The "market" as deus ex machina (or, The Scapegoat For Rising Housing Prices and Other Inconvenient Realities)

Today’s newspapers (both TODAY and The Straits Times) featured comments by National Development Minister Mah Bow Tan about rising prices in the public housing market.

"It's in the interest of buyers to have low COVs, but it's in the interest of sellers who own the flats to have high COVs. So, between these two groups, we must let them fight it out. The Government is not able to settle or fix COVs to say that it should be this or this figure. The Government prefers not to interfere. But we can interfere in the supply. This is something we can control.”

In short, the Government will not set or fix prices directly -- but it will indirectly influence prices by manipulating the factors that affect prices. In particular, the Government will influence supply, and then leave it to the magic of “the market” to set prices. These latest statements are consistent with what Mr Mah told Parliament back in April, that the Government intended to leave the purchase of resale flats by first-time flat buyers "to the market".

"Leave it to the market" is a rationale that is often trotted out, to justify why the Government should not intervene in something or other, be it rising housing prices or rising COE prices. But government policy can have a huge impact on prices (and sentiment, which can drive prices in markets like property), as implicitly acknowledged by Mr Mah when he talked about ramping up supply as a way to moderate price increases.

In this case, what’s ironic is that the Government is now scrambling to fix a problem that is largely of its own creation. Why are housing prices rising so quickly? Here are some likely reasons, all linked to Government policy from the last few years:

• Recent HDB changes making it easier for HDB owners to rent out the entire flats. After living in the HDB flat for a few years (I think 5 years in most cases), HDB owners can now rent out their entire flats even after upgrading to private property. Previously, they would have had to sell their HDB flats if they want to move into private property. Well, not any more. This has been portrayed as a liberalization, and hence presumably A Good Thing. But the reality is that it keeps potential supply off the resale market -- I suspect that many HDB-owners who upgrade to private property actually keep their HDB flats as an investment property to rent out. In fact, HDB flats strongly outperform private apartments in terms of rental yield.



• The influx of foreigners. I work with a lot of foreigners, and I think in many cases they do bring net benefits to Singapore. In light of our immigrant roots and as a matter of necessity, I do think we have to be open to foreigners. But I also believe that we are close to the creaking limits of our country’s present infrastructure; that the rate of increase in recent years has been too fast; and that this influx has limited the opportunities available to locals. In other words, the Government did not think through the costs of such a rapid increase in the foreign population in Singapore (costs which are of course not captured in the GDP figure), and continues to disregard these costs. The Government’s approach of “sharpening the differences” between citizens and foreigners misses the point, because it focuses on increasing prices for foreigners, which only makes life harder for them without making life better for citizens.



• The ease with which foreigners could become permanent residents (PR), thereby qualifying to purchase HDB flats. I know of at least one foreigner whose PR application was approved in 3 weeks or so. This has massively increased demand for public housing, hence driving up prices. The absolute number of PRs purchasing HDB flats may constitute a fraction of the overall HDB-purchasing population, but you actually only need a small number of purchasers bidding up prices at the margins, for overall property prices to increase.



• The rise of en-bloc sales over the past decade. I’m told that a popular retirement strategy for older folks who cashed out from en-bloc sales, is to buy a HDB flat in cash and then live off the massive cash balance left over for the rest of their retirement. The lax rules for en-bloc sales therefore channels cash-flush buyers into the HDB resale market, hence the advent of near-million-dollar HDB flats.



• HDB’s dogmatic adherence to its Build-To-Order (BTO) model. Burnt from the huge supply overhang of public flats when it massively over-built in the face of the HDB bull market that ended in 1996, HDB now only builds flats when it is confident of selling most of the flats built. This means that HDB will launch a project (i.e. start taking orders from interested buyers), but only start construction when most of the flats (I think at least 70%) have been booked. This avoids a supply overhang, which means that the cost of public funds being tied up in unsold public housing (which is saved by the Government) is transferred to citizens, who end up bearing the cost of a longer waiting period for new flats. In addition, the delay in getting a flat drives potential buyers to the resale market. This in turn pushes up resale prices, which actually then increases BTO prices down the road since BTO flats are priced at a discount to the then-prevailing market price. So this policy is a vicious cycle that delivers a double whammy (if not more) to prospective buyers.

But most fundamentally, increasing HDB prices marks the coming to roost of the Government’s deliberate (and much ballyhooed) policy of making one’s flat a financial asset for retirement purposes. This works only if flat prices increase over time – otherwise, they would make really bad investments that are unsuitable for retirement. By mixing up the public policy goals of providing affordable accommodation and helping citizens plan for their retirement, the Government has ended up achieving neither, with public housing becoming increasing unaffordable and many retirees being asset-rich and cash-poor.

The point that I ultimately want to make, is that the “leave it to the market” message is deceptive when the bearer of the message is able to manipulate the market. Markets do not exist in vacuums, but are instead influenced by government regulations and policies. So when the Government declines to intervene or to change the underlying rules, it is really a conscious political decision to maintain the status quo.

In such cases, the “market” becomes a convenient scapegoat for a mess that’s really of one’s own creation. A deus ex machine, if you will, that conveniently resolves an inconvenient political truth.

So the next time a government official or politician talks about “leaving it to the market”, or blames the market for something or other, be a little bit more questioning. Drill deeper and find out if that person is really helpless to influence the market. I would bet that’s not the case in most cases.

Question for Written Answer: 10 April 2007

In February, I had asked questions in Parliament about the repossession of HDB flats by banks. Back then, I had asked the Parliamentary Secretary to the Minister for National Development for figures on the repossession of flats by the HDB, before the market was liberalised to allow banks loans to purchase HDB flats. He did not have the figures then, but said he would provide them if I wanted. In the event, I had to file another question to get the information. So here it is.

What is telling is that in the 5 years from 1998 to 2002, the HDB repossessed only 24 flats in all. Contrast this to 895 HDB flats repossessed by banks in the 4 years from 2003 to 2006. Is this an improvement for the people? I'm not so sure.

WPQ

HDB LOANS

(Flats repossessed due to failure of loan repayments)

Mr Siew Kum Hong asked the Minister for National Development in each of the 5 years before the market for HDB loans was opened up to banks, how many flats did the HDB repossess for failure to make mortgage or loan repayments.

Mr Mah Bow Tan: From 1998 to 2002, a total of 24 flats were recovered by HDB. These flats were either abandoned by lessees or returned to HDB by lessees due to default in mortgage payments. The breakdown by year is provided in the table below.

1998: 8 cases
1999: 5 cases
2000: 9 cases
2001: 1 case
2002: 1 case
Total: 24 cases

Questions for Oral Answer: 10 April 2007

A while back, I wrote about an article in TODAY about the woes suffered by one-room rental flat tenants during an upgrading exercise. I felt it was outrageous and unacceptable.

In this past month's sitting, I filed an OPQ about it. The response presented a very different side of the story. I just wonder why the HDB did not respond to the media reports, to clarify what had happened.

I also filed an OPQ on the Administrative Service. The reply shows that there has been no increase in the number of resignations from the Administrative Service. In the event, since the Administrative Service SR9 benchmark was not being revised, I left it at that.

Someone had, after reading my post on the OPQ, suggested some follow-up questions for additional information which I thought were excellent ideas. But Minister Teo's response showed that follow-up questions for additional information would not have been entertained.

But that also brings me to how PQs are phrased. Even on the most innocuous and least politically-charged topics, sometimes answers are not directly on point. So some MPs, myself included, have taken to asking multi-part questions. For me at least, this is not designed to squeeze as many questions as possible into one.

Instead, it is to ensure that the various aspects of an issue are ventilated properly and to give the Ministry a chance to prepare responses to these aspects that we intend to touch on, instead of having to rely on supplementary questions or running the risk of getting the reply that Minister Teo gave.

It's not easy, crafting a PQ to tease out all the information that an MP thinks ought to be provided. And the Ministries do not help by preparing answers that are sometimes less than complete, even when presented with very pointed, very direct multi-part questions.

OPQ #1

ADMINISTRATIVE SERVICE

(Resignations)

Mr Siew Kum Hong asked the Prime Minister and Minister for Finance for each of the years from 2004 to 2006 (a) how many officers resigned from the Administrative Service and what resignation rate did that represent; (b) of these resignations, how many Administrative Officers cited higher pay in a new job as the main reason or one of the main reasons; and (c) how many Administrative Officers were asked to resign for reasons related to non-performance.

The Minister for Defence (Mr Teo Chee Hean) (for the Prime Minister and Minister for Finance): Mr Speaker, Sir, the number of Administrative Officers who resigned from the Administrative Service in 2004, 2005 and 2006 were four, 10 and seven respectively. This corresponds to the resignation rates of 2%, 4% and 3% respectively. If we include Management Associates, who are the officers being tested for suitability for the Administrative Service, the resignation numbers are larger, but of course the base is larger as well. The total number of Administrative Officers and Management Associates who resigned in 2004, 2005 and 2006 were four, 14 and 12 respectively. This corresponds to resignation rates of 1%, 4% and 3% respectively.

Administrative Officers leave the Service for various reasons, and we may often not be able to ascertain exactly the real reasons for their departure. Some indicated that they would like to further their studies while others want to have a change of career. Some of those who leave for jobs in the private sector enjoy a pay increase in their new jobs.

The Administrative Service has very stringent retention standards. Officers are appraised annually and are expected to have the potential to hold at least Deputy Secretary or CEO level jobs. Those who do not meet the mark are asked to leave the Service but they could remain in other schemes in the Civil Service if they wish and if there are suitable jobs for them. Over the last three years, a total of 13 Administrative Officers left the Service on such grounds, ie, they were managed out of the Service. Of these, eight officers left the Public Service. The other five transferred to join other schemes within the Public Service where they continue to contribute to the public service.

Mr Siew Kum Hong (Nominated Member): Mr Speaker, Sir, I would just like to ask the Minister how many Administrative Officers are there in grades MR4 and above between SR9 and MR4 and on Timescales.

Mr Teo Chee Hean: Sir, I do not carry the numbers in my head. If the Member could submit a Question, I would be happy to answer it.

OPQ #2

UPGRADING OF ONE-ROOM HDB FLATS

(Temporary units for tenants)

Mr Siew Kum Hong asked the Minister for National Development in view of the situation of some tenants of one-room flats having to sleep in corridors and common areas when their flats are being upgraded (a) what are the HDB’s reasons for not permitting vacant units to be used on a temporary basis; (b) whether this situation has been encountered in previous upgradings; and (c) what measures will be taken to prevent a recurrence in future upgrading projects.

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): Mr Speaker, Sir, I would like to thank the Member for this opportunity to clarify media reports in mid-March that the ongoing upgrading of a block of rental flats in Toa Payoh had inconvenienced some residents.

The particular rental block is being upgraded under Project LIFE. LIFE stands for Lift Improvement and Facilities Enhancement. This is a programme implemented by HDB for one-room rental blocks where there is a high concentration of elderly residents. It seeks to improve the physical living conditions of the elderly tenants through lift upgrading and the installation of elder-friendly features, such as support handbars and the Alert Alarm System. It is fully paid for by the Government.

When these upgrading works are going on in a rental block, HDB implements a host of measures to reduce inconvenience to residents. The contractors can work inside the flat only from 9.00 am to 5.00 pm during weekdays. They have to ensure that the flat is cleared up at the end of each day. There is an air-conditioned area for affected residents to rest during these working hours. Temporary toilets and storage space are also made available. And the upgrading is done in batches so that these communal facilities are sufficient for the affected residents’ use.

Sir, since 1993, HDB has upgraded 38 rental blocks under Project LIFE and, in all these projects, no tenant has been forced to sleep in the corridors as a result of the upgrading works. One of the newspaper articles showed a picture of a man sleeping at the common corridor of his rental block. HDB investigated and found that he was sleeping outside on his own accord. The upgrading works at his unit has not even started. We have informed the newspaper that they had inadvertently misled their readers by using the picture in the wrong context.

HDB does exercise flexibility in cases of residents with serious medical or mobility problems and will arrange for such households to be shifted to a vacant unit. However, in the recent case, the resident who complained to the press did not fall into this category. He had asked for a vacant unit to store his belongings. He was not happy that he had to store it in the allocated storage space provided. HDB could not accede to his request, so he complained to the press.

Budget 2007 Debates: Ministry of Information, Communication and the Arts and Ministry of National Development, 3 March 2007

This was a Saturday sitting. Yes, Saturday.

I treasure my weekends -- I have never worked a 5.5-day week (barring NS and occasionally being the Saturday duty lawyer in my first employer, a local big law firm), and I'm pretty sure that I never will. So when I got the notice announcing that a Saturday sitting was being fixed, I was a little dismayed. But I still went, although I noticed that attendance seemed a little sparser than usual.

I had two cuts fixed for that day. The first was on Internet content regulation. I've never favoured the Internet Class Licence (available at the MDA website) -- it had always seemed to me to be a set of regulations that are just on the books but not enforced.

If you actually read it together with the Internet Code of Practice (which you have to), you can see that everything is worded so broadly that it covers a very broad range of Internet content (and probably everything on Sammyboy!!). Yet, it very, very rarely been enforced.

In fact, to the best of my knowledge, except for Sintercom, it has only ever been used or explicitly threatened against sexual sites (specifically, gay sites and child porn). And when the racist bloggers were prosecuted, they were charged under the Sedition Act. If that is the case, then why keep the Class Licence regime?

The only reason I can think of is for it to operate as a threatened Sword of Damocles hanging over would-be transgressors, as it were. And that is nothing if not the "chilling effect" at work. I don't agree with that. And if "offline" laws like the Sedition Act and the soon-to-be-updated Penal Code cover online behaviour, then the argument for repealing the Class Licence becomes even stronger.

Unfortunately, I didn't time my speech properly, and in the end I got "guillotined" (i.e. cut off) by the Speaker before I could complete my speech. I think I managed to make the point in my clarification question, but I know I could've done better if I had paced myself better. I'm still a little disappointed with that.

I thought the Senior Minister of State's prepared response didn't really meet my speech head-on, unfortunately. He seemed to mischaracterise my speech as expressing concern about light-touch regulation -- no, it wasn't and I certainly do not advocate heavier regulation. Certainly, that is one of the dangers of relying on a prepared speech, and I think that was the point the Senior Minister made after the Budget debates.

But I thought his response to my clarification was very good, with a clear explanation of what a light-touch approach is all about. Having said that, I still disagree with him on the necessity of the Class Licence, and I still believe that its existence results in an unnecessary "chilling effect" as in the Sintercom case and that it should be repealed given the authorities' ability to avail themselves of other legislation.

The second question is about barrier-free access. Now, it is very well known that Opposition MPs do not get to use the Community Improvement Projects Committee (CIPC) funds. They are entitled to apply, but their longstanding grouse is that they are not granted the funds. Instead, in Opposition wards, CIPC funds are normally granted to projects by Citizens' Consultative Committees, which are advised by the prospective PAP candidate for that Opposition ward (unlike in PAP wards, where the CCC adviser will be the elected MP).

I don't agree with that at all, just as I strongly disagree with the Government's policy of giving priority to PAP constituencies over Opposition wards when it comes to upgrading. So when the news reports came out that the Government had set aside funds for barrier-free access, but that they would be administered through the CIPC, I wanted to file a question about it.

A Straits Times article on 15 February 2007 ("Estates run by PAP to be barrier-free by 2011") stated that 95% of the cost would be covered by CIPC funds, with town councils having to bear the remaining 5%. Furthermore, as the Minister noted in his reply, the procedure is to make the application through the CCCs.

Now, the co-payment requirement and the application procedure clearly means that Opposition town councils and their CCCs (advised by a PAP member) will have to come to an agreement on the proposed project, before they can avail themselves of the CIPC funds. Who really thinks that this will happen?

The result is to deprive aged and disabled Singaporeans in Opposition wards of access to the CIPC funds. And that is simply wrong.

I don't think the Minister really answered the question or addressed the concerns about fairness and justice, and what the concept of "inclusiveness" should stand for. I think his answer speaks for itself. And that's all I'll say about it.

Towards the end of the debate on the Ministry of National Development, one of the other MPs Mr Seah Kian Peng asked about pet ownership and regulation of pet shops. I then decided to ask a clarification about the HDB's policy on cat ownership in HDB flats (it's banned).

This is a complicated issue. People know it's not allowed -- so those who do want to keep cats, will do so surreptitiously and allow cats to roam freely. Perhaps as a result of this loose sense of "ownership" over their cats, they frequently also do not sterilise or vaccinate their cats properly.

(Just as a point of comparison, my cats are not allowed outside at all, even though one of them regularly makes a dash for the door if he is nearby and it is open. The main reason is a fear that if they go off, they might not find their way back, or worse, they may be picked up by AVA and culled. I am told by the Cat Welfare Society that registering your cat does not prevent that, because AVA -- or their contractors -- will not check against registrations before culling.)

This results in ill-behaved cats making a lot of noise -- if you have ever heard a cat in heat, you will understand. The yowling is absolutely awful. There is a school of thought that legalising cat ownership in HDB flats will (a) reduce this problem, if owners are required to register and sterilise their cats, i.e. be responsible pet owners, and (b) be fair, since some breeds of dogs are allowed. But so far, the HDB has been very firm about retaining the policy, even though it is not consistently or strictly enforced.

Well, I don't think the Parliamentary Secretary's response really said all that much. But he makes a fair point, about the difficulty in reconciling conflicting interests. Having said that, this study by the Singapore Veterinary Association indirectly suggests that anti-cat sentiment may not be as strong as it might seem.

MINISTRY OF INFORMATION, COMMUNICATIONS AND THE ARTS

Control and Regulation of New and Old Media

Mr Siew Kum Hong (Nominated Member): Mr Chairman, the Government has repeatedly stated that it regulates the Internet with a light touch. That is commendable and I think also a pragmatic recognition of the difficulties in regulating the on-line world. But what is a light touch? Can regulation truly be light touch if behind it is the threat of a criminal offence, punishable by a fine not exceeding $200,000, or jail of up to three years or both, with additional fines of $100,000 per day for committing offences?

Sir, that is exactly what our light touch regulation is. The Media Development Authority regulates the Internet through the Class Licence and a breach of the Class Licence will potentially attract the penalties that I have described.

Sir, the MDA's website describes the Class Licence as setting minimum standards for the responsible use of the Internet. I think it goes much further than that. Read in conjunction with the Internet Code of Practice, the Class Licence prohibits, and I quote, "material that is objectionable on the grounds of public interest, public morality, public order, public security, national harmony or is otherwise prohibited by applicable Singapore laws."

Sir, I would submit that this language is unnecessarily broad and that the Class Licence, in its present form, is no longer relevant or appropriate. When the Government wanted to take action against certain racist bloggers, it chose to charge them under the Sedition Act. That decision surprised many, including lawyers. I myself wondered why the racist bloggers were not charged for breaching the Class Licence. After all, they had posted objectionable online content that would have breached the Class Licence which was specifically created to regulate online content.

Sir, the Government can and will use traditional statutes like the Sedition Act to regulate the Internet and the Penal Code is being updated for the digital age. So I think that the time is right to review the Class Licence 10 years after it was issued, so as to limit the prohibitions to match its existing practice of enforcing the Class Licence against sexual contents. This will avoid ---

The Chairman: Your time is up, Mr Siew.

The Senior Minister of State for Information, Communications and the Arts (Dr Balaji Sadasivan): Mr Chairman, Sir, you are TIME magazine’s person of the year for 2006. So are Miss Penny Low, Mr Siew Kum Hong and anyone who sits in front of a computer and interacts with it. TIME magazine’s selection of you as person of the year was meant to highlight the millions of individuals who, through their interaction in cyberspace, have created new channels and types of communication. Two hon. Members of Parliament have pointed out the problems related to the new media and I shall answer their cuts together. These are wild and exciting times in cyberspace.

Blogs, YouTube, MySpace, Secondlife and Wikipedia are impacting the lives of millions. Many among the younger generation socialise in cyberspace. Some have termed this revolution in cyberspace as Web2.0, likening it to an updated version of software. While this revolution has brought the wisdom of millions together to create Wikipedia, there is stuff in cyberspace that can make you fear for the future of the next generation. There is a large supply of obscenity and stupidity, dishonesty and danger. So how does my Ministry deal with this brave new world?

We have a three-pronged approach in managing the new media: (1) a light-touch regulatory framework; (2) industry self-regulation; and, (3) public education.

Let me start with light-touch regulatory framework. Internet content providers are regulated under the Media Development Authority’s Class Licence Scheme. There is an Internet Code of Practice, which stipulates the type of content prohibited in cyberspace. The Class Licence requires Internet content providers and service providers to take down or deny access to such harmful content. This light-touch regulatory approach has served us well in regulating online content, helping to facilitate the growth of the industry while allowing us to act if we find harmful content that threatens our social values, and racial and religious harmony.

Mr Siew asked whether we should review our light-touch regulatory framework. Last year, the National Internet Advisory Committee (NIAC), a people-private sector body set up to advise the MDA, reviewed the Class Licence Scheme. It found the light-touch scheme still relevant and appropriate in dealing with emerging media trends.

The Member was also concerned about the use of the Sedition Act recently. The Sedition Act reinforces MDA’s light-touch regulation on new media. The proposed expansion of the Penal Code to cover electronic transmissions now will provide an alternative to the Sedition Act for charging offenders purveying inflammatory content that stirs up public mischief.

Besides legislative action, another important limb in managing the new media is industry self-regulation. The MDA and NIAC work closely with the industry to promote industry self-regulation. For example, last year, the mobile service operators - MobileOne, SingTel and StarHub - developed and adopted a voluntary industry content code for mobile services which aims to protect users, especially the young, from undesirable and objectionable mobile content.

The third prong, public education, is vital. Public education is vital and I totally agree with Miss Penny Low on the importance of public education. ...

Clarification

Mr Siew Kum Hong: Sir, the Senior Minister of State has pointed out that the NIAC had endorsed the light-touch approach under the Class Licence. He has also mentioned that the Sedition Act supplements the regulations, and the Penal Code provides an alternative mechanism for enforcement. What this means is that a single action can technically contravene three different laws with very serious consequences for each contravention. There is overlapping liability under multiple statutes for one single action. That creates uncertainty and a potential chilling effect on Internet speech. I would like to ask the Senior Minister of State whether this is healthy and leaves too much discretion to the authorities when taking enforcement action.

Dr Balaji Sadasivan: Sir, let me begin with the real world before I go into the cyber world. Even in the real world, there is much overlap between laws, and a particular wrongdoing can come under several sections of the Penal Code, and it is for the Attorney-General to study the various laws and decide which one is applicable in a particular case.

In cyberspace, the same is true. A law applies in cyberspace and so the same law and the same overlap that is found in the real world will be found in cyber space. The difference is that in cyberspace, it is a particular medium that is being used when compared to print, but the laws apply equally whether in cyberspace or in the real world. In cyberspace, what we do not do is that we do not go after every action that breaks the law, because it is impractical and impossible to police cyberspace. So, by and large, cyberspace is left alone and that is what we mean by regulating with a light touch. But where wrongdoing or bad action in cyberspace can have an impact on the real world, like the racist blogs, then we act.

MINISTRY OF NATIONAL DEVELOPMENT

Barrier-free Access

Mr Siew Kum Hong: Madam, the Government recently announced that it will make available $32 million over five years to implement barrier-free access in housing estates. These funds will be disbursed through the Community Improvement Projects Committee (CIPC). Based on media reports, Town Councils will be required to co-pay 5% of the cost of projects using these funds.

The use of the CIPC, coupled with the requirement for co-payment by Town Councils, effectively excludes the Opposition wards of Hougang and Potong Pasir from access to these funds. CIPC funds are channelled through the Citizens' Consultative Committees, but the advisers to the CCCs in those two wards are from the PAP and are not the elected MPs, which is the case in the PAP Government wards.

So I think that is very unlikely that the CCCs and Town Councils in Hougang and Potong Pasir will be able to come to an agreement on how to use such funds. This penalises the disabled and elderly folks in those estates. If we are serious about making society more friendly to the disabled and the elderly, then this method of disbursing the funds is unhelpful and unfair. In fact, it directly contradicts the vision of an inclusive society for Singapore, knowing that the use of the CIPC will almost inevitably exclude Hougang and Potong Pasir from access to these funds.

Madam, these funds are for barrier-free access. In an ageing society, that is increasingly a must-have and not a good-to-have, like upgrading. They should not be subject to political considerations such as whether the ward in question is an Opposition ward. I would suggest that a better way to distribute these funds is to make direct grants to the Town Councils for their use. After all, the Town Councils would know the best ways in which to apply these funds and what are the most pressing areas of need for barrier-free access. This would truly further our vision of an inclusive society.

Mr Mah Bow Tan: ... Let me now talk about barrier-free accessibility which Mr Siew Kum Hong mentioned. It is an important part of our programme to help the elderly to age in place to make sure that the environment is barrier free and more elderly friendly. My MOS has already updated Members about the progress of the LUP which is also part of the barrier-free accessibility programme, and we are also supporting the Town Councils. We will extend the barrier-free accessibility to all HDB precincts by 2011.

How do we fund it? We have a CIPC fund. The CIPC fund is meant to help or improve projects within the community. So we decided that we will expand the CIPC fund to also fund the construction of the barrier-free accessibility (BFA) items such as ramps, railings and so on. All Town Councils will be invited to draw up their BFA masterplans for their estates and apply for access to the CIPC fund. I just want to make it very clear at this point that we are not excluding any Town Council from applying for these funds. Everybody is welcome to apply for the funds and, in fact, we have written to every Town Council, including to Mr Low Thia Khiang, to apply for the CIPC funds in order to implement BFA. So I do not think there should be any problem in so doing. This is not subject to political consideration, it is just commonsense. Here you have a CIPC fund and you are using it to improve the neighbourhood and the precincts and there we have a need to improve barrier-free accessibility. Why do we not put the two together? So that is the reason why we have expanded CIPC to allow for BFA and the simple procedure is to apply for it through the CCC. Why the CCC? Because they are the ones who are most familiar with the neighbourhood. If all Town Councils do this, follow the procedure, draft their BFA masterplans and apply for access to the CIPC funds, I am sure that by our target date of 2011, all Town Councils will be redeveloped and all the BFA facilities will be put in place.

Clarification

Mr Siew Kum Hong : Madam, the Parliamentary Secretary has shared with us some of the policies on pet ownership. I would like to ask the Parliamentary Secretary whether the Ministry would review the existing ban on cats in HDB flats. I understand that, very often, HDB dwellers who do keep cats will let them roam around so that they can deny owning the cats when confronted. They also do not bother to sterilise the cats. This need for possible deniability leads them to be irresponsible pet owners. If cat ownership is permitted ---

The Chairman: A clarification, Mr Siew, not a speech.

Mr Siew Kum Hong: Yes, Madam. I would like to clarify with the Parliamentary Secretary whether he agrees that if pet ownership is permitted, subject to sterilisation and the need to keep the cats within the flats, then many problems attributed to stray cats will be resolved.

Dr Mohamad Maliki Bin Osman: Madam, this issue of pet ownership, cats especially, in housing estates has been discussed several times. There are two groups effectively - one, the pet lovers who feel that it is okay for pets to be in housing estates. As long as they are sterilised, they will be able to manage and live among HDB dwellers. However, there is also the other group off HDB dwellers who are very particular about the nuisance created by pets of this kind.

The policy of HDB has been that we do not allow cats to be kept in HDB flats because cats are nomadic in nature and are difficult to be confined within the flat. They have also given rise to problems such as defecation, noise and shedding of fur, which will affect the living environment of our housing estates. Having said that, I think we continue to try to engage the pet lovers group to try to bring both parties together. I think what is important is a sense of appreciation of each other's side and to see if, at some point in time later, they will come to an agreed position.

As of now, I think we receive a significant number of complaints from HDB dwellers with regard to nuisance created by cats. Therefore, at this point in time, the position of the HDB remains the same - cats will not be allowed in HDB flats.

Pain Plus Progress

Last Friday's edition of TODAY carried a story about the upgrading of HDB flats. It reported on how HDB's ongoing Project Life (Lift Improvement and Facilities Enhancement for the Elderly) programme to upgrade one-room rental flats (which is A Very Good Thing) has resulted in some of the tenants having to sleep in the corridors and common areas (which is self-evidently A Very Bad Thing).

If you have ever been through or seen what happens during an upgrading exercise, you will understand why that happens. If a man's home is his castle, then upgrading represents a temporary invasion and occupation of that castle by well-meaning, benevolent invaders.

Your flat becomes a huge mess, with plastic sheets and tarpaulins draped all over your stuff, workers trampling all over the place, and dust and dirt all over the floor. You lose the part of your flat that is being worked upon. And when it's a one-room flat, that basically means you lose your flat. So I'm not surprised that some of the tenants preferred to sleep in the corridor.

There were two things in this article that really hit home for me. The first was the quote by Mr Chan Sai Meng, about HDB's response to his request for the unused rental flats to be opened up for temporary use, that it was "too tough" administratively. The civil service might have a No Wrong Door policy, but it's pointless when the right door opens directly into a brick wall.

The second thing was Mr Chan's parting shot at the end of the article, and his last two sentences really, really affected me:

“You must have a solution before this programme starts... The Government said (to) progress together with the people. I don’t want to progress if it is so painful and without dignity. You go ahead.”

The next Parliamentary sitting is on 9 April 2007. I am going to file a PQ on this. It is not acceptable.

Questions for Oral Answer: 27 February 2007

I had previously posted about a written answer to an OPQ I had filed for 15 February 2007. Well, here is the official transcript from the Hansard of the sitting on 27 February 2007, for a related question filed by another MP Mr Hri Kumar, his and my supplemental questions, and the responses given. I intend to (but have not yet) follow-up on the Parliamentary Secretary's offer to provide the relevant figures on repossession by HDB before bank liberalisation.

By the time the Parliamentary Secretary finished his answer, we only had 2 minutes left for the next question -- which happened to be a related OPQ filed by me. The Speaker carried on and promptly cut the PS off after 2 minutes, and so I didn't get a chance to ask any supplemental questions on his reply which I suspect was incomplete.

The rules are that MPs are not supposed to ask questions that have already been answered in that session of Parliament -- that's session, not sitting, meaning it could well be the full term of this Government until the next General Elections unless prorogued (i.e. ended) by the Government.

So by right, I should not file the same question. I don't know if I should try "by left", but I really would like to get a breakdown of the HDB's reasons for rejecting almost half of the requests for assistance from those people who had lost their flats. It troubles me greatly that there could be children in these families who are put into very unfavourable and unstable home environments because of the financial woes of their parents, even if they had been "financially irresponsible".

I actually did fill in the form asking for parts (c) and (d) -- which I felt were not really answered by the Parliamentary Secretary -- to be postponed to the next sitting, but that didn't happen.

OPQ

REPOSSESSION OF HOUSING AND DEVELOPMENT BOARD FLATS BY BANKS

Mr Hri Kumar asked the Minister for National Development from 2003 to 2006, what is (i) the number of HDB units that had been repossessed by banks and the current rate of repossession; (ii) the number of repossessed units currently being held by the banks; (iii) the average time taken by the banks to dispose of the repossessed units; (iv) the average outstanding amount owed to banks and the average interest rates charged on these outstandings; (v) the number of persons currently in arrears in loan repayments to HDB and the banks; and whether the bank's repossessed units are disposed at market prices and, if not, what is the range of discount to the market price.

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): Mr Speaker, Sir, as at 31st December 2006, the banks have completed the mortgagee sale of 895 HDB flats financed by bank loans. This works out to about 1% of the 89,000 HDB flats financed with bank loans since the start of bank origination in January 2003.

The rate of bank repossession has fluctuated over the past three years. In recent months, the rate is about 60 cases a month, but the number is on the decline in tandem with the improving economic condition and employment situation.

The banks normally take about six months to sell off HDB flats which they have repossessed. Currently, they have about 550 repossessed HDB flats in hand. As the majority of the repossessed flats are the smaller types which are currently popular with flat buyers, the banks have generally been able to sell them off at market prices.

As information on banks’ arrears cases, including outstanding loan and interest rates charged, is confidential, HDB does not have data on them.

As at 31st December 2006, about 7% of HDB mortgagors are in arrears of three months or more. HDB has in place various financial assistance measures to help flat owners who have difficulties servicing their mortgage loans.

Mr Hri Kumar (Bishan-Toa Payoh): Will the HDB consider being more flexible in granting concessionary loans to those who may not qualify because they have already had two such loans previously?

Dr Mohamad Maliki Bin Osman: Sir, as Members of the House will probably know, HDB's policy is to allow one concessionary loan for every household buyer and to allow a second so-called bite of the cherry if they choose to upgrade. I know a lot of Members of the House have faced residents who have difficulties asking for second, third or fourth concessionary loan with regard to those who are downgrading because of financial situation. As I mentioned in the House previously, HDB is very sympathetic to each case. And if we look at the circumstances surrounding the case, we look at the case based on the history of the loans that they have taken and whether, in fact, the loans have been taken based on flats that were purchased direct from HDB or flats that were purchased in the resale market, and so on.

To answer the question, we will continue to be sympathetic to every case that comes to HDB for request for concessionary loan. But, sometimes, we do come across cases where they may not be capable of purchasing the flats at that point in time and we advise them on other alternative solutions with regard to their capability at that point in time.

Mr Siew Kum Hong (Nominated Member): Sir, I would like to ask the Parliamentary Secretary, before the market was liberalised for bank loans to purchase HDB flats, what was the number of HDB units repossessed by HDB itself? And in light of this historical figure, does the Ministry think that the 1% repossession rate is acceptable?

Dr Mohamad Maliki Bin Osman: Sir, I do not have the figures for the number of cases that were repossessed prior to bank origination. Then, all loans were with HDB, but we are glad to surface the figures if the Member is interested. Whether the 1% is acceptable or not, I think we have to look at the perspective of why this 1% happened. We have to understand the circumstances surrounding cases that were repossessed. Many of them were repossessed because they were not able to manage their loans at different points in time. We understand that what is important is for them to appreciate the contract that they come into with the banks and the policies that the banks have put in place. One of the most important things today is to ensure that flat buyers are aware of what they are getting into - be more vigilant and be more prudent in their expenditure.

For HDB loans, we have put in place new policies like the housing loan eligibility requirement where they have to ensure that they get the housing loan eligibility assessment done first. The banks are also putting forth similar parallel measures where they will have to get approval from the banks with regard to the amount of loan that they can get from the banks. What is important now is to ensure that the public is educated and informed of the decisions that they are going to make. I think it is not to say whether it is acceptable to the Ministry because we will want to ensure that every household who purchases their flat is capable of managing their flat. But if they are really unable to do so, we will try to see how else we can assist them, ensuring that the different solutions are made available to them and for them to be able to decide on all these solutions. Some of the solutions are short term; and some are longer term. What is important is to continue to assist and educate them on what they can do.

OPQ

HOUSING AND DEVELOPMENT BOARD FLATS
(Number of households defaulting in mortgage or rental payments)

Mr Siew Kum Hong asked the Minister for National Development (a) how many HDB flat owners lost their flats due to failure in making mortgage or rental payments, in each year from 2002 to 2006; (b) of this number, how many applied to HDB to obtain alternative accommodation in each year and how many were rejected for each year; (c) what were the most common reasons for rejection; and (d) whether the fact that an applicant’s household includes dependants is a relevant factor in deciding such applications.

Mr Speaker: You have two minutes, Dr Maliki.

Dr Mohamad Maliki Bin Osman (for the Minister for National Development): Mr Speaker, Sir, from 2002 to 2006, 360 HDB households voluntarily surrendered their flats to HDB due to default in HDB mortgage loan payments. There were also 895 cases of mortgagee sale of HDB flats by banks, as I mentioned earlier. No tenant under the Public Rental Scheme was evicted due to rental arrears, although some have been advised to transfer to smaller rental flats to reduce their rent.

Of the 360 households who voluntarily surrendered their flats to HDB, 200 (56%) have been allocated rental flats while the rest found their own housing arrangements. Among the 895 households affected by HDB mortgagee sale action, 273 appealed to HDB for some form of help. Of these, 131 (48%) were offered a rental flat while another 13 (5%) who met credit assessment guidelines were provided a concessionary loan to purchase another flat.

There are strict eligibility criteria for the Public Rental Scheme to ensure that our heavily subsidised rental flats are allocated to those without housing options. For example, households who sold their flats are not eligible for subsidised rental flats for 30 months from the date of sale of their flat. If they have enjoyed two housing subsidies, they will be permanently debarred from a rental flat.

However, HDB does exercise flexibility in applying these eligibility rules. The key principle is that citizen households who are truly needy and with no alternative housing option will be considered for a rental flat.

Mr Speaker: Order. End of Question time.