Mr. Speaker Sir, I rise to support the motion.

The President has outlined his vision for Singapore –“secure and prosperous, harmonious and cohesive – a country that Singaporeans are proud of, and love, and that other nations respect and admire”. Such a nation must first get its fundamentals right – to be able to feed, clothe and house its people properly, to be able to educate its children, to take care of the less well off, and most importantly, to be able to generate the wealth to do all of the above. Sir, I join this debate to talk about one fundamental aspect – public housing, and how it has a key role to play in realizing this vision, just as it has played a key role in our nation building ever since independence, 41 years ago.

WHERE WE ARE TODAY

2. Members who are old enough may remember the Singapore of the 50s and 60s, where many families, including many of us, lived in overcrowded squatter colonies without electricity or proper sanitation, and which were prone to disease and fire. The challenge then for the new PAP government was to build as many HDB flats as quickly as possible, to get these families out of the slums and into proper housing. They did not care whether they had lifts on every floor or covered walkways. They just wanted basic amenities like running water and electricity. And the PAP delivered.

3. Our public housing programme has exceeded beyond all expectations. Today, more than 8 out of 10 Singaporeans live in HDB towns and estates across the island. More remarkably, 95% of all HDB residents own their flats. We have the world’s highest home ownership rate. It is something that many countries respect and admire. By providing a physical stake in the country, our home ownership programme has strengthened our sense of belonging to Singapore. It has made Singapore citizenship means something, something tangible, something to fight for.

4. A typical HDB estate is a microcosm of Singapore society, where Singaporeans from all walks of life and ethnic groups live, work and play. HDB living is a shared experience that has become an emotional reference point for Singaporeans. We eat in neighbourhood coffee shops and hawker centres, watch our children play in precinct playgrounds, and walk or jog in neighbourhood parks. We also share the frustration of inconsiderate neighbours who insist on hanging their dripping mops above our freshly washed clothes, or neighbours who decide the lifts are also public toilets. When young couples say, “let’s register for a HDB flat …” Singaporeans know exactly what they mean. If you want to feel the pulse of Singapore, go to the HDB heartlands. There is truly where the Singapore heart beats.

5. Home ownership has also provided Singaporeans with a valuable asset. According to a Department of Statistics study last year, on average each HDB households has a net equity $154,000 (i.e. assets net of outstanding loans) in their HDB flat. As the President pointed out in his speech, public housing is one of the three key pillars of social security system. It is a major transfer of wealth from the state to our citizens, to share the fruits of growth so that no one feels left behind. As a result, HDB residents have a valuable asset that they can cash out of in times of need.

REAFFIRMING OUR COMMITMENT TO HOME OWNERSHIP

6. As we stand at a turning point in Singapore’s development, I want to reaffirm the Government’s commitment to the home ownership policy as a key pillar of our public housing programme. The Government will continue to support and subsidize home ownership for eligible Singaporeans. This will contribute to the building of a Singapore that is “secure and prosperous, harmonious and cohesive”.

7. How will we do this? By continuing with the three-pronged approach that has served us well: one, ensuring affordability of HDB flats; two, promoting social mobility; and three sustaining the quality of the living environment in HDB towns.

Affordability

8. First and foremost, affordability of flats. The Government will ensure that HDB flats remain affordable to 90% of all Singaporeans. HDB will offer new HDB flats at heavily subsidized prices to eligible first-timers. Those who choose to buy a resale HDB flat will enjoy a CPF Housing Grant of $30,000 or $40,000. On top of that, HDB will also provide loans to first-time buyers at a concessionary rate to help them buy HDB flats.

Building of Smaller Flats / Building Plan for 2007

9. In 2004, HDB resumed building new 3-room flats to provide Singaporeans with a choice of smaller flats. In March this year, I announced that HDB would start building new 2-room flats to provide even more affordable housing options for low-income families. These flats are priced so that they are affordable to households, earning about $1,000 per month. This is roughly equivalent to the 10thpercentile of households

10. To date, we have offered for sale about 200 new 2-room flats in Sengkang and Jurong West. The response has been very good. About 95% of the 2-room flats offered in Sengkang have been sold, and HDB has received more than 200 applications for the 100 2-room flats offered in Jurong West. In view of the good demand, HDB will proceed to build more of such flats.

11. For 2007, HDB plans to launch about 4,000 new HDB flats, half of these flats being 2-room and 3-room flats, and Studio Apartments.

Additional CPF Housing Grant

12. To specially enhance the affordability of low-income families, we introduced the Additional CPF Housing Grant (AHG) in March this year. First-timer families earning up to $3,000 a month can enjoy an additional grant of between $5,000 and $20,000. The grant is given on the condition that applicants have worked continuously for a minimum of two years. What we are saying is, “If you are already trying your best but still need a little help to buy your first flat, the Government recognizes this effort and will help you achieve this goal.”

13. I am happy to note that the scheme has benefited about 1,500 families to date. I expect more to do so in future.

14. By building more affordable flats and by targeting additional subsidies to those who need it, more low income families will be able to become home owners. We will continue to monitor the situation and we can adjust our policies to keep our promise that 90% of our people will be able to afford to own their own flats.

Social Mobility

15. Next, social mobility. HDB’s policies promote social mobility. Citizen families upgrading to a larger flat will be eligible for further housing subsidy in the form of a second concessionary loan. A recent Department of Statistics (DOS) study on the housing mobility, which traced the movement of Singapore resident households in the 10-year period between 1995 and 2005, showed that 350,000 households changed residence during this period. Of these, more than 60% upgraded to a larger house type. This trend was particularly evident among the smaller flat owners, the 1- to 3-room households. Over 80% of them upgraded to larger house types. This clearly shows that our policies on social mobility have had an impact.

16. To provide more housing options for first-time flat buyers and upgraders, we have introduced new forms of HDB housing. For example, we introduced the Design, Build and Sell Scheme (DBSS) recently. Under this scheme, a private developer undertakes the entire public housing development process, from bidding for the land, to the development of the flat, to the sale of the flats at market prices. The developer of the pilot DBSS project has chosen to market their flats with premium design and features. The response to the project was overwhelming despite the higher prices.

17. Given the demand, HDB is considering releasing more sites for DBSS projects.

Financial Prudence

18. At this stage, I need to sound a word of caution. While we encourage social mobility, we must also ensure financial prudence, so that homebuyers do not end up overstretching themselves when they commit to a flat purchase. It is no use to buy a flat when you cannot keep up with the mortgages. For the HDB flat to be a sustainable and meaningful investment, the buyer must be able to service the mortgage so that he can hold on to the flat over the long term.

19. HDB has implemented various measures to encourage financial prudence. For flat buyers taking HDB loans, they are subject to credit assessment and financial counseling. From 1 Jan next year, HDB will require flat buyers to produce either a HDB Loan Eligibility Letter (if they are taking HDB loans), or a Letter of Offer from the banks (if they are taking a bank loan) before they commit to the purchase.

20. There are also households who have downgraded to smaller flats because of financial hardship. While I empathize with their difficulties, I am heartened that they are being financially prudent and practical in doing so. For deserving cases, I have asked HDB to exercise maximum flexibility in acceding to appeals for an additional concessionary loan to buy the smaller flat.

SUSTAINING THE QUALITY OF LIVING ENVIRONMENT IN HDB TOWNS

21. Third, HDB will sustain the quality of the living environment of Singaporeans through the systematic rejuvenation of HDB towns through the many upgrading schemes we have - MUP, LUP and SERS. This way, the value of Singaporeans’ investment in their HDB flats will also be upheld.

22. The Government has a mission to develop our city into a distinctive, global city with a quality living environment. Within the next five to 10 years, Marina Bay, Orchard Road and Bras Basah/Bugis areas will see a slew of new developments that will drastically transform these areas.

23. Beyond the downtown areas, a quiet transformation has taken place in HDB estates over the years, as a result of. HDB’s upgrading programmes. The programmes have made quantitative and qualitative improvements to the living environment.

24. They are very expensive programme, costing the Government some $7 billion so far. But it is worth doing, because these upgrading programmes ensure that our older HDB estates do not fall behind the newer ones in terms of facilities and amenities, and this is something we want to avoid.

25. The transformation in our HDB heartlands is no less exciting than what is happening in the city. For example, Toa Payoh has become a vibrant hub of Central Singapore and given a new lease of life. Crowds throng the new mall to shop over the weekend, or to audition for the Singapore Idol contest. The estate has been rejuvenated with new and upgraded flats, which attract younger residents who in turn help to revitalize the town.

26. HDB will be drawing up comprehensive rejuvenation plans for other estates, taking into account their residents’ profiles, the age of the estate and existing facilities. Regardless of whether the estate they live in is old or not so old, residents will have something to look forward to. We intend to do a makeover, and in some cases, an extreme makeover to our housing estates. Our ultimate goal is to redefine the living experience for HDB residents. This will be the next major phase of the development of our public housing programme.

27. Sir, in implementing the upgrading programmes, we will pay particular attention to the needs of our elderly residents. The aim is to make the HDB living environment conducive and comfortable, so that they can be encouraged to remain healthy, active and involved in their communities.

28. The upgrading package for senior citizens consists of several components: LUP, Barrier Free Accessibility (BFA), and Universal Design (UD). Last but not least, to ensure our senior citizens keep fit and healthy, we will be introducing more senior citizen fitness parks.

29. The most important component is LUP. It improves mobility for the elderly and keeps them connected to the community. That is why the Government has stepped up the LUP, with the commitment to extend lift access to every floor of all eligible HDB blocks by 2014. I am pleased to inform Members that the programme is progressing on schedule. I expect that by the end of this financial year, about 65% of all the eligible blocks will be selected for LUP.

30. The Government has also committed to achieve Barrier Free Accessibilty (BFA) in all HDB estates by 2011. To do this, HDB is working closely with other agencies such as Town Councils, NParks and LTA. The aim is to enable our senior citizens to move about with ease within their blocks, and around their estate.

31. A pilot project was carried out in Bukit Batok East, and feedback from the Adviser and the residents was very positive. I encourage other Town Councils to draw up similar plans for their precincts for the benefit of their residents.

32. To make our new flats more user-friendly for the elderly and the physically handicapped, HDB has adopted a new standard of design called “Universal Design” (UD). UD features include wider corridors to facilitate easy wheelchair movement, step-less interiors, and accessible and easy-to-use switches.

33. Finally, to encourage senior citizens to exercise regularly and stay healthy, we have introduced senior citizens fitness parks, equipped with special exercise machines. I was in Shanghai a few years ago, when my wife and I were taking a walk early one morning and we saw many elderly Shanghainese happily exercising in their public parks. They all looked so fit and healthy. When I came back, I decided to build one for my residents in Tampines. HDB told me that they could not fund it, as it was not a standard item. So I raised my own funds, and here I must acknowledge the contribution of Lee Foundation and Tsao Foundation. It was huge success. People from Pasir Ris, Bedok and even Hougang came over to use it. Since then, we have installed such parks in many other HDB estates. And we will do more for the benefit of our senior citizens.

ESTATE UPGRADING PROGRAMME (EUP) FOR PRIVATE ESTATES

34. Complementing the upgrading efforts in our HDB estates, we have also been upgrading private residential estates since 2000 under the Estate Upgrading Programme (EUP). To date, 23 private estates have been selected for EUP, including Serangoon Gardens, Thomson Gardens and Sennett estate. The works involve improvement to footpaths and lighting, upgrading of neighbourhood parks, fitness corners and playgrounds, as well as connectivity and accessibility of the estates. We expect to do more of these and we will announce the selected private estates for the next EUP batch in early 2007.

MEETING THE CHALLENGES OF TOMORROW

35. In implementing our public housing programme to pursue the goals that I have highlighted, we are also mindful of the challenges we face.

36. First, we have to be prepared for an ageing population. Second, we have to help the lower-income to move forward together with the rest of society amidst the economic pressures of globalisation. And third, we can build cohesive HDB communities as part of an inclusive society.

Elderly

37. Let me first touch on the challenges of an ageing population. By 2030, 1 in 5 Singapore residents will be seniors aged 65 and older.

38. One of the biggest worries in their retirement years is financial security. That is why we have put in place several measures to help the elderly monetize, or unlock the value in their flats, to enjoy a comfortable retirement.

Monetization

39. I mentioned earlier that the average HDB net equity is about $154,000, after deducting their mortgage loans. One way to unlock this value is for elderly lessees to sell their flat, and buy a Studio Apartment that is purpose-built for the elderly. Alternatively, they can downgrade to a smaller flat, such as a 2-room flat. By moving to a Studio Apartment, an elderly household will have about $80,000 in cash and CPF proceeds, assuming they sell a 3-room flat to supplement its other income.

40. HDB’s Studio Apartments have been very well received. Close to 95% of the 1,200 units offered to date have been taken up. In September this year, HDB started offering Studio Apartments in Bishan. The response for this project has been overwhelming, with about 1,000 applications received for the 176 units launched.

41. To allow more elderly households to stay in our Studio Apartments, HDB will launch more Studio Apartment projects. We will also incorporate Studio Apartments as part of SERS replacement flats. In this way, we can roll out the Studio Apartments at a much faster pace.

42. Another option for the elderly is to move in with their families for mutual care and support, and to either sell their flats, or rent them out, either wholly or partially. Since 2003, HDB has progressively relaxed its rules to facilitate the subletting of whole flats. To date, about 12,000 flat lessees have done so. Today, a 3-room HDB flat can fetch an average monthly rental of about $1,000. Those who wish to continue staying in their flats can also choose to rent out single rooms at about $250-$500 per month to supplement their monthly income.

43. There is also the option of committing one’s flat to a reverse mortgage. Since March this year, HDB has relaxed its regulations to allow the elderly to do so. Although not many have chosen to take up the reverse mortgage scheme, as they are relatively less familiar with it, this is another option for them.

44. Ultimately, our objective is to put in place a whole range of housing options for the elderly to support a comfortable and meaningful retirement. Each elderly household can then decide how best to unlock the value in their flat, based on their own lifestyle needs and preferences. It is just not the CPF value alone; do not forget the value that you can unlock in your HDB flat. If we can have residents think about this, many of them can have a comfortable retirement. Let us have the options on the table for them to choose.

45. Between January 2003 and June 2006, some 18,000 HDB households with at least one lessee 50 years or older have chosen to monetize their flats by selling or subletting them. We will monitor the take-up rates of the various options, and refine our policies further where necessary to support them.

HELPING THE LOW INCOME

46. While globalization will be a boon for many Singaporeans, some households may find it increasingly difficult to cope. So one of the priorities of my Ministry is to help these low-income families cope in a sustainable way.

47. I have spoken about the measures that we are putting in place to ensure that home ownership remains an attainable goal for those in the low-income group.

More Help for those who need Rental Flats

Increasing Rental Supply

48. However, we do recognise that in every society, there will be some among the lower income group for whom home ownership is not a viable housing solution. In recognizing that, HDB currently provides heavily subsidised rental flats.

49. To further extend our help to such needy households, HDB has decided to increase the supply of subsidised rental flats. Currently, we have about 40,000 rental flats in stock. We believe the demand for such rental flats will increase and I have asked HDB to increase the supply of such flats. For a start, HDB plans to convert some of its former 3- and 4-room rental blocks at Boon Lay and Woodlands into about 1,000 units of 1- and 2-room rental flats. HDB will also build new rental flats starting with around 1000 units in the next few years. Our new rental flats will be sited in both mature and new estates, to ensure a balanced social mix across our housing estates and to afford some choice of location to rental applicants.

50. Alongside the Additional Housing Grant and the building of 2-room and 3-room flats, this increase to our rental capacity will form part of the spectrum of housing assistance that we are putting in place to provide targeted special assistance for the less well off in our society.

51. We cannot adopt a one-size-fits-all approach in providing accommodation subsidies to the low-income families. While some need a little encouragement and financial boost to own their own flat, others may have to depend on subsidised rental flats as their only option.

Ensuring Rental Subsidies are well targeted

52. HDB’s rental flats are very heavily subsidized. Households earning below $800 a month currently pay a monthly rental of $30 for a 1-room flat, and $60 for a 2-room flat. How heavily subsidized are these flats? Just to give you an indication, recently, one household was found to have illegally sub-let his 1-room rental flat for $500 a month.

53. The incomes of rental tenants do not remain static. They do improve over time. This is a good sign. There is a household who has stayed in one of our 2-room rental flats since 1986. Their household income had risen from $700 per month at that time to almost $5,000 today. This is indeed a desirable outcome, and we are happy for them. But we also need to ensure that those who are ready for home ownership do not overstay in their rental flat. They should be encouraged to move on and not deprive more needy households of a rental flat.

54. Therefore, to ensure that our housing subsidies are targeted at those who need them most, we will align our rental rates to household income. For the tenants whose household incomes have grown through the years, their rates will be adjusted to take into account their higher incomes. In this way, we hope to encourage them to move towards owning their own flats, with help from the Additional Housing Grant and other subsidies if they eligible for them.

55. Even as the Government is committed to help the lower income, we are faced with a dilemma --- how many times should we subsidise them? How much help is enough? Some of the rental tenants have previously sold their subsidised flats, sometimes more than one, and made substantial cash profits. We have decided, in the interest of equity, that new rental tenants who have previously sold one or more subsidised flat will pay higher rates, taking into account the fact that they have benefited from an earlier housing subsidy.

56. I would like to assure the House that over 80% of our existing tenants, including all those with monthly income below $800, will not be affected by this rental rate alignment exercise and will continue to pay their current low rates. More details will be announced by HDB in a few days’ time.

57. I want to stress that the aim of this exercise is not to recover cost, but it is to avoid abuse of Government subsidies, which are meant for the lowest income. In this regard, I want to highlight that some Singaporean families should not think of subsidised rental flats as a cheap place to dump their elderly parents. This is an abuse of Government subsidies meant for the needy, and a misguided approach towards fulfilling their responsibilities towards their parents.
58. In one recent appeal to HDB for a rental flat, the children offered to hire a maid to stay in the rental flat to look after their parents, who are in ill health. Sir, I encourage families to have their elderly parents stay with them as far as possible, for mutual help and support. Similarly, extended families should turn to one another for help in times of hardship. In this way, we can keep our heavily subsidised rental flats for those who are really in financial hardship and who have no alternative in housing options.

BUILDING HDB COMMUNITIES

59. Next, I will talk about the challenge of building inclusive and cohesive HDB communities. An inclusive Singapore society needs inclusive communities within our HDB towns.

60. Over the years, we have paid special attention to ensure that our HDB estates are suitable platforms upon which we build an integrated and cohesive community. We have implemented policies such as the Ethnic Integration Policy. We have shaped the physical environment through the provision of communal facilities such as void decks, playgrounds and RC centres. We are not just building HDB flats but a lot of thoughts have also gone into the building of community space.

61. The President has spoken about the challenges of globalization, the ageing population and a new generation of Singaporeans with higher expectations and with views that they want heard. In the light of these structural changes, it is timely for us to review the state of community building and consider new initiatives to strengthen community ownership. We must ensure that the HDB living experience continues to be glue that bonds Singaporeans to their country and to their fellow citizens.

62. Therefore, I have asked my Minister of State, Ms Grace Fu, to lead a public consultation exercise with a group of MPs over the next few months to see how we can better build HDB communities. I hope Singaporeans of all walks of life can come forward with ideas on how we can strengthen rootedness, community ownership and mutual support in housing estates.

CONCLUSION

63. Mr. Speaker, Sir, the vast majority of Singaporeans have benefited from our public housing programme over the last 40 odd years. Our home ownership programme has not only successfully housed a growing nation, but it has also strengthened social cohesion and provided Singaporeans with a valuable asset for their retirement.

64. We will build on this strong foundation. We will upgrade our flats, build cohesive communities, rejuvenate our estates and transform our city - to create a Singapore that is secure and prosperous, harmonious and cohesive.

65. The Government will work together with all Singaporeans to make this a reality. I am confident that together, we can build a Singapore that we will be proud and love to call home --- for ourselves, our children and all others who share our vision.

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