Affordable and Accessible Public Housing, and Public Housing Policies

Debate resumed.

9.34 pm

The Minister for National Development (Mr Desmond Lee): So, I was speaking about the new housing models that cater to seniors – and we are not done yet. We are not done yet.

We continue to make an extra effort to help the lower income own their own homes, so that their next generation will have a leg-up in life, which another social element behind public housing. To ensure that we help lower-income groups fulfil their home ownership aspirations, our housing grants are tiered such that they receive more in grants.

We have also introduced the ComLink Rental Scheme, enhanced the Fresh Start Housing Scheme and set up the Home Ownership Support Team to closely support rental families towards progress, stability and the path to home ownership. And I was cheered when I heard Ms Janet Ang speak earlier about actual families that she works with.

I have talked about the past, a few years before COVID-19, to show how we have kept building and keeping pace with housing demand and needs, how we try to build a model to anticipate, how during the COVID-19 black swan event, things turned out the way they are, what we are doing, the commitment that we have made to address these issues openly, assiduously, transparently, and my colleagues at MND and HDB and many other agencies are working really hard to tackle today's challenges.

But we also must look at affordability and accessibility and the public housing of Singapore into the future as well.

So, the important question is, will we have enough land and resources to build new and better homes for younger Singaporeans, and the generation after them and the generation after that. We do. And we will be able to find the space to build homes for Singaporeans for the long term. There are a number of ways we do this.

First, we will be making some big moves to create space. These include the relocation of Paya Lebar Airbase which frees up land for us to build some 150,000 new homes equivalent to the number of homes in Punggol and Sengkang combined. The Greater Southern Waterfront has not just infrastructure but also provide for affordable housing in that area. It will also be transformed into a new major gateway and location for urban living along our southern coast, including 6,000 new public housing units to be built on the Keppel Club site. And these are some of the exciting new bounds in our ambition as a distinctive city and enduring home.

Second, we will continually redevelop older parts of our city and in due course, also rejuvenate our older estates through the Voluntary Early Redevelopment Scheme, or VERS. This provides us the opportunity to redevelop towns in a sustainable manner and ensure equitable housing through the generations.

But will we, the people of Singapore today and tomorrow continue to afford public housing? Yes.

First, we build and price BTOs to ensure affordability for Singaporeans of various income levels. Access to BTOs is based on income eligibility and other criteria. This allows us to ensure BTO flats can continue to remain affordable over the long term.

Second, for mature estates, we will price flats affordably but as I described at length earlier, we cannot price them like non-mature estates. We have implemented the Prime Location Public Housing (PLH) model to ensure that flats in the central locations remain affordable at the point of sale and subsequent resale. But they come with additional conditions to ensure equity and fairness, so that we ensure a good mix of Singaporeans from more diverse walks of life, while ensuring fairness between PLH owners and other flat owners.

For choice projects in the mature estates, we must study carefully how to continue to keep BTO prices there affordable, and Members have given many useful suggestions in this regard. For the resale market, we can also continue to ensure that it grows as an asset for a good part of its duration, for the good part of a buyer’s life and yet remain affordable.

Today, resale prices are as they are, and we have put in cooling measures to address them. But in the long term, resale prices will be kept affordable and yet remain largely as an appreciating asset for the nest egg of Singaporeans through a combination of grants and policy measures such as PLH and others, as well as measures to ensure that the property market does not run ahead of economic fundamentals.

More importantly, we do this by growing the economy and growing the incomes of Singaporeans at every level. So, their incomes grow, and their ability to spend, their ability to invest, their ability to look after their families grow.

Mr Speaker, this debate has been very valuable in allowing us to clarify and put forward clear facts to address the concerns of Singaporeans. And by no means are we saying through this Motion that all is well and good and that nothing needs fixing, and it is a perfect system. As I said in the opening speech and as reported in the papers, our system is far from perfect but it has achieved through the generations, the outcomes that we have laid on the table today.

And there are things that we have to tackle today. There are the imbalances of COVID-19 but there are also work-in-progress pieces as part of social policy to ensure affordability and accessibility as our households change, our society matures, our economy evolves and expectations change. And that is our commitment to those twin goals.

Public housing has been and remains accessible and affordable broadly to Singaporeans. And in the next lap, we will face new challenges in terms of ageing infrastructure, more binding land constraints, climate change and we will need our resources, our reserves and our wherewithal to go through them.

As I set out in my opening speech, we disagree with the PSP’s claims in its Motion and decided to table our own Motion. One reason is because we believe that we must maintain housing accessibility and affordability while keeping sustainability in mind, and upholding a culture of politics, where we discuss hard truths and trade-offs in a transparent manner, robust manner, even if they may not all be popular.

Throughout this debate, Members from both sides of the House also agree that fiscal sustainability is imperative. In fact, Mr Leong and the PSP’s position seems also to have shifted, from pricing flats based on median incomes in the 2020 manifesto; to December 2022 where they proposed eliminating land cost totally from the cost of developing public housing; to today, a deferred payment scheme where owners pay the full cost of land with accrued interest only when they want to sell the flat, as we learnt yesterday. I think Mr Leong and many Members may disagree whether it is a mischaracterisation or whether it is military strategy, I think it is quite clear to most of us, including objective observers, that there has been a change.

I welcome the convergence of both sides of the House on this principle of sustainability, which lies at the heart of our Motion. I was quite taken by what Mr Cheng Hsing Yao said, and I would like to quote briefly from him. He spoke sensibly and passionately about policy trade-offs yesterday. He said: “An enlightened public leader will carefully weigh the pros and cons of each policy option, never downplay the trade-offs, never sacrifice the long-term benefits for short-term gratification.” He also cautioned all of us in this House that if we were to give in to the “appealing rhetoric that understates the trade-offs and real costs", “eventually, it is still the people and the man in the street that suffer the most”.

Sir, the PSP’s Motion has noble intentions, but the claim by the PSP that our public housing system is fundamentally broken is something that we cannot accept. It is not a perfect system, there are things we need to improve today and tomorrow, but to say it is fundamentally through and through unaffordable and inaccessible and needs a radical change of the kind that he is proposing together with his party, is something we cannot accept. And if I may say, I believe the Workers' Party also agrees with the Affordable Homes Scheme as part of supporting the Motion, but you can clarify.

And as we said, we think the proposals put forward by the PSP do not address today's problems and certainly do not address tomorrow's problems.

Instead, today we have a system that seeks to ensure affordability and accessibility in public housing for Singaporeans, while allowing them to have a stake in Singapore, to enjoy the fruits of economic progress and income growth through the asset of their home so that they can build up their nest egg.

Disruptions from the pandemic have caused imbalances, which we are working hard to address. As I said earlier, our system is not perfect, but we keep improving it and striving to make it better. And we have a strategy to ensure public housing remains affordable and accessible into the future.

In that regard, Mr Speaker, I do not know whether it is right to say it now or later, I propose that we reject the PSP Motion, we reject the Motion for the reasons I have said. Stand with us, support our Motion, support the plans for today and tomorrow, and let us work together on our public housing journey.

As for the Workers' Party's proposal, I think the fact that we have a commitment to the twin goals implies this spirit of always wanting to improve, that there are issues that we face today and tomorrow's challenges are something we have to keep an eye on.

I think that is evident from the opening speech, that is evident from my colleagues' speeches, that is evident from the speeches of speakers in the House. For the Leader of the Opposition to characterise our Motion as us sitting on our laurels and, therefore, necessitating this late amendment, I think it is misplaced. And, therefore, I propose that we reject the PSP Motion, vote down the Workers' Party's attempts at politicking and stand with us, stand with public housing, stand with giving every Singaporean a stake in housing but address with all humility the pain points and challenges that they face today as a result of COVID-19 and tomorrow as a result of the changes in society that Singapore is going through. Mr Speaker, I beg to move. [Applause.]

Mr Speaker: Are there any clarifications? Assoc Prof Jamus Lim.

9.47 pm

Assoc Prof Jamus Jerome Lim: Thank you, Mr Speaker. I just have two quick clarifications for the Minister. I am wondering if the Chief Valuer – and I appreciate that this is an independent office – is provided guidance by the Government that land designated for public housing should embed stronger public considerations; just like how land for other kinds of public priorities may differ from commercial uses? Would the Government then accept this valuation as acceptable for channelling into reserves and that this would not then constitute a raid on reserves that would require Presidential approval.

My second clarification builds on this. And if the answer is indeed yes, and I will wait for the response, but what then would be the constraints behind the Government providing such guidance to the Chief Valuer? Because it surely already provides some form of guidance for different classes of land. And just for clarification, in my speech, I had mentioned that $1 pricing for land for road but that was actually for the Land Betterment Charge and not in the context of what I am suggesting public housing land be priced that.

Mr Desmond Lee: Sir, I replied to Mr Gerald Giam in a Parliamentary Question recently, in a supplementary question that the Chief Valuer is an independent office, and there are provisions in the Constitution to ensure that. But he or she will apply the valuation principles that are accepted and value land on the basis of its use. Public housing land is zoned for public housing and I think the Chief Valuer would be in command of the necessary information to understand what public housing is about. We can share information with him or her, and it is available publicly.

But to say that we should – I do not know whether the Member is asking us to – persuade the Chief Valuer to accept his method of valuation as something that is acceptable, I think the profession as a whole would not accept the Member's strategy of valuation. But it is always open for Workers' Party to make representations to the relevant departments to advance reasons why the Workers' Party's method of valuation is professionally acceptable. There are institutions and associations that are professional valuers and the Chief Valuer himself or herself is a professional.

Mr Speaker: Mr Louis Chua.

Mr Chua Kheng Wee Louis: Thank you, Mr Speaker. Firstly, just to respond to Minister's reference to the working paper that we had and then subsequently a clarification for Minister. I think at that point in time, as Minister quoted, we did base our assumptions on an average household size of 3.3. And today, based on the latest data, it is 3.1. And I also note that Minister has said to Member of Parliament Mr Leong Mun Wai in a Parliamentary Question response that the Government does expect in the near future for housing demand to be robust due to strong household formation and societal trends towards smaller households.

So, knowing now that effects and circumstances of housing demand has changed and demand will remain robust, I think the question then is do we decide that we need supply or not.

And I think it is also important to point out that the context of this paragraph was really in the context of urban renewal and in the subsequent paragraph, Minister would also see that we clearly stated that the BTO projects should continue, just that it would be supplemented by supply from flats that are acquired under the USB. So, in the context of supply of public housing, that would be from the BTO projects as one source and also from the USB as another source. So, that is the clarification.

And I think, separately, in terms of the new move to have 2,000 to 3,000 per year of Shorter Waiting Time flats by 2025. I just wanted to check – in the response to my Parliamentary Question in January, the Minister did say that over the last couple of years that there are already 2,000 to 3,000 Shorter Waiting Time flats within the BTO launches. So, just to double-check, is this consistent in that it will still be 2,000 to 3,000 in the next two years to 2025, or is Minister saying that it will be 4,000 to 6,000 – 2,000 to 3,000 plus 2,000 to 3,000?

Mr Desmond Lee: I thank the Member for his clarification. On his first point, I hope the Member understands where we are coming from and that we meant well when I said what I said earlier. We acknowledged that there is a high demand today. It is clear from the high BTO application rates across the board, but especially in mature estates and choice locations, that there is high demand. There is broad-based demand but there is also market psychology at work and COVID-19 had a lot to do with that. We and my colleagues and the construction industry are working very hard to make the land available, to take over land to develop public housing, to do the land preparation, to do the work expeditiously but safely and productively.

And it was quite clear from the data that before COVID-19 struck, we were building higher than what Workers' Party had proposed and the application rates were low and the resale prices were soft. To say both to PSP and the Workers' Party that, "Oh, before COVID-19, you all should have anticipated, you should have done this and done that", I think reeks of applying perfect hindsight. I do not think it is fair to my colleagues. I just hope you understand why.

And then knowing full well what you had proposed in 2019, to come to this House and then before in COS and Parliamentary Questions repeatedly to make the allegations against my colleagues in the different departments that we did not plan ahead, I decided today I think better set the record straight because the Workers' Party did not disclose that when you did this report, the Workers' Party had asked for a reduction in BTO supply to almost half of what we put up, based on your assumptions.

But we accept today that there is demand, we have to build, we have to prioritise better, we have to reduce the 40% of BTO applicants who do not select flats and there are things that we have to do to fix today and to make things sustainable for tomorrow.

On your question about Shorter Waiting Time flats, we aim to reach levels that we had prior to COVID-19 of between 2,000 and 3,000 a year, from 2024 onwards, by 2025. [Please refer to the clarification later on in the same debate, Official Report, 7 February 2023, Vol 95, Issue No 82.]

But as I said in my opening speech and just now, we want to re-calibrate so that a larger proportion of our overall supply of new flats has waiting times of two years plus, or below three years. That provides more choice, together with BTO flats that we build more productively. And I think 2.5 years or three years before COVID-19, the waiting times were certainly less than the waiting times today.

If you look at the new projects that we build for Singaporeans, the quality of the buildings, the height of the flats, the amenities that we build, the services that we provide, the design of the buildings, I think you would accept that they are quite a different class of public housing than what you cited in the 1980s and 1990s.

A lot of that accounts for why it does take time despite productivity measures. The sites we are building in are complicated sites and some of them are more challenging to build. Some private developers will probably not touch those sites. But we go in for it, we know we want this site for public housing and we go for it. So, we will re-calibrate our supply but overall, there will be a flat mix for Singaporeans.

Mr Speaker: Mr Leong Mun Wai.

9.56 pm

Mr Leong Mun Wai (Non-Constituency Member): Mr Speaker, Sir, I thank the Ministers, Senior Minister of State, Minister of State and Members for making so many contributions which have enabled us to have a lively debate on public housing.

I have certainly learned a lot from this debate because the rebuttal points have been specific and substantial. While we may differ in our policy ideas and recommendations, all of us in this House share a common objective of keeping public housing affordable and accessible for Singaporeans.

I also agree with Ms Janet Ang that we are here to unite and not divide but that is provided the Government does not treat every alternative ideas as a source of division.

I will now give specific responses to the questions and rebuttals. I will demonstrate to Mr Murali Pillai and all of you that what PSP has proposed are feasible aspirations based on pain and choice. This is because our policies will benefit most Singaporeans but there will be some slight negative effect on some as well, like those who have committed to high-priced resale flats in anticipation of future profits. This is no different from some of the other policy proposals made by PAP Members.

I thank Mr Sitoh Yih Pin for pointing out the example of the Japanese property market which, indeed, is one of the reasons why I have tabled this Motion.

I spent a total of 12 years, first studying and later working in Japan. So, I have a fairly good understanding of what the overuse of property as an economic management tool had done to that country. However, the lesson I have learned was opposite to what Mr Sitoh has tried to convey.

The Japanese property market downfall was not due to just a change in policies. It was caused by property being used as a tool to prop up the economy for too long until it is no longer sustainable.

The property market cannot rise forever at a fast pace. In the long term, any country's population will eventually peak and decline and there will be fewer buyers than sellers. Continued economic growth will then depend on raising productivity and competitiveness.

However, the more important property investment and speculation become in an economy, the more likely that economy will become less competitive because property speculation and rent seeking are easier and better alternatives to innovation and entrepreneurship.

In Japan, for example, I have seen how the average Japanese has been bogged down by their mortgages, some of which straddle two generations. It is from that angle that I got worried when I look at the situation in Singapore today – high property prices but a dearth of innovation and creativity. What we need is more innovation and entrepreneurial spirit to continue competing effectively with the rest of the world in the Information Age.

A home is a place for a Singaporean to share comfort and love, not a chain that ties him down with a mortgage that needs to be serviced for the larger part of his life. He should spend his life innovating, creating and fulfilling his potential. Singaporeans can become knowledge workers only if they are liberated from the bondage of mortgages and high property prices.

The only saving grace is that our property market is still rising partly because of population growth through immigration. If we do not want to be left with no choice, however, except accepting a continuous fast pace of immigration, we will have to seriously consider a reset at this stage when the foreigners, especially the Chinese, are still eager to put their money in our property market.

So, I think this is a brilliant opportunity, while our market is very bullish, for us to reset the policies.

I think, for years, policy-makers and policy analysts have debated – maybe we should change our public housing policies, but we are at such a high price already, how do we do it? I think that has been bothering a lot of people. But I think this is a brilliant opportunity.

Fortunately, unlike Japan, we can use our public housing sector as a buffer. We can continue to allow foreigners and well-off Singaporeans to invest in our private property market at higher prices but we must maintain an affordable and accessible public housing market so that our young Singaporeans can have the financial security to be enterprising risk takers and build Singapore into a competitive information economy.

While the Government thinks it is doing its best, I think there are substantial reasons to think that there needs to be a reset because the current system is not delivering all the outcomes that we desire.

For example, young couples are not forming families as fast as we want, CPF savings are being depleted and going forward, there is no sign that this will slow down because as BTO prices escalate, the amount of CPF savings required to pay for the mortgage will be bigger and bigger. Our CPF contributions are capped but housing prices are not capped.

Also, the lease decay problem is worsening. If we do not change the way we price the HDB flats, the lease decay problem will be a problem of every generation.

These are some of the problems that accompany the current housing policies. I think we need to address them. I do not think in the debate and even what the Minister said just now have fully addressed them.

The Minister had concentrated on doing more of the same, sorting out the current tight demand-supply situation, but what is required is a fundamental change in the thinking of what should be the best public housing policies going forward.

As a result, PSP has proposed the Affordable Homes Scheme and the Millennial Apartments Scheme as key proposals for the policy reset. I must say again that the Affordable Homes Scheme and the Millennial Apartments Scheme, we had them in mind right from the beginning. I did not shift my ideas from taking out of land cost and now add that land cost as a deferred land cost. I must again repeat that point.

So, what are the advantages of the Affordable Homes Scheme? The most important objective of this scheme is to stop the depletion of the CPF savings of Singaporeans from buying HDB flats. What we are aiming for is to delink the CPF account from the HDB flat.

Mr Murali Pillai argued that only the Ordinary Account savings can be used for housing. There is still the Special Account savings. But how many Singaporeans can meet even the basic retirement sum with just their Special Account savings and without having to sell their flat?

Under the current system, retirement adequacy will only deteriorate further as CPF contributions are capped and remained the same level for many years while HDB prices continue to rise.

Senior Minister of State Sim Ann shared just now that maybe the retirement situation in terms of the CPF saving balances are better than what we have gathered. But nevertheless, as BTO prices continue to go up, CPF contributions will continue to be depleted.

One thing I want to highlight is that Senior Minister of State Sim Ann had defined the CPF account now as being one that would cater for both buying the HDB flat and for retirement. That is something new to me. The CPF account has been pulled into financing the HDB flat from 1968. The original definition or the original intention of the CPF account is for retirement. I hope the Government will clarify on that later.

We want a situation whereby Singaporeans do not have to depend on resale prices for their retirement.

Many Members have pointed out that resale prices go up and down. This proves my point – that retirement adequacy needs to be delinked from housing prices because resale prices go up and down.

Is our current system fair to the elderly Singaporeans who may be forced to retire during a recession but have not enough money in their CPF and may therefore have to sell their flat at a lower price point? Not everyone can control when they retire or when they must monetise their flat for retirement. This is a real problem and I hope Members on the other side of the House will consider when they are voting for the two Motions.

At the same time, the Affordable Homes Scheme increases owner-occupation intent without having to tighten current rules on the Minimum Occupation Period, which Ms Denise Phua has suggested. Application for BTOs in popular areas will increase and upper middle-income Singaporeans may be unhappy but that is the cost we have to pay to reduce social inequality.

Mr Sitoh Yih Pin, Mr Xie Yao Quan and Mr Vikram Nair are concerned that the PSP's proposal will cause a collapse in resale prices.

In fact, a collapse is actually counterintuitive because in the long term, the supply of resale flats will be reduced as new sellers will not sell their flats unless the price is high enough for them to earn a profit after paying for the deferred land cost. Furthermore, there will also be support for the resale market from the backlog of housing demand.

In addition, a large pool of buyers who are ineligible for BTO flats, buyers who want to live in a specific location because they want to live near their parents, Permanent Residents and buyers who want to upgrade to a larger flat form a large pool of demand that will underpin the resale market.

Most importantly, we must bear in mind that in Singapore, the resale market HDB market is still much lower than the private property market, so there is a demand there.

But I believe that the Affordable Homes Scheme is also aiming at engineering a soft landing of the current surging resale market. That will be healthy after recent market exuberance. We want a buoyant resale market, not an exuberant one.

At the same time, to complement that strategy with a Millennial Apartments Scheme, which can increase the number of housing units in the same prime location housing site by building smaller units for rental. These quality rental apartments will absorb demand while people are waiting for their new flats.

I think the Millennial Apartments Scheme is a much better policy solution than the PLH scheme in terms of providing choice to young Singaporeans, reducing the profit motive in speculating in HDB flats in mature estates and thus moderating social inequality.

The current BTO system, which feeds on the resale market and vice versa, does not make the overall housing market accessible to young Singaporeans. I think we all agree that this is detrimental to our total fertility rate. The current system cannot provide a large enough price difference between BTO flats and resale flats to restrain the resale market.

But the Affordable Homes Scheme, which is based on the clean concept of taking out the land cost for the owner-occupier, can do this and make the overall housing market more accessible to young Singaporeans.

Next, I want to address some of the questions raised by Mr Lim Biow Chuan and Mr Henry Kwek on the Affordable Homes Scheme. There are two main areas that they have raised.

One is, will the scheme actually increase the holding cost of the buyers? I call that a breakeven price, meaning the land cost is determined today, you add on the interest payment and what would be the price going forward when the buyer wants to sell the flat in the market. The idea is that, this breakeven price should not be much higher than the current price for the current HDB owners. Of course, there is an accrued interest involved but we can actually adjust the number of years for accruing the interest.

So, this is something that we can still subject to more research, but as a starting point, we can say that the accrued interest will accrue for 25 years. That is the normal term of a loan. First, I propose an idea, but based on the experience that we have in the public housing market, if it is a good idea, then based on the experience accumulated by HDB, we can decide on how much we want to accrue that interest going forward. This is one thing.

The second thing is, there is a question about what happens if the flat is given to a beneficiary? Does the beneficiary need to pay the accumulated interest on the land cost? The answer is that the beneficiary can live in the flat as long as they are just an occupier. But they can also sell the flat. When they sell the flat, then the same rules apply. They have to return the land cost with the accrued interest to the past reserves. But if they cannot sell the flat in the market, then they sell the flat back to HDB, based on a formula which I have explained to Ms Carrie Tan just now. It is based on the user price, minus the location premium and some depreciation.

Again, we can decide on how much depreciation we want to put into the price later.

So, I have addressed the resale market, I have also addressed some of the questions raised by the Members. Next, I will address the impact, or the perceived impact, on the reserves.

Given the advantages of the Affordable Homes Scheme and the Millennial Apartments Scheme, their implementation will require the Government to change its mindset regarding accounting for land reserves. I beg to disagree with Mr Cheng Hsing Yao and Mr Sitoh Yih Pin, that we must necessarily charge a price, because land is a scarce resource. PSP believes the land cost should not be charged for owner-occupied HDB flats because it is a public good, with all the social benefits that can be shared by society.

Our proposals are still fair to future generations, because not all the land cost will be lost. We are also giving the present generation a leg-up to do better, which is the best inheritance which we can pass on to our future generations. In fact, Affordable Homes Scheme will make it fairer for future generations who can enjoy HDB flats at the user price, rather than the higher BTO price in the future. This is the most consistent and fair treatment for every Singaporean in each generation.

Whether it is a draw on reserves, actually we all know that it depends on the definition of use. If the use is to serve a very useful purpose, then we should not hesitate to redefine the use – if public housing land is state land, we can redefine it. If public housing land is defined as state land, then there is no question about the use of reserves.

But there will be a cost.

Still, this cost can be managed under our budget resources and there is no need to actually use the reserves.

Ms Denise Phua asked about the fiscal implications of our policies. The total land cost paid by HDB is only about $3 billion a year. Under our scheme, most of it will not be permanently lost, first of all, and can be recovered with interest from the deferred land cost. But even if we need to fund the whole sum, we will have more than sufficient fiscal resources required for the implementation of the reset. We only need the Government to do more for Singaporeans, because we actually have the resources.

The Government has been saving repeatedly, again and again, in many ways, just to take the resources and put it back into the reserves. First of all, reserve accumulation, that is something that you cannot spend unless the President approves it.

Second, the Government said, put 50% of the net investment return into reserves. You can only use 50%, that 50% becomes the net investment return contribution (NIRC), which goes to the Budget.

Yet again, I do not know whether Members noticed, 80% of our NIRC was never used, maybe except during the COVID-19 years, in the current year. For most of the years, NIRC was re-parked into endowment and trust funds. So, this is the money, 50% of the net investment returns that is supposed to be used for the budget. We will assume that it should be used for the current year for the benefit of Singaporeans, but the Minister for Finance put that under endowment and trust funds again. So, the funds, again, are not used in the current year.

For example, in 2019, $13,570,000,000, or 80% of NIRC was ploughed back into the funds. Hence, if we can use part of that money, the $3 billion that we are talking about to execute the public housing reset, represents a very small fraction of NIRC allocated to the Budget each year.

So, we can see that we do not need to use any additional reserves at all, we only need to deploy our current resources where and when they are needed.

With the above, I hope I have addressed most of the Members' questions, but of course, questions are welcomed afterwards. Next, I will conclude today's debate, although the conclusion will take some time. [Laughter.]

Mr Speaker: Members, do know that you are not obliged to ask clarifications if you do not want to.

Mr Leong Mun Wai: The asset enhancement policy, which started in the 1990s, may have reached its limit as the price of any asset cannot rise forever, especially one with a lease decay problem. The Government's appreciating asset narrative for the HDB flats has become untenable, as more than 50% of the HDB flats will be over 50 years old by 2030.

It is also counter intuitive to believe that a system that relies on rising HDB prices can actually deliver affordability.

The ecosystem developed to sustain the asset enhancement policy, like the BTO supply and pricing systems, as well as the link between CPF retirement funds and housing prices must be reviewed and changed accordingly.

We have explained why Affordable Homes Scheme and the Millennial Apartments Scheme are the way to achieve a reset of the public housing policy. When PSP advocates that the land cost be taken out of the pricing of owner-occupied HDB flats, so that every Singaporean in each generation can have access to affordable housing, we also believe that this is in keeping with the spirit with which our Pioneer Generation sacrificed their land for national development. A spirit, which the Government might have forgotten from the 1990s onward.

The Pioneer Generation have responded to the call for national development and sacrificed much when they gave up their land. These are not just the big landlords and capitalists, but also ordinary Singaporeans, including farmers who were resettled from rural areas, such as Chua Chu Kang, Lim Chu Kang and Punggol, and indigenous Malay fishermen who were resettled from the Southern Islands. They surrendered their lands to the Government, in the hope that it will be used to improve the lives of Singaporeans, not for the Government to accumulate reserves for the sake of accumulating, with no clear and transparent definition as to what constitutes "a rainy day", when we can use the reserves for the benefit of Singaporeans.

In the run-up to this debate, some descendants of the Pioneer Generation who had given up their land came to see me and asked me to fight for affordable homes for their children. Is it not a great irony that a family that had earlier given up its land for a pittance, thus sacrificing housing for his descendants, is now seeing his descendants pay half a million dollars each for a 90 square metre BTO flat?

Thus, PSP believes that it is the Government's duty to live up to the hopes and expectations of the Pioneer Generation and repay them by ensuring their descendants continue to have affordable homes. Mr Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Dear Fellow Singaporeans, I believe many Singaporeans, like me, still remember how Pioneer Generation Singaporeans were forced to sacrifice their land under the Land Acquisition Act in the 1970s and 1980s. Among them, there were big landlords and capitalists, but also many more ordinary Singaporeans including pig farmers in Punggol, villagers in Charn Mao Hern and Koo Chye Sheng, as well as fishermen in Tuas fishing Village.

Most of our forefathers willingly gave up their land to the People's Action Party (PAP) Government. They knew that they sacrificed their land and their way of life for the country's development and the interests of the majority. They believed that the Government would make good use of their land to provide affordable and quality housing for their children and grandchildren and build a better future for Singaporeans.

But today, the public housing policy has imposed a heavy burden on the people of all generations. Although the land of the Pioneer Generation was acquired by the Government at a low price, their children and grandchildren could not benefit directly from it as HDB has to buy land at market prices to build HDB flats.

While BTO prices are not pegged to market prices, rising land cost will eventually push up BTO prices in the long run. In addition, the long waiting time of BTO flats has caused many young couples to choose to buy flats at high prices in the resale market. The current high property prices are not only a heavy burden to many young people, but also a shackle that keeps them from starting a family and developing their talents.

During yesterday and today's debate, PSP has proposed the Affordable Homes Scheme to reduce housing costs by exempting Singaporeans from paying land cost when buying a flat. It is only when they sell the flat that they need to return the land cost together with interests to the Government. This means that if a couple lives in the same flat from the time they get married to the end of their life, they do not have to pay the land cost.

In order to provide more housing options for young people, PSP has also introduced the Millennial Apartments Scheme, which allows young people to rent premium HDB flats in the city for a long time at a low cost. These two policies will significantly reduce the housing burden of young people, give them more space to start their own businesses and fulfil their dreams, and inject new vitality into the city.

More importantly, with reduced housing costs, young people do not have to use a large portion of their CPF savings to service their housing loans. This will break the vicious circle of "house prices must continue to rise, otherwise Singaporeans will not have the money to retire". PSP is of the view that Singaporeans should not need to sell their flat or lease for old age, and that everyone should own a flat while meeting the Basic Retirement Sum. Our country has sufficient resources to realise this vision. This dream can be translated into reality by PSP’s Affordable Homes Scheme.

Our Reserves will not be raided by the Affordable Homes Scheme and the Millennial Apartments Scheme. Although Singaporeans are exempted from paying land cost when buying a flat, under the Affordable Homes Scheme, they still need to return the land cost with interests to the Government when they sell the flat, so most of the land cost will be recovered sooner or later.

Moreover, the exempted land cost is only about $3 billion to $4 billion a year, which is a small fraction of our Net Investment Returns contributions (NIRC), as our NIRC has reached $30 to 40 billion a year.

Our country can afford the financial expenditure of these policies. Singaporeans need not worry too much that our Reserves will be reduced. We will continue to uphold the principle of "planting trees to provide shades for future generations."

On the other hand, many senior citizens who own flats with shorter and shorter leases have another worry. Many Singaporeans use their CPF savings to service their housing loans, so they have to find ways to monetise their flat after retirement. Many people do not mind, nor do they worry about falling home prices because the Government has stressed for years that HDB flats are valuable assets and their prices will continue to rise.

However, in recent years, price increase of older HDB flats has not kept up with that of new flats as people are starting to pay attention to the issue of lease decay. This issue cannot be ignored. Hence, PSP called on the Government to announce the details of VERS as soon as possible to put an end to the lease decay issue and maintain stability in the resale market of old HDB flats.

HDB flats are one of our greatest achievements, but HDB housing policies must stay relevant to ensure that every generation of Singaporeans can benefit. Our land is a precious asset, shared among each generation of Singaporeans. PSP’s Affordable Homes Scheme will be a wise and sound way to ensure that Singaporeans can benefit from our land assets for generations to come. This is also in line with, and a continuation of the spirit of land reform that the Government has been carrying out under the Land Acquisition Act for nearly half a century.

(In English): Mr Speaker, the President said at the opening of this 14th Parliament that Singaporeans are masters of their own land. But that rings hollow when a significant number of Singaporeans have difficulties owning a house.

I have spoken about this —

Mr Speaker: Mr Leong, please wrap up. You have exceeded your time.

Mr Leong Mun Wai: Okay. I have spoken about this in my maiden Parliamentary speech on 1 September 2020. I said, "it is disconcerting to have many of countrymen live outside Singapore in Johor and Batam while we are housing more than two million foreigners on our island at the same time. Surely more consideration can be given to Singaporeans who are citizens of our sovereign city state."

So, let us work together as one united people to achieve a better future for Singapore and Singaporeans. Singaporeans deserve better.

Mr Speaker: Minister Desmond Lee.

10.37 pm

Mr Desmond Lee: Mr Speaker, just three matters. First, we do not want to prolong the debate. The points made by Mr Leong on the NIRC are clearly wrong, but we will have the opportunity to debate this in the coming Budget debate. I just want to make sure that we put that on record.

Secondly, Mr Speaker, I want to make a clarification. Earlier in response to the learned Member Louis Chua, I mentioned that the Shorter Waiting Times flats of 2,000 to 3,000 will be by 2024. That is wrong. In my opening speech, I said 2025. And I want to apologise and put that on record.

Thirdly, Mr Speaker, I thought that we should settle this before we start voting on both Motions and the Workers' Party's amendment of our Motion. In deciding how to vote on each Motion, including PSP's Motion, I invite the Members of the Workers' Party or the Leader of the Opposition to spell out clearly your position or the Workers' Party's position on PSP's Motion as well as on the Affordable Homes Scheme and the Millennial Apartments Scheme.

Mr Pritam Singh: Thank you, Mr Speaker. Let me get that out of the way. I intended to put some clarifications to the Minister and also address that point which Minister requested for earlier with regard to WP's position on the Affordable Homes Scheme.

Our view is that it is an intriguing proposal. The WP, of course, has its own proposals that we have put across in the debate on this Motion, but we are not carrying PSP's proposals. Our own view is that it should be studied further. This is the same for their Millennial Apartments Scheme. On the point about our view on PSP's Motion, I believe I already covered it in my speech.

I have some clarifications for the Minister.

The first clarification I have is with regard to his point that in the course of addressing some of the pain points with housing policy today, the Forward Singapore exercise would be one platform which would be used by HDB and the Government to seek feedback from Singaporeans.

In this vein, I refer to the report of the Land Working Group of the Economic Review Committee (ERC) in 2003, which I referenced in my speech. When that report was released, industry watchers opined that the Land Working Group could not undertake a proper review of land policy because public housing was not within the committee's purview and neither was HDB or MND actually represented on the Land Working Group.

As part of the Forward Singapore exercise, would the Minister consider standing up a committee to look into the impact of growing land prices and increasing taxpayer subsidies on HDB affordability in particular?

The second query I have is with regard to the Minister's handout, specifically Annex 5. Does the Minister have a view on the reasons for the steep demand from second-timers? I understand earlier he mentioned demand was broad-based, but does the Minister believe that the creeping reality of lease decay is also a driver behind this steep rise? I think it was 140% over the time period that was identified in Annex 5.

I made some reference to the POFMA Order. I am sure the POFMA Order was drafted very carefully. Point number six of the POFMA Order I referred to, the one of 14 October, said that the Government cannot sell state land at nominal or much lower cost than its fair market value. I was inquiring in my speech whether HDB priced land with some different valuation or modelling in mind vis-a-vis public housing because it says not at a much lower cost. So, really, what are we referring to here?

I thank the Minister for recognising my point about subsidies and equity. I think that really focuses on the questions that I have been asking and the detail that I have been seeking.

The Minister replied about and I think I have heard him more than once refer to the brochure, and he uses this word repeatedly – "broadly reflects", "broadly reflects", "broadly reflects". I understand that. Hence, my clarification and my use of Waterway Banks, which was employed by the Minister for National Development in 2013 in his Parliamentary reply, where he could identify specifically subsidies, the fixed costs, and he identified the figure without a problem. I do not believe HDB does that and I believe it can.

Yes, I think I have addressed the question that the Minister raised about WP's position on PSP's proposals.

Mr Speaker: Minister Desmond Lee.

Mr Desmond Lee: Thank you, Sir. I welcome the Leader of the Opposition's clarification that Workers' Party does not support PSP's proposals on the Affordable Homes Scheme and the Millennial Apartments Scheme. Whichever way it votes on the Motion later, I think that clarity is helpful for the record and to understand the Workers' Party's position on affordability, accessibility and the proposed reset by PSP.

On the 2003 ERC report, I do not have the report with me at this point in time. I will have to go back and view that.

I would just say this – that as part of Forward Singapore, we have already embarked on a number of conversations with people from across different walks of life and also received lots of representation by Singaporeans and organisations. In fact, there is another one going on tomorrow night where people would want to share their views about public housing.

There are many platforms for Singaporeans and well-wishers to contribute their ideas, views, data and so on.

On Annex 5, the Member is asking us to give a sense of why the demand has shot up. In the interest of not prolonging the debate, I have covered some of that in the opening speech as to the kind of dynamics and the interplay of factors which led to the spike in demand.

But I think there are, of course, other factors as well. Firstly, there is the fact that first-timers have a much larger share of the flat supply than second-timers. For second-timers, they are applying for a variety of reasons – some because they need housing, some because they see the wide gap between resale prices and BTO prices. These are all views that one can make as to what interplay of reasons led to this market psychology.

On the POFMA question, let me go back and have it properly addressed. If the Member would file a Parliamentary Question, I will have it properly checked because it is a legal matter.

And lastly, on subsidies, when I said, "broadly reflects", I wanted to be very accurate because we provide price ranges for each project. So, when you see 5-room flats in Central Weave @ AMK, they are 5-room flats on different floors, and therefore, the price before grant is different. The comparable resale prices which is put right next to the BTO prices are again in a range because you have probably a variety of resale transactions around the area. You must also adjust for comparability. Some professional work needs to be done to adjust for tenure, adjust for condition, amenities, and so on, and these are professional matters. I wanted to be accurate to say, "broadly reflects" because there are all these considerations will be taken into account. I hope that addresses the Member's questions.

Mr Speaker: Mr Leong Mun Wai.

10.46 pm

Mr Leong Mun Wai: Thank you, Mr Speaker. I am of the opinion that the point about NIRC is a very important one. So, can I request the Minister to respond to that point properly?

Mr Speaker: Leader.

Ms Indranee Rajah: Mr Speaker, Sir, it is an important point, but the statement made by the Non-Constituency Member of Parliament was incorrect. His suggestion is that the NIRC all gets swiped and packed into funds and therefore, actually, if we did not put it into funds, we would have plenty of money to do other things. The NIRC goes into the whole pool, and with the whole pool, we will distribute what we need to do or allocate according to National Budget.

The Budget debate takes three days. I really do not want to start the three-day debate right now. So, that is why as an act of kindness to all Members, we have said that we would just register that it is incorrect and we will debate it later.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai: Minister, I would accept that you register that this is an outstanding issue. I do not accept that this is an inaccurate fact.

Mr Speaker: Noted. Leader.

Ms Indranee Rajah: The Member does not need to accept that it is inaccurate or not so. I am stating our position that it is inaccurate. He is free to debate that if he wishes, but that should be done on another occasion.

Whilst I am here, Mr Speaker, may I seek a further clarification from the Leader of the Opposition.

Mr Speaker: Please do.

Ms Indranee Rajah: Earlier on, Minister Desmond Lee had asked the Leader of the Opposition to clarify the Workers' Party's position on the Progress Singapore Party's Motion. I think he asked about the position that Workers' Party has on the Affordable Homes Scheme. The leader of the Opposition said, if I understood him correctly, that it is an intriguing proposal that needs further study. That does not actually quite answer the question, but let me put the question more clearly.

One, there is the Motion. The Motion by the Progress Singapore Party says that this House calls on the Government to review its public housing policies in order to deliver affordable and accessible HDB flats for Singaporeans and so on.

So, I think the first clarification is: is it the Workers' Party position that it can support that Motion. But the second part is the whole of that Motion is actually premised on the Affordable Homes Scheme and the Millennial Rental Scheme. So, it seems to me, and the Progress Singapore Party may disagree, that because that Motion is premised on these schemes, actually, if you are voting in favour of the Motion, you would also be voting, or you must necessarily agree with those schemes. However, if what the Workers' Party is saying is that it can vote in favour of the Motion, but not necessarily in favour of the two schemes, then I would be grateful if the Leader of the Opposition could clarify that.

Mr Speaker: Mr Pritam Singh.

Mr Pritam Singh: Thank you, Speaker. Yes, indeed, I thought I had made it clear in my reply. I had also made it clear in my speech what our position was on the Progress Singapore Party Motion. I think the operative word, when the People's Action Party Members spoke about the Motion was that they were reading an implication into that Motion. So, I had just stated our stand clearly that we do not read it that way. We do not see the Motion per se in an insidious fashion. We actually focus on the fact of calling for a review of policies for better outcomes. That is how we see the Progress Singapore Party's Motion, and we are going to vote in favour of the Motion. Insofar as the schemes are concerned, we see them as different from the Motion. I think the exact words I used in my clarification was, "These are not our proposals. We are not supporting them. We do feel that they should be studied further." I hope that clarifies.

Ms Indranee Rajah: I thank the Leader of the Opposition for his clarification. So, the decision, as I understand it, is that the Workers' Party will vote in favour of the Progress Singapore Party's Motion, but keeps a safe distance from the Affordable Homes Scheme and the Millennium Rental Scheme.

Mr Speaker: Mr Sitoh Yih Pin.

Mr Sitoh Yih Pin (Potong Pasir): Sir, I will take less than one minute. I just want to clarify with Mr Leong whether he is aware that Singapore's home ownership rate is 89% because I started yesterday by disagreeing with him. But the more I listened, the more I think it is scary and dangerous, and it is like a gust of Progress Singapore Party wind can blow us all off. So, just be careful.

Second, I appreciate what Mr Leong said about doing more for Singaporeans. I know we want to have more Singaporeans to get onto the property ladder; we can give them a stool to climb up; but he is not doing that; he is taking down the whole ladder. And I just want to make the comment.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai: Mr Speaker, I would just like to tell the Member, whether it is taking away the ladder, or whether it is a stool that I am providing, is a matter of interpretation.

10.53 pm

Mr Speaker: Thank you. We have now, finally, come to the conclusion of the debate. I shall put the necessary questions to the House for decision.

We will first deal with the Motion by the Minister for National Development on Affordable and Accessible Public Housing. We have a substantive amendment by the Leader of the Opposition, Mr Pritam Singh.

Mr Pritam Singh's amendment is in line 4 of Minister Lee's Motion to delete the words "endorses the commitment of the Government to" and to replace them with" calls on the Government to intensify its efforts to meet".

We will deal with the amendment by Mr Pritam Singh first.

Question, "That the words proposed to be left out, be there left out", put and negatived.

Mr Speaker: The amendment falls. The Motion remains in its original form.

The question is, "That this House affirms the importance of keeping public housing affordable and accessible while protecting the interests of current and future generations of Singaporeans, and endorses the commitment of the Government to these twin goals."

Mr Speaker: As many as are of that opinion say "Aye".

Hon Members say "Aye".

Mr Speaker: To the contrary say "No".

Hon Members say "No".

Mr Speaker: I think the "Ayes" have it. Mr Murali Pillai.

Mr Murali Pillai: Mr Speaker, Sir, I wish to call for a division.

Mr Speaker: Would you like to record your dissent, or would you like to call for division?

Mr Murali Pillai: Mr Speaker, I respectfully call for a division.

Mr Speaker: Okay. Will hon Members who support the division, please rise in their places?

More than five hon Members rose.

Mr Speaker: Clerk, ring the division bells.

After two minutes –

Mr Speaker: Serjeant-at-Arms, lock the doors.

Original Motion put, "That this House affirms the importance of keeping public housing affordable and accessible while protecting the interests of current and future generations of Singaporeans and endorses the commitment of the Government to these twin goals."

Mr Speaker: Mr Murali Pillai, would you like to proceed with the division please?

Mr Murali Pillai: Yes, Mr Speaker. I would like to proceed with the division please.

Mr Speaker: Clerk, proceed with the division. Before I proceed to start the electronic voting, may I remind Members that they are to be seated at their designated seats and should only start to vote when the voting buttons on the armrest start to blink.

Members may begin to vote.

Members are advised to check that the names are registered according to their vote indication when the electronic voting results are shown on the display screens. The Clerks will now tally the votes from the electronic voting.

Mr Speaker: I will proceed to declare the voting results now. There are 82 "Ayes", 11 "Noes", zero "Abstentions". The "Ayes" have it.

Resolved,

"That this House affirms the importance of keeping public housing affordable and accessible while protecting the interests of current and future generations of Singaporeans and endorses the commitment of the Government to these twin goals."

Mr Speaker: We will now deal with Mr Leong's Motion on Public Housing Policies.

The question is, "That this House calls upon the Government to review its public housing policies in order to deliver affordable and accessible HDB flats to all Singaporeans, strengthen the owner-occupation intent of public housing, protect retirement adequacy and keep public housing inclusive for every Singaporean of each generation."

As many as are of that opinion say "Aye".

Hon Members say "Aye".

Mr Speaker: To the contrary say "No".

Hon Members say "No".

Mr Speaker: I think the "Noes" have it. Mr Murali Pillai, would you like to call for a division?

Mr Murali Pillai: Yes, Mr Speaker. I wish to call for a division.

Mr Speaker: Would you like to record your dissent instead or still call for a division?

Mr Murali Pillai: Mr Speaker, I respectfully call for a division.

Mr Speaker: Will hon Members who support the division, please rise in place?

More than five hon Members rose.

Mr Speaker: Clerk, please ring the Division bells.

After two minutes –

Mr Speaker: Serjeant-at-Arms, lock the doors.

Question put, "That this House calls upon the Government to review its public housing policies in order to deliver affordable and accessible HDB flats to all Singaporeans, strengthen the owner-occupation intent of public housing, protect retirement adequacy and keep public housing inclusive for every Singaporean of each generation."

Mr Speaker: Mr Murali Pillai, you claimed a division. Would you like to proceed with the division?

Mr Murali Pillai: Yes, Mr Speaker. I would like to proceed with the division, please.

Mr Speaker: Clerk, proceed with the division.

Before I proceed to start the electronic voting, may I remind Members that they are to be seated at their designated seats and should only start to vote when the voting buttons on the armrest start to blink.

Members are advised to check that the names are registered according to their vote indication when the electronic voting results are shown on the display screens.

Before I proceed to declare the results of the vote, are there any Members who wish to claim that his or her vote has not been recorded correctly? That would be me. My vote should be "No".

Mr Speaker: I will proceed to declare the voting results now. There are 11 "Ayes", "82 Noes" and zero "Abstentions". The "Noes" have it.

Motion,

"That this House calls upon the Government to review its public housing policies in order to deliver affordable and accessible HDB flats to all Singaporeans, strengthen the owner-occupation intent of public housing, protect retirement adequacy and keep public housing inclusive for every Singaporean of each generation" negatived.