Mr Speaker, Sir

2.1 I will now turn to the Budget for the Fiscal Year 2002.

FY 2001 Revised Budget Estimates

2.2 First, let me recap the FY 2001 Budget. I refer honourable members to the second column of the budget statistics table in Handout 1.

Budget statistics for FY 2001 and FY 2002 (figures in $ bn)

2.3 When Dr Richard Hu presented the budget last year, operating revenue was estimated at $34.3 billion and total expenditure at $28.1 billion. With a provision of $1.9 billion for special transfers, the forecasted budget surplus was $4.4 billion.

2.4 However, as members can see from the third column of the table, the sharp economic downturn reduced revenue from taxes and fees sharply by $4.6 billion to $28.8 billion. To make up for this, we raised the contribution from Net Investment Income (NII) from the budgeted amount of $0.9 billion to the constitutional limit of $2.7 billion. Despite this, operating revenue still fell by $2.8 billion to $31.5 billion. The revised total expenditure also fell, but by a smaller $0.4 billion to $27.7 billion. Special transfers, however, increased to $5.3 billion, mostly as a result of the two off-budget packages. Special transfers included $2.45 billion for the New Singapore Shares, $500 million to the Skills Development Fund, $500 million to the Eldercare Fund, and $200 million to the Community Assistance Fund. Even after tapping all revenue streams, we expect a budget deficit of $1.4 billion for FY 2001. However, this deficit will not cause a draw on past reserves, because it can be funded entirely from the surpluses accumulated over the term of the previous government.