ANNOUNCED INCREASES IN PRICES OF HOUSING AND DEVELOPMENT BOARD FLATS

3.38 p.m.

Mr Ng Kah Ting (Punggol): Mr Deputy Speaker, Sir, I have obtained the right to raise a matter on the Motion for Adjournment today because I believe that the latest increase in prices of Housing Board flats announced by the Minister for National Development on 24th May to the Press is a matter of grave concern to the public at large and the applicants in particular. I must add that I received a copy of the statement from the Government Whip on 26th May 1981. I also believe that Government itself acknowledges the concern and therefore, as pointed out by the Leader of the House, has lifted Standing Orders to enable my colleagues on this side of the House to air their views. Nevertheless, Sir, exemption from Standing Orders provides the Minister with an opportunity to enlighten and to elaborate to the House, his reasons not only for the hefty increase of 38% but also the prospect of annual increases in future.

Ministerial Statement

As far as I can recollect, the first round of price increases was effected in 1974 when the Leader of the House who was in charge of the Ministry of National Development made a statement in this House on 30th November, 1973. The increases were $2,000 for a 2-room flat, $4,000 for a 3-room flat, $6,000 for a 4-room flat, and $8,000 for a 5-room flat. The then Minister said, "In order to help the lowest income groups, there will be no increase in the selling price of 1-room flats." (Hansard, Vol. 32, col. 1319). This is laudable and I do hope that the present Minister for National Development is magnanimous enough to give his most sympathetic consideration to the very special cases of resettled families who cannot afford the new prices.

HDB Announcements

However, HDB's selling prices were further increased by 15% in 1979 and 20% in 1980. Such increases came in the form of press releases. For example, Sir, I have a copy of a release dated 29th May 1980 entitled "HDB announcements". The announcements were categorised under three headings:

(1) An increase in selling prices and rental of HDB flats.

(2) The introduction of a new flat type called the executive apartments.

(3) Raising of income eligibility ceiling from $1,500 to $2,500. By this announcement all selling prices of flats were increased by 15% and rentals by 10%. All these increases were attributed to rising prices of building materials, wages, land cost, and even to improvement in the design and better communal and recreational facilities. The Minister, in his latest announcement to the press, not to the House, has also attempted to justify the increases by quoting the annual recurrent subsidy of $55 million for the maintenance and management of housing estates and staff salaries, and also a capital subsidy of $30,000 per flat to finance the difference between the costs and selling prices of flats.

Objectives of CPF

The Minister has also gone so far as to determine the percentage of applicants who can afford the new prices using only their CPF contributions. Just now, in reply to my question, the Acting Minister for Labour also made reference to the affordability of CPF contributors vis-a-vis the purchase of HDB flats. The Minister's analysis showed that 87.5% of applicants can afford a 3-room new generation flat and 81.5% a Model A flat, while 84.5% can afford a 4-room new generation flat and 75% a Model A flat, and 81.5% for a 5-room improved flat and 73% for a Model A fist. There are six types of flats being built in six zones that the HDB offers for sale to the public. I make mention of six flat types in six zones because they have relevance to what I shall be touching on in the latter part of my comments which dwell on what the HDB should do. The remaining applicants, however, will have to pay part of their instalments from their take-home pay. That is according to what the Minister has said.

Abundant Supply of Key Materials

Mr Deputy Speaker, Sir, let me enumerate the factors that have been given as the reason for these increases. First, cost of building materials. It is gratifying to note that in May last year the Minister was reported to have said in the Sunday Times of 11.5.80 that:

'Singapore has abundant supplies of essential building materials which have not been tapped. They can easily support the local building industry for 20 to 50 years. The Government plans to centralize, expend and improve the mining capacities of these materials.' With this multi-million dollar plan to increase output of sand, clay and granite, it went on to say:

'the HDB will not only become self-sufficient but will also be able to supply about 40 million bricks to the public and private sectors.' This abundant supply of key building materials will certainly help to stabilize prices. Sir, if this is the case, may I ask: Where then is the logic for such steep increase in prices?

Land cost

Next is land cost. Mr Deputy Speaker, Sir, is the Hon. Minister saying that the HDB is paying more for land? It is a well known fact that in the compulsory acquisition of land for a public purpose, the land value that is determined will be the value prevailing in 1973, not the value as at the date of acquisition. We all know that land values in 1973 are far below what they are today. However, I can only concede on one point, and that is. the HDB might have to pay a little more than 1973 prices only because ex-gratia compensation rates for resettlement cases have gone up somewhat and up again by 30% last March. Thirty per cent, Mr Deputy Speaker, Sir, sounds a high figure, but 30% in terms of the compensation that a family gets for displacement, loss of income and of livelihood, is certainly a meagre sum. And this does not take into consideration the large family which may require more than one flat upon resettlement. Hitherto, these families lived under one roof, so to speak, With this clarification, Sir, how does the Minister reconcile these rising costs if these two key factors are taken into consideration in the total sense? Affordability

In his analysis of the affordability of flats, the Minister said that the remaining percentage of applicants would have to pay part of their instalments from their take-home pay. This undoubtedly means that the lower income group with small balances in their CPF will have a reduced take-home pay, and this is aggravated by the fact that it will be further reduced by an additional 4% CPF contribution to be effected next month. And the compensating factor of NWC wage increases for this year unfortunately is something which not all workers will enjoy.

Sir, there must be a limit to the increases in CPF contributions or even NWC recommendations, and whatever corrective action is taken, it cannot match the fantastic and certainly prohibitive hike of 38% now. And then there is the threat of further annual increases. If I may remind the Hon. Minister, Sir, the main objective of the CPF is to provide the worker with some means in his old age, and while the rule has been relaxed somewhat to permit him to buy and own a home, which is certainly a praiseworthy move, the question is: how much subsidy, in concrete terms, has the Government got to cough out annually under the Government's Home Ownership Scheme?

Sir, I would like to submit for the information of hon. Members two tables (Cols. 97 - 100) showing the sale prices of HDB flats from 1971 to 1981. They are with the Clerk. I would be grateful if the Clerk could distribute them now. (Copies distributed to Members). tables - SELLING PRICE OF HDB FLATS, NEW SELLING PRICES OF HDB FLATS EFFECTIVE FROM 1 JUNE 1981 (Cols. 97 - 100)

From these tables hon. Members can easily comprehend how these prices have leap-frogged over the years. Therefore, before I come to the question of what I personally believe HDB should do to correct and, if possible, stabilize prices to enable the percentage of affordability to rise to more than 80%, I would like to mention the problem in my constituency. This is merely to allow hon. Members time to look at the two tables. Resettlement in Punggol

On 12th January this year, Sir, a good portion of the lands in Punggol was compulsorily acquired by Government for public development and the Minister has, in a reply to me, indicated that some 26,000 housing units would be built in Punggol and Paya Lebar constituencies to be known as the Hou Gang New Town. The House would be interested to know that in the acquisition of these lands, more than 3,000 families in Punggol alone have to be resettled. I am given to understand that the ex-gratia compensation to be paid to the resettled families have been increased by 30% in March 1981. But I hasten to point out that although the percentage may appear to be high, in monetary terms there is a great difference between the revised compensation rate and the latest price increases. This has put the resettled families in greater financial difficulty. They have therefore very strongly petitioned to me and to the Minister on the ground that since they have to make sacrifices in the public interest, they should be given more than sympathetic consideration. Sir, even the Hon. Prime Minister has said sometime ago that resettlement should be carried out in a more humane manner. Therefore, whilst these resettlement cases benefit from the small increase in ex-gratia compensation, the higher compensation will not help them to pay for this 38% increase which, I think, is both unfair and unjustified.

I know the Minister is sympathetic but surely he can be more than sympathetic by adopting a more humane and positive attitude towards resettlement cases not only in Punggol but in other constituencies as well, as I understand there are many thousands of families in other parts of Singapore facing the same fate. I leave it to my colleagues on the Back Bench and even on the Front ,Bench to appeal to the Minister to give his serious and humane consideration to resettlement cases. If he does not seriously consider this, I can only say that there will be problems.

New Concept of Public Housing

I now come to the question of what I shall call, in my personal view, a totally different concept of public housing which the HDB should adopt. This could mean a more stable pricing of HDB flats.

But I must point out that I am no architect nor town planner but, to my simple and lay mind, I think it is about time that the HDB sat down to do some hard thinking with regard to public housing. I have taken the trouble to go round visiting some of the new housing estates that are coming up, and I notice that there is much room for improvement in both management and building construction. One point I would like to raise is whether the H D B has looked into the question of reducing labour by greater mechanization of its procedures and processes. Another aspect is design. I notice that many of these new blocks of flats have varied designs. Some of them are fanciful too. Therefore, it is only too true that this means greater costs.

This brings me to the question of the types of flats. From the two tables distributed by the Clerk just now, Members will note the difference. In Table 1, from 1971 to 1974, with the 3-room and 4-room improved and the 5-room standard type flats, the price difference of a 3-room improved flat between 1971 to 1974 was $4,000; it was $6,000 for a 4-room improved type flat and $8,000 for the 5-room standard type flat respectively. However, Sir, the HDB introduced the 3-room and 4-room new generation flats and the 5-room improved type flats in 1975. The selling prices of these new types of flats had to be raised. Even with rising costs in building construction, the H DB went on to build other new types of flats.

In Table 2 are listed the 3-room Model A, the 4-room Model A, and the 5-room Model A types of flats. Inevitably, Sir, the selling prices of these types of flats must be higher than the rest. The question here is: can the HDB really cope with so many types of flats? As we all know, last year the HDB could not meet its target of building 25,000 housing units. It only managed to build slightly less than 20,000 units. This has inevitably put back its building programme by about 20%, which means 5,000 units, and this has to be carried forward to the following year, i.e. this year. I am not so sure whether the HDB can achieve its target this year. Whilst being an optimist, in this particular instance here I am not optimistic. So the waiting time for the public applicants gets longer and the waiting list becomes longer too. The result or prospect is that there will be further increases in prices.

I am quite sure the Hon. Minister fully understands the purport of my statement since he was in charge of the HDB as Chief Executive Officer for nearly two decades and now he is the Minister for National Development. I must give him credit for what he has done for the HDB. [Applause] But of late things are getting to be a bit different. I am sure it is not impertinent to ask of him. What is wrong with buildings of simple design? Simple in design means housing that is quick to build and yet comfortable to live in and -

Dr Ahmad Mattar: Cheap.

Mr Ng Kah Ting: - and economical. It is better to have blocks of flats that are simple, comfortable, and economical than to have housing blocks of different sizes and shapes, more complicated and more intricate in design, more beautiful to look at but all these mean more costs and higher selling prices. I do not know whether the HDB has taken this into consideration.

In other words, while we talk about encouraging the majority of our people to buy their own homes, we cannot in the same breath make announcements of price hikes of such magnitude as 38%. Sir, if I may refer to the reply of the Hon. Minister to remarks by several hon. Members over the impending increase in prices of HDB flats during the debate in the Committee of Supply on 24th March last year. Amongst other things, the Minister said:

'The HDB has requested for a 30% increase in the selling price. But I have asked HDB to try its best to see how much the Board can help to absorb the increase in costs so that the full 30% inflation need not be passed on to the purchasers.' [Hansard, Vol, 39, No. 16, col. 1355] Subsequently, the increase was brought down to 20%. Therefore, Sir, the House would certainly want to know what happened this time. But how much or by what percentage did the HDB want to increase the selling prices? How hard did the HDB work to try to reduce the percentage and how did it arrive at the figure of 38% and not less?

Sir, the public must also be realistic to external events that govern property prices, and they should not expect too much from the Housing Board because bigger and better quality flats as mentioned earlier like Model A, new generation flats, etc., could only mean higher and still higher prices. The HDB, on the other hand, has to be very pragmatic about the pricing of its flats. If wages and CPF contributions are not able to match the price hike of HDB flats, the solution can only be to control the prices of HDB flats and not allow them to rise so fast as to price-out the public housing applicants. If this situation arises, there will be problems. I do not think that we can allow this to happen.

Mr Deputy Speaker, Sir, I do like to bring in other cogent reasons in support of my statement but since there are many other speakers who also like to air their views -

Some hon. Members: You can continue.

Mr Ng Kah Ting: - I rest my case. 4.06 p.m.

Mr Eric Cheong Yuen Chee (Toa Payoh): Mr Deputy Speaker, Sir, I rise in support of the views expressed by the hon. Member for Punggol.

It is recognized that the HDB has over the years done a sterling job in providing low-cost housing to the masses. Of late, people are wondering whether the HDB has deviated from such a policy. The mood of the people is aptly reflected in a cartoon of the Hon. Minister in a Chinese language newspaper. Sir, no one is quarrelling with any reasonable increase in prices of HDB flats but it is the manner in which such increases are implemented and announced outside the House. The sudden and hefty price increase of 38% upsets many people, particularly those who cannot afford to buy private residential properties. Each time an announcement is made, whether on price increases or some new regulations by the Housing Board, people swarm not only the HDB offices but also the office of the Registrar of Marriages as well. A panic situation is created every time such announcements are made.

Sir, has the HDB considered the adverse social impact that such sudden and hefty price increases in HDB flats have on the people, particularly young people? One day, on my way to the Ministry of Labour, I was caught in a traffic jam along Canning Rise which was very unusual. At first, I thought that an accident had occurred somewhere along the road. On passing through, I was surprised to see a large crowd waiting outside the Registry of Marriages. A long line of vehicles were parked along one side of this narrow road, obviously waiting for the newly-weds and their families. This rush by applicants to meet the deadline clearly indicates that many people would not be able to afford to purchase HDB flats in time to come. Many of these applicants are young people. By force of circumstances, these young people have to get betrothed at an early age. Among those who are getting engaged or married are young girls still in their teens. I wonder how many of them are mature enough to take on the responsibilities of having a family of their own. In subsequent years, when these young couples find that they are incompatible partners in life, family breakups could occur. Has the HDB thought of these potential and undesirable social problems?

The HDB is often credited with long-term planning in housing projects. Have they given some thought to such long-term social problems? Asian customs, Sir, frown upon long periods of engagement. Those who are engaged may under parental pressures be forced to contract early marriages. These problems are not unique as other countries have similar problems where young people marry at too early an age. During my meet-the-people sessions, many young couples have approached me for assistance in renting one-room flats temporarily to overcome their domestic plight. Most of them have already registered for purchase of HDB flats. Some of them are living apart because of lack of accommodation. One can imagine the undesirable mental effects such young people face.

It is recognized that there are many factors leading to the increased construction cost of HDB flats. But surely the HDB can regulate the increase in selling prices at fixed intervals, for instance, annually, so that would-be applicants would not be faced with sudden financial problems. Another point the HDB could consider is to extend the maximum period of mortgage up to 25 or 30 years. 4.10 p.m.

Prof. S. Jayakumar (Bedok): Mr Deputy Speaker, Sir, as a preface to my remarks, I wish to recall the words of advice made in this Chamber by the late President when he said that Members of Parliament, especially those who are not constrained by ministerial office, have a duty to voice the views of their constituents and that Parliament must mirror the views, the hopes, the doubts and the fears of Singaporeans. He also said that Members would best help the Government to meet this objective by speaking out their views and criticise Government policies, to make Government policies more responsive to the needs, of the people.

I must also recall the equally important words of the Leader of the House, the Honourable Minister for Law, who, in welcoming the 18 new Members of Parliament advised us to let our conscience be our guide.

It is in this spirit that I join the debate on the Motion for the Adjournment moved by the hon. Member for Punggol. It is not my intention to denigrate the HDB or to unreasonably or unfairly complain about the increase in prices. The reaction to the increase in prices, especially the suddenness, is well known. I realise that I have a duty to be constructive in my criticism.

On the one hand, if I have to be constructive, I must of course, recognize and understand the serious difficulties which the HDB faces. It is a fact that they have difficulties such as increased cost of materials, shortage of labour, the unwillingness of contractors to tender for H D B projects. Another fact which, of course, I must not fail to realize is that, even at increased prices, there is a heavy subsidy in the price of HDB flats.

On the other side of the story, however, it is equally important to recognize the fact that the steep rise in the price of HDB flats has caused disappointment, anxiety and frustration to many Singaporeans who are on the waiting list. It is also a fact that many of those persons do not consider that they are responsible for the problems faced by the HDB. It is also a fact that we are reaching a point in Singapore where home ownership has been encouraged as a matter of Government policy and to own one's own home is being regarded as an important symbol of security.

We are therefore in a peculiar situation. All these years, we have prided ourselves in having solved our housing problem; our experience was looked upon by other countries as a shining model. But now we are in a situation where 20-25% of the applicants may have difficulties in paying for their HDB flats at the revised prices, that even annual increases in prices may be expected, that the era of cheap housing is over. And we are also told that even at high prices, there may not be sufficient units to meet the demand.

So the era of cheap housing is over. It will, therefore, be of not much purpose on my part to protest and recount all the reasons why high prices have certain effects on the people. The question, however, to which I wish to address myself is: what can be done, or what measures can be taken, to alleviate the burden for those who are facing the tight squeeze caused by the recent price increases?

In this regard, I wish to make a few suggestions: the common denominator of my suggestions being a call for greater flexibility, innovation and exercise of discretion by the relevant authorities.

My first suggestion calls for flexibility regarding the income ceiling. It is true that the income ceiling has been revised periodically. However, notwithstanding the periodic revisions of the income ceiling, the recent price increases can still cause problems. If a person, say, has applied for a 4-room unit but if it can be shown that he is now facing difficulties in meeting the prices and cannot afford the revised cost, then I would request the HDB to be flexible and to allow him to obtain a 3-room unit even if his income ceiling exceeds what is stipulated for that smaller unit. I am particularly thinking of cases where the income ceiling is exceeded marginally. This may require exercise of discretion after examining the circumstances of the applicant. If he is priced out of a 4-room unit and at the same time he is told that his income ceiling is too high for a 3-room unit, then this appears inconsistent. Logically it is also not acceptable because if he has difficulties in meeting the price of a larger unit, it must surely be due to his income, his take-home pay and his CPF account. It is precisely because of this that there should be flexibility to allow him to get a smaller unit.

My second suggestion relates to the use of CPF funds, I would respectfully suggest that perhaps the time has come for consideration to be given to allowing a person to assign a limited part of his CPF savings to assist another member of his immediate family who has genuine difficulties in purchasing an HDB flat.

Let me explain, In a given family, there may be persons who are already in ownership of accommodation or who otherwise may not have utilized the CPF. Another member of the family who had applied for a HDB flat may, however, face difficulties because of the new prices. We should allow other members of the family, if they wish to do so, to assist a parent, child, brother or sister, as the case may be, in the purchase by assigning part of their CPF funds even though they are not joint applicants and have no legal interest in the flat. There should, of course, be several safeguards. First, a maximum amount, in terms of percentage, say, 10%, that can be so assigned should be stipulated. Second, this should be limited to cases of genuine difficulties. Third, where a person so assigns a part of his CPF to assist a relative and the relative then sells within a given period, then the portion so assigned should be returned to the assignor's CPF account. I realize that this may be seen to be a radical move but the present problems are acute and may require novel suggestions. Indeed, my suggestion may bring about a feeling of family cohesiveness and self-help and reduce the burden on the HDB applicant who may have to tap his ta ke-home pay at an extraordinary rate.

My third suggestion relates to the existing rental blocks. My call here is for flexibility in allowing persons who are living in rental blocks to purchase the units in which they are staying if they wish to do so and if they have the necessary means at their disposal. I understand that the past practice of the H DB is that if a relatively high percentage of the sitting tenants in a given block desire such purchase, then sympathetic consideration would be given. My point is, whether we can encourage and accelerate this trend. There are good reasons why we should allow sitting tenants in rental blocks to purchase their flats. First, many of them residing in rental blocks may already be applicants for other HDB purchase flats. They are, therefore, amongst the many thousands in the HDB waiting list. Now, if the HDB allows them and accelerates the process of allowing them to purchase the existing rental flats, and imposes the condition that they must give up their applications for new purchase flats, then there would be a reduction in the waiting list. Others who are renting flats will avoid getting on the waiting list if they can purchase the existing flats. The HDB, of course, should always set aside a certain number of rental blocks for resettlement cases.

My fourth suggestion concerns the loan repayment period and it is a point which has already been made by the hon. Member for Toa Payoh. Consideration should be given to extending the loan repayment from 20 years to 25 years. This may help to cushion the burden caused by increased prices as the amount of instalments would be reduced, especially for those with smaller CPF contributions.

Finally, I would like to ask the Hon. Minister for National Development whether costs could in any way be reduced by prefabricated construction. I understand that this was tried before but was not successful. I mention this because the press on 10th June publicized this method and quoted the Head of the HDB's Social and Research Unit as stating that the best hope lies in the prefabricated housing where ready-made components are fitted together. Does this mean that HDB is rethinking this question? If so, it would be helpful for myself and other colleagues if we could be informed of more details and, in particular, whether such method will bring down prices and speed up the construction process.

Sir, I have been a great admirer of the HDB's achievements and I wish to express the hope that the present problems which we are directing our minds to can be overcome by ingenuity, determination and innovation which is so characteristic of our Government.

It is said that institution languish and become complacent when their admirers or lovers are not critical, and when their critics are not appreciative and understanding. I hope that the suggestions that I have made will be regarded as coming from a person who is a loving critic and a critical lover of our housing programme. 4.23 p.m.

Dr Tan Cheng Bock (Ayer Rajah): Sir, in deliberating this debate on the increase in prices of HDB flats, I was tempted to put the blame on the Ministry of National Development, but on further consideration I find that the Ministry of Labour, the Immigration Department and, in particular, the CPF Board, all have a finger in this. Perhaps it is our attempt to persuade Singaporeans into the building industry that started this chain of events. To encourage Singaporeans into the construction trade, the latter was brought into line with that of the other industries. This means that the building trade will be treated like the other sectors, and that the contractor has to contribute CPF and so has the worker, irrespective of whether he is a local or a foreigner.

In the past, block permit holders pay only $10 application fee, and this amount was usually borne by the sub-contractor. With the introduction of the new CPF ruling on 1st January, contractors have to pay CPF contributions in two phases. Under phase 1, con- tractors have to contribute 10% of the worker's salary, while the worker pays 9%. In practice, the contractor pays the whole 19%. Under phase 11 in July 1981, employers will have to contribute 20% and workers 18.5%. This time the contractors have decided not to pay the workers' share, as the sum involved is very large. The workers, on the other hand, not being Singaporeans, see no reason to contribute to a fund that benefits them very little. They cannot use it to buy SBS shares or HDB flats. Moreover, they are here on a temporary basis. This move helps to make up the minds of many traditional foreign workers to return to their homeland, instead of contributing incessantly to the CPF Board for which they see no advantage, Therefore, the original aim to attract more foreign workers into the labour-hungry industry, has backfired with such moves. In fact, I quote the Minister for National Development as saying, during a tour of Block 41 Sims Drive, that it would be unfair to deduct CPF from the wages of foreign workers as this would force them to leave. [Straits Times, Monday, 10th November 1980].

With the uncertainty of the labour workforce, coupled with inflation, shortage of materials, and short delivery, it is no wonder that the construction costs have gone up, and so has the price of HDB flats. The CPF contributions required of contractors will have caused a number of contractors to go bankrupt if they comply, as the contract secured from the Government did not include any provision for CPF payment for foreign workers.

The Ministry of National Development came to the rescue of these contractors, promising to pay $50 million as compensation to contractors and block permit holders working on public sector projects tendered before 4th August. Although half the sum went to those working on HDB projects, I have a hunch that this sum lost has also contributed to the rising price of the present HDB flats. Am I correct, Mr Minister? Having lost our traditional ground of foreign workers because of our CPF move, contractors were asked to try their luck in non-traditional sources, like Thailand, Sri Lanka, India, Indonesia and the Philippines. They must comply with a series of do's and don't's and in addition they will have to pay a $230 monthly levy per worker in lieu of contributions that contractors and foreign workers will have to pay to the CPF. When the Labour Ministry was asked why there was this levy, the answer was, and I quote from Straits Times, 27th March, 1981:

'The aim of the levy is to encourage contractors to improve the existing conditions and wages to attract more local workers.'

We have clearly failed in our attempt to attract Singaporeans into the building industry. Perhaps it is time we faced up to the fact rather than impose all sorts of restrictions and disincentives which will endanger the whole construction industry, We must avoid the attempt to push Singaporeans into the construction work at the expense of the construction industry. Let us be more flexible in our ruling with regard to foreign workers, traditional or non-traditional, and carry on with the past good work of the HDB. While we must ensure that foreign workers coming to Singapore are not exploited, we must also not place too many obstacles in the way of those who need them. Perhaps we should go back to the original method of allowing our traditional workers the usual block permits and remove this $230 levy on foreign workers from non-traditional sources.

In the meantime, the move to mechanize the building industry must be encouraged. Perhaps when the Singaporean sees that houses can be built without those fright- ening scaffoldings and that machines can help to build houses, they might join the construction trade. Till then, we have no choice but to depend more on foreign workers to build most of our homes. 4.31 p.m.

Mr M.K.A. Jabbar (Radin Mas): ( In Tamil): Mr Deputy Speaker, Sir, thank you for allowing me to speak on this topic. I wish to bring the following to the attention of the Minister concerned. A great number of Singaporeans who have registered for HDB flats are now in a quandary. Those in the lower income group find it difficult to meet from their salaries the daily expenses, expenditure on the education of their children, and their family needs. People who had previously lived in the kampongs are inconvenienced when they are resettled or when they obtain a new HDB flat. Singaporeans who have registered for flats have to wait for up to three years to obtain their flats. These people have to pay a substantial sum as deposit.

In order to alleviate the problems faced by these people, may I request the Minister to consider allowing these people to pay their deposit in instalments during the waiting period of three years. In this way, those in the lower income group and who do not have any funds in the CPF will benefit.

People who have been occupying rented flats for a long period have been distressed by the announcement of the Minister for National Development that the price of HDB flats will be increased annually. These people wish to purchase the flats in which they live. If this suggestion is implemented, those residing in rented flats will not be disturbed any more and it will help the respective MP of the constituency to give his best service to the people. For example, when I visited my constituents, those living in rented flats told me that they wished to purchase their rented flats and requested me to do the needful. When questioned, they told me that being in the lower income group they were unable to buy flats at a higher price. I have written a letter to the Ministry and I request early action on this matter.

Mr Deputy Speaker, Sir, the Port of Singapore Authority has given notice to its employees to quit their houses in which they have lived for a long time. Some of the PSA workers are foreigners and they are doubtful whether they are eligible for HDB flats. Since it is not possible for them to look for their own accommodation, this housing problem is causing them great anxiety. Therefore, the Minister in charge must help these people to obtain HDB flats. I would also request the Minister to persuade the PSA to assist these people in their re-housing needs because they have worked for a long period of time.

Sir, the HDB has been praised for its expeditious and efficient management by experienced and able personnel. However, the Minister for National Development who is endowed with good administrative skills should protect the lower income group who may not be able to purchase HDB flats in the future. I implore that steps be taken to prevent a situation where only the rich enjoys all the benefits. Even the poor should be given the opportunity to buy flats. Therefore, I support the views expressed by the Member for Punggol and others here to-day. 4.36 p.m.

Encik Saidi Shariff (Kaki Bukit): Mr Deputy Speaker, Sir, that Singapore is still a good place to live in despite some restrictions and constraints is beyond dispute. One has only to take a trip somewhere to establish this truth. That the majority of Singaporeans are decently and comfortably housed in HDB flats is also beyond dispute. This is due mainly to the hard work put in by HDB in its efforts to break the backbone of the housing problem. Therefore, I must pay this compliment because it is due, However, in some other areas, the HDB has not been so successful. This is why I rise to join my brother MPs to speak on the matter of the announced increase in prices of HDB flats which is exorbitant and, in some ways, unjustified.

I am fully aware that Singapore is caught up in the era of advanced technology and micro-chips and perhaps it is not totally possible for some of the effects not to be rubbed off into our living patterns. But it would be tragic if human beings become mere cold statistical digits, and services rendered are computerized into balanced sheets showing profits and losses. We are all aware of what inflation is. Inflation is something we bring to bed with us each night, and each morning when we wake up we see it in the mirror. But it should be a challenge, something to be overcome. Inflation should not be allowed to become an ogre, something to frighten us, something that will melt our resolve because it is something that cannot be overcome.

Where rising prices of flats are concerned, inflation has become an ogre, particularly in Kaki Bukit Constituency. To understand why this is so, it is imperative that we understand the kind of residents in Kaki Bukit Constituency, particularly those living in Jalan Eunos/Kaki Bukit Malay Settlement and the outlying areas of Jalan Lembah Bedok, Lorong Kancing and Lorong Wali. Most of them are not living below the poverty line. Neither can they, by any stretch of the imagination, be classified as affluent. They are mostly ordinary workers, wage-earners, retired senior citizens or pensioners and small-time farmers whose families have settled in the areas for the last 50 years or so.

Given the choice, many would remain where they are right now if it is only for sentimental reasons. But being true Singaporeans, they know that personal sentiments must play second fiddle to national development and national interest. Nothing is static and, like everyone else, they do not only expect changes but have learnt to accept changes. They have taken it in their stride the fact that there will be further increases in the price of public housing. They appreciate the fact too that public housing has been and will continue to be subsidized. Still the recent announcement of price increases is a bitter pill to swallow as it is prefaced by explanations and rationale which do not border on the logical. First of all, it is not by their own design or choice that they have to purchase HDB flats and that they have been given notice to be resettled before the date of announcement of an increase in prices of HDB flats. It is my hope that the Minister would consider it justified for all those affected by the clearance scheme of the Resettlement Department to be allowed to purchase flats at the old prices if they are eligible.

It has been announced that on the average the price increase is 38%. Averaging is a convenient mathematical term to use but it can be insidious for it assumes a lot of similarities that do not exist. For instance, the percentage price increase for a 3- room flat in the inner suburban zone is 50.7%, and not 38%. The enhanced value of this type of flat is attributed to the fact that it is now in the inner suburban zone. This brings me to my next point - zoning. Singapore has already acquired the reputation of being an urbanized society. Now we have a new battle of words. We are not just urbanites but we are also inner sub-urbanites and outer sub-urbanites. All very grandiose terms but what do they really mean? Do they make us feel less or more of a Singaporean? Nol The difference lies in the economic terms and a great stretch of our pockets where HDB prices are concerned. Because of these new zoning areas, a constituent in an area, particularly in Kaki Bukit, about to be resettled finds himself in a financial dilemma. He is on the waiting list for a new tow flat but he has now to pay inner-suburban rates. It would be interesting to learn the basis on which these demarcation lines are drawn. In the same breath, such a person living on Government land in the newly constituted inner suburban zone is being compensated at the old rates plus 30%. In simple terms, such a constituent loses out twice. He has to pay the new HDB prices which can amount to a substantial sum but there is no real increase in the compensation rates in actual fact. Is there no possibility of revising the compensation rates of those so affected?

It has been brought to my attention that there are still quite a number of HDB units for sale to resettlement cases at the old prices, Such units can be found in the estates which are considered unpopular for various reasons. The rationale for this incentive is probably to encourage some Singaporeans at least to become outer suburbanites to avoid congestion in the urban zone. Whatever the merits of this incentive scheme, one salient point stands out. There are still available some HDB flats going at the old prices. In fact, there could be more, and indeed there are. Flats, I believe, are normally built in phases and each phase is contracted out on a tender basis. In simple terms, this implies that even some blocks that have yet to be built have been tendered for at lower costs. Therefore, it seems only logical and fair that those who are on the waiting list and are eligible should not be lumped together with new applicants and made to pay new prices. An analogy will make my point clear. Imagine a cigarette vendor selling old stocks of cigarettes at a higher price each time there is a price increase. Perhaps he can be excused for hoarding as he is swayed by higher profit margins. I am confident that the HDB is not a profiteer and therefore does not hoard in anticipation of higher profits. So I do not really understand why there is a sudden jump in prices for all flats when only some are affected.

Lastly, the cost of building every unit of flat is met by the HDB. If the computation is right (I may be wrong here but I hope the Minister can enlighten me), the cost of land, at so many square metres, is added to the actual cost of labour and building materials. This is to be expected as all of us have accepted the principle that nothing is for free. But what appears to be irrational is the fact that the cost of land is added on to the cost of every unit of flat. Surely, arguing from sound principles of logic, the units from the second floor upwards do not technically utilize any additional area of land. A block of 25 storeys, for instance, still utilizes the same area of land as the void deck. So if the cost can be re-computed, it will be found that the cost of each unit will be much less. Hence, assuming that the same subsidy is maintained, the cost of each unit should not be as high as it is now.

I have great faith in my Government which does not only practise political democracy but is in itself an enlightened institution. It is far-sighted and stand prepared to make even drastic changes for the good of the whole. Still, whenever changes are made, maximum efforts are made to reduce the voltage of shock and hardship to citizens. This altruistic intent is well-known and appreciated. Standing firm on that belief, I appeal to the Minister to consider seriously the points I have brought up so that compromise prices can be arrived at. It is in the nature of things that in the process of effecting changes, be it a salary revision with its golden points, there will be some who stand to gain and some who stand to lose out a little. But in this change, too many of my constituents are involved. On that point, I rest my case, Sir. 4.45 p.m.

Mr S. Chandra Das (Chong Boon): Mr Deputy Speaker, Sir, in the 1950s and l9F60s, we were haunted by the spectre of inadequate public housing. Then, we prided ourselves on having broken the back of the housing problem. However, today, we are once again meeting this housing problem in a different way.

It has been reported that 20% of the 83,000 applicants on the waiting list would not have sufficient CPF funds to pay for the price of new flats. Also, since 1st June 1981 the cost of HDB flats has gone up by an average of 38%.

While the Government may want to unfold the stark truth to Singaporeans, the continual repetition of such statements by Ministers have unfortunately injected inflationary and speculative elements into the property market in particular and the economy in general. This will impede the Government's efforts to control inflation in general. Each time a statement is made, rather frequently too, the price of private housing jerks up. A one-storey terraced house of about 1,400 sq. ft. used to cost around $75,000 in 1979. The same house costs about $200,000 today.

Government statements have a profound effect on property prices. The speculative element in the market, particularly property, is a crucial factor in determining the price. In the property situation in Singapore, the speculative element of the price has been more decisive than construction cost. The cost of labour and materials has not increased by 250% in the last 18 months, but the cost of properties has.

The Government and the economists can discuss property prices in fairly high faluting economic terms. But the ordinary man is beginning to wonder whether there is any meaning in working. Can a young worker of Singapore today with his wife and two children, with a combined monthly income of about $1,500 ever hope to own an HDB flat? I think this is a question which we should seriously address ourselves to.

The continual Government statements on the hefty increase of prices of HDB flats serve to accentuate this sense of hopelessness in the younger Singaporeans.

It would be useful now to examine some of the contributory factors. They can be summarized as follows:-

(a) shortage of labour, hence resulting in higher construction costs;

(b) increases in prices of building materials, e.g. cement, steel, sand, etc., and

(c) other oil-related hikes. It can be generally conceded that increases related to oil are not within our control, but what about cost increases that are the direct result of Governmental policy decisions?

For example, take the policy towards relieving the labour shortage. I am of the opinion that we should seriously diversify our sources of supply, i.e. do not confine ourselves to traditional sources only. Increasingly, as these countries industrialize, not only would it become more difficult but also more expensive to tap these countries for labour.

Then there is the concern over social problems arising from recruiting workers from non-traditional sources. I have a feeling that these problems are over- magnified. We could bring in workers from non-traditional sources either on a project basis or for fixed periods of time. Countries in West Asia have recruited foreign workers from Korea, Philippines and the Indian sub-continent and are none the worse for it. Finally, I will still labour on this point of the exorbitant $230 monthly levy. Earlier the Minister of State for Labour had given the answer. But I am still not satisfied. I am of the view that as a result of the labour shortage and rising construction costs, the Government should seriously reconsider this levy.

Lastly, I would like to touch on the point of the URA land sales policy. This is another example of Government-induced cost increases. According to the authorities, one of the causes of the current malaise is the shortage of skilled construction workers and contractors. We learn that the HDB has to go abegging for building contractors to take on tenders. Paradoxically enough, the URA has chosen to release more property for development at very close intervals. The market has yet to absorb the result of the ninth sale when notice was given for the tenth suction. Such liberal land sale policies invariably put on an additional squeeze on the H DB. The upshot of such contradictory measures is the inflationary impact on our economy and society. The immediate social cost will be met by the 6,600 applicants on the HDB waiting list. It will be useful for the authorities to decide on their priorities.

Mr Deputy Speaker, Sir, I submit that 'Poverty in the midst of plenty is a greater strain on one's conscience than poverty in the midst of nothing.' Similarly, to be flatless is much more painful and less acceptable in the midst of skyscrapers and condominiums. 4.52 p.m.

Mr Lim Boon Heng (Kebun Baru): Mr Deputy Speaker, Sir, no one in this House disputes the need to raise the prices of HDB flats from time to time. Inflation is an unavoidable evil. Rising costs of materials and labour all add up to increase costs of HDB flats.

However, I feel compelled to join fellow hon. Members to question the manner in which prices are increased and implemented. Those who apply for HDB flats have no alternative. Private housing is simply beyond their reach. To them, public housing is the only hope. In this situation, the average increase of 38% in prices comes as a shock - a shock that is much more deeply felt than the OPEC oil shock of 1973. Over the years, the HDB has earned the trust of the common man. Over-night this faith is shaken.

No frustration is greater than when it is accompanied by a feeling of helplessness. To those who await their turn to be allocated a flat, it is a question of "take it or leave it". HDB is free to impose new prices at will. There is no fixed price at the time of registration. The terms of sale are decidedly in favour of the HDB.

How does one explain that the HDB felt it possible to absorb the increases in costs between 1976 and 1978, but now decided not to do so, and must increase the selling prices by 38% instead of 25%? We look forward to a fuller explanation that has been given so far. All in all, there is too much hindsight and too little foresight. Let us hear for a change what steps the HDB is taking to ensure that the public housing programme will be efficiently administered, that cost increases are controlled and that price rises are reasonable.

We have a ten-year concept plan for the economy. Let the HDB present to us a ten-year plan for public housing. Let not the public await in trepidation the next round of HDB price increases. 4.55 p.m.

Mr Bernard Chen (Clementi): Mr Deputy Speaker, Sir, when we talk about price increases for HDB flats, we can divide them into two main categories. In the first category are those increases which are beyond our control, such as the cost of building materials, energy and labour, caused by rising wage levels as well as the shortage of construction workers. For these reasons it would be reasonable for us and the public to accept these increases. But in the second category are cost increases induced by factors which, to a certain extent, can be controlled. Take, for example, the setting of standards by various Government agencies in respect of public housing, standards which they lay for building requirements, such as finish, space, and so on. There are also the ancillary services provided for public housing estates, such as roads, drainage, parks and open spaces. Again, there are infrastructures for the residents in the town centres, sports complexes and other recreational facilities. Then there are the environmental standards that we impose on the construction of public housing estates. Depending on the standards that we set for ourselves, the cost per unit of public housing can increase much more substantially than those caused by rises in the cost of building materials and labour.

It was the intention of the HDB several years ago to raise the standard of housing in keeping with the rise in the standard of living, But we should also remember that, at that time, much of the improvements introduced in the current generation of flats were made in an environment where building and labour costs were not escalating as rapidly as they are today. In the absence of disincentives of this kind, it would not be unreasonable to expect that planners would want to be more lavish in trying to provide the best flats that can possibly be provided, without taking into account the inflationary effect that they may have. Moreover, standards could also have been set by different Ministries, each wanting to do its best. The Roads and Drainage Branch may want to provide wider and more efficient drains. Instead of two lanes, they may want to provide three lanes for the roads. All these add on to the indirect costs of public housing.

Now that we are faced with an inflationary situation, there should perhaps be a review of the standards set by the various Government agencies so as to minimize cost increases brought about indirectly by having set our standards at too high a level. There should also be further consultations and cooperation between the HDB and other Ministries which are, in one way or another, connected with our public housing project to make sure that whatever standards or requirements laid down could present an overall package that is more cost effective and take into account the inflationary impact in the coming years.

Another factor which is not directly connected with the price increases that I have mentioned earlier is the problem of high building construction prices existing in the construction industry in both the public and private sectors. There is a close nexus between the private and public sector construction industry as they both put a heavy demand on the same resources. Given a boom in the private sector, there would be a tendency for contractors to swing from the public to the private construction projects which are of a higher value and, therefore, a higher profit margin.

Singapore's development in the past 15 years has shown a record of ups and downs in terms of construction pace, and we can conclude quite obviously that as the private sector grew the public sector suffered, and vice versa And if we do not control the pace of construction in the overall construction sector, the cost of construction and materials will rise correspondingly. If we are to expect a stable increase in public construction, especially in HDB flats, then we must do more to regulate the pace of construction, in both the private and public sectors.

In the past two years, the Urban Redevelopment Authority has embarked on a massive building programme, as can be gauged by the numerous sites that have been released for development of new office buildings, hotels, shopping centres, warehouses, and lately it has tendered more parcels of land for residential development. Coupled with other massive projects in the public sector, for example, the construction of the new Changi International Airport, the various expressway systems that are now under construction, one can imagine the tremendous strain that has been put on the construction industry. It is small wonder then that we find ourselves in a situation where we cannot find workers or even contractors to take up our public housing programmes.

I think we should pay more attention to ensure an orderly development in the construction industry and try to avoid the peaks and troughs that we have experienced in the past 15 years. Only then can we expect to arrest the inflationary trends and the resource shortages for public housing. Otherwise we get ourselves into a vicious cycle for as we push for further development in both the private and public sectors we will get mired deeper in spiralling cost increases which is particularly hard for the public sector to bear, especially in the public housing programme where income ceilings of the public are not as flexible as those who can afford to buy private sector properties. 5.03 p.m.

Mr Ho See Beng: Mr Deputy Speaker, Sir, I would like to join in the protest against the massive 38% increase in the prices of HDB flats, as announced recently by the Minister for National Development. Housing is a basic need of the people and a sudden and arbitrary 38% increase in the cost of public housing will have serious repercussions on the lives of the thousands who are still on the waiting list for flats.

A 38% increase in the price of any commodity is high by any standard and bearing in mind the fact that the purchasers of Housing and Development Board flats are citizens in the middle and lower income groups, the 38% increase is obviously excessive and could put these flats out of the reach of thousands who have waited many years for a flat.

The excuse that the result of a Housing and Development Board survey shows that those on the waiting list will have enough CPF savings to pay for their flats over a period of 20 years is a puerile and ridiculous argument. If the entire CPF savings have to be utilized for a flat, then what savings will the people have to live on when they retire?

It must also be pointed out that one inevitable by-product of this massive increase of 38% by the Government will be to encourage manufacturers and traders and others to similarly raise their prices. We have seen how commodity and other prices follow the annual NWC wage recommendation each year. Government will not be in a position to direct merchants to refrain from increasing their prices because Government itself has set a bad example. It will be futile to say, "do as I tell you to do, but do not do as I do."

The rising cost in the construction industry is appreciated, but instead of allowing market forces to do their worst and contribute to an increase in the prices of houses and then pass on the price increase to our citizens, surely the Government should look for alternative solutions. One alternative solution is to dampen and stabilize construction costs. Alternatives are often available if one is really concerned and all possibilities explored.

Mr Deputy Speaker, Sir, when the HDB found that due to a shortage and other reasons that the price of granite was rising, they developed their own quarries and stabilized the price of granite. Similarly, the prices of bricks and cement were kept at a reasonable level for a long time.

It is the responsibility of the Government to ensure that the price of housing, which is essential and important to every citizen, is kept within the reach of the people for whom they are intended. There must be some correlation between the prices of Government housing and income of our citizens. This is a responsibility of every socialist government. Otherwise, open market forces will prevail and will be defeating our well-considered plan for home-ownership, which is one of the fundamental considerations of our Government policy.

Sir, if the prices of Housing Board flats have to rise, I would then suggest that price increases be introduced gradually and in stages over a period of time. The 38%, for example, could be reached in five years, without upsetting the hopes and plans of thou- sands of citizens who are waiting for their flats.

If it is contended that the 38% increase must be made this year, then I can only say that the Ministry of National Development has been guilty of neglect in the past few years for not having foreseen the need for an increase, in view of inflation.

Sir, there will be less hardship if the increase in price is spread over a few years and will be in keeping with our policy since the flats are subsidized in any case.

It would seem that there is no coordination between the Government Ministries, as a result of which the workers suffer. May I refer to the example where the employee's contribution to the Central Provident Fund is accompanied by an increase in the price of Housing Board flats? How then does the worker cope with inflation which is beyond his control?

It then becomes exceedingly clear that this sudden 38% increase in the price of HDB flats is a retrograde step, an action that must undermine our Government's declared Home Ownership Scheme, because fewer people will be able to afford these flats. In fact, this massive increase of 38% makes a mockery of our claims to have improved the workers lot through our economic development and the acknowledged professionalism of the PAP.

I would submit that the rationale for any decisions of this nature ought to be as declared in our manifesto: that is to say, as Singapore becomes more and more affluent through the success of our economic policies, the burden of its citizens should become lighter and lighter; and not heavier and heavier by such sudden massive increase of 38% in the prices of public housing.

Sir, if this type of massive price hikes, on the part of the Ministry of National Development is not curbed forthwith, hospital and education fees may similarly be increased. The private sector will follow the pattern set by the Government and soon we will have a galloping inflation. We could then become the most expensive country in Asia and price ourselves out of the international market. 5.11 p.m.

Dr Chau Sik Ting (Thomson): Mr Deputy Speaker, Sir, the Hon. Minister for National Development has revealed some painful truths behind his policy decisions and statements. There can be no doubt about the rising cost of construction, of land, of clearance, of resettlement and of financing. However, like my fellow colleagues who have dealt with this subject of HDB price hike exhaustively, I would like to emphasize and to seek further clarification from the Hon. Minister on the following three points: (1) land cost; (2) status of resettlement cases; and (3) the measures Government is taking to minimise future increases.

On land cost, according to the Ministerial Statement on 24th May this year that despite the increases, i.e. 15% in 1979, 20% in 1980 and 38% this year, public housing continues to be heavily subsidized and that the subsidy given reflects land cost at less than half of the market rates. This is an important point. What is market rate? Is it market rate of 1973 or 1981 based on URA tenders? The information released indicates that land cost accounts for as much as 48% of the total cost of a 3-room new generation flat in the Central Core and about 30% in the New Town. The Government through land reclamation and urban renewal programmes has acquired a large land bank at presumably manageable cost, Is this land bank adequate for our projected future housing needs? The H DB has to acquire land from the Government but has it got to be at current market prices or even half the current market prices? Can the Government in selling land to the H DB do so at cost? This can help lower the price of public housing.

On resettlement cases of which I have a fair share, there are a number of cases who have not been allocated HDB flats for administrative and other reasons. Though they have registered with the HDB for more than six months, will these people have to pay the increased cost of flats? Though there has been enhanced compensation for resettlement cases since March this year, these people were paid the old rates. As such, there should be some flexibility in the decision to allow them to pay the old prices for their flats. It is only fair. Even if they have been given a so-called choice before and did not take it, they should not be penalized as there was no warning to them by the Board of so much increase in so short a time. It is necessary to have a cut-off date but such administrative convenience does not preclude the need for flexibility to consider certain cases on their own merits.

On the measures to minimize future increases, I would like to refer to the recent statement by the HDB's Head of Social and Research Unit that the best hope lies in prefabricated housing to help solve the chronic labour shortage in the building industry. Will this, in fact, help to cut down costs in the long-term? Perhaps the Hon. Minister would like to enlighten this House on this point.

The other matter of public interest is the recent accusation of short delivery by building suppliers. This is another area that needs to be looked into urgently because chronic short deliveries will mean eventually extra cost to the HDB and the average Singaporean. 5.16 p.m.

Dr Augustine H.H. Tan (Whampoa): Mr Deputy Speaker, Sir, it is an accepted fact that the HDB has accomplished a tremendous feat in housing 70% of our population. Between 1960 and the end of last year, the Board built an astonishing 372,158 units of flats and shops. In terms of the administration and maintenance of its housing estates, the Board has also done an admirable job.

No Minister wants to be unpopular. The Minister for National Development found himself caught in an inflationary situation in the construction industry. It is understandable, therefore, that price adjustments have had to be made for HDB flats over the last three years. However, it would help the public to understand and accept the price increase, if the HDB could explain how the various cost figures are arrived at. After careful study of the Minister's press statement and the H DB accounts as presented in the Board's Annual Report, I feel that the HDB has over-stated the rationale for the price increases. Please do not misunderstand me, Sir. I agree that there is some justification for an increase in the Board's selling prices of flats. What I do not agree with is the quantum that the Board claims it is subsidizing per flat.

There are three subsidies mentioned in the Ministerial Statement of 24th May, 1981. According to the Minister:

'The Board receives a subsidy every year from the Government to cover the deficit in its operating expenditure. This recurrent subsidy is mainly for the maintenance and management of housing estates and the salaries of staff. In the last financial year, the recurrent subsidy was $53 million. The subsidy for this financial year is estimated to be $55 million.'

On pages 82 and 83 of the HDB Annual Report for 1979-80, there is indeed a figure, called "gross deficit", amounting to $52.5 million. However, in the same table, there is also an item called "property tax" which amounted to $51.3 million. In other words, Sir, in 1979-80, the Board paid $51.3 million to the Government as property taxes and received a so-called subsidy of $52.5 million in return. Of course, every property owner has to pay property tax but he also enjoys some benefit from Government expenditure in return. It is not unreasonable that 70% of the population pays $51.3 million in property taxes collectively through the HDB and receive $52.5 million benefit in return. In fact, Sir, HDB flat owners also pay their own property tax directly to the Government.

A second subsidy that the Minister claimed the Board provided is, and I quote:

'the capital subsidy borne by the HDB to finance the difference between the costs and selling prices of flats. This subsidy comes from HDB's reserve funds, The capital subsidy is far larger then the recurrent subsidy as HDB is subsidizing an average of $30,000 per flat. Assuming 20,000 units of flats are sold a year, the capital subsidy is $600 million.' Sir, I searched high and low for this $600 million subsidy or its equivalent in the Board's Annual Report, but I could not find it. On page 78 of the same Report which I quoted earlier, there is a figure of $791.6 million which was spent on land, housing development and improvement. This was financed by a loan of $369 million from the Government and $422.4 million from sundry creditors and temporary advances from the revenue account. However, of the flats, shops and factories built by the Board since 1960, out of a cumulative total worth of $5.7 billion, that is valued at original cost, the Board has sold $3.1 billion and has retained $2.5 billion worth of property. As at 31st March 1980, the Board owed the Government $3 billion but it owned, in addition to the $2.5 billion worth of property, outstanding mortgage loans of $1.3 billion. If we bear in mind that the Board's outstanding property of $2.5 billion was valued at original cost, we can see that its finances are not at all unhealthy.

In the Notes to the Board's Accounts for 1979-80, there is an interesting statement by the Auditor-General. On page 84, paragraph l(a)(ii), entitled "Sales of flats and leases of land", I quote:

'The proceeds from sale of flats are shown as a deduction from the long-term assets and premiums from the lease of land are credited direct to the General Fund in the Revenue Account. The Board is unable to follow the desirable method of deducting the cost of the flats and land sold from the long-term assets in the Balance Sheet because the existing accounting system does not provide for the costing of flats and land.' Perhaps the Minister could explain how, between 1979 and now, the Board has somehow managed to cost the flats it is selling to the public. On what basis is it costing the flats?

In the Capital Account of the Board presented on pages 76 and 77 of the Annual Report, it can be seen that the Board has accumulated some hidden surpluses in its subsidiary companies, as follows: - 1. Quarry plant $33.9 million (surplus) 2. Brick factory $24.6 million (surplus) 3. Pile plant $ 7.9 million (surplus) 4. Metal workshop $14.4 million (surplus) 5. Tile factory $ 7.7 million (surplus) 6. Prefabrication $ 2.7 million (surplus) factory 7. Sand quarry $ 5.4 million (surplus) Total Surplus $96.6 million

Yet another hidden surplus is to be found on page 81. The Board owns $15.6 million in MND Holdings which has accumulated $52.6 million in unappropriated profit, of which half belongs to the Board. It is, of course, healthy and necessary for every enterprise to make profits. But when the companies have a monopoly position vis-s-vis the Board, it is no sweat at all to make substantial profits. Perhaps the Minister could explain to this House the terms of purchases the HDB makes with its subsidiary companies to supply various types of building materials.

The third subsidy claimed by the Minister was stated as follows, and I quote:

'The subsidy indicated reflects land costs at less than half the market rates. If land costs had been computed at market rates, the subsidy would have been another $30,000 to $40,000 per flat.' This statement is a non sequitur, as other Members have pointed out, because the HDB never acquires land at market prices. Consequently, there is no question of subsidy on land cost by Government or the Board. In fact, the public knows that Government bodies, like the URA, have acquired land at a small fraction of the prices subsequently sold at public tender.

Sir, I have brought out these points here in Parliament because these are misgivings of the educated public in Singapore. No one can deny that HDB has done an outstanding job and no one can begrudge price increases due to rising construction costs. But the case must be presented fairly and accurately.

There is no doubt that there is world-wide inflation in construction materials and there is also the rising cost of labour in Singapore. Perhaps we have unwittingly contributed to such inflation by trying to do too much at the same time. As was pointed out earlier by another Member, we have been building Changi Airport and we are building viaducts, flyovers, Raffles City, Marina City, the General Hospital, hotels, offices, shopping complexes, condominiums, HUDC and HDB flats, all at the same time. Perhaps we should look closely at our construction capacity and try to space things out. Perhaps then, the property market will not be so wild and HDB price increases more tolerable. 5.27 p.m.

The Minister for National Development (Mr Teh Cheang Wan): Sir, first of all, I wish to thank hon. Members for giving their opinion on the recent price increases in HDB flats, and I will ask the staff in my Ministry and the HDB to carefully consider the various proposals suggested by Members.

If we look at the housing situation in Singapore rationally, I would say that today the majority of Singaporeans live in comfortable homes, and not in a miserable situation. 70% of the population live in public housing, mainly in HDB flats, a small percentage in JTC flats and HUDC flats; another 10-12% of our population live in 70,000 units of private housing comprising bungalows, semi-detached houses, terrace houses and private flats; the remaining 18-20% live in shop-houses, mainly rent controlled, and semi-permanent housing generally in the rural areas. The squatter colonies and slums in Singapore are on the verge of disappearing.

In the sixties, the majority of Singaporeans lived under deplorable housing conditions. When the Government formed the Housing and Development Board in February 1960 to launch the public housing programme, large numbers of people believed that a solution to the massive housing problem was impossible. Twenty years of dedicated effort by the PAP Government has transformed Singaporeans into one of the best housed peoples in Asia, if not in the world. Our standard of housing surpasses that of Hong Kong whose per capita income is about the same as ours. We are equal to, if not better than, some of the cities in Japan, Europe and America where the per capita incomes are three to four times higher than ours.

I agree with Members of the House that the recent increase of 38% in the selling price of HDB flats is steep. However, this has been necessitated by the 48% increase in the cost of public housing in 1980. This is the highest inflation rate experienced by HDB in the last 20 years. Even in 1974, when the oil price quadrupled, the inflation rate experienced by HDB was only 34%. Therefore, with the wisdom of hindsight - although some Members say that we should have more foresight and less hindsight - I share the opinion of hon. Members that it is better for us to have a gradual increase in the selling price of the flats rather than a sudden increase. Perhaps in future HDB will try to manage with a gradual rather than a sudden increase in the selling price.

On the question of construction costs, the Member for Whampoa has brought up several points. The construction costs are contained in my statement which has been circulated to Members. That figure in the statement is the actual cost of the HDB flats and, in fact, if the Member for Whampoa knows of anyone who could build HDB flats at that cost, I would be very grateful to him. If he suspects that the figure is inflated and that it is not the actual figure, I would say that it is the actual construction cost today.

Dr Augustine Tan: Sir, can I make a point of clarification? I did concede that there have been increases in construction costs but I could not understand how the figures were arrived at, especially for land cost and the various components, and I particularly questioned him on the various subsidies which he pointed out.

Mr Teh Cheang Wan: No, you did not raise that.

Dr Augustine Tan: I didn't raise that?

Mr Teh Cheang Won: In fact, we are looking for more contractors who are able to build HDB flats at the construction cost which I quoted in my paper to Members. We would be very happy if large numbers of contractors could come forward now to build HDB flats at that cost.

As I said earlier, the HDB should have increased the selling price gradually over a number of years. Had HDB pursued such a policy, it would have substantially reduced the Board's subsidy for public housing in the last five years. If we had increased the price in 1977, 1978 and 1979, our subsidy would be much lower. Furthermore, we would have avoided this recent substantial increase of 38% in the selling price. But despite this increase of 38%, public housing continues to be very heavily subsidized and in most of the pricing zones the selling prices of HDB flats are well below the construction cost. If I say that the construction cost is the actual cost, then our proposed selling price, which Members consider to be too high, is, in fact, below the construction cost, as Members can see from my paper.

The inflation rate of 48% is not confined to public housing alone. Most other building projects of private development experienced the same, if not, higher level of inflation last year. In fact, the school building programme is facing the same inflation rate. I have been looking at the school building programme for 1980 and I think the inflation was 54%. It is a few per cent higher than for public housing. Public housing experienced a 48% increase in price. The school building programme experienced a 54% increase. That is the figure provided to me by the PWD. Of course, in the private sector, some of the developers claim that their inflation rate is much higher than what is experienced by the HDB.

The escalation of construction cost in public housing projects has been moderated somewhat by HDB's direct supply of granite, bricks and sand from its own quarries and they are not sold at a monopolistic price, as suggested by the Member for Whampoa. HDB is providing these building materials to HDB contractors at half to two-thirds of the market price, The profits realized by the H DB quarries result from better machinery and better management of the quarries. It is not because they are selling the materials to HDB contractors at higher prices. In fact, there is no monopoly. H DB contractors are at liberty to obtain the materials from other sources. Of course, the HDB's price is so much lower that no contractor has attempted to obtain the materials from other sources. I will just quote the figures. HDB is providing granite to HDB contractors at $17 per ton, Today if you ask a contractor for private development, he will tell you that he is getting granite at $28 to $30 per ton. You can see the great difference in price. The profit made by the HDB quarries is not a result of monopoly and selling the materials at a very high price.

Hon. Members suggested that HDB fists should be sold to resettlement cases at old prices. The Government policy is to periodically review both the rates for resettlement compensation and the selling prices of HDB flats. The resettlement cases are compensated at prevailing rates and are granted priority to purchase HDB flats at current prices. This policy has been working satisfactorily for the last 20 years. If the policy is to be changed to permit resettlement cases to buy HDB flats at old prices, then the Government will also have to stop the periodical adjustment of compensation benefits, because this cuts both ways. If we do not increase the selling prices of our flats, most probably we will have to stop the increase in the benefits to the resettlement cases.

HDB statistics show that in the last three years only 39% of all resettlement cases applied to buy HDB flats. In other words, 61% of the resettlement cases were not buying HDB flats. If HDB were to sell its flats to resettlement cases at old prices, we will unwittingly encourage the remaining 61% of the resettlement cases to apply for HDB fiats as well, because if we are going to sell the fists cheap then we can be sure that there would be a lot of buyers. Many resettlement families will be tempted to take advantage of the cheap flats by splitting up the families and applying for more than one unit of flat. Thus, a family of five persons, for example, comprising a husband and a wife, married son and daughter-in-law and a grandchild, which will normally apply for only one flat will most likely opt to purchase two units of flats if these flats were sold at the old prices. The resettlement cases are aware that after five years of occupation, the flats could be sold at a good profit on the open market. So if we adopt the policy that resettlement cases can buy flats at the old prices, then instead of buying one flat the family will buy two flats. They will stay in one flat for five years and then sell that flat at a profit. They will then go back to the other flat.

Singaporeans are very rational people and if the Government policy is to encourage more people to split the family and buy more than one unit of flat then this will be the position. This is another reason why we are against such a policy because this will encourage the family to split up. But the present Government policy is not to encourage the family to split prematurely and to encourage the parents and children to stay together. But if we adopt the policy that a resettlement case can have the advantage of buying two units of flats at the old price then, in fact, our policy will encourage the splitting of the family.

The upshot of adopting a policy of selling flats to resettlement cases at old prices is that HDB will face an inflated demand for flats from resettlement cases. Public applicants on the waiting list will inevitably have to wait for a long time for their flats. This can be very serious. Lest year, HDB resettled 15,033 cases and about 6,000 resettlement cases purchased fiats. In other words, 9,000 resettlement cases did not buy HDB flats. But if we adopt the policy that resettlement cases could purchase the flats at the old prices - the difference between the old prices and the new prices is very substantial - the end result is that these 9,000 cases who did not apply for H D B flats would naturally apply for HDB flats. We will end up with 15,000 resettlement cases asking for HDB flats. And if you add on some cases which will be splitting their families, we may end up with 16,000 or 17,000 resettlement cases asking for HDB flats.

As I mentioned earlier, the HDB is finding great difficulty in keeping up with the building programme. But if we are going to end up with a large number of resettlement cases, who will have priority for purchase of HDB flats, taking away 17,000 flats, then how many flats will be left for the public? There will be only 2,000 or 3,000 units of flats left as the HDB is only building 20,000 flats per year. If our policy is to encourage the 15,000 resettlement cases to buy more then 15,000 units of flats per year, then we would have very few flats left for the public.

Mr Ng Kah Ting: Do not resettle them then!

Mr Teh Cheang Wan: If we do not resettle them, then how can we develop? Another consideration is that the policy of selling HDB flats cheaply to resettlement cases does not merely result in an artificial demand for flats but it would also lead to a tremendous pressure on the HDB to build more fists in the Central area. As the increase in the selling price of flats is lowest in the New Towns and the Suburban zones and highest in the Central Core and the Inner Urban zones, the resettlement cases will opt overwhelmingly to buy flats in the Central area where they will enjoy the maximum benefit. Because the land for public housing within and around the City is limited, the HDB will not be able to meet this demand. Therefore, clearance work will be held up and the development projects cannot go ahead. So this is another consideration why we cannot allow the HDB flats to be sold at the old prices for the resettlement cases because public applicants who apply for flats in the Central area will never have a chance to get these fiats. It is, therefore, obvious that the Government cannot adopt the policy of selling HDB flats at the old prices to the resettlement cases. The effect of this policy will be disastrous.

I share the view expressed by some hon. Members that the HDB should build flats of a simpler design in order to reduce costs. In fact, I have given instructions to the HDB to look into the designing of HDB flats and I hope that very soon the HDB will build less numbers of Model A flats. It will most probably go for the Model B type of flats. The design will be simpler and the cost will be much lower. In fact, in the HDB's announcement on the increase in the selling price of flats, it has also mentioned that the Board is considering various means, including the designing of smaller and simpler flats, to reduce future cost increases.

To come to the point, the bone of contention is the question of land cost. This is perhaps the key issue regarding the subsidy. What is the price of the land we should fix for the HDB flats? It is a fortunate thing that the Government and the HDB have built up a "land bank", so that there is sufficient State land and land owned by the HDB to meet the demand for public housing and other projects. However, land used for housing has a high opportunity cost. The argument is this. If we say that it is HDB land, some of the land has, in fact, been taken over by the H DB from the SIT and, as such, the land cost is virtually zero. And if we say that the land costs nothing to the HDB and therefore there is no land value, we can therefore say that the HDB subsidizes very little. If anyone accepts that line of argument, then the subsidy for the HDB flats will be very much less than what I have stated in my statement circulated to Members.

On the other hand, if a piece of land is offered for sale in the open market for housing, then we will be able to fetch the market value for the land. To quote an example. There is a piece of land on which the HDB has built the Hong Lim complex. Three-quarters of that land were utilized by the HDB to build shops for resettlement cases and the flats were sold to the public applicants. As for the remaining quarter of that land, the URA offered it for sale to the public. I cannot remember the exact figure, but it fetched something like $6,000 per sq. metre, which means that the land was sold for more than $500 per sq. ft.

If we were to calculate the cost of that piece of land at $6,000 per sq. metre then, of course, the public housing built on that land has been heavily subsidized, much higher than the figure which I have circulated. But, on the other hand, as I have said earlier, if hon. Members say that the HDB cannot calculate the land cost at the market price but can only calculate what it costs the HDB, then of course the land cost would be very low and the subsidy would be very little. I will give another example. If the Member for Punggol bought a terrace house in 1963 for $30,000, it would be worth $300,000 today. Now, if the hon, Member were to sell this particular terrace house to his brother for $150,000, would he say, "I am being very generous by selling this house to my brother at half the market price, i.e. $150,000", or would the hon. Member say, "Look, the house cost me only $30,000 and I am being very unfair to my brother if I sold it to him for $150,000."

Mr Ng Kah Ting: Sir, on a point of clarification , On the question of land cost which I have raised, is the Minister taking it at the cost of acquisition plus ex-gratia compensation, and then from there to calculate what is the subsidy? Or is the Minister trying to suggest to this House that the land cost is based on today's price and, therefore, gives an unrealistic figure of subsidy? I would have imagined that the land cost to the Housing Board which it pays after acquisition would not be high. That is the point of my contention.

With regard to the terrace house if I had a terrace house (which I do not), I would have bought it for myself and not to sell it. That is exactly the point that the Hon. Minister has missed - home ownership. Do we want to encourage home ownership, or do we want to encourage homes for sale?

Dr Augustine Tan: Sir, I just wish to clarify a point. The Government cannot be compared to a private individual. The Government is the largest land owner in Singapore. If the Government were to choose at any time to do so, it can swamp the property market by just unloading land. If we try to sell a small piece of land, say, one-quarter of the land at Hong Lim complex, or whatever it is we call it, we can realize the market price. But when we try to sell thousands of acres of land, we will not be able to get the market price. The market price will go zooming down. So there is no valid comparison at all.

Mr Teh Cheang Wan: Sir, I agree with hon. Members that the land cost to the Government is much less. Therefore, the subsidy which I have mentioned is not the actual subsidy in dollars and cents that the Government is paying out. However, I would like to remind hon. Members that when we talk about subsidy, we must talk about what is the actual or fair market land price. When the Government develops a piece of land for public housing, it is only fair for the Government to remind the public that in the promotion of its policy of home ownership scheme, the Government is, in fact, subsidizing very heavily on the land cost. I think the public should be made to realize this fact rather than mislead them into believing that the Government is unfair to them in the sense that, since the land costs nothing, what the Government is now saying that the land costs so much and that the Government is subsidizing towards the cost of the land, is not true.

When we calculate the subsidy, we have to calculate on the basis of the actual market price of land, because only then will Government decide to utilize a piece of land for any specific purpose. For example, if the Government is going to build a school, in calculating the expenditure for the Ministry of Education, the Ministry would include the construction cost of the school, the land cost and other costs. So I think we should tell the public what is the actual subsidy. I personally believe that the correct way of calculating is to find out what is the actual land cost. Let us say a piece of land can fetch a certain price in the open market and we are utilizing it to build HDB flats for sale to our citizens at a cost to be decided by the Government. I think the subsidy should be reflected in the actual land cost, that is, the market price of land.

Mr Sia Khoon Seong: Sir, I have a point of clarification.

Mr Deputy Speaker: Is the Minister giving way? Perhaps it would be better to allow the Minister to finish his reply.

Mr Sia Khoon Seong: I wish to make a clarification on a particular point which the Minister has just brought up.

Mr Teh Cheang Wan resumed his seat.

Mr Sia Khoon Seong: Sir, on the Minister's point about the Government giving a subsidy, if we want to be exact about it, the subsidy is, in fact, given by the people from whom the Government acquires the land. If the Government had not acquired the land from individuals, companies or property owners, they would still have their land and they would have been able to sell it at the market rate. Since the Government acquired their land at a much lower rate, then Government is not actually subsidizing it. It is the people from whom it has acquired the land who are subsidizing it, if we want to talk about subsidy. So the Government is not giving anything away.

Mr Teh Cheang Wan: Sir, I do not think this is quite true. First, the majority of the land used by the HDB for housing development is HDB's land and State land. Acquired land constitutes only a small percentage of the land used for housing. Even when Singapore attained internal self-government in 1959, the State land was, in fact, very extensive. I cannot give the exact figure, but it was very extensive.

Secondly, most of the private land which Government acquired were heavily squattered. I am not saying that none of the land was clear of squatters. But the majority of the pieces of land were heavily squattered, and it would be next to impossible for the owners to clear the large number of squatters. I can quote the figures, The number of squatters cleared by the Singapore Government last year was 15,000. In FY 1979-80, there were 18,052 resettlement cases, and in FY 1978-79, there were 16,443 cases. Most areas of private land were squattered and their value was not very high.

Another point is that a lot of the squatter land which the Government acquired was not zoned for residential development. When we talk about private land being worth a lot of money, we mean private land which is suitable for development. But a lot of private land is zoned as rural or green belt and most of these lands are also not accessible. So when the Government acquired those lands at a low price, they were not lands which would have fetched a high market price. The acquired lands were squattered, they were inaccessible and in the rural zone and, therefore, the Government managed to acquire them at a lower price.

The hon. Member for Bedok asked for flexibility on the income ceiling. I am happy to inform him that the H DB is at present looking into the proposal to relax the income constraints for purchase of HDB flats. A statement will be released shortly on this matter.

On the suggestion of the hon. Member for the use of CPF funds for other members of the family, I think it would be more appropriate if he approaches my colleague, the Minister for Communications and Minister for Labour, on this matter as the Central Provident Fund is under his jurisdiction.

On the question of the sale of rental flats, the Government policy is to promote home ownership for the people and therefore the HDB will be quite happy to sell flats to sitting tenants when more than 70% of the tenants in a block of rental flats wish to purchase their flats. The reason is that if it is less than 70%, for example, if only 50% of the tenants wish to purchase, then the HDB will have the problem of rehousing the other 50% and this will create difficulties.

Mr Ng Kah Ting: At what price?

Mr Teh Cheang Wan: At the prevailing market price.

On the question of early marriage as a result of the housing policy, mentioned by the Member for Toa Payoh, I am rather doubtful that his conclusion is correct. I would like to see more evidence before I can agree with him. Usually a person gets married for various reasons. I do not think the intention of purchasing an HDB flat is the only reason. The Member said that after the announcement he saw a traffic jam along the road in front of the Registry of Marriages and that was conclusive evidence of that policy. I am rather doubtful if that is so.

On the question of regulating the building industry and the sale of U RA sites mentioned by a few Members, I agree with them that the sale of URA land has a bearing, in fact, a strong demand on the resources of the building industry. It indirectly affects the number of contractors undertaking HDB housing and, in turn, affects the cost inflation of HDB flats. On the other hand, the Government is the biggest land owner in Singapore and if the Government does not sell State land, then there would not be enough supply of residential and commercial properties in the private sector. In this way, the Government has to strike a balance, The Government cannot say that it requires all the capacity in the construction industry for public projects and therefore should freeze private development. We cannot do that. On the other hand, we will not allow the construction capacity to be completely cornered by private development while there is nothing left for public development projects. So we have to strike a balance. I think a solution would be for the Government to continue to offer URA sites for sale in order to increase the supply of the commercial and residential properties in the private sector, On the other hand, we have to try and increase the capacity of the construction industry.

On the question of the PSA flats raised by the Member for Radin Mas, perhaps I would suggest that he write to me on this matter and give me more information so that I can look into it. I suspect that this is a PSA matter rather than an HDB matter.

I do not like to dwell on the cost of land again. The hon. Member for Kaki Bukit has mentioned that since the ground floor has been built up, therefore there should be no land cost for the upper floors, That is not the system in calculating the land cost. Usually when we calculate land cost, it is something like this. Let us say we value the land at $60 per square metre. One hectare is 10,000 square metres. Therefore, the land cost for one hectare is $600,000. Within that one hectare of land, we are able to build 15 units of flats and, therefore, the land cost for each unit is $40,000. Whether the flat is on the ground floor or on the top floor, the land cost is the same.

Perhaps I would now like to give my observations on the cost of housing and what the future is likely to be. We are now entering the period of high construction cost in the 1980s and I believe this decade is going to be a decade of high construction costs. The golden era of cheap public housing has come to an end. The abundant supply of cheap labour in the 1960s from unemployed Singaporeans and in the 70s from Malaysia has come to an end. Some contractors have told me that the wages of construction workers have increased 10 times compared with that in the 1960s and five times compared with that in the 1970s if CPF contributions and productivity of the workers are also taken into consideration. I felt that the comparison was exaggerated and I asked for proof or how they calculated it. It was pointed out that in the 1960s, an unskilled construction labourer earned $5 a day for nine hours solid work. In the 1960s, a construction worker usually worked from sunrise to sunset. Today, the same labourer is paid $20-$25 per day. With CPF contributions, his total wage is $30 per day. However, the contractors say that the workers put in only seven hours of half-hearted effort!

The contributing factor of abundant supply of cheap labour and cheap building materials which enabled the H D B to build cheap flats is gone forever. The reality is that even if we are prepared to pay high wages, we may not be able to get the required number of workers to build our flats. It is unrealistic for the HDB or Singaporeans to hope for the return of the good old days. Both the HDB and Singaporeans will have to face this new situation. The HDB will have to explore new construction methods and techniques, i.e. including the prefabricated method which the HDB is at present actively negotiating with two foreign firms and we hope that the HDB will be successful in this. Prefabrication will not bring the cost down. Prefabrication will increase the construction capacity and, indirectly, it will benefit the building industry.

The HDB will also explore new sources of labour supply so that the supply of housing will not fall far below the demand. On the other hand, Singaporeans must also realize that the selling prices and rental of public housing will have to continue to increase in future and they will have to allocate a larger percentage of their income for housing in future. The Government on its part will have to adjust and subsidize the pricing of HDB flats to ensure that they continue to be within the reach of the largest number of Singaporeans. At the same time, the subsidy provided for public housing should not break the HDB and render it an inefficient housing authority. That is the reason why the HDB has to have some reserves. The HDB just cannot use all its resources to subsidize public housing and leave nothing in reserve.

Compared with private housing, HDB housing is still extremely cheap as the monthly rental of HDB flats is between $1.10 and $1.80 per square metre or 10 cents to 17 cents per square foot. That is the HDB rental rate for 1-room, 2-room, 3-room and 4-room flats. The selling prices of HDB flats are between $380 per square metre or $36 per square foot in the new towns and about $800 per square metre or $75 per square foot in the City area. These prices can be found in the Table which I have circulated to all Members.

The HDB's rental rate is only about 10% of the market rental for private housing. At present, in Singapore, rental for private housing ranges from $1 to $1.70 per square foot. So the HDB's rent is only 10%. When the hon. Member for Toa Payoh says that the private sector would follow the HDB, I doubt very much that it would.

The selling price of HDB flats is only about 20% of the market price of private housing. If Members look at today's Straits Times they will find that private housing is being sold between $200 and $300 per square foot. On the average, the HDB is selling in the new town and in the city area at about $50 per square foot. Therefore, Members can see that for public housing the selling price is only about one-fifth the price of private housing.

In conclusion, I would say that the HDB has overcome many difficulties in its 20 years of existence and I am confident that within the next two years the HDB will succeed in finding a solution to the problems of the shortage of construction workers and overcome the reluctance of contractors to undertake HDB projects. I am equally optimistic that the future increases in the selling prices of HDB flats will be much less than the 38% hike announced in 1981.

Question put, and agreed to.

Resolved,

That Parliament do now adjourn.

Adjourned accordingly at Thirteen minutes past Six o'clock p.m. to a date to be fixed. tables - SELLING PRICE OF HDB FLATS, NEW SELLING PRICES OF HDB FLATS EFFECTIVE FROM 1 JUNE 1981 (Cols. 97 - 100)