Hansard, Thursday, 1 March 2018

1 Dr Lim Wee Kiak asked the Minister for Education (Higher Education and Skills) (a) how frequently does the Ministry review the courses offered by the polytechnics so as to stay relevant to the needs of industries; (b) what are the two least popular courses; and (c) how many courses have been cancelled last year because of a lack of student interest.

Mr Speaker, the polytechnics strive to ensure that their courses are relevant to the needs of industry. Every year, they review the range of their diploma course offerings and make changes to drop or start new courses. In addition, every three years or so, they do an in-depth review of the curriculum of each course. For courses in sectors, such as information technology (IT), the curriculum is reviewed more frequently, given the fast-changing nature of the industry.

Popularity of a course can be measured in different ways, such as ratio of applications to places, or the aggregate score of the last student posted to the course. The popularity of courses changes from year to year, so I would rather not disclose which are the two least popular ones this year. It is also a disservice to students currently in these courses.

In 2017, seven full-time courses were retired, partly due to a lack of interest from students, and partly to reposition them to meet the needs of industry better.

Minister Ong Ye Kung will address this issue further at the upcoming Committee of Supply debates.

The following question stood in the name of Mr Kwek Hian Chuan Henry –

2 To ask the Minister for Education (Schools) what is being done to help deepen students' understanding of ASEAN in our mainstream schools.

Question No 2, please.

Mr Speaker, the Ministry of Education (MOE) develops students’ understanding of the Association of Southeast Asian Nations (ASEAN) throughout their time in school. In primary Social Studies, students are introduced to the origins, member countries and purposes of ASEAN as part of appreciating how communities in ASEAN member countries are connected through cultural, economic and geographical ties.

At the secondary level, students expand their understanding of ASEAN and its member countries through subjects like History, Geography and Social Studies. Students study the key forces and events that shaped the histories of Southeast Asian member countries and appreciate the importance of ASEAN in forging friendly relations with countries in the region. They explore environmental issues related to the social and economic development in Southeast Asia and learn about the role of ASEAN in maintaining regional stability and security.

At the pre-university level, students deepen their understanding of the opportunities and challenges confronting ASEAN. Through History, students discuss the effectiveness of ASEAN in promoting peace, security and economic development in the region. They examine the role of the ASEAN Free Trade Area in regional economic development in Economics and Geography. In General Paper, students also engage in discussions about regional issues, including perspectives of ASEAN.

When investigating issues related to ASEAN and its member countries, teachers take into consideration age appropriateness, learning load and learning goals for each level. They use authentic case studies and multiple perspectives to enable students to have a deeper understanding of these issues.

Schools also enhance students' appreciation of ASEAN through meaningful occasions. For instance, the annual commemoration of International Friendship Day celebrates the region's diversity and emphasises the importance of good relations between Singapore and her neighbours.

Students interact with their counterparts from the different member countries when they undertake overseas learning journeys in Southeast Asia. Schools also organise ASEAN-themed forums to engage students to discuss pertinent regional and international issues. In addition, through the ASEAN Schools Games, our student athletes not only spar with the region’s best, they also forge friendships and gain greater cultural awareness of their fellow athletes from the different ASEAN countries.

Dr Lim Wee Kiak.

Mr Speaker, I would like to ask the Senior Parliamentary Secretary regarding our students' understanding of ASEAN. Is the Ministry now happy with the current level of awareness that our students have of ASEAN? What is the yardstick and what does the Ministry do in terms of measurements? Does the Ministry do surveys to see what is the current level of students' awareness? I am happy to hear of all the activities that have been organised. The question is whether these are effective and what more can be done.

Sir, as I mentioned earlier, it depends on the age-appropriateness. At the different levels, we introduce the different sets of knowledge and discussions that we want our kids to have. At the curriculum development level, we have measurements to look at how our students have grasped what they have learnt. Nevertheless, as the Member can see, things are ever-changing, especially for this year, as we have assumed the Chairmanship of ASEAN. We want to take this opportunity to engage our students, see how they can discuss in class and work with the Ministry of Foreign Affairs to see how they can get involved in the process.

3 Ms K Thanaletchimi asked the Minister for Health whether the Ministry will consider forming an association for intermediate and long-term care institutions that is similar to the Association of Small and Medium Enterprises so that these institutions can collectively benefit from sharing of best practices, standards, staff training and economies of scale.

Mr Speaker, institutions providing intermediate and long-term care services can, indeed, benefit from the sharing of best practices, standards, staff training as well as pooling of resources for better economies of scale. Today, there are already representative bodies that organise such efforts, sometimes in collaboration with the Ministry of Health (MOH) and the Agency for Integrated Care (AIC). Examples include the Singapore Hospice Council and the Association of Private Nursing Home Operators. In addition, most of the voluntary welfare organisation (VWO) providers in this sector are members of the National Council of Social Service (NCSS). NCSS' key roles include raising the capabilities of the VWO members and strengthening partnerships among them.

These representative bodies are complemented by AIC, which plays the roles of sector developer and coordinator. AIC convenes regular sector-wide platforms to raise the quality of care, build up competencies and facilitate effective practices across the sector. In recent years, AIC has promulgated standards, such as the Enhanced Nursing Home Standards and Guidelines for Home and Centre-based Care, and convened industry committees to develop strategies and initiatives in quality improvement and manpower development. AIC has also brought providers together for better economies of scale in areas, such as procurement of consumables and organisation of transport services, and intends to extend this to new shared services, such as security and waste management.

The current structures are serving us well. We will continue to assess how we can better promote the interests of the Intermediate and Long-Term Care (ILTC) sector and to raise the level of industry practices and professionalism of ILTC sector workers.

Ms Thanaletchimi.

Sir, I have a clarification. In regard to AIC that is being the focal point of bringing all the ILTC institutions together, there are different forms of ILTC institutions. Some are VWOs, some are privately-owned, some are kind of supported by MOH. How can they among themselves cross-learn the best practices and, at the same time, be more cohesive to be able to transfer skills and share skills where it is needed, because there are small and big institutions within the ILTC sector?

I would like to thank Ms Thanaletchmi for the supplementary question. Indeed, she is right that there is a bit of unevenness amongst the various providers. That is why MOH felt that it is probably not the right time to have an ILTC association as such. With AIC being the sector developer and coordinator, we are able to help each and every individual operator to level up. I would like to assure Ms Thanaletchmi that we have not precluded the idea of an ILTC association in the future. We will watch this space very closely.

4 Dr Lim Wee Kiak asked the Minister for Manpower (a) which are the top five industries that freelancers are venturing into; and (b) whether more grants and mentorship programmes will be given to support freelancers outside of the creative industry.

Mr Speaker, I will be answering Question No 4. The top five occupations for self-employed persons (SEPs) without employees, or more informally "freelancers", are taxi drivers, real estate agents, working proprietors, insurance agents and private hire car drivers.

The Government provides skills development and training support for all workers, both employees and SEPs, through initiatives, such as those under SkillsFuture (SSG). All SEPs, not just those in the creative industry, can access subsidised courses offered by Continuing Education and Training Centres appointed by SkillsFuture Singapore as well as certifiable courses that receive funding support of SSG. Eligible trainees can also apply for a training allowance under the Workfare Training Support scheme. We encourage all workers, including SEPs, to take advantage of such schemes to upgrade and improve skills and competencies continuously.

Dr Lim Wee Kiak.

Mr Speaker, I would like to thank the Second Minister for her reply. Let me just ask her one supplementary question regarding the top five industries that freelancers have ventured into. The Second Minister mentioned there are schemes to help them. How well are these schemes currently taken up? Can more be done to help them? I understand that this group is also not a permanent group; they are a transient group. Some of them will be freelancers for a while, and then they will find a full-time job, and then they may go back again. The issue now is how to help them to continue to upskill. We are also worried about them being stagnant in one position and miss out the entire innovativeness of the economy as the economy improves. Can the Second Minister update us as to how much the freelancers in these five industries utilise the schemes she just mentioned?

Mr Speaker, the Member is right that we also want the self-employed persons to be able to keep up with all the changes that are happening within our economy.

Where there are associations, for example, the sports coaches or the National Taxi Association, there have been mechanisms for outreach and we can certainly intensify the efforts. The plan is to do so. I will be talking about this during the Committee of Supply debate for the Ministry of Manpower.

Where there are no associations, it becomes a bit harder. The reason is because if you look at the landscape of self-employed persons, although the numbers have been largely stable over the years, the occupations are very varied. There are at least 100 occupations among all self-employed persons. They keep changing as well.

One assurance I can give to the Member is that where there is an association, where the self-employed persons have come together and they can identify common needs among themselves, then there is a way in which we can work with them to enable more of them to keep up with skills development.

5 Ms Sun Xueling asked the Minister for Transport what is the average daily number of requests for help that the pool of 150 service agents employed at MRT stations to assist commuters with the ticketing machines receive and what is the demographic mix of those who seek help.

Mr Speaker, commuters can use cash to top-up their travel cards at the ticketing machines found at every Mass Rapid Transit (MRT) station. What is gradually being withdrawn is the cash top-up service at the Passenger Service Centre (PSC).

To help commuters make adjustments, some 150 service agents are deployed at MRT stations to help commuters with the ticketing machines. The service agents helped a few hundred commuters per day in the beginning, but the number has since come down significantly. Based on our sample count, the estimated breakdown of these commuters who needed help is: 42% seniors, 35% working adults, 19% foreign workers and 4% others.

Ms Sun Xueling.

I thank the Minister for the explanation. I would like to enquire if there is a sense that the same group of commuters, perhaps the 42% senior citizens, would require repeated help in this area. If so, how can we help them to remember how to do so, perhaps for a longer period of time?

Anecdotally, there were some who tried it and felt it was still difficult. So, they came back and we helped them. We take a very flexible and patient approach. My philosophy is quite simple: technology must help us and help consumers. We should not try to get consumers to change in order to fit technology, especially if it is difficult. But, at the same time, I think consumers do need some nudging. If you do not nudge people along, we would still be using bullock carts.

6 Dr Lim Wee Kiak asked the Minister for Transport (a) what are the statistics on bicycle ownership in Singapore; (b) how many people use bicycles as part of their daily commute; (c) whether the drive towards the Walk Cycle Ride SG vision is on target; and (d) whether the rise of PMDs is undermining this vision.

Mr Speaker, based on the Land Transport Authority's 2017 Household Interview Travel Survey, about a quarter of households own bicycles and about 125,000 people use them for their daily commute.

Our Walk Cycle Ride aspiration is for Singaporeans to choose to walk, cycle and ride public transport, instead of driving. We have set a target of 75% of peak hour trips to be on public transport by 2030. The mode share of public transport has risen from 64% in 2013 to 67% last year. We expect it to rise further as more rail lines are launched. The increasing use of personal mobility devices as a first- and last-mile mode of travel has also contributed towards this vision.

Order. End of Question Time. The Clerk will now proceed to read the Orders of the Day.

[(proc text) Order read for Resumption of Debate on Question [19 February 2018], (proc text)]

[(proc text) "That Parliament approves the financial policy of the Government for the financial year 1 April 2018 to 31 March 2019." – [Minister for Finance.] (proc text)]

[(proc text) Question again proposed. (proc text)]

Mr Speaker, Sir, being the penultimate speaker in this marathon Budget Debate stretching to a third day, there is always this pressure not to cover the same ground as the speakers who have gone before me. I had to revise my speech several times. I realised through the revisions, they have helped me better understand what is at stake in this year’s Budget. So, it is not all that bad being the second last speaker. I cannot speak for Mr Saktiandi Supaat though.

This House has heard impassioned pleas from hon Members on the focus areas for this year’s Budget. For instance, there have been clarion calls to further increase social spending to take care of less fortunate people and improve their social mobility, address more issues associated with the ageing population, and providing better opportunities for all, young and old.

At the same time, all hon Members have agreed that we need to ensure that the Budget is financially prudent. There are divergent views on how this can be achieved. It is important that we in this House try our best to build a consensus on at least the broad areas of strategy that this Budget represents. Everyone must agree that we should not dissent for the sake of dissent. So, what should be the framework for us Members to build this consensus? I will return to this question shortly.

But before that, I want to, first, deal with a point made by hon Member Ms Kuik Shiao-Yin in her speech yesterday. It may be useful to outline her speech first. She said the Government's decision to increase the Goods and Services Tax (GST) to 9% is justified as a pragmatic decision. She said the Government's decision not to raise the Net Investment Returns Contribution (NIRC) to above the 50% mark is also justified as a pragmatic decision. She further cites a report in support of the view that the Government is excessively prudent with its large Reserves. She then asked how much is then enough for us. She also said "every tilt towards the side of pragmatism is simultaneously a tilt away from the side of our ideals".

With respect, I do not see pragmatism on one hand and being true to our ideals on the other as binary choices giving rise to a zero-sum game. This kind of approach would give rise to polarising views which would make it harder for us to reach a consensus on what is the right approach to be taken in our Budget.

Let me explain by dealing with the example of Reserves that she raised in her speech. Ms Kuik asked how much is enough for us. From my perspective, no one can tell. In a financial crisis, the value of assets, especially those marked to market will shrink. We saw that in the Global Financial Crisis when the international bank shares dropped. We cannot predict with any certainty how much we need to overcome the next big crisis that will hit us. As an analogy, think of the Indian Ocean tsunami. Nobody predicted that. We can only make an educated guess.

Using the pragmatism/idealism dichotomy that she raised, what should the Government then do? Should it be idealistic, assume that the world is kind and, if Singapore, a small country with no natural resources, needs help to prop up its finances, it will get help, and it will be treated fairly, equally and equitably? With due respect, is this a realistic assumption?

Or should it be pragmatic, because it is a steward of 3.6 million Singaporean lives and that of their progeny, and ensure that the Reserves can be tapped to save us from the next crises whenever it may happen?

As a father who has a stake in the future of his children, I am clear in my mind what the Government should do. What is more important, I would respectfully suggest, is to appreciate whether the approach taken in this Budget is in keeping with our values. This is how I suggest we can forge a consensus as Members on the Budget.

I would like to quote former United States (US) Vice President Joe Biden, who said, "Don’t tell me what you value, show me your budget and I’ll tell you what you value".

Members of this House would recall the debate on the Government White Paper on Shared Values in 1991 in this House during the tenure of the second-generation leaders led by Emeritus Senior Minister Goh as Prime Minister. The first three shared values are: (a) nation before community and society above self; (b) family as the basic unit of society; and (c) community support and respect for the individual.

The Budget reflects these values. Investment in economy and infrastructure is needed to secure the future of Singapore as a nation. This is not growth for growth’s sake, as emphasised by Minister Heng. It is about making sure that our families remain intact and we and our family members enjoy a good standard of living.

There is also a healthy dose of idealism in this Budget. Just look at the plans that the Minister has suggested to take advantage of the opportunities within Asia and the Association of Southeast Asian Nations (ASEAN). At same time, the funding of the investments is done in a prudent way, which is also in keeping with our values in putting our nation first.

The GST is proposed to be increased in the next term of Government after carefully studying all other options. The hon Member for Aljunied, Mr Low Thia Khiang, said reference to this is a distraction and unnecessary. With respect, I fail to see how this can be so. We have already been committing to expenditure well into the 2030 and beyond. Surely, a responsible Government should also signal how it plans to raise the revenue for the same period.

Reserves are not being used to fund expenses. I endorse this forceful point that was made by hon Member Mr Christopher de Souza yesterday on the danger of using proceeds from land sales, which make up our Reserves, to fund expenditure. That is not to say Reserves cannot be used. The way the Budget is pitched, it represents a fair usage of Reserves and allocation of responsibilities between the present and future generations.

Borrowings for infrastructural developments are to be secured by guarantee, subject to the President's approval, which, in turn, is secured by the Reserves. Payment obligations on the loans would also fall on the future generations.

The 50% NIRC rate, in my view, represents a fair balance between ensuring a bright future as a nation and the present funding needs of the community. There is no loading in favour of one or another. This better represents our Asian values. Once we change this, it will be a slippery slope and there will be a tendency to adjust a higher percentage to accommodate for higher expenditure.

This is my answer to the hon Member Asst Prof Mahdev Mohan who suggested in his speech yesterday that the Government listen to views expressed by some Singaporeans that the NIRC rate should be increased. Mr Speaker, may I speak in Tamil, please.

(In Tamil): [Please refer to Vernacular Speech.] Yesterday, Asst Prof Mahdev Mohan spoke about the Government listening to the people's concern on raising revenue. I agree but this is not enough. There are several opinions on this. As such, the Government should consider and decide which approach will be suitable for the people, and then the Government should explain its decision clearly to the people.

(In English): Next, the concrete steps in providing greater support for families recognise the primacy of the family as the basic unit of society and the important role it plays in nation-building.

Finally, the programmes to support individuals, especially our seniors, are consonant with the values of community support and respect for the individuals. For these reasons, I support the Budget because it accords with our shared values.

Before I leave this point, I would like to return to an aspect of the speech Ms Kuik Shiao-Yin made in reference to JC and polytechnic students she spoke to, constantly using the word "uncertain" when asked to describe their future. If I were there at the discussion, I would acknowledge that, indeed, our future as a nation and as individuals has and will always be uncertain. This has been the case since 1965. We survived because we remained together, worked hard putting the nation before community and community before self.

I would point out that we are in a better situation than before because of a prudent and forward-thinking Government. I would highlight the importance of being resilient and the need for the students to be the best they can be for themselves, their families and our country. If our youths can accept this, we can be sure that we will have a strong future. Having said that, I have three observations to make on the Budget.

First, the Wage Credit Scheme (WCS). Minister Heng decided to extend WCS to overcome near-term challenges because, in his words, "Some firms remain concerned about business costs" even though our economy has picked up. We, therefore, will see a second extension of WCS which has been running since 2013.

Based on estimates, the Government would have committed up to $7.2 billion for this programme. For the period 2013 to 2015, it is about $3.6 billion; 2016 to 2017, it is $1.8 billion; and an additional $1.8 billion for the next three years.

In 2015, when the Government first proposed the extension of WCS in Parliament, concerns were raised in this House. The hon Member Assoc Prof Randolph Tan warned that WCS may land up in delaying the adjustments that businesses should make in order to complete restructuring. In other words, WCS should not unwittingly become a wage subsidy crutch.

The hon Deputy Prime Minister Mr Tharman Shanmugaratnam explained then that there is a need to adopt a phased approach whilst the foreign manpower policy is tightened and the labour market becomes tighter. Otherwise, there would be an impact on weaker businesses, especially startups. There is also a need to support those who are rejoining the economy and may need time to enhance their skills and increase their productivity.

I support this approach but, given that this is the second time an extension is being sought, I am of the view that the WCS criteria should be sharpened so that we focus on the firms which are concerned about business costs. I do not see why a muscular company, say, a Government-linked company or a listed company, can benefit from WCS in the same way as a small enterprise.

Also, the drivers for WCS, when implemented in 2013, were the need to improve productivity and the tight labour market. Productivity growth for 2017 is 4.5%, highest since 2010. Citizen unemployment rate for 2017, based on the Ministry of Manpower's (MOM's) preliminary figures, stands at 3.3%, better than in 2013 when it was 2.9%.

In light of the improved situation, why does the Government see a need to further extend WCS by another three years, which is a year longer than the first extension, which was for two years?

Second point, promoting partnership. Minister Heng Swee Keat identified the forging of strong partnerships as a third key enabler to capture future opportunities, especially in Asia and ASEAN in particular. He pointed out: "Competition is not the only driving force in our economy. Cooperation is also key."

He went on to identify platforms for partnership, such as Partnerships for Capability Transformation (PACT), Global Innovation Alliance, ASEAN Innovation Network, and announced the setting up of the Infrastructure Office.

I support the focus on capturing future opportunities in Asia and ASEAN to grow the Singapore economy. There is, however, a need to overcome the default mindset of companies which are used to competing with one another. This will not be easy. Also, PACT contemplates large organisations to partner small companies. This is not a partnership of equals. Recognising this, in a Business Times article published on 8 November 2016, Mr Lim Hwee Seng and Ms Bernadine Huang of PricewaterhouseCoopers (PwC), stated as follows:

"This scheme remains out of the reach of the smaller-scale small and medium enterprises (SMEs). More often than not, large organisations will choose to work with the bigger SMEs, and not the smaller ones. We suggest for PACT to be extended to allow bigger-scale SMEs to work together with smaller-scale SMEs and not just large organisations vis-a-vis SMEs."

How would the Government promote the forging of strong partnerships in these circumstances? In particular, how would it ensure that the smaller SMEs would benefit from PACT? This is especially important in the technology space where there are a good number of startups and small companies which could potentially benefit from venturing overseas in partnership with large organisations.

I note that the 2001 Economic Review Committee, in its report which was issued in 2003, a similar call was made. It promoted a cluster approach amongst companies venturing overseas, where larger companies lead a cluster of enterprises, including SMEs.

May I ask what has been the Government’s experience in promoting such partnerships? What lessons can we draw from the past?

Final point ‒ strengthening social safety nets for those in need. I am very heartened to note the concrete plans for Budget 2018 to build on the SG Cares movement. On the aspect of financial support for charities, I note that the total donations have increased from $2 billion in 2011 to $2.7 billion in 2017.

One big contributor is Tote Board, through its grant-making activities across sectors, such as Arts, Community Development, Education, Health, Social Service and Sports. In financial year (FY) 2016/2017, Tote Board approved disbursements of $459 million to these sectors. This amounts to about 17% of the donations. In the past five financial years beginning from 2012, Tote Board collected an average of about $150 million from casino entry levies per year, which is used to fund its grant-making activities.

Casino entry levies have not changed since 2010, not even adjusted for inflation over the past eight years. May I ask why this is so? Increasing the casino entry levy will enhance the safeguard to protect Singaporeans and Permanent Residents (PRs) from the ill-effects of gambling and, at the same time, allow charities to be better supported through Tote Board’s grant-making activities. With that, I support the Budget.

And finally, we have Mr Saktiandi.

Mr Speaker, Sir, like what Mr Murali Pillai has mentioned, I think it is a great honour to be the last speaker. But I think Mr Murali has done great justice in terms of trying to wrap up some of the points made by other Members. I am not sure whether I should try and keep it brief or try to be on point.

Brief is always good.

But I find that the Budget takes a very detailed approach to the challenges that Singapore will face in the next five years and the Minister for Finance has scrutinised the various revenue platforms and carefully considered how best we should manage this against our expenditure, especially on building the infrastructure necessary for the future and the rising expenditure on healthcare and security. The hallmark of this Government has always been to plan ahead, including this time round, providing forward guidance on its fiscal plans.

Based on the past two days' debate, I think it has also led to a healthy discussion on our fiscal sustainability and reserve adequacy as well. This is an important issue to lay bare, in particular, for a small and open economy such as Singapore, as huge amounts of money move in and out of Singapore all the time. This is of benefit to us, especially as a financial centre, but it can bring with it risks that we need to buffer against, so as not to take risk leading to major job losses. And I think that is the penultimate key issue ‒ the job losses that might arise from this.

After yesterday's debate, I was looking at statistics overnight. For example, to put things in perspective, based on 2016 data, Singapore's foreign direct investment (FDI) stock is S$1.4 trillion. This is quite substantial. This is no fun and games. This is a huge amount. If there is a loss of confidence or catastrophe and, let us say, 30% only of the FDIs were to move out, it will wipe out S$400 billion. And we should note that the Monetary Authority of Singapore's (MAS') official foreign reserves are only $370 billion, and this is just 30% of the FDIs. "FDI", if I may define it, is actually the amount of investments by foreign multinational companies (MNCs) or multinational enterprises investing in Singapore. This S$400 billion is what actually leaves Singapore's shores, and we will need money to rebuild for jobs if this goes out. And I remind Members again that this is only 30% of the FDI amount.

So, we are fortunate to have a good team handling our Reserves. They have been able to secure good returns from year to year to supplement our Reserves. I must, at this point, congratulate them and the Ministry of Finance (MOF) for an excellent job.

The point made by Ms Kuik Shiao Yin in her speech yesterday about being pragmatic and shifting from pragmatism and moving away from idealism, I think is the point that I shared just now in terms of statistics. So, being pragmatic today is actually quite important so that tomorrow's kids can have a space to realise their dreams and ideals. That is an important point I want to share today from that perspective.

I am glad also with the Minister for Finance's assurance in his speech that we need to take the right approach to have future generations in part bear financial responsibility for infrastructure projects that are built for future needs.

At this juncture, Mr Speaker, please bear with me. I am trying to share a bit in terms of using a localised version of the island parable sketched by the late American economist Paul Samuelson of Massachusetts Institute of Technology to set the context about the overlapping generational issues that we face before my comments and questions later on.

Let us assume we have this island which is home to unusually tall rambutan trees ‒ Samuelson uses cocoa trees and I am using rambutan trees here to give a localised version ‒ and also hungry people ‒ one young and one old generation ‒ and little else. The rambutan trees are our surpluses and reserves, and the fruits are our returns from our reserves. The trees reflect the island's strong fundamental. So, the young among the people would climb the trees and pick the fruits. Take note that the fruit must be eaten quickly before it is spoilt by the hot weather. The older people are physically incapable to climb and pick the fruit. Neither could they buy fruit from the young, as they have nothing to offer in exchange. So, if the elders had saved the fruit from their youth, it would not work. The stockpile would have rotted with the passage of time. So, the solution: the young gives to the old the fruit they pick and, in return, the next generation will do the same for them when they, too, grow old. Thus, the young sort of pays it forward. This also serves as a link between two generations. The scheme works, Samuelson pointed out, only because “new generations are always coming along”.

I will pause at this moment and say this may be an oversimplified world I am painting, but the same core values and principles have been applied in Singapore. So, past and current generations always looking forward and thinking about the future and caring for the less fortunate.

In Singapore’s context, things have evolved with practical policies introduced in the past 50 years. Our young can acquire a durable asset, say, a Housing and Development Board (HDB) flat, and our Government buys reserve assets and can replant half the rambutan fruits or seeds to grow more rambutan trees. At a future date, they sell these to cash out and take care of themselves. Thus, when the young get older, they can rent or sell the HDB flat to the next generation. In most cases, this kind of saving and investing does far better to serve the people. Capital accumulation enlarges the economy’s productive capacity, thereby creating wealth. Saving and investing both store value and add to it, turning one rambutan fruit into a whole tree. Retirees can, therefore, expect to get more out of their investment than they put in, not to mention other long-term initiatives that we have already built up over the years, such as Central Provident Fund (CPF) and ElderShield, for future retirement and healthcare needs.

So, Mr Speaker, my first question is related to the fruits from the replanting of the rambutan trees. We should make sure we continue to plant more rambutan trees and not go down the path of eating too much rambutans. In fact, we should have a balanced diet ‒ our NIRC (or rambutans) ‒ when we can find other sources of food or tax revenue. After all, too much rambutans may not be good for us. We can get a sore throat. Besides, even when we take other sources of food from other plantations or trees, we have consistently taken care of those plantations with fertilisers and tender loving care by offsets and other measures to ensure all is well and more fruits can be produced in the future.

So, back to my first question to the Minster, will the trees continue to bear fruits at a rate we need? Can we and future generations continue to plant trees, even as some of the older trees wither and die? It would be good, too, if the Minister could say whether or not we can continue to expect such returns from the Government Investment Corporation (GIC), MAS and Temasek in the next few years or decades. If this is achievable, then perhaps there could be a chance for the proposed GST hike to be deferred to a later date.

I wholeheartedly agree that it is important to save for rainy days and keep a substantial Reserve. I am glad that the Government is looking at ways to address the overlapping generation usage of our future infrastructure, especially in the next economic phase of Singapore. This Budget is a good start. In particular, the issue is about optimal financing and that the user pays. Rather than just building up funds now for future infrastructure projects, I am glad that the Budget highlighted efforts to fund infrastructure projects by a debt structure to finance the construction of infrastructure. In principle, under such a debt structure, the cost of funding the infrastructure project should be amortised over time, so that each generation pays for the benefits they get from using the infrastructure project.

In our case, it may be useful to earmark a certain amount of Reserves or NIRC to use to “guarantee” the bonds or borrowings for an infrastructure project. To segment spending for infrastructure projects and other expenditures in our Budget explicitly would give taxpayers a better picture of where their money is going to, and how they will benefit from it. In fact, this is a feedback from one of my residents ‒ trying to give a better picture of where the money is spent and how you benefit and the usage of Reserves as well.

So, the key word here is “earmark” for the guarantee to lower the financing costs. But the returns from the infrastructure project must make sense. If future users cannot afford to pay, lenders can tap on that collateral and assume ownership of it. For example, in the context of the rambutan story, build a fence around one rambutan tree and use that as collateral to borrow money to construct the bridge to the next island, so that we can build more rambutan trees there, and not sell the rambutan tree. We can use the toll for the bridge to next island to eventually pay for the bridge. Most importantly, the future users of that bridge will pay for the bridge. No need to chop down the rambutan tree.

As mentioned in the Budget speech, borrowing arrangements for Statutory Boards and Government-owned companies which build infrastructure would form one part of the solution for funding large investments. However, contingent liability is a potential future issue that must be taken into account, given the unpredictable nature of the global economy and the financial markets. So, it is an issue and concern I have. Contingency liabilities could build up for future generations, affecting the ability to obtain funds in future. Does the Ministry see an issue in the build-up of contingent liabilities for future generations?

Moving ahead, we will also have to evaluate how a GST increase in the near future would impact on the lower-income and middle-income groups. If GST is to be increased, how much of it is expected to be ploughed back to reach those in need? Will more resources be pumped into existing assistance schemes to mitigate the impact of rising living costs? It would be prudent to explore means to collect the revenue efficiently, and quickly and fairly allocate it to reduce further inequalities.

Furthermore, as the Government moderates the pace of various Ministries' budget growth and looks out for ways to be more efficient and effective, there will be decision inflexion points with tradeoffs at the margins. I am concerned if some of the decision points and tradeoffs may lead to reduced spending in specific areas of education and skills training, in particular, the Institute of Technical Education (ITE) segment of the student population. They constitute about 25% of the post-secondary cohort each year and are a significant future labour force with key skillsets for us to be future-ready.

I have visited and met students and staff of ITE as part of the Council for the Development of the Singapore Malay/Muslim Community's (Yayasan MENDAKI’s) Future Ready Unit's efforts to enhance the awareness of the younger generation about being future-ready and to instill the importance of SkillsFuture and lifelong learning. Without a doubt, the Government has provided excellent support and resources to ITE.

In the last 25 years, ITE has made tremendous progress to provide skills training for full-time students and Continuing Education and Training (CET) skills upgrade for in-service workers. Recently, ITE had made further advancement by providing new upgrading pathways for its alumni and in-service workers through the programme called Work-Learn Technical Diploma (WLTD), which is a path towards higher certification through apprenticeship model.

Another ITE programme, which in my view is excellent, is the Global Education Programme (GEP). This programme provides ITE students with a holistic education by exposing them to new skills, global mindsets and perspectives, and a better understanding of the culture and lifestyle in other countries. It has proven to be life-changing for some of the students and is impactful, especially for those who come from humble backgrounds.

So, I hope the Government will ensure that the support for programmes like those in ITE and, for example, programmes like the ITE WLTD and GEP, will not be affected, and future demands for development resources will continue to be given to ITE. This is even more important in Singapore’s next phase of development where skills meritocracy is essential.

Another resource that I hope will not be affected are the financial assistance support for ITE students. More than 50% of ITE students qualify for some form of financial assistance and they generally come from diverse challenging backgrounds. The application and checks because of means testing can be very onerous for these families. So, the ITE schemes allow more direct assistance to the students and their families. I do hope that tradeoffs from the reduction in the budget growth do not lead to reductions in the ITE Opportunity Funds, for example.

Mr Speaker, this is a progressive Budget that seeks to prepare Singapore to cope with significant future expenditure growth. The Government is clearly seeking solutions to do so without putting too much burden on the current generation and these efforts should be lauded. I hope there will be no more rambutan trees being cut. Sir, I support the Budget.

After 54 speakers and a short detour on how speakers are rostered, Minister for Finance.

Mr Speaker, Sir, first, let me thank Members of the House for the thoughtful and wide-ranging debate over the past two and a half days. As you said, over 50 Members have spoken for more than 10 hours, and if I were to do a point-to-point discussion, it will take us beyond 10.00 pm tonight. So, in line with my Ministry's policy of limiting Ministries' budget growth to 30% of gross domestic product (GDP) growth, I shall try to keep it to about 30% of 10 hours. [Laughter.]

Thank you.

I am glad that the Budget has sparked many thoughtful conversations among citizens and fellow Singaporeans. Many Singaporeans have shared their perspectives with me in the course of various consultations and engagements, as well as with the other Ministers. I am grateful for the feedback that has helped us to refine our thinking and ideas along the way. This is important because the Budget is not an accounting exercise. It is a strategic and integrated plan for the future, about how all of us can come together to achieve our shared aspirations.

As we learned in Our Singapore Conversation, many aspire for a home where we can make a good living and fulfil our potential, regardless of where we start in life; where we can live purposeful lives, and enjoy our silver years surrounded by the care of family and community; and where we feel assured that our aspirations and needs can be met.

This Budget is about how we allocate resources to achieve these aspirations, through: (a) a vibrant and innovative economy, with diverse opportunities for all; (b) a smart, green and liveable city that we can be proud to live in; (c) a caring and cohesive society where people look after one another, especially the disadvantaged and the vulnerable; and (d) a sound fiscal system that provides for Singapore’s needs in a fair and sustainable way.

Our Budget theme is "Together, a Better Future". I am glad that many Members agree that we can achieve a better future if we work together. I would like to cover three key themes in this debate. My Ministerial colleagues will talk about the respective issues under their purviews at the Committee of Supply (COS).

First, I will explain our approach to revenues and taxes, and why this is the sustainable, responsible and fair way to meet our future needs. Second, I will talk about the urgency of transforming our economy. Third, I will speak about how we can, together, build a more caring and cohesive society.

Let me start with our fiscal strategy. In this debate, two main questions have been raised: why do we need to spend more? What are the roles of taxes, Reserves and borrowing in meeting our revenue needs?

First, let me explain why we need to spend more. I explained in the Budget Statement that we face structural and sustained increases in expenditure in a number of areas – healthcare, security and other social spending.

Government healthcare spending is projected to rise by nearly 0.8 percentage points of GDP from 2.2% of GDP today to around 3% in the next decade. That is $3.6 billion more in today’s dollars. Why this rise?

First, we will spend more due to an ageing population. Already, Government subsidies for seniors' healthcare needs are more than six times that of a young person. From now till 2030, the number of seniors will double from about 450,000 to 900,000. This alone will increase healthcare spending significantly.

Second, the number of citizens who have chronic conditions is rising. Without taking action on diabetes, the number of diabetic patients aged 18 and above could rise from 450,000 in 2015 to 670,000 in 2030. We are working hard to arrest these trends.

Third, new medical technologies, new treatments, procedures, diagnostic tools and drugs can lead to a higher quality of life, but they could also cost more.

Next, annual security spending is also expected to rise by about 0.2 percentage points of GDP as we invest more to counter rising threats. The scale and magnitude of terror attacks around the world in recent years are signs that the terrorism threat has heightened. This threat has come closer to our shores, given the Islamic State of Iraq and Syria's (ISIS’) ambition to establish a caliphate in the region encompassing Singapore. As ISIS loses ground in Syria and Iraq, ISIS fighters’ return to Southeast Asia presents a serious threat to Singapore. The recent Marawi crisis in southern Philippines is a sign that extremist terrorism is now endemic in the region and may take many years before the security problem is rooted out. Around the region and at home, we have also seen more cases of self-radicalisation.

In addition, the range of threats has widened. In recent years, we have seen an increasing number of high-profile and damaging cyberattacks around the world, like the WannaCry ransomware incident, which affected computer systems around the world. With rising security threats and a wider range of threats, we will need to continue to invest in security to keep Singapore safe.

Preschool spending is expected to double in the next five years to $1.7 billion a year in 2022, an increase of about 0.1 percentage point of GDP from today. This is a vital investment in our future generations, ensuring that they have a good start in life. Two in three preschoolers will have a place in a Government or Government-supported quality preschool, up from one in two today.

Apart from these recurrent expenditures, we are investing in key infrastructure to build a better home and ensure we remain one of the world’s leading global cities. And we have to be prepared that expenditures could rise further than what we project now.

Healthcare spending, even in countries that are prudent like Japan and Germany, is around 10%-12% of GDP. New medical technologies could accelerate spending trends.

A sudden escalation in terrorist threats or geopolitical tensions could significantly increase the security spending required. A decade ago, we could not have predicted the rise of ISIS and the speed with which terrorism has spread and evolved around the world.

Our responsibility is to ensure that we make timely decisions and have enough revenues to meet our future expenditure needs readily, amid an uncertain future. In making the additional investment, we are doing so on a strong foundation. Government spending to date has achieved good outcomes.

Indeed, as Miss Cheryl Chan has noted, it is not about how much we spend, but how well we spend. We achieve very credible outcomes, with overall expenditures of about 19% of GDP in FY2018. This is less than half of what the OECD countries typically spend. We think carefully about how to design and organise our underlying delivery and funding systems and consider the roles of all stakeholders. Let me illustrate this in three areas: education, healthcare and law and order.

This is a chart showing how 15-year-olds from different countries do on the Programme for International Student Assessment (PISA) test for science, compared with how much the government spends on education. One group is the Nordic countries, which typically spend about 7% to 8% of GDP. Various OECD countries form a second group, around the OECD average. They typically spend about 4% to 6% of GDP. A third group comprises East Asian societies – Japan, Hong Kong, South Korea. They tend to spend less, with PISA scores on the higher end.

Where is Singapore? We spend about 3% of GDP and do well compared to other countries. The conclusion is the same even after we consider private expenditure on education, such as enrichment classes. It is not just in taking tests that our students do well, but other skills like collaborative problem-solving. And this does not capture the immeasurable character-building work that our schools do in cultivating traits in our students, such as perseverance, responsibility and valuing hard work.

The next chart shows healthy life expectancy against government and statutory healthcare spending. Countries to the right of the chart spend more of their GDP on healthcare, while those to the left spend less. The higher up a country is on the chart, the longer its residents live in good health.

Green points represent the younger societies, while red points are the more aged ones, and amber ones are somewhere in between. Many governments spend around 6% to 10% of their GDP on healthcare. As Members can see from the charts – 6% to 10%.

Compared to other countries shown on this chart, Singapore spends less on healthcare, yet achieves a high healthy life expectancy, higher than the OECD average. Even with population ageing, we expect to spend less than other countries with similarly aged populations.

Similarly, we are able to get effective outcomes for our spending on policing. We were ranked top in the 2017 Gallup Global Law and Order Index, which gauges people’s sense of personal security and their experiences with crime and law enforcement when living in their respective jurisdictions. This is despite our spending being at the lower end when compared to various jurisdictions. That said, Singapore must stay vigilant as a society and as a country.

How have we been able to achieve this so far? It is through a whole-of-society effort.

In education, we achieve good outcomes because we have invested in our schools and a dedicated corps of educators who believe in developing every child to their fullest potential. We have engaged parents who do their best for their children’s education. We have community groups, charitable foundations and individual donors who support students and families in need.

In healthcare, we are able to lead long and healthy lives because we have a well-designed healthcare system and dedicated healthcare professionals, with a system of incentives aimed at delivering value, rather than volume of treatments. We have citizens who take responsibility for their own health and strong families who look after their aged parents. And we have caring and dedicated voluntary welfare organisations (VWOs) that run many services in the community.

In security, we enjoy safety today, not only because we have built up robust and sophisticated systems and a strong corps of Home Team officers. It is also because we have National Servicemen and volunteers who serve with pride, and a united, law-abiding and vigilant community that stands against crime.

This is the power of partnership, and of a whole system that encourages everyone to take responsibility. It explains how a tiny country like Singapore with no natural resources can have world-leading outcomes with moderate levels of taxation and spending. This is the Singapore way and we must continue to build on this ethos. In particular, managing the cost of healthcare must be a whole-of-nation effort. We all need to do our part to keep healthcare cost growth sustainable.

In this respect, I appreciate the useful suggestions by Ms Sun Xueling on how we can be more efficient, effective and smart in spending. The Ministry of Finance (MOF) will elaborate more on how we are doing so at the Committee of Supply.

While we must instill prudence as a value in managing our resources, we must also appreciate that the major structural expenditure drivers that I have spoken of will entail billions of dollars of additional spending a year. The needs they address cannot be met by just squeezing more out of every dollar.

Having explained why we need to spend more, let me now talk about how we plan to finance this in a fair and sustainable manner.

Ms Tin Pei Ling and other commentators have asked if we could fund the increased spending for the future with a windfall surplus like the one we had in FY2017.

The surplus in FY2017 was largely due to one-off, exceptional factors that we do not expect to occur every year. The main increase came from an exceptional Statutory Board Contribution from MAS due to unexpected currency translation gains and investment gains from a global rally in equity and bond markets. The increase in Stamp Duty collections was generated by the recent property market pick-up.

We cannot fund our plans to secure Singapore’s future on the basis of episodic windfalls. If we are fortunate to have these occasional windfalls, we should do the responsible thing and save most of it for our future needs. We should not plan for our future in the hope that markets will always continue to move in Singapore’s favour. That is why we are reserving the bulk of the FY2017 surplus for future needs like the Mass Rapid Transit (MRT) development plans and ElderShield subsidies. The Government is also sharing some of the surpluses through the SG Bonus.

Let me explain at this point our approach to financing our needs. There are essentially three ways of doing so: raise taxes; borrow; or draw on our Reserves. Each of these ways serves a purpose; each involves risks and tradeoffs. We have decided on our approach only after deep and serious study – first, of our spending needs, followed by the options available to fund them.

Mr Louis Ng can be assured that in the process, many public officers from MOF, MOF agencies like the Accounting and Corporate Regulatory Authority (ACRA), Customs and the Inland Revenue Authority of Singapore, and other agencies spanning different policy and operational areas, debated the ideas rigorously with me and their own bosses. In the process, they pushed back on many ideas but also gave me fresh perspectives and feedback. They were certainly not afraid of speaking up or disagreeing with me or with the other Ministers for that matter.

So, let me now turn to the roles of each of these methods – taxes, borrowing and Reserves.

Let me, first, explain why we have decided to raise taxes. This is not an option that we have taken lightly. Not just because raising taxes is unpopular, but because the Government should, as far as possible, avoid taking people’s hard-earned money and deciding on their behalf how the money should be spent, unless it has to do so for critical social, economic or national needs.

Certainly, we should not shy away from addressing the need for taxes, where we see areas of collective need that can be better met by Government provision. These include areas like healthcare, supporting the elderly and retirees, investing in our people through preschools and SkillsFuture, and strengthening our security. As Mr Liang Eng Hwa reminded us, many Members in this House have fought for the Government to do more in these areas. But we should also consider the costs and how to fund them.

Looking ahead, we have needs that occur year after year. The responsible way for us to fund such spending is to raise taxes. As Er Dr Lee Bee Wah pithily reminded us, you do not fund recurrent spending needs by hoping to strike 4D. Or by borrowing with your credit card.

Each generation should strive to pay for its own spending through sustainable means, instead of drawing down more than is prudent from the Reserves or by borrowing and passing on the cost of current spending to future generations.

In particular, for the broad-based needs that I have mentioned, a broad-based tax like the GST is appropriate. As then-Minister for Trade and Industry, Mr S Dhanabalan, said at the Debate on the GST Bill in 1993, it is critical to have a “tax system that will make an immediate and direct connection between demands for public service and the private purse”. This is important so that we understand that whenever we increase demands for public services, we should also pay more. Mr Lim Biow Chuan gave us all a timely reminder that when the Government pays, it is the taxpayers who pay.

Let me now address some key questions that have been raised with respect to the GST increase and other tax changes: first, how we decided on the timing of the GST increase and its announcement; second, how we sized the GST increase relative to our needs; third, how we take care of our lower-income and ensure that our overall taxes and benefits system remains progressive; fourth, how the tax changes will affect our competitiveness.

First, there have been questions on the timing of the GST increase that I have announced. In planning our finances, we take the long view. We seek to understand major trends holistically and how they may affect Singaporeans. We assess carefully what we need to do in response and how we should find the resources to support our plans. This is how we had determined that we will need to raise GST sometime in the period from 2021 to 2025.

By announcing the GST increase early, we are being honest and upfront about our national needs and setting out what needs to be done. We are giving ample notice to citizens and businesses that we will need to raise GST. Members of Parliament (MPs), such as Mr Lim Biow Chuan and Asst Prof Mahdev Mohan, have spoken about why we need to do this, to set out a clear direction for the future.

I hope that it helps everyone to understand our shared challenges in the coming years. Indeed, we must have such important discussions about our future, well in advance. This is important because it is not just Government finances that will be impacted by trends like ageing, but individual citizens and their families. We must all prepare for what is to come. This will also help us to better determine an appropriate offset package that can help with the adjustment.

But we know that there are always uncertainties. That is why we have given a timeframe of 2021 to 2025 as to when this increase would need to take place. I would like to assure Members that, just as the decision to raise GST was not made lightly, the Government will exercise care in deciding the timing for its implementation. Before we move to raise GST, we will carefully assess the prevailing economic conditions as well as our needs at that point.

Second, let me address questions over how the GST increase is sized relative to our needs. As mentioned, a two-percentage point increase in GST rate is expected to raise revenues worth about 0.7% of GDP per annum. This estimated amount is before we account for the amount needed to fund the enhanced GST Voucher (GSTV). On the other hand, the expenditure drivers that I earlier mentioned – healthcare, security and preschools – already exceed this amount. These are serious commitments that we must budget for, and there are risks that overall spending could rise further.

So, the two-percentage point GST increase will not fully cover our expenditure needs, but only make the fiscal gap more manageable, in conjunction with other measures to manage expenditure. It is thus the prudent and responsible approach to raise GST in good time, instead of hoping for expenditure to fall.

Third, let me address concerns over the fairness and progressivity of an increase in GST. I understand that some are worried about the impact of a GST increase on the cost of living, not just among the lower-income, but also among many middle-income households. Let me assure everyone that we are mindful of the impact of tax changes on households, particularly the lower-income, and will help them to adjust while maintaining a fair and progressive system of taxes and transfers.

As I have mentioned in my Budget Statement, GST should be seen together with the rest of our taxes and transfers system, including the GST Voucher scheme. The Government provides structural GST offsets through the GST Voucher. This is a permanent scheme, an integral complement to GST. For the lower-income, we provide substantial offsets. This is a targeted way of making the GST package a progressive one. For retiree households, they also get significant GST offsets.

In addition, we have schemes and programmes to support the less well-off. This includes the Workfare Income Supplement and Silver Support. From education to healthcare and housing, our social programmes provide higher levels of support for the lower- and middle-income households than they do for the well-off, with lower-income households benefiting the most.

We also provide support for the middle-income. First and foremost, our approach to supporting the middle-income is to create good economic growth, as the best form of social security is a good job. Second, we keep the tax burden low, so that Singaporeans get to keep as much as possible of what they earn. Finally, in recent years, we have expanded the support for Singaporeans to take care of their children and aged parents, easing the burden on the "sandwich generation" which Mr Desmond Choo spoke about.

So, when you look at the overall balance of taxes and transfers, lower- and middle-income households receive significantly more benefits from transfers than what they pay in taxes. The middle-income group gets $2 in benefits for every dollar of tax that they pay. The lower-income group gets about $4 in benefits for every dollar of tax.

As I have mentioned in the Budget Statement, we will continue to absorb GST on publicly subsidised education and healthcare.

When we eventually raise the GST, we will enhance the permanent GST Voucher scheme to provide more help to lower-income households and seniors. We will also implement a transitional offset package, with lower- and middle-income households receiving more support, to help them adjust.

Mr Lim Biow Chuan and Er Dr Lee Bee Wah also asked if we intend to set up a Committee Against Profiteering (CAP) to combat any illegal profiteering due to GST hikes. When we last raised the GST in July 2007, most businesses did not use GST as an excuse to raise prices beyond the GST increase. The then-CAP looked into the complaints to manage profiteering.

Similarly, when we raise the GST to 9%, we expect businesses not to exploit the situation and use the GST as a cover to raise prices. If necessary, the Government is prepared to convene a similar CAP.

There have also been concerns that consumers may choose to shop abroad for daily products and there will be more attempts to evade GST. Today, we limit the value of goods that can be brought into Singapore for their personal use without GST. Customs and Immigration and Checkpoints Authority (ICA) officers enforce this, and we will continue to have an appropriate level of enforcement when the GST is raised.

While we have announced the GST increase this time, we continually consider all other taxes and sources of revenues to meet our expenditure needs. Some Members have asked if we are doing enough to tax wealth, and if those with higher income are contributing a fair share.

Dr Intan Mokhtar has suggested raising personal income taxes (PIT). We have raised PIT in recent years to further enhance progressivity. We increased the marginal tax rates for higher-income earners with chargeable income exceeding $160,000 and raised the top marginal rate from 20% to 22% for those with chargeable income exceeding $320,000. This took effect from YA2017. We also introduced a cap of $80,000 on PIT reliefs, taking effect from YA2018. Under the present PIT structure, about half of our workers do not pay personal income tax. Among those who do, the top 10% pay about 80% of our PIT revenue.

Any review of PIT rates must ensure that Singapore remains attractive. Just yesterday, Hong Kong has announced a reduction in PIT in their Budget. We will be moving in the opposite direction if we are to raise PIT when all jurisdictions are competing for talent, including our Singaporean talent. We will continue to monitor and review our rates but, for now, our view is that PIT rates are reasonable for us to remain attractive, given the intense global competition for talent.

Mr Ong Teng Koon and Mr Yee Chia Hsing suggested that we look closely at wealth taxes. Aside from taxing income, our current approach to taxing wealth is mainly through taxes on assets that cannot be tax-planned away easily, unlike other methods like estate duties. That is why we have enhanced our property tax regime in the last decade to make it more progressive, and to meet our spending needs. For residential properties, 86% of property tax collected comes from non-owner-occupied residential properties, and owner-occupied residential properties with an annual value of $30,000 and above.

In this Budget, we have made moves to improve the progressivity of our stamp duty regime, so that those who can afford a higher-value residential property pay more taxes on their purchase. I thank Mr Seah Kian Peng and Mr Yee Chia Hsing for their strong support for this move. On average, we collected about $8 billion in recent years from property tax and stamp duty. This is a significant proportion of our revenues. We will continue to review this area closely.

Mr Yee Chia Hsing and Ms Foo Mee Har suggested reviewing taxes on alcohol and gambling. We regularly review such duties and we will take these suggestions into consideration.

On the introduction of GST on imported services, Mr Thomas Chua mentioned the $225 billion worth of imported services reported by the Department of Statistics. I wish to clarify that this includes all business-to-business (B2B) services, and vastly overstates the imported services which we will introduce GST on. Our move to levy GST on imported services will not affect most businesses. This is because most businesses can claim full refund of the GST they incur on inputs that they procure for their businesses, including imported services. Thus, businesses affected by the GST on imported B2B services are primarily financial institutions and residential property developers which do not get such full refunds.

Mr Pritam Singh asked if this will yield additional revenues. We estimate it could yield additional revenue of about $90 million per year. But let us be clear that this is a move to defend our current revenue base from being eroded as more transactions move online.

Finally, let me talk about keeping our fiscal system pro-growth. Dr Intan Mokhtar has made suggestions to raise corporate income tax rates, particularly for MNCs and large firms. Let me elaborate more about our environment today. Around the world, there are significant changes and uncertainties in the global tax environment. There is ongoing discussion worldwide on international tax rules for combating tax avoidance under the Base Erosion and Profit Shifting (BEPS) project. In 2018, the US reduced its headline corporate income tax rate from 35% to 21%. It also made other changes to make it more attractive for US companies to invest at home. This may spur cuts in corporate income tax rates around the world.

Singapore must remain sensitive to these global trends that impact us. We are a small and open economy, subject to the full forces of competition in a globalised economy. It is important for us to remain a competitive and business-friendly location. In 2017, $9.4 billion of fixed asset investments and $6.5 billion of total business expenditure were committed. When the projects are fully implemented, about 22,500 jobs will be created.

The increase in GST is not expected to impact our competitiveness significantly, which is a concern raised by Dr Lim Wee Kiak. The future GST rate of 9% is not high by international standards as this chart shows. The OECD average is 19%. So, our new rate is less than half of that. Among countries in the region, many others have GST standard rates that exceed 9%. Some countries are also contemplating raising GST. Japan, for example, plans to raise its consumption tax rate from 8% to 10% in October 2019.

In summary, we have taken a principled approach to meet the general population's future needs through a broad-based GST increase, while ensuring that our overall system of taxes and transfers remains fair and progressive and is supportive of growth.

I have spoken at length on the first way of financing our needs through taxes for recurrent needs. Let me now move on to the second way, which is borrowing. Borrowing is a reasonable option for major long-lived capital investments with high capital expenses, because the benefits of these assets are enjoyed mainly by future generations, in fact, many years down the road. This is an option that we are pursuing for major long-term projects like Changi Terminal 5.

Ms Tin Pei Ling and Mr Saktiandi Supaat raised concerns on whether borrowing will result in unsustainable debt and interest payments and they have raised an important point. Indeed, we aim to live within our means. We should not over-borrow and burden future generations with unsustainable debt, as we have seen in other countries. The stark difference is that unlike some other countries, we borrow not to spend on recurrent needs like healthcare, education and security, but to invest in long-term infrastructure. Such long-term investments will continue to yield economic benefits and position Singapore well for the future.

We are strategically leveraging the strength of our financial position to optimise our borrowing. To reduce financing costs, the Government is considering the provision of guarantees to back borrowings by our Statutory Boards and Government-owned companies. The Government is consulting the President's Office and the Council of Presidential Advisors (CPA) on this proposal, including the details of how it will be structured. So, many of the points that Mr Saktiandi mentioned earlier on will be discussed in great detail.

This way, we can tap on the Government's triple-A credit rating and the strength of our Reserves without directly using it. This is how we are helping the current and future generations. We are able to do so only because we have planned our finances soundly and accumulated strong Reserves. We are one of only 11 countries in the world, and the only Asian country, which has a triple-A credit rating, which represents the solid foundation and safety net that our forefathers left for us. We do not and cannot take our credit rating for granted. I am glad that Members, like Mr Sitoh Yih Pin, Mr Liang Eng Hwa and Mr Ong Teng Koon, think that this is a sensible approach and recognise the value in this.

Now, I will talk about the third way we have been financing our needs, which is our Reserves. Our Reserves have been painstakingly built up over half a century by our Pioneers and previous generations. We have inherited this nest egg and must act as responsible stewards. That is why, over the years, we have carefully deliberated and developed a comprehensive set of rules to safeguard and manage the use of our Reserves. Our Constitutional rules protect our financial assets and land as past Reserves. As land sales convert physical assets into financial assets, the proceeds from land sales are rightly fully protected as past Reserves as well.

This principle of asset conversion is sound. It is irresponsible to mislead people that the principle suddenly does not apply when we use just, say, 20% instead of 100% of land sales proceeds.

Mr Pritam Singh made such a suggestion and if I may use an analogy: suppose our forefathers left us with five plots of land and, each year, we sell one plot, 20% and use that money. In five years, there will be no land left. So, that is the fallacy of using 20%.

Now, instead of using the proceeds of land sales, or any part of it, for spending, the proceeds of land sales are added to our Reserves, which are invested in a globally diversified portfolio. From the returns, we take 50% as NIRC to supplement our budgetary needs. This achieves a balance between supporting the needs of the current and future generations.

Today, contributions from Reserves are already the largest contributor to our revenues. If we did not introduce the NIRC framework, we would have had to double our PIT collection or our GST collection to raise the same amount of revenues.

And yet, some have suggested increasing the NIRC spending cap from the current 50% to 60% or using a portion of land sales proceeds for recurrent social spending. All this sounds very tempting. It seems relatively painless to do so compared to raising taxes. And you may be wondering why do I not take a painless way? But is it the right thing to do? Certainly not.

The rules on Reserves were debated and agreed in this House. We enshrined them in the Constitution. We deliberately introduced rules on land sales and the 50% NIRC cap so that we do not succumb to the temptation to draw more from our Reserves to fund current expenditure or eat into the principal sum.

To amend the rules as a first resort is ill-disciplined and unwise. This would defeat the purpose of enshrining the 50% cap in our Constitution. Moreover, if as soon as we need more money, the first thing we do is relax the rules, that is the surest way to change Singapore's basic orientation, from saving and building for the future, to living for today and letting tomorrow look after itself. We must not give in to the temptation to chip away at our strategic national asset.

Indeed, as many Members agreed, we should not over-rely on NIRC, which is already the largest source of our revenues. An over-reliance will hurt our ability to respond to changing circumstances in the future.

We are stewards of the Reserves for our future generations, as what our forefathers had been for us. It was thanks to the astute Dr Goh Keng Swee and other forefathers, who had the foresight of investing our Reserves in a long-term and diversified portfolio early, that Singapore has built up a nest egg.

Since then, each generation of Singaporean leaders has upheld that discipline of running balanced budgets, setting aside surpluses, having professional managers manage our Reserves for long-term gain. Our founding generations resisted the temptation to spend more from our Reserves.

What if Dr Goh and our other forefathers had said, "We are saving too much of our surpluses", "we should spend more on ourselves and leave less for our children and grandchildren"? Would we have this inheritance from which we are now benefiting so handsomely and debating how to use more of it? We would have nothing.

Today, the constitutional arrangements for the use of Reserves represent this discipline we have set for ourselves. As the Prime Minister said in 2008, it is about "our commitment to continue growing our Reserves, while allowing the Government to tap on part of the investment income for current spending". Deviating from these rules in a sustained way will put this critical balance at risk and may compromise the long-term health of our Reserves and the country. Be it NIRC or land sales proceeds, we must uphold the discipline in tapping on our Reserves in a sustainable way.

And to be clear, we prepare for the future not only within our own lifetime, but our children's and children's children. The average life expectancy of a Singaporean child born today is over 80 years. A lot can happen in such a lifetime. Just think about what the world has gone through in the last century.

In the first 50 years of the 20th century, a person would have lived through two world wars and the Great Depression, the advent of nuclear weapons and the establishment of the Bretton Woods system that governs the international financial order today, including the setting up of the International Monetary Fund (IMF) and the World Bank.

In the next 50 years of the 20th century, a person would have lived through the Vietnam War, the formation of ASEAN, major advances in technology, such as the space race and the Internet, the rise and fall of communism and the Asian Financial Crisis.

As we now come into the 21st century, we are moving from a unipolar world to a multipolar one, with growing tensions between major countries and concerns about global and regional stability. If anything, developments that we are witnessing today remind us that the future is ever-changing and uncertain, as recognised by Mr Liang Eng Hwa and Mr Henry Kwek. What is clear is that in the aftermath of a crisis, be it financial or geopolitical, there are usually many years of subsequent weak economic performance. Employment and economic output tend to fall for a sustained period.

For example, the US unemployment rate only recovered to pre-Global Financial Crisis levels last year. It took a decade. Unemployment rates in some European Union (EU) countries have not recovered even after 10 years.

In turn, with crises like these, Government revenues are likely to decrease, at the very moment when we need resources to support our people and economy, a view shared by Assoc Prof Randolph Tan. That is why our Reserves are critical to help us overcome such challenges, especially since we have no natural resources.

Ms Kuik Shiao-Yin raised the IMF's general guidance on reserves adequacy. IMF's guidance is meant to specifically address capital flight risk, which is the risk that the Singapore dollar deposit holders will switch out to foreign currency because there is a loss of confidence in our currency. That is but one of many scenarios which our Reserves have to deal with.

So, the examples I gave of the last century, and all the major events and the potential impact, should serve as a very important reminder about the role of our Reserves. Also, even major countries, very well-developed countries, whether it is the US or the EU, are not immune from financial or economic crises. In fact, ironically, the last global financial crisis originated in the most developed parts of the world. But its impact was felt all around the world.

So, however much that Singapore develops, however much the world develops, we must be cognisant and we must be prepared to deal with unforeseen events, to deal with crises which can have a very significant impact on Singapore and around the world. We need to be prepared for crises that go beyond just a currency crisis.

More importantly, we must have the humility to recognise that we can never predict what will happen in our lifetime, much less our children's lifetime, or their children's lifetime. So, what we must do is to give them the best chance of a better life, whichever way the winds of change may blow. What we have inherited from the past, we also owe to the future. That is our moral obligation.

Members of the House, what I have elaborated on is on the overall approach that we are taking to fund our growing needs.

I have listened carefully to the speeches of Members of the Workers' Party to see if they could offer an alternative approach. But as far as I can tell, the Workers' Party supports the thrusts that I spoke of. In fact, no one has asked the Government to cut back on any specific item. On the contrary, they have asked the Government to do even more. Assoc Prof Daniel Goh asked the Government to do more in many areas, like giving Silver Support to those living in large flats. Mr Dennis Tan asked the Government to enhance elderly care support. Ms Sylvia Lim spoke about inequality and what we must do.

It is easy to ask for more. Not a single one of the MPs, except Mr Pritam Singh, even mentioned what it would cost, nor how to fund it. In fact, not a single one mentioned about how much it would cost for each of the ideas that you articulated.

Only Mr Pritam Singh spoke about other ways of funding it. Mr Pritam Singh offered a few options. He suggested using revenues from land sales and increasing the NIRC cap. I have explained earlier, clearly, why we cannot, and should not, use this. He asked if we can rely on GST on imported services. I have explained that the yield is small, less than $100 million, and that we need to do this to protect our revenue base. He even suggested that through our Smart Nation efforts, we can increase tax collection from self-employed hawkers and taxi-drivers!

Mr Pritam Singh cannot be serious. Any serious-minded person will appreciate that not one of these is a viable alternative to a GST increase. These are distractions, and Mr Low Thia Khiang asked us not to be distracted, so I hope that you could have a discussion with Mr Low Thia Khiang. Instead of taking a principled stance, Mr Pritam Singh would rather withhold his support for the GST increase by adopting a "wait-and-see" posture.