INCREASE IN PRICES OF HOUSING AND DEVELOPMENT BOARD FLATS (Statement by the Minister for Law and National Development)

2.50 p.m.

Mr E. W. Barker: Mr Speaker, Sir, the present selling prices of Housing and Development Board flats were fixed in 1965 when the "Home Ownership for the People" scheme was first introduced. In the last eight years the cost of providing public housing has risen considerably, mainly due to increases in, firstly, the prices of building materials and wages pushing up construction costs; secondly, land cost; thirdly, clearance and resettlement costs; and lastly, additional costs due to improvement in the design of flats and better communal and recreational facilities. The Housing and Development Board can, therefore, no longer continue to sell flats at prevailing prices without incurring heavy losses.

There are over 100,000 applicants on the waiting list for Housing Board flats; more than 75,000 wanting to buy and more than 25,000 wanting to rent. The Board can only satisfy this great demand for flats without suffering a great financial loss if the selling prices of Housing Board flats are raised.

As from 1st January of next year, the selling price of Housing Board flats will he increased by $2,000 for two-room fiats, $4,000 for three-room flats, $6,000 for four-room flats and $8,000 for five-room flats. In order to help the lowest income groups, there will be no increase in the selling price of one-room flats. The new selling prices will be as follows: one-room flat, no change. Two-room (standard), Urban $9,500, Suburban $8,200, New Town $6,900.

Mr Speaker, Sir, I will proceed to give the prices of various other categories of flats in the Urban, Suburban and New Town areas respectively. Urban Sub- New Types of Flat urban Town Two-room Improved $11,000 $ 9,500 $8,000 Three-room Standard $14,500 $11,800 $10,200 Three-room Improved $17,500 $13,500 $11,800 Three-room Corner $18,500 $15,000 $12,800 Four-room flats $26,000 $21,500 $18,500 Five-room flats $41,000 $35,500 $30,000

Mr N. Govindasamy (Telok Blangah): Mr Speaker, Sir, the Minister has just thrown a bombshell in front of us. We were expecting price increases, but to hear that the lowest increase is going to be $2,000 is too hard to take. I wonder if the Housing Board is also joining in the inflation racket! It would be reasonable to suppose that people who have registered for purchase of flats have to wait for some time before increases in costs would be effected and borne by them. But there are also other categories of people who are awaiting allocation of flats. By "people", I mean those who were affected by urban renewal sometime ago.

Mr Barker: Sir, will the Member get on to his question? In a Ministerial Statement a Member may ask questions, but not make speeches.

Mr N. Govindasamy: Sir, I will conic to the point. What about those who arc affected by urban renewal? The compensation to be paid by the Resettlement Department has been agreed in some cases as far back as six months ago, and the Housing Board was not able to allocate flats to those to he evicted at the time, when they should have been allocated, and they are still waiting. Will these people have to pay the same increased cost for flats that the Minister has just enumerated?

Mr Barker: Mr Speaker, Sir, soon after the last elections, I received a paper from the Housing and Development Board asking for an increase in the sale prices of flats. Because of the rising cost of living, I have resisted the proposed increases for more than a year; but we cannot resist it forever, and I have given reasons why the costs of these flats have gone up.

As for the various categories of applicants, whether they are affected by urban renewal, or whether they have applied three years ago, or whether their house is affected by some Government project and have to move, there must be a dividing line; there must be a cutoff date. We therefore chose the 1st of January next year. Whatever date you choose, people will grumble; but the best date one can choose is the beginning of the new year.

Mr Ng Kah Ting (Punggol): Mr Speaker, Sir, the Minister has just pointed out that building costs have gone up. Is it possible for him to elaborate on these increases? He mentioned increases in the cost of building materials as well as labour. If he elaborates on this, I shall follow up with another two questions.

Mr Barker: Sir, over the last several years, prices have gone up, but they have gone up significantly over the last twelve months. The percentage increases in the main building materials were cement about 33 per cent, steel about 100 per cent, timber 100 per cent, and labour 50 per cent. Roughly, the overall increase in building materials and labour per unit of 3-room flats works out to be about 35 per cent over the last twelve months.

Mr Ng Kah Ting: Sir, in order to save the Minister's time, I shall proceed straightaway with the other two questions. It just came to my mind the question of conservancy charges and rentals. In this respect, will the Minister indicate to the House as to whether conservancy charges and rentals are likely to be increased also? My next question is: in view of the oil crisis, there is a move to cut down wasteful use of electricity, may the House be informed as to what the Housing and Development Board is going to do about it?

Mr Barker: Sir, in direct reply, charges for service and conservancy must go up. The cost, I believe, is about $6.50 a day, but the costs of providing these services have gone up, particularly the amenities for Housing Board flats which have improved considerably. The Housing Board is responsible for maintenance of parks, playing fields and other improved amenities. But there is one peculiarity and, that is, that the old Singapore Improvement Trust flats have been totally exempted from all service and conservancy charges ever since they were built. It is time this policy was changed. All I can assure the Member is that if these charges go up, they will go up only sometime next year.

As for rents, the likelihood is that they will go up, but we will give consideration to these increases only after receipt of the recommendations of the National Wages Council, which will probably be in the middle of next year.

As for energy conservation, every alternate lighting point along the common corridors of Housing Board flats, except along the staircases, has been cut off. Altogether 23,000 fluorescent tubes have been removed and kept in the stores. Further, the lighting hours have been cut down by two hours, the common lights are switched on an hour later than before and switched off an hour earlier in the morning.

Mr N. Govindasamy: Sir, one of the reasons advanced by the Minister just now for the increase in selling prices was the cost of land. Will the Minister consider selling Housing Board flats at the old rate to those people affected by urban renewal? The reason is that since the compensation they are going to receive is based on the old rate, they should be allowed to purchase flats at the old rate. The Housing Board should not charge them the higher selling prices now, because the Board was not able to allocate them any flats earlier. Does the Minister want a new cut-off date for this category?

Mr Barker: I do not follow the question. Is the Member referring to the landowner or just the tenant?

Mr N. Govindasamy: Both tenants and landowners, Sir. You have computed compensation based on the old rate for the house, land, etc. But the prices of houses have gone up or are likely to go up further from 1st January.

Mr Barker: Perhaps the hon. Member does not know that even the Housing Board, when it purchases land from the Government or from the private sector, has to pay for the land at market prices. One of the reasons I gave for the increase in building costs was the increase in land costs which have gone up considerably in Singapore. Hence, Government's policy statement last September barring foreigners from purchasing land in Singapore without permission; and I shall be tabling the Land Acquisition (Amendment) Bill very soon after this. This is Government's effort to prevent speculation in land prices in order to stabilise, if not lessen, land prices. But we have always been concerned with the amount of compensation payable either to farmers in the rural areas or to urban dwellers. It was not long ago that the compensation rates went up, and if conditions are such that the amount of rates should go up, they will go up.

Mr Ho See Beng (Bras Basah): Mr Speaker, Sir, with the increase in the purchase price of Housing Board flats, will there be a consequent increase in the rent for Housing Board flats?

Mr Barker: Sir, I have said just now that consideration will be given to such an increase sometime next year. But we do not want to do everything at one blow. All I can tell is that if the rents go up, they will not go up for the next six months.

Dr Ong Leong Boon (Kim Seng): Mr Speaker, Sir, on a point of clarification. Will the Minister kindly let me know if these new prices for Housing Board flats apply to all new flats that are balloted with effect from 1st January, or are they for new applications?

Mr Barker: The answer is, yes, no more flats will be balloted for the rest of the year. Sir, the next ballot will be sometime next year, and prices will go up. We must have a cut-off date. There have been letters to the press grumbling about the flats in Marine Parade which are nearly ready, "Why don't we sell them now?" The objection is this. If we balloted away one or two blocks of flats in Marine Parade in December, and they would have to be sold at the old prices, then if we have a second ballot next year with the increased prices, those who buy in the second ballot will grumble. They will point to their neighbours next door and say, "That person paid $2,000 or $4,000 less." This policy is not a pleasant one. But unless we increase the prices of flats, it will be uneconomical for the Housing Board and the Minister for Finance to increase considerably the subsidies that Government is already providing for cheap low-cost housing.

Mr Ivan Baptist (Potong Pasir): Mr Speaker, Sir, the Minister did say that he would consider increasing the quantum of compensation for people affected by urban renewal, and he also said that he would consider it when the time is ripe. I feel that the time is ripe now. Will the Minister consider increasing the compensation especially for those people who have just been affected by urban renewal sometime in August, as they will be obtaining their flats after January? The increased compensation can help them meet the extra costs that are to be charged for Housing Board flats with effect from 1st January, 1974.

Mr Barker: I will have to work out the details. All I can say is that it is unlikely that compensation rates will be increased by the end of this year.

Dr Augustine H. H. Tan (Whampoa): Mr Speaker, Sir, the hon. Minister mentioned that the Housing Board has got to acquire land from the Government at market prices. Obviously this is pushing up the cost of these flats. May I suggest, Sir, that the Government refrain from making too much profit in selling land to the Housing Board?

Mr Barker: That is a difficult question for me to answer, because I represent the Housing Board. I also represent the Commissioner of Lands who sells the land, and the Housing and Development Board comes under the jurisdiction of the Ministry of National Development. But it is not exactly taking from the left hand and giving it to the right hand. I cannot do a thing without reference to the hon. Minister for Finance who rightly looks after Government's money.