Our expenditure policies will continue to focus on building a competitive economy. The strategy is to channel more funds into productive infrastructure and into areas which yield lasting returns and support growth.

Our philosophy is to promote a cohesive, resilient and upwardly mobile society. We will therefore continue to spend heavily on education, primary healthcare, public housing and community development. As we are approaching developed country status, our aim is also to develop a more gracious society. More funds will therefore be allocated for the development of the arts, recreation and sports.

Government will also continue to restrain growth in the size of Government. This will free more human and financial resources for the private sector to play its role as the engine of growth.

The government's budgetary policy is to ensure that all expenditures are met from operating revenues. Income from investments is retained in reserves to preserve their real value. Singapore has few natural resources. Our financial reserves therefore constitute our national wealth and resources. They are critical, not only to see us through times of crisis, but also to secure investor confidence in our future.

Because of continued strong economic growth, the FY96 budget is expected to yield a surplus. Some of this can therefore be channelled to augment Medifund and Edusave. I propose a contribution of $100 million to Medifund to ensure that healthcare remains affordable to all, and another $500 million to Edusave to broaden the choice and enhance the quality of education for our young.