HEAD T - MINISTRY OF NATIONAL DEVELOPMENT

Head T – Ministry of National Development

The Chairman: Head T – Ministry of National Development. Mr Charles Chong.

Public Housing

Mr Charles Chong (Pasir Ris-Punggol): Sir, I beg to move,

That the total sum to be allocated for Head T of the Estimates be reduced by $100.

Sir, Singaporeans' ownership of their homes has not been spared the effects of the current economic recession. I have three areas of concern, which I believe will result directly from this.

First, smaller HDB flats. Home owners or potential home owners will be looking to downgrade or to purchase smaller flats. When times were good, the demand for these smaller units did not justify the building of new 1- to 3-room units. It is, however, reasonable to anticipate the demand for these units will rise if the economic situation continues its decline. Does MND foresee a need for new smaller size HDB flats to be constructed in view of Singaporeans' changing needs, and will we see more new 1- to 3-room flats being built?

Second, the availability of HDB rental flats. My experience in the recent Meet-the-People Sessions is that more Singaporeans are having their flats compulsorily repossessed because of their personal financial difficulties. I am also seeing more residents who are having to voluntarily sell their flats to enable them to settle their debts. These ex-home

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owners will need to obtain alternative housing and often look to rent flats from the HDB after they have moved out of their old flats. However, there is currently a 30-month debarment period from the time of sale within which they will be ineligible to obtain a rental flat from the HDB. Does MND anticipate that the current supply of HDB rental flats will have to be increased to cope for greater demand? And would MND consider amending the HDB rental flat eligibility criteria and the debarment period for those who have to sell their flats because of financial difficulty?

Third, downgrading. If someone is facing financial difficulties, it makes good economic sense that he should try and downgrade to a smaller property and use the unlocked equity from the sale of the larger unit to tide him over this difficult period. This is something, I think, should be encouraged where it is a realistic possibility. The difficulty with this is that the second concessionary interest rate of HDB loan is currently only available to those who are looking to upgrade to larger units and not to those who intend to downgrade. The latter category of home owners will generally have to take commercial bank rate loans to finance the new smaller flats. To further complicate matters, a number of these downgraders will not be able to obtain bank loans because of their financial situations and also, possibly, because banks' lending criteria have become more stringent. Would MND be able to help those in these difficult situations? In particular, would HDB consider doing away with the upgrading criteria for a second HDB loan?

Sir, on a separate note, could the Minister provide an update on the status of the HDB's Lease Buyback Scheme which the Senior Minister of State has said will be implemented early this year? Given the current economic conditions,

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this would be a very timely and welcomed alternative for a number of elderly Singaporeans who are in financial trouble, and further details of the Lease Buyback Scheme would be appreciated. Sir, I would be especially interested to learn more about the proposed lease extensions should home owner outlive the 30-year lease period. I would also be interested to know if the eligibility criteria have been relooked in view of what Singaporeans are currently experiencing.

Finally, Sir, all of us would no doubt have heard of the singularly unromantic way Singaporean men propose marriages by suggesting the purchase of an HDB flat to their girlfriends. Could the Minister comment if MND is looking to put into place further schemes to make public housing affordable, especially for those first-time HDB buyers who are looking to settle down and start families?

Affordable Public Housing

Dr Lim Wee Kiak (Sembawang): Mr Chairman, Sir, why are HDB flat prices so high? What is in the pipeline currently now to help HDB mortgagees?

In the 1970s, prices of 3-room, 4-room and 5-room new HDB flats were $15,000, $20,000 and $25,000 respectively. A graduate starting pay in the 1970s was around $1,000. That means he could pay off his flat within 15 to 25 months with his salary. Today graduates' starting pay is about three-five times higher than that in the 1970s but the prices of our new flats have gone up by 10-40 times.

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Young couples today face a challenging situation in home ownership as private property is mostly beyond their reach and new HDB flats are hard to come by. As MPs, we all have encountered many couples who have

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gone balloting for a few rounds of flats without success. Many finally relented to the resale HDB market, paying exorbitant cash-over-valuations as well as high HDB resale prices.

Various reasons can be attributed for the rise in HDB prices. The most important is the switch by HDB from a cost-based pricing approach to a market-based pricing approach. The market-based pricing approach has resulted in escalation of both new and resale flat prices as both are benchmarked to one another in an upward spiral manner.

Housing is the single largest investment by most Singaporeans. The high cost of housing has many repercussions as it results in higher cost of living, reduction of resources for other pursuits such as education and investment, and inculcates a risk of aversive culture as most will not take risk in their careers.

I suggest the building of "no frills" flats and price them based on cost-based approach instead of market-based approach. These "no frills" flats should be built with only basic amenities rather than the full complement of covered linkways, gardens, playgrounds and barbeque pits. In doing so, we can lower the construction cost and price these flats well below $100,000. The Government can take time to improve the amenities so their prices can appreciate with time just like a bottle of good wine.

The current prices are priced too high and there is limited room for any price appreciation in the long run. The amenities are so comprehensive that it leaves no room for MPs to improve the estate further.

We can lower the cost by reducing the lease to 80 years instead of the current 99 years, or by reducing the size of the unit and by building "no frills" flats.

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I suggest the Government lower the costs of HDB flats by all means and realign the HDB with its mission of building low cost, affordable housing for the masses again.

The Senior Parliamentary Secretary to the Minister for the Environment and Water Resources (Dr Amy Khor Lean Suan): With close to 90% of our population living in public housing and owning their flats, public housing affordability is both a critical and uniquely Singaporean issue which affects not only the housing options of citizens and PRs but also has implications on the cost of living.

Public housing affordability is a perennial issue, whether in good times or bad. Due to a strong economy in 2007 and the first half of 2008, prices of HDB new and resale flats continued to escalate, outlasting even the prices of private residential properties which had already started retreating. This has led many Singaporeans, especially newly-weds and potential first-time home owners to feel that they are being priced even out of public housing.

As resale flat prices have recorded hefty price increases, many young couples are unable to afford resale flats even with a housing grant and say that their only option is to buy a new HDB flat. But here lies another problem. Due to strong demand for new flats in the last few years, many have been unsuccessful in getting a flat even after numerous tries. Increasingly, I am seeing young couples coming to my MPS to appeal for faster allocation of a new HDB flat. In the last two years, it is hard even to get new flats in outlying areas like Jurong West and Woodlands, once shunned as " ulu " due to strong demand.

The move to increase the maximum Additional Housing Grant (AHG) from $30,000 to $40,000 and raise the household income ceiling from $4,000 per

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month to $5,000 per month are thus welcomed as they would help improve the affordability of public housing to first-time buyers, specifically low-income households. Since the AHG was implemented in 2006, it has been revised twice, once in 2007 and then this year under Budget 2009. However, rapidly rising resale flat prices could cause public housing affordability for first-time buyers to lag prices unless housing grants are revised regularly.

On the other hand, in a downmarket the prices of both new and resale flats tend to be more sticky as the Government could be cautious of the impact of reducing the sale prices of unsold new flats on existing home owners, whilst sellers in the resale market may hold out for better prices. I would, therefore, like to propose that the HDB commit to regular reviews of both the CPF and the additional housing grants at, say, yearly intervals to ensure that public housing remains affordable, at least to first-time buyers and low-income households.

Furthermore, the HDB should also look at pegging the prices of all new flats to the market prices of comparable resale flats at, say, the beginning of the year. This is similar to JTC's pricing of its industrial premises. Such yearly revisions will give more transparency and certainty to the pricing of new HDB flats and help mitigate the problems of affordability of new flats regardless of the state of the market. I would also add to what my Parliamentary colleague Dr Lim Wee Kiak said, not help to cause spiralling in prices of both resale and new flats because they feed on each other.

Er Lee Bee Wah (Ang Mo Kio): Sir, very often my residents lament to me that they have been balloting for a new flat as many times as they had tried their hands at Toto and 4-D, and both end up having

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the same results. In my resident's words, " boh chai, boh chu " means no luck, no house.

We certainly need more smaller HDB flats to cater to those who are getting married, the ageing population and those who are downgrading their residences because of the economic downturn.

Currently, studio apartments and 2-room and 3-room flats are in great demand and more of these should be built at a faster pace. To increase affordability of housing, we should avoid building flats which look like condominium with value-added features. These should be left to the private developers. We should help the newly-weds start their own home. Is HDB thinking of other ways to help these couples? Housing is a basic necessity.

Enhancement to the Additional Housing Grant

Mr Liang Eng Hwa (Holland-Bukit Timah): Sir, one of the most visible aspects of Singapore's progress and development is in the area of public housing. At 95% home ownership, mostly in public housing, Singapore’s housing achievement has been widely admired by many countries. This is a commendable feat.

However, the severity of this downturn will impact Singaporeans’ financial ability to purchase homes and service their mortgages.

In most countries, even in the best of economic times, such high home ownership would not be possible to achieve. There will be segments of the lower income group, perhaps the lower 20%, who will either be unable to afford the initial downpayment and/or not be able to obtain loans or the inability to service the loans. In fact, this could have been the case for Singapore as well.

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In Singapore, according to the Department of Statistics, our lower income 10% of the households earned an average monthly income of $1,310 in 2008. Given our cost of living in Singapore, this group of Singaporeans survives on very thin margin for error in their day-to-day endeavour to make ends meet. This is already the case even without housing commitments.

It is, therefore, remarkable that we are able to maintain such a high home ownership rate, even for our citizens in the lower 20% of our income group.

Three crucial features in our public housing policy make this high home ownership possible. They are, firstly, HDB flats are sold at subsidised price, secondly, generous housing grants, and thirdly, the HDB concessionary loans.

I am glad that the Government has, in response to the severe economic crisis that we are facing, further enhanced the CPF Housing Grants. I look forward to hearing further details from the Minister on the enhancements.

While I applaud the Government enhancements to the AHG, I also hope that MND can look into the unintended situations created in our efforts to make home ownership more affordable to the first-time flat buyer.

Often in my Meet-the-People sessions, I have residents who come to see me with regard to the difficulty they face in servicing their mortgage loans. They are usually from the lower income group with earnings of less than $2,000 per month. Besides working on a shoestring budget, their income streams are often uncertain as they are the most vulnerable in a downturn. Occasionally, when they are faced with any unforeseen circumstances or mishap at home, they will run into arrears for their mortgage repayments.

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When I probe deeper into their situations, many of them are actually second or third-time home owners. In fact, what most often happens is that with the housing grants, the subsidised prices and the concessionary loans, they are able to get by with the purchasing and servicing of their first flat. They can manage the mortgage repayments because of the small loan quantum required. However, more often than not, the home owners would be tempted to sell their flats and cash out the gains as soon as the minimum occupation is served out. Given that they had bought the first flat at a subsidised price coupled with the generous housing grant, there is usually quite a tidy sum of cash proceeds. The problem begins when they buy another flat, now without the housing grant and the subsidised price. Their loan quantum will have to be increased and the corresponding monthly repayments increase sharply as well. So if the income level of these home owners has not increased sufficiently, they will soon run into problems servicing their mortgage repayments. The arrears will pile up and often leading to the dreadful consequences of compulsory acquisition.

I hope that the Ministry will study ways to minimise this undesirable situation from recurring. Among possible measures – can HDB have dedicated financial counselling for these Singaporeans who are contemplating such a move so that they can be better advised on their new financial commitments?

Also, can the Ministry also look at ways of incentivising first-time home owners who have enjoyed the generous grant to stay in their flats longer before selling?

Sir, in this downturn, other than enhancing the AHG, I hope that HDB can also enhance the existing financial assistance schemes, helping those who have problem servicing the mortgage

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repayments due to the economic crisis. While downgrading to smaller flat is one option, there may be instances where high relocation and social costs make the downgrade not worthwhile. It is often the children who suffer when a family needs to downgrade and move to a new home, especially when it involves the change of schools.

Single Parents

Ms Eunice Elizabeth Olsen (Nominated Member): Sir, the Prime Minister has said Singapore will be a caring and inclusive society under his Government. With this promise in mind, I would like to speak for a group of people who might feel that they have been left out – single mothers.

The public housing policy for single mums has not changed, and those under 35 cannot buy HDB flats unless they go through a difficult process that is assessed on a case-by-case basis. Mother and child are not considered a family unit.

Sir, why does the Ministry keep a housing policy that undermines many other Government policy objectives? The authorities say they endeavour to prevent dysfunctional families. Is this better served by allowing mothers to find a roof over their head if they can afford to, or by preventing them from doing so?

The Finance Minister said Singapore must be the best home to nurture our young. How is this served by preventing some of our children from benefiting from the security of their own home?

MND says it works to make home ownership a pillar for Singaporeans, to provide an asset that will grow in value. Does excluding single mums and their children strengthen or weaken this pillar?

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Most of all, when it comes to single mums, how can the Prime Minister's promise be best fulfilled?

Sir, at the very least, let us start somewhere. Why not allow single mums above 30 to be allowed to buy a flat?

I can imagine the Ministry might say that the priority is for family units consisting of a father, mother and child. Sir, there are ideal families, but a mother and child are a family too. We allow divorced mothers to own a flat, why not single unwed mums. What is the difference? Ultimately, the fabric of our community is made up of all families, big and little. The question the Ministry must answer is whether their policy actually strengthens our families, or undermines our community and whether the Ministry is undermining or advancing our national interests on balance, as I have just listed, and in reality. I repeat, on balance and in reality.

Speaking of divorced mums, I would next like to touch on how a good number of them find it hard to afford their own homes, especially those who have little in their CPF accounts.

I recently came to know of one, whose husband walked out on her and their two children. She was a stay-at-home mum for a few years, with very little CPF and is not confident of buying a flat. But she probably would not qualify for public rental flats, either.

Sir, what can be done for these mums? Is it possible for those who had bought only one subsidised flat to purchase a second smaller flat direct from the HDB? Or can the HDB at least offer them concessionary loans, even if they buy resale flats?

Sometimes, divorced mothers have to wait for their matrimonial homes to be

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sold before they can find new housing, which can be delayed by uncooperative dads. How can the Ministry help speed up the process?

HDB Downgrading

Mr Baey Yam Keng (Tanjong Pagar): Sir, I have many residents coming to my Meet-the-People sessions appealing for a second concessionary housing loan to buy a smaller or same flat-type. These are people who have fallen into financial difficulties and have to downgrade their flats. It is a practical and prudent action of these people who are trying to live within their means. The assumption that they could tap on their sale proceeds does not always hold true. Sometimes, there are no sale proceeds. Even if there are, the money is usually used to settle debts, arrears and other financial commitments. Under such circumstances, they usually cannot get bank loans too. This group of no-choice downgraders is faced with no roof over their heads. And they may never get a second loan as they cannot ever afford a bigger flat.

I would like the Minister to liberalise the second concessionary loan guidelines so that it can be used for downgraders.

On a separate but related matter, I would like to talk about the CPF housing grant. HDB provides an additional $10,000 to encourage family members to stay nearby. It applies to both parents and married children buying a flat in the same town or within 2 kilometres.

The restriction is that the applicant must not have enjoyed HDB's subsidy before. As most elderly parents would have had the subsidy

when they applied for new HDB flats in their younger days, they are not eligible. So I believe this grant has mostly been given to the children.

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That creates a situation. Many of the elderly parents live in mature estates like Queenstown. As there are limited new flats built in such areas, the children have to buy resale flats. The CPF housing grant does come in very useful as the prices are usually much higher than resale prices in the less mature areas. Together with the fact that mature estates are usually more developed with amenities and closer to town, this creates a strong demand for resale flats in mature estates.

I would like to suggest that the additional family CPF housing grant be also applicable to parents who have had a subsidy before but choose to move to new towns where their children are staying, places like Sengkang and Punggol. This would create a demand there and balance the age profile of residents in mature and new housing estates.

I also urge our town planners to have a good mix of studio apartments, 2-, 3-, 4- and 5-room flats in each estate for this reason. The elderly tend to want to downgrade and there needs to be a choice for them in newer towns.

Housing Needs of the Elderly

Dr Muhammad Faishal Ibrahim (Marine Parade): Sir, it was previously announced that the Lease Buyback Scheme (LBS) will be launched this year. I have met many residents who have asked me about the implementation of the scheme. Will it be anytime soon? Can the Minister give the House an update?

One common concern among the elderly is whether they will leave anything behind to their children as they pass away. If the elderly in the LBS passes away before the end of 30 years, what will happen to the flat and the balance of his annuity money?

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Sir, following the announcement about the LBS, I have also met elderly residents who may not be able to meet the criteria to participate in the LBS. These include those who live in larger than 3-room flats, and those who may have enjoyed more than one housing subsidy in the past. Will the Ministry consider having variations in the LBS policy to allow residents having different circumstances to have the opportunity to monetise their assets and have a secured retirement here in Singapore?

Sir, besides the LBS, many elderly I have met have also called for more development of studio apartments. Can the Minister share with the House on the development plans for such a housing option? Where are these flats going to be developed? What is the demand for such flats and how can the supply meet the needs of such demand?

On a related issue, does the Minister think that the current lease structure of land being sold for private residential development in Singapore is the most optimal one, taking into account the current needs of the society, such as ageing population as well as the current socio-economic landscape, such as globalisation? Among us, there may be elderly Singaporeans and perhaps foreigners who may like to stay in private developments with shorter leases. These are likely to be cheaper and will help in their planning for a secured retirement here in Singapore. I would like to ask the Minister if there are any plans to have variations, as in shortening the lease structure of land sold for private residential developments here in Singapore, to cater to our ageing society. Has the Ministry received any request for the development of private residential developments with shorter leases?

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Home Affairs (Mr Masagos Zulkifli B M M): Sir, of late, I have noted an increase in the number of elderly residents who are requesting for assistance in the form of financing their monthly utilities bills and disbursement of vouchers to purchase daily necessities. They are usually unable to secure gainful employment owing to their age and often not in the best of health. These elderly folks are experiencing a great challenge to live the remaining period of their twilight years.

At a deeper level, there are also cases where these elderly residents are left with no choice but to sell their homes to deal with their financial woes and then later, cannot get along with their children or maybe their in-laws whom they have to live with after they sold their flats. HDB, or MND, has introduced a policy for these people to monetise their housing equity to meet their retirement needs, if they live in 3-room flats. Under the Lease Buyback Scheme which was announced, there is a housing equity lock, for which HDB will provide a subsidy of $10,000. Out of this total amount, $5,000 should be given to the household as an upfront lump sum. The household promises to stay in their flat which will be left with a 30-year lease. Following the details of the LBS, can the Minister for National Development share with us on the exact date where the Lease Buyback Scheme will be launched?

Like Dr Faishal, I would like to know if this is a step forward in ensuring that elderly Singaporeans, who are not well off, do not fall through the cracks in the society. There is also a need for more clarity as to what will happen to the flat if the elderly passes away before the end of the 30-year lease and the balance of the annuity money. Would the balance of the annuity money be handed over to the public trustee or even a charitable organisation? In addition, would HDB also consider extending the LBS to elderly residents who occupy 4-room flats or bigger, as at present this scheme is

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confined to those who are living in 3-room flats or smaller?

Mdm Ho Geok Choo (West Coast): Sir, just like my colleague before me, I would like to know when the Lease Buyback Scheme would be launched. Sir, I am also keen to know how is the Ministry going to promote awareness of this scheme. Some of the elderly residents are illiterate, so advertising the scheme in the newspapers will have very limited effect. TV advertisements may be more useful but some may not have TV sets as well. Perhaps, the HDB can appoint officers to visit such elderly residents and advise them.

As I understand it, under this scheme, the elderly person sells back to the HDB the tail end lease of his flat at market rate. He then gets a 30-year lease on his flat. The elderly gets a $10,000 subsidy out of which $5,000 is paid to him upfront. Why are the elderly not able to get the full $10,000 subsidy in cash upfront, especially if they have pressing needs?

Sir, society has evolved and baby-boomers prefer to stay on their own. I urge the HDB to build more of the Studio Apartments for the elderly. I would like to know what special scheme will be made available to them.

Sir, in Hong Kong, the Hong Kong Housing Authority has a number of options for the elderly. There are different types of housing in public rental estates designed to facilitate the everyday lives of the elderly. I would like to know how HDB can offer a wider range of housing options for the elderly in line with changes in their lifestyles. How can the elderly be integrated with the younger families in the community, such that they do not become a forgotten lot? On the other hand, how can we be sure that there is enough planning and designing that go into such housing, such that the dementiated will

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not become an inconvenience to their neighbours?

In my estate, which has a high proportion of elderly, I get complaints about the inconveniences suffered because of the behaviour of their lonely elderly neighbours, who could be throwing stuff down their high-rise flat or making noises in their flat in the middle of the night. Sir, I urge the HDB to continue sending teams to countries, like Japan, that have more experience in handling housing needs of the elderly.

The Minister for National Development (Mr Mah Bow Tan): Mr Chairman, Sir, as Mr Liang Eng Hwa alluded to just now, our high home ownership rate has been a major Singapore success story. Statistics show that over 80% of Singaporeans live in public housing and over 95% of them actually own their own homes.

This is a remarkable home ownership rate. In fact, I believe it is one of the highest, if not the highest home ownership rate in the world, and more remarkably we have achieved this without going into heavy taxation or suffering a sub-prime crisis as in the US. Rather, through generous Government subsidies, whether it is in the form of a housing grant or whether it is through subsidised loans and an emphasis on prudence in home purchases, the vast majority of Singaporeans need not worry about not having a roof over their heads, even in this economic downturn. For those who face difficulties, the Government will help them cope with the economic crisis, including their housing problems. I will elaborate on this later.

Let me touch a little bit on the philosophy behind our home ownership programme. I have explained this before but I think it is worth reiterating.

We adopt a life-cycle approach in our home ownership programme, so that the

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housing needs of Singaporeans are fully catered for over their lifetime. Let me elaborate. We start off with providing generous subsidies for young couples starting their own family, to buy their first home. When their family grows and they are financially ready, we facilitate their upgrading to a larger flat with another subsidised loan and this is the reason why we have kept the second subsidised loans for upgraders. I will talk about second subsidised loans for downgraders later on. Then to sustain the value of the flat over time, their flats as well as their estates are regularly rejuvenated and upgraded through various upgrading programmes. Finally, in their later years, we help them to unlock the value that is stored in their flats to provide for their old age. So we start off helping them to buy a flat, preserving their value, finally unlocking that value.

Many Members, Dr Lim Wee Kiak, and Dr Amy Khor, among others, have asked whether HDB flats are affordable at current levels. Are HDB flats over-priced? Have they gone up in price faster than income? I think as far as affordability of HDB flats is concerned, my answer is an unequivocal "yes". We sell our HDB flats at a generous discount, either by pricing new flats below market value or giving a grant to buyers of resale flats. There is a CPF Housing Grant of $30,000, or a higher grant of $40,000 if they stay near their parents. We have also introduced an Additional Housing Grant, or AHG, to help the lower-income families. This year, we are going to enhance the AHG further. I will elaborate on this later.

When people talk about affordability, what do they mean? What is affordability? There are generally-accepted criteria to measure affordability which we have adopted. So we monitor affordability by how much a flat buyer has to pay out of his monthly household income, in order to

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service his mortgage loan. This is a commonly used indicator in the financial industry, they call it the debt-service ratio (DSR). A DSR of 30% or below, is accepted as an indication that housing is affordable. In other words, it is reasonable that you spend not more than 30% of your total household income on housing. In some countries, this measure is also used to measure how much rental they spend out of their total household income. So whether it is rental or whether it is mortgage payments, 30% or below is the benchmark to measure affordability. So what is the situation in Singapore for HDB flats? In 2008, the DSR for purchases of new HDB flats was 21% overall, well within the affordability benchmark of 30%. In other words, households use 21% of their total household income to pay for housing.

Let me give you a little bit more detail about this. I show you a chart which shows the average DSRs for different flat types, based on the median income of actual applicants last year. For example, a 2-room flat, the average price was $88,000, but the median income of buyers for 2-room flats was $1,280. And the DSR for a 2-room flat was 18%. So they use 18% of the median income of $1,280. So for a 3-room flat, DSR 24%; 4-room, 21%; 5-room, 23%; and average 21%. You can see that the DSR for almost all flat types was lower than 23%. What does this mean? Why 23%? Because 23% is the monthly CPF contribution that can be used to pay for housing mortgages. In other words, that loan repayment which is below 23% of total household income can be serviced entirely by their monthly CPF contributions. They do not need to come out with any cash. So if you take a typical 4-roomer, household income $4,000 plus, debt-service ratio of 21%, he does not have to pay any cash to buy that new 4-room flat which cost about $250,000. This is the best way of measuring affordability, to show that, if you compare

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incomes with house flat prices, flat buyers in each category of flat are able to afford their flats. This does not mean to say that a person with a median income of $1,200 buying a 5-room flat will not have a problem of affordability. This is why HDB builds a whole range of flats, which will cater to different income groups.

1.30 pm

Apart from affordability, we also need to worry about the supply of flats. And many Members have asked about supply of flats. Mr Charles Chong, Dr Lim Wee Kiak, Er Lee Bee Wah, among others, asked whether HDB will offer more lower-priced flats, especially during this economic downturn. The answer is "yes". For the first half of 2009, HDB plans to launch about 3,000 flats for sale, out of which half or 1,400 will either be studio apartments, two-room and three-room flats. The basic no-frills flats, as Er Lee Bee Wah would call them. Over the next two years, there will be about 2,000 such smaller flats launched each year. We will increase the supply of smaller and lower-priced flats further, if necessary, if the demand for such flats goes up.

Another common question raised by Members in this House – Mr Charles Chong, Dr Lim Wee Kiak and Dr Amy Khor – is about residents who have complained about not being able to get HDB flats. They have balloted unsuccessfully, many times, especially in mature estates, or as Dr Amy Khor mentioned, "even in the ulu estates". Let me elaborate a little on this. HDB sells flats in two ways. One is through the balloting exercise, and one is through the BTO exercise. In the balloting exercise, the flats that are offered are those that are surplus flats after SERS-affected residents have selected their flats. So they are limited in number. They are in mature estates. They are very popular for these reasons. And it is not unexpected that when HDB ballots these flats, the number of applicants is in the

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thousands, when the flats available are in the hundreds. So as a result, the chances of applicants getting a flat successfully in these ballots are very low. And these are the ones who always come back to us and say, " I have balloted many times and I cannot get a flat".

But, that is not the only way HDB sells flats. In fact, HDB sells the bulk of its flats under the BTO scheme, which is a demand-responsive scheme. In other words, applicants apply for a flat and they indicate that they want to buy the flat, then HDB builds. So from the time you buy until the time you get your flat, typically, it is about three years, which is about the time you usually wait for a new private property in any case. All the BTO exercises that HDB has conducted in recent months have been undersubscribed. In other words, there are more than enough new flats supply from the BTO exercises to cater to the demand.

Just to give you an example, there were two BTO selection exercises that were recently completed, one was called Fernvale Residence and the other one was called Punggol Breeze. Both of these are in Punggol. After all the applicants were asked to select their flats, there were still about 200 flats left for sale. Some of those who were asked to select the flats actually did not select the flats, even though there were many flats available. We do not know why they did not select a flat. There are many good reasons, but if any of those residents were to come back and say that they could not get a flat, the first question to ask them is whether they have actually been offered but have not selected. I have received quite a few complaints or cases from Members of this House, complaining about the issue of their residents not getting a flat. The first question I asked them is to get me the details, let me know who is the person and I will check. Most of the cases that I have checked, have been cases where the applicants have

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been offered but they have not selected a flat. I have often gone back to Members with full details so that they can then approach their residents to further clarify why is it that they did not select a flat.

So the point I am trying to make is, there are new flats available. Not all flats will be available in mature estates because we do not have the land for this. Not all flats will be available immediately for occupation, but, certainly, there will be flats available, although it may not be in an estate, or on a floor of their choice. And certainly, we will make such flats available in more estates, and in a speedier manner with a wider selection over time.

Let me now move on to the issue about Additional Housing Grant (AHG). I think all Members accept and realise that we need to incentivise young couples and low-income families to buy their first homes, and the Government will give them more help to do so, especially in these difficult times. We introduced the AHG in 2006 for this particular purpose – to give the low-income an extra leg-up in owning their flats. In 2007, we enhanced this scheme and this year, we are going to do even more. How will we enhance the scheme? The maximum AHG amount for those earning less than $1,500 monthly will be increased by $10,000 to $40,000. In addition, to help not only the low-income, but also middle-income families, we will raise the income ceiling for the AHG from $4,000 to $5,000.

The AHG also has a "two-year continuous work" condition. This is to make sure that flat buyers have the ability to sustain their mortgage payments. HDB will reduce this work condition to one year. In other words, it will be easier for applicants to now qualify for the AHG. With these enhancements, we have doubled the amount that the lowest-

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income families receive, from $20,000 in 2006, when we implemented the AHG, to $40,000 today. So in two years, we have doubled it. We have also doubled the number of families benefiting from the AHG from about 4,000 in 2006 to now, about 8,000 per year.

Let me give some specific examples of how the AHG works. If you take a young couple earning $1,500 a month, buying a new two-room flat with the average price of about $90,000. With the AHG of $40,000, they will need a loan of about $50,000. To repay that loan of $50,000 will cost them $200 a month or 13% of income. In other words, all of these repayments can be made through their CPF. No cash involved.

If we take another case of a family buying a four-room flat, say, middle-income family with $4,000 household income. They buy a resale 4-room flat at $315,000 near their parents, so they get a CPF Housing Grant of $40,000, and with the added AHG of $15,000, the loan will be about $260,000. The monthly instalment will be $1,041. This is 26% of their household income. 23% of that will come from their CPF. They need to come up with $121 in cash – 4% of their monthly take-home pay. So, this is how we will incentivise and we will help low-income and even middle-income families to own their own homes.

With the above policy adjustments, families will get significant extra help to buy their first homes. But I want to take this opportunity to remind flat buyers to exercise financial discipline and prudence. My advice to young families is this – start with the right flat, one that is within your means, and upgrade only if you can afford it and when needed. I agree with Mr Liang Eng Hwa that home owners should hold on to their flats and not cash out too often, too soon. We do see, many times, families selling their flats for a good profit, use up their cash proceeds, run into

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difficulties servicing the mortgage payments for the larger flat that they have purchased. These are some of the examples, I think, all of us as Members of Parliament see in our MPS.

I want to stress that HDB flats are for the long term. They are not for speculation. They are not for quick profit. Those who have bought subsidised HDB flats are required to live in their flats for at least five years before they can sell in the open market. This helps to guard against speculation. The CPF Housing Grant and the AHG that I spoke about earlier, must be refunded into buyers' CPF accounts when the flats are sold, to ensure that flat owners do not cash out their subsidies too soon.

HDB has also put in place measures to ensure that buyers do not over-stretch themselves when purchasing flats. They do credit assessment. They require a HDB Loan Eligibility (HLE) letter so that people know exactly how much loan they can get, before they commit to a flat purchase. This may seem quite self-evident that you find out how much you can borrow before you buy a flat, but you will be surprised how many flat buyers buy a flat without knowing how much loan they can get. And this is why we had to implement the HLE. But, ultimately, flat buyers and flat owners need to exercise financial prudence and live according to their means.

Now let me turn to the Lease Buyback Scheme (LBS). Many Members have asked about it. The LBS follows upon what I said earlier. If owners hold on to their flat for the long term, they will be in a position to unlock the value of their flats when they grow old. Some Members – Mr Charles Chong, Mr Masagos, Dr Faishal and Mdm Ho Geok Choo, among others – have asked for more details of the LBS. I am happy to announce and inform them that we have finalised the details with all the relevant parties and we

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are ready to kick off the LBS with effect from 1st March this year. We will be having a major launch for this purpose and we will involve all the advisers, especially those who have larger numbers of senior citizens in their constituency in this exercise.

The LBS is one of our key initiatives to facilitate flat monetisation by the elderly. It targets those who own smaller flats, 2-room and 3-room flats, who have enjoyed not more than one housing subsidy. It is another subsidised scheme because the Government will be providing a $10,000 grant to anyone who signs on this scheme. Under the LBS, HDB will buy back the remaining flat lease, less the first 30 years. In other words, if there is a 70-year lease remaining, we will buy back 40 years and leave the first 30 years. In return, the lessee gets a $5,000 upfront sign-on bonus and a lifetime income stream from a CPF annuity plan. $5,000 upfront plus income for life.

So, if I take an example of a 62-year-old male lessee of a 3-room flat with a typical resale price of $236,000. Under the LBS, he gets to stay on in the same flat albeit with a reduced lease of 30 years. After he receives his first LBS ang pow of $5,000, he will continue to get monthly payouts of about $530 for life. $5,000 cash upfront and $530 for life, and he remains where he is. He can do whatever he likes. He can rent out an extra room. He can move. He can rent out one or two rooms and keep the cash. And on top of that, he has the CPF LIFE.

Mr Masagos and Dr Faishal asked what will happen should an LBS applicant pass away before the end of the 30-year lease. If such an unfortunate event happens, his wife or child will be given the option of either staying in the flat for the rest of the 30 years, or getting a refund of the remaining flat lease. Further, they will be given the full refund of the undrawn premium from the annuity

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plan. Let me elaborate. For example, if $100,000 was used from the sale of the flat to purchase the annuity plan, and the lessee passes away after receiving $10,000, his estate will be given the remaining $90,000, so he will not lose any of the annuity that is unused.

And if the applicant lives a very long life – that is a very good and happy situation – the annuity will keep paying him for every month of his life even beyond 30 years, even after he has exhausted the 30-year annuity plan. For those who live beyond the 30 years of the flat lease, we will guarantee them a roof over their head thereafter. We will look at individual cases. If there is a need and a possibility to extend the lease, we will do so. If not, we will find them an alternative accommodation.

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Sir, the LBS will increase the housing and monetisation options available to our elderly lessees. I strongly urge eligible flat lessees to sign on to this scheme. It is a good and generous scheme. And I would like to urge advisers, Members of this House, to explain this scheme to their residents, and I would ask HDB to work with the advisers to provide more details of the scheme especially to their senior citizens, so that more of them will be able to take advantage of the LBS.

A few Members have asked whether we can extend this scheme to other lessees, eg, 4-room flat lessees or larger flats. My response to them would be this: let us wait until we roll out this scheme for the 3-roomers and below and, say, after six months or a year, gauge the response, get the feedback from the public, and then we will decide. But I am open to the idea of extending this scheme to others if there is a good demand for it.

Let me now talk about studio apartments. I think Dr Faishal mentioned

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studio apartments as a good and popular option. It is a popular option because all the studio apartments that we have built have been taken up. So we will build more. Over the next two years, we are going to build 1,000 more studio apartments, and we will build them in various parts of Singapore. As Mr Baey mentioned, we are going to build them in non-matured towns, eg, Chua Chu Kang and Woodlands. We are going to make sure that there is a good social mix of studio apartments with other types of flats, so that there is a good ambience and community being built around them. So he might want to encourage some of his constituents to sign on to the studio apartments in places like Woodlands, Chua Chu Kang, Tampines or other places, and not just in Queenstown or Bukit Merah. All of these options will help our senior citizens and our people to monetise their flats. In these difficult times, we will commit to making sure that housing remains a key pillar of our Home Ownership Programme. And we are going to support home ownership through enhanced AHG. We are going to build more lower-price flats, and we will also introduce the LBS to offer more monetisation options for the elderly. But I emphasise these are not short-term measures that are reacting to the current situation. These are actually long-term solutions designed to help Singaporeans in need while we strengthen the social security framework, so that people not only do not have to worry about a roof over their heads but they will also have security in their old age.

So I just want to reiterate my note of caution – because I feel this is something that is not emphasised enough – that when flat buyers buy their flats, they must be prudent in their financial planning. As Mr Liang pointed out, the generous subsidies that are given by Government may encourage some people to cash out too early. These subsidies are meant to help our citizens build their nest

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egg for their golden years. They should not be treated as a windfall to be used or consumed prematurely or spent. But despite our best efforts, I grant that some Singaporeans will still fall into financial difficulties especially in these tough times, and I will elaborate on how we can help this group later on.

Flat Owners in Financial Difficulties

Dr Muhammad Faishal Ibrahim: Sir, with the economic downturn, many home owners may face retrenchments and job losses. They may struggle to pay their HDB loans. I would like to know how the HDB will help these home owners cope with their loan payments.

I would like to urge the HDB to demonstrate compassion and generosity in helping these residents.

Home owners who had gone through such experiences in the past could actually share their personal experiences with those experiencing their plight now to help the latter manage their problems better. I would like to ask the HDB if they have a platform akin to that of a support group to help these financially stricken home owners. Will the HDB consider helping the setting up of support groups for such purpose?

Sir, I would also like to urge the HDB to facilitate the process of timely downgrading for those who genuinely need to do so. This will help them avert from going deeper into their financial woes. For those whose flats have been foreclosed, we should do all we can to assist them secure alternative or temporary housing. Wherever possible, we should avoid situations where the family members are displaced due to the unavailability of housing options. We do not want a situation where the children and their parents have to stay at different locations due to the foreclosure of their

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flats. This will result in the disintegration of the family unit, lower morale and affect the development of our society.

Sir, I often observe that those who are unable to manage their HDB loans often have arrears with SP Services, property tax as well as Town Council. I feel that not only do these residents need help to pay their arrears, they would also need support to manage their stress levels and the financial knowledge and skills to get them out of the vicious cycle of outstanding loans and arrears. I would like to propose that the Government take an inter-Ministry and agency integrated approach to assist these residents in managing their current financial burden, as well as to get them stay out of the arrears cycle.

In our quest to encourage home ownership among our people, it is also important that we continue to educate them about property ownership and their responsibilities when owning properties. I would like to know what other plans the HDB has in enhancing the understanding of home ownership.

Finally, as we move deeper into the economic crisis, I am concerned that the number of housing loan arrears may increase. As such, there may be a risk of a sub-prime crisis in Singapore. I would like to ask the Ministry how the HDB intends to prevent such a sub-prime crisis from taking place here.

Dr Amy Khor Lean Suan: As at October 2008, it was reported that there are 33,000 flat owners owing HDB arrears of three months or more. This is about 8% of the 420,000 households with outstanding mortgages. While this percentage is not very high, it cannot be said to be low either. In absolute terms, 33,000 homes in arrears for three months or more is cause for concern. Sure, some of these might be just slow in settlement for all sorts of reasons – busy,

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overlooked, travelling, prolonged illnesses, etc. But I am certain that a significant number of these 33,000 originate from genuine financial difficulty. Undoubtedly, as the economic thunderstorm ravages on, this number will certainly increase. All MPs, myself included, have our fair share of residents coming to our MPS to appeal for help to sort out their housing arrears or rental woes. In fact, the number of such appeals has risen significantly especially in the last two years. Proportion wise, such appeals are among the highest in our MPS case load. Whilst MND has time and again assured this House that HDB will assist households with mortgage arrears on a case-by-case basis, we continue to see mounting unresolved repeat cases as well as new arrears cases. Admittedly, HDB has been flexible and made exceptions for some of these cases to waive the debarment period, allow them to downgrade with a subsidised HDB loan, while some have been allocated a rental flat. But the number of resolved cases remains a small fraction of the number of appeal cases we receive. Is this a sign of recalcitrants or is there something deeper? While it is not reasonable to expect all appeal cases to be resolved since not all may be deserving cases, providing some certainty and transparency through reviewing some relevant HDB policies will go a long way in mitigating the problem.

Let me make four suggestions for MND to consider.

Firstly, HDB should change its two-bite-of-the-cherry policy and allow downgraders to obtain a second subsidised HDB housing loan. This would allow even those who are not already in arrears but nonetheless have financial difficulties to downgrade. After all, the policy that only upgraders who are purchasing directly from HDB for the second time can enjoy a second subsidised HDB loan was

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implemented many years ago when upgrading was a norm. Times have changed.

Second suggestion: HDB should make available flats to be sold directly to those in mortgage arrears with genuine financial difficulty to allow them to downgrade as quickly as possible, so that they do not accumulate even more arrears.

Thirdly, HDB should also give some priority to those with severe financial difficulty and wanting to sell their existing flat, and then rent a flat from HDB.

Finally, as a concession to badly hit households during this recession, HDB should also relax its policy on loan deferments or allow home owners to dip into their CPF Special Account to pay for their housing loans.

The Senior Parliamentary Secretary to the Minister for Community Development, Youth and Sports and Minister for Transport (Mr Teo Ser Luck): Sir, I agree with the Minister that when they buy their flats, they have to be prudent. But, sometimes, when crises hit like the situation right now, we are seeing more and more cases of families that are looking to downgrade. And I have seen about 20% increase in the cases in my constituency. They have defaulted on their loans, piled up on their arrears, they tried to get private bank loans or, if they are on private bank loans, they try to get refinancing but they could not. So they are left in the lurch; they do not know what to do. And many a time when we make the appeal for HDB loans, the applications get rejected. They do not have a clear idea of what happened, neither do we. Like many of my colleagues, we feel that it is difficult to explain to residents. Maybe it is time to review the policies and what we can do for them because I see more and more of these families coming to the MPS for these cases. So I hope that the HDB or

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the Ministry can review this and help these families.

Mr Mah Bow Tan: Mr Chairman, Sir, Members have asked how my Ministry intends to help those home owners who are facing financial difficulties during this time. Let me explain what we have done and will be doing.

Firstly, as a short-term assistance measure, if households show that their income has been affected because of retrenchment or a wage reduction, HDB will temporarily reduce or even defer their loan repayments for up to six months. This gives them time to make adjustments to their lifestyles and consider longer-term options. However, reducing the loan repayment cannot be a solution in itself, especially in cases where the poor financial situation is likely to persist. The longer we stretch the reduced repayments, the more the interest accumulates. More seriously, households may be lulled into a false sense of financial security, and reduce their resolve to settle their financial problems decisively.

I am not talking about hypothetical situations here. In the last economic slowdown in 2003/2004, if you look at all the arrear cases, HDB allowed very long periods of reduced repayments. Today, what we have in the files are some 6,500 households in arrears who were granted periods of reduced or deferred repayments that accumulated to more than two years. Some of them are owing three to four years in arrears. We have hoped that by giving them more time, they would be better able to resolve their financial problems. Instead, they remain unable to service their loans and they are not nearer to a sustainable solution. In fact, their circumstances have worsened significantly, and their arrears have gone up.

This is a salutary lesson for us. If a patient needs surgery to get well, we cannot just keep on giving him painkillers. We will do him more harm in the long run

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by storing up more problems for the future. That is why HDB has shifted the focus from giving short-term relief to helping our arrear cases find longer-term sustainable solutions. To do this, we also need individual households to be realistic and prepared to make tough but necessary adjustments.

For some, such adjustment entails subletting a room or even the whole flat, where circumstances permit. In many other cases, the most viable solution is for the household to right-size their flat and reduce their loan by downgrading. So HDB will help households in financial difficulty to downgrade.

They will facilitate this process.

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First, we will provide them with an additional loan. Mr Charles Chong, Mr Teo Ser Luck, Mr Baey Yam Keng and many others have called for HDB to give downgrading loans. HDB generally will not provide another loan to downgraders because usually they have enough proceeds from the sale of their larger flat. But for those who need help in this difficult time, HDB will be flexible and will help them with another loan to buy a smaller flat. So there is no overall change in policy, but recognising the situation, HDB will be more flexible for such things. De facto , those who are in difficulty and want to downgrade will be able to get another HDB loan.

Second, HDB will make available low-cost flats where necessary to help those in need to downgrade. This is what Dr Army Khor requested for just now. This is a small vulnerable group and HDB will help them source for affordable resale flats. If need be, HDB will also directly purchase flats from the open market to sell it to them. In this way, these households do not need to pay any Cash-over-value (CoV) valuation or the HDB resale levy.

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HDB will also make available some of HDB's unsold stock of lower cost flats to these cases in financial difficulty. HDB has some stock of low-cost flats that were built in the early years that are still available and these can be sold to some of these households who are in severe financial difficulty. I want to stress that these are special measures for exceptional cases of financial difficulties.

Finally, we recognise that some households in difficulty may need temporary accommodation as they downgrade from their current flat. Some may be waiting for their new two-room flat to be completed. To tide them over this period, HDB will refer deserving cases to its managing agent for a temporary rental of a room at below market rate. Sir, by helping families to right-size their flats, we allow them to remain as homeowners. But for those in financial difficulty, who cannot afford a smaller flat in spite of our help, HDB will consider allocating a rental flat to them if they have no other housing options.

To make sure that families in financial difficulty are given proper advice, HDB has deployed special housing counsellors at every HDB branch office. The job of these housing counsellors is to look at each and every case holistically and comprehensively. So, when we talk about a sustainable solution, we are talking about painstakingly going through each and every case, making sure that they know what are options available, working out the sums. Having available those options at their disposal, HDB will be able to guide them and direct them to the right solution. This is a very complex and painstaking task as I have said. But I have asked HDB to press on because we want homeowners to find a viable long-term solution. We want them to sleep easily and soundly at night, with a roof

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over their heads without having to worry about financial problems. No effort will be spared.

Last year, HDB officers made more than 60,000 house visits on arrears-related matters and conducted over 35,000 interviews and financial counselling sessions. I have asked for these figures because I have been pressing HDB to do more and they tell me that all their officers have been harnessed for this effort. I have had to encourage them and explain to them why it is important for us to do so, even though it is a lot more work. A lot of these interviews and counselling sessions have to be conducted even outside office hours because sometimes, flat owners are not at home during the day. But they must press on because if they do not, the problems facing these households will accumulate and become worse over time. But despite our best efforts, some households are still not prepared to face up to the reality of their circumstances.

Today, there are more than 15,000 HDB loan cases that are in arrears for over a year. Some deliberately ignore HDB's frequent calls and house visits. Whilst HDB has exercised patience, at some point, a line must be drawn. If the lessee remains unmoved, HDB has no choice but to issue a notice to acquire the flat. Otherwise, his debts may spiral to the point of negative equity. This would be even worse for the flat owner.

Even when HDB issues a notice of compulsory acquisition, it is still with the intent and hope that the lessee comes to realise the seriousness of his situation. And if he is serious about selling his flat without any more delay, HDB may withdraw the compulsory acquisition notice. Otherwise, they may have to proceed. But HDB will ensure that the lessee has a viable housing option, including a rental flat, if necessary.

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So for those who fall into financial difficulty, HDB will spare no effort to help them work towards a financially sustainable housing solution, particularly, help them downgrade to a more affordable flat with another loan. Downgrading is a tough decision. It requires adjustment to lifestyle, even with some discomfort. But, ultimately, it is in the best interest of the family as it allows them to get a fresh start to rebuild and recover from their financial setback.

I want to end by highlighting a family which made such a decision. Mdm Tan Suay Yan was in this predicament and took the advice after quite a long consultation process. She wrote a letter to Zaobao to explain her experience and gave some good advice. Her husband lost his job and the family started to accumulate arrears. They downgraded to a flat that HDB found for them. They cleared their arrears and their financial situation today is much improved. In her letter to Zaobao , she used the term " ku kou po xin ", in other words, the HDB officers patiently and painstakingly gave them advice. She also urged those who are in financial woes to " jiao ta shi di , liang ru wei chu ", in other words, be realistic, spend within your means. So this is indeed what I urge loan mortgagors to do if they find themselves in financial difficulty. Do the right thing and we will help them and support them every step of the way.

HDB Rental Flats

Mr Masagos Zulkifli B M M: Sir, quite a number of residents come to see me to appeal for a rental flat during the Meet-the-People session. The situation will be exacerbated with the worsening financial situation that has impacted Singapore. The effect takes place in the form of retrenchments and pay cuts. Residents will definitely come in droves sooner or later, requesting for their respective

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Members of Parliament to intercede in the application for rental flats.

While HDB undoubtedly goes all out, trying its best to assist these needy residents, one of the most effective ways in addressing this is by building more rental flats to meet the demand, and this would naturally take time. For this purpose, I would like to ask the Minister what measures the Government will take to address the immediate issue of the increasing number of rental flats applicants, and whether a revision of the eligibility criteria will be institutionalised.

The queue for rental flats is indeed very long. I was told for every one person who has vacated a rental flat, four people are waiting to come in. There have been instances where residents who turn up during MPS, may really not be genuinely in need of rental flats. While no official statistics are available, the practice of receiving and looking into every application may have contributed to a backlog of cases, thus, not utilising effectively and efficiently the manpower resources at HDB. At the same time, this process is also holding up other residents who are in genuine need of rental flats. It is true that information is already available on the eligibility for rental flats from HDB. However, I think the public needs clarity in terms of HDB's rental housing philosophy so that only those who really qualify for rental flats will be served and attended to. This also means obviously rejections of applicants who do not qualify for rental flats.

There are also four other areas that I would like HDB to look into in reviewing this criteria, namely, income ceiling, definition of family nucleus (eg, whether grandparents and grandchild qualify), financial hardship plus negative return on sale of HDB flat, single parent and divorce cases, especially women in financial hardship.

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Mdm Ho Geok Choo: Sir, as this recession wears on, the number of people seeking HDB rental flat accommodation has increased. It was reported in the Straits Times on 25th April 2008 that the waiting time for a rental flat was two to three months in 2006. In 2008, it was about nine to 18 months. This underscores the increasing number of people who are caught in financial difficulty because of this recession.

Sir, ultimately, the goal of the Government is still home ownership and that I do support, but for the interim when times are bad, a roof over one's head, even if rented, is better than no roof at all!

Given time, when these tenants' circumstances improve, they can choose to buy over their flats. Sir, I believe if this group of needy Singaporeans cannot find affordable housing, we will soon have more social problems, like stressed out families, domestic strife, juvenile delinquency, maybe even increased crime. Sir, I would like to ask the HDB what alternatives are there if people on the rental queue are not able to get a rental flat fast enough.

Sir, having said that, I note that the MND is building 2,260 rental units this year. But is this enough? I also note that the HDB will ramp up its number of rental flats from 42,800 to 49,860 by end-2011. Sir, can we have an update every quarter on the average waiting time for such a flat so that HDB perhaps can then plan better in terms of building the supply of rental flats?

Sir, I want to commend the Government for deciding to give an additional rental rebate of one month, bringing the total rental rebates to three or four months this year. What else can the Ministry do to assist this group of people on the rental queue who obviously are in dire financial straits?

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Mr Mah Bow Tan: Sir, despite our generous housing subsidies, a small group of Singaporean families are still unable to afford their homes. These are the people that we have designed the public rental scheme for because it serves as a final safety net for them to provide for their housing needs. We will further enhance this rental housing safety net to help low-income Singaporeans to weather the economic downturn. We will do this in several ways. Let me elaborate.

First, we will continue to keep the rents low for our public rental tenants. Second, we will increase the supply of rental flats significantly. And finally, we will take steps to manage demand and safeguard rental flats for the deserving, so that they are not crowded out by the less needy. Let me talk about how we will keep rents low.

The Minister for Finance announced in the Budget speech that we will give our rental tenants another month of rent rebates for 2009. One-room tenants will enjoy four rent-free months for the whole year; 2-room tenants will enjoy three rent-free months for the whole year. These rent rebates are on top of the heavy rent discounts that we are already providing. Most of rental tenants, in fact, 85% of our rental tenants, pay the basic tier rent. This basic tier rent is less than 10% of the open market rate. Taking the increased rent rebates into consideration, the total rent that they need to pay for 2009, ie, for the whole year, for a 1-room tenant, is $240 and, for a two-room tenant, it is $540. If we take the current rentals that they are paying, if you discount it and remove the rebate for those months that they do not have to pay, that is what they are paying – an average of $20 a month for one-roomers and $45 a month for two-roomers.

For the other 6,000 tenants with relative higher income, their rents are not fixed but pegged to 30%-50% of the

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market rate. To help this group of tenants, we have deferred the market adjustment of the rental rates.

For example, 30% market rate for 1-room flat is $160 per month, but HDB charges the tenant only $110 a month. We will freeze the market rate adjustment for 2009.

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In addition, HDB has frozen its rental rate alignment exercise. This is a little bit complicated. So let me explain a little bit. You remember that in November 2006, HDB announced that tenants earning above $800 per month would see their rental rates increase over two rounds of tenancy renewals, or four years. So every round is two years. This is the rental alignment exercise. The first round started in November 2006, the second and final round was supposed to start in November 2008. It would have affected 6,000 rental tenants. But in view of the economic downturn, HDB will freeze this second round of rent alignment for a year. So it would not be implemented by November 2008, as originally planned.

Next, let me address the supply and demand of public rental flats. Mr Masagos asked how my Ministry intends to cope with the increasing number of rental applicants. Yes, every month, there are more new applicants than there are people giving up their rental flats. Three hundred new applicants join the rental queue every month. The number of people returning flats is 150. Over and above that, there are over 500 appeals from Members of this House each month, from those who do not qualify for rental housing, who are not on the queue at the moment. I think all Members would know that this is probably the largest item on the agenda, as far as MPS is concerned.

On the queue today, there are now 4,550 applicants. Some are really in need of help but they are on the queue. They

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have no housing options and the rental flat is really the final safety net for them and their families. For this group, we have started to build more rental flats since 2007. Going forward, HDB will accelerate its rental flat building programme. So, by 2012, we will increase the stock of HDB rental flats to 50,000 units, from the current 42,000 units, that means an increase of 20%.

But just increasing the supply alone will not solve the supply-demand mismatch. There is an overwhelming demand for rental flats from those who have alternative housing options. Who are these people? They either have the financial means to buy or rent a flat in the open market, or they have family members who could easily accommodate them.

HDB’s rental flats are very heavily subsidised so it is not surprising that these people also join in the queue. As I said, the rent for a 1-room flat for the whole year can be as low as $240, which is probably half of one-month rental for a 1-room in the market. So our rental flats have now become a cheap and attractive option for those who want to cash out of their ownership flats, or for children who want their elderly parents to live elsewhere or for elderly parents who want to live away from their children.

Let me give Members two real-life examples. One rental applicant had a 5-room flat, sold it after paying off his loan, received net proceeds of $325,000 – more than enough to buy a studio apartment, a 2-room flat, a 3-room flat or even a 4-room, for that matter. But he is now in our rental queue. He meets our current eligibility criteria: he has zero income, he waited 30 months after selling his flat. So he is eligible under the current rules. Another applicant – an elderly couple – happily staying with their child in a private condominium. They can continue

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to do so. Instead, they chose to apply for a rental flat. Again, they qualify – they are retirees, they have zero income.

These are, by no means, isolated cases. Two-thirds of applicants in the rental queue currently comprise households who used to own an HDB flat. In other words, they are second-timers. They bought a subsidised HDB flat and enjoyed a housing subsidy previously. Now they have cashed out and they are coming back for a heavily-subsidised flat. The majority of them, of these two-thirds, do not seem to have financial difficulty when they sold their flats – no financial arrears, not divorce cases, etc. Forty per cent of these ex-lessees received more than $90,000 as sales proceeds. As I said earlier, they could easily afford a studio apartment or a small resale flat. These applicants on the queue should not be competing with needy families for rental flats.

They do qualify for rental flats under our current eligibility criteria. We need to take decisive steps to correct this. We must reinstate the Public Rental Scheme to its rightful role as the final safety net and the housing option of last resort for the needy. If everybody jumps onto this safety net, whether they deserve it or not, the safety net is going to break.

So, with immediate effect, HDB will implement revised eligibility criteria for HDB rental flats. We will adopt three main principles: first, rental flats should only be allocated to those who cannot afford their own housing. The current household income ceiling of $1,500 per month does not stop retirees who have zero income but are asset-rich from accumulated savings or from buying and selling subsidised HDB flats, from joining the rental flat queue. Therefore, HDB will take into account both the income and the assets of rental flat applicants who have

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enjoyed at least one housing subsidy. Those with substantial savings, as well as those who realised significant proceeds from their last flat sale, will not qualify for a rental flat.

Secondly, the family, not the Government, should be the first line of support for those in need. Therefore, an elderly applicant will not qualify for rental housing if his children own flats or houses, and are able to accommodate him.

As rental flats are heavily subsidised, HDB will continue to permanently debar those who have enjoyed two housing subsidies. This is a current criterion, and we will maintain that. We will also retain the 30-month debarment for those who have just sold their flats. I assure Members that appeals that are based on financial hardships that do not meet these new eligible criteria will continue to be evaluated based on the merits of each case.

HDB will release the details of these new eligibility criteria later today.

Sir, in conclusion, let me reiterate our commitment to ensuring that all Singaporeans will have a roof over their heads. We will build more rental flats. We will also ensure that they are allocated to deserving cases only, so that those public rental flats that we do build will be truly an effective final safety net and housing of last resort for the truly needy.

Home Improvement Programme and Spalling Concrete

Mdm Cynthia Phua (Aljunied): Spalling concrete is not a new issue in Parliament. Spalling concrete in existing HDB flats affects ceilings. So far, HDB has treated the spalling in non-wet and wet areas differently. HDB has assisted financially in the repairs for wet areas as these are serious. Last year, the Minister wrote in

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his reply that HDB had assisted 2,300 lessees affected by spalling concrete over the past 12 months. The figure of 2,300 lessees affected may seem small in relation to the nearly 900,000 HDB units islandwide. But I believe this is only the tip of the ice-berg. Many of the residents have carried out the repair themselves. As they have to pay for the costs of repair, they go for a cheaper contractor.

As a landlord, can HDB organise such repairs on a national level? By calling a bulk tender to carry out such works, there will be the economies of scale and residents can have the repairs carried out at competitive pricing. The Minister has said that the cost to lessess is an average of $40 for each repair. This is not so. Residents tell me the cost of repair to the lessee is about $200, when I see them in MPS as well as during house-to-house visits. I have asked the lessees about the $40 payment but their reply is that the contractor said that the area repaired is bigger. Can the Minister explain the cost of $40? Is it for an average size of repair? Maybe this question will help. What is the cost of repair for one square foot of spalling concrete?

What is the guarantee period for each repair? Many a time, residents come back and say that the repair was done at one area and the same area was spalling again a few months, or after a year. Can HDB look into a period of warranty of at least three years or more, considering that since 2005, HDB has provided a 10-year warranty against spalling concrete for new flats?

Should not the whole ceiling be repaired, instead of spot repairs? Is there any better method of repairs to ensure warranty of more than 12 months? Can HDB do more research into old flats as the problem lies here, besides we are already 90% built up?

Would HDB consider helping its lessees fund the repair of non-wet areas

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in view of this difficult time? Moreover, such repairs, if done by the HDB under the Home Improvement Programme (HIP), are free of charge. But we cannot wait until HIP comes their way. We do not want the concrete to fall on the heads of the residents when they cannot afford to pay for repair.

The Home Improvement Programme was announced last year in February as an alternative to the MUP. This programme helps to address the spalling concrete at the wet areas. What is the status of the programme now? What are the learning points? What is the cost of redoing the toilet? What is the cost of HIP? I have a precinct in Paya Lebar and it has many spalling concrete problems. However, it was rejected for HIP and I do not know the reason. Can I appeal to the Minister to reconsider this precinct for the HIP? Can the Minister update us on the plans going forward? What is the budget for HIP and how does it plan to implement the programme for the residents? And in light of the economic downturn, will the Ministry consider escalating the HIP?

Lift Upgrading

Mr Charles Chong: Mr Chairman, Sir, could the Minister give us an update on the lift upgrading programme that has been targeted for completion by year 2014? How many blocks have already been completed and the number of blocks that has yet to be completed? In view of the current economic recession, would there be a slowdown in this programme? Could the Minister also tell us if all Town Councils are projected to have sufficient sinking funds to pay for their share of the LUP before the 2014 deadline?

Sir, on another subject, the HDB has already constructed lifts in some multi-storey car parks. However, in the vast majority of multi-storey car parks, there are still no lifts. In view of our ageing

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population, could the Minister consider starting a programme to install lifts in all our multi-storey car parks so as to make these car parks more handicapped- and elderly-friendly, and perhaps also more convenient for young parents with children to carry?

Dr Lim Wee Kiak: Sir, I was so happy when MND informed me that my precinct in Yishun was selected for LUP. The LUP received very strong endorsement from the residents with some blocks achieving 100% votes.

However, we heard that due to sand shortages as well as the escalation of building costs, new construction techniques and materials were used to speed up construction and at a lower cost. We are quite happy as well. But this happiness was short-lived.

Our neighbouring precincts were selected for LUP. They used conventional concrete shaft while my precinct was the first to try out the aluminum cladded lift shaft. When the construction started, I received many feedback as well as emails from disappointed residents complaining about the poor aesthetics of the aluminum cladded lift shaft which looks out of sync with the concrete HDB blocks. There were also complaints about potential poor insulation problem.

Can the Minister address these issues from the ground and assure the public of the safety, aesthetics and insulation of the new lift shafts?

Mr Low Thia Khiang (Hougang): Sir, I noted that prefabricated metal lift shaft is commonly used now, instead of four wall concrete lift shaft under the LUP. The Minister has also mentioned in this House that this change will reduce the total cost of construction. I would like to request the Minister to provide a detailed breakdown of the cost reduction and how

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much this translates into savings for the HDB, the Town Councils and the residents, in terms of dollars and cents. I would also like to know whether the metal lift shaft would be the choice of all future LUPs. If that is so, will the use of steel, which is by nature a better conductor of heat, increase the frequency of breakdown of various heat-sensitive mechanical components of the lifts? This would have implications on the maintenance cost. As Town Councils and, eventually, residents are responsible for the cost of the maintenance of lifts, a Town Council should be given a choice to decide the type of lift shaft they prefer under LUP.

Hougang Town Council recently called for a tender to replace

54 number of lifts to 26 blocks of flats, but MND informed the Town Council to prepare financially for the coming LUP in Hougang estate. Although the objective of the Government is to complete the LUP programme by 2014, MND has not informed Hougang Town Council on the planned commencement and completion dates for the Hougang LUP.

2.30 pm

Sir, such information is vital for Hougang Town Council to plan and accommodate works by the HDB, so as to avoid wastage of the Town Council's precious resources. Such wastage of resources was experienced in the ongoing demolition of the HDB blocks at Hougang Avenues 3 and 7. Just a mere seven years after the lifts at these blocks were upgraded at a cost of some $400,000 to $500,000, the HDB refused to reimburse Hougang Town Council the cost for the expired cyclical period. Had Hougang Town Council been informed of the plans of the Government, the money could have been saved and put to better use.

Mdm Cynthia Phua: Sir, the HDB Lift Upgrading Programme has improved the

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quality of life of many Singaporeans. With this love Budget, we hope that LUP, which is part of the infrastructure programme to enhance our living environment, will be uplifted. Can the Minister update the status of the programme and how fast his Ministry has been rolling out the LUP? And will there be any cutback in the programme, in view of the higher cost of materials in 2007 and 2008?

I understand that HDB has reduced the number of blocks for LUP because of cost factor. Can the Ministry reveal how many blocks do not qualify for the HDB LUP, because of the $30,000 per benefiting unit cap? And what plans does the Ministry have in mind to improve the mobility and accessibility for residents of these blocks? In view of the recent downward trend of the material cost, will HDB ramp up its programmes? And is the $30,000 cap still a realistic figure after the hike in 2007 and 2008 material cost and, hopefully, with some downward adjustment in 2009? Has HDB reviewed its cap of $30,000? Will it increase the cap to allow more blocks to be eligible for the LUP? It is an infrastructure programme that will enhance the living condition of the residents and it is essential.

Secondly, will the Ministry reveal the amount payable by the Town Council as co-payment for HDB LUP, since it is an infrastructure programme and Town Council will need to pay more to maintain the new flats, because of more new landings and many more additional new flats?

Another point I would like to raise relates to the sinking fund, which has come under the limelight recently. The sinking fund is a sum total of monies saved up over the years for the purpose of paying for big-ticket items which need repairs, refurbishment or replacement. Without this, residents will find their estates deteriorating into a slum. Has our

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Town Councils been taking steps to grow this fund? There are concerns that the sinking fund may not be adequate in time to come. Firstly, as estates get older, there is the need for more regular maintenance. Secondly, the cost of upkeep has risen. And thirdly, the conservancy fee has been unchanged. As a result, the funds that are at the disposal of the Town Councils have not kept pace with the market, such as inflation, cost of labour, material, and energy. The Town Councils have also used parts of the sinking fund to co-pay for the HDB LUP.

I, therefore, like to ask whether the Ministry would consider helping Town Councils keep up with their seasonal cyclical maintenance by reinstating the Cyclical Works Grant which was granted to Town Councils in the earlier years, since Town Councils have to pay for part of this infrastructure cost, especially when there are more lifts in each block and these are new infrastructures.

Town Councils

Mr Charles Chong: Mr Chairman, the Town Councils are currently required by regulation to set aside a minimum of 30%-35% of the collection from the Service and Conservancy Charges into their sinking funds. The money in the sinking funds can only be used for relatively long-term cyclical works, such as block painting, roof replacement, electrical wiring, and lift upgrading.

Could the Minister tell us if the amounts accumulated by Town Councils in their sinking funds are excessive or just sufficient to meet their long-term requirements? Now, if these accumulated funds are deemed to be more than sufficient, would MND consider lowering the minimum contributions into the sinking fund for those Town Councils with excessive sinking funds, or even amending existing regulations to allow

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Town Councils to use the net investment incomes generated from their sinking funds to be transferred into their operating funds in order to delay increase in charges?

Accessibility

Ms Eunice Elizabeth Olsen: Sir, as the Government brings forward $1.3 billion worth of Government projects, it is imperative to ensure that accessibility needs are not only taken into account, but met to the fullest extent, especially when it comes to the work being done to rejuvenate our estates.

At present, it would seem that getting this right and making it safe for the disabled and less mobile is a challenge. Just last week, I took a walk in two recently upgraded neighbourhoods – in Bishan and at Towner Road. I noticed how a lot more work is needed in this aspect of our infrastructure development.

In Bishan, the lifts at one of the blocks were recently upgraded. Very well done, except that there was a small step down from the new lift lobby to the walkway leading to the main road. Sir, I may say small step, but that is only the case for able-bodied persons. For a wheelchair user, it is an obstacle. It is a difference between ease of access and having to go around the block to find a way out. There was also a path leading to the main walkway. The path was slightly elevated. Instead of a proper ramp, a narrow and makeshift-looking slope of concrete was slapped on at an angle where path and walkway met. I asked a mother pushing a pram down what she thought of the ramp (I use that word loosely), and she said, "It's not very good."

In the other estate, there was an upgraded covered walkway leading to a bus stop. Instead of a ramp to link the

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two, there were three high steps. Sir, this is for a bus stop that is part of a wheelchair-accessible route. So, a bus stop for all Singaporeans and a sheltered walkway only for the able-bodied.

Sir, in these two estates, as my wheelchair-bound friend put it, you need to know where the accessibility points are, otherwise you have to go round in circles to find them. Surely, the Government is not investing so much to upgrade our estates and to make them more disabled and elderly friendly only to achieve the results I just described. It is a pity that the attitude towards accessibility seems to be one of getting the job done with little thought put into purpose, functionality and safety. Simply building a ramp – never mind how steep some might be – and assuming that is enough for the disabled will not do. The question of where and how, by putting the disabled on equal consideration with the able-bodied, needs to be applied.

I would like to ask the Ministry if there are any compliance standards set for accessibility in our existing and upcoming estate rejuvenation programmes, and what may these be. Second, who monitors estate renewal, from the planning to the implementation, and who would be responsible for ensuring accessibility is met? Third, are Singapore's accessibility standards aligned to any international code?

Sir, we have what it takes to integrate accessibility into our infrastructure. So let us ramp up our efforts and get it right.

The Senior Minister of State for National Development (Ms Grace Fu Hai Yien): Sir, Mdm Cynthia Phua asked for an update on the Home Improvement Programme (HIP).

The HIP is a new upgrading programme for flats built in 1986 or before that have not undergone flat

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upgrading. In FY 2007, we selected four new HIP precincts. In FY 2008, we have accelerated this to seven new HIP precincts. So far, over 13,000 flats have been selected for HIP. There are another 320,000 flats that are eligible for HIP. In other words, we have many more flats that are eligible for HIP, but our focus now is LUP, which I will talk about shortly. The repair of spalling concrete is only one of the improvements under HIP. The incidence of spalling concrete is not high. It is at about five cases per thousand flats, or 0.5%. Until a precinct is selected for HIP, spalling concrete repairs can be handled using a targeted approach, under the Goodwill Repair Assistance measure (GRA). Under this assistance scheme, HDB helps to repair spalling concrete that occurs with ceiling leaks and co-pays 50% of the cost.

The remaining 50% is to be shared by residents in the two units on top and below each other. And the $40 that Mdm Cynthia Phua has brought up in her question relates to $40 for the share. In other words, 20% share of the cost, which ties in with what she has said earlier on about an average of $200 repair bill. But as the name implies, GRA is carried out by HDB out of goodwill. HDB has no plans to extend its assistance measure to cover other aspects of maintenance and minor repairs. Home owners are responsible for the upkeep of their own homes. That is a fundamental policy rationale of our home ownership policy.

Several Members have spoken about the LUP – Mr Charles Chong, Mdm Cynthia Phua, Mr Low Thia Khiang. It has been a challenge to carry out LUP amidst the sharp construction cost increases over the last two years. Construction costs have begun to moderate recently. HDB will press on with this programme. To date, we have selected 80% of eligible blocks for lift upgrading, including those

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selected in FY 2008, which will be announced soon. The programme is on track. HDB will select the remaining 1,000 eligible blocks over the next few years, so that they can be completed by 2014. HDB has reduced costs through block procurement, reconfiguration of lift excess and introduction of machine roomless lifts, home lifts and shaftless lifts. HDB will continue to explore different lift solutions so that even more units can be eligible for LUP.

Dr Lim Wee Kiak's query touches on a new lift solution that HDB has implemented. This involves steel lift shafts clad with aluminium for aesthetic purposes. The steel lift shafts are designed and constructed in accordance with the relevant code of practice and are as safe as conventional concrete lift shafts. The use of new technology, such as steel lift shafts, not only hopes to make more units eligible for LUP, it also reduces the costs for residents as well as the costs to Town Council which has to co-pay the LUP programme. Generally, for steel lift shafts, we find them in low-rise blocks where conventional concrete method makes it very expensive because of the small number of benefiting units involved.

Mr Charles Chong asked if there will be a slowdown in the LUP, given the current economic downturn. The answer is "no". On the contrary, we intend to step it up. For FY 2008, we have selected 60 precincts for LUP, 10 more than the original intended 50. We also plan to select more for FY 2009 and to bring forward this selection by about six months. Nonetheless, we need to monitor the construction costs and the capacity of the construction industry carefully. We are mindful of the impact on Town Councils and residents who co-pay the LUP costs.

Co-payment by Town Councils for LUP has been an integral part of the

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programme since its inception. Mr Charles Chong, Mdm Cynthia Phua and Mr Low Thia Khiang have asked about it. In fact, Town Council sinking funds are meant to fund the cyclical overhaul of lifts, even in the absence of lift upgrading. Furthermore, lift upgrading is a key estate improvement item and the co-payment by all three parties, namely, the residents, Town Council and the Government, reflects the joint ownership of the LUP. The co-payment scheme has been implemented since LUP was introduced in 2001. It is a scheme that we intend to continue. When LUP was conceived then, several Town Councils indicated that they would like to help make lift upgrading more affordable for their residents by sharing in the co-payment. Town Council and residents co-pay only a small fraction of the LUP costs at 5% to 12.5%, depending on flat type. The Government bears the bulk of the costs as a subsidy for the programme.

Mdm Cynthia Phua has expressed concern about the cost of LUP for her Town Council. Towards the end of last year, we provided each Town Council with a projection of their share of the total LUP costs going forward – thus, the question that Mr Low has asked on why he was given a number of expected co-payment. Some Town Councils have raised questions on the basis of estimates and asked for further details. As construction costs are changing, we will soon be updating the Town Councils with further estimates and information in order to help them prepare for co-payment matters. This projection is to facilitate the Town Council's budget planning for future remaining LUP projects. Town Councils are given ample notice of the co-payments as they are billed in parts over several years after a precinct is selected for LUP.

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2.45 pm

Mr Charles Chong asked if the Town Council Sinking Funds are excessive. The $2 billion in sinking funds held collectively by the 16 Town Councils might appear large at first glance. However, it needs to be reviewed in the context of the expensive long-term maintenance works needed for almost 9,000 HDB blocks as well as the LUP co-payment needs. Mdm Cynthia Phua has given a very long explanation about the pressure that Town Councils are facing. Our preliminary study of the adequacy of residential sinking funds of the Town Councils has shown that they are not excessive. It is, therefore, unwise to lower the minimum contribution into the sinking funds or to allow Town Councils to use the net investment incomes generated from sinking funds to be transferred into operating funds.

As Mr Chong is aware, sinking funds are earmarked for specific expenditure and works in the future and they are vulnerable to inflation. If a Town Council does not have sufficient sinking funds to carry out the necessary works when needed, the living environment of the housing estates may deteriorate, and the health and safety of the residents compromised. It is important that the level of S&CC takes into account the long-term financial needs of the town.

Mr Charles Chong also suggested a programme to install lifts in all multi-storey car parks (MSCPs). HDB recognises the need to make our MSCPs more accessible. And since December 2006, HDB has designed all MSCPs in new public housing developments with lift access. We are also installing lifts in some MSCPs in conjunction with LUP and car park improvement works. However, as I have mentioned earlier on, our priority now is really to complete our LUP project for residential blocks and, therefore, the need is more urgent there, and we will focus our resources on that project.

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On accessibility, Ms Eunice Olsen has asked about the Barrier-Free Accessibility Programme. HDB is working closely with the Town Councils to complete this for public housing estates by 2011. The programme is on track with over 40% of blocks completed as of 2008. Residents welcome the programme on the whole. Some have given feedback about specific sites, maybe not different from some of those as mentioned by Ms Olsen, and they would bring this feedback to their Town Councils who will act on their suggestions. What we have done is to have Town Councils act as managing agent for this project, and Town Councils, being under the leadership of a local MP, would have a much better feel of the ground the needs of the residents, and they should look for solutions that best suit the needs of their residents.

The Chairman: Mr Liang Eng Hwa, you have two cuts. Take them together, please.

Property Market

Mr Liang Eng Hwa: The economic contraction and the gloomy outlook have adversely affected the property market, one of the important pillars of our economy. Since the middle of 2008, prices and rentals have fallen and the demand across all property sectors has softened.

I would like to ask the Minister if the Government has any further plans to pre-empt a severe slump in the property market that may impact asset values of homeowners and would also have further repercussions on other sectors of the economy.

Also, how does the Government intend to help the real estate industry tide through this downturn in the market?

The Finance Minister in the Budget 2009 and the Ministry’s subsequent press

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release has announced some measures to assist the real estate sector.

The general feeling, as well as feedback from the industry, is that more could be done to stabilise the market and strengthen confidence.

I would also like to ask the Minister how badly is the industry hit by the tightened credit and whether there will be any further help or new policy initiatives in the area of financing to ensure smooth functioning of the market.

Given our very high home ownership, a severe slump in the property sector could have a serious impact on the equity level of our citizens, even those living in the heartlands.

Master Plan 2008/Bukit Panjang Town

Last year, the Minister announced an exciting decentralisation plan which involved developing and rejuvenating two additional commercial centres, the Jurong Lake District and the Paya Lebar sub-regional centre, over the next decade. I would like to ask the Minister if these development plans will be affected by the economic downturn and be put on hold.

I certainly hope not as it is the right time to invest in infrastructural works now as well as the estate upgrading. Moreover, the size of the infrastructural works is also at the right bite-size for our local contractors, thus helping to stimulate the local economy.

Besides the two regions, we have also read and seen exciting development plans for Sengkang, Punggol 21, Queenstown, and so on.

As one of the MPs serving in Bukit Panjang Town, I am often asked by my residents whether there are similar exciting plans for a middle-age HDB town like Bukit Panjang. What plans would the

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Government have to develop the empty land parcels over there? Would the Minister give some indication or the planners at the Ministry take a look at it?

Master Plan 2008

Mr Charles Chong: Mr Chairman, Sir, as mentioned earlier by Mr Liang, Master Plan 08 was recently gazetted. As part of the plan, the Ministry of National Development and URA had announced exciting new plans to develop and rejuvenate certain areas in Singapore such as Jurong Lake District, the Paya Lebar sub-regional centre, and so on.

Some of the development plans also announced last year, such as Punggol 21 Plus development programme, although equally exciting, were not really new. Punggol 21 Plus is a refreshed version of the old Punggol 21 Plan that was announced some years earlier. However, due to the previous recession, the Punggol 21 Plan did not fully take off. Sir, with the current recession, will all these exciting development plans including the Punggol 21 Plus Programme be put on hold again?

Sir, I was delighted to hear the Senior Minister of State just announce that the LUP Programme would be accelerated rather than slowed down. I hope that we could also accelerate these wonderful exciting plans in the Master Plan 2008.

Redevelopment Plans for Paya Lebar Central and Geylang

Dr Fatimah Lateef (Marine Parade): Sir, URA has recently announced the masterplan for redevelopment of the Paya Lebar-Geylang areas. This area is one which is rich in culture and heritage of the Malay Community and it holds the Malay Village as well. Many residents and shopowners in the area feel a strong

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sense of attachment and thus they would like to have as much as possible retained. Will MND and URA be working closely with the inputs from National Heritage Board in planning the redevelopment for this area to ensure as much as possible of the Malay ethnic characteristics are preserved? Most certainly, if some of the structures and places cannot be retained in its original form, some sort of replication or a new structure with the unique Malay features can be done.

Sir, this area also holds hundreds of temples and clan associations. Will this be affected in any way?

Sustainable Development and Environmental Sustainability

Dr Muhammad Faishal Ibrahim: Sir, in his Budget speech, the Minister for Finance revealed that the Government plans to spend $1 billion over the next five years on sustainable development initiatives. May I know what has been the progress of the Inter-Ministerial Committee on Sustainable Development (IMCSD) in charting new strategies for Singapore's future development since it was formed a year ago? When can we expect the IMCSD to announce its findings and recommendations?

Nature Conservation - Marine and Terrestrial

Er Edwin Khew Teck Fook (Nominated Member): Sir, much has been done by the MND over the last five years to find a pragmatic balance between infrastructure development and conservation of terrestrial and marine ecosystems. I applaud the NParks for developing nature walks in the Southern Ridges, Bukit Timah Nature Reserve, Sungei Buloh and also marine areas like Chek Jawa, and setting up of a coral nursery. However, more can be done if we want to be truly a sustainable island state. A survey done recently by the Singapore Tourism Board shows that of

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the selected fauna groups, 252 species of animals exist in Singapore. However, 55 are locally threatened and will disappear if we do not do something to protect them.

In the marine ecosystem, we have lost 60% of our coral reefs because of coastal reclamation, but we are fortunate that the biodiversity has not been affected much. We are still in a position, if we act now, to reverse the trend of our dying corals. In our coral reefs, we have more than 250 species of hard corals, more than 120 reef fish from 30 families, 12 out of the 23 seagrass species found in the Indo-Pacific region. To ensure that we conserve and preserve what we have both terrestrial and marine, I have a number of recommendations. But because of time constraints, I can only mention two.

One, preserve and restore the edges around the seven fragmented patches in our nature reserves. Our once integrated forest nature reserves are now fragmented into roughly seven patches, each standing isolated with gaps in the forest cover. Fragmentations bring about population isolation among the various species causing the edge effect which has no immunity or resistance, therefore finally killing the native wildlife.

Two, conserve 10% of our natural unmodified remaining coastline. Although we have high biodiversity, the small reef size or areas mean that we need a critical area for the reef to survive and thrive. Fragmentation of our reefs like the terrestrial case does not work. I would be happy to provide the Minister with reports on all the other recommendations.

Mr Mah Bow Tan: Mr Chairman, Mr Liang Eng Hwa asked what could be done to address the weak property market. The property market is inextricably linked to the economy as a whole. It saw phenomenal growth in 2007 in tandem with the strong economic growth then. Now, with the current economic

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downturn, the market has similarly corrected. The Government cannot artificially prop up prices, in as much as we cannot suppress prices in a bull market. But we can seek to achieve several objectives, two, in particular.

First, we want to ensure that the property market is efficient and functions well. In other words, property prices move more or less in tandem with economic fundamentals. We want to prevent excessive swings in the property market as this would have serious ramifications on home ownership, asset prices, retirement savings and other sectors of the economy.

Second, we want to help businesses in the real estate sector ride through this difficult period.

The Government has already acted very swiftly.

First, we have suspended the Confirmed List of the Government Land Sales (GLS) Programme for 1st half 2009, this was last year when we made that decision. And we have also made sites available via the Reserve List only. This allows the market to decide how much supply is released to meet real demand.

Second, URA has released more real estate data to enhance market transparency, so that all market players – buyers, sellers, developers, finance industry and Government agencies – are aware of what is the real situation and will act accordingly.

Third, we have introduced new measures in this Budget to ease the cash-flow of developers and give them more flexibility to stage the sale and construction of their developments in accordance with market conditions. These measures give developers more time to complete their projects, allowing them to reassign their sites, giving them

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more time to sell the completed units, allowing them to rent out the unsold units, giving them property tax deferrals and, last but not least, granting the 40% property tax rebate.

Mr Liang also asked how badly the market is hit by the tightened credit. I think it is not unreasonable to expect that banks will be more prudent in lending under the current tough economic situation. However, I understand that genuine buyers are still able to obtain loans, especially for owner-occupied property, and developers who have good collaterals and track records can still obtain financing for their projects. In fact, several of the REITS have recently announced that they are able to obtain financing to roll over their debts. These new measures announced in the Budget are aimed at helping developers ease their cashflow and give them more flexibility, so that they can stretch out the development as well as the sale of their developments in accordance with market conditions.

However, I just want to assure Members that MND and other relevant agencies will continue to monitor the property market closely, and we will implement more measures, if necessary, to lend stability to the market.

3.00 pm

Sir, let me just say that this is not all gloom and doom. While we tackle the current challenges, we must not forget that our economic fundamentals remain strong, and we should continue to position Singapore so as to seize new opportunities when the upturn comes. The Government will therefore press on with the long-term development plans to build Singapore as a vibrant global city, and an endearing home for Singaporeans.

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By the end of this year, Singaporeans will see Marina Bay take shape as a new premier business location. A new vehicular and pedestrian bridge with a unique double-helix design will link the Bayfront area to Marina Centre. A new Art Park and waterfront promenade, which will loop around Marina Bay, will also be substantially completed. This will create opportunities for not just people living or working in the vicinity but for Singaporeans from all over to come and enjoy Marina Bay. In the next few years, we can look forward to the completion of Gardens by the Bay, along with the Marina Bay Sands Integrated Resort and the Marina Bay Financial Centre. By then, Singapore will have a new downtown, a waterfront hub for business and financial services that can offer an exciting “live-work-play” destination for all.

We are also pressing on with the infrastructure development for new regional commercial hubs at Jurong East, Paya Lebar and Kallang that were earmarked for development in the Master Plan 2008. A total of $2.9 billion will be invested to implement essential infrastructure works for the progressive development of these three new growth areas.

At the Jurong Lake District, LTA will upgrade the Jurong East MRT station and redevelop the bus interchange to integrate better with the MRT. JTC will expand the International Business Park southwards to cater to increased demand. PUB will transform Jurong Lake to allow more water-based activities. MOH will build the Jurong General Hospital. The Science Centre Board will develop a new science centre – all these in the next few years. So it is not surprising that some property analyst are now saying that prices of HDB flats in Jurong area are increasing faster than in other parts of Singapore. And, of course, this is what prompted Mr Liang Eng Hwa just now to also ask what we

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are doing for Bukit Panjang, which I will come to later on.

Sir, at Kallang Riverside, we will also create new infrastructure to open up the area for future waterfront developments. At Paya Lebar Central, the Circle Line, a new Paya Lebar MRT interchange, will be operational in 2010, and the new Geylang Serai Market will be completed this year. I would like to assure Dr Fatimah Lateef that when we finally implement the plans, the heritage and ethnic character of the Paya Lebar and Geylang areas will be preserved in the process of the redevelopment, and we will make sure that she is consulted when we do up these plans.

For instance, a new pedestrian mall along Geylang Road will be redeveloped to accommodate more stalls during the annual Hari Raya bazaar. I know this is a very popular Hari Raya gathering place for Singaporeans, not just for people around Geylang but from all over. So we want to make sure that this special aspect of the Geylang Serai area is preserved.

At the same time, we will rejuvenate our HDB heartlands. We see here on the slide the upgraded Clementi Town Centre. We have spent $2.4 billion over the last five years on the various upgrading programmes; and will almost double it, with another $4.6 billion, over the next five years. That is a picture of the Ghim Moh MUP (Main Upgrading Programme) and I believe that that garden is now well used. Under the Remaking Our Heartlands (ROH) initiative, we will revitalise the old and middle age towns in a more comprehensive manner. Rejuvenation works for the pilot town, Yishun, have just started. This is a picture of the Yishun Town Centre. The next picture shows the Yishun pond which is an area which is abutting the Town Centre, which will be redeveloped into a place for water-based recreation and activities.

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We will also rejuvenate our older estates through the injection of new flats and residents. Such projects include the DBSS project in Bishan; the waterfront SERS project in Kallang Whampoa; and the new BTO projects in Choa Chu Kang as well as in Woodlands.

Now, I come to Mr Liang's question about development plans for middle age towns like Bukit Panjang. Bukit Panjang residents can look forward to the new upgrading programmes, such as the Home Improvement Project (HIP) and Neighbourhood Renewal Programme (NRP). They will soon enjoy new recreational facilities at the Bukit Panjang Sports Complex and Community Hall and also the Dairy Farm Nature Park. Under the NRP, Advisors can engage residents to shape their neigbourhood and the "character" of their town.

Next, I refer to Mr Charles Chong’s question about Punggol 21 Plus. I want to assure him that the Government remains totally committed to the Punggol 21 Plus programme. It is not just a rehash of the Punggol 21 plan. There are some very new aspects of the Punggol 21 Plus plan, which were never envisaged, in the original Punggol 21, eg, the contract for the construction of the first 2.4 km of the Punggol Waterway. This is a new park of the Punggol plan. This 2.4 km of the Punggol Waterway will cost $145 million. The contract has just been awarded and announced last week, and is scheduled to complete by end 2010. This will allow the first sale site for a mixed commercial-residential development at the Town Centre to be launched by 2011. Apart from the waterway, we are also ramping up housing in the area so that there is a critical mass of at least 20,000 units ready by then. So in 2011, we will be ready to launch the sites for the first commercial development. When the new Town Centre and the Waterway are completed, residents of Punggol 21 will enjoy a first-class waterfront environment quite unique in Singapore.

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Sir, the transformation of our city goes beyond infrastructure. Dr Faishal asked about the work of the Inter-Ministerial Committee on Sustainable Development (IMCSD). It was set up last year to chart strategies for Singapore’s sustainable development. I am pleased to inform him that we have met up with industry leaders and members of the public. We sought ideas and we have deliberated and are ready to release our recommendations in March this year. So I will not go into the details yet.

But I want to say, in general, that the IMCSD’s recommendations will centre on four key areas. First, measures to improve Singapore’s resource efficiency. In particular, we will put in special efforts to promote energy efficient buildings, both new buildings as well as existing buildings. We will encourage energy efficiency among industries and households and greater fuel efficiency in the transport sector.

Second, we will implement measures to enhance the livability of our city. More efforts will be made to promote clean transport and enhance connectivity for cyclists and pedestrians. I just want to assure Mr Edwin Khew that we intend to further extend the greenery and protect the rich bio-diversity of our city. We will work with the relevant NGOs, such as the Nature Society and individuals such as Mr Khew, to come up with these plans, and we will announce more details in due course. As regards these plans, I refer both to terrestrial as well as marine nature areas.

Thirdly, we will invest new resources to build up Singapore as a hub for sustainable development technologies and solutions. And last but not least, all these would not be possible if we do not build up new partnerships with the people and the private sectors so as to promote

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lifestyle changes to support a higher level of sustainability.

The Government will take the lead in sustainable development by setting aside $1 billion over the next five years to implement IMCSD’s recommendations. We believe that early investment in sustainable development will strengthen Singapore’s competitive position as a lively yet livable city in the medium to long term.

Sir, in short, notwithstanding the current economic recession, we are taking the opportunity to remake our city. In five to 10 years’ time, we will see a new Singapore. We will have a new city, as plans to transform and rejuvenate our downtown and our heartlands take shape. Singaporeans will enjoy a better quality of life, as our public housing plans, our upgrading plans, our plans for new parks and plans for greater connectivity all start to take shape. We will create new opportunities for both locals as well as global businesses and talents.

On Wednesday, during the debate on the Budget, Ms Eunice Olsen asked who are we building or creating this global city for. I think this is a very relevant question. We are striving to be a global city of distinction – a top destination for global businesses to base their operations here. We also want to be a choice location for global talents to come here and to work but, above all, we want to build a city that all Singaporeans can be proud to call home. Sir, let us look beyond the immediate troubles and press on with our efforts to remake Singapore. We have the resources and the resolve. Let us tell the world that we are a resilient people, that we have a resilient economy and Singapore will continue to be a land of opportunity for all.

The Chairman: Order. I propose to take the break now.

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Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.35 pm.

Sitting accordingly suspended

at 3.12 pm until 3.35 pm.

Sitting resumed at 3.35 pm

[Mr Speaker in the Chair]:

[Mr Speaker in the Chair]: **** Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head T (cont.) –

Heavy Vehicle Parks

Mr Charles Chong: Mr Chariman, Sir, heavy vehicle owners are currently required to have parking lots for their vehicles before they can register or renew their vehicle road tax. Owners of heavy vehicles sometimes designate their factory premises that may be far away from any residential area, such as Jurong Island. Many of these heavy vehicles operate after office hours so as to avoid congestion with peak hour traffic, and this should be encouraged. However, drivers of these vehicles often have to start or end their shifts when public transport is no longer available, and therefore have to incur high cost in taxi fares in order to get to work and to return home after work.

Could the Minister tell us the number of heavy vehicle parks located within or near HDB estates? Are there usually waiting lists for season parking at these heavy vehicle parks, especially in new towns such as Sengkang and Punggol which really have ample space to accommodate such vehicle parks? If so, what measures are being planned to meet this demand?

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Dr Mohamad Maliki Bin Osman: Mr Chairman, there is currently an island-wide supply of more than 42,000 parking lots to meet overnight parking needs of 21,510 registered heavy vehicles. More than 12,000 of these lots are located within or near HDB estates. The remaining 30,000 lots are available in industrial estates. Demand for heavy vehicle parking lots in or near HDB estates is high and there are waiting lists for season parking in HDB estates, including new towns such as Sengkang and Punggol. However, we cannot keep building heavy vehicle parks in or near residential estates as these would cause disamenities to the majority of the residents in the estates. There is more than enough heavy vehicle parking spaces island-wide. Residents who are not able to secure heavy vehicle parking lots near their residences would have already secured parking lots at their workplaces, like factories, and at designated parking places outside HDB estates. They can continue to park at these locations.

Sustaining the Construction Industry

Mr Masagos Zulkifli B M M: Sir, prices of private residential offices, shops and industrial properties have decreased in the fourth quarter of 2008 as well as year-on-year 2008. So have rentals of these private residential offices, shops and industrial properties. However, the supply of these properties has increased or they are online to be supplied into the market. As of fourth quarter of 2008, there were about 65,000 private residential units in the pipeline comprising supply from projects that were already under construction and those that have been granted planning approval but were not under construction yet. For the office sector, there was a pipeline supply of about 1.39 million square metres of gross floor area of office space from various Government and private land sources. With the falling prices, faltering demand and a glut of supply coming on line, what

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is the likely impact on the construction sector going forward? In addition, what are some measures the Government will put in place to sustain and assist the construction industry during this period in continuing to spur the construction sector in moving forward? In addition, how can we avoid a situation where private developments are half completed, stalled or even abandoned due to surplus of office space and falling private home prices and the possibility that some contractors will go bust? Will there be sufficient public sector projects for contractors, particularly those who do not have?

Er Lee Bee Wah: Sir, I would like to declare my interest as a professional engineer working in the construction industry. During this difficult economic situation, perhaps the Government could look into providing downpayments to consultants and contractors. This would give them a headstart to moblilise manpower and purchase required resources without having to struggle with bank loans. Another way that Government can help is to pay on time. Inefficient administrative processes often slow down the settlement of payments to the building contractors, in particular, when it comes to the settlement of the variation orders. This has imposed additional financial burden on the contractors. Besides that, new Government requirements that are not critical should be deferred. An example of this is the requirement of geo-technical professional engineers for the designing of foundations for high-rise buildings.

I would also like to urge the Government to push out more lift upgrading programmes and covered link-ways to improve the quality of HDB living. In Nee Soon South, for example, there are 35 blocks of flats which have not been selected for lift upgrading. I know there is

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a schedule drawn up for LUP, but the Ministry should review this periodically as time waits for no man, and how long must elderly residents endure before relief comes to them. MND should also re-examine the building of covered link-ways. Is our policy so rigid that some of our residents are deprived of having covered link-ways? Let me give Members an example. In Nee Soon South, there are seven blocks of flats – Blocks 858 to 865 – not linked to the adjacent cluster of HDB blocks because they are separated by a school and a temple. We know that these days the weather is often in the extremes. When it rains, it pours; when it shines, it burns. Residents do not have access to sheltered paths that would take them to Khatib MRT Station. I brought LTA top officers to the site to show them that we can build a covered link-way along the roadside in order to link it to the nearest HDB block. LTA told me that they do not have the budget and referred me to CIPC funding. So, when I talked to the Town Council, they told me that the cost for the linkway exceeds the CIPC funding cap. I hope I would not have to window shop from LTA to MND.

Can the Government also look at tweaking the Workfare Bonus to give more to those workers who take up employment in the construction industry? This way, it may be able to attract more Singaporeans to work in the industry. With the expected slow market recovery, property developers are laden with high operating cost and cashflow burden. Additional tax incentives, like waiver of property tax for land under development, property tax rebates for service apartments and stamp duty reduction deferred will be welcomed.

Construction Industry

Mr Masagos Zulkifli B M M: Mr Speaker, in the news dated 17th January 2009 on the Building Construction Authority's website, it was stated that

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the annual construction demand is projected to reach $22-$37 billion dollars in the next three years to 2011. This sustained higher level of construction activities will open up many job opportunities at home, especially for locals. Despite the gloomy economic outlook, the construction sector, which has a sustained workload in the next three years, is still continuing its recruitment efforts across the professional, technical, supervisory and tradesman level. However, we have the knowledge that more needs to be done for ensuring that workers, especially the mid-career ones, are transitioned well to undertake such positions. Mismatch of expectations may result between the employers in the construction industry and interested mid-career Singaporeans.

Taking this further, the knowledge gaps may result in the overall construction industry not being able to meet its objectives, thus derailing the efforts by the Government in stimulating the Singapore's economy. For this purpose, can BCA share some of the measures to ensure the smooth transition of workers, particularly on placement and training? In addition, while the interest may be there on the part of mid-career workers, are there schemes to assist these workers to receive training and, at the same time, receive some form of stipend or allowance to ensure that they do not prop up their cost and that they are incentivised to graduate from the programme? Finally, how certain is BCA in the mid-career workers crossing over and setting down well in the industry, especially when the lure of hiring foreign workers on the part of small and medium size contractors to keep their business cost or manpower low is too alluring.

Employment Opportunities in the Construction Sector

Mdm Ho Geok Choo: Sir, amidst all this gloom and doom, the construction sector

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is still one bright spot. So, how can we convince Singaporeans to take up jobs in the construction sector? A recent Channel News Asia (CNA) report noted that foreigners had a higher employment share in manufacturing and construction when many took up labour intensive jobs. It cited MOM saying the more demanding working conditions in these positions are the less attractive to Singaporeans and PMETs. How does BCA hope to change this perspective?

Indeed, there are professional jobs in the construction sector. Unfortunately, the mental image of the construction sector is that of hard toiling, physically demanding labour. What new plans are in place to profile such jobs?

3.45 pm

It is timely to improve the image of the construction industry by enhancing its ecosystem. We have about 250,000 foreign workers in Singapore and it is estimated that about 10% of this group will be shed. For the remaining, they will constitute a revolving pool of foreign labour on musical chairs, as there will be pockets of contractors who will release these foreign workers, while other contractors may be in need of them. The challenge is really to devise a good mechanism to match the released workers with the vacancies. It is important for the image of the construction industry not to leave these foreign workers in the lurch during this downturn.

As for the PMETs, the challenge is to change their perception. I propose that we establish, also, another mechanism to facilitate the induction of PMETs into this sector, perhaps guided tours of the construction sites and the various kinds of work involved.

Sir, the ecosystem of the construction industry must be nurtured. We have to maintain and improve this ecosystem by assuring PMETs that it is fashionable to

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work in the construction industry. To do this, there must be champions who will step forward to do this rebranding. I call on the Government to give its full support to these industry players –

The Chairman: Your time is up, Mdm Ho Geok Choo. Er Lee Bee Wah.

One-stop Service Centre for Private Estate

Er Lee Bee Wah: Sir, I have brought up in this House several times the frustration of my residents living in the private estates having to call up agency after agency as they were repeatedly told that that was not the right agency for the matters they wanted to bring up. Hence, I would like to take this opportunity to request an update on the one-stop private estate maintenance service which is currently on trial in Aljunied GRC. May I know what is the outcome of the trial? Will there be any modifications? Will it be implemented in other private estates in Singapore? Residents of private estates in Ang Mo Kio GRC are keen to have this service. May I know when can this service be extended to Ang Mo Kio GRC?

Ms Grace Fu Hai Yien: Sir, I thank Mr Masagos and Er Lee Bee Wah for their questions on the construction sector and measures to assist the industry. The construction sector is a vital part of our economy. We need to sustain and grow the industry, which can provide good jobs for Singaporeans.

Sir, the construction sector had a very good year in 2008, with demand reaching a record of $34.6 billion. Although it will not be left unscathed by the current economic downturn, the sector is still expected to perform relatively well for the next few years.

First, the strong construction demand of 2007 and 2008 will keep the sector

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relatively well occupied as works for ongoing projects, especially the larger ones, continue. Second, public sector demand from 2009 to 2011 will remain strong. For 2009 alone, the value of Government projects to be awarded will reach between $18 billion and $20 billion. This will make up for the slack in private sector demand. Although the total annual demand will moderate to between $20 billion and $29 billion from 2009 to 2011, this is still substantially higher than the average annual demand that we have seen from 1998 to 2006, and that is about $13 billion in the past.

We are aware that the current economic downturn has presented some specific challenges for the sector. We are monitoring the situation and have worked with other Government agencies, to provide proactive and targeted support for the industry and I will elaborate on them.

The order books of the larger construction firms would remain relatively full for 2009 and, perhaps, until 2010. But some of the small and medium-sized builders are beginning to feel the pinch due to the rapid drop in private sector demand. We are, therefore, taking a targeted approach aimed at helping the small and medium-sized contractors during this difficult period.

As announced by the Minister for Finance, the Government will award, in 2009, an additional $1.3 billion worth of small and medium-sized public sector contracts, each valued at $50 million or less. Together with the amount of small and medium sized projects in the original plan, this will bring the total public sector demand for such projects to $4.8 billion. This is a sizeable increase of 67% over the average annual value of small and medium-sized Government projects awarded in the past five years.

The range of projects to be brought forward will include smaller scale projects

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of value up to $15 million, such as the upgrading of community clubs, roads, parks and park connectors. Projects of value up to $50 million will include the building of new rental flats, indoor sports halls in schools, upgrading of hospitals, as well as projects under the lift-upgrading programme.

As banks and financial institutions have become more prudent in extending credit, viable construction firms may face the challenge of having adequate cash flow to sustain their businesses. To ease the credit squeeze, the Government has made several enhancements to the business financing schemes offered by SPRING Singapore to help companies access credit financing. For example, the relaxation of qualifying criteria and loan quanta means that even large construction firms can now access some of these schemes, like the Loan Insurance Scheme-Plus and the newly created Bridging Loan Scheme.

In addition, the Government will ease the cash flow of construction firms undertaking public sector projects, which Er Lee Bee Wah called for. Public agencies will provide more frequent and prompt payments to construction firms for work done. The Government is also taking an exceptional measure to undertake higher risk by lowering the security deposits for construction projects from the normal 5%. In general, the quantum will be capped at 1.25% for projects of value up to $15 million, and 2.5% for projects of higher value. We will continue to monitor the situation closely. If necessary, we are prepared to take further measures to assist the industry. I think Er Lee Bee Wah will agree with me that the industry generally thinks that the Government is a very good paymaster and is a preferred customer in these times.

Mdm Ho Geok Choo and Mr Masagos asked about training and employment opportunities in the construction sector.

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Workload in the industry will stay at a healthy level over the next few years. There will be continued demand for manpower, including at the PMET levels. With a relatively stable outlook and abundant training incentives, the industry presents new entrants into the job market and those seeking a career switch with excellent prospects for a rewarding career.

What are the job opportunities and how do we attract talents? Many construction firms are, in fact, looking to hire more workers. In a BCA's recent survey of about 1,500 firms in the sector, half of them indicated that they are short of manpower and they have posted more than 800 jobs on BCA's Building Careers Job Portal since December last year. Mdm Ho would like to know that the job portal actually features very attractive young people, whom we are working very hard to attract, to improve the image of the industry.

Firms are seeking additional tradesmen and foremen in areas such as crane and construction plant operation, electrical works and plumbing. For the PMETs, there will be job opportunities in new growth areas, such as energy-efficient or green buildings. As the green building movement gathers momentum, the demand for a "green collar" workforce will grow rapidly. Mid-career PMETs could also retrain and take on jobs in areas, such as safety coordination and property management.

To prepare new entrants and upgrade the existing workforce to fill these key demand areas, BCA, together with WDA and NTUC, have stepped up the pace of its Job Recreation Programme (JRP). This initiative aims to train locals in key demand areas and match them with job vacancies. Let me elaborate further on the types of training opportunities available.

We have up to 1,000 training places available over the next two years to train

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locals in key trades. The BCA Academy also offers diploma programmes to upgrade tradesmen to take on supervisory positions. All these courses are subsidised under training assistance schemes such as the Skills Development Fund as well as the Skills Programme for Upgrading and Resilience (SPUR).

To support the growth of the green building sector, there will be some 8,000 training opportunities over the next five years to develop a highly skilled "green collar" workforce. In addition, the BCA Academy offers diploma courses in areas such as building cost management and interior design that are also suited for mid-career entry. We will place more courses under WDA's Professional Conversion Programmes, to re-skill mid-career professionals to join this industry.

One example of a professional who has made a very successful mid-career switch into the green building sector is Mr James Chua. After 25 years in the manufacturing and electronics industry, he embarked on his Green Mark Manager Course at the BCA Academy. Upon completion of the course, James joined G-Energy last year and is now an Energy and Sustainable Design Consultant.

Sir, while we tackle the immediate concerns of the economic downturn, the Government will also remain focused on the long-term goal to upgrade the construction sector. We will introduce measures to enhance productivity, build capabilities and expertise in new growth areas, and nurture a core of skilled local workers and progressive builders to lead the industry. I am confident that with the various stakeholders working closely together with the Government, the industry will ride the current economic turmoil well and will emerge stronger.

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Sir, Er Lee Bee Wah also asked about one-stop service centres for private estates. Arising from the recommendations of the Committee on Private Estates chaired by Senior Minister of State, Mrs Lim Hwee Hua, a two-year pilot project was launched by Aljunied GRC in July 2008 in which public education and a telephone hotline are provided to help private estate residents coordinate estate maintenance issues with relevant Government agencies. Mrs Lim's Committee will review the scheme at the end of the pilot and assess if it should be extended to other constituencies.

Food Safety and Security/Development of an Agri/Aquaculture Industry

Dr Lim Wee Kiak: Sir, with the current economic crisis, there are signs of reversal of population shift from cities to rural areas in big countries. People can choose to return to the rural areas for farming when there is manpower redundancy in the cities. In Singapore, we do not have such an option as we do not have a significant agricultural industry.

During last year's high food prices inflation, some food producing countries adopted a protectionist stance and limited food exports. We are completely dependent on imported food so we are at the mercy of these countries. We need to import almost all our food, including any possible chemical or biological contaminants, such as melamine as well as viruses. Although adopting a diversity of food sources approach gives us more option, we are still vulnerable and dependent. How can we overcome such a shortcoming with our limited land resources?

We have had some high tech agricultural ventures such as hydroponics and aeroponics in the past, but many of these ventures did not seem to survive for long. I would like to ask the Ministry what are the factors that resulted in their failures, and what can we do in Singapore to develop a viable agriculture

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and aqua-cultural sector to provide employment and food security for Singapore.

4.00 pm

Preventing an Outbreak of Avian Flu in Singapore

Mr Charles Chong: Mr Chairman, there have been recent news reports of a number of new cases of Avian flu in humans occurring in countries in the region. We have seen these cases in China, Vietnam and Indonesia. I am concerned that this might be the start of a wave of an Avian flu epidemic. I wish to ask the Minister what measures have been taken or are being planned in preventing an outbreak of Avian flu in Singapore.

Dr Mohamad Maliki Bin Osman: Mr Chairman, I thank Dr Lim for his question on the safety and resilience of our food supply.

Ensuring food safety is key priority of AVA. Diseases such as the avian flu and abuses such as the melamine contamination of milk in China show clearly the need to remain vigilant, especially since most of our food is imported. In this regard, AVA will be establishing a dedicated Unit to monitor early signs of food safety threats. The Unit will undertake horizon scanning to gather information from various targeted sources, such as Internet, open literature, news feeds and networking with strategic partners including key industry players. It will then carry out trend and impact analysis to determine a potential threat, and coordinate responses to such alerts. This will allow us to take pre-emptive calibrated responses in line with our overall risk management philosophy. This Unit will work closely with its overseas counterparts, and partner regional and world organisations, such as WHO, OIE and the European Commission, which

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allow rapid information-sharing to respond to potential health threats.

Let me now speak on the resilience of our food supply. The sharp price inflation last year also showed the volatility of the global food demand and supply situation. As a small country, diversifying food imports remains an important strategy. We will strengthen our diversification efforts and consider other complementary strategies such as encouraging and supporting our companies in investing in agriculture businesses overseas.

Dr Lim also raised the idea of developing our agriculture industry to provide food and employment for Singaporeans in this economic downturn. Given our land scarcity, we need to consider this very carefully. We have to ask ourselves whether it is better, cheaper and easier to grow our own or buy from overseas. In some cases, it is; in others, it is not so.

For example, local egg production has proven to be valuable, as our shell egg supply is not well diversified. The aquaculture industry is another example to reduce our reliance on wild catch. AVA has invested in high-value upstream technology to produce robust fish frys, which is the weakest link in the food fish production. Growing-out of frys can then be carried out in nearby waters. I am pleased to say that we have achieved some success with our R&D, such as the "super seabass" which feed our market last year.

Mr Charles Chong asked about our safeguard against the incursion of Avian flu. Avian flu is endemic in this region, and its recent resurgence in China, Vietnam and Indonesia is a stark reminder of this. Although the WHO has assessed that there is no risk of a full-blown epidemic across Asia like we have seen previously, AVA will remain vigilant and continue to enforce and review our multi-

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layered defences. Our safeguards include importing poultry only from HPAI-free countries or zones, and enhancing biosecurity measures and disease surveillance at our local establishments.

Sir, the task of balancing food safety and supply has become more challenging. We will continue to work with the industry to achieve a resilient supply of safe food at affordable prices for our people.

Mr Charles Chong: Sir, just a point of clarification for the Parliamentary Secretary in answer to my earlier question about heavy vehicle parks. The Parliamentary Secretary said that there are more than ample heavy vehicle parking lots throughout Singapore and yet he said also that there is a long waiting list for heavy vehicle parking lots such as in Sengkang and other areas. Would it not be a reasonable conclusion to say that we have over-catered for heavy vehicle parking lots in areas where there is no demand and under-catered for areas where there is demand? And if the Parliamentary Secretary agrees with that, could he tell us what remedial actions the Ministry would take?

Dr Mohamad Maliki Bin Osman: Sir, I think the issue is not a matter of an excessive supply or demand but one of preference and striking a balance between the needs of the heavy vehicle drivers as well as the residents in residential estates. What I have highlighted earlier in my reply was that there are enough heavy vehicle parks available all over Singapore, the bulk of them are in the industrial estates where the heavy vehicles rightfully should be. We do recognise that many drivers prefer to have their vehicles parked near their residential areas. But we have to strike a balance between the disamenities that these vehicles will cause the residents of those residential estates. So

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it is not so much that there is a long waiting list. Of course there will be a longer waiting list in areas that are highly preferred but that does not mean that the supply is not readily available. As Mr Chong mentioned earlier, the vehicles will have to have a parking lot first before they can be registered. We have about 21,500 registered heavy vehicles with 42,000 parking lots available. So the issue is really one of preference but, at the same time, I hope Members will appreciate the need for us to ensure we reduce the potential disamenities that can create in our public housing estates.

Mdm Cynthia Phua: Sir, I would like to ask the Minister on home ownership. Has the Minister reviewed the need for 90% home ownership? Is the Minister hoping to achieve more than 90%? Can we do less than 90% in view of a more complex family structure that we have now and a more diversified population? And this leads me back to the Lease Buyback Scheme. Is it too late because there are already a lot of old folks in the market? Can we not have a wider range of rental flats that have less subsidies? And can we be more creative and consider maybe allocating land – if HDB does not want to build – to the private sector to build rental flats and rent them out? This is an area where we should have more love but instead we tightened the criteria for the application of our older folks. Has the Minister talked to the elderly on the sum of $5,000 upfront before confirming it? And has the Ministry, again, looked at its proposal on the overall guideline and talk to our senior residents on whether they are agreeable or happy with this Lease Buyback Scheme?

Mr Mah Bow Tan: First of all, on the 90% home ownership. There is no magic number that says we should have 90% home ownership. But the fact is that based on the schemes and the heavy subsidies that we have put in place like the CPF Housing Grant, the additional

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housing grant and the incomes that our people are able to earn, there is no reason why more than 90% of our citizens cannot enjoy a home-ownership flat. In fact, the pricing of our home-ownership flats is such – as I have demonstrated just now when I showed the numbers – that the 2-room flat, which is priced around $90,000 with the CPF grant and the AHG, is easily affordable to somebody who earns something like $1,200, and that makes it easily readily available to 90% of our population. So there is no magic number that says 90%. But home ownership per se is something that we want to promote. And the reasons for home ownership as opposed to renting a home are very clear cut.

Let me give Members the situation in Hong Kong. Hong Kong has about 50% home ownership. The rest of the people in Hong Kong rent their flats. And if you go to Hong Kong and you look at the condition of the rental estates, I think you will agree with me. In fact, the Member has been to Hong Kong – she was in a delegation that was led by my Senior Minister of State that went specially to Hong Kong to look at it – and she has seen for herself the condition of a rental flat versus a home-ownership flat. We do not want that to happen in Singapore. We do not want to have rental flats deteriorate. Why should they take care of their rental flats when they do not belong to them? That is number one. Number two, as I have explained in my reply earlier, a home-ownership flat is a store of value. When you have a flat, first of all, you receive a grant that allows you to own a flat, then you enjoy upgrading subsidies through the course of the life of the flat. Finally, at the end, in your later years, that flat that you own is a substantial store of value. The Department of Statistics did a study recently that suggested the value that is residual in our flats is something like over $100,000. I think it was $120,000. In other words, every Singaporean who owns a flat, on

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average, has about $120,000 of value stored in his flat. And if we can find a way to unlock that value, that would create a substantial sum of money for him to retire with. And this is where the Lease Buyback Scheme (LBS) comes in. The Lease Buyback Scheme is one way for us to try to unlock some of that value.

The Member then asked whether we have spoken to the residents about the sum of $5,000. First of all, when we fashioned this Scheme, we wanted to make it attractive to the elderly low-income. How do we make it attractive? The Government decided that there should be an additional grant, a bonus, for them to sign on to this Scheme. And this sign-on bonus was fixed at $10,000, which is not a small sum of money. So $10,000 is given to somebody who signs on to the Scheme. Then the next thing we ask ourselves is, how much should we give upfront? If we give all of them $10,000 upfront, we are sacrificing downstream income – the monthly income that will be paid to him or her for the rest of his or her life. If we give nothing upfront, the Scheme will not be that attractive. So we decided to go for somewhere in between, ie, $5,000. Should it be $4,000 or should it be $6,000? If you do a survey, I think you will find as many answers as there are people surveyed. We decided to go for $5,000. You get $5,000 upfront if you sign, and the rest of the $5,000 will be put into the annuity together with the rest of the money that we will give you for the remaining lease of your flat. And that annuity will then generate a stream of income for you for the rest of your life.

In the example that I have cited, somebody could get $5,000 upfront, another $520-$530 for the rest of his life, plus stay where he is and find other ways in addition to that to unlock even more value from his flat. For example, he can still rent out a room in the 3-room flat and keep the additional rental. So this is what

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I mean when I talk about a life-cycle approach to our housing programme – give generous discounts, give generous subsidies upfront to enable young families to own their flats; provide subsidies, provide upgrading to preserve and maintain the value and even increase the value of the flat. As the economy grows, the flat will grow in value in tandem. All these benefits will be preserved in the flat, unlocked at the end of the day. So it is not just a matter of providing a roof over people's heads.

In Hong Kong, the approach is very simple. You need a flat, I will give you a roof over your head, I will rent it to you, and the rental is pretty cheap. But what happens after that?

Who looks after the flat after that? I mean, we have been to those flats. We saw BMWs or Mercedes parked in the car parks of rental flats in Hong Kong. Nobody cares because you can carry on and live there for as long as you like. In our case, we have decided that we will have tenancy renewal, we will encourage people to buy, to provide AHG, and so on. In that spirit, we decide that our rental flats will and should be kept as the final safety net for those who are really in need.

4.15 pm

So when the Member talks about "love", I think we are really looking at those really in need. We would really love to help them. Everybody who is in the queue who does not deserve a flat is taking the place of somebody else who does. I have 4,500 people in the queue. I look at the list of names. Two-thirds of them actually have reasons not to be in the queue. We love them in many other ways but this is not the way. So we will love them in this way for the rental flat tenants. We will make sure that the rental flat tenants are reserved for them. And indeed, what we are doing now is we are

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pushing those who are in the queue and who really need help ahead of those who do not need help. I think this is really showing love in the right way.

Mdm Ho Geok Choo: Sir, I would like to ask the Minister three supplementary questions. One, on rental flats, I would like to ask the Minister if the rental demand continues to rise and unless HDB continues to build more, it will have to chase after the demand. MND will have to ensure that those who come in for a rental flat must continue to be helped towards home ownership. Does MND have any plans to ensure this? Question two, Sir, is on housing for the elderly. Can the Minister elaborate on the plan and design for elderly housing, taking into consideration the needs of the elderly and the younger community? The third question is township. I would like to know whether there will be some spillover effects of the Jurong Lake district development into Boon Lay, an old and remote estate. In the Jurong district, as well, which has not seen much modern development. Can Boon Lay share some of Punggol 21's windfall? Actually on this subject of "love", it would appear that Punggol 21, being a relatively younger estate than old Boon Lay, is getting more attention.

Mr Mah Bow Tan: Sir, my Ministry tries to love everybody equally but some need more love than others. I sympathise with the Member for Boon Lay. I think Boon Lay has more than its share of residents who are in financial difficulties (the lower income). We need to do more to help these people in Boon Lay. I promise her that we will look into it. I cannot promise the Punggol Waterway will stretch all the way from Punggol to Boon Lay, although it is not inconceivable. We might need to build a waterway in Boon Lay from Jurong Lake all the way out to the Straits of Johor. But the fact is that we are progressively, through our estate rejuvenation programme, looking at all the

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estates in Singapore. We have divided all the estates in Singapore into the old estates, the middle-aged estates and the new estates. The old estates refer to those estates where flats were developed in the 1980s and earlier; the middle-aged estates would be those developed in the mid-1980s; and the new estates would be those in 1990s and later. For each category of estate, we have policies and programmes in place that will benefit the residents. In the case of the older estates, we are going to rejuvenate them through SERS and a whole Estate Rejuvenation Programme. The old places like Queenstown, Redhill, and so on. The middle-aged estate, Yishun, is a classic example. Yishun's flats were mainly built in the 1980s. Those are the flats that we are going to rejuvenate through the HIP and NRP and the Estates Renewal Programme. Punggol 21 is in the category of new estates. The reason we have concentrated on Punggol 21 this time is, as Members know, as Mr Charles Chong said in the House yesterday, in the last recession, the plans for Punggol 21 were stalled. The residents did not move in and demand for flats went down. Therefore, the rebuilding programme for Punggol 21 was stalled. We have decided to restart that programme in a big way. We have deliberately targeted most new flat developments in Punggol so that there will be a critical mass. That has allowed us to restart the programme as well as to put a whole new dimension to it. So the "plus" in the Punggol 21 Plus programme is actually quite substantial. For each of these genre of estates, the old, the middle-aged as well as the new, there will be something. But as Members all know, there is a limit, in terms of budget and resources, and we simply cannot do everything all at once. But rest assured that we have your estates in mind and we will try to implement those programmes as fast as possible.

As far as rental demand is concerned, yes, I think the Member is right. We

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cannot just keep on building and chasing after demand. Demand for rental flats can be limitless. Who does not want to live in a new rental flat for $25-$30 a month? I think if we did not put new rental eligibility criteria, the demand for rental flats would hit the roof. And all of us, at the meet-the-people sessions, will suddenly find long queues of people wanting to come and apply. So this is the reason why we had to look critically at the situation and find out who are the people that we are building these flats for. And make sure they get them and not have everybody else coming in and joining the queue. That is the reason why we have to change the criteria and not to allow the demand to dictate how much rental flats to be built.

For the housing for elderly, I have explained that we are stepping up the building of studio apartments. The number of studio apartments that we are going to build, the 1,000 over that we are going to build, will be distributed all over the place. In terms of the types of flats that we are building, definitely, this is going to cater to the elderly because they will have elder-friendly features. They will have, as far as possible, VWOs to look after their needs in the vicinity, either in the block itself or nearby. And to create a more balanced environment, we will be relocating them together with the other flats – the 3-room, 4-room and even 5-room flats. I am not sure I have answered the Member correctly on this. If she has any other questions, I will be happy to clarify later on.

Ms Eunice Elizabeth Olsen: Sir, can I seek clarifications from the Minister to address my cut on single parents and housing?

Mr Mah Bow Tan: My apologies to Ms Eunice Olsen. I missed out on her cut on single mothers. She asked whether our current policy on singles mothers undermines other policies such as home

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ownership and also being pro-children. I just want to say on this point that the principle underlying our housing policy for single mothers is to be pro-family. That is the major policy imperative. That means HDB flats will only be sold at subsidised rates to those who can form a family nucleus, whether it is a couple or whether it is a couple with children or whether it is parents and grown-up children. Single mothers would be considered under this policy as singles. Under the singles policy, they can form a family nucleus with their parents and they can buy a new flat. If they are over 35, they can buy a resale flat under the Singles Singapore Citizen Scheme and of course, they will be eligible for the singles grant. For young umarried parents below 35 years, what do they do? We encourage them to stay with their parents for mutual care and support. But we all know that in some cases, this is not always possible and we have instances where we have granted exemptions for single parents to actually buy a HDB flat. So exemptions have been made for poor families in difficulties.

As for divorced women, although divorced couples do not constitute a family unit, HDB does allow the divorced party, with custody of children to keep their flat. So they are able to retain the matrimonial flat, of course, subject to the usual eligibility conditions. This will help the divorcees who do not have the means to buy another flat to live in the flat. Essentially, our policies on divorced women are quite sympathetic and we have quite a lot cases where divorced women who have custody of children continue to stay in the flat. However, we also have certain situations where they cannot afford to buy over the flat and we have looked at it sympathetically and provided them with a rental flat.

Dr Muhammad Faishal Ibrahim: Sir, two points of clarification. One is with regard

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to the housing counsellors mentioned by the Minister earlier in his speech. I would like to know whether these are full-time professionally-trained counsellors or HDB estate officers doubling as counsellors. Secondly, with regard to the optimal level of lease structure in Singapore, in view of the changes in the socio-economic structure, such as with the ageing population and globalisation, are there plans to review the land lease structure in Singapore for the development of private residential housing in Singapore? Has the Ministry received any request or indications of demand for such developments of maybe, 30, 50 or 60-year lease land for private residential development in Singapore?

Mr Mah Bow Tan: Yes, for housing counsellors, I informed Members that HDB has appointed housing counsellors in all our branch officers. These are existing HDB officers and they have been trained to deal with financial counselling, ie, to deal with cases in financial difficulty. Although they may not be professional financial counsellors, they do have the information and ability to counsel these difficult cases. They have been successful in what they do. In fact, the number of arrears cases has seen a drop in the last year. They have been able, through very patient and painstaking efforts, to work with the individual cases to resolve their financial problems in a more sustainable way. So when I described the various ways that they can help these residents – giving them a loan to downgrade, providing them with temporary interim accommodation where necessary and now providing them even with a new flat but at market rates – all these measures are made known to the counsellors and the counellors in turn would advise the residents accordingly. So they have all the information at their fingertips and they will be able to give the necessary and proper advice to the residents. I have faith that they will be able to do a good job. Many a time, it is not the

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professional expertise that is required. It is in trying to convince the residents to have a change in their lifestyle. Many a time, when they approach the HDB officer, they are not psychologically and mentally prepared to make that change. And it is difficult change. So the counselling involves not just showing them what they can save from downgrading, but also giving them some time to psychologically prepare themselves.

Sir, I think in this respect, I have confidence that the HDB housing counsellors will be able to do a good job. It is not an easy job, but I am encouraging them to persist and to carry on.

4.30 pm

The other question by Dr Faishal is about land lease structures, whether there are requests by private residential housing developers to have shorter leases. The answer is, "no". We had in fact put one piece of land at 30-year lease, on the reserve list, for developers to indicate interest, so that developers are able to consider other housing forms, for example, retirement homes. So far, that land has not been tendered for.

Er Lee Bee Wah: Thank you, Sir. I would like to ask the Minister, does Nee Soon South come under Yishun town or under Ang Mo Kio town. The feedback from my residents is that for the rejuvenation of Yishun town, they do not see many things being done at Nee Soon South. And I would like to urge the Minister to look into bringing forward the lift upgrading for the remaining 35 blocks as well as the linkway, that I mentioned just now, for the seven blocks. The Senior Minister of State also mentioned that the payments for most of the public projects are very prompt. But I would like to bring up that when it comes to settlement of the VOs, I have a lot of feedback from contractors that it takes years to settle the VOs. The other thing is whether the Ministry can look into the downpayment

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method for the contractors because this has been the practice in some of the bigger projects, for example, Marina Sands.

Mr Mah Bow Tan: Sir, the last I looked, Yishun South is in Yishun town. It has not changed. I do not think. But that does not mean that the rejuvenation of Yishun town means that we will be doing all the lift upgrading for Yishun, we will be putting linkways all over the place for Yishun. As far as the Lift Upgrading Programme is concerned, it is still a programme, it still has to be prioritised across different precincts, different blocks at different constituencies. But please rest assured, your turn will come, soon, I am told. But when it comes to linkways, when residents asked me, "Why isn't there a linkway? How am I going to walk from this block to that block? You know there are linkways from there to there, but here to there, there is no linkway. How am I going to walk?" I asked the resident, "Have you heard of umbrellas? Why not walk from here to there?" I think we have to have a sense of proportion. Yes, we are going to build linkways. But I think we need to build linkways where it makes economic sense. I am not pre-judging the linkway that the Member is asking. I think we will look into that. But, as a general rule, it does not mean that we are going to build, just because we have a linkway policy, linkways criss-crossing the whole of Singapore.

Ms Grace Fu Hai Yien: On payment, please be assured that we have, through working with MOF, instructed Government agencies to accelerate their payments and, of course, we are taking additional risks by lowering the requirement on security deposit which we have explained earlier on. I think the Government realise that this is an unusual time and therefore it warrants us to take certain risks. But having said that, ultimately, we are responsible for public funds and there is a requirement on the

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issue of VO to properly verify the claims. I do not think there is any intention on the Government agency's part to unnecessarily delay payment but they just have to exercise due care and process in verifying the claims.

Dr Lim Wee Kiak: Sir, Sembawang needs some love as well. I would just like to ask the Minister to clarify two points, one of them is the affordability of HDB flats. He mentioned about the debt servicing ratio as the gauge to whether flats are affordable. Currently, I would like to ask the Minister how many years of loans are we talking about when we talk about debt servicing ratio of 21%. Because with longer life expectancy and delayed retirement age, debt servicing ratio of 21%, if I need to take a loan of 50 years, is a lot of money as well. The second point is in terms of rate of returns in an investment. If I bought a HDB flat in 1970s, compared to if I bought a HDB flat in 1980s and 1990s, what are my relative rate of returns over the years? I believe it is decreasing over the years. Last of all, on rental subsidy. I know that each rental unit is heavily subsidised. How much is the Government subsidising per unit? The Minister mentioned that there are a lot of people on arrears currently and waiting to rent out their rooms to settle their debts. Why does the Government not take this subsidy and rent those rooms in the open market so that they can pass it to those in the long queue? In this case, it will cut short the whole system of building rental flats immediately and there is a ready supply now.

Mr Mah Bow Tan: On affordability, the debt servicing ratio is calculated based on an average mortgage tenure of about 30 years, because mortgages cannot go beyond the age of 65 years for the mortgagee. HDB will not give you a loan that stretches beyond 65 years because

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we want to make sure that when you retire, you are not saddled with this housing debt. It is based on a subsidised concessionary loan rate currently set at 2.6%, and on the average price of the flat and your median income. So based on these numbers that I showed, the debt servicing ratio is comfortably below what most financial institutions would regard as affordable for the family.

On rate of return – I think the point is not the rate of return per se . The point is really from the time you buy your flat to the time you can unlock the value of the flat, whether there is this store of value that has been created. The track record shows that there is this store of value. It is just like making any other property investment. The longer you hold and if the economy grows, the better will be your return. Of course, if you buy and sell, as some people did in the heydays of the 1990s, you can make a lot of money, but you can also lose a lot of money. So, here we are talking about the HDB flat as a long-term investment. It is not for speculation. It is not for short-term profit. I try to emphasise that many times. I did that again in my speech just now. If you start talking about what is your rate of return, I think you have already started off on a wrong footing. Basically, you own your flat, you have a roof over your head, it is a comfortable roof, it will appreciate in value over time and it will be your nest egg in your old age.

Finally, on rental subsidy. Currently, our rental flats are priced below 10% of the market value. So one room, on average, in the market is about $400-$500 depending on location. The rental for a subsidised 1-room flat is $30. So it is probably closer to 5% rather than 10% of the market rate. You just do the mathematics. That is the kind of subsidy we are talking about, and it is a substantial subsidy, $20,000, $30,000 over the lifetime. And that is the reason why we say if you have already enjoyed

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two housing subsidies, you cannot come back for a rental flat because you have enjoyed more than your fair share of the housing subsidies.

On his other suggestion, one of the things we could do is to price all our flats at market rate and provide subsidies. You can use that subsidy for your rental flat or you can use it for something else. But is that something that the Member would advocate?

Dr Lim Wee Kiak: Just to reply to the Minister. I am just advocating that since there is a long queue for rental units and you are still building the rental flats to increase the supply and the supply cannot meet the immediate demand, the fastest thing to do now is take this subsidy and then rent rooms from those units that are owing arrears to HDB because they need the money to pay their arrears anyway, and then pass the rooms to those people who need the rental units.

Mr Mah Bow Tan: In the first place, they should not be in the queue. This is what this whole exercise is all about. They should not be in the rental queue. They should not be in the queue for a heavily subsidised rental flat. Yes, if they are eligible under the old criteria, they remain in the queue. I do not see why we should be cooking up new schemes in order to give them a rental flat.

Dr Lim Wee Kiak: There are genuine cases in the queue and you need an immediate supply for those. And with this recession, there are genuine cases.

Mr Mah Bow Tan: So you are saying for those who genuinely need a flat, why not rent a room for them? Yes, that is conceivable. But I can tell you, they will much rather wait for the rental flat.

Miss Penny Low (Pasir Ris-Punggol): On behalf of Punggol 21 residents, we would like to thank the Minister for showering

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Punggol 21 residents with love. But the vehicle-owning population in Punggol 21 needs more love. On this, there are two issues. One is the heavy vehicle parking. The same issue was mentioned by the Member, Mr Charles Chong. Is the Minister not aware that most of the heavy vehicle owners tend to be from the lower-income group? One of the biggest problems they face is that they have to get up very early or come back very late and, very often, that means there is no availability of public transport that can offer them a cheap mode of getting home. Parking at industrial estates, which are all very far from Punggol/Sengkang area, is not a viable option. Second, even the HDB parking is insufficient. In some of our clusters of flats, the HDB season parking subscription is more than 110%. What plans does the Ministry have to make good the insufficiency of parking lots?

Dr Mohamad Maliki Bin Osman: Sir, I can appreciate the Member's concern about the residents who are driving heavy vehicles and the fact that they come from low-income families. I also hope that the Member can also appreciate the concerns of the other residents in that area who, time and again, have given feedback about the possibility or even actually the disamenity that it has created. As I mentioned earlier, it is actually striking the balance. We are trying to appreciate the situation in Sengkang and Punggol areas and will re-evaluate it again. But, in general, the principle is to try to provide what we can to try to minimise the disamenity, yet at the same time get them to understand that there are heavy vehicle parks available, albeit not in the strategic or ideal locations that they want. Perhaps, you have to try to look at the other solution of trying to get them back from the heavy vehicle parking lot to their homes, whether it is in the middle of the night or early in the morning. These are solutions we have to find comprehensively, rather than assume that one solution is to provide them with

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something that is ideal for them because there are the concerns of the other residents that we have to take care of too.

Mr Low Thia Khiang: Thank you, Sir. The Minister of State has not answered my specific question. I would like to know whether the Minister can provide an indication of the scheduled date of the LUP in Hougang. The Hougang Town Council has called a tender for lift upgrading for 54 lifts. We do not know whether to proceed depending on when the LUP will come. Sir, the second clarification is, I would like to know why is HDB not reimbursing the Hougang Town Council the cost of unexpired cyclical periods of lease and other items

for the blocks that HDB decides to demolish at Hougang Avenue 7.

4.45 pm

The third question is on the types of lifts. Will Town Councils be given a choice in the LUP to decide what type of lift shafts – whether the ferroconcrete or metal type? I like to know whether MND has made a study on the implications on using metal lift shafts. The concern is whether it will increase maintenance cost as the heat difference in temperature could cause frequent breakdown of the lift parts.

Ms Grace Fu Hai Yien: Mr Low, I like to basically go back to the answer that I have provided in the original discussion. We will be scheduling to complete LUP by 2014 and if you take a reasonable construction period of, say, about two to three years, it means that we have to make all the selection and announcement probably by 2011 to 2012. That is not many years from now. So it gives you an indication of what is going to come. This

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applies to Hougang area as well as all the other constituencies.

On why HDB is not reimbursing the blocks that were torn down. I think the Members was specifically referring to blocks that were affected by redevelopment. HDB/URA will review our land use requirement on a regular basis. We make our decision whether to redevelop or conserve areas according to market requirement. Will we be able to tell them seven years in advance that there is a market redevelopment plan? I do not think we can do so. As it is, I think it is hard to project seven months in advance, let alone seven years.

As to the type of lifts, I would just like to, perhaps, explain the process that we will take. In the LUP project preparation, HDB will involve the Town Council as well as representatives from the residents, typically from the RC, and we will form a working group. In this working group, we will discuss various options including type of lift, location of new lifts, the number of lifts to install, and so on. And, of course, one important consideration would be the expected cost as a result of this solution. As I mentioned earlier on, we have to look at alternative methods of installing the lifts. Primarily, from a cost perspective, we do have a cost cap in order for us not to spend too much on any single block. That, first of all, could be expensive and it is not a wise way to use Government funds. Secondly, Town Councils and residents will have at the same time pay equivalent amount of co-payment which is on the high side as well. Taking that into consideration, the discussion at the working committee will take into consideration the views of the Town Councils, residents as well as HDB. If we find that the only way to carry on with the LUP is to use a certain method, we will definitely put forward that as an option to the working committee. The working committee can decide to proceed with the proposed method or they can

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decide not to proceed. I think that is the prerogative the working committee can take. So let me assure Members that Town Council's view will be solicited and will be taken into consideration in that process. On whether we have studied that implication, I think we have studied it. In fact, before we implement the solution, we have actually tested it out with the prototype in the engineering section in HDB.

Mr Cedric Foo Chee Keng (West Coast): Sir, Jurong West, or Pioneer Division for which I am the MP, has a very different problem. Our facilities are very modern and we have a new $760 million Jurong Point extension. But the problem is that all the food facilities are air-conditioned and with the economic outlook being poor, my residents are asking if MND can provide hawker centres or food centres that are not air-conditioned so that they have a choice whether or not to patronise those lower cost non air-conditioned food centres or the spanking new Jurong Point.

Mr Mah Bow Tan: Yes. We are actually trying out one concept, which is a non air-conditioned food centre. It may not be called a hawker centre. We call it a food centre. We are trying out one in one of the constituencies. A private developer is looking at it and if it works, Jurong West may be the next candidate.

Mr Charles Chong: Sir, I would like to thank the Minister, the Senior Minister of State and the Parliamentary Secretary for their responses, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $744,296,100 for Head T ordered to stand part of the Main Estimates.

The sum of 4,071,242,200 for Head T ordered to stand part of the Development Estimates.