HDB: $2b drop to $1b deficit?

HDB: $2b drop to $1b deficit?

By Leong Sze Hian

I refer to the articles “HDB will be the price-setter: Khaw” (Straits Times, Apr 13).

A $1b deficit from HDB?

It states that “HDB pays market rate for its land and construction costs. Hence, when it prices flats below a market rate, it incurs a housing deficit – now in the region of about $1 billion a year, including other costs such as upgrading.”

Should HDB give us a break-down of the building costs?

In view of this statement, isn’t now a good time to finally disclose the break-down of the costs of building HDB flats?

Puzzling $2b deficit previously?

I am puzzled by the deficit of about $1 billion a year, because the previous National Development Minister said in 2009 that the deficit was $2 billion.

In this connection, let’s revisit what the previous MND Minister said in 2009 – “Mr Mah’s remarks seem to contradict the statistics provided in the HDB’s latest annual report.

Were there less flats sold?

According to the annual report, HDB revealed that “the number of flats sold under the home ownership scheme this year was 4,738, which was 7,253 less than last year”.

Less “demand for flats” and flats built?

According to its section titled “Key statistics”, the “demand for flats” was 9,870 Home Ownership flats for 2008/2009, compared to 12,449 for 2007/2008; and the “Building statistics – Dwelling units” was 3,154 in 2008 compared to 5,063 in 2007.

All statistics on flats declined, but deficit increase?

All these numbers show that the number of flats sold have declined, rather than increased.

The number of flats sold under the home ownership scheme declined by 60 per cent, “Demand for flats” declined by 21 per cent, and “Building statistics – Dwelling units” declined by 38 per cent, for the last year.

So, how is it possible then that “the reason for the high deficit ($2 billion) was because more flats were offered for sale last year, compared to the year before”, when the HDB statistics show that flats’ building, demand and sales, all declined substantially last year compared to the year before?

From $1 billion to $2 billion and now back to $1b deficit?

Can the Minister clarify his statement on the reasons for the doubling of the deficit from $1 billion to $2 billion for the last year?

As for Mr Mah’s assurance that HDB “sells flats lower than their cost price”, the HDB has not disclosed the breakdown of the cost of building flats, despite letters to newspaper forums requesting for this information, almost every year.

Last time when flats’ costs were disclosed to the public?

The last time this information was disclosed was in 1981, when the then National Development Minister Mr Teh Cheang Wan, disclosed the land and construction cost, as well as the subsidy and selling price, of the various flat types in six districts.

For example, a three-room flat in the central core region, cost $53,700 to construct and incurred a land cost of $40,000, and sold for $57,100.”

Build more flats = lower deficit?

Since “HDB has rolled out 70,000 new flats since Mr Khaw took over”, why has the deficit shrunk from $2 to about $1 billion, when the number of flats is so much more now than the earlier period?

Does this make any sense to you, as it appears that the more flats we build, the lower the deficit?

Removing the wrong Income Ceiling?

As to the article “Radical idea: Remove income ceiling” (Straits Times, Apr 13), we may be barking up the wrong tree by removing the upper income ceiling of $10,000. What we may need to do urgently is to remove the $2,000 income ceiling for 2-room flats, because some cash-strapped families may be forced to buy much more expensive 3-room flats.

With regard to the article “Ex-Harvard prof launches book on S’pore health-care system” (Straits Times, Apr 13) which said that “The Singapore system is unique in that it provides among the best health quality in the world at the lowest cost among any developed economy”, Singaporeans may be looking forward to the current National Development Minister (former Health Minister) doing the same “magical” – “best quality at lowest cost” for HDB too?