Not enough money?
AFTER I shared about the lessons learned from our neighbouring country in building affordable housing in my last article, I received many positive comments plus a painful but very relevant question, “Where are we going to find the money to subsidise public and affordable housing?”
Last year alone, Singapore’s public grants and subsidies to its Housing Development Board (HDB) was S$1.2bil, equivalent to RM3.6bil, according to the HDB financial report.
How can we allocate such subsidies or even higher grants to affordable housing in consideration of our growing population?
When the previous government tabled Budget 2018 last year, they allocated RM2.2bil to increase home ownership via PR1MA, Syarikat Perumahan Negara Bhd, and other agencies.
How much of that fund had been channelled to affordable housing? We can roughly assess the progress of affordable housing in our country based on the clues below.
PR1MA was initially set up in 2011 to build 500,000 affordable homes by 2018. However, the agency subsequently revised their target down to 210,000. At the end of 2017, only 4% of that revised target was met. This means only 8,400 affordable homes were built over six years!
The underlying problem of this issue was land scarcity. PR1MA estimated that it would need about 12,500 acres (based on the assumption of 40 units per acre) to build 500,000 units. However, it only ended up getting 108 acres, of which only 39 acres were suitable for development.
It is a clear illustration that more is needed to be done to provide affordable housing for the people.
According to a study by Real Estate and Housing Development Association (Rehda) Institute, our government would need RM22bil per year and 4,100 acres to deliver its promise of one million affordable homes over 10 years.
The above study is based on only high-rise development, before calculating land costs.
It would require a huge financial commitment to achieve this goal. As mentioned previously, we would have achieved our needs for affordable housing long ago, if the billions of ringgit reported stolen from 1MDB were allocated instead to the affordable housing sector by the previous government.
Likewise, if the total accumulated fuel subsidies from 2006 to 2013, amounting to RM120bil, were spent instead on affordable housing, the issue would also have been solved. People may comment these are all on hindsight now. Where are we going to find the money in the future?
There is a saying that history is a great teacher. If we can learn from the past, we can source the funding for affordable housing.
In May this year, The Star published a news article on “Cost of Corruption”. According to Transparency International Malaysia (TIM), corruption had cost the country about 4% of its gross domestic product (GDP) value each year since 2013. Added together, this amounts to a high figure of some RM212.3bil since 2013. And for 2017 alone, that figure was a whopping RM46.9bil.
To put things in perspective, the development expenditure allocated for 2017 was RM48bil. If the corruption figure above was accurate, our development fund was almost “wiped out” due to corruption.
On the amount of corruption, TIM president Datuk Akhbar Satar was reported saying, “This is our estimate. It is likely to be higher in reality.”
Can you imagine what we could do with these monies if there was no leakage in the system?
Going forward, with the promise of a cleaner government under Pakatan Harapan, we hope we will have removed the legacy of corruption from the previous government, and therefore generate a healthy surplus to redeploy.
With that, it answers the question of “Where will the money come for affordable housing?” and any additional subsidies on the housing sector would not be a burden on the people.
It then remains the resolve of the government to commit substantial subsidies towards affordable housing to resolve the problem once and for all.