Parliamentary Snapshots (for 18 Nov 08)

November 19, 2008 by admin
Filed under: Parliament 

References: ST Online and Channel News Asia, 18 Nov 08
Adapted & Summarized

Singapore’s FY08 budget deficit to swell

Finance Minister Tharman Shanmugaratnam said in a written response to Parliament that Singapore’s budget deficit in FY08 (fiscal year 2008) could be three times larger than the initially estimated 800 million dollars, partly because of the global economic turmoil.

There may be some dampening of revenues in view of lower-than-expected economic growth and more subdued property transactions, especially in the last two quarters of the fiscal year. At the same time, government expenses have risen with an August announcement that cash handouts to ease the burden of a rising cost of living would be increased by 50 per cent along with electricity rebates. There are also higher infrastructure costs, and additional spending on procreation measures.

“The larger deficit is an appropriate fiscal stance in the context of an economy that has entered a slowdown,” he said, adding that the government would not seek to reduce the deficit by cutting spending or raising additional revenue. He added that the Government will be able to fund the larger deficit from the $6.4 billion Budget surplus accumulated in the last financial year ending March 31, this year, “when we had unexpectedly higher revenues”.

Singapore statutory boards have no exposure to Lehman-linked products

Finance Minister Tharman Shanmugaratnam told Parliament that Singapore government statutory boards are not exposed to the structured products and credit notes linked to bankrupt US investment bank Lehman Brothers.

Mr Tharman was responding to questions from Non-Constituency MP Sylvia Lim who had asked if statutory boards have invested in risky structured products linked to bankrupt US investment bank Lehman Brothers.

But he also said that four statutory boards — the Civil Service College, Singapore Land Authority, Infocomm Development Authority and the Professional Engineers’ Board — have invested in other credit-linked notes, which have suffered a 14 per cent paper loss this year. The exposure of the four boards to such notes make up 0.05 per cent of the total investment portfolios of all of Singapore’s statutory boards.

According to a Finance Ministry spokesperson, these four statutory boards had positive returns on their overall investment portfolios this year, averaging about 2 per cent. For the past 3 years, the average annual return on their investment portfolios averaged 3 per cent.

Another question came from Nominated MP Siew Kum Hong who wanted to know if those investments were linked to collateralised debt obligations (CDO) or credit default swaps (CDS), which are both complex investment products at the centre of the global credit crunch.

On Mr Siew’s query, Mr Tharman said a fifth statutory board – which he did not identify – has financial products other than credit-linked notes, which are linked to CDOs and CDSs.

Mr Tharman also said the government has advised all the statutory boards to maintain sound principles of diversification and risk management when investing.

Market-based pricing for new flats

National Development Minister Mah Bow Tan told Parliamen on Tuesday that when pricing an HDB flat, costs are not taken into account. Its price is based on what the flat is worth at the point of purchase. This is called the market-based approach.

Mr Mah gave this response in Parliament to Mr Liang Eng Hwa (Holland-Bukit Panjang GRC) who had asked if the Government would consider pricing flats according to costs.

The minister said that its building programme suffered losses of $530 million a year over the last three years.

Mr Mah said a typical four-room flat in Sengkang costs more than $300,000 to build. This is above the $200,000 to $260,000 price at which HDB sells it.

He noted that there were concerns over the high prices of premium flats like the Pinnacle@Duxton, with prices ranging from $457,000 to $645,000. But Mr Mah claimed that the prices reflected the value of the flats, and that for every one unit on sale, seven people wanted to buy it.

Singapore government has been giving more help to people with disabilities

Giving an update in Parliament on Tuesday, Minister of State for Community Development, Youth and Sports Yu-Foo Yee Shoon said that more help has been given to people with disabilities in Singapore as part of the Enabling Masterplan.

For example, there are two additional Early Intervention Programmes for Infants and Children (EIPIC) centres, bringing the total to 11. The capacity has also been increased from 1,000 to 1,400 places, and the average waiting times for such programmes have also been reduced from 9 months to 4 months. An EIPIC Support Grant worth S$3.6 million was also set up to make sure every child has access to appropriate early intervention programmes even if the child’s family is less well off.

She added that since the Open Door Fund was set up in May 2007 to allow companies to claim up to S$100,000 to redesign the workplace to employ the disabled, 115 disabled persons have been employed.

200 more childcare centres

MCYS minister of state Yu-Foo Yee Shoon said that about 200 more childcare centres are in the pipeline, and will be ready in about five years. This will bring the number of places from about 63,000 in 739 centres as at Jan, to about 83,000 in 940 centres. It is also an increase of 10,000 places or 100 childcare centres on top of what MCYS had announced earlier this year in March.

Mrs Yu-Foo said this is a perennial issue as more families have both parents working, and as more people want more early childhood development services for their kids. The increased number of childcare centres will likely “bring about more competition” and “moderate fees at an affordable level”, she said. Childcare fees have recently been on the rise, due to increased costs of living and higher educational requirements for teachers.

Madam Halimah had pointed out that the quality of childcare centres depended on the quality of its staff, but low salaries paid out often meant centres could not attract better staff.

Mr Zainudin Nordin (Bishan-Toa Payoh GRC) also asked if there were plans to improve the image of childcare staff.

To that, Mrs Yu-Foo said that though some private childcare centres were known to have teachers with degrees, and that despite increased subsidies and higher training criteria from the Government, “we still need some time to improve the image”.

Income Tax Act enhanced to better achieve economic, social objectives

The Income Tax Act has been amended and enhanced. Senior Minister of State for Finance, Lim Hwee Hua, announced in Parliament that one key change is that the amounts of Child Relief and Handicapped Child Relief will be increased from next year.

Qualifying Child Relief will be doubled to S$4,000. She said this will be extended to all qualifying children, beyond the fourth child. Handicapped Child Relief on the other hand will be raised by S$2,000 to S$5,500.

Working mothers will also be able to claim up to 100 per cent of their earned income for all qualifying Singaporean children under the Working Mother’s Child Relief. This includes the fifth child and beyond.

The cap for the total amount claimable for all three relief schemes in respect to the same child has been doubled to S$50,000.

As for the S$5,000 Parenthood Tax Rebate, it will be extended to the first child. Mrs Lim said that parents can also get S$20,000 for each child beyond the fourth one.

All these are part of the Marriage and Parenthood Package announced in August this year.

The government also made two other key changes after a regular review of Singapore’s existing tax policies. One is to exempt selected groups of taxpayers from filing their income tax. This will not only benefit about 300,000 taxpayers, but help the government save on tax administration costs.

Under the other amendment, General Partnerships and Limited Liability Partnerships will now enjoy tax incentives. For a start, Mrs Lim said they will enjoy specific tax incentives such as further reductions for research and development expenditure. But she added the government needs to proceed carefully on opening up tax incentives.

Employment Act revised to bring law up to date with market changes

Changes were made to the Employment Act on Tuesday to bring the law up to date with significant changes to the labour market, with the presence of more professionals and contract workers, and a much larger services sector. The Act offers basic benefits such as salary protection, minimum employment terms and dispute resolution.

Among the major changes are:

  • The new Act will cover workers with a monthly salary ceiling of up to $2,000, raised from $1,600.
  • Junior managers and executives earning less than S$2,500 will now be covered, and be able to settle salary claims through the Labour Court;
  • Paid public holidays and paid sick leave will be extended to all employees covered under the Act;
  • Part-time work will be redefined to include those who work less than 35 hours a week;
  • Penalties for flouting the Act will be enhanced.

While the changes are long overdue, some MPs questioned the timing and impact on businesses’ bottomlines, while others were concerned about possible exploitation.

“One concern that has surfaced is whether some employers will take advantage of the situation and start converting full-time workers to part-time workers,” said Madam Halimah Yaacob, MP for Jurong GRC.

Mr Gan responded by saying that it is a balance between worker protection and market flexibility, and that many changes are already industry norms and should not increase costs.

Parliament passes Bill to regulate licensed moneylending

Parliament has passed the Moneylenders Bill. The new Bill repeals and replaces certain provisions of the Moneylenders Act.

Senior Minister of State for Law Ho Peng Kee said the changes will help to better regulate licensed moneylenders and safeguard the interests of borrowers so that they will not turn to illegal moneylenders or loan sharks.

To counter loan sharks, two new measures have been introduced. First, people who instigate their runners to harass the debtors will now also be liable for caning.

Second, if a person allows his or her bank account or ATM card, handphone or pager line to be used by an unlicensed moneylender to collect debt, they would have been deemed to have assisted in the unlicensed moneylending business.

The Bill removes restrictions on moneylenders operating from only one location, and moneylenders can now advertise.

The cap on interest rate chargeable is also removed. But the Law Minister now has the discretion to prescribe the maximum rate of interest that a licensed moneylender may charge for any loan granted. Currently, the interest rate is capped at 18 per cent per annum for unsecured loans and 12 per cent per annum for secured loans.

While some controls are relaxed, Professor Ho said regulation and enforcement are not loosened.

The Registrar of Moneylenders will have the powers to refuse to issue or to revoke and suspend a licence, and can impose and change the conditions of a licence.

The Registrar will also be given greater investigative power. This allows it to inspect premises, documents and records without notice, and issue directions to moneylenders whether they are licensed or exempt under the law.

Still, some MPs had their concerns. Ellen Lee, MP for Sembawang GRC, said: “I am concerned that with this relaxation, it will signal that moneylending activities are now decontrolled … … Borrowers who can always rely on the government to control moneylenders, may then become complacent and enter into such transactions under a false sense of security.”

Professor Ho responded by saying that borrowers themselves have to act responsibly, that they should not overstretch themselves in doing so, and if they do borrow money, they should seek clarification if they do not understand the terms and conditions of the loan. Finally, borrowers should make every effort to repay the loan.

MOM to embark on two key strategies to help companies and workers

Acting Manpower Minister Gan Kim Yong said a tripartite taskforce will be set up to help companies reduce manpower costs and help those retrenched to find jobs. He gave this update in a written reply to a parliamentary question from Sembawang GRC MP Lim Wee Kiak.

On reducing manpower costs, Mr Gan said the tripartite partners — comprising the ministry, the Singapore National Employers’ Federation and NTUC — strongly encourage companies to manage their excess manpower by redeploying workers to other areas of work, sending excess manpower for skills upgrading and training, or adopting alternative arrangements like short work-week. Retrenchments should only be considered as a last resort.

He also said companies can also adopt a flexible wage system to manage wage costs or implement temporary layoffs.

The career centres at the Community Development Councils (CDCs) and NTUC’s Employment and Employability Institute (e2i) will provide career counselling, training support and job placements for the unemployed.

Job seekers could be deployed to sectors which are still hiring and have strong growth prospects, such as the retail industry. It is estimated that the industry will need at least several thousand retail workers once Ion Orchard, Orchard Central and the integrated resorts are open.

Amendment to the Stamp Duties Bill passed in Parliament

SINGAPOREANS transferring their shares and property to another person will no longer need to get the taxman to value the assets. They just have to declare the value to the Inland Revenue Authority of Singapore (IRAS).

The amendment to the Stamp Duties Bill was passed in Parliament on Tuesday.

In reading the bill, Mrs Lim Hwee Hua, Senior Minister of State for Finance, said: “With the removal of mandatory adjudication, taxpayers can enjoy a faster transfer process and save on the adjudication and valuation fees.”

She explained why the previous requirement — aimed at safeguarding stamp duty revenue — is now removed. This was because most of the gift cases involve HDB flats. Their values can be easily ascertained through HDB’s valuation reports. Second, most property transfers have third-party valuation reports which safeguard against under-declaration of property values. Third, the value of shares transferred can be calculated based on audited accounts or traded prices.

Another change concerns unlimited companies, statutory boards and limited liability partnerships which will qualify for stamp duty relief, so long as the entities doing the transferring of assets are associated.

Goods and Services Tax (Amendment) Bill passed in Parliament

The Goods and Services Tax (Amendment) Bill was also passed on Tuesday to put in place GST exemptions for the sale, leasing and servicing of containers used in international transport of goods. This is to promote Singapore as a shipping and logistics hub.

Also exempted are supplies of specialised tools and relevant services used in the manufacture of goods for exports.

The various amendments took into account feedback received during a public consulation between August and September.

Amendments to Property Tax Act clarify tax treatment for structural networks

Structural networks like pipelines, cables, ducts and railway lines will be subjected to property tax by January 1. The provision is one of the changes to the Property Tax Act which was passed in Parliament on Tuesday.

Senior Minister of State for Finance Lim Hwee Hua says the Inland Revenue Authority of Singapore (IRAS) currently taxes structural networks together with the building to which they are attached. For example, electricity networks are assessed together with the substations.

But the current rules does not specifically hold owners of the structural network responsible for paying property taxes for parts of the networks that pass through lands they do not own.

Mrs Lim says it is proposed that the boundaries of the building be used to demarcate parts of the structural network which may not be considered as machinery and hence be subjected to property tax. The change will bring Singapore in line with practices in Britain and Hong Kong.

Health Ministry exercises extra caution with pills related to sex, slimming

Health Minister Khaw Boon Wan told Parliament in a written response that the Health Sciences Authority imposes stringent controls on western pharmaceutical medicines and herbal Chinese proprietary medicines (CPM), in reply to MP for Sembawang GRC Ellen Lee who asked if all medicinal, herbal or related items from China are screened and tested.

He said additional attention is paid to higher risk products that are more likely to be adulterated, such as sexual enhancement and slimming pills. For such products, the seller will have to submit more test reports.

However, Mr Khaw pointed out that routine testing will only detect known and expected chemical contaminants. If new chemicals are added by an unscrupulous trader, existing tests will not detect them.

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One Comment on Parliamentary Snapshots (for 18 Nov 08)

  1. The Singapore Daily » Blog Archive » Daily SG: 19 Nov 2008 on Wed, 19th Nov 2008 11:56 am

    2. [...] 17 Nov 08 – Sgpolitics.net: Parliamentary Snapshots (for 18 Nov 08) – Majulah Singapura: Budget deficit (may be) 3 times more (S$2.4b) – Hard Hitting in the Lion City: [...]

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