The ‘great’ MDA Parliamentary debate: So what?

By Leong Sze Hian

MDA

Adjournment motion on MDA in Parliament – 8 July 2013 

When Parliament starts on 8 July, Mrs Lina Chiam has filed an adjournment motion and 7 MPs (4 PAP and 3 opposition) have filed 9 questions on the controversial new MDA regulations.

Questions on how it may be applied?

Most of the questions evolve around what and how the Minister will implement the new regime? Does it really matter what the Minister’s replies will be? In my view – No, not very much. Because years down the road, what the Minister said may be long forgotten.

And even if we make reference to his answers in this Parliamentary sitting in the future, they may have no effect whatsoever on how the new MDA rules may be applied. Why? Because, at the end of the day – it is what the wording of the legislation that matters, and not what went on in Parliament debating the legislation.

Questions on why no consultation?

As to the other questions asking why there was no consultation, no announcement in Parliament (Mostly Don’t Announce) – the fact is the new MDA regulations have already been implemented.

Most memorable Parliamentary debate?

In this connection, someone asked me which parliamentary sitting in history was the most memorable.

Well, from my living memory – it must be the parliamentary debate in October 2002 on the amendment to the HDB Act.

Whilst the debate then covered several areas, I shall just focus on 2 of them.

Allow banks to do HDB loans?

First, the amendment to allow banks to offer HDB loans from 1 January 2003.

Selected extracts from the debate:

“Mr Mah Bow Tan (MND Minister):

Let me, first of all, explain – I think it was Mr Ang Mong Seng who said that this is a new policy – that this is not a new policy. This is an existing policy, and what this amendment Bill seeks to do is to require such lessees, instead of getting a market rate loan from HDB, to now get it from the bank. This is just for clarification.

But back to the reason why we have not allowed these people who want to either downgrade or to move laterally from taking a concessionary loan and instead to take a market rate loan. First of all, let me, as I said in my Second Reading speech, repeat once again that the Government is committed to ensuring that public housing in Singapore remains affordable to its citizens.

As the public housing authority, HDB‘s role is to ensure that all Singaporeans will be able to afford at least the first HDB flat. This is the reason why HDB sells new flats at subsidised prices and also with subsidised loans at concessionary interest rates, and HDB will continue to do so.

If they do not wish to buy a subsidised new flat, they can also buy a resale flat and we give them a CPF housing grant.

For the first loan, HDB will provide a subsidised interest rate for first-timers. In addition to that, to encourage social mobility, to encourage people to move up, to allow those who have outgrown their flats – they may have bought a 3-room flat many years ago; their families have grown up; they want to have more rooms for their children – or they just simply want to have a bigger flat,

HDB provides a second concessionary loan to those who have already bought their first subsidised flat. So, from the perspective of the need for housing, the need to have a roof over their heads, there is really no strong reason for an HDB flat owner to move laterally; in other words, move from one flat to another flat of the same size, or for him to downgrade.

And those who decide to do so should consider carefully when they do so. They should act prudently and they should decide whether they have sufficient funds. Indeed they would have sufficient funds in most cases arising from the sale of the existing flat.

Invariably, most of them who sell their first flat, which is a subsidised flat, would be able to enjoy quite a significant capital gain. They can then use this capital gain to finance the purchase of the second flat, which is either of the same size or smaller.

But having said all these, we do know that there are people who downgrade because of financial difficulties, and these are the cases which, I think, Members in this House come across during their meet-the-people sessions.

These are the cases which Members who have spoken just now are referring to – people who have difficulties in servicing their mortgage either because of retrenchment, prolonged illness, demise of their main breadwinner, and so on and so forth. Therefore, because of this, they have no choice but to downgrade.

So we recognise that there are such cases which downgrade due to financial difficulties and I would like to assure Members of the House that HDB will consider such cases sympathetically as and when they come to the attention of the HDB.

Passing the buck to banks?

Finally, I would like to respond to Mr Low Thia Khiang. His point is that this whole move is politically motivated that, as a result of this, Government will now wash its hands off market rate loans, so that we do not have to evict tenants who foreclose. Let me inform Mr Low that the number of evictions from HDB flats of tenants who do not pay up their loans (this one I think the Minister may have pulled off a fast one as at its highest ever – over 40,000 HDB households were on financial assistance from the HDB (cannot pay?) – Mostly Don’t be Accountable), or who default on their loans, is extremely small.

So that has never been the motivation for this move. It is not as if there are many HDB tenants who are defaulting on their loans and HDB is now deciding to throw this problem on to the banks. That has never been the intention, I assure Members of this House.

HDB‘s role is to make sure that there is sufficient housing for our people. It is affordable, good quality housing and we want our people to stay in the flats.

What is the motivation then, if it is not political? It is very simple. We are in the process of reviewing the role of HDB. We know what HDB should do. We want HDB to concentrate on public housing. We want HDB to concentrate on building good public housing.

We want HDB to concentrate on managing, on making sure that towns are properly built, and so on. HDB is not a bank. It is not a financial institution. There are many financial institutions, over 100 at the last count, who are better placed to provide market rate loans. These are market rate loans. These are not concessionary rate loans.

So for market rate loans which are provided at market rates, let us leave it to the banks. HDB should concentrate on doing what it does best – building good quality, affordable public housing. That is the motivation for this move. It has got nothing to do with what Mr Low mentioned just now.”

Untold misery from this policy change?

This policy change may have caused untold misery to tens of thousands of HDB flat owners.  In most of the financial counselling cases that I have come across in the last decade did not benefit from the Minister’s assurances of flexibility in dealing with hardship cases on a case to case basis.

The latest reply from the HDB to one of my newspaper forum letters was that they do not have the statistics on HDB bank loans’ delinquency or foreclosure (but a reply in Parliament a few years ago was able to disclose the delinquency rate for HDB bank loans?).

MDA rules curtails freedom of expression?

So, similarly, unless the subject new MDA rules are amended or repealed – the future of freedom of expression on the internet looks rather bleak.

Akan datang: The other bigger HDB untold misery?

I shall write about the other very significant policy change on HDB that was announced  in October 2002 which may have caused even more untold misery to even more Singaporeans (hundreds of thousands of them), in my next article.