Committee of Supply – Head M (Ministry of Finance)

Helping Government, Helping Businesses

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

As the largest buyer of goods and services in the market, the Government has significant market influence to shape enterprise behaviour and, through its procurement practices, incentivise businesses to draw on their research and innovative capabilities in coming up with solutions to public sector problems.

There is scope to enhance our procurement practices towards promoting innovation among our small and medium enterprises (SMEs) while, at the same time, delivering value for money for the public sector.

As a start, the public sector could earmark a portion of the public sector tenders specifically to promote and encourage innovation and creativity. I suggest that the Government establish a new "buy innovation" procurement framework where innovative solutions are being sought for public sector problems. This could be a new category of tenders carved out for projects where the public sector agencies intend to co-create solutions with SMEs.

In such tenders, the procurement of innovations is better achieved by specifying the public sector problems to be solved rather than by prescribing the solution and the work to be done, which is the usual approach.

Mdm Chair, at the Public Service level, our procurement rules and instruction manuals may also need to be reviewed and updated to cater to a more entrepreneurial and innovative society to come. We need to allow for sufficient discretion at the operating level for bite-size public sector projects to be awarded to small businesses which may be early movers or who are proactive in coming up with innovative solutions that the public agencies are looking for. Subjecting every proposal to an open tender would be the surest way to kill off initiative and creativity among the small businesses, and some could be start-ups.

Understandably, there is a need to devise new and alternative governance safeguards other than just making every tenderer compete on prices in the name of transparency and fairness.

Getting the best price tender may not necessarily bring out the most creative and innovative solution which serve the long-term needs of the public sector. The cumulative solution may not be a more sustainable solution.

In the private sector, awarding contracts on the basis of ideas and innovation by large companies to small firms are already prevalent. Many developed countries' public sectors do have tailor-made procurement practices too that promote innovations and co-creations.

We can take a leaf from the United Kingdom (UK). To help SMEs develop innovative solutions to public sector challenges, the UK government established the Small Business Research Initiative (SBRI) specifically to help small companies compete for government projects. SBRI helps to connect small businesses to government departments which have public sector problems and assist small businesses come up with innovative solutions and ideas. This scheme even helps with bridge financing and, in cases of new invention, to safeguard the intellectual property.

In Singapore, we do have a similar scheme known as Public-Private Co-Innovation Partnership (CI Partnership), which is the platform for Government departments and local companies to co-develop innovative solutions to meet the Government's needs. However, upon deeper study into the details on the CI Partnership website, it seems that this scheme has turned dormant. Despite being a $450-million scheme, only 28 projects were put up since 2011, with no mention of any take up. One of the criteria mentioned was that during the commercialisation phase, the agency may need to call for an open tender to procure the innovative product or service.

Mdm Chair, this is a good initiative, notwithstanding the poor take-up rate. It is probably ahead of its time. But now, with greater emphasis on working closely with businesses and to foster innovation, the Government should give this scheme another boost and fine tune the criteria and KPIs to be more innovation friendly.

Given the call in the Budget Statement for the Government to better partner industry and innovators, can the Minister share how the Government intends to co-create solutions with businesses and the public? What can the Government do to help smaller firms better access Government procurement opportunities and to build a track record for their overseas expansion?

Cumbersome procurement processes and irrelevant qualifying criteria, such as how big the company is and the number of years in operation, have deterred many SMEs, especially the start-ups, from supplying solutions to the Government where innovative and creative procurement is concerned.

We should introduce greater flexibilities in the way the Government sector procures goods and services, including looking at non-traditional safeguards to ensure value for money.

Developing a more SME-friendly procurement process will allow SMEs the opportunities to harness their creativity and capabilities, yet result in higher competition on ideas and solutions, leading to better value for money for the public sector agencies. This is a win-win for the Government and businesses.

Question proposed.

Government Procurement

Mr Chen Show Mao (Aljunied): Madam, I would like to call on the Government to look into encouraging the increased use of price-adjustment or escalation clauses in Government procurement. These clauses provide that should some key costs in Government contracts rise significantly from the time of tender to the time of performance or over a long period of performance, then the contract price will escalate in accordance with some pre-agreed formula, typically with reference to an index. This would protect the contractor from having to assume the risk of sharp increases in key costs. This will also benefit the Government in that their contractors will be under less pressure to over-budget when they bid for a contract and build into their bids their estimates for future cost increases.

Escalation clauses need not be used only to protect the contractors when the costs go up. They can also be used to favour the Government when key costs drop, say, commodity or oil prices. They can provide that in such cases, the contract price to be paid by the Government will decrease accordingly.

In this way, escalation clauses remove some financial risks for Government contractors and may enable or allow SMEs to punch above their weight in more public tenders. To me, this would be in keeping with the spirit of this year's Budget, in the various forms of financing and tax incentives proposed to support the scale-ups of our SMEs.

The Chairman: Mr Yee Chia Hsing; not here. Miss Cheryl Chan, you have two cuts. Take them together, please.

Partnership for Growth

Miss Cheryl Chan Wei Ling (Fengshan): Thank you, Mdm Chair. After 50 years of good progress, it is timely for us, as a nation, to reflect and begin charting new directions together to scale new heights for the next 50 years and more.

As the Minister for Finance calls for better partnership with industry and our people, what areas can we look at to co-create solutions? Here are some areas that may be worth considering. Let us start from the ideation process. With many sectors in the broad-based industry, each sector has its unique characteristics and needs. To enhance and find areas of synergy, it is pertinent for the different sectors to provide insights and champion ideas that they believe would put our industries on a better footing on the global stage.

The Ministry should provide platforms for such collective ideas to take shape. Each sector should allow natural champions in leading their own industry to define the framework and seek support in areas of assistance required to differentiate themselves as a business or as a Singapore brand.

For community leaders, we need flexibility in defining guidelines and, during its implementation, to encourage co-ownership and innovation with local adaptation of ground-up initiatives to suit their needs. This is a culture that we seek to foster with both our industries and our people. Reduce top-down directive that is, in return, strengthened by our social recognition of what we define together as a community.

Next, to create enhanced support with a planned roadmap for these outfits. Take, for example, our social enterprises that have emerged over the years. Many have embarked on the path due to their passion and belief to support specific causes.

However, many have closed down over time from an inability to sustain due to funding or other reasons. The Government should consider having the public sector outsource some of their functions in support of these organisations. This way, it allows the enterprises to harness resources and leverage capabilities to sustain or learn best practices.

Lastly, in all solutions initiated, it is critical to have a closed loop to improve the feedback channel and finetune the system instead of adding more features continuously which, invariably, result in some complexity and redundancies.

Move towards Digital Service Delivery

As the world transforms, so must we, to keep pace and remain relevant with the global environment, digitalisation being one of the ways forward as there are known benefits.

I would like to ask the Ministry, as we introduce more of such programmes, how can we ensure that all Singaporeans, including seniors and those without prior knowledge, will not be left out of the journey? And a clarification whether the Ministry has done anything to advance the use of e-payment.

Before we move full swing to introduce services, there are a few aspects that are necessary to be deliberated. First, sufficient effort must be made for different groups of participants, be they businesses, citizens, voluntary welfare organisations (VWOs) and so on, to understand the significance and tangible benefits of such implementation rather than viewing the process as yet another target.

The initial process may be long, but these efforts are necessary, without which, any momentum in the transformation would be painfully slow and is likely to achieve a lower success rate. It may also cost us more since additional resources have to be injected at a later stage because it is more of a "push" than a "pull" process.

Assurance is also necessary that the push for such electronic service delivery within Government agencies does not result in lesser clarity of ownership on the issues or become a revolving door.

Second, how does digitalisation change our behaviour towards the auditing, security and data protection processes in organisations? As it stands, many organisations already have different forms of operating systems and databases that they use to handle the operational tasks. However, the regular audit process still requires massive amounts of manual backend paperwork, filing and keeping of records in order for all these audits to take place.

The question remains if the methods of handling audits are contradictory to the digitalisation efforts, while remaining a necessary and critical check of any organisation.

Third, the resistance to change will set in when users contemplate that they have to input similar data repetitively into different Government agencies. So, I would encourage the Government to create a unified base system structure where existing data can be shared across the different agencies. Time and cost on both parties would be alleviated when fewer processes are reinvented and streamlined.

And of course, the most critical link is the need for inclusiveness when systems and processes are designed because the ability of the different groups to adapt will vary in society. As we progress, we must not forget there are those who lack resources to keep pace.

Tax Credits for Caregivers

Assoc Prof Daniel Goh Pei Siong (Non-Constituency Member): Mdm Chair, more than 200,000 people are estimated to be providing regular care to family and friends in Singapore. This number is expected to rise as the number of elderly would more than double by 2030.

A Duke-NUS Medical School survey found that fewer than 5% of caregivers interviewed used individual support services, such as home nursing and respite care programmes. Care-givers are becoming a vulnerable group themselves while they care for their vulnerable loved ones. They face emotional stress, lack of social support and immediate and long-term financial burdens. This is worse for specialised caregivers who have to care for loved ones with specific illnesses, for example, caregivers for elderly with dementia, caregivers of people with mental illness and parents of children with special needs.

I understand that some of these specialised caregivers will qualify for tax reliefs, such as Handicapped Parent Relief or the Grandparent Care-giver Relief. However, tax reliefs are only meaningful for working Singaporeans with large enough incomes to pay taxes. Many specialised caregivers either cannot work or work part-time due to the nature of the specialised caregiving.

I also understand that some Government subsidies are available at the point of service, for example, for the Singapore Programme for Integrated Care for the Elderly (SPICE) and also the Foreign Domestic Worker (FDW) grant. However, there are also specialised caregivers who feel that taking care of the dependants personally is the best care that they can give them.

I ask that the Minister consider giving means-tested refundable tax credits for specialised caregivers, meaning that some of these caregivers who do not work or work part-time would get the cash refund, a portion of which would go into their Central Provident Fund (CPF). This will lessen their financial burdens, improve their retirement adequacy, give them flexibility to use Government aid and empower them to seek individual support services for a better quality of life for themselves and their loved ones.

Means Testing

Mr Edwin Tong Chun Fai (Marine Parade): Mdm Chair, income redistribution and social transfers have played an increasing role in our fiscal system for some years now. This year has not been any different.

We are a country with limited resources, and we cannot afford to be like some of the countries in the western world which spend a large proportion of their national budgets and gross domestic product (GDP) on welfare schemes. It is, therefore, necessary for us to strike a right balance in how we allocate our resources for these schemes that we put in place. There are a few basic issues here.

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First is the philosophy that the less privileged should receive more. There cannot be any real disagreement there.

The second issue, however, is much harder – how do we determine who the less privileged are, and should there be a scale to distinguish them and, hence, how much assistance they receive? This issue undergirds the importance of means testing, which is the basis on which our resources for transfers are allocated.

Over the years, Singapore has enacted a wide range of welfare schemes that seek to benefit many low-income families and they are targeted at the vulnerable groups. These include system schemes such as Community Health Assist Scheme (CHAS), ComCare, the Silver Support Scheme, the Post-Secondary Education Account (PSEA) for education bursaries, and so on.

Currently, a majority of these schemes assess eligibility based on three broad key factors and these are: household income, per capita income and home annual value (AV). For example, in healthcare, the MediShield Life scheme, which provides medical coverage for all Singaporeans and Permanent Residents, tiers its premium subsidies solely based on home AV and monthly household income.

CHAS adopts the same criteria. The MediSave Top-Up scheme also looks at the home AV. PSEA, which is the entitlement for all post-secondary school education students, likewise, does the same, as does the CDAC top-up. I would suggest, Mdm Chair, that the factors which go into the means testing criteria be reviewed.

For instance, the emphasis on AV is perhaps something of a misnomer in the context of means testing. As a result of this, a number of people who need assistance could well fall through the cracks. And let me elaborate a little on this point.

There are families who live in private estates, but who may have little or no regular income to get by on. Many of them are likely to be elderly; they have inherited their homes or acquired it many years ago and have lived in this home all their lives. They may live in a property which has good AV, but they are cash poor. But we tell them that because of their home AV, they will fail to qualify for many of the social schemes which they might need. To this group of people, AV is indeed something of a misnomer.

It is really no answer to tell these people that they should sell their home, their property, relocate and live off the remaining proceeds of the sale. We would only be dislocating many of them from their homes; the environment they have grown comfortable with and this would directly, in my view, undermine efforts at fostering the social fabric within our communities we have strived so hard to build.

Another quibble I have with the present system is that the means test merely uses the home address on the National Registration Identity Card (NRIC). It does not matter to the means tester whether the individual owns the property or not, whether he or she is renting or not, or could even be only temporarily living there on the goodwill of a friend or a family member. The moment there is a private residential address, the means test criteria look immediately at the AV, regardless.

But is this right? Because these factors, such as whether they actually own it or are just living there temporarily while they find their own feet and gain financial independence, do matter, and they might tell us a very different story of the financial sufficiency of the individual concerned.

Finally, whilst income per capita is a useful gauge of a family's financial status, it fails to take into account other tiers of factors, such as factors which may significantly affect a family's cost of living, for example, dependants who are elderly, suffer from serious illnesses which need medical care or who have special needs in their families.

I, therefore, believe, Madam, that we need to look at refining the criteria for some of our social transfer schemes. Whilst current measures do provide a decent gauge of a household's or individuals' financial needs, I think more granulation needs to be undertaken. Could the Minister consider a revision of the means testing criteria to incorporate a matrix of factors with the following in mind?

First, consider home ownership rather than just home residency.

Second, go beyond mere household type, in particular, for the Silver Support Scheme. It has already been mentioned in this House that the current criteria need to be revised because indicators, such as household type alone, are not reflective of income and wealth, and I agree. Additionally, these factors need to take into account needs-based wants, such as the existence of permanent and also severe illnesses, which are factors that are, more often than not, present among our elderly.

Third, have a deeper inquiry into income status and also consider special cases where, despite having a good annual or per capita income, the family unit could be facing significant financial strains.

Fourth, consider the annual income over a longer span of time, say, three to five years, rather than just the preceding year.

Fifth, incorporate other needs-based eligibility factors. For example, where members of the family could be unemployed due to temporary sickness, disability, or where a family is headed by a lone parent of young children. In fact, some of these factors that I have mentioned have been borrowed from some of the factors that I have seen used by the UK government, in relation to how they qualify their citizens for support.

So, with that, I urge this House and the Minister to consider reviewing the means so that the means tested criteria are fairer and they allow for a bigger span and better allocation of our resources so that our Budgets can be maximised and our resources directly applied specifically to those who need them more.

Reduce Compliance Burden

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mdm Chairman, Singapore is ranked first in the World Bank Group's index on the ease of doing business. Yet, among SMEs, compliance costs remain a significant burden on profit margins. Can the Minister update on the Ministry of Finance’s (MOF) plans to reduce the compliance burdens on businesses?

Among some of the biggest compliance burdens that companies face is the necessity of computing detailed records of inputs and outputs to qualify for grants. I have encountered business owners who complained of their grant applications being rejected multiple times due to submission of inadequate information. Sometimes, outputs are intangible and the applicant is unsure of how to put these into measurable amounts. These could lead to significant losses when the applications fail to get approved in time for the deadline of that particular financial year. Sometimes, businesses which cannot cope with the necessary administrative work will have to hire someone to handle the administrative work and that adds to significant compliance costs.

On top of that, SMEs may overlook regulatory and compliance requirements, and this can lead to even higher costs to the business when it is subject to penalties for defaulting on payments. More outreach and handholding must be done to ensure that SMEs practise voluntary compliance. SMEs should run through their business model with an appropriate professional, trained in legal matters to aid them in understanding and planning for regulatory and compliance requirements. Perhaps MOF might also want to look into setting up a consultation unit to help SMEs in this area in their first year of business operations and also when policies are updated.

Smart Nation and Service Delivery

Ms Sun Xueling (Pasir Ris-Punggol): One of the key thrusts of the Smart Nation programme is to harness info communications technology (ICT) networks and data to support better living, create more opportunities and enable stronger communities. Networks of sensors and smart devices will enable better collection of data and the creation of user-specific solutions that will enable more targeted and efficient service delivery of Government services to citizens and businesses.

While the greater use of data and technology can increase the efficiency of service delivery, how do we maintain a human touch in the process, especially if there are outlier cases? And how do we ensure that the needs of the elderly or the less Internet-savvy can continue to be met? And while technology allows our communities to connect to one another more easily and intensely, how do we guard against domination of data share by vocal groups and continue to deliver solutions that are beneficial to the majority of our citizens and businesses?

Staying Inclusive in the Digital Era

Dr Tan Wu Meng (Jurong): Mdm Chair, many public transactions are now online, such as for Singpass and e-Government websites. Yet, a number of Pioneer Generation Singaporeans do not have a computer at home or a handphone. Some are not computer literate, and residents with mobility needs can find it difficult to go to the nearest community centre or shared computer facility.

As we move towards a Smart Nation, we must ensure that we are a Smart Inclusive Nation, where no Singaporean is left behind because they lack a computer, lack computer knowledge or lack access to a shared computer facility.

Our digital journey must empower all Singaporeans and not become a regressive situation where the less advantaged and those with disabilities are unable to access digital services.

Plight of Middle-income Earners

Ms K Thanaletchimi (Nominated Member): Mdm Chair, with the looming economy, the middle-class earners may face the brunt of stagnating income growth, increased expenditure, possibly with the tax burden and also the possibility of not having a job secured.

I would like the Government and the Minister to also look into the plight of the middle-income earners, especially those with families. More often than not, they are sandwiched as they do not enjoy the benefits given to low-wage workers and neither do they have the high disposable income like those high up in the pyramid.

In Singapore, we all agree that the best security is job security and the best way to ensure employability is by staying relevant in the same industry through upskilling or in a different industry through reskilling. With SkillsFuture, can we push SMEs and larger companies to adopt the apprenticeship scheme or Place-and-Train scheme more pervasively like it was in the past?

The apprenticeship scheme should be age-blind or age-neutral, so that those inclined to take up the scheme with wage support assistance from the Government could benefit. This would allow the middle-income earners to stand a chance or career surf.

The Chairman: Senior Minister of State Indranee Rajah.

The Senior Minister of State for Finance (Ms Indranee Rajah): Mdm Chairman, I thank the hon Members for their thoughtful comments. I will address three broad themes that were raised in the debate: first, how the Government can partner industry to facilitate innovation and growth through our procurement processes. Members spoke about support for innovative SMEs, co-creation of solutions and helping smaller firms access Government procurement opportunities; second, principles underlying our procurement approach; and third, improving the ease of doing business and reducing compliance burdens. Senior Minister of State Sim Ann will address the other cuts.

We share Mr Liang Eng Hwa and Miss Cheryl Chan's views that Government agencies should be open to developing innovative solutions together with the private sector. The world today is becoming increasingly complex and the multi-faceted issues we face require us to work in partnership with one another, each playing our part. And this is the spirit of partnership underlying this year's Budget.

Government agencies are crowdsourcing ideas more, and involving communities and businesses in problem solving through hackathons and innovation challenges where individuals and firms can participate in developing and co-creating innovative solutions to challenges faced by businesses or the society.

So, in the Infocomm Development Authority of Singapore’s (IDA) Hackathon@SG last year, Goji, the winning team, developed a data visualisation tool which allows corporate and financial data from the Accounting and Corporate Regulatory Authority (ACRA) to be easily and quickly viewed. This can potentially be developed further for credit risk analysis. ACRA is working with the team to explore how we can implement the idea.

Another example is the recently deployed Volunteer Broadcast System mobile app for Food from the Heart. Many are familiar with Food from the Heart, a non-profit organisation whose volunteers collect unsold bread from bakeries and hotels daily and deliver it to welfare organisations and self-collection centres within the heartlands for distribution to beneficiaries.

Previously, volunteers had to call in to the coordinating centre to plan their delivery routes. The centre staff had to manually search and suggest delivery routes for the volunteers. To get replacement volunteers, the centre had to call volunteers individually, a manually intensive task.

At a GeoHackathon event organised by the Singapore Land Authority (SLA) and voluntary welfare organisations (VWOs), one of the winning ideas was an app that used SLA's geospatial data to update the organisation and its volunteers on real-time collection and delivery information. With the app, volunteers can quickly identify which collection or distribution point has not been visited and select their routes, without having to call the centre. What used to take 30 minutes to find a volunteer replacement is now just a "click away" and this has significantly improved productivity for both the centre and the volunteers.

Mr Liang Eng Hwa will be pleased to know that as we promote the generation of new ideas, we also seek to adopt more flexible procurement processes, where practicable, to facilitate the adoption of innovative solutions. Under the outcome-based procurement approach, we encourage Government agencies to specify desired outcomes rather than prescribe solutions in their tenders. This approach allows vendors to propose innovative solutions to develop prototypes and potentially be awarded the contract subsequently.

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A good example is IDA and the Sentosa Development Corporation's (SDC) recent Integrated Guest Experience Innovation Challenge, an open invitation for participants to develop ideas to enhance guest experience for visitors to Sentosa. Proposed ideas included innovative solutions involving data analytics, wearable devices, virtual assistants and augmented reality.

SDC is currently exploring the possibility of inviting the shortlisted participants to develop their prototypes for implementation. Those shortlisted need not go through a separate open tender, as the objectives of fair and open competition, transparency and value for money would have already been met through the Innovation Challenge.

We are working on introducing outcome-based procurement in the cleaning, security and landscape sectors over time. For example, rather than specifying headcount for security contracts, agencies could specify areas to be monitored and the response time expected of security officers in the event of an alert. This would enable tenderers to consider using technology and innovative deployment of their staff to support our efforts to raise productivity and wages in these sectors, a point made by Mr Zainal Sapari in his Budget Debate speech.

This alternative procurement approach will require Government agencies to change the way they call and evaluate tenders and how they monitor service providers. It will also require changes by service providers in the way they respond to tenders and provide their services. It will involve some effort, but we believe that this is a move in the right direction.

Mr Liang Eng Hwa also asked about the PPCIP initiative and suggested that it be boosted. There have been some successes under PPCIP. Under this initiative, JTC partnered a local company, Samwoh Corporation, to successfully trial the use of sedimentary rocks excavated from the Jurong Rock Caverns to pave a stretch of road outside Mediapolis. The rocks had little value in themselves but, with this initiative, the rocks have acquired a new value, and the initiative has potential to be implemented across other new roads in Singapore.

This is an illustration of how a partnership between the public and private sectors can create value for our enterprises while meeting public needs. So, we are reviewing the initiative to see how it can be more effective in public-private co-innovation, alongside other existing efforts to promote collaboration.

On helping smaller firms access Government procurement opportunities, Members will be heartened to know that over the past three years, SMEs have been successful in securing Government projects under our open procurement system, capturing more than 60% of total Government contract value and around 85% of all Government tenders. This share of the total number of Government contracts is significantly higher than in other countries, such as the UK. Our SMEs have successfully tendered not just for smaller projects, but also for more sizeable ones. For the past three years, by contract value, about 50% of all contracts above $50 million were awarded to SMEs, a very respectable proportion.

We would encourage more SMEs to participate in Government procurement. Those who need information on how to go about doing so can refer to the Standards, Productivity and Innovation Board (SPRING Singapore) and MOF websites. SMEs are also encouraged to attend the engagement sessions organised by industry associations and the Government to better understand Government procurement processes. For example, earlier this year, the Singapore Business Federation (SBF) organised a Government Procurement Fair for SMEs, where various Government agencies, including MOF, participated to clarify the Government's procurement practices. SBF is also developing a Best Practice Guide to help SMEs better understand Government procurement principles and processes and how to bid for Government contracts.

Another simple but useful thing which SMEs can do to improve their access to Government procurement opportunities is just register for a Government Electronic Business (GeBIZ) account. If you are registered on GeBIZ, you will automatically receive alerts on new procurement opportunities. The system also allows businesses to save their business information, making it easier for them to submit bids. Registration is straightforward and can be done online. Best of all, registration of the first GeBIZ account is free.

To help suppliers find and participate in Government procurement opportunities, we revamped the Government procurement portal GeBIZ in January this year. The revamped portal has a more user-friendly interface which was developed following extensive consultations with businesses that use the portal and has received much positive feedback from existing suppliers and new users. We will continue to work with the industry associations to improve outreach and education to SMEs in this area.

We also recognise that SMEs without a track record may find it challenging to win tenders. We are open to helping SMEs with innovative ideas and quality products to compete and establish their track record. An example of how we do this is the Accreditation@IDA programme. Set up in 2014, this programme helps promising Singapore-based technology startups to establish their track record to have a better chance at securing Government and private sector projects.

The accreditation programme evaluates and accredits companies to give potential buyers the assurance of their quality. IDA also partners companies in their development process by providing advice and recommendations to strengthen their product, improve financial management, and better manage intellectual property. To date, the programme has assisted 29 companies, of which 12 have obtained accreditation status. We expect more to be accredited in due course.

We have also revised our Government procurement rules, within the parameters of our international trade agreements, to make it easier for Government agencies to procure innovative solutions from these companies. They will be considered first when agencies seek to buy technology services or products. More than 15 contracts have been awarded to accredited companies and many more are currently in various stages of discussions towards signing of a contract.

Subject to obligations under international trade agreements, we are open to working with suitable industry partners to recognise promising startups in other sectors so that they can compete favourably for contracts and build up their track record.

In his Budget debate speech, Mr Zainal Sapari suggested using Government procurement practices to achieve certain objectives, such as raising wages for low-income workers. Mr Chen Show Mao also talked about price escalation clauses. I thought it would be helpful to clarify the Government's approach on this.

The objective of public tenders is to procure goods and services required for the delivery of public services in a fair and transparent manner and, given that we are spending public monies, to obtain value-for-money in our procurement. Value-for-money does not mean always and only going for the lowest price. Agencies also consider quality factors in their evaluation as this has a bearing on value and these are spelt out in the tender documents.

Where Government intervention is required to meet certain policy objectives, we generally do this through targeted measures rather than through conditions of procurement. This avoids mixing multiple objectives into the Government procurement process which could result in distorted outcomes. That is the broad principle.

So, for example, to help social enterprises, which Miss Cheryl Chan spoke about, the Singapore Centre for Social Enterprise, also known as raiSE, was set up to provide support in areas, such as funding, business advisory and training. We believe that this is a better approach to helping social enterprises stay viable rather than to artificially set aside Government contracts to sustain them.

However, in very specific instances where the evidence suggests that Government procurement practices can make a substantial difference, we will take the appropriate action. For example, we have our effort to support the Progressive Wage Model in the cleaning, security and landscape sectors. To combat the risk of cheap sourcing and suppressed wages in these sectors, and following agreement with our tripartite partners, the Government took a deliberate decision to accredit or license companies that pay according to the Progressive Wage Model and to buy only from these companies in these sectors.

However, in other sectors where procurement policy is not a suitable or appropriate means of impacting wages, we have other ways to assist, such as through the Workfare Income Supplement (WIS), which has been enhanced in this Budget.

Mr Zainal Sapari also spoke about unfair contracts and options to extend. Options to extend contracts are a common practice internationally and in the private sector. The benefit of an option to extend is that it enables a longer-term relationship with the supplier if the supplier has provided good quality service and demonstrates the ability to continue to do so. The extension also means continued employment of the suppliers' employees. It could operate unfairly, however, if the extension does not allow for any increase in contract price in subsequent years to take into account wage increments. This can be avoided if price increases upon extension are factored in from the outset.

Our practice is to ask Government agencies to remind tenderers of multi-year contracts to factor in wage increments for their workers. We also explicitly allow tenderers to present their price bid on a year-by-year basis, so as to factor in annual wage increments.

Mr Chen Show Mao spoke about encouraging the increased use of price escalation clauses in Government contracts. We are open to this in the appropriate situations and where it is right to do so. For example, in standard clauses for construction contracts, we do explicitly allow for material price fluctuations based on material price indices which are published by the Building and Construction Authority (BCA), and that is based on objective indices which are published independently.

What I would suggest in this case, really, is for the tenderers to propose this if they feel that either the price of the materials or anything that forms part of their costs, is something which would be subject to fluctuation and needs to have some sort of price escalation in years to come. It is something that they should raise with the Government.

Let me assure Members that we regularly review Government procurement practices to keep abreast of developments and ensure that procurement clauses are reasonable and fair. Of course, we welcome feedback as we learn from them as well as the practices in other countries and the private sector.

We will also continue to raise the capabilities of our procurement officers and community in the public sector, so that they can handle Government procurement well and ensure that public monies are spent prudently.

Mr Saktiandi Supaat asked what can be done to reduce the compliance burden and facilitate the ease of doing business. As Mr Saktiandi noted, Singapore has been ranked No 1 in the World Bank Group's Ease of Doing Business Index for the past 10 years, ahead of other countries, such as Korea, Japan and the United States. So, we are not doing badly. However, we cannot be complacent. As we press on to transform our industries, we will continue to review our regulations to facilitate doing business in Singapore.

Over the past year, ACRA has implemented significant changes to the Companies Act to reduce the regulatory burden, provide greater business flexibility and improve the corporate governance standards in Singapore. These include exempting small companies from statutory audits and allowing public companies to issue non-voting or multiple vote shares.

MOF and ACRA are reviewing other corporate regulations to facilitate business, including: (a) requirements on the use of common company seals; (b) the holding of annual general meetings (AGMs); and (c) the filing of annual returns.

Details of the proposed changes will be announced during MOF's public consultation on the regulations later this year. We will continue to work closely with businesses to avoid unnecessary burdens on businesses.

Ms Sun Xueling highlighted the need to ensure that our licensing requirements remain conducive for promising new technology and business models in her Budget debate speech. We agree. The Pro-Enterprise Panel, comprising business leaders and senior public officers, was set up in 2000 as an internal advocate for businesses within the Government. The Panel works closely with public agencies to provide timely, effective and practical solutions to address the regulatory concerns that businesses face, including those in new technology areas. Since its inception, the Pro-Enterprise Panel has reviewed more than 1,800 suggestions and more than half have led to changes in regulations and rules.

Mr Saktiandi also highlighted that some companies might inadvertently overlook regulatory and compliance requirements. On our part, we try to reduce the likelihood of default. Where possible, our agencies facilitate compliance by sending reminders ahead of statutory deadlines, such as for AGMs and filing of annual returns.

ACRA has also partnered other Government agencies, such as the Inland Revenue Authority of Singapore (IRAS), the CPF Board and SPRING Singapore, to organise information sessions on statutory obligations for new and aspiring business owners. Feedback has been generally positive, and we intend to ramp up our outreach efforts to another 2,000 businesses this year.

Mr Saktiandi also commented on difficulties faced by SMEs in applying for business grants. It is a question of achieving the right balance. In administering grant schemes, the Government is accountable for the money spent. We, therefore, require information to monitor the output of the support we give to businesses to ensure that the money is used for the proper purpose.

At the same time, we recognise that applications for grants should not be unduly burdensome and a deterrent instead of an encouragement. As such, we constantly review the appropriate level of documentation and information that is required for grant applications.

In last year's Budget, we simplified the application process for SPRING's Capability Development Grants below $30,000 by reducing the information required. In this year's Budget, of course, Minister Heng Swee Keat announced the launch of the Business Grants Portal. That will simplify the application processes.

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Mdm Chair, in conclusion, MOF will continue to review Government procurement processes to ensure that we remain open to innovative ideas and support the co-creation of solutions in delivering public services. We must continue to ensure financial prudence, but we must also be fair to our companies and their workers. We will also continue to review our corporate regulatory regime to ensure that it remains relevant while facilitating ease of doing business in Singapore.

The Chairman: Senior Minister of State Sim Ann.

The Senior Minister of State for Finance (Ms Sim Ann): Mdm Speaker, allow me to address the cuts by Ms Sun Xueling, Miss Cheryl Chan and Dr Tan Wu Meng on the various facets of digitalisation and the delivery of Government services, followed by the cuts by Assoc Prof Daniel Goh and Mr Edwin Tong.

Madam, the Government has, indeed, been using technology and data to improve service delivery. Advancements in ICT have raised public expectations of Government service delivery. On the Government's part, we have taken efforts to transform service delivery and bring about more convenience for the public.

The IDA's e-Government Perception Survey conducted in 2015 indicated that almost three in four citizens were very satisfied or extremely satisfied with the ease of completing transactions online using Government e-services.

There is room for improvement and the Public Service will continue to do so, amidst tighter constraints on public sector manpower growth. The Public Service has embarked on a multi-year transformation journey into a Digital Government, with citizens at the heart of it. We will redesign online services and underlying processes to make them simpler to use and easier to access, including providing more services on mobile devices.

Some agencies, such as the Ministry of Manpower (MOM), have already begun to do this. MOM has made online foreign domestic worker (FDW) permit renewals much easier for employers. Instead of relying on agents, more employers now directly interface with MOM, with 56% of renewals done directly by employers in the past 12 months, up by 11 percentage points from a year earlier. There has also been a 40% reduction in call centre enquiries related to renewals over the same period. Renewed permits are also directly couriered to employers, increasing the convenience of self-renewal.

We want more high-volume Government services to be similarly redesigned to be intuitive for users. An idea we are pursuing is to integrate and digitise key services around important milestones in life for individuals and businesses. We will facilitate more data sharing to make it easier for businesses and citizens to transact with the Government and deliver more targeted and effective services.

For businesses, the National Trade Platform (NTP) will significantly improve digital connectivity across businesses in the logistics and trade finance sectors. As announced by the Minister for Finance in his Budget speech, NTP will facilitate data sharing for both business-to-business and business-to-Government transactions to help SMEs cut costs and streamline processes. The potential for productivity savings is significant.

At the firm level, businesses will be able to digitise their documents or information to support data sharing, with the help of software tools or applications. Electronic data shared among all parties in the supply chain will allow them to have sight of information related to their cargoes and better manage their resources accordingly.

At the industry level, by connecting importers, exporters, logistics service providers, NTP will enable each party to establish linkages with multiple partners. Such data sharing on this Government-owned platform could yield further collaborations across partners in terms of resource sharing.

There may also be downstream benefits for associated sectors, such as trade financing. For instance, financial institutions could use the data transmitted to expedite trade finance operations.

NTP will be designed as an open innovation platform which businesses can tap on to develop new applications that support evolving business needs. As we embark on this, we welcome industries and businesses to come forward with ideas and partner us to create solutions that are relevant for the industry.

The National Electronic Health Records (NEHR) project was rolled out by the Ministry of Health (MOH) in 2012 to allow participating healthcare institutions to access the same set of patient records for seamless healthcare delivery across the national healthcare network. With NEHR, patients no longer need to worry about being brought to the nearest public hospital that is different from the one they regularly visit, as all public hospitals will have access to the same set of medical history.

Today, the secure use of data by authorised clinicians and healthcare professionals supports more accurate diagnosis, better treatment and patient-centric integrated care. It also helps to reduce the cost for patients as duplicated tests and referrals can be avoided. In the month of March 2016, there were more than 11,400 users of NEHR and over 600,000 searches made for patient records. Compared to a year earlier, there has been a significant increase of 63% in users and over three times the number of searches.

Miss Cheryl Chan asked whether digitalisation could inadvertently result in a lack of clarity over ownership of issues. We wish to assure Members that technology remains an enabler and will not displace or diffuse responsibility. In fact, technology allows for greater accountability as requests by citizens could be traced and tagged to specific agencies for resolution.

We agree there is a need to debunk the impression that digitalisation will create more work and lower efficiency. It is in fact the opposite. For example, through the electronic tax-filing and no-filing schemes, IRAS has saved time for taxpayers. It was also able to redeploy around 100 officers who used to handle manual tax filings to new and other areas of work, despite the tax base growth of 32% from 2009 to 2014.

Our Digital Government strategy aims to enhance productivity by actively using data and technology not just for service delivery, but also to change the way we work. This twin focus will be vital for the public sector to function more efficiently and respond more quickly to citizens' service needs.

By 2020, at least six agencies will digitise the majority of their records and processes for higher productivity. They are the Immigration and Checkpoints Authority (ICA), IRAS, MOM, VITAL, the Supreme Court and the State Courts. Citizens will benefit from easier access to Government information and e-services from home or on the go. Some of these efforts will also reduce the need for repetitive submission of information to agencies.

For instance, ICA will digitise records and implement an enterprise-wide case and content management system. This is expected to lead to an overall productivity gain through integrated processes and better case management that will see a reduction in the need for duplicate data entry when a case is routed from one unit to another. If required, users of ICA's services will only need to submit supporting documents once, rather than resubmitting each time they apply.

Digitalisation will also reduce backend paper processing and result in better auditing, security and data protection processes within organisations. VITAL, the Government's shared services department under MOF, has begun integrating human resources (HR), payroll and claims processes for civil servants while concurrently using information technology (IT) systems to reduce paperwork, capture and retain information. This will facilitate better document management, thus making it easier to carry out audits and reduce paper handling in the process.

We are also improving arrangements and facilitating e-payments in order to reap similar benefits and greater convenience for users of Government services.

Dr Tan Wu Meng and Miss Cheryl Chan have pointed out that there will be some who will have difficulties accessing digital services. Indeed, even as we make transacting digitally a way of life, we must not forget that there may be some Singaporeans who may not be comfortable with or know how to use digital services.

Based on IDA's surveys, three in four individuals aged 50 to 59, and almost one in three seniors aged 60 and above used the Internet in 2014, with usage increasing considerably compared to two years ago.

Since 2005, we have built up a network of 26 Citizen Connect Centres (CCCs) islandwide for those who do not have computers or Internet connection and those who need help to use Government e-services. Trained staff are on hand at CCCs to assist and teach users to access Government services online. The goal for CCCs is to teach users to transact online independently, so that they can access Government services from the comfort of their own homes in future. But even if they find it hard to learn, they will still be helped at the CCCs. In 2015, CCCs helped around 120,000 citizens to access e-services.

We will enhance our CCCs to make it even easier for users to self-help by upgrading the equipment and redesigning the online interfaces. We will progressively upgrade the CCCs to become CCC+s, starting with pilots at the Toa Payoh Central and Chong Pang CCCs, and Our Tampines Hub by end of this year. If successful, the nationwide rollout of CCC+s will follow from 2017 onwards.

CCC+s will complement the existing suite of initiatives by the Ministry of Communications and Information and IDA for the elderly, persons with disabilities, and low-income households to help them get online and stay online.

Ms Sun Xueling also asked how we can maintain a human touch amidst more digitalisation within the Government. Even as we go digital, the Government will continue to provide face-to-face services, where necessary, for example, in reaching out to less connected groups like the elderly.

As Dr Tan Wu Meng pointed out, there are some Pioneer Generation residents with mobility needs who may find it difficult to access shared terminals. The Pioneer Generation Ambassadors (PGAs) serve as one key touch point to convey policy information, such as the Pioneer Generation Package and MediShield Life, to our Pioneers.

The Minister for Finance spoke about the Community Network for Seniors pilot led by MOH. We will continue to strengthen coordination among Government agencies, VWOs and local volunteers, and build strong community networks to provide support and engage the elderly within the community.

We are also continuing with the face-to-face approach when gathering feedback. Reaching Everyone for Active Citizenry @ Home (REACH), the Government feedback unit, continues to retain face-to-face engagement. For example, for Budget 2016, it has held 12 such engagements so far, where close to 3,800 Singaporeans from all walks of life have participated and given their views.

Madam, I will now address the questions relating to building an inclusive society. Ms Thanaletchimi's points on the middle class, as well as apprenticeship, were largely addressed in the Minister for Finance's round-up speech and also at the MOM's Committee of Supply (COS) debate last week and, in the interest of time, I will not repeat those points here.

Assoc Prof Daniel Goh asked if refundable income tax credits could be provided for specialised caregivers of dependants with special needs, including autism and dementia. In essence, the Member is asking if direct cash grants can be provided for caregivers.

Madam, this suggestion has been raised several times in the past by Members of this House, including Dr Lam Pin Min and Mr Christopher de Souza. We recognise that caregivers play an important role, which can be very demanding and challenging, and we should support them. Our approach is to focus on directly subsidising services required by people with special needs, thereby defraying the costs borne by their families and caregivers, rather than by providing cash allowances to people for looking after their family members. This has been our consistent approach, as reflected in previous replies on this subject by office holders overseeing health, social support and ageing policies.

Caregivers who work can tap on subsidised centre-based care services when they are working, such as Special Student Care Centres for students, and dementia day care and home help services for seniors. We will continue to expand the capacity of these services, especially as our population ages.

If caregivers hire a FDW, they can benefit from a lower FDW concessionary levy. If they are from lower- and middle-income families and are caring for an elderly person or a person with moderate disabilities, they can get an additional FDW grant. They also benefit from tax reliefs, such as the handicapped parent relief and the handicapped child relief, if applicable, which reduce the tax they have to pay.

Caregivers can also benefit from a training grant to equip themselves with the necessary skills to care for their loved ones, and self-care skills. We are also strengthening respite care to enable caregivers to take a much-needed break at times. Should caregivers require additional assistance beyond what is already available, we have existing social safety nets to help them when required.

We will continue to explore further ways to help persons with special needs and dementia, as well as their caregivers. The Ministry of Social and Family Development has recently set up a committee to look into the next Enabling Masterplan and it will be studying various initiatives to support persons with disabilities, and their caregivers. MOH will speak more about enhancing support for those with dementia as well.

12.30 pm

Mr Edwin Tong asked about reviewing means-testing for our social schemes. I am glad that the Member supports our principle of having a progressive system of taxes and benefits, where lower- and middle-income households pay a smaller share of taxes and receive a larger share of benefits, while higher-income households pay a larger share of taxes and receive a smaller share of benefits. I am also glad that the Member recognises the importance of means testing so that benefits can be provided in a targeted manner to those who need help more. Very importantly, the Member has also affirmed that with limited resources, we have to be careful with spending. Indeed, we have a responsibility to manage our fiscal burden prudently and to be fair to future generations.

The Member has suggested other needs-based factors to refine the qualifying criteria for schemes, in particular, to overcome the perceived drawbacks of using the Annual Value (AV) of the property.

I also find myself frequently thinking about the points he has raised as I look after both Housing and Development Board (HDB) residents and private estate residents in my role as a Member of Parliament. The challenge in determining means-testing criteria for social support schemes is deciding on relevant measures that are clear, reasonable and practical to implement. Typically, this involves measures of income and wealth.

There are, of course, trade-offs with each criterion. If we take current income, we may not, as the Member has pointed out, have a longer-term picture of the families' financial means. But if we take income over a few years, as the Member has suggested, we might also not be as responsive to recent deterioration in the financial situation of a household.

AV is frequently used as a measure of wealth. While it is not a perfect measure for wealth, it remains the best available proxy. Furthermore, because the data does not need to be separately collected, using AV allows benefits to be delivered automatically to recipients without them having to apply. It is an important consideration for schemes like the Goods and Services Tax (GST) Voucher, and indeed for better Government service delivery overall.

The Member can be assured that appeals by those who are in need and in exceptional circumstances will be carefully considered on a case-by-case basis. This includes, for instance, appeals from those who are not related to the owners of the homes they live in.

The Member suggested that we consider incorporating other needs-based eligibility factors used in the UK's Income Support. We note that this scheme is a targeted one based on application, and also requires other criteria, such as the amount of personal savings the individual and his spouse have. We do have schemes, such as the ComCare Short- to Medium-Term Assistance, that take into account the unique needs of each family that applies. This is more similar to the UK's Income Support mentioned by the Member.

We will continue to review our means-testing criteria across all schemes to ensure that our assistance is targeted at those who need them most. I would also like to share that such targeted schemes form only a small part of the total amount of benefits that Singaporeans, including private property dwellers, receive. Broad-based schemes that involve less or no targeting include (a) healthcare subsidies, (b) education subsidies for primary education to tertiary education, (c) training subsidies like the SkillsFuture credit, (d) Marriage and Parenthood Package, (e) lower Foreign Domestic Worker levies for those with young children or the elderly, and (f) the Senior Citizen Transport Concession.

Mdm Chair, I thank all Members again for their comments and suggestions.

The Chairman: We have a little bit of time for clarifications. Dr Tan Wu Meng.

Dr Tan Wu Meng: I thank the Senior Minister of State, for her update on the upcoming CCC+s, which will make an important difference to our residents who have less access to IT facilities. Could the Senior Minister of State update us further on what she means by upgrading of equipment and redesigning of online interfaces?

Ms Sim Ann: I thank the Member for his support and efforts to bring e-services to more people. The CCC+s that I have talked about earlier, are kiosks which will comprise docked mobile tablets with touch-screen interfaces, that are less cumbersome and easier for the elderly to use. Some kiosks will also be height-adjustable to better serve the needs of those who are wheelchair bound. In addition, CCC+ landing pages would be redesigned for better access to the 10 most commonly used digital services by CCC visitors today, such as checking their CPF and IRAS statements. We will also ensure that CCC officers are well-trained to provide assistance to the visitors.

Mr Saktiandi Supaat: I would like to ask the Minister for Finance a question with regard to what I raised in the suggestion in my speech on the Budget debate. I actually suggested to move away from the preceding year system to a current year system. I was wondering whether MOF can share whether they are looking into it or are there any plans, going forward, to look into it.

One of the reasons why I raised that was because it could help some of the retrenched or some of the professionals, managers, executives and technicians (PMETs) going forward, given that it will also act as an automatic stabiliser for the economic system as well. I hope MOF can shed some light on my suggestion.

Ms Indranee Rajah: I think what we can say, Mdm Chairman, is that we have taken note of the suggestion. We will look into it, and in due course, if there is anything to be done further on it, of course, we will let the public know.

Mr Liang Eng Hwa: Mdm Chair, this year's COS is held in the month of April. We are into the new financial year (FY) 2016. I would like to ask the Minister: how is the Government able to stay funded in this month of April when we are still here in the midst of debating and passing the Supply Bill for FY2016? Are there any Government programmes or functions of the Government which are affected because of the later than usual COS?

Ms Indranee Rajah: Mdm Chairman, the Government's financial year is from 1 April of the year to 31 March of the following year. So, in this case, as Parliament opened at the beginning of the calendar year in January, we had a very heavy Parliamentary schedule, and so, the Government's Budget was presented on 24 March 2016, taking into account the President's Address and the debate on the proposed policies as well as programmes of the Government in January. The Supply Bill 2016 can, therefore, only be passed by Parliament and enacted after the start of our financial year and, under the Order Paper, Parliament is currently scheduled to vote on the Bill after the end of COS on 14 April 2016. Once passed, the Bill would be submitted to the President for assent before it can be enacted as the Supply Act. So, I think, really, Mr Liang Eng Hwa's question pertains to that period after the end of the preceding financial year on 31 March to the time the Supply Bill is passed and how we are funded for that period.

The Government is able to continue its operations as per normal because Article 148 of the Constitution allows for expenditures in the interim until the Supply Bill is passed. Under Article 148B (4) of the Constitution, the Finance Minister, with the Cabinet's approval, can authorise spending from various Government funds to keep public services running until the Supply Bills are passed into law. However, the amount that is spent must not exceed one quarter of the total sum approved for the particular service in the past year's Budget.

So, in this case, the Government is able to continue its operations as per normal as the Finance Minister has, with the prior approval of the Cabinet, authorised interim expenditure pending the Supply Bill becoming law under Article 148B (4) of the Constitution and we are, therefore, funded for this period. This has been done before, in 2002 when, likewise, the new Parliament opened on 25 March 2002 and Budget Day was on 3 May 2002, thus pushing back the Parliamentary calendar and requiring interim funding under Article 148B (4) of the Constitution.

Assoc Prof Daniel Goh Pei Siong: One of the chief problems faced by specialised caregivers is their own retirement adequacy. Government assistance and direct subsidies, at the point of service, help them for the immediate needs. But many of them are themselves well advanced in age after the end of care and will not do well in the labour market. My question is: how is the Government looking into enhancing the retirement adequacy of this group in the long run?

Ms Sim Ann: The Government is concerned about the retirement adequacy of Singaporeans who may not have had the opportunity to work or to build up their savings either in cash or in their CPF. That includes, but is not limited to caregivers. To address this, there are CPF top-ups. There are also various assistance schemes which we have mentioned broadly, which are meant to supplement either the incomes of those who are in greater need or to help them cope with living expenses.

The Chairman: Mr Liang Eng Hwa, do you wish to withdraw your amendment?

Mr Liang Eng Hwa: Mdm Chair, I am sure it must have been a hectic few months for the MOF team. And in keeping with tradition, we have kept the MOF COS short and sweet. Once again, congratulations to Minister Heng Swee Keat and the MOF team for the truly transformational Budget and also thanks to Senior Minister of State Indranee Rajah and Senior Minister of State Sim Ann for their replies, notwithstanding the short time that they have. So, with that, Madam, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $767,425,400 for Head M ordered to stand part of the Main Estimates.

The sum of $175,267,300 for Head M ordered to stand part of the Development Estimates.