Indranee Rajah on public housing motions

The Progress Singapore Party’s (PSP) alternative proposal on affordable public housing will change HDB’s existing home ownership programme into “a national prepaid rental scheme with an option to buy”, said Second Minister for National Development Indranee Rajah. More importantly, she said, the proposal does not safeguard the interests of current or future generations of Singaporeans. Instead, it will erode the country’s reserves. Speaking in Parliament on Tuesday (Feb 7), Ms Indranee said PSP portrays its plan as providing cheap housing with no downsides - but the catch is, the BTO “user” does not have to pay for the land value or bear any cost of the land until they choose to sell, so who is paying for the land for the duration that the “user” stays there? The answer, said Ms Indranee, is all other Singaporeans, in this generation and beyond. This happens in three ways - financially, through the erosion of Singapore’s shared reserves; in inequity, where some benefit at the expense of others; and in poor policy, with implications for the broader housing market. Ms Indranee explained that those who choose not to sell their flats will enjoy a large subsidy at everyone else’s expense. Those who choose to sell will have to pay the recorded land cost and accrued interest, which could affect net proceeds; and with no subsidies or grants, they might not be able to finance another home. PSP’s proposal will also lead to much cheaper flats, paid for by everyone else. This will drive up demand, leading to longer waiting times and more uncertainty. Those who cannot get a flat will have to turn to the resale market and again, under the proposal, there will be no grants or subsidies. In short, said Ms Indranee, PSP’s proposal and position are riddled with inconsistencies.