MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE - FINANCIAL YEAR 1ST APRIL, 1987 TO 31ST MARCH, 1988
Mr Chairman, Sir, can I take the points made by the Member for Bo Wen first? He asked for an assurance that in the relocation exercise sufficient consideration will be given to old people who are used to living in a particular area and who may suffer disruption if they are moved to areas far from where they are living now. Sir, we are aware of this problem and HDB will try its best to relocate those who are now occupying 1- and 2-room rental flats which are due for demolition to relocate them as close as possible to where they are now. But we cannot give an assurance that this can be done in all cases. In a total context of this relocation exercise, we have enough flats to relocate all those who cannot afford to buy flats. The HDB estimates that 50% of the tenants who are now the subject of relocation will purchase flats and the other 50% will have to continue renting. Over the period that the relocation would take place, it appears that we will have enough flats to house all those who cannot purchase flats. The problem is whether they can get a new rental flat in an area that they desire or prefer. I think this problem will have to be tackled constituency by constituency or area by area and it is difficult to give an overall answer that everybody will be satisfied. But the general principle is quite clear. We will try our best. But because of the location of the flats that will remain on a long-term basis, it may not be possible to rehouse everybody in their desired locality. I have asked the HDB to be very flexible in this relocation exercise and not implement the programme according to the initial concept without regard to the problems that arise during the course of the implementation. So the HDB will be quite flexible. They will assess the impact on the people concerned and try as much as possible to minimize the problems of relocation. The Member also brought up the question of the over-supply of 3-room flats. I think in an answer to a question for oral answer, I gave details of the number of flats that are completed but unsold. In that answer, I indicated that on an overall basis we have 60,000 applicants on the waiting list as against about 22,000 completed but unsold flats. But when you look into the details and compare the number of applications against the number of flats available, Members would have noted that we do have at the present moment an excess of 3-room and 4-room simplified flats. And I explained the reason why we have ended up in this present position, because the construction programme started before the change in demand pattern. Although the HDB has been constantly reviewing the supply or the construction of flats to keep it as close as possible to demand for the different types of flats, it has not been possible to completely match supply with demand. Applicants change their preference from area to area, some of them even upgrade, some downgrade and some reject flats even in the areas that they requested for. I mentioned that in order to ensure that supply would match demand more accu- rately, HDB will have to look into a system whereby applicants will be asked to give more firm commitments on the area that they want their flat. It is true, as the Member pointed out, that resources are locked up. It is more than a billion dollars. The 3-room and 4-room simplified flats alone account for close to a billion dollars. The HDB has taken various measures to encourage applicants to purchase these flats, especially those in the new towns. For a start, of course, HDB has stopped building the 3-room and 4-room simplified flats and so we have to deal with the existing stock as well as 3-room flats which will be sold to the HDB or sold to the others as a result of HDB residents upgrading. There are still 80,000 tenants in rental flats. Even if half of them, as I said just now, were to purchase flats, there is a potential 40,000 buyers there. Special incentives are being given to these residents in rental flats to upgrade themselves and buy flats. I am told that in the last two months, 5,000 applications have been received by the HDB from the 1- and 2-room rental flats. The HDB will continue to persuade applicants to take up flats in the new towns such as Yishun, Tampines, Pasir Ris and Chua Chu Kang. And as there are plans to improve the transport network including MRTC to these new towns, I think that we should get an increase in applications for flats in these new towns. It has always been the experience of HDB that every time a new town is built, it is difficult to get people to go there. I can remember long before Toa Payoh and the other new towns were built, it was difficult to get people to go to Queenstown because it was considered as too far. So it was with Toa Payoh when Toa Payoh was first built. So it was with Ang Mo Kio when it was first built. Somehow or other, people never seem to learn. They hold back and then when they are prepared to go into the new town, they find that all the flats around bus services or the town centre have been taken up. So I would urge those who are being offered flats in new towns to accept them and perhaps suffer minor inconveniences in the initial stage because of lack of transportation and other infrastructure. But in time to come, these new towns will be fully supplied with all the transportation and other facilities and they will be able to enjoy the facilities and amenities that fully matured new towns enjoy now. Regarding the urban renewal policy, the Member made the point that perhaps the private sector should be given a greater role. The URA is well aware of this. In fact, URA's plans, especially the conservation plans, for the city cannot be achieved without an active role and commitment by the private sector. 75% of the identified conservation areas are owned privately. And URA strategy is to encourage as much private initiative as possible, recognizing that this is a practical way of tapping the resources and expertise in the private sector. Detailed guidelines for such conservation will be drawn up by URA for each area in the same way that such guidelines were drawn up for Emerald Hill and Boat Quay shophouses along the Singapore River. There should therefore be plenty of opportunities for the private sector to be involved in the conservation projects. But one must realize that in many areas, private owners may face difficulties in undertaking projects, eg, where ownership is fragmented or where properties are subject to rent control and they cannot get rid of existing tenants. Where the Government feels that the private sector is unable to proceed and there is urgency for action, the acquisition may be necessary as a last resort. The URA sees its role not as one of just acquiring and doing things itself. It sees its role as a facilitator in this process of conservation. So it will identify conservation areas, draw up overall plans for these areas. It will initiate projects in areas where the land is owned by the Government. It will provide infrastructure like pedestrian malls and plazas where the private sector can develop the adjacent plots, and it will provide general guidelines for the private sector for such conservation activity. The Member then spoke on Town Councils. The Member is right. The Town Council is not purely a maintenance manager of the area. He said that Town Councils should have the opportunity to participate in certain decision making, especially regarding improvements in the neighbourhood. That will certainly be one of the areas where Housing Board would work closely with the town council. But as to whether the town council should be involved in the development of reserved sites, that is an area which I think requires further consideration. Reserved sites are quite often sites which are left undeveloped for some future use and there are also empty lots in some of the new towns because certain demands will only arise when the town becomes more mature, when more people move in. It is not as if a new town is developed completely with all the facilities and then the town council takes over. In such a case, of course, any reserved lots or empty lots may be given to the town council to develop. So I think this is a little more complicated. But the general principle that HDB should work closely with the town council in providing certain facilities in the area is accepted. I think this will be followed. As to whether cross-subsidy should be allowed, this again is quite a complicated and complex problem. At present, as I understand it, HDB allocates to the town council certain funds for particular areas of activity. For example, funds are given maybe for maintenance of commercial areas or industrial areas and so on. At least during the pilot stage we want to establish what the town councils can do within the limited funds that they are given. One factor to bear in mind, of course, is that town councils will be under tremendous pressure from the residents to do all kinds of things and very often you find that those who are the lessees of the shops or the industrial buildings are not necessarily the residents or the voters in that particular area. I certainly have some reservations about allowing complete cross subsidy because when the pressures are put on the town council the chances are that those who do not have the vote in the constituency may rank last in priority for the town council. So at least during the pilot stage we want to make a proper assessment of what would be required for different types of activity which the town council would be responsible for. The present pilot stage must be treated very much as a learning stage. The general policy is very clear. We want to try and give the maximum that we can to a town council to do the things for the residents in their area. It is not that we want to yield the minimum. That is not the approach. The approach is to try and give the maximum. I think during the period of the pilot stage we can discuss these things and try and arrive at a solution that will keep everybody satisfied. Things like opportunity to invest funds, these are all matters of detail which I think we will have to look into. Regarding the service that HDB provides, the Member said that HDB should not charge exorbitant rates. Well, HDB will charge what they think are reasonable rates. But one of the purposes of the town council is precisely this. That if the town council feels that it can get somebody else to provide a service, whether it is consultant service or any other kind of service, at a lower price than what HDB can provide, then the town council should be free to make use of such services. This will mean not only that the town council would be able to get the maximum for whatever funds that it has, but it will also mean that the HDB will have to be on its toes. So for the question of exorbitant charge, there is always a way out. If there is an alternative cheaper way of doing it, by all means the town council should be allowed to pursue this alternative and cheaper solution to the problem. Terms of staff of the town council, this again is a matter of detail. We will have to look into this how the staff in the town council should be employed, what terms and conditions, who should employ them, what continuity of tenure they will have and so on. I think these are all matters that we have to discuss further during the pilot stage. I now come to the points raised by the Member for Potong Pasir. He wants to know what is the unit cost per flat. This will certainly depend upon where the flat is, what is the cost of the land, what is the cost of construction. It varies from area to area, block to block. It depends whether the block stands on good ground which does not require piling or whether it is on a former swamp which required a lot of piling. It is not possible for the HDB to publish, as I told the Member for Paya Lebar, so detailed an account in its annual report that anybody opening the account would be able to find out exactly how much his flat costs. It is just not possible to do that in a report. It does not mean that the HDB does not have the costs. But it is not possible to publish it for general information. I have already stated that we will consider whether some broad categories can be made public, but I will have to discuss further with HDB on this. It is very clear from the accounts that have been presented that there is a subsidy. Whether the Member for Potong Pasir agrees with the definiton of the subsidy is beside the point. When somebody gets something below what is available on the market, that is a subsidy. It must be so. It does not mean below cost. Suppose an oil-producing country sells us oil at $8 a barrel, will we say, "Well, the oil comes almost free from the ground and therefore you are not doing us a favour"? When that same barrel can fetch $18 per barrel? That cannot be so. As long as HDB's price per flat is such that it cannot recover the market price of the land, it is a subsidy. It must be so. After all, the Government is the steward of the property of Singapore, and it cannot say, "Well, just because a particular piece of land was obtained free because it reverted to it after 99 years, therefore anything that is built on the land must have land cost attributed at zero." That certainly cannot be the case. So based on market price of land, HDB flats are subsidized to the tune of $1 billion that I referred to in the accounts for the year ending March 1986. HDB does not acquire land. The State acquires the land. HDB is a mere agent acting on behalf of the State. Previous to 1986 the land which the State asked the HDB to acquire on its behalf was left in the HDB, which I think was an error. State land should be vested in the State and the State should then allocate the land for different uses to different Ministries depending upon the needs and the reasons that the Ministries can give to justify the use of the land. So all the land is now vested in the State. HDB has to buy the land from the State as and when it wants to build flats. As and when it requires, it obtains it, or it buys it at market price. But it sells the flats at prices which do not recover the cost of the land, and the difference is the subsidy. It is $1 billion in 1986. I think it is very simple, very plain. Even the Member himself, I am sure, will agree. As I said just now, if he has a house and he sells it to his brother at $100,000 and the market price is $250,000, and the brother says, "Well, it cost you only $20,000 20 years ago, so you are making a profit of $80,000," I do not think the Member is going to be very pleased. After having done such a big favour to his brother, the brother comes round and tells him, "Well, you made a profit of $80,000 from me." As long as assets are being sold at less than market price, it is a subsidy. It is a special favour. Town councils, well, I have already given my answer to the Member for Bo Wen. But I do note that the Member for Potong Pasir seems to be getting cold feet because it appears that he is afraid to take on the responsibility of managing his own area.