Do You Know HDB Lose S$1Billion a YEAR

[domho8]

Some Singaporeans asked that land costs be excluded from HDB pricing. The answer to this was a stern no. Too much social welfare, as we all know, leads to laziness, communism, and Satan worship. Or even worse, voting for the Opposition. Besides, HDB loses a billion dollars a year as is. That’s pretty bad, right? Trouble is, that “loss” is irrelevant…as an argument or otherwise:

 

HDB’s Losses: Not Surprised. Not Even a Bit.

 

We’re not amazed by the loss, and we’re not moved by it either. See, we remember HDB announced losses before, in April ’08. Back then, HDB claimed a loss of $2 billion. So actually, the deficit is shrinking.

 

And anyway, HDB has never hidden its losses. That’s what their financial reports claim most of the time.

 

(Bet you thought those reports were secret. But no, there they are in the open, where anyone with a web browser and more patience than God can understand them*).

 

But the most important reason we don’t care (and neither should you) are:

 

*They’re vaguer than Matrix Reloaded. On page 53, for example, dividend income is listed as coming from “unquoted subsidiary” and “others.” And the only “breakdowns” happen on the 114th attempt to make sense of the accounting.

 

 

•Most of that money isn’t actually “lost”

•It’s a terrible counter-argument anyway

•HDB is not a company

 

1. Most of that money isn’t actually “lost”

A billion was easy. For our next trick, we’ll make your entire flat disappear.

 

The Singapore government’s land is handled by the SLA (Singapore Land Authority). When HDB needs to build flats, it pays to acquire the land from SLA.

 

Thing is, HDB has to pay market rates*. That is, they pay the same price a private developer would. But unlike private developers, HDB also has to subsidize the cost of flats. This inevitably leads to a loss: The land is purchased at a much higher price than proceeds from the flats can cover.

 

But while HDB takes a loss, the Singapore government as a whole doesn’t.

 

However much HDB pays for the land, it’s still paying much of that money to another government body (SLA). So HDB’s “losses” are more like a monetary transfer than an expenditure. And if you ask some angry flat buyers, that transfer seems to be from their wallet to the government coffers.

 

*At least, it’s now claimed that HDB pays market rates for land and construction costs. We don’t know the actual prices.

 

There are two reasons the billion dollar loss is a terrible counter-argument.

 

First, it suggests it’s impossible for HDB to ever exclude land costs, or to give many more subsidies. Any more and our economy will be reduced to trading sea-shells for pomfrets or something, because look at how IN THE RED we already are.

 

But that isn’t true. As we said in point 1: Most of the money goes back to another government body. The “loss” is nowhere near as serious as it appears. And with an expected $3.9 billion surplus, I doubt the exclusion of land costs is entirely unfeasible.

 

After all, the government owns the land. Granted, if SLA doesn’t charge market rates for it, the government won’t make money. But it doesn’t stand to lose much either.

 

Second, the land cost argument is impossible to verify. HDB doesn’t publicize how much it pays for land, yet those unpublicized costs are part of their argument. Trying to evaluate it is like trying to pass a Maths test typed in Wingdings.

 

But if more information comes up, follow us on Facebook so we can update you.

 

HDB isn’t a company, and budgeting’s a different ball game for them.

 

HDB at its core is an administrative body. Just like MOE or MOM, it’s priority is not to generate revenue. It’s supposed to take whatever resources it’s assigned, and spend said resources to achieve a task.

 

The next year or quarter or whenever, HDB’s resources are topped up and they do it again.

 

HDB may spend a billion or two, but public housing is a necessary expense. What matters is not that they spent the money (the resources were assigned to be used), but how well the money was spent.

 

Remember the NParks bike saga? The big issue wasn’t that NParks had $57k to spend; the issue was how they spent it (on 26 bicycles). Apply the same principle here.

 

Could that billion dollars have been better used? Could we have lowered construction costs? Was the EC scheme a bad idea overall? Could we skimp on some aspects to build more units? Those are the questions that matter.

 

We shouldn’t be sidetracked by an impressive sounding deficit. If HDB had spent twice that, but spent it well enough that Singaporeans felt secure, there’d be less anger.

 

And some transparency to back Minister Khaw’s position wouldn’t hurt.

 

[vieri]

I plead with minister Khaw to scrutinise at SLA's corresponding Financial Statement the same year which HDB has deemed to make such huge financial losses.

We may not be ministerial material but we aint 3 year old stewpid brats.

I also suggest for minister khaw to take a basic accounting course for beginners/idiots. That way he wont be seen like one, i mean, a beginner, should the public scoff at him for his inept knowledge.

 

vieri

[HoSaybo]

Someone will just pretend he never hear or see these request. Happened when he was asked about his comments abt michael palmer's case.

[Audio]

What happened to "build flats for Singapore Citizens"??

 

Guess nobody is talking about that anymore...........    :)

 

 

(Audio)

[YH]

So this means SLA is EARNING one billion a year? 

 

Something doesn't add up

 

Say SLA sell land to HDB for 2 billion,  HDB builds the flats with material and labour cost of an additional 1 billion, then sell to us for 2 billion.

 

So HDB so-call pay out 3 billion, collect 'only' 2 billion' and 'loses' 1 billion

 

How much did SLA pay for the land in the first place?

 

So in the end, how much does the GOVERNMENT earn???

[vieri]

 

How much did SLA pay for the land in the first place?

 

 

Youre almost there. The right question is "how much did HDB paid to SLA for land acquisition"?

 

Vieri

[bberry]

Asking the right questions is of no use, they will never give u the answers.

 

even after the AIMgate review, the report say nothing wrong ah.  And if WP asked the right questions after reviewing the AIMgate report, we will not have the answers given

 

 

 

[Audio]

Youre almost there. The right question is "how much did HDB paid to SLA for land acquisition"?

 

Vieri

 

 

Didn't they say "at market rate"?  That means same same as private developers......

 

(Audio)

[armoury]

 

Didn't they say "at market rate"?  That means same same as private developers......

 

(Audio)

 

Also partly begs the question: how much land utilised in an HDB estate is actually nominally purchased by HDB, and how much remains as State land?  In a condo, the entire estate is owned by the proprietors, with the common area (starting with the driveway into the estate, guardhouse, all the facilties such as swimming pool, lift lobbies etc) shared between the proprietors.  In HDB flats, common areas are not co-owned by the flat owners (tenants on 99-year lease, really) but remain the property of HDB.  I would assume at a bare minimum land on which the footprint of each block stands therefore 'belongs' to HDB, but what about the grass verges in between, the driveways, the car parks? 

 

Going further, what about the streets running through an HDB estate?  Do those still "belong" to LTA, as most public roads do, or is HDB forced to nominally pay for those as well? 

 

Oh well, just raising questions for the heck of it.  I agree with the main premise in this thread anyway, that it's all just accounting, take from left pocket and put into right pocket...

[Quest88]

Left or right pocket, it's a way to monetize the value of the land, which does reflect in our budget and sets some basis for the management thereof.

 

From what I can read, I just think it's another communication issue again. :)

You're all right that HDB doesn't really make a loss per se since it's a theoretical 'lost profit' that they would have made should they be a private contractor. Trying to use this to prove a point that HDB is good for the country seems to have become counter-intuitive.

[Charnel]

If HDB lose money, it will be "black magic"!

[tsammyc]

The larger the HDB loss the better as it means the bigger the subsidy to the citizens

[aquarius]

If HDB/SLA does not lose money, then it is not subsidised.  The fact that these loses are never made known - is there something to hide? 

 

If land is acquired at $X and sold years later at market price of $X+$Y, should not $Y be the gross profit before expenses in accounting?  It would only be a loss if SLA sells the land to HDB at below the original cost i.e. $X.

[econav]

For HDB , you lease the unit only , you don't own it and no say to the land.

when they enblock , they can re-use the same land at what coast =zero ?

last time HDB bult it with no losses? than why now with so called high losses and always the same bulilder get to BTO ?? not difficult to google and link up pieces..............

[econav]

What happened to "build flats for Singapore Citizens"??

 

Guess nobody is talking about that anymore...........    :)

 

(Audio)

 

that is what was promise , but they now can tell you , those are by the old man , we are the new one and we did not ;D

[econav]

So this means SLA is EARNING one billion a year? 

 

Something doesn't add up

 

Say SLA sell land to HDB for 2 billion,  HDB builds the flats with material and labour cost of an additional 1 billion, then sell to us for 2 billion.

 

So HDB so-call pay out 3 billion, collect 'only' 2 billion' and 'loses' 1 billion

 

How much did SLA pay for the land in the first place?

 

So in the end, how much does the GOVERNMENT earn???

 

even they loss 1B a year , they have so far squeeze out fewx100B from it customer by all they division , many manage but 1 boss lar.

[tsammyc]

For HDB , you lease the unit only , you don't own it and no say to the land.

when they enblock , they can re-use the same land at what coast =zero ?

 

Actually HDB seems to be better than private 99-yr leasehold because when the HDB is old, SERS seems to buy it up and offer you a new subsidised flat nearby.

[tsammyc]

If HDB/SLA does not lose money, then it is not subsidised.  The fact that these loses are never made known - is there something to hide? 

 

If land is acquired at $X and sold years later at market price of $X+$Y, should not $Y be the gross profit before expenses in accounting?  It would only be a loss if SLA sells the land to HDB at below the original cost i.e. $X.

 

Whether you believe that SLA sells land at market rates, at least its better than BOTH SLA and HDB making a profit :)

[Guest francishuang]

Actually HDB seems to be better than private 99-yr leasehold because when the HDB is old, SERS seems to buy it up and offer you a new subsidised flat nearby.

 

Hdb is machiam freehold. U pay some money many yrs later to 'renovate' n get a new place..lol

[econav]

Hdb is machiam freehold. U pay some money many yrs later to 'renovate' n get a new place..lol

many yrs later you pay them to renovate outside , but still they are the owner. then later they offer you to move out than they en-block( 35-40 yrs ).they may sell the land or built new BTO , who make the most money ?

[relaxed1624706010]

Actually HDB seems to be better than private 99-yr leasehold because when the HDB is old, SERS seems to buy it up and offer you a new subsidised flat nearby.

 

Subsidised is highly debatable.........

[econav]

Actually HDB seems to be better than private 99-yr leasehold because when the HDB is old, SERS seems to buy it up and offer you a new subsidised flat nearby.

 

not much dif  , HDB the boss is Gov , private the boss is developer ( They en-block and top up lease ) , but private you may get to pocket some money , HDB you have to return everything to CPF first. if 99 yrs landed , you can built within the limit and some of the very early leasehold with bal 35yrs or less is on the radar scope of developer , I know few off this have since fully rebuilt to a new house ......

[econav]

ppl in the construction estimate the bultiing cost by just counting how many piller and beam x $7-10k to rebuilt a house. I spend less than $400k , to rebuilt a 5000sqf 2 level to a totally new house. ( not counting the land ).

[darkeststar]

 

"Whether you believe that SLA sells land at market rates, at least its better than BOTH SLA and HDB making a profit "

 

 

That pretty much sounds like the same logic behind "do you prefer small increase in bus fares every year, or a big increase in  every 3 years..??"

[tsammyc]

"Whether you believe that SLA sells land at market rates, at least its better than BOTH SLA and HDB making a profit "

 

 

That pretty much sounds like the same logic behind "do you prefer small increase in bus fares every year, or a big increase in  every 3 years..??"

 

Don't agree. If it is true that SLA is selling at market rates and HDB is taking a loss, then at least there is the chance that we are being subsidized. However, if SLA is selling at a "profit" and HDB is making a profit, then there is no chance of any subsidy.

 

Of course, if SLA is selling at a profit, then it's unclear.

 

However, the concept of the Government profiting monetarily from selling land is absurd to me since the Government prints all those pieces of paper and plastic that we call money. The money only has value because foreigners are willing to trade food and Blu Ray players for it and foreigners judge the value by Singapore's reputation and fiscal/financial stability through our exchange rate. It has been this way since the end of the gold standard and Bretton Woods https://en.wikipedia.org/wiki/Bretton_Woods_system

 

A better concept if we think SLA's land is too expensive, is that the Government is making us work too hard for our HDB flats.