UPGRADING OF HDB FLATS

Mr Chiam See Tong asked the Minister for National Development whether, in view of the current currency turmoil in the region and the expected slow down of our economy, the Government will be able to upgrade the HDB flats as promised in the last General Election.

The Minister for National Development (Mr Lim Hng Kiang): Mr Speaker, Sir, the Main Upgrading Programme for HDB flats is funded out of budget surpluses. In recent years, the Government has consistently accumulated budget surpluses through prudent fiscal policies. Therefore, the progress of the Main Upgrading Programme has so far been smooth and uninterrupted.

The recent currency turmoil has created uncertainties in the economic outlook of the region. Our economy will slow down in the short term. Government revenue in fiscal year 1998 will be affected although we still expect a budget surplus. The Main Upgrading Programme can therefore continue although we will have to scale back the programme to 10 precincts in 1998 compared to 15 precincts last year. Over the longer term, the Government remains confident about Singapore's economic prospects. The Main Upgrading Programme will continue whenever there are budget surpluses. Over the next five years, we will implement the Upgrading Programme as we promised in the last General Election.

Mr Chiam See Tong: How much did the Government spend on upgrading of HDB flats last year ending 31st December?

Mr Lim Hng Kiang: On the average, every year, we announced a launch of 15 precincts which totalled about 15,000 units. The budget for each unit is under $60,000 per unit. The actual expenditure per year depends on the progress of works from previous precincts. As you know, today, we have over 50 precincts which are undergoing the Main Upgrading Programme at different stages. So if the Member wants the specific amount that we spent last year, I will get the number for him.

Mr Chiam See Tong: Since Singapore is making a loan of $5 billion to Indonesia, will there be a run down of funds and there will not be enough funds for upgrading?

Mr Lim Hng Kiang: As Dr Richard Hu explained just now, the loan to Indonesia is a separate issue from the funds given to HDB for the Main Upgrading Programme. The Main Upgrading Programme is funded out of budget surpluses. So for FY 98, the Ministry of Finance expects to run a budget surplus and therefore we are allowed to continue with the Main Upgrading Programme, albeit on a smaller scale, ie, 10 precincts a year.

Mr Chiam See Tong: If there are already funds in hand, why should the Government reduce their upgrading programme from 15 to 10 precincts? We should not be affected by the currency turmoil.

Mr Lim Hng Kiang: The currency problems affecting the region would result in slower economic growth for Singapore which would result in smaller Government revenue and hence, smaller budget surpluses. Therefore, as a prudent measure, we have scaled down the MUP accordingly.

Mr Chiam See Tong: Is the Government saying that the funds for upgrading are in fact dependent on a year-to-year collection, ie, whether there are surpluses?

Mr Lim Hng Kiang: We have been saying so for the last seven years.

Mr Chiam See Tong: It means that if the economic situation really becomes bad, there will be no upgrading. So the Government cannot keep its promise then.

Mr Lim Hng Kiang: We have also said that for the last seven years. The people believed that this Government would run a prudent fiscal policy and ensure budget surpluses and that the MUP will continue. That is why they voted for us.

Mr Chiam See Tong: If there is going to be a reduction in upgrading, what is the Government's priority criteria?

Mr Lim Hng Kiang: You can be quite sure that it would not be Potong Pasir.

Mr Chiam See Tong: Not Potong Pasir. Will it be last or first?