Senior Minister of State for National Development Sim Ann and Non-Constituency Member of Parliament Leong Mun Wai reloaded their metaphorical six-shooters and slugged it out in another public duel over the pricing of Build-To-Order (BTO) flats and government reserves in the middle of the town square known as Facebook.
Fresh off a couple of posts, in which Sim rebutted Leong's assertion that land costs can be taken out of the picture when it comes to BTO housing, the duo are back for Round Two.
They will return for Round Three in parliament next year, after Leong accepted Sim's invite to file a parliamentary motion so that the issue can be fully debated.
How Round Two started
Leong started with a post on Dec. 16, disputing Sim's characterisation of his earlier post that he "accepted" that HDB flats are subsidised by the government.
"This is because the government has net positive cash flow from each HDB flat it sells disregarding land costs," Leong says, which also demonstrates his continued insistence on taking land costs out of the equation.
However, he added "we have no choice but to accept this" and continued the discussion with land costs included.
Leong on subsidies for HDB flats
Leong claimed that "it is not clear" how the government has priced and subsidised HDB flats over the years.
"The so-called “net government subsidy” has fluctuated significantly over the years as a percentage of the total cost, based on the Progress Singapore Party’s (PSP's) research of the HDB’s financial statements over the past 20 years," Leong said.
He further claimed there were a few years in the 2000s where the government subsidy was a negative, which supposedly meant a profit was made in selling these flats.
Leong on reserves
HDB flats should be viewed as public infrastructure and land costs: Leong
Leong then turned to the question of Singapore's national reserves. Sim previously devoted a substantial portion of her argument that Leong essentially wanted the government to spend more on subsidising HDB flats, which would require drawing more on the reserves.
His argument is that there will be no draw on reserves if the government does not charge a cost for land when HDB builds flats. Leong proposed categorising HDB flats as public infrastructure, like schools and hospitals, for this purpose.
He also challenged the government's position that the land is "disposed" for HDB's use, as among other things, flat owners are arguably paying a "fixed monthly rent" for 99 years upfront when they purchase a flat, in an apparent reference to a HDB flat's lease.
Singapore should not put proceeds for land sales into reserves: Leong
Leong then said that Singapore's financial assets total S$1.57 trillion as of end-March 2022, not including assets owned by MAS and others, and will continue to increase by at least S$40 billion a year.
Leong made this point:
"Even the drawdown on reserves for Covid-19, which is touted as a once-in-a-lifetime crisis, has hardly caused “a dent in the armour” of our trillion-dollar reserves. So how much money do we need to save for future generations?
Is there any point in talking about providing for future generations when they are already assured of a few trillion dollars of inheritance?"
Instead, Leong argued, the "more urgent need" is to help the present generation with their many challenges, giving the rise in GST as an example. He added that the government could make better use of the reserves.
"We would not be drawing down on the reserves but using the annual investment returns on the principal," Leong said.He made a final point that land sales proceeds will drop to S$6 billion from S$10 billion if HDB does not pay the land cost, and that his party's view is that proceeds from land sales should not be put into reserves, but used in the annual Budget.
However, this last bit was previously addressed by Second Finance Minister Indranee Rajah.
State land is part of the reserves, but selling state land does not increase the reserves
During the Nov. 7 sitting of Parliament, Indranee addressed Leong and explained the relation between land sales and the reserves.
The sale of state land does not increase the reserves, as it converts the physical land in the reserves to an equivalent amount in financial value.
However, if the government charged HDB less for acquiring land, that would represent a draw on the reserves, as state land forms part of the reserves. HDB must therefore pay the government a fair market value for land.
Sim: BTO flats are sold at a significant subsidy
Sim dismissed Leong's claim that BTO flats are not subsidised, saying that it is "simply incorrect".
"HDB BTO flats are sold at a significant subsidy, and many buyers also get grants on top of that. When home owners sell their BTOs on the resale market, this subsidy is realised," she said.
Sim next said that Leong's post "confirmed her impression" that Leong simply wants the government to price BTO flats lower, disregarding land costs if necessary.
Sim said it is one thing to discuss the price of BTO flats, but it was another to question the accounting of land value as part of Singapore's reserves.
"There is no room for magical thinking here. Although the government has explained it many times, it appears we have to do so again," she said.
Sim added that Leong is not the first government critic to have "over-confidence" in the reserves and to call for more government spending. She also said:
"Like his predecessors, Mr Leong wants Singaporeans to believe that we should save less in our Reserves for future generations, and can afford to draw down more of our Reserves for today’s needs. This is a wrongheaded proposal which carries serious consequences."
"I therefore invite Mr Leong to go beyond social media posts and file a motion in Parliament, so that we can have a full debate," Sim concluded.
PSP will file a motion
PSP shared a post on Dec. 21. Attributed to party secretary-general Francis Yuen, it said:
"PSP welcomes the Government’s offer for a parliamentary debate on our public housing, and we will file a motion in due course to have a free and open discussion on the challenges facing our public housing market."
Leong also shared another Facebook post on Dec. 21, saying, "we welcome and will accept the government’s challenge to have a parliamentary debate on these issues."
It appears that the back-and-forth will continue beyond Facebook and into the House.
Top image from Sim Ann Facebook page and PSP YouTube page.