LAND ACQUISITION (AMENDMENT) BILL

LAND ACQUISITION (AMENDMENT) BILL: Order for Second Reading read.

6.44 pm

The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the main purpose of this amendment Bill is to revise the basis of statutory compensation for acquisition of lands under the Land Acquisition Act.

Overview of land acquisition legislation

The Land Acquisition Act has played a pivotal role in the development of Singapore. It paved the way for numerous major developments in Singapore, including HDB's new towns to house the majority of our population, the Jurong Industrial Estate which provided jobs for many, key infrastructure, such as the Changi International Airport and, more recently, the various MRT projects. These projects, which brought much benefit in the public interest, were made possible because they were developed at a cost which was affordable to the State then, through the limiting compensation provisions under the Land Acquisition Act.

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Singapore today has become more developed and urbanised. Land acquisitions now affect far more people than those carried out in the 1970s or 1980s. Today, many more Singaporeans own private properties. It is often that Singaporeans sink a major portion of their life savings and future earnings into their property.

Sir, we have not made major amendments to the Land Acquisition Act from the time it was enacted in 1966, except for the periodic updating of the statutory date to bring compensation value nearer to the current date of acquisition. The current approach on payment of compensation is based on the market value of the land as at one of the two dates: the date of acquisition or the statutory date (which is a date in the past), whichever is the lower. There are also restrictions in arriving at that market value. Furthermore, the market value cannot exceed a value based on the land’s existing use or the development baseline for the land, whichever is the lower.

The "whichever is lower" provisions in the Land Acquisition Act to cap the statutory compensation have been a source of contention. Over the years, we have sought to cushion the impact of this approach by periodically updating the statutory date and also through ex-gratia payments. However, after reviewing the Act, we have decided that these provisions are no longer appropriate in the current context. We are therefore amending the Act to provide for compensation at the prevailing market value.

Amendments relating to compensation

Let me now explain how the amendments relating to statutory compensation are being effected. This is provided for in clause 10.

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Firstly, we will remove the alternative dates for determining the statutory compensation and move away from using a past statutory date of 1st January 1995. Instead, compensation will be based on the market value as at the date of the acquisition of the land.

Secondly, the statutory compensation will not be limited to the existing use or development baseline of the land, whichever is the lower. Instead, the compensation will be based on the market value which a bona fide purchaser would reasonably be willing to pay for the land. This means the compensation can take into account, inter alia , the land’s permitted use and the potential value that is realisable under the Master Plan, subject to the prevailing planning requirements, and other factors such as location, tenure, restrictive covenants in the title and site conditions. In other words, this will be no different from how land would have been valued had it been sold in the open market.

Thirdly, the so-called two-year and the seven-year rules that limited the payment of compensation will be removed as they are no longer applicable. The two-year rule disregards the value of the improvements made by the owner of land within two years in contemplation of the acquisition. The seven-year rule disregards any increase in value that is attributable to infrastructural works done by the Government within seven years prior to the acquisition. So we think that is no longer meaningful or significant to isolate and quantify the increase in value due to such works as improvements made by the land owners are generally bona fide and Singapore is now well developed.

Finally, clause 10 also abolishes the special compensation for acquired land which is used as a burial ground and acquired land that is devastated or affected, directly or indirectly, by fire,

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explosion, thunderbolt, earthquake, storm, tempest, flood or any act of God. Such land, if acquired, will be assessed no differently from other acquired land, in line with the move towards market value compensation.

Sir, I beg to move.

Question proposed.

6.52 pm

Mr Alvin Yeo (Hong Kah): Mr Speaker, Sir, I rise in support of the Bill.

Since its implementation in 1966, the Land Acquisition Act has served as an essential instrument for our Government and its agencies to acquire land in Singapore. The land acquired has enabled our Government to develop the necessary infrastructure to support our economic and social development and transform Singapore into a world city. Many Singaporeans understand the need for land acquisition and have accepted the principle that on certain occasions, some land owners will have to forgo their land in return for compensation for the common good. However, the Act has attracted its share of criticism for being unfair, outdated and giving the Government unchecked powers. Sir, I wish to address these common criticisms in the context of the Bill.

Sir, the chief criticism of the Act in the past has been the basis for compensation and how that was based on the lower of two values, including the value taken at the particular date, the statutory date. The proposed amendments in the Bill do away with the alternative of the statutory date in determining the compensation for land acquired. This is a major breakthrough towards aligning compensation to how

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the market will value the property. This will ensure that land acquired will be compensated based on the market value as at the gazetted date of acquisition. This move will boost the confidence of existing and future land owners in Singapore, be they occupiers or investors.

As our population increases to possibly as much as 6.5 million, there will be further demand for land for future developments. This is particularly so if we want to construct infrastructure necessary to support such a population, in particular, to build a comprehensive transport network of trains and bus services to serve the greater needs of our population. Some of these new developments will require the acquisition of privately-owned land. So it is heartening to note that, with effect from 12th February 2007, affected owners will get compensation based on market value as at the date of acquisition. This amendment will remove a major criticism of the Act it made in the past and bring compensation in line with market conditions. This is fair and just to affected land owners and will increase public and investor confidence in not just the property market, but in our country overall.

In relation to outdated provisions, Sir, the previous regime had several technical provisions which were difficult for many land owners to understand. In this regard, the abolition of the two-year and seven-year rules regarding improvement works made by an owner and infrastructure works are value attributable to infrastructure works. The abolition of those rules is welcomed. This will not work to the disadvantage of the land owner as market valuation will take into consideration all of the value that is attributable to such works or such improvements. This is likely to increase the compensation to affected parties, which is surely good news for them.

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In relation to the criticism about unchecked powers, section 5 of the Act provides that the State may acquire land for any public purposes or, in the opinion of the Minister, it is of public benefit, or public utility, or in the public interest, or for any residential, commercial or industrial purposes. These definitions or purposes for compulsory land acquisition are wide and necessarily so, since not all users can be anticipated in the Act. However, the width of the purposes means we need to ensure that there are proper checks and balances to prevent mistakes or even abuses.

One criticism that has been made of land acquisition in the past is that acquired land parcels were not developed for many years after acquisition. One such example was brought up at Question Time, although I must disclose my interest in that my firm acted in that case for the company concerned.

Sir, the Government must properly time the acquisition of land in accordance with the proposed development programmes under the URA Masterplan. Land should only be acquired when needed for development, as stated in the Masterplan, and not earlier or otherwise. In this way, the Act will not affect more than it is necessary the property rights of owners and give rise to any allegation that the Government agencies are being cavalier or high-handed.

Further, to avoid disruption to parties affected by land acquisition, the Government agencies concerned should try to give sufficient notice of intentions to acquire and allow sufficient time for affected parties to relocate. One suggestion is to consider land acquisition in the first year of the release of the URA's five-year Masterplan. Upon serving acquisition notices, the Government agencies can provide a grace period of perhaps two or three years for affected parties to relocate. Thereafter, the proposed

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development can proceed within the five-year period covered under the Masterplan.

Sir, I accept that it may not always be possible or practicable to adhere to such a schedule and to provide such early notice for acquisition. But in those cases, the Government agencies should be prepared to be flexible in allowing more time for affected parties to relocate. Sometimes, there are complaints that affected parties are served very short notices and required to vacate the land within a very short period of time, thereby causing them loss either through lost business or relocation cost. There may be very good reasons why such a short notice of period can be given, but one should try to avoid or minimise such situations from arising.

Sir, as land acquisition has a drastic impact on property owners, the State must do its utmost to respect the property rights of owners and exercise due diligence to ensure that acquisition is really necessary for the good of the country and not simply because it is more convenient for the agency concerned. In this regard, I would propose that the Ministry set up some process or mechanism whereby Government agencies should explore all possible options when considering an acquisition to build amenities for public purposes. Where possible, Government agencies should consider in-fill development on vacant sites in the city areas or upgrading of existing infrastructure as alternatives to acquiring private land.

Sir, the Government needs to be transparent in its feasibility studies for land acquisition and development and to provide information to convince the affected parties of the need for compulsory acquisition. This will reduce the unhappiness of affected parties and enhance the Government's image of being transparent and fair. Overall, I do believe the amendments take us closer to that ideal.

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Sir, I support the Bill.

Mr Alvin Yeo (Hong Kah): 6.57 pm

Ms Indranee Rajah (Tanjong Pagar): Mr Deputy Speaker, I wish to speak in support of the Bill. Before I do so, I also wish to declare my interest as a practising lawyer. In some cases, I do land acquisition cases and it is because of that, that there are some points which, I think, may be of interest to raise.

I would like to touch on three points. Firstly, the main amendment to the Act which changes the date to which compensation for acquired land is to be taken, from certain specified dates to the market value as at the date of acquisition. Secondly, it is a legal thing, what is known as Pointe Gourde principle, which I will explain later, and whether it should be applied in the reverse. And, thirdly, the impact of the Planning Department's practice of zoning road widening lines as road zones and how this impacts on land acquired under the Land Acquisition Act.

First, market value as at the date of acquisition. Under the current Act, the owners of land whose property is acquired do receive compensation, but that compensation is pegged to certain statutory dates. And these were dates which were really not reflective of market value. The most common one will be for land acquired on or after 27th September 1995, the compensation will be taken as at the market value as at 1st January 1995.

Whilst this device of pegging compensation to a fixed statutory date far back in time may once have served the purpose, it is now anachronistic and out of touch with the reality of property

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prices, especially where property values have risen over the years. Under the current Act, the owners of land acquired on, say, 1st December 2006, will be compensated on the basis of the market value of the land as at 1st January 1995. This makes no sense, and, in some cases, can operate very inequitably. I therefore welcome and fully support the proposed amendments to the Act and, in particular, the amendment to section 33(1) which changes the basis of compensation from market value as at a fixed rigid statutory date to instead market value as at the date of acquisition.

The date of acquisition under the proposed amendments would be the date of the Gazette notification under section 5(1) of the Act, which is when the President declares that the land is required for a public purpose specified therein,

or the date of the Gazette notification under section 3(1) of the Act which specifies that the land is likely to be needed for public purpose under section 5(1), and then where this notification is actually followed up by a declaration under section 5.

The effect of these proposed amendments effectively allows the market value to be taken at a time when it is publicly made known that the land is to be acquired, and it is therefore a much more accurate reflection of what the owner would be able to get from a willing buyer but for the acquisition. This is subject to qualifications which I will touch on shortly. This is, of course, much more equitable.

I am also happy to note that the proposed amendments to section 33(5)(e) of the Act include a deletion to the reference to the development baseline. Section 33(5) of the Act sets out various things which can and cannot be taken into account when deriving the market value of the acquired land. When I last spoke in this House on the Land

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Acquisition Act, I had made the point that the current wording which attempts to define the purpose of land use, the reference to the development baseline in the Planning Act, was so convoluted and tortured that was guaranteed to give an instant migraine. I am very pleased to note that the Ministry of Law appears to have taken note of this and deleted that reference. The current wording is much better, simplified and it expresses the intention in plain English, which is good news for all practitioners and landowners whose land is acquired.

Having said this, I need to touch on two areas which I believe require either legislative amendments or some change in practice. The first of this is the Pointe Gourde principle. The Pointe Gourde principle is a common law principle which simply means this. It says that when the land is acquired, you must disregard any increase in the value of the land which arises as a result of the acquisition. That is fair, because the landowner should not get a windfall. If, for example, the land is acquired because a MRT station is going to be built nearby, then immediately that would increase the land value, and it is not right for the landowner to get a windfall as a result of that.

Under the common law and in other Commonwealth jurisdictions, if there is a decrease in the value of the land as a result of the acquisition, then you disregard that decrease as well. Otherwise, the landowner is prejudiced. However, in Singapore, the way our courts have interpreted the Land Acquisition Act is that it upholds the principle that you disregard any increase. This is known as positive Pointe Gourde , but it has not included the fact that you should disregard any decrease. And this was actually held in a Court of Appeal case of Ng Boo Tan against the Collector of Land Revenue in a split decision by the majority of the Court of

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Appeal with a strong dissenting judgment by Justice Chao Hick Tin, as he then was.

The majority of the Court of Appeal felt that the wording of the Act conflicted with the negative Pointe Gourde principle and, on that basis, they excluded the negative application of the principle. They also felt that if any changes were to be made, they would have to be made in Parliament. The majority of the Court of Appeal said:

"Neither are we swayed by counsel for the appellant's corollary argument that undue hardship has been visited on the appellant in this case. We do not find hardship alone sufficient to justify the adventurous restatement of the law that the appellant invites us to make. The argument of hardship in this instance is more appropriately made in Parliament and not in the courts."

So, in the light of that, I am making this argument now.

Most times, people would not know about an intended acquisition until it is gazetted. So, when land is gazetted and we take the market value at the time of acquisition, there is no problem because the public did not know about it before. Under the proposed amendments, that is fine. However, we will occasionally have a case, like the Ng Boo Tan's case, where the scheme or the planning behind the acquisition was known in the public domain before the land was acquired, with the result that the value of the land decreased even before the formal acquisition. And what the appellant had argued in that case was that because it was known in the public domain and because the value of the land had decreased as a result, and at the time of acquisition, when we take the market value, the market value was already lower. The appellant argued that we should disregard the decrease and we should assume that there was no decrease and we just take the market value as if it had not been known, as it

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was in that case, that a road was going to run through the property, and the Court of Appeal held that well. In other Commonwealth jurisdictions, it may be disregarded. But under the current wording of our Act, the drop in value should not be taken into account. Basically, the landowner lost out in that case.

What I think we ought to do is to make a legislative amendment to allow for the application of the negative Pointe Gourde principle. That may not be possible at this particular reading of the Bill but, hopefully, this is something that the Ministry of Law can look into.

The second point I wanted to raise was the application or the impact on land acquisition, of the way the Planning Department zones strips of land for road widening. I appreciate that this may actually be more a point for the Ministry of National Development and the Planning Department and I am happy to raise it with that Ministry, if need be. But I have encountered this in the context of land acquisition and therefore thought that it should be appropriate to raise it here.

The problem arises in this way. In many cases, land was purchased, let us say, back in the 1960s or 1970s. The way the Planning Department provided for roads in the event of redevelopment was that if you had a piece of land, they provided for a road widening line. The land would still be zoned residential, commercial or mixed use with a road widening line running through it, so that whoever bought it would know that, in the event of redevelopment, it would be set back and a road would run through it.

What happens somewhere along the way is that the Planning Department changed the practice. And instead of drawing road widening lines, they zoned

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the strip of land for "road". The moment it is zoned as "road", then any potential buyer looking at it is going to give it a zero value for that strip. And in the context of land acquisition, because in land acquisition, zoning is one of the factors we have to take into account in determining compensation, and we must look at the market value just before the land is acquired. If there is a strip of land there which is zoned for road, that basically means that that strip is worth zero. And for compensation purposes, we have got to exclude the value of that strip of land.

I suppose the Ministry of Law's response to this is, "Well, that is the basis on which a willing buyer is going to buy from you." This is at the point he buys it, assuming that there has been no acquisition. The difference is this. In some cases, the willing buyer may feel that if he is not going to redevelop, he will have the use of the land with that strip. So he may be still willing to pay for that strip even though it is zoned "road". But in the case of land acquisition, we cannot, because it is frozen at the time of acquisition, and then we must take into account the zoning requirements. And if that strip is zoned "road", we have to give a zero value to it.

Sir, I hope that something can be done as far as road zones are concerned, whether under the Land Acquisition Act or through the practice of the Planning Department, as I feel that that would be a fairer basis on which compensation to landowners can be calculated.

With that, I support the Bill, Sir.

7.10 pm

Ms Ellen Lee (Sembawang): Mr Deputy Speaker, Sir, I applaud the Ministry of Law for amending the Land Acquisition Act to enable the Government to pay

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market rates for all properties acquired under the Act after the Bill becomes law.

This is indeed a laudable move and long overdue. Under the amendment Bill, the compensation payout will factor in the property's location as well as improvement works done to the property by the owner and upgrading works surrounding the property carried out by the Government. Previously, such works were not considered if they were carried out within two years by home owners and seven years by the Government.

Besides pegging compensation for land acquisition to market value, the Ministry of Law has also abolished some arcane provisions in the current Land Acquisition Act. These seek to reduce compensation of acquired land that is devastated or affected, directly or indirectly, by fire, as well as acquired land used as burial ground. Previously, properties affected by fire were compensated at one-third their market value, as some owners had resorted to arson to evict their rent-controlled tenants. Given the new move, any land will be assessed no differently from other acquired land. With all the unhappiness caused by the current Act, particularly the mismatch of when the date on which the compensation sums should be assessed, the new changes are definitely a welcome change.

Sir, we have a Government that has been seen by many to be very rich and can afford to pay the market value of the land that is acquired for State use. Further, many people deem it right that if the Government's intention to acquire land is ultimately to sell it to the developers for commercial, residential or other uses, then the Government should not be the only one to profit from the astronomical sums it collects from the developers through development and other charges while it only pays less than adequate compensation based on unrealistic figures pegged at a time when

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the property market was at the lowest. In the past and even now, these compensation sums are often not enough to repay the mortgage and other loans taken out by the owners, the cost of relocating home and business and what money can never compensate - the loss of clientele, business goodwill built over decades, feng shui and other sentimental values. The land or property owners who are affected by the acquisition should not only be paid market rate, they ought to be paid for the loss of business caused by the disruption or premature demise of their businesses and the loss of an environment that they have sunk their roots. Although this amendment may indeed lessen the grievances of property owners over valuation prices, it would not necessarily make them happy to be told to leave and set up a new home or a new business elsewhere. Past unhappy settlements, the most recent being the case of Hock Kee House in Paya Lebar acquired for the Circle Line construction by the Singapore Land Authority, could certainly be avoided in future.

Sir, I also wish to emphasise that, if acquired, the land should be developed quickly for the stated purpose, as in the Hock Kee House case, and not left vacant for several years as in the case of fire or other sites acquired but somehow "forgotten". Doing so would serve to convince people that the land was indeed acquired for a reason and not to deprive an otherwise thriving business, or a family business, or demolition of a family home, or newly acquired asset.

Sir, the Act must send a correct signal to the ground that the acquisition process is indeed transparent and fair. For example, we are aware that the Government has plans to build more MRT lines, roads and expressways in the future. Although these new land acquisitions are likely to be on a smaller scale than compared to those done in the 1970s and 1980s, there would still be

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people affected - be it business premises or homes/houses. I hope the Government takes this opportunity to demonstrate that the acquisition process is indeed a fair and transparent one. This is crucial, as the Singapore Land Authority had previously said that it was unable to reveal the areas earmarked for acquisition.

To the individuals who will be affected in future, I hope the Government would ensure that ample notice is given to affected landowners and more time is given to them to relocate before they surrender the affected land to the Government. Further, the process for landowners to appeal all the way to the Appeals Board should be simplified so that there is no unnecessary waste of time and money. As the acquisition is not an "act of God" but the act of the Government motivated by long-term public interest, the sacrifice of the affected landowner should be recognised and compensated adequately. But what is adequate compensation?

Sir, Singapore is not the only country to practise fair acquisition. Nevertheless, I propose that we examine other countries' acquisition actions, such as those in Hong Kong and Australia, and see how we can learn from their experiences. In Hong Kong, when private land is acquired in the public interest, usually to implement public works projects, it may be acquired

either by negotiation or by resumption under the relevant ordinances, which provide for payment of compensation based on the value of the property and for business loss, at the date of acquisition. The Lands Department was also involved in the resumption of land for implementation of urban renewal projects undertaken by the Urban Renewal Authority in Hong Kong. During 2003, statutory compensation totalling HK$65 million was paid to owners of 60 resumed properties affected

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by 11 urban renewal projects. In a situation where agreement cannot be reached on the amount of compensation, either party can refer the claim to the Lands Tribunal for adjudication. Apart from statutory compensation, there is an alternative system of ex gratia zonal compensation to provide a simplified compensation procedure and early payments leading to land resumption in the New Territories.

Unfortunately, paying the landowners market value is not always possible. In fact, in some countries, the compensation often runs into difficulties. The problem arises because before the land is developed, its price is low. After it has been developed, the price goes up. The developer is often seen to make huge profits from resales. Neighbouring plots of land also see a sharp increase in price due to the effect of the land development. This sharp increase in land prices makes the previous landowners feel they have been short-changed. In India, West Bengal, the government has addressed this problem by paying 30% above the market rate. Even in China, land is not private property and people merely have 'land use rights'. China is grappling with the compensation problem which is currently based on previous income from the land. The standard compensation is 4-6 times the average production value of the land in the past three years. There is no land market which can determine a market price. Strictly speaking, it is not "land acquisition" but "compulsory land resumption" because the government is the owner of the land and merely taking back the land under "land use rights". In Britain, the compensation is based on the value of the land to the owner and this has difficulties because the value, say, of an ancestral home may be above the market value. The fair price thus remains an unresolved question. Ultimately, land is like a financial asset whose price moves as the expected returns from it

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change. The way the price of shares changes when the prospects of a company change, the price of land changes when the prospective rental revenue stream from that piece of land changes. This depends on the use to which it is put. Forest land owned by tribes, as in the Tata Steel project in Orissa in India, had a low expected income from it and thus each parcel of land has a low market price. Agricultural land owned by farmers in Haryana has low productivity. If the land continues to be used for forestry or agriculture, its market price would be low. Yet, when the same land is put to a different use, the cash flow from the land changes. This different use, and the enhanced valuation, is possible only when the land is consolidated.

Sir, when the acquired land is not for public use such as road widening but for commercial enterprises, I hope the Government can be equally transparent. Land acquisition for commercial projects is not new and has been controversial all the world over. Whether in an effort for development of an underdeveloped area in a poor country, or the revival of a dying city centre in a rich country, governments have been involved in land development projects all over the world. In an extreme case, government may use force in order to get existing landowners to sell their property. Sir, the issue of land acquisition by the State for private use has raised questions in many parts of the world. For example, the Orissa government was reported acquiring 1,135 acres of land to hand over to a Korean steel company Posco. This was reported in the Indian Express on 2nd August 2006. Regardless of the negative (or even extreme) examples highlighted in some parts of the world, and I think the recent ones being in China, I have great faith in our Government in ensuring a fair system of compensation in land acquisition based on fair market value.

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Sir, with that, I support the Bill.

7.19 pm

Mdm Cynthia Phua: Mr Speaker, Sir, I fully support the changes proposed in the Bill, in particular the valuation of land acquired which is to be based on the land's market value as at the date of acquisition. I must applaud the Government for taking this big step forward in compensating the affected landowners.

In 1960s, the Government felt it necessary to acquire pieces of encumbered land in order to assemble them into large plots for implementation of comprehensive urban renewal plans. Thus, the Land Acquisition Act (1966) became operational on 17th June 1967. During the years of development in Singapore, this Act is one of the best used and the most controversial Act, and till today, from the political standpoint, the impact can still be felt in some quarters.

Market value

To ensure that the market value at acquisition is relevant to the affected person, the process of acquisition must be swift as the property cycle moves very fast, whether it is in the upswing or downswing cycle. The date of notification, Gazette and acquisition, and compensation must be done within a short period of time so that affected persons could source for alternative accommodation, whether it is for business or for housing. Any slight swing in the prices would affect the affordability because of the size of the property and values.

Definition of public use

This Act contains a few noble and controversial phrases which empower the State to acquire land for any residential,

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commercial or industrial purposes, with qualifying phrases such as "of public use, public benefit and public utility". These are powerful phrases without any definition in the Act. When kampong houses were acquired and land redeveloped immediately for public housing and public roads, the definition of "public use and public benefit" is clear to the affected people and to the general public. However, in the recent Teng Fuh Holding's court case, the land at Geylang Road was acquired for general development in 1983 and is still undeveloped today by the Government, as reported by the Business Times on 13th March 2007. The Court was quoted as saying that "in such prolonged inaction if not explained could constitute an arguable case of reasonable suspicion that the land was not needed for general development when acquired in 1983". "The only change in this case seems to be converting an owner into a tenant", as stated by source close to the deal, as reported again in the Today 's newspaper on 17th October 2005.

Another occasion when the land can be acquired under "public use and public benefit" is when it is done for urban conservation. Urban conservation began in the 1980s. The Government initiated active maintenance and restoration of select shophouses. In August 1987, 38 restored shophouses (27 parcels of land) in Tanjong Pagar were listed and sold for designated commercial uses. A new form of conservation was also introduced at China Square Centre and Far East Square. Building blocks were designated for conservation with 61 shophouses compulsorily acquired and sold and restored at developers' expense.

Tras Street residents were compensated and asked to move out under compulsory acquisition. The houses were restored and upper floors become

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offices. Today, the area becomes an eatery and a club pubbing belt.

Fundamentally, there was nothing illegal about the way Government did the acquisition. The place was under Rent Control. It would have deteriorated if the Government did not step in. At least the gangsters in Duxton Road area were also cleared out. However, the grouse from the former tenants remained that they were paid pittance, given up their premises for Government to make the millions.

I would like to urge the Ministry to take another bold step, besides the demolition of the various dates of determining the amount of compensation and change to the market value at date of acquisition, to also clearly define these controversial phrases in this Act, "the public use, the public benefit and the public utility". Should urban conservation purpose be part of this definition of "public use"? This would give further clarity to the Act and the intended purposes of the Act.

Removal of fire provision in section 33(2)

There is one other section in which one of my residents has highlighted, and that is to consider the wider implications on the proposed removal of the fire provisions in section 33(2) of the Land Acquisition Act. The concern is that in removing this section, it may have repercussions on the URA's efforts to conserve and protect our heritage for the future generation. This provision is particularly important in view of the fast declining quaint and beautiful colonial homes, many of which have great historical and architectural merits for conservation. These properties are our national treasures and must be protected for our future generation.

At present, there is no law to compel their owners to take care of these

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buildings or houses. To remove this section without putting other regulatory safeguards in place to promote urban conservation could lead to a situation where history would become just a rubble of broken bricks. Also, some of these historically important private homes could be the targets of mischief, especially when they are unoccupied, or others degenerate into eyesores.

A case in point about a house, which has some merits for conservation but was eventually lost, is the one at No. 3 Allenby Road. The house was left abandoned and it was mysteriously burnt down. The culprits have not been apprehended. However, the end result is a building which in 2004 was deemed worthy of conservation by the URA was lost. The owner's surveyors eventually declared it unsafe and it was demolished.

With the above explanation, although modern conservation is important, what I would like to suggest is whether the Government can consider giving owners of properties/buildings with historical merit, to have some incentives for them to upkeep these structures, if possible, to the standards of their glorious past. These buildings may have been handed down by their forefathers and over the years the beneficiaries may, because of differences of views, eventually decide to sell them for redevelopment. We need to weigh the views of these owners and that of the conservationists. Older buildings require more maintenance. Restoring them to their former glory may be possible, but probably at a high cost. Then there may be the push and pull factors where there is no consensus of views among family members who own the property.

I understand that one building in which a group of conservationists has been calling for its restoration is at No. 23 Amber Road. Built in 1912, it is the only residential building here designed by

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Regent A.J. Bidwell. He was a colonial architect who had designed such other buildings as the Victoria Memorial Hall, Raffles Hotel, Teutonia Club (currently Goodwood Park Hotel) and Stamford House, among others. I must declare I am not a part of this movement to call for the preservation of this house in Katong, but what I want to say is that there should be incentives for owners of such buildings, if they choose not to sell them, to be compensated for preserving them.

In doing so, the Government would thus be encouraging these owners to maintain them so that our future generation will not be deprived of a piece of our colourful history.

Prof. Jayakumar: Mr Deputy Speaker, Sir, I thank the Members for their comments and for their support of the amendments in this Bill. They have also raised certain concerns and questions. Sir, the hour is late but, since some of the points that they have raised are important, I think it is only right and proper that I address them. But let me admit, at the outset, that land acquisition is unpleasant. No one would like his property acquired, whatever explanation you give and whatever compensation is awarded.

We can look at the practices in other countries such as Australia, UK, India but, at the end of the day, I think we have to remind ourselves of our own context and the realities in Singapore and that context is that we are not talking about a large country like the US, Australia, where you have large tracts of land where the approach to acquisition could perhaps be different. We are one of the smallest countries in the world - we have 704 square kilometres - and we will continue to be so. Therefore, land in Singapore is, and always has been, a special case and very few countries faced with such land scarcity and with such high density of population have within four decades had

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such success in developing such a small country successfully for industrialisation, public housing for the majority of our population,

facilities for schools, parks and other recreational amenities, First World class quality of airport, port, and so on. All these would not have been possible without the Land Acquisition Act and policy and without far-sighted planning policies. This is why I said, in my speech, that the laws and policies behind the land acquisition have been pivotal in our development.

Can we do without the Land Acquisition Act? No. Can we reduce the hardships and rigours of the land acquisition? Yes. And we will continue to see how we can do that. That is in fact one of the purposes of this amendment which we are bringing to Parliament. With that backdrop, let me try to deal with the specific issues which have been raised.

Mr Alvin Yeo and some of the other Members expressed the view that we should try to explore all possible options before acquisition, that the Government should also be more transparent in its study for land acquisition and development. Other Members also echoed the same point. While we will see how we can be more transparent, I think I have to stress that for obvious reasons, we will not be able to make known acquisition plans in advance of the actual acquisition. If we do that, it may either lead to a depressant effect on the value of the property and the owner will not be able to transact or, worse, it may lead to wild speculation which may destabilise the property market.

Therefore, our practice has been to serve notice when the land is acquired. This will enable the decision on compensation to be based on the market value of the land at the time of the

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acquisition. And as I mentioned during Question Time, as far as checks and balances are concerned, in my reply to Mr Siew Kum Hong, all proposals for land acquisition are carefully considered and, in fact, every proposal for acquisition of land has to be submitted to the Cabinet and has to be approved.

Ms Ellen Lee and Mr Alvin Yeo also asked for more time to be given to affected owners for them to relocate before they surrender the affected land to the Government. I think it is a valid point. Where acquisition is needed, sufficient time is given to the landowners to relocate. Owners are generally given six to 12 months to relocate for infrastructure development cases and even a longer duration of three to five years where the land is required for comprehensive pre-development. Owners can, of course, in some cases, offer to surrender the properties any time before the deadline and full compensation will be paid. Where the construction schedule permits, the developing agency will also accommodate requests for a slightly longer time for relocation. So we will consider the case and try to accommodate.

Mr Alvin Yeo and Ms Ellen Lee have also emphasised that the acquired land should be developed quickly for the stated purposes and not left vacant for several years so that the acquisition process is indeed fair and transparent. I think Mr Alvin Yeo mentioned the Teng Fuh's case, and Mdm Cynthia Phua also did. Perhaps, they were not here during Question Time when I had to answer two Questions from Mr Hri Kumar and Mr Siew Kum Hong, which touched on this matter, and I gave the explanation as to why, in some instances, it will not be possible to synchronise the acquisition of land with the redevelopment of the land, although that is ideal. But sometimes, this ideal is not always achievable for the many factors which I spelt out during Question

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Time, and I hope that Members will, in the interest of time, not require me to restate those points. But let me assure them that my Ministry will liaise with the other agencies to better coordinate the timing of acquisition and redevelopment of the acquired land.

Ms Ellen Lee cited other countries' practices, with respect to compensation payments. She has highlighted that some of the countries pay beyond market value, such as paying compensation based on future loss and paying for business loss. If the zoning or other planning requirements in the Masterplan are such as to allow for higher or more intensive land use, compared to the existing use of the land, at that time of the Gazette of acquisition, then, yes, the higher or more intensive land use is taken into account when valuing the land under the revised Land Acquisition Act. But any uses beyond the Masterplan zoning or other planning requirements would not be considered. And this is because that would be speculative and conjectural as to what could be permitted on the site in future, and that would not be in line with the payment of compensation based on market value which a bona fide buyer would reasonably be willing to pay for the land. Also, I should say that it is not the policy or intention to compensate for business loss or loss of goodwill, because loss of goodwill of a business is usually due to a combination of many factors. It could be due to a downturn of the economy, business management strategies, and not solely due to the relocation caused by the acquisition. So it is a very difficult set of factors to assess business loss and loss of goodwill.

Let me turn to the points raised by Ms Indranee Rajah on road lines and also points about negative Pointe Gourde . She raised this point in 2005 which my colleague Prof. Ho Peng Kee answered. I would ask her not to give up, even though my answer may not be satisfactory for

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her. As she pointed out, there is a positive Pointe Gourde principle and negative Pointe Gourde principle. The Land Acquisition Act gives effect to the positive Pointe Gourde , why not to the negative Pointe Gourde principle? We have not included this change in this set of amendments because, after review, I feel that there is good reason for maintaining this position. Let me explain.

Firstly, we are moving to pay market value compensation. Therefore, even if land is not acquired, all these factors would have been taken into account in the private transaction by the willing buyer. So if there is depressant effect on the basis of the road line, or whatever, then that would have been what the willing buyer and willing seller would have transacted in the open market, and we are moving to that basis of compensation. Secondly, it can result in other landowners claiming for compensation even if the land is not acquired, if we amended the law to require the Government to make up for the loss of value under negative Pointe Gourde . Thirdly, I want to make this point. As far as I know, and I stand corrected if I am not, in other countries that recognise the negative Pointe Gourde , their Masterplan basically reflects the existing use of the site. In Singapore, on the other hand, we have adopted a forward-looking Masterplan regime where the Masterplan reflects the long-term planning intention for the land. Hence, the Masterplan shows both the upzoned and downzoned land use.

Moving on, the primary objective of the Masterplan is to guide the development of land by showing the land use intention for all lands in Singapore. Hence, if the land is required for an approved road scheme, it will be zoned as such in the Masterplan. The zoning of land for a particular use is guided by this objective, and not by valuation considerations. So if a land site that is zoned "road" is acquired, it does not necessarily result in

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a nil or nominal compensation being awarded. The compensation amount payable for each property will vary according to the physical attributes of the property and the specific facts of each case. Where a strip of land is acquired from a larger parcel for road widening, the statutory compensation will take into account the severance damage from the part-lot acquisition if the damage can be substantiated.

The Land Acquisition Appeals Board, as I understand, has used the before-and-after method to determine severance damage, in other words, the compensation is derived from the difference between the market value of the entire lot before acquisition and the market value of the remaining land after acquisition. Hence, the final compensation amount may not be nominal. But where there are cases of hardship caused by the acquisition, then let me say that the Government will pay ex gratia on a case-by-case method.

Mdm Cynthia Phua asked about the definition of "public purpose" and whether urban conservation can be considered as for "public use, public benefit, public utility". I think she was concerned about what she calls "controversial phrases" like these and whether we could be more specific in defining them. I think it is generally accepted by the courts that such expressions are not capable of precise definition. So the courts have largely approached the matter in a common sense way, based on the context and circumstances relevant at that time of the cases concerned. Even countries with large areas of land, such as the United States, the courts there would define such concepts very broadly. If that is so, then what more in land scarce Singapore? I think this is a very sensible approach as I believe it is self-evident as to what can be public use, public benefit

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and public utility. It can never really be cast rigidly in stone. Society needs will change over time and it is impossible to enumerate all the situations that would fall within the terms of "public use", "public benefit" and "public utility". But one thing I want to make clear is that the term "public purpose", "public utility", and so on, cannot be allowed to be used for compulsory acquisition for the personal interest of a particular person.

Mdm Cynthia Phua also commented whether it would be controversial and whether urban conservation can come under public use or public benefit. I would argue and persuade her, if I can, that urban conservation must clearly be considered a facet of urban renewal. In fact, that has been the hallmark of Singapore's development. Urban renewal is not just about conserving individual shophouses, but also upgrading of public facilities and infrastructure in a precinct. Urban renewal, in fact, has been the major hallmark of Singapore's urban planning.

Finally, she touched on the fire site provisions. Some points she made in connection with that, I will have to defer detailed consideration to my colleague, the Minister for National Development, at a later date.

But in so far as the Member's points touch on the fire site provisions and why we cannot use it for the purposes of conservation she mentioned, let me explain first why we deleted the fire site provisions.

Sir, the Government does not acquire private land because it is gutted by fire per se . This is so, regardless whether the fire is due to an act of God or deliberate arson. The Government will consider acquisition only if there is a public purpose for which the State needs that land. In the past, large tracts of squatter private land which were devastated by fire were acquired. Why? Because they were required for the development of

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public projects like new towns and housing. The legislative intent behind the fire site provisions, which we are now removing, was clearly explained in Parliament before. Should the land be required, it was to prevent landlords from enjoying the benefit of increased land value caused by the devastating fires that cleared their land of squatters and tenants, especially those protected by the Rent Control Act, as Mdm Cynthia Phua mentioned. That was so when Singapore was rapidly undergoing urban renewal in the 1970s and 1980s and, with the abolition of rent control, the justification for the provision is no longer valid.

That is the background. But for the Member's point as to whether we should retain this because of conservation, I think that would not be really proper because it would be retaining that provision now to serve an objective that is outside the scope of this Act. In any event, those who commit arson would already be facing heavy sanctions under the Penal Code, because it is a criminal offence. And with the move to pay market value for acquisition of properties, properties which are affected by fire should be assessed no differently from other acquired land. I hope my colleague does not disagree with me later on.

As to what the Member said about conservation efforts and incentives in relation to land acquisition, as far as I understand, since the 1980s, the Government, through the URA, has made concerted attempts to progressively identify, evaluate and designate heritage buildings in Singapore for conservation and adaptive reuse. Government assistance, eg, waivers of development charge, carpark provision, carpark deficiency charges, and so on, are given to owners to encourage them to restore their buildings. So in the event the fire were to seriously damage a conservation building, the owner is required to rebuild the building in accordance with the con

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servation guidelines and the building will remain a gazetted conservation building.

As regards the Member's specific points about No. 23 Amber Road, I think it may be more appropriate if she were to file a Question for Oral Answer. But I do know that the other property which she mentioned, ie, No. 3, Allenby Road, is actually not a gazetted conservation building. But, having been badly damaged by fire in January 2006, it was considered unsafe and had since been demolished. Hence, its owner was not required to reconstruct it on its original site because it was not a gazetted conservation building.

I hope I have touched on the main points. If not, I hope Members will jog my memory.

Ms Indranee Rajah: Just a very quick point of clarification for the Minister for Law. It is correct the Minister mentioned that, for part-lot acquisition, the "before" and "after" method of valuation is used. I would just like to ask the Ministry of Law to consider, for future, that in the context where you acquire a strip of land that is zoned "road", what happens is that when the Land Tribunal calculates the "before" value, the "before" value is already lowered because the part that is zoned "road" is valued at zero. So, if something could be done about that valuation of the land at zero, ie, if it was not zoned "road", it would have a different value. Then, your "before" value would actually be a higher value. That was the point that I was making.

But, perhaps by way of clarification, I should say to the Minister for Law that I shall not give up. I shall be back, Sir.

Prof. Jayakumar: Mr Deputy Speaker, Sir, I take note that the Member has, as I expected, declared that she would not give up. She knows that, previously, she made suggestions which have borne some fruits. I do not promise her anything. The

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specific point that she made about the strip of road and "before" and "after" value, I will have a look at it and see what the position is in discussion with my Ministry.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Prof. S Jayakumar].

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Bill considered in Committee; reported without amendment; read a Third time and passed.