National Development Minister Mah Bow Tan (pictured) yesterday responded to some of the points raised by the Workers' Party on public housing. This is an edited version of Mr Mah's response.
The Worker's Party (WP) has proposed to lower Housing Board flat prices by pricing public-housing land below its true value. It has also opposed the Government's asset-enhancement programme. The WP's views raise serious concerns that must be addressed.
The Government fully understands Singaporeans' concerns about rising housing prices.
Housing prices have risen due to our sharp economic recovery, as well as low interest rates and excess liquidity internationally.
We cannot artificially depress prices. But we can moderate the increases, by increasing supply and moderating demand. Prices and transaction volumes are showing signs of stabilising.
The Government will continue to ensure that HDB flats will be both a home and an asset for successive generations.
However, the WP's proposals are not in the interest of Singaporeans and are even dangerous, for three reasons.
Pricing new HDB flats lower than current levels
The WP's proposal to price new HDB flats much lower than current levels will devalue existing flats. If new flat prices are significantly lowered, more flat buyers will buy new flats instead of resale flats. This will cause prices of resale flats to fall.
First- and second-time home buyers who bought resale flats accounted for over half (17,000 out of 32,000, or 54 per cent) of total resale transactions last year. They were eligible to buy new flats from HDB.
If we depress new-flat prices, many of them will switch to buying new flats. This will lengthen waiting time for all new-flat buyers and depress prices of resale flats. This must impact the flat values of the existing one million HDB homeowners, and sooner rather than later.
WP is against asset enhancement policy
The WP blames HDB's upgrading programmes for pushing up flat prices. The People's Action Party's (PAP) home ownership and rejuvenation programmes have made the HDB an asset, whose value appreciates in tandem with our economic growth.
In recent years, the Government has incurred deficits of about $1 billion each year in the home-ownership programme and committed another $1 billion each year in rejuvenation programmes to benefit Singaporeans.
Why is the WP against upgrading programmes which enhance the value of Singaporeans' homes, and enable the people to enjoy the fruits of Singapore's progress? Why does the WP want to push down the value of all existing HDB flats?
Proposal to pay less for land
The WP's proposal to lower flat prices by paying less for the land is an illegal raid on our reserves. Under our Constitution, after every general election, the new Government is required to manage its expenditure based on its current revenue during its term in office. It cannot use assets which have been accumulated under previous governments, unless the Elected President (EP) agrees.
These assets are reserves protected by the EP for future generations of Singaporeans. This system was put in place to prevent a profligate government spending money which it had not accumulated.
State land forms part of the reserves protected by the EP. When the Government takes state land from the reserves to use, for the example, for public housing, it has to pay the full value of the land back into the reserves, to replace the land which it has used.
This land value is determined by the Chief Valuer, according to objective market conditions and established valuation principles. In this case, it is valued for public housing, which is already lower than for private housing.
The Government cannot arbitrarily price state land higher or lower as it pleases. Nor can it appoint a Chief valuer to do its bidding, because the Chief Valuer's appointment is protected, and subject to the approval of the EP.
Paying less for land to build flats is thus not a casual matter of "left pocket to right pocket" as the WP has put it, but of raiding our reserves (contrary to our Constitution), which are meant for future generations, and spending the money on ourselves now.
Not coincidentally, the WP manifesto also advocates abolishing the EP. Its motive is clearly to remove vital constitutional safeguards, so that it can raid the reserves to fund irresponsible spending.
Is this what the WP means when it offers itself as a "responsible" alternative to the PAP?
The WP's proposal for public housing leave many questions unanswered. It aspires to be the government one day. It should spell out clearly what its proposals will mean for present and future generations.
For more my paper stories click here.