HOUSING NEEDS AND EXPECTATIONS

1. Sir, let me continue where I left off on Saturday, by addressing Dr Teo Ho Pin's concern about promoting family members' desire to stay close together. I agree with Dr Teo that this is a worthwhile objective. That is why HDB provides a higher housing grant for couples who buy resale flats near their parents. Further, In our balloting exercises for flats in mature estates, applicants hoping to live near their parents also enjoy a higher probability of success. As a result of such pro-family measures, HDB estimates that around 40% of HDB residents with married children live with their married children or within the same estate, based on the findings of a survey HDB did a few years ago.

2. Dr Michael Lim and Dr Amy Khor suggested introducing shorter tenures for HDB flats so as to enhance affordability. Firstly, I should point out that, even with 99-year leases, HDB flats are already affordable. As I had mentioned on Saturday, the typical 4- and 5-room flat applicants in 2001 needed to use only about 15% of their household incomes for their monthly mortgage instalments. Hence, there is no need to introduce shorter leases just to increase affordability.

3. However, we do have short leases for specific purposes, e.g 30-year leases for Studio Apartments for the elderly. Question is whether we want to expand this to other flat types. One of our fundamental objectives in public housing is to encourage home ownership. If we shorten the lease significantly, the flat would, as some Members have pointed out, essentially become a consumption item. How different would that then be from rental housing? Would that not run counter to our home ownership objective? Are HDB flats with short leases acceptable to the public? These are some of the issues that have to be considered.

4. A few members have highlighted that we should pay greater attention to the housing needs of singles. Sir, let me remind members that public housing is subsidized housing. The subsidies are justified because it promotes social objectives which are in the public interest. Racial harmony, social cohesion, family values. That is why public housing comes with many rules and regulations. We try to keep such rules to the minimum. Even then, I must admit that they can be quite bewildering. However, I wish to assure the House that they are necessary. Coming back to housing for singles, let me state upfront that our public housing policy is pro-family in orientation, to support the Government's social objective of promoting family formation and bonding. At the same time, we also recognize that single citizens have housing needs, and have made valuable contributions to our society and economy. That is why we have reviewed the rules to allow singles aged 35 and above to buy 3-room resale flats on their own. Contrary to Ms Indranee's claim that they are not eligible for subsidized housing, singles can apply for a housing grant of $11,000 when they buy their resale flat. If they can find another single to buy a resale flat jointly, they can get a higher grant of $22,000. Why the minimum age of 35? We had to have a cut-off, to be consistent with our pro-family approach. We do not want to inadvertently encourage singles to live away from their parents at an early age. We checked with other agencies and the advice was that marriage rates for singles tend to be much lower after this age, hence we chose 35 as the cut-off. Why are they eligible only for 3-room flats, and not larger ones? Sir, anyone who is familiar with a 3-room HDB flat, 70 sqm large, with 2 bedrooms, would agree with me that this should be more than adequate for the housing needs of a single person, particularly in land-scarce Singapore.

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5. Members have suggested allowing singles to rent HDB flats on their own. Our current policy is to reserve HDB's heavily-subsidised rental flats for lower-income families who cannot afford home ownership. Nonetheless, there are schemes in place to allow lower-income singles to jointly rent a 1-room flat. We do not encourage singles to rent HDB flats on their own, partly because of the limited rental flats available, but mainly because we want them to look first to their family for support rather than the State.

6. Mr Ang Mong Seng had suggested that we build HDB blocks purely for singles to encourage greater social interaction. Sir, many members in this House have asked for a review of HDB's role. Even while the review is going on, I can categorically say that HDB will not take on a role which others like SDU and SDS are better placed to play.

7. Let me take up a point which Ms Indranee and others have raised, that it is difficult to obtain a waiver of policy from HDB. Let me state at the outset that policies are set by the Govt. HDB is the implementing agency. Rules and regulations are put in place to support existing policies, and for good reasons. Nonetheless, as with all rules, there are always grey areas, at the margins, which is why we have mechanisms in place which allow HDB to exercise judgment and discretion on a case-by-case basis. Exceptions to the rule do take place, but these are not the norm. And it must be so. If this were not the case, then there must be something wrong with the policy, in which case we should change the policy. Policies are not cast in stone. Members may recall that the housing policy for singles was only recently relaxed less than a year ago, to allow the purchase of 3-room resale flats in all estates, including urban estates. We will continue to review and refine our policies when necessary. MPs sometimes raise specific cases in the House, on behalf of their constituents and to illustrate their point. Nothing wrong with that. However, I should point out that sometimes, there is often more to each case than what MPs are told, and it is only when HDB interviews their residents to see how it can assist them that more facts surface. My advice is: don't listen only to one side of the story before making up your mind.

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TIGHTER BUDGET: IMPACT AND REVIEW OF HDB FUNDING STRUCTURE

8. Let me now go on to the other areas of review. The budget landscape for the Government in future years will not be the same as before. Our public housing expenditure will have to adjust according to what the Government can afford. In the past five years, we spent an average of 1.1% of our country's GDP, or more than $1.5 billion annually, on our public housing programmes. This included HDB upgrading programmes, subsidized flat prices and housing grants. In the future, we will need to be more prudent and efficient in the way we spend the public housing budget.

9. As a start, we have already embarked on a review of the way our public housing budget is managed.
We will be looking at all options pertaining to the financing of HDB flats, taking into account, amongst other things, our budgetary and financial position.

RESTRUCTURING OF HDB

10. We are also reviewing the roles and functions of HDB, in particular its role in the development of public flats. HDB has been spectacularly successful in building affordable public housing. The expertise and achievements of HDB in this area have won world-wide recognition. For instance, it was conferred the World Habitat Award in 1991 for the development of Tampines Town, beating strong contenders such as Vancouver and Boston.

11. Today, however, property development is a more mature industry. Recognising this, HDB has over the years, been gradually increasing the involvement of the private sector through, for example, its Premium Apartments. We can further increase private sector involvement to enable us to respond faster and better to changing housing demand and preferences.

12. As a first step, we are looking into the feasibility of corporatising HDB's Building and Development Division, or BDD. Since the inception of HDB forty years ago, BDD has accumulated a wealth of experience in the design and development of HDB flats. It has gathered considerable expertise in various areas, from surveying to architectural design, engineering and project management. It is especially strong in comprehensive township development.

13. MND and HDB are currently studying the implications of a corporatised BDD. A key consideration is to ensure that corporatisation does not have any adverse impact on the delivery of our public housing programmes. The benefits of corporatisation include giving give them the autonomy and flexibility to build on their current strengths, venture overseas and establish an external market, leveraging on the HDB brand name. It will enable them to unlock their value and potential, for they have a skill and track record that few organisations around the world have. At the same time, the public housing building programme can be gradually opened up to private sector developers.

14. Whatever the outcome of the review, let me reassure Members that there will be minimal impact on the public. We will ensure that the fundamentals of public housing are preserved. Singaporeans will continue to enjoy high quality housing at affordable prices.

15. At the same time, I would like to assure Mr Othman Haron and Mr S Iswaran that the Government appreciates the valuable contributions of HDB staff. They have given loyal and sterling service to HDB and to the public, and their interests will be looked after in the review.

CONCLUSION

16. Sir, I have announced some changes to our public housing policies and programmes. I have also outlined some of the key areas that MND will be addressing and the considerations that we will bear in mind. We will weigh the various options before us carefully, keeping in mind the impact that fundamental changes in public housing will have on Singaporeans.

Date: 20 May 2002

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