SINGAPORE — Second Minister for National Development Indranee Rajah and Leader of the Opposition Pritam Singh crossed swords in Parliament on Monday (Nov 7) over whether to make public the breakdown of development costs of all new public flats and the subsidies applied to them.
Mr Singh suggested that releasing such data would be useful to track the amount of subsidies that go into helping people own a Housing and Development Board (HDB) flat, but Ms Indranee disagreed saying it was not “meaningful” to do so.
“Why would you have to disclose or put out the development costs of every single project? It’s just not meaningful. The key thing is, to the buyer: Is this affordable? And that’s what HDB does,” said Ms Indranee, who is also Minister in the Prime Minister's Office and Second Minister for Finance.
Mr Singh had filed a parliamentary question asking whether the HDB would provide a clear breakdown of the total development costs of all new HDB flats in the future and what the value of “generous subsidies” applied to the assessed market price of these new flats are.
His question was prompted by recent correction directions issued to former GIC chief economist Yeoh Lam Keong over “false and misleading” statements he had made regarding HDB’s deficits and Singapore’s past reserves.
In a back-and-forth exchange, Mr Singh said that scrutinising the amount of subsidies for home ownership was especially important since the Ministry of National Development in 2011 decided to de-link the price of new Built-to-Order (BTO) flats from the resale market.
This was so that BTO flats would remain affordable despite the rising resale market then.
But with resale prices soaring over recent years, that would likely have meant that the size of subsidies has also gone up, Mr Singh said.
He further noted that under the Prime Location Public Housing (PLH) model introduced last year, owners have to return the subsidies to the Government when they sell their flat after 10 years.
But instead of returning the dollar value of the subsidies they received from the Government, the subsidy clawback is calculated based on a fixed percentage of the selling price.
Mr Singh noted that this clawback would be “a reflection of the prevailing market value, regardless if the flat is sold at a gain or a loss”.
The following is an edited transcript of their exchange.
Mr Singh: Mr Speaker, I don't believe minister has answered the question on whether HDB will be providing a clear breakdown of the costs.
Ms Indranee: The question that was asked by the Leader of the Opposition in this parliamentary question was “in view of the current Pofma (Protection from Online Falsehoods and Manipulation Act) correction directions issued, whether HDB will provide a breakdown”. What is the correlation between the Pofma correction direction and your request?
Mr Singh: The correlation is the Government's point that flats are “generously subsidised” before they're sold. So a subsidy is applied by HDB, and that's why flats can be sold at an affordable price. That's the correlation.
Ms Indranee: I'm not sure I understand the correlation. If Mr Singh was just asking: 'Can you provide the breakdown?', that I understand. But he's saying that in view of the Pofma correction, whether HDB will provide the breakdown. I'm just trying to understand how it's correlated, because the fact that we provided subsidies has always been known long before the Pofma correction notice.
Mr Singh: The connection would be that the identity of the individual who was issued the Pofma correction direction was the chief economist of the Government of Singapore Investment Corporation. So if the Minister says that this has been known for a long time, one would expect someone of that stature to also not fall foul of Pofma and be 'Pofma-ed'.
Ms Indranee: Again, if Mr Singh says that how come somebody who's an ex-economist of GIC can be Pofma-ed, I don't think there is any rule in the law books which says that economists and ex-economists of GIC cannot be Pofma-ed.
But coming back to the question. The reason why I say there's no correlation is this: It’s because in the Pofma clarification, what Minister Desmond Lee gave, was the net loss. It's a separate issue from total development costs.
Should we give the total development costs? The answer is that we don't think that anything would be achieved by doing so. And the reason is this: What is the real important thing to Singaporeans? The real important thing is: Are you able to afford the flat? Every Singaporean who buys a BTO knows that actually the price that they are paying is less than what you would have to pay if you were paying at pure market price. That's why BTOs are so popular, otherwise you will buy resale.
Mr Singh: Let me suggest why that, perhaps, could be meaningful. Since the introduction of the prime location housing flats last year, it ... provides an example why a detailed publication of HDB subsidies actually is warranted. A HDB PLH flat buyer, upon selling his PLH flat after 10 year MOP (Minimum Occupation Period) will have to return the quantum of additional subsidies provided as a percentage of the original assessed market value of the flat.
Another reason I would suggest to the minister to publish the dollar value of the subsidy is to scrutinise and track the amount of subsidies being diverted for home-ownership purposes. This is particularly in view of the Ministry of National Development’s 2011 decision to de-link BTO prices from the rising resale market then. With resale prices reaching record highs today and therefore pushing up the market price of land, increasing the size of the subsidies under the current HDB policy would appear to be the main way through which BTO prices will be kept affordable.
In view of these new reasons, what is preventing HDB from publishing the dollar value of HDB subsidies for new BTO flats?
Ms Indranee: With respect to prime location housing, it actually doesn't really change my answer. Because at the end of the day, the question is: What is affordable to the person who's buying? And we have made no secret of the fact that for prime location housing, you will have to have a greater subsidy. Why would you have to disclose or put out the development costs of every single project? It’s just not meaningful. The key thing is, to the buyer: Is this affordable? And that's what HDB does.
