Sir, going forward, we will have to be more stringent on headcounts. Agencies will have to be more circumspect in expanding their manpower needs, and must trim back wherever possible. I am reluctant to impose a freeze again, but MOF is working on ways to control total headcount numbers, while allowing Ministries flexibility to grow and to shrink their departments and agencies. One of the ideas that we are thinking of is to impose a headcount tax. If we think that is what you should have and you have more than that, I would not stop you, but I am going to levy a tax here. If you do not want to pay the tax, then you bring your headcounts down in line. These are things which we have to work out.

Mr Yeo Guat Kwang and Mdm Halimah asked what this means for jobs in the public service. Just like in the private sector, every public officer must continually improve his productivity, work smarter, upgrade and learn new skills. When missions and needs change, which from time to time they do, then Government departments and statutory boards will have to restructure, and sometimes they will have to shed staff. It is inevitable, but when it happens the civil service will work closely with the public sector unions to manage the change, as we did in the case of the HDB restructuring last year. Where possible, we will redeploy the officers but where it cannot be done, then we will have to release them on fair separation terms.

For the FY 2004 Budget, we imposed a permanent 2% cut on the budget caps of all the Ministries, except MINDEF, and we are going to cut by another 2% by next year.

Mrs Lim Hwee Hua and Mr Leong Horn Kee expressed concern that the 2% cut should not be achieved by sacrificing social programmes or passing on costs to the private sector. Let me assure them that the cut will not be onerous to the Ministries. Ministries’ budgets are tied to the GDP. Because we are projecting growth this year, in dollar terms, the spending caps for all the Ministries are higher this year than last year, despite the 2% cut. Because you take a percentage of GDP, GDP grows, so your budget grows, then a 2% cut. If the GDP grows by more than 2%, in fact, in dollar terms, you still get more. So social subventions for healthcare, schools, voluntary organisations and town councils will not be cut. In fact, we are budgeting for 14% more social subventions this year compared to last year, of $287 million.