Political Legitimacy and Housing

Singapore's Stakeholder Society

Beng-Huat Chua

• Publisher: Routledge
• Year: 2002
• Topic: Politics & International Relations
• eBook ISBN:
  9781134705986
• Subtopic: Politics
• Index: Politics & International Relations

Singapore's successful public housing programme is a source of political legitimacy for the ruling People's Action Party. Beng-Huat Chua accounts for the success of public housing in Singapore and draws out lessons for other nations. Housing in Singapore, he explains in this incisive analysis, is seen neither as a consumer good (as in the US) nor as a social right (as in the social democracies of Europe). The author goes on to look at the ways in which Singapore's planners have dealt with the problems of creating communities in a modern urban environment. He concludes that the success of the public housing programme has done much for Singapore.

Chapter 1

Public-housing policies compared

United States, ex-socialist nations and Singapore

Introduction

In a world of nations replete with instances of failure to meet the housing needs of their respective citizens, Singapore’s successful public-housing programme is one exception. The programme was initiated in 1960, a year after domestic self-government was gained from the British Colonial Office. Influenced by the social democratic ideology of its British-educated leaders, the newly elected government of the People’s Action Party (PAP) launched the comprehensive housing programme as a covenant with its recently enfranchised electorate. The task was entrusted to the new public-housing authority, the Housing and Development Board (HDB). Since then, the HDB has been given extensive powers in all development work – land acquisition, resetdement, town planning, architecture design, engineering work, and building material production – but not in the actual construction of the buildings, which is undertaken by private construction firms. It is also responsible for the allocation of flats and, until recently, the management of all aspects of the housing estates.¹ In other words, it is responsible for the total management of the public-housing programme, except for setting the sales and rental prices of flats, which is undertaken by the Ministry of National Development.

The programme began modestly, providing basic rental units for the poor who were living in overcongested urban shophouses and ‘squatters’ (settlements) at edges of the central business district. The latter areas were among the first to be affected by the physical rebuilding of Singapore, which eventually transformed the city into its present modern form (Chua, 1989a). Construction activities proceeded very rapidly. After only one year spent in setting up the necessary bureaucracy, the second year saw the completion of more than 7,000 rudimentary flats, and more than 11,000 under construction (HDB, 1961). A large supply of new housing has been sustained on an annual basis ever since. Then, in 1964, the HDB introduced a ‘home ownership’ scheme, in which ‘owners’ purchased a 99-year lease on their flat instead of ownership in perpetuity. The leasehold arrangement separated the flat from the land. Under this scheme, land is retained by the state in inalienable public ownership, leaving it free to compensate and resettle any lessee if or when redevelopment becomes necessary. After three and a half decades, the HDB has completed more than half a million flats and a massive volume of related facilities – such as commercial spaces, recreational facilities and light industrial estates – all within comprehensively planned new towns. Currently, more than 85 per cent of the three million population live in public housing, of which about 85 per cent is ‘owner-occupied’.

To extract the essential ingredients of the HDB’s success, we will now compare analytically the mixed state-and-market system of providing public housing in Singapore with two other systems of housing provision: namely, the relatively free-market system of the United States and the state-controlled economy of socialist nations. Notwithstanding the fact that the once socialist states of eastern Europe are currently in the process of restructuring and integrating their economies into global capitalism, the mode of housing provision in the days of socialism remains conceptually a system in its own right. As a model, it retains its heuristic value. Knowing why it failed may contribute significantly to the successful formulation of public-housing programmes elsewhere.

The Three Modes of Provision

The three public-housing programmes to be compared may be placed on a continuum with reference to the role of the market mechanism in their respective housing sectors. At one end is the United States, characterized by dominance of the market, with little government intervention (Hartman, 1983: 4) and government provision restricted to specific groups that are not adequately served by the market itself. At the other end is the ex-socialist nations, where the market mechanism was eliminated in principle, housing was ideologically instituted as a natural right – ‘not a market commodity; and its production and distribution should not be a means of unearned income’ (Szelenyi, 1983: 28) – and the state was ideologically committed to universal provision. Between these two ends is the credible notion of a mode of provision that reduces the role of the market without eliminating it and which aims at universal provision without raising it to the level of rights or entitlement. Such is the public-housing policy of the Singapore government. The following analysis will begin with the free-market strategy, followed by the socialist mode. Failures at these two extremes will serve to highlight the success of the middle path.

United States: Free Play of the Market

Housing for Americans has improved significantly since the Second World War, largely through a filtering-down process in which the government had at best a marginal role (Weicher, 1982: 27; Kain, 1983). Indeed, it is one of the most convincing cases for free-market provision of housing (Nesslein, 1988). However, even those who are enthusiastic about free-market provision readily agree that the poor remain inadequately housed (Nesslein, 1988: 102). Under the 1937 US Housing Act, the federal government had subsidized, via local housing authorities, direct construction of public housing.² Nevertheless, the total output of 1.1 million dwelling units in the forty years following the inception of the programme was marginal relative to the housing needs of low-income groups (Weicher, 1982: 34). In 1968, Congress set a target to build and rehabilitate, with public subsidies, 6 million dwelling units that were needed for low- and moderate-income families. This target was missed by a wide margin; even by conservative estimates, 3.8 million households remained in substandard housing a decade later (Weicher, 1982: 17).

Persistent relegation of the poor to substandard housing is a consequence of the US federal government’s dependence on the market to provide housing for the entire nation. In addition to an ideological commitment to a free market, the government’s reluctance to provide public housing may be due partly to negative experiences with conditions in public-housing estates themselves. To an American, the demolition in 1972 of the barely twenty-year-old, architecturally acclaimed Pruitt-Igoe high-rise projects in St Louis symbolizes all that is wrong with public housing. Three factors have been identified: poor quality, inadequate maintenance and the social climate of public-housing estates. These factors are, in turn, some of the consequences of financing policies and of restricting tenancy conditions to the lowest-income groups that are variously socially disadvantaged.

Financially, the federal government paid for the capital cost of construction, while local housing authorities had to operate the programmes from the rent derived. This was a viable arrangement as long as the housing units were fully occupied and rent could be readily collected from stable tenant households, which was the case from the late 1930s to the early 1950s (Meehan, 1979: 59; Wright, 1982). However, there was an intrinsic ideological weakness in the federal funding programme: ‘the prime goal of federal policy was to exclude from public housing anyone with enough income to obtain housing in the private market’ (Meehan, 1979: 23). Since income ceilings for eligibility for public housing were determined by rent levels, real estate interests, who were against direct public-housing provision, sought to ensure that minimum possible levels were used. Consequently, families with stable and above minimum incomes were forced out of public-housing estates, leaving behind only those who were unable to meet simultaneously their rents and daily necessities.³

Over time, public-housing estates increasingly became concentrations of the underclass: the black, the elderly, the female household head with children, the unemployed and the unemployable. Rent collection proved more and more difficult – indeed, impossible. Furthermore, until 1972, no effective operational subsidies were granted to local housing authorities, which had to survive on dwindling rent collection and rising costs. Under this income-cost squeeze, instead of being benevolent public-housing agencies, local housing authorities were forced to act like slum landlords: that is, to increase rent, defer maintenance and reduce services. The outcome was gloomily summarized by Meehan (1979: 35): ‘a ghastly landscape of mutilated buildings, broken glass, empty apartments, abandoned automobiles, litter and garbage; a wasteland hostage to the criminal, vagrant, truant, and street gang; a hazard to the passerby; and a nightmare to the resident’.

Ironically, such disasters did not occur cheaply. Without any statutes to govern land cost for public housing, or restraints on profits for the building trades – including tax exemptions on interests for public-housing-bond investors – public-housing estates were very expensive failures indeed. The various subsidies have been estimated to add up to almost US$6,000 per year for each unit of public housing through the 1970s (Weicher, 1982: 60). In spite of the cost, only a small fraction of target households were placed in public housing (Weicher, 1982: 62). This ‘failure’ intensified proposals for replacing direct provision by rent subsidies, in the face of a projected massive shortfall in rental housing stock for the 1980s (Downs, 1983).

In fact, a much larger rent supplement programme has always run alongside direct state construction. Details of the programme change with time, but in essence it requires the federal government to pay the difference between the rent which a needy family can afford out of its own income and the market rent charged by private landlords. Everyone who is involved in the production of housing obviously favours this programme (Weicher, 1982: 33)⁴ because it leaves all the profit-making opportunities for the real-estate industry largely undisturbed: that is, the market is free to determine land prices, cost of housing units and rent.

The effect of the market on the existing condition of rental housing in the United States can be readily observed. According to Kain, in the 1970s several market factors made home ownership more attractive to an increasing number of renters:⁵

Their shift to the owner market has reduced the demand for rental housing, making it difficult for landlords to raise rents enough to keep pace with higher operating and capital costs. The decline in real rents, moreover, has reduced the value of rental properties, inducing landlords to convert owner-occupied units. Record-high mortgage rates have now all but halted new rental housing construction … new construction will not occur until market rents reach levels that justify private investment, or until the government provides subsidies that reduce the cost or increase the profitability of rental housing.

(1983: 146)

What Kain describes is but the manifest effect of the structural contradictions between landlords and renters. Suppose, for instance, the potential yield of money on the capital market is 15 per cent per annum, and suppose that there is an abundance of low-income rental units in a particular city and that the rate of return is 5 per cent. Then, a rational landlord strategy is to reduce maintenance, milk properties of value, and actively disinvest, using the money so extracted on the capital market where it earns, say, 15 per cent. With declining maintenance, housing deteriorates in quality and eventually the worst units will be taken out of use – scarcity is thus successfully reproduced. Rent will gradually rise until the 15 per cent rate of return is obtained. ‘If tenants are politically weak, with rising rent eating into an already limited disposable income, low-income tenants can respond only by subdividing space with the inevitable consequences – overcrowding and slum formation’ (Harvey, 1983: 254–5).

The problem of housing for the poor was exacerbated by declines in rental-housing stock due to demolition, condominium conversion,⁶ abandonment and, most importantly, lack of new housing start-up. Arguably, gains made by the poor in the fifty years since the enactment of the first Housing Act by Congress in 1934 had been threatened by absence of new housing construction since the early 1980s (Sternlieb and Hughes, 1983). Subsequently, housing policies under the anti-welfarist Reagan administration led to a crisis in homelessness (Hartman, 1983: 1–3), which became a serious blight in every American city by the late 1980s (Rossi, 1989) and remains so today.

Given the underlying structural conflict, trying to solve the housing problem for the poor through rent subsidies appears misplaced (Kain, 1983: 147). Recognition of the structural conflict leads radical analysts to call for ‘decommodification’ of housing in America (Hartman, 1983; Achtenberg and Marcuse, 1983), which, as we shall see, has its own problems. For now, it should be noted that public housing failed in the United States not as a result of direct state provision, but because of (1) high costs of land and production due to profit maximization by all actors involved in the market-based economic organization of housing activities, and (2) restrictive allocation, which leads to concentration of the lowest-income groups, thus creating serious financial difficulties for local housing authorities.

European Socialism: Total Decommodification

Total decommodification of housing was formally instituted in eastern Europe after the socialist revolution. According to Szelenyi (1983: 45): ‘As it developed in the late 1940s, the socialist system was based on these principles: housing should not be market merchandise; therefore its rent need not necessarily be strictly related to housing quality; rent should be a very modest item of household expenditure; within the limits of economic growth, families should have a natural right to healthy, modern, self-contained housing, and they should receive it as distribution in kind, independent of their rent-paying capacities.’ In other words, the state was to assume universal provision of housing in order to reduce existing inequalities that it inherited as a legacy of its prehistory. Such a comprehensive position was consistent with socialist commitment to collective ownership. However, this ideologically motivated position was far from implemented.

Szelenyi points out that, for example, contrary to the scale of construction required by the stated policy of universal provision, total production of new housing in Hungary in the first half of the 1950s was far less than in the previous three decades (1983: 30). According to him, the reasons for the underproduction were fourfold. First, rent return was minuscule relative to capital resources committed to housing construction. Second, tenants who were allocated public housing were able to realize high proportions of savings and improve their levels of preferential consumption; in mid-1950s Hungary, it meant ‘eight to ten years ahead along the road to consumer security’ (Szelenyi, 1983: 34). Hence, once secured there was no motivation to move out of public housing. Third, without residential mobility, new housing start-up was constantly required to meet fresh demands, demands that were relentless because, in principle, everyone was entitled to decent housing. Finally, as rent was marginal, new constructions meant a constant drain on the national economy, leading socialist economic planners to see ‘housing as a “returnless expenditure”, a necessary evil to be minimized as far as possible’ (Szelenyi, 1983: 32). Thus industrial development, which generated ‘profitable’ returns, inevitably received priority in fiscal allocation.

As actual housing output was kept to the minimum, the proportion of public housing in the total housing stock kept decreasing (Musil, 1987: 27). Competition for the advantages of rented public housing was very high, rendering the bureaucratic mechanism for distribution vulnerable to pressures from different groups. The politically least influential were inevitably left out of allocation. Analysing the 1960s housing condition, Szelenyi found that half of the higher bureaucrats and salaried intellectuals lived in state rental apartments; on the other hand, half of the unskilled worker households had to finance their own homes with their lower incomes, private savings and interest payments on privately obtained bank loans. His conclusion is that in socialist countries, ‘[p]ublic policy thus provides that, on average, the richer classes get better housing for less money and effort, while the poorer classes get worse housing at the cost of more money or effort, or both’ (1983: 63).

There appeared to be two main causes for the housing inequality. First, low supply of state housing was unable to match demand. Evidence drawn from the 1970s in Poland, a period of relatively large supply of public housing, indicated that when supply was substantial, social status was a less significant factor than household demographics in housing allocation (Musil, 1987). To the extent that lower-income groups tend to have larger families, the implication is that with increased supply there is greater equality in allocation, even if basic structural inequalities still obtained (Musil, 1987; Szelenyi, 1987). Second, there was an absence of a market mechanism to tie quality of housing to tenants’ ability to pay. Hence, once allocated state housing at a nominal rent, a household would have no motivation to move unless it was to better housing at the same cost. Indeed, the Hungarian government accepted in principle that rent must reflect quality of housing from 1971 onwards, but did little to implement it (Szelenyi, 1983: 77). From the evidence drawn from Hungary and Poland, it should be obvious, therefore, that complete decommodification, as desired by radical American analysts, is likely to lead to consistent underfunding by the state in housing, resulting in scarcity and inequality.

Singapo...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Dedication
• Contents
• List of figures
• Preface
• Acknowledgements
• Introduction: some necessary conditions for a successful public-housing policy
• 1. Public-housing policies compared: United States, ex-socialist nations and Singapore
• 2. From city to nation: planning Singapore
• 3. Resettling a Chinese village: a longitudinal study
• 4. Modernism and the vernacular: public spaces and social life
• 5. Adjusting religious practices to different house-forms
• 6. A practicable concept of community in a high-rise housing environment
• 7. Public housing and political legitimacy
• 8. Nostalgia for the kampung
• Notes
• References
• Author index
• Subject index