Committee of Supply – Head M (Ministry of Finance)

Fiscal Management and Transformation

Mr Liang Eng Hwa (Holland-Bukit Timah): Mr Chairman, I beg to move, "That the total sum to be allocated for Head M of the Estimates be reduced by $100".

Sir, I sit in Parliament’s Public Accounts Committee (PAC). Every year, the Committee would scrutinise the findings listed in the Auditor-General's report. While we do not expect zero gaps and weaknesses for a government machinery of this scale and complexity, what concerns the PAC Members is that many of the audit issues brought up in the Auditor-General's report were recurring items that happen year after year. For example, lapses in procurement and contract managements, weaknesses in IT controls and gaps in management of grant programmes.

Some of the lapses this year concerned the PAC Members so much that Permanent Secretaries from four Ministries were also asked to meet the Committee to explain the reasons for the lapses and what are the detailed follow-up measures taken to address the lapses.

The PAC was concerned that given the increasing size and complexity of the work in the public sector, such lapses, if not addressed fundamentally, may compound over time and weaken the governance and accountability over the judicious use of public funds and resources.

Can I ask the Minister on the role that MOF plays in ensuring good governance and accountability within the Public Service? How does MOF ensure that value-for-money practices and culture are strongly embedded in the public service? Also, does the Public Service track and measure the effectiveness of Government spending for better decision-making?

Sir, Budget 2020 clearly demonstrated that prudence and disciplined financial management will always pay off for Singapore. The accumulated surpluses in the last four years for this term of Government gave the Finance Minister the fiscal firepower and the critical resources to decisively respond to the virus outbreak and help businesses and Singaporeans that are impacted by the crisis in a timely way.

We have very ambitious spending programmes and plans ahead in the decade ahead, including big-ticket infrastructural items like the Cross Island MRT line, Terminal 5, the ramp-up in healthcare infrastructure, climate change adaptation projects and so on.

How do we ensure that the Government will spend carefully and prudently on these mega items? Given its complexity where the projects may cut across Ministries and agency lines, how would the Government ensure that there will be no overlapping of efforts and costs? Are there clear working protocols established to streamline and harmonise the whole-of-Government efforts here?

Finally, I would like to ask the Minister to update on efforts to transform the public service processes, in particular, how MOF intends to leverage on digital capabilities as well as the community partners to deliver more thoughtful and joyful services to businesses and to citizens.

Question proposed.

Fiscal Sustainability and Accountability

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Chairman, fiscal sustainability and accountability and the use of public funds are important, so good financial stewardship is essential for Singapore for years ahead, given the more challenging environment we have for many years down the road.

In the Budget, the Deputy Prime Minister highlighted plans to set aside funds for an initial injection of $5 billion for the new Coastal and Flood Protection Fund, $1 billion for building up the Government’s cyber and data security capabilities and there are also further plans to build new housing estates, increase the green cover in the residential estates and so on. These are all major projects that will be implemented over a number of years. How are we ensuring that the Government spends prudently and appropriately on big-ticket infrastructure and IT projects such that our financial stewardship would be put in good stead, going forward?

4.45 pm

Ms Foo Mee Har (West Coast): Mr Chairman, with the anticipated rise in expenditure, it is important that the Government ensure fiscal sustainability and accountability. Singapore's strong financials have been instrumental in enabling the country to carry out audacious development projects, as Deputy Prime Minister Heng said just now. So, what is the scope, within our budgetary mechanisms, to ensure this trajectory and to ensure inter-generational equity, balancing the needs of current and future generations, especially for big-ticket items like infrastructure and climate change?

Most fundamentally, a healthy and growing economy will be crucial to ensuring a healthy revenue stream. The Government has invested substantial funds to support firms to transform and grow under the Industry Transformation Programme. The Government has also allocated a significant share of the Budget to R&D and RIE investments.

I would like to ask the Minister what measures are used to determine if these investments are indeed bearing fruit: what KPIs are used to track progress and success? What has the impact of investment in R&D been, in elevating and positioning Singapore for the future and in supporting industry transformation?

Sir, Government Ministries can also contribute to the sustainability of Government finances. They should be expected to practice prudence in their spending and seek the best value for the money they put into their projects. I would like to ask the Minister what budget mechanisms and controls are deployed to manage expenditure growth in Government, ensuring efficient and effective spending of public monies and the sharing of best practices. How does MOF ensure value-for-money is the responsibility of every Ministry and every public officer?

I would like to ask the Minister what incentives there are for Government officers to under-spend their budgets and continuously achieve savings in projects and initiatives for which they are responsible? What mechanisms are in place to ensure budgets are efficiently and effectively allocated, and to what extent can the whole-of-Government approach be used to explore cost synergies and cross-agency collaboration, in order to avoid duplication of effort and cost?

Sovereign Wealth Funds

Mr Leon Perera (Non-Constituency Member): Mr Chairman, Sir, in 2017, I asked a Parliamentary Question (PQ) about succession planning in Temasek Holdings. The reply was that these matters are to be dealt with by Temasek's Board and the Government does not interfere because Temasek operates as a commercial entity. In 2019, my Parliamentary colleague, Mr Png Eng Huat asked about whether remuneration bands can be disclosed for senior officers in sovereign wealth funds or SWFs. And again, the reply was similar.

The reason this is problematic is that the two entities are not privately-held commercial entities in which case the stance would be understandable, but public ones managing public funds. The public has a legitimate interest in understanding for instance, why CEO succession was deemed to be enough of a priority in 2009 to appoint a CEO designate, and yet, there has not been any concrete movement or succession on the 11 years since then, in spite of what one must assume would be no lack of suitable candidates internally or externally; or whether remuneration given to top executives is consistent with market norms and represents good value.

In contrast, the Singapore code of corporate governance calls on listed companies to disclose total remuneration paid to the top five key management personnel. A 2018 study found that close to 70% of Singapore listed companies did so. The SGX and most of the exchanges do not take the view that the disclosure of such information is unnecessary in the public, and shareholders only need to know past financial performance and nothing else, because such disclosure has a bearing on likely future performance and risks among other reasons.

Singapore Exchange Regulation Chief Executive Tan Boon Gin said, and I quote, "Shareholders, especially minorities deserve to know why company directors and executives are paid the way they are." "The Board and Management therefore owe it to investors to explain the link between performance and remuneration."

The same reasoning would apply to our SWFs because the Government is the shareholder, the people of Singapore are, by implication, stakeholders. In the case of the Norwegian SWF, the government questioned the rising operating expenses of the SWF publicly. The compensation of the CEO and CIO of the Norway fund are publicly known.

In passing, let me note that I am not holding up the Norway model as one we should emulate in all respects. That is not my point. I am also not calling for Government interference in the commercial operations of the SWFs. That is not my point.

I would like to ask how Singaporeans are able to obtain a reasonable degree of accountability and transparency over matters relating to business succession and top executive compensation at our SWFs which manage hundreds of billions of dollars of public funds. Would the Government consider, at the very least, allowing a bi-partisan Parliamentary Committee to interview the key personnel from these SWFs once a year so that there is some degree of accountability to legislators?

Ministry's Role in Industry Development

Mr Lee Yi Shyan (East Coast): Mr Chairman, Sir, one of the key trends shaping Singapore's future is the rapid advancement of technology. Artificial Intelligence, 5G, Robotics and blockchain and so on, are poised to disrupt existing industries, eliminating jobs and create new ones.

According to McKinsey, applying AI to nine business functions in 19 industries has the potential to create between US$3.5 trillion and US$5.8 trillion in value annually. Growth projections for 5G, Robotics and blockchain technology applications are similarly breathtaking. Traditionally, economic development is predominantly the responsibility of MTI, but increasingly, several other Ministries are overseeing vertical domains which are filled with opportunities for innovation, technology applications and industry development. For instance, MND has deep knowledge of planning a smart and sustainable city, MCI for smart nation, MOT for driverless transportation, MEWR for clean energy and water solutions, MOF for Fin Tech, and MOH for telemedicine. In all these areas problem solving will require multi-disciplinary knowledge employing the new technologies I just mentioned. These Ministries are in very good position to champion R&D applications and industry development in their respective domain expert areas.

Would MOF therefore consider, when allocating budgets to Ministries, set aside a certain percentage of the Budget for Ministries to take on mandatory industry development roles, including technology planning, R&D and enterprise development within their vertical domains? After all, building an advanced knowledge economy is a complex task well beyond the expertise of any single Ministry.

The Chairman: Mr Louis Ng, you can do both your cuts together.

Providing Single Unweds with Parenthood Tax Rebate (PTR)

Mr Louis Ng Kok Kwang (Nee Soon): Sir, MND stated that "single unwed parents are valued citizens, and like all parents, are respected for the love and care they provide for their children. They are no less a mother or a father, just because their child was born outside of marriage." Why do they not then get the parenthood tax rebates like other parents? MND also stated that "every parent regardless of their marital status, ought to be treated with respect."

Our policies can help end the discrimination. It is time to level the playing field and treat single unweds with respect. As citizens, they should qualify for the Parenthood Tax Rebates like all other parents. Next cut.

Providing Working Mother's Child Relief (WMCR) to Single Unweds

The Working Mother's Child Relief rewards families with children who are Singapore Citizens. Why leave out single unwed families? Why only encourage married women to remain in the workforce after having children?

It is strange that we do not want single unwed women to remain in the workforce after having their child. Why discriminate, even after MND has stated again that "every parent regardless of their marital status, ought to be treated with respect."

Let us respect single unwed mothers who look after their children single-handedly and remain in the workforce despite all the difficulties. Will MOF consider allowing single unweds to qualify for the Working Mother's Child Relief?

Foreign Domestic Worker Levy Tax Relief

Mr Png Eng Huat (Hougang): Sir, no one likes to raise a child alone be it the mother or the father who has to take on the role by choice or by fate. Whether it is the case of a failed marriage or the untimely death of a spouse, the burden and responsibility of single parenthood is a long and arduous journey to undertake. I have seen a number of single parents at my Meet-the-People sessions over the years. While most of them were women, there were single fathers who came along with the children in tow.

The story they share about raising their children all by themselves is a story of love and perseverance. A story that highlights the need and importance to have a support network comprising their extended family, friends and even enacted policies to make single parenthood work for them. Recently, a single father wrote to me to share about his experience about raising his two young children. While he works hard to put bread on the table for his young family and to provide for his aged parents, he found out that the taxman does not really recognise his role and effort as a single father.

While the role and responsibility of being a single parent are not any lesser for a single father, the taxman does not treat a male taxpayer in the same light as the opposite gender when it comes to claiming for Foreign Maid Levy (FML) Relief. While this single father can work out the apportionment of the Qualifying Child Relief with his ex-spouse, there is no levy relief for him if he hires a foreign domestic helper to look after his young children. This single father would fit the criteria for FML relief to the letter, except for the fact that he is of the wrong gender.

Anyone in his shoes would certainly use whatever that is out there to stretch his hard earned dollar to feed his family. I hope the Ministry can look into addressing this disparity soon. The Foreign Maid Levy Relief has to be gender neutral.

Government Procurement Policies

Ms Foo Mee Har: Chairman Sir, the Public Accounts Committee observed, in its latest report to Parliament, that it is concerned about recurring lapses in procurement and contract management. Government agencies were directed to urgently address these recurring lapses and basic mistakes. They need to prevent weaknesses from compounding over time, and thus weakening governance and accountability for usage of public funds and resources.

I would like to ask the Minister how can Government procurement policies and processes be made more streamlined and effective, so that the value of spend is maximised? What training do Government procurement officials undergo, in order to ensure that they are fully conversant with the relevant policies and processes? What consequences do the officers-in-charge and management face, for lapses in enforcing controls? How can the identified lapses be addressed at a whole-of-Government level?

The Chairman: Mr Henry Kwek, you may take both your cuts together.

Better Support for SMEs and Start-ups

Mr Kwek Hian Chuan Henry (Nee Soon): Mr Chairman, Sir, the Singapore Government is at the forefront of public policy formulation and implementation. It is also one of the largest procurer of goods and services.

Naturally, it constitutes an important demonstration platform and springboards for many companies, especially for SMEs and startups, that want to deliver innovative solutions for Singapore and beyond. This is especially so for smart city, climate change, and e-services. Can MOF share how we can enhance the Government procurement approach to enable SMEs and start-ups to develop innovative solutions, and in doing so also help them to grow? This is especially so, as it is imperative to grow new companies in Singapore for the next phase of our economic development. Can MOF also share on how we will inform companies of such efforts? My second cut.

Co-creating Solutions with Businesses

As the needs of our society grow more diverse and complex, it is inevitable that more regulations are needed to safeguard Singaporeans in different ways. At the same time, more regulations mean more processes and greater compliance cost. This represents added cost and potentially, lost productivity to businesses. I have spoken on this issue on a number of occasions in the past.

I am heartened that over the years, the Government also recognises this issue. It has formed the Pro-Enterprise Committee and achieved positive results in cutting red-tape. Nevertheless, this is a never-ending marathon. Can MOF share on how, as part of the Singapore Together movement, MOF and the greater, larger Government agencies can partner businesses on co-creating solutions to reduce compliance costs and streamline processes for greater productivity?

The Chairman: Mr Saktiandi, you may take both cuts together.

Transforming Public Service Processes

Mr Saktiandi Supaat : Mr Chairman, the COVID-19 situation we are facing now has highlighted the importance of digitalisation for work and daily household processes. Being able to perform many tasks from home has helped to reduce the necessity of gathering and queuing in public places. In regular times, digitalisation of existing Public Service processes has brought extensive convenience to citizens and businesses.

Checking our CPF balances, obtaining information about housing grants, submitting a tender for a public project and so forth have become so easy they can be done from our computers and smartphones. How has MOF tapped on digitalisation to enhance its service delivery and interactions with businesses and citizens? How does it engage the older generation who may experience a steep learning curve and may need the necessary devices to benefit from this digitalisation? Second cut.

Deliver Business- and Citizen-centric Services

Mr Saktiandi Supaat: During COVID-19, we saw many heart-warming instances of individuals, organisations and businesses performing acts of kindness, from individuals setting up hand sanitisers for their communities, to businesses giving away masks and organisations persevering with their regular food distributions. Singaporeans also donated generously to organisations in need. It is a reminder of how much we can achieve together.

As part of the Singapore Together movement, how has MOF increased partnership and co-creation with citizens, businesses and the community in delivering solutions? How can the Government work together with Singaporeans, stakeholders and partners to ensure that we can inculcate the society and people who have empathy, care and strength to overcome challenges?

5.00 pm

Increasing Community and Business Partners

Miss Cheryl Chan Wei Ling (Fengshan): Chairman, Sir, the number of ground-up initiatives supporting the community and underprivileged have increased over the years. In part, it was contributed by greater social awareness, corporate social responsibility and more funding channelled to support these causes. I commend all the immense good efforts and initiatives that everyone across the country have contributed to benefit the different individuals amongst us. I ask that we do not stop here and continue to do more.

We have been on the journey of promoting digital services. For a while, the focus had been on our seniors and keeping them abreast of digital application. As we continue to bring more on board this digital journey, I feel that another group of people who will benefit immensely is people with special needs.

Under the Singapore Together movement, how can the Ministry enable more partnerships with the community and businesses to co-create, deliver solutions and build a more caring and resilient society?

I encourage the community and businesses to use their knowledge, technology, tools and people network to strengthen this partnership in helping people with special needs. I ask we particularly look at some aspects in their life journey.

First, life skills for independent living. People’s adaptability to changes vary. For those with special needs, more patience and efforts are even required on their part. To assume responsibility in managing their life, they need more intuitive systems and aid. With big data, there can be analysis done to provide reference for them on how to do certain things or automate it for them.

Second, healthcare insurance. Today, people with special needs face insurance discrimination for declaration of their medical conditions. It is not easy for them to get coverage for some basic investment policies, much less medical coverage. By precluding them, they are not just financially worse off but it makes it even harder for them to take stewardship of their health at old age. MediShield Life and soon to be introduced CareShield Life will help but they may not apply for all depending on conditions and further not all their health issues require hospitalisation. Finally, for regular check-ups and therapies, what additional funding and support are available?

Third, financial management. Planning is of utmost importance and how to do it becomes critical for people with special needs to learn in order to minimise risk and disruption in their lives. Before investments and housing needs, they could require lessons on financial budgeting around necessities versus good to have. Understanding what is genuinely good for their well-being and prioritise to prevent straining their own resources.

Lastly, social life. Moving out of comfort zone in communal setting is not the easiest for many of them. We should try to breakthrough social stigma at workplace, community and family and increasingly integrate them in our society. Build emotional and relational connections with people of special needs and give them a safe and respected environment to be in.

The Chairman: Minister Lawrence Wong

The Second Minister for Finance (Mr Lawrence Wong): Mr Chairman, I thank the Members for their questions and comments for the Ministry of Finance. Members’ cuts cover three broad topics: first, fiscal sustainability and accountability; second, transformation of public service processes; and third, enhancing service delivery to be more business- and citizen-centric. I will speak on the first topic, as well as the questions on reserves and tax matters. Second Minister for Finance Indranee will cover the other two topics.

The COVID-19 virus outbreak and its economic fallout is a timely reminder of why it is critical to ensure long-term fiscal sustainability. We are a small country with no natural resources, exposed to global forces beyond our control. As Mr Liang Eng Hwa highlighted just now, our prudent fiscal strategy has provided us with the resources to respond promptly and decisively to crises, and also to continue investing for the future and for the long term.

Such resources did not come about overnight. They were built up over several decades. They were the result of prudent fiscal policies put in place by our pioneering leaders. So, it is imperative that we continue to uphold this sound fiscal approach in order to maintain our strong financial position. In particular, as Ms Foo Mee Har mentioned just now and I think Mr Cedric Foo also said earlier in the Budget Debate, every generation must contribute its fair share and not leave an undue burden for the next generation to bear. This is why we must continue to pay for recurrent needs with recurrent revenues. That is why every year when we prepare the Budget, we do not come to Parliament to appropriate monies just for the sake of spending every cent. Instead, we look at each project on its merit, we spend on what we deem to be cost-effective, and then if there are any savings, we set these aside for anticipated future needs, as we did this year. We set aside some amount of money for climate change.

Upholding such financial prudence and discipline is a reflection of our commitment to Singaporeans, not just the present generation of Singaporeans but, as Deputy Prime Minister said just now in the Budget round-up speech, it is also a reflection of our commitment to future generations of Singaporeans.

A key part of our prudent fiscal system is to have a resilient and diverse revenue base, as well as to have effective and value-for-money public spending. So, I will elaborate on each of these.

First, on the revenue side. As Ms Foo highlighted, a healthy and growing economy is crucial to sustaining our revenues. This is why the Government invests upstream to build capabilities of Singaporeans and to provide maximum opportunities for Singaporeans to excel. This is how we can continue to enlarge and grow our economic pie.

Mr Lee Yi Shyan asked whether Ministries play a role in industry development and contributing to economic growth. In fact, this is already the case. While MTI is the lead agency for the economy, various Government agencies do take on sectoral lead roles. For example, as all of you would know, MAS oversees the financial services sector; the IMDA looks at industry development for the IT sector; and the BCA takes care of the built environment, and so on. All in all, we have 23 Industry Transformation Maps (ITMs) and we have set aside budgets for the respective lead agencies to support the implementation of the ITMs and that would include technology adoption, R&D and industry development. All of this work is coordinated under the Future Economy Council.

To Ms Foo’s question on the progress of our investments into economic transformation, we are starting to see these efforts bear fruit. In the last three years, overall productivity growth, as measured by real value-added per actual hour worked, rose to 2.6% per year, up from the 2.2% per year in the preceding three-year period. Real median wages have also gone up.

Ms Foo also asked about the impact of our R&D investments. The National Research Foundation (NRF) recently completed its mid-term review of the Research, Innovation and Enterprise (RIE) 2020 Plan and this RIE2020 is on track to meeting its outcomes, such as in supporting industry growth and catalysing greater innovative activities in the private sector. As at end March 2019, our RIE investments have supported the creation of more than 5,500 industry jobs. Business Expenditure in R&D has grown steadily since the start of RIE2015, from $4.5 billion in 2011 to $5.6 billion in 2018 – an increase of about 25%. In less than two years, RIE2020 has also exceeded the target of supporting more than 250 successful start-ups.

So, we are seeing positive results but there is always room to do better. And all Government agencies are fully aware that they must continue to achieve maximum value from the public funds they are entrusted with, so as to keep transforming our industries and sustaining economic growth.

Next, on the expenditure side. Just as we want to grow our revenues, it is equally important to ensure that our spending is prudent, efficient and cost-effective. Ms Foo asked about the budget mechanisms in place to manage expenditure growth and to incentivise public officers to achieve savings.

Our Block Budget Framework sets a spending cap for Ministries. In 2017 and 2018, we reduced both the spending cap and the annual growth rate of the block budgets, to further manage expenditure growth. Within this Block Budget Framework, if Ministries have any savings, they can roll over part of the savings from the operating budget to the next financial year.

For big-ticket items such as infrastructure and ICT projects, which Mr Saktiandi Supaat and Mr Liang spoke about, MOF applies additional scrutiny to evaluate such projects for their worthiness and cost-effectiveness before embarking on them. Large infrastructure projects, like the coastal protection infrastructure that Mr Saktiandi mentioned, would be reviewed by a panel of technical experts from the private and public sector and academia, before they are given the go-ahead. Over the past five years, these processes have led to design improvements and generated savings of about $3.5 billion for infrastructure projects.

Take the Cross Island Line (CRL), for example. The depot for CRL at Changi East was initially planned to be underground to optimise above-ground land use. After working with LTA and agencies to evaluate the costs and benefits of this approach, agencies found a way to site the depot above ground with reduced engineering risks and at lower cost.

Similarly, through the review processes for ICT projects, we have been able to achieve cost savings of about 6% or $900 million over the past five years. To further strengthen our scrutiny over ICT spending, we will be inviting industry experts to form an ICT advisory panel to benefit from their private sector perspectives in the evaluation of major Government ICT projects.

For issues that may not fall neatly within a specific agency’s domain or area of responsibility, we agree with Ms Foo and Mr Liang that agencies do need to collaborate to avoid duplication of efforts and costs. To facilitate this, MOF has set up joint programme budgets for cross-cutting areas, like ICT and Smart Systems, Cybersecurity, and Research, Innovation and Enterprise.

For example, the Cybersecurity programme budget was put in place by MOF, Cyber Security Agency of Singapore (CSA) and Smart Nation and Digital Government Office (SNDGO) to improve coordination, discipline and prioritisation for the build-up of whole-of-Government cybersecurity programmes. So, this sort of partnership helps the Government to make more informed and robust resourcing decisions as a whole.

MOF will continue to identify areas that warrant such multi-Ministry or multi-agency approaches and set aside joint programme budgets, where necessary, to get agencies to work together for more effective outcomes, rather than to do so in their individual agency silos.

Ultimately, while budgeting mechanisms can facilitate discipline in the way we use public monies, the best way to ensure prudence and effectiveness is to instil a value-for-money (VFM) mindset in every public officer, as Ms Foo and Mr Liang rightly highlighted. Again this is a continual work in progress, but we have seen improvements over the years.

Take MOT as an example. It sets outcome-based KPIs such as percentage of commuters' journeys completed within 45 minutes. So, there are clear outcomes for its spending. MOT also conducts VFM workshops for its officers to share ideas and best practices, and has its very own Ministry’s VFM Awards for projects that generate significant dollar savings and benefits for citizens.

One LTA project that recently won the MOT VFM Distinguished Award is the Smart and Energy-Efficient Street Lighting System which provides higher energy efficiency, as well as reduced manpower and time to detect and rectify defects. This led to cost savings of about $4 million every year.

A key part of ensuring every dollar has been well spent is tracking and evaluating the effectiveness of our spending and we do so by setting KPIs upfront during policy design so that spending is tied to the desired outcomes. Then, we review the policies regularly to ensure that they are on track to fulfil the outcomes.

Take the KidSTART programme as an example. ECDA started this as a pilot in 2016 targeting to benefit about 1,000 children, with carefully designed indicators and a clear evaluation plan. Since then, the team has been monitoring outcomes such as child developmental milestones, pre-school attendance and quality of parent-child interactions, to assess the programme's effectiveness. Based on the preliminary results and positive feedback, the Government and MOF had the confidence to expand KidSTART to benefit another 5,000 children over the next three years. And thereafter we will take stock again to see how we can expand KidSTART further. So, this example illustrates the approach we take, how we scale up progressively, relying on data, evidence and learning points to improve the programme, and then, constantly review the effectiveness of public spending.

5.15 pm

Mr Liang earlier shared about his work as a Member of the Public Accounts Committee. Let me thank him and the Public Accounts Committee for their hard work in scrutinising public expenditure.

Addressing lapses that Mr Liang and Ms Foo mentioned is a continuing effort that requires balance between controls and efficiency. Like any large organisation, we recognise that it will not be possible to achieve zero lapses, given the high volume of transactions across the Government. Nevertheless, where lapses are found, our agencies will take immediate steps to address them and strengthen their controls to minimise recurrence. This may include relooking at our policies, practices and systems, as well as stepping up training of public officers.

I assure Ms Foo that the Government adopts a zero-tolerance approach to fraud and corruption. Those who commit wrongdoing will face the full measure of the law. Where appropriate, disciplinary actions are also brought against officers responsible for lapses. MOF will spare no effort, as we work with agencies to ensure that the Government remains responsible, open and accountable in our use of public funds. We will continue to strengthen our system of checks and balances and instil discipline in every officer to make sound spending decisions.

Next, Mr Leon Perera asked about succession plans and disclosure practices of Sovereign Wealth Funds, particularly of GIC and Temasek. The Government has explained its position clearly on these issues. Both GIC and Temasek are commercially-run entities, and the Government maintains an arm's-length relationship with them. The boards of these entities are ultimately responsible for their respective operations, performances as well as succession for leadership.

For these two entities, the focus and the mandate that we have put on them is to generate long-term financial returns for the benefit of Singaporeans. The two entities put out a lot of information every year in their annual reports, highlighting not just their performance, but also extensive information and commentary on their investment approach and their outlook. In fact, over the years, GIC and Temasek have progressively put out a lot more information than they used to.

We will continue to encourage the two entities to review and examine what additional information they would like to put out in their annual reports. From the Government's point of view, our key consideration is this: whatever disclosure requirements that the two entities put out should be part of an overall system that enables these two entities to maximise their ability to secure long-term returns for the benefit of Singaporeans. That is our overall objective.

We want to have a system that allows our two entities to succeed in achieving their mandate and we have to be very mindful of what kind of disclosure requirements we place on them, and be careful of not leading them to pursue indicators that can lead to undesirable behaviours. For example, if we were to insist, as some have suggested before, on publishing annual indicators of performance, some of these entities may then be driven towards short-term performance. That would not be in our interest because these are entities that are looking at achieving long-term financial returns.

If we are insistent on them disclosing indicators of fees and expenses to a great level of detail, it may lead these entities towards minimising expenses, potentially eroding capabilities or diminishing their talent pool, which would also not be in our interest. So, we are quite careful and deliberate in thinking about what sort of system we want to put in place and ultimately, it is a system that enhances the performance of the two entities in securing long-term returns.

That is why if you look at what is published, it is the long-term returns net of all expenses incurred, and the information is published for both GIC and Temasek in their annual reports. Ultimately, we want to preserve the competitive advantage of our two investment entities vis-a-vis other market players and we want to maximise their ability to secure long-term returns for the benefit of Singaporeans.

Lastly, let me touch on tax-related matters. Mr Louis Ng and Mr Png Eng Huat suggested extending existing tax reliefs to unwed parents and single fathers respectively. Again, let me explain the Government's considerations here.

Where there are Government benefits that support the child's growth and development, we will extend them, regardless of their parents' marital status. That is why all Singaporean children today receive over $180,000 of education subsidies by the time they turn 16, at least $6,000 in their Child Development Account (CDA) Grants and $4,000 in MediSave Grant for Newborns. In this way, we support all parents, including unwed parents, to give their children education opportunities, good healthcare and a conducive social environment, so they can realise their fullest potential in life.

For the Parenthood Tax Rebate and Working Mother's Child Relief, these were intended to support parenthood within marriage and for married mothers to continue working after childbirth. Likewise, for the Foreign Maid Levy Relief, this was specifically granted to encourage married women to continue working. So, there were specific objectives tied to these schemes. Having said that, all Members would know that,our schemes are never cast in stone. We continue to review and re-calibrate them from time to time.

Members will recall that we have reviewed and extended support to unwed parents in recent years, including the CDA benefits as well as the full 16 weeks of Government-paid maternity leave. These things will continue to progress and evolve.

I would encourage Members also to consider this. Besides looking at specific tax reliefs and comparing the benefits for one group versus another, it is important to take a step back and look at the broader picture. Ultimately, we all share common objectives. We want to give every child a good start in life, provide support for all parents and build strong families in Singapore. We have different schemes and policy tools to achieve these multiple objectives and we will continue to fine-tune and review our schemes to achieve the optimal balance.

Mr Chairman, MOF is committed to ensuring that our spending is effective and sustainable over the long term and we will do so in partnership with the community. I will let Second Minister for Finance Indranee address the other questions raised.

The Second Minister for Finance (Ms Indranee Rajah): Mr Chairman, I will now address Members' questions which fall under two broad topics: first, how the Government is transforming public service processes to better serve our people and, second, how we are enhancing service delivery to be more business- and citizen-centric.

Minister Chan spoke earlier about transforming the public service for the future. I will cover MOF's efforts in transforming Government procurement through rule reviews and pervasive use of technology. This contributes to being more nimble, innovative and effective, as urged by Mr Liang and Ms Foo.

First, MOF has used regulatory sandboxes to lift procurement rules and allow agencies to test new approaches. One such sandbox enables Government agencies to negotiate with the most qualified bidders in open tenders to identify alternative solutions that provide better value for the Government. For instance, through this approach, we were able to secure a more cost-effective solution for a large ICT contract at tens of millions of dollars lower than the original bid price.

Second, we are introducing more dynamism in some of our bulk contracts to be responsive to market changes. While current ICT bulk contracts allow suppliers to refresh their prices, we are introducing further dynamism by allowing new requirements and new suppliers to be added throughout a multi-year contract. This is especially pertinent in an environment of rapid technology changes. Suppliers will be able to offer new products and services to the Government, without waiting for bulk contracts to expire. Agencies can have faster access to newer technology and capabilities, leading to time savings of about three months each time this feature is used. We have piloted the use of dynamic contracts for two ICT bulk tenders amounting to more than $700 million and will scale this up to three more bulk tenders this year.

Third, public officers can soon make small value purchases directly from e-commerce sites, which will enhance speed and convenience. Today, the public service spends more than $60 million annually on small value items, such as pantry supplies, stationery and small electrical appliances. By the end of this year, MOF and GovTech will enable public officers to make small value purchases from e-commerce sites seamlessly, without having to claim reimbursement.

A fully automated e-commerce model will lighten the processing workload on our corporate staff. Audit controls will be automated and monitoring done in the background. This will save our public officers more than 100,000 man-days a year, freeing up their time to focus on delivering better services to the public.

We are partnering our vendors in this digitalisation journey, particularly our SMEs. By bringing their businesses online, SMEs can digitalise their processes from order to invoice to payment and improve productivity. It also opens up new opportunities – SMEs can access an additional channel to supply Government agencies and other buyers and expand their reach beyond Singapore's shores.

Mr Henry Kwek asked how we are enhancing the Government procurement approach to enable SMEs and startups to develop innovative solutions and help them grow. More than 80% of the total number of procurement opportunities are awarded to SMEs and startups. We will continue to look at how we can facilitate their participation and support their growth.

Mr Kwek also asked how we inform companies of such efforts. One key way is to partner our Trade Associations and Chambers to reach out to them. For instance, MOF regularly engages the Singapore Business Federation to gather feedback from their members and provide clarifications on Government procurement matters.

GovTech, as the Government’s lead for ICT procurement, has regular platforms with SGTech to facilitate collaborations with the tech industry. One of the initiatives shared with SGTech is the Infocomm Media Development Authority (IMDA)'s Open Innovation Platform (OIP), which enables smaller enterprises to better access Government opportunities.

Since its launch in July 2018, agencies have posted 13 challenges on OIP to invite the public to submit solutions, with prize monies of more than half a million dollars. This attracted 191 proposals, with more than 90% coming from SMEs, startups and individuals.

NEA, for example, has posted a challenge on addressing air pollution from vehicles' smoke emission. Twenty SMEs, startups and individuals submitted proposals. NEA is now working with the awarded startup to co-develop a proof-of-concept where video analytics capabilities will be used to detect smoke emissions remotely yet accurately. If the solution proves to be effective, it can be piloted and scaled up without the need for further tenders.

For the ICT sector, we have gone a step further to list promising Singapore-based tech startups in a panel for Government agencies to consider first. The SG:D Spark programme gives these startups priority access to Government projects to build capabilities and track record for further growth.

Impress.ai is a local SME on the SG:D Spark programme which helps companies automate their recruitment process using artificial intelligence. It has grown its clientele to 10 Government agencies in its two years on the programme. These agencies, in turn, have benefited from a more efficient and effective recruitment process. For example, Ngee Ann Polytechnic reduced the time taken to review over 4,000 applications, from 470 hours to just two hours.

Mr Saktiandi and Mr Liang asked how MOF has tapped on digitalisation to enhance its interactions with businesses and citizens. Mr Kwek also talked about reducing business compliance costs.

Earlier this year, the Accountant-General’s Department announced that the Government has taken the lead to adopt the Nationwide e-Invoicing Network. This provides our 20,000 vendors currently on e-invoicing arrangements with an additional channel to transmit invoices from their accounting systems to the Government. Being on the network also allows vendors to exchange documents seamlessly with one another, including overseas counterparties.

As part of the Digital Government Blueprint, all Government interactions with businesses and citizens will include an electronic signature option by 2023. This will make it easier, more convenient and less costly to transact with the Government. Within the Public Service, we have conducted reviews to digitalise processes and do away with signatures. Where signatures are still required, electronic signatures will be the norm.

We have gone one step further to integrate digital solutions across platforms and agencies to create seamless digital touchpoints. In partnership with software providers, the Accounting and Corporate Regulatory Authority (ACRA) and Inland Revenue Authority of Singapore (IRAS) are enabling seamless filing for smaller companies. Using source data from accounting records, financial and tax returns can now be automatically generated and submitted directly to ACRA and IRAS. With the launch later this year, about 200,000 companies can potentially benefit from this initiative.

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Even as we seek to create seamless digital touch points with citizens, we must also help those who might require more customised assistance, as Mr Saktiandi Supaat and Miss Cheryl Chan highlighted.

IRAS has been working with taxi and private hire car (PHC) drivers on a chat-filing initiative to simplify tax filing. Through this collaboration, IRAS developed a conversational-style form to help drivers understand the information they need to report. The form was piloted last year with over 600 drivers who found this tax filing process more intuitive. They also spent 30% less time filing their returns. Given its success, IRAS is working with GovTech on a prototype chatbot to benefit about 6,000 taxi and PHC drivers during this year's tax filing season.

We recognise that the Government does not have a monopoly of ideas or resources. For Singapore to succeed, we must harness the collective wisdom and ideas of our people. I am glad that Mr Henry Kwek, Mr Saktiandi Supaat and Miss Cheryl Chan highlighted the SG Together movement, which will anchor our nation-building going forward.

Budget 2020 is a good example of SG Together in action. We engaged and received suggestions from about 6,000 contributors, almost 40% more than last year's Budget. We will continue to step up our engagement efforts so that all Singaporeans can have a say in our Budget.

Beyond engagement, we seek to actively partner our businesses, community groups and citizens to create policy solutions together. Take for example the Matched Retirement Savings Scheme under Budget 2020. This had its origins in early discussions between the Tsao Foundation and the Government. The Tsao Foundation did a pilot study to provide dollar-matching on CPF savings for a small group of older women. We then scaled up the idea into a nation-wide programme to boost the retirement adequacy of eligible lower and middle income seniors with little retirement savings.

We also leveraged data sharing via Application Programming Interface (API) exchanges and crowdsourcing through hackathons to co-create solutions.

For instance, IRAS' API Marketplace and ACRA's API Mall allow developers and businesses to harness data and create applications that interface seamlessly with Government systems. These APIs are currently used by over 150 organisations to develop business and productivity solutions.

We have also taken a further step to partner businesses and empower the community to co-implement solutions. For example, our banks and telecommunication service providers are valuable partners under IMDA and Enterprise Singapore's Start Digital initiative, who help introduce business solutions through their touch points with SMEs. With their support, the scheme has benefited over 10,000 SMEs since its launch in 2019.

We also leveraged partnerships to promote inclusive growth, and foster a caring and resilient society, which Miss Cheryl Chan spoke about. Tote Board's Enabling Lives Initiative, managed by SG Enable and the National Council of Social Service, is one example of how various stakeholders such as social service agencies, academia and corporates work together to deliver projects that improve the well-being of persons with disabilities and care-givers.

As Miss Cheryl Chan mentioned, people with special needs will benefit immensely from the use of digital tools. Under Tote Board's initiative, a social enterprise called Digital D.R.E.A.M. pioneered the use of virtual reality systems to provide immersive learning opportunities for students with special needs, such as learning about road safety in a safe environment. Digital D.R.E.A.M. has since partnered various Special Education schools to develop tailored content materials for their students.

Later this year, Tote Board will launch the second tranche of the initiative. We look forward to more collaborations with our community partners to deliver impactful and innovative solutions in various aspects such as life skills and assistive technology for persons with disabilities.

MSF has formed three Enabling Masterplan work groups to guide us in building a more inclusive society. More details will be shared at MSF's COS later.

Mr Chairman, our work is not done in creating a better Singapore for all. We encourage our businesses, community groups and individuals to come forward and work together with us to build and sustain Singapore's success for future generations.

The Chairman: Mr Louis Ng.

Mr Louis Ng Kok Kwang: Thank you, Sir, just three points regarding the single unweds again. We have MND that is saying that every mother and every father is equal. It does not really matter whether the child was born out of marriage. But here we are now saying that they are not equal, that because the child was born outside of marriage, they will not qualify for the Parenthood Tax Rebate and the Working Mother's Child Relief. Why do we do that?

Second, with these two rebate and relief, there are single parents who qualify for it, who are the divorcees. So, why can we not just extend it to the single unweds? Unless of course we are saying we want that as a form of deterrent so that people do not have children out of wedlock. But again, as I raised in my Adjournment Motion, I doubt this will be a deterrence, unless, just before they have sex, they think about the Parenthood Tax Rebate and Working Mother's Child Relief, which we know, will not happen.

And that comes to my third point. I am not really fighting for a lot of money here and I do not think actually a lot of single unweds pay a lot of taxes, because we know their median income is $600 for those under 35. We are not fighting for the money here. We are fighting the stigma and the discrimination. And I know MOF will support this as this is a Unity Budget. It should be for all Singaporeans.

Mr Lawrence Wong: Mr Chairman, I think Mr Louis Ng is talking about the support for single unwed parents in the context of MND's issues on housing; and certainly, if I were to wear my MND hat, we have said that we want to provide housing even for single unwed parents in the interest of the child. So, there is no issue there.

But I think the question here is a different one. I think the question here is: do we want to provide support for parenthood in the context of marriage? Singaporeans have asked for this support. Various Members of the House have asked for such support too. And if you were to provide that support, there will invariably be a gradient between incentives and encouragement for parenthood within the context of marriage versus outside of marriage. That gradient exists today in our schemes.

But it does not mean that we are not supporting children. As I said, schemes that provide support for children, we will ensure that the children have them. It does not mean that we are not supporting parents, whether you are a single father, a single mother or whether you are a divorcee. We have support for them. But so long as we take the view that we want to provide support for parenthood in the context of marriage, that gradient will exist.

How do we manage this going forward? Do we still want a gradient? Do we not want the gradient and treat all as equal? I think that will evolve. It is a continuing journey, as I alluded to earlier. I think in this House, we have heard calls for more support for parenthood in the context of marriage too. So, obviously, there are different views and we will have to manage these different views and continue to refine and improve our schemes over time to manage this diversity of views and to address the different objectives, as I highlighted earlier.

Mr Liang Eng Hwa: Sir, I noticed in the revenue estimates that the NIRC has grown from $17 billion last year to $18.6 billion for FY2020. So, can I ask the Minister if this continued growth in NIRC is realistic, sustainable, given the grimmer outlook now, not just because of the current COVID-19 fallout but also of more concern are the longer term global structural stresses that we saw and the persistent near-zero interest rate environment that is still there? Can we expect this NIRC to grow to fund our Budget in the future?

Mr Lawrence Wong: Mr Chairman, the NIRC will be an important source of revenue over the long term. As Mr Liang Eng Hwa, I think, is fully aware, the NIRC is tied to the long-term expected returns of our investment entities. So, the critical words are "long-term expected returns". It is not linked to short-term performance. It is not impacted by immediate market volatilities. So, we are not so concerned about that.

But looking ahead, looking at the long term, there are indeed reasons for concerns. And we do expect more pressures in the longer term investment environment. For example, geopolitical tensions, I think, will be a long-term issue between America and China. That contestation for power will be with us for quite awhile and it may lead to a more bifurcated world over a period of time.

We will likely see more nationalist and protectionist pressures continuing, which means that the pace of globalisation will slow. We may even get de-globalisation, which will cause global growth to be lower for longer periods of time.

In developed markets, you see ageing populations, you see lower productivity, you see stagnating growth. So, those trends are continuing.

If you think about these long-term trends, then indeed, there will be continued pressures on our long-term expected returns. So, we are very mindful of that. We stay vigilant. We do not assume that our NIRC will always be able to keep pace with our spending needs and that is why all the more we must not take our current fiscal strength for granted.

The Chairman: Okay, Mr Louis Ng, one more time. Last one.

Mr Louis Ng Kok Kwang: I try one more time, Sir. I hope the Minister will agree with me that it is not a deterrence. Not providing single unweds with the Parenthood Tax Rebate and Working Mother's Child Relief is not a deterrence. And I also hope that the Minister will agree with me that it is not an incentive. It might be this worry that if we provide the single unweds with more benefits, all of a sudden, there is going to be huge population of children born out of wedlock. I do not think that will happen as well. And if we do not think that it is going to incentivise or discourage, then again, what is stopping us from levelling this playing field and ending the discrimination?

Mr Lawrence Wong: Mr Chairman, I respect Mr Ng's views. I think there are many in this House who will feel like that. I think there are many who will also ask for additional support for parenthood in the context of marriage as has been the case before. So like I said, there will be a range of perspectives on this matter. We take all this into consideration in continuing to review and update our schemes.

Ms Foo Mee Har: I actually would like to continue the clarification started by Member Liang Eng Hwa and the Minister's eloquent reply. It is regarding the return from NIRC.

I noted the same strong growth projected for 2020. It is 9.3%. And I do understand we project long-term expected returns. To me, that is a very big achievement and we are very grateful, because we can then use it to fund our Budget. But then, what would the trend be in terms of percentage increases? 9.3%, right? This year versus last year. I think in wealth management, if you can achieve 9.3% for long-term expected growth, that would be an amazing achievement. I would like to ask the Minister whether there was some special adjustment from 2020 versus 2019, because I would imagine for the long term, probably, it would look more like 4%. That would be a good achievement.

Mr Lawrence Wong: Mr Chairman, there are two figures which we should not conflate. One is the growth of NIRC but that does not equate to the long-term expected rate of return, because the NIRC is the base multiplied by the rate of return. So, the base changes too, in order to get your NIRC.

As far as the rate of return is concerned, this is evaluated every year. We have a rigorous process to go through what that rate of return should be. The investment entities will review it. MOF will review it as well, and then we put it up to the Council of Presidential Advisers and the President finally has to approve the figures. We have explained the process, it is a rigorous process that goes through quite a bit of scrutiny before we finalise the figure.

The trends which I talked about earlier, what Mr Liang Eng Hwa had asked for, are concerns that we have, looking ahead. It need not impact on the immediate long-term expected rate of return. But we are concerned indeed that over a period of time, if these trends were to continue, if you see continued geopolitical tensions, if you see a growing trend of de-globalisation, then indeed, expected returns over the longer term may be impacted. So, we are mindful and we are watchful over this.

The Chairman: Mr Pritam Singh.

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Mr Pritam Singh (Aljunied): Mr Chairman, I did not file a cut for this Head, but if there are questions, I am prepared to give way. I am assuming that there is no one behind me who has raised his or her hand. If it is fine, I will just proceed to ask my question.

The Chairman: What are you requesting, Mr Singh?

Mr Pritam Singh: I am going to ask a question but I did not speak during for this Head, Mr Chairman, so I feel that those who had filed cuts should have first priority.

The Chairman: If you can couch it as a clarification, I will allow it. If it is a new question, I will not allow it.

Mr Pritam Singh: Sure. I will put the clarification. Minister Wong, following up on the question on the NIRC, I remember when we had the debate in this House in July 2015 on the amendment to the Constitution. We confirmed that the formula that was derived – the figures the NIRC reflects – is very conservative. Even more so when the broader economic environment is poor. It could be structurally or cyclically poor. Can I confirm then that the prospects of a "famine and feast" of NIRC, as a budget line item, actually is very, very minimal. That is the first clarification.

The second clarification is pertaining to the question I had put in my Budget speech about the formula that the Government was proceeding with insofar debt financing was concerned and the implications that has on some sort of fiscal room in subsequent budgets. Is there any clarity on that particular point, because the repayment period is stretched instead of a lumpy one-time or two-time payments. Thank you for the indulgence, Mr Chairman.

Mr Lawrence Wong: Technically, the second question is a new question not a clarification, but I will answer it anyway.

On the first part, the NIRC or the long-term expected return is looking at long-term what the investment entities are expecting in terms of their returns over a long period of time. So, it is not tied to immediate short-term market performance.

For example, if this year's market performance ends up negative, stock markets everywhere were to crash and overall returns are negative, it does not impact on our NIRC. Conversely, if it is a bonanza year and markets were to go up, it does not impact on our NIRC because we are looking at expected long-term returns. So, to the first point, it is not so much a conservative element. It is simply that we look at a long-term figure in order to derive the NIRC. We do not look at short-term market changes. So, that is our focus for deriving the NIRC. And that is also why we have continually emphasised that we hold our investment entities to the performance measure of their long-term returns, rather than looking at year-to-year performance. Because year-to-year performance can vary depending on the market, but we look at long-term trends.

On the second part, we are still working out the debt financing arrangement. MOF will reveal the details of the debt financing arrangement in due course. The idea is that we will borrow for selected major infrastructure. Rather than to fund this entirely from the Budget, we will do it through borrowing. We think this is a more equitable arrangement for major infrastructure that spans a long period of time; then, both current and future generations will pay for the payment of that infrastructure through its useful life. Doing so may provide you some fiscal space in the interim, of course, compared to the alternative of funding everything upfront. But I think it would also be wrong to assume that this fiscal space can be entirely spent away because you need to pay for it later on anyway. If you were to spend all of that fiscal space immediately on something that carries a long tail, down the road, you will end up with difficulties paying for the debt repayment.

So, the idea of borrowing is, not so much to provide fiscal space. It is really one where we look at the infrastructure spending we will need to incur going forward, it is likely to be another lump that is coming up in terms of infrastructure needs, like we did when we first financed our first MRT project. We borrowed for it as well. So, now, in the new phase of development, there will be major infrastructure projects coming up. We think it is more equitable that the Government borrow and then spread out the repayment over the lifespan of the project rather than to fund everything upfront, which I think would then present too much of a burden on the current generation. That is the thinking around debt financing. It is not so much to provide fiscal relief or fiscal space.

The Chairman: Mr Liang, would you like to withdraw your amendment?

Mr Liang Eng Hwa: Sir, on behalf of the Members of this House, I would like to thank Deputy Prime Minister and the Finance Minister for a massive and far-reaching Budget, if befitting of the challenging environment that we are in today. He has not only shown fiscal fire power but also standing power – speaking and standing for more than two hours in both speeches.

I also want to thank Minister Wong and Minister Indranee for responding to our cuts and also the various engagements that we have with the GPC.

And finally, to the MOF colleagues, they must have worked really hard this time with the fluid circumstances. I hope the young officers can now make up for their Valentine's Day that they missed out as the Deputy Prime Minister has mentioned. With that, Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $877,537,300 for Head M ordered to stand part of the Main Estimates.

The sum of $158,428,400 for Head M ordered to stand part of the Development Estimates.