Singapore Media Watch

Wednesday, December 13, 2006

Your Views: HDB's reply a red herring? - ST (8 Dec 2006) - Ltr from HDB: HDB consistently incurs losses selling new flats

I attach below HDB's reply in the ST dated 8 Dec 2006.

While HDB's may not be technically misleading the public (as far as land cost is concerned), I feel the government is.

If one looks at the whole issue of "subsidised" (or what I call "market-rate discounted") HDB flats, HDB may be running deficits if the land is purchased from the SLA at market rates. Therefore, HDB may not misleading the public.

But, many of these state lands were compulsorily acquired during the early days of independence for a song. I know because my ancestors' land was compulsorily acquired back in the late 60s/early 70s for something like 10 cents per sq feet - all in the name of national development!

Now what happens to these vast tracts of government land? They are sold to HDB at market rates - hence the deficits in HDB's books but the surpluses are booked under the entity selling the land to HDB - whether SLA or the old Land Office or whatever.

The trick is that the profits are shown in the government's books (either through the SLA or the URA or even JTC?) because the land was acquired for only 10 cents psf (before the government started paying "market" rates for land compulsorily acquired only some 10 years or so ago when prices sky-rocketed). So, for the majority of state land under the government's books (in SLA/URA/JTC) which were acquired way before the "market rate" era 10 years or so ago (compare 10c cost vs the current market rate of $400-5000 psf), the profits are humongous.

Therefore, while the HDB might not have not misled the public in its land cost claim, the government certainly did when its "silence" (or through HDB's red herring reply) gave the impression that the government (through HDB alone) was "subsidising" public flats.

What I would like is for the government (either the "profitable" entities like SLA or URA) to come clean and let the public know how much profits are stashed away in their books or transferred to the government as capital gains since Day One. We do not want to hear HDB's deficit; rather, we'd like to hear the SLA's or URA's surpluses.

Didn't the government make use of these surpluses from land sales to use it towards funding the Progress Package of $2.6b prior to the General Elections in May 2006?

The public deserves a wholistic picture of the government's land ownership and surpluses/deficits rather than the often-heard exhortation by the HDB that they have been running deficits through its subsidised HDB flats.

Can the relevant authorities (SLA and/or URA?) please reply?



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