Hansard, Thursday, 7 March 2013

1 Mr David Ong asked the Prime Minister with the large number of Permanent Residents and foreigners residing, studying and working 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, Singapore has always welcomed foreigners who can contribute to our country and we are enriched by the diversity that they bring. However, we must be mindful that this diversity does not affect our social harmony.

New citizens and Permanent Residents (PRs) have chosen to settle here for the long term. As such, we encourage them to embrace our local norms and values, so that they can interact meaningfully with Singaporeans, forge stronger bonds with our community and contribute to nation-building.

As for those who come here to work or to study for a few years, we should also help them understand and respect our norms and culture. Mutual respect and understanding between Singaporeans and foreigners who work or study together enhances social harmony, and ensures that diversity enriches and strengthens our workplace and schools.

To help build relationships between locals and new immigrants, as well as strengthen understanding of local norms and culture among non-Singaporeans, we have set up the National Integration Council (NIC) to drive integration efforts across the public, private and people sectors, including at schools, workplaces and residential communities.

Since 2009, the NIC, through the Community Integration Fund (CIF), has supported more than 280 ground-up integration initiatives and engaged more

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than 160 organisations, to provide platforms for locals and newcomers to forge friendships and improve their understanding of each other's culture, values and norms.

For example, the NIC has supported our educational institutions in their efforts to help our international students blend into our local environment, even as they continue to foster a climate of international understanding and academic exchange. Our Universities have been stepping up their efforts with activities such as camps to bring together local and international students to build friendships and understanding. The Singapore Institute of Management (SIM) organises comprehensive orientation programmes such as workshops and visits to heritage sites for international students to gain insights into our multiracial and multi-religious society. I encourage other education institutions, especially those with a significant enrolment of international students, such as our Foreign System Schools to help their students and staff enhance their understanding of Singapore culture.

The NIC will continue to encourage its partners to offer a wider suite of initiatives to better meet the integration needs of the various segments of our new immigrants and foreigners in our midst.

However, these efforts alone are not enough. Integration is a two-way process and must occur at all levels of society, involving as many new immigrants and locals as possible to be effective and sustainable. Positive interactions experienced by both locals and newcomers in the course of their daily lives will go a long way in strengthening our bond as a community.

2 Asst Prof Tan Kheng Boon Eugene asked the Prime Minister what are the necessary pre-conditions before Singapore is prepared to accept dual citizenships and what are the implications for Singaporean identity and national service.

Mdm Speaker, citizenship is a serious matter. Singaporeans enjoy rights and privileges as citizens, and are expected to uphold the duties

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and responsibilities that come with citizenship.

Foreigners are granted Singapore Citizenship only if they are committed to making Singapore their home, and see their long-term future with Singapore. They should be prepared to give up their foreign nationality.

As Singaporeans, we count on one another to be loyal and if need be, to defend Singapore and fellow Singaporeans in our hour of need. We work together to build a brighter future for Singapore and Singaporeans.

Singapore is a small and young nation. It is all the more important that we are clear that our citizens have a long-term commitment to building a future together here. Allowing Singaporeans to retain or acquire a second citizenship is unlikely to enhance that commitment but could dilute it. We are not in a situation where allowing Singaporeans to hold dual citizenships would strengthen us as a people or a nation.

Mdm Speaker, I thank the Deputy Prime Minister for his reply. In light of the fact that we have a lot more Singaporeans in international marriages – I must say here that I am not an advocate; I am somewhat agnostic at this point in time – would not dual citizenship help to enable children of these international unions to have a connection with Singapore? I know that up to the age of 21 years that there is no such restriction but I think it is important for us to keep an open mind with regards to dual citizenship.

Mdm Speaker, I do not have a different view from Asst Prof Tan. I agree with him that we should not have dual citizenship at this point in time but that we should always keep an open mind.

3 Mr David Ong asked the Prime Minister what is the Government's position on foreign spouses, especially those with children in Singapore in the event of the demise of their Singaporean husband or wife.

Mdm Speaker,

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the Government recognises the importance of families and is committed to supporting Singaporeans in getting married and having children.

To help the couple remain together in Singapore, the foreign spouse of a Singapore citizen is typically granted a Long-Term Visit Pass (LTVP) in the first instance. The foreign spouse is allowed to seek employment while on the LTVP.

ICA will then require some time to assess that the marriage is stable, before it considers the foreign spouse for longer term immigration facilities such as Permanent Residence (PR) and citizenship. The factors considered include the length of marriage, whether the couple has children from the marriage and the ability of the Singaporean sponsor to support the family.

Where the foreign spouse does not yet qualify for PR, we have introduced the Long-Term Visit Pass-Plus (LTVP+), an enhancement over the LTVP. The LTVP+ holder is eligible for a range of benefits, including healthcare subsidies for inpatient services at a level similar to PRs, and is facilitated in their job search as they only require a Letter of Consent from MOM. They are not counted towards the foreign worker quota of their employers and their employers are also not required to pay the foreign workers' levy for them.

For foreign spouses who are widowed and have young children who are Singapore Citizens, ICA would generally facilitate their continued stay in Singapore through a renewable LTVP or LTVP+. This is to enable them to care for and raise their Singaporean children here.

Help is available to those who face financial hardship, and the family may also be referred to a Family Service Centre which will help them to adjust and tide over this difficult period.

Asst Prof Tan, next question.

4 Asst Prof Tan Kheng Boon Eugene asked the Prime Minister (a) what is the acceptance rate for PSC undergraduate scholarships, overseas and local, for the last five years; and (b) what are the reasons for scholarship offerees

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declining the awards.

Mdm Speaker, PSC scholarships are awarded to outstanding students with the passion and commitment to serve Singapore and Singaporeans through a career in the Civil Service.

Over the last five years, the average acceptance rate for PSC scholarships was about 80%. This covers both local and overseas scholarships awarded by the PSC at the undergraduate level. Generally, students who decline the PSC scholarship offers do so as they have scholarship offers from other public sector agencies to pursue more specialised careers, or are undecided about pursuing a Civil Service career.

This is consistent with the message that the PSC Secretariat has been actively sharing with students, parents and schools – that the PSC scholarship is a gateway to a Civil Service career and that students should think very carefully before applying for or accepting a PSC scholarship.

Asst Prof Tan, next question.

5 Asst Prof Tan Kheng Boon Eugene asked the Minister for Education (a) what is the proportion of Singapore Citizen faculty members to non-Singapore Citizen faculty members teaching in each of the four Autonomous Universities as of 1 January 2013 in each of the academic tracks of tenure-track, tenured, and non-tenured; and (b) whether there are specific plans to develop and nurture more Singapore Citizen faculty members in all academic tracks to ensure a strong Singaporean Core committed to the long-term development of our Universities.

Mdm Speaker, in NUS, NTU and SMU, more than one in two tenured faculty members are Singaporean, while about one in five tenured faculty members in SUTD are Singaporean.

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For tenure-track faculty members, about one in four faculty members in NUS and NTU are Singaporean, while about one in six and one in three faculty members are Singaporean in SMU and SUTD respectively.

For non-tenure track faculty, about half of all such faculty members in NUS, NTU and SMU are Singaporeans. SUTD currently does not have any faculty members who are on the non-tenure track.

To deliver world-class education and research, our Autonomous Universities recruit the best talents possible based on merit, from around the world. However, they also recognise the need to develop local talent and have a range of different talent schemes and programmes to grow the pipeline of Singaporeans in academia.

Mdm Speaker, I declare my interest as an academic at the Singapore Management University. I thank the Senior Minister of State for her reply. I am rather disappointed by the low figures. If I got the information correctly, for the tenure track and for the non-tenure track, we have a majority of faculty members teaching in our Universities who are not Singaporeans. I agree with the principle that merit ought to apply but I hope that there will be efforts undertaken by all the Universities to develop a Singaporean Core. I think this is important in light of our attempts to deliver a world-class education and we need people who are committed to the long term.

Mdm Speaker, I do not think there is any disagreement there with the professor that we should develop a strong Singaporean Core, not only in academia but elsewhere. I hear the call to encourage the Universities to have more Singaporeans on their tenure and other tracks. Indeed, that is the position of the Ministry of Education. The Universities are, as Asst Prof Eugene Tan has indicated, autonomous. So, they do have a large degree of autonomy in the way they recruit and in the way they structure. But that said, the Ministry is strongly supportive and encouraging of the Universities getting more Singaporeans onboard for all their tracks and we will certainly encourage them to do so.

Thank you, again, Mdm Speaker. I am pretty concerned about the tenure track faculty in our Universities because the majority are not Singaporeans. One can envisage that, going forward, the proportion of Singaporeans as tenured faculty in our Universities would be even lower. At the moment, it is one in two for most of the Universities, but

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going forward, given the lower numbers in the tenure track scheme now, that could mean problems in future when it comes to tenured faculty. We need to make a more concerted effort to develop local talent. My call here is not for preferential treatment but rather, a level playing field.

Mdm Speaker, I did not understand the hon Member's comment to be a request for preferential treatment. In fact, I understood it to be a call on merit. And I have no doubt that the Singapore academia are well placed to stand on their own merit and their own right.

Coming back to what I said earlier, and taking the Member's point about developing those who are in the pipeline, the Ministry will encourage the Universities to develop the staff who are in the pipeline. NUS has, for example, the Overseas Graduate Scholarship and the Overseas Postgraduate Scholarship which are for Singaporeans and Singaporean PRs. I understand that NUS also actively tracks and courts overseas Singaporeans to take up positions at NUS and a recent success was the recruitment of Prof Ho Teck Hua who was a professor of marketing at UC (Berkeley)'s Haas School of Business. Prof Ho is now the Vice President (Research and Strategy) and Tan Chin Tuan Centennial Professor in NUS. NUS has also tapped on the A*STAR academic pathway scheme to draw more Singaporean talents in research.

NTU does not have fellowship awards specifically meant to attract Singaporean talents, but it does have awards such as the Lee Kuan Yew Postdoctoral Fellowship, the Temasek Research Fellowship and the Nanyang-DSO Post-Doctoral Fellowship which is opened to all nationalities. NTU has also indicated that it intends to tap on the A*STAR academic pathway scheme to provide a pipeline of Singaporean talents in research.

As for SMU, it has its Faculty Development Scheme (FDS) which sponsors Singaporeans and Singapore PR graduates who are keen academic career and went overseas PhD programme. Upon successful completion of the degree, he or she will be considered for appointment to an assistant professorship at SMU. The School of Accountancy, School of Law, and the Lee Kong Chian School of Business have all made use of the FDS since SMU started in the year 2000.

As for the SUTD, it has been tapping on the A*STAR academic pathway scheme, and currently have one faculty from A*STAR in the form of secondment or joint appointments. They also work closely with Contact Singapore on the international faculty recruitment roadshows to bring back returning Singaporeans. It has had hired three returning Singaporeans from the

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US and UK in this manner.

That said, however, I think that the hon Member's thrust, really, is that we should do more to encourage the Universities to put Singaporeans on track, and that point is well taken.

Mr Zaqy, last question.

I thank the Senior Minister of State for her comments. We have seen the current ratios. Will the Senior Minister of State explain whether we see a decreasing trend over a period of time where we will see less and less Singaporean lecturers who are given full tenure? That is the impression that many lecturers have. The Senior Minister of State mentioned retention and how we have programmes to encourage more Singaporeans to be retained. But retention of existing local lecturers whom we can keep can be addressed. And whether we studied whether there is a skills gap, and gaps in meeting the criteria in which we can also help them be retained, while at the same time adding more to build up our Singaporean Core?

Mdm Speaker, I do not have the specific information at the time about the trends, but that can be looked into. Again, I understand the Member's question – his concern is that if there is a declining trend, then you must do something to arrest it. If the trend is on the upswing, it means that the Universities are taking the right track, and certainly that is something that MOE can ask the Universities to look into.

Order. End of Question Time.

[(proc text) Order read for Resumption of Debate on Question [25 February 2013], (proc text)]

[(proc text) "That Parliament approves the financial policy of the Government for the financial year 1 April, 2013 to 31 March, 2014." – [Deputy Prime Minister and Minister for Finance]. (proc text)]

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

Mdm Speaker, I rise to speak in the support of the Motion raised by Deputy Prime Minister, Mr Tharman Shanmugaratnam.

The part of this Budget which resonates best with me is: "to sustain social mobility and strengthen support for older Singaporeans". I have mentioned in this House time and again on the plight of our older Singaporeans especially our needy elderly and have been asking for more help for them. I have also expressed my concerns for the children from poorer or less stable families and the issue of social mobility. Therefore, I applaud our Government for this caring Budget to provide more for them. This shows that ours is a Government that listens and responds with a heart for the well-being of older Singaporeans and for lower income families. I shall speak further on these issues at the Committee of Supply.

This Budget Statement had spelled out more measures to achieve quality growth. I agree that this is an important thrust going forward. I am glad that this Budget has given a big consideration to help businesses cope with the tightening labour market through the Wage Credit Scheme, PIC Scheme and Productivity Incentives. I hope to see the success of all these measures with higher productivity to ensure our economic growth with decreasing reliance on foreign labour.

I do not believe GDP growth is not as important as some camps have advocated. I feel GDP growth matters a great deal for a small country like ours. We do not have the vast hinterland for farms and natural resources to fall back on if our economy should falter and result in lesser opportunity or lesser employment for the people. We want our SMEs to thrive well and contribute to our economy and to employ more Singaporeans. We need foreign investments to give more diversity of employment for more Singaporeans and grow our economy. We need good GDP growth to have healthy Government coffers for our infrastructure developments and for our subsidies toward education, medical care and national defence. We do need healthy Budget surpluses to take better care of our disadvantaged citizens.

On the various productivity incentives, may I request the Minister for Finance to better inform and ensure better take-up rate of the available incentives that are targeted to help especially the SMEs? Many small businesses want to innovate for better results and are in urgent need of newer ideas but may not have the "thinking-out-of-the-box" ways to survive the present

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circumstances. Could the Minister provide a better hands-on approach at assisting them on utilising available incentives and at sharing with them good practices ideas? If their businesses still do not make it despite all these, then at least, it is not from the lack of helping on the Government's part.

I believe in the common vision spelled out in this Budget Statement such as Singapore Identity, vibrant economy, care of the disadvantaged and affordable living. The one that I consider very important but not as easily achieved, at least not with any monetary incentives is a society with a greater sense of togetherness and where the Government and the people have a more collaborative relationship. This is similar to what the Prime Minister alluded to as the "Singapore Spirit" in this House only last month. I would like to speak on this common vision for the rest of my speech.

Prime Minister said that the "Singapore Spirit" is when we feel together, we are in a cause together and we are committed to create a future for all of us. Thus, it is a society with greater sense of togetherness. Are we deficient in this "Singapore Spirit" presently? Will this "Singapore Spirit" further decrease in time? How do we enhance this "Singapore Spirit"?

I am sure we are all in agreement that the "Singapore Spirit" or the vision of togetherness, if embraced by the majority of Singaporeans, can bring us the stronger cohesive community which is the foundation of a strong country. The shared values and the unity will bring out more confidence in Singaporeans. The trust and the concurred vision for the betterment of Singapore and Singaporeans will further facilitate peace and growth. Thus, is it not time that our Government takes the initiative to rekindle the "Singapore Spirit" to enthuse more Singaporeans towards building a better nation? Since the "Singapore Spirit" is such an important tenet for our small city-state, with only human resource to depend on, should we not ensure that it is prevalent and instinctive amongst Singaporeans for the good of Singapore?

I would like to suggest the following three ways to achieve this society with greater sense of togetherness and where the Government and the people have a more collaborative relationship.

One, consensus. I am convinced that our Government designed the best plans and policies to benefit Singapore and Singaporeans. But today with the sophisticated populace, it is not enough just to plan the best options and policies but we must be prepared to accommodate useful feedback to build

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consensus.

We need to simultaneously design ways on forging the shared visions. We need to get our ideas across on why certain policies, especially those that may not be too popular, are so made for the desired outcomes. It is only with the support of our people that all the policies executed will bear the outcomes that they were originally set upon. Thus, there is a need for a specialised team of public relations experts that are working daily on feedbacks and negotiating on policies with one or multiple Ministries involved to accommodate the end-users. They are then to engage the people and explain policies to them comprehensively.

I feel that this cannot be just left to the concerned Ministry of each policy-maker to execute as is being done today. It must be a more concerted effort involving the various Ministries that may be subsequently affected. We need a dedicated team of people to execute it well with targeted outcome. Most importantly, we need the resources and to quickly set it up as a priority agenda.

One good example is the enhanced PA Scheme MSF announced 1 March 2013. This enhanced policy was well thought out to reach the recipients who have many needs; many of which are health-related. It is a not the usual "one-size-fits-all" kind of policy. It should be rightly so and I hope many of our new policies can be so designed to better target the end users. This new policy has many healthcare components and the success of it will benefit not just MSF, but also MOH. This policy enables patients to live in their own homes with better support and care, thereby reducing the demand for institutional care. There is good synergy between MSF and MOH here.

Two, forging unity. As our society ages, we may have need for more facilities that others in the society feel otherwise. Different groups of the population have different agenda that may be of opposite directions to each other. Nonetheless, we need to cater to the various needs of our residents and we therefore may need more dementia homes or Senior Activity Centres in areas where the locals may prefer not to have in their neighbourhood. Thus, we really need to have a considerate and caring society that is willing to accommodate the needs of others. We must find ways to promote this and prevent the "not in my backyard" syndrome to flourish.

Our people living in the HDB homes are living in harmony except for the few disputes that have arisen from inconsiderate behaviours occasionally. We have a finite land area here and people know that they have to live with many

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neighbours in our city-state. We really have to revive the old kampong spirit for things to become better.

I feel that going forward, we just cannot leave forging our unity to chance. Our society is subject to demographic change and the various needs of different groups will get more variant and may be more incoherent. The fast pace of life today may leave people with lesser time for interaction and rapport with their neighbours. Many people today have no time to do more than taking care of their own space. There is therefore a need for more Government effort towards encouraging more consideration, better neighbourliness and good rapport among the residents.

Such mindsets may be promoted through campaigns or ways that discourage unacceptable neighbourly behaviour. We may need stern measures in place to discourage unreasonable behaviours, especially for recalcitrant cases that are very disruptive to their neighbours. Members of Parliament and grassroots organisations can take more initiative to promote bonding with residents and among residents.

I feel that our Government should invest in this pillar that promotes a cohesive society. This cannot be ad hoc efforts, and we need continuous action plans that set out policies backed up with adequate resources.

Three, assimilation of new Singaporeans. Singapore is now taking in about 20,000 new citizens each year. This intake is necessary to stop our citizen population from shrinking. There is a need to better integrate our new citizens into our Singapore society. It really takes two hands to clap and we must have a conscious effort from both the new immigrants as well as locals to make this work. Our Government can play a vital role in this area and, for a start, our Government must send the right signals to all concerned. It is necessary to prevent any discord among new citizens and Singaporeans, and for that matter, any discord between Singaporeans. This is so vital for our multiracial society.

The unity among Singaporeans, be it the inherent or the new citizens, must be the basis of the "Singapore Spirit" and the common vision of togetherness. I have been fortunate that I was included in the Singapore Core, although I was not born and bred here. The truth is that I grew up and stayed in four different countries before settling down in Singapore. I made Singapore my home, raised my family here and my son has done National Service like any other Singaporean. I am wholly committed to Singapore and will do the best I can to contribute like any other Singapore Citizen. Thus, I hope that more people like

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me will come and make Singapore their home just like what I have done, but more importantly, that they can be truly included in the Singapore Core.

My fear is that the rhetoric of future Singapore Core being "only those born and bred here" may resonate with some people and may fester into more support of such suggestion in the community. Such views amongst political parties here may invariably promote discord amongst the citizenry. It is crucial that our Government ensure that discord among political parties here does not spill into discord on the ground.

That said, I believe that policies are made for the benefit of Singapore and Singaporeans and the granting of permanent residence and citizenship is discerning enough to ensure positive contributions and not otherwise from the newcomers. The interest of Singaporeans must come first in any formulation of policies and, more importantly, the policies must ensure that we do not attract people with wrong motives. I would argue for a relook at our policies and tweak them so that immigrants welcomed to our shores cannot take undue advantage of our goodwill and be detrimental to Singaporeans. One such relook would be on the criteria for PRs to own homes in Singapore. There had been laments that PRs have bought HDB properties here at subsidised prices, though lesser than Singaporeans, and landed homes, which other foreigners are not eligible, only to sell them at great profits several years later and leave Singapore with their windfall. Should we not offer such benefits only to those who really intend to make Singapore their permanent homes, and thus incentivising only those who want to sink roots here?

Lastly, Mdm Speaker, the three areas of consensus, forging unity and assimilation of new Singaporeans need a lot of continuous efforts in planning and execution. They therefore require a lot of commitment and resources to ensure results. It is a worthwhile and important pursuit for a better tomorrow. It is building a strong social infrastructure for our country. I would like to suggest that we form a new Cohesion Ministry in order to ensure sufficient emphasis, continuity and outcome. Denmark has a "Ministry of Social Affairs and Integration" for coordinating the government's efforts to promote civic citizenship and integration. I hope our Government will set up a similar Ministry to ensure cohesion, national identity and integration for a stronger Singapore.

Mdm Speaker, the other bedrock of a cohesive society is the provision for the less well-off group of our society. I am glad that this Budget has provided much for their needs in many areas.

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I applaud Deputy Prime Minister Tharman Shanmugaratnam on what he said, and I quote, "We also want to do more to enable our seniors to have a sense of economic security and fulfilment in their retirement years." With our impending demographic changes of a growing number of elderly populations, the number of the elderly poor will increase in the future. May I beseech our Government to have another safety net for this group to give them peace of mind as they grow old? I would like to suggest having an "Elderly Endowment Fund" to ensure that no elderly Singaporean will be deprived of their daily living due to the lack of means, similar to the Medifund that ensures that no Singaporean will be deprived of medical care due to the lack of funds. On this note, Mdm Speaker, I support the Motion.

Mdm Speaker, I rise in support of this year's Budget. In Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Last year, I was fortunate to have the opportunity to go to Qufu in Shandong province with a group of senior Singaporean management executives studying a postgraduate course.

We all know Qufu is the home town of Confucius. In Qufu, I was rethinking a famous quote from Confucius which goes: "At age 15, I was determined to learn; at 30, I stood on my own; at 40, I had no confusion; at 50, I knew what fate was; at 60, nothing can offend me; at 70, I could do as I wished without violating the rules."

When I was listening to Deputy Prime Minister Tharman's Budget 2013 speech, this line from Confucius emerged in my mind. We will soon celebrate Singapore's 48th birthday. In terms of human life, Singapore would have reached middle age and would have felt how quickly time had gone by and started to relook at the value of life.

Since Independence, Singapore have worked hard in its younger days and achieved much at the age of 30, gaining a presence in the international arena. Going forward, we will be stepping into the golden age when current conditions are better than before. We should explore how to make Singapore even more vibrant and how social development can be more meaningful, more fulfilling and more valuable.

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Through Budget 2013, I can see how the Government is planning to transform Singapore and make her more attractive, creating more value for her people. Meanwhile, we should also explore how we can develop our middle-age workforce so that they can become a vital force in transforming Singapore into a smart economy with quality social development. Here I would like propose the four Ps – Purpose, Priorities, Potential and Passion. Allow me to continue in English.

(In English): Mdm Speaker, Singapore is at an inflexion point where the crossroads of review can redefine our purpose, realign our priorities and recapture potential and possibilities. Budget 2013 is a timely effort to restructure and shift our economy for Singapore to achieve quality and inclusive growth.

Today, I would like to explore how four Ps could help us move in this direction: Purpose, Priorities, Potential, and Passion.

The first one, purpose. Deputy Prime Minister Tharman shared that many Singaporeans hope for, and I quote, "A Singapore with a robust and vibrant economy, with good jobs that enable a more fulfilling pace of life." The inclusive Singapore that we all seek to build has gained much ground, especially in the recent years. Besides taking care of the disadvantaged and lower income Singaporeans and older workers, let us also look at how we can also be inclusive towards the technical and trade vocations. From aircraft engine mechanics to electricians, glassmakers and building maintenance workers, the one who fixed our problems, keep things going and ensure the normality of our daily lives, something that we often take for granted.

This year's Budget will, through the expansion of Workfare Income Supplement, help older and lower income Singaporean workers gain higher wages. Some of the craftsmen benefit from this if they fall under this category. The basic monthly wage for rank-and-file jobs under MOM's Craftsmen and Related Trade Workers category ranges from $900 for glassmaker to $2,200 for aircraft engine mechanic. Some of these craftsmen are self-employed, workers or sole proprietors of a small business. As this year's Budget rolls out plans to help SMEs with the schemes such as Productivity and Innovation Credit (PIC) and Partnerships for Capability Transformation (PACT), I urge that we also look at how our craftsmen' vocation tradesmen and sole proprietors be engaged to innovate, upgrade their skills and increase their productivity.

Take the ITE example. As we all know, ITE has been transformed into a very well respected educational institute today. Likewise, let us move upstream and

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lead the way for skilled craftsmen to shine in their vocation trade and for society to respect their technical and vocational jobs as valued occupations in Singapore. This will be a mark of a truly inclusive Singapore.

The Government or NTUC can set the ball rolling by working with trade associations to raise the professionalism of their vocations, skills and image. Better perceptions of such trade vocations can attract new entrants, create higher quality apprenticeship, like in Germany, and re-invigorate sectors straining under manpower shortages.

To realise our vision of an inclusive Singapore where we help each other achieve a better life, we need to make job redesign a key priority, the second P. During last year's Budget debate, I spoke about how redesigning jobs can future-proof our workforce. This year, I would like to highlight it again as I wish to stress the urgency to institute job redesign as a permanent feature or function in organisations and businesses. We not only need to make job redesign a key priority, we need to make it pervasive, across different sectors and industries. Job redesign helps companies adjust to the slowing flow of foreign labour and also better cope with the tight labour situation. As we restructure our economy and workforce, we need job redesign to become an integral part of businesses and organisations. As we all know, due to technology and the increasing speed of change in the globalised economy, business cycles are getting shorter and job roles evolving faster than before. Workers are being made redundant faster and businesses have a shorter response time for workforce re-deployment.

Some economists have highlighted how technology has hollowed out the jobs of middle-class workers. An Associated Press analysis of employment data from 20 countries found that millions of mid-skill, mid-pay jobs have already disappeared over the past five years. Economists are wondering whether middle-class jobs will ever return when the global economy rebounds to health, or whether they have been lost forever. The "jobless recovery" in the US has been a headache for its government struggling to improve the labour market.

While we do not have such a problem in Singapore right now, we cannot afford to rest on our laurels. We need to re-prioritise the training needs of our workforce and institute job redesign as part of an organisation or company's growth to effectively compete in today's dynamic world. In the larger scheme of things, let us explore how job redesign can be instituted at various levels of the workforce. We want to avoid the scenario of high middle-class unemployment, social discord, falling living standards and unmet aspirations

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as we can see in Europe and US.

Job redesign has so far proven to benefit companies and employees. It has helped older Singaporeans and also women to stay and re-enter the workforce through schemes such as ADVANTAGE! or Flexi-Works!. The lessons from such job redesign schemes should be quickly expanded to other segments of the workers, especially those in mid-skilled jobs. Not only can job redesign improve productivity, it can also help maximise resources and improve employability of the workforce. Labour market shortages could be eased by efforts to adapt or redesigning the skills of workers in declining industries to meet the needs of growing sectors.

I understand so far the ADVANTAGE! scheme has benefited more than 25,000 mature workers and provided $24 million in funding to companies for job redesign. My question is: could MOM and MOF examine if job redesign can be included as part of the PIC scheme? Second question: would MOF consider increasing the amount of resources and funding for job redesign to be instituted in broad majority of businesses and organisations?

Government agencies like SPRING and WDA can also assist by: (a) beefing up the HR sector's capabilities and expertise in job redesign; (b) review how SMEs can be made much more aware of the benefits of job redesign and what it can do for their business; and (c) expand job redesign specifically into sectors with a high demand for workers, such as healthcare and early childhood education.

Another key priority that is getting the much-deserved attention is the area of early childhood education. I am greatly heartened by the Deputy Prime Minister's recent Budget announcement on how the Government will dedicate a significant sum of $3 billion over the next five years to the development of our young children. In Budget 2012, I raised the need for more resources and expertise to be invested in early childhood education. And as the Government increases its investment and resources in this important area, I would like to suggest an area of consideration that could help us to unlock the potential, which is the third P, and passion, the last P, in every child and teacher.

As we seek to unlock the potential of the early childhood years, research can play an important role in improving the quality and delivery of early childhood education. While there is a wealth of research available from all parts of the world, we need to boost the repository of our own local research that can deal with the conditions that are unique to Singapore. For example, many of

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our childcare centres are located in common void decks and some are housed in private estates.

The 2013 Budget outlined plans to expand capacity and have more pre-school centres located closer to homes and workplace. This makes it even more important for us to examine the impact of tight space constraints, adapted facilities and limited play areas on our children's development.

Research could also reveal how we can overcome the challenges and barriers posed by locations such as HDB void decks and office compounds in a dense and urban environment. What other ways to maximise our physical environment to nurture our children's passion for learning? That is the key question.

To this end, researchers from Australia have developed the Early Childhood Physical Environment Rating Scale that is designed to assess the quality of the physical environment of early childhood centres in relation to their potential for children's development and learning. The quality of the child's physical environment has been linked to positive learning. Other research findings from Australia suggest that children's exposure to natural and green settings can improve social interactions and motor skills, as well as alleviate stress for our children. When we talk of stress, research can also help us confirm what are the top stress contributors on our young children in highly urban Singapore. And how can we tap on our experience of building a garden city to benefit the future of early childhood education?

As MOE sets up a few kindergartens to develop best practices, I hope one of them will showcase how physical environment can be maximised for optimal early childhood learning in Singapore.

Understanding and applying research findings from early education to classroom practice is an important step in achieving effective outcomes for our children. Educational research findings can improve classroom practice and form the foundation for quality early childhood programmes. In an article on the success of the Finnish model of education, the newspaper TODAY noted – two days ago − the view of the Finnish National Board of Education's Head of Professional Development, Ms Anneli. She attributed research-based teacher education as the factor that accounts for the high quality of teaching in Finland. As the world's speed of change is accelerating all the time, research in learning would keep us at the forefront of the acquisition of knowledge.

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The way we learn is no longer constant. Previously, it was thought that our educational foundation could last us our whole lifetime. We all know that this is no longer true. In today's hyper-connected world, the speed with which every job and industry changes has trebled or quadrupled. Technology and super computing power is making the knowledge, skills and tools we use obsolete faster.

As Thomas Friedman of The New York Times wrote, and I quote, "The winners tomorrow won't just be those with higher IQ. It will also be those with more PQ" – not our PQ, but passion quotient – "and CQ", or curiosity quotient, "to leverage all the new digital tools to not only find a job, but to invent one or reinvent one, and not just to learn but to unlearn and relearn for an entire lifetime."

Being "middle age" at this point in history can be advantageous for us. The urge to do something different, to learn a new skill or sport a fresh look is something that is quite welcome in today's hyper-connected world. This is the time for reinvention and for redesigning the work we are doing, for researching new ways to improve early childhood education, and for adopting a new perspective as we restructure our economy for a better Singapore. On this note, I support the Motion.

Mdm Speaker, life must surely be more than just about ranking and lists alone, but today I am not going against the grains, so here is yet another one for us to ponder. In the list that was recently published in the Economist magazine, Singapore was ranked as the best country in Asia to be born in, and was named sixth overall, losing out only to Switzerland, Australia, Norway, Sweden and Denmark. Hong Kong came in at 10th, Japan at number 25. Fundamentally, this list tries to predict the countries that "provide the best opportunities for a healthy, safe and prosperous life in the years ahead", and looks beyond economics, focusing equally on such diverse factors as security and the health of family life. I think particularly that this list is remarkable, because while most lists focus on the here and now – how competitive you are, how happy we are, or how unhappy we are − this survey attempts to quantify the future prospects of a newborn child in any given country.

So, I see this Budget as an important step in ensuring that Singapore remains a great place to live in, and a place where our children can look forward

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to a future where they can realise their full potential and lead fruitful and fulfilling lives. Some of the ways towards securing this future are enunciated clearly in this Budget, which is focused on promoting quality growth while still ensuring that such growth is inclusive and social mobility is encouraged. This Budget sets forth further measures to nurture the young, support workers and families, and look after the needs of our growing cohort of seniors.

I was particularly heartened by the announcement of the Wage Credit Scheme − like many of my Parliamentary colleagues – which I see as a proactive step by the Government to support wage increases for the majority of Singaporean citizens, covering up to the 70th percentile in terms of salary. During last year's Budget proceedings, I expressed my concern that when companies did well due to the improved innovation and productivity of their workers and with support from the Government, it sometimes seemed that improvements in profitability did not translate into significant wage increases for the employees, and I asked the Government to do more to support initiatives to boost wages, especially for the lower income employees. The Wage Credit Scheme (WCS) is a good start, but I also think that it has the potential to be so much more.

Right now, there are already many Government transfers, such as Workfare, various vouchers and rebates that significantly raise the real wages of lower income workers and families in Singapore. And I also welcome the broad and generous improvements to the WIS scheme which has just been announced. This is something which indices of income inequality, such as the often quoted but often incompletely understood Gini index, frequently fail to fully address. The headline wages of lower income Singaporeans in certain sectors do appear low and may not have increased as much as we would have liked over the past few years but, in real terms, many of these workers are the beneficiaries of substantial Government transfers. So much so that some workers I have spoken to are sometimes hesitant about wage increases at the inflexion point, as the increase in their salary may push them over the ceiling such that they no longer qualify for some of these benefits, which could be worth more than the salary increments that they have earned.

I would like to propose that the WCS be expanded to support the progressive wage model championed by our trade unions, and that part of these Government transfers, such as the WIS and others, be used to support a minimum wage for certain segments where wage growth is in fact lagging. This may not mean an unsustainable increase in Government expenditure since it already leverages on transfers that are already in place. Here I support many of the points that have already been raised by the hon Member Mr Inderjit Singh

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yesterday.

This is not your normal minimum wage system, where a blanket wage guideline is summarily imposed, leaving employers to comply. This is a fair wage system on steroids, grounded on a sectoral approach, and supported by a wise and just Government, determined to uplift the wages of the lower salaried members of our Singaporean workforce. This fair wage support system can buffer employers and safeguard jobs for Singaporeans as we transition into a higher wage workforce across the board.

This fair wage support system also honours our workers by allowing them to earn a decent wage without needing to always rely on Government transfers directly. This fair wage support system can be calibrated to different age groups as is the case with the Workfare system, with bigger transfers for older workers. I share Mr Alex Yam's concerns for young Singaporeans entering the workforce, as younger workers could become relatively more expensive to hire in the beginning, but we would expect these younger workers to be more adept at improving themselves and becoming more productive, so that their future wage growth would be more dependent on their own self-improvement, rather than due to Government aid.

As part of the efforts to strengthen our Singaporean Core, I also applaud the moves to raise the S Pass salary qualification to over $2,200 per month, as this would ensure that young Singaporeans just entering the workforce will be suitably advantaged when looking for a job. Like my colleague Er Dr Lee Bee Wah, Mr Patrick Tay and other Members of Parliament, I would also like to renew the call that we take a relook at labour market affirmation and testing for Employment Pass applicants, to ensure that PME jobs for citizens are suitably safeguarded. While there are already fair employment practice guidelines in place and the unions are working overtime with employers to advance such fair hiring practices, I believe that some degree of legislation mandating that companies consider Singaporean Citizens first for PME positions should be enacted. Many developed countries − the US, the UK, Canada, Australia and Hong Kong, to name a few – already have some form of legislation to this end, but this has not led to significant drops in workplace vibrancy or competitiveness, and has not resulted in these countries being labelled as closed or anti-foreigner. Such measures, if applied in a sensitive and sensible manner and on a sectoral approach, should not adversely affect the autonomy or competitiveness of businesses, but will nudge them towards a reduced reliance on foreign employees, and I believe this will leave them in a more robust position in the final analysis.

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Additionally, I would also support the creation of a fund to specifically support Singaporean PMEs who are in transition, between jobs. Finally, part of what it means to be an ideal place to be born in, and to live out a full and fulfilling life, is to stay healthy. I have spoken in this House on several occasions about how we can refine our healthcare system to better serve Singaporeans.

I believe that, as many do, the public healthcare system in Singapore is of a quality that is world-class, and is both accessible and affordable to all. We have a "Heal First" policy in our public healthcare institutions which guarantees that all Singaporeans receive the medical care they need even if they are ultimately unable to pay for it.

However, some Singaporeans are still concerned about affordability, and I welcome the announcements made earlier about top-ups to MediSave and Medifund, and eagerly await further announcements regarding the fine-tuning of the healthcare financing framework.

One key issue concerns the cost of outpatient care for chronic conditions. Although the Chronic Disease Management Programme has gradually been liberalised in terms of the use of Medisave for chronic conditions, and the Community Health Assistance Scheme helps Singaporeans who wish to remain under private care with their family doctors, many patients actually suffer from multiple chronic diseases, which unfortunately also means multiple costs. Many of these diseases need regular laboratory tests for optimum management, and these tests can be costly. Hence, I would like to call once again for CDMP financing to be further individualised to the needs of the patient and be calibrated to the age of the patients. I again renew my call that the Government consider adjusting subsidies according to the age of the patients, meaning that older Singaporeans should be able to receive more heavily discounted healthcare. This serves to recognise the contributions of older Singaporeans to nation building, and takes into account that older Singaporeans with chronic illnesses are more likely to have less in their Medisave accounts and would also be more likely to be limited financially.

Some have criticised our country for spending too little on healthcare, having too few hospital beds and so on. While I fully agree that we need to pay attention to infrastructure and forward planning, I think that this misses the point somewhat. Amongst developed nations, there is actually a poor correlation between healthcare expenditure or indeed infrastructure volume, and the overall health of the citizens. Again, I draw your attention to another list where in a well-respected and widely-cited report by Bloomberg published last year, Singapore actually topped the list of the world's healthiest countries,

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comfortably trumping many other developed countries with significantly higher per capita healthcare expenditures. The key here is that in the long run, it depends less on how well you treat sick people, but more on how you keep people from falling sick.

Health maintenance and promotion is a key strategy for ensuring the continued wellness of Singaporeans while ensuring that healthcare costs do not spiral out of control, even given the challenges that an ageing population presents us. Much of the expenditure on health promotion and maintenance may not be captured under the key numbers for healthcare spending, which thus may lead to an underestimation of how much a country spends on health rather than healthcare. Given that fiscal measures can be strong behavioural modifiers, I hope that this Budget and future Budgets will support a wider range of wellness and health promotion initiatives that will result in not only a stronger but healthier Singaporean Core.

There is much that can be done to nudge Singaporeans to take greater ownership of their health. Anti-tobacco measures should be stepped up, and while some may argue that unhealthy behaviours should be penalised, by the same token, healthy choices can be incentivised. I have previously asked that we consider the imposition of a "junk food tax" on sweet, sugary and high-fat junk foods and beverages, but by the same token, we can perhaps make healthy foods like fresh fruits and vegetables cheaper through targeted subsidies. In schools, the foods that are sold in the canteen could be more closely regulated to help stem the menace of childhood obesity. Singaporeans who participate regularly in approved wellness programmes or can demonstrate that they adhere to a healthy lifestyle with regular exercise, for instance, could receive tax rebates or pay discounted rates at public healthcare institutions. Similarly, patients with chronic diseases who adhere to their treatment programmes and clinical pathway could receive extra credit for their medical expenses.

Finally, I would support expanded recognition and benefits for volunteers who help to promote healthy lifestyle choices. For instance, the Health Promotion Board has a network of health ambassadors who are volunteers who go about promoting a healthy lifestyle. They could have a system of benefits perhaps similar to the system for frequent blood donors.

In closing, the title of the article with which described the results of the survey on where to be born in 2013, which I mentioned at the start of this speech, was actually entitled "The Lottery of Life". Although where we are born can be likened to a lottery, the lofty position Singapore has achieved on this list did not happen by chance. A good life with good prospects is predicated on many

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factors. But, surely, the ability to find and hold on to a good job with a good wage, and to be in possession of good health, are two very important determinants. Although I am asking for more in this Budget, I do support this Budget, because it continues the fiscal and social narrative that ensures that Singapore will remain a choice place to be born in, and to live your life in, for many years to come.

Mdm Speaker, thank you for allowing me to join in the debate.

It is heartening to know that the Government's direction in this year's Budget has striven to build a better Singapore through quality growth and building an inclusive society. Deputy Prime Minister Tharman has clearly set out the various visions of Singapore that Singaporeans want and I am also glad to see that the Singapore that we are building takes its point of reference from "Our Singapore Conversation" platform. It is only through the active engagement of the various segments of society that we can truly derive a common vision of Singapore for Singaporeans.

Mdm Speaker, this is indeed a progressive and inclusive Budget. However, I do believe that there are several areas that we can do better. As Deputy Prime Minister Tharman rightly points out, there are segments of the society that have been disadvantaged and, thus, need more assistance. I would like to turn our attention to these subaltern or marginalised groups in Singapore. The reason is simple. We, in Singapore, have pledged to build a democratic society based on justice and equality. Through our parliamentary and judiciary systems, we have achieved the first two. While we have endeavoured to meet their needs in this year's Budget, I am particularly concerned that inequalities still persist in our society. I will highlight specific groups of people whom I think we, as a society, can do more to help improve their lives.

Mdm Speaker, I shall first touch on the needs of persons with disabilities. I am glad to note that this year's Budget has announced that the Foreign Domestic Worker Levy Concession will be further reduced from $170 to $120 for families caring for children, elderly and persons with disabilities, in addition to the $120 caregiver grant announced previously. There is also a renewed focus on the disabled with the setting up of a new social agency to look into their needs.

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I also applaud the Government in leading the way with the two Enabling Masterplans. However, in areas of employment, education and transportation, there remain challenges for persons with disabilities. How can we make society more understanding in the employment of persons with disabilities, in seeing them as equal members of the society, and remunerating them fairly? In transportation, can we also look into providing transport concessions for people with disabilities? What is the progress on the provision of more wheelchair-accessible buses on the roads? Have we done enough in ensuring barrier-free accessibility in our public places?

Having said that, I do think we are building a more and more inclusive society. This is exemplified by the fact that just weeks ago, paralympian, Laurentia Tan, who is deaf and has cerebral palsy, won The Straits Times "Athlete of the Year" award for 2012, edging out three other nominees, namely, table tennis player Feng Tianwei, bowler Shayna Ng and footballer Shahril Ishak. It is heart-warming to see how Singapore and persons with disabilities have come so far in the journey to inclusion. Yet, while we build a more inclusive society for all, more can be done to meet the aspirations of the disabled and make Singapore a cosier home for them.

First of all, more attention can be paid to groom and develop persons with disabilities from a younger age to allow them to develop to their fullest potential. This would mean that society at large also needs to be more understanding of their needs. I do not want to take anything away from the achievements of Laurentia Tan, or belittle the things that our Voluntary Welfare Organisations are doing in Singapore today, but I wonder if she would have been given the same level of support, education and acceptance, as well as accomplish as much, had she remained in Singapore. She had after all, at the age of three, moved to London, remained there, where she received her education and was introduced to horse riding. The mindset in the United Kingdom towards disability is very different from that in Singapore after all. Can we, as a society, work towards acceptance of persons with disabilities, to build better schools, facilities and programmes which will enable them to feel that Singapore is their beloved home, too?

Mdm Speaker, the disabled today are gradually finding acceptance in our changing society. I believe most of us here have heard of Esme, the guide dog, and her owner Cassandra. Through their Facebook site, we have seen how they have highlighted aspects of society which have caused concern for them in their everyday lives. I am glad to see how society at large also speaks up for them, notably in the episode regarding a fashion retailer here. With this heightened awareness, more and more retail outlets in Singapore are becoming guide dog

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friendly.

On the contrary, I was aghast to hear of the case of Mr Kua Cheng Hock, whose guide dog was recently denied access on board an airliner. As Deputy Prime Minister Tharman has pointed out, we are a society in transition. This is the time to think about ensuring persons with disabilities get access to equal opportunities and treated fairly in all aspects of life. This should also go hand in hand with the building of infrastructure for the disabled.

Mdm Speaker, I am also glad to know that there are plans to review healthcare financing in Singapore, to reduce out-of-pocket costs to Singaporeans, broaden insurance coverage and the use of MediSave and Medifund. As Singaporeans grow older, there is a need to ensure that our healthcare sector remains relevant to the needs of Singaporeans and this is indeed a step in the right direction.

I came across an article last week which related how a 41-year-old man in America had to resort to crime and re-incarceration after being released from prison in order to receive the medical treatment he needed for his condition. This man was diagnosed with aneurysms in the artery of his liver while he was in prison, which required life-saving surgery. Fortunately or unfortunately, he was released from prison one week later. When he returned for his pre-operation visit, he was told that since he had been released from prison, he no longer had insurance to cover the surgery. When he asked the doctor what he should do, he was told to figure out how to get insurance instead. But not knowing what else to do, it occurred to him that the easiest way to get the care he needed would be to get back to prison.

The week after, he went to a department store and, making sure a security guard saw him, pocketed some moisturising cream. He looked at the guard, smiled and walked out. After he was arrested, he wrote a note to the judge saying that he needed to get back into prison for a year, to get an operation.

Absurd as it may sound, we must not fall into the same trap in terms of healthcare provision and finances. We must ensure that healthcare will not be denied to certain groups of people because of their inability to pay. Affordable and accessible healthcare must remain a basic right for all Singaporeans. In our review of the healthcare system, we must adhere to certain basic principles that have served us well.

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Mdm Speaker, while I am still on the topic of elderly and persons with disabilities, it is important that we acknowledge that there is a group of Singaporeans who have devoted much of their time to care for these people. We, as a society, have improved in the past years to meet the needs of informal caregivers. We have a caregiver training grant, respite care options and have gradually begun to change perceptions about caregiving. Yet, can we still seek to do more to assist them? Caregiving is never easy and the stress on the caregivers, financially and emotionally, can be enormous. I have raised this issue many times in the last six years and I would like to raise this again. Can the Government consider providing some form of caregiver allowance to these caregivers, just like what many countries, including Japan and Australia, have done? This could take the form of cash payouts or even MediSave or CPF top-ups.

Mdm Speaker, the recent changes to the economy are also a step in the right direction, as we seek to reduce our dependence on foreign labour, increase productivity and transit to a high value, knowledge-based economy. As the transition takes place, I applaud the Budget for helping our SMEs make the painful but necessary change, to become less dependent on foreign labour, and in helping our lower wage, lower skilled workers, through increasing the employer CPF contribution, and Workfare. These schemes will undoubtedly help to ensure that Singapore is more ready to deal with the changes ahead.

At the same time, I would like to caution that while we make changes to the economy, let us learn from the lessons of the past. In the late 1970s and early 1990s, we had restructured our economy from a labour intensive, low skilled, to a less labour intensive, higher skilled economy. At each stage, there were Singaporeans, especially the older and less educated ones, who were unable to adapt to the new mind and skill sets needed. As a result, they lost their jobs, and were unable to find new ones, as their skills were no longer relevant. Such structural unemployment is of particular concern. As we make the current changes, let us keep in mind how to minimise such problems and to provide a helping and guiding hand to these Singaporeans to overcome any challenges in the course of this transformation.

This year's Budget has also sought to better promote social mobility in Singapore and to ensure better redistribution of wealth to lower- and middle-income Singaporeans. I applaud the Minister for Finance for adopting a more progressive version of taxation. At the same time, I also welcome the revamped assistance scheme, with the increase in the primary cash assistance rate, and introduction of two new tiers of assistance and the enhancement of Workfare to include more low-wage workers. This will help more low-income families

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cope with the higher costs of living in Singapore. More importantly, the initiatives taken to enhance the pre-school education scene and provide more support for disadvantaged students in school would ensure that social mobility is maintained. In many ways, this would allow us to maintain the ideals of meritocracy and equal opportunities and build a better Singapore.

Yet, when we speak about "meritocracy", which has been one of the cornerstone philosophies of our society, I would like to draw our attention to an article written by Donald Low in the IPS Commons. He argues that meritocracy in the education system in recent years has favoured certain types of people, because of our emphasis on sorting the best from the rest. He also argues that when that happens, people who are better off and well-to-do have a higher propensity to succeed because they have the means to access resources. While I do not agree with all of his argument, I think that there is a certain truth to it. After all, parents who are well-to-do have the means to send their children for such enrichment classes. In fact, popular tuition centres have also started to offer headstart classes, beginning as early at K2 level. Yet most of these are affordable only to parents of the upper middle-income group.

The emphasis in the Budget on levelling this playing field is commendable, but I do think we can do more to provide low-income Singaporean children the same access to enrich their children's abilities outside the mainstream education system. Can we not take a leaf from Edusave and to think about the possibility of a means tested central pool which will fund enrichment classes for those less well off?

Madam, besides the under-privileged families, elderly, disabled and their caregivers, I would also like to speak briefly about another group of people in society who are often left in the lurch. This group is the single parent, either male or female. The single parent faces many challenges in life as he or she takes care of the children. For one, the myriad of schemes and subsidies available to married Singaporeans with children are not available to them. Often than not, the single parent is faced with a double whammy of sorts. Apart from the lack of Government support, some are also cut off and "abandoned" by their families. Take, for instance, the Baby Bonus is only eligible, according to MSF guidelines, if the mother is lawfully wedded to the father. The case is the same for maternity leave, childcare leave and income tax relief, where marriage is one of the eligibility criteria. HDB BTO policies are also skewed against those who are single parents. I think we should relook the way we see parents who one way or another have to raise their children on their own. Let us remove our "biasness" and make avail to them all such schemes and subsidies that are available to married couples. We must remember that some of them are single

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not by choice and we should not further add to the problems they face in raising a child single-handedly.

A transiting economy is not the only transition that we need to manage today. Events in the past years have also shown that our society is undergoing significant changes. I think we can agree that there are segments of our society that have become more progressive, more vocal and who are more interested in liberal ideas than others. We have seen how Singaporeans have shown their passion on various issues, such as the death penalty, animal rights and Green Corridor, just to name a few. We should, in building a better and more inclusive Singapore, also provide the space to accommodate the views and aspirations of these Singaporeans.

In conclusion, I would like to take this moment to recall the lyrics of one of my favourite songs, "Home" by Kit Chan:

[(proc text) "This is home truly, (proc text)]

[(proc text) where I know I must be, (proc text)]

[(proc text) where my dreams wait for me, (proc text)]

[(proc text) where the river always flow. (proc text)]

[(proc text) This is home truly, as my senses tell me, this is where I won't be alone, (proc text)]

[(proc text) for this is where I know its home" (proc text)]

"Home", as this familiar song goes, is defined not by the infrastructure, the wages or the jobs, but our senses, our feelings, our emotions. We are Singaporeans because we feel connected. It is truly inspirational in defining what "home" is. As we endeavour to build a better society, let us ensure that while we make the material changes to ensure fairness and inclusiveness, we also need to pay more attention to the intangible, the emotive. After all, it is the experience of being a Singaporean that counts the most. With that, I support the Budget.

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Mdm Speaker, the Budget means different things to different people. Over the last few days, we have heard many hon Members of this House express different views, different perspectives on the Budget. But at its heart, Budget 2013 sets out a vision to build a better Singapore for Singaporeans not only in the shorter planning horizon, but in the longer. We have to deal with the shorter term needs as well as meet the longer term aspirations of all Singaporeans.

In striving to meet these objectives, two key concerns have been identified in this Budget. They are not new issues. In fact, they are rather quite old chestnuts, but they need tackling with more urgency today.

The first is a growing income inequality, as our economy develops. We have one of the greatest income disparities in the world and this has caused serious societal tension. The direct, tangible result of this is really that the poorest households in Singapore have been hardest hit by inflation. Higher healthcare and housing costs have contributed largely to this. Real income growth at the lower end of the income scale has also been a challenge and it looks like it will continue to be so.

Second, at the same time, we have a declining population resulting in a workforce that is growing in number all too slowly, but growing old all too quickly. This affects the ability of the workforce population in our economy to generate GDP and consequently real income growth.

Madam, these twin concerns are formidable issues. Not too long ago, this House debated the White Paper on Population. Many of us sitting here vexed over the population strategy and some even asked if the relevance of GDP growth and economic progress had been overstated as we debated the Population White Paper. Yet, we sit here today in this debate and we now angst over the cost of living, and how slow income growth has been and how much it has not kept pace with society.

Well, Madam, the two points are related and I hope that those who think that our workforce population strategies can be decided in a vacuum and without a real hard look at how it affects our economy will think again.

Another example of how the population strategies are linked to the economy. The hon Member Ms Lee Li Lian argued yesterday that there must be more "affordable access to foreign domestic workers" and all families with a child or elderly have to have access to a foreign domestic worker. She says

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domestic help is a necessity. I tend to agree, and I think the Budget recognises that in making foreign domestic worker levy concessions and help make domestic help even more affordable. But what she may have forgotten is that her suggestion alone will see an increase in the number of foreign workers in Singapore. Based on information that we can obtain from the MOM website alone – public information – this suggestion means that there will another approximately 250,000 foreign workers in Singapore, just on that suggestion alone.

How then does this square off with the Workers' Party's proposal made not quite so long ago in this Chamber of having zero foreign labour growth? It simply does not. So, it tells us that the policies have to be looked at, on a macro level. We cannot just go about making politically expedient points without linking it to the larger picture and making sure that it is consistent and that it works.

Madam, I want to come back to the income disparity and a growing Gini Coefficient. This is an inevitable consequence of Singapore being a global economy. We have high wages to attract the best talent and retain them, but also lower wages so that we can keep ourselves competitive. We face the same concerns as cities like New York and Hong Kong.

The array of measures introduced in this Budget shows that the Government is determined to close the gap. It has deployed a blend of both short- and long-term measures to achieve the needs and aspirations of Singaporeans today and their dreams of tomorrow. Income inequality, however, threatens those dreams and aspirations. If we believe the results of some income elasticity studies that are made across generations, then one of the consequences of an acute inequality, left unchecked, is that social mobility will be diminished resulting in poverty being transferred across generations.

The Gini Coefficient in 2012 has gone further up to 0.

478. The Department of Statistics put out a press release about two weeks ago to say that there are different methods of calculating the Gini Coefficient and by some standards, it could be lower than 0.

478. But by whatever method we use, it is quite clear that income gaps today have become even more pronounced. Indeed, if the trend of the last 10 years is anything to go by, then we can expect that in the next 10 years, it will go up further. Looking back 10 years, it has gone up from 0.43 in the year 2000 to 0.459 in 2012 even after accounting for some Government transfers. It is true that the more advanced Asian economies such as Japan, South Korea and Hong Kong, have also experienced rising Gini Coefficients in the same period. But what is troubling and significant for us in Singapore is that

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the rate of that increase over the last 10 years has been faster than these countries.

Hence, a very tangible and marked emphasis in the Budget this year is the deliberate stepping up of social policies, to provide what Deputy Prime Minister calls "Direct Assistance" to a range of less advantaged Singaporeans in our society. It is a deliberate and focused tilt in favour of the low- and middle-income Singaporeans via a combination of progressive taxing and social transfers.

Take GST Vouchers, for example. At last year's Budget, I noted that the Budget then introduced – I believe for the first time – a permanent transfer scheme by way of the GST Vouchers. This was distributed to Singaporeans in a variety of measures. This year's Budget reinforces that in two ways. First, by having an extra GST Voucher this year which doubles the payout and, second, by topping up the GST Voucher Fund by a further $3 billion so that it is sustainable each year until the year 2020.

It is likely that social policies and transfers aimed directly at helping the low-income will become a regular feature of our future Budgets. Indeed, the GST Voucher Fund is an example of a permanent feature of our fiscal policy and not just a temporary offset measure. This signifies the Government's assessment that the income gap will not be significantly bridged anytime soon, and, by extension, we are also likely to see progressively enhanced social policies to assist lower income Singaporeans.

Madam, these enhanced social policies, which are an integral part of an inclusive Budget, have received widespread cheer when Deputy Prime Minister announced them, and I support them. I particularly support these measures where they assist the disabled and the elderly who may find employment difficult to come by. However, much as I support them, we should equally be careful not to see transfers as a long-term solution to income inequality.

Singapore is not unique in having an acute income inequality nor are we unique in seeking to address that by increasing the level of social transfers. It would thus be useful to consider briefly the experiences of two comparable economies which have spent gradually increasing amounts on social transfers over the last decade. Take Hong Kong and South Korea as examples. These are two of the Asian Newly Industrialised Economies which the Deputy Prime Minister referred to as comparison in looking at the real growth of median total household incomes against our own.

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Hong Kong has had a new government. About the same time as we did, they announced the budget for 2013. Hong Kong too grapples with rising property prices and a widening income gap, and it too seeks to bridge this gap with increased social spending. Hence, in the latest budget, they have put aside HK$50 billion into a package of measures aimed substantially at alleviating poverty and they include measures such as outright rental housing waivers and direct electrical subsidies.

South Korea, which has also seen a new President installed recently, faces the same issues, perhaps on a more aggravated scale. The income divide is somewhat more stark and acute particularly for their ageing population. As at 2011, 45% of those aged 65 and above were living with less than 50% of median household income. The gap is so pronounced that the South Koreans have now planned to introduce a further means tested National Happiness Pension that comes on top of the existing pension scheme. All of this, Madam, comes with a cost. It becomes an economic and social burden that the future generation of South Koreans – the younger generation – will have to carry.

But the real lesson in this is that in the last 10 to 15 years, the social spending budgets of Hong Kong and South Korea have grown steadily. Yet the income inequality in those economies remain wide, if not became even more acute.

These experiences tell us that social transfers address only the symptom, but not the cause of income inequality. They help alleviate poverty, but do little to fix the underlying issue of income stagnation or minimal income growth.

Madam, I am not suggesting that social transfers in this Budget form our only strategy – far from it. But at the same time, we have to be careful not to end up on the slippery slope of welfarism and becoming overly dependent on handouts.

I was troubled last year, as I said, by the permanent transfer – introduced by our GST Vouchers – and I had raised that concern in my speech then. This year, this has been reinforced in the ways I have described earlier until 2020. I am concerned that we do not create a dependency on such transfers which are not paired with co-funding or co-payments. In contrast to off-set packages, once we introduce a permanent transfer, especially over a sustained period, it will be difficult to withdraw or even re-calibrate. Come 2020, we may either have to find a way to top up this fund, or create another one.

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We should therefore place more emphasis on other ways of closing the income gap. A key pillar of the Budget is the need to ensure a fair and inclusive society. Central to that must be social mobility. Stripped away from the jargon, what this means is that all Singaporeans regardless of background or station in life must be given equal opportunity and access to be able to improve themselves and move up the socio-economic ladder.

I used to believe that meritocracy alone was enough. In fact, when I was introduced as a candidate for general election in 2011, I said exactly that. I now think that that is not entirely right because there will always be children who are born into different family backgrounds that will carry very different relative advantages and disadvantages. I realise how much of an effort my own parents have made to put me here. But it will be very different for different families – some better, some not so good. So, we have to apply a bit of the socialist brush to meritocracy, to nudge it slightly to the left in order to find the right equilibrium and balance. Not everyone will achieve the same success – that is in the nature of life. But everyone must, as far as possible, start from the same point.

Education has been said to be the great leveller. It is supposed to be, but that may not always be true in our system. Children who come from well-off backgrounds inevitably get a head-start. They start in brand name kindergartens and get enrolled in extra-curricular classes to improve academic as well as soft skills. By the time they get into Primary school, there is often already an appreciable gap between those who are more well off and those who are not. This is sometimes further exacerbated at the Primary school level where students are almost expected to have some sort of tuition or other. If they do not, then they may lose out further.

So, it is on that score that I am very heartened by the latest initiatives to strengthen opportunities, especially for the low- and middle-income pupils in our education system. In particular, the emphasis on pre-school education is, to me, a significant step in the right direction.

On the topic of pre-school education, this is not a new debate. There have been previous calls, even in this debate on the Budget, to nationalise early childhood education. The Ministry has previously resisted a system where pre-school education merely becomes an extension of the formal school system, where numeracy and literacy skills get emphasised at the expense of other developmental goals.

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Madam, I agree with that, and I am not advocating an extension of formal education, but to borrow a phrase from MOE itself – "Teach Less, Learn More". But I do believe that more could be done to start the process of inculcating core values and character development from an early age.

It has long been recognised that children between the ages of three and seven have a strong cognitive ability and that this can be nurtured through play at that age. The pre-school years are a critical period for the development of our children. We must not lose them. They lay the foundation for our children's education prior to formal schooling. I hope this will be seriously considered by the MOE and the Early Childhood Development Agency when formulating the kindergarten curriculum.

Pre-school curriculum content is not currently regulated by the Government. Hence, in addition to expanding capacity and having more anchor operators, could the Government also consider initiating a character development program which starts at a child's pre-school years and also investing more in training and equipping pre-school teachers specifically to be able to help our children in character development and building a strong value system at that age. Those are the formative years in a child's learning path, and I feel we could do well to take advantage of it.

Madam, this Budget has been well received in many sectors, and it is easy to see why. It is balanced, with immediate steps in place to arrest pressing issues, and longer term measures to restructure our economy to remain competitive and to remain ahead of the curve.

To me, however, the key to a successful Singapore and a successful Budget is best encapsulated by some of the Deputy Prime Minister's final words when he concluded the Budget, and they are, "But our policies will ultimately succeed by building on the strengths of Singaporeans – the skills and mastery in every job, the compassion, the sense of collective responsibility, and the belief in this country. They each tell us something about our strengths, and about why we will have a better Singapore ahead."

We have to instil in each Singaporean a strong fighting spirit, a determination and resilience to overcome the competition, and there will be stiff competition. Our people have always been our best resource and it remains the case. No amount of rebates, vouchers, credits or other social transfers can help if we do not play to our strengths and work hard and with the courage of

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conviction, to succeed.

Singaporeans cannot depend on the Government alone, and we have to ensure that all the handouts and transfers which the Budget provides for that they do not make for a softer and less resilient population. Madam, having said all that, at the same time, we must continue to look out for many individual Singaporeans who may, for one reason or another, have fallen through the cracks of our policies.

I have a resident who is in her 50s, Mdm J. She is single. She is employed and lives in a one room rental flat. She has no dependents, but also no family to support her. She is physically disabled and wheelchair bound. She has been so since birth. But she endeavours to be self-sufficient so she is gainfully employed. She has worked hard and recently got a pay rise. In the weekends, you will find her at the marketplace in her wheelchair, peddling little knick knacks and other wares to make some extra income.

She came to see me several times as she is facing mounting costs of living like many of us do. But unlike us, she cannot walk to work or even take advantage of the free public transport proposals that some of my colleagues here have made. She has specially arranged transportation. She has to have this transportation specially arranged, but she was just told that the cost of that transportation will double next month. Her HDB rental will also go up, because of her salary increments – she is now at the next band. She is not entitled to Workfare because of the level of her salary, especially after her raise. In truth, she is probably better off without the pay increment and that is a travesty. In fact, she tells me that she is almost better off not being employed and just getting the benefit of assistance schemes.

Madam, we must not lose sight of the fact that even as we applaud this Budget, even as we say that this is an inclusive Budget, many Singaporeans continue to need help. I hope that the Government will look at all appeals for assistance carefully and compassionately and pay heed to the particular circumstances of each individual case and not just issue standard replies.

I started this speech by saying that the Budget means different things to different people. All that is right, but it cannot mean nothing to some people in Singapore. Madam, with that, I support the Budget.

Deputy Prime Minister Tharman.

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Mdm Speaker, first, let me thank Members for their very thoughtful comments and suggestions made in the debate over the past two and a half days. As usual, the comments covered not just the key thrusts and key policy initiatives in this Budget, they also covered a range of other issues that we will be discussing in the Committee of Supply (COS) and which will be taken up by the respective Ministries.

For instance, many Members spoke on the importance of pre-school and supported the initiatives that are being taken in this Budget, which MOE and MSF will be talking about in their COS. Mr Christopher de Souza, Dr Intan Azura Mokhtar, Mr Yee Jenn Jong, Miss Penny Low, Asst Prof Eugene Tan and many others spent a good part of their speeches on the pre-school sector.

Sports and arts – Mr Baey Yam Keng, Mr Nicholas Fang, Ms Janice Koh made useful points which will also be taken up.

Environment – Dr Lim Wee Kiak, Ms Faizah Jamal and others spoke about the environment and this too is increasingly important to us as we go forward, and which will feature in our COS as well.

I want to say this because I am not going to cover all the issues that have been raised in the debate, but will focus on some of the key policy initiatives in this Budget.

I will focus essentially on two main issues. First, why SMEs are at the heart of what we are trying to achieve in our shift to quality growth. Why SMEs are at the heart of what we are trying to achieve. Second, what is our approach towards progressivity and social spending. We know social spending will have to go up, but what is the right approach? "How far" and "how" is as important as "how much". So, what is the right approach?

In particular, how do we help low-income Singaporeans on a sustainable basis? How do we help the broader base of middle-income Singaporeans who are also at the core of what we are trying to achieve in a better Singapore?

Let me start with the first theme, which is on helping our SMEs make this transition – this difficult but important transition. Ms Jessica Tan, Dr Teo Ho Pin, Dr Lily Neo just awhile ago had spoken about the criticality of the SME sector

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and how we have got to make sure that they are able to make this transition. If they cannot make the transition, we will not achieve quality growth in Singapore.

I agree with them. We want our SMEs to succeed and not just for economic reasons; not just because they comprise roughly half our GDP. We also want them to succeed because they are part of the lifeblood of our society. They are part of Singapore and they contribute to the vibrancy of Singapore, as Mr Teo Siong Seng pointed out as well. So, we must transform and revitalise our SMEs in this next phase of our development as a country.

We are intensifying the restructuring of our economy. But that does not just mean intensifying the tightening our foreign worker policy. It is not just intensifying the pain. We are in fact intensifying our support, for our SME sector in particular, during this transition period. Put simply, of the $5.3 billion three-year Transition Support Programme, about two-thirds of the monies are expected to go to our SMEs. I will elaborate on this in a short while. About two-thirds, roughly in proportion to their share of employment.

The first issue which we have to think hard about is the pace of restructuring. Not moving too fast, but also not moving too slowly. Several Members spoke about this – Ms Jessica Tan, Mr Lim Biow Chuan, Mr Seng Han Thong, Er Dr Lee Bee Wah and Mr Inderjit Singh. Many were concerned about the pace with which we are tightening foreign worker policies and what the impact will be on our SMEs. Mrs Lina Chiam had another view – she was disappointed that we were not tightening more significantly and across all sectors.

It is an important issue. I agree with Mr Inderjit Singh, for instance, that restructuring is not something to be achieved in two or three years. But we are not starting from today. We started in 2010. We started in a very determined way in 2010, made clear our directions: that we are to grow on the basis of productivity and much less on the basis of manpower growth. We had to do it to sustain wage growth for Singaporeans and we also had to reduce our reliance on foreign manpower – to slow down the growth of foreign manpower.

We made clear our directions then and we also made clear that we were not going to turn back. And I made it a point, in fact, in Budget 2011, one year after we started this, to emphasise that we will not any longer – as we had done many years in the past – vary our foreign worker levies for cyclical reasons, that is, if we had a slowdown or a recession, we lower our foreign worker levies. We

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made it clear that the new direction was here to stay, and the direction was clear. We have to keep tightening and keep leaning on firms to do more to reduce manpower demand and to invest in productivity.

So, we started in 2010. This three-year Transition Support Package is for three years, after the three years that have already taken place – of significant tightening, in levies as well as reduction in dependency ratio ceilings.

As I mentioned in the Budget Speech, to be quite frank, we are making this next set of adjustments in full knowledge of the difficulties that businesses will face. But there is no choice. If we do not achieve momentum in the next three years, there is real risk that three years from now, we will be in exactly the same position. Both workers and businesses will in fact be worse off.

So, we have to gain momentum in the next three years. There is no choice. That means giving strong incentives for our businesses, large and small, to reduce dependence on manpower, both by tightening our foreign worker levies and selective cuts in the dependency ratio ceilings, as well as by providing enhanced support for every form of investment in productivity, including training up workers and developing new capabilities. So, that is what the Quality Growth Programme is about, with its three-year Transition Support Package, taken together, $5.9 billion over three years.

The question has come up: will SMEs benefit from this $5.9 billion Quality Growth Package? In fact, as I mentioned in the Budget Speech, we intend to flow back to the business sector all the additional revenues we are collecting from foreign worker levies. Specifically, if we take the increases in levies, starting from January this year, which actually was announced in 2011, and if we include the increases in levies that take place this year, next year, and the year after – the next three-year period of levy increases – we will flow back to the SME sector more than twice that amount of money. More than twice the cost of the increased levies will be flowed back to the SME sector – through the Transition Support Package as well as through the other measures in the Quality Growth Programme.

Let me explain this for each component in turn. Wage Credit Scheme. The question came up in the debate – I think a few Members asked if SMEs will benefit from the Wage Credit Scheme. There was another view that for the large companies that benefit, maybe we do not need to be supporting them because they would have paid their workers more anyway – so there is some deadweight

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cost in this. And those are good questions.

First, let me make clear that wages will have to be market-determined. They have been and they have to continue to be market-determined. But what is the market? It is not an unchanging labour market. We have tightened foreign labour policy. It is a tight market and as long as we keep Singapore competitive, it will remain a tight market. In that market, our businesses, and especially our SMEs, are going to face wage pressures. The wage pressures will be there in a tight labour market. That is why we want to help the SMEs see through this period of transition with the Wage Credit Scheme, and, at the same time, prevent inflationary pressures that will otherwise result from higher wage costs being passed through into higher consumer prices.

Mr Lim Swee Say spoke about this yesterday – what is the right approach? The right approach for businesses, to sustaining wage increases beyond the three years, is to take full advantage of all the Government schemes that are on the table to raise productivity. Take full advantage of them.

We are making them accessible. We are making them easy to apply for. We are even pushing some of them in front of firms. Take full advantage of all the schemes – Wage Credit Scheme, PIC Bonus, and, of course, the Corporate Income Tax rebates which come in automatically, and all the other enhanced productivity incentives. Incentives not just for investments locally, but also to expand abroad.

Taken holistically, SMEs will be the largest beneficiaries of the Quality Growth Programme, because we have designed it that way.

Wage Credit Scheme – two-thirds of Singaporean employees who earn gross monthly wages of less than $4,000 are, in fact, employed by our SMEs. So, that is where the core of the full workforce below $4,000 is. I looked at the data – we do not have data yet for 2012 that is disaggregated in detail, but for 2011 we have the data and it gives some indication. The SMEs are paying their share of wage increases.

In 2011, more than half of our SMEs gave wage increments and amongst those that gave wage increments to employees earning below $4,000, the median wage increment was over $200. That is for the very small SMEs, those with 50 employees or so. A median wage increment of $200 for that group of employees whose pay was below $4,000 and whose wage increased. So, they are already paying wage increases, and with a tightening labour market as I

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mentioned, the wage pressures will be there and may, in fact, rise. We can expect SMEs to have their full share of the Wage Credit Scheme.

Should we have designed the Scheme only for SMEs and left out large companies? It is a meaningful question. In principle, you would expect larger companies to have the means to improve productivity on their own and to share productivity gains with their workers. In practice, it is very hard to draw the line. How, for instance, do we distinguish between a company that is small with a small number of employees, but is in fact highly profitable, and has no problem sharing gains with its workers, compared to a larger enterprise which may be in a sector with very thin margins, for whom the Wage Credit Scheme can be very helpful in allowing them to free up resources to invest in productivity and also to share the gains with their workers? It is very hard, in practice, to say who deserves it more than someone else.

It is not simply small against large. It varies widely according to sector and even for companies of the same size, it varies widely. So, it is much better to be clean about this. Our basic motivation is to flow additional foreign worker levies back to the businesses, but flow it back in the right way and not flow it back indiscriminately. The right way means flowing it back in ways that support productivity and productivity gain-sharing with workers.

For other components of the Quality Growth Programme, SMEs were also foremost in our minds when we designed the measures. Corporate income tax rebate – the 30% corporate income tax rebate is higher than we have done before. We decided to do that but to impose a cap at $30,000. Because the higher the percentage rebate, the more the SMEs benefit. The higher the dollar cap, the more the large companies benefit. So, 30% per Year of Assessment for three years. SMEs will receive an estimated 90% of the total amount of the corporate income tax rebate.

PIC Bonus – I will not go through all the details, but, frankly, the $5,000 per year, or $15,000 over three years, is not a large sum for the large companies. But for the SMEs, including micro-SMEs, it is very meaningful. For this PIC Bonus, we estimate that the SMEs will receive about 95% of the PIC Bonus. It was not designed for large companies.

The other enhanced schemes – the $500 million worth of enhanced productivity schemes on top of what we are already doing. Again, they were designed for SMEs. For example, the industry collaborations linking up large firms, not just MNCs, but large local enterprises with SMEs up and down the

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supply chain – it is a very meaningful scheme to share expertise, develop best practices and even to have technology innovation in the SMEs. Developing or helping SMEs to strengthen their brands, helping them to expand abroad. That $500 million is a very meaningful scheme, which MTI will be talking about in the Committee of Supply (COS).

How can we help the SMEs recruit people – especially to recruit Singaporeans who have been economically inactive? This is a very important issue and there were useful suggestions from Members during the two-and-a-half days' debate. Ms Foo Mee Har and Ms Mary Liew mentioned the PAP Women's Wing's recent proposal to give a special Back-to-Work employment credit to help the employers hire women who are returning to the workforce. They gave the example of giving a credit for one year, but those are details. Mr Gerald Giam mentioned a New Hire Wage Credit Scheme, somewhat similar in concept – one-quarter of the first six months of salary of a new hire, for a longer period of the next three years. I think Mr Giam can become an honorary member of the PAP Women's Wing.

Ms Jessica Tan had another very interesting proposal on training subsidies for PMEs – a very important group, not economically active but some of them may have lost their jobs or been dislocated temporarily. We must help them to come back in. Every form of training subsidy, including helping them get jobs in Singapore with companies that can use them abroad in their operations because companies are very short of Singaporeans abroad.

Mr Liang Eng Hwa had another suggestion to help PMEs, which goes back to what we did during the crisis in 2009, where through an EDB and MAS scheme, we helped the companies pay for the salaries of re-skilled PME workers.

These are all ideas which we can consider. Some, in fact, had been tried before. We introduced the People for Jobs Traineeship Programme in 2001, more than 10 years ago, to encourage employers to hire older workers. We terminated it. I will explain why. First, the programme provided wage support to employers for hiring unemployed mature workers. In fact, it is somewhat similar to the New Hire scheme and the other proposals that were mentioned. We discontinued it after three years because there were very low retention rates of the workers that had been hired on the basis of this initial wage subsidy. It does not mean it will not work again, but this has been a problem that many countries face, in what they call active labour market policy, when you provide a subsidy initially and you hope it works out and the person will stay, and the employer also wants the person to be part of the team. So, this is a concept that

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we tried out before, but which we will continue to study.

But we have other schemes that we have since introduced, which are quite significant. The Special Employment Credit, as you all know, is very significant – 8% of the pay of our older workers is paid for by the Government; a very strong incentive for employers to go out and look for older Singaporeans who can work part-time or full-time, and give them a meaningful and fulfilling job. The Place-and-Train Programme that the Workforce Development Agency (WDA) runs, which helps job seekers to re-skill themselves – first get hired by an employer, then go for structured training paid for by the Government. It is very heavily subsidised by the Government. This is another very useful scheme.

The ADVANTAGE! Scheme, which helps firms redesign jobs. There are some sectoral schemes too, like SPRING is working with the F&B industry to develop a part-time pool of manpower that they can tap on. Flexi-Works!, which many Members are aware of, gives employers 80% of the cost of putting in place flexible work arrangements. Some Members spoke very passionately about this, and I know Members like Ms Irene Ng have been talking about this since 2004, if I am not mistaken. Others made very strong points about this. If we want to attract the economically inactive, particularly people who have family responsibilities, we must have much more flexible work arrangements. We have to be very serious about this. MOM will be talking about how it is going to enhance a whole range of schemes. Many of the things are covered already. They are going to make some enhancements to help our companies, and especially our SMEs, attract and retain Singaporeans and to help Singaporeans to have meaningful jobs, part-time or full-time.

Productivity has been weak. Last year, it was miserable. Minus 2.6%. That was the preliminary data. One reason was cyclical – we were in a very unusual situation where we had very slow economic growth but a very tight labour market. It was quite an unusual situation. In such a situation, firms do not shed workers. They do not retrench workers. They would rather not lay off workers because they are not sure they would be able to get them back. So, firms keep workers despite a slowdown in the economy and that was part of the reason for the slippage in productivity, in both manufacturing and services.

It also reflects a broader point that there is a gestation period, as many acknowledged. There is a gestation period before productivity schemes can take off, before firms can customise the schemes that are available to their own needs, and think through what is in their business interests. There is a gestation. We have been tightening foreign labour policies and we have provided generous schemes, but there is a gestation which all countries face in the

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restructuring process. It takes a while before firms can respond. The pain has to be enough and the gain has to be quite clear. I think we now have both in place.

We had been careful not to disburse grants from the National Productivity Fund and the other sources too quickly, before firms are ready. These are tax monies and they have to be used well. We have taken pains to work with the industry to develop roadmaps for the future, industry by industry, conducting deep dives, with clear milestones as to what should be achieved and with funds to be disbursed at each milestone.

In the next few years, we are going to see a lot more traction, a lot more take-up, because many of the roadmaps have now been developed and they are ready to roll.

Take construction for example, which is raised by Er Dr Lee Bee Wah and Mr Gerald Giam. It is a good example because it has had poor productivity performance. We have been spending time with the industry to develop the roadmap going forward.

What does it involve? First, of course, the obvious parts on foreign worker policy, controlling the supply of foreign workers and also trying to manage the demand for foreign workers. Second, imposing new regulatory requirements. In this year's Budget, we are taking a significant move on mandatory requirements – buildability standards, constructability standards, which basically mandate manpower-saving techniques.

Thirdly, we are providing very strong incentives, not just disincentives, but incentives for companies to adopt technology and to develop manpower and capabilities, including scholarships schemes for locals to join the sector.

We have developed a set of targets. They vary depending on which component of the construction sector we are talking about. I will give you a few examples so that you know basically what working industry-by-industry involves.

Adoption of drywalls. Drywalls can be built about two and a half times faster than brick walls. Currently, adoption of drywalls in our local industry, if we take condominium projects, is relatively low by advanced country standards. About one-third to, at most, 40% of our local condominium projects involve drywalls. In Japan, it is the norm. By 2020, we expect at least 70% of our local condominium projects to be using drywalls. HDB, too, is piloting the use of

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drywalls in its new projects.

Another example is system formwork, which is a prefabricated mould used for wet concrete work. It is employed in just 25% of our projects today. In Japan, it is around 80%. Here, too, we expect adoption of system formwork to go up to 40% by 2016 and 80% by 2020.

We have set aside monies in the Construction Productivity and Capability Fund (CPCF) – the $250 million that has been mentioned. But we have not disbursed much yet. We have committed $85 million and there will be a lot more disbursed over the next few years as we start implementing the road map. It will take place as the tightening of the Man-Year Entitlement (MYE) quota kicks in, which Er Dr Lee Bee Wah spoke about. The 45% reduction in MYE – not much effect so far because it is only new projects that are affected. So, some tightening but much stronger support and mandated requirements.

By the end of this decade, we will see a different construction sector.

Let me now move on to the second major theme, which is our approach to progressivity and social spending.

The tone of the debate was one of supporting a move towards greater progressivity and many Members, like Mr Vikram Nair, Mr Christopher de Souza, Mr Ong Teng Koon, Mr Baey Yam Keng, Dr Amy Khor and Ms Denise Phua, had thoughtful things to say about this. They differed in their views as to how far and how quickly to go, but they felt this was an important issue for us at this stage as we make this transition in our evolution as a society and not just an economy.

We do have a highly progressive system of taxes and benefits. It is designed to be equitable as well as efficient. In other words, it has to support economic dynamism. Let me start by explaining. I will take Members through this briefly because it is very important to understand how the whole system adds up.

Firstly, income tax. We know that for the low- and middle-income group, most do not pay income tax because slightly over 55% of Singaporeans do not pay income tax. But the other important part of the income tax schedule that is worth emphasising is that it is not just a schedule that goes from zero to 20% marginal rates. It is also a schedule that extends backwards from zero to minus 30% because of Workfare. I am leaving out the other schemes, but Workfare is

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a negative income tax. If you work and you are in the lower income group, you get Workfare. It is a credit to you and a negative income tax. So, our true income tax schedule is actually from minus 30% to plus 20%. Minus 30% effective tax rate, to close to 19% or 20% effective rate for the very high income earners. That is what our true income tax schedule is – 50 percentage points. It is highly progressive.

Members could look at the charts on the proportion of personal income tax paid by the different income groups. [Please refer to Annex 1.]

I should mention that there were some figures that were mentioned in the debate, and that have been in the press, where there had been some misinterpretation of the IRAS data. It refers to individuals, but I think there was some mention of 11% of individuals paying for 80% of all taxes. Actually, it was income taxes, not all taxes. It also refers not to 11% of all income earners but 11% of people who pay personal income tax. But leave that aside. I am saying that because there were figures mentioned in the debate that I am now clarifying.

If we look at Singaporean households, the top 20% account for 80% of income tax. And that is the way it should be.

Secondly, how about other taxes – not just income taxes but GST? We have discussed GST extensively in previous Budgets. In itself regressive, but GST, together with everything that goes with, GST-Plus, is a highly progressive system when you add the whole system together. Let us add all the other taxes. Besides income tax, if we add all the taxes together – no benefits yet, just taxes – if we take maid levy, car taxes, GST, income taxes, add everything up, still a highly progressive system. The top 10% pays well over a third of total taxes, and the top 20% pays over half of our total taxes.

Then, add in the benefits. Because the true test of the progressivity of a fiscal system is not just about taxes, but taxes together with benefits. It is extremely important to understand that. We raised the GST together with an enhancement of benefits, and made clear the connection – that this was a fiscal strategy to raise revenues to support the lower- and middle-income groups.

So, who gets the benefits? Of course, it is the other way round. The bulk of the benefits are received by those in the lower deciles.

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I should explain a very interesting quirk in the data, which shows that those in the first decile get less benefits than those in the second decile. In fact, if we go back to the previous chart, you will also see that the first decile pays slightly more taxes than the second decile.

This illustrates a point which I hope everyone will understand – these income deciles, that we publish regularly in our household income trends and so on, reflect income from work. But many people in the first decile, indeed in all the lower deciles, but especially the first decile, are not people who are poorly off.

They may have stopped work for some reason or the head of the household may have just retired, but 17% of our first decile live in private properties, 16% own cars, 10% employ a maid. So, they may not be very well off, but they are not poor.

The first decile has many people in there who are not poor, and this explains why they do not get as much benefits as those in the second decile, and they pay slightly more taxes. I say this because the statistics need to be interpreted with caution when you look at income by decile.

The basic picture is that the bulk of the taxes is paid for by the top two deciles and the top decile pays its fair share, and bulk of the benefits received at the bottom. That is the way it should be, and we are going to enhance the progressivity of our system further, as I indicated in the Budget Speech.

Ms Sylvia Lim cited an IMF discussion paper – a very interesting paper. I was familiar with it but I looked at it again since she mentioned it. It is a good study. In fact, it is what economists would call a heroic study, because it attempted to find a link between inequality and growth which has been a thorny issue in economic literature. It reached a tentative conclusion which Ms Sylvia Lim pointed out – this study of developing countries found that those that had better equality or less inequality were able to sustain growth for longer periods. And that explained partly why countries in Asia generally had been able to sustain growth for longer periods than Latin America, for example. That was one important conclusion.

But what Ms Lim did not mention was a second, equally important, conclusion of the study, also right there side-by-side in its executive summary, which I will read out because it is an important conclusion.

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The first conclusion was that less inequality tends to be associated with longer periods of growth. The second conclusion, however, is that, "The immediate role for policy, however, is less clear. Increased inequality may shorten growth duration, but poorly designed efforts to lower inequality could grossly distort incentives and thereby undermine growth, hurting even the poor. There nevertheless may be some ‘win-win' policies, such as better-targeted subsidies, improvements in economic opportunities for the poor and active labour market policies that promote employment."

This is, indeed, the type of thinking that instructs our approach. Not because it was an IMF staff discussion paper. This is, in fact, what we have been thinking about for some time. We study very carefully what is happening in other countries and we have learned from our own experience. It is the type of thinking that inspires our approach.

We are not going for progressivity, or re-distribution, for its own sake. We are designing and implementing policies that stand the best chance of sustaining economic dynamism and building a society that all Singaporeans can truly benefit from. That is the end objective and we have to keep that firmly in mind.

The litmus test is not how progressive a fiscal system looks. That is not the litmus test. The litmus test is whether it will truly help lower- and middle-income Singaporeans to have better lives. And that is not a question with straightforward answers in tax policy and spending policy, and we have to think very hard about those issues.

Let me, therefore, make four points that start from that premise.

First, when we think about the adjustments we have to make in taxes, we have to think hard about what they mean for equity and fairness. That is important. What do our taxes mean for equity and fairness? But we also have to think about what they mean for economic dynamism, dynamism that is needed to support our lower- and middle-income Singaporeans. That is my first point.

Likewise, secondly, on spending. It is not just about spending more, but spending better to achieve our objectives. It is not just about how much we spend but how we spend. How can we go about it in a way that helps people to stand on their own feet especially, and that targets benefits at those who need them the most? In our context, too, as I mentioned in the Budget Speech and

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which many Members have mentioned, we also have to pay special recognition to the situation of our older Singaporeans, the pioneer generation.

So, thinking about spending involves targeting. It involves also how we do and not just how much we do. That is the second point.

The third point: the Government has to work with the community. It is not just about what is in the Budget. We have to work with the community in a way that strengthens our VWOs and civic organisations not just to achieve many-helping-hands but to achieve stronger helping hands on the ground. One reason why Acting Minister Chan Chun Sing has introduced the initiative to have social service offices on the ground is to strengthen the helping hands on the ground, coordinate better, integrate better, work better across Government, but also work better amongst the Family Service Centres (FSCs) and the VWOs, which is a good point that Mr Muhamad Faisal Bin Abdul Manap made, that is, strengthen the FSCs.

Fourth point, we have to design policies that can be sustained, not just for one or two electoral terms, but for many years after. This is a fundamental point.

So, those are four points which start from that premise, that it is not progressivity for its own sake that we must aim for, but progressivity that will help to uplift lower- and middle-income Singaporeans on a sustainable basis. We think very hard about these issues.

We also study what is happening elsewhere. There are numerous examples of how you get paradoxical results. Many examples. I will just give you two examples. If you look at any of the advanced countries, a good example is the United States.

Since the 1970s, they have had very significantly enhanced income transfers to the poor, defined in different ways – single mothers, low-income families, sometimes neighbourhood support – many forms of enhanced transfers to the poor. But the poor neighbourhoods have not gotten better; they have gotten worse. Many more families are disintegrating. Not efficient and also not very fair.

Second, unfunded public pension fund liabilities and other unfunded commitments to their retirees. The US is a classic example; Europe is an even worse example. Not just a problem for budgets but actually highly regressive, highly inequitable. If you look at what is happening with the US state-level

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pension funds, public pension funds at the state level, highly regressive because they have provided, year after year, electoral term after electoral term, enhanced commitments and promises which they now have to keep to retirees, those who are now going to retire as well as those who have already retired. They cannot meet the budget, so current workers have to pay. They are cutting salaries, jobs and they are also cutting the future promises for current workers. Highly regressive because the current generation of retirees is generally, on average, better off than the current generation of workers. It is an example of what looked good, looked progressive, but actually was bad, not just from a financial sustainability point of view but unfair.

These are just two examples. Spending better is as important, and more important, than how much you spend, and whether we can do it with a view to fairness and with a view to efficiency. We will do more in social spending. We have indicated our priorities and we are doing more especially in the areas that meet our objectives of preserving a dynamic society – education, housing, work support and providing some economic security to our retirees, especially the current generation.

We are not starting from a state of despair. As Dr Chia Shi-Lu just mentioned, it does mean something that in an EIU study, of a whole range of countries internationally, Singapore was placed No 6 as the best place to be born this year. The study has many indicators, you can question some of them, but these are objective indicators. And as Dr Chia also mentioned, in healthcare, the latest Bloomberg index of healthiness, a very large number of countries − I think 100-over countries, I have it here myself − Singapore was ranked No 1 in the world for healthiness. They had 16 indicators of healthiness – risk indicators and other objective indicators. In education, we know how we are ranked. In the World Economic Forum Global Competitiveness Report, third best education system. And regularly in the PISA and TIMSS reports, not just because we have top students who do well, but also because we have what is called "resilient" students, that is, our students from the lower social economic background do better than expected compared to the way it is in other countries. So, it is quality across the board. That is in education.

So, we are not starting from a position of despair. But we want to do better. We have set out our priorities and we want to do better. Our social policies will evolve, particularly as our incomes grow more slowly and grow unequally, and as our society gets older.

Let me go on now therefore to two key priorities with regard to our low-income group. When we think about the low-income group, those who have the

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toughest time are the bottom 10%. Among citizen households, the 10th percentile have incomes of about $1,650 per month – or if you include employer's CPF, it is about $1,800. It is tough to survive, particularly for those who have larger families, elderly or children. And we intend to do more to help them.

But there are two very distinct groups within this lower income segment − those who are older and those who are younger. And our solution needs to be tailored to their distinct needs.

Households who are older, whose heads of households are 55 or above, actually account for slightly over half of this group of households in the bottom 10%. Most of these breadwinners, in fact, six out of 10 of these breadwinners, have no more than primary education. That is the description of the older Singaporean low-income households. And many have seen very little improvement in their pay, especially in real terms, in the last five to 10 years. We know that.

For the younger group, it is very different. If you look at the group aged below 35 years, there are some in that bottom 10% as well, but it is a very small group, a very small proportion of the young and very small proportion of the bottom 10%, nationally, of households. They are very different in description, having benefited from a vastly improved education system − almost all with at least Secondary education, and many with ITE or something further. So, they are in the early stage of their careers. So, the way we think about them and how we want to help them, with regard to work, skills and home, is different.

For older low-income Singaporeans, we have to enable them to have the dignity of work, we have to think about workplace design to suit their needs and we have to provide them with greater economic security in their retirement years.

For younger low-income Singaporeans, we have to provide every opportunity for them to climb the ladder of skills, better jobs and better pay, every opportunity for them to do that. And find every way for their children to do well, starting early in life through their school years.

Let me start with older workers. Mr David Ong, Mr Heng Chee How and several others spoke at length about their needs and how we need to pay more attention to them. What is our approach? These are people who are already well

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into their careers, well into their 50s, some 60s.

First, we will supplement their pay using Workfare. We have enhanced it now. Almost 30% of the older workers who are low-paid, almost 30% supplement to pay through Workfare. Second, we are helping their employers to hire them, through the 8% Special Employment Credit. And if you take it together for someone who is earning, let us say, $1,000, a low-income worker, if you take the Workfare and Special Employment Credit together, it means that we are paying about 40% on top of what the employer would have paid. That is a very substantial top-up by the Government.

Then, we have the Workfare Training Support Scheme (WTS). Mr Ang Hin Kee is very familiar with this as he used to run e2i. Mr Ong Teng Koon and several others spoke about this. Even our older workers are benefiting from the WTS and we have to find every way of tailoring it to their needs. No one is too old to learn, to do better on their job and to take on responsibilities at work. We have many examples and we are very serious about this. So far, one in five older workers aged 50 to 64 years have been taking part in the training and we want to up that ratio. MOM will be discussing this in the Committee of Supply as well.

Next, the Progressive Wage Model which Mr Lim Swee Say and his colleagues among the Labour Members spoke about. How do we give them the maximum upside, while minimising the downside, as Mr Lim Swee Say put it. And that is a very important point because for our older workers, the downside comes easily. The downside of losing their job, because they are most vulnerable and they have the least education. It is very easy for employers to discriminate against older workers if they want to, even on what appears to be the basis of merit. So, maximise the upside and minimise the downside, as Mr Lim Swee Say says. Progressive Wage Model − we are putting resources into it, we are helping the companies through the Inclusive Growth Programme together with it, and we are going to find a way of raising their pay, particularly in cleaning and security. And we are working industry by industry.

Next, redesign the workplace. I will not elaborate on this because many Members have spoken about it, including just a short while ago, Ms Low Yen Ling. MOM will take up suggestions on job redesign and how we can enhance our schemes. That is for workplace-related initiatives.

The home was always a key pillar of our social support for that generation of Singaporeans. Eighty-three percent of those aged 55 and above who are in

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this bottom decile are proud homeowners. Most have paid off their loans, and for those who own a fully paid-up 3-room flat and if they are moving to a studio apartment, they can realise on a net basis, after paying for the studio apartment, housing equity worth $200,000. And on top of that, we are giving them a Silver Housing Bonus of $20,000 as an incentive. So, the home is very important, and helping them to monetise their home and unlock the value so that they can have better retirement years is extremely important.

Finally, the healthcare financing review, which I am not going to discuss in detail, but that generation of older Singaporeans is foremost in our minds. Mr Gan Kim Yong will be talking about this in the Committee of Supply.

Next, the younger group of low-income Singaporeans − they require a different set of strategies. We provide the best education and the best opportunities for upgrading. We must provide every leg-up, rather than handouts.

Social mobility is a key feature of our policies and Members across the board supported the strategy we are taking, including what we want to do to enhance the pre-school sector. But beyond the pre-school and school years, we also need to provide them with a ladder of advancement in the workplace. We have to be a continuous meritocracy, not a meritocracy based on what happened when you left school or a tertiary institution. We have to be a continuous meritocracy. Constant opportunities to upgrade, to switch line, to pick up new skills and develop real mastery. And I think we can do it. We have the resources and we can work together closely on a tripartite basis. We can do this.

Next, housing, which was very important for the older generation but is still a key pillar of our social support for the younger generation of low-wage workers. You know the schemes – the $40,000 Additional CPF Housing Grant, and the $20,000 Special CPF Housing Grant which we introduced two years ago. These are tailored to the needs of the low-income Singaporeans. I just checked the data recently. Since we introduced it two years ago, 1,100 low-income households have taken advantage of the Special Housing Grant. For those who have income below $1,500, which is very low and within the bottom 10% of household incomes, they are eligible for 2-room flats. In fact, one-third of those who obtained 2-room flats using Special Housing Grant, had income of $1,000 or less, which is something that initially people find surprising. How can someone with $1,000 or slightly less obtain a flat? It is because of the Special

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Housing Grant and the Additional Housing Grant.

But why do we want to help them this way? For this group, surviving is tough. Why do we want to help them this way? First, it allows them to have more disposable income because they pay for the 2-room flat entirely, or almost entirely, and, in fact, in almost all cases, entirely using their CPF. It gives them the incentive to stay in a job. We will support them in staying in a job while they pay for their housing using their CPF, so that they can use their full disposable income for their other needs.

Second, very importantly, it is not just about immediate cash needs, it is about having an asset that will appreciate with inflation and appreciate with progress. So, they do not get left out and they too will retire with a significant asset for their retirement years. It is a very important strategy.

Eight out of 10 low-income households in Singapore can own their own homes. There is no other country that comes close to it. The Koreans are closest – another country with an East Asian ethic, a roof over the head is very important and you want your own.

But no other country comes close to us. Eight out of 10 of low-income households own their own flats. Those who cannot own because they do not have a stable job especially or there has been family disruption, HDB subsidises public rental flats. Mr Khaw Boon Wan will, of course, be discussing all these issues in further detail in the Committee of Supply.

But I will just clarify very quickly the useful points that Mr Png Eng Huat raised about the "cliff" effect, so to speak, when someone crosses monthly income of $800. I would like to reassure him and all Members that for existing tenants, HDB automatically gives a grace period when your income crosses $800.

So, that is basically our approach to helping the younger group. Workfare, once they cross 35 but before that, opportunities to upgrade, helping them own their home, helping their children in school. Every opportunity for a leg-up for this younger group.

Next, let me move on to my third theme which is about the middle-income group of Singaporeans. It is a positive for Singapore society that expectations and aspirations have gone up; aspirations for education, for how well you do in

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your job, as well as for your standard of living.

That is a positive. How do we meet the needs of an aspiring middle-income group of Singaporeans? First and foremost, we have got to succeed in achieving quality growth. First and foremost, we must enable income growth for Singaporeans, including especially this middle-income group, besides the lower income group. And all our surveys show that that is the main consideration. All our surveys of Singaporeans showed this: good jobs with income that can go up and more than cover the cost of living. That is their main concern. That has to be a key priority. And quality growth is not just an economic strategy but a social strategy.

Second, we have to ensure a level playing field for Singaporeans, in terms of job opportunities and progression on the job.

Third, we have to make sure they get adequate benefits as well out of our whole fiscal system.

Fourth, we have to do so in a way that keeps overall taxes low, particularly for the middle-income group, and I will come to that in a short while.

The key strategy, as I mentioned, is to help incomes grow. Fortunately, we have been able to do this so far. Many other countries have had difficulty, including countries that are on the same league as us, as I mentioned in the Budget Speech – Korea, Taiwan, Hong Kong. We have done much better than them to grow median incomes, in real terms, in the last five years.

We designed the Wage Credit Scheme deliberately to include the middle-income group. We extended the Wage Credit Scheme up to pay of $4,000 to help the companies and to help Singaporeans. So, that is income growth. I will not go into it in any more detail because we have covered quality growth. Quality growth is a key social pillar as well, not just in economic strategy.

Second, a level playing field. Many Members have spoken about this. We have to make sure that as more Singaporean graduates enter the workforce, diploma and degree holders, there is a level playing field at the middle- and upper levels of the workforce, besides the lower levels.

That has been a concern. You notice that we have been tightening at the middle end. We have tightened especially for the lower end of Employment Passes (Q1 Passes), and also for S Passes, tightened quite significantly, to

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ensure that Singaporeans are not disadvantaged by the presence of foreigners at these levels of the workforce.

Mr Liang Eng Hwa and Mr Patrick Tay reflected several valuable concerns. Mr Patrick Tay has been talking about this for some time. He is the one who started talking about labour market tests and the variety of labour market tests. We have been studying the proposals. MOM is still studying this very carefully. It is not something that we want to rush but we want to put in place a system that is fair, sustainable and allows the companies to stay competitive. But it is a very important issue for us.

Our younger PMEs have been able to find jobs quite easily. Our youth unemployment rates are the lowest around. It is even lower than in Korea and Taiwan. Very low. For our older PMEs, especially in the middle age and once they lose their jobs, some of them find it tough to get back in. I believe there is an element of age discrimination that we have to tackle. They are also vulnerable to the competition from foreigners. So, we have to be quite careful about this.

We need to do more to ensure a level playing field but very importantly, do it in a way that is sustainable. Sustainable means our firms must be able to compete. They must be able to compete. They must have the teams with the right mix of locals and foreigners with the right skills and expertise – because that is what allows us to compete internationally. The competition is changing. It is not about China 10 years ago – low-cost manufacturing. It is changing dramatically as Chinese cities move up the value chain and large numbers of their own graduates entering the workforce. The competition is also changing in the United States. Re-shoring is now happening. Very significant advantages that the US has – lower cost of power because of shale gas; and technology improvements that have allowed them to substitute for manpower. It is not helping their unemployment situation but it is helping their companies. They are able to base operations in the US on a more competitive basis than even their operations in China in many segments of the industry.

And there are new advancements in technology that Ms Tan Su Shan was talking about – big data and data analytics – which are transforming not just manufacturing but services. They are going to pick up steam going ahead.

The competition is changing and we have to make sure our companies can survive and compete, which means having the right mix of locals and foreigners with the skills that we need to create a strong Singapore team, because the real

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competition is outside.

We are determined to ensure a level playing field for Singaporeans, fair to Singaporeans, not just in getting a job but progression on the job – while ensuring that it is sustainable, by enabling our companies to compete.

Next element of how we are helping the middle-income group because I think in the overall Budget Statement, it is not something that received strong emphasis but actually, there was a significant amount of benefits for the middle-income group as well, in terms of actual benefits in this year's Budget. Special transfers as well as some of the permanent changes we have put in place.

I will just give Members an example. Husband and wife in their 40s; middle income; together earning above $6,000 – very distinctly middle-income group; living in 4-room HDB flat; two children – one in Primary school, one in Secondary school; employing a foreign domestic helper. This family, from this year's Budget, would save a combination of $530 through the special transfers, as well as $730 through tax savings, both the personal income tax rebate as well as property tax changes, which are permanent; and a permanent change in the foreign domestic worker concessionary levy.

When we add it together, it is about $1,500 which also happens to be about the same as the increase in their household expenditure as measured by the CPI. About the same. We did not design it to fully offset their cost of living increases, but it is a decent sum – $1,500.

They have benefited from other improvements in recent years. The middle income group has benefited from significant improvements in recent years, especially our childcare subsidies, the increase in our tertiary subsidies including the increase in University bursaries to cover the middle income and our healthcare financing changes.

Last year, we introduced major changes to support the middle-income group in community care and home-based care, outside the restructured hospitals. Going forward, the middle-income group will be a major beneficiary of the healthcare financing review because the low income group is in fact already heavily subsidised. We can improve it, particularly in giving people a greater sense of whether they qualify for Medifund, but the middle-income group is a major beneficiary of the healthcare financing review.

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I am not going to go into the initial thinking on the healthcare financing review. Mr Gan Kim Yong, Minister for Health will be covering that, but there were several suggestions in the debate which I can assure Members we will take up. Mr Heng Chee How talked about looking at ElderShield, Dr Intan Azura Mokhtar, Assoc Prof Fatimah Lateef, Ms Tin Pei Ling and Ms Ellen Lee all mentioned greater flexibility in the use of MediSave. That is close to the hearts of our residents and is something which we are studying as well.

Ms Janice Koh mentioned the issue of capping co-payments, particularly for very large expenses. It is an issue that we are studying, about how we can give Singaporeans re-assurance against very large bills including the middle income group.

Caregivers are also very important. Mr Christopher de Souza and Ms Lee Li Lian had spoken about caregivers, including respite care to give caregivers a chance to rest and recharge. Respite care is an important issue as well and Mr Gan Kim Yong will be talking about this in the COS.

Keeping the tax burden low on the middle-income group is also part of this strategy. It is not just the benefits we can give out but keeping the tax burden low. They pay GST, very limited income tax. If you look at those with chargeable income of about $60,000, we have also reduced the income tax rate. They pay income tax but we have reduced income taxes significantly for the middle-income group two years ago. We kept the top rates unchanged but we reduced the middle bands. So, they benefited. This saves about $650 a year.

The Foreign Domestic Worker levy reductions will benefit them. Some also pay taxes for cars but the overall burden when you add it together – maid levy cost, small amount of personal income tax because it is very low rates for the middle-income group and GST – the overall is low by international standards.

We have to keep it low. Keep the burden on the middle-income group low. Through our emphasis on our priority to achieve quality growth and through keeping the tax burden low, we will be able to allow disposable incomes to rise for the middle-income group. That is our basic strategy.

No country has been able to deliver significant benefits for the middle-income group without significant taxes for the middle-income group. There is no country that has done so. There are some countries that are in fact more progressive than us – much stronger slant in their transfers towards the lower and the middle-income groups – but also much higher middle-income taxes.

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There is no country that can raise the revenues that it needs to support not just the low-income group but the middle-income group through substantially enhanced benefits by just relying on taxes at the high end.

Taxes for the middle-income group are the norm in many European countries.

The US has somewhat lower taxes than them but higher than us. The European countries have vastly higher taxes. And that is why the VAT rate – the GST equivalent – ranges from about 17% to over 25% in most European countries, including those that have quite admirable social welfare systems but very high rates of tax in the middle-income group. Their income tax rates are also extremely high for the median, not just the top end. The lowest tax rate for the median in Europe is Switzerland – something like 10% for the median. But for most of them, it is 20% or higher. Income tax for the median is 20% or higher, in addition to VAT rates of 17% to 25%. Very high tax burden on the middle-income group.

Our strategy is to do more for the middle-income group, particularly greater assurance in healthcare financing. We are helping them in home ownership too. But the main way is to help them grow their real incomes and keep taxes low. Keep the overall burden of taxes low, even if we unfortunately have to tax cars because of road congestion. Minimal income tax, try to avoid GST going up and try to keep the overall burden low when all indirect taxes are counted.

Let me then move on now to two specific issues. I will not elaborate on housing because Mr Khaw Boon Wan, Minister for National Development, will be talking about it, but it is an important concern for younger middle-income families. House prices have risen faster than incomes, much faster in the last few years. And we are doing something about it. We intend to bring house prices down relative to incomes, not just short term but long term. Mr Khaw Boon Wan will be discussing this issue.

Demand for cars has increased. But this is unlike housing – Mr Lui Tuck Yew, the Minister for Transport, cannot be Mr Khaw Boon Wan in cars. We cannot ramp up the supply of Certificates of Entitlement (COEs) the way we are ramping up the supply of housing. We need to manage our vehicle population growth within what we can support with our land constraints.

COE prices have been driven by very strong demand and also the slower growing supply of COEs. That is why we have seen a very sharp spike in COE

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prices over the last two years. Last year, there was a 30% to 60% increase in COE prices. Low interest rates and easy credit have fuelled this as well – 100% credit at very low interest rates. Many Members have been speaking about this. In fact, we have been receiving feedback from Singaporeans for some months on this issue of whether we should tighten the loan restrictions so as to cool the market and not have credit so easily available.

A rapid increase in COE premiums poses two types of risks. First, for car buyers, they take on more debt to finance their car purchases, sometimes beyond what is financially prudent. We all know of very unfortunate stories – of young people who have taken loans for cars, although they are not able to service it over time. It does not end in a nice way.

The second risk, however, is that higher COE prices contribute to a higher inflation rate that affects all Singaporeans and the broader economy. This is because the increase in COE prices does not just jack up the price for those who are buying a car, but also shapes inflationary expectations and feeds generally into inflation.

Car prices accounted for one fifth to one half of CPI inflation in the past three years. One fifth to one half of our total CPI inflation. In 2012, car prices contributed one full percentage point of our CPI inflation. So, by helping to dampen the demand for motor vehicles, the financing restrictions that MAS has introduced aim to cool the COE market and to help alleviate overall inflationary pressures in the economy. This is to the benefit of most Singaporeans.

The last time we introduced these restrictions was in 1995. At that time, the loan-to-value ratio was 70%, maximum loan tenure was seven years. Unfortunately, it did not have much discernible effect on COEs at that time and eventually we lifted the restrictions in 2003. This time round, COE prices have risen much more significantly. MAS has, bearing in mind the past experience, unfortunately had to take much tougher measures to make sure that the financial restrictions are effective. However, the measures are not permanent. They are necessary for now, but depending on market developments, MAS will review the loan rules later.

Several Members, including Ms Jessica Tan and Mr Lim Biow Chuan, had concerns about the impact of the new loan rules on families. As Dr Intan Azura Mokhtar had specifically mentioned, families with physically disabled members may face difficulties. This is a valid concern. MAS has therefore decided to exempt a physically disabled person, or his or her caregiver, from the loan

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restrictions for one car. The exemption will take reference from the criteria in existing assistance schemes for the physically disabled. MAS will provide details of this exemption soon.

Besides this exemption for the physically disabled, it is unfortunately not possible for MAS to liberalise further at this point without undermining one of the important reasons for the new loan rules, which is to cool demand and COE prices. As I mentioned earlier, the new MAS rules are not permanent and will be reviewed later, depending on market circumstances.

Er Dr Lee Bee Wah and Mr Teo Siong Seng also flagged the concerns of used car dealers, given the unexpected impact of the financing restrictions on the industry. To help used car dealers make adjustments, LTA will give them more time to find buyers for their cars, by extending the Temporary Transfer Scheme for used car dealers from the current nine months to a full year. MAS has met the Singapore Vehicles Traders Association to listen to their feedback and also to explain the rationale for the measures.

MAS is studying how the depreciation in the value of a used car can also be taken into account in determining the Open Market Value (OMV) for the purpose of applying the appropriate tier within the new loan rules. If Members recall, the new loan rules have a 50% or 60% loan-to-value ratio, depending on the OMV. MAS will study how the depreciation in the value of used cars can be taken into account when determining the OMV. This is something MAS is studying.

I will touch on other tax issues very briefly before I conclude.

Ms Sylvia Lim wanted me to clarify what I said in the Budget Speech about the majority of retirees not being affected by the more progressive property tax structure for owner-occupied residential properties. The Government is especially mindful of this group, as I mentioned in the Budget Speech. That is why we designed the new property tax schedule for owner-occupied properties to make sure that it only meant a higher property tax for the top 1% of homes, or about 12,000 homes. These are homes with annual values of above $59,000. The remaining 99% or 950,000 owner-occupied homes will pay less property tax rather than more.

What is $59,000 annual value like? In other words, those that are below $59,000 would cover 96% of terrace houses and 85% of semi-detached properties. To be frank, in designing this scheme, we even studied it

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geographically to make sure that the places where we knew older Singaporeans owned private homes were taken into account carefully. We looked at Serangoon Gardens, Opera Estate and Teachers' Estate. I can tell Members that at least 90% of even the semi-detached properties in these older estates will not face higher property tax rates as a result of this move.

For the small group of retirees who own and live in the top 1% of owner-occupied residential properties, they will be subjected to a higher property tax rate. Even then, the tax increase is modest unless they are at the very high end. For example, a centrally-located condominium with an annual value of $70,000 will see property tax going up by just $120 a year. It may be a meaningful sum for retirees, but in this top 1%, many retirees have other forms of income. They are not earning income from work but they have passive income from interest, dividends and rental. That is the typical profile of people in this top 1%.

Fundamentally, this is a matter of equity. It is the right principle that a wealthy retiree should pay more tax than someone who is less well-off. For example, a wealthy retiree may own and live in a large bungalow with considerable worth, whereas a middle-income Singaporean may own and live in a smaller home but own a investment property, letting it out for rental. It would be inequitable, particularly since we are raising tax rates for investment properties, not to tax the wealthiest of those who live in owner-occupied homes.

Ms Sylvia Lim also had an interesting suggestion about taxing properties based on the total value of properties owned by an individual rather than on a per property basis. Internationally, property tax is on a per property basis. In principle, I think the Member's concept is right − that since it is a wealth tax, why not consider taxing based on the value of all the properties owned by an individual? Not a bad idea in principle, but unfortunately very difficult to implement from a practical point of view. To implement based on the individual and all his or her properties owned, rather than on a per property basis. Properties can be held under the names of different family members or relatives quite easily. And there will also be administrative problems when properties are jointly owned by multiple owners, which is not uncommon – when they are jointly held by multiple owners with no divisible share for each owner. There are many practical issues but the idea was not a bad one.

Mdm Speaker, let me conclude. We are intensifying our efforts both to restructure our economy and to build a more inclusive society, so that we can achieve a better Singapore.

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This is a critical period of transition for Singapore. As Ms Low Yen Ling says, "We are at the inflexion point in our history". There is no guarantee that we will succeed. There is no guarantee that any economic or social strategy will succeed. But whether we succeed depends not on incentives, grants and subsidies. It does not depend on the narrative of incentives, but on the narrative of responsibility and values. Whether we take responsibility together, to strengthen the values that matter the most to Singaporeans – that is what will determine whether we succeed in this important new phase of our national development.

The Government has a responsibility. We will play an active role in enabling Singaporeans to achieve their fullest potential and in enabling them to live fulfilling lives.

Employers have a role. And they should heed the call of Members over the last two and a half days to value every worker, including the elderly and women, and to reshape the workplace to allow every worker to have a fulfilling job.

As individuals, too, we all have roles, whatever our vocation. We all have roles. Do better and develop mastery, in every vocation, and stay long enough in a vocation to develop mastery. Each of us, too, has a responsibility in our own ways, to contribute to a better community and a better Singapore.

So, that is what will determine our success in this next phase of development, just like it has done before. It is not about incentives, grants and subsidies. It is about responsibilities and values. And that will determine whether we will transform Singapore by the end of this decade. Mdm Speaker, thank you.

[(proc text) Question put, and agreed to. (proc text)]

[(proc text) Resolved, "That Parliament approves the financial policy of the Government for the financial year 1 April 2013 to 31 March 2014." (proc text)]

Order. I propose to take the break now. I suspend the Sitting and will take the Chair at 3.15 pm.

Sitting accordingly suspended

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at 2.54 pm until 3.15 pm.

Sitting resumed at 3.15 pm

[Mdm Speaker in the Chair]

[(proc text) Order read for consideration in Committee of Supply [1st Allotted Day]. (proc text)]

[Mdm Speaker in the Chair]

Main and Development Estimates of Expenditure of Singapore for the Financial Year 1 April 2013 to 31 March 2014, contained in Paper Cmd 3 of 2013.

For convenience, I shall take the totals for each Head of Expenditure in the Main and Development Estimates as they appear in the last columns of the schedules of estimated expenditure under the Main and Development Estimates Outlays for FY 2013 on pages 6 and 7 respectively of the Command Paper.

A total of 483 amendments to the Estimates of Expenditure have been submitted this year. The guillotine times to the discussion of the Heads of Expenditure under Standing Order 92(7)(a) have taken into consideration the earlier commencement time of a sitting, the reduction of Question Time and the extended sitting times of the Committee of Supply for each allotted day. I must remind hon Members that the total time for discussion of each Head of Expenditure includes the replies from the front bench. With the assistance of the digital timer in the Chamber and Members' experience last year, I trust that hon Members will be able to keep to the speech times indicated against their amendments. I would urge hon Members – both from the back and front benches − to adhere to their time limits, as I will be very stringent in my time-keeping.

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I shall deal first with the Heads of Expenditure in respect of which amendments stand on the Order Paper Supplement. Head U – Prime Minister's Office.

Madam, I beg to move, "That the total sum to be allocated for Head U of the Estimates be reduced by $100".

Every motorist knows that whenever he or she travels along the expressway and meets a heavy downpour, there is a shelter nearby for them to take cover. I always admire the planner of this project who has a heart for every single user in mind, especially when I see the motorist taking cover under the shelter.

This is a classic case which shows that for every policy, project and programme that the Government implements, it can always be made more user-friendly and people centric, and people appreciate whenever they use it or even have a look at it.

This Budget and many other policies which this Government introduced are, in fact, formulated with more heart for our people. However, when the policies come to implementation or communication with the public, it may sometimes lose a human touch along the way. The way that our civil servants respond to our residents' requests has been in general too robotic and lacking the human touch. Instead of just playing the role of saying "yes" or "no" to the application, they need to take a step forward in exploring alternative options to help Singaporeans, as these officers know the background of the case better and also the policy guiding the decision. The residents' problems will not just go away by simply telling them about the rules and regulations, especially when our rules and regulations are becoming more and more complicated. We should work on trying to understand the root of their problem and exercise flexibility on a case-by-case basis. We know that we have to strike a balance in doing so, or else it will blur the transparency and consistency of our system. No rules and regulations fix all circumstances, but there is a need for it in order to protect the interests of the majority and order of our system. We should win more hearts and souls of our people through understanding the ground and Singaporeans' behaviour patterns. We should also exercise more flexibility when it comes to implementation. We are doing the right things, but we need to do a review if

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we are using the mass approach.

(In Mandarin): [Please refer to Vernacular Speech.] It is said that even the wise are not always free from errors. No matter how smart you are, even if you have a group of people pondering over the same question a hundred or thousand times, inevitably, there will still be an error somewhere. When the Government implements key policies, errors will sometimes occur, and this is what we describe as "even the wise are not always free from errors". On the contrary, it is also said that a fool may get things right occasionally. Here, the "fool" does not mean a stupid person − he is simply an ordinary one. In other words, if an ordinary person thinks hard and long, he may reap unexpected results. At present, the COE prices have risen up to as high as $90,000, but once there was a person who had secured a COE with only $50! This is what we call "a fool may get things right occasionally".

The wise and the ordinary person, the "success" and "error" here are interrelated, not mutually exclusive. The Government and the common people can consult each other and achieve a win-win outcome. Government policies have all along been based on people's interests and are meant to benefit them. Taking into consideration people's long-term interests, the Government will not please the people. It means that the polices are meant to benefit, but not please the people. This is something which we all know.

My view is that policy formulation should benefit the people. However, during policy implementation, the Government should please the people. We should not allow inflexibility in implementation to cause unhappiness. This year's Budget and many other policies have been carefully drawn up. Should we not take some time to consider how to implement these policies so that people will appreciate the Government's good intentions?

Recently, Government agencies have introduced a series of measures to tackle various social issues. This reminds me of a phenomenon called "beating the system". From COE, retail prices to foreign worker policy, we see a battle of wits between the Government and the people. However, during this battle, some law-biding citizens' interests will get hurt. Because of this, some ground resentment surfaced. The Government and grassroots representatives should have better coordination. We must understand what is in people's mind in order to build an inclusive society.

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Mdm Chairperson, the public service sector is one of the major employers in Singapore, which offers exciting and challenging careers, especially to young recruits in the prime of their lives, and for ladies in the prime of their reproductive lives. Today, we have some 65,000 graduate ladies who are not economically active. In many surveys that have been conducted locally, women who actually stopped work or do not work, have cited family and childcare as the main reasons.

As we are adopting measures to enhance our total fertility rate, what type of flexible work arrangements are available for employees in the public service sector? What proportions of the staff are already on this arrangement? PSD can indeed set the example for many other companies and organisations to follow.

Mdm Chair, the Civil Service implemented re-employment in July 2011 ahead of the country. We started on 1 January 2012. Because of the size of the Civil Service, it has taken a formula-driven approach to implementing re-employment. There is a limited flexibility, but there are also automatic wage cuts. Re-employed workers are also re-emplaced on a different medical scheme from the Comprehensive Co-payment Scheme (CCS) to the Medisave cum Subsidised Outpatient (MSO) Scheme. The public sector union as well as union members within the public sector have made repeated calls upon the Government to review both these practices, and move away from automated wage adjustments downwards during re-employment. As has been shown in surveys in the private sector – both unionised and non-unionised companies – they do not do so automatically, but they look at the change in the job nature.

With respect to medical schemes, if the re-employment had been substituted by an extension of the retirement age for example, then there would not have been a change in the medical scheme. A 62-plus-year-old civil servant would have continued on the CCS Scheme instead of being emplaced upon the MSO scheme, because it would not have been viewed as a fresh episode of employment. This would be a way of looking at how this longstanding employee can continue to be covered for his healthcare cost in a caring way within the Civil Service. So, we once again call upon the Civil Service to review this practice and allow the civil servants on re-employment to continue on the CCS scheme.

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Mdm Chairperson, the MSO Medical Benefits Scheme was introduced in 1994, about 20 years ago.

Since then, for outpatient treatment, regardless of pay and job grade, the PSD provides all in the Civil Service with a co-payment cash budget of $350; for treatment at private clinics, the limit is $10 per visit. As for inpatient treatment, the PSD provides 1% additional contribution to Medisave based on an officer's total monthly salary capped at $7,000, that is up to $70 per month, for officers to arrange their own medical insurance coverage.

I would urge the Government to review the medical benefits for civil servants in view of the rising cost of treatments. With rising medical costs, the Government as the largest employer in Singapore should lead by example to enhance its medical benefit provision to keep up with the changing times.

On behalf of the union leaders from the public sector, I urge the Government to adjust the benefits soonest possible, particularly the coverage for outpatient and dental treatments. The $350 cap for outpatient is too low for older officers and those who suffer from chronic illnesses. On dental benefit, an officer is eligible to only 50% subsidy subject to a maximum of $70 per year. This rate of subsidy was set more than 30 years ago in the 1990s. The cost of dental treatment has gone up so much. Madam, it is time to increase and enhance the benefits.

Mdm Chairperson, I thank the Members for their interest in, and support for, the Public Service.

Mr Seng Han Thong spoke about the need for "policies with more heart". The Government seeks to design policies and services that bring the most benefit to the largest number of Singaporeans. At the same time, I agree with Mr Seng Han Thong that public officers need to have the flexibility and compassion to better understand the particular needs and circumstances of individuals and be prepared to allow exceptions where these are possible. Indeed, Singaporeans must be at the centre of all that we do.

Singapore has largely gone beyond just fulfilling citizens' basic needs. Singaporeans' interests and aspirations are becoming increasingly varied. Sometimes, different groups or people may have interests or needs that tug in

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opposite directions and a middle ground has to be found.

The Our Singapore Conversation provides a new and good avenue for Singaporeans from all walks of life to express their heartfelt concerns and aspirations. Just as Our Singapore Conversation provides opportunities for citizens to hear from one another, it also has been offering a good opportunity for public officers to gain a deeper understanding of the concerns and aspirations of fellow Singaporeans so that they can design policies and implement programmes that are better attuned to Singaporeans' needs, taking into account their varied aspirations and interest. Listening to and taking into account different perspectives and concerns will help strengthen us as a community.

Government agencies also have mechanisms for engagement, to reach out to the community, understand their local or unique needs and tailor initiatives to meet these needs. Mr Seng cited a few. Let me give a few more examples. The Land Transport Community Partnership Division helps LTA to understand local road and traffic issues at the constituency level. Ground feedback from the community is systematically surfaced, and LTA can respond more quickly and effectively to these requests. The Singapore Police Force also launched its Community Policing System last year, with more police officers sent to the Neighbourhood Police Centres to tackle local crime. Police officers also go on foot and bicycle patrols to get closer to the community, and play an active role in community safety and security programmes.

This is in line with three new service principles that the Public Service added last year: people-centricity, mutual courtesy and respect and shared responsibility for the public good.

Each year, we give out Excellence in Public Service Awards to recognise public officers and agencies for their efforts in providing good service. One of last year's PS21 Star Service Award winners is Ms Cadence Goh, from People's Association. As the coordinator of the constituency's social assistance programmes, she often delivers welfare funds personally to the sick and elderly whose mobility is restricted. On one occasion, she coordinated responses across several agencies to help a distressed family restore their utilities after clarifying that arrangements had been made for their bills to be paid through a financial assistance scheme. This is a good example of a public officer who has gone the extra mile, many times over, to deliver service to Singaporeans with

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a heart.

We also recognise customers – Singaporeans, ordinary citizens – who have been exemplary in contributing to better public outcomes through their partnership with public agencies. The Public Service will continue to work hand-in-hand, wholeheartedly, with citizens for the good of Singapore and Singaporeans. Both the public and the Public Service have a shared responsibility for the public good, with both partners working together with mutual respect so that this relationship will thrive and bring about positive results for all of us.

I will now address Members' questions concerning the well-being of our public officers.

Assoc Prof Fatimah Lateef asked about flexible work arrangements. The suite of flexi-work arrangement options offered by the Public Service includes part-time employment, telecommuting and staggered work hours. Today, 95% of public agencies offer flexible work hours. Officers can choose the time they prefer to start work within a time-band, as long as they perform 42 hours of work a week. This flexibility allows officers to better manage their work and personal needs.

All public agencies also offer part-time employment with prorated salaries and benefits. As at 31 December 2012, there were some 1,700 public officers working part-time. One example: just last month, the Accountant-General's Department accepted an applicant's request to work part-time in a role that was originally advertised as a full-time position. The officer is now able to pursue a meaningful career while spending more time with her two young children. I agree that the Public Service, as well as all employers in Singapore, can do a lot more in this area.

Mr Heng Chee How asked for a review of re-employment guidelines with regard to wages and medical benefits, and Mr Yeo Guat Kwang asked for a review of medical benefits. The public sector re-employment guidelines were drawn up in consultation with public sector agencies and unions. They take reference from the Tripartite Guidelines on the Re-employment of Older Employees. Hence, what the Public Service is practising is not different from what has been discussed and what has been agreed on the Tripartite basis.

Since the implementation of re-employment in the Public Service in July 2011, PSD has made refinements to the guidelines based on the feedback

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received. For instance, since 1 April 2012, all eligible Division IV officers are re-employed at their last drawn salaries at the point of retirement. Agencies also have the flexibility to re-employ officers with strong performance at their last drawn salaries if they are still doing the same jobs.

The practice in the private sector remains mixed. Some companies adjust pay at the point of re-employment, while others do not. PSD is currently reviewing the salary guidelines for re-employed officers in the light of these private sector practices. And PSD will support a national consensus on re-employment practices. The review will be completed in six to nine months.

Re-employment is a new episode of employment after retirement and that was the way it was structured. Non-pensionable officers who are re-employed are hence placed on the Medisave-cum-Subsidised Outpatient (MSO) scheme which is offered to all new appointees. Pensionable officers who are eligible for post-retirement medical benefits can choose to remain on their post-retirement medical benefits during the period of re-employment. Officers on the MSO scheme receive an additional sum of 1% of their monthly salary (capped at $70 per month) beyond their normal Medisave contributions, in their Medisave account. This helps the officer to buy medical insurance (MediShield or Medisave-approved insurance plans) or to pay for his medical expenses.

It is important for officers to plan ahead and ensure that they have adequate medical insurance coverage, particularly after their retirement. Agencies have been encouraging officers to buy medical insurance for themselves and their families. To facilitate this, PSD has arranged for a panel of insurance companies to provide Medisave-approved medical insurance coverage at group discounted rates for public officers since October 2006. More than 40 road shows were held in public agencies in the last year alone to create greater awareness of the importance of medical insurance. Over the past three years, more than 21,000 public officers have enrolled in plans under this central arrangement, bringing the total to over 37,000 officers. This is under this central arrangement. Most other officers have their own medical insurance plans. As at end 2011, 97% of civil servants have either basic MediShield or Integrated Shield Plan. We will continue these efforts to encourage more public officers to take up medical insurance.

Members have asked, over the years, particularly Mr Yeo Guat Kwang, for a review of medical benefits for our civil servants. Last year, I informed the House that we are carrying out a review to assess if the MSO scheme and the dental benefits scheme are sufficient to meet the needs of civil servants and how they compare against practices in the private sector. After a careful study

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and consultation with the unions, the Civil Service will revise its medical and dental subsidy caps with effect from 1 April 2013, to keep up with market practices in employee benefits.

Currently, an officer who visits a private clinic can claim up to 85% of the medical bill, subject to a cap of $10 per visit. This cap for the reimbursable amount will be increased to $20 per visit. This is comparable with the average amount that the Civil Service subsidises an officer for outpatient treatment at a polyclinic, which is about $18. So, it equalises both of them. Civil servants can currently claim up to $350 per year for their outpatient expenses. Any unutilised balance of the $350 is credited into the officer's Medisave account at the end of each year. While some private sector employers may provide a higher annual limit for outpatient subsidy, it is usually on a reimbursement basis, that is, if you do not consume it, it is not credited to your account.

We recognise that some officers may need more than $350 for their medical needs in a year. We will thus raise the annual outpatient claim limit to $500, with the additional $150 beyond the $350 given only on a reimbursement basis. This approach allows us to better meet the different needs of our officers while ensuring that our overall package of salary and benefits remains competitive compared to the private sector.

On dental benefits, the Civil Service currently pays 50% of the dental bill per visit and the annual claim limit is capped at $70. This is a very modest amount. Not many officers make use of the dental benefits today. We see the importance of maintaining dental health and want to encourage our officers to visit a dentist regularly. We will increase the subsidy of the dental bill per visit from 50% to 85%. Officers who used to pay $35 for a $70 dental bill will only need to pay $10.50 with this change. The annual dental reimbursable limit will also be increased from $70 to $120, bringing it closer to market practices.

The enhanced medical and dental benefits will also apply to our re-employed officers and Statutory Board employees. Thank you, Madam.

(In Mandarin): [Please refer to Vernacular Speech.] Recently, I suggested that the Government should give elderly folks who help look after their grandchildren grants and incentives, similar to those enjoyed by the childcare centres and parents. I hope the

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Government will consider this suggestion.

I also suggest that the Government set up a COE category for families as a pro-family measure to encourage people to have children. In this category, the bidder must be a group consisting of three members of the same family, including children. One bidder can only bid once and cannot make multiple bids, nor can he own other COEs. The bidder will have to pay exactly what he bids and the bidder can also use the ATM to bid. The COE cannot be financed but MAS can allow the bidder to obtain an 80% loan. This can help curb high COE prices to some extent while taking care of Singaporeans' needs.

Mdm Chairperson, there are Singaporeans who choose to give up their full-time jobs to take care of others – whether elderly parents or family members, or their young grandchildren. These are our elderly and grandparent care-givers. They usually get no income, except maybe some pocket money allowance from the other working adults in the family or their children who are working.

However, we must recognise the important role they play in taking care of the family and in keeping the family together. Is there a way for our elderly and grandparent care-givers to receive some direct benefits or incentives, such as free public transport passes, annual passes to places of interest or even shopping or discount vouchers at shopping malls?

At the moment, for grandparent care-givers, only their children who are working will get Grandparent Care-giver income tax relief. But, again, this is not a direct benefit to the grandparent care-givers themselves.

With the Government taking a lead in emphasising the significant role they play, I am sure we would also be able to bring in some corporate sponsors to support this and show greater appreciation to our elderly and grandparent caregivers.

Madam, the Baby Bonus scheme introduced in April 2001 is a Government-led initiative to support parents' decision to have more children by helping to lighten the financial cost of raising children. The recent enhancements to Parenthood package offer higher baby

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bonus payouts. The increase in the cash gift quantum appears to be a welcome relief for parents in lower income families as it could potentially mean a greater cash inflow for them. However, the dollar-for-dollar bonus structure tends to favour higher income groups over those who may be more in need of extra financial help to raise children.

Many of the lower-income and middle-income families presently have many financial obligations to meet, leaving them with little cash flow for the month. Thus, it would not be a surprise that, given such circumstances, many lower- and even middle-income families are not able to put down $6,000 or more in order to receive bonuses from the state.

This House has discussed the urgent need for the TFR to rise. If we are truly committed to pushing the TFR up, it is important to re-visit the way the Baby Bonus scheme is structured to cater to a larger segment of couples who can be persuaded to have children. I would like to call upon the Ministry to consider removing the dollar matching requirement for a couple's first two children in light of the financial realities that I have highlighted above.

Mdm Chair, currently, parents of Singaporean children under the age of seven are entitled to six days of paid childcare leave.

Younger children tend to fall ill more frequently than older children, particularly when they first start attending childcare. One bout of HFMD, which requires a child to stay at home for at least a week, can wipe out the entire childcare leave entitlement for the year. While the law provides for six days of unpaid infant care leave for children under two, the fact that it is unpaid renders it of little value to most employees. Furthermore, whether a parent has one or three children under age seven, his or her paid childcare leave entitlement is the same.

Would the Government, therefore, consider granting parents about two additional days of Government-paid childcare leave for each child under the age of three? This will not only help parents of younger children, but also give greater benefits to parents who choose to have more children.

Next, unmarried single parents are entitled to only two days of childcare leave, and employers are not reimbursed for this. It is ironic that single parents

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have fewer childcare leave benefits, even though they probably need them more than married couples because they have no spouse to share the childcare load with.

In order to make our childcare leave scheme more effective and equitable, can the Government give all parents of Singaporean children, including single parents, equal childcare leave benefits?

Madam, in the last decade, we have approved and granted many new citizenships and Permanent Residents (PRs) to eligible foreigners. One of the many objectives of this is to enhance our fertility rate and improve our elderly dependency ratio. Of course, the number of minors approved for such status will also contribute to this effect.

From 2008 to 2012, an average of 4,100 new PRs and another 4,100 new citizenships were granted annually. Approximately 82% and 92% of new PRs and new citizens were females respectively.

Does the Government track the number of children born to these groups of people annually, and are we within the range of our projected target, if we had actually indeed set that target?

Mrs Lina Chiam is not in the House. Mr Ang Wei Neng.

Madam, with the recent debate on the Population White Paper, much spotlight has been on the Singaporean Core, immigration and naturalisation. Many are concerned about the number of foreigners that we allow to become citizens or PRs.

I wish to share a suggestion that arose out of consultations with committee groups by the Bicultural Taskforce of which I am a member. I think most Singaporeans do accept that it makes sense to welcome the right kind of foreigners to become Singapore Citizens or PRs. For example, many Singaporeans marry foreign spouses and would want them to be naturalised. Some foreigners who bring with them credible skills, share our values and can

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readily assimilate into our society should also be considered.

Currently, we are encouraging integration through various means, particularly the work of the National Integration Council. Perhaps, we should take a step further.

Today, PR and citizenship applications are evaluated by the Government. Why not give Singaporeans a say in the process? If we are accepting newcomers to join the Singaporean Core, surely it makes sense for existing members of the core to express their views on the matter. Perhaps we should require PRs to obtain some form of community endorsement as the final hurdle to cross before clinching the Singapore citizenship that they want. In other words, I am suggesting that we create some meaningful roles for the community in the naturalisation of new citizens.

Let me be a little bit more specific. We could consider requiring applicants for Singapore citizenship, after satisfying the current eligibility criteria, to further obtain the endorsements from the community. It could be in the form of obtaining endorsements from 10 Singaporean "community assentors" who are the applicant's acquaintances in the workplace and in the neighbourhood.

For example, for applicants who are working adults, five assentors could be their colleagues and five could be their neighbours. The idea of giving the community a say in naturalisation is not completely new. The cantons in Switzerland is practising a version of this.

For the "assentors" scheme to work, we need some form of guidelines and safeguards to ensure impartiality, fairness and to pre-empt undesirable implications, such as bribery, malpractices and so on. For instance, the 10 community assentors:

have to be Singapore Citizens by birth or for at least a certain number of years; and

should have multiracial composition, reflecting Singapore's overall demographics so that the potential citizen applicants understand the importance of embracing multiracial harmony.

At the same time, we may need verifications, perhaps carried out by our community leaders, to ensure that the assentors are indeed the applicant's

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colleagues or neighbours.

The above idea, though appears raw, could possibly trigger more ideas to eventually fine-tune a workable methodology of community endorsement that is uniquely Singapore.

Madam, Singapore's population and ageing woes have made it necessary for us to welcome migrants every year.

However, I believe there is a need to introduce more stringent measures in identifying suitable migrants for citizenship. As shared by Mr Ang Wei Neng, currently, the transaction for citizenship application is between the applicant and the Government.

Even though applicants have to undergo an interview as part of the application process for Singapore citizenship, when compared to other developed countries like the United States, UK and Australia, our requirements seem less stringent as all these three countries have citizenship tests for applicants.

Madam, moving forward, I believe there is a greater need for more stringent citizenship criteria and processes as we select new migrants who are able to become a meaningful part of the Singapore story. Like Mr Ang Wei Neng, I would like to make the call for the process of citizenship application to involve Singaporeans and community leaders which must support the application for citizenship. I would also like to add, for the Government to consider a citizenship test to ensure some understanding of our laws and culture. These measures can increase the level of rigidity in application while ensuring that the applicants are suitable for Singapore citizenship.

Madam, the process for becoming a new PR or a new citizen starts with the intent, followed by the application process. Subsequent to this, there is: (a) the online questionnaire survey or quiz; (b) a visit to places of national interest; and, of course, (c) the community sharing session before the citizenship ceremony.

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The decision to become a citizen of a country is a critical one. It is also a long-term decision. Will we be able to review this process of appointment, perhaps adding some new components where locally-born Singaporeans can be engaged and their inputs sought? This is in line with giving Singaporeans a stake in the decision-making process and empowering them as well. An example would be to have at least each potential PR or new citizen who have met the eligibility criteria, get between five to 10 supporters who are Singaporeans from different ethnicity, who know them well, who could come from their work environment as well as the community, such as their neighbours and grassroots leaders.