At this year’s National Day Rally, Prime Minister Lee Hsien Loong announced that the Special CPF Housing Grant would be extended to middle-income families looking to buy bigger Housing Board flats. The move is a significant one, in my opinion, as it represents a fundamental shift in policy approach that takes us a step closer to being a more inclusive society.

The Government has always exercised fiscal prudence when it comes to social spending. This pragmatic approach is to encourage self-reliance.

However, the downside is that the low- to middle-income group has not been able to keep up with the pace of the globalised world, and some have fallen through the cracks.

According to official data, the median Singaporean worker experienced real wage growth of 5.2 per cent (including employer CPF) from 2009 to last year. The prices of new and resale HDB flats have gone up by 12 per cent and 45 per cent respectively during the same period.

Middle-income families could well be bearing the brunt of the increase in housing prices, as the low-income families receive a lot more aid from the State.

The Government has realised the problem and acted on it quickly. During this year’s Budget speech, a slew of measures was announced to meet the diverse housing needs of those who were previously sidelined. First-timer singles, expectant mums, parents with young children and Singaporean with foreign spouses all had their fair shares of the pie after recent tweaks in housing policies.

PLAIN VANILLA IS BEST

Our Singapore Conversation was also carried out for the public to rethink the role of public housing. However, housing is multi-dimensional, and it is almost impossible to come up with an ideal solution to help the new entrant without affecting the prices of existing homes.

This could explain why the Government still prefers plain vanilla policies over complex recommendations suggested by market players — such as selling new flats at cost-based prices minus land value, a longer minimum occupation period and selling flats back to the HDB at some predetermined price.

To me, increasing subsidies to home buyers is the right approach, as direct handouts can be easily understood by the general public, and the benefits are immediate.

The flexibility of allowing couples to purchase a bigger flat with extra help is also a big plus, as it removes concerns over not having enough space if they are planning for larger families.

SAVINGS SUBSTANTIAL OVER LONG TERM

Based on the example cited by Mr Lee during the NDR, if a family earning S$4,000 were to buy a four-room Build-To-Order (BTO) flat worth S$285,000, the S$20,000 extra grant translates into a monthly cash savings of S$91.

This might not be a big sum at a glance, but over a period of 25 years, the savings can still be substantial considering the amount of interest one could save by paying less on the principal.

The extra cash the new grant brings can be used to pay for school fees and textbooks for young children, or outpatient treatment for the elderly, and so on. It could ease the burden of many cash-strapped low- to middle-income families, who might be living from hand to mouth.

The Government is also using a shorter loan repayment period to calculate the affordability of a flat. Though a small move, it helps with the financial planning of the vulnerable group, allowing them more leeway to build up their retirement savings.

I remember our fiscally prudent Government was once criticised for lacking compassion and flexibility when responding to the needy, who might not meet all the criteria under various social welfare schemes.

But from what I see in this year’s NDR, we are heading in the right direction, towards a more inclusive society. Bit by bit, we should see these efforts bear fruit.