FY99 Expenditure Estimates

Development Expenditure

Total development spending will amount to $13.9 billion, an increase of $1.2 billion from $12.7 billion in FY98. However, compared to FY97, the FY99 development budget is a hefty $5 billion or 50 per cent more. In fact, Government has been increasing development spending over the last 5 years. Development spending has grown on average by about 30 per cent each year since FY94. The FY99 development budget is about 3.5 times higher than development spending 5 years ago in FY94, when it amounted to only $4.0 billion.

I should point out that the large sums allocated to development spending is not to pump-prime the economy in the short term because this would have limited effect as we are a small open economy. Instead, our aim is to invest in strategic development projects, especially those with long gestation periods, such as land reclamation and IT in education. These are investments which would reap benefits several years down the road.

Against this backdrop, every sector of development spending has grown compared to FY97. The largest increase is spending on the social and community services sector, which has doubled from $3.1 billion in FY97 to $6.0 billion in FY99. In percentage terms, the social and community services sector is allocated the largest share of 43 per cent of the development budget. The other major allocation goes to the economic and infrastructure development sector at 34 per cent.

Spending on education increased from $1.0 billion in FY97 to $1.7 billion in FY98, and to $2.2 billion in FY99. This is a 31 per cent increase over FY98. Of this, more than $1 billion goes towards development of schools and campuses, and another $350 million on IT Masterplan and IT projects in schools and tertiary institutions. A provision of $170 million is set aside to build residential and hostel facilities in schools and campuses, and $250 million for new projects comprising mostly buildings and further IT investment in tertiary institutions.

Spending on public housing increased from $850 million in FY97 to $1.9 billion in FY98, and to $2.3 billion in FY99. Deficit financing to HDB accounts for $1.2 billion, mainly due to a surge in demand under the CPF Housing Grant Scheme. Continuing HDB upgrading is allocated $430 million and compensation under the Selective En-bloc Redevelopment Scheme is allocated $370 million. The $400 million increase in public housing spending is mainly due to increased provisions of $150 million for compensation under the Selective En-bloc Redevelopment Scheme and $270 million for deficit financing to HDB. .

Spending on environment has also risen steadily from $650 million in FY97 to $1.0 billion in FY98, and is set to level off at $980 million in FY99. The Fourth Refuse Incineration Plant at Tuas accounts for half of this sum, while the other half goes to improvements and expansion of sewerage and drainage facilities.

The economic and infrastructure development sector no longer occupies first place in development spending because of the large increase in allocation to the social and community services sector. Nevertheless, the sector is still allocated a sizeable sum of $4.7 billion. This is lower than spending in FY98 by $220 million, but 23 per cent higher than the $3.8 billion spent in FY97. The sector is led by strong spending on communications and trade & industry projects at $1.8 billion and $1.7 billion respectively.

The North-East MRT Line and the Changi MRT extension projects account for two-thirds of the $1.8 billion development budget for communications. In all, rail projects account for $1.4 billion, while another $270 million goes to road improvements and development of bus interchanges. Provision is also made for continuing reclamation at Changi East.

Spending on trade & industry projects has slipped by $350 million compared to FY98. However, this does not reflect a lower commitment by Government, but rather the result of huge savings in lower tender prices for recent reclamation projects awarded for Jurong Island Phase III and reclamation at Changi East. More than half of MTI's development budget will go to reclamation at Jurong Island, Tuas View, Changi East and Sentosa Cove. Spending on these reclamation projects will increase from $810 million last year to $930 million in FY99. Other major projects in this year's budget are the Economic Development Assistance Scheme, the Tourism 21 Plan to re-develop Chinatown attractions, the Mega Exhibition Centre and the Singapore ONE project.

Spending on the general services and security sectors accounts for the remaining allocation at 12 per cent and 11 per cent respectively of the development budget. The allocation for general services will see an increase of $730 million from FY98. This is largely accounted for by $500 million to be held centrally by MOF for new projects, which Ministries may embark on in the course of the year, and $260 million more for the New Supreme Court building project.

Spending on internal security is expected to remain at the same level as the last two years. Provision is made for on-going projects such as the Civil Defence Shelters Programme, and new complexes for the Ministry of Home Affairs, Police Headquarters, Singapore Civil Defence Force Headquarters and Traffic Police Headquarters. Provisions are also made for the redevelopment of the Changi Prison Complex and Command Control and Communication Systems to improve the operational capability of the Police, Singapore Civil Defence Force and Central Narcotics Bureau.