3-ROOM HDB FLAT DWELLERS (Review of rebates)

Dr Ow Chin Hock asked the Minister for Finance whether a review has been made on the rebates granted to 3-room Housing and Development Board flat dwellers, in terms of rental, service and conservancy charges as well as the rebates on public utilities bills; and, if so, whether he will inform the House of the outcome of the review.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I have earlier announced that Government would review the package of rebates given to 3-room households. This was because the total benefits, including the various rebates and tax savings arising from the reduction in individual income tax rates, given to 3-room households in the FY96 Budget were comparatively lower than those given to 1-, 2-, 4- and 5-room HDB households.

The reason is that 3-room flats are mainly owner-occupied and households could not be assisted through rental rebates. Also, unlike 4- and 5-room households, the majority of 3-room households would not benefit from any tax savings arising from the announced reduction in income tax rates.

The Government has reviewed this and has decided to raise the total amount of rebates for 3-room households by $55. The increase is made up of two components, namely, a one-month increase in net S&C charges of about $25 after deduction of the GST offset rebate; and a $30 increase in utilities rebates to $150.

The increase would bring the total rebates given to 3-room households to around the average given to 1- and 2-room households. The estimated cost of the increase is about $13 million.

The extra month of S&C rebates for 3-roomers will take effect on 1st August this year. This is on top of the one which has already been given on 1st July and the two to be given on 1st September and 1st December later this year.

As for the utilities rebates, they will be paid in two equal instalments for all eligible households. The first payment will be given for the September bill and the second for the November bill. As the utilities charges for each month can only be billed after that particular month, the actual cash flow will take place in October and December. Households with smaller bills will continue to enjoy the balance of the rebates until they are used up.

The effects of the changes I have announced above are summarised in the Annex (Cols. 471 - 472) which has been distributed to Members of the House. Annex - Table 1: Rebates Granted in FY96 Budget ($), Table 2: Rebates Granted After Revision ($), Table 3: Schedule of Utilities Rebates (Cols. 471 - 472)

Dr Ow Chin Hock (Leng Kee): Sir, let me thank the Minister on behalf of the 3-room flat dwellers. My supplementary question is: in future, if any rebates are given, will the Minister consider making the amount of the rebates inversely proportional to the size of HDB flats, in other words, the smaller the flat the greater the amount of rebates?

Dr Richard Hu Tsu Tau: It is difficult to produce an exact formula because of the way in which rebates are distributed. They are in the form of S&C rebates, so many months, rental rebates, so many months, and utilities rebates are in a fixed amount. If rebates are always given in this combination, the Member's suggestion might be possible because we can round them off using the utilities rebates. But, in general, if rebates are given in the form of S&C or rental rebates it will be difficult to follow the formula without arriving at some rather awkward situation. However, I will take the Member's suggestion into consideration.