Statement By Minister For Defence At 2004 Budget Debate
(Source: Singapore Ministry of Defence; issued Mar.15, 2004)
Sir, I would now like to turn to what is a key initiative in MINDEF. One which we have embarked on to ensure our security for the future and not just to defend against today’s threats. While we maintain our operational readiness, we are also looking ahead and developing capabilities to enable the SAF to stay ahead in the next decade and beyond. The Iraq war last year showed us how the revolution in military affairs will change the way in which wars are fought. The devastating effect of precision strike, for instance, was decisive. In World War II it was estimated that it took 9,000 bombs brought out by waves of bombers to ensure a successful strike against one strategic target such as a command HQ or a key bridge. In the Iraq war, just one aircraft flying a single sortie could destroy several such strategic targets by dropping one or two precision-guided bombs with pin-point accuracy on each such target.

This was possible also because the US and coalition forces had superior information on the battlefield, made possible by the latest communications, network and sensor technologies. Such technological possibilities - and there are many other exciting areas of technological developments – will fundamentally change the nature of warfare in the future. The advantage in the battlefield of the future lies with the force that can harness technology to make maximum use of these transformational capabilities. Platforms, manned and unmanned, weapons and sensors that are fully networked into such a fighting system will have their combat power magnified many times. Tanks or ships or aircraft operating on their own which are not so networked and which are capable of operating only in the conventional way, may find that they are merely targets.

Investing in the Future

The transformation of the SAF to exploit these rapidly emerging possibilities is a strategic imperative. But it is not something that can be achieved overnight. To introduce new concepts of operations and new technologies requires experimentation and research and development. It will ultimately lead to changes in organization, less demand for conventional platforms, more demand for less visible technologies like information systems, precision weapons, electronic warfare systems, unmanned platform technologies, and a new type of soldier who is trained to exploit these capabilities. This is a major and strategic effort we have already embarked on, but it will take time.

We recently set up a Future Systems Directorate to take the lead in exploring and experimenting with how technology can be harnessed to develop superior and innovative concepts. MINDEF considers this effort so critical that we have set aside 1% of the defense budget for experimentation, over and above the 4 to 5% we set aside each year for research & development. The newly created SAF Centre for Military Experimentation is already conducting various experiments in a virtual environment. The SAF also started conducting experiments outside the laboratory, during exercises, to test out new concepts under real-life conditions. For instance, when I visited Australia last year, I was able to see some experiments with new command and control concepts and systems for future land battles fielded for the SAF’s Exercise Wallaby.

While MINDEF will continue to modernize the SAF, such as through the acquisition of the Next Generation Fighter, the effort in transformation will eventually see a third generation SAF emerging over the longer term. This would be an SAF that has enhanced capabilities through exploitation of new concepts and technologies, an ability to fight across a wider spectrum of operations, flexible, and much more efficient in the use of resources.

The SAF has for many years now been exploiting technology as a force multiplier and investing significantly in R&D, locally as well. We have built up many centers of excellence in a number of high pay-off strategic transformation technologies – such as comprehensive awareness, network–centric warfare, electronic warfare, and precision strike – in the Defence Science and Technology Agency, DSO National Laboratories, and Singapore Technologies Engineering. Our local laboratories and industries have a solid repository of the technologies that are needed for the future. While I am unable to describe many of the remarkable achievements and capabilities because they are classified, I can say that some of these are in technologies one reads about on the war in Iraq. But given the importance of their work in developing the third generation SAF, MINDEF intends to showcase some of these technologies at an exhibition later this year that will coincide with the Defence Technology Prize award ceremony. In addition, I would be happy to invite Members for a visit to the Defence Science and Technology Agency to view some of these technologies.

People - A Key Resource

One of the key advantages that we have is that we are fortunate that we have well-educated soldiers who can easily master the technologically sophisticated weapons and equipment. We also have a strong science and technology base, and a solid R&D set-up. These are things which no country can create overnight, and which we are fortunate that we have built up both nationally and within our defense establishment and industry over many years. The implications for the SAF are profound. It means that we will not be held back by numbers. A small population will not be a constraint on our ability to defend ourselves and to deter would-be aggressors. Our technological edge, our transformational capabilities will not only neutralize but more than compensate for this.

Sir, the transformation of the SAF is a critical initiative. It is an effort to make sure that Singapore is safe not just for today, but for our children and our children’s children. That is why we must continue to invest a portion of the defense budget for transformation, for research and development. And that is why the Government is prepared to invest a significant share of the budget in MINDEF.

Maintaining operational readiness and transformation are both key priorities in the SAF. One priority, operational readiness, ensures that the SAF can carry out the missions required of it to defend Singapore against the spectrum of threats to our security – a spectrum which has grown both in range and complexity. The other priority, transformation, ensures that the SAF continues to be a credible deterrent for many years to come, sustaining the clear edge over potential adversaries, equipped with the capabilities to fight the wars of the future.

Steady Investment in Defence

The firm support for defense investment which has been expressed here today by several Honourable Members. The firm commitment of our people to the defense and security of Singapore has allowed the Government to maintain a steady and prudent course over many years in the development of our defense capabilities. Ours is not a feast or famine approach, we do not splurge in good times nor do we cut back and leave ourselves exposed in difficult times. Defence capabilities cannot be built up in fits and starts. Singaporeans understand that the optimal development of defense capabilities takes time and careful planning with a long-term horizon.

Defence is not an optional extra for Singapore – it is critical for a small state for which there will be no second chance if we lose the first battle. Defence spending is the largest part of our budget by far, reflecting the importance the Government and people attach to ensuring Singapore ‘s security and the seriousness we put into the effort. The Government is committed to spending up to 6% of our GDP on defense. W e have been spending between 4.5% and 5% for several years now. MINDEF has requested only for what is needed to ensure our defense, and has not always asked for the full amount. We will keep to this policy. MINDEF is committed to prudent spending.

Economy Drive

Sir, allow me to elaborate on some of the measures MINDEF and the SAF have adopted to stretch each dollar of our defense expenditure to get maximum value. The MINDEF Productivity and Innovation Committee is chaired by the Minister of State for Defence. The MINDEF Economy Drive Committee indeed has been in place since 1976. Over the last few years, the Committee has helped MINDEF to make cost savings of an average of $125 million a year. Last year, the saving was $195 million, or 2.37% of the defense budget. The savings are effected without compromising operational readiness and effectiveness and allowed these resources to be ploughed back to develop other areas of defense. MINDEF’s Economy Drive effort is the analogue of what the civil service has adopted in its Economy Drive campaign. At the individual level, a strong culture of cost consciousness and striving for improvement is encouraged. In the last quarter alone, the SAF suggestions scheme yielded cost savings of $62.7 million. This amounted to $144 of savings for every dollar that MINDEF and the SAF awarded to servicemen for the suggestions they put up.

Exploiting Technology

We have also been able to leverage on technology to increase productivity and stretch our defense dollar. For instance, the SAF uses some of the most advanced simulators in the world. These simulators have improved training effectiveness in such areas as armor and marksmanship training, flight training, and navy procedural and tactical training. They have both increased the effectiveness of our forces and reduced the cost of training.

A t force structure level, we have stretched our defense dollar by upgrading our platforms, and replacing them only when they are no longer cost-effective to deploy. Our A-4 fighter aircraft and missile gunboats would have been upgraded several times and been in service for 25 to 30 years by the time they are replaced. In fact, they are older than most of the servicemen who serve on them.

Manpower Productivity

In manpower productivity, our artillery guns are a good example. In earlier days we needed 12 men to operate each 155mm gun. Then we developed locally our FH-2000 which needed only 8 men. Last month I was in New Zealand with Dr Ong where we carried out the first live firing exercise of the Primus, our Singapore Technologies built self-propelled 155mm howitzer which has improved mobility, faster response time and more lethal firepower. It requires a crew of only 4 national servicemen. Over a decade, we had increased manpower productivity three-fold for our artillery guns. We were able to do so through innovation in operational thinking and engineering, and also because we could leverage on the increasing proportion of A-level and Diploma qualified men in each cohort to operate these systems.
Honourable Members have asked about the effect of a lower birth rate. This is not a new challenge for the SAF. The Ministry of Defence and SAF have had a policy of zero growth in regular manpower establishment since 1986 while cutting down on the requirement for full-time national servicemen. This is possible despite the greater demands on the SAF and the deployment of more capabilities, because of productivity improvements and constant attention to restructuring in both front-line units as well as support units.

Best Sourcing

Outsourcing is one important cost-saving measure. For instance, members may not be aware, but we now do our air-grading, that is, how we identify those with flying potential, in a place called Tamworth in Australia. It is a commercial arrangement where we do not even own the aircraft. We provide the key people to do the assessment but we don’t own the aircraft, we don’t maintain the aircraft. The savings from doing our air-grading in Tamworth instead of the previous way of maintaining a fleet of our own trainer aircraft has resulted in savings of $7 million a year. Yet another example is the maintenance of our C-130 aircraft for the operation in Iraq. Members may not realize that the maintenance of the C-130 has actually been outsourced, and together with our pilots and crewman operating into Iraq, are ST Aerospace technicians who service the aircraft when the aircraft return from the missions.

There are other initiatives which MINDEF has pioneered in the civil service to cut costs. One example is how we commercialized our logistics through the setting up of the Army Logistics Base. It is a Private Financing Initiative arrangement, a commercial company put in the investment and MINDEF assured it of a multi-year contract.

To address Mr. Steve Chia’s comments, all investments in new capabilities go through stringent assessments of requirements in relation to the SAF’s missions and war-fighting strategies. Our current program to select a New Fighter Replacement is a case in point. It is a program which is being watched closely by the aerospace industry and other air forces. As the Financial Times said in an article last year, much of the intensity is due to Singapore ‘s reputation as “a ‘reference customer’, one of a handful of countries that carry weight because of the stringency and transparency of their procurement process.
Sir, when we buy weapons, when we look at them, our engineers and our people do so very seriously and with a keen eye to cost-effectiveness to make sure we make the most of our defense dollar. Our engineers and procurement officers ensure that we get the most cost-effective systems, and we undertake creative sourcing, strategic cost previews and cost audits. As an example - we started using reverse auctions for procurement in 2001. Not something our suppliers like or enjoy. This procurement method has yielded an average 10% savings over traditional methods. We have activated about $100 million worth of reverse auction buys per year and this has generated an average of $10 million in savings each year. For the Ministry of Defence, such efforts are not merely driven by financial considerations. Taken together, they give the Ministry of Defence a real strategic advantage by ensuring that we get maximum value for each and every defense dollar that this House votes for MINDEF.

Safety

Sir, Dr Ong Chit Chung, Mr. Tan Soo Khoon, Mr. Sin Boon Ann and Ms Irene Ng and others have raised the issue of training and safety. The interest in this subject and the concerns that have been expressed are fully understandable and well placed given that almost every Singaporean family has a son or husband, or other male relative, who is an SAF serviceman doing National Service. I would like to reiterate the assurance I gave Parliament last October, after the tragic deaths of three SAF servicemen during training. The SAF will train our servicemen hard and train them realistically for the defense of Singapore, but we will never compromise on safety nor risk the lives of our servicemen during their training. I am heartened by the very mature response of Singaporeans and Members of the House. Singaporeans understand the need for the SAF to have tough and realistic training, many have told me so, but they also expect the training to be conducted safely – and rightly so. They must also have the confidence that if, in spite of the procedures and checks in place, an incident does occur, that MINDEF and the SAF will deal with it professionally and in as open a manner as possible, to uncover any problems and shortcomings, learn from them and prevent a recurrence.

The SAF has completed a full review of its training safety system. The review affirmed that we have in place a strong safety system to support our training. The safety structures, processes and procedures that had been developed over the years are robust. The review also found that for the safety system to work most effectively, there must also be a strong safety culture. This has been pointed out by members of this House, Dr Ong, Mr. Tan and others. This is one of the areas of focus of the SAF’s efforts to further improve training safety. The enhancement of a safety culture includes emphasizing openness, command responsibility, and an attitude of performing one’s job professionally and safely. Safety hotlines have been installed in all three Services to encourage feedback. The SAF has also taken steps to ensure that not just accidents, but near-accidents are thoroughly investigated and lessons learned from them.

Besides enhancing the safety culture, the SAF has also improved the dissemination of safety information within its ranks. A knowledge management system for safety information is currently being set up. The SAF is also studying trend forecasting methods to anticipate and address potential safety problems before they arise.

The review of the training safety system included a full review of lesson plans to ensure that they are up to date. To make sure that training is actually conducted in accordance with the lesson plans, we have stepped up senior commander visits and audits by the Service inspectorates. All instructors and all army commanders now undergo safety-related training before they take up their posts, so that they are well equipped for field training. In addition, all three Services have beefed up their inspectorates and safety sections with additional staff. They are also looking into how best to engage external safety auditors so that we may further improve training safety. We are also bench-marking SAF safety standards against those of established armed forces.

The review concluded that medical coverage for SAF training was adequate. Nonetheless, we have made a number of improvements to the medical support system. Training centers now have advanced resuscitation equipment such as defribillators. Additional training for first responder resuscitation is conducted for both medical and non-medical personnel. This means that more and better first-line medical response can be provided in the field. The training for medical vocationalists has been revised so that our doctors and medics are current in advanced life-saving skills.

T he SAF is working hard to maintain high training and safety standards. The review that we have just completed has led to several measures being implemented, as I have enumerated. But safety has to be a constant, ongoing concern. I assure Members that attention to safety will continue to be of the highest priority for the SAF. We have a substantially good system, but we know that we can always try harder and improve – and we will.

Compensation

Sir, on a related matter raised by Dr Ong – the issue of compensation for SAF servicemen was raised in Parliament last October. I informed Parliament then that MINDEF would carry out a review of the compensation issue.

MINDEF compensates servicemen for death and injury sustained due to military service in accordance with the SAF Regulations. While the basic compensation provided is based on the provisions in the Workmen’s Compensation Act, MINDEF also has the flexibility to pay up to 30% in additional compensation in cases where circumstances merit this. In exceptional circumstances, MINDEF has also paid compensation beyond the 30% cap

The principles that MINDEF applies in computing the compensation amount are consistent with the legal principles applied by the civil courts in assessing damages for injuries and deaths. I am satisfied that MINDEF’s current framework is essentially adequate to provide fair and reasonable compensation to our servicemen

I have directed MINDEF to formalize these arrangements into a framework for compensation. This framework will provide greater clarity for decisions on compensation for deaths and injuries sustained due to military service, according to the merits of each case.

In addition, I have asked that for the purpose of compensation, MINDEF treat Full-time National Servicemen and NSmen on par with regular soldiers. This means that for deaths due to service, we will also provide a lump-sum pension of a minimum of one year’s equivalent regular’s pay in addition to the compensation.

Aside from compensation, there is also a range of additional benefits, such as welfare grants from the SAF Benevolent Fund and a dependants’ pension depending on the family’s financial circumstances. There is also a comprehensive group insurance scheme which our soldiers are encouraged to take up. It provides coverage of up to $400,000 at affordable premiums of $16 per month for every $100,000 of coverage.

Sir, MINDEF knows that no amount of compensation or benefits will alleviate the grief or make up for the loss to the serviceman’s family. However, with these improvements to our compensation framework, we will be in a better position to compensate our servicemen’s families as fairly as possible.

Retirement and SAVER Scheme

Sir, Dr Ong Chit Chung has asked about the SAVER scheme. We have a policy of keeping the SAF young. With the threat environment and war-fighting becoming ever more complex, the timely renewal of the SAF leadership is key if we want to keep the SAF dynamic, vigorous and forward-looking, with a constant supply of fresh ideas and receptiveness to new concepts and change. This is the best way to make sure that our generals are always prepared to fight the next war and not be trapped trying to fight the last war.

In 1998, MINDEF implemented a 23-year career for our officers. This maintains a balance between the requirement for experience while ensuring timely leadership renewal. This also means that the individual officer is still young enough to acquire the skills and knowledge to make a switch in career, and he has enough working years left to have a meaningful second career.

To support this new career structure, MINDEF introduced the SAVER scheme. This scheme offers our officers accelerated career advancement and a very good salary and benefits package. A key feature of SAVER is a generous superannuation scheme to support their transition to a civilian career when they leave the SAF. This is designed such that an SAF officer in his 23-year career would earn close to 75% of what his private sector counterpart would earn in a 40-year career. Since its inception, the SAVER scheme has met its objectives of improved recruitment and retention of officers and timely leadership renewal.

Currently, MINDEF is enhancing the career transition program to provide better support to those officers who are leaving as the employment environment in recent years has been more difficult. The program offers career counseling, networking opportunities and outplacement services in preparation for their career transition.

Dr Ong has also referred to some complaints by retired officers that they did not get good returns from the SAVER scheme. Now, let me explain. The SAVER fund is no different from other pension funds, it’s invested and we have explained to our officers that they should take the long-term view. In fact the returns are slightly higher than the benchmark which the fund compares itself to. SAVER benefits are invested with a view to giving good returns over the long term, based on a strategy of balanced asset allocation. There may however be a few years when the performance of the fund is negative, and there may be a small minority who leave the SAF at that point where the returns are negative. The performance of the fund as I’ve said so far, have been better than our benchmark, and better than numerous established pension funds in the market. Our officers also have the option. They can move their retirement benefits into a more conservative portfolio two years before their retirement, depending on their risk appetite. But of course if they do that and if the investment makes exceptional gains in those two years, then they will not benefit from those exceptional gains. But those are the risk-return benefits. However, having now run the fund for about six years, MINDEF is reviewing the fund structure to fine-tune it to see whether there are better options, more options, that can be developed to meet the needs of the fund members at the various points of their careers.

Sir, good and strong leadership in the SAF is vital and cannot be compromised. MINDEF will ensure that our employment schemes continue to attract officers of a quality which can meet the demands required of those who shoulder the responsibility of safeguarding our nation’s defense and security.

Part V: Conclusion

Sir, I am most heartened by the degree of support which Honourable Members have shown for the need to ensure Singapore ‘s defense and security. Underlying many of the points which they have raised is the recognition that security is the basic building block of our nation’s well-being. Without security, economic development, social progress, and nation-building cannot proceed. I would also like to take this opportunity to express appreciation for the support that Members of this House and Singaporeans in general demonstrated for the SAF through the difficult times last year. That brought the people and the SAF closer together. It also helped to reinforce confidence in the SAF, and strengthened deterrence.

Thank you, Sir.

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