Debate on Annual Budget Statement

Debate resumed.

7.00 pm

Mr Dennis Tan Lip Fong (Non-Constituency Member): Thank you, Mr Deputy Speaker. In these uncertain times, we need to build resilience in many ways. Does the Budget this year help to build that resiliency? I would like to touch on a few points in the Budget where it seems our resilience is being tested as we speak.

Mr Deputy Speaker, environmental resiliency is a big concern in a world where climate change is increasing front and centre of policy agendas everywhere. We see elements of this in Budget 2019 where Minister Heng Swee Keat announced that the excise duty on diesel fuel has been increased from $0.10 to $0.20 per litre with immediate effect. While there were positive results, my concerns have remained unchanged from 2017 when the diesel excise tax was introduced. Indeed, my concern is that while we care about environmental resiliency, we may be doing this at the expense of economic resiliency.

Diesel is the common fuel for most taxis, public and private buses, delivery vans, pick-ups, lorries and many other different types of heavy vehicles. The announced road tax rebates for commercial diesel vehicles are not going to completely offset the excise tax payable according to usage. Taxi drivers are already complaining about this. Moreover, such rebates are really short term measures and ultimately operators and owners will face the full effect of the price increase for their businesses. They will have to pass the increases to their customers downstream sooner or later.

In short, this diesel tax increase will mean an increase in transportation expenses, which will translate to higher costs for all kinds of businesses in Singapore requiring directly or indirectly transportation.

Until all public buses are converted to electric ones, diesel tax increase will increase the operating costs of our Public Transport Operators. Is this really necessary? Will that lead to fare increase again at some point? Why penalise taxi drivers who do not own the taxis they drive? How soon can the taxi fleet be converted to hybrids or even to the use of fully electric cars for taxis?

While environmental concerns are understandable, and while the Minister can talk about some car owners and taxi companies switching to hybrids, the vast majority of existing vehicles using diesel have no other options for an immediate switch at the moment. If the message that the Government wants to send is that diesel is bad for our environment, what are the hybrid or fully electric options that the Government is providing at this moment for users to switch to non-diesel vehicles, especially beyond cars and taxis? If electric or hybrid options are not realistically available en masse now, the tax will just perpetuate the continuing operation of diesel vehicles with the owners paying more into the state coffers. And that does not really help the environment either.

The increase in diesel tax will only increase the cost for businesses, especially our SMEs, in an economic climate that is not rosy at all. Whether we are talking about commuters taking public buses, workers or students taking chartered buses to work or school, delivery vehicles sending goods and food, and so on, ultimately, the diesel tax raise will just increase our cost of living, diminishing our economic resiliency at a time where we may ill-afford to.

Another part where our resiliency is being tested is in our aerospace industry. In his Budget speech last week, Minister Heng mentioned that for the development of Changi East, where the new Terminal 5 will be built, the Changi Airport Group will be taking loans to fund its share of the infrastructure and the Government will provide a guarantee for the Changi East borrowings in order to reduce the cost of borrowing.

In last year’s MOT’s Committee of Supply speech, the then Second Minister for Transport Ng Chee Meng shared with this House exciting plans for the proposed building of Changi Airport Terminal 5 and the development of Changi East. The Minister spoke of it being, I quote, "a bold move to cement Changi Airport’s position as a premier air hub for the future" and that "it is critical our aviation sector can continue to grow and support the growing needs of our economy".

We are told that the scale and complexity of the project is unprecedented: new runways, new terminals, network of tunnels and system, in short, "a game changer" and "a mega terminal with satellite terminals". The Government even decided that it would foot the majority of the costs of building which will be expected to cost tens of billions of dollars. As of last year, $9 billion has been spent.

I cannot agree more that these are exciting developments for our Changi Airport, for Singapore as an international as well as regional air hub, and with good prospects. However, I am concerned whether recent announcements from Malaysia will affect our plans and more importantly the future of our air hub.

On 4 December 2018, Malaysia announced its intentions to take back its delegated airspace in southern Johor. This means that it will take back its air traffic control service arrangements over Southern Johor. Currently, Singapore has been providing air traffic control services over southern Johor through the Operational Letter of Agreement Between Kuala Lumpur and Singapore Area Control Centers Concerning Singapore Arrivals, Departures and Overflight since 1974.

Over our southern border, there has also been media reports of Indonesia demanding to take back its delegated airspace over the Riau Islands Flight Information Region.

I am certainly concerned with the possible effects of our neighbours taking back their delegated airspaces on: one, Singapore as a major air hub; two, Singapore’s aerospace industry; and, three, the development and future viability of Changi T5 and Changi East.

Are our aerospace ambitions sufficiently resilient against such uncertainties and potential shocks?

The tests of resilience also extend to our port and maritime sectors. Minister Heng mentioned in his speech that the British decision to declare Singapore a free port plugged us into an emerging network of global trade. Indeed, this is also the bicentennial of the modern port of Singapore. In this bicentennial year, it is noteworthy that over the last 200 years, as different businesses and industries rise and fall, our port has remained one constant key to Singapore’s survival and prosperity. It has in fact grown from strength to strength, thanks to our strategic location and to those who have worked hard over 200 years to keep Singapore port in its position today.

Last year, in my Budget Debate speech, I spoke of the challenges to our port and asked how long we can continue to enjoy our advantages. I mentioned of challenges from the Arctic or Northern Sea Route and the Malacca Port. There are other challenges too. At MOT’s Committee of Supply (COS) Debate last year, the long talked about possibility of a canal across the Kra Isthmus in Thailand was brought up briefly. Indeed this will be another threat too. In face of changing leadership in Thailand and the new Asian political landscape, it is uncertain whether the long talked about project can be resisted indefinitely. Besides monitoring developments, are we doing any forward scenario planning and how are going to deal with such possibility?

In November last year, Malaysia unilaterally attempted to draw a new port limit boundary off Tuas, encroaching on the waters which have long been under the jurisdiction and control of Singapore. The stand-off has continued since November 2018 and the Malaysian government vessels have remained in our port waters since. We have not attempted to dislodge them.

There was even a collision in those waters between a Malaysian government vessel and a tanker, bringing with it awkward issues of jurisdiction exercised by both port authorities for the investigation of liability.

Our port waters, being filled with so many visiting and passing vessels, are already bursting in its seams and being sandwiched between the Malaysian and Indonesian waters. I am concerned how the latest developments may affect our port or ancillary maritime businesses, whether in the short or longer run, if this is not managed and resolved appropriately by our Government in our negotiations with Malaysia.

In January this year, Mr Andreas Sohmen-Pao, Chairman, Singapore Maritime Foundation, said at the Singapore Maritime Foundation (SMF) New Year Cocktail Reception that "just as shipping fundamentals are starting to look a little better, we see new issues around geopolitics, trade policies, energy and equity market volatility which have us wondering whether the long-awaited improvements will materialise after all."

In my Budget Debate speech last year, I said that while I support the push for digitalisation and innovation under the Sea Transport Industry Transformation Map, we must not forget those who may not be able to benefit from this development. Similarly, I said that how many of our SMEs are in a position to compete in the LNG and offshore renewables identified in the industry transformation road map for marine and offshore engineering. Besides these areas, what are the future options they should be prepared for? In these still difficult market conditions, how are our industry transformation road maps helping our maritime SMEs beyond the categories which have already been talked about? I hope we can receive an update on this either here or at the COS Debate later.

There is a saying in Mandarin, "有国才有家". Overcoming tests of economic resiliency may not ultimately help our citizenry if there is no country to begin with. This underlines the importance of our security resiliency.

Minister Heng stressed in his speech the importance of keeping safe and secure and justifying that our spending is significant but indispensable. He mentioned that a strong SAF remains a bulwark against threats to our way of life.

While our spending on SAF’s military equipment and hardware may be important to keep our potential adversaries at bay, our SAF, though led at the highest levels by full-time regulars, is largely a conscript force. While equipment, hardware and spending may be important, for SAF to succeed in its defence objectives, the buy-in from our NSFs and NSmen is absolutely critical.

The Minister has said that national service has forged a deep understanding in our people that each and every one of us has the duty to defend our nation. This ought to be the case but it is something we can ill afford to assume or take for granted. It is something we must always continue to strive to achieve and maintain. In my view, it is a constant work-in-progress.

If we expect our NSFs and NSmen to take their NS training and call-ups seriously and do their utmost, they will need to be convinced that the training they do is necessary and both SAF as well as their commanders, especially senior commanders, not just their NSmen commanders, must be able to command their confidence in this respect. Equally, our NSFs and NSmen and indeed their families too must have absolute confidence in both SAF and their commanders taking responsibility for their men’s welfare and training safety, while balancing the equally important objective of operational readiness. This buy-in may be easier said than done and we need to enhance our current efforts.

As we are at our bicentennial, I look to our forefathers over the 200 years, who have displayed tremendous resilience to recover from adversity and build Singapore to what it is today. The hope is that we can continue to ace the tests of resiliency that come our way as a people. Mr Deputy Speaker, may I end my speech in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.]: Mr Deputy Speaker, Sir, the Merdeka Generation Package appears to be the highlight of this Budget.

The generation being honoured truly deserves to be named the Merdeka Generation. Not because they happened to be born in the 1950s, just as Singapore fought and got its independence, beginning with self-rule in 1959, but because this generation was imbued with the spirit of independence and imparted the spirit of independence to future generations.

As a generation who embodied and imparted the spirit of independence, the Merdekas should be enabled to age with independence. Ageing with independence is the ability of our seniors to retire on their own, with as little financial dependence as possible on their children, siblings and other family members, and also on the Government and welfare organisations. Except for incidents of serious illness and accidents, seniors ageing with independence will be able to care for themselves or pay for the care that they require to lead purposeful golden years. Indeed, we should work towards this goal for all our seniors, both now and in future.

We need and we should calibrate our healthcare, manpower, social pension, housing and gender policies to make sure all our seniors, both now and in future, age with independence. The Workers’ Party has five proposals to enable our seniors to age with independence.

First, CHAS auto-enrolment and outpatient subsidies should kick in for all Singaporeans who turn 60 years old to plug the primary care gap in our universal healthcare system.

Second, the retirement age be removed, re-employment age raised to 70 years old and CPF contribution for older workers restored so that our seniors can continue working as long as they can and want.

Third, the CPF be transformed into a safety net for seniors, that payout eligibility age be lowered to 60 years old and members be allowed to make partial withdrawals if incapacitated to work for a period of time.

Fourth, ageing in place be deepened by promoting the Lease Buyback Scheme to the Merdekas.

Fifth, close the gender gap in CPF and other savings for our senior women by increasing the Medisave top-ups for them and the participation incentive for them to enrol in CareShield Life.

Ageing with independence is ageing with dignity for our seniors. If we have missed our chances with the Pioneers, we should not miss this opportunity with the Merdekas and all future generations of seniors.

7.17 pm

The Senior Minister of State for Education and Trade and Industry (Mr Chee Hong Tat): Mr Deputy Speaker, I thank Members for their speeches on the economy, workers and jobs. It is important that we focus on economic growth as this is linked to our ability to create good jobs for Singaporeans; generate resources for our social and security needs; and provide opportunities for future generations. MTI and MOM will address these issues more fully during our Committee of Supply Debates.

Today, I will explain why the Government had to make the difficult decision of tightening the Dependency Ratio Ceiling (DRC) and the S Pass sub-DRC for the Services sector in 2020 and 2021. This will impact industries like accommodation, information and communications, food services, retail and professional services. I will also discuss how the Government, employers and workers can jointly tackle the challenges going forward.

Let me start by commending our mainstream media for their insightful and balanced pieces on the DRC issue. In particular, I want to highlight a well-written editorial by Zaobao on 22 February, which presented the trade-offs clearly and explained why the tightening is necessary.

The number of S Pass and Work Permit holders in the Services sector has increased by 34,000 in the last three years. In fact, the S Pass numbers are the highest we have seen in the last five years. The editorial hit the nail on the head by observing that if the total number of foreign workers rises too quickly, it will affect the employment outcomes of local workers and lead to socio-political problems in Singapore. We have seen this happen in other countries.

Indeed, this is the key reason why the Government proceeded with the DRC tightening. We knew it would be painful for the affected companies, and we agonised over this difficult decision during our many rounds of inter-ministry discussions. On balance, we decided that it was better to make a move now to moderate the overall number of foreign workers in Singapore before the problem gets out of hand. As the Zaobao editorial said, the DRC tightening is necessary bitter medicine, “治本的苦口良药”.

We are aware that many companies in the Services sector are facing labour constraints, and some have started to invest in productivity improvements by adopting technology and re-engineering their processes. Ms Denise Phua and Mr Douglas Foo spoke about this. Our economic agencies like ESG and STB have been working closely with the companies and industry associations. I attend regular dialogues with our companies, including sessions organised by NTUC in my capacity as Adviser to U-SME. My colleagues and I also visit Services sector companies and witness first-hand how they have been working hard to implement productivity measures and upskill their workers through SkillsFuture training.

The hard work is starting to bear fruit, we need to keep it up. If we look at the real value-added per actual hour worked from 2013 to 2018, which is one measure of productivity, it has increased by 4.4% per annum for the accommodation industry, 3.2% per annum for retail trade and 1.4% per annum for food services. In the accommodation industry, for example, total manpower declined by about 1% between 2013 to 2018, even though total room stock increased by 4% during the same period. These positive results were due to our companies’ efforts to innovate, upskill their workers and adopt progressive work practices.

What I shared above are the average numbers for each industry, we can expect some companies to be above and some companies to be below these averages. But the outcomes show that our productivity measures are producing results. The key is now how to spread these efforts and benefit more companies, and for the more successful ones to eventually scale up and expand overseas.

I agree with business leaders and Members like Mr Seah Kian Peng and Ms Jessica Tan who cautioned that technology is not a silver bullet and cannot completely replace the need for human workers, especially in customer service roles. Technology is a tool and an enabler, and what results we achieve ultimately depends on how well we use the tool. But we also know that in the current operating environment, it is important for all companies – big or small, traditional or modern – to have a good understanding of technology and what it can do to improve their products, reduce costs and enhance service quality. Otherwise, you risk being overtaken by your competitors. To paraphrase a Chinese saying, “科技不是万能，但不懂得用科技就万万不能”. Technology is not everything, but if you do not make good use of technology, there are many things you cannot achieve.

Sir, the Government will continue to help our companies and we will increase our efforts in these areas. I thank Mr Douglas Foo and our TACs for their partnership. We will work with industry associations to reach out to their members and enhance the support we provide to companies that want to transform their operations. For example, we will be enhancing the Productivity Solutions Grant (PSG) to include a new subsidy of up to $10,000 for employer-led training. We will also extend enhanced support under the PSG and Enterprise Development Grant (EDG), keeping the maximum co-funding by the Government at 70% to support enterprise transformation.

Under MTI’s Pro-Enterprise Panel, we work with industry associations and companies to review government rules and regulations, to support new business ideas and look for ways to reduce licensing costs.

Using this approach, we made several rule changes over the past months which have been welcomed by our enterprises. There are more changes in the pipeline, including a project to simplify the licensing requirements for food services companies. We will be launching the pilot system for beta-testing in May. So far, we have managed to consolidate the number of forms that businesses need to submit from 14 to 1; reduced the number of data fields required from 845 to 130; slashed licensing fees by up to $500; and shortened the processing time by two weeks.

My colleagues and I are working hard on rules review because we believe it supports entrepreneurship and innovation, which are critical elements to achieve our economic transformation goals.

We understand that the transformation journey for our companies can be a daunting and difficult challenge. Government agencies and industry associations will walk this journey together with you – this is our commitment to our companies. If you want to transform and you are willing to put in the effort to do so, we will help you.

Let us work together to have a pro-enterprise, pro-worker economy, where we can continue to achieve economic growth to provide good jobs for our workers and a good life for our people. Mr Deputy Speaker, please allow me to say a few words in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.]: I am heartened that business owners and workers across various sectors have been working hard to raise productivity and transform their enterprises. Take our home-grown F&B company Jumbo Group as an example. Last year, I went on a tour of Jumbo’s new central kitchen facility and saw how the company has automated its production of sauces and soup bases. Besides reducing Jumbo’s labour requirements, this has allowed for better quality control in the production process. Jumbo also developed a mobile app to facilitate short-term job placements, which has helped to alleviate manpower shortages during peak periods.

Heartland shops can also adopt technology solutions with support from Enterprise Singapore. Ngee Soon Jewellery is an example of a company that has managed to do so successfully. In 2014, Ngee Soon implemented an RFID system, which allowed them to reduce the amount of time taken for daily stocktaking by more than 50%. The system also minimises human error and improves the accuracy of stocktaking. Ngee Soon’s staff can, therefore, devote more time and attention to serving customers and generating sales.

All companies, no matter big or small, modern or traditional, have to transform to increase their competitiveness. The Government and industry associations will walk this journey together with our companies. This is our commitment to the business community. Let us stand united, press on in the face of any challenges and work together to build a pro-enterprise, pro-worker Singapore. Thank you.

(In English): Sir, I would now like to respond to some of the points from the Workers' Party Members of Parliament. I may need a little bit more time, Sir.

7.27 pm

Mr Deputy Speaker: Okay. Leader of the House.

Mr Deputy Speaker: Senior Minister of State, please proceed.

The Senior Minister of State for Trade and Industry (Mr Chee Hong Tat): Thank you, Sir. Sir, Mr Pritam Singh and several of the Workers' Party Members of Parliament spoke about universal healthcare subsidies for all seniors. I would like to share with the House that today, we already have quite a number of healthcare subsidies that are structural. So, it is not cohort-based. In fact, polyclinic subsidies are universal. Seniors who go to polyclinics get additional subsidies compared to other patients. This is part of the primary care network that Mr Pritam Singh and Assoc Prof Daniel Goh spoke about.

MediShield Life – for all, for life. This is a universal healthcare insurance that protects Singaporeans against large hospital bills, with premium subsidies and additional premium support from Government to help low-income Singaporeans and middle-income Singaporeans pay for their premiums. So, it is not quite accurate for Assoc Prof Goh to describe it as Singaporeans pay for each other, Government saves money. Actually, Government pays quite a bit of the premiums through premium subsidies and additional premium support. This is part of the sharing.

The same principle is applied for CareShield Life. There are premium subsidies, there is also additional premium support, and these are part of the design of the scheme. It is not cohort-based. It is structural.

CHAS, we will be enhancing the coverage of CHAS to benefit even more Singaporeans, especially for chronic care. In 2017, and this is before the enhancement, more than 650,000 Singaporeans benefited from $154 million of CHAS subsidies. And we will enhance the coverage, we will enhance the help that Singaporeans can get, the benefits that Singaporeans can get under CHAS, as part of enhancing primary care and giving Singaporeans greater peace of mind.

In our hospitals, in our Specialist Outpatient Clinics (SOCs), in our nursing homes, there are also structural subsidies. These are means tested because we want to give more help to lower and middle income Singaporeans. When we introduce packages that are cohort-based, like the Pioneer Generation Package (PGP), the Merdeka Generation Package (MGP), these are on top of the structural subsidies that are already provided in the system for all Singaporeans.

Mr Singh claimed that the MGP gives off a pungent odour of an unfair advantage for the electoral prospects of the PAP, I hope I heard him correctly. Now, I wonder why Workers' Party chose to use such an unpleasant description. And to focus on politicising this tribute to our MGs. The Opposition calls for the Government to give more and yet when the Government gives more to help Singaporeans, the Workers' Party criticises the move as an election tactic. You cannot have it both ways. Please make up your mind and decide where you stand.

As previously explained, we are setting aside funds from current Budget surpluses to give our MGs greater peace of mind and encourage them to stay active and stay healthy. It is also to show our heartfelt appreciation to our MGs for their sacrifices and contributions to Singapore during the early years of our nation building. So, let us not diminish the significance of the PGP and the MGP.

It is misleading to link these packages to election cycles. We have explained this point before in the House, but let me say it again, because Mr Pritam Singh brought it up. The way we derive the surpluses is that you have to earn these surpluses during the term of Government. And then you set them aside, the surpluses that you have accumulated, to fund the PGP and the MGP. You cannot do this at the start of the term because you do not know at that point how much surpluses you are going to have and how much surpluses you can set aside to fund these packages. These have been explained before. It is part of the design of our system for financial prudence and sustainability.

To look after our current generation as well as future generations, we must plan for the long term. And this is what a responsible Government needs to do, to ensure that our policies and programmes are financially sustainable for the current and future generations. What is the size of the bill, where are the funds coming from, how do we achieve maximum value for money, these are important questions.

What we can provide for future cohorts of Singaporeans and how much resources we have to invest in our people and to continue to rejuvenate our communities, our infrastructure, these will depend on whether Singapore continues to have constructive politics, good Government, strong economy and a cohesive society. Sir, I support the Budget. [Applause]

Mr Deputy Speaker: Leader of the House.