Speech by SMS Sim Ann at the Parliamentary Motion on Cost of Living
Nov 7, 2023
The Senior Minister of State for National Development (Ms Sim Ann): Mr Speaker, thank you for letting me join the debate. Acting Minister Chee had earlier shared in detail on how we tackle rising costs – managing the Singapore dollar to contain imported inflation, ensuring our economy remains competitive to create good jobs and sustain real income growth, and providing support packages targeted especially for vulnerable groups.
I wish to respond to some specific points raised by Members on topics including housing affordability, cooked food prices and profiteering.
Housing Affordability
First, on housing affordability. Members would recall we have had an extensive debate in this Chamber in February on housing affordability and even more recently, there was a major announcement on upcoming changes to the BTO classification framework.
Before I respond to points made by Members, including Mr Louis Chua and Mr Leong Mun Wai, please allow me to set out the Government's overall approach towards maintaining stability in the housing market.
As economic conditions improve and wages rise in Singapore over the long term, we expect to see this reflected in a gradual rise in housing values and prices. Sudden shocks in either the public or private housing markets will cause serious problems and even hardship for Singaporeans, and this is why the Government actively uses policy levers to moderate price increases.
What do these levers comprise?
First, careful land use planning, coupled with a land recycling strategy, to ensure a steady supply of both public and private housing, to meet Singaporeans' needs.
Second, pricing BTOs, which by the way, in response to the point made about the five "C"s, these BTOs have become more and more similar to condominiums, in terms of build quality and aesthetics. Pricing these BTOs with a view to affordability, not cost recovery.
Third, demand-side levers for public housing such as grants and priority schemes for various categories of buyers.
Fourth, maintaining controls on home loan financing, whether through CPF or cash to encourage prudence on the part of home buyers and moderate price increases in the HDB resale and private property markets.
And fifth, additional measures such as ABSD to cool the overall housing market where necessary.
Recent housing price movements have been due to specific imbalances which the Government has identified. The first imbalance: our building programme fell behind in the last three years due to COVID and we are catching up.
To date, HDB has completed close to 75% of the projects delayed by the pandemic and should complete the rest of the delayed flats by early 2025. And we are committed to launch up to 100,000 new flats between 2021 and 2025.
The resumption of delivery of private housing will also, over time, ease the crunch in private housing and moderate rentals and home prices.
The second imbalance. HDB resale prices have risen significantly in recent years. This is due to buyers turning to resale when BTO construction was affected by COVID-related delays and shifts in social norms prompted by the experience of the pandemic, contributing to overall increase in housing demand. The catch-up in BTO supply will help moderate demand for resale units as people move into the homes they have booked.
We have implemented two rounds of cooling measures in December 2021 and September 2022. Coupled with the broader economic climate and mortgage interest rate increases, these have moderated property prices.
The prices of private residential properties increased by 0.8% in 3Q2023, lower than the quarterly average of 2.1% in 2022. Similarly, prices of HDB resale flats increased by 1.3% in 3Q2023, a figure that I believe Mr Louis Chua also quoted just now. And this is lower than the quarterly average of 2.5% in 2022.
The third imbalance. This is the fact that mature estate BTOs had presented a specific set of concerns. The price of mature estate BTOs drove much of the ground concern about BTO prices. So, when people talked about BTO prices being a concern, they were mostly talking about the BTO prices that they saw in the mature estates.
The issue we faced was how to price mature estate BTOs because these are very sought after so that they do not rise out of reach of most buyers and also not in a way that induces its own demand, which is why we announced the introduction of a new housing framework, comprising a new classification of "Standard", "Plus" and "Prime" flats, to take effect from the second half of 2024 onwards.
The new framework seeks to ensure homeownership remains affordable, including in choice areas, by providing additional subsidies to these flats, but also tighter restrictions, so that they are affordable even upon resale.
This also helps to keep our system of subsidies fair, while keeping to market principles. This means that we can also maintain a good social mix, even in good locations, because housing will be accessible to a wider range of Singaporeans.
Based on our ground engagements, Singaporeans are generally aware of and support the new housing framework and its objectives. This will help implementation go more smoothly next year.
So, measures are in place for each of the specific imbalances causing price increases in BTO, resale and the private housing markets.
Despite having to tackle these imbalances, we have broadly maintained measures of public housing affordability. In 2022, eight in 10 first time home buyers of BTO and resale flats had a Mortgage Servicing Ratio (MSR) of 25% or less upon key collection. This meant that they could finance their monthly instalment with CPF, with little to no cash outlay.
The Government will continue to monitor closely and adjust policies whenever necessary. And I am glad that Mr Louis Chua acknowledges our housing moves. However, he seems to think that we have not done enough. I noticed that Mr Louis Chua had co-authored a piece in January this year, saying housing in Singapore is affordable. Perhaps, he no longer thinks so. But I am glad that he agrees that the fundamental issue with housing affordability is one of supply, not policy.
Supply was indeed disrupted due to COVID. But we are catching up with the backlog.
Mr Louis Chua seems to think we should build more. In fact, HDB is already doing all it can on the supply side. We have also activated more levers on the demand side, for instance, by prioritising BTO flats for young married couples.
Through catching up on supply and managing demand, we are stabilising the housing market and there are signs that this is happening.
Launching 100,000 flats from 2021 to 2025 which I mentioned previously means a commitment of 20,000 flats per year. And prior to 2019, HDB launched about 16,000 to 17,000 new flats per year, a figure that Mr Louis Chua had also noted.
But at that time, the WP thought that was too many and said so. Now, we have 20,000 flats per year and it seems the WP thinks it is too few. So, I have to ask what figure does the WP propose? And should your higher number be adopted and if the market comes down due to over-supply, then, what will your party be saying then?
I notice that Mr Louis Chua appeared to express some puzzlement about where all this demand for housing is coming from and he seems to want to link this to population increase. In fact, Mr Louis Chua should know because we have brought this up, we have mentioned this during the debate on the housing Motion in February this year. We have been building HDB flats faster than the HDB population growth.
And, in fact, the average number of persons constituting each HDB household has been going down. This is the decrease in household size that Mr Louis Chua has also noted.
And what is the cause of this reduction in household size? One factor, and I think this is a long-term one, has to do with the fact that we have heard the housing aspirations of singles and we have, over the years, progressively provided more housing options for the singles so that there are more housing types that they can buy, be it on the resale or the BTO market. And, in fact, we have further open this up with the new BTO classification framework that was announced.
Given rising rates of singlehood, even if the population were to remain completely static, demand for housing is going to increase over time because the reduction of household sizes is set to continue. This is the reason why I seek Mr Louis Chua and the WP support for all our levers on both the demand as well as on the supply side. Please support us in having a robust recycling strategy for our land in addition to having careful land planning.
Let me now turn to some points that Mr Leong Mun Wai has repeated. These are familiar points because he has also raised them during the debate in February.
He talked about the PSP's proposal of an "Affordable Housing Scheme". And as far as I can make out, the affordable housing scheme tries to do a few things. It seeks to achieve dramatically lower BTO prices by leaving out land cost at the point of first purchase, while seeking to assure existing homeowners that their home values will not be destroyed via a crash in the resale market and avoiding being seen as raiding the Reserves. These are the three aims.
However, the first aim is simply incompatible with the second and the third aims, which is why the proposal was met with considerable scepticism, from Members of this House as well as the public.
More importantly, the affordable housing scheme does not address the specific imbalances in the housing market that the Government has already responded to and identified. For example, dramatically lowering BTO prices is likely to trigger even more demand, especially in the very popular prime areas, instead of moderating demand. On the other hand, the Plus/Prime model which we have announced will address this concern.
I now turn to Mr Leong Mun Wai's mention of his Millennial Apartments scheme and I would also like to address some points that Mr Louis Chua has made about addressing the rental market in flats.
I say this to Mr Leong Mun Wai and Mr Louis Chua. Let us listen to what younger Singaporeans want. MND and HDB have been engaging Singaporeans at large but also younger home buyers or prospective home buyers. And most of the younger Singaporeans we have engaged indicated a preference to own their own homes; own rather than rent.
So, we are not closed to new ideas. We have, indeed, been hearing inputs from Singaporeans about alternative typologies of housing but we also have to recognise that the very strong desire for home ownership is present within Singaporeans and we will have to prioritise building for home ownership, not so much building for rent, especially if we are talking about people of middle-income. But we will, first, make sure that there are still public rental options for those who are unable to attain the goal of home ownership.
Also, we are ramping up supply for the Parenthood Provisional Housing Scheme (PPHS). We will have close to 2,000 PPHS flats at the end of this year and we seek to double this to 4,000 by 2025.
In terms of how the rents are moving in response to the various measures that have been undertaken, I would like to share that private and public housing rents are showing signs of stabilising.
In the second quarter of 2023, the increase in private and public housing rents moderated to 2.8% and 3.0% respectively, as compared to 7.2% and 4.4% in the previous quarter and we expect this to further ease as more homes are completed and become ready for their owners to move into.
Budget Meals
Allow me to move onto concerns raised by several Members, including Mr Leong Mun Wai, Ms He Ting Ru, Ms Tin Pei Ling, Ms Yeo Wan Ling and Mr Xie Yao Quan on food, especially cooked food.
We had proactively launched the Budget Meal initiative in 2023 to increase the availability of affordable food options in HDB estates, especially for residents who need them.
These budget meal options are typically lunch or dinner meal options that are priced affordably and are comparable to meals sold at lower price points at nearby eateries, including HDB coffee shops or hawker centres.
We have observed that rental coffeeshops leased under the Price-Quality Method (PQM) tenders typically provide budget food options with prices at around $3 to $3.50, across different estates. I should add at this point that operator proposals for PQM tenders that include healthier food options are already given more points and are more favourably considered under the quality criteria. So, I want to thank Ms He Ting Ru for supporting this idea. We are already doing it.
Currently, some 114 HDB rental eating houses offer budget meals and drinks. And by 2026, budget meals will be offered at all 374 HDB rental coffeeshops. Members of public can use the BudgetMealGoWhere site to find out what budget meals are offered at HDB coffeeshops near them. HDB also puts up decals at participating coffeeshops to help residents identify the participating stalls more easily.
However, while we help residents with their cost of food, we are also mindful that rising costs affect everyone, including coffeeshop operators and stallholders.
To ease the transition for them, HDB has also offered a rental discount of 5% off the market valuation-based renewal rents for a period of one year from the time of the tenancy being renewed, subject to verification that the new budget meals and drinks have been implemented.
In the spirit of partnering Singaporeans under Forward Singapore, we soft-launched an effort last month to crowdsource the public's recommendations and verification of budget meals in coffee shops across the island.
Using the CrowdTaskSG portal, the public can be part of this nation-wide pilot campaign called the Great Budget Meal Hunt by submitting information on affordable meals they would recommend to others or by verifying the details of a budget meal listed on the BudgetMealGoWhere site. Over the past week and a half, we have received 245 recommendations of affordable meals and 319 verifications across 91 coffee shops. We welcome Singaporeans to contribute actively to this initiative.
While the current budget meal initiative only applies to coffee shops rented out by HDB, there are also sold eating houses that are privately owned. HDB is studying regulatory options to require budget meals to be provided in these sold eating houses. This includes making the provision of budget meals a condition for the renewal of use of the outdoor refreshment areas – an idea that Mr Murali Pillai had raised previously.
We will continue to work with coffee shop operators to find sustainable ways to offer affordable food options to residents.
On Profiteering
Some Members have also raised their concerns that businesses may take advantage of the inflationary environment to raise prices exorbitantly.
The Government takes a strong stance against profiteering and will not hesitate to take action if there is a case to be made. To date, the Committee Against Profiteering (CAP), which I note Ms Hazel Poa also sits in, has received over 350 feedback submissions, of which 32 cases have been found to involve GST misrepresentation and which have been resolved.
If Mr Leong has concerns about GST misrepresentation, in other words, a business unjustifiably raising prices by attributing it to GST increase, he can make a submission too to the CAP.
However, there is also broad recognition also that many businesses are facing rising costs, as Mr Mark Lee has pointed out, including the cost of utilities, manpower, rental and raw materials, and some may need to raise prices in order to remain viable. These could include our hawkers and SMEs.
The best safeguard against profiteering is healthy competition. We have a robust system in place to remove impediments to competition and encourage a diversified supply chain, which help to ensure that businesses compete fairly and that consumers have sufficient choices.
The Government keeps a close watch on the prices of essential goods and services, especially during this challenging period, and will not hesitate to investigate anti-competitive behaviour. Should a member of the public come across such egregious cases, they can report this to the Competition and Consumer Commission of Singapore (CCCS) and the Consumers Association of Singapore (CASE).
If Ms Hazel Poa, as she said in her speech, felt that the scope of the CAP that she sits on is not sufficient for possible upstream cases of price rises to be investigated, I think CCCS would be glad to hear from her with regards to specific details and investigate them.
To further help Singaporeans make better purchase decisions on essentials, CASE has developed an app Price Kaki to compare the prices of items sold at supermarkets. To address potential concerns about shrinkflation, CASE has introduced a unit pricing feature this year on Price Kaki to help consumers more easily compare the prices of products with different package sizes and across different brands.
Specifically, on business rentals, Ms Hazel Poa had suggested releasing guidelines on fair rental prices.
The Parliament has passed a Bill mandating that tenants and landlords of qualifying retail premises comply with the leasing principles set out in the Code of Conduct for Leasing of Retail Premises in Singapore. This is to ensure industry-wide consistency in leasing principles and practices to provide certainty to landlords and tenants and set out a dispute resolution process that is affordable and expedient.
The Act will take effect in early February 2024 as sufficient time has to be given for the industry to transition to mandatory compliance. The code will be reviewed and updated as necessary, based on feedback from industry players.
On support for caregivers and persons with disabilities
Let me now turn to some points on supporting persons with disabilities and caregiving that Mr Gerald Giam had raised.
We empathise with the challenges of those who need additional support, such as caregivers and persons with disabilities. I beg your pardon, I think it was Mr Dennis Tan who raised these points.
To Mr Dennis Tan's points, I would like to clarify that financial support schemes for caregivers such as the Home Caregiving Grant or the Migrant Domestic Worker Levy Concession do not just apply to caregivers of disabled seniors but persons with disabilities too, including care recipients with autism spectrum disorder or intellectual disability.
Similarly, all Singapore residents have basic health insurance coverage for life, regardless of pre-existing health conditions. MSF has also recently increased funding to adult disability homes and day activity centres in 2021. Mr Speaker, in Mandarin, please.
生活费这个课题牵动着所有人的注意力。过去几年，基于疫情、战争、国际局势、气候变化等因素对全球经济所造成的冲击，我们处于企业成本与生活费持续上涨的环境中。
虽然目前通货膨胀有放缓的迹象，但政府充分理解不少国人还是因为生活费居高而感到压力。因此政府加强定心与援助配套，用实在的方法为大家纾解一些压力。
在控制成本的同时，政府向来也致力于保持高效的公共服务。尽管如此，成本是在所难免的。虽然我们尽量节约，但是成本上涨了还是得支付。
政府会通过津贴，承担重要公共服务的部分成本增幅，但不能全数埋单。其中有一部分必须由消费者来承担。
政府知道，有些消费者的经济条件有限。政府会直接补贴他们，越有需要的补贴越多，比如通过水电回扣计划、公共交通补助券等。
这种方式比全面压低产品或服务价格，或分阶收费好得多，因为那些方式较为耗费资源，效果也不够理想。
政府预算低于我国经济总量的百分之二十，比大多数发达国家来得低，但总体上却能够持续为国人提供优质的行政与公共服务。
尽管如此，政府所需要的开销逐步上升，尤其是公共医疗领域。
为了应付结构性的医疗开销增幅，我们必须调高消费税。采取这种措施，向来是没有理想时机的。但是通过定心与援助配套，政府既抵消了消费税调高对大部分公民家庭在头几年所造成的影响， 又不耽误扩大税收来源。（比方说，大部分的消费税总额是由非公民和高收入群体所支付的）。所以政府在帮助大部分公民家庭的当儿, 这一些非公民或者高收入群体可以为国家的这个税收来源做出更多的贡献。
政府的方针是：在该调整收费或税务时不要拖延，但也要为公民家庭提供他们所需要的帮助，这样我们才可以确保公共服务的质量、平衡收支，并帮助国人渡过眼下的难关。
Conclusion
I would like to take this opportunity to highlight the point that was just raised – I believe it was by Mr Louis Chua – on delaying GST increase for one or two years on the basis that finances have been better than expected.
We are actually doing much better than that. With the Assurance Package, we have delayed the impact of the GST increase for the majority of Singaporean households by at least five years and by about 10 years for lower-income households.
In conclusion, we recognise the impact of inflationary pressures on Singaporeans. Many are cutting back on spending while we ride out the economic uncertainties. We empathise with these challenges and we will do more, if necessary.
But, we have to do it right. This means: one. preserving market principles and not over-regulating – to allow the market to allocate resources and determine price so that we can have an efficient, productive economy while intervening decisively where market failures exist; and two, fiscal sustainability – to intervene prudently so as to remain responsible to future generations.
In the longer term, the only bulwark against inflation is to remain competitive, to grow the economy and to achieve wage growth for all. This is the sustainable and sensible way ahead and this Government is committed to this mission.
Mr Speaker, Sir, I support the amendments to the Motion raised by Mr Liang Eng Hwa.