening of multiple pathways, MOE has introduced new subjects, such as Drama, Physical Education, Computing and Economics. Schools could also work collaboratively with the Polytechnics to offer niche subjects to their students. These subjects include Media Studies, Creative 3D Animation, Biotechnology, Design Studies and Introduction to Enterprise Development.

Our schools offer Literature, History and Geography as compulsory subjects for Secondary 1 and 2 students. At the upper Secondary levels, the introduction of Combined Humanities, with the compulsory Social Studies component and an elective Geography, History or Literature component, was the main factor for the decrease in candidature of Geography, History and Literature as a full subject. Teachers and students have responded positively to Social Studies and have commented that this subject has helped them to better understand societal issues that concern Singapore and the world. Students have also acknowledged that Social Studies helped them to develop critical thinking.

Another contributory factor for the decrease in candidature in Literature was the common perception that it is difficult to obtain a good grade for this subject. MOE's data suggest, however, that students' performance in "O" level Literature has been consistently good. There has, in fact, been a slight upward trend in the pass rate for Full Literature, from 90% in 2002 to 95% in 2012. The percentage of students scoring distinction grades has also risen from 35% to 40% over the same period.

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Schools may start classes based on available resources. There are enough qualified Literature teachers and, if necessary, MOE will recruit teachers to meet demand. In addition, MOE organises regular sharing sessions on the teaching of Literature and a biennial Literature Seminar to meet the needs of Literature teachers. A special interest group to promote sharing of teaching strategies and ideas has also been set up. These platforms have been well-subscribed to by teachers.

To make the subject accessible to and interesting for students, MOE regularly reviews and revises the Literature syllabus. The 2013 syllabus was developed to provide students with a strong foundation in the study of Literature and cultivate in them a love for the subject by the end of Secondary education. The focus of this syllabus is to strengthen the lower Secondary Literature instructional programmes in schools so that students develop a strong foundation in the subject and the confidence to offer Literature at Upper secondary, should they wish to.

Literature remains an important core Humanities subject in the curriculum as it helps us to better understand human nature and impulses for human behaviour. MOE will continue to support Literature and encourage schools to offer this subject in the context of a holistic and broad-based education.

Our approach to the teaching of English in schools is two-pronged. First, to enable our students to build a strong foundation in the use of the language skills of listening, reading, speaking and writing, and secondly, to strengthen that foundation by exposing students to different text types from print and non-print sources. This approach ensures that our students learn to use the language accurately and fluently, and to appreciate the use of the language to represent ideas effectively, appropriately and with impact.

MOE provides training to our English Language teachers to use this approach to enable their students to read, understand and critique both literary texts, such as stories and poems and informational texts, such as those in science and geography textbooks, and to produce such texts in speech and writing. The training is provided for student-teachers at the National Institute of Education (NIE) as well as for teachers already in our schools, in collaboration with the English Language Institute of Singapore (ELIS).

I thank Senior Minister of State for the reply. I have three supplementary questions. The first is, given that there is so much emphasis on academic achievement and ranking of our schools, are

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our Secondary schools and school leaders pressuring students against taking up softer subjects like the Humanities and subjects like Literature? If so, then, is it really a choice for students if they are not given the opportunity to take up that subject at upper Secondary? How is the Ministry then trying to redress this imbalance?

Secondly, I have come across cases of students who may have entered the school and started studying Literature at lower Secondary and then realise that at the upper Secondary, their subject is not offered as an examinable subject in their school and they have tried lobbying the school to take up these classes but have been rejected. What is the Ministry doing to help students like these who want to take Literature but have no other options within their school and would the Ministry consider setting up centres for such students to do it independently outside their school?

And thirdly, would the Ministry consider publishing General Certificate of Education (GCE) enrolment take-up rates for subjects, the pass rates, as well as distinction rates of the different subjects to enable students and parents to better make choices as to what subjects they would like to take, so that it is not just a perception that the Humanities are difficult to score in?

Sorry, can I just clarify with the Member on the last question? She wanted Ministry to consider —

To consider publishing or at least making public the GCE enrolment for the subjects at schools, among students, and the distinction and pass rates so that students are able to make an informed decision. If we are saying that Literature is actually a subject that has gotten good results, we should then try and not demonise the subject as being too difficult to score in.

I thank the Member for her questions. Her first question was given that there is so much emphasis on academic achievements, are schools pressurising students to take up the harder subjects. Let me just break that down. Even if you take Literature, there is an academic rate attached to it. It is not Literature, not academic, and other subjects, academic – that is the first point. But the more important point and I think the thrust of the question was are schools pressuring students to take the subject? And remember, in my answer, I have broken it down to Secondary and upper Secondary. In the lower Secondary, it is compulsory, so they have to take it. We are really talking about the upper Secondary. And in the upper Secondary, it is already a component of the Social Studies. For the Social Studies subjects, you have to take Social

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Studies plus an elective. The elective would be either Geography, History or Literature. At that stage, they have a choice and it is very much the students' choice. They can also take it as an additional Humanities subject. That too, is a choice for the students but some would choose not to take that up; some may prefer Geography or History.

So, in answer to the first question, I would certainly hope schools are not pressurising them but the system is structured such that it is for the students to elect. And one would certainly hope that for those who love Literature as a subject and just for the language and what the subject has to offer that they would take it up as a subject, as a matter of choice.

The second question related to students who wanted to take it as an examinable subject and was not offered in their schools. For that, perhaps, if you have specific examples, you could send that along to MOE so that we can look into those. Certainly, the idea would be to encourage students to pursue their passion where they can, but at the same time balance it within the framework of what the school has available and the school's resources. But wherever one can, one should try to achieve that balance.

The third question on the question of publishing the enrolment and the pass rates. We have just moved away already from the publication of the PSLE results – who does the best. We have moved away from ranking. I think we are trying to move away from this system of "I compare with you and I compare with another person". I think we would want that if Literature is taken up, it must be taken up because you love the subject and it has much to offer. You should not take it up merely because it is a question of my comparison with somebody else, but if the question is directed to what can we do to encourage students to take it up and to at least indicate that it is not such a—because the pass rates do actually show that good results – if we can put that out to show that it is not a subject to be feared only because it cannot be scored at, that I think MOE would be happy to do.

Thank you, Madam. I would just like to check. I have been told by some people in the education field that the small pool of Literature students in schools means that there is smaller number of people taking Literature in the universities. Has the MOE experienced problems trying to get good Literature teachers given that small pool of Literature graduates to hire from?

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My understanding is that at the present time, the resources – in terms of the teachers available – is sufficient, but as I indicated earlier, if there is a greater need, we would be happy to increase that pool.

11 Mr Alex Yam asked the Minister for Transport if the Ministry will consider (i) limiting the access of heavy vehicles into residential areas for non-essential journeys; (ii) making provision of alternative access routes for heavy vehicles to industrial areas that are in close proximity to towns; and (iii) reviewing traffic safety measures around schools and high-pedestrian traffic areas.

Mdm Speaker, heavy vehicles typically ply roads that are specifically planned to serve industrial areas to keep industrial traffic away from residential areas. Where we cannot avoid heavy vehicles accessing residential roads, for instance to access construction sites within residential estates, LTA works with agencies and contractors to determine appropriate access routes to minimise access to areas with high pedestrian activity. Warning signs are also put up around construction or industrial sites.

LTA and the Traffic Police regularly review and improve traffic safety measures in collaboration with schools. Some of the measures introduced include the school zone scheme, providing more warnings to motorists at pedestrian crossing facilities, and speed humps and traffic calming markings to slow vehicle speed. The schools also play their part in educating the students and parents on road safety. We have plans for a review of the traffic safety measures around schools and will release further details in due course.

Mdm Speaker, I thank the Parliamentary Secretary for his reply. The question was raised in relation to the recent tragedy in Tampines. There are few Members here who take care of residential areas quite close to major industrial estates. In particular, I would like to ask the Parliamentary Secretary, in relation to my first question on limiting the access because towns like Yew Tee have only one major access road to Sungei Kadut, which is in Choa Chu Kang Way. Over the past two years, we have seen monthly accidents in that area. Many people use Choa Chu Kang way to access into the camps. I have personally witnessed one accident myself. He was evacuated to

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Khoo Teck Phuat Hospital. He has recovered; unfortunately, he will live in the shadow of that accident.

So, for towns like Yew Tee and other towns of similar nature, where there is only one direct route to major industrial areas and they have to pass by residential estates, would there be consideration by the Ministry for opening up additional peripheral routes for these vehicles. Again, another problem is speeding. These vehicles are definitely travelling far in excess of their speed limits. So, whether the Ministry will consider other plans and policies to help to regulate this.

Mdm Speaker, I would like to thank the Member for the supplementary question and also the feedback. We share the Member's concern about safety. In fact, I would be pleased to inform the Member that we would be pleased to work with the Member to see how we can further improve the safety of the area and, wherever possible, will find ways to work with the Member to see how we can inject or improve other elements to enhance the safety of the area identified by the Member.

Madam, we understand that in mature estates where there are construction works, it would be difficult not to have a lot of heavy vehicles in certain areas, including schools. But I would like the Ministry to review the current ban on cement mixers on expressways. Because in my discussion with the authorities, we knew that there is actually an alternative route for the cement mixers to by-pass the area where the accident happened but they must ply a certain stretch of the Tampines Expressway (TPE). I would also like to suggest that the Ministry encourage the contractors or the route planners to work closely with the Advisers on the ground, especially where there are heavily-populated residential areas, to work out a safer route for the heavy vehicles in the estates.

Madam, indeed, certainly we will take on the Member's suggestion. Wherever possible, safety is our priority.

I would like to ask the Parliamentary Secretary a supplementary question. Perhaps to take a more whole-of-Government approach, for example, in my constituency there is a primary school which is going through upgrading programme and there is going to be a Build-To-Order (BTO) project next to it, many of the enquiries have been to give access roads to heavy vehicles that may be flowing through, to protect the

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safety of the students and the staff working in the school. The discussion so far has been quite convoluted because they will talk to MND, refer to MOT and then to MOE because multiple agencies are involved in the specific access of the road. So, I was wondering if, from a perspective of safety, MOT would take on a more coordinating role and work with the other agencies in order to ensure the safety of the students and teachers working in the Primary school.

Madam, I would like to reassure the Member that we indeed take on a whole-of-Government approach. Nevertheless, we have to understand that each department or agencies have their own specific area. However, we find that it is very, very, critical for us to work together, and this is exactly what is shared by the Member, and we will continue to improve on this aspect.

12 Ms Lee Li Lian asked the Minister for National Development what are the reasons for disqualifying a Singapore citizen whose spouse holds a long-term visit pass from applying for a rental flat under HDB's Public Rental Scheme and whether HDB offers alternative housing options for such families.

Mdm Speaker, HDB public rental flats are heavily subsidised to help low-income Singapore citizen households who have no other housing options or family support. The HDB rental scheme treats a citizen married to another citizen differently from a citizen married to a foreigner. Nevertheless, HDB will consider the merit of each case and exercise flexibility to help those truly in need.

13 Mr Yee Jenn Jong asked the Minister for the Environment and Water Resources (a) what steps have been taken to counter the threat from the recent spike in dengue cases, especially in the biggest hotspot area in East Coast Road/ Telok Kurau; and (b) of all sites found to be breeding mosquitoes in the past one year, how many were in (i) residential houses; (ii) construction sites; (iii)

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public outdoor spaces; and (iv) other areas.

Mdm Speaker, there has been, unfortunately, a significant increase in the number of dengue cases over the past two months, particularly in the eastern part of Singapore.

Please allow me to share some medical facts to set things in context. There are four types of dengue virus. If a person has been previously infected by one, he would usually develop life-long immunity to that particular serotype, but not to the other three. In fact, if that person is subsequently infected a second time, but by a different dengue serotype, the chances of complications become much higher. A change in the predominant dengue serotype that is circulating in our population can often lead to an epidemic because, by definition, if there is a change, the population lacks the immunity to this new circulating serotype. In the past, in fact, we had observed that the probability of a major epidemic breaking out increases every time you detect a serotype switch. This occurred in 2005, when Singapore had the worst incidence of a dengue epidemic.

At that point in time, in 2005, the predominant serotype changed from Dengue Type 2 to Dengue Type 1. Two years later, in 2007, we saw a smaller scale dengue outbreak when the predominant serotype switched from Dengue Type 1 back to Dengue Type 2. Thankfully, in the years since 2007, we have managed, through some very intensive efforts, to prevent a major dengue epidemic from breaking out. However, I must stress that this very success poses a potential problem because it means that the Singapore population has relatively low herd immunity against dengue and, therefore, each passing year that goes by without an epidemic paradoxically means our risk of developing an epidemic increases.

To complicate matters further, we have now seen more cases of Dengue Type 1 and Dengue Type 3 cases emerging over the last two months. This potential change in serotype has contributed to the latest spike in dengue cases.

The largest dengue cluster recorded so far is at the area around Telok Kurau and East Coast Road, and this is a Dengue Type 1 cluster. Seventy per cent of the breeding sites in this cluster were actually in residential homes. NEA has worked very closely with the local grassroots organisations and, in particular, with the local Member of Parliament, Mr Charles Chong, who has tirelessly knocked on doors to urge residents to empty their flower-pots, pails, containers and so on, in order to protect themselves and their neighbours from dengue.

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NEA has sent out advisories to all residents and put up dengue posters in the public areas. We have also sent SMS alerts to the residents and visitors in the area.

Breeding sites can also be found in other outdoor spaces, like construction sites. We have alerted LTA, HDB, PUB, NParks and Town Councils as well the local contractors, to step up their inspections of the areas under their respective charge, and NEA has helped to coordinate these efforts through an Inter-Agency Dengue Taskforce. We have been paying particular attention to construction sites, and there have been a few cases of irresponsible contractors failing to take adequate measures and we have subjected these contractors to composition fines, starting from $2,000 for first offence, and escalate thereafter. In fact, repeat offenders can face a maximum court fine of $50,000 and/or a jail sentence not exceeding six months. Last year, 900 mosquito-breeding offences were detected in construction sites, of which 626 were first-time offences.

Let me conclude by saying that this is a clear and present danger confronting Singapore. Remember that mosquitoes do not usually fly very far − on average, 150 metres, 200 metres. What this means is that if you have a dengue infection, you almost certainly caught it from another family member or neighbour living close by. The mosquito is simply a go-between. What this means then is that it requires individual and collective responsibility to eliminate mosquito breeding in your own home and in your own neighbourhood in order to protect yourself, your family members and your neighbours.

I would like to thank the Minister for the answer. I have two supplementary questions. But, first, I would like to declare that I live just next to the biggest hotspot area in East Coast Road. The first question is that, as an interested resident of the area, I would like to do my part to fight dengue. Other than making sure that there is no stagnant water at home, I would like to know what else can people do. I read that the Ministry had in the past given ovitraps to residents in some pilot schemes to trap the eggs that were being laid. I would like to know what has happened to that project and whether there is a plan to carry it on, and whether that has been effective.

My second supplementary question is this: I have read that the Ministry has stopped fogging because it is said that it is not effective. I would like to know why is it not effective, based on what sort of data, and would it be a plan to fog

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if there is a need to?

I thank the Member for those very relevant questions and also for reminding me that he is an interested party, as a resident in a hotspot. The first set of questions was: what else can you do? As I said, the most important strategy is still source eradication. So, you will be surprised at the creativity of the mosquitoes in finding new breeding spots. I will give Members an example. Even if you were to take a holiday for five days, and your home toilets are uncovered and unflushed, mosquitoes will happily breed in your toilet bowl. They will happily breed in gulley traps. They will happily breed in roof gutters if you have not secured them and you have not cleared them. And it only takes five to seven days. And it just shows you that you may think they have done a complete clearance, but there is always a possibility we have missed something, and there is always a possibility in that space of five days to a week, another life cycle has begun.

The second point is that this is, in a sense, a proximity disease. As I said earlier, mosquitoes do not fly very far. Therefore, you catch dengue from a neighbour or a family member. If you have a fever, it is worth remembering that you are a potential reservoir of infection. And this is relevant because, in fact, the majority of people who may carry the virus may not be diagnosed with dengue. And it is a clear reminder that if you have a fever and you are living in a hotspot, please see a medical professional who can make a specific diagnosis. And nowadays with the more sophisticated tests which are available, a diagnosis can be made within the space of hours or a maximum of a day.

The next point is, if you have been diagnosed or if there is a significant possibility that you are infected, your responsibility, first, is to get well yourself but, equally, remember you do not want to pass on that same virus to your family members, so prevent yourself from being bitten by mosquitoes using repellants or even good-old-fashioned mosquito nets. In the past, we used to do that but, nowadays, you hardly ever see a mosquito net. I think you probably have to go to the Beach Road surplus stores to find a mosquito net which we used from our army days. But, in fact, mosquito nets are very effective barriers to the transmission of the virus by mosquitoes. And I am not talking about preventing you from being infected but preventing you from infecting other people; similarly, with the use of insect repellants.

The Member also asked a question on the use of fogging. We do not believe in fogging as a first-line of defence.

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Study after study has found that source eradication of breeding areas is the most effective way of dealing with the problem. In extremely high risk areas where we think that there is a significant pool of adult mosquitoes which are infected, we would use fogging in a concentrated and targeted manner. Generalised fogging – where you see more smoke rather than real impact – is not something that I would recommend.

The question on ovitraps, we actually use that more as a surveillance because it will give us some idea of the prevalence of mosquitoes and whether those mosquitoes that we trap are infected with the dengue virus.

I just want to conclude that in fact, although we focus on mosquitoes, actually the real primary host for dengue is us, human beings. If you were a mosquito, your perspective would be that human beings are the problem. The human beings are the reservoir for the virus. Of course, we will take the human-centric point of view. I just want to emphasise: take all sensible measures to protect yourselves, your family and your neighbours; eliminate all breeding areas. If you have any doubts about your own potential to be infected, please do the responsible thing: Get yourself diagnosed and take appropriate measures to isolate yourself from your friends, families and neighbours with mosquito nets and repellents.

Mdm Speaker, the fight against dengue has been on-going for decades. So has the research on dengue vaccination. Can I ask the Minister if he has any update on dengue vaccination research?

I thought I will show this chart. It goes back to the 1960s. In the earlier years – in the 1960s and 1970s – there was very low incidence of dengue. It picked up mainly in the 1980s and 1990s. Before Members jump to the wrong conclusion and say that this is a Singapore problem, this is a global problem. For some reason which we still do not fully understand, there has been a global increase in dengue, particularly in areas of the world bounded by 35 degrees north and south of the Equator. Dr Lam is absolutely right. The only long-term resolution to this problem is a vaccine. There have been some trials going on, but I would say at this point in time, it is not yet ready to be rolled out on a full scale basis.

Basically, my strategy in Singapore is to keep buying us time; keep intensively eradicating mosquito breeding within our city; and then, if and when the vaccine is ready, we can embark on mass vaccination. At that point in time,

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NEA can redeploy the 1,000 inspectors who are currently knocking on doors every day, checking on mosquito breeding. I also want to make this point that I am very grateful to the residents and citizens of Singapore for cooperating with this effort and for their patience over these years. Once the vaccine is ready, we roll that out, and we build up immunity in our population, then this problem will be resolved.

14 Mr Zainal Sapari asked the Minister for the Environment and Water Resources (a) what are the measures taken to regulate and monitor the noise, water and air pollution pertaining to the operations of the Loyang Offshore Supply Base (LOSB); (b) in the last three years, how many times were enforcement action taken by NEA against Toll Offshore Petroleum Services (TOPS) for non-compliance with the water, air and noise regulations that govern such industrial activities; and (c) whether NEA can consider imposing stricter noise guidelines on LOSB given the proximity of the site to residential areas and the intensity of its offshore base activities.

The LOSB is located at Loyang Crescent and currently operated by TOPS. It was established in 1970 and consists of port facilities, offices, warehouses, storage facilities and workshops.

As part of its operations, TOPS must comply with the Environmental Protection & Management (Boundary Noise Limits for Factory Premises) Regulations which we have imposed, and insisted that these companies take appropriate mitigation measures to minimise noise generated at the premises. In January 2011, NEA directed the company TOPS to provide quieter external generator sets for large ships berthed at Loyang Jetty and TOPS has complied. TOPS also installed a noise meter for the real-time monitoring of noise levels at the Jalan Loyang Besar area.

Between January 2010 and January 2013, NEA took enforcement action against two cases of noise violations at LOSB, which occurred on 1 April 2011 and 12 January 2013. NEA has also required TOPS to put in place the following measures: first, to schedule ship repair work to complete earlier and not to carry out the more noisy activities late into the night; and secondly, to install another online noise monitoring meter nearer to the jetty. If these measures are

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insufficient, we will take further measures against the company.

NEA and the Maritime and Port Authority of Singapore (MPA) also ensure that all companies and ships comply with the relevant water and air pollution regulations. For example, the MPA port inspectors patrol our port waters round the clock and monitor the ships in port to ensure strict compliance. Between January 2010 and January 2013, MPA took enforcement action against eight cases of vessels for emitting black smoke at LOSB. NEA has also taken enforcement action against TOPS for discharging industrial effluent into a drain.

The Government will continue to monitor the situation at LOSB and work with all the users of LOSB to minimise the environmental impact of their activities on the surrounding area. We will also work closely with the residents and local MP if further problems arise. We will not hesitate to take all the necessary actions to resolve this.

Mdm Speaker, the noise and air pollution has been a perennial problem facing residents of Jalan Loyang Besar. Would NEA consider in the long term to make a very strong recommendation for the Loyang Offshore Supply Base to be relocated or closed down completely, given its proximity to residential areas?

The supply base has been there since 1970. A lot of the residential developments have only occurred there after the year 2000. The point is that we need to make sure that our regulations are practical and realistic. Secondly, we need to make sure of having established standards to enforce those standards. We make the companies embark and invest in the necessary infrastructure as well as the re-engineering of their work flow processes in order to meet these standards.

I am not in a position to move offshore bases and businesses and factories from their premises. I think this clearly illustrates the need as we go forward in the future, that as people's expectations raise, and we also want to elevate standards, but at the same time, we need to achieve an appropriate equilibrium so that businesses can still pursue activities and hopefully arrive at a win-win outcome. I do not think we have the luxury of chasing our businesses out from many, many places in Singapore. This is something which requires balance and judgement.

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15 Mr Yee Jenn Jong asked the Minister for Law with regard to the investigations into claims by former SMRT bus drivers of police brutality (a) whether the attempted retention or confiscation of a laptop, desktop computer and mobile phone belonging to a film maker at her residence by Singapore Police Force officers is in conformity with proper procedures and requirements of the Criminal Procedure Code; and (b) what is the legal basis for the attempted retention or confiscation.

Mdm Speaker, the allegations of police brutality against the former SMRT drivers, which were posted on the website "Lianain Films" on 28 January are serious allegations. They are currently being investigated by the Police Internal Affairs Office.

Notwithstanding these allegations, the drivers have indicated through their counsel that they intend to plead guilty to the criminal charges preferred against them. I understand that the case is scheduled for this afternoon.

It is best if we deal with this issue after all the relevant proceedings are over. If the Member were to file this question again at that point in time, a full account will be given of the case.

Mdm Speaker, I thank the Senior Minister of State for the reply. My question is more relating to the process that was taken by the investigating officers rather than about the case itself. There have been quite troubling reports – at least to the members of the public – that the officers do not seem to be able to answer the film-maker about the basis of seizing her computers and mobile phones. When questioned about which part of the Criminal Procedure Code was being used, they did not seem to be able to answer. So, I was wondering if the officers are familiar with the procedures.

Mdm Speaker, I understand the Member's concern. In effect, if we considered the Member's question, what the Member is really asking is about an investigation whilst the investigation is on-going. That makes it difficult to proceed with the investigation in a proper manner, which is why I had indicated in my answer that if the Member would wait until all the relevant proceedings are over – that includes the investigation into these allegations –

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then a full account will be given. So, the intention is not to not give an answer. The intention is to ask for the Member to defer this question so that when it is asked at the appropriate time, a full answer can be given which addresses his queries.

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

Sitting accordingly suspended

at 2.51 pm until 3.30 pm.

Sitting resumed at 3.30 pm

[Mdm Speaker in the Chair]

Mdm Speaker, I beg to move, "That Parliament approves the financial policy of the Government for the financial year 1 April 2013 to 31 March 2014."

Our Budget for FY2012 is expected to have a surplus exceeding what we had estimated a year ago. We had estimated an Overall Budget Balance of $1.3 billion or 0.4% of GDP. We now expect a higher surplus of $3.9 billion or 1.1% of GDP. This additional surplus was due entirely to higher revenues from stamp duties and vehicle-related taxes. These are short-term increases in revenues, which we cannot expect to be sustained.

The Government expects Singapore's GDP growth in 2013 to remain modest at between 1% and 3%. This is comparable to the 1.3% growth last year, and down from the 5.2% growth in 2011.

While part of this slowdown is due to global cyclical factors which affected sectors such as Manufacturing, it is also to be expected as our economy matures and our labour force grows more slowly. In fact, our economy has been at full capacity since our strong recovery from the global financial crisis. This is

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why we have virtually full employment. It is also why wage costs and many other costs like rentals have been going up.

Rising costs remain a concern for both businesses and households. The pass-through of higher business costs into consumer prices, together with the sharp increase in COE prices, has kept upward pressure on CPI inflation in the last two years.

Household incomes have risen in 2012 and over the last five years. Adjusted for inflation, the median Singaporean household saw income per member grow by 14% over the last five years, cumulatively. Lower-income households at the 20th percentile also saw real income per member grow by 10% in the last five years. Excluding imputed rentals on owner-occupied homes, which do not involve actual spending by households, both the median and 20th percentile households have, in fact, experienced growth of 19% in real incomes over the five years. This reflects both higher individual wages and greater employment opportunities, part-time and full-time.

However, many Singaporeans who work in jobs at the lower rungs of the income ladder, especially cleaners, waiters, and security guards, have not fared as well. They have been able to get jobs easily but have seen little or no rise in their real incomes over the last five years. These jobs should be paid better, and our schemes will help ensure that they are. For cleaners, the Government is working with NTUC and the business community to equip them better and to uplift their pay through the recently introduced Progressive Wage Model. We will be doing likewise for security guards. This Budget will also introduce further measures to support our workers, including those with the lowest wages.

Slowing or stagnating incomes are a real challenge for many economies around the world. It has happened not only in the advanced economies like the US, but also in the Asian countries that are in the same league as Singapore. Chart 1 shows the experience of "Asian Newly Industrialised Economies (NIEs)". The median Singaporean household has seen its real income grow more than twice as fast as that in Hong Kong. South Korea and Taiwan have seen little or negative growth in real median household incomes.

We do not set our goals based on whether our incomes do better than in other countries. Many of them, in fact, have strengths that we lack in Singapore. But their experiences provide a sense of perspective. They illustrate the realities of the highly competitive world that every country now faces.

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We cannot change that reality. But it means that we have to work harder, through both our economic and social strategies, to help Singaporeans improve their lives and build a truly inclusive society.

Many Singaporeans, through Our Singapore Conversation platforms, have been sharing their hopes for Singapore – the kind of home we want to build for our families and our children. There has been a rich diversity of views. But a common set of aspirations is emerging, a common vision of the future that Singaporeans want:

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a home with a strong Singaporean identity and sense of belonging;

a Singapore with a robust and vibrant economy, and with good jobs that enable a more fulfilling pace of life;

a home with strong families, and where our seniors can age with dignity;

a society that takes care of the disadvantaged;

a Singapore with affordable living; and

a society with greater sense of togetherness, and where the Government and the people have a more collaborative relationship.

This is the Singapore that we want to build together.

The Government is making major moves to support this endeavour. Since 2010, we have embarked on major steps to transform our economy so as to create better jobs and allow for a better pace and quality of life. We are also making important shifts in social policies, as announced in last year's Budget, to foster a fair and more inclusive society.

We will need to make further moves so that by the end of the decade, we will have a better Singapore, a better future for all Singaporeans.

First, we have pressing challenges in housing and transport. The Government will spare no effort in resolving these problems.

We want to reduce the cost of housing relative to the income of young Singaporeans. Prices in the HDB resale market and private market have risen too rapidly in the cycle that began as we recovered from the 2009 economic crisis. We have taken major steps to cool the housing market. We have also ramped up the supply of HDB flats which will help first-time buyers book their flats faster as well as ease prices in the resale market. And we have increased supply of private housing through Government Land Sales. The Minister for National Development will speak more in Committee of Supply (COS) about these immediate challenges as well as how we can ensure affordable, quality housing for Singaporeans over the longer term.

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We have to make many improvements in public transport. Congestion and waiting times are a daily problem for Singaporeans. We are ramping up bus capacity, especially feeder services, to improve frequency and add new routes. We are accelerating the rollout of the additional 800 buses that we made provisions for last year. In addition, LTA will be tendering out routes to private operators.

Our rail network will expand by more than 50% by 2021. That is still eight years away. But in the meantime, we will see improvements that will help relieve congestion. Parts of the Downtown Line will start operating from the end of this year, and new trains will be added to existing lines from next year. We will also introduce other measures to reduce crowding, including significantly enhanced incentives for commuters who travel during the "shoulder" periods before and after the morning peak hour. The Minister for Transport will talk about these measures in the COS.

While we fix these immediate problems in housing and transport, we have to press on with our priorities to help Singaporeans have a better quality of life over the medium to long term.

We have to shift gears for an economy and society that is in transition.

We are no longer a developing economy, but we have not achieved the level of productivity and income of an advanced economy. At the same time, our own workforce is growing more slowly, and is gradually getting older.

We must make every effort to achieve quality growth: growth that is achieved mainly through innovation and higher productivity, and growth that will benefit all Singaporeans – our children, working families, our elderly and disabled.

Our strategies for achieving quality growth and an inclusive society are in fact tied inextricably together. Raising productivity is not just our most important economic priority but enables us to build a better society. Higher productivity is the only sustainable way to raise incomes for ordinary Singaporeans, and provide jobs that give people a sense of responsibility and empowerment. Higher productivity is also necessary for us to shorten working hours over time and allow Singaporeans to enjoy a better work-life balance.

Our society is also facing the pressures of widening income disparities. This is happening in cities globally and in Asia, but it matters more to us because

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Singapore is not just a city but also a nation. We must take further steps to temper inequality. We also want to do more to enable our seniors to have a sense of economic security and fulfilment in their retirement years.

On both economy and society, therefore, we need to shift our thinking. In government: where we are reshaping policies and driving new initiatives, especially to sustain social mobility and strengthen support for older Singaporeans. In the business community: which has to innovate and adjust to the permanent reality of a tight labour market. In our society at large: where we have to accord ordinary workers not just better pay but greater respect. In the community: with non-profits and other voluntary groups pursuing the causes we all believe in and working with an active partner in the government. And for all of us individuals, to do our best to improve and to contribute to our country in our own ways.

We are restructuring our economy. We began this in earnest in 2010, by:

tightening foreign worker inflows;

supporting enterprises in their efforts to upgrade operations and improve productivity; and

investing in our workers by heavily subsidising their training, in every skill.

We need to intensify this economic restructuring and skills upgrading so as to achieve quality growth. Although wages are going up in a tight labour market, productivity has lagged. If we do not do better in raising productivity, we will be caught in a situation where businesses lose competitiveness, and wages eventually stagnate. Both workers and businesses will be worse off.

We must help our SME sector revitalise itself. There are, however, wide divergences in efficiency amongst SMEs, even in the same industries. Restructuring will unfortunately lead to some businesses being winnowed out, but the end result must be a vibrant and sustainable local SME sector. Every support must be provided to help the businesses which bring in more efficient techniques and service models, so they can grow in a tight labour market and, where possible, make their mark internationally.

There are already many examples of SMEs transforming themselves in every sector. For example: in furniture manufacturing, local firms are training

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multi-skilled employees, relocating manpower-intensive activities, developing unique brands and carving a niche for themselves in overseas markets.

To make this economic transition, we must also harness the value of older Singaporeans and design jobs suited for them, as well as for other potential employees who are unable to work regular, full-time schedules. Flexible work practices must become more common, enabling employees to structure their work so that they have time for their families or for personal development like part-time courses. We should also make it possible for more employees to have the option of telecommuting from home or working from "smart work centres" near their homes, like what they have in Amsterdam and Seoul. The Government will work closely with businesses in these efforts.

We are also taking major steps to ensure a fair and more inclusive society.

First, to sustain social mobility. Meritocracy alone will not assure us of this. We, therefore, want to do more, starting from early in our children's lives, to give the best leg up to those who start with a disadvantage. We cannot change the fact that children have different family backgrounds that bring very different advantages and disadvantages. But we want to find every way, at the pre-school and primary school levels, to help our children from poorer or less stable families to develop confidence and the self-belief that gives them aspirations of their own, and to help them catch up when they fall behind. And we will provide pathways to develop every skill and ability, so that every child can discover his strengths as he grows up and can do well.

Second, we must do more to mitigate inequality. We are making our fiscal system more progressive, by tilting our taxes and benefits in favour of the lower- and middle-income groups. Currently:

a lower-income older worker receives a significant top-up of his income through Workfare each year.

A middle-income family with a child in childcare gets subsidies of $4,800 per year. If the child is in university, he can receive more than $8,500 in bursaries over the course of his studies and get a subsidised Government loan to pay off the remaining fees and cover study expenses. Children from lower-income families receive far more – from childcare all the way through to ITE, Polytechnic and University.

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Singaporeans with disabilities now receive substantially greater support. Both when young through early intervention under the Early Intervention Programme for Infants and Children (EIPIC) and, as adults, where we provide a substantial incentive through the Special Employment Credit (SEC) for firms to employ them so that they can contribute and lead more independent lives.

An older Singaporean in need of long-term care can receive subsidies of $870 per month for home-based care or $1,200 per month if he is in a nursing home, following the changes we introduced last year. Those who need more help will get it through Medifund.

We will take further significant steps in this Budget towards strengthening social mobility and increasing the progressivity and fairness of our system. In particular, with enhancements to Workfare, a low-wage worker who is 60 years old would receive a top-up of his pay of about 30%. This is in addition to what his employer can receive through the SEC, and the new Wage Credit Scheme, to be introduced in this year's Budget, which will encourage his employer to up his pay.

While raising incomes is the best way to help lower- and middle-income Singaporeans cope with rising costs, this Budget will also include measures to help them more immediately. The most significant support will go to older Singaporeans, to help them with medical costs.

Taking all our measures together, including with those which will be announced in this Budget, we are providing substantial benefits to lower- and middle-income Singaporeans. The full picture can be seen if we look at benefits over a lifetime, starting from a couple's needs when they first have children, to the time they get old and need other types of help, especially with healthcare costs.

In total, over a lifetime, a young low-income couple with two children can expect to receive more than $600,000 in benefits in real terms. This comes from subsidies and other means-tested benefits for their children's education, housing, healthcare, Workfare, the GST Voucher, and other schemes. This is much more than we used to provide in the past. In the last decade alone, we have more than doubled the lifetime benefits in real terms for such families.

When we take into account all the taxes that such low-income families will pay, mainly GST, they will get back far more in benefits. In fact, they will get

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more than five dollars in benefits for every dollar in taxes paid.

However, today's generation of older Singaporeans will not benefit as much as younger Singaporeans from the enhancements in Workfare and CPF and other schemes. We want to do more for this senior generation of Singaporeans, who worked over the years, often with low pay, to build a better future for their children. They made today's Singapore possible. We will do more for them. The Government is reviewing the system of healthcare financing and some other schemes to help them in their retirement years.

Finally, the Budget will make significant investments to nurture the sports and arts, which play a growing role in enriching life in Singapore. Over the next five years, we will invest 30% more in sports programmes, and more than double our investments to develop regional- and community-level sports facilities. The Government will also create a new Cultural Donation Matching Fund, to provide dollar-for-dollar matching for donations to the arts and culture.

In short, we are building a better Singapore: a more inclusive and caring society, with an innovative and dynamic economy, so that Singaporeans can have better opportunities and more fulfilling lives.

Let me go on to the first major thrust of the Budget: to intensify our efforts to achieve quality growth, in other words, growth that is driven by sustained productivity improvement rather than manpower growth.

Productivity gains are not new to Singapore. With the exception of the previous decade, our productivity growth rates were well above the norm even as our labour force grew significantly.

In 1980, we were what the World Bank called a middle-income developing country. However, our productivity level was about a third of the most advanced economies then.

Three decades on, our productivity level is about 70% of today's global productivity leaders – countries like the US, Japan, Switzerland and Sweden. Our overall productivity level is now, in fact, above Hong Kong's, although it used to be below theirs in the 1980s.

We have achieved this by:

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bringing in leading global companies at each stage of our development, with the technologies to create better jobs for Singaporeans;

upgrading local enterprises, including those in mature industries that were once thought to be fading out, like the food manufacturing and marine industries; and

above all, by building a strong education system and improving the skills of our workers.

However, we must now go through a new phase of transformation.

First, we need to catch up from a decade of slow productivity growth.

Second, we also have much room to catch up with the global leaders in each of our sectors.

Third, we must also reduce the wide gaps in efficiency between the different sectors of our economy. In particular,

our Manufacturing and Transport sectors are well ahead in productivity compared to other economies in Asia, apart from Japan, although we are behind the global leaders;

but in Construction, our productivity is about one-fifth below that of Hong Kong and South Korea, and much further below that of Japan and other international leaders;

in many Services industries, like F&B and Retail, we are also about one-fifth behind Hong Kong.

We must, therefore, press ahead and upgrade technologies, skills and expertise across our economy in this decade, so that we can be a truly advanced economy. The 2% to 3% per annum target for productivity growth that we had set after the weak decade until 2009, is ambitious but we must make every effort to achieve it. That will bring us, at the end of this decade, much closer to where the most advanced economies are today.

There is also another important reason why we have to step up productivity improvement. If we do not succeed in this new phase of transformation, we will

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lose ground to emerging cities in Asia, which are catching up quickly. We can lose even the good jobs that we want to retain in Singapore. Several Chinese coastal cities, for example, are catching up in industrial robotics, so as to compete with German and Japanese manufacturers.

We slowed down the increase in our foreign workforce in 2012 compared to the previous two years, but it was still rather high – 67,000. However, most of the growth in the foreign workforce was seen in just two areas of the economy: the Construction and Process industries, and the Services sector. In Manufacturing, there was, in fact, a slight decline in the total stock of foreign workers.

The Construction and Process industries, with most workers coming in at the Work Permit level, accounted for about half of the total increase in the foreign workforce. This was partly due to the ramp-up in infrastructure projects, but also because productivity in these sectors remains weak.

In Services, there has been continued rapid growth, especially of S Pass employees.

Overall, the total number of Employment Pass (EP) holders declined last year. This was in part a result of the tightening of MOM's eligibility criteria, especially for Q1 pass holders so as to raise the quality profile at the lower end of the foreign professional workforce as our economy restructures.

Foreign workers now comprise 33.6% of our total workforce. The Government had in 2010 accepted the Economic Strategies Committee's recommendation that we moderate the growth of the foreign workforce so as to avoid its proportion of the total workforce increasing significantly beyond one-third. While our mix of policies must allow for foreign worker numbers to fluctuate in the course of the business cycle, or when we have major infrastructural projects underway, as is the case currently, the proportion of foreign workers in the total workforce should not increase indefinitely. Our foreign worker policies remain guided by this objective.

We have to make further adjustments so that we can continue moderating the growth of the foreign workforce, but they will not be across the board. The adjustments will reflect the circumstances of each sector.

First, we will make selective further Dependency Ratio Ceiling (DRC) cuts for sectors where there has been continued significant growth in foreign worker

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numbers, and where productivity levels are still well behind international productivity leaders.

Second, we will increase levies for all sectors to ensure that businesses continue to reduce dependence on foreign manpower and improve productivity. The levy increases will be sharper for firms that are most dependent on foreign workers.

However, while there will be significant levy increases for less-skilled workers, we will not increase levies for skilled workers in most sectors after the previously-announced rates for July 2013 kick in. So most companies will not need to pay a higher levy if they rely on skilled Work Permit Holders.

Third, we will encourage companies to pro-actively develop the talents and skills of our Singaporean workforce and reward them fairly.

We cannot cut off the flow of foreign workers abruptly, but we have to slow its growth. We are, therefore, making these further adjustments, and we have to do so in full knowledge of the difficulties they will pose for many of our companies. There has been extensive feedback from businesses and associations about the challenges that employers face in finding local workers.

And as everyone knows too, there are many sectors, such as the Construction, Marine and Process industries, and even in some Service industries, where there will remain a significant shortage of local workers and where we will continue to need foreign workers for some time to come.

However, the basic reality is that these sectors which are most dependent on foreign workers are also the ones furthest behind international standards of productivity, and which account for the lag in productivity in our overall economy.

The tightening of foreign worker policies is, therefore, aimed mainly at reducing reliance on manpower, not merely replacing foreign workers with locals. That is the only way we can significantly improve productivity and avoid an indefinite increase in the ratio of foreigners in our workforce.

Further, within the Services sector, industries like F&B and retail that have been most reliant on foreign workers have also seen low wages and low wage

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growth for local workers in certain jobs. Waiters are an example.

We cannot carry on in the same way. If we pause now and postpone the restructuring of these industries, we will face the same problems of low productivity, low wages and low profitability in these industries in future.

The problem does not merely lie in individual enterprises, but in the structure of industry. In Construction and Services, there are many small firms working very hard to survive, and to attract local employees. Sometimes, the owners themselves double up as workers. Many find it difficult to scale up to the point where they can invest in significant productivity improvements or build up and retain a pool of skilled employees.

Food and Beverage (F&B) is a good example of this fragmented industry structure. The problem has not been inadequate workforce growth. The F&B workforce has, in fact, increased by one-third over the last five years, with foreign workers making up half of the increase. However, there has also been rapid growth in the number of F&B establishments. Many new F&B firms are formed each year, and many also exit, but the total number has grown. With our local workforce now growing more slowly, and as we are at full employment, many firms find it increasingly difficult to attract local workers.

The structure of some of our industries will inevitably have to change, given our tight labour market. Consolidation is part and parcel of restructuring. While efficient enterprises and those who develop stronger brands will grow, others may eventually downsize, switch to new business lines, or move parts of their operations abroad. This is indeed how productivity has advanced in the most developed economies – not just by individual firms innovating and upgrading, but also through the freeing up of space in the industry for more dynamic enterprises to obtain workers and grow.

The Government cannot decide which firms should succeed, or which employers within an industry should get more workers while others get less. Only the market can decide that. But the Government can and will actively support all SMEs that are willing to upgrade, so that they can retain their roots in Singapore and grow. The restructuring of our economy must result eventually in a dynamic and re-energised SME scene.

Businesses have to respond in new ways to the tight labour market – adopting shared services to save manpower, redesigning jobs, and giving workers broader responsibilities and rewarding them fairly. Indeed, in every

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sector, there are already examples of SMEs that stand out as having adopted these practices and are growing. Consumers, too, have to adjust, for instance, by getting used to self-serve or semi-serve models and returning trays, all of which are common in the F&B industry in many developed countries.

In this Budget, we will introduce a Quality Growth Programme, which is aimed at helping businesses to upgrade, create better jobs and raise wages. The Quality Growth Programme has four pillars:

First, tightening Foreign Worker Policies. We will continue tightening our foreign workforce policies through a targeted approach, considering the circumstances of each sector and each category of workers.

Second, we will introduce a special three-year package to support companies during this period of restructuring. We call it a Three-year Transition Support Package. This will include a new Wage Credit Scheme to encourage companies to share productivity gains with their workers through higher wages.

Third, we will also strengthen our schemes to help companies improve productivity, and make it much easier for companies to tap on them. These measures will be focused not just on helping individual companies, but also on supporting industry-wide collaboration.

Fourth pillar within the Quality Growth Programme: Capabilities for new growth industries. We will develop capabilities that will enable us to chart new frontiers in the manufacturing sector, and enable our Services sector companies to seize opportunities in Asia's rapidly growing economies.

The Government will not be keeping the additional levies that we will receive as a result of the additional tightening of the foreign worker policies. We have, in fact, flowed back to companies the additional revenue that was collected since we began tightening in 2010 – through the Productivity and Innovation Credit (PIC) Scheme, the Special Employment Credit (SEC) to help firms employ older workers, as well as various productivity grants and training subsidies. This will continue to be our approach over the next three years: through new initiatives and enhancement of existing programmes, we will channel all additional levies collected back to help businesses upgrade and share productivity gains with their workers.

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Let me first outline our measures to further moderate our demand for foreign workers.

First, we will raise Foreign Worker Levies across the board in July 2014 and July 2015. Increases will be most significant in sectors where productivity growth is weak and the growth of the foreign workforce is significant.

We will also take further measures to moderate foreign workforce growth in the Construction, Process and Marine sectors, as well as the Services sector.

Let me deal with Construction and Process first. We will mandate the use of more manpower-efficient designs and technologies in building projects through increases in the minimum Buildability scores. The Government will take the lead and adopt even higher standards of buildability and constructability for public sector projects, which will yield significant productivity gains.

Second, in construction, we will:

increase levies for less-skilled Work Permit Holders by $150 between July 2013 and July 2015.

Steeper levy increases of $300 will be imposed on workers hired outside a company's Man-Year Entitlement or MYE.

We will not be making further cuts to the MYE in Construction this year because, by July 2013, we will have made a significant cumulative reduction of 45% since 2010. This reduction applies to new projects undertaken over the next few years.

In addition to levy increases, we will reduce the overall Dependency Ratio Ceiling (DRC) and S Pass Sub-DRC by five percentage points each in the Services sector. Therefore:

the overall DRC will come down from 45% to 40%; and

the S Pass Sub-DRC from 20% to 15%; and

for their existing workers, companies will be given until June 2015 to comply with the new DRCs. However, companies will not be allowed to bring

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in new foreign workers beyond the new DRCs from 1 July 2013.

The DRC reductions will particularly affect services industries like F&B. As I have just explained, this is a painful but necessary step that we have to take, in order to allow for market restructuring, to encourage innovations in the industry and to grow stronger companies that can create good jobs and raise wages. However, to help firms in the Services sector cope with labour constraints, MOM will allow more flexible deployment of foreign workers within a firm to raise productivity.

Cleaning. Other sectors, such as cleaning, will not be significantly affected as most firms remain below the new 40% DRC. Together with the levy increases and programmes like the Clean Mark Accreditation Scheme, the DRC cut will give a push towards higher productivity and wages in these sectors.

Healthcare. Our Healthcare sector is able to provide good quality care with low labour intensity. However, our healthcare manpower demands will increase as our population gets older. While we will continue to expand our local supply of healthcare manpower, we will still need a significant pool of foreign healthcare staff. In order to support the healthcare needs of Singaporeans, we will continue to ensure flexibility so that healthcare institutions are able to fulfil their staffing needs.

The Marine sector. EDB and SPRING are working with the key players in the marine sector to upgrade operations to improve land and labour productivity, and focus their Singapore operations on higher value design and engineering activities.

As part of this plan, we will reduce the overall DRC for the Marine sector from 1:5 to 1:3.

5. This change will take place in two stages, in January 2016 and again in January 2018.

S Passes. We will tighten the qualification criteria for all S Passes, so as to moderate future growth, and ensure ample opportunities for career progression and wage growth for Singaporean mid-skilled and technical professionals.

From 1 July 2013, we will increase the minimum S Pass qualifying monthly salary from $2,000 to $2,200.

We will introduce a tiered salary system based on age and qualifications of the applicant. Older and more experienced S-Pass applicants will need to

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qualify at higher salaries. This will help to level the playing field for our local workers in the same jobs and also nudge employers to bring in better calibre workers to raise the overall quality profile of S-Pass holders.

MOM will release more details of these changes in a separate press release.

Let me now move on to Employment Passes – also an important issue. Our employment market for PMEs (Professionals, Managers and Executives) will evolve in the coming years. We will see progressively larger numbers of Singaporean university graduates entering the workforce.

Our Employment Pass policy must ensure that firms in Singapore remain able to recruit the best teams, including both locals and foreigners, with the skills and expertise our companies need to compete internationally. At the same time, we must maintain a level playing field for Singaporeans with respect to jobs and progression opportunities.

We will, therefore, make further calibrated adjustments in our policies.

First, MOM will continue to tighten eligibility requirements for the Employment Pass workforce, especially for Q1 pass holders. This has already led in the last year to more foreign employees coming within the S Pass category, which are subject to a DRC and levies.

Second, for the longer term, MOM will put in place a framework to ensure that firms give fair consideration to Singaporeans in their hiring practices. MOM has been studying work pass policies in various developed countries. Some countries, for example, require companies to advertise job vacancies to locals, before they can apply for a foreign work pass. Any such framework must enable companies to continue to meet their competitive needs, so that they can provide Singaporean professionals ample opportunities to do well in their careers. This framework is, however, not a matter to be rushed. MOM will consult closely with all stakeholders to develop a workable framework.

This will be discussed further in MOM's Committee of Supply, together with the other key initiatives I have announced.

To help businesses through this period of restructuring, we will provide significant Government support through a Three-Year Transition Support

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Package. There are three components:

a Wage Credit Scheme;

a PIC Bonus or Productivity and Innovation Credit Bonus; and

a Corporate Income Tax Rebate.

First, the Wage Credit Scheme. Businesses will have to restructure in a tight labour market in the coming years, and wages will have to rise. Government will provide support to help businesses raise their employees' wages. More importantly, this will incentivise employers to share productivity gains with their employees.

To do this, we will introduce a Wage Credit Scheme (WCS).

Under the WCS, the Government will co-fund 40% of wage increases for Singaporean employees over the next three years.

This co-funding will apply to wage increases for Singaporean employees earning up to a gross monthly wage of $4,000.

The Government will co-fund any increase in wages given to an employee in any year between 2013 and 2015, over his or her wage level in the preceding year. Co-funding will apply not just for that year, but for the rest of the period.

For instance, if an employer increases the gross monthly wage of his employee by $200 in 2013, the Government will pay 40% of the $200 wage increase, not just for 2013 but also the remaining two years.

If further $200 increases are given in 2014 and 2015, the Government will co-fund 40% of the total wage increases of $400 and $600 in 2014 and 2015 respectively.

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There is no need to apply for the Wage Credit Scheme. The Wage Credits will be automatically paid out to employers annually. We encourage all employers to take full advantage of the Wage Credit Scheme to share productivity gains with workers. The Wage Credit Scheme will cost the Government about $3.6 billion over three years.

Next, the PIC Bonus that I have just spoken about. We want as many businesses as possible to take advantage of the Productivity and Innovation Credit (PIC) scheme.

We will, hence, introduce a PIC Bonus as a second component of the Transition Support Package. Businesses that invest a minimum of $5,000 per Year of Assessment (YA) in PIC qualifying expenditure will receive a dollar-for-dollar matching cash bonus. The bonus will be up to $15,000 over three years – Year of Assessment 2013 to Year of Assessment 2015. This PIC Bonus is paid over and above the existing PIC benefits.

The $5,000 minimum qualifying expenditure encourages small businesses to undertake meaningful productivity investments. Based on current claims, we expect that many firms will be able to benefit from the full $15,000 bonus. The PIC Bonus is expected to cost $450 million over three years.

Next, Corporate Taxes. Besides higher manpower costs, businesses also face other cost pressures, such as higher rentals. To help companies cope

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during this period of transition, I will provide a special Corporate Income Tax rebate from Year of Assessment 2013 to Year of Assessment 2015. This is a three-year rebate. I will give a rebate of 30% of tax payable up to $30,000 per Year of Assessment. This is expected to cost $1.3 billion over three years.

We will also introduce two specific measures to help owners of commercial vehicles.

Currently, when commercial vehicles reach the end of their 10-year COE, the owners can only renew for five years with no further extension or pay more for a 10-year renewal. We will allow owners who choose to renew their COEs for five years in the first instance to extend their COEs further for another five years. This will ease their cash flow and provide flexibility. More details will be given by the Minister for Transport in MOT's COS.

I will also grant a one-year 30% road tax rebate for goods vehicles, buses and taxis. The rebate will take effect on 1 July 2013 and save businesses $46 million.

I will now move on to the third major pillar of the Quality Growth Programme, which comprises a significant enhancement of the productivity incentives we have introduced since 2010.

We have taken onboard detailed feedback on how we can improve and strengthen our incentives to help businesses raise productivity. Taken together, these enhancements will involve additional Government resources of about $500 million over three years.

The enhanced incentives will be at three levels of the economy:

First, we will support initiatives for industry-wide collaboration that can either provide the scale that individual firms often lack, or enable best practices to be widely replicated:

This will include Collaborative Industry Projects (estimated $100 million over three years), where consortia of firms will develop solutions to industry-specific productivity challenges. This approach will be adopted in seven new priority industries.

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A further initiative will foster SME collaborations with large enterprises so as to enable co-innovation, capability upgrading and sharing of best practices within the supply chain. We will broaden and enhance the Partnerships for Capability Transformation (PACT) scheme, which we initiated in the Manufacturing sector, to other sectors. (Estimated $60 million)

Next, a set of initiatives to help individual firms:

I will make it much easier and faster for businesses to make PIC claims. Businesses and chambers, such as the Singapore Chinese Chambers of Commerce and Industry (SCCCI), have asked that we broaden the range of investments that can qualify for PIC benefits. Just to give two examples, restaurants will be able to claim for dishwashing machines and contractors can claim for scissor lifts.

We will also introduce a Land Productivity Grant to support companies which intensify their use of land in Singapore. Help will also be given to those who choose to relocate some operations offshore, including to the immediate region, while retaining core functions in Singapore and saving land. This incentive was proposed by associations like the Singapore Business Federation SME Committee (SBF-SMEC).

Next, we will link up SMEs with public-sector research institutions and private sector technology providers to identify and develop productivity solutions that give them a competitive advantage.

To promote prefabrication in construction, we will set aside land for Integrated Construction and Precast Hubs and enhance grants to encourage adoption.

Third, we will provide a further boost to training for Singaporeans at all levels of the workforce:

We will enhance the Workfare Training Support (WTS) scheme for lower-wage Singaporeans as well as programmes to help PMEs to develop further expertise or to make mid-career switches.

We will launch an SME Talent Programme, developed by SPRING Singapore, together with the industry chambers and trade associations. The programme will provide awards to encourage polytechnic and Institute of

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Technical Education (ITE) students to join our SMEs upon graduation.

We will also top up the Lifelong Learning Endowment Fund (LLEF) by $500 million.

Lastly, we will improve the accessibility of Government support schemes for our SMEs. Amongst other things, SPRING will enhance the Enterprise Development Centres into one-stop, integrated SME Centres. ($32 million)

Details of these initiatives will be shared during the Committee of Supply of MTI, MOM and MND.

We are working industry by industry, with business associations and individual firms to help them adopt customised solutions that will help them reduce costs, develop economies of scale, and raise productivity and wages. I will describe briefly how this is being done for the F&B industry as an example.

SPRING is working with the industry to help companies adopt wireless technologies; move towards using more central kitchens, or an example in today's Straits Times of central dish washing; and to collaborate more closely with food manufacturers. We are helping the industry to tap into a pool of part-time manpower and adopt manpower scheduling systems that many SMEs have found can lead to much more efficient deployment of employees. In addition, we are also helping promising F&B firms develop their brands and expand overseas.

There are already many examples of F&B establishments that are changing the way businesses are run, using technology and new management methods, like PastaMania and Mr Bean, two well-known local brands. PastaMania had its roots in a foodcourt, and has now grown to have over 40 outlets in five countries. It pioneered mobile app ordering in the F&B industry, relies heavily on part-time staff, and invests in their training. Mr Bean started in People's Park Food Centre, as some of you will remember, and has now grown to 70 outlets in six countries. It, too, has made significant productivity improvements. It is also collaborating with various Voluntary Welfare Organisations (VWOs) to provide training and employment to Singaporeans with special needs.

What we are doing in the F&B industry, we are also doing for our retail establishments and hotels – deep dives to understand the industry better and to work with firms to better cope in a tight labour market.

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Restructuring our economy is also about looking ahead for new growth opportunities. We have to keep developing new capabilities so that we stay relevant in the world and create higher value industries and high quality jobs for Singaporeans.

The global manufacturing landscape is being redefined by disruptive technologies, such as robotics and 3D printing, and business models involving mass customisation and use of manufacturing analytics. We must keep up with these developments to ensure that Singapore remains a key global centre for advanced manufacturing.

EDB will set aside $500 million over the next five years to support a Future of Manufacturing plan. We will work with key industry partners, our universities, polytechnics and Research Institutes to test-bed new technologies and develop applications that can be commercialised and tapped on by our firms, including our SMEs. This has the potential to create a range of new jobs for Singaporeans in future, such as high-skilled robot operators and materials scientists.

We will also support the emerging satellite industry in Singapore through a $90 million Satellite Industry Development Fund.

In the services sector, the rapid rise of middle-class consumers and dynamic enterprises in Asia is boosting demand for modern, high value services. Our companies, particularly in the professional services industries, are well positioned to ride this wave.

Data analytics is one such industry cluster that we are developing. We aim to develop a pool of 2,500 analytics professionals over the next five years to support this new area through programmes, such as NTU's recently launched Business Analytics degree.

Infrastructure development is another such cluster. We are bringing together expertise and players from across the infrastructure value chain in Singapore, from project developers to EPC (Engineering, Procurement and Construction) players and financiers.

For example, the World Bank's investment arm, the IFC, will be setting up its first Asset Management Company office outside Washington DC in Singapore, to invest in infrastructure projects in the region.

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We will also help SMEs who are expanding their overseas footprint by mitigating the risks inherent in such ventures. In addition to the Political Risk Insurance Scheme introduced last year, IE Singapore is working with ADB and private insurers to expand the Asian Development Bank's Trade Finance Programme for Singapore exporters. This will provide credit guarantees to facilitate exports by our companies.

I will also take the opportunity to make a few other tax-related changes.

We will refine tax incentives for companies in the Maritime sector and Financial sector to ensure the continued growth of high-value activities in Singapore. I will not go through the details but they are in Annex 1 to the Budget speech. [Please refer to Annex 1.]

Investment holding companies or property development companies incorporated after 25 February 2013 will be excluded from the start-up tax exemption. Investment holding companies derive passive incomes, while firms in the real estate industry typically incorporate a company for each new property development. The start-up tax exemption for encouraging entrepreneurship is really not intended for such entities. These companies can still enjoy the partial tax exemption available generally to all companies.

Benefits-in-kind, such as housing or hotel accommodation and furniture and fittings that are provided in the housing premises, are taxable as part of employment income. The current way of taxing housing and hotel accommodation has remained unchanged since the 1960s and under-values the actual benefits received by the employees.

To tax such employment perquisites more equitably, housing and hotel accommodation provided to employees will be taxed based on the Annual Value of the property and actual cost of the hotel accommodation incurred by employers respectively.

The changes will take effect from Year of Assessment 2015.

Finally, we will take the final step to harmonise the tax rates between cigarette and non-cigarette tobacco products which we started two years ago. I will raise the excise duties for Beedies, Ang Hoon and smokeless tobacco by 25% from $239 per kilogram to $299 per kilogram, and unmanufactured tobacco by 1.5%, from $347 per kilogram to $352 per kilogram.

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Mdm Speaker, let me move on to the second major thrust of the Budget which is about making our society even more inclusive.

We have two key concerns. First, income inequality and the risk that it poses to social cohesion. We have to take further steps to ameliorate inequality and give every Singaporean a real chance to do well and have a fulfilling life.

We have a special challenge in inequality that stems from the fact that our education system and economy have been completely transformed over the past 40 years. Many in our present day older generation of Singaporeans had very little education – barely half were able to go beyond Primary school. Their pay was very low in the first few decades of our development. Younger Singaporeans have benefitted from vastly improved opportunities in education with the bulk of them going on to tertiary studies. As a result, a disproportionate number of middle- and high-paying jobs are taken up by younger Singaporeans while older Singaporeans (those aged 55 years and above) make up more than 40% of workers in the bottom fifth of the income ladder. Our schemes to help low-income workers, therefore, pay special regard to our older Singaporeans.

Second, we want to do more for our retirees. As they depend on their savings to finance their daily expenses, they are most affected by rising costs. Many worry about being a burden to their children. We must provide our seniors with a greater sense of security in their retirement years.

Our social strategies are shaped by these two key concerns of Singaporeans, which are key priorities for the Government.

Twenty years ago, we could get by with very little Government social support, apart from the Public Assistance (PA) scheme. We were a young nation then. Incomes were rising rapidly across the board and the elderly had more children to support them. However, as our society matures and our incomes rise more slowly and more unequally, we have to step up our social support.

We took significant steps in last year's Budget. This year, we will put in place further initiatives as part of our commitment to build a more inclusive society. There are four pillars to our strategy.

First, we must do all we can to promote social mobility. It is still an important feature of our education system today. However, as all societies have found, social mobility becomes increasingly difficult to sustain beyond the first

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few generations who benefited from a good education system.

To make a difference, we must start earlier in a child's life – from the preschool level. We must find new and innovative ways to support children with disadvantages as they grow up in our primary schools and beyond.

Second, we must continue to provide good job opportunities and grow incomes for all Singaporeans. This is fundamental to achieving a stable and cohesive society, here and everywhere else in the world. Indeed, better jobs and higher incomes are still the foremost concerns of most Singaporeans.

This is why the restructuring of our economy – so that we can grow incomes and give Singaporeans a sense of fulfilment in their jobs – is an essential part of our strategy for a better society.

Third, we need to redistribute to benefit our lower- and middle-income groups. We must maintain a progressive system of taxes and benefits and preserve a sense of fairness, even as we ensure that our economy remains competitive. Everyone contributes something to Singapore, but the bulk of our taxes is paid by the high-income group, and most of the benefits received by the lower-income group. And everyone must feel they belong to a thriving and cohesive society.

In this Budget, we will add to the progressivity of our system, including enhancing Workfare significantly, to help older workers.

We are also reinforcing our social safety nets. We are charting new directions to ensure healthcare remains affordable for older Singaporeans. We are also improving on the way we deliver social services to bring support closer to the home and to better meet the needs of individual families.

We will also provide some help in this Budget to cushion the impact of rising costs on Singaporeans, especially our older folk.

The fourth pillar, and a critical one for a vibrant society, is the role of the community. The Government will provide strong support for community initiatives by partnering with community bodies and groups of citizens to improve the lives of Singaporeans.

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There is already a growing number of such bright spots of goodness, like the collaboration between Lien Foundation and Care Corner launched just a few days ago to help underprivileged preschoolers. Or the house-to-house health screening and counselling programme launched in 2007 by a small group of medical students led by Tan Chong Keat, who was then a second-year student. It has now grown to 400 students doing house-to-house visits in Jurong, MacPherson and Bukit Merah, doing the tests, counselling and following up with the older residents.

In this Budget, we will take further initiatives to strengthen opportunities for low- and middle-income pupils in our education system.

Over the past five years, we have significantly increased financial assistance for students of all ages, especially for those from lower- and middle-income families. We have enhanced pre-school subsidies, so that those from the bottom 20% of households only pay about $10 a month for childcare. We have expanded the MOE Financial Assistance Scheme benefits in schools and provide low-income students with breakfast to start their school day well. We have also increased our bursaries for lower and middle-income students when they go on to University, Polytechnic or ITE.

Together with the significant enhancements to childcare and infant care subsidies that the Government announced in January, we will more than double our spending on the pre-school sector over the next five years to over $3 billion.

We are expanding capacity so that preschools will be available closer to homes in all our neighbourhoods, as well as closer to workplaces.

Second, to ensure quality and affordable preschools, we will bring more operators onto the Anchor Operator (AOP) scheme. We will provide for 16,000 additional places in Anchor Operators by 2017.

Third, good teachers. They are the key to a quality pre-school sector. We will increase salary grants to the Anchor Operators so that all their pre-school teachers will be graduates or diploma holders, up from 80% today. We will also provide pre-school providers across the sector with greater support in curriculum and teaching guides. Teachers will also be able to obtain scholarships and training grants to upgrade and look forward to a structured training and career development.

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Fourth, MOE will work on distilling best practices that have the potential to scale across the sector. MOE will, on its own, also set up a few kindergartens to develop best practices to be part of this effort to catalyse quality improvements.

Fifth, we will establish a new autonomous agency, the Early Childhood Development Agency, to drive improvements across the entire pre-school sector. The new agency will combine the preschool teams within MOE and MSF and will be overseen by both Ministries.

MOE and MSF will elaborate on these initiatives at the Committee of Supply.

Our next set of initiatives is at the school level. They will help students with a disadvantage to catch up and better build a foundation to do well later in life.

First, we will extend the learning support programme which is currently for Primary 1 and 2. It is resource-intensive because the classes are conducted in small groups of less than 10 students.

Our experience has shown that early intervention helps but also that continuous intervention is necessary to reinforce what has been achieved.

We will, therefore, extend the learning support beyond the early Primary school years. The programmes will require about 600 additional teachers who will be specially trained.

Second, we will significantly expand the number of school-based student care centres to take advantage of the move to single-session Primary schools. These centres can play a useful role providing additional development support to students outside school hours. The widespread provision of after-school care, together with the enhanced subsidies that we introduced last year, will also be helpful to working parents.

Third, MOE will develop richer instructional materials to enhance teaching and learning in every school. One important initiative is to develop online resources that include the best lessons, especially on difficult concepts, taught by experienced teachers and specialists. This is a new way in which we can support our goal of enabling every school to be a good school with equal access to the best teaching resources.

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All in, these three school-level initiatives will cost an additional $120 million each year.

In addition, we will put another $72 million into the Opportunity Fund. Schools with a larger number of students from less advantaged backgrounds will receive up to $275,000 for a Secondary school and $150,000 for a Primary school. This is 40% up from today. We will also be extending the Opportunity Fund to the Polytechnics for the first time. In total, this is expected to benefit about 100,000 students across schools, ITE and the Polytechnics.

The Minister for Education will provide more details at the Committee of Supply.

Furthermore, I will make a $300 million top-up to the Edusave Endowment Fund which is used to help all our students develop as well-rounded individuals.

Let me move on to talk about the further steps we are taking to make our fiscal system more progressive.

We will make the following enhancements to the Workfare Income Supplement (WIS) starting from work done from 1 January 2013.

First, we will expand the coverage of Workfare Income Supplement to workers earning a monthly wage of up to $1,900 per month. This is an increase of $200 from the current $1,700 ceiling. WIS will benefit about 480,000 Singaporeans or 30% of our citizen workforce.

Second, we will increase WIS payouts significantly for all those who receive WIS. For those who are aged 45 years and older, the maximum payout for a low-income worker earning $1,000 will increase by $700. Those aged between 35 and 45 years will get a smaller increase. The enhanced WIS will mean increases of between 25% and 50% in maximum payouts.

Third, we will increase the proportion of cash in the WIS payout. Our unionists had made a strong call for this so as to help WIS recipients with their immediate expenses. Workers will now receive 40% of WIS in cash and 60% in CPF. Previously, recipients received 29% of WIS in cash.

With the higher WIS payouts, even with more being paid in cash, workers will still receive more WIS top-ups to their CPF accounts. We will channel more

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to their Medisave and Special Accounts equally.

Taken as a whole, this is a significant boost to the Workfare Income Supplement scheme. I will state an example. A 60-year-old cleaner at the bottom 10th percentile of incomes, earning $1,000 a month, will get $3,500 in WIS annually. This is equivalent to 3.5 months of additional income or a 29% top-up of his normal pay, almost a 30% on top of his normal day. Of this, $1,400 of the $3,500 will be paid in cash, which is more than $100 a month. Both his healthcare and retirement savings will also receive a boost.

We will also tighten the WIS criteria to ensure that they are focused on low-income households. There are some WIS recipients who own second properties or have spouses who are fairly well-off. These individuals would be better-off and are not the target of the WIS scheme. We will thus implement additional eligibility criteria for WIS to exclude those with a spouse earning more than $70,000 per year, and individuals or couples owning a second property.

Only a small percentage of current WIS recipients fall into this category. But it is best that we make the refinements now as we are significantly enhancing WIS.

In total, the enhancements we are making to WIS will bring its annual cost to $650 million, which is about 44% higher than last year's bill. [Please refer to Annex 2.]

We will also be enhancing the Workfare Training Scheme (WTS) Scheme, which the Acting Minister for Manpower will elaborate on during the COS.

With the increase in WIS payouts, we will also be able to raise the employer and employee CPF contribution rates for low-wage workers without a reduction in take-home pay for most of them. Their CPF contribution rates were reduced in 2007 to enhance their employability.

Since then, we have put in place schemes, such as the Special Employment Credit for older workers and the Workfare Training Scheme, which have improved their employability.

We will, therefore, restore the employer contribution rates fully (to the same level as for higher-income workers at the same age group) from 1 January 2014. We will also bring the employee contribution rates for most of these workers to the normal levels. The increased CPF will help them with their

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retirement and medical needs.

Take, for example, a 45-year-old earning $800 a month. His employer contribution rate will be restored from just below 11% currently to 16% from next year, and his employee contribution rate from 16.5% to 20%. As a result, he will now save $15,000 more in his CPF by age 65.

The revisions will also make it easier for employers to calculate the CPF they need to contribute for most workers, as their CPF contribution rates will be the same as for higher-income workers (see Annex 2).

The increase in employer contribution rates is expected to cost employers $83 million in 2013.

We will also increase the Medisave contribution rates for Self-Employed Persons (SEPs) earning net trade income of between $6,000 and $18,000 per annum (see Annex 2).

Let me now move on to the tax measures.

When we eliminated Estate Duties, I highlighted that we would retain property tax as a means of taxing wealth. Unlike Estate Duty, the burden of which was felt most significantly by the middle- and upper-middle income groups rather than the rich, property taxes can be structured more equitably, with the rich paying the most. Property tax cannot be avoided through tax planning.

Three years ago, I introduced a progressive property tax structure. Last year, I also signalled that this would be a way in which we can increase the progressivity of our tax system going forward. A more progressive property tax allows us to achieve greater social equity without hurting our economic competitiveness or reducing the incentives for enterprise. It is what economists call an "efficient" tax.

With this Budget, I will increase property tax rates for high-end residential properties, the largest increases being for investment properties – in other words, those that are not owner-occupied.

First, I will increase property tax rates for the high-end of owner-occupied residential properties, while lowering tax rates on the majority of owner-

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occupied residential properties. This is fair. The property tax is a wealth tax and is applied irrespective of whether a property is lived in, vacant or rented out. Those who live in the most expensive homes should pay more property taxes than others.

I am especially mindful of the fact, however, that we have retirees who do not have significant cash resources even if the homes they live in may be of significant value. The new property tax schedule for owner-occupied residential properties will ensure that most retirees will end up paying less property taxes.

Currently, property tax rates for owner-occupied residential property are 0%, 4% and 6%, depending on the Annual Values of the properties.

I will widen the 0% property tax band which currently applies to the first $6,000 of Annual Value. I will widen it to $8,000. In addition to the current 4% and 6% tax rates, I will introduce new property tax rates of between 8% and 16%.

The widening of the 0% property tax band will enable 950,000 owner-occupied residential properties to enjoy some tax savings. All 1- and 2-room owner-occupied HDB flats will continue to pay no property tax. Homes with Annual Values of $12,000, such as a 5-room HDB flat, will experience tax savings of $80 or 33% of their current property tax bill. These savings for the majority of homes will mean a reduction in the Government's property tax revenue of $44 million.

The top 1% of owner-occupied residential properties, or 12,000 properties, will face increased taxes, contributing an additional $25 million. However, the increase will be small except for those at the very top-end. A landed property in the central area with an Annual Value of $150,000 will see an increase in property tax of $5,120 per year.

The result of this more progressive property tax for owner-occupied residential properties is a net revenue loss to Government of about $19 million once fully implemented.

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I will apply more significant increases to tax rates for high-end investment properties. Currently, for residential properties that are not owner-occupied, the property tax rate is a flat 10%. I will introduce new marginal property tax rates of 12% to 20% for these investment properties.

What this will mean in effect is an increase in property taxes paid for non-owner-occupied residential properties with Annual Values above $30,000. These residential properties belong to the top one-third of all non-owner-occupied residential properties, or the top half of such private residential

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properties.

The increase will only be significant for investment properties at the high-end. Most suburban condominiums will only see a very small increase in property tax of about $100 to $300 per year. Residential properties with Annual Values of about $70,000, such as many condominiums in the central area, will face a $1,500 tax increase. A high-end property such as a landed property in the central area with Annual Value of $150,000 will see an increase in property tax of $9,000 per year.

These changes in property tax rates for non-owner-occupied residential properties will increase revenues by about $72 million per year once fully implemented.

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The revised progressive property tax structure for residential properties will be phased in over two years starting from 1 January 2014. The revised rates will take full effect from 1 January 2015.

Property tax rates for non-residential properties remain unchanged at a flat 10%.

Property tax is a tax on property ownership and should be levied irrespective of whether the property is vacant or occupied. For consistency and equity in tax treatment, I will remove the current concession which provides tax refunds on vacant properties. This is fair, especially as we are now introducing a new and more progressive property tax schedule on residential properties.

The changes will take effect from 1 January 2014 and the details are in Annex 1.

I shall now move on to the vehicle tax system. Today, all cars incur the same Additional Registration Fee (ARF) at 100% of their Open Market Value (OMV).

I will make the vehicle tax system more progressive by introducing a tiered ARF structure for passenger cars and taxis. The ARF for car models with OMVs up to $20,000 will remain at the current 100%. I will introduce two more tiers for more expensive cars. The next $30,000 of the OMV of the car will attract an ARF rate of 140%. Any value beyond $50,000 will attract an ARF rate of 180%.

With the new ARF structure, a Sedan with an OMV of about $18,000, like a Mazda 3, will see no change in ARF rates. A car with an OMV of $45,000, like an Audi A5, will incur $10,000 or 22% more ARF, while a luxury model with an OMV of $74,000, like a BMW 735, will face a 42% increase in ARF payable.

The Preferential Additional Registration Fee, or PARF rebate, will remain unchanged as a proportion of the ARF paid.

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The tiered ARF structure will apply to vehicles registered with COEs obtained from the first COE bidding exercise in March 2013 onwards. This will contribute about $150 million in additional revenue annually.

I will now turn to our initiatives to strengthen the social safety net so that we provide more support for families in need.

First, healthcare. Our system of Government medical subsidies and the 3Ms provides universal healthcare coverage with multiple layers of protection. There are significant Government subsidies across all settings – outpatient, acute and long-term care. Last year, we significantly increased subsidies for middle-income Singaporeans in long-term care. Whilst we have co-payments to reduce over-consumption, we also have Medisave and MediShield. Medisave ensures that Singaporeans have savings for their own and their family's healthcare needs. MediShield, our national healthcare insurance scheme, covers large medical bills.

The third and final "M" is Medifund which ensures that no one will be denied any treatment that he needs. Over the last five years, we have expanded Medifund to benefit more patients, including those from middle-income

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families.

However, our approach to healthcare financing has to evolve. As our society gets older, we will see higher demand for quality care, longer life expectancy and the rising incidence of chronic diseases. Families will also get smaller over time and we will have more singles without family support when they are in their silver years.

We have, hence, embarked on a thorough review of our healthcare financing system, as the Minister for Health has earlier indicated. This should seek to provide greater peace of mind for all Singaporeans while ensuring that the healthcare system remains sustainable. The review will look at all components of our healthcare financing framework.

First, although overall healthcare expenditure will go up, we want to see Singaporeans' out-of-pocket share of medical costs fall, and the Government take on a larger share. We will target help at those who need it the most. But we will also want to ensure that the needs of the middle-income group are met.

Second, we want to broaden insurance coverage by expanding risk-pooling so that, as a society, we support those who require more help. We must, however, be careful about how this affects premiums.

Third, we must study how to increase the role of Medisave so it can be used to meet more healthcare needs whilst ensuring sustainability of savings.

Fourth, we will do more for those who need help with their medical expenses by expanding the usage of Medifund.

Finally, we will help Singaporeans stay healthy by increasing our investments in health promotion and preventive care, so all individuals are encouraged to stay healthy.

This is a major review. We are studying the strengths and weaknesses of other countries' healthcare systems.

We will have to consider the options carefully and consult broadly with Singaporeans. We want to do better for today's generation of Singaporeans, and do it in a way that is fair and sustainable for the next generation.

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The Minister for Health will elaborate on these directions at the Committee of Supply.

In the meantime, in this year's Budget, we will introduce further support to meet Singaporeans' healthcare needs.

We will expand the current Senior's Mobility Fund into a Senior's Mobility and Enabling Fund, which will cover a much wider range of assistive devices like hearing aids, shower chairs and motorised wheelchairs. These devices are a great boon to our seniors, and help them stay active and independent.

Many frail elderly living at home are also concerned with the cost of consumables, such as milk feeds and adult diapers, which can be a costly burden. We will provide subsidies of up to 80% to the lower-income elderly to help defray the cost of consumables. For example, an elderly patient in need of milk feeds can save up to $2,000 per year.

We will also top up the fund from the existing $10 million to $50 million.

We have expanded MediFund to benefit many more patients, including those from middle-income families. I will top up MediFund by $1 billion, bringing the total fund size to $4 billion.

I will top up the ElderCare Fund by $250 million this year to support patients tapping on subsidised nursing homes and other long-term care services. This will bring the total size of the fund to $3 billion.

We will also enhance the Public Assistance (PA) scheme, which provides a basic level of financial assistance to those who are permanently unable to work.

The monthly cash assistance for households will be raised to help recipients meet their daily needs. For example, a couple will now receive an additional $90, making up $790 in cash assistance. A recipient in a single-person household will receive $450 in cash. PA recipients will continue to receive other free services like medical treatment in polyclinics and our restructured hospitals, Primary and Secondary school education and access to a broad range of social services, such as home help and day activity centres.

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We will also introduce more flexibility to support recipients who need to incur other expenses.

To help Government pensioners who draw lower pensions, the Government will increase the Singapore Allowance and monthly pension ceiling by $20 per month to $280 and $1,210 respectively. This will benefit about 10,000 pensioners.

I will inject a further $200 million into the ComCare Fund as the Fund is well-utilised.

I will also give an additional $10 million grant to the Self-Help Groups to help them enhance their programmes over the next two years.

A further aspect of the social safety net that we are strengthening concerns how we deliver social services. We want citizen-centred social services that are more integrated, so that anyone who needs help can get it conveniently and need not go to different agencies. To achieve this, there are three main initiatives that we are embarking on in this Budget.

First, we will introduce about 20 Social Service Offices in HDB towns over the next few years. A needy family can apply for help at a Social Service Office nearer their home, and benefit from better coordination of Government and community help in the local area.

The second initiative is to integrate eldercare services. As we scale up support to meet the needs of a growing elderly population, we will integrate the aged care services of the Centre for Enabled Living (CEL) and the Agency for Integrated Care (AIC). We will integrate it under one roof at AIC. The new AIC will be the single agency that helps the elderly and their caregivers to get easier access to both medical and social care services in the community.

Third, MSF will at the same time strengthen its focus on persons with disabilities with an agency dedicated to the disabled. This will serve as a focal point for all their needs.

The Acting Minister for Social and Family Development and the Minister for Health will provide more details on these improvements in social service delivery at the COS.

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This year's Budget will provide some direct assistance to households to help them cope with increases in the cost of living.

We introduced the permanent GST Voucher scheme last year to help lower- and middle-income households. The typical lower-income household receives $740 in GSTV-Cash and U-Save. A typical retiree household receives, in addition, $500 in GSTV-MediSave, for a total of $1,240.

This year, to help households facing cost of living pressures, I will provide an extra GST Voucher on top of the permanent voucher. In other words, all eligible Singaporeans will get double the usual amount.

This will benefit approximately 1.4 million Singaporeans and cost the Government an extra $680 million.

We will also provide one to three months of Service and Conservancy Charges (S&CC) rebates (see Table 4). One- and 2-room HDB households will receive a total of three months of rebates for this year, while 3- and 4-room households will receive two months of rebates. This will cost the Government $77 million.

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To help older Singaporeans with their healthcare expenses, I will provide a $200 top-up to the CPF Medisave Accounts of all Singaporeans aged 45 and above. The top-ups will benefit 1.5 million Singaporeans and cost the Government $300 million.

I will provide a Personal Income Tax Rebate this year for all taxpayers, with a larger rebate for those who are 60 years old and above. The rebate will be for Year of Assessment 2013 (in other words, for income earned in 2012).

I will extend a rebate of 30%, subject to a cap of $1,500, for taxpayers who are below 60 years old. I will also introduce a higher rebate for those who are older. Those aged 60 or above will receive a higher rebate of 50%, subject to the same $1,500 cap. Having this cap of $1,500 allows us to provide the greatest benefits to those at the 80th percentile and below of taxpayers.

1.3 million resident taxpayers will benefit. This will cost the Government $615 million.

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