Source: http://www.mnd.gov.sg/newsroom/speeches/speeches_2010_M_05032010_COS02a.htm
Speeches
SPEECH BY MR MAH BOW TAN, MINISTER FOR NATIONAL DEVELOPMENT, AT COMMITTEE OF SUPPLY DEBATE, 05 MARCH 2010, 6:00 PM AT PARLIAMENT
SUPPORTING AN INCLUSIVE AND COHESIVE HOME, PART A
1 Mr Chairman, Sir, earlier, I talked about what HDB does for families looking to set up their first home. Let me focus now on some specific groups, namely the lower-income, the elderly, and PRs.
2 Housing for the low income
Helping people buy their flats is one part of the story. After buying, some people run into trouble. I spoke about the upstream measures to help manage this problem. Er Lee Bee Wah asked about downgraders and compulsory acquisition, and for HDB to have a kinder heart. HDB spares no effort in helping households find a long-term solution to their arrears problem. Right-sizing their flat is one key solution. I have announced changes to HDB’s loan policies to help families do so, and I believe that this will go some way to helping the low-income families, particularly those with financial difficulties to right-size their homes.
3 Compulsory acquisition only comes into the picture when all other options are exhausted, and households repeatedly ignore HDB’s efforts. So I can assure the House that HDB’s heart is in the right place. But sometimes I wonder if they are a little too compassionate. So much so that people do take advantage of HDB’s kindness. I have come across many cases where residents are in arrears for years, not months, with some as long as three to four years. And they still refuse to accept efforts to solve their problems, such as to rent out a room, to sublet their flats, to add family members to the flat to help service the loan, to encourage their spouse or children to work or children, or ultimately, to downgrade.
4 So it is not a matter of showing compassion, I think the compassion is already there. I think there needs to be some reciprocity on the part of the lessee. They need to be willing to make adjustments in their life, to change their lifestyle, to find a solution. It is not enough just to say that “I don’t want to move, I don’t want to downgrade, I don’t want to do this, I don’t want to do that. HDB should just allow me to stay on because I am in financial difficulties.” This is not a tenable solution and that is the reason why HDB had to deal with non-performing loans of close to 9 percent at one stage.
5 Today, with these upstream measures such as the HDB Home Loan Eligibility letter, credit assessment, as well as downstream measures like helping them to right-size, HDB has managed to bring the arrears situation down to around 7 percent, which is still very high. HDB does exercise a lot of compassion, and I am surprised to hear that the terminally ill case was being asked to quit. I am sure there is another part of the story, and I would be glad to look into it if the member would pass me the details. There could be another part to the story, because I do know for the fact that HDB does grant a lot of forbearance to such hardship cases, particularly when the hardship is through no fault of their own. So please be assured that the HDB will continue to be the housing authority with a heart, although there needs to be a response on the home owners’ part as well. I hope members will help to solve the residents’ problem, not just by asking for forbearance but also by coming up with long-term solutions.
6 Rental housing
Despite the generous help, there will still be families who cannot afford to own their homes. We will help those who are in genuine need, with no other housing options, through the provision of subsidised rental flats.
7 Mdm Ho Geok Choo asked if rental flats are going to the truly needy. Mr Teo Ser Luck also asked about supply, and the rental queue. I announced at last year’s COS debate that HDB will adopt a two-pronged strategy of increasing supply, while managing demand. I also explained that if I just increase supply and I do not manage demand, the queue will get longer, including the cases that some members have brought up in here. HDB revised the eligibility criteria for its Public Rental Scheme from Feb 2009. Besides an income limit, HDB now also looks at an applicant’s assets and whether he has family support, because income alone is not sufficient to assess whether that applicant really deserves it.
8 Mr Lim Biow Chuan suggests that strained family relationships should be considered for rental flat applications. The Government’s philosophy, which is embodied in various policies, not just housing, is that families must be the first line of support. Children, and not the government, should provide housing for parents, if they are able to. We do look at the flats that they own, whether they can take care of their parents. And in many cases, we find children living in five-room flats, four-room flats with spare rooms, even landed properties. For these cases, you cannot join the rental flat queue. Rental flats are heavily subsidized. And that is why the queue is long. We charged $30 or $40 per flat, and the flat is very comfortable, not like the old days. Everyone wants to join the queue. If we do not screen the applicants carefully, no number of new rental flats we build will be sufficient. Those who can stay with their families should not compete with the truly needy for these flats. For those who cannot get along with their families, or cases of family violence, we do exercise compassion. The Family Service Centre can provide counselling.
9 HDB is building 7,000 more rental flats over the next 3 years to increase its stock to 50,000. So by 2011, 2012, we should be having 20 percent more rental flats. This two-pronged approach has resulted in a 50% reduction in waiting time, from 21 months a year ago to 12 months today.
10 While this is good news, HDB’s efforts have not always been smooth sailing. Recently, HDB came under fire from some residents who were unhappy that new rental blocks were springing up in their neighbourhood. Their concerns are quite real. But I would appeal, too, for their understanding that we need to build these rental flats to meet demand; and that in land-scarce Singapore, give-and-take is often necessary to make space for the different groups in our society. I am heartened to note that this is a view shared by many other Singaporeans, judging by public reactions in the media and other forums.
11 Mdm Ho also asked if flat owners were told about the rental flats. Yes, surrounding residents were informed of construction works before they started. Some residents felt that having new rental blocks close by might block views or affect flat resale prices. Let me assure Members that as far as possible, HDB will minimise blockage and inconvenience from the rental blocks. As for concerns about resale prices, HDB’s data suggests that rental blocks alone do not affect prices. Many other factors come into play, including whether the block is undergoing upgrading, or whether there are new facilities coming up in the neighbourhood.
12 Unlocking value for the elderly
The next group of HDB residents I would like to touch on is the elderly. One of the benefits of owning a flat is that you have an asset that can provide for your retirement. So you have two valuable assets in your old age - your CPF and your flat.
13 The Lease Buyback Scheme, or LBS, was implemented on 1 Mar 2009 to allow elderly lessees to continue living in their flat and receive a lifelong stream of income.
14 Er Lee Bee Wah and Mr Teo Ser Luck asked if the LBS could be expanded. I am glad to announce that we will revise the criteria to allow more elderly lessees to benefit. Lessees who had previously owned 4R or larger HDB flats can now apply for the LBS. We have excluded these lessees in the past, and now we are including them.
15 We will also allow lessees with an outstanding loan exceeding $5,000 to apply for the LBS, so long as the amount available for the purchase of an Immediate Annuity is at least $60,000. This revision will allow 3,800 more elderly lessees to be eligible for the LBS. HDB will announce further details.
16 Singapore Citizen-Permanent Residents Balance
Mdm Ho Geok Choo, Dr Lim Wee Kiak and Mr Ang Mong Seng raised questions about PRs buying HDB flats. Let me reassure Members that Singaporeans will always come first. PRs here also need a roof over their heads. Hence, they are allowed to buy resale flats. If we do not allow them to buy resale flats, and private property is out of their reach, they have to rent. But they do not get any subsidies or loans from HDB, and they cannot buy new flats, which are reserved for Singaporeans.
17 PRs are long-term residents. They live, work, and study in Singapore. Their experience here is a major factor in whether they take up citizenship and we want them to take up citizenship. My Ministry will adjust our public housing policies to nudge them in this direction.
18 Currently, a PR married to a citizen can enjoy exactly the same housing benefits as Singaporean couples for homeownership flats. To provide an incentive for PRs to take up citizenship, we will withhold $10,000 of the subsidies for SC/SPR households (where one member is a citizen and one member is a PR) when they buy a HDB flat. This will also reinforce the principle that Singaporeans are our priority.
19 What this means is that if such a couple buys a resale flat and is eligible for a CPF Housing Grant, we will hold back $10,000. So if their grant previously was $30,000, their grant now will be $20,000. If it was $40,000 previously because they are staying hear their parents, they will now get $30,000. If they buy a new flat from HDB, they will pay $10,000 more, on top of HDB’s subsidised selling price.
20 Once the PR converts to citizenship, or when they have a Singapore citizen child, we will return the withheld subsidy. The full $10,000 will be refunded into their CPF accounts if they convert, or if they have a citizen child.
21 These measures will give greater assurance to citizens that they are our priority, and at the same time encourage our PRs to view citizenship more favourably. HDB will release further details shortly.
22 Mr Cedric Foo, Dr Lim Wee Kiak and Mr Christoper de Souza also raised concerns about foreigner enclaves in HDB estates. Currently this is not a major problem. As of 2009, PRs make up 14% of our resident population. But PR families own only 5% of HDB flats. PRs buy flats all over Singapore. However, there are some towns in the western and northern regions where the proportion of PRs owning flats are slightly higher than the national proportion of 5%.
23 Even though PR enclaves are not a problem today, we try to look ahead as always. We should put precautionary measures in place early. Otherwise, it might be difficult to unravel problems later. It is important that PRs integrate well in our local communities as they are long-term residents in Singapore.
24 To prevent enclaves from forming, HDB will introduce a new quota for PR families buying resale flats. PRs will be subject to quotas of 5% and 8% at the neighbourhood and block levels respectively. In other words, a PR family cannot buy a flat if the neighbourhood or block already has 5% or 8% of flats owned by other PR-PR families. The quota will only apply to non-Malaysian PRs. Malaysians are excluded, because of our close historical and cultural links.
25 The quota will be applied on top of the Ethnic Integration Policy (EIP). This means that a PR family will have to fulfill both the EIP quota and the new SPR quota. HDB will provide details shortly.
26 Racial balance
The importance of racial harmony cannot be overstated. Mdm Ho asked if the EIP has been effective in preventing ethnic enclaves. One just needs to look at any HDB estate to answer this. We do not see ethnic congregations anywhere. So we need to work hard to maintain this. This will not happen if we do not implement the EIP vigourously. As a result of doing so, some transactions cannot take place because the quota is hit. Although the EIP limits are reviewed periodically, they have not been changed since 1989.
27 In line with demographic shifts, we will raise the Indian/Others limit from 10% and 13% at the neighbourhood and block levels respectively, to 12% and 15%. The overall proportion of Indian/Others households in public housing has grown over the years to about 10% in 2009, which is pushing at the current neighbourhood limit. That is the reason why we have to revise it. This revision will allow the EIP limits to better reflect current demographic realities. Based on HDB’s projections, the limits will remain relevant until 2020.
28 We will not change the Malay and Chinese limits because the current limits still provide a reasonable margin of flexibility relative to the Chinese and Malay share of public housing. These will remain at 22% at the neighbourhood level and 25% at the block level for Malays; and 84% and 87% respectively for Chinese.
29 My Parliamentary Secretary will now address queries on other groups such as divorcees and families in distress.
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