Factors Determining Increase in HDB and URA Car Park Charges

Mr Lim Biow Chuan asked the Minister for National Development what is the basis for deciding to increase the car park charges for HDB and URA car parks.

Our key principle is that car owners should bear the full cost of ownership and usage of cars. This includes the cost of parking cars. Hence, parking charges in our Housing and Development Board (HDB) estates are sized to cover the cost of building, operating and maintaining residential car parks. It would not be equitable for the government to subsidise the cost of parking, as this would mean that non-car owners are subsidising car owners. Today, about three in 10 HDB households own cars, that is, the majority of our residents do not own cars1.

While car park charges have remained constant for the last 14 years, costs have increased over this same period. Since 2002, core-inflation has risen by about 30%. The total costs of building, operating and maintaining HDB residential car parks have increased even more, by a total of about 40%.

The main increase in cost is due to: (a) rising overheads in the construction industry; (b) more capital expenditures in new and existing HDB car parks, such as lifts and roof-shelters at multi-storey car parks; and (c) additional repair works required to maintain an increasing number of ageing car parks.

Therefore, while HDB has largely been able to achieve cost recovery for its residential car parks in the past, this will not be the case going forward. From 2002 to 2015, HDB managed an average annual surplus of 4% of its average income, or $19 million, in its car park activity. But the fiscal position is worsening sharply. Without the revisions to car park charges, HDB expects to incur a deficit of 13% of average income, or $80 million this year. From next year till at least 2020, a deficit of around $100 million is projected every year. In fact, HDB expects to continue running a small deficit in the coming years, even with this latest increase in fees.

Most of the Urban Redevelopment Authority's (URA's) car parks are in the city centre and the parking charges are set higher than HDB car parks in order to appropriately manage parking demand. Despite this, without the fee revision, URA also expects to incur a deficit in its car park activity in the coming years. Hence, from a cost recovery point of view, adjustments have to be made to both HDB and URA car park charges.

In reviewing the parking rates, we have also differentiated the HDB season parking charges such that residents pay a lower season parking rate for their first car. Season parking rates for subsequent cars, or non-residents who use HDB car parks, are set at a higher charge to reflect the full cost recovery rate. While the revised parking charges will result in higher costs for car owners, it is necessary to do so to cover the costs of building, operating and maintaining car parks. It is only fair for car owners to cover these costs, because the alternative is for non-car owners to subsidise car owners. Right-pricing our parking rates is also in line with our aim to be a more "car-lite" society.