Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [20 February 2017]

"That Parliament approves the financial policy of the Government for the financial year 1 April 2017 to 31 March 2018." – [Minister for Finance].

Question again proposed.

Mr Ganesh Rajaram (Nominated Member): Mdm Speaker, thank you for allowing me the privilege of speaking in these Budget Debates. I think I speak for everyone in this House when I say that perhaps the best thing about this year's Budget Speech was to see it being delivered by Finance Minister Heng Swee Keat. Welcome back, Sir!

I speak in support of the Government's Budget and its various initiatives that I believe are necessary in these uncertain times. They include: the promotion of digitalisation for Small and Medium Enterprises, the International Partnership Fund that encourages companies to internationalise, as well as the various public sector productivity funds that encourage innovation. These are all measures that will be crucial for businesses that need to dial up their innovation in the face of ever-faster disruptions arising from technological advances.

Mdm Speaker, while these are vital issues of concern for the livelihood of Singapore and Singaporeans, I would like to address an equally important matter: the social development of Singapore, in particular, graciousness. Or the increasing lack thereof.

Singaporeans want to be the best at whatever we do and strive hard to achieve this. It is that drive that has brought us this far and will take us further. But I wonder if this almost instinctive need to compete, to be the best, has come at the expense of graciousness, compassion and kindness. It seems to me that the more achievements and accolades we collect as a country, the harder we drive ourselves. It is a relentless drive for excellence that, in my view, has some Singaporeans climbing up the scale of increasing ungraciousness.

How else can we even begin to understand ungracious behaviour that has become everyday experiences? There are people who now drive against the flow of traffic on Singapore roads, block your way out of a lift or MRT train and complain about everything – from the noise that kids make playing football to harmless neighbourhood chickens that remind us of our kampongs.

And we must surely be one of the few countries in the world where a car indicator signal to change lanes almost always results in other drivers who speed up to prevent you from making that switch. We are not short on daily anecdotes of ungracious behaviour. We just seem to be short on patience, courtesy and kindness.

Ten years ago, in May 2007, Prime Minister Lee Hsien Loong gave a speech at the 10th anniversary of the Singapore Kindness Movement. He said, and I quote, that our efforts to build a vibrant, global city "will be in vain unless we complement them with social development, to build a Singapore with a heart. As we grow and globalise, the values of care, compassion and neighbourliness will become even more important."

Mdm Speaker, Singaporeans have been trying to be a kinder people − at least officially − for the past 20 years. I am not quite sure that we are succeeding. We have made tremendous achievements as a country along the political and economic fronts in those two decades. Can we say the same for our social development as a gracious society? Performance and graciousness are not mutually exclusive. Graciousness is a building block of a strong community and is as important as productivity, resilience and all those other qualities that define us as Singaporeans.

Research has shown, many times, that attention to the social development of a community results in deeper bonds, improved health and a culture of paying it forward. Key social values, such as graciousness, compassion and kindness will help address issues, such as the unity of our society, our attitudes toward the elderly and the development of our youth − all crucial factors in achieving the goals set out in Budget 2017. Let me explain how.

Unity as a people. Some in this House may find it surprising that I have never felt like a minority in Singapore. Yes, it is true, and it is not because I am delusional as I am fully aware that the Indians are a minority in Singapore. But the reason I have never felt like a minority is because of a life lesson I learned in an HDB lift when I was about five years old.

My mother had been walking me home from kindergarten to our 1-room rented flat in Margaret Drive. We lived on the seventh floor and had entered the lift to go up. The two middle-aged Chinese women in the lift immediately pinched their noses as soon as my mother and I entered the lift. I tugged at my mum's saree and wanted to know what was going on. She gave me a look that said "Keep quiet and behave", so I stayed silent. When we got out of the lift, I asked my mother why the women had pinched their noses. She said, "Didn't you smell it, Ganesh? Someone had spilt something in the lift and it was very smelly." I insisted that there had been no such smell in the lift, to which she replied that it was probably because I had been hiding under her saree. I was a lot smaller back then.

That incident took place about 45 years ago and her graciousness in the face of deliberate prejudice taught me a life lesson I will never forget. It shaped my deep appreciation for diversity and understanding in Singapore. Consequently, my childhood was spent running in and out of my neighbours' flats along the common corridor. I grew up thinking we were all the same − it did not matter whether we were Malay, Indian, Chinese or Eurasian. And I suspect that a lot of us from that generation grew up in similar communities.

So, when the Government introduced the Elected Presidency Bill late last year, I had thought that most Singaporeans would, like me, share similar views. The ethnicity of the President does not matter to me as long as he or she is qualified for the role and deserved to be there. However, I soon realised after attending a few community dialogue sessions that the Singapore of today is very different from the one that I grew up in. I was shocked that the community that I belonged to had some serious and deep prejudices about sub-communities within the group, perceived divisions carved along the different dialects spoken. Let me clarify that these views are held by a very, very small portion of our society, but, even then, it is worrying.

The Government has made great progress in fostering unity in the community and continues to take the lead. But surely, the rest of the unity-building must be undertaken by members of the community. Parents must still be the main role models for children to learn about graciousness and understanding. Our young learn from us and it is vital now, more than ever, that we step up and behave in a manner befitting citizens of a proudly multi-racial society.

We live in an age where the world is becoming more polarised, and communities and countries are becoming more inward-looking. Singapore's strength and resilience as a nation has always centred on our multi-racial unity. This foundation will be crucial as the nation moves into the next phase of rapid development. We will welcome more and more new Singaporeans and friends of Singapore who will join us in our transition to the economy of the future. We will need to give them time to adapt and understand our norms and the values we hold dear. We will need to be gracious, compassionate and kind, as was my mother all those years ago. Because that is what Singaporeans do.

Mdm Speaker, another area that we need to pay special attention to is the way we treat our elderly workers. By 2030, one in every five Singaporeans will be aged 65 and above. We are an ageing population and we stand on the shoulders of those who came before us. While the Government has done a tremendous amount of work in drafting legislation and schemes that protect the rights of the elderly and promote re-employment, more can be done to ensure that the elderly remain as a core driving force of our economy. The challenge we see in industry is a worrying trend of employers who seem to favour the young because of lower wages. The logic behind this thinking is that, for a fraction of the cost, a young worker can actually take on a lot more than an older worker leading to a perception of increased productivity. That is not always the case. Let me illustrate this with a real example.

A few years ago when a local telco launched its digital television service, as with any new service, there were teething problems. On two separate occasions, rather young and inexperienced technicians were sent to my home. On both occasions, after several hours, the technicians could not resolve the problem. On the third try, I asked the telco to send someone a little more senior, someone with experience, to help resolve the matter. They sent me a senior gentleman in his early 60s. He sorted out the issue in less than 15 minutes and even gave me his personal handphone number so that I could call him if I encountered any further issues. This senior technician had about six months to go before retirement and wanted to continue working. Unfortunately, it was cheaper for the company to use external vendors for his position.

These attitudes are prevalent in other industries, too. In the local media industry, we see a diminishing representation of experienced anchors and veteran journalists. Newsrooms have become very young. On international cable networks, we watch Christiane Amanpour, Wolf Blitzer, Richard Quest and natural historian Sir David Attenborough − who is in his 90s now, many of us have followed them for decades. They have paid their dues and earned their credibility. When they give an opinion, it is backed by decades of experience and stories.

In Singapore, we seem to be losing experienced talent, both in front and behind the camera, as well as in print newsrooms. The common comment I get from international media colleagues is that the newsrooms in Singapore are very "young". While there is need for a balance in the composition of the newsrooms, I do wonder, as do many older Singaporeans, if we might have a better representation of experienced news anchors and journalists.

We may have an ageing population, but that does not mean that we should hide them away from public view. Instead, age, experience and credibility should be treasured, celebrated and embraced, somewhat like fine wine, and rewarded accordingly, particularly in this era of "fake news" and "alternative reality".

Mdm Speaker, teaching the value of graciousness must begin in the home, and be reinforced in the schools. Earlier this year, Minister for Education (Schools) Mr Ng Chee Meng spoke to The Straits Times about his journey in his life from fighter pilot to Cabinet Minister. There was one particular phrase the Minister used which caught my attention − and the attention of many others, too. He used the colloquial term "chiong", and urged students to "dare to 'chiong'". Loosely translated, what this means is to go after opportunities and to make the most of opportunities. Of course, the Minister explained at length that "chionging", and I quote, "was about breaking boundaries, creating value and having that x-factor".

Sadly though, we seem to have created a system of "chiong kings" − people who "chiong" at all costs − at the expense of important values like empathy, graciousness and compassion. For a lot of parents, "chionging" means winning at all costs. This is not a bad trait if children are also taught how to moderate the amount of "chionging" because what we want to hire in industry are people who are both independent workers and team players. The key to tempering this over-enthusiastic drive to be the best is for parents and schools to ensure an equal emphasis on graciousness and compassion. The signal must be sent that gracious and compassionate behaviour are as important as good grades and impressive CCAs, for it is these values that will ultimately guide them through their adulthood and careers.

Mdm Speaker, lastly, let me touch on gratitude. There is much that Singaporeans have to be thankful for. However, these days, thanks to social media, as a society, all we seem to be doing is to complain and criticise. Social media has created a community of self-styled "experts" in crisis management − individuals who seem to be waiting in the wings to freely offer their opinions on everything from politics to PR, from sports to poultry. While some of the commentary has been constructive, much has been conjecture and assumptions that are not necessarily based on facts. These opinions and comments are shared and repeated often enough on social media that they become the "truth" in the eyes of many. This is not constructive.

Take the recent example of the Singapore Armed Forces Terrex vehicles that were detained in Hong Kong. Social media was rife with callous and irresponsible conspiracy theories and conjecture. In my humble opinion, I felt that the Government's approach and handling of this delicate situation was spot on. I commend Minister for Foreign Affairs Vivian Balakrishnan and Minister for Defence Ng Eng Hen for their gracious and measured approach on this issue. Quiet diplomacy was the key here. And after a few weeks, we got our tanks back, safe and sound.

Social media, of course, was rife with criticisms and even comparisons to governments of a bygone era, completely ignorant of the current state of geopolitics in the world. Much of the vitriol might have been predicated on an arrogance stemming from a history of accelerated development and success.

Instead, what we needed from social media was balance, a sense of gratitude and support for the way in which the Government dealt with the issue. It has become almost unfashionable to credit the Government on a job well done. It would be a shame if this self-defeating sentiment continues.

Mdm Speaker, my hope is that armchair critics and self-styled experts can learn to be constructive, not personal and abusive. Remember that the person you are criticising and abusing is someone's father, mother, son, daughter, brother or sister. Put yourself in their shoes − how would you or your family feel if it were you who was being abused online, or your photo shared without reservation? In this fragmented, polarised world where "alternative facts" and "fake news" are celebrated and validated, it is all the more important that we work together to foster a more caring and inclusive society by exercising empathy and grace. Singaporeans have much to be thankful for and even more to look forward to the in future if we can embrace these virtues.

Thank you, Mdm Speaker, I support the measures outlined in the Government's Budget.

Mdm Speaker: Thank you, Mr Rajaram. That was, indeed, a very insightful speech. Ms Sylvia Lim.

12.31 pm

Ms Sylvia Lim (Aljunied): Mdm Speaker, when the Finance Minister delivered the Budget Statement last week, the announcement which grabbed the most attention was the increase in the price of water by 30%. Besides the quantum of the increase, what shook people were the suddenness of the announcement and the very short lead time from the announcement in February to its implementation in July.

Yesterday, the Minister for the Environment and Water Resources gave various reasons for the water hike. But these reasons are longstanding. The justifications, such as increased cost of production, the need to build more desalination plants and so on, did not come up suddenly.

For the last 17 years that the water price was unchanged, did it not cross the Government's mind before this year that it would want to raise the price of water? By contrast, there is a two-year lead time for the impending carbon tax, which the Government is announcing ahead of its implementation in 2019. This lead time is welcome, as it will enable businesses and consumers to prepare, such as by strategising and investing in energy-efficient measures.

Coming back to water, why was it not possible to prepare Singaporeans for the increase to take effect in July this year, with an announcement similarly two years ahead of time − in July 2015? Perhaps, July 2015 was not a good time to make such as announcement.

Madam, the other statement in the Budget speech which caused insecurity and unease was at paragraph E.18 − that as we invest more in healthcare and infrastructure, the Government would have to raise revenues through new taxes or raise tax rates. Few people would quarrel with the need to invest more in healthcare and infrastructure. Our healthcare system is still facing capacity shortages, as seen from the 20-hour waiting times for beds at certain public hospitals.

I understand that the waiting time at some hospitals providing Long-Term Acute Care are indefinite. As for infrastructure, Singaporeans will benefit from a more comprehensive rail network, which will hopefully ease traffic congestion and provide more efficient connectivity. One legitimate question to ask, however, is whether there is an effective mechanism to assess whether expenditure that has been incurred has been effective in achieving desired outcomes.

Take, for example, the Productivity and Innovation Credit Scheme (PIC) introduced in 2010. I believe the Government's intention was to design an inclusive scheme, with less red tape, which would be easy for businesses to access. I am aware that businesses are supportive of the PIC scheme, but for various reasons, not necessarily related to productivity. For example, in 2014, a post-Budget survey conducted by KPMG, 58% of the 80 senior executives surveyed admitted using the PIC to defray operating expenses, instead of using it to raise productivity.

Madam, I am not faulting the Government for its system design at the outset, as it may not be possible to foresee initially all the ways in which a scheme may be gamed or exploited. But now that the scheme has run for some years, how effective has the PIC scheme been in achieving its aim of boosting productivity? The PIC is a huge scheme, with the Government putting in billions of public funds. Do we know whether the results were worth the huge cost? As it turned out, millions of dollars were also sucked out of the system through fraudulent or dubious PIC claims.

What lessons have we learnt from this? We now read that the SkillsFuture Scheme launched just last year, has also been subject to a potential fraud of $2.2 million, already paid out. While I understand that designing a scheme is not a simple process, what lessons have we learnt in order to minimise such wastages of public funds?

This year, the Committee for the Future Economy (CFE) has come up with seven broad strategies to tackle the challenges ahead. Minister Iswaran took us on a tour on some of the key thrusts on Monday. We have also had such committees to review our economic strategies in the past. Have we had any review of what had worked in the past and what had not?

For instance, in 2010, we had the Economic Strategies Committee (ESC). The ESC had made recommendations to improve productivity which the Government accepted and implemented. The aim was to grow productivity by 2% to 3% per year over a decade, which should bring us to a 30% productivity increase by 2019. However, after seven years, productivity improvements are way off target and weak in domestically oriented sectors like retail and food & beverage. What lessons have we drawn from here? And can these lessons be applied to the CFE's strategies?

Madam, after the Budget Statement, several economic round-table discussions were held. Various economists expressed concern about fiscal sustainability. They called for greater accountability on the outcomes of public spending, which they thought was necessary before the need for additional revenues and new and higher taxes should be called for.

At the roundtable organised by the Economic Society of Singapore, SIM University economist, Dr Walter Theseira, made the following observation, "Every few years, we have a big transformation package. We spend a few hundred million dollars here, a billion dollars there on different kinds of programmes, but we never really found out years later whether those programmes were any good or not."

Since the Government looks to the people to raise funds for such expenditures, public accounting of the outcomes of spending is warranted.

Madam, another issue that has been raised from time to time is whether the Government's revenue from land sales should be factored into the Budget as a source of revenue.

I raised this matter during the Budget debate 10 years ago and I am glad that other Members also see the pertinence of raising this question in this year's Budget debate. Economists have recently also revived this question in their current discussions on Singapore's fiscal sustainability.

At the time I made my speech 10 years ago, the revenue from land sales was in the region of $4 billion to $5 billion. Today, we see the revised land sales figure for this Financial Year to be $11.8 billion and the projection for the coming Financial Year to be $8.2 billion.

Tapping on land sales to fund annual Budgets is internationally accepted and practised by other governments. As our expenditures are expected to rise in the coming years, is it not reasonable to seriously think about utilising land sales revenue to fund the Budget? This will reduce the need to tax the people further.

Madam, as I mentioned at the start of my speech, few will quarrel with the need to spend more on areas, such as healthcare and public transport infrastructure. The legitimate questions being asked are whether we have done adequate reviews of past and current initiatives to weed out wasteful and ineffective expenditures. The other issue is whether we have completely recognised our sources of revenue. Doing so will help to ensure that we do not place unnecessary tax burdens on the people.

12.38 pm

Mr Christopher de Souza (Holland-Bukit Timah): Mdm Speaker, thank you for allowing me to join in the debate.

Today, I would like to touch on four topics. First, the need to maintain a strong defence budget in light of the growing tide of nationalism in countries around the world. Second, the need to support workers to transition from one type of career to an altogether different type of job scope on account of changing growth sectors in the economy. Next, the need to continue progressing on the path of social mobility and providing Singaporeans with opportunities and, finally, to accord strong support for the increased grants on resale HDB flats as they will provide young couples with the real possibility of owning a more affordable first property more quickly.

First, defence. It is heartening that, despite the challenging economic outlook, we are maintaining a strong defence budget.

Just a few weeks ago, Singapore was remembering the 75th Anniversary of the fall of Singapore into the hands of the Japanese. The pain that the Japanese Occupation brought to many is still fresh in the memories of our pioneer Singaporeans. Since the birth of Singapore as a sovereign nation, spending on defence has always been one of our top priorities. Defence planning continues to be important as the very existence of Singapore's sovereignty as a nation depends on it.

Thus far, Singapore has enjoyed exceptional defence relations with many countries. For instance, Singapore's forces have been able to train overseas in countries, such as Brunei, France, United States, India, South Africa, Indonesia, Canada, Australia, Germany and in other skies and fields. This allows Singapore's forces to test their mettle and manoeuvres in a wider area − something that is difficult with Singapore's space constraints.

A key highlight last year was the signing of an enhanced deal with Australia for a piece of land to train 14,000 personnel for 18 weeks per year. Not only does this stand as testament to Singapore and Australia's close defence ties, but it also allows Singapore to have yet another terrain to train in.

We must regard the defence of Singapore as a priority. This means allocating a strong and healthy fiscal budget for defence. The recent growing tide of nationalism around the world provides a clear signal that Singapore and the Government must continue investing in the protection of our sovereignty. Therefore, in Parliament, we should continue to press for and secure a strong defence budget.

In Europe, there has been a rise in nationalism and anti-globalism. In France, Ms Marine Le Pen's nationalistic party is gaining popularity. In Germany, the Alternative for Germany party has increased in popularity in recent times and is reported to have attracted voters who are "anti-establishment, anti-liberalisation, anti-European, anti-everything that has come to be regarded as the norm". This is not an isolated movement, but one that has pockets of trends around the globe. Growing tides of nationalism across the globe must prompt Singapore to muscle up its defence capabilities to ensure our sovereignty.

In Singapore, there have been plans to enhance Lim Chu Kang for military training purposes. The plans for the new urban training facility include featuring high-rise buildings, complex road networks, an MRT station and a bus interchange. Simulation technology is also increasingly used in training. With such political climates around the world, such initiatives are timely and necessary. It is important that we maintain a strong defence budget, and I am heartened that we are doing so. We should maintain this even if we enter lean economic times.

Madam, my second topic is on employment. It is necessary to support workers to transition from one type of career to an altogether different type of job scope on account of changing growth sectors in the economy.

The employment market has changed significantly. Lucrative industries in the past no longer pay as much today. For instance, the oil, gas and marine industries in Singapore went through − and continue to go through − a very competitively tough environment. In fact, Keppel, one of the largest oil-rig builders in the world, cut its yard capacity − two overseas and three in Singapore. It had also cut 10,600 jobs from its Offshore and Marine division last year.

When industries slow down, ripple effects are felt across the economy, including the finance and banking sector. I have met with residents in the constituency I serve, who have, unfortunately, lost good paying jobs in the marine industry. Freelance or temporary contract work becomes options for them. Unfortunately, as a result, they face a large pay reduction and no CPF employer's contribution.

It is a tough position to be in. Therefore, the drive to assist these workers − from presently vulnerable industries, such as oil, gas and marine − to reskill and get employed in permanent jobs is key. This will allow the laid-off worker to chart his employment path in a more permanent second career instead of relying on temporary contract jobs to make ends meet. This allows the worker to plan longer term − in terms of the housing, educational and fiscal needs of his family.

This is why the Adapt and Grow Initiative, which has been enhanced to include Attach and Train, is key in the present economic climate. Under this enhancement, participants have "opportunities for work attachments to improve prospects of employment." This is a win-win situation − employees pick up valuable on-the-job skills while employers see the potential employees' strengths in action.

To reduce the hindrances to reskilling, the focus will be on providing short, modular, e-learning opportunities to upskill and retrain. This increases the flexibility so that learning and upskilling becomes easier and more a part of life. Eventual consequence is more potential job openings for reskilled and resilient workers who seek to move from vulnerable industries to enterprises where the sun is rising.

I move to my third and penultimate point, Madam, that of social mobility.

Ensuring social mobility of Singaporeans is a precious ideal and a worthy aim − it is a constant work in progress. It is important for Singaporeans, and critical for a cohesive society, that all Singaporeans are presented with a wide menu of opportunities to excel. When in the constituency, I am so happy when I meet residents who decide to purchase a 2- or 3-room HDB flat instead of continuing to rent their flats at subsidised rentals from HDB. That is a classic example of social mobility − from non-ownership to home ownership. It is a considerably larger financial commitment but it is always good to see that with a steady income, CPF contributions and a HDB loan, residents decide to own their first major asset − a home. This is the Singapore way and we must preserve it, nurture it.

Education plays an important role in catalysing and fuelling social mobility. We need to continue to provide Singaporeans with opportunities, especially at an early stage of their lives. It is good that we start early with pre-school, providing affordable, accessible pre-school for children. This year, we are investing into increasing the infrastructure of our pre-school sector at an even earlier stage − infant care. This accommodates an increased demand for centre-based infant care. This helps ensure that Singaporeans, even at an early stage, are given a wholesome menu of opportunities allowing the potential for social mobility to commence early.

The emphasis on opportunities should continue and be prioritised throughout a student's schooling life. Therefore, it is good that the Budget this year provides for an increase in Post-Secondary Education Institution bursaries. To provide a wide a range of learning opportunities throughout a child's schooling life, MOE could help ensure the fair distribution of very good teachers across all schools.

Madam, the fourth and last topic I would like to talk about is the new grants for resale HDB flat purchases. This is an excellent move and one that is important to young couples who are planning to get married or wanting to start a family. For young couples commencing working life, a private property purchase can be very financially daunting. This new HDB resale grant provides young couples with the real possibility of owning a more affordable first property more quickly and quite possibly near their parents. This would mean that when the parents happily become grandparents, the precious and necessary support will be close by. So, there are many merits to these new resale grants.

Before I close, Madam, I would just like to share that I was in the House and had the opportunity to listen to the hon Ms Sylvia Lim's speech just moments ago. She seems to be supporting the Workers' Party position that it is good to not have carbon tax introduced so quickly, yet it is not good to introduce the tax on water quickly. I respect that she is entitled to her views but I am afraid, Madam, I cannot agree with those views.

Carbon tax and water are quite different. For carbon tax, the history was that once we ratify the Paris Agreement, we have to reaffirm commitment to address climate change and reduce emissions. It is actually quite a long runway in order to implement what we need to implement to honour the ratification. The issue of carbon tax affects all countries, not just Singapore, or not just Singapore and our immediate neighbours. In particular, small island states like ours, as part of the Agreement, Singapore has pledged to cut emission intensity by 36% below 2005 levels by 2030 and stabilise emissions with the aim of peaking around 2030. So, it is a long runway, it is actually a 13-year runway. And carbon tax, there is an aim to implement it from 2019 and target industries and not consumers, in order to price -signal to incentivise industries to reduce emissions, and it will also help us to achieve our commitment to reduce emissions under the Paris Agreement, do so efficiently and at as low a cost to the economy as possible. So, a long runway and we can be cautious in how we move ahead, and we have the freedom of time to decide these things.

Compare that with the situation of water. I think water, the Workers' Party's position is why is it so fast, why not take a little bit more time as you have done for carbon tax? Water is completely in a different pool, if I may say. There has been an increase in price as demand for water that cost more to produce increases. We need to value water, and technology has already been deployed for water and has already been invested in. Two-thirds of Singapore's land is for water catchment, with 17 reservoirs, and the desalination plants have to be increased.

And why the need for a rush? I think we have heard from both Minister Chan Chun Sing and also Minister Masagos that the Linggiu Dam is twice the size of Singapore, and we need many years to build the water level up again. We also need to take into account climate change.

So, to compare carbon tax on the one hand and having a long runway and say, "Why are we not in a rush there?", and to juxtapose, contrast or alienate water as a completely comparable commodity is not something that I can agree with. It would cost less than a dollar per day for 75% of businesses. For 1- to 2-room flats, we will not see an increase through U-Save.

So, while I listen to Ms Sylvia Lim's speech − I respect she can have a different view − I am not sure that the comparison between carbon tax and water is, indeed, a fair comparison.

Madam, in closing, I conclude by observing that we live in a rapidly-evolving world. As a country, we need to have the foresight to prepare for the future. But, we must also guard the fundamentals and should, therefore, maintain a strong defence budget so as to protect our country's sovereignty and overcome those who seek to do us harm.

Let us work together to protect and partner fellow Singaporeans who move from vulnerable industries to sun-rise enterprises. Let us ensure that a wide and wholesome menu of opportunities pervades our schools for the benefit of all students who turn up to learn every day. And let us assist younger Singaporeans to sink roots here, start their homes here and be part of a new band of Singapore pioneers. Budget 2017 advances these ideals and, therefore, merits our support.

12.53 pm

Ms Sylvia Lim: Thank you, Madam. A clarification for the Member. I would like to thank him, first of all, for his explanation of our long runway for the carbon tax. But I think if he had listened to my speech carefully, the point I was making was that the reasons used by the Government to justify the water price increase have been there for quite some time. Unless he is trying to suggest that these factors only dawned on the Government recently and that is why they had no time to give Singaporeans more warning of the increase.

Mr Christopher de Souza: Thank you, Madam, for the right of reply. That is not my understanding of what Ms Sylvia Lim said. I think Ms Sylvia Lim said, "Look, on the one hand, you have a two-year runway or an X number of year runway for carbon tax. Why do we not just take a little bit more time for water?" I have explained that they are completely different subjects. Carbon tax, we have got to look at how our commitment is corralled within an overarching Paris Agreement, and how it impacts all the members who have ratified that. Therefore, a longer runway is completely justifiable.

Versus a situation where we have had to deal with a situation where water is precious, it is a commodity, it is scarce and we have to act promptly. We are doing all we can in terms of the 17 reservoirs. The Linggiu Dam has been reported in Parliament to be twice the size of Singapore and has been depleted. So, rather than procrastinating about this, a swift move will also increase the value of water as being a precious commodity in the minds of Singaporeans.

In addition to that, where price increases are concerned, I think it is a dollar increase per day for 75% of the businesses and, with the U-Save rebate, the 1- and 2-room flats will not suffer a detriment. Even with the swift movement, there have been measures to ameliorate the possible rise in price.

Again, I go back to Ms Sylvia Lim's point. Ms Sylvia Lim's point was to compare carbon tax versus water. I think people in this House and people reviewing this debate will say that it is chalk and cheese.

12.56 pm

Mr Gan Thiam Poh (Ang Mo Kio): Mdm Speaker, for this Budget, MOF has maintained our tradition of prudent public spending and I am glad to support it.

Although FY2017's primary deficit will be double last year's, we will still manage a surplus of $1.9 billion even after factoring in Special Transfers, thanks to the $14 billion contribution from our Net Investment Returns. This is good news.

This Budget has many good and targeted initiatives to support businesses, in response to the report by the Committee on the Future Economy (CFE). The Government's commitment to drive innovation is clear as we can see in the $500 million top-up to the National Research Fund and an additional $1 billion for the National Productivity Fund.

However, as we had just experienced our weakest economic growth rate since 2009 and the growth outlook is weak, many are waiting for the Government to share more details about how the economy will achieve the target growth of 2% to 3%. Where are the growth sectors in the immediate future? Notwithstanding, I must thank Minister Iswaran for his assurance to the House the day before. Mdm Speaker, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Some residents told me that they could not understand the relevance of the CFE Report. Not everyone can be in the fields of engineering, information technology (IT) or artificial intelligence (AI). In fact, quite a number of residents feel stressed by the advance of disruptive technologies. They are totally at a loss about how to stay in the competition, never mind about staying ahead. They cannot keep up and cannot fill in the gaps in knowledge and skills. They are fearful, feel down and left out.

The Government can step up their efforts to share relatable success stories to motivate them, show them how others have adapted so that they do not have to worry or be fearful, share information about how people have managed transitions and, very importantly, how changes can benefit them.

Singaporeans must recognise that these changes are not threats but opportunities. The fundamentals do not change – for example, robots assist, not replace humans.

When residents heard about the initiatives, such as the acceleration of $700 million worth of infrastructure projects, they were heartened. These are concrete developments they can relate to. Hence, the Government should share more news about how it will pump up the economy and attract more investments. For example, the Government can highlight updates about how many more direct and indirect jobs will be generated by Changi Airport Terminal 4 and the other projects in progress.

(In English): We have to make a greater effort to focus on the tangible benefits for workers. Success stories about jobseekers benefiting from matches at our National Jobs Bank, our Career Support Programme, Professional Conversions Programme and the Work Trial Programme will also boost the morale of the unemployed and encourage them to enrol and persist in their training. Periodic updates about the new Attach and Train initiative should be shared in the media to raise awareness of its benefits.

Mdm Speaker, US President Donald Trump wanted to make America great again; Americans first. We must strive for "a great Singapore: Singaporean is the most preferred choice" for all employers, not only locally but internationally and wherever Singaporeans are.

The Singapore Government must continue to invest in all Singaporeans and make every Singaporean the best and most preferred person to employ and work with wherever Singaporeans are in the world. The world is our market and oyster.

The Internet has removed many geographical barriers to enable a global market. Hence, more local companies should think about tapping the bigger global market overseas through e-commerce. The number of people making purchases online is increasing exponentially and they do not care where the e-commerce websites are based.

Is it possible to compete with Amazon, or Tmall or Taobao? Yes, it is. Even though these sites seem to sell almost everything, there are many niche sites out there which are able to build their brands online and secure loyal customer bases.

However, even as we encourage our companies to venture overseas, the fact is that they are based here in Singapore and our high business cost structure is a problem. Some sectors, like construction, are heavily reliant on foreign workers. There are limits to how much innovation in construction can help assist to reduce costs. Would the Ministry reconsider deferring or staggering the foreign workers levy increase for all sectors and providing rental rebates to help SMEs offset higher utilities bills, compliance costs and the new carbon tax?

As HDB is a major developer, it can consider taking the lead in construction innovation as it is in a position to enjoy economies of scale. Would the Government share what innovative practices it will be engaging in and what would be the expected savings in terms of costs, manpower and time?

I recall meeting a foreign contractor recently and checking with him how the contractor competed in the market. I was particularly struck by the fact that the company was not reliant on the relatively cheaper unskilled labour for their competitive advantage. He shared a good example. A good, experienced, skilled and productive plasterer could produce four times more than an unskilled labourer even though he may be one and a half times more expensive than the unskilled labourer. In addition, the company could save on unnecessary hidden and unforeseen costs, such as wastage and material costs ,if the job needs to be reworked or improved. He shared that, in conclusion, cheap is not necessary good, and increased productivity is relatively important in ensuring the competitive advantage.

Another topic which features prominently for this Budget is the 30% hike in the water price. I do share the concern of Singaporeans over the price hike and worry about the impact on the cost of living and business costs. Even until today, people do still laugh at us for drinking "long kang" water. Putting aside such remarks, businesses that I spoke to shared that the consequences of not having reliable and sustainable water solutions are far-reaching. If not solved, it might be worse, and we might lose businesses and investors. Imagine, if we do not have such alternatives, what would be the price Singaporeans would have to pay in the future?

A few months ago, there was an interesting article by Channel NewsAsia. It shared that Singapore consumers spent about $134 million on still bottled water in 2015, up 25% from five years ago. A 60 ml bottle of drinking water usually retails for about 50 cents to about $1 in the supermarket. For the same amount of tap water, PUB reported it would cost only 0.1 cents, not even 1 cent. This makes it 500 to 1,000 times cheaper than the bottled water. It made me puzzled and I could not reconcile it.

I certainly support our move to become even more self-reliant in our water supply through the use of the latest technology. While the cost increase cannot be avoided due to the huge investments required, more efforts should be made to continue to increase the sources of water supply and the use of technology that can help reduce the cost of water production. We should continually remind Singaporeans of the importance of conserving water. On this note, may I know whether the Ministry will consider opening up the water supply sector to more private players to set up more plants to increase competition?

We should have more dialogues and discussions about how to motivate Singaporeans to save water. In short, I believe in incentivising rather than having penalties in promoting water conservation.

May I recommend that we look more closely at how other countries conserve water? For example, in Hong Kong, every household is served by two water pipes − one for potable water and one for non-potable water. In some areas in Japan, it is common for the toilets to be designed in such a way that used water from wash basins are fed to the flush tanks.

I am also heartened to note that the Singapore Government has increased the grants for Singaporeans to buy resale flats so that they can live near their parents or working area. However, we need to be mindful and remain cautious, and monitor whether such additional grants may end up pushing up the prices of resale flats. Also, with these grants, resale flats are becoming more attractive. Will the Ministry share if the prices between BTO and resale flats are narrowing?

I am heartened by the announcement that more flats may be built to shorten the waiting time for BTO flat applicants. My residents have given me positive feedback on this. Will HDB consider increasing the allocation for new BTO flat upgraders or second-timers slightly, cautiously, moderately? These owners will, in turn, release more resale flats into the market for young couples looking for this option.

Finally, I would like to conclude with my thanks and appreciation for the extension of the Additional Special Employment Credit. This is something I have been hoping for as I think it is effective in incentivising companies to retain our older workers and help them stay employed. We should also remind companies that the Government is continuing to support them through ongoing schemes, such as the Wage Credit Scheme and the Special Employment Credit scheme. These are not small amounts, totalling $900 million. Mdm Speaker, with that, I support the Budget.

Mdm Speaker: Minister Heng.

1.11 pm

The Minister for Finance (Mr Heng Swee Keat): Mdm Speaker, I thank Members for their thoughtful views in the Budget Debate. I also appreciate the diversity of opinions from economists and journalists; and heartfelt feedback from Singaporeans and business owners. The more specific issues that Members have raised will be taken up by my Ministerial colleagues during the Committee of Supply (COS).

As Mr Liang Eng Hwa observed, the Budget is not an occasion where there will always be many "tasty goodies". Rather, it is an opportunity for the Government to set out our plans and priorities to work with our people and businesses to bring Singapore forward.

Last year, the economy grew by 2%. It is within the range of 2% to 3% as set out in the CFE report, and is comparable to the performance of many other high income economies. In the US, Switzerland and Germany for example, their economies have been growing at about 1% to 2% yearly on average in the last five years.

We also remain an attractive investment destination globally. In 2016, we climbed to fifth position for FDI inflows in a difficult international environment. I think it is a good vote of confidence for Singapore.

Our demographics are changing. Our labour force growth is slowing down because of smaller cohorts entering the workforce and a slowdown in foreign worker inflow. To counter this, future growth has to come from sustained productivity growth. We need to help every worker maximise his potential, and support our businesses in innovation. This will put us in good company among high-income, productive economies.

Winds of change are also sweeping across the world. Many of the favourable conditions that buoyed our growth over the past few decades are now under threat. Protectionism is on the rise. Global trade and production patterns are shifting. New technology arrives in waves, sometimes with disruptive consequences.

Unlike the 2009 Global Financial Crisis or the 1985 recession, we are not in a crisis. Nevertheless, the changes we are facing have far-reaching implications. The best way to address them is to meet them head-on.

I understand that this is not easy. Many Members, including Mr Lim Biow Chuan, Mr Murali Pillai and Mr Saktiandi Supaat, have spoken about the pressures on our businesses, especially SMEs, in a time of restructuring.

Notwithstanding the 2% growth in 2016, we recognise that the economy and labour market exhibited uneven performances across different sectors. Some sectors did well and could not fill vacancies. Others faced cyclical weaknesses. Yet others had to relook their business models due to more fundamental changes in their sector.

We recognise that some businesses are facing cost pressures. But we must also recognise that in a functioning economy, cost pressures serve as price signals, so that resources can be channelled into the most productive use. We must be careful not to hamper this process. An across-the-board stimulus would not be effective as it may further push up cost pressures.

So, we monitor the situation closely and calibrate the fiscal stance accordingly. The Budget this year strikes a careful balance between reinforcing restructuring efforts and providing support to businesses and households. Against the current macroeconomic backdrop, the slightly expansionary fiscal stance is appropriate.

There are many Government schemes, as Minister Iswaran pointed out, that benefit businesses. For example, the near-term support measures mentioned in this year's Budget total up to $1.4 billion. These include the existing Wage Credit Scheme and Special Employment Credit, along with enhancements to the Corporate Income Tax Rebate and the Additional Special Employment Credit; $1.4 billion is not a trivial amount. These are on top of the substantial stimulus measures introduced in the last three to four years, of which their cumulative effects are still working through the economy.

So, the Government is providing support, and Minister Iswaran has given a very comprehensive explanation of the range of support from the Government for businesses, especially SMEs.

Indeed, different firms and different sectors face varying challenges and opportunities and will require different solutions. We are thus giving more targeted and customised help. For firms that are ready to internationalise, we are providing more help to scale up and go abroad. The most recent examples are the enhanced Internationalisation Finance Scheme and the new International Partnership Fund. For firms that are ready to upgrade their capabilities, they can tap on the Capability Development Grant in a wide range of areas, from raising service standards to adopting technology and staff training.

There are also firms in sectors, such as retail, which are facing structural challenges. The Industry Transformation Maps (ITMs)are the platform for individual companies to work together with agencies, unions, trade associations and others to restructure, to stay competitive in the new environment. For those facing cyclical weakness, such as the marine and process sectors, we are deferring foreign worker levy increases. We are also accelerating public sector infrastructure projects to support the construction sector.

This is what in Chinese is called "对症下药", or giving the right medicine to cure the ailment. A painkiller may work for a while to dull the pain, but it masks the underlying problem and delays needed action, or, in Chinese, "治标不治本".

We are providing near-term relief, but we do not want to provide only temporary relief. We want to help our businesses build deep capabilities that will enable them to adapt to a fast-changing world and seize new opportunities where they arise. And this is the key to continued success.

Mdm Speaker, may I say a few words in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] I thank various Members for their suggestions on how to help businesses overcome challenges. We understand that many companies have been affected by the slowing economy and are hoping for the Government to come up with some near-term measures to give them a helping hand.

In reality, different companies and industries face varying challenges and opportunities. Therefore, the measures introduced by the Government must be targeted. We have provided some near-term measures to help them, but these are like painkillers; they provide temporary relief but do not address the root of the problem, so it is best not to take them too much.

The key is to help companies upskill and enhance their capabilities, to get to the root of the problem and build themselves up. We urge leaders of trade associations and chambers to continue to work closely with the Government and to take the lead in bringing about transformation and innovation amongst their member companies. Only then will companies be able to maintain their competitive edge, seize new business opportunities and succeed in the ever-changing environment.

(In English): Let me now touch on building our future economy. When the Prime Minister announced that we will form the CFE, he said, and I quote, "With an ageing population and uncertain global conditions, growth will be harder to come by. Yet, our economy must grow to create opportunities for Singaporeans and to improve our lives." And, indeed, this is what guides us in the CFE work − to create opportunities for Singaporeans and to improve our lives. We live in a world undergoing major and rapid structural changes. Shifts in global trade and production patterns are opening up new markets, even as parts of the world appear to be moving towards greater protectionism. Advances in technology, in particular, digital technology, give us new ways to improve productivity, efficiency and service delivery. These trends may throw up potential disruptions, but they also bring many new opportunities.

To seize these opportunities, our businesses and our people need to build deep capabilities. Only with deep capabilities can we thrive in an unpredictable and fast-changing world. Our businesses need to digitalise, innovate and internationalise, to create value and bring it to the world. Our people need to continuously learn and re-learn skills, to be entrepreneurial and flexible in adapting to varying circumstances.

All these are brought together in the CFE's recommendations. Of the CFE's seven key strategies, the first five are about building the very capabilities that I have described − to internationalise, to develop and use deep skills, to innovate and scale up, to digitalise, and to make the most of our city. These five are brought together by two other strategies: through the ITMs and through effective partnerships.

These seven strategies are mutually-reinforcing. It is not about different people pulling in different directions. Instead, we need a sense of partnership and collaboration, to work together for economic development and in all areas. Taken together, the whole is greater than the sum of its parts.

The way in which the CFE strategies can be brought to life is through two critical elements. First, we need a spirit of enterprise, a willingness to try new things, to seek creative solutions to problems, to venture where few others have gone; an attitude of continually striving, of persevering, of drawing out the best ideas from every individual.

Second, effective partnerships with one another − between the Government, the community, businesses and individuals. Together, we will refine our ideas and put them into action. By working together and making the most of everyone's abilities, we can achieve more than we will on our own.

To those who are looking for a new blueprint and a plan to follow, let me say that what we need is not a change in strategy, but a strategy for change. We must recognise that we are in a different world. The world is changing, but we do not know for certain the pace and direction of change. Many Members, such as Ms Jessica Tan and Mr Muhamad Faisal, have also noted this uncertainty. What we need is not a cast-in-stone roadmap, but a spirit to constantly forge forward and to find a new way forward.

This strategy for change requires a significant shift in mindset. The CFE strategies are part of a broader movement to develop a pervasive culture of innovation, nimbleness and adaptability. This will not take place overnight and Budget 2017 is but a step in that direction and builds on what the CFE has put forward.

This is a Budget to position us for the future. This is about doing, learning and adapting. We cannot afford to wait and see. Those who wait will only miss out. As Ms Chia Yong Yong has shared, it is time for us to take our own future into our hands.

Structurally, we have always faced constraints as a small nation-state. But our strength, our enduring strength, has been to break through all of these constraints. We have proven to the world that we can do this time and time again.

We are on a journey of transformation together, where success is not an endpoint but an ongoing process of change, as Assoc Prof Randolph Tan put it.

I am confident that we will succeed, as one people, on this journey of change. I am confident because I see many positive examples of people, of firms, that have embraced the spirit of enterprise and partnership. So, let me first talk about our people.

Our people must be willing to go beyond the familiar and explore new prospects. For example, as Mr Ong Teng Koon, Mr Melvin Yong and Mr Kok Heng Leun noted, with rapid changes in technology and business models, job roles will be redefined more often, and new skills will frequently be required. Given these trends, Members like Mr Ang Wei Neng, Mr Leon Perera and Mr Patrick Tay have expressed concerns about how Singaporeans can adapt.

To thrive in such an environment, we need to continuously upgrade our skills and keep them relevant. In some cases, we will have to go beyond the job scopes that we are familiar with and try something different. We can use the knowledge, strengths and personal interests that we have developed to contribute in a different way. Here are some examples. With your permission, Mdm Speaker, may I display some slides and photos on the screens?

Mdm Speaker: Yes, please. [Slides and photos were shown to hon Members.]

Mr Heng Swee Keat: This is Chandra. Chandra used to be a network engineer in a bank. In 2008, he was retrenched but he persevered and found a network engineer job in a telco. Similar skills, in different sectors. It was in his new job that Chandra got exposed to a very interesting and growing new field of work with good opportunities: cybersecurity. So, he started to look seriously into this. He took up on-the-job training through the Cyber Security Associates and Technologists Programme under the TechSkills Accelerator. Now, he has taken up a new job in cybersecurity.

This is Yvonne. Yvonne has done different things in her career, including working in the financial sector and helping with her family business. But throughout, she knew that her passion is working with children. So, she exited senior management positions at mid-career to enter a completely new area by joining the Professional Conversion Programme for Pre-school Teachers. Through this programme, she is currently taking the WSQ Professional Diploma in Early Childhood Care and Education and working as an assistant teacher in a childcare centre. Upon completion of the PCP this April, she will take on the role of a pre-school teacher.

So, one way we can explore new opportunities is by going beyond our current job roles. Another is to go beyond our geographical borders and venture into different markets.

I was interested to hear Amirul's story. Amirul was the first Singaporean Malay student to participate in the NUS Overseas College in Beijing. He did an internship there with Traintracks.io, a data analytics startup. Despite not knowing much Chinese, Amirul had such a positive experience in Beijing that when he returned to Singapore, he joined the local startup scene, working full time at F&B tech startup Oddle after graduation. He is currently the company's Digital Marketing Lead, introducing the company's solutions to the Southeast Asian and US markets.

Indeed, I share Mr Gan Thiam Poh's objective of helping Singaporeans to be great in what they do. Chandra, Yvonne and Amirul exemplify the spirit of enterprise we need to flourish in today's economy. So, I urge all Singaporeans to be bold and proactive like them, to go beyond the immediate confines of what we are used to and find new prospects in different places.

To do this, Singaporeans can tap on a wide range of support measures, from SkillsFuture Credit and subsidies for training courses, to Adapt and Grow initiatives that can help with job placements and attachments. The Global Innovation Alliance will also give our young people more overseas exposure, especially to exciting startups with good ideas. At the same time, in supporting our people to try new areas and learn new skills, we will also pay careful attention to those who may be more vulnerable:

As Mr Zainal Sapari has noted, it is important to take care of the needs of lower-wage workers. The Workfare scheme provides them with income supplements and training support. This tops up their wages as they upgrade themselves with new skills. The Wage Credit Scheme has also supported businesses in sharing productivity gains with workers through wage increases.

In addition, we share Mr Desmond Choo, Mr Ang Hin Kee and Mr Ong Teng Koon's concerns for freelance workers, and are looking into how we can work with our tripartite partners to support them better. The Minister for Manpower will say more on this at the COS.

Having spoken about our people, let me now talk about our businesses. Like our people, our businesses must have the courage to adapt and try new ideas. Often, we can tap on the expertise we already have to create new value for others. I am encouraged by the progress that many of our local firms have made.

Many of us use radio frequency identification (RFID) tags every day − when we check out library books or tap our EZ-Link cards. Tunity Technologies, in collaboration with A*STAR's SIMTech, applied this technology to something unexpected − food trays. Customers make a $1 deposit to borrow a tray and they get their deposit back when they return their tray to an automated system, which detects the returned tray using RFID technology. This encourages customers to return their trays after use and allows the cleaning staff at a food centre to concentrate on other more productive tasks. An innovative solution to an old problem!

Matex International Ltd is a specialty chemicals company that has adapted to enter a new area of business. With the help of Intellectual Property Intermediary, a SPRING affiliate, Matex licensed a specific advanced membrane technology from NUS to help it develop capabilities to treat its own waste. Subsequently, Matex combined this technology with its own in-house knowledge to create customised ways to remove particles from waste water more efficiently. This allowed Matex to move beyond being a specialty chemical manufacturer to also offer industrial waste water treatment solutions. It could have stopped with solving its own problem, but Matex took its solution, asked themselves who else would find it useful and opened up new business opportunities.

These are good examples of creating value. In addition, our businesses stand to gain when they bring these ideas into new markets. To do this, we should develop stronger in-market presence to gain insights about consumers' needs and preferences in foreign markets, so that we can tailor our products and services accordingly. As Mr Lee Yi Shyan put it, we need to develop a "deep awareness of the world".

We should also be willing to explore new destinations, especially those places where few others have gone. We can contribute most in these places. This is about improving our businesses, as much as it is about contributing to the world.

Ninja Van has brought innovative technologies to the logistics industry. For example, businesses on the Ninja Cloud platform can make use of spare capacity on other fleets in real time. In addition, Ninja Van has managed to expand its presence into regional markets like Malaysia, Indonesia, Vietnam, Philippines and Thailand. It did this with some help from IE Singapore, which helped Ninja Van to understand and navigate in-market conditions and build up overseas market operations.

Our businesses need to develop a strong spirit of enterprise by innovating to create new value and internationalising to bring this value to new markets. They can tap on a range of support measures for these efforts. For example, businesses that wish to innovate can tap on measures like A*STAR's Operation and Technology Road-mapping, Headstart and Tech Access initiatives.

Even as our people and our businesses adopt a greater spirit of enterprise, we must all work together in close partnership, as Mr Darryl David and Dr Tan Wu Meng pointed out. We each have different strengths and, when we work together, we can achieve more. This is why one key CFE strategy is to use the ITMs to bring industry partners, trade associations, unions and public agencies in a movement for economic transformation.

Many Members, including Ms Jessica Tan and Ms Foo Mee Har, have expressed support for the ITMs and I thank them for their support.

As Mr Heng Chee How pointed out, these ITMs must be dynamic plans, which will be updated even as they are carried out. And as Mr Henry Kwek noted, the key is in getting things done − how the different partners can work together to drive industry development.

After the Budget, one economist asked me, "Is the Government really the right party to drive the ITMs?" It was an indirect way of saying: does the Government really have the business experience to say what should be done to restructure each sector? My answer? He is right. The Government cannot, on its own, design plans for the tens of thousands of firms across different industries. This is just not possible, nor is it what we want to do. Miss Cheryl Chan has expressed similar sentiments.

What the Government can do is to catalyse and bring stakeholders together. This is what we seek to do with the ITMs. The ITMs are a joint effort among all partners in an industry. What the Government will do is to catalyse action through ITMs. We can provide a platform for different partners to share ideas; we can help to facilitate change, for example, by reviewing regulations where appropriate. But, ultimately, the ITMs need to be driven by the industry with strong participation. The quality of the ITMs will depend on the quality of inputs from industries and partners and how well we work together for the larger good.

I hope that entrepreneurs, businesses and trade associations will take the lead in developing and implementing the ITMs. We need everyone to contribute actively, to work together to get things done, in order for the ITMs to succeed. So, I am glad to hear Mr Thomas Chua's call for companies and TACs to play a more proactive role in industry development. Indeed, our TACs must play a leadership role to galvanise companies to seize opportunities and embark on the challenging but fulfilling journey of transformation. In this environment of rapid change, when individual companies may be uncertain about how to proceed or how best to tap on available Government support, this is a great service that TACs can perform for their members. Unless we have strong leadership among our partners in the ITMs, the ITMs cannot take off.

I am also encouraged to learn that even before all 23 ITMs have been launched, we are already seeing good collaborative work among different industry partners. For example, to raise the standard of pharmaceutical handling in Singapore, Changi Airport Group has partnered the Civil Aviation Authority of Singapore and Workforce Singapore, to build a community of companies certified by the International Air Transport Association (IATA) in pharmaceutical handling. Companies involved include both ground handlers at Changi, as well as Singapore Airlines Cargo and four freight forwarders. These companies from across the air cargo supply chain will undergo training and have their processes and facilities accredited by IATA. This will help to attract global demand for these services, thus boosting the growth of the airfreight, logistics and pharmaceutical industries in Singapore ‒ a good example of cross-industry collaboration.

Another example of partnership involves local firm, V-Key Pte Ltd. V-Key has developed a patented virtual secure element which makes mobile phone applications and transactions secure, and serves more than 30 million banking and e-commerce users across Southeast Asia, India and China. To develop more digital talent and nurture future digital leaders, V-Key has partnered our Institutes of Higher Learning and local banks, to enable selected students in infocomm to complete multiple structured internships with V-Key over the course of their studies. Students can gain valuable industry experience, and those who perform well are offered a permanent job at V-Key. V-Key ends up hiring about 50% of its interns. Such programmes benefit both the student and the employer.

The TechSkills Accelerator (TeSA), which was launched last year to develop talents for the infocomm sector, brings together trade associations like the Singapore Infocomm Technology Federation (SiTF), NTUC representatives and Government agencies like the Infocomm Media Development Authority (IMDA). One of TeSA's initiatives is the Company-Led Training Programme which allows individuals to deepen their ICT skills through on-the-job training hosted by various companies. So far, the job placement rate has been high for this programme.

We should encourage joint efforts like these. On our part, the Government will support the needs of our people and businesses, so that they can achieve their full potential.

For example, we will create a regulatory environment that both supports innovation and manages risks. It is a balance. We need not regulate everything down to the last detail for fear that we will expose our society to risks. Instead, we should stretch our thinking and come up with ways to encourage enterprise growth, while still mitigating risks to an acceptable level. As I mentioned in the Budget Speech, agencies like MAS, LTA and HSA are already moving in this direction.

The seven strategies of the CFE are mutually reinforcing. It is important that we pursue this with a spirit of enterprise and partnership. Only then can we come together to transform our economy and succeed in a more unpredictable and fast-changing world. Rather than following a blueprint, this is a journey of doing, learning and adapting. I am excited for what we will achieve together.

Let me now turn to the environment. We have had a lively debate in this House on this Budget's measures for protecting the environment. Many who spoke expressed support even as others pointed out the impact on households and businesses. In particular, Mr Chong Kee Hiong, Mr Pritam Singh, Ms K Thanaletchimi, Mr Dennis Tan and Mr Png Eng Huat raised concerns about costs. There will be some costs, but also assistance measures. These should be debated, but at the end of the day, as Minister Chan Chun Sing said, the Government needs to be responsible in taking care of not only the short-term needs but also address future challenges.

We must also change our mindsets and habits, as Er Dr Lee Bee Wah pointed out when she suggested the need to reduce consumption and to be more conscious about recycling. And indeed, everyone has a part to play − from parents teaching our children conservation, to volunteers picking up litter in our waterways and parks, and firms adopting green technology.

Let me touch on water pricing. The Minister for the Environment and Water Resources addressed Members' questions yesterday. I shall reiterate a few key principles and say more about the Government's additional investments in the water system.

Water sufficiency is a matter of national survival. Members are well aware of how Mr Lee Kuan Yew, our Founding Prime Minister, obsessed over water since the Separation Agreement. Securing a sustainable water supply for Singapore has been an all-consuming pursuit of the Government since Independence. We lodged our water agreements with the United Nations, invested in a strong defence force and developed strong capabilities in water technologies.

Singaporeans have enjoyed uninterrupted and high-quality drinking water through rainy weather and droughts alike. This is not mere good fortune or our birth-right. Rather, it is the result of long-term planning, a can-do attitude, innovation and sound policy.

As the Minister for the Environment and Water Resources explained, the cornerstone of our water policy is the pricing of water on sound economic principles to reflect its long-run marginal cost (LRMC). This reflects the cost of supplying the next available drop of water, which is likely to come from NEWater and desalination plants. This ensures that users will conserve water and we can make timely investments in the water system.

Ms Sylvia Lim asked why raise the water price now and carbon tax later. The carbon tax is new and the details will have to be carefully studied. But I think a more fundamental point is whether Ms Lim agrees that water is of strategic significance and we should each do our part.

Mr Seah Kian Peng highlighted yesterday that the Government spends more than it collects on the water system. This is, indeed, the case. The revenue which PUB collects from users is only enough to cover operations and the depreciation of waterworks, pipelines and water reclamation plants. The annual surpluses that PUB records are transferred to its capital reserves to finance these property, plant and equipment. This is clearly stated in PUB's annual reports. Over the next five years, PUB intends to invest $4 billion in additional water infrastructure.

Besides PUB's investments, the Government makes further substantial investments in the sewerage network. This includes the Deep Tunnel Sewerage System which will be completed in 2025 and will cost more than $4 billion.

In the next five years, the Government will spend about $3 billion on other sewerage network projects and to strengthen the resilience of our water supply. These expenditures exceed the amount of revenue from the water conservation tax which is expected to be about $1.6 billion over the same period. In other words, the Government pays for part of the total cost of securing a safe and clean supply of water for our people and businesses.

Let me now speak on protecting our environment. Dr Lim Wee Kiak, Assoc Prof Daniel Goh and Dr Teo Ho Pin shared their views, among others. Introducing a carbon tax is the economically efficient way of reducing greenhouse gases. A carbon tax places a price signal to incentivise emitters to lower emissions.

Singapore will join dozens of other countries in pricing carbon to address climate change. Many jurisdictions that have put a price on carbon, such as Sweden, are reducing their emissions while maintaining economic growth, promoting green growth and reaping environmental benefits.

Singapore continues to provide a favourable business environment for companies. We will consult widely before implementing the carbon tax. Industry consultations have already begun and will be expanded, and public consultations will begin this month. We welcome all to contribute.

Let me now turn to diesel. We have restructured diesel taxes to introduce a volume-based component. This will incentivise reduced usage and lower pollutive emissions.

Nonetheless, as a number of Members have noted, the restructuring of diesel taxes will impact some businesses. This is an important measure to help improve the health of all Singaporeans. In the longer run, we hope users will switch to cleaner fuels and technology. In the short run, we have put in place significant offsets to help businesses manage the transition.

The first year 100% road tax rebates will more than offset the diesel duty incurred for the majority of commercial vehicles. There will also be partial road tax rebates for two more years.

The reduction of the annual Special Tax on diesel cars and taxis will also help to cushion the impact on these drivers, as Mr Sitoh Yih Pin has noted. In the Budget speech, I had urged taxi companies to pass on the Special Tax reduction to drivers. I am glad that taxi companies will be doing so in various forms.

I have earlier spoken about the spirit of partnerships which will help drive our economy. Similarly, everyone has a part to play in securing a better living environment for Singapore. We are taking decisive steps in this area because we want a cleaner and healthier environment for ourselves and our children. We want businesses, visitors and Singaporeans from all backgrounds to enjoy a lush city scape to work, live and play in.

We invest in keeping our living environment in good shape because we care for our future and our children. This is the home that we have been building and will continue to build. Home comes alive because of our people, because of our relationships.

Over the last decade, we have steadily increased our social investments. Our social expenditures, including in housing, healthcare, education and community development, have almost tripled, from $12.7 billion in FY2006 to $34 billion in FY2016.

We introduced major schemes to open up multiple pathways to success for all, provide assurance in key areas of need, and strengthen social safety nets.

In education, we significantly enhanced the quality, affordability and accessibility for all, across all levels from pre-school to tertiary.

In housing, we increased housing supply and housing subsidies.

In healthcare, we enhanced Government subsidies across all care settings, like CHAS, and introduced MediShield Life. Pioneers receive additional subsidies and benefits from the Pioneer Generation Package.

For the lower income, we enhanced Workfare, introduced Silver Support and made GST Vouchers permanent.

We will continue to refine our social policies and study new ideas and suggestions. For example, MOH is doing a major review of ElderShield.

Each Budget builds on past Budgets. Over the years, we have built up a strong social security system that serves Singaporeans well. In Budget 2017, we are focusing our efforts on continuing to empower the community and forge partnerships.

This is a movement towards the future, where we nurture a culture of caring for one another, of many helping hands, to meet a significant increase in societal needs. Our demographics are changing. We have a rapidly ageing population and our families are getting smaller. We can expect social needs to increase, for example, in healthcare. At the same time, Singaporeans are living longer, healthier lives. Our seniors can contribute meaningfully to the community as they age gracefully and actively. Indeed, many Singaporeans, both young and old, want to make a difference and give back to society. We want to empower all to try new ideas.

Hence, our social compact must be one of partnership, where each of us gives our best. As Ms Rahayu Mahzam and Mr Louis Ng pointed out, we need to strengthen community bonds. And as Ms Kuik Shiao-Yin pointed out, it is up to, and I quote, "all of us". Indeed, everyone − the Government, the community and individuals − all of us have a unique role to play.

There are functions that the Government is best placed to perform − such as legislation and the provision of public goods and services. And there are areas where we can achieve more, much more, when we all work together. When it comes to customising assistance to the specific needs of certain communities, or providing last-mile social service delivery, community action is critical. Even the strongest social safety nets are no substitute for the caring hearts and helpful hands of neighbours.

And we want a close partnership among individuals, communities and the Government, because this is an end in itself. This is a society that we aspire to for Singapore − a caring, resilient and inclusive society. A society where Singaporeans help fellow citizens in each way we can and where individuals and community organisations work together to make Singapore a better home for all.

This is not new to us, but we can do more to foster stronger partnerships and bring collaboration to the next level. The Government will do more by helping to create the right supportive environment to encourage community efforts, where everyone plays the part that we are best placed to perform.

We are placing greater emphasis on bringing together community efforts for key areas of need. Last year, we piloted the Community Network for Seniors to better support seniors. It has brought the Government and the community together to build "communities of care" right within our heartlands.

In the three pilot sites, the Community Networks have reached out to more than 15,000 seniors or 40% of seniors there. Of these, they have assisted 380 seniors with multiple needs, engaged over 5,000 seniors in active ageing and preventive health, and recruited 180 volunteers to support seniors as they age in the community. It is a small start but, at the same time, it is rewarding to see how community and the Government are working together to touch lives.

This is Mdm Lee Ah Kiow. It is nice to see her energetic and happy, exercising outdoors. But it was not like this for her just six months ago. You see, at 70, Mdm Lee has weak knees and a history of falls. Until the Community Networks learnt about her, Mdm Lee was keeping to herself at home, afraid to go out for fear of falling.

A Pioneer Generation Ambassador visited Mdm Lee and saw that she was at risk of social isolation. All the parts of the Community Networks sprang into action.

NTUC Health Cluster Support visited her. They worked with HDB to install grab bars in her home under the EASE programme. REACH Community Services Society introduced befrienders to Mdm Lee. Her new friends visit her regularly and bring her down to the fitness corner near her house for simple exercises.

This is the story of how the Community Network for Seniors, by bringing the different parts of the community together, helped to bring Mdm Lee out of isolation and lead a more active lifestyle.

The Community Network for Seniors pilot shows us the power of partnership. Ms Joan Pereira, Ms Tin Pei Ling and Dr Lily Neo raised interesting ideas on how we can better support the elderly to age gracefully. These are useful suggestions that we will study further.

In this Budget, we introduced the Community Mental Health efforts and the Third Enabling Masterplan. I thank Miss Cheryl Chan and Assoc Prof Fatimah Lateef for their support for these initiatives, and am confident that community partnership will help us build a more inclusive society.

I also take heart to see a growing spirit of enterprise in the social sector. I hope that, over time, there will be more enterprising Singaporeans and community organisations that start ground-up initiatives and make significant social impact.

Bakery Hearts is one such example. It was started by AMKFSC Community Services Ltd to help prepare unemployed women from low-income families to enter the workforce by equipping them with baking and other skills, while providing them opportunities to supplement their household income. The project grew with support from community resources and is able to touch the lives of many more families.

We continue to encourage more of such ground-up projects, as well as philanthropy and volunteerism. Last year, we introduced Our Singapore Fund and piloted the Business and IPC Partnership Scheme to encourage more businesses to organise their employees to volunteer and provide services to IPCs.

Mr Azmoon Ahmad suggested VWOs and self-help groups can play a greater role to support communities in various areas. I agree and strongly encourage our community partners to continue building up their capabilities so that they can better serve communities. This Budget provides additional funding, through the VWOs-Charities Capability Fund (VCF), to support their efforts.

Members would know of the Alzheimer's Disease Association, which provides a range of services for people with dementia and their caregivers. Tapping on the VCF, it is upgrading its IT system to centrally manage client and caregiver records and enhance data analysis capabilities. This allows its staff to increase productivity and better serve their clients. I hope many other community organisations will likewise build their capabilities to do even better work for those they serve.

By building many overlapping networks of community self-help and Government support, we build a more caring and inclusive society, and one that is resilient to weather change, in whatever form it takes.

Just as we seek to protect our home and environment for our future generations, we must ensure that our finances are sustainable for the long term.

As Ms Sun Xueling pointed out, our expenditures have started to exceed our operating revenues since FY2015. The Government had, in fact, anticipated this and prepared early, by raising revenues ahead of our spending needs. Indeed, this is the approach this Government has always taken.

We had, therefore, raised the GST in 2007 and introduced the NIR framework in 2008. In the last term of Government, we had also undertaken measures, such as making our property tax rates more progressive and increasing the duties for betting, liquor and tobacco over time. In Budget 2015, we announced increases in top marginal rates for personal income tax and revisions to the NIR framework. These measures now serve us well to meet our spending needs through to the end of this decade.

But beyond this decade, we can expect the fiscal situation to become more challenging as expenditures exceed revenues in the longer term.

First, our economy is maturing. With slowing economic growth, our revenues will also grow more slowly. Second, our population is ageing rapidly and we can expect rising expenditure needs, especially for healthcare. Third, our infrastructure needs are rising, as we seek to build new infrastructure and renew old ones to enhance our quality of life and Singapore's economic competitiveness.

Going forward, we must continue to prepare for our greater needs in the long term by working on two fronts: spending prudently and effectively; and growing our revenues fairly and sustainably.

With higher spending needs, it is ever more critical to ensure that we spend within our means to get the outcomes we want, as Mr Vikram Nair noted.

At the Ministry level, we have designed our funding policies to drive agencies to operate efficiently and effectively. Today, we budget for on-going functions using a Block Budget Framework, where Ministries are provided with budget caps for a medium term period. Within the cap, each Ministry decides how best to allocate its budget. This approach encourages Ministries to strive for cost-effectiveness, because every dollar optimised means more resources available for worthwhile programmes.

This year, we sought to further reinforce the importance of spending prudently and effectively, by applying a permanent 2% downward adjustment to the budget caps of all Ministries and Organs of State. This will free up resources that MOF can re-deploy towards higher priority requirements and projects that deliver value to citizens and businesses, such as initiatives by the Municipal Services Office. Within their adjusted budget caps, agencies will decide how to prioritise their programmes and projects, and review how they can achieve greater efficiency. Fundamentally, we want to imbue these values of prudence and innovation in all officers in the Public Service: to always seek value for money and constantly strive to improve and innovate, so that we can do more, and do better, with less.

At the project level, we are tightening scrutiny of major infrastructure projects to ensure robustness of its business case and value-for-money. We have a process today that puts large infrastructure projects, those more than $500 million, or those that are highly complex in nature, through a series of reviews before funding is approved. This process taps on a panel of senior public officers and industry practitioners, those with deep technical expertise and experience in major infrastructure developments, with the aim of optimising the project's overall design, use of space and cost-effectiveness.

At the programme level, we are designing our schemes so that subsidies are targeted at the right groups. As a general principle, we price services to recover full cost and discourage over-consumption. We then target subsidies appropriately at those in need, such as through GST Vouchers, S&CC rebates and Public Transport Vouchers. This is more progressive than under-pricing services, which implicitly subsidises all groups, including the rich.

Ms Sylvia Lim asked whether we evaluate programmes. On economic programmes, Minister Iswaran gave a detailed explanation about how agencies evaluate those programmes and have to adapt and change when necessary. Then, she raised the issue of the PIC. The PIC, in fact, has largely achieved its objective. But she raised examples of abuses to make her case. This is mistaken.

In fact, the fact that those abuses are uncovered is because of extensive audits that are done by the agencies, and we should commend the officers for the seriousness in which they undertake this. In many other countries, those abuses would not even be known.

The schemes were done in a way that is broad-based and reaches the right groups of people. The alternative, of course, is to have every detail scrutinised and approved before the businesses can use it. And, in fact, in many of the Budget dialogues we had with businesses, their concern was if you have too many schemes that are just based on approval, things will not move. So, it is a delicate balance and a good balance which the agencies should be commended for.

Besides spending prudently and effectively, we will have to grow our revenues through new taxes or raising tax rates over time. This challenge of raising revenues for growing needs is not unique to Singapore. If you look at many other countries, the need for more revenue to meet spending needs is a common theme that cuts across different systems. For example, Hong Kong had announced at its recent Budget that it would be setting up a tax policy unit to comprehensively review its tax system. One of its objectives would be, and I quote, to "explore broadening the tax base and increasing revenue, so as to ensure that adequate resources are available" to support sustainable development.

Mr Saktiandi Supaat and Mr Yee Chia Hsing had asked how we intend to review our own tax system. I would like to assure them that we will ensure that our tax system continues to be both fair and sustainable.

First, our tax system must be fair and progressive across income groups. What this means is that those who are better off must contribute more. In recent Budgets, we have continued to make our personal income tax and property tax rates more progressive, even as we introduced or enhanced permanent schemes, such as Silver Support and Workfare, to provide more support to lower-income groups.

Second, a sustainable tax system is fundamentally one that rewards efforts by individuals and enterprise by our companies. As Ms Foo Mee Har pointed out, the only way to sustain a healthy revenue stream is to have a healthy and growing economy.

In more recent years, more countries have lowered or announced their intention to lower corporate income tax rates. The UK has lowered its corporate tax rate from 30% to 20% over the last 10 years and plans to further lower it to 17% by 2020. The new administration in the US has also indicated plans to cut corporate tax rates.

We must ensure that Singapore continues to be an attractive place to work and do business, so that we have a thriving and vibrant economy.

Third, sustainability is also about striking the right balance between current and future generations. We have spent prudently, built up our reserves and tapped on their returns judiciously. Ms Sylvia Lim suggested using the proceeds from land sales. Now, the proceeds from land sales go into past reserves and it is because of this prudence that we are able to build up our reserves and we can use part of these returns for our expenditure. So, we must remain disciplined and prudent in spending the returns of our reserves, so that they remain a stable and sustainable source of revenue over the long term.

Any decision to raise taxes will not be taken lightly. We will study all options carefully. While our finances today are sound, we must start planning early. This is the right and responsible way, rather than leaving problems to be dealt with by future governments when Singapore comes under fiscal strain. Planning for the issue now will allow us to better ease in the needed measures, to give our people and businesses some time to adjust.

We must plan for the long term, not five years, not 10 years, but big ambitious plans for decades ahead. Like the new airport, new towns each with distinctive features to attract families, new MRT lines. We are in a good position today, because we have planned early and invested in the long term. This ability to plan and invest for the long term is a key strategic advantage. So, we must ensure that we continue to have this capacity to invest in critical programmes and infrastructure with long-term benefits, in a way that is equitable to both current and future generations.

Mdm Speaker, let me conclude. This Budget sets the strategies for building a better Singapore in a sustainable way. We can move forward confidently on these strategies, as we are starting from a position of strength. This is a cumulative effort from previous Budgets. We have a well-functioning economy where most Singaporeans have good jobs; we have a good social security system that serves the majority of Singaporeans well; we have spent prudently so we have the necessary resources.

In this fast-changing world, we cannot predict how the journey ahead will pan out, but we can expect that it will not be always smooth-sailing. There is no step-by-step guide for how to venture into the volatile, unpredictable future that lies ahead for the whole world, not only Singapore. But for Singapore, we have our compass, a compass of our shared values and our common hope.

In this Budget, we set our minds to seize opportunities to succeed; to be part of, to play a part in, a caring and inclusive community; and to build, protect and pass on a truly special home to future generations.

Let us develop the deep capabilities, strengthen the spirit of enterprise to adapt and try out new things, work together in partnership, and care for and support one another.

I am confident we can do it. We have been through tougher situations. Each time, despite the naysayers, we emerged stronger and more adaptive, as we held strong together as one people.

I thank Members for sharing your ideas for our future. Let us move forward, together. [Applause.]

Mdm Speaker: Mr Desmond Lee.

2.14 pm

The Senior Minister of State for National Development (Mr Desmond Lee): Madam, I would just like to seek a clarification. Yesterday evening, those of us who were in this Chamber were very moved by Ms Kuik Shiao-Yin's speech, a heartfelt one about how much heart we need to put in to help people in need.

As I reflected through the night, I thought I would like to clarify with her, in respect of the divorcee she mentioned with two children earning $1,600 seeking rental housing and other forms of social support.

The first clarification is: is this an individual whom she could put us in touch with so that we can look at what happened and see how best we can assist her? Even as cases do fall through the cracks, it is important for us, as a Public Service, to make sure we pick up on all these cases and assist them.

The second clarification is: some people may take away from the speech the impression − perhaps wrongly − that the Public Service has lost heart. I am asking for this clarification on behalf of the officers who work at the rental department, the Social Support Offices, the Family Service Centres and the many other social service agencies across the Public Service who are Singaporeans and who care.

Ms Kuik Shiao-Yin (Nominated Member): I want to thank the Senior Minister of State for his care. First, I want to affirm what I said yesterday. I actually do not believe that it is all on the Government and that everyone has to work together to solve all these issues. I want to affirm that I actually do not believe that the Public Service has lost heart, as some reports have said. I personally know of many deeply compassionate civil servants, especially those who work for people in rental housing, who actually go out on a limb to make things work out for the needy. That I really want to state.

The story that I mentioned yesterday, as I said in my speech, is also not based on a single story. It is based on a composite of a few stories of single-parent households. So, it is entirely possible also for some of them that they slip through the cracks − as the Senior Minister of State has said − and they could have also met the wrong person who gave the wrong advice. So, I am more than glad to link you up with each of the organisations working with each of these women for their cases to be reviewed.

I would also like to take the opportunity to state that I am also aware that, for some, they do not actually look for help because they believe mistakenly that nobody cares about them in the civil service and I think that is a mistake because that stops them from actually getting their needs met. Thank you for the question.

Mr Desmond Lee: I thank the hon Member for her clarification. On behalf of all the officers who work in social agencies, we will continue to work hard. And for those cases, we will follow up on them. Thank you.

Ms Sylvia Lim: Thank you, Mdm Speaker, a clarification for the Minister for Finance. Earlier, he referred to my raising of the PIC scheme. The point I was making was whether, as an example, the PIC scheme, but, in general, whether there are any mechanisms to assess the effectiveness of expenditure in terms of the outcomes that are intended to be achieved?

He mentioned that the PIC scheme was largely effective. We have seen productivity data that seems to be very mixed and also weak in the domestic sectors for the last couple of years. And I am wondering whether he could elaborate further on whether there is any publicly published Government report that shows the effect of the PIC scheme on productivity. Because I may have missed something that his Ministry or MTI has published.

Mr Heng Swee Keat: I thank Ms Sylvia Lim for her question. In fact, in terms of productivity growth, the productivity growth over the period of 2011 to 2016 has been above 2%. I think it is 2.1%. It is within the range of what the ESC has set out to do. So, these measures, in terms of the productivity numbers − yes, it has achieved that sort of outcome.

But I think, more importantly, the PIC scheme was also intended to create a greater awareness amongst our SMEs of the need to take productivity seriously, to upgrade. The fact that so many businesses have actually taken up the scheme and improved their performance is a sign that the objective of raising awareness of getting businesses much more involved in it has achieved its purpose.

So, there are schemes that you cannot measure just by one parameter that it has achieved or not achieved its objective. But in terms of what it sought to do − which is to raise this broad-based awareness of the importance of productivity, getting companies involved and then getting people to participate in it, and also achieving certain measures of productivity growth − it has achieved its objective, largely.

That is why, last year, I spoke about why we need to move on to more targeted measures in the next phase.

Mr Leon Perera (Non-Constituency Member): Thank you, Mdm Speaker. I just have three points of clarifications for the Minister for Finance. Before I start, I just want to wish the Minister many more years of good health. I thank him for his hard work on the Budget.

My first point is regarding the presentation of the Budget Statement. I raised this in my speech. Will the Minister for Finance consider presenting one or two pages in future Budget Statements which presents the Budget according to IMF guidelines, reflecting the total net amounts of money leaving the economy to the state, and money that the state is pumping back into the economy? This is so that Singaporeans can make a well-informed assessment of whether future Budgets are expansionary enough to facilitate genuine, democratic consensus formation.

Secondly, I would just like to refer back to the net births of companies' statistics that I cited in my speech to ask what is the Minister's evaluation of the state of the SME sector. Because I highlighted that net birth of companies has been plunging in 2016. The last time we saw such a figure was in 2009. And if we push the data series even further back, the last time we saw a below-10,000 net birth figure was —

Mdm Speaker : Keep it short, please, Mr Perera. Your point has already been made in your speech.

Mr Leon Perera: Okay. The last point is that I just wanted to ask the Finance Minister again about the timing of the price hikes that we have seen. As other Members have alluded to, the Government did have the option of either pre-announcing some of these price hikes, and/or phasing or staggering them, and/or deffering them.

So, given that there have been four price hikes − gas, water, electricity and parking − all within a space of three months, at a time when GDP growth is the lowest it has been since 2009, jobseekers outnumber job vacancies and so on. And given that the Government has shared that the reasons behind these are not political − and I believe that was shared yesterday − can the Minister help Singaporeans understand a little better? What are the non-political reasons behind timing the price hikes in this way?

Mr Heng Swee Keat: I thank Mr Leon Perera for his questions. First, on whether the data that he has asked for, as prescribed in the IMF format, is available. In fact, it is. And if he actually accessed the IMF website, he will find that our numbers are there, because we submit these numbers to the IMF.

The reason why the Budget Book is presented the way it is, is that this meets our specific needs. We need to know, for particular Ministries, how much spending is available, what is the development spending, what is the operating spending. Whereas the IMF is for a macroeconomic evaluation. It serves a different purpose.

As to whether a particular Budget is expansionary or not expansionary, in fact, it is not just by looking at those numbers. If you consult the economists, you will know that they actually take great pains to model the effects of the monetary and fiscal policies. And, in the case of fiscal policy, how much of a fiscal impulse a particular Budget provides to the economy. Here, we are fortunate that MAS would do some of these simulations to give us a sense of whether it is appropriate or not appropriate, because we also have the important objective of keeping inflation in check.

These are not numbers that are not available, or numbers that you can just read off and conclude that it is expansionary or not expansionary. It takes a general equilibrium model for us to look at some of these impacts.

The next question on the net birth of companies, whether it is an indication that companies are not doing well. In fact, there are many reasons behind the birth rates and exit rates of companies, and we must expect that it will fluctuate over cycles, depending on the economic conditions and so on.

I think Minister Iswaran has explained that if we are looking at the health of SMEs, there is a broad range of factors that one has to look into. If the Member's specific question is, are SMEs doing okay, I have indicated in both my Budget Speech and in the round-up speech that the performances across sectors, across industries and across firms differ. And that is why we need a targeted approach. That is why I used the Chinese phrase, 对 症 下 药, which means to have the right remedy for the right ailment.

It is not a case of having broad-based measures, that every firm is doing badly and therefore, we need a big rescue operation, as we had during the Global Financial Crisis.

So, those things will have to be carefully studied and we cannot just draw a simplistic conclusion, just a number of firms are formed this year, that year and, therefore, the situation is better or worse.

The Member's final question was on the timing of the increases. The fact is, first and foremost, do we agree that the price signal is important so that consumers know what the actual cost of the resource is and, therefore, can then take action to mitigate the use? If the answer is yes, then, there is never a good time. Because I do not think any Finance Minister finds it a popular thing to come here and say, "Oh, I am going to increase this. I am going to increase that". It is never. I do not take great joy out of announcing all these increases. But the fact is, we have to do the right and responsible thing.

The right and responsible thing is to make sure that the price signal and the correct price feeds through with the economy early enough. If we do things early, often we will also have the ability to provide the mitigation package, the support package, which is what we have done, whether it is for diesel duty, whether it is for water, whether it is increases in U-Save rebates.

This is a fundamental point that we got to make sure that we do things correctly, we have the right price signal, and that every one of us factors this into our decision-making and do our part.

Ms Foo Mee Har (West Coast): Thank you, Mdm Speaker. I would like to ask the Minister on two suggestions that I made to support businesses and individuals during this difficult period. One is: there has been a lot of questions about the use of state land or vacant properties − about 1,000 of them − whether the SMEs or operating businesses that find rentals high could use the spaces as public offices, low-rent public offices, borrowing the idea of JTC LaunchPad. There has been quite a lot of calls on that, so I would like to hear the Minister's response.

Second, Mdm Speaker, is whether the Minister will also consider suspending income tax payment when someone is unemployed, as well as more flexible use of the CPF in order to tide them over to pay mortgage.

Mr Heng Swee Keat: I thank Ms Foo Mee Har for her questions. First, on state land, whether it can be used by SMEs and so on. The amount of land that is used, whether it is commercial, industrial or residential, is planned very carefully by the various agencies, and also together with the economic agencies. Where there is a need, more land can be released, but where some temporary uses can be made, in many cases, the Singapore Land Authority has allowed for some of them to be used.

But we should not take that as a matter of course, because, if we do, then a lot of that planning will have problems later on. If the business is a startup, perhaps, it requires a lower cost, but if it is going to operate permanently in a particular way, we cannot just permanently subsidise rental because that would eventually make it harder for businesses to adapt.

On the second question on whether we can suspend income tax payment, for those who have particular difficulties, they can, in fact, apply to IRAS for a deferment of payment or for payments over a period of time. So, if you do know of particular cases, you can advise them to apply to IRAS.

Ms Chia Yong Yong (Nominated Member): I seek two clarifications. The first is to the Minister for Finance in relation to the diesel tax − whether he would consider ameliorating the impact for vehicles that are serving the needs of VWOs, in order to also help the organisations save some costing.

My second clarification is for the Minister for the Environment and Water Resources − whether the Government will consider water rationing across the board for individual households as well as commercial entities, as also previously suggested by a former Nominated Member, Prof Tan Tai Yong.

Mr Heng Swee Keat: I thank Ms Chia Yong Yong for her questions. Whether we can ameliorate the impact on VWOs, we have the diesel tax and the road tax rebates for certain types of vehicles. I would ask the Ministry to have a look at it in greater detail.

But let me say that for the VWOs, there are also many other schemes to help with the transport-related matters.

Mdm Speaker: Mr Masagos, do you wish to respond?

The Minister for the Environment and Water Resources (Mr Masagos Zulkifli B M M): If I may, Mdm Speaker. I thought it is odd for me to respond during the clarification of my Ministry's COS.

Mdm Speaker: Yes, please.

Mr Masagos Zulkifli B M M: Thank you. For rationing, we have been asked by many Members, as well as the public, to try and put this rationing regime into a yearly exercise for everybody. There are many reasons why we should do it and there are also problems when we want to do it. Therefore, what we have decided to do is to start small in schools, and we started last year. Ten schools participated. This year, more schools – 11 schools – are participating and preschools are also participating.

That is addressing part of the problem. Hopefully, we will never have to go into rationing when we are ready with our desalination plants and our NEWater plants. I think to press the point about how precious water is by making it difficult through rationing may not always be productive.

Ms Sun Xueling (Pasir Ris-Punggol): I thank the Finance Minister for his speech. I have a clarification. NIRC has consistently contributed 20%-21% of total revenues in the most recent two Budgets.

In a recent article on Bloomberg, Norway Central Bank Chief warned of how the risk of a 50% decline in 10 years of the sovereign wealth fund increases five times if government withdrawals from the fund increases from 3%-4%.

Given our reliance on NIRC to fund our Budget, what are the inherent risks we face? Should there be huge changes in global outlooks of capital markets, how does that change our expected long-term rates of returns and our ability to use NIRC to fund our Budget?

Mr Heng Swee Keat: I thank Ms Sun Xueling for her question. Indeed, it is an important one. First of all, let me put it in perspective that, indeed, we are drawing about 20-odd percent of our Budget from the NIRC. The fact is that we still have 80% that is based on current revenue. It is important that we keep a vibrant economy and that we keep our tax rates in such a way that allows us to do this.

Is there a risk that the returns will not be adequate in the future? When the former Finance Minister, Deputy Prime Minister Tharman Shanmugaratnam, revised the NIR framework, there were a number of careful safeguards that were put into the spending rules. Our spending, first of all, does not depend on the fluctuations in the market from year to year. In fact, it is the expected long-term rate of return. That means that in a very good year when markets are very vibrant, we do not just take very vibrant returns but, rather, the agencies give us an expected long-term rate of return, and we look at that number. If you look at the numbers, it has been conservative, compared to many of the endowment funds. That is one important safeguard.

Two, it is that we only use up to 50% of the expected returns. As long as the return is positive, we add to the reserves, not only through new revenue sources, new surpluses but we add to it through the returns not spent. That is something that we take very seriously.

The third thing that we do is to make sure that if the returns are very good in one particular year, asset value tends to be very high, the rate that we apply, the long-term return that we apply, is not to the very high base, because we know that the markets will go up and down. If you apply to a very high base, you may overspend. For that reason, it is based on a smoothed asset base, so that in good years, we do not overdo it, and, in bad years, we will still have adequate resources. All these returns are real returns, net of inflation; it is not just some big nominal numbers that are used.

Indeed, the Member's point is a very important one; that we have to be very, very careful in guarding the use of these reserves and in making sure that we spend on a sustainable basis.

Ms Chia Yong Yong: Further clarification for the Minister for Finance. I apologise I did not make myself very clear just now. I was not referring to vehicles owned by VWOs but, rather, to the commercial operators because many VWOs are not able to or, for some reason, do not own their own vehicles. They rely on commercial operators to supply the services.

Mr Heng Swee Keat: Thank you, Ms Chia, for the clarification. I am sorry I misunderstood your question. This is something which I will ask the Ministry to look into.

Question put, and agreed to.

Resolved, "That Parliament approves the financial policy of the Government for the financial year 1 April 2017 to 31 March 2018."