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.

3.56 pm

Mr Liang Eng Hwa (Holland-Bukit Timah): Mdm Speaker, thank you for this opportunity to start the debate.

The general response from the businesses to this year's budget has not been positive. From the media reports, we have read strong statements from the SBF, SCCCI, ASME and the other TACs expressing disappointments with the Budget for not doing enough to help businesses cope with the immediate challenges.

It is understandable and natural for businesses to always seek an even better business environment. It happens in all countries to varying degrees and for as long as we can remember.

I did some quick homework to satisfy myself as to whether this barrage of criticisms by the businesses are fair and justifiable, or whether the Finance Minister is indeed doing the right thing from an economic management and, of course, from a prudence standpoint.

So, let us start with the most recent economic numbers to see if the economy is indeed in a dismal state.

In the latest fourth quarter GDP numbers, the economy grew 12.3% quarter-on-quarter. It is the strongest quarterly growth recorded in six years and it translates into a 2.9% year-on-year growth for the fourth quarter. Granted that the key driver from the surge in growth came mainly from two manufacturing sectors; namely the semiconductor and the pharmaceutical sector, but we can expect spill-over effects to other sectors supporting these two sectors such as precision engineering, transport, warehousing, financial and other supporting services.

Importantly, we have also seen credible growth from the services sector which account for about two-thirds of the economy. The sector grew by 8.4% quarter-on-quarter and 1% year-on-year.

So, clearly, from a data standpoint, we are not seeing the sort of sharp contraction similar to what we saw in recent downturns. And hence, it may not warrant the Government to roll out a massive rescue package to save the economy but rather to continue with and enhance existing schemes to assist businesses which include the cash schemes, like the Wage Credit and the additional SEC. These are in addition to the other assistance measures in the Budget, some of which were recommended by the CFE. So, in my view, the Finance Minister has struck the appropriate balance here.

However, it is worth noting that we are seeing the new realities of our economy setting in. Firstly, the uneven nature of the growth and secondly, the overall low and flat growth trajectory. This probably explained why some businesses are feeling downbeat. In particular, businesses are beginning to feel effects of life under a slower 2% growth environment; compare to what used to be a 3% to 5% growth a few years ago.

It is showing up in their order books in the form of fewer orders and as a result, more competition and compressed margins, while at the same time, seeing business costs continuously creeping up.

If we further overlay the picture with the employment situation, then we are beginning to see troubling signs that we ought to be concerned with.

For the fourth quarter, last year, total employment grew by only a lower 1,900 compare to 2,700 in the previous quarter and much lower than the 16,100 of the same quarter in 2015. This could be due to a combination of cyclical downturn in some sectors and structural shifts taking place within the economy which leads to higher job mismatches. As we intensify digitisation, we can expect possible job losses but there will also be new jobs created for those who can adapt.

Under such circumstances, giving out broad-based short-term cash grants to businesses will not reverse these trends. It requires a whole-of-system approach to deal with the challenge.

The CFE and Budget 2017 do have a host of recommendations and measures to address this development, including the Adapt and Grow initiatives and specific industry transformation support.

For the businesses, the perennial concerns are still about the costs of doing business in Singapore. I do agree that the increase in water prices and the diesel duty do not help the situation; even as the businesses can understand the reason for the hikes.

For example, I read last Thursday in Lianhe Wanbao about how the food industry and food manufacturers are most concerned with the hikes as both water and diesel are their major inputs in the food production chain and there are no direct rebates in the Budget to help them.

We do know that there is no turning back on having less air pollutive fuel and to have better air quality, that is what we want. We want better environment. We also know that the cost of an additional drop of water will cost more as we tap more of the expensive sources of water going forward.

These are irreversible trends. Rather than look for short-term painkillers, let us tackle the problem head-on and collectively work on longer term alternative solutions. For example, in the case of water, perhaps the food industry's Industry Transformation Map (ITM) can be the platform where industry players and all stakeholders come together to seek longer term solutions; and working with PUB and A*STAR for both R&D and resource support.

Mdm Speaker, this year's Budget carries with it the added vital task of implementing the recommendations from the CFE and the all-important mission of renewing our economy. Hence, necessarily Budget 2017 would be more heavily weighted in the areas of economic transformation and setting our sights on the medium- to long-term horizon.

The GPC for Finance, Trade and Industry supports the key thrust of the strategies outlined by the CFE to decisively position Singapore to capture the opportunities of the future economic landscape.

The comprehensive set of recommendations is a good start to deepen transformation. We noted that a number of the suggestions put up by the GPC; primarily in the supply-side areas, were also in the report. Some have critiqued that the CFE report offer no new ground-breaking ideas and that it was lacking in detailed execution plans.

It is indeed not the usual approach. However, we are in uncharted territory. In this new fast-pace ever-changing landscape, having a well thought out strategy and clear directions as to where we should go will put us in a pole position. But the important next step is to develop quick response capabilities that can react swiftly and seize opportunities whenever they present itself; and these opportunities are likely to come in shorter cycles with greater injects of newer unknowns in play.

Many of the key ideas of the CFE were well-shared and ventilated during the one year of public engagement and hence most of the recommendations come as no surprises, though they are not any less impactful. We know that this is the to-do list on hand and what is more crucial is to get as many done as soon as possible and to do it well. That will make a transformational difference.

Since not everything is cast in stone and more plans are being hatched on the move, I hope the Government can still take new ideas on board to transform the economy, and I have some of my thoughts and suggestions here today.

Building strong digital capabilities is among the foremost priorities. We must quickly capitalise on our competitive edge to stay way ahead of the curve, so that we can exploit the powerful multiplying effect that digitisation can bring. Jack Ma recently said that Alibaba aims to be the fifth largest economy in the world with its e-commerce platform and digital connectivity. So, the sky is the limit in this space.

We need to accelerate adoption of digital technologies by SMEs. There is no other more enterprise-centric way to carry this out than to go one-on-one with enterprises, offering step-by-step advice on the technologies to use at each stage of the growth, roping in resources from IMDA, SPRING and other lead agencies, giving some funding to those that are ready to pilot emerging ICT solutions and starting with sectors that are in greatest need to improve productivity. All that I have just said is actually what the SME Go Digital Programme is all about and that is the way to go.

At the national level, the Government should also see building nation-wide digital capabilities and infrastructure as a public good and to go beyond just playing the enabling role. Often, decisive actions are needed to fast track or build such capabilities ahead of time. Private sector may not always be commercially aligned to the ultimate National objectives and may have other nuances or take longer to mobilise, for example. A case in point is the setting up of the National digital payments system, which was suggested by the GPC to CFE, where leaving it to the private sector may take ages to happen, given the multiple commercial stakeholders involved.

The Government should also hasten the proliferation of sharing economy platforms, enabling trade and e-commerce connectivity across and up and down the economy.

In the area of innovations, the GPC believe that enterprises should leverage on R&D as a key competitiveness driver. Through the ITM platforms, more R&D support such as RIE2020 can be made available to promising local enterprises to develop breakthrough and trendsetting products and services. Currently, most of our R&D resources are being utilised by very large companies. We need to "bite-sized" this R&D funding support so that it is within the scope of smaller enterprises and through ITMs to cluster businesses together to seek joint solutions to common challenges, such as water and carbon emissions.

Mdm Speaker, the Global Innovation Alliance and SkillsFuture Leadership Development initiatives are sound attempts to build international innovation networks. In the new landscape, superior global connectivity will be the key success factor. It can expand Singapore's economic spaces and add excitement and vibrancy notwithstanding a slower 2% to 3% home-based growth.

On internationalisations, given recent global political developments and the anti-free trade sentiments in Europe and the US, we clearly need to further expand and diversify beyond traditional markets.

There is scope to pursue more opportunities within the ASEAN markets; riding on the growing middle class and its expanding infrastructural needs. We would need to further expand consular and IE Singapore's presence in these locations, expand air-links and develop closer multi-faceted ties including setting up more location based business councils with the local jurisdictions.

Amidst all these initiatives, the oxygen for businesses to scale up, innovate and to venture overseas is funding and capital, which was also addressed in the CFE report.

Besides the international financing schemes such as IFS which has been enhanced, we must also have available long-term risk capital and seed funding to take direct equity stakes in promising local enterprises or ventures with the aim to help companies expand the regional footprint and anchor value in Singapore.

Hence, I welcome the setting up of the $600 million International Partnership Fund (IPF). Indeed, this is one of the bold ideas of the CFE. Under this initiative, the Government will commit capital through a Temasek-linked fund to co-invest with a Singapore-based company. Such equity injection, which tends to be longer term in horizon, would be a good source of patient capital as well as a confidence and rating boost for the company. It also gives the Government a greater handle in keeping the company's HQ and core operations rooted in Singapore. And should the company's owner decides to cash out and sell their stakes, the Government's equity stake in the company would better able to help retain the value in Singapore. These requirements should be clearly stated in the investment mandate.

Besides the state investment agencies as provider of patient capital, the GPC also urged the Government to encourage locally established and "patriotic" foundations and family offices to be another source of capital for local enterprises' efforts to boost innovative capabilities and scale up. We have seen that in some countries, for example, in Sweden, there is this Wallenburg Foundation who will invest in companies to pursue their own Sweden national interest.

Mdm Speaker, cost of space is often cited as an impediment to start-ups and new enterprises. We should expand the availability of low-cost spaces. Last year, France opened Europe's biggest accelerators with space for 1,000 start-ups in a refurbished Paris train station. There are many more such newly set up accelerators in Europe today, very much like our Blk 71.

State land that are earmarked for medium- to long-term use could be leased out on short-term leases with temporary built-in structures.

Also, from overseas experience, precincts near the Institutes of Higher Learning (IHLs) tend to be good fertile ground for like-minded innovators to gravitate and a community of innovators to spontaneously form.

I hope MND can consider making available unused buildings or spaces in locations near IHLs, such as Clementi and West Coast, which is near to NUS, Dover Road, near Singapore Polytechnic, to foster closer social networking and economy shaping between IHLs and the innovators.

On skills, Mdm Speaker, the key word in CFE and Budget 2017 is to go deep. The message is loud and clear. So, while I can appreciate the need to make training more accessible via e-learning platforms, I am not sure that a modularised and technology-enabled training programme can achieve the right depth and rigour to meet needs of the market place. But I fully agree we need to strengthen on-the-job skills utilisation and to urge employers and TACs to take the lead in the design and structuring of skills upgrade. The nexus between skills acquisition and utilisation will be better aligned if employers and TACs take ownership.

In addition, I hope that the Government will also consider three other suggestions related to skills and jobs that the GPC has earlier put up.

Firstly, we should allow more flexibility in admission for mid-career applicants to enter ITEs, Polytechnics and Universities. Matured students with their rich life and workplace experience can bring useful perspectives to the classroom, even as they learn new skills there. I like a particular line in the CFE report, which said "we need to go beyond the pursuit of the highest possible academic qualifications early in life to focus on acquiring and using knowledge and skills throughout our lives." I hope MOE and the IHLs can start making changes in this area and turn these words into actions.

Also, I hope companies can be incentivised to provide sabbatical leave to long-serving employees who may wish to take stock of their accumulated skills and experience, take learning breaks to re-skill and re-energise. This is consistent with enhancing long-term employability in the future economy. Many of the Fortune 500 companies already have such practices.

Secondly, to expand post-Secondary education options with more Polytechnic and ITE places and also to expand the range of course offerings. We should also review the curriculum of Junior Colleges and to consider placing a greater emphasis on applied learning, beyond just as pre-University education. It is also timely to study and weigh the long-term benefits of national A-level exams in the new future landscape.

Thirdly, we should carry out deeper analysis on EP and S-Pass data to understand the skills and expectation mismatches within the workforce. After all, these are real observable data on why we could not find Singaporeans to fill those jobs. With the deeper understanding, we can map out the right skills development programme to reduce mismatches.

Information gaps are among the reason why there are mismatches between employers and employees. I am glad that the CFE and Budget 2017 have undertaken to step up the functionality and user experience of the national Jobs Bank. We need to harness the value of the whole-of-economy data to do a better job, matching jobs.

Mdm Speaker, in the interest of time, I will not speak on the ITM but I will cover them during the COS for MTI.

The transition to a more entrepreneurial, more international and more innovative economy will obviously come with risks. And the best way to mitigate these new risks is to always maintain a strong financial position; ready to act with effective measures when the situation warrants and have the internal resilience to weather external shocks that will definitely come time and again.

Amidst all these, we must maintain social cohesion, alongside capable political leadership. As individuals take on more career risk and the nature of work changes due to innovations, there may be the need to further strengthen the social safety nets while maximising opportunities for Singapore workers. We must avoid the discontentment and divisions that we recently saw happening in Europe and the US to globalisation.

Mdm Speaker, the Budget is a package of good policy intentions and in the Singapore's context, almost always medium- to long-term in focus. In the last 10 years of Budget which I have debated as a Member of this House, I can only remember one year where the Budget was almost entirely short term. That was in 2009 when the economy contracted by 17% the quarter preceding and a negative growth of 2% to 5% was forecasted for that year. The circumstances then warranted decisive and timely action by the Government to save jobs and to help businesses and the centrepiece item for that year's Budget was the $4.9 billion Resilience Package.

Everyone would love to have a Budget package with tasty, immediate goodies. I would love it too. However, we would find our fruits tastier, if they were harvested through hard work and prudence from plans put in place many Budgets ago. That has been the spirit of Singapore Budgets since our Independence, and has been core to our values. We should continue to do it this way; even in the future economy. Madam, I support the Budget.

4.16 pm

Ms Jessica Tan Soon Neo (East Coast): Mdm Speaker, thank you for allowing me to participate in the Budget debate. Madam, as we discuss this year's Budget, we cannot ignore the changes and how these changes are impacting Singapore, our lives − economically, socially, culturally and even our environment. The intensity of the pace, scope and scale of this change is what is different. The rapid changes are driven by the combination of globalisation and technology that is removing the constraints of geographic boundaries and limitations and blurring the lines between the physical and our digital world. Reactions and feedback to the Budget reflect the anxieties and optimism that people are feeling with the impact that these changes are bringing.

It is against this landscape of rapid global changes, new opportunities and challenges and a maturing economy that Minister Heng had emphasised that we need to reposition ourselves for the future.

He had categorically stated that measures for Budget 2017 for our economy, society and fiscal policies must "take a learning and adaptive approach". He said that we will "try new methods, continue with them when they work well, cut losses when they do not, and draw on feedback and experience to adjust and refine our plans. That is the Singapore way".

This "learning and adaptive approach" may be uncomfortable, and I think the feedback we received have indicated that it is uncomfortable for many of us, as we are used to certainty and clear plans. But given the pace, scale and impact of these changes we are seeing, none of us, not even the Government, can predict the future. Rather we must take some bets directionally, and that enables us to be ready but be prepared to adjust and adapt to the changes that will unfold. It is no longer simply about picking the right bets, having the right skills and then just executing. With the uncertainties that unfold, nurturing a culture of learning and having the mindset and flexibility to adjust and adapt will be key. Otherwise, we will be irrelevant.

The measures in this Budget focus on the quality of growth in a future economy that is anchored on building the capabilities of enterprises, deep skills in our people and enabling innovation. I believe that together with the Industry Transformation Maps (ITMs), these are the right strategies to enable the businesses and our people to stay relevant and thrive in the future.

But to achieve deep capabilities, skills and innovation is not easy, because it will require structural changes and partnerships. Partnerships between large and small enterprises, local and foreign, educational and research institutions, trade associations, unions and the Government.

I would like to touch on two points in my speech. One is the strategy for economic growth and innovation, and the other around ensuring caring society and inclusive growth in helping those impacted by the transformation.

To build enterprise capability, the Budget outlined the need for enterprises to use digital technology, embrace innovation and scale up. It is evident that enterprises, both large and small, cannot ignore leveraging digital technology to transform their businesses. Many are already facing the impact of the disruption brought about by technology. The introduction of the SMEs Go Digital Programme to help SMEs adopt digital technology and solutions is a necessary initiative. Although many SMEs today do see the benefits of leveraging digital technology to transform their businesses and address the changing business environment, many do not have the skills or resources to do so and have not done so, or do not even have the plans to do so.

Klaus Schwab, and I thought he shared this very well and I wanted to share the thoughts that he shared about the Fourth Industrial Revolution, because he talked about the demand and supply side impact on businesses. On the supply side, what he shared was that new technologies in many industries are creating entirely new ways of serving existing needs, enabling new ways of working and significantly disrupting existing industry value chains. Access to global digital platforms for research, development, on marketing, sales, and distribution, have enabled new entrants to compete and thrive by improving the quality, speed, or price of what they deliver.

On the demand side, technology has also enabled a change in how products and services are being consumed and new services and business models are emerging to address demands and creating new markets. Obvious examples that many of us are familiar with is online shopping, from Grab to Uber, to Deliveroo, to Airbnb, just to mention a few. These are giving competition to established incumbents, both large and small, from all industries whether it is retail, transportation, F&B, hospitality, learning. The barriers to entry has been lowered and new entrants are driving new demands and addressing new demands areas as well.

Going digital is important but I do want to stress the point that we must be cognizant that it is not about going digital. Rather, becoming a digital business is a means to an end. It is key that our enterprises, both large and small, as they embark on their digital transformation, keep the consumer at the centre of their strategy. The importance of using data as a key business currency to understand and get insights of both the demand and supply side opportunities and challenges, will be key for businesses, and being able to stay relevant.

As our businesses leverage digital platforms as well, they need to continue to build credibility and trust. Keeping data secure and ensuring that their digital platforms stay secure will be critical. Building cyber security skills is an area that all business will require. But for SMEs, this is going to be an extremely challenging area given the challenges they are already facing in the adoption of digital technology. The SMEs Go Digital Programme needs to have clear plans on how our SMEs can build digital resilience as they leverage digital technology.

Another area I would like to touch on is driving transformation and growth need strong leadership. As we know, successful reinvention, business change and innovation require strong leadership. The introduction of the SkillsFuture Leadership Development Initiative is definitely welcomed. But I do see that the emphasis of the programme seems to be on developing these leaders to support companies expanding overseas and going global. And I think that is important, but it is also important to stress the need that this initiative gives similar attention to building capable leaders to lead and drive businesses in Singapore. In order for our businesses to expand and scale, they need strong leaders to make decisions, transform and grow the businesses locally. There are good examples of MNCs already doing this. There are those examples today, but we need more. Because with the pace of change, this needs to be done.

Let me touch on an area that I feel needs some focus, given the current economic climate and our businesses transformation platforms. There are real fears amongst our workforce that these changes will not only disrupt jobs but displace jobs.

The measures announced in the Budget and the on-going measures to help our people access, acquire and deepen skills are needed and welcomed.

I am not going to speak about the specific measures but I like to touch on one segment of the workforce, that is the middle income and middle-aged. While there are other segments of the workforce impacted by the disruption, this is a talent base that is significantly impacted by the transformation of businesses. With an ageing population, a highly-educated workforce and PMETs forming more than 50% of our workforce, this group will need attention to manage the transition in work to different roles, or across industries or from employment to becoming entrepreneurs. Across several economies, we are already seeing a growing discontent amongst those in the middle income. We must ensure that the measures are effective in enabling this segment to deepen their skills and adapt and grow. Driving innovation will require deep skills.

I want to also share a point that we need to ensure that this group continues to see that the opportunities that they have are not about transitioning, and not just about finding employment, but that they can find fulfilling jobs and see opportunity to improve their lives and that of their families. The then US Vice-President Joe Biden in a keynote address at the World Economic Forum Annual Meeting 2016 told participants "the middle class is about possibilities − the possibilities for anyone willing to work hard to achieve a decent life". He said that a thriving and growing middle class has been the main reason for social stability in the world's democracies.

It is our own responsibility to make sure that this group continues to be able to drive, because they are impacted with the changes that were seeing in businesses. I strongly believe that if we strengthen the Singapore Core, and give our people confidence and hope in the future, we will have a culture of growth and learning, but we must continue to remain open. Because it is only when we are able to stay open, can Singapore benefit from strong partnerships and learn from foreign companies, both large and small.

I would like to touch on one last point about making sure that we help those who are lagging adapt to the changes. On the point of definition of who needs help and how the help is extended. When distributing rebates and subsidies given, we do all understand the finite resources and budgets. I do agree that there must be criteria for qualification. Our current approach uses size and value of housing type as the primary factor for qualification. The criterion is also not based on ownership, but on the type of housing you live in. While logical, this may no longer be as valid or accurate. There are some living in HDB flats who may not be worse off than someone living in a private property.

This is not a straightforward matter and it will need further study what it needs to be addressed. But I do feel that we need to relook at our approach. I am not asking that we grow the size of the number of people getting help as it will not be fiscally sustainable to do so. What I am requesting is that we relook at the distribution to ensure that those who need help do receive it.

On social inclusion, as we build a society that is moving on and moving on fast, I think it is important, another aspect of inclusion is about helping people feel that their contributions matter. We do already have many platforms of recognising people from all walks of life and professions and we must continue to do so. I recall NS50 is a recent example of a platform to recognise the efforts of National Servicemen past and present including bringing them together and sharing their experiences. Because it is through the experiences, having the platforms that we can feel part of, that would make people feel included and bring us forward together.

Mdm Speaker, Budget 2017 as with all Budgets, is about the future. I have spoken on many occasions in this House of ensuring that Singaporeans continue to have "hope" and see Singapore as the home and place for each and every one of us to aspire and build a better life for ourselves and our families. We have seen in recent times how many economies are driven by fear and anxiety and facing pressures to become more protectionist. To this point, it is apt that the theme for this year's Budget is "Moving Forward Together".

The journey we are embarking is not going to be easy. But while there are challenges, there will be opportunities. This Budget is a rallying call for us on the need to build our capabilities and pull together to ensure that Singapore and Singaporeans continues to grow and thrive in an uncertain and rapidly changing world, but recognise that we must remain open, so that we can continue to learn, partner and benefit from all that is happening around us. So, Mdm Speaker, I support the Budget. Thank you.

4.30 pm

Mr Leon Perera (Non-Constituency Member): Mdm Speaker, Singapore's economy is at a crossroads. In the past, lies an economy driven by foreign direct investment, state initiatives and capital and labour inputs. In the future, lies the dream of an economy driven more by productivity and innovation, local enterprises and private initiative. How do we move from A to B?

The Committee of Future Economy (CFE) outlined a few broad strategies. Some have criticised these for being too broad, but I do acknowledge that there are details contained in the Industry Transformation Maps and other Governmental statements outside the CFE report.

There was also not a great deal that was new in the CFE report. A few new ideas, like the Global Innovation Alliance, for example, but not many. For the most part, the CFE referred to and affirmed existing initiatives.

I do acknowledge, however, that we should not value novelty for novelty's sake. If indeed, what we are doing now has little room for improvement because it is delivering results, then so be it. But is what we are doing now delivering the results that we need?

Madam, our economic growth in 2015 and 2016 was about 2%, the slowest since the financial crisis year of 2009. As at December 2016, jobseekers continue to outnumber job vacancies in Singapore for the first time since 2012. Low headline unemployment belies deepening insecurity in the job market, with rising redundancies, reports of under-employment and more people taking up jobs in the less secure gig economy, not all from choice. As it is well known, productivity performance in recent times, has been poor and far below our target. And according to one city-level study cited by the Prime Minister in 2012, our per capita GDP is not even among the top 20 cities worldwide.

Madam, let us take another indicator − net births of companies. That refers to the formation minus cessation of companies, companies, generally being larger, and more economically-weighty entities than proprietorships. In the last three months of 2016, the net births of companies have plunged. Since December 2015, this indicator has registered negative net births of companies four times − in four months out of 13. The total net births figure for 2016 was about 6,000. For the previous four years, it ranged between 12,000 and 21,000. In fact, in the last 10 years, this figure has fallen below 10,000 only twice. In 2009, the year of financial crisis, and last year, 2016.

Madam, our SME sector employs two-thirds of Singaporeans. The SME sector situation is seriously challenged at the present moment.

Madam, we all want Singapore to be exceptional, to be a shining Red Dot. But how can we make sure that the Red Dot does not dim for our children and our grandchildren? What was lacking in the CFE report was a deep self-examination about why we are producing these kinds of results? From deep self-examination, and even self-criticism, could come fresh thinking.

Our drive towards high productivity is not new. It began decades ago. Yet we have produced weak results. United States, Korea, Hong Kong and Australia have better real productivity growth compound on annual basis from 2004 to 2014, according to one analysis published in The Straits Times on 24 April 2016.

Madam, we recognise the problem with our total fertility rate (TFR) in the 1980s, and yet we have not succeeded in reversing the decline, so much so that our TFR today is among the very lowest in the developed world. Yet other developed countries have reversed their TFR decline, such as Japan, France and some Scandinavian countries.

To take a micro example of what I am referring to here, Budget 2017 announced a new SkillsFuture Leadership Development Initiative (LDI) to groom corporate leaders, which is good. Yet an initiative to groom Singaporeans to become leaders in global companies had already been announced several years back. What lessons were learnt from that?

Turning now to Budget 2017, is it a Budget that deals with the economic situation we are in? The Minister for Finance said that 2016 was an expansionary budget, meaning to say, in crude terms, and at the risk of some over-simplification, that the state was pumping in more money into the economy than was taking out, because the basic deficit was $5.6 billion in 2016. In 2017, the basic deficit is projected to be $8.2 billion or about 2% of GDP, which would imply an expansionary budget again, even if the deficit turns out to be smaller by a few billions due to conservative budgeting, as it almost certainly will be.

But what if we properly reflect the cash going out of the economy to the state in the form of land sales, projected to be $8.2 billion in 2017, net of other elements that may not be reflected, such as the actual cash spending of endowments and funds. Once all of these items are accounted for, is the Budget as expansionary as the basic deficit of $8.2 billion would suggest?

I would like to ask the Government if it can include a section in future Budget Books that presents our National Budget and quantifies the surplus or deficit according to the methodology prescribed by the IMF. Such transparency is important to enable Singaporeans to make up their own minds, as to whether future Budgets are indeed an effective response to current economic realities.

Madam, the recent Budgets from the Government have tended to follow a pattern − racking up a surplus in the early part of the Parliamentary term and then incurring deficit spending towards the end of the term, close to the General Elections. So much so that some economists now openly predict the Budgets in certain years will be election year Budgets that spend off the accumulated surplus from the preceding term of Parliament.

Has the Government held back on fiscal stimulus in 2017, so as to keep ammunition in reserve for closer to the Elections? Seven hundred million dollars in construction projects have been brought forward. Has the Government considered bringing forward projects in other areas of expenditure than construction − ICT projects, for example? This will provide a greater and more sectorally-balanced stimulus.

My colleagues will comment and discuss in detail on the water price hike and other price hikes and taxes. But let me make a few observations now. The timing of these price hikes seems more synchronised to the political cycle than to the economic cycle. The economy is facing numerous problems and net births of companies are plunging. Is this the right time to raise electricity tarrif, to raise the gas price, to raise parking fees, and last but not least, to raise the water price? All within the space of a few months?

Madam, what is the justification for these price hikes and their timing? Hitting the economy with these multiple price hikes within the space of a few months may make good political sense, because people have three years to forget them, before the next General Election. But do they make good economic sense?

Why introduce all these price hikes now at the time of relative economic fragility, when they could tip some SMEs at the margins over the edge, when they increase the hardships faced by Singaporeans beset by job market insecurities? Why not introduce some of them later when there is an up-swing in external demand?

Next, I will speak about local enterprises. Budget 2017 has not make a decisive shift towards building local enterprises as an engine of value-creation, alongside MNCs and Government-linked companies (GLCs). This is a huge missed opportunity.

There are some initiatives to address SME funding, and there are some new measures announced at this Budget, for example, tweaks to the Internationalisation Financing Scheme (IFS) and the new Globalisation Fund. These are welcomed moves to be sure, but is this enough to uncage our local firms?

Commercial and industrial rents and land costs are still very high relative to the region. When this was debated in COS 2016, the reply was that we do not need more measures, because the retail and industrial space market was already softening due to market forces.

However, the Government should understand that for entrepreneurs, it is not all about the costs today, but what will be the costs tomorrow? An entrepreneur will not invest blood, sweat and tears to build the business, only to see commercial rentals surge due to market forces and wipe out his/her commercial viability in five or 10 years' time. They think about the long-term future outlook. A larger share of JTC in commercial and industrial space and a smaller share held by REITS, as was the case in the past, or another similar suite of policies, would help to underscore that long-term assurance to entrepreneurs and would-be entrepreneurs.

Madam, we also need to step up education about entrepreneurship to our students, and I have raised this in past Parliamentary Questions. Time does not permit me to delve too deeply on this subject, but we can and should do more to enable our students to understand how entrepreneurship is both a viable and a socially meaningful calling. Right now, I fear that most of our aspiring students dream of becoming civil servants or working in an MNC.

And on funding, in New Zealand, for example, an SME can obtain a bank loan for an M&A project overseas based on a certain P/E or price-earnings ratio. In countries like Switzerland, Germany and Japan, local banks have close ties to local companies in particular states or prefectures, and both parties see a commonality of long-term interest. Is such funding easy to obtain in Singapore?

Of course, I fully recognise that not all ideas and companies are fundable. But that is precisely the point. Should we not make our support to companies much more selective − with much more generous support at higher caps, given to companies which truly have the track record of results, and the acumen and the ambition to succeed globally, with that sort of support being scaled down, if the results are not delivered, or if the results do not benefit Singapore? Should we not move decisively away from schemes of administration mindset to a results-driven mindset in SME development?

It is this kind of tough-minded results-driven approach which enabled Japan and Korea to groom world-leading companies in the 1960s and 1970s. Companies that, to this day, employ many people in their home countries both directly and indirectly, in the form of complex chains of suppliers and sub-contractors.

Madam, one of the opportunities missed by the CFE and Budget 2017 is about fostering risk-taking. It is no coincidence that the countries with the most innovative companies and disruptors are also the countries which have a larger role for social safety nets and risk-pooling.

There are two aspects that stand out. One is managing the risks of redundancies from ever shortening product life-cycles and continuous disruption. Here, Ms Sylvia Lim has proposed the redundancy insurance scheme during the Budget Debate 2016.

The second is retirement adequacy. Most Singaporeans do not have enough in their CPF to live on when they retire. As the Prime Minister discussed in his National Day Rally speech in 2013, necessitating some kind of monetisation of their HDB flat, which is not always an easy straight-forward or happy process, or continuing to work till they are much older. This is due to high property prices depleting the CPF Ordinary Account.

Managing these risks are important if a globalised open economy and society are to thrive. We must create enough security and confidence for Singaporeans to become the disruptors, and not the disrupted. There have been some measures announced to address these issues over the past few years, but the basic structural impediments remain.

Most households are exposed to cyclical economic risks without robust safety nets and risk-pooling, reinforcing a tendency to focus on short-term cash flow. This makes it less likely that they will set up companies, less likely that they will take risks to innovate, less likely that they will take time off work for education, re-skilling or training, because they cannot afford to.

And lastly, Madam, our education system excels at training literacy and numeracy to a high standard. The Government takes pride in our PISA scores. But equally important to competitive success in the 21st century are "skills" like lateral thinking, creative problem-solving, leadership, communication and self-confidence, as I spoke about during COS 2016.

Can we sustain the current high academic content workload and add the cultivation of these softer attributes on top, like the icing on a cake? Will our students be able to cope with these demands?

Some recent research suggests that there is generally an inverse correlation between a country's PISA score and that country's GEM score which measures entrepreneurial qualities. An over-emphasis on high stakes academic testing may hold back the cultivation of these elusive entrepreneurial qualities.

I am not arguing that we should reduce our PISA scores in the hope that our GEM score will go up, nor am I saying that having both a high PISA and GEM score is impossible. In fact, Finland is one such outlier country which has high scores on both metrics.

But in striving for very high academic standards we must always measure, publish and debate the impact of that academic workload on the cultivation of other qualities in our young people to ensure the right balance.

My colleague Mr Png Eng Huat has spoken about the need to study the reasons behind the vast tuition industry in Singapore. Raw academic performance can always be inflated upwards with enough academic pressure from schools and families, enough tuition, model answers, 10-year series and discipline. But to what end? Are we helping our children compete in the world of disruption that they will live in when they grow up?

Madam, in conclusion, while we do recognise the positive moves in Budget 2017, we question the timing of some of the measures that will raise costs as well as their necessity and justification. We question whether more can be done to support a beleaguered economy at this time. And above all, we question the missed opportunities to make decisive bold moves in local enterprise development, risk-pooling and education to pivot Singapore towards truly finding its place in the sun in the 21st century.

4.45 pm

Mr Thomas Chua Kee Seng (Nominated Member): Mdm Speaker, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mdm Speaker, Members of Parliament, good afternoon! Today, my topic is − Successfully transforming the Singapore economy amidst adversity.

To complement the Committee of the Future Economy's mid- and long-term strategies, this year's Budget has unveiled some concrete solutions, centred on innovation, digital economy and internationalisation to build up Singapore's mid- to long-term core competitiveness. This is a far-sighted approach.

After the Budget Statement, as President of SCCCI, I have heard many feedbacks from businesses. They are more concerned about short-term measures. After the Government announced the increase of water tariff and diesel tax, some related industries immediately felt the impact. Water cost affects millions of users, and would have an impact on every industry. The Government has decided to raise water tariffs to ensure the sustainability of our supply, and to defray the costs of building NEWater and desalination plants, as well as the operational cost of water supply. But businesses feel that infrastructure is part of public service, and the Government should not compute this on a commercial basis.

The major concern of businesses is operating costs, while the Government's concern is the nation's mid- to long-term competitiveness. How to strike a balance can be challenging. Currently, Singapore's external business environment is changing. Countries which were previously more advanced than we were, are now becoming less expensive; countries which were less expensive than us, have become more advanced. Our Singapore companies have to innovate in order to adapt to this new business environment.

The Government encourages companies to innovate and internationalise. This is the right approach. At the same time, businesses also hope that the Government could apply a new mindset to plan its expenditures. Going forward, there are still many areas that need expenditure, such as social development, healthcare, environmental protection, defence and foreign affairs. In order to increase revenue, the Government is likely to continue to adjust other taxes.

Let us look at some numbers. In 2011, the Government's total expenditure was $46.6 billion, and by 2017 it had increased to $75.1 billion, which is more than 60%. Government revenue comes from two sources, one is taxes and fees, and the other is Government's investment returns. The economic outlook will not be rosy in the days ahead. If businesses cannot raise their competitiveness and increase their profits, tax revenues will not increase. Similarly, the Government's investments are inextricably linked to the economic situation. If the economy is weak, there would be no magical formula to turn stone into gold.

Two idioms come into my mind. One is "broaden the sources of income and cut costs" and the other is "live within our means". The meaning of the first idiom is to increase income and save on spending; the second idiom means to spend based on one's income. As the saying goes, "If a man has nothing to worry about in the long-term, he will definitely have something in the short-term to worry about." We have domestic and external factors to consider.

The domestic factor is that for many years now, we keep increasing the budget on certain areas, but the results cannot be seen. Now, should not we begin to review if this is the right way of spending? Just because it was correct before does not mean it is correct now. Our thinking should not be based on what we are used to. We should avoid "being blinded by group-think" − here I am quoting Minister Chan Chun Sing.

Externally, there is a protectionist wave emerging globally, and the wave is becoming increasingly stronger. Hence, we should prepare ourselves to address this adversity. Given the unpredictability of the external environment, not increasing business costs, maintaining Singapore companies' competitiveness, strengthening the profitability of companies would mean increasing the national revenue.

Mdm Speaker, adversity is not to be afraid. Compared to more than 50 years ago, Singapore is overall much stronger. We have advanced infrastructure, top-class port and airport, and an extensive network of undersea cables, and a comprehensive financial, legal and education system. Many MNCs have set up their regional headquarters in Singapore. Our own companies should also use Singapore as their regional headquarters and venture overseas boldly. The Government should give support to those local companies which have the gumption and willing to go do so, be they traditional industries or emerging industries. No one should be left behind.

I hope the Government would do its best to reduce business costs. At the same time, businesses should also review the internal factors which could contribute to their operation problems to see whether it is their product quality and service standards that are not up to the mark, or it is their business model that is outdated. During this economic transformation period, companies, especially Chambers and trades associations, should play a more proactive role. They should work closely with the Government, based on their industry's specific circumstances. Everyone should come together to think of ways to revive and promote the Singapore spirit, a spirit which has steered Singapore into success in the nation building days, to overcome adversity and head towards success!

4.53 pm

Mr Lim Biow Chuan (Mountbatten): Mdm Speaker, I rise in support of the Budget. There are many things that I like about this year's Budget. I like the fact that the Government is trying to prepare Singapore for the future economy and to sustain employment for the seniors. I like the budgetary provisions to help all of us build an inclusive society and to strengthen our economy. The CFE's recommendations are important and relevant proposals. If well executed, they will help Singaporeans prepare ourselves for the future economy.

I also believe that the young couples hoping to start a family would appreciate the generous increase in housing grants. It is a clear indication that the Government cares for our younger generation. I hope that younger Singaporeans hoping to start a new family will consider the option of buying a resale flat with the increased housing grant. I also want to say that I appreciate the increase in GST Voucher, U-save rebates, the cash special payment and the increase in S&CC rebates. All these would provide much needed relief for the average Singaporeans who face a higher cost of living expenses.

The additional support of up to $100 million for the VWOs, $6 million for the self-help groups and the support for people with disabilities and mental health conditions send a very strong signal that this budget is to enable all of us as Singaporeans to move forward together.

However, Madam, allow me to express the concerns of many smaller businesses which are facing serious struggles to survive in an unpredictable economy and who are also facing declining sales. The reality is that not every business is not doing well over the past few years. Some of these businessmen were hoping that Budget 2017 would provide them with some form of financial relief or reduced costs.

However, it seems that their hopes may not materialise. The feedback which I have received is that many of the budgetary measures in this year's Budget would only help a specific segment of the business community. The focus of the Government is to strengthen capabilities for the future. Thus, for some of the smaller businesses, this year's Budget may not be a major event. It has little positive impact for them. And instead, some of the measures taken to protect the environment and the water price increases may hurt them more.

I do not believe that businesses are hoping for a handout from the Government. What they are appealing for is a business climate which is less costly and friendlier to businesses. As it stands, property related costs is still very high. I urge the Government to consider some additional measures, for example, a rental rebate for all tenancies where JTC or HDB is the landlord, or a property tax relief which landlords of private properties must pass on to their tenants.

Although there is a SME working capital loan, the feedback is that not many SMEs are aware of the loan or how it works. There is also the perception that it is not easy to get such loans. How can the Government do more to reach out to the many SMEs who are looking for a lifeline for their businesses? Can the Government elaborate on their plans to conduct more outreach to the SME on all the available help? Would the Government also consider a one year stay on all foreign workers' levy (FWL) hike until the economic situation has stabilised?

Next, allow me to express my concern for the middle income Singaporeans. I have a large number of such middle income residents in my constituency. Many of them are PMETs who are living in condos or five-room flats. I also have a number of retirees living in private homes which they had bought many years ago after saving for many years.

For this category of residents, they feel that they have been left out in this Budget. They feel penalised simply because they were trying their best to live their aspirations in the past. For the retirees, they have no income and are relying on their savings, their pension or on their children to provide for them. For the PMETs, their income is unlikely to rise due to wage freeze in many companies.

Yet, these retirees and the middle income PMETs, they will face increases in water pricing; increases in car park charges and increases in S&CC charges. Some of the PMETs may also face job insecurity.

This group will not benefit from many of the support measures of Budget 2017. If they stay in HDB flats, they may receive a smaller S&CC rebate. If they stay in private properties, they will not benefit from the GST U-Save vouchers, the S&CC rebate or the GST cash special payment. And the retirees also do not benefit from the tax rebate.

So, I urge the Government to consider ways in which we can allow the retirees and middle income Singaporeans to share or enjoy the growth of the country and to move forward together as a nation. We should find other more equitable ways to share and re-distribute the country's wealth rather than rely on the home type as a proxy for measurement of their wealth.

Let us do more for the middle income so that they too can find the theme for this year's Budget − "Moving forward Together" − a meaningful theme for them as well.

Finally, I also want to urge the Minister to consider a stay on water price increases for this year. There is never a good time to raise prices for utilities. However, increasing the price of water in times of economic uncertainty is definitely not a good time. Let me stress that I totally agree with the Finance Minister that water is critical to our survival and we need to take adequate measures to conserve water. But sadly, the 30% increase in water prices seems to have distracted from the main intent of the Budget. And due to rumour-mongering, many people seem to have been so caught up and so concerned over this 30% water price increase such that they seem to have forgotten or ignored the various other measures that the Government has introduced to help Singaporeans mitigate the price increase.

Thus, it seems to have distracted many of us from the much important message that all Singaporeans need to focus on, which is how to plan our future, how to develop stronger capabilities in a fast changing world. That is the main message of the Budget but seemingly, when I go for feedback sessions, everybody's first question is about the water price increase. And I felt that it is really an unnecessary distraction for all of us.

If it is really not possible to defer the water price increase, then I hope that the Government would consider measures to ensure that businessmen do not profiteer from this water price increase. And this may be similar to the Committee Against Profiteering (CAP) which was set up some years ago, when GST was raised.

Mdm Speaker, I support the Budget.

5.00 pm

Assoc Prof Daniel Goh Pei Siong (Non-Constituency Member): Mdm Speaker, my initial reaction to the Minister of Finance's Budget Statement last Monday was deep dissatisfaction and disappointment.

I thought a lot about it in the next few days. Was I disappointed because this Budget contained relatively few goodies for SMEs, workers and consumers? This was the first question that crossed my mind. Many businesses and Singaporeans expressed the same sentiment, as reported in the papers and as can be read online on social media.

It is understandable. This time round, the support given by the Government is targeted rather than broad-based. We have gotten too used to spectacular Budgets with goodies for everybody and the fireworks of snazzy phrases, pictures and presentations. Yet, there is nothing positively spectacular in this Budget. Instead, the negatives stand out in ominous light, especially the big 30% hike in water prices.

I stared at the "Budget in Brief" for a very long time, putting aside my sentiments, trying to make rational sense of the Budget, to see the pattern and trend that have to be there. So, I stared and stared. Then, it came to me, this is a "Wait and See" Budget.

It clicked. This is why Minister Heng opened the Budget Statement signalling a time of VUCA − the volatility of populist politics, the uncertainty of economic protectionism, the complexity of technological disruptions, the ambiguities of the changing global order.

In such a context, it is prudent to wait and see before committing national resources to a set path with a clear destination. When everything is up in the air, we need to wait and see, to keenly observe the trajectories of the things being thrown up to decide which gems to catch and how to catch them.

Wait and see does not mean to do nothing. I read an article in the Harvard Business Review that helped me see the pattern and logic of the "Budget in Brief" I was staring at. This was an article written by two United States Marine Corps officers who switched careers to become business consultants. They wrote, and I quote:

"As Marine officers, we always ate last, ensuring others had food on their plates before ours were filled. During down-time, we kept our teams busy with training opportunities so they could broaden their skills, which also curtailed complacency. When it was dark and cold in the field, we made a point of being present on the lines, not hiding out in a warm tent, to show our teams we were right there with them. Through our actions, we demonstrated that we were willing to go without food, free time and comfort to ensure our people knew they were supported. The result? Our teams felt cared for and valued, and they demonstrated their loyalty through their initiative and engagement."

Waiting means to keep ourselves busy with training and development. Thus, many of the Budget initiatives are focused on the long-term development of business capabilities and enhancing the affordability and accessibility of training for our workers.

Seeing means to be vigilant and being prepared to respond quickly to opportunities and exigencies. Thus, many of the Budget initiatives have to do with road-mapping and transformation-mapping, and prototyping, testing and experimenting.

As the Marine officers related, waiting and seeing also means cultivating strong bonds of trust through shared engagements. Thus, many of the Budget initiatives emphasise partnership, alliances and integrated spaces.

If I were to summarise this "Wait and See" Budget into three main thrusts, they are: (i) training and development; (ii) mapping and testing, and (iii) partnership and team building. Despite my initial disappointment and dissatisfaction, I believe this Budget is making the right moves of waiting and seeing in these three thrusts.

But I do not think we should dismiss the negative sentiments of disappointments and dissatisfaction with this Budget. They are also signals to possible deficiencies and gaps in the Budget.

I believe they point to one defect that the Government can do a lot better to address. This is the psychological effect of insecurity induced by the VUCA environment. It is getting very dark and cold in the field and ordinary Singaporeans are feeling unsettled by the uncertainty. We need to understand and alleviate this psychological insecurity.

There are three ways to improve the psychological security and mental well-being of ordinary Singaporeans, even as they are exhorted to train and develop themselves as they wait and see. First, we should maximise the availability and accessibility of the training programmes as far as possible. Second, we need to strengthen the safety nets for middle-income households who are financially squeezed on several fronts and threatened by employment insecurity. Third, we should transform the current management culture of top-down leadership to one of service-based leadership, which is more conducive to fostering real partnerships of trust.

The first way to improve psychological security is to maximise the availability and accessibility of training and development for workers. We should not under-estimate the sense of security that comes with knowing that there are many options available to us for deepening our skills or changing tracks to pursue new dreams. I have three substantive points to make in this respect.

The Adapt and Grow programmes are excellent for promoting functional skills and the practical placement of jobseekers. But we should not forget the psychological impact of the various conditions and restrictions that the programmes place on workers. For example, young PMEs have to wait for six months of unemployment before they become eligible for the Career Support Programme.

The new Attach and Train initiative is interesting. Notwithstanding the details to be elaborated later by the Minister for Manpower, I ask that the Government pay close attention to the psychological aspects of attached participants, as there is a risk that the attachments could backfire if participants find themselves treated as mere interns and not as valued would-be employees.

Regarding the Global Innovation Alliance, going forward, it would be good to open up the Innovators Academy to mid-career workers who would like to explore opportunities and build up experiences in innovation. Many entrepreneurs are not born straight from the universities, but become enterprising innovators after accumulating years of experience in the marketplace.

Regarding Continuing Education and Training degree programmes, this would be a good time to accelerate the placement of adult learners in part-time programmes in our universities to 10% of each cohort from 2015 onwards as recommended by the 2012 Committee on University Education Pathways.

I understand our six universities have been launching various types of work-study programmes with SkillsFuture support and in partnership with industry. But many of these programmes are understandably starting out slow and small, and targeted at young adults heading to university and not adult learners. I hope this would accelerate to cater to adult learners who defer their university education to later and even to mid-career switchers, especially since the size of cohorts heading to university would start to shrink due to plunging birth rates two decades ago.

The second way to improve psychological security is to strengthen the safety nets for middle income households. The 30% hike in water price and the carbon tax when implemented, will have knock-on effects on the costs of living, as all areas of everyday life are affected by the use of water and electricity.

Middle income households do not have the benefit of the enhanced financial transfers to low-income households to soften the impact of the water price increase. Compared to low-income and high-income households, middle income Singaporeans will feel the head-on impact of the increase in costs of living most strongly.

In this respect, the Personal Income Tax Rebate of 20% capped at $500 does not benefit the middle income worker as much as the high-income earners. For example, a worker earning the median gross monthly income with a taxable income of around $40,000 will only receive $110 tax rebate. On the flip side, high-income earners will be receiving the full $500 tax rebate. This effectively means that the Government will be subsidising the expenses of high-income earners many times more than the middle income workers. Middle income workers need the rebates a lot more in order to soften the impact of the water price increases and the knock-on increases in costs of living.

Middle income workers are also facing higher risks of retrenchment and under-employment. While the Adapt and Grow programmes help to mitigate the fallout from retrenchment and encourage retrenched workers to reskill and return to employment, the Budget could do better to provide for short-term relief to allow workers to find their feet and not be mired in temporary cash-flow problems that could distract them from training and job-seeking. The Government could consider introducing redundancy insurance to even out the risks of retrenchment and provide short-term support. Short-term tax deferments would also help retrenched workers to manage their cash flows.

The third way to improve psychological security is to promote service-based leadership. Management thinker Robert Greenleaf introduced the concept in 1970 in his famous essay, "The Servant as Leader". In contrast to traditional leadership involving the top-down exercise of power and the taking of individual credit from the team's work, the service-based leader focuses on the growth of the people they are leading and the well-being of the communities they serve in.

The SkillsFuture Leadership Development Initiative announced by Minister Heng is an excellent initiative. It is a belated recognition that we need to consciously cultivate Singaporean leaders in all our industries. We have focused on talents who could follow through the logic of development and faithfully execute the plans. What we need now are thought leaders and visionaries who could inspire teams of talents and workers to collectively chart and create new pathways of growth.

However, to maximise the return of investment in leadership to ordinary Singaporeans, we should focus on cultivating service-based leaders. Traditional leaders who are focused on their own power and achievement may well achieve the same level of growth as service-based leaders, but the benefits will not be equitably distributed to workers and the community. On the other hand, because service-based leaders are committed to the personal and professional growth of their workers, growth will benefit everyone.

In turn, this will foster committed and engaged workers who will use their initiative and give their best and all to the team's efforts. The two Marine officers I quoted at the beginning of my speech, consciously applied this concept of service-based leadership to build up a cohesive team of well-trained and deeply committed warriors. Instead of producing an elitist group of leaders commanding regular troops, they forged an elite fighting unit.

Conversely, traditional leaders will treat workers as expendable units to be constantly evaluated for their performance and stigmatised and culled if they no longer meet certain standards. I think it is very clear how this can be detrimental to the psychological security of our workers, with ripple effects beyond the affected companies and industries, as can be seen in the Surbana terminations.

I believe this is the missing ingredient in our drive to improve productivity and inspire engaged workers. Thus, I urge the Government to emphasise service-based leadership in its industry transformation mapping exercises, in the SkillsFuture Leadership Development Initiative and in the Future Economy programmes to deepen partnerships to share expertise and solutions.

Mdm Speaker, I have come to accept this "Wait and See" Budget for what it is. It is down-time and the Government is encouraging Singaporeans to get busy with training and development, mapping and testing, partnering and team building. We are preparing for the fight to come.

But it is also getting dark and cold in the field. It is unnerving to many Singaporeans. The price hikes and the looming tax increases do not help. A sense of insecurity is setting in. Other than the three ways to improve psychological security even as we train and prepare, I have highlighted above, there are two things that the Government, the political leaders, can do.

First, we are still not getting a sense of the big picture of the changes in the global order and how Singapore features in this big picture. What are the different scenarios of the future we are facing? We seem to be still focused on internationalisation, but do we have a plan if nationalistic protectionism takes root and spread? What are the worst-case scenarios and the known unknowns, and how should we prepare for these? We need to have a shared understanding of what we are fighting and what we are fighting for.

Second, as the example of the two Marine officers show, when it gets dark and cold in the field, being present on the lines with the troops and not hiding out in a warm tent is a tremendous demonstration to our people that they are being fully supported and truly valued. It is not my place to lecture the Government leaders on what they should be doing to be present on the lines with the workers and small businesses, but it is my duty to register that there is a need for it.

Mdm Speaker: Dr Tan Wu Meng, you have a clarification?

Dr Tan Wu Meng (Jurong): Thank you, Mdm Speaker. I just have a couple of clarifications that I would like to ask about the evolving corpus of the Workers' Party economic model.

I understand that the previous speaker Mr Perera had mentioned land sales could be lost revenue. I was wondering if Assoc Prof Goh might elaborate on what he views as an appropriate level of land sales to front our current Budget. For example, what percentage of land to sell in this term of Government, and what percentage of GDP the sales should be?

Secondly, I was also wondering in terms of supporting our SMEs and standing with our people, as Assoc Prof Goh has mentioned, what his view would be on the optimal level of foreign manpower in our SME sector? Should be it more, less, or the same amount as we have today? Thank you.

Assoc Prof Daniel Goh Pei Siong: Mdm Speaker, I have not mentioned these two points in my speech. So, I am not sure what I am supposed to clarify.

Mdm Speaker : Dr Tan, do you want to respond to that?

Dr Tan Wu Meng: The point was raised by Assoc Prof Goh's colleague earlier, and there is a thread about standing with our people and our SMEs. So, I was wondering whether these points might be clarified at some point.

Mdm Speaker: Mr Perera or Assoc Prof Goh, would you like to respond? Mr Leon Perera, do you want to make any clarification?

Mr Leon Perera: I thank the hon Member for raising those points. On the first point, he asked about the optimal level of land sales. In our speeches, we have not put forward a model of land sales nor have we put forward an alternative Budget model.

What we have asked for previously is to understand the expansionary or contractionary effect of all the measures in the Budget, including land sales, including possible cash spending from the Government and funds that may not be reflected in the basic and primary deficit as well as the overall surplus or deficit. We want to have that clarity because that is needed to assess to what extent the Budget is really expansionary.

On the second point, this is something that we did not touch on in our speech. I think for SME development, we did give a number of ideas and suggestions. I do not think we brought up our proposals on manpower per se in the speeches that we made. So, I do not wish to comment on that at this point. I direct the Member's attention to ideas and suggestions we made about local SME development.

5.17 pm

Ms Foo Mee Har (West Coast): Mdm Speaker, Budget 2017 strikes a delicate balance between providing sufficient support to bridge near term challenges and taking bold steps to invest in new capabilities in our firms and workers for a brighter future. Businesses had expected more help in this Budget to ride out the challenging operating environment. Support is promised, but in a targeted manner, instead of being as broad-based as in the past − I support that this is a more efficient approach.

When studying the Budget financials, we should all be concerned about our weakening fiscal position. For five consecutive years, total growth in revenue has outstripped growth in operating revenue, and our Budget is getting tighter every year. This is the third consecutive Budget that reflects a basic deficit. We expect only a modest overall surplus of $1.9 billion after taking into account the significant Net Investment Returns Contribution (NIRC) of $14.1 billion from past reserves. Additional funds that were afforded by the inclusion of Temasek in the NIRC starting year 2016, not too long ago, appears to have been exhausted quickly − this is worrying.

The Finance Minister spoke about the implications of rising long-term expenditures, particularly in healthcare and infrastructure, and the need to prepare options to strengthen the revenue base. This has rekindled fears of new and higher taxes, including GST hikes. There are those who would advocate tapping our reserves further, and others like myself who would call for a cap on how much we should take from NIRC to fund our expenses. Clearly, Singapore must find a sustainable fiscal footing for our future generations and we need a thorough review of both expenditure and revenue.

On expenditure front, I applaud the Finance Minister for sending out a strong signal of fiscal prudence, with the permanent 2% downward adjustment from the budget caps of all Ministries and Organs of State. I would like to ask the Minister what other budget mechanisms are in place to encourage savings across the Ministries, including rationalising roles and functions of agencies as well as extracting cost synergies from cross-agency collaboration. Madam, even as the Government continues to enhance the social safety net, we must keep up the disciplines of means-testing, targeted supported and co-payment, to preserve the value of personal responsibility.

Madam, a healthy and growing economy is the only sure way to sustain a healthy revenue stream. I am encouraged by the efforts of the Committee of Future Economy (CFE). The seven strategies put forward by CFE form a comprehensive plan to capture the opportunities of the future economic landscape. But it is one thing to strategise, but quite another to execute. The 22 sets, I counted, of recommendations spelt out in the CFE report all seem to be the right things to do. But, taken together, I cannot help but felt a little overwhelm with the long list of tasks ahead to reposition Singapore. From deepening our knowledge of markets, acquiring better skills, strengthening innovation ecosystems, to developing and implementing 23 Industry Transformation Maps (ITMs). These lofty objectives demand significant change and adaptation involving Government agencies, companies and people, working in unison. How Singapore executes as a team, with each pulling its own weight, will make the difference.

A common theme in the CFE's recommendations is for the Government to create enabling environments, within which companies become nimbler and more innovative, to cope with the rapid pace of innovation and increasing competition around the world. In this context, I commend the Monetary Authority of Singapore (MAS) for leading the way. To meet their ambition of building a Smart Financial Centre, MAS instituted the concept of "regulatory sandboxes" to enable fintech experiments and trials of promising innovations, to be tested in the market with appropriate safeguards.

The sweeping reforms announced recently by MAS have made it easier for smaller firms and budding entrepreneurs to secure financing for their businesses. MAS intends to simplify the venture capital regime, introduce dual-class share structures, strengthen the role of finance companies and develop private market platforms. It is also actively laying down technology infrastructure to drive innovation, including an electronic trade finance platform, infrastructure to enable the pervasive use of e-payments and an industry know-your-customer utility, the first of its kind that I know of, that will greatly improve productivity of banks when on-boarding clients and managing money laundering risks. These wide-ranging policy measures set a great example of forward-looking regulations which creates a dynamic ecosystem that enables growth and innovation. If more sectors adopt a similar approach, it will go a long way towards enhancing Singapore's vibrancy and competitiveness, and accelerate our pivot towards the future economy.

Madam, the Government should critically review how it can help businesses manage operating costs. The high cost of rentals is often quoted as prohibiting the setting up of new businesses and the survival of businesses. Is there a way for entrepreneurs to be offered affordable premises to kick-start their businesses, in the same way that the Government actively intervenes to keep housing affordable with HDB flats, and food prices affordable using hawker centres?

JTC Launch Pads is a great initiative, but we need more platforms where businesses can operate in low-rent spaces acting as public offices located across Singapore. I would like to ask the Government to consider deploying some of their vacant properties for this purpose. From a recent Parliamentary Question, I understand there are as many as 1,000 Government properties that are vacant, pending lease, redevelopment or demolition, some of which stay vacant for extended periods of time.

State lands that have been earmarked for medium-to-long-term use could also be leased out on short leases with temporary built-up structures. Making some of these premises accessible as public offices, at nominal rent for a limited period of time, will help businesses bootstrap their operations and develop the critical mass needed before they transition to private market rentals.

In this year's Budget, there are many initiatives to help businesses scale their operations, go international, go digital and innovate. With the development of ITMs for 23 sectors, covering 80% of our economy, the Government has offered support to all sectors, not just selected ones, to seize growth opportunities and make the necessary transition. Through ITMs, industries with good growth prospects can take advantage of global opportunities and technology whilst domestically-focused industries, such as food services, will get support to increase productivity and upgrade jobs. So, regardless of which sector it is in, every business has a fighting chance of realising their fullest potential and reposition themselves for a brighter future.

Madam, our people will need to move in lockstep with these changes, if they are to thrive in this new economy. It is heart-breaking to encounter stories of families impacted by retrenchments, and my sense is that increasing numbers of PMEs, especially older ones, are being displaced. Whilst I appreciate that Adapt and Grow has launched an extensive set of programmes to help workers take on new jobs, I call on the Government to consider some short-term measures to help families cope during this transition. For example, during periods of unemployment, would the Government consider suspending the retrenched workers' payment of income tax instalments and allow some flexible use of CPF to pay mortgages, so as to help them keep their homes?

The Economist magazine published a special report in January on the need for lifelong learning. It is apparent that if 21st century economies are not to create a massive underclass, policymakers need to urgently work out how to help their citizens learn while they earn. The need for new and constantly updated skills in the new economy is universal, and many countries are ill-equipped to do so. Unfortunately, lifelong learning in most societies is undertaken by those who are already doing well, and is therefore likely to widen the gap of inequality rather than narrow it. Singapore had the foresight to launch the SkillsFuture movement nationwide in 2014 as our next wave of development, and we must make sure our approach is an inclusive one, benefiting all Singaporeans along the journey.

Mdm Speaker, even as we work to continuously enhance the SkillsFuture system, it is critical for Singaporeans to expect that their current full-time jobs may be disrupted, and take ownership of preparing for their next careers well before their current ones becomes obsolete. My worry is that not enough of us accept this as a personal risk and do not proactively seek to future-proof ourselves. Some of those who lost their jobs may have found relief as Uber drivers − itself a fortuitous result of industry disruption − but I fear this too could be a short-lived job, with the advancement of self-driving technologies. Jobs are hybridising. With longer life expectancy and unending shifts in the jobs market, the ability to learn will be the key skill to nurture, along with the willingness to do so.

Madam, Budget 2017 has drawn us a map to reposition Singapore strongly. The path ahead will not be easy, there are mountains to climb and rivers to cross, whilst the weather changes constantly. But we will not travel alone. Our firms and our people must be the agents of change, taking greater charge of our own destinies, learning and improving, whilst the Government fosters enabling environments in which to grow and thrive. Whether we succeed in reaching our destination depends on how we prepare together, support each other and keep pace with one another as we stay the path. I support the Budget.

5.29 pm

Mr Dennis Tan Lip Fong (Non-Constituency Member): Mdm Speaker, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mdm Speaker, in Mandarin.

I am very concerned with some of the measures announced in this year's Budget. First of all, the increase of water tariffs by 30% and the imposition of water consumption tax.

In this year's Budget, the announcement by Finance Minister to raise water tariffs by 30% left many Singaporeans anxious. Not only was the increase of water tariffs sudden, the scale of increase is also higher than expected. At the same time, the Government has also decided to impose a water consumption tax, which will increase the burden of the people during this water tariff hike.

Although the Government has said that it will be giving rebates to some families through GST vouchers U-Save rebates, most Singaporeans and industrial/commercial users will be affected, as they do not fulfil the criteria to enjoy rebates or will be receiving only token rebates. Companies and industries that uses a lot of water, such as the F&B industries, will be affected the most. I am concerned that this large increase in water prices will have adverse knock-on effects, leading to price hikes of other daily necessities and increasing the cost of living, which will in turn, increase the burden of the people. How can the Government ensure that the rise in water tariffs will not lead to price increases at hawker centres, coffee shops and other products?

Many industrial and commercial activities require the use of water. This rise in water tariffs mean that operating costs and living expenses will increase. With uncertainties in our economic prospects and growth, the hike in water tariffs will make the situation worse. So, I would like to know if the Government will offer assistance to industries that will be adversely affected by the increase in water tariffs, especially those that require a lot of water.

What puzzles me, is that the Finance Minister has mentioned in his Budget Statement, that water is essential to our survival, so the pricing of water must reflect the higher production cost of desalinated water and NEWater. My question is, we have had desalination and NEWater plants for some time now. In recent years, water reservoirs, desalination plant and water supply from Malaysia and other water issues have been better resolved. We already have more choices when it comes to water supply. Then, why the sudden mention of higher cost of water? Why was this not mentioned in recent years?

Second, I am also very concerned about the increase in diesel tax by 10 cents per litre, which applies to car diesel, industrial diesel and bio-diesel. The reasons given for the increase in diesel tax are firstly, diesel is a source of pollution; and secondly, to encourage users to reduce consumption by imposing diesel taxes. I can understand and agree with the problem of pollution, but I do question the timing and scale of increasing diesel tax. I believe that it is not the right time to increase diesel tax under the current difficult economic situation.

The tax increase will cause diesel prices to go up, and this will directly affect transport costs, such as those of taxis and buses, as well as school buses and buses ferrying workers. Can the Government assure the people that our transport cost will not increase? Can the short-term road tax rebates ensure that transport costs will not increase?

The Finance Minister has also announced a cut in Special Tax for diesel cars. For taxis, even if taxi companies were to return the savings of $850 from the reduced special diesel tax to taxi drivers, the taxi drivers would still have to come up with cash to make up for the increase in diesel prices. This is calculated based on the distance of 250 km to 500 km that a taxi needs to travel every day, assuming they will need to consume 25 litres to 50 litres of diesel a day.

Diesel is the general fuel for delivery trucks, vans, lorries and other heavy vehicles. With the 10-cent increase for every litre, transport and delivery costs will also increase, and this will also affect the operating costs of businesses that depend directly or indirectly on transport services.

Mdm Speaker, after the budget was announced on the 20th of February, the general consensus among businesses is that SMEs and Singapore-based companies are not getting sufficient help from this Budget amidst the difficult and uncertain economic climate. The increase of diesel tax at this point will only add on to their operating cost.

In view of the economic uncertainties and anxieties over job prospects, it is regrettable that the measures announced by the Government in this budget have not given the people a stronger sense of security. Instead, they have increased the cost of living of the people.

5.36 pm

Mr Darryl David (Ang Mo Kio): Thank you, Mdm Speaker. The world today is quite different from the one that many of us are used to. Many countries that were once champions of globalisation and trade are experiencing fundamental shifts in their political orientation and attitudes towards globalisation.

[Mr Deputy Speaker (Mr Lim Biow Chuan) in the Chair]

Economically, the VUCA environment that businesses are operating in has led to the shortening of business cycles and the increasing occurrence of creative destruction. The biggest causalities of these changes are jobs. Employees in every sector and industry are at risk of experiencing structural unemployment that resulted from skill obsolesce. The danger of being replaced by automations or algorithms is real. In view of these economic headwinds and strategic challenges, we must continue to safeguard the employment of Singaporeans by creating good jobs and by helping our economy transit into the next phase.

While we are living in the VUCA environment, Mr Deputy Speaker, Sir, earlier on our colleague Assoc Prof Daniel Goh mentioned this image of us living in darkness and in fear. I think, perhaps, that may be exaggerating the image somewhat. I do not believe that we are living in a wait-and-see mode, but rather using the analogy of military exercises, it is more of a mode that we are anticipating what will happen, we are preparing for what could come up next. This is something that I feel very strongly about.

It is easy to take a big broad brush and try to solve a situation by bombarding with artillery, for example. What you end up with is you have very much collateral destruction. I think the Prime Minister is aware of the impact of too much artillery in a situation.

I prefer to see us not so much as Marines but a Seal Team Six, Mr Deputy Speaker, Sir, whereby we work fast, we work sharp, we are small, we are nimble, we are strategic. And we are far from a people cowering in fear and darkness. I believe that we use this time to focus, we use this time to regroup, we plan our strategy and we move forward.

So, this year's Budget is really a strategic one that aims to help Singapore grow despite this global uncertainty that we are living in. It also reflects a paradigmatic change in how the Government views our economy. The shift from the traditional intensive-driven Budget to the current strategies-driven one demonstrates the Government's appreciation that Singapore's economy is, indeed, becoming increasingly more complex and intertwined with the rest of the world. We need to take a mid- to long-term view of our economy and implement a Budget that will continue to meet our long-term objectives.

Yes, there are several "pain points" in this year's Budget where the prices of some goods and services have to be adjusted to reflect the cost of providing those services or to increase social awareness about environmental sustainability. But these "pain points", however, are also mitigated by the various grants and subsidies that that Government will implement. These policies will ensure that those in our society who need an extra helping hand should not be in a significantly worse off position after the adjustments. I would like to elaborate on some initiatives in the Budget that I think will help to continue to steer Singapore on this right path to keep us going as that "nimble" Seal Team Six.

First of all, helping SMEs. We all agree that SMEs form the bulk of the number of businesses in our economy. Despite their significant contributions to our economy, however, our SMEs do face serious challenges moving forward.

First, many continue to lack in their digital capabilities and the ability to tap on newer technologies to improve productivity and service delivery. Second, they lack the resources and expertise to truly internationalise. Finally, there are few, if any, holistic industry-wide initiatives to help them transit their businesses to the new economy. I am glad that the Government is cognisant of these challenges and the Budget has targeted programmes to help our SMEs overcome them.

It is crucial that we help our SMEs scale up their digital capabilities in the era of e-commerce and "click 'n' mortar" businesses. While it is unlikely that digital platforms and online business models will completely supplant traditional modes of business, our SMEs cannot afford to assume that they can continue to operate the way that they have been operating. So, the implementation of the Industry Digital Plans and the setting up of the SME Technology Hub will provide our SMEs with the much needed baseline assistance to digitalise their businesses, and I am eager to hear more details from MCI during the COS debate.

We should, however, go beyond this baseline assistance. The crux to a successful digital transformation is to have a talent pool that businesses can tap into. This is especially important for SMEs since SMEs are traditionally not the first choice of employment for many of our graduates. While the Government can help to nurture a pool of digital talent, I believe SMEs themselves need to ensure that they can provide a good career path for these talents.

The career paths in SMEs can be increased by potentially increasing their level of internationalisation. An SME with regional or global presence is definitely in a better position to offer attractive careers to digital talents and also other professionals, as the scope and nature of their operations will offer the requisite job challenge and development opportunities. The International Partnership Fund proposed in the Budget will help catalyse the regionalisation of our SMEs. The devil, of course, is in the details of implementation.

The Government is not in the business of picking winners and losers, so guidelines and assessment processes must be put in place to ensure that the funds that are set aside are used to support SMEs that have the best potential to internationalise. The assessment criteria and methods must be appropriate and transparent, and support must be given to high-potential SMEs regardless of their size.

Mr Deputy Speaker, Sir, I would like to speak a little on supporting families in housing. The Government has, in recent years, implemented a number of different measures to help Singaporeans own their own homes. I am glad that this year's Budget has continued on this trajectory by providing greater financial support to Singaporeans who wish to purchase a flat in the resale market. This group of Singaporeans are typically those who wish to start their family and also want to live near their parents for the supportive network.

The current CPF housing grants for both 4- and 5-room flats are similar at $30,000. The new grant structure, however, would provide those who purchase a 4-room flat a higher grant than those who purchase a 5-room flat. While I appreciate the rationale that the Government would not want to subsidise those who purchase bigger flats too much, as they are likely be from a higher income group, I think we cannot ignore that some consumers might choose to purchase a 4-room flat due to the fact that it is more expensive than a 5-room flat because of its location, age and other factors. Conversely, some consumers with a lower income might have to purchase a 5-room flat, as opposed to a more expensive 4-room flat in other locations, due to their family requirements as well.

In view of these idiosyncrasies, would the Government consider providing a percentage-grant based on the purchase price of the flat? But this amount would be subject to an absolute ceiling amount, and whichever amount is then higher would be given to the qualifying purchaser as the housing grant.

On to household measures, Mr Deputy Speaker. The recent Budget saw increases in the prices of water and diesel, and soon, Town Councils will be increasing their S&CC rates to meet rising costs, especially with regard to servicing and eventually replacing lifts.

Singaporeans are concerned that that is too many bullets to bite at a go. Although Singapore has experienced modest GDP growth over the past few years with real median wage growing by 2.6% per annum, from 2009 to 2016, the impact of these growth figures has not be felt equally across all sectors of the economy and strata of the society. Indeed, some segments of the population are concerned that the recent increases would pose additional constraints on their finances, and these concerns are somewhat justified.

I am thus heartened to know that the Budget has provided various avenues of support through the form of GST Vouchers, S&CC rebates, and personal income tax rebates. As Singapore's economy enters a period of low growth and more employees are at risk of losing their job due to structural changes in the economy, I hope that the Government will review its existing assistance schemes from time to time so that it remains responsive to the needs of the people.

Mr Deputy Speaker, Sir, this year's Budget is unique in its approach in laying the necessary foundations to support Singapore's growth for the next five to 10 years. Rather than having a broad-based Budget that hopes to raise all boats by lifting the overall level of the tide, the Budget is measured and its initiatives are targeted at giving specific help to those that need help the most.

More importantly, it reflects the Singapore ethos of fiscal prudence and the belief that the future of Singapore depends on the strong partnership between Government, business and people. And I stress again, we are people that are not cowering in the dark or in the cold and the wet, we are people that are getting ready and preparing ourselves, whatever may come next. It is not so much wait and see but being prepared.

I believe that implemented well, this year's Budget, together with the recommendations of the Committee on the Future Economy, will form a roadmap that will help us to navigate the global uncertainty and possible economic headwinds that Singapore will face. With that, Mr Deputy Speaker, Sir, I conclude my speech in support of the Budget.

5.46 pm

Mr Murali Pillai (Bukit Batok): Mr Deputy Speaker, I have three points to make in my speech.

First, in connection with the Government's measures to support businesses, I wish to highlight the cash flow problems faced by some SMEs arising from big companies holding back on prompt settlement of their invoices.

From feedback received, some big companies leverage on their economic power against SMEs by delaying payment on invoices for goods and services. If the shoe was on the other foot, these big companies may not hesitate to impose interest for late payment in addition to the principal amounts.

Micro SMEs are in particular vulnerable because, on one hand, they do not want to upset the commercial relationship with the big companies. Yet, on the other hand, especially in a period of slow economic growth, the delay in payment may tip the SMEs to cash flow difficulties, higher litigation risk and even insolvency.

To ameliorate the effect on these SMEs, I have two suggestions.

First, I wonder if the Government could consider extending the scope of the SME Working Capital Loan, under which the Government assumes the risk for loan defaults, to allow SMEs to collateralise their receivables owed by big companies for loans at low interest rates. This would give SMEs more flexibility in managing their cash flow. Whilst factoring arrangements may be available to SMEs, this comes at a cost and means a further erosion of their profit margin.

Second, I suggest that the framework in the BCA Security of Payment Act for the building and construction industry, which allows the employer to make payments directly to a subcontractor when the main contractor fails to do so, be extended to other industries where such multi-tiered relationships also exist. In this way, SMEs may, in appropriate situations, utilise the framework to obtain payment on overdue invoices.

The next point I wish to make concerns the Wage Credit Scheme. Under this Scheme, the Government co-funds 40% of wage increases for Singaporean employees earning gross monthly salaries of $4,000, which is roughly about the 50th percentile of wages in Singapore, and below. This Scheme is extended by two years under the Government's plan to continue supporting businesses.

As may be recalled, the Wage Credit Scheme was introduced in Budget 2013. The purpose behind the Scheme is to help businesses cope with rising wage costs in a tight labour market. The idea is to encourage businesses to invest in and make productivity gains. These gains are to be shared with the employees.

In light of the Government's decision to extend the Scheme, may I please ask if the assessment in this economic climate is still that the businesses are continuing to face a tight labour market vis-Ã-vis employees at the 50th percentile of wages and below?

Also, I would be grateful if the Minister could please let us know whether the effort to improve productivity amongst the businesses participating in the Scheme is paying off. I do appreciate it may be difficult to get details or data on a specific industry basis but, perhaps, at least at the general level.

Without the linkage to productivity and sharing of the gains with the employees, we run the danger of providing just a wage subsidy which, given the second extension of this Scheme, may become a crutch for the Government. This is something we should avoid.

Finally, I refer to the Government's plan to implement a carbon tax at a rate of between $10 and $20 per tonne of greenhouse gas emissions from 2019 on upstream emitters. I note that the industry consultation on the proposed carbon tax will take place from March 2017 with the final carbon tax and exact implementation schedule decided thereafter.

In principle, I support the premise behind the imposition of a carbon tax; that Singapore should do her part to address climate change, to create a sustainable environmental future for our children and generations after.

Indicating a carbon tax range, as opposed to a specific rate, however, may create some uncertainty as companies would not be in a position to properly make business decisions in anticipation of the precise carbon tax rate which can be anywhere between 10% and 20% per year. This may have knock-on effects, for example, companies prematurely passing costs to consumers in advance of the implementation of the tax, something we must certainly guard against, or not provisioning or investing sufficiently to mitigate the effects of the carbon tax on their businesses.

As a comparison, with respect to Goods and Services Tax (GST), the Government issued a White Paper on GST on 9 February 1993, in which the 3% rate was stated. Thereafter, the GST Bill was introduced later in the same month with the rate of 3% also stipulated in the Bill itself. Further, during the debate of the GST Bill in Parliament the following month, the Government gave an undertaking that the GST rate of 3% would not be changed for at least five years.

For the above reasons, I respectfully suggest that the consultations be speeded up and a decision be made as soon as practicable on the precise carbon tax rate, the implementation schedule and the measures to ease the transition for affected companies. With the uncertainty removed, the companies will be able to focus on the improvements they need to make to reduce greenhouse gas emissions.

Notwithstanding the points that I have made, I support the Budget. In my view, the hon Minister for Finance has, in his speech, properly identified the main economic challenges that we face as a country and clearly outlined a rigorous plan to strengthen our economy and allow us, as a nation, to continue to move forward together.

In this regard, I respectfully disagree with the hon Non-Constituency Member of Parliament Assoc Prof Goh's categorisation of this Budget as a minimalist Budget. A cursory review of these Budget details will reveal otherwise. Just for an example, $600 million is being set aside for the Wage Credit Scheme to allow companies to use this Scheme to pay wage rises for Singaporeans. In particular, the serious investment in relation to helping Singaporeans deepen their skills, companies to deepen their partnerships, and to basically look out for opportunities in the digitalisation space.

So, this is far from being a static Budget. It is a Budget that would allow us to reposition ourselves and focus on the opportunities for the future.

5.53 pm

The Minister for Trade and Industry (Industry) (Mr S Iswaran): Mr Deputy Speaker, may I have your permission to use some slides in the course of my speech.

Mr Deputy Speaker: Yes, please.

Mr S Iswaran: Sir, thank you for allowing me to join in the debate. In the week of the CFE report and also the Budget Statement delivered by the Finance Minister last week, there has been much discussion on the economy in the lead-up to this particular debate.

There are three central questions that we need to think about. The first is where the opportunities are; the second, how do we position ourselves to seize them, and the third, what do we need to do to deal with some of the short-term challenges. These involve important policy decisions and trade-offs. These are questions that several Members have echoed today. I would like to share my views on this.

First on the economy as a whole. Last year our economy grew at 2%, with growth picking up in the final quarter. Between 2011 and 2016, we averaged 3.1% which is comparable to other advanced and regional economies, as Members can see from the chart. The Committee on the Future Economy (CFE) expects annual growth of 2% to 3% over the next decade. This may be less than what we have been accustomed to in the past, but it is totally consistent with our stage of economic development, our demographic profile. So, we need to ensure that within the context of where we are today, we continue to emphasise productivity and innovation as part of the basis for our continued growth. Because even at these levels of economic growth, which are not insignificant by international comparisons, it will continue to allow us to create opportunities for our businesses and jobs for our people.

This point is further enhanced when we consider the context that we are in, that is the region. We are in the heart of a region that is an important driver of global economic growth. ASEAN, China and India are bright spots, with the ASEAN-5 countries expected to grow at 4.9% this year, China at about 6.7% and India at about 6.6%. Their growth emanates not just from the key regions and main cities or metros that we are all quite familiar with but, in fact, they come from the next tier of cities and regions with which we might be less familiar. In China, from the Central and Western regions; in India, from secondary cities like Coimbatore, Pune and Jaipur; and in Indonesia, cities like Semarang and Medan offer interesting opportunities.

In fact, the recent data that the Singapore Tourism Board put out on visitor arrivals, which was strong last year, were actually significantly supported by the efforts that STB made in the secondary markets and regions with the consequential response from the markets. So, we need to go beyond traditional spaces and we need to deepen our knowledge and acquire a more nuanced understanding of these new markets.

In tandem with this growth in the region, we are seeing rapid urbanisation and the rise of the Asian middle class with greater disposable incomes and sophisticated demand in sectors like retail, lifestyle, F&B, education and healthcare. These opportunities play to our strengths, those that we have developed over the years.

One example I want to cite is in the area of infrastructure and urban solutions. McKinsey estimates that the demand for infrastructure in emerging Asian markets, particularly China, Southeast Asia and South Asia, will grow by about US$20 trillion between 2016 and 2030. China's Belt and Road initiative has heightened interest in regional infrastructure projects, whether it is road, rail, ports, airports. India's plan to build 100 smart cities needs adaptable and high quality urban solutions. Our infrastructure and urban solutions companies are generally held in very high regard and they can participate in these opportunities, in partnerships with their Chinese, Indian and Southeast Asian counterparts.

This is not just an opportunity for the big players in this space. In fact, it extends to SMEs like Memiontec and WaterTech Private Limited, who tapped into the demand for small-scale water and energy solutions in the region, and there are many of these that are emerging. This is one of the reasons why in this Budget, in particular, there was an effort to enhance the measures that we have already taken to support infrastructure. If Members would recall, when the ESC concluded its findings, this was about six, seven years ago, one of the initiatives was to set up the Clifford Capital which is just to finance many of our infrastructure projects. In this Budget, a key initiative is really the extension of our IFS Scheme to Non-Recourse Financing. I will elaborate on that but, essentially, it is aimed to help our smaller businesses who are in this space to go regional, to seek out new opportunities.

The other area I want to emphasise is the digital economy which also presents unprecedented opportunities. Think about it. The smallest company can now seek out customers in the furthest markets as long as there is digital access. What it means also is that through the digital platform, they can transact with their business partners, they can coordinate logistics and they can effect payment systems. This is literally transformative and it is transforming industries and offering new ways to overcome our constraints and seek out new opportunities.

That is why in the CFE, we have emphasised the importance of enabling our companies to harness digital technologies and platforms. Some companies have already made the move. I can just give Members one example from a somewhat traditional sector − HipVan. It is a company in the furniture business but they have inverted the traditional furniture business model by going online. Customers transact with them over the Internet and then they work through logistics and delivery, and this is a new model for this company, quite different from what we understand to be furniture businesses.

So, companies are already moving and similarly, we are seeing good collaborative initiatives from big players and others coming on board. For example, just today, Singtel, which is a co-founder of the 99% SME movement, announced a partnership with Lazada to set up an SME e-marketplace. That will help SMEs step into a wider online customer base.

I can go on and give Members many other examples, whether it is in advanced manufacturing and Internet of things, and so on. But my key point is this. There are significant opportunities available to us. Our challenge is ensuring that our companies, especially our SMEs, are geared up for the longer term, so that they can seize these opportunities. This is especially important if we are to sustain our competitiveness because others around us have also seen this and are also adapting. It is a race. But we think it is a race that we can compete in quite effectively. So, a key focus of the Government's economic efforts is, indeed, in how we bring about such transformation. Hence, the Industry Transformation Maps. They are the key modality with three broad areas.

First, to grow top-line and scale, through support for companies and internationalising and financing.

Second, to stay competitive by supporting capability development, both to innovate and to raise their productivity.

Third, to develop deep skills in our workers.

In all of these efforts, the primary focus and beneficiaries are our SMEs. I want to emphasise that. They are the primary focus and beneficiaries. And this is for good reasons.

Firstly, they are of a significant part of our economy. They account for about half of our GDP, two-thirds of employment. If you are really going to effect change and transformation in industry in the economy, the SMEs are key change agents. They have to accept the reality, embrace the change and be change agents.

Secondly, individually, SMEs often lack the scale to make the investments that are necessary to cope with the changes taking place and to benefit fully from the technologies that we are talking about.

Finally, we also believe that SMEs are a key engine of growth for the future in Singapore, and integral to the competitiveness of our economic clusters. As they scale, SMEs will create more opportunities and jobs for Singaporeans.

So, the Government is resolute in our commitment to help our SMEs make this transformation successfully. Large companies do not necessarily need this breadth and depth of support. In fact, it is the small companies that need them.

Let me outline five areas in which we are actually delivering this support.

Firstly, internationalisation. If you are a company taking the first steps towards internationalisation, you can tap on IE's Market Readiness Assistance and Global Company Partnership Scheme, and so on. It has about $40 million in grants. Essentially, the aim is to help our businesses go international. Some are taking tentative steps, others are a little bit more experienced. But they have to go into newer and more risky markets. In general, we are trying to help them to take that move forward. I want to stress here that the Government can be an enabler, but we cannot make the decision for the company. But once a company makes the decision ‒ the leadership and the people ‒ we can support them in the effort.

In this Budget specifically, there is a $600 million International Partnership Fund. It is a co-investment effort with firms as they expand overseas. In other words, beyond loans and financial assistance and grants, the Government is prepared to come in through equity as well. This is an important commitment on the part of the Government, and we are putting our money where our mouth is, quite literally.

Secondly, financing. The Government has a suite of loan programmes which will collectively catalyse $5 billion in loans up to 2020. I do not want to get into a laundry list, but it includes, for example, the SME Equipment and Factory Loan, which is for expansion overseas. So, if you are going overseas, you have done your market studies, you have decided you want to go, but there is capital expenditure (capex), this scheme helps you. You have got to make the move. The MAS has also recently reviewed regulations that will enhance the ability of finance companies to provide financing to SMEs.

I mentioned earlier the infrastructure sector. In this Budget, the specific announcement was on the Internationalisation Finance Scheme (IFS) for Non-Recourse Financing to help SMEs participate in these opportunities. This scheme is designed to encourage financial institutions to provide non-recourse loans to SMEs once projects move into the post-construction stage, so that SMEs can free up their balance sheets to take on new projects. The constraint today is that, if you are a small business going in for a $50 million or $100 million project in the region, you will have to tie up your resources either through personal guarantees or corporate guarantees, and it limits your ability to take on new projects. This scheme is targeted to help our businesses do more and do it in an effective way. Over the next five years, we expect to catalyse $600 million dollars in loans, which will probably correspond to about $1 billion in infrastructure projects. And I am talking here about the small businesses, not the big players.

Thirdly, on innovation. We want SMEs to create new products and services ‒ that is what they want to do as well ‒ to differentiate themselves in the market, but they are constrained by resources that are available. I think several Members talked about this earlier. So, we have a range of schemes. One is to help SMEs commercialise intellectual property through our network of Centres of Innovation, and a substantial amount of funding has been committed, about $100 million for this. And to help them build up their innovation capabilities, we also have the secondment of our public sector researchers through our SMEs. They go there, they help them come up with their R&D blueprint, and they also, in many cases, end up joining the SMEs, sometimes to the chagrin of the research centre's director. But, in general, we are supportive of this because it is an important productive flow of talent between the public and the private sectors.

In this Budget, there are two specific ideas which have been mooted and pushed out. One is A*STAR's Tech Access Initiative. Basically, it is to help SMEs access the more costly specialised equipment and to also get training and advice. In other words, this may be in our research institutes, and SMEs cannot afford to have it on their own, but they can go in there and use it under certain arrangements. The Headstart Programme, where A*STAR allows SMEs to enjoy royalty-free and exclusive IP licences for up to 18 months until recently. With this Budget, it has now gone up to 36 months.

The fourth point is on capability development. The SMEs can tap on this grant ‒ Capability Development Grant (CDG) ‒ for larger scale projects. So, if it is automation, there is the Automation Support Package, and I think Members are familiar with the scheme that was introduced last year. There is also the Innovation and Capability Voucher (ICV). Importantly, the point I want to stress is, we have what we call the Partnerships for Capability Transformation. This is where SMEs collaborate with big companies in order to develop new capabilities. This is key, because many of our SMEs are an integral part of a cluster. They work with the core company ‒ a big player ‒ international, local or foreign. And the SMEs' capabilities reinforce the competitiveness of the cluster as a whole and its sustainability in our environment.

Many Members have talked about the Go Digital Programme. I do not propose to elaborate on it other than to observe that this is, again, a key plank. Big companies do not need a Go Digital Programme. It is the SMEs that need it, and that is why we are doing it. In total, we have about $1.5 billion of grant support for such capability development of SMEs.

Finally, a word on skills. We are making significant investment in developing the skills of our people. Members are very familiar with this through SkillsFuture. The SMEs can tap on these, whether it is SkillsFuture initiatives like the SME Talent Programme, SkillsFuture Mentors Scheme, and the SkillsFuture Earn and Learn programme.

I have taken Members on a tour of the kind of things that we are doing with our companies. Sometimes, the criticism is "Oh, it is all too complicated and so on". It is not so much that there is too little, but there is too much and too variegated. Even on that score, our agencies have worked on how we can make Government support more accessible to SMEs. So, they have got the Business Grants Portal, SME Digital Technology Hub and the new IP Master Agreement.

But let me cut to the chase. If you are an SME, you have a need in these areas, go to an SME Centre or go to one of the economic agencies. There is no wrong door. They will help you navigate and sort it out. That is a backend issue. The key point is we have this plethora of support.

So, I am surprised when Mr Leon Perera earlier said that we have missed an opportunity to strengthen local enterprises. I have just given Members a complete ‒ and this is not an exhaustive ‒ list of the various initiatives that we have undertaken. So, how is it a missed opportunity? Perhaps, the key point the Member was trying to make is that the Government should get into the business of picking more winners, because I think the Member described it as a bold initiative. Go in there, back a company. If it fails or does not meet up to expectations, pull out. It is an interesting idea, but Mr Perera has omitted important details and how we would execute this and why the Government would be the right party to do this. Because if the Government backs a company, it goes with whatever initiative, and then the initiative goes south, and then Government decides that it is going to withdraw the support, I think we can anticipate the kind of debate we would have and, indeed, the kind of questions that Mr Leon Perera will then pose on "Why did you do it in this way? Why did you waste your funds here?" or "Why did you withdraw your support?"

So, I think we have to have a sense of perspective and balance. The Government is an important enabler. The Government is taking a view on certain industries and directions that we want to go. But, fundamentally, what we are trying to say is this: you are in an inherently more uncertain environment. Therefore, the emphasis on the broad range of capabilities that I have outlined and the broad scheme of measures that we have, are going to be the key platforms to raise the industry as a whole. Sure, the companies that are prepared to move further and go faster will receive more support. But that does not mean that we are picking winners. The winners are picking themselves and adapting to our schemes.

I want to emphasise that the impact of such schemes is really significantly amplified when we can get a collaborative effort going. That is why we have stressed the role of trade associations and chambers. We do not want to substitute business judgement or trade associations' and chambers' assessment of market conditions with bureaucratic views. We want it to be a complementary exercise.

One example I want to just share with Members is the logistics industry. Container Depot Association (Singapore) (CDAS) − probably not something that many Members are familiar with. But they have been involved in a major effort in terms of launching electronic container trucking system and they want to track the movement of their trucks, and it is going to enhance their supply chain and how they introduce efficiencies and the way they deploy their fleet and so on. This is an initiative that the CDAS came up with. They worked with SPRING Singapore and they got this executed. We want to see more of this because they understand the need, their members tell them what their issues are, we can appreciate that there may not be enough resources, but that is where we come in and may complement.

Similarly, Singapore Logistics Association (SLA) has made initiatives in terms of going into a new market overseas and how they can help smaller businesses do that and also in the training of our workers.

So, I hope Members would agree with me that there is actually no lack of Government resolve or resources that are available to support our companies, especially our SMEs, make the transformation. But I know that there is a view ‒ and I think many of us have echoed that sentiment here ‒ that the current reality is the issue. We have challenges because of the cost and the pain and so on. The reality is also that the economic situation is variegated. You have sectors like electronics that grew at 15% last year. You have a sector like transport and storage that grew by 2.3% last year. You have a sector like marine and offshore engineering that has contracted for nine successive quarters. How do you come up with a programme that is supposed to help SMEs in all of these, beyond the measures that we have already undertaken?

So, these variations are there because the different sectors face diverse cyclical and structural challenges. For example, lower oil prices ‒ and some might argue that this might be a permanent shift ‒ have changed the demand patterns for the marine and offshore industry. It does not mean that they cannot do business, but they may have to adapt and also look at new opportunities.

The retail industry is going through a major change because of disruptive technology, in particular, e-commerce. In fact, the adoption of e-commerce in Singapore is at a lower rate, compared to many markets around the world. So, if anything, the challenge is going to get greater, not lesser. It would really be quite futile for us to argue that we should resist such an overwhelming system level change, which, in fact, in aggregate, will bring benefits to consumers through businesses that respond to it and adapt to it and to the economy as a whole.

Having said that, I think we are very clear that we recognise that there are immediate challenges that our SMEs are facing and we will continue to provide certain forms of short-term relief where they are necessary and through the system of broad-based support that we have built up over the years. One example is the Wage Credit, the Special Employment Credit and the extension of the additional SEC in this Budget to end of 2019. Collectively, this is about $1 billion in cash pay-outs to businesses in March this year. It is no mean sum. It is a significant outlay from the Government to alleviate some of the cost pressure on our businesses.

Also, in terms of liquidity, we have introduced the SME Working Capital Loan in 2016, which has basically catalysed about $700 million in loans to about 4,300 SMEs. If you go beyond that, and you look at the broader pattern, I think there was some reference to rental and other business costs. I know that this is an area of concern. It comes up in many of our industry engagement exercises. But the reality also is that industrial, retail and office rentals have all deep fallen, and they fell in 2016 as well. And we, on our part, will continue to maintain a steady pipeline of industrial land and space to ensure that there is competitive pressure in the market and rentals remain affordable.

So, let me put it together to say that we have not introduced further broad-based measures because they are not quite warranted and properly not even appropriate for the circumstances that we are in. But have sustained what we already do − in some cases, extended down − and at the same time, put in place additional customised support for specific industries because of the circumstances that are quite divergent. As many Government leaders have said, we will continue to track the situation closely and to intervene where necessary.

So, if I can just give you an example − Marine and Offshore Engineering sector. Last December, we introduced the bridging loans and international finance scheme. It is not a panacea; it is not going to prevent consolidation which will occur to some extent in the industry. But what it will do is help address some of the liquidity issues that some of the strong companies are facing and potentially, also help them get financing for expansion when they go for new projects overseas because there was a general tightening for financing in the sector.

Another example is in the construction industry. It has been weighed down by the property market slowdown and economic uncertainties but we are bringing forward $700 million of public sector infrastructure projects which will start in FY17 and FY18.

These measures are an illustration of the Government responding with a more targeted response and support for SMEs and other businesses. It is a complement to the broad-based measures we already have in place, in response to the varied needs in the economy. And importantly, it is one aspect, even as we look at the longer term challenge and how we need to gear up for that.

Mr Deputy Speaker, Sir, if I can summarise, we have significant opportunities before us. But to seize them, we have to invest in the capabilities of our economy, of our people and our enterprises, and especially so, with our SMEs. The most durable solution really lies in moving up the value chain, innovating, offering products and services that others are not offering, and adopting methods and techniques that will allow us to close some of the big gaps in productivity that we see when compared to international best practices.

As for the Government, we are resolute in our support, through broad-based and targeted programmes, to help our SMEs make the transition successful. We do not engage in the art, or perhaps, Mr Perera thinks it is the science of picking winners, but we will support companies that are prepared to make these important transitions because they see the benefit and they are prepared to take the important steps to move the organisation. In all of these efforts, the SMEs would be our central focus.

Ultimately, creating a vibrant, competitive industry with strong capabilities is the surest way of ensuring success of all our businesses, including the SMEs. And so we look forward to working closely with the trade associations and chambers, and the unions to ensure that we have a diverse enterprise eco-system, from start-ups to SMEs, to large local enterprises, to multi-nationals − we have a thriving SME community, and an economy that is rich with opportunities. Thank you, Deputy Speaker. [Applause]

6.20 pm

Mr Pritam Singh (Aljunied): Mr Deputy Speaker, this year's Budget has brought the focus on cost of living issues by way of an increase in water prices amongst other things. This increase comes on the back of a 15%-odd increase in HDB car park charges, higher electricity and gas charges and the announcement of higher Service and Conservancy rates all in the space of about three months. The Straits Times noted that the Government feedback channel REACH had identified cost of living as a key pre-Budget concern among Singaporeans.

I have a few questions for the Government to understand the decision-making processes around the latest round of increases in water prices. The last time an announcement was made to raise water prices in 1997, prices were raised by 120% for households and 30% for industrial and commercial users over a four-year period.

The Government has stated in previous parliamentary replies that it prices water according to its Long-Run Marginal Cost or LMRC. To this end, the water tariff, water conservation tax and used water charges or waterborne fees are priced to reflect the cost of producing the next drop of potable water, which is, I quote, "is likely to come from desalination and NEWater."

In announcing the opening of the fifth NEWater plant last month, the Minister for the Environment and Water Resources noted that there has been upward pressure on costs because of increases associated with asset replacement, energy and manpower. Can the Government share details on how the components of Long-Run Marginal Costs for water pricing are computed by the Public Utilities Board (PUB) and how it assesses when to increase the price of water?

Can the Government also clarify if the maintenance and upkeep, and the associated manpower costs of current PUB assets, including thousands of kilometres of transmission networks and so forth, would have already been factored into the calculation of LRMC before the latest round of price hikes? Even so, it would be helpful to understand which variables of LRMC have changed from 1997 when the last price hike was announced, what is the range within each variable, and how often is the LRMC determined or re-determined?

Can the Government also share how much it costs each desalination and NEWater plant to produce water today, especially since some of these plants operate on a private-public partnership basis? How do they compare with plants directly run by the PUB?

Finally, when the PUB refers to the long-run in LRMC, what sort of time horizon is used for projection purposes and what are the population parametres for these projections? Are we looking at 2061 when the Water Agreement with Malaysia comes to an end, or is it when the PUB expects a doubling of Singapore's consumption in absolute terms for a much larger population and when 85% of our needs are projected to be met by NEWater and desalination? If this is so, what are the projections for expected water price hikes as the population grows?

It is noteworthy, Mr Deputy Speaker, that the PUB was able to bring down the cost of NEWater production from 2002 to 2004 from $1.30 to $1.15 per cubic metre as a result of more competitive membrane technologies. In 2003, a Straits Times article quoted then Prime Minister Goh assuring Singaporeans that, and I quote, "the price of PUB water, which now costs $1.52 a cubic metre, would stay below $2 for some time, reversing all earlier projections. The sums were redone because desalinating sea water was cheaper than thought; and NEWater, even cheaper to produce."

The same year, it was reported that the Tuas desalination plant desalinates water at the cost of $0.78 per cubic metre. This compared very favourably against about $0.90 per cubic metre produced by the Ashkelon desalination plant in Israel, considered in 2003 to be the one of the cheapest producers of desalinated water. In 2008, Sembcorp, which secured the bid to design, build, own and operate the fifth and largest NEWater plant, submitted a first-year price of about $0.30 to produce a cubic metre of NEWater. A 2011 Business Times' report also noted that Singapore would produce the world's cheapest desalinated water by 2013. How does the PUB adjust its Long-Run Marginal Cost projections with the advent of new technology so as to keep water prices affordable and to keep its profits within reasonable limits, on an on-going basis?

From parliamentary replies in the past, it would appear that energy is the real cost variable that can be difficult to track with a sufficient degree of accuracy. In view of the lower cost of producing water over the years, can the Government reveal how much NEWater and desalination costs have fluctuated over the years as a result of energy prices?

In 2008, the Siemens Water Technologies Team was awarded a $4 million grant from the Environment and Water Industry Development Council (EWI) for successfully designing a more energy efficient desalinisation technique which produced a cubic metre of drinking water on 1.5 kWh of power as compared to PUB's current desalination method using 3.5 kWh per cubic metre. In addition, the 2015 PUB annual report highlights PUB's collaboration with a US water technology company which has piloted electro-deionisation technology which has achieved reductions in energy consumption in the desalination process by more than 50%, and this pilot would be expanded in 2016. Can the Government share details of this project and its prospects going forward?

Separately, Mr Deputy Speaker, the announcement of an increase in water tariffs bookends a two-odd year period when Singaporeans were repeatedly reminded of water scarcity issues as a result of very low water levels in the Linggui reservoir in Malaysia, a water supply source five times the size of all of Singapore's reservoirs. At the start of each respective year, the water levels were at 84% in 2015, 49% in 2016 and 27% in 2017. We have been informed by the Minister of Foreign Affairs in response to a Parliamentary Question in January this year that there is a significant risk of the water levels in the Linggui Reservoir falling to 0% this year should there be a dry spell in Johor.

In view of the low water levels in the Linggui Reservoir from 2015 onwards in particular, how often has Singapore drawn less than the 250 million gallons a day it is legally entitled to under the 1962 Water Agreement and what has been Singapore's average daily rate of abstraction from the Linggui Reservoir since 2014? To that end, what role, if any, have the low water levels in the Linggui Reservoir played in the latest water price revision especially since the Government's position as late as 2013 confirmed no need to raise water prices?

In the middle of last year, on the back of the Singapore International Water Week, a PUB official stated that should the Linggui Reservoir fail, there ought to be no cause for panic in Singapore as there were new and indigenous capacities in Singapore to meet such a contingency in the form of NEWater and desalination. However, the Minister of Foreign Affairs only last month stated that the failure of the Linggui Reservoir would cause severe problems for Singapore and Malaysia. Can the Government elaborate what are its contingency plans in the event of such an eventuality? Do these contingencies include the possibility of another rise in water prices, especially the water conservation tax since its policy rationale is aimed at reminding the taxpayer about the importance of saving water and separately, to account for the Long-Run Marginal Cost of desalination and NEWater? That would also prompt a corollary question as to whether the latest water price revision was set with a view to account for the complete failure of the Linggui Reservoir.

Even so, in the middle of 2016, it was reported that Johor was studying plans to divert water from two rivers into the Linggui Reservoir. The first proposal was to build a low wall to channel about 50mgd of water from the Sayong River catchment area at the cost of about RM$250 million. The second plan called for the building of a dam at the Ulu Sedili Besar River to transfer about 110mgd to the Johor River at the cost of RM$660 million.

At the end of the last Leaders Retreat between Prime Ministers Lee and Najib in December last year, it was reported that Malaysia was looking at measures to increase the supply of water at the Linggui Reservoir.

Can the Government comment, in the event Malaysia successfully diverts water to the Linggui Reservoir allowing Singapore to draw its full entitlement of 250mgd or more, would such an outcome end up reducing the price of water for consumers in Singapore? And if so, would Singapore consider co-funding the diversion of the two rivers or re-negotiating some aspects of the Water Agreement with a win-win prospect in mind especially since Singapore has not hesitated to supply Malaysia with more treated water than it is required to in its time of need particularly in times of drought and over the Ramadan period last year?

This brings me to my final point about the public messaging on water conservation policies and the outcomes the Government seeks from the water conservation tax and how these outcomes can be improved. About a month before the 2015 General Elections, the Prime Minister said, "In Singapore, water will always be a precious resource. Never take it for granted or waste it."

In the middle of last year, on the back of the Singapore International Water Week in a piece entitled "How Singapore Will Never Go Thirsty", the PUB CEO announced that Singapore, in spite of being water-poor, had "significantly overcome the challenge of water scarcity" and later that "Singapore is not short on water".

While I understand the PUB official was showcasing to an international audience the good work over many decades of our water specialists, there is a risk that over amplifying self-sufficiency can have a dampening effect on efforts to encourage water conservation. The fact is self-sufficiency comes at a high price for the consumer.

In fact, Singapore's per capita water consumption rates have been dropping steadily from 2005 when it was 162 litres per day to 151 litres per day today. It would appear that the answer to the question of whether we can reduce consumption without price increases is a yes − perhaps not as resounding a yes as the experts would wish for − but a yes nonetheless. Even with our hot and humid climate and cultural practice of not using dishwashers, perhaps as a result of the spices, sauces and seasonings in Asian cooking, progress on water conservation has been steady and continuous. Rather than to look solely at water pricing to promote conservation, the Government should look at new policies further tightening regulations on the sale of sanitary appliances such as mixers and shower heads which discharge excessive water, so as to nudge consumers to use more water-saving appliances.

Some experts have also proposed pricing strategies used elsewhere like in Spain which hosts a price structure that provides for a 10% rebate should a household's water consumption pattern show a 10% decrease compared to the year before.

What these creative pricing strategies suggest is the prospect of a different approach towards water conservation taxes to promote a more efficient usage of water. We already see PUB nudging Singaporeans in this direction by informing consumers of the consumption patterns of their neighbours and the national average in our monthly bills. What may truly push a renewed commitment to a water conservation drive is to significantly alter a consumer behaviour towards a tax regime that differentiates between efficient and inefficient usage of water by lowering taxes for consumers who use less water.

For example, a household of four which meets the national average consumption can have their water conservation tax remain at the current 30% of the tariff rate. Depending on additional usage, PUB could establish an ascending or descending scale relative to consumption. This has better prospects for water conservation as real savings would be given to individual households, building on the current two-tiered approach between households that consume more or less than 40 cubic meters of waters. This approach would also be more targeted and would cohere with the objective of saving water as opposed to the Budget announcement which bluntly increases the water conservation tax from 30% to 50%, and 35% to 65% for all households.

To conclude, Mr Deputy Speaker, a piece in The Straits Times last week argued that the water price only reflected the reality of increasing water stress worldwide and that bigger hikes were needed to curb wastage. The comments to that story were unexpectedly, rather animated. I believe a deeper explanation from the Government about how it prices water and its long-run cost imperatives would enable the public to better understand and rationalise this water hike in addition to improving public understanding on this issue.

This would be important as the water price hike occurred on the back of many other municipal prices increases which could arguably have been better phased to reduce the impact on the average Singaporean for whom cost of living concerns are an increasing issue. There remain concerns among Singaporeans who fear the knock-on effect of the water price hike on daily necessities and I hope the Government will address this point too. Thank you.

Debate resumed.

6.35 pm

Mr Deputy Speaker: Mr Leon Perera, you wish to raise a clarification?

Mr Leon Perera: I would like to make some clarificatory points to the Minister for Trade and Industry.

Mr Deputy Speaker: You are asking to raise a clarification about the Minister's speech?

Mr Leon Perera: Yes.

Mr Deputy Speaker: Okay. Please note that you are not supposed to raise new matters in the speech.

Mr Leon Perera: Sure. Thank you, Mr Deputy Speaker, for giving me a chance to make a few points. I would like to thank the Minister for Trade and Industry for his detailed and comprehensive talk on the schemes available to SMEs. My first point is really on the results of these schemes. There are many and various schemes and some of these schemes have had precursors, for example −

Mr Deputy Speaker: Mr Leon, I need to interrupt you. You are not supposed to raise new matters. If you want to raise a clarification about the Minister's speech, raise the clarification but do not make another speech, please.

Mr Leon Perera: Okay. So, my clarificatory point would be: does the Government actually track how many SMEs take advantage of these schemes and grow, and stop becoming SMEs and actually become global companies? Is there a number to that? Are those results being tracked? And if in fact those results are tracked and those results are not good, then would that not suggest that there is a role for the Government to take a more active stance in grooming these companies?

The second point is relating to funding. I would like to ask the Minister whether there is any data from SMEs through surveys and other means to suggest that the funding needs that they have are being sufficiently met by existing schemes and by other funding providers within the funding ecosystem. Because I certainly do hear feedback that the funding needs are not fully met. And would the Minister not acknowledge that if so, would there not be a role for the Government to actually be more interventionist to provide funding at higher levels of caps for those SMEs which have self-selected themselves by demonstrating a track record of results as opposed to SMEs who remain SMEs for decades.

My third point is really on the issue of long-termism, which I raised. People will not become entrepreneurs if they feel that, structurally and culturally, the environment is not conducive to SMEs. There are many schemes, there have been in the past. But some of these schemes have limits. Some of these schemes will be phased out in the future, in the way that the PIC is being tapered down, for example. Some of the current schemes will be phased out. That may affect the willingness of the people to become entrepreneurs because there may be many schemes on the table now, but in 10 years, those schemes may be phased out.

It is in that context that I raised land cost, funding and the overall culture. So, what would be the Government's strategy to address that fundamental structural impediment to entrepreneurship? Thank you.

Mr S Iswaran: Deputy Speaker, I thank the Member for his range of questions. If I may take the last one first. If somebody becomes an entrepreneur because he wants Government schemes and support, then that is probably the wrong starting point, if I may respectfully suggest. I think the starting point for any entrepreneur is really in deciding that he or she has a strong value proposition, a passion to grow something, and then they go out there and make it happen. Indeed, we have many outstanding examples of entrepreneurs who have done exactly that. Along the way, yes, they benefit from certain Government support schemes. But I think we should not put the cart before the horse. The Government cannot mandate entrepreneurship. We cannot force entrepreneurship. It has to come from the individuals who have the motivation to make it happen. Our schemes can enable but they can never be a fool-proof support system for this.

I think the other points that the Member has made − what are the results of the various schemes? We track them. If there is one thing that we do rigorously is that we track the take-up rates, the outcomes, the KPIs associated with any programme that we introduce. But I would say that the Member raised the point − how many take up the scheme, how many globally competitive companies were created, and so on. So, let me take a couple of those points.

How many take up the scheme? We can initiate the schemes. We can create channels and make it easier for companies to find out about the schemes. We have got SME Centres. Mr Thomas Chua will tell Members that SCCCI has got one of the most active SME Centres in Singapore, and we find a plethora of ways of communicating. But at the end of the day, the take-up rate rests with the individual companies. Minimally, you have to make the effort to find out what it is that is available, what are my needs, where is the match, and how do I get it. And you do not need to do it alone because we have the SME Centres. Even our economic agencies are prepared to work with them.

As for the rate at which we get globally competitive companies, if I may draw Members' attention, in the ERC report, there was a goal to have 1,000 companies that cross the $100-million turnover mark by the end of this decade. That was an important directional goal because it is to set a sense of the scale of ambition that we have, and it is something that we continue to monitor. I would say that on balance, we are on track to getting there. Now, whether we will actually hit a thousand or not, I think it remains to be seen because there are many factors beyond our control. But the general directional push is very clear and we have in fact seen that grow.

But let me make one other point. Ultimately, whether we end up having a local enterprise that becomes a global champion, again, cannot rest just with the Government, because we have many instances where companies grow and when they reach a certain stage, they get a very tempting offer from either a fund or some larger company and they sell out. Do we then say that our effort has failed or do we say then that, well, this is the realities of the market and we have to live with it because there will be some of this development.

In Israel, for example, they are known as a start-up nation because they generate tremendous amount of knowledge which generate in many start-up companies. But ask yourself the question. In Israel, is it a scale-up nation and how far do they go in scaling up? In fact, I think the Israelis themselves will tell you that this is one of their main focal points − how do we get our companies to scale up − because that creates the next level of depth in the economy and the capabilities that we seek.

As for funding needs, my general point would be this. I have never been in a conversation where companies or enterprises tell me that funding is completely met because the need is always there, there are different kinds of needs. You have a spectrum of funding providers in the market, whether it is Government schemes and grants, obviously, and then Government-supported schemes, whether it is venture capital, angel funding and so on. And it goes right through to private equity and then larger scale and, of course, you can then tap public markets, and now we got a lot more crowd-funding platforms.

So, actually, there are a lot of mechanisms available but there will always be mismatches or gaps because the needs and the market situation keep changing. And that is why, ultimately, what is required is not so much about Government intervening by providing the lending solution per se, but it is to keep track of the situation, understanding whether this is a regulatory impediment, or a market failure, or is this because we are not getting the relevant players around the table to understand the issues and then deal with it.

A case in point is what we are doing with the infrastructure financing I elaborated on, because for the smaller businesses in the infrastructure space, this was a real issue. Big banks and other funds, when they typically do financing for infrastructural projects, they do project financing, but they need big ticket numbers, they need a billion dollar project and above because it does not justify the level of work. So, the easy way out when you are dealing with smaller companies, or the one way to mitigate the risk, is to say I need personal guarantees and corporate guarantees, which immediately shackles the company in terms of how far it can go.

So, we have tried to come in with this scheme. This is after consultation with all the key players − the banks, the industry, companies and so on. And we will have to see whether it takes off, how successful it would be and whether there is a need to recalibrate.

6.43 pm

The Senior Minister of State, Prime Minister's Office (Mr Heng Chee How): Mr Deputy Speaker, thank you very much for allowing me to join the debate on this year's Budget.

The Labour Movement, representing working people of all collars and ages, looks at this Budget with keen interest. We strongly believe that if we as a country and as tripartite partners set our sights high, put our shoulders to the wheel, persist through difficulties and setbacks with courage and not lose heart, we will get lead our people to a better future. That said, we must indeed expect significant difficulties in the economic and job transformation journey.

Over the decades, the economy, job types and workforce structure of Singapore have all become more diverse. Consequently, the needs, hopes, fears and prospects of the working people in Singapore have become more segmented as well. The traditional blue-collar and white-collar workers are increasingly joined by highly skilled professionals on one hand, and workers of the gig economy on the other. The typical workforce comprise workers across widening age bands and multiple nationalities. The lines between these different groups have become more porous, sometimes due to choice and at other times, owing to circumstances such as restructuring. This renders social mobility more fluid in both directions.

Both the corporate sector and Singaporeans at large tended to read and rely on the choices and signals by Government to guide their education and career decisions. This is fine when things are stable and predictable. In an environment that is more likely uncertain and fast-changing, how should companies and workers sensibly decide on their steps and paths?

My fellow Labour Members will elaborate on the various segments of the working population that they are championing. For me, my speech today will focus on the economic transformation aspects of the Budget and on the impact on mature workers.

Mr Deputy Speaker, when the Committee for the Future Economy (CFE) was set up last year, some people took the view that it was for the Committee to produce magic bullets that would take away the stress of transformation and yet produce a quantum leap in business outcomes and living standards.

Thus, when the CFE issued its report earlier this month, we hear comments that the strategies sounded somewhat generic, and that there were no clear magic bullets. They then pinned their hopes on the Budget.

When the Budget was announced last week, we again hear people saying that they wished for more painkillers for the immediate strain and that the path toward transformation is still not set out clearly enough. I believe this reaction reflects a mismatch of expectations, mindset and capability.

Last Friday, I attended the third annual Projects of the Year Awards presented by the Singapore Chapter of the Project Management Institute (SPMI), a body whose membership comprise project management professionals.

The leadership of the SPMI shared with me developments in their profession. They told me that if one goes back in time, project managers are deemed good if they are able to execute to a given plan, within time and budget. For that, they would be deemed to be good. But that is no longer the case.

Clients today look for much more from project managers. They expect such managers to not only execute well, within time and budget, but also be able to add value and create value up and downstream from their traditional work − in areas of coordination, integration and unleashing synergy.

Those who can do so have developed capabilities and connections both broadly and deeply, which they then leverage to good effect. They are valuable to clients and are in strong demand. On the other hand, those who can still only execute conscientiously to a plan given to them will see their relative value decline, and the need for their services progressively supplanted by re-design and technology.

This account mirrors that heard in many other forums, across different professions and industries. What does this tell us?

To me, this means that life will no longer get better just by executing someone's plan conscientiously. That was value, but that was past value. The bar has already been raised.

Going forward, we must focus on leadership that can skillfully and effectively work the white space between boxes marked "Funding", "Schemes", "Regulations", "New Technology" and the such, bring them together in order to develop the critical partnership capabilities and reflexes needed to produce innovative and valuable new platforms, products and services.

If we understand this, then we will also understand that much needs to be done to move us from a traditional "execute to a given plan" mindset to a leadership mindset. In other words, it is akin to moving from being a chess piece to being a chess player, and a strong one.

Therefore, even as I support and commend this year's Budget for adding another $2.4 billion in CFE-related funding over the coming four years on top of the $4.5 billion that was already set aside in last year's Budget for the Industry Transformation Programme (ITP), I want to emphasise the importance of implementing the Industrial Transformation Maps and in building leadership and partnership reflexes and capability in the Trade Associations and Chambers (TACs), and the Tripartite Partners.

This is because ITMs, whatever their details, will begin to be outdated the moment they are defined. Therefore, we must not delude ourselves into believing that submitting or approving a ITM, or even in implementing fully an approved ITM, would suffice. Indeed, we must see ITMs as Dynamic ITMs, ever changing, never ending, always adjusting, because the underlying forces are such.

In a sense, we have to complement once-in-seven or 10-year Economic Committees such as the ERC or the CFE with a decentralised yet capably led, continuously adaptive, responsive, innovative partnership structure that is alive and that goes on all the time, with all the partners that I have mentioned drawing upon all the resources there are. The point I want to emphasise is, many Members have spoken about the different schemes, whether or not there is a plethora of them, whether or not any particular one is sufficient or not. These are the boxes. But I think it is really in how you draw all these boxes together, whether as an individual, as a firm, across clusters, in partnership. That is the one that will create that value.

Thus, "Building Agility through Capabilities and Partnerships" as highlighted in the Budget Speech, especially through strengthening sectoral tripartism, would be critical. In this regard, the scope of the SkillsFuture Leadership Development Initiative should not only build skills for operating internationally, but also build "white space leadership and partnership capabilities", which I deem to be equally important.

Mr Deputy Speaker, I move now to the topic of mature workers.

Even though mature workers welcome the raising of the re-employment age ceiling from 65 to 67 that will happen from July this year, many are worried about their Job Security. They see that in industries where demand has dropped significantly, companies had begun to shed workers, both foreign and local. They therefore worry if they would be axed next, and whether they would be unfairly targeted for termination or retrenchment on account of their age or because they are deemed to be more costly.

In this regard, the Labour Movement and tripartite partners are monitoring the situation closely. The tripartite partners have long agreed that mature workers, including re-employed workers, are not to be targeted for discriminatory retrenchment or termination. Companies tackling excess manpower are to abide by the relevant Tripartite Guidelines, which emphasised that such action should be based on how workers demonstrate capability and value on the job, rather than on age, gender or other arbitrary non-work criteria.

On the Government's part, the extension of the Special Employment Credit and the Additional Special Employment Credit, being wage subsidies to companies to lower the cost of employing mature workers, will help address cost differentials between older and younger workers in the same jobs, and in this period, particularly pertinent.

As stated by the Finance Minister in his Budget speech, "To help firms with rising wages, more than $600 million will be paid out in March 2017 under the on-going Wage Credit Scheme, while more than $300 million will be paid out in FY2017 to benefit 370,000 workers under the Special Employment Credit (SEC).

The Additional SEC will also be extended till 31 December to provide wage offsets of up to 3% to help older workers stay employed. The extension will benefit about 120,000 workers and 55,000 employers, at a cost of about $160 million.

Taken together with the SEC, employers will receive support of up to 11% for the wages of their eligible older workers",

This wage subsidy for mature workers in a slower economy helps boost their cost-competitiveness, and the Labour Movement is grateful to Government for that.

Older workers who feel that they have been unfairly targeted for retrenchment or job termination can seek help from the unions, TAFEP or the MOM.

Every effort will be made by the tripartite partners to help displaced workers of all ages find new jobs, whether in the current line of work or, through conversion, to other lines of work. We must not under-estimate the ability and will of mature workers to adapt and grow. Many have shown by example their resilience, and have demonstrated reliability and openness to learning new skills. Those who adopted a flexible attitude helped themselves seize opportunities faster.

Government has also introduced or enhanced initiatives that help displaced mature workers get back into work more quickly. These included improvements to the Adapt and Grow Programme and related schemes such as the Career Support Programme, the Professional Conversion Programme, the Work Trial Programme and the Attach and Train Programme.

I draw attention especially to two elements in these programmes which are very important. The first is developing a keener sense of where the jobs are today and where they will be in the future. The second is the wage and training support within these programmes.

These are critical ingredients especially when helping middle age workers transit and adapt to structural shifts in the economy. While displaced mature workers want to get back into work quickly, they also have many commitments to meet. In such a situation, many risk becoming structurally unemployed or underemployed, if they hold out for too long or if they do not get the offers. The help with adaption and job matching must seek to minimise such risks.

On the Labour Movement's part, the NTUC has set up a unit called the Future Jobs, Skills & Training (FJST) Unit to integrate and maximise our efforts, as well as to complement those of our tripartite partners. As an example, we believe that as the mature workforce will be a growing part of the local working population, it is important for ITMs to include plans to fully utilise and continual sharpen this resource − and to do so within the ITMs as part of strategy, rather than as an accommodation or afterthought.

At the same time, companies must be reminded that should they lose experienced manpower because of lowered demand, they will find it harder to recruit such manpower quickly when the demand returns. They will then constrain their own prospects for growth. So, please do not under-estimate the value of an experienced worker.

This is also a time and opportunity for the HR profession to step up and help companies maximise the contribution of their human capital, beyond just making tactical moves. In this regard, I urge the HR profession to pro-actively and seriously support and adopt the recommendations of the HR Sectoral Tripartite Committee and initiatives under the MOM's Human Capital Programme (HCP).

Mr Deputy Speaker, the future is full of danger and uncertainty. That same future is also full of opportunity, promise and prospects. The paths we choose and the actions we take, individually and jointly, will decide our chances of success. We must not drop the ball. I support the Budget.

6.58 pm

Mr Desmond Choo (Tampines): Mr Deputy Speaker, Sir, allow me to start my speech in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Deputy Speaker, during the earlier debate, Mr Dennis Tan could have given the impression that with the increase in water tariffs, the additional U-save rebates could only help the minority of Singaporeans, while middle income Singaporeans, in particular, might not receive much help from the U-save rebates. In reality, however, the U-save rebates will indeed help to buffer the impact of higher water tariffs for most Singaporeans.

How is this so? According to PUB's analysis, Singaporeans living in one- to two-room HDB flat will not see any increase in their water bill after factoring the U-save rebates, while Singaporeans living in 4-room HDB flats will only see a small increase of $5 per month. For 75% of shop owners, they will only see an increase of $25 in their monthly water bill after tariffs go up. Companies can also tap into the Water Efficiency Fund to install water-saving devices to mitigate over the longer run price increases.

I hope the above explanation can clarify our understanding about U-Save rebates.

(In English): Mr Deputy Speaker, please allow me to continue in English. This year's Budget seeks to position Singapore to be "future-ready" to meet the challenges of a future filled with uncertainties and opportunities. Together with the Committee on the Future Economy report, it identifies how Singapore and Singaporeans can navigate the seismic economic and technological shifts. Being nimble and adaptable to change are the names of the new game.

Everyone knows that this change is inevitable. But the breakneck pace of change is almost unforeseen for many. The Fourth Industrial Revolution is well under way. The race for artificial intelligence had actually started quite a few years ago. The speed of innovation brings the "future" much closer. Our workers and companies need to be future-ready. In fact, for some of them, they actually need to be "now-ready". How do we gear them up for this so that they can seize the opportunities of tomorrow today? Whether we succeed in this economic transformation or not, we cast our lot with our millennials and Generation Z. They are at the threshold of opportunities unseen in a century. Yet, the job search has also become more trying. And, in itself, that causes them worry.

There are three major challenges confronting them. Firstly, it is less about what to study and what skills to master, but more of what would keep them relevant. In essence, what to invest their time in. Secondly, it is not so much about having no job but which job would allow them to build up their careers and life journey. In short, how do they go about navigating the shifting turbulence of the new job market? Thirdly, businesses are placing greater importance on work experience, on top of academic qualifications. The latter is what new graduates and first career Singaporeans would not have.

I believe that there are three ways to tackle these challenges. I believe that helping younger Singaporeans and workers is no longer about a massively sophisticated blueprint. The speed of change certainly defeats the best intents of such blueprints. It should be a system where young workers help one another to navigate in this new economy. So, how would this work?

Allow me to share the story of 23-year-old Yam Su Xian who was looking for a job, and 38-year-old Zuhaina Ahmad who heads business support in her company. Su Xian was a Business Management major who was finding it difficult to land her first job. She sent out many job applications but could not find any positive responses. Zuhaina was a pioneer career guide in Young NTUC's Youth Career Network (YCN) programme. She volunteered to pay-it-forward to help others who might have struggled as she did in her earlier years.

Through the YCN engagement sessions, Su Xian better understood the different jobs that would suit her skills and personality. Zuhaina then helped Su Xian to build and enhance her resume. They worked together to create a LinkedIn profile to boost her visibility to prospective employers. Every day, she suggested to Su Xian on how to expand her network to enhance her job opportunities. They worked together on boosting Su Xian's self-confidence. Su Xian eventually found a position as an accounts officer. She recounted, after getting a job, "I was alone by myself with friends on different paths. Some of them had already found jobs, some were holidaying and others were still studying. I was on my own until I found out about career mentoring with the Youth Career Network."

YCN empowers youths to take up ownership in charting their own career journey. With no fees and not limited to any Institute of Higher Learning, the YCN is accessible to all. We can see from Su Xian's story that we saw neither blueprint nor career counsellors. The programme worked because Zuhaina wanted to pay-it-forward and Su Xian found help that was current, personal and approachable.

We can and should invest in such mutual help platforms to unleash the collective strength and potential of Singaporeans. The system is almost future-proof because there will always be people like Zuhaina and Su Xian who are leaders in their own industries keen to help, and young people who need them. A networked system of mentors like Zuhaina could potentially serve more students and Singaporeans than physical career centres would ever do. If we can expand this programme, it would be more than building mentoring networks but also about the strengthening of community bonds amongst Singaporeans. In doing so, we can continue to leverage on the extensive network of the Labour Movement. Then, it can truly be the Singapore Career Network.

Now, let me move on to the National Jobs Bank and the National Talent Bank. The National Jobs Bank has helped many Singaporeans to find work. It puts in one convenient location, the job vacancies available in Singapore. It also allows for the analysis of jobs and skills trends. Going forward, we would need a National Talent Bank where jobseekers and would-be jobseekers can access conveniently, to be headhunted for jobs. This system should also include networking features like those on LinkedIn and Facebook. The National Talent Bank also allows us to analyse the deficit between national skills, competencies and what is required in our economy. As we go global, international companies should now know where a good place is to reach out for Singaporean talent. The current job sites are specific industry-focused and tend to be used mostly by professionals. Hence, I encourage the Government to work with private sector companies, such as LinkedIn and Monster.com, for example, to develop such solutions on a national level.

Next, I would like to turn our attention to the "gig economy" as the third leg of the proposals. The recent Graduate Employment Survey (GES) showed a growing emergence of a "gig economy". These part-time and freelance jobs will increasingly become more prevalent as both employer and employee can react to economic changes better. This "gig economy" can be an important feature in managing structural changes in the economy. It also helps in continuous learning and being entrepreneurial. However, it cannot develop without stronger workplace protection and retirement support. We need a robust network to protect freelancers and the employers hiring them, giving them a sustaining ecosystem to grow. With the three proposals above, I believe that we can better help our younger Singaporeans navigate in these times of rapid technological and economic changes.

I would like to shift our attention now to empowering our women to get back to work. I applaud the Government for announcing the Attach and Train Programme. I think that it can be a real boost for back-to-work women.

A recent small-scale online poll by NTUC U Family done on stay-at-home women who plan to get back to work revealed that out of 564 female respondents, 94% are between the age of 25 and 54 years old which is in the prime working age. Of those in this age group, a significant majority (73%) are Diploma and Degree holders. More than 60% of them intend to work within the year, while others (20% or more) wish to do so within the next one to two years. Most of them would like to start immediately if there is a trial work option. That is immense latent talent waiting to be tapped upon.

NTUC recommends a Returnship Programme as a bridge to help women get back to work again. The programme targets women who are looking to re-join the workforce, and for employers to offer them a two to four months paid trial period. It provides a trial for both the employee and the employer to ascertain job fit. The goal is to place them in a permanent role in the same company or another company. The chances of a good match would be much higher if we have work flexibility built in the system as well. We should start with companies which have vacancies, or even a company whose workers are on temporary leave and need workers for the interim period, for example, employees on maternity leave. As the largest employer in Singapore, we hope that the Public Service Division can take the lead in actively looking at offering these back-to-work individuals career trial opportunities. We also hope that the Government Linked Companies (GLCs) can also answer the nation's call.

Mr Deputy Speaker, Sir, the crux of our economic transformation depends on a populace equipped to navigate and seize the skills and opportunities of tomorrow. No one entity can claim to have the monopoly of knowledge in this complex world to drive this change on its own anymore. But, together, we can build good platforms to nurture higher probabilities of good outcomes. With this, I support the Budget. Thank you.

7.10 pm

Mr Kwek Hian Chuan Henry (Nee Soon): Mr Deputy Speaker, I rise in support of the Budget.

I have been making rounds in my constituency in the last couple of weeks and have been reading the local and regional news with regard to the water tariff. The concerns of our people and businesses are understandable, given the current economic challenge. And much has been said about this issue, both in and outside of the Chamber. Nevertheless, it is sometimes useful to take a view from outside Singapore. For example, how do our competitors see us?

The South China Morning Post, widely seen as Hong Kong's flagship English newspaper and not always a fan of Singapore, recently carried this headline: "Can Hong Kong follow Singapore's lead in water tariffs?" In its sub headline, the report noted: "Among Asia's metropolises, Hong Kong is stuck with frozen tariff rates that are hurting water conservation efforts".

The report said experts are calling for Hong Kong and other Asian cities to follow Singapore's lead. The South China Morning Post quoted experts from the UN and think tanks, who called for countries to invest more in water infrastructure, reduce water wastage by reflecting the real cost of water, while insulating the vulnerable from the impact ‒ all of which the Singapore Government is doing. The South China Morning Post's views are also shared by leading water experts, such as Prof Asit Biswas and Robert Brears.

Indeed, the challenges of pricing water right to ensure access amidst climate change are not unique to Singapore. We must deal with them decisively while taking care of our vulnerable. And in this debate on this issue today, it is important that we separate facts from fiction, and reality from perception.

Therefore, I am heartened to hear our Government's recent clarification which directly addresses the hon Member Mr Dennis Tan's concern that the additional usage rebates will limit the impact on low-income and middle-income households. Families in one- and two-room HDB flats will, on average, see no net increases, and families living in a typical four-room HDB flat will see a $5 extra on average. I am also concerned about the impact on the hawkers in my constituency, which affects the cost of living. So, I took a look at their water bills. I saw today a bill for an entire coffee shop with six stalls. On average, each stall is using around 50 cubic meters of water a month, which costs around $100. With the new water tariff, each stall will see an increase of around $30 a month. So, while there is an increase, it is unclear that it will lead to a significant increase in the cost of living.

I am also relieved to hear that three in four businesses will see an increase of less than $25 a month, which also addresses Mr Dennis Tan's concern. Nevertheless, I call for the Government to continue monitoring the situation, both for individuals and businesses, to see whether further tweaks are necessary.

Mr Deputy Speaker, now that the CFE and Budget have mapped out the broad directions ahead for our economy, I would like to focus my Budget speech on how to best execute our plans for the CFE, and about creating a gig economy for our senior workers.

Recently, I had breakfast with a senior retired official who worked for Mr Goh Keng Swee. I asked him what did he learn working for Mr Goh Keng Swee. He thought for a while and quoted Mr Goh, "Don't tell me the why. I know the why. Tell me the how. Tell me how you are going to get this done." Indeed, many retired senior officials whom I spoke to shared the same view ‒ what separates Singapore from the rest is our focus on getting things done quietly, efficiently and quickly.

One, a strong national coordination body. To implement our decade-long CFE strategy, we will be well served by a strong national coordinating body. This coordinating body, like the CFE Committee itself, should comprise not just our civil service officials, but also key union leaders, business leaders, and educators. This coordinating body will serve as a strong centre to oversee our Ministries' efforts to translate broad strategies into detailed plans, regularly review the progress made, incorporate good ideas and seek out industry proposals along the way, and communicate to all stakeholders annually on where we are, and where we must go.

The current National Productivity Council could serve as a basis for this coordinating body. Why is this high level of coordination and communication necessary? The answer is simple. To fundamentally transform our economy, we need to go beyond the whole of Government approach. In fact, we need our Government to move as one, we need a whole of nation effort.

Two, our Industry transformation maps (ITMs) must contain bold ideas. The premise of the ITMs is this: each industry requires bespoke solutions to achieve deep transformation. So, I hope that we must be fully prepared to remove policy sacred cows when necessary.

If the new plans for the industries end up not differing from existing plans, and if many of our ITMs look too similar, then we should question whether we are fully stretching our imagination and aspirations. Some say there is no Big Bang in the CFE. But I feel that it is no longer sufficient to push for a single Big Bang industry. Our Government must, however, light 23 bright sparks with each of the 23 ITMs. And our industries must turn these bright sparks into a brighter future for all.

My third point about the CFE is that we must start our transformation quickly. We should roll out our ITMs as quickly as we can, far earlier than the proposed deadline of end of this financial year. The ITMs are supposed to rally their respective industries. Many businesses, stuck in the trenches of disruption, are looking for direction amidst the storm. Not all of them found clarity for their sector, in the measures provided in this Budget.

But it does not mean that help for them is lacking. In fact, I am heartened to hear that considerable resources are set aside for our industries − close to $7 billion for the whole CFE, including $4.5 billion for the Industry Transformation Program.

When we can translate this significant budgetary firepower, into concrete policies industry by industry, policies that our businesses and people can touch and feel, they will naturally gain the quiet confidence that the future is bright for all.

Also, rolling out our ITMs quickly provide much needed clarity to the supporting CFE's efforts. For example, in this Chamber, we frequently talk about using our SkillsFuture funds efficiently. But it is not easy for our officials in SkillsFuture, or any other CPE supporting efforts, to make concrete plans until they know the precise direction that we want to take each industry to. So, therefore, a quick rollout of our ITMs is critical.

In summary, to execute our plans, we need a strong centre to pull everybody together, we need bold plans to transform each and every of the 23 industries, and we must provide our industries with quick and clear directions.

Now, I would like to talk about a separate point − creating a gig economy for our seniors. When I spoke to our seniors about the CFE, they are not sure how they fit in the future economy. Today, we already have forward-looking policies for our senior workers, such as our Senior Employment Credit, and our Retirement and Re-employment Act. Nevertheless, there is room to do more. In fact, I think there is room for our Government to catalyse a gig economy for our seniors, by creating micro-jobs.

Despite legislation, it is hard for us to fully remove ageism, especially towards seniors above 67. Many companies, especially in tough times, are not willing to take the risk of hiring, or even retaining senior workers. This issue would be more serious over time as we continue our restructuring, and as our workforce continues to age.

The gig economy can help us combat ageism. Compared to companies, consumers using the gig economy are far less willing to discriminate. What do I mean? A good example is Uber. Through technology, Uber empowers hearing-impaired drivers to work in the car using Uber app. Other examples include delivery services such as Honest Bee, Food Panda, and Deliveroo, show that our consumers are less interested in discriminating, on who shows up on the door, as long as that person can do that one-off "micro-job" well.

So, how can the Government create a gig economy for our seniors? By doing three things: one, creating micro-jobs for our seniors starting with those in the social services. Two, creating a national digital platform and app, and three, equipping our seniors to do these micro-jobs through SkillsFuture.

Let me use the example of delivery of home-based health care. Today, we sometimes send two nurses to visit patients, many of whom are bedridden or have mobility challenges. Why cannot we cut down to one nurse instead, and then hire a trained senior, living in a nearby block or street, to assist such as carrying the patient and assist in wound dressing.

There are many seniors living in our midst who can qualify to do such micro-jobs. How do we page for these seniors? Simple. Through a gig economy app that the Government creates, perhaps by working with our start-ups. How do we prepare our seniors for these micro-jobs? Through SkillsFuture, of course. How do we ensure quality of service by these seniors? Through the apps that ask for feedback from the nurses, and may be even the patient.

Imagine the vast possibilities. What if we certify some of our able grandmothers to provide infant care service for a few infants at their home, or retired teachers to provide after school care for a few students at home? What if we equip our seniors to provide care-giving or respite care to their neighbours? How many purpose built infant care, after school care centres, and respite care centres can we end up not building?

When I talk to public officials or VWO leaders about this idea, they get it. But they also confide that they cannot do it alone. That is why we need the Government to spearhead a gig economy for our seniors, using social services as a start.

We can even extend this to the private sector, for example in food service. There is already a company that hires retired prata-makers today, and deploy them to meet shift gaps throughout Singapore. So, we can also help our seniors to find micro-jobs in the food service industry in their own neighbourhoods. We can also even extend this to stay-at-home mothers and special-needs workers to find micro-jobs nearby.

Now, what about meeting the practical realities like CPF contributions, or verifying who is eligible for what micro-jobs? These can be easily done, by inserting lines of code, to wire micro-contributions to one's CPF account, and to check out our seniors' SkillsFuture individual learning portfolio. In short, in this digital age, data is the new invisible hand. We should fully tap on data; combine it with our social policies, to orchestrate our economy and society of the future.

In closing, creating a gig economy for our seniors benefits Singapore. It can erase ageism. It can put money directly in the hands of our seniors. It can cut down on unnecessary manpower including foreign manpower. And it can help reduce our social spending. Therefore I call for the creation of a national digital initiative for our seniors involving our social services Ministries, VWOs, and SkillsFuture. It will take a few years to get this done, so I hope we can start soon. With that, Mr Deputy Speaker, I stand in full support of the Budget. Thank you.

7.23 pm

Mr Lee Yi Shyan (East Coast): Mr Deputy Speaker, one theme that stands out in Budget 2017, is the emphasis to strengthen our external orientation. The new Budget introduces a $600 million International Partnership Fund. It also extends the existing Internationalisation Finance Scheme which has worked very well.

These programmes dovetail closely with CFE's first strategy to "deepen and diversify our international connections". Under this strategy, the Committee suggests the setting up a Global Innovation Alliance, linking our IHLs to the leading innovation hubs in the world. It also recommends us sending more young Singaporeans to overseas internships and leadership development.

Despite the fact that close to 10 million Singaporeans travel overseas every year, that these programmes are still introduced says something about our realisation that we cannot afford to slacken in inculcating in especially our young, the ability to understand and appreciate the world. The world is like a vast ocean, constantly waving currents and under-currents. Singapore can only steer forward safely if only we have up-to-date weather charts and topographical maps.

Speaking of unpredictability of events, 2016 was nothing short of surprises and shocks. Uncertainties are still unfolding in ways which have profound implications for Singapore. Let us consider three trends.

Firstly, protectionism is on the rise. Amongst the first executive orders President Trump signed was to withdraw from the TPP. As Prime Minister Theresa May laid out her 12-point plan for Brexit, EU is now increasingly worried about the prospect of a "Frexit" as the French presidential elections draws near. Meanwhile, right-wing populist parties campaigning on anti-immigration and anti-globalisation are gaining ground in Europe. If EU, the world's largest single market breaks up, world trade will be in disarray. What ensues may be trade wars leading to ultimate shrinkages in trade volume causing job losses and destabilising economies. Given that two-third of our economy is externally driven, a trade-hampered world will spell great hardship for us.

Secondly, populist politics are leading people away from real solutions. From the rising popularity of far-right political parties in Europe, one has to conclude that more and more voters are taking in their campaign promises which are premised not on reasons, research and facts but on impulses, emotions and anger. Their prescriptions to economic and social woes ignore the very complex nature of economy and trade, of global supply chain and relative competitive advantages. They promise a magic wand which solves all problems merely by building walls around one-self, for instance.

David Rothkopf, the chief editor of The Foreign Policy, coined the term "the shallowness of the state" to describe politician's tactics to over-simplify issues to win votes. He reminded us that "experience, skills and know-how require time, work and study. Truth is hard, shallowness is easy".

Thirdly, news-reporting and consumption tend to be local. That most people will be concerned with things happening in their backyard is perfectly understandable. In fact, survey has shown that those who follow local news closely also tend to be more civically engaged in and volunteer for the local community, which is a good thing for citizenry.

But we also must be aware that there are a few orders of magnitude of difference when one says "local news" in continental-size countries such as the United States and China, and that in our tiny Singapore. While people in these large countries may take comfort in being contended with local news, we in Singapore cannot afford to think and behave the same. Lest we unknowingly wear blinkers to see a very narrow world.

A number of businessmen I met commented to me that many Singaporeans are surprisingly insular and inward-looking. I asked them for evidence. They told me two manifestations of this psyche. One is Singaporean's unwillingness to leave their comfort zones and take up foreign postings; two is that being very sheltered, Singaporeans become unsure and very risk adverse in poorly defined and uncertain environment. They believe that such lack of adaptability will hold Singaporeans back from many opportunities in the emerging world.

When I travel, I like to tune into news stations and see what is being reported. When I tuned into CCTV or Phoenix news, I often found their reports of world affairs very insightful and comprehensive, covering a wide range of geographies far beyond the Chinese borders. Over the years, I have also found CNN and other American news reporting to be more globally informed, often although accompanied by distinctive American view of the world. Singapore news and our public discourse must, by definition, be a keen observer of the world. This is because we do not have a continental size economy or geography to buffer us from any shocks.

Mr Deputy Speaker, at the domestic front, the issue of 30% water tariff hike seemed to have hogged the headlines of the new media space for the past week. But I just realised that in this House, it is the topic that every Member has addressed. I think it is perfectly understandable how many people had found the jump of 30% abrupt and drastic. But if we consider the subject in context, that despite the very same dry season brought by El Nino in 2016 sweeping across Southeast Asia, Singapore unlike a number of Malaysian states such as Perlis, Pahang, Malacca, Johore and Sabah, did not have to impose water rationing because of the severe drought. The belated 30% hike, put in context, is a necessary and small insurance compared to the billions of dollars we need to set aside for future new water plants and pipeline infrastructure. We can go around the world and survey more water-deprived countries. Their problems are many times more severe.

To put things in perspective, our public discourse needs to be supported by deep knowledge of subject matters in discussion. Thankfully, our schools are doing a great job in injecting realism in learning. Our teachers are taking learning beyond classrooms, into the community and overseas. We have more students at different levels participating in overseas exchange programmes than ever before. The CFE also outlined the Government's intention to provide more funding to support overseas internships and work attachments. We are headed in the right direction.

I would also argue that we should do more, for the population at large. For instance, the Government could invest more in media and content production, to help our public broadcast be even more comprehensive and interpretational in their news-reporting and analysis. Complemented by our growing think-tank and research community, there is no reason why we cannot raise our average understanding of complex issues and the understanding of the world. I think the bottom line is, how do we watch the world "live" from Singapore.

Mr Deputy Speaker, international competition is intense and relentless. Consider this, the Single's Day Sales on Alibaba amounted to S$25 billion sale in just one day. That is 70% of all retails sales in Singapore for one year. So, 70% in Singapore is one day on the Alibaba platform.

Still in China, WeChat Pay has become the de-facto cashless payment means in China, regardless of transaction amount and IT infrastructure. By this, I mean, even hawkers at the wet market can take payment using WeChat Pay, without the cashless terminal. It makes us wonder why we are still struggling with different non-standardised payment terminals in Singapore after many years of trying to go cashless.

Mr Deputy Speaker, let me conclude. Budget 2017 builds upon a plethora of support programmes previously introduced. These programmes include SkillsFuture that help the workforce in general, and a whole host of productivity-related programmes that help SMEs. And they were all summarised just now by Minister Iswaran. There is really no shortage of support programmes.

What we need is strong motivation from individuals, from firms and organisations. To develop strong motivation, there must be deep awareness of the world and the understanding of competition.

Singapore's challenge now is how not to be a victim of our own success. How can we leap from our comfort zone and overcome the false sense of security. It is not just physical connectivity that we need to build, but the psychological bridge to understand the world, to reach out to complex issues and to deal with them tenaciously. There is no silver bullet but hard work aplenty. Mr Deputy Speaker, there is great urgency. I support the Budget.

7.35 pm

Ms Sun Xueling (Pasir Ris-Punggol): Budget 2017 attempted a fine balancing act. Trying to build for the future, for whom most discount the benefits of, and meeting short-term needs, for whom most place an emphasis on. But the future is not that far away and how we spend in the long term affects how we budget for the short term.

Uncle Koh came to see me a few weeks ago and he was in a fix. Adventurous and enthusiastic in his 60s, he had tried being a Grab taxi driver. But he did not know how to use his phone to locate customers. So, three days into the job, stressed out by the ordeal of fiddling with his phone till no end, Uncle Koh gave up and decided to be a cook instead. He took a course in culinary skills, used up his SkillsFuture credit and brought his shiny, laminated certificate to see me. He could not find a job, he said, as he did not have any prior experience being a cook. So, please, could he have more SkillsFuture credits so he can try something else?

This story encapsulates the challenges the future economy brings us as individuals, as businesses and as a government. For Uncle Koh, he could no longer cruise empty on the streets, burning up diesel, looking for customers. He had to learn how to use a taxi-hailing app. He had SkillsFuture credits, but he had not used them where he needed it most.

For firms, they can no longer rely on old business models as new entrants come in, disintermediating them, and being asset-light, did not have the sunk costs that traditional firms bear.

SkillsFuture and the Industry Transformation Maps (ITMs) are two key pillars of our strategy to help individuals and firms meet the challenges in the new economy. And huge sums of money have been set aside for them − $1.5 billion in Budget 2015 to support SkillsFuture, not a small sum and more will be put in. And $4.5 billion for the ITMs in Budget 2016 and Budget 2017 announced further top-ups to this initiative to transform our industries. We have to make these investments work for us because every dollar spent on one item in the Budget, is another dollar not spent somewhere else.

For SkillsFuture, Budget 2017 focuses on "on-the-job skills utilisation" to ensure a better match between training and jobs. Such an outcome-based approach where employers, TACs and unions are encouraged to develop training programmes for their workers because they know best the skills the marketplace values and thus the skills workers need to have, is the right move for SkillsFuture.

With the integration of SkillsFuture Portal with Jobs Bank, the nexus between training and jobs will be even tighter. I would like to suggest that there be reviews of training providers under SkillsFuture to ensure that there is accountability on the part of training providers to provide relevant training, that is, which is linked to job outcomes. Further, that individuals are guided by industry practitioners in their choice of training so that they are likely to choose relevant training which provides tangible benefits and, therefore, motivate them to train more. Sometimes, less is more. A more targeted approach in the delivery of training is more likely to deliver tangible outcomes.

For the ITMs, their effectiveness is tied to the KPIs set out for them. While it has often been said that we should not set static targets for the ITMs, given that they defer from industry to industry, and should be instead be "live" documents, having a vision on what the industry could look like and thinking through what the parameters for automation, innovation, labour and productivity can be, will give them something to work on, to try and possibly fail, to retry, and recalibrate. For how then will we − Government, firms and workers − know whether we are succeeding?

It requires great trust, collaboration and vision for firms, competitors, unions and Government representatives to come together and work effectively together. I further suggest that disruptors, entrepreneurs from adjacent industries and also overseas markets be brought in, where possible, into the discussion on the ITMs to enrich the discussion and paint the possibilities or we might be entrenched in local models and local constraints.

SkillsFuture and the ITMs are huge outlays to develop our capabilities. How they are implemented affects their ultimate efficacy and we need to be clear as to the outcomes we hope to achieve, and have parameters to track their implementation and course-correct to ensure success. For only then will they be effective investments commensurate to the amounts we have allocated them in consecutive Budgets.

That said, SkillsFuture and the ITMs form only part of the overall Budget. An analysis of how else we are allocating our resources will give a sense of how prepared we are for the future.

The Budget surplus of $5.18 billion for FY 2016, 50% larger than originally estimated puts us in a better position to react to external shocks and potentially fund future needs in the remainder of the Government's term. However, since FY 2015, we have been running a primary deficit where our total expenditure exceeds our operating revenue even before Special Transfers are considered.

The reasons provided for why total expenditure budgeted for in 2017 increased by 5.2% over 2016 when revenues are only increasing at 1.1% are that they are mainly due to higher expenditures on public housing, higher development expenditures for water-related treatment and health expenditure arising from growth in patient subsidies and improved training and retention of healthcare workers.

To ensure prudent expenditure, can we look to bind expenditures or match them with revenues, so that any increases in expenditure are carefully considered in relation to how the funds will be provided. Further, while the net investment returns contribution has helped turn our Budget into an overall surplus, the scale of its contribution relative to other sources of revenue is large, at 20% of our total revenue. It is the largest source of funds for our Budget, larger than corporate tax contributions.

In a recent article on Bloomberg, Norway's Central Bank Chief warned of how the risk of a 50% decline in 10 years of their sovereign wealth fund increases five times if government withdrawals from the fund increases from 3% to 4% of the fund. 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 and earnings of firms, how does that change our expected long-term rates of return and our ability to use NIRC to fund our Budget?

In Budget 2017, we see attempts to diversify revenue sources − a carbon tax to reduce greenhouse gas emissions by large direct emitters such as power stations, the restructuring of diesel taxes and water price changes. But these are taxes mostly to right-size behaviour and are not in the longer term derived from new economic activity. The future economy has already been shown to bring new business models and new relationships between firms and workers. With the growing importance of the sharing economy and cross-border transactions over Internet platforms, more thought should be put into how we can update our tax policies to keep in line with new emerging business models and maintain a level playing field. Otherwise, the tax burden may fall unnecessarily on certain segments, or individuals and consumers over time.

Lastly, as more individuals participate in the New Economy through freelance work arrangements, we will need to ensure that our retirement adequacy frameworks take care of our citizens. One leg of the equation is missing if companies who engage individuals systematically to work for them do not pay CPF. And regulations may need to be tweaked to bring them into the fold.

Much has been said about how firms and workers need to be oriented to meet the challenges of the Future Economy. I would like to add that our Budget and its construction likewise needs to be future-ready and future-proof. The future may be uncertain but we need to make certain as much as we possibly can. We require daring, but we also require prudence. This requires leadership and it requires judgement. Mr Deputy Speaker, in Chinese, please.

(In Mandarin): [Please refer to Vernacular Speech.] Much has been said about how businesses and workers can meet the challenges of the future economy. What I would like stress is that the future may be uncertain but we need to make Singapore's success as certain as we possibly can.

Budget 2017 attempts to strike a balance between building for the future and meeting short-term needs. SkillsFuture and Industry Transformation Maps are the two key pillars to help businesses and individuals to meet the challenges of the new economy.

Budget 2017 focused on "on the job skills utilisation" to ensure a better match between training and jobs. Outcome-based training is the right move for SkillsFuture. I suggest that there be regular reviews of the training programmes under SkillsFuture to ensure they indeed generate desired job outcome.

For ITM, although industries differ from each other, having a vision of what the industry could look like and thinking through what the parameters for innovation, labour and productivity can be, will guide firms on their next move. I hence suggest that entrepreneurs who are equipped with disruptive technologies and technology pioneers in the overseas market be brought into the discussion on ITMs to help our firms paint the future.

With regard to Government revenue, NIRC has helped turn our budget into an overall surplus, contributing a 20% share of the operating revenue. Given our reliance on NIRC, if the outlook of the international market changes, are we still able to fund our budget? Therefore, can we consider binding expenditures with revenues or performance? Be it SkillsFuture, ITM or government projects, can we determine how much we should invest in based on anticipated and quantifiable outcome?

As more individuals are participating in the shared economy or becoming a freelancer, if a company who systematically engage individuals to work for them do not pay CPF or taxes, one leg of the equation in our social safety network will be missing. Hence, I suggest that we include the new economic model into our CPF and tax regime. Facing an uncertain future, we need to make Singapore's success as certain as we possibly can. We need to be daring, but also prudent. This requires leadership and judgment.