MAIN AND DEVELOPMENT ESTIMATES - OF SINGAPORE FOR THE FINANCIAL - YEAR 1ST APRIL, 1983 TO 31ST MARCH, 1984
Sir, the hon. Member for Anson has been harping on the HDB accounting system for a long time. In fact, the last such occasion he talked about the HDB accounting was on the 3rd December last year. I have repeatedly explained the HDB accounts, and I am sorry I have to repeat again for his benefit - that HDB's current accounting system is not an HDB's invention. The system was inherited by HDB from the Singapore Improvement Trust which was established by the British Government. It is not an HDB invention. It is certainly not a PAP invention. This method of accounting was, in fact, a widely accepted system of presenting the accounts of a public authority in England. However, in line with the Auditor-General's recommendation that HDB should adopt a more modern accounting system based on commercial convention of accounting, the HDB has been taking all the necessary steps to change its accounting system. The hon. Member for Anson must surely realize that the HDB has provided accommodation for 75% of the population in Singapore. The number of accounts handled by HDB comes close to one million, comprising 400,000 service and conservancy accounts, 160,000 loan and instalment repayment accounts for sale of flats over 100,000 rental accounts, thousands of hawkers' accounts, car parks accounts, and so on and so forth. The magnitude and the complexity of HDB accounts explain why the change of accounting system cannot take place overnight. Therefore, we have to continue with the present accounting system. The HDB is doing all it can to switch over with the minimum inconvenience to the 75% of the population living in HDB flats. 4.30 p.m. A Committee comprising the Auditor-General, Accountant-General and representatives from the Ministry of Finance, Ministry of National Development and the HDB, has been formed to select a consultant for the enormous task of changing the accounting system. I am indeed most puzzled that any informed person could think that it is possible for HDB to convert the accounting system of such a huge undertaking like the HDB overnight. I had expected the Member for Anson to be the first person to appreciate the complexity of the task facing the HDB since his own political party appears to have some accounting problems. If the press reports are anything to be believed, it seems that his party has been facing great difficulty in presenting its accounts while the balance standing to the credit of his political party amounted to - I must not use another unsuitable word - a grand sum of $18.
47. Just now the hon. Member appears to have spoken with great authority on accounting knowledge. In fact, some of the people asked me, "Why don't HDB solicit his service to switch the accounting system?" I would say this much. The hon. Member seems to have a penchant for ignoring facts which look him in the face. He has accused HDB of organizing confused accounts to mislead the public. This is not so. In fact, he has come here to give the impression that HDB is - he has, in fact, repeated this many times in this House - purposely making confusing accounts, and that it is a profit-oriented organization and it is overcharging the residents. It is trying to sell the flats at a profit or that the rentals are unreasonably high, and all sorts of other accusations against HDB. Instead of going into details, I just want to give a fairly simple example. HDB is doing three things for the public, i.e. the 75% of the population who are housed by HDB and also the more than 100,000 applicants who are waiting for HDB flats. The first thing is that the 400,000 families who are living in HDB estates, HDB is collecting service and conservancy charges from them and providing the cleansing service and other services to these residents. Hon. Members most probably do not have the HDB's Financial Report with the exception of the Member for Anson. On page 8 of the 1981-82 accounts, the service and conservancy charges collected by HDB were $134,658,581 while the expenditure was $142,868,152. From there, you can see that HDB is subsidizing the service and conservancy charges. In other words, we are collecting less than what we spent. The second point is on rental of HDB flats. HDB is charging a rental of $40 for 1-room improved flats. I just do not want to go back to the argument. Ask anyone in Singapore: is this rental a subsidized rent, or is this rental a profit-making rental as maintained by the Member for Anson? If it is a profit-making rental, I would advise the Member for Anson to get some investors to build flats and rent them out at $40. I think a lot of Singaporeans would be grateful to him if he is capable of doing that. I come to the third point. It is the selling of HDB flats, These are the three items that are important. The hon. Member is trying to confuse the people by saying that HDB has got MND Holdings and so on and so forth. To the public, that is a Government investment. It is not that much different from Government investment in SIA. Therefore the HDB residents are not directly affected by the investment. Is HDB charging high prices for its flats? That is important. Is HDB making money out of the service and conservancy charges? The answer is no. HDB is losing money. The second question is: Is HDB charging very high rentals for the rental flats? Can the hon. Member answer me? $40 for a 1-room flat, is it expensive? Is this rental not subsidized? Or can the hon. Member do better and build some flats and rent them out at less than $40? If the Member can do that, then I must take my hat off and say that he is indeed very good, a financial wizard. Can he persuade anyone who has accommodation to rent it out at $40? No answer. He keeps quiet. Because he knows that renting a room in a flat is $200 a month with a condition that you do not do any cooking. The Member for Boon Teck just said that the condition is that you are not allowed to cook and that you must not have children. And HDB is renting out its flats at $40. You show me the accommodation that you are able to provide at less than $40, and I will supply you no end to the number of tenants. Tell me, where are the accommodations that you can rent? The third question is about the selling price of HDB flats. I do not want to take up too much of hon. Members' time, but here I just want to quote a very simple thing. The majority of applicants on the waiting list for HDB flats are applying for 3- and 4-room flats. This category has the largest number of people. Out of 110,000 people on the waiting list at the end of last year, 38,561 people have applied for 3-room flats and 42,490 applicants applied for 4-room flats. So for the 3- and 4-room flats, the total number of applicants is 80,000 out of the 110,000, which is an overwhelming majority. How much does the HDB sell its 3-room new generation flats in the Inner Suburban area, i.e. in the New Town in Tampines, Bukit Batok, Jurong East, Jurong West and Upper Hougang? These are the areas where the majority of HDB flats are now being built. The construction cost of a 3-room new generation flat is $35,000 to $38,000 per unit, excluding land cost, architect's fees and the finance required during the period of construction. And what is the selling price of these 3-room new generation flats? It is $30,900, Construction cost paid to the contractor is $35,000 to $38,000, excluding land cost. This is just the construction cost. The selling price is $30,900. Is this profit-making that HDB has to cook up the accounts to fool the people? As for the 4-room new generation flats, the construction cost is between $50,000 and $55,000, depending on how deep is the piling and so on, in the Outer Suburban zone. The selling price of a 4-room new generation flat is $47,300. In other words, we are selling the 3-room and 4-room flats built in the New Towns at below the construction cost. Do not argue about the land cost. Do not argue about other things. So as a housing authority which is selling 70% of the flats at below the construction cost, let me just put a simple question: is this not a subsidy? If not, what is a subsidy? The Government is selling flats at such a low price and it is losing money in service and conservancy charges. The Government is renting out flats very cheaply to the people. Is it necessary for the Government to cook up the accounts so that HDB can hide the profits? Anybody who is mentally not confused will be able to know that the sale of flats is heavily subsidized. The provision of service and conservancy charges is again subsidized. The rental flat is subsidized. It is totally not necessary for HDB to cook up the accounts to hide anything. For the construction cost, you can go and ask HDB contractors what is the construction cost. This is an open book. There is nothing to hide. In fact, the flats built by HDB are at the lowest possible price. A lot of contractors do not want to take HDB contracts because the price is too low. So it is totally unnecessary for HDB to cook up the accounts because there is nothing to hide. In fact, HDB would like to make known its accounts to everybody so that the people know the extent of the subsidy given by the Government. The hon. Member has kept harping on this old accounting system because he knows that the HDB has followed the old SIT accounting system and which at present the Auditor-General has asked us to change the accounting system. As Members know, HDB has the biggest allocation of $3,162 million by the Government. This is the amount which the Government is giving to HDB for housing. We have the biggest allocation. When a political party with $18.47 has great difficulty in presenting its accounts, certainly the Secretary-General of that particular political party should be the first to know that when a sum of $3,162 million is involved - which is how many times $18.47 - it requires a lot of effort to switch the accounting system so that the people will not be inconvenienced. 4.45 p.m. We can switch the accounting system overnight but everybody will get confused. A person may get five bills asking to pay for the same account. So we must switch the accounting system in such a way that no inconvenience is caused to 75% of the population living in HDB flats. In fact, the HDB has nothing to hide. If the hon. Member believes that we have broken the law - I am quite sure our Singapore Government system is based on the rule of law - if we have done anything against the law, action will be taken against us, including the Minister. The Minister is not above the law.