Committee of Supply − Head M (Ministry of Finance)

The Chairman: Head M, Ministry of Finance. Mr Liang Eng Hwa.

2.28 pm

Digitisation, Procurement and Regulation

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

During the Budget Statement speech, the Minister for Finance announced that a permanent 2% downward adjustment to the budget caps of all Ministries and Organs of State will apply from financial year (FY) 2017 onwards.

Mdm Chairman, I support this measure and the emphasis to spend judiciously and to do more and better with less. A 2% cost adjustment is a reasonable decremental target to work on and the public sector agencies should use the exercise as impetus to review its organisation and its policy implementation, modus operandi to improve its efficiency and, importantly, as a result, to cut red tape. Rather than go on penny-wise mode, the Ministries and agencies should look to trim down costs by way of re-engineering existing processes and streamlining workflows. Thoughtful harnessing of technologies should be considered in every aspect to improve productivity and service delivery. This will benefit both the public and the public sector employees as well.

There are excellent examples by the Public Service agencies which have done more and which have done well with less. One example that comes to mind is the Inland Revenue Authority of Singapore (IRAS) with regard to their efforts to simplify the tax system and their effective use of technology. Its 24/7, one-stop self-service MyTax portal and the no-filing service offer taxpayers a hassle-free way to manage their tax returns.

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The outcomes are most impressive. The cost of tax collection by IRAS is among the lowest in the world, and among the lowest rates of arrears as well. And the taxpayers' satisfaction surveys ranked high consistently.

The concept of "no need for service is the best service" is clearly demonstrated here. If such service philosophy and strategy can be replicated extensively within the public sector, we would have made a quantum leap in not just the efficient delivery of public service but also deliver positive experience to the public. We have to ask, why not?

I note that digital transformation of Government services is already on the Ministry of Finance's (MOF's) and many Ministries' to-do list. The Committee on the Future Economy (CFE) has also recommended to intensify digitisation and to leverage data as a key enabling asset to transform the economy. The sooner we become a digital nation where interacting digitally is citizens' everyday way of life, the sooner we can reap the benefits and advantages of a smart economy. That, in itself, opens up new possibilities.

The public sector must be early adopters in this digitisation drive and be prepared to try out newer and innovative digital solutions to improve bureaucracy and, hence, benefit society at large.

Of course, as we digitise, along the way, we may inevitably encounter some bugs or blind spots in the initial implementation. It is not uncommon to have minor glitches in new information technology (IT) rollouts for large organisations as well. There may be criticism from the public and complaints for the inconvenience caused. We should take all these in our stride, learn from the mistakes, quickly rectify the gaps and continue to press on with bold and necessary digitisation efforts. I would appreciate if the Minister can provide an update on the Government's digitisation efforts and the results so far.

Moving on to another area, Government procurement. At last year's MOF's Committee of Supply (COS) debate, Members had raised about using Government procurement to support innovation and capability-building by small and medium enterprises (SMEs). Many jurisdictions have already practised this approach and we should move on this as well.

I was, hence, delighted to hear at this year's Ministry of Trade and Industry's (MTI's) COS that the Government will launch a new scheme known as the Government's enhanced Partnerships for Capability Transformation (Gov-PACT) where SMEs can leverage Government-led demand to participate and offer innovative solutions, in the process, strengthening their new capabilities and track record.

This is a good start and I would like to ask the Minister how we could push the frontier further to help more new startups in this area. How would the Government agencies resource themselves to carry out such procurement in an extensive way?

Question proposed.

The Chairman: Ms Foo Mee Har.

Government Digitalisation Efforts

Ms Foo Mee Har (West Coast): Madam, CFE has recommended the pervasive adoption of digital technologies across all sectors of the Singapore economy to transform our economy and create new growth and job opportunities.

For a start, the Government should lead the way to transform the delivery of Government services with digitalisation. I would like to ask the Minister for an update on efforts invested by the Government, as part of the Smart Nation initiative, to transform the public sector and make it more innovative and effective. How pervasive is the use of technology in making it easier and more efficient for businesses and citizens to interact with the Government? Is there a master plan for the deployment of digitalisation and innovative technology across Government agencies, with clear targets and key performance indicators (KPIs)?

My residents often share the frustrations of having to provide and submit the same data and documents for different Ministries to verify. The Government should really adopt a whole-of-Government approach in data collection and leverage technology to improve efficiency and service delivery by eliminating the need for citizens to provide the same data repeatedly. So, I would like to ask the Minister what constraints the Government agencies face in sharing information among themselves and how digitalisation can contribute to the solution.

Finally, the Government is in a good position to develop frameworks and infrastructure to lay the foundations for smart digital platforms that businesses can leverage and build upon. For example, data has been recognised as the most important asset for business success. So, how can businesses leverage data captured by the Government to build deep insights, new capabilities and solutions?

Improving Service Delivery Digitalisation

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mdm Chairman, with more people turning to technology for their daily needs, from shopping to checking their bank statements, it is important to improve service delivery through digitalisation. What is the Government doing to make digital services for citizens easier to access and more convenient to use? Common grouses I hear from the residents include difficulties to use the two-factor authentication and one-time passwords to access Government services for e-transactions, especially among the older generation. Some older residents find themselves having to waste a lot of time getting hold of a customer service officer via phone to get a walk-through. I believe it is a waste of productivity as well for the customer service officers who could be doing something else. I understand the need for additional security measures. Is there anything that can be done to make this more hassle-free for everyone involved? For example, maybe we can have embracing digital for senior volunteers, whether they are humans or maybe bots speaking in Hokkien or Teochew in community clubs (CCs), for example, as we step up our widespread digitalisation for e-services.

With regard to businesses, what is the Government doing to make it more efficient for them to transact with the Government? There are so many grants and rebates out there, so it can get overwhelming. What can be done to simplify application processes as well as time and effort taken to process the applications?

The Chairman: Mr Low Thia Khiang. Please take your two cuts together.

Office of Budget Responsibility

Mr Low Thia Khiang (Aljunied): Madam, I would like to call on the Government to consider setting up an independent office for budgetary responsibility that provides expert, non-partisan, open-source analysis of the Government's budgetary plans and is accountable to Parliament.

I believe an independent fiscal watchdog is necessary since the Government has been concerned with the rising expenditures in recent years, and the Minister for Finance raises the prospect of tax increases. The public will be interested to know the effect of public expenditure and its actual impact on our fiscal position by an organisation independent of the Government by providing expert analysis.

I believe that no individual outside the Government has the expertise to analyse each year's Budget in much depth, and I believe that Parliament and Singaporeans would benefit from the in-depth analysis provided by an independent fiscal watchdog. Such an office also helps to improve fiscal governance by holding the Government more accountable through better transparency.

There are countries that have an independent budgetary office. The United Kingdom (UK) Office for Budgetary Responsibility was established in 2010, and its missions are: one, to produce detailed five-year forecasts for the economy and public finances; two, judge the Government's performance against its fiscal targets; three, assess long-term fiscal sustainability; four, evaluate fiscal risks; and five, scrutinise the Government's costing measures.

The independent analysis of such an office can also provide input to the Elected President on whether or not to veto Supply Bills, should the Government wish to draw on Reserves not accumulated by the current Government. Given that this is one of the most important decisions the President might have to make, there should be a non-partisan, professional and specialised outfit putting out independent assessments to assist the Elected President.

Taxes

Madam, the Minister for Finance appears to be laying the ground to prepare Singaporeans for a rise in taxes. He said, and I quote, "We will have to raise revenues through new taxes or raise tax rates" to keep our finances sustainable. I would, therefore, like to ask the Minister: what are the new forms of taxes that he is considering? What are the Ministry's considerations in introducing new taxes? And what are the principles guiding these considerations?

There has been widespread speculation that the Government is looking to raise the Goods and Services Tax (GST), with experts and journalists suggesting that it is no longer a matter of whether the Government will do it; it is simply a matter of when.

I would like to ask the Minister: is he planning a GST increase as a revenue measure before the end of the decade? If so, when is he looking to implement this increase in GST, and by how much?

It is widely recognised that GST is a regressive tax that hurts the poor much more than it hurts the rich, which is why the Government has been providing GST Vouchers in an effort to correct the impact on lower-income households. However, GST Vouchers do not fully offset the amount of GST paid by lower-income households. I would like to know whether the Government has exhausted all other cost-cutting and revenue measures and, hence, have to raise taxes.

If the Minister is, indeed, considering an increase in GST before the end of the decade, I hope he can be upfront with Singaporeans now so that they are not blindsided by the Government, as they were with the sudden 30% increase in water price.

Retrenchment Tax Deferment

Assoc Prof Daniel Goh Pei Siong (Non-Constituency Member): Madam, I would like to ask the Minister to consider temporarily deferring the collection of personal income tax from workers who have been retrenched or made redundant.

Typically, more workers are retrenched in the first and fourth quarters of each year than in the second and third quarters. This means that these workers would have earned enough income to be taxed, and their tax liability becomes an additional drain on savings that they have to factor in. Workers who have signed on to the General Interbank Recurring Order (GIRO) payments will experience ongoing tax deductions even during the period of unemployment, either monthly, or in a lump sum, and if they are unable to pay up, they are slapped with a late payment penalty.

I would like to propose that workers who have been retrenched or made redundant be allowed to defer payment of all personal income tax for a period of six months, or until the worker receives fresh Central Provident Fund (CPF) contributions for the new job, whichever is sooner. The six-month deferment would be in line with the duration used in labour policy for retrenchments.

Giving laid-off workers the option of deferring payment of their personal income tax would help to alleviate some financial stress, especially for middle-class workers. It will give them room to plan their finances so that their families can be better prepared to tide over the period of unemployment. It will also give them some psychological security during the transitional period to focus their energies on training and seeking re-employment.

US Tax Reform

Assoc Prof Randolph Tan (Nominated Member): Mdm Chairman, the United States (US) administration has been reported as considering radical tax changes which could see a drastic lowering of corporate income tax rates.

As Minister Chan Chun Sing mentioned in his speech on Wednesday during the Budget debate last week, tax competition is a major concern for Singapore, and it determines to a large extent our policy on corporate and personal income tax rates.

At the moment, Singapore has one of the most competitive tax regimes in the world. Together with our infrastructural quality and skilled workforce, this has enabled us to attract significant amounts of foreign direct investments (FDIs). Usually, we would consider economies, such as Hong Kong and Luxembourg, as being more comparable as competitors. The tax rates in major economies, such as the US, UK and Japan, have always been much higher.

By virtue of its size, the relative strength of the US economy and its value as a consumer market, any move by the new US administration to improve its tax competitiveness will refresh its attractiveness to investors and have major repercussions on its competitors. It could spark similar moves by other economies.

Intensified tax competition from large economies will increase the number of economies which investors consider in deciding where to put their money. This will affect our ability to attract FDIs in future. These challenges are of particular concern in the current context, in light of the setback from the abandonment of the Trans-Pacific Partnership (TPP) and other global challenges.

What is the Ministry's strategy should such a scenario unfold? How severely would a US tax cut affect our ability to maintain a sustainable tax regime?

Leadership in Government-linked Firms

Mr Leon Perera (Non-Constituency Member): Mdm Chairperson, there are many prominent examples of former civil servants and military officers who have taken up senior appointments in GLCs. Often, such transitions happen when the individual is in his 40s. There are many examples of such appointments in the past, and some are also still currently serving.

Madam, I have no doubt that the possibility of senior civil servants and military officers moving to GLCs when they reach a certain age helps us attract good talent to the Civil Service and Armed Forces, and that is not a negligible benefit. Young people contemplating a career in the Civil Service and Armed Forces would know that there is a pathway to enable them to move into the private sector should they choose to do so.

However, has MOF considered if this benefit outweighs the potential downside, which is that our GLCs' senior posts may be filled by individuals who lack experience in their respective industries? Has MOF analysed the performance of GLCs during periods when they are headed by a former civil servant or army officer versus periods when they are headed by an industry veteran or a private sector veteran to see if there are any differences in business performance and organisational effectiveness? If so, what have been the findings? If not, would the Ministry consider doing such an analysis?

Reviewing Corporate Regulations

Dr Tan Wu Meng (Jurong): Madam, corporate regulations are necessary, but too much can hurt innovation and be regressive because it is the big players who can hire an entire team of compliance officers. Does MOF track the amount of corporate regulation, for example, how long it takes to fill up a form, how many forms or steps are needed to attain a specific administrative objective? And is there an active effort to minimise and streamline red tape?

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SMEs and Government Procurement

Mr Kwek Hian Chuan Henry (Nee Soon): Madam, Government demand is a very important part of total business demand. As such, Government procurement policies impact our businesses, especially the SMEs. Is there more that the Government can do to ensure that Government procurement contracts, especially those related to construction, maintenance and transportation that usually go beyond hundreds and millions, are not unnecessarily big, which could have the unintended effect of crowding out SMEs from competing effectively in terms of Government procurement?

Local Firms in Government Procurement

Mr Chen Show Mao (Aljunied): Madam, the importance of Government-led demand to our small and medium enterprises has been very much rehearsed in these COS proceedings for other Ministries.

Through the Government procurement experience, SMEs get to build not only their track record, but also the capabilities they need to be competitive at home and outside Singapore in the internationalisation drive. Could we complement these efforts and facilitate these outcomes by refinements or enhancements to our Government procurement practice, subject, of course, to alignment with international standards and obligations and the underlying principles of fairness, transparency and value for money.

Could the scope of work be more finely delineated, for example, by specific types of requirements so that different SMEs may take on different parts of the work? This could help them enter into collaborations and form consortiums to bid for higher value contracts in the future. Could SMEs which have niche technologies relevant to the work be engaged through research partnerships with the Government Technology Agency (GovTech) or other agencies?

Madam, our SMEs contribute half of our gross domestic product (GDP) and employ 70% of our workforce and have won the substantial majority of Government tenders under our open procurement system in recent years, both by number and the value of contracts. However, due to their large numbers and variety, it is estimated that less than 5% of our SMEs secure Government projects. Last year, the first Government procurement fair was held, in part, to encourage SMEs to participate in the Government procurement process. Could we look into possible enhancements and refinements to the process that could help even more of them to do so?

Innovation and SMEs

Miss Cheryl Chan Wei Ling (Fengshan): Madam, with several upcoming infrastructural projects in Singapore, there will be opportunities for companies to participate in the supply of goods and services to these projects. Understandably, local SMEs and some startups are curious how they can contribute and be a part of the growth.

Will the Government be using more innovative methods to assess the solution providers? For these companies, can the Government provide some insights to a few aspects?

One, subcontracting of projects. For companies which wish to subcontract specific modules or areas of supply within a mega project, will the Government provide this option instead of having the smaller companies to bid from the main contractor? This will provide better accountability and enable a fairer share of profit margins.

Do the Government agencies provide opportunities to SMEs or startups during the regular business period to demonstrate their products' and services' capability? Through this regular assessment, the SMEs which are successful in meeting base criteria could be placed on a list of preferred suppliers for potential invitation to future bids by the agencies.

Two, digitalisation. For projects under the Government agencies, sometimes it is difficult for new digital solutions to be directly adaptable to an existing system, even if it proves to be a better option. Part of this could be due to sensitivity of information or compatibility of different systems, particularly those that straddle across functions. Would this result in the status quo of suppliers and lack of diversity to maximise an optimal outcome in our roadmap?

Three, impact of regulatory sandboxes and intellectual property (IP) access. This initiative is intended to allow some relaxation of rules to promote innovation. It is a welcome move for novel and unproven concepts. But, if faced with a situation where there is a handful of new startups with similar end markets, what are the guiding principles in the Ministries' consideration for relaxing the framework to ensure a level playing field from the onset? Would this actually be the same basis that complicates the work for the IP intermediary under the Standards, Productivity and Innovation Board (SPRING) Singapore to decide who can best access the associated IPs?

SMEs' Access to Government Procurement

Mr Saktiandi Supaat: Madam, the Budget has introduced many measures for the business community this year. I am glad to note the strong focus on preparing SMEs for the future economy. However, while clearly a lot of thought has been put into medium- to long-term measures to help SMEs in the long run, I am concerned about the smaller players who may already be struggling. I hope the Government can give SMEs more procurement opportunities to help them cope in the short term.

Last year, it was reported that SMEs were winning more than 60% of total Government contract value and about 85% of all Government tenders over the last three years. This is good news and I urge that this momentum be maintained or even improved upon.

With bigger players and more foreign companies entering Singapore and the economy being lacklustre, I am concerned that the SMEs will falter against the stronger competition. I would like to ask what procurement efforts are in place to support the CFE recommendations and ensure that local companies are getting a significant share of the pie. How will they be rolled out and how will they benefit SMEs? As SMEs have clearly proven capable of handling Government tenders and projects, I urge the Government to set aside at least 60% of total Government contract values for them. In addition, award one-third of all Government tenders —

The Chairman: Mr Saktiandi, you have to stop.

Mr Saktiandi Supaat: — to smaller SMEs with a turnover of less than $10 million.

Helping SMEs for Government Procurement

Mr Yee Chia Hsing (Chua Chu Kang): Madam, Government procurement needs vary and range from simple low-value purchases to complex multimillion-dollar construction contracts.

Whilst we recognise the principles of value for money, transparency and open and fair competition in our procurement process, have we seen an increase in the award of Government contracts to our SMEs? Are there any specific procurement approaches that various agencies are embarking on to support innovation and growth in our industries and help the SMEs access these procurement opportunities?

I hope we can help our local SMEs build their track record and credibility to participate not just in our local market, but potential overseas markets as well. This increase in opportunities will also enable the growth of job opportunities for Singaporeans.

Government-led Demand

Ms Sun Xueling (Pasir Ris-Punggol): Madam, Government-led demand can be a powerful means to support innovation and growth in new industries. But it must be structured correctly to maximise participation from the private sectors, attracting interest from both large and small companies while remaining accountable to taxpayers' monies.

Can the Ministry share on the range of procurement approaches that the agencies are using to maximise the positive externalities from Government-led demand as well as the measures in place to prevent abuses?

Further, how does the Ministry ensure that contracts awarded do not subsequently create an incumbency advantage for the awardee arising from the project solution implemented? This is possible, for instance, in information and communications technology (ICT) projects, where subsequent add-on solutions by other players are not possible because of the initial project design.

The Chairman: Dr Tan Wu Meng, please take your two cuts together.

Procurement to Support SME Growth

Dr Tan Wu Meng: Madam, value for money matters. But there are positive externalities to building a resilient local SME ecosystem like jobs, opportunities and skills for Singaporeans at home.

What measures is MOF taking in procurement so that smaller players like SMEs have a chance to participate? Can larger projects be split into smaller tenders – right size, bite size?

Best Sourcing and Human Resource Standards

Next, contractors in major Government tenders can have a certain signature. They receive substantial public funds. They shape labour market norms.

When evaluating tenders, does MOF consider the human resource (HR) and tripartism record of tendering companies, especially if the company may have a history of significant HR bad practices? After all, Madam, awarding a contract is a form of endorsement to the market and society.

Towards a Fairer Procurement Policy

Mr Zainal Sapari (Pasir Ris-Punggol): Madam, Government procurement policies can set the benchmark for the private sector to follow. I would like to encourage that Government procurement practices be improved further because it can shape procurement behaviour and set the stage for better service provider and service buyer relationships that will ultimately benefit our workers.

I have three suggestions towards fairer procurement practices.

First, a fair clause for a contract validity period to allow for prices to be agreed upon and also allow for price variations, including that for option years should there be any unforeseen changes in Government policy, for example, mandatory adoption of the Progressive Wage Model (PWM) and announcement of National Wages Council (NWC) guidelines during this period. This will allow service providers to factor in any cost increases.

Second, a termination clause that allows for reasonable engagement by both parties to address any issues, as well as enable both sides to give notice for early termination based on the agreed terms and conditions should issues remain unresolved. This will ensure that the workers' sense of job security is not compromised.

Third, liquidated damages should not be punitive but used as a professional tool to reasonably compensate service buyers for non-compliance of service standards. In current practice, service buyers often dictate liquidated damages for service lapses and this is often blown out of proportion or used as a "cost-saving" measure.

With greater transparency in contractual obligations, it can create a level playing field for all businesses and encourage better gain-sharing practices that will benefit workers when the worries of unnecessary costs are alleviated with fair contracts and best practices.

Towards Fairer Means Testing

Mr Edwin Tong Chun Fai (Marine Parade): Madam, I tried this last year. I will try again this year with a few extra minutes added to my clock.

Madam, not everyone who lives in private estates is financially independent or self-sufficient. Many of them, especially retirees and elderly singles, need a measure of financial assistance, even though they may, at the same time, live in or own a private property.

If we accept the above proposition as being true, then something has to be done about the way in which we means-test and administer assistance and social transfers. One of the key assessment criteria in our means-testing programmes − and I accept and acknowledge that there is a whole range of these programmes − is the annual value of a home in which they live in, not own, but live in.

For instance, the Silver Support scheme. This is only for Housing and Development Board (HDB) dwellers, with the amount of payout dependent on the HDB flat type. Likewise, the U-Save vouchers and the service and conservancy charges (S&CC) rebates are only applicable to HDB dwellers. Or the Workfare Income Supplement (WIS). To even qualify, applicants must be staying, not owning, in a property not exceeding an annual value of $13,000. Likewise, grants and subsidies, such as the special outpatient clinic, foreign domestic worker grants, all of them include the annual value of the home as one of the eligible cumulative criteria.

WIS has been part of our social safety net since 2007. It is meant to incentivise less educated Singaporeans in the older age group to enter and stay in the workforce. Why then should this turn on what type of housing the applicant stays in as long as the other income criteria are also met?

It suggests to me that the annual value has become too much as a simple surrogate for accessing eligibility criteria for financial assistance. The annual value is frequently used as a measure of wealth, but it is really not. In a publication by the Department of Statistics titled "Key Household Income Trends 2016", HDB dwellers, on average, received about four times the amount of Government transfers when compared to private estate dwellers in the same year in 2016.

I am not against using accessible income or annual value as one of the indicators. We have to start somewhere. But it cannot be the start point and end point for such a measure. Nor can it be the only measure. I believe we can and should do more to refine our means-testing criteria so that it is no longer a blunt and ineffective tool. It may be simple to administer, but it is not the most equitable.

First, whilst the ability to afford private housing may generally be indicative of wealth, there are clear exceptions. And these undoubtedly include a number of residents, especially elderly ones, who have no income and little savings. The same report by the Department of Statistics in 2016 found that 6.5% of households in the lowest 10% of monthly household income live in private properties. The landed properties in which some of them live, tend to be old and ill-maintained. And their elderly inhabitants usually struggle with their day-to-day expenses.

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For this group, their private or even landed houses are not indicators of wealth, but simply a home where they have lived their entire lives. They probably acquired it many years ago on very modest incomes but could never dream of being able to acquire it today. They are the classic asset-rich but cash-poor residents. Whatever "wealth" they possess is almost entirely locked up in their property and cannot be utilised. I would say it would be unrealistic to ask these persons to cash out, to unlock the value of their property by selling, uproot themselves in their golden years, depart from their daily routine, live away from the community they have grown accustomed to and their way of life just to cash out on their asset.

Second, in the means-test which includes the criterion for annual value, it applies, as I said earlier, irrespective of whether the resident actually owns the property or not. So, a person may be renting a home or even just a room in a home in a private house or apartment, or he may just be squatting at a friend's or relative's apartment on goodwill terms. In all of these cases, that person would not qualify for those programmes which consider as one of their means criteria the type of dwelling home in which they live. But surely, we agree that renting a small private apartment or a room in that apartment does not automatically mean that that person is financially better off than an HDB dweller. In fact, I would argue probably worse off.

Third, the annual value of $13,000 has been fixed as a threshold for the last five years at least, as far as I could tell. Leaving aside the fact that the $13,000 annual value is really a hypothetical value for persons who cannot or should not be made to unlock the value of their homes, it cannot be realised. The bar has actually been set pretty low. Thirteen thousand dollars in annual value means that any property which can fetch a market rent of about $1,100 per month would not qualify based on the latest 2016 fourth quarter median rental statistics, only 1- or 2-room HDB flats would then qualify. In other words, if a person lives in a property where the annual value is higher than a 1- or 2-room HDB flat, he or she would probably not qualify for the social assistance programme. And this comes on top of the fact that the annual values for properties are adjusted from time to time, based on market movements and with no correlation to that person's income status or income level.

Fourth, there is little, if any, consideration for the particular financial demands of the household in question, the individual's specific needs of the household in question. Each household is different. What could be a decent household income for a family of three or four could be very different for a multigenerational household with elderly parents and in-laws in need of medical care and, at the same time, young children in school.

We really have to look beyond just one measure of assessable income and annual value and consider other factors as well and also consider dependants who rely on that household income. Some of these cases could well be long-term chronic ones, but there are others which could be short term caused by sudden catastrophic events like the loss of a key family breadwinner or the loss of a job, or a sudden acute need for medical care. All of these are likely scenarios, but our means-testing criteria just do not respond well to any of these happening.

Consequently, there are families which, because of no or insufficient assistance rendered at the right time, fall into cracks and into acute difficulty. To take a leaf out of Minister Chan's ethos when he was at the Ministry of Social and Family Development (MSF), the critical challenge is how to ensure that today's middle income does not end up as tomorrow's bottom. To do that, our financial assistance and social transfers must be far more nimble and adept at identifying those who really need our help. Again, in Minister Chan's words, "we have also to help the temporary poor, those who, for financial reasons, fall into hardship."

Madam, in closing, I would just leave the House with the quote that I found in the Guardian which, I think, aptly summaries the point I am trying to make, and it goes like this. This is a Guardian article in January 2013, "Means testing hurts people who are neither very rich or very poor because there is always a cut-off point. Some who are far from well-off and who would generally benefit from them are excluded. There are also many people who seem comfortable to the outside world, but who do not necessarily feel so themselves. So, they are frugal for fear of rainy days, not realising that the rain has already come."

Household Income as a Criterion

Mr Murali Pillai (Bukit Batok): Madam, many of our social assistance schemes or initiatives look at the gross total monthly household income or monthly household income per capita as a means-test or criterion for eligibility. Some examples are eligibility for the Community Health Assist Scheme (CHAS) or the Silver Support Scheme.

While household income may generally be a good indicator of need, I am concerned that there are situations where this criterion may paradoxically penalise those who have no choice but to live together with their families because of, amongst others, their financial situation.

For example, to be eligible for CHAS, an applicant's household monthly income per person must be $1,800 or below. Elderly persons without incomes who live apart from their working children would likely be able to meet this criterion and be eligible for CHAS. However, if they were to live together with their working children, the total household income per person may be beyond the $1,800 threshold. In such an event, they would not be eligible for CHAS.

I recognise that family care and support should be the first and most important port of call. However, household income as a criterion may have an asymmetrical effect on particularly our sandwich middle-income families who live with and support their elderly parents and parents-in-law. In such cases, where married couples have to support two sets of elderly parents as well as their children who all live in the same household, this may create a significant financial pressure on the couple even when the combined household income or household income per capita does not fall within the threshold amount for obtaining assistance.

On the other hand, richer families whose parents live apart from them will continue to benefit from the schemes since their elderly parents stand to receive subsidies. Support for such families, I respectfully submit, subverts the policy intent behind the schemes.

Minister Lim Swee Say, referring to the Silver Support Scheme, candidly recognises this anomaly in Parliament on 13 September 2016. He further postulated the possibility of migrating to a per capita family income basis at some point in the future.

I respectfully suggest that the faster the Government migrate to a per capita family income basis as a criterion, the better. With the migration, we will get a more accurate picture of the number of families at the relevant percentile level where the schemes are supposed to kick in and provide help. Once we get a more accurate picture, we can even provide a higher level of subsidy for low-income families from the subsidies redirected from richer families whose parents live separately without increasing the budget.

In this regard, I urge the Government to leverage data analytics to build our family trees. I also further suggest that we look at the Japanese family registration system known as the "koseki".

GST Vouchers and U-Save Rebates

Assoc Prof Randolph Tan: Mdm Chairman, in 2007, expenditure on social transfers was 3.3 times that in 1997. In Budget 2017, expenditure on social transfers is more than six times that in 2007. On average, over the last 20 years, social transfer expenditures have been growing about three times the rate of growth in total expenditures. And this growth has accelerated, with the last 10 years seeing much faster growth than a decade before. Between 1997 and 2007, expenditure on social transfers rose as a proportion of total expenditures from 1.4% to 2.6%. By 2016, this had risen to 8%.

Madam, in 2017, we are seeing a slight pull-back. But the abovementioned total expenditures do not include special transfers. According to the detailed proposal for Budget 2017, on top of the $4 billion worth of social transfers, Special Transfers to Singaporean households will cost half a billion dollars, while Special Transfers to businesses, which include Workfare, will cost $2.1 billion. The current Budget continues with a regular practice of giving payouts which benefit very large numbers of recipients. For example, the one-off Special Payment will reach more than 1.3 million Singaporeans. Both the U-Save rebates and the S&CC rebates reach about 880,000 HDB households.

Unlike targeted schemes, because of the broad coverage, such payouts are spread very thin. Regular payouts of this sort are diffused in their impact and are not directly linked to structural outcomes.

There is no doubt that they play an important role in easing the transition to policy changes. But if they become more or less permanent, their value for this purpose becomes diminished. I am not asking for all forms of short-term reliefs to be curtailed. But we have to decide if it is a good idea for short-term relief to become more or less permanent entitlements. We should move away from a situation where households compete for more Government handouts towards the creation of a support structure that has forward-looking objectives.

The Second Minister for Finance (Mr Lawrence Wong): Mdm Chairman, I thank the Members for their comments and questions for MOF.

Three broad topics have been raised by Members. First, how the Government can help to build a stronger economy through digitalisation of Government services, procurement, corporate regulations and taxes. Second, there were queries on accountability, especially in relation to the Government's Budget and Government-linked companies. Third, areas to finetune our social schemes and programmes.

I will address the cuts on the first topic and Senior Minister of State Indranee will take the other cuts.

Madam, the key driver of the economy is our people and enterprises. But the Government can and will play an important enabling and facilitative role. Our efforts so far have yielded results. At the Budget Debate earlier, the Finance Minister mentioned the improvements in productivity growth over the recent years. Here, I would like to just clarify that he was, in fact, referring to the period from 2009, which was the year the Economic Strategies Committee (ESC) based its recommendations, to 2016, and productivity growth in that period, as measured by value-added per worker, was 2.1% per annum.

If we look at real value-added (VA) per actual hour worked, in other words, VA per hour, not VA per worker, so VA per hour, which is internationally viewed as a better measure of labour productivity growth, was 2.6% per annum over the same period.

These are positive results and we must build on this momentum.

Digitalisation efforts in the Public Service can play a role in our transformation efforts, and here I thank Mr Liang Eng Hwa, Ms Foo Mee Har and Mr Saktiandi Supaat for their suggestions.

Our efforts to build a Digital Government are not new. In fact, they started in the 1980s when we first pushed for computerisation in a big way in the Public Service. And we are continuing with this effort to more proactively use technology and data to improve our service delivery. In fact, now, we are giving this a much bigger push with our Smart Nation efforts which Minister Vivian Balakrishnan highlighted and shared last Thursday.

Our Digital Government efforts form an important part of the overall Smart Nation strategy. Here, MOF works closely with the Ministry of Communications and Information (MCI), the Public Service Division (PSD), the Smart Nation Programme Office and GovTech to drive the Digital Government agenda by setting clear goals and maintaining central oversight. These goals include enhancing the efficiency of our services and ensuring that citizens and businesses are satisfied with them.

As of 2015, nearly 90% of the most frequently used Government transactions can be conducted online. This is a significant increase from 76% in 2013. Based on a survey conducted last year, 77% of citizens said that they were very satisfied with Government digital services.

Our efforts have also received international recognition. In 2016, we maintained the top position on two rankings − the World Economic Forum's Global Information Technology Report Index as well as the Waseda-International Academy of Chief Information Officer (CIO) International e-Government ranking. These are international surveys which rank countries according to their efforts, results and potential in the area of Digital Government.

While we have done well, we should not be complacent. Advances in digital technologies are evolving rapidly and we have to keep up. As Minister of State Janil Puthucheary shared yesterday at MCI's COS, we also need to ensure that our digital services do not leave the elderly and the less tech-savvy behind, and extra support must always be there to help them when they need it. One example is the Silver Infocomm Initiative which helps our elderly stay connected.

Our aim is to make Government digital services more pervasive, more user-friendly for both businesses and citizens, young and old. We want users to be able to transact smoothly with minimal assistance. Let me outline three broad approaches to achieve this.

First, we will do more to customise digital services to the needs of different stakeholders. Several Government agencies have already been doing this. I am glad that Mr Liang mentioned just now the efforts of IRAS. Indeed, in January this year, IRAS released the first phase of its redesigned MyTax Portal, which is more intuitive and mobile-optimised so that you can file taxes on your smartphone. Of the users surveyed, 90% expressed no difficulty in accessing the services after the revamp, as compared to 40% before. So, it is a significant improvement.

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Second, we will leverage technology to simplify and streamline online services. As Ms Foo Mee Har mentioned just now, one inconvenience and constant bugbear that Members hear from people is that they have to submit the same data repeatedly to different Government agencies.

To address this, we launched MyInfo last year which allows citizens to automatically fill up digital forms with just one click. So, this will reduce the time spent filling up forms or having to submit supporting documents like the CPF statement repeatedly to different agencies.

Later this year, all SingPass users will be able to make use of this MyInfo service to automatically prefill their basic details like the name, National Registration Identity Card (NRIC), address and contact number, as soon as an online form loads. So, it will be an automatic click and the information will be provided. By 2018, citizens can look forward to this convenience for more than 150 Government digital services.

To extend these benefits to the commercial sector, we will embark on a pilot for citizens to use MyInfo when opening bank accounts. This will begin in the second quarter of 2017 with the Overseas-Chinese Banking Corporation (OCBC), United Overseas Bank (UOB), Development Bank of Singapore (DBS) and Standard Chartered Bank.

We will also continue to make e-payment more convenient, seamless and user-friendly for citizens. Minister Vivian had already spoken about this earlier and our plans to enable the transferring of funds on a mobile phone. We are also exploring a one-stop platform for citizens to make payments to the Government through their mobile phones. This can potentially consolidate bills from different agencies, saving citizens the trouble of having to go through multiple channels.

Third, we will continue to improve Government digital services for businesses. In the same survey that we did last year, we found that 65% of businesses were satisfied with the Government's digital services. This compares against the 77% satisfaction rate for citizens which I highlighted earlier. So, clearly there is still more work that we need to do on the business side.

Many businesses need to go through the process of applying for grants and Government licences. So, we will strive to make these transactions more convenient. The Business Grants Portal was announced last year during the Budget. It is a one-stop shop for businesses to identify and apply for the right grant. The portal now offers six grants, including SPRING's Capability Development Grant.

By the end of this year, businesses can look forward to four more grants, including the Building and Construction Authority's (BCA's) Mechanisation Credits and the National Park Board's (NPark's) Landscape Productivity Grant. So, we will continue to review and streamline the grant application process.

For licence applications, we have rolled out LicenceOne progressively since 2014 to provide businesses with a one-stop business licensing portal. The portal contains several pro-business features, like an integrated application for multiple licences from different agencies and an integrated dashboard to check the status of applications. Currently, there are over 80 licences from 16 agencies on LicenceOne and, by FY2017, more than 100 licences will be available.

Payment is also an important transaction for businesses and we will improve the e-payment landscape to make it more convenient for businesses to transact with the Government. In June 2016, the Accountant-General's Department (AGD) launched the Vendors@Gov mobile app which caters specifically to the needs of SMEs that transact frequently with the Government. Sixty-five percent of these businesses have since downloaded the app. In addition to submitting electronic invoices to Government agencies, these businesses can also receive alerts on the status of their invoices and accounts and keep track of their projected cash flows. So, this will save businesses precious time. Indeed, within three months of the launch, we saw a 21% drop in the number of payment-related enquiries. We are also very proud that AGD clinched the "best mobile Government service award" at the World Government Summit last month.

Next, let me highlight how we support businesses through Government procurement.

Many Members spoke on this issue and asked that the Government do more to support local companies, especially SMEs, through procurement. I understand these sentiments. Indeed, Government procurement has played a useful role over the years in spurring lead demand and building capabilities in certain industries like defence and water.

But let us also remember that Government procurement must, first and foremost, abide by the key principles of fairness, transparency and value-for-money. Our procurement processes are also governed by a clear set of rules, with checks and balances, calibrated to the value and risk of the purchase. This is a point that Ms Sun Xueling made and also about the need to have safeguards against potential abuses.

In our desire to help companies, we must never compromise our principles of Government procurement. I am glad, listening carefully to all the speeches made by Members, none of you has suggested doing so. Government support should not become a crutch for uncompetitive companies.

I remember what the former civil servant Mr Philip Yeo used to tell us about his work at the Chartered Industries of Singapore (CIS). He was Chair of CIS for many years. CIS, Members would recall, was set up as an independent corporate entity to manufacture small arms ammunition for the Singapore Armed Forces (SAF). As Mr Philip Yeo used to remind us, then Defence Minister Dr Goh Keng Swee was insistent that CIS be treated on an arms-length basis − it had to bid for MINDEF work in competition with other foreign suppliers. So, CIS was motivated. In fact, it was forced to work hard to maintain a lean and efficient operation and it rose to the occasion and delivered good service to the SAF in competition with foreign suppliers.

That is the approach we should take – maintain stringent standards in Government procurement. Ensure that these standards are fair, transparent and offer value for public monies. But, at the same time, as we go about this work, we also build capabilities in our businesses and SMEs and give them maximum opportunities to win Government procurement tenders on their own merit. I think this is a better approach than to artificially set aside a certain proportion of Government tenders for SMEs.

If Members look at the statistics, so far, our SMEs are doing quite well. Each year, over 80% of Government contracts, comprising about half of total Government contract value, go to SMEs. So, 80% of the number of contracts and about half of contract value, go to SMEs. This is a respectable result even when compared to developed countries like the UK and the US. By the number of contracts, more than 40% were won by companies with revenues of less than $10 million. And of these contracts, almost half were won by micro-enterprises with revenues of less than $1 million.

Going forward, we will continue to do more through Government procurement. So, let me elaborate on some of the measures.

First, Government agencies are making use of crowdsourcing methods to look for solutions. This approach is ideal for the Government to partner businesses, the community and individuals to reach out to smaller players to provide innovative solutions, which several Members spoke about.

For example, at the recent Designathon 2017, organised by the DesignSingapore Council, there was a focus on developing solutions for persons with disabilities. The winning team comprised students from the Singapore University of Technology and Design (SUTD), and they developed a device for converting a manual wheelchair into an electric one at a fraction of the price of a regular electric wheelchair.

Another example is an idea that emerged from HDB's Cool Ideas challenge. This is an idea for a safer gas hob because fires caused by unattended cooking cause a significant proportion of fires in residential buildings. So, the students from Republic Polytechnic and Anglo-Chinese Junior College proposed a gas hob with a safety device that cuts off the gas supply when the flame goes out, preventing fires. They worked with City Gas, the company, and Aerogaz, commercialised the idea and eventually brought this to market in 2015. So, crowdsourcing is a useful platform for the Government to engage the community, small players and come up with more innovative solutions.

Second, Government agencies will continue to ensure that tenders are appropriately sized to give SMEs a chance to compete for them, as suggested by Dr Tan Wu Meng and Mr Henry Kwek. Here, a balance needs to be struck. Some contracts need to be of a large enough size for the supplier to invest in innovative solutions or technology to improve productivity. At the same time, Government agencies are interested in ensuring that tenders are not too large that only a very small number of suppliers can tender for the project. That is why, even today, a very high proportion of about 90% of contracts called by Government agencies each year are below $100,000 in value. There were more than 30,000 of such contracts in 2016. Only about 5% of contracts are above $1 million.

Several Members spoke about construction projects and, when we think about construction projects, we think about the big ones entailing hundreds or even billions of dollars. But, in fact, for construction contracts, about 80% of them have values that are less than $650,000 and can be carried out by contractors registered with BCA without a track record. Eighty percent of contracts in the construction sector are less than $650,000 and contractors without track record can carry them out. More than 90% of construction contracts are less than $10 million and are accessible to the smaller players.

For some larger projects, where it is appropriate, the Government may call separate tenders for different parts of the contract or different parts of the project, giving smaller companies an opportunity to participate. We already do this. For example, the construction of a single Mass Rapid Transit (MRT) line is often carried out in many parts.

Separate tenders may also be called for individual MRT stations, or MRT stations with connecting tunnels, depending on the complexity of the railway lines. Often, smaller companies will tender only for the "station" project, and then larger companies will tender for "station with tunnel" contracts. So, this is already happening for MRT projects. Some smaller companies have also formed consortiums with others to tender for larger and more complex projects.

Third, we will help SMEs without track record to participate in Government procurement. Again, here, there were various suggestions made by Members, including Miss Cheryl Chan, Mr Chen Show Mao, Mr Saktiandi Supaat, Ms Sun Xueling and Mr Yee Chia Hsing.

Minister Iswaran had highlighted the new scheme called Gov-PACT in MTI's COS last week. Gov-PACT provides grants to SMEs and startups to collaborate with and undertake innovative projects initiated by Government agencies. SMEs and startups will be funded at various stages of product and solution development for these innovative projects.

Under this scheme, SMEs and startups whose projects are approved are eligible for up to 70% funding support for the qualifying development costs. One example is the Smart Elderly Monitoring and Alert System (SEMAS), which is now being piloted in Yuhua. The system helps families take better care of elderly dependants by allowing them to monitor the safety of the elderly at home and sending them alerts when the mobile panic button is pressed during an emergency or when living patterns that are out of the norm are detected. This is a very useful system that is now being piloted. HDB worked with the SMEs that were involved to develop the business model, paired them up with telecommunications companies (telcos) and helped to deploy the system. Hopefully, this works well in the pilot and we can scale it up in more housing estates.

Last year, we highlighted the Accreditation@IMDA scheme, which helps promising and innovative Singapore-based technology startups to establish their credentials. So far, the scheme has helped 59 companies by providing assistance to strengthen their products and advice on fundraising and business pitches. Seventeen of these companies have been accredited, out of which, 13 have won contracts. We expect more to do so over time and they will benefit from the $60 million of Government pipeline opportunities that have been generated to date.

A good example of an SME that has benefited is SenseInfosys. SenseInfosys focuses on data fusion, analytics and fraud detection in military-grade intelligence projects in the security and maritime domains. Its product enables enterprises to analyse data to gain timely and accurate insights to improve their operational processes and make more informed decisions. The company was founded in 2013 and received accreditation in May 2016. It subsequently went on to win six Government projects when they were still a young company without a significant track record. Last year, the company raised $2 million from investors to help accelerate the company's growth.

We are also introducing platforms to facilitate small players to take part in Government contracts. One such platform is the Government Electronic Business System (GeBIZ) Mall, which makes it easy for suppliers who want to sell to Government agencies. Under GeBIZ Mall, suppliers are given electronic "shelf-space" to sell their goods and services. Each supplier can list 10 items on their online "shelf" for free. So, Government agencies can then buy directly from these suppliers if the purchases are below $5,000, or they can call for quotations.

Over the last five years, an average of 5,000 orders per year have been placed through GeBIZ Mall. This amounts to a value of $3.5 million per year and we intend to encourage greater participation on this platform.

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We are also making it easier for agencies to buy from smaller players. GovTech has started an experiment. It is a website experiment called govBuy. This allows Government agencies to post small projects or tasks for IT programmers to work on, and no track record is required to participate on this platform. So, these are the various things we are doing.

There is one more thing that we will do to promote best-sourcing practices and innovative solutions. Several Government agencies have already adopted outcome-based procurement where the desired outcomes are spelt out, giving tenderers the flexibility to propose the solution.

MOF, for example, has been working with various Government agencies to implement outcome-based procurement in the cleaning, security and landscape sectors. The Ministry of Education (MOE) has been doing this for school cleaning since 2014. For example, its tenders for school cleaning list the sites to be cleaned, the quality standards and the KPIs, and tenderers have the flexibility to propose an operations plan.

Various Ministries are also adopting outcome-based contracts for their security services. For example, MOM's tender for the provision of security services lists several desired performance outcomes and then invites tenderers to propose technology to optimise manpower resources. And the examples of technology that have been proposed include an automated self-service system for pass exchanges and a licence plate recognition system. So, through such outcome-based tenders, we can encourage more innovative solutions from the private sector.

In situations where the results are uncertain and some experimentation is required, we are encouraging agencies to adopt a spiral contracting approach. This means that the agencies will award the project in phases, starting with a more experimental phase. If the initial experimental stages are successfully completed, then the subsequent phases of the projects are awarded to the same supplier to continue.

One good example of this is what the Jurong Town Corporation (JTC) did with a tender to remotely manage its facilities and estates. Tenderers were not confined to any particular approach, and a spiral contracting approach was used, which started with a proof of concept to test out the solution on JTC's premises. And then, after the proof of concept, an evaluation was made to see which is the best, and then a decision made to proceed with a full rollout of the solution. So, that is another useful approach which more and more Government agencies are adopting.

Mr Zainal Sapari gave several suggestions on fair procurement practices. So, to respond to this point on policy changes that affect costs, the Government makes it a point to announce these in advance, as we have done with the introduction of PWM. This allows suppliers to factor in their higher wage costs when bidding for contracts. If a contract had started before the announcement and would continue beyond the effective date of the new policy, MOF has asked buyer agencies to accede to requests by suppliers for mutually agreed termination to allow a fresh tender to be called.

On the issue of liquidated damages, I will confirm that these are not intended to be punitive. The Government's procurement rules clearly require agencies to ensure that any liquidated damages imposed are commensurate with the losses suffered if the supplier fails to fulfil contractual obligations. And we encourage the unions and suppliers to seek clarifications and give feedback to the agency involved if there appears to be unfair clauses in their tenders.

Dr Tan Wu Meng and Mr Zainal Sapari also spoke about the Government's ability to shape labour market norms through responsible procurement, and I agree with them and the Government will do its part.

We want to work with service providers who are responsible employers and who adopt good HR practices. So, wherever possible, Government agencies will take into consideration the HR and tripartism records of tendering companies. In particular, we focus on the sectors that are more at risk of cheap-sourcing and suppressed wages, like in the cleaning, security and landscape sectors. For example, the Government buys only from accredited service providers that adopt the PWM for cleaners. And we also proactively encourage service providers to adopt the NWC guidelines on wage increments for their employees, and to factor in wage increments in multi-year contracts.

As mentioned at MOM's COS yesterday, we will also be putting in place further measures to safeguard the basic employment rights of outsourced workers under Government contracts.

Mr Liang Eng Hwa asked about capabilities in procurement. This is, indeed, an area of priority. We have started the work of building up capabilities to enable Government agencies to be smarter buyers and we will continue to do so. And this includes understanding the industry and technology well, so that we can stay on top of what the suppliers are doing and ensure that tender specifications are well crafted. So, these capabilities can help to minimise the likelihood of being locked-in to certain tenderers, especially to incumbent suppliers, which is a point that Ms Sun Xueling made just now as well.

Let me touch next on how we can foster a corporate regulatory environment that allows us to be competitive whilst strengthening our reputation as a trusted international financial and business centre. I hear Dr Tan Wu Meng raised several points about corporate regulations. MOF continually reviews our corporate regulations to ensure that they remain robust yet business-friendly.

Last year, the Accounting and Corporate Regulatory Authority (ACRA) had undertaken reviews in areas, such as the requirement on holding annual general meetings (AGMs) and filing annual returns. We will simplify these requirements to give greater clarity to companies. We will exempt all private companies from holding AGMs, provided they meet certain conditions, and we will also remove the requirement for companies and limited liability partnerships to use the common seals. This will help reduce business costs.

Other than amending regulations directly, we are also cutting red tape and improving our systems and processes, to reduce compliance and regulatory transaction costs for businesses. For example, Trade Facilitation and Integrated Risk-based System (TradeFIRST) is an assessment framework that Singapore Customs uses to determine the type of trade facilitation that is to be provided to a company. The checklist was revised to reduce the number of criteria by about 50%. So, with the revised criteria, each trader can save around 14 man-hours of application time.

Another example is the revamped electronic transaction system, BizFile+, which was launched by ACRA in January 2016. This system has streamlined processes, removed over 100 ad hoc fees and included mobile options for key transactions. The enhancements will benefit 450,000 registered business entities.

The tax-filing process will also be improved for businesses this year. IRAS has extended tax filing using a simplified corporate tax return to companies with annual revenues of less than $5 million, instead of $1 million. This will help an additional 28,000 companies ease their tax filing compliance.

We will continue to review and strengthen our regulatory and governance framework so that it is more robust and transparent. We will amend the Companies Act to allow companies registered in another jurisdiction to transfer their registration to Singapore, or what is also known as inward re-domiciliation. This will make it easier for foreign companies to relocate their businesses here to tap on Singapore's strengths and ease of doing business.

We will also amend our laws to require companies and limited liability partnerships to maintain non-public registers containing the particulars of their beneficial owners, and by enhancing efforts to combat money laundering and terrorism financing. This will strengthen our position as a trusted financial centre.

Besides updating our corporate regulations, we also want to ensure that our overall regulatory environment remains conducive to business innovation. As the Minister for Finance mentioned in his speech, we are creating more space for innovation through regulatory sandboxes where rules are suspended to allow for greater innovation and experimentation. And Miss Cheryl Chan is right that, in doing so, we also have to exercise judgement and make sure that we are fair to the different entities and, particularly, to ensure a level playing field that is applied to all entities that are being regulated. There are also ongoing efforts by the Pro-Enterprise Panel to address regulatory concerns that businesses face. The panel comprises both business leaders and senior public officers, and has received more than 1,900 suggestions, with over 1,000 of these leading to changes in rules or regulations.

Finally, several MPs raised points about taxes. Assoc Prof Daniel Goh proposed for opt-in tax deferment for retrenched workers for six months. I believe that this is a point that Ms Foo Mee Har had also suggested in the Budget Debate and this was addressed by the Minister for Finance. I would just reiterate that we already allow taxpayers on IRAS' GIRO scheme to pay their income tax in up to 12 monthly interest-free instalments. A taxpayer who faces financial hardship may apply to IRAS for longer instalment plans.

With regard to Mr Low Thia Khiang's query on the considerations for introducing new taxes, again, the Minister for Finance has spoken about them in his Budget Round-up Speech. Let me just reiterate a few points.

First, we would all like the Government to do more, but we must always ensure that our fiscal system is one that secures a better future for the next generation and not leave them with a bigger debt burden. Any programme we put in place must be sustainable for the long term. And that is why we are studying all options carefully to determine the best way to raise revenues to support our future expenditure needs.

Second, we must ensure that the overall fiscal system remains competitive, supports economic dynamism and reinforces individual effort. So, whatever adjustments we make, these key principles remain. Then, we can continue to keep our economy growing and create more jobs for Singaporeans.

In this regard, Assoc Prof Randolph Tan is right that we also have to be mindful of income tax changes in other countries. Around the world, corporate income tax rates have been falling, and some countries have announced plans to further reduce their corporate income tax rates. At 17%, our corporate income tax rate is still competitive internationally. But we will continue to monitor the trends and ensure that our tax system remains competitive and pro-growth.

At the same time, I should add that our competitiveness is not just based on taxes alone. We compete on many other factors − our quality workforce, rule of law, good corporate governance and infrastructure. All these have helped to build Singapore's reputation of trust, integrity and reliability and given businesses the certainty to invest here for the long term. We will continue to build on these strengths and the CFE recommendations provide clear steps for us to take over the coming years.

Finally, we want to maintain a progressive system of taxes and benefits. It is a system where the higher-income households contribute more of the taxes and the lower-income households receive more of the benefits. And this is also why we have designed our GST system with a permanent scheme of GST Vouchers so that the overall system is progressive, with the rich paying more. And this is how we help lower- and middle-income Singaporeans to have better lives and build a society that all Singaporeans can truly benefit from. So, we will continue to build on this progressive system of taxes and transfers, even as we consider revenue options for the future.

Mdm Chairman, the Singapore economy is now more complex and diverse than it was in the past. There are more interests and stakeholders involved. So, no single command entity can drive our economy. We need to forge stronger partnerships to reinforce our mutual efforts, tackle common challenges and move forward together. MOF and the Government agencies are committed to working with our partners in this shared effort. I believe I have addressed Members' questions on the first cut and I will leave Senior Minister of State Ms Indranee Rajah to take the others.

The Senior Minister of State for Finance (Ms Indranee Rajah): Mdm Chairperson, Mr Low Thia Khiang suggested that we set up an independent Office for Budget Responsibility (OBR), such as those in other countries, and he referred specifically to the OBR in the UK.

While it is always useful to look at what other countries do, it is important to remember that what is done in one country is not always necessary or relevant to another. In determining whether to adopt institutions similar to those elsewhere, it is also important to understand the context in which those institutions were established.

The OBR was set up in the UK in 2010 and the context in which it was set up is as follows.

The new Conservative Liberal Democrat coalition government had just taken over from the Labour government after the general election. They were burdened by a huge deficit inherited from the previous government. There was little confidence in government economic and fiscal planning. This can be seen from the speech of the then Chancellor Mr George Osborne when he announced the setting up of the OBR. And this is what he said:

"So, today, less than a week after taking office, I want to explain some of the early arrangements for dealing with the fiscal crisis left by the last Government.

First, let me just tell you some of the stark facts. Last year, our budget deficit was the largest ever it has been in our peacetime history. This year, it is set to be among the largest in the world. According to the IMF and the European Commission, it will be the largest in the G7 and the largest in the European Union. This is the legacy of thirteen years of fiscal irresponsibility."

Mr Osborne went on to highlight the urgent need to tackle the deficit and said that the first part of their approach was to boost credibility and confidence in the UK's fiscal framework. In that context, he said the UK urgently needed a full, independent assessment of how bad their problem really was.

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He went on to say, "Over the last 13 years, the public and markets have completely lost confidence in government economic forecasts. The last government's forecasts for growth in the economy, over the past 10 years, have, on average, been out by £13 billion. Their forecasts of the budget deficit three years ahead have, on average, been out by £40 billion. Unsurprisingly, these forecasting errors have almost always been in the wrong direction. The conclusion is clear. We need long-lasting change in the way we put together the budgets in this country. The final decision on the forecast has always been made by the Chancellor, not independent officials, and that is precisely the problem."

Mr George Osborne's view was that a significant part of the problem in the UK was because of "the temptation to fiddle the figures, to nudge up a growth forecast here or reduce a borrowing number there, to make the figures add up and that had proved too great".

And so, there you have, in the words of the UK Chancellor, the context of the OBR and why the UK set it up − which is huge deficits and unreliable budgeting. Likewise, a number of other Organisation for Economic Co-operation and Development (OECD) countries have set up budget offices or fiscal councils in the aftermath of the global financial crisis as the surge of government deficits and debts" left countries worried that fiscal rules were insufficient and "governments wanted to boost the credibility of their financial promises" to financial markets.

That is not the case here in Singapore. Our situation is very different. Our Government has a strong track record of sound finances. While many other countries are in a net debt position, we have consistently spent within our means and achieved a balanced Budget in each successive term of Government. A good example is the Pioneer Generation Package, announced in Budget 2014. We set aside $8 billion from Current Reserves to help fund this.

To ensure the long-term sustainability of our expenditures, this Government has consistently also taken the approach of preparing ahead for spending needs. This Budget is a good example of this approach. The Minister for Finance has highlighted the longer-term increase in healthcare and infrastructure needs and has signaled that we will be reviewing revenue measures to meet this expenditure. This is the right approach − spending prudently and effectively and growing our revenues fairly and sustainably.

We have in place a strong system of fiscal rules and safeguards to ensure fiscal sustainability. This is provided for in our Constitution. The Government is required to seek Parliament's approval for its expenditures during each year's Budget. The annual Budget Debate and COS provide the opportunity for Members of Parliament to raise questions and scrutinise Government policies and programmes. Parliament is supported by the Estimates Committee, which examines the Government's Budget.

The Elected President, advised by the Council of Presidential Advisors, holds the second key to our Reserves. At each year's Budget, the President may veto the Budget if he is of the opinion that it is likely to draw on Past Reserves. This effectively instils discipline for the Government to achieve a balanced Budget over each term of office. The Government's accounts are audited by the Auditor-General's Office (AGO). The AGO's findings are reported to the Public Accounts Committee (PAC), which can call on the relevant agencies to explain lapses or take corrective actions.

The net result is that markets have confidence in our system. This can also be seen from the fact that we are among the few countries today that continue to enjoy AAA credit rating.

I move on to Mr Leon Perera's cut. He had referred to the recruitment of a former civil servant in GLC. I should, at the outset, explain that the GLCs operate as commercial entities. The Government does not get involved in the recruitment of their senior management. That is something which they do very much as a matter of their own needs.

GLCs, like other companies, recruit senior managers based on their circumstances and their needs. At the more senior levels, experience can cover a wide range of domains. It may mean industry-specific knowledge or functional expertise, like recruiting a finance professional to be the Chief Financial Officer (CFO). It may encompass broader management experience in organisational transformation or leadership qualities.

At the end of the day, it is for each company to decide what is most relevant or useful for it. Mr Perera might have been under the impression that GLCs recruit only from the public sector, but that is not the case. If you take a sampling, for example, we have seen leaders who are promoted from within organisations, such as Singapore Telecommunications' (Singtel's) Group CEO, Ms Chua Sock Koong, who first joined Singtel in 1989, and then we have Singapore Airlines' (SIA's) CEO, Mr Goh Choon Phong, who joined SIA in 1990. These are people promoted from the ranks.

Then we also have lateral recruitment. There are leaders who are recruited from other companies, like Mr Tan Chong Meng, who was with Shell before joining the Port of Singapore Authority (PSA), and Mr Piyush Gupta who held various senior management roles at Citigroup before joining DBS Group as CEO, and Mr Neil McGregor who will succeed Mr Tang Kin Fei as Sembcorp Group President and CEO with effect from April 2017. Mr McGregor is currently the Senior Managing Director and Head of Energy and Resources at Temasek International. He was previously a CEO of LNG Corporation and Managing Director of YTL PowerSeraya.

So, you can see that the GLCs recruit from diverse sources. Obviously, the Civil Service may be one of those sources, but it is not the only source. At the end of the day, they recruit just as other companies do, which is, they look for the right talent for the right need and they recruit based on merit.

I move on now to some of the other cuts.

Some of the Members have also asked how we set the eligibility criteria for our social schemes. Mr Edwin Tong and Mr Murali Pillai asked if our means-testing criteria are sufficiently flexible to accommodate diverse circumstances. Assoc Prof Randolph Tan asked if our schemes can be made more targeted. The queries raised by the three Members reflect the wide and diverse views on how social schemes can be designed.

In designing our social schemes, we are guided by a few key principles. First, what is the objective of the scheme? If it is a scheme to support the needy, the eligibility criteria will be set to target the intended beneficiaries. If it is meant to benefit more, the criteria will have to be set for a broader coverage. Second, is the scheme design fair and progressive? We want to make sure that those with less receive more support. But at the same time, we want to design the scheme in a way that does not erode our societal values of family and community support and, more importantly, the value of a strong work ethic that Singaporeans share. Third, is the scheme sustainable? We have a responsibility to ensure that each generation does not burden the next with unsustainable spending.

This is why we have schemes with different objectives to support Singaporeans in different circumstances and with different needs. This is our approach of providing gradated tiers of support, so that every Singaporean can benefit from our social schemes in one way or another.

We have schemes that support strategic objectives, such as better education and health outcomes. These cover all Singaporeans, regardless of income or wealth. Those with lower incomes receive more assistance, which should be the case, but Singaporeans across the board receive some support.

For example, eligibility for the SkillsFuture Credit, the Pioneer Generation Package and the Marriage and Parenthood Package is not dependent on income or wealth. For schemes, such as childcare, education and some healthcare subsidies, all Singaporeans can receive benefits, but those with lower incomes generally receive more assistance, which should be the case.

We also have schemes that are more targeted. Some provide benefits not just to the lower income, but also to the middle income, for example, subsidies for housing and intermediate and long-term care. Others are more tightly scoped for those who need more help. These can range from MOE's Financial Assistance Scheme, WIS and the Silver Support Scheme. By the way, the Silver Support Scheme is not for all HDB dwellers, but only for seniors who have had low income through life and now have little family support; likewise, ComCare and MediFund as safety nets for those in need.

Assoc Prof Randolph Tan spoke about the "broad" coverage of the GST Voucher (GSTV). The GSTV has different components, each with a different objective. For instance, the GSTV − Cash payment, is meant to help the lower income offset some of the cost of daily living. The eligibility criteria are deliberately set such that coverage is broader than schemes like ComCare and MediFund which target only the very needy. In this way, we can cover more Singaporeans with lower income.

Meanwhile, the GSTV and Utilities (U)-Save are meant to help both lower- and middle-income households offset some of their utilities expenses. By extending the benefit to eligible HDB households, we cover about 70% of properties, including the middle-income group.

If we put together all our different social schemes, we have a progressive social system where support is extended to all, but those with greater need receive more. I agree with Assoc Prof Tan's caution that we need to avoid a creep towards all schemes giving something for everyone. By careful design, we can have a system that is sustainable.

Mr Murali Pillai and Mr Edwin Tong raised thoughtful points about our current means-testing system. Broadly speaking, our means-testing criteria consider income or wealth, or a combination of both, in order to determine how much support to give. For some schemes, we also consider the number of dependants in a household, with per capita means-testing criteria. This is fair and helps us target our schemes at those who need more assistance.

Nonetheless, we recognise that no criterion is perfect. Each come with trade-offs. For instance, a wealth criterion that requires an individual to report his personal savings may be a more accurate assessment of his wealth, but that would require the citizen to apply for benefits rather than receive them automatically. The annual value (AV) of property criterion, which does not need to be separately reported, allows us to deliver benefits automatically.

Different trade-offs arise with other means-testing criteria. I thank Mr Murali Pillai for pointing out the limitations of using household income and for his suggestion to migrate to family means-testing. Even if data analytics can map our family trees based on administrative data like births, deaths, marriages and divorces, it may not fully capture family relationships, which can be complex and fluid. The Government is also not privy to family dynamics.

Hence, to date, the household income remains the best available proxy for family support. But we will keep in mind good and practical ideas on how to improve on this. I thank the Members for their suggestions. There is another benefit of household means-testing. It enables us to make it more convenient for Singaporeans to benefit from our social schemes, as applicants do not need to provide information on family members who do not stay with them.

Mr Edwin Tong also spoke about schemes that do not apply to those who live in private housing. Our underlying principle is to provide support according to need, and those in private housing are generally better off than those in public housing. Nevertheless, there are schemes which extend to those in private housing.

For example, all Singaporeans, including those who live in private housing, can receive retraining support, subsidies for inpatient and outpatient care, and preschool and education subsidies. Education can be quite significant. For instance, a child entering primary school in 2016 would stand to benefit from over $100,000 in today's terms in education subsidies by the time he/she completes secondary school. With post-secondary education, it is even more.

When property is taken into consideration, many schemes consider the AV with a threshold of $13,000 and/or $21,000. The AV is reviewed annually. An AV threshold of $13,000 already covers all HDB flats, while the AV threshold of $21,000 covers about 80% of residential properties, including some lower-value private properties. This means only those who live in private properties with AVs in the top 20% are excluded. In short, while there is always room for improvement, what we have today is a system that is fair and inclusive. At the same time, we exercise flexibility and will consider appeals on a case-by-case basis. Those in genuine need of help will receive help.

Mr Edwin Tong highlighted cases in which a resident may be living in a private property under extenuating circumstances, for instance, renting only one room or living with friends in a private property on goodwill terms. For these, if they have any specific needs, the best approach would be to appeal to the relevant agencies, which will consider various appeals on a case-by-case basis and on their merits. There may also be schemes at the constituency level that can be tapped on, and these can be checked at the respective constituency offices.

4.00 pm

Mr Edwin Tong has also highlighted that HDB dwellers receive on average about four times the amount of Government transfers when compared to private estate dwellers in 2016. I would like to clarify that this is correct if you compare the transfers received by 1- and 2-room HDB flat residents with those living in private properties. This is a reflection of our progressive system. But if you take into account 3-, 4- and 5-room flats, then the ratio is different.

We have been able to achieve good social outcomes, including when compared to other countries. For example, we have one of the highest home ownership rates in the world. More than 90% of Singaporeans, including many young Singaporeans, are homeowners. Compare this to Britain, for example, where the rate of home ownership among those aged 25 to 34 has fallen by about 20% in the past decade, from 59% to 37%.

Our education system provides our students with a good foundation. Our students consistently do well in many international education rankings. But besides developing our students intellectually, we have also placed a lot of emphasis on values and character development, as part of holistic education.

Our healthcare system is recognised for providing good quality and affordable care in a sustainable way. The Bloomberg Healthcare Efficiency Index, which considers life expectancy and total healthcare costs per capita and as a percentage of GDP, places us near the top consistently. We do not claim to have the best system, but we have done quite well over the years.

Going forward, we will need to manage rising healthcare costs, while helping older Singaporeans age well. The Government will continue to improve our social programmes and schemes to foster a caring and inclusive society. But the Government cannot achieve this outcome alone. As the Finance Minister has stressed in his Budget speech, we will need to work in partnership with community organisations and individuals, especially since many of our social challenges are complex and multi-dimensional.

Madam, allow me to conclude. One key theme has recurred in these discussions. It is about the role of Government in catalysing growth and building a strong and resilient society. We will do this within a credible and trustworthy system of checks and balances.

We have made good progress in these areas and we will continue to refine and improve. We are committed to work in partnership with our businesses, the unions and citizens in this journey.

The Chairman: Mr Liang Eng Hwa.

Mr Liang Eng Hwa: Madam, I just want to ask the Minister on the progress of the MyInfo portal which was launched last year. How has the take-up been like? And given that this is a voluntary system where you need to get consent from the users, how does the Government intend to incentivise more users to sign up, and because this is really a good start to the digitalisation journey where there is just one touchpoint? There is this convenience of not having to fill up personal data in the system. So, what would the Government do to get more sign-ups in this area?

Mr Lawrence Wong: Madam, as I mentioned earlier, later this year, we will be making available MyInfo service to all SingPass users. So, that will mean that all SingPass users can potentially access this service where, through one touch, you can automatically fill up information and forms with different Government agencies. I think it is a very convenient service.

The Member is right that we cannot force people to use the service. Ultimately, Singaporeans must also give consent for their data to be shared for privacy reasons. There will be effort to reach out and educate people and to show them how useful the service is, what can it do for them, the convenience that it provides and, through that, we hope the take-up of the service will eventually start to go up over time.

The Chairman: Mr Low Thia Khiang.

Mr Low Thia Khiang: Madam, I asked two specific questions on GST. I would like to seek clarification from the Minister: one, would the Government raise GST before the end of this decade, whether it is yes or no?

Secondly, does the Minister agree that GSTVs do not fully offset the amount of GST paid by lower-income households?

Madam, on my cut on OBR, I would like to thank the Senior Minister of State for her explanation why OBR is not needed here and also for explaining the context in which OBR was set up in other countries. I have the following clarifications: one, do we need to wait till the international market loses confidence in us to set up such institutions? I thought the Government is always preparing for rainy days? We are talking about "未 雨 绸 缪 ".

The second clarification: does the Senior Minister of State not agree that such an independent institution will enhance public confidence in the Government's expenditure and why the need to raise the tax? I suppose it would be easier to justify when such an independent organisation explains.

The third clarification: does the Senior Minister of State not agree that such an independent institution could provide useful input to the Elected President? Or whether the Government draws from past Reserve? Currently, the Elected President has no independent institution that can help him except advice by the Government?

Mr Lawrence Wong: Madam, in response to questions that Mr Low raised, I would say that, as the Finance Minister said, we are studying all revenue options. Let us do not jump to the conclusion of which particular tax is going to be increased or when. The point is that we are preparing ahead and we are studying and keeping all options open at this time.

GST is a progressive tax the way we have designed it. It is not a question of whether the offsets are sufficient to cover everything that the low income has to pay, but it is the overall progressivity of the system. The way we have designed GST with a permanent voucher is to make it a progressive consumption tax. That is the way the system is designed. We have had many debates in this House about this particular design feature of our GST system. More fundamentally on this issue, we have to ask ourselves, and if I could ask Mr Low these two questions.

Firstly, do we agree that our longer-term expenditures, despite our best efforts to be prudent in spending, whatever we do, do we agree that our long-term expenditures are going to go up, particularly in areas like healthcare, with a population that is ageing rapidly and with huge infrastructure requirements that we do need to put in place to prevent our basic infrastructure from deteriorating and decaying? Do we agree that these long-term expenditures are going to go up?

Second, if we agree that long-term expenditures are going to go up, is it not proper and responsible and prudent for the Government to start thinking ahead of what these expenditure needs are and preparing for all options and studying what revenue options we need to prepare for this eventuality?

That is where we are today, and that is why the Finance Minister has highlighted in his speech to study all options.

The Chairman: Mr Low Thia Khiang.

Mr Low Thia Khiang: Madam, I would like to clarify in response to the Minister's questions, that yes, I would expect the long-term expenditure to go up because of the ageing population and the need for infrastructure development. But that does not mean that you will have to raise taxes. Are there other forms of revenue that we can look at, for instance, revenues from land sales, which my colleague has brought up during the Budget Debate?

Secondly, is it not what a responsible Government should do to have an independent institution, like what I suggested, so that the independent institution can study the expenditures by the Government on what is necessary, what is not or what can be cut back, and also explore other possible revenues, rather than raise taxes? It could also look at what are the taxes that should be raised and whether it is justifiable to do so.

I would expect a responsible Government to allow information to be accessed by an independent agency. And then, people can have ample time and ample advice by an independent institution, rather than MOF.

Mr Lawrence Wong: Madam, I believe the Finance Minister had explained in the Budget Round-up Speech that land sales, revenues go into our past Reserves. So, unless the Workers' Party would like the Government to use past revenues, then this option is not going to be made available.

And Mr Low said we should study all taxes, all different forms of revenues, before making a decision. But this is what we are doing. We are studying all revenue options, we are keeping all options open, and we are looking at different possibilities to ensure that we have a sustainable fiscal system for the long term.

And on the point of accountability, I will leave the Senior Minister of State to make the clarifications.

Ms Indranee Rajah: Mdm Chairperson, before I answer, may I just clarify with Mr Low his first and second clarifications? For the first clarification, he said, "Do we need to wait until the international market", and then something? I am sorry, I missed that word. Could he just repeat?

Mr Low Thia Khiang: Lose confidence.

Ms Indranee Rajah: Lose confidence, I see. Lose confidence in us, you mean? All right. And the second clarification, because Mr Low went so quickly, I am afraid that I could not catch his question. Something about having such independent institutions to enhance something?

Mr Low Thia Khiang: Public confidence.

Ms Indranee Rajah: All right. I thank Mr Low for clarifying that.

With regard to the first clarification on whether we should need to wait till international markets to lose confidence before setting up such an institution, I think the correct approach to take is to make sure that international markets do not lose confidence in us to begin with.

This has actually been our approach for the last 50 years. It is an approach of fiscal discipline, financial prudence, effective spending, sustainable revenues. And this is all underpinned by the constitutional safeguards. So, the short answer really to that clarification is that we must make sure that we never get to that situation. We are already in the situation where international markets have confidence in us, and that is indicated by our AAA rating. So, we must continue to do as we have been doing, which is to maintain fiscal discipline and financial prudence.

The second question on whether having such an independent institution will enhance public confidence, it really goes back to the same thing. You have to make sure that whatever you do, you spend within your means, you do not rack up huge deficits, that you stay within your forecasts and you just make sure that, basically, you do not spend beyond your means. So, the answer to the second question is really the same as the answer to the first question.

The Member's third question was whether or not, having such an institution could provide useful inputs to the Elected President. The Elected President, of course, has access to the Council of Presidential Advisors, but he is not precluded from seeking expertise from consultants or any other sort of expertise that he may need in order to make the kind of decisions that he needs to make under the Constitution. So, it does not necessarily have to take the form of an OBR. The expertise is out there available to him, and he can avail himself of it as and when he needs it, if and when he thinks he needs it.

The Chairman: Mr Liang Eng Hwa, please withdraw your amendment.

Mr Liang Eng Hwa: Mdm Chair, I want to thank Minister Lawrence Wong and Senior Minister of State Indranee for the comprehensive answers, notwithstanding a very short guillotine time, and also the hardworking MOF team for the Budget, and Minister Heng for coming back and delivering a far-sighted Budget and staying the course and readying Singaporeans for the future landscape with confidence. With that, Mdm Chairman, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $800,157,600 for Head M ordered to stand part of the Main Estimates.

The sum of $184,120,400 for Head M ordered to stand part of the Development Estimates.