MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE - FOR THE FINANCIAL YEAR 1ST APRIL, - 1983 TO 31ST MARCH, 1984
In Singapore, the Government owns the biggest land bank. This is fortunate because it allows the Government to use land alienation as a stabilizing factor. Depending on the studies of demand, land is periodically released through URA sales of sites. For example, in accordance with the Tourist Promotion Board's forecast for hotel demand, the URA offered land for hotel development in 1979,1980 and 1981. Similarly, in response to residential property demand, the URA offered in 1981 sufficient land for development of 5,000 residential units. Other sales had made land available for office, shopping, warehousing and industrial development. Land offers in URA sales are sold by public tender. The prices are therefore dictated by market forces. I believe we can safely assume that developers place their bids only after due and careful calculations. Now I come to the comments made during the Budget debate. The hon. Member for Chong Boon has said that HDB changes its policy too often. Just now the Member for Alexandra has very eloquently demonstrated that, in fact, the Government has all the time been changing the policy very drastically for HUDC flats. I have to point out that no Government policy can remain static for long periods of time. So Government policy must change and will continue to change. As external and internal environment changes, so also must Government policy change. Among them is the housing policy. The former Housing and Urban Development Company was established in the early seventies to build homes for the middle-income group. The company set forth to fulfil its mission through a very liberal approach. For example, its rule permits single persons and permanent residents to apply for flats. Applicants were exempted from paying any initial deposit other than $200 registration fee. The flat could be resold freely after five years without a resale levy and flat owners could purchase private properties after five years. On top of all this, HUDC buyers could use their CPF money to pay for their flats. At that time the CPF Board had not liberalized its policy to allow withdrawals, as at present, to buy private flats. That was a very special privilege for the HUDC applicants. The company did not realize that by adopting such a liberal policy, it was in effect taking over the role of the private sector in residential development. The only difference between a private property owner and an HUDC flat owner was the restriction on ownership of another property in the first five years. After five years, HUDC owners were on par with private property owners. The company's policy, in fact, was contrary to the Government's intention. The real objective of the middle-income housing scheme was and still is to provide homes at below market prices for the middle-income citizens who find prices of private residential homes beyond their reach. It was never the Government's intention to supplant the private sector in building homes for investment purposes. I would like to emphasize this point. If we maintain the HUDC's policy, then Government is, in fact, taking over the role of developing private residential properties. That is not what the Government wants. The Government wants an active private sector in developing residential property for investment. The Government has no intention of taking over this role. But the HUDC, by adopting a very liberal policy, has in fact been unwittingly taking over the role. I will illustrate afterwards what I mean. The company's liberal policy has encouraged a large number of applicants for HUDC flats in the property boom years in 1980 and 1981. As property prices climbed, so did the demand for cheap HUDC flats, or at the time they believed to be cheap. At the height of the boom, HUDC applicants peaked to 600 applicants per month or 7,200 applicants per year. I think the year before last I said that the building materials and the labour involved for one unit of HUDC flat was equivalent to three units of HDB flat, on average. So if the Government had taken over the development of private property for investment, then Government would have to build 7,200 units of HUDC flats every year, and possibly even more, if we did not change the policy. Then Government would have to divert the resources for the construction of HDB flats, about 21,000 units of HDB flats a year, to build HUDC flats mainly for investment. As you can see, this is an untenable situation. The HDB building programme will collapse. We will not be able to build the necessary number of HDB flats to meet the demand of the public applicants and, at the same time, build enough HUDC flats to satisfy the demand for investment. In fact, I have heard from people living in HUDC estates that there are Koreans and Japanese in their estates. The reason is that some bachelors had bought HUDC flats and had locked them up because they did not need the flats as they could stay with their parents or somewhere else for four or five years. After five years, they rented out their flats to Koreans and Japanese, for investment. I am just asking: Is this the purpose? This is certainly not the purpose of the Government, to build HUDC flats for investment by renting out to the foreigners. That certainly is not the correct policy. The policy of HUDC is that the Government builds HUDC flats to meet the demand for homes for the middle-income group. That means they are for owner-occupiers, not for investors and not for the person who is going to rent his flat to other people. The huge demand for HUDC flats has generated, as I have said earlier, an untenable situation. Therefore, the policy has to be changed. The function of developing and management of the middle-income housing was thus transferred to the Housing Board on 1st May 1982. HUDC housing now represents the apex of public housing. In other words, HUDC housing is now not developed by a private company. It is part of HDB's public housing programme. Therefore, HUDC flats were subjected to the same rules and conditions as other types of housing sold by HDB. This is a very rational approach towards attaining the Government's objective of providing a decent standard of housing and promoting home ownership among Singapore citizens whose incomes are less than $6,000 per month, i.e. the HUDC group of people. Their income ranges from $3,501 to $6,000. This income group is only allowed to buy HUDC flats. Therefore, there is a need to revise HUDC rules. I would illustrate another example of why HDB has to consider changing the rules to attain certain Government objectives. For example, in line with our national goal of preserving traditional Asian values, like filial piety and preserving the family structure, HDB introduces the joint balloting and multi-tier family schemes. This, in fact, is the policy adopted by HDB to achieve that objective which we did not have earlier. And there are people who complain that because we allow multi-tier families to jump the queue they have to be pushed back. They are unhappy. But on balance the Government believes that this is a good policy. It will be good for society if we allow joint balloting so that the families can live next to one another and the younger generation can take care of the older generation in future. Also, in the multi-tier families, the younger people can live with the older people and look after their parents. To promote security in HDB neighbourhoods, the HDB has accorded priority in the allocation of flats - I think it is 2% - to police personnel. This, again, allows the police personnel to jump the queue. This is a good objective of the Government because with the presence of police personnel in the neighbourhood I think the security will improve. As you can see, the public housing policy will continue to change in response to social, economic and other changes both in Singapore and sometimes outside Singapore. However, I would like to assure the House that every change of HDB and HUDC policies is made with the good of the community and the country in mind. 7.00 p.m. I have explained the general policy and, perhaps at this stage, I would like to answer in detail the various points raised by the hon. Member for Alexandra. He has talked about the increase of HUDC prices of up to 148%. This increase is reasonable based on two counts. One is inflation of the construction cost and the increase in land price. If you take the 1977 or 1978 private property prices and today's private property prices, the increase is not 148%. The increase is more likely to be 300% to 400%, that is, if you compare our increase with the private property price increase. If we compare them with the cost prices of Government housing, in other words, the construction cost and the land cost, the HUDC flats are still subsidized. They are subsidized in respect of the land cost. We cannot take the market land cost, because if we price the cost of the land for building HUDC flats at today's market price, then the HUDC price would have to be very much higher than what has been announced. As we all understand, in Bedok we are pricing HUDC flats at between $1,200 and $1,300 per sq metre, or about $120 per sq foot. I ask you, where can you buy a flat at $120 per sq foot in that area today? It is obvious that the HUDC prices are still subsidized to a great extent. They are still very much cheaper than the private flats by as much as 30% to 40%. As regards the levy of 30% for the sale, I will just explain the principle of this levy. In HUDC flats, there is an element of subsidy by the Government. The levy is not in the form of a tax whereby the Government just collects the money. I would say that the Government is subsidizing HUDC flats maybe by 30% to 40%. If a person decides to sell his HUDC flat, the Government says, "This 30% to 40% Government subsidy, you return it to the Government, because you can then come back to buy another flat again." That is the basic principle, "So you can come back to buy a second flat." in the case of the first flat, the Government has subsidized a certain amount of money, so he returns it to the Government. When you say "circumstances change", i.e. the financial situation of the person has changed after he has sold the HUDC flat, then if he wants to come back to buy another unit, we will still give him the same subsidy. But if we do not ask him to pay a levy this time, it would mean that if he were to buy a second flat, then the Government would be giving him a second subsidy. That is the basis of this principle. So the Government says those who buy HUDC flats, Phase 1 and Phase 2, are not allowed to buy another flat again. It is the same principle, so that they will not enjoy a second subsidy. There are people who say that it is unfair that we should not allow the Phase I and Phase 2 buyers to buy another flat. Supposing a buyer's financial position is all right now. Then he sells his flat. Subsequently his financial situation is not so good and he needs to buy an HDB flat, and we do not allow him or debar him for the rest of his life from buying another HDB or HUDC flat, then he may be homeless. That seems to be the argument. I would say that if he is willing to voluntarily return the 30% of the selling price of his HUDC Phase 1 or 2 flat to Government - that is not required at present in his lease - but if he is willing to return the 30%, then I am prepared to consider allowing him to buy a second flat. I hope I have explained the basic principle. Another point is about the civil servants. In fact, these two housing estates, Pine Grove and Gillman Heights - am I right?