CENTRAL PROVIDENT FUND (Use for repairs to HDB flats)

Mr Eric Cheong Yuen Chee asked the Acting Minister for Labour whether he will allow lessees in older Housing and Development Board estates to use their Central Provident Fund credit balances for major repairs to their flats.

The Acting Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, under the HDB home ownership scheme, CPF members are allowed to use their CPF savings to pay for the entire financial outlay for the purchase of their HDB flats. This includes not only the purchase price of the flat but also the interest on the housing loan and various legal and administrative fees. The total CPF savings utilized is therefore usually much more than the purchase price of the flat.

Having purchased the flat entirely with his CPF savings, it is reasonable that the CPF member should pay for its renovation, maintenance and repairs with cash. These are normal expenses often of a recurrent nature, connected with the ownership and use of properties. I am therefore not in favour of allowing CPF savings to be used to defray such expenses. Besides, being difficult to monitor and administer, such expenses will encroach on the member's CPF savings which he will need for his old age.

I would prefer to keep the CPF scheme as simple as possible and only make fundamental changes if there are good reasons for doing so.

Mr Jeyaretnam: Would the Minister explain why he is not in favour? Does he not realize that if major repairs are needed to an apartment, the expenditure on those major repairs is an investment for the contributor?

Mr Lee Yock Suan: Mr Speaker, Sir, I think it is a matter of opinion whether these expenses are consumptive in nature or of an investment nature.

Mr Jeyaretnam: Major repairs of an apartment.

Mr Lee Yock Suan: My basic point is this: we have to draw a line somewhere, and I have drawn the line at purchase because otherwise there will be no end to this issue. I would rather that my Ministry review the whole issue of CPF thoroughly and fundamentally, and only make fundamental changes if necessary, rather than allowing small changes to nibble away at the scheme; because by so doing, we may lose sight of the basic objective of the CPF scheme which is to provide for the old age financial security of members.

Our studies have shown that even expenses which appear relatively minor, coming at the front-end of the CPF scheme, tend to have a significant impact on the old age savings.

Mr Chiam See Tong: Does not the Minister realize that, in fact, CPF money is being used for legal costs and other costs related to transfer of title? So, therefore, could not an additional sum set aside for repairs be approved by the CPF, just as the approval given for this additional sum for legal costs?

Mr Lee Yock Suan: Sir, I think I have already included that point in my answer - that I have drawn a line somewhere. These legal costs have been included because they are connected with the purchase, and that's it. I will not make further changes unless there are fundamental reasons for doing so.