HOUSING AND DEVELOPMENT BOARD (Reasons for increased service/conservancy charges)

Mr Ong Teng Cheong asked the Minister for Law and National Development if he will give reasons to justify the quantum of the recent increases in service/conservancy charges in the Housing and Development Board housing estates.

Mr P. Selvadurai asked the Minister for Law and National Development for the details of the financial and other factors that have necessitated the recent increases in the Housing and Development Board conservancy charges.

The Minister for Law and National Development (Mr E. W. Barker): Mr Speaker, Sir, with your permission, I would like to answer Questions 12 and 13 together in order to avoid repetition.

Mr Speaker: Yes.

Mr Barker: Thank you, Sir,I refer Members to the budget of the Housing and Development Board for 1974/75, which was published in the Government Gazette on 24th May, 1974. The Board will spend $40 million on management, maintenance and repairs in its estates for the current fiscal year. It hopes to recover $18 million from its collection of service and conservancy charges at the old rates. The increases in service and conservancy charges will bring in another $15 million, making a total of $33 million. So the Board has still to provide a subsidy of $7 million for the maintenance and management services to its estates. The financial statements which I referred to do not include the capital costs of constructing swimming pools, sports complexes and recreational and other amenities in the housing estates, nor the increase in loan servicing expected for all new Government loans as a result of the new Central Provident Fund rates.

Members will recall that when I announced in Parliament on 30th November last year the increases in the selling prices of Housing Board flats, I also informed Members that the service and conservancy charges for HDB flats will be increased in 1974 and that rentals may be increased. Rentals have not been increased but the service and conservancy charges have been revised with effect from 1st July, 1974.

The reasons for the revision have been explained in the press statement issued at the time. The service and conservancy charges have never gone up since 1960 when flats were first built for rental by the Housing and Development Board nor for flats sold under the Home Ownership Scheme, first introduced in 1965. Most of the tenants in flats built by the former Singapore Improvement Trust do not pay any service and conservancy charges. This is an anomaly.

In the last 10 years, there have been mounting increases in the service and conservancy costs. The charges for water used in cleaning the common areas have increased by about 248 per cent. Charges for electricity for lighting of public areas, the running of lifts and power to pump water to the roof tank has increased by about 69 to 70 per cent. Wages of workers and salaries of management staff have also increased with the National Wages Council recommendations and higher Central Provident Fund contributions, while the inflation in our construction industry has raised the costs of redecoration and maintenance works by more than 100 per cent. Lift contractors charged from $30 to $50 per month to maintain a lift in 1964. Now they charge $80 per month.

Residents in Housing Board estates now enjoy better environment, services and amenities than they did 10 years ago. More greenery, gardens and playgrounds have been added in the estates. Sports complexes and swimming pools are provided in each new town. There is emergency repair service round the clock for repairs to electrical and sanitary fittings in their flats. They can call upon the service of the Lift Rescue Unit. Residents will enjoy even better environment, services and amenities in the future. Swimming pools and other sports facilities are being extended to old housing estates. The first such swimming pool is under construction for the Old Kallang Airport and Tan jong Rhu Estates. Other swimming pools are being planned for the Bukit Ho Swee and Alexandra Estates while a sports complex will serve residents in the Tiong Bahru, Redhill and Henderson Road Estates.

The increase in service and conservancy charges has been modest. They appear large only because they had not been gradually adjusted since 1960. For the 66,744 owners of Housing Board flats, the maximum increase (for the larger-sized flats) is only $10 per month. Fifty-five per cent of these owners are using their CPF credits to pay for their flats. The only cash outlay per month for their homes is the service and conservancy charges and property tax, which together come to less than the rental they would otherwise have to pay.

The Housing and Development Board subsidises the rents of tenants. It cannot subsidise increases in service and conservancy charges. The 90,450 tenants of Housing Board fiats, who previously enjoyed lower service and conservancy charges than owners, have to pay the same rate as owners of Housing Board flats. But to minimise hardship, the increase ranging from $6 for 1-room (emergency) flats to $18.50 for 4-room flats, is being implemented in two stages.

To equalise subsidies between old and new flats, service and conservancy charges for sold SIT flats are now the same as for owners of HDB flats. 14,990 tenants of SIT flats will now pay service and conservancy charges similar to HDB tenants. These SIT tenants have been enjoying free service and conservancy for the last 17 years. This was due to an administrative oversight. Nevertheless, to relieve hardship, the Housing Board has implemented the increase of these charges also in two stages.

The Housing and Development Board has to revise the service and conservancy charges to be more equal in its treatment of old and new tenants, and between owner-owned and rented, premises. Lastly, may I remind Members that the Board must also be ready to meet increased subsidies as interest rates for loans from CPF funds go up for the new estates.

Mr Cheong Yuen Chee (Toa Payoh): Mr Speaker, Sir, may I ask the Minister why has it been necessary for the Housing Board to show discrimination in the issue of these notices to tenants and owner-occupiers of HDB flats? Owner.occupiers received their notices by registered mail whereas the tenants had their notices pasted on their doors without any prior notice at all.

Mr Barker: Mr Speaker, Sir, there was no intended discrimination between owners and tenants even in respect of the service of these notices. Under the law it is necessary to serve a tenant or a lessee-owner with a notice which is headed, "Notice to Quit", before the service and conservancy charges can be raised; the intention is to terminate the tenancy so that a new tenancy can be offered and signed between the Board and the tenant. In the same way, notices had to be served on owners of flats, telling them that the old rates do not apply and that new rates will apply as from the 1st of July. Under the terms of the tenancy agreement, of which I have a blank copy here, clause 18 reads:

`all notices, including notices to quit, which the Board may require to be given to the tenant shall be in writing and shall be deemed to be sufficiently served if they are posted upon some conspicuous part of the premises or if they are addressed to the tenant at the premises and forwarded by AR registered post.' To have served nearly 196,000 occupiers of HDB flats with letters by AR registered post would have cost a lot of money. Even the post office charges have gone up! So where a tenant was not at home the notice was posted on to the premises. As far as the owners or lessees were concerned, there was no such similar provision in any of the clauses of the lease. Letters, therefore, had to be sent.

Mr Ho See Beng (Bras Basah): Mr Speaker, Sir, at this time of economic strain and stress, what justification is there for the Housing Board to provide such luxuries like swimming pools and a sports complex? Will there be any economic return because we do not know what is in Store for us in the future?

Mr Barker: Mr Speaker, Sir, financially, of course, it is a strain on the resources of the Housing Board to provide recreational or sports facilities, but the dividends do not come by way of money. They come by way of better and healthier citizens. Besides, nowadays tenants and occupiers of Housing Board flats expect swimming pools and parks. When the Housing Board first built flats in 1960, all it did was to provide homes with very little recreational or sports facilities. But our standards have gone up and their demands have gone up, and we will provide these sports and recreational facilities even if we lose money on them. I think the dividends that come by way of higher standards of sports, or healthier citizens (social dividends if you like) are really worth the money spent.