Parliament: Budget 2018 Speech – On Education, Fiscal Sustainabilty & Taxes

Introduction

1. In his Budget debate, the Finance Minister spoke of three major shifts in the coming decade. The rise of Asia was observed some years ago, but the colossal scale of the change only became apparent to many with the conception of China’s global One Belt One Road (OBOR) initiative. Technological disruption is mind-boggling, if not downright terrifying for some. The sight of agile robots from Boston Dynamics on our Facebook news-feeds, driverless vehicles and news of medical initiatives in cloning, herald a world that was considered to be fictional only one generation ago. The prospect of an aging society however was not sudden. Successive governments have identified it with the second generation PAP leadership establishing the Inter-Ministerial Committee on Aging which published its report in 1999, and with at least four other high-level committees on aging since 1982 putting the issue squarely in the public imagination.

2. The Workers’ Party notes that this year’s Budget is one that seeks prepare Singapore and establish strong foundations for economic growth for the next 10 years. Singapore’s situation is unique. Economic growth is at the centre of our existence and an economy that exhibits a certain verve and vitality is critical to the well-being of our people. While the Government has got the headline issues right as it had with identifying aging almost 20 years ago, what will matter most is how its vision of looking after Singapore and Singaporeans is translated operationally and executed on the ground. My speech will cover education, fiscal sustainability and taxes.

Driving Educational Transformation

3. In his budget speech, the Finance Minister spoke of Industry 4.0, a reference to the technological shift from computer systems to integrated cyber, physical, biological and intelligent systems. Mr Speaker, as much as we seek to encourage workers of today to embrace the future economy through the Industry Transformation Programs, the Tech Skills Accelerator and the Go Digital Programme amongst other initiatives, there is another segment of our population for whom the new economy is one they must fit into seamlessly. They are our younger Singaporeans – many of whom are still in school today.

4. On 19 Feb 2018, the Straits Times carried a fictional article that sought to imagine what Singapore would be like in 2030 for one young Singaporean. It spoke of the story of Alex, whose life was transformed by the Committee of the Future Economy report of 2017. Alex interpreted the report to mean that entrepreneurship was the way of the future. By 2023, his fictitious company was awarded a contract to supply the Ministry of Health with mechanical parts for robot assisted surgery. With a local foothold, he expanded his business into Southeast Asia.

5. Alex’s story was fascinating to me particularly when I contrasted it against the speech of the former head of civil service Mr Lim Siong Guan, who gave a series of lectures as part of the IPS-SR Nathan Lecture Series on Singapore late last year. Most striking was Mr Lim’s observation of how we in Singapore pile accolades on those who reach the pinnacle of success, with others often remaining unnoticed and unmentioned. The call for innovation, a central pillar of this year’s budget requires – in Mr Lim’s view – for our people to try more and fail; and to be recognised not only for their success but their effort, and to be proud of the trying their best in exercising their talents and abilities.

6. In a second equally compelling and parallel anecdote, Mr Lim spoke about how Israeli mothers in the past wished their children to be doctors and lawyers. Fast forward 20 years and this scenario has apparently changed completely with Israeli mothers wishing their children to be CEOs of start-ups. The situation is similar in Estonia and Finland. In Mr Lim’s words, “Singapore has to get there and be exceptional in our own way.”

7. I have my doubts about whether Alex’s parents are ready for him to forget how they changed addresses to get him enrolled into a better school before he entered Primary 1 and how they spent thousands of dollars in tuition fees so that he would be streamed for the best outcomes to secure a stable and lucrative career. More pointedly, unless Alex comes from a rich family, I am not sure he would be in a position to give up an education in accountancy in favour of entrepreneurship, given our cultural biases to what qualifies as a good school, job, university or career.

8. Mr Speaker, ensuring the readiness of the education system to drive future economic growth is a critical strategy that we cannot afford to overlook. Only last month, the Minister of Education in charge of Higher Education shared that the Government is examining how it can better design the learning landscape so as to ensure that opportunities are available for Singaporeans to succeed in life. However, the Minister said that this endeavour may take a generation.

9. Without a doubt, the education system has progressively evolved for the better, but do we have the luxury of time to undertake its transformation for the new economy, a transformation that is arguably as urgent as the economic transformation we desire? With people as our only natural resource, we must begin from the starting point that each and every one of our students, regardless of race, language or religion, can not just succeed, but excel in the economy of tomorrow. The focus cannot be on acing examinations as a means of securing a child’s future as is overwhelmingly the case is today. Even as our education system has correctly made adjustments to allow for a minority of students to benefit from aptitude-based entry points across the eduction system, this is not enough.

10. In fact, we continue to have a tuition culture which is allegedly a billion-dollar industry in Singapore. There are no evident signs of this tuition culture abating. Even PAP MPs have raised questions in this House about stress and anxiety levels in our students. Parents naturally equate poor PSLE results with relatively poorer opportunities and outcomes for their children in secondary school. They fear that poor PSLE results will evince a bleak future, with their children condemned to schools dominated by problematic students who in their estimation essentially do not like to study or cannot communicate well, hence setting their own children up for mediocrity. Such fears, amongst others, drive the tuition industry and the stress both in parents and by extension, students.

11. Mr Speaker, it will take a radical move to energize the cultural shift needed to change mindsets about tuition and early streaming among all stakeholders, particularly parents. But there is another downside, and very important one that requires us to hasten educational transformation. Streaming and ranking only serve to reinforce the inequality the Finance Minister warned about in his Budget speech. This is particularly since our educational culture is weighted in favour of parents with means and those who can pile on enrichment classes and tuition and even consider paying educational professionals to work out strategies to game Direct School Admission exercises.

12. The Government has previously looked at board-based schemes like the Productivity and Innovation Credit (PIC) to drive productivity only to shift now to more targeted measures for specific industries through the ITMs. In similar vein, the Government should start identifying the specific policy changes needed to alter behaviour and drive cultural change in favour of learning. The time has come to look squarely at our tuition culture and ironically, how it may actually be holding us back rather than spurring and motivating our students in a healthy manner. The tuition industry is an important stakeholder in this undertaking. Rather than time and money spent on tuition, would our students not be better served by an education in various regional languages, more debates, better communication skills, financial literacy, problem-solving and negotiation, and on field trips rather than cramming model answers and methodologies for exam-based outcomes only for them to be forgotten shortly thereafter? How critical is streaming and even the PSLE examinations for success in life in the future economy? If it is not critical, are there persuasive arguments that remain for their continued existence?

13. The need of the hour today is different from that of the past. A radical cultural shift in direction needs to take place to set up our future generations of workers and employees for the future economy. Alex’s plans to become an successful entrepreneur with an appetite for risk – and for his story and Singapore’s economic future not to be a fictional one – depend on it.

Reframing Fiscal Prudence and Sustainability?

14. Mr Speaker, from a citizen perspective, making deeper enquiries of the Government’s budget is no less important than acquiring deep skills for the economy. Some very important and healthy conversations are taking place within our society about social protection and the size and use of our reserves, estimated in the Straits Times last week to be in excess of a trillion dollars – I will say that again, in excess of a trillion dollars. How much of it do we need to protect the Singapore dollar from currency speculators is a valid question given that yearly revenue from land sales alone ensures that our reserves continue to grow in size.

15. Some arguments have been made in public for Net Investment Returns Contribution (NIRC) to be increased to 60% to stave off a GST hike. Similarly, there have been calls to consider only a temporary increase in NIRC to fund non-recurrent, lumpy infrastructure investments such as the High Speed Rail, new MRT lines and the Changi T5 terminal. After such infrastructure has been completed, the NIRC can return to 50% and some portion of the revenue earned from such infrastructure can also be returned to the reserves. Such proposals leave more scope for the Government to hold back from increasing regressive taxes like the GST which also hit middle-income Singaporeans with young children and elderly parents the hardest mainly because offset packages announced by the Government inherently target the low-income and needy more.

16. In his Budget speech, the Finance Minister made a fundamental distinction to set out the Government’s thinking on recurrent spending which directly benefits current generations, and that the responsible way to pay for such expenditure is through taxation. However, it is no secret that Singapore’s approach to budgeting is highly conservative with land sales excluded from the Government’s income. Even as more resources are required to take care of our elderly population through to 2030 and beyond, reasonable Singaporeans take the view that there is scope to consider how elderly Singaporeans can be better protected in their twilight years with the burden of additional taxes like the GST held off for as long as possible. One novel, if not relatively radical approach in view of the current orthodoxy is to reconsider the role land sales can play in recurrent spending.

17. The Government is by far and away the largest landowner in Singapore. The majority of all land here comprises of 99-year or less than 99-year leasehold properties. Seen in this light, should not current generations be allowed to benefit from some percentage of today’s land sales with the knowledge that such land regenerates in value for future generations providing successive governments with a recurring source of income? Should Singaporeans who are now expected to live well into their eighties reap more benefit from land sales so as to justify better social protection for them?

18. Even as land is scarce in Singapore, it is also highly valued with land sales likely to be very healthy in the decades to come right until our HDB flats run down their leases well into the second half of this century. As much as the development of the port in Tuas will cost money, the move of port facilities from Tanjong Pagar will free up prime and valuable waterfront land adjacent to Shenton Way. After 2035, a massive tract of land where the current Paya Lebar airport sits – massive by Singapore standards at least – will be available for sale to the Government of the day. In between, the Government as the largest landowner has many sites open for development that will ensure a progressively steady growth of the reserves for the foreseeable future.

19. On the Government’s Factually website, the argument against including land sales for budgetary spending is two-pronged, apart from Constitutional restrictions.

20. Firstly, excluding land sales prevents the Government from unnecessarily selling land to meet expenditure needs. However, this argument that can potentially be addressed with a cap on spending revenue from land sales – for example, not more than 20% of the value of average land sales over 20 years, or 20% of land sales for that year, whichever is lower. This would give no good reason for an ill-advised Government to ramp up land sales when in Government to increase its own income.

21. The second argument on the Factually website posits that income from land sales are invested and already available to the Government for spending through the NIRC. While this is a stronger argument and certainly true, not co-mingling the income from land sales with other reserves for investment also brings with it the prospect of greater transparency to the public and of mitigating the consequences of poor investment decisions, most dramatically highlighted by the GIC’s partial divestment of its stake in UBS and losing billions in the process as reported last year.

22. Mr Speaker, the Workers’ Party is open-minded about looking at different modalities of funding future Budgets with a view to strengthening social protection frameworks. This also promotes a healthier discussion of fiscal issues amongst our population. Of course, the money has to come from somewhere. But there are two ways of framing this conversation. One is to say proposals to seek to improve and suggest better social protection for Singaporeans is tantamount to raiding the reserves. The other is to take a strategic perspective of our reserves position – something only the Government can holistically do in view of the significant information asymmetries, look at the how quickly the world is changing and always assess how Singaporeans can be better protected ahead of time.

23. To reiterate, allowing a portion of the revenue for land sales will also not stop the reserves from growing. They will continue to grow and disproportionately benefit future generations. But looking at using land sales also gives the Government of the day more flexibility to ensure that current generations of elderly Singaporeans’ healthcare needs for example, are adequately budgeted for, leaving more scope for the Government to strengthen social protection for a current generation of Singaporeans. Inter-generational equity is a subject that deserves greater discussion. The importance and willingness to prepare for the future cannot underestimated especially since the very technological disruption the Finance Minister spoke of will – like globalisation in the past – host the discontented. Those who cannot be readily re-trained to assume higher value-added jobs. Those who may not be able to build new capabilities. Those who for example, cannot stand for too long and for whom job redesign is only catchphrase. And those who may not adapt to what they fear is a brave new world.

24. GST may well have to rise but Singaporeans could be more likely to accept it if the Government considers the pros and cons of moving from the established orthodoxy and consider new approaches that improve social protection thresholds for all, and elderly Singaporeans in particular.

WP Position on the Government’s plan to raise GST

25. As expected, the Budget drew much attention on the Government’s plan to raise GST from 7% to 9% sometime in the future. However, there was an inconsistency in the treatment of some additional taxes that will no doubt add to the Government’s coffers before that. For example, the Government was able to confirm that the imposition of the carbon tax would bring an additional $1b a year of revenue after implementation. However, no estimates were provided on the likely additional revenue that would be be added to the Government’s income with the inclusion of GST on imported services.

26. In addition, the journey to become a smart nation – another plank of this year’s budget – is likely to make Singapore more efficient in tax collection. There is also the question on the move to become a cashless society and the impact this will have on sectors which have traditionally been thought to under-declare their income such as the self-employed, hawkers and taxi drivers. This prospect will become less probable with the advent of more electronic transactions and in turn, is likely to have a positive impact on tax revenues. Furthermore, with borrowing backed by a Government guarantees proposed for large infrastructure projects, more spending for such projects can potentially be allocated elsewhere for recurrent spending.

27. In view of the absence of such details, the Workers’ Party is unable to support the announcement of a GST hike at this moment in time. This is because of the lack of clarity surrounding projected expenditure when the Government raises GST in future and the relative lack of information on whether there is scope for the reserves to better support Singaporeans. In addition, as the Prime Minister told the media some years ago when the GST was raised from 3% in response to initial objections from the Workers’ Party, we would also need some understanding of the Government’s offset package for the low-income and middle-income should the GST be raised – information which the Government has not revealed thus far.

Conclusion

28. In conclusion Mr Speaker, the Government has made significant investments in placing Singapore to take advantage of initiatives like OBOR and tapping on the potential of the ASEAN region. These are necessary investments to keep the Singapore economy humming along. However, the people who keep it humming must be equipped to succeed in tomorrow’s economy. Some sacred cows may have to be slain forthwith. Equally, the security of elderly Singaporeans, each generation a pioneer generation of an improbable country in its own right, should not be made to feel insecure in their old age, particularly when it is comes to healthcare. Instead, they should be respected for what they have done for Singapore and looked after in their golden years.

29. Mr Speaker, we must never be done making Singapore an even better home for all Singaporeans. Thank you.

Parliament: Criminal Law (Temporary Provisions) (Amendment) Bill

Mr Speaker, the prospect of locking people up for an undetermined duration is incongruous with the rule of law. Should a state have such powers? Insofar as the Criminal Law (Temporary Provisions) Act (CLTPA) is concerned, the answer has been yes for reasons that have been enunciated in this House over many decades, albeit not without significant soul-searching and qualified support. One important reason that underpins the qualified support for the CLTPA in Singapore through the decades has been the prospect of judicial review, which operates as an important safety valve to check against any excesses of the Government of day. The importance of judicial review with regard to the CLTPA was publicly expressed recently by the Court of Appeal judgment in the matter of the international match-fixer Tan Seet Eng or Dan Tan.

Unlike many extensions the Government has sought for this Act since then, the one before the House today includes a few fundamental amendments, which are very significant and extend new powers to the Government for an Act which was ostensibly temporary.

Why change the law?

At the outset Mr Speaker, is an amendment to the Act even necessary?

To answer this question, it is helpful to look at what transpired in the aftermath of international match-fixer Dan Tan’s short-lived release under the CLTPA after the Court of Appeal ruled against the Government and in favour of Dan Tan. Government critics focused on Dan Tan’s re-arrest six days after the Minister cured the deficiencies in the original Grounds of Detention (or GD) with a more detailed GD describing how Dan Tan’s activities had a direct relevance to public safety, peace and good order in Singapore. As stressed by the Court, that was the crux of the CLTPA – the Government had to show how Dan Tan’s activities prejudiced public safety, peace and good order in Singapore, something it had not sufficiently done in its original grounds of detention.

However, what was somewhat overlooked in the decision to re-arrest Dan Tan was the Minister’s decision to revoke the detention orders under the CLTPA of three members of Dan Tan’s global match-fixing syndicate. The Ministry of Home Affairs in a statement on 18th of January 2016 stated that “the evidence against the three persons, and their roles in the syndicate were recently reviewed, after the Court of Appeal gave its decision in Dan Tan’s case.”

It would appear that in light of the judgment in Tan Seet Eng, the Government became aware of the poor case against them in law, putting the three detainees on supervision orders instead. To that end, the purpose of the Act and more importantly, the separation of powers between the Executive and Judiciary as it currently stands would appear to be operating effectively, giving the Minister enough leeway to take decisive action against individuals who in his estimation pose a threat to ensure public safety, peace and good order in Singapore, while being in a position to apply the Act lawfully even it means revoking detention orders in light of the clarification of laws by the Judiciary. Quite simply, the system is working as it should. If so, what is the impulse behind this amendment bill and is it justified?

The Minister’s decision is Final: A lesser role for the Judiciary?

Secondly, the Bill introduces a new limb to Section 30 of the Act, legislating that a decision of the Minister would be final. I seek the Minister’s clarification on how this new clause 3 will interact with the prospect of judicial review for individuals detained under the CLTPA in future, in view of the Court of Appeal’s judgment in Tan Seet Eng.

While clause 3 does not explicitly exclude the prospects of judicial review unlike section 8(2)(b) of the Internal Security Act, it is a fact that more, not fewer judicial review cases are coming up for adjudication in our Courts, challenging the lawfulness of government decisions. In recent years, these include questions on the legality of whether or when elections ought to be called in a Single Member Constituency and a Group Representation Constituency, the constitutionality of 377A with regard to homosexuals, the constitutionality of the Government’s decision to extend a loan to the International Monetary Fund, a challenge by some Hindu adherents on the banning of musical instruments during Thaipusam and the challenge by a Sikh prison counsellor on prison policy covering Sikh inmates, amongst others.

In concert with a more educated population and a greater recognition of the critical role an independent Judiciary plays as a co-equal organ alongside the Executive and Legislature, it is unsurprising that more Singaporeans are seeking the avenue afforded by judicial review for clarity on public law matters and for the Judiciary to have the final say on the legality of government actions. I would hazard that even the front bench recognizes and agrees with the critical role the Judiciary plays as a feature of a good government and good governance.

Judicial Review: The Sharp Edge

Mr Speaker, in a speech delivered at the American Law Institute in 2016, the Chief Justice referred to judicial review as (and I quote) “the sharp edge that keeps government action within the form and substance of the law.” (unquote) However, it is well established under Singapore law that judicial review only covers the process and legality of Government decisions, not the merits of a decision which are properly empowered to the Executive, who having been lawfully voted in by Singaporeans at each General Elections take decisions by virtue of their electoral mandate. To that end, a policy question or decision of the Government of the day can only be overturned by the Courts on grounds of irrationality, illegality, or impropriety – thresholds which are exceedingly high to begin with.

However, the law covering judicial review has not stood still even if Singapore law does not recognize some of the newer heads and principles that define judicial review in the UK such as the proportionality principle – ostensibly because some of these new approaches risk substituting the judiciary’s decision for the executive – a concern which is in light of our separation of powers schema is a legitimate one. But even so, the Chief Justice in his speech to the American Law Institute which I referred to earlier, found it appropriate to share the Singapore experience with regard to a new head of judicial review recognized under Singapore law – that of substantive legitimate expectation – which concerns government action that is contrary to a promise or an expectation that it has created or encouraged.

For the man on the street and the average Singaporean, the knowledge of a continual evolution of the law on judicial review is a welcome development. Justice must be seen to be done, and the evolution of the law on judicial review has required judges to make more not less enquiries on the facts and circumstances of a matter at hand so as to be able to decide whether the government has made a lawful or unlawful decision. In and of itself, it would appear intuitively logical for judges to have maximum access to the Minister or the Executive’s thought processes even if they cannot replace it with their own. However, clause 3 appears to be going against the grain, closing the door and further limiting the judiciary’s scope for judicial review for CLTPA cases. At this juncture, it would be useful for me to recite a a short paragraph of the Court of Appeal judgment in Tan Seet Eng which buttress the point that even though the ambit of judicial review only covers the process and legality of how a decision is made, the role of the courts is far from routine and administrative.

“In our judgment, while it is one thing to say that the court must not substitute its view as to the way in which the discretion that is vested in the Minister should be exercised, it is quite another to say that the Minister’s exercise of discretion may not be scrutinised by the court at all. We asked (the Government’s lawyer) if he was contending that the function of the court was confined to verifying, as a clerical matter, that the paperwork was in order and included at least a bare recitation by or on behalf of the Minister that formally complied with the statutory formula. The (Government’s lawyer) said that was not his position, and in our judgment, rightly so. We have already referred to the decision of this court in Chng Suan Tze where an objective approach was laid down. This plainly runs counter to any suggestion that the court is confined to so narrow a role. Indeed, this recognises that a court may and indeed should examine whether the power that is vested in the Minister is being properly invoked (unquote).”

On clause 3 per se, the explanatory note to the Bill states that the Minister’s decision being final applies in any of these three instances:
(a) That the person has been associated with activities of a criminal nature;
(b) That it is necessary for a person to be detained in the interests of public safety, peace and good order; and
(c) That it is necessary that a person be subject to the supervision of the police.

Mr Speaker, all three instances operate to narrow the judiciary’s role with respect to judicial review. To this end, I would like to ask the Minister, in the event the Courts require the Minister to reveal detailed information on the background facts on any of the three instances to determine and assist the Court to decide on the lawfulness of a CLTPA detention for the purposes of judicial review, can the Minister confirm if the Courts will be able to do so? More fundamentally, would it not be more propitious for Parliament to extend real scope to the Judiciary to review the Minister’s decision in the case of CLTPA detentions particularly since detainees cannot challenge the evidence against them in an open court, notwithstanding the Executive check available by way of the Advisory Committee under the Act?

Extending the CLTPA to crimes committed outside Singapore

The third point I wish to make extends to the inclusion of clause 8 which covers section 48(1) of the Organised Crime Act in Schedule 4 of the Bill extends the reach of the CLTPA – by way of legislation – to individuals who participate or facilitate a serious crime overseas. This is a significant shift in the reach and ambit of the CLTPA and I have some questions in this regard.

What is the threshold of participation or facilitation in a serious crime overseas as defined by section 48(1) of the Organised Crime Act before the CLTPA can be employed against an individual? Does the Minister have any examples of criminals having facilitated or participated in crimes overseas only for the Government to be bereft of any legal options to bring such individuals to justice? More narrowly, would the detention of an individual arising from Section 48(1) of the Organised Crime Act under the CLTPA require the Minister to include evidence or the results of investigations from a foreign counterpart in his Grounds of Detention or would some other standard apply – and if so, what would that standard be? Or would it be up to the Minister in step with the amendment proposed in clause 3 that his decision is final and there is for all practical purposes, no scope for enquiry into this matter? Finally, and in this context, does the Minister foresee the CLTPA to be employed against foreigners who commit crimes overseas and who may be members of or in the employ of a Singaporean or local criminal syndicate?

Mr Speaker, the Workers’ Party opposes this Bill.