RESETTLEMENT COMPENSATION (Revision of rates)

Mr Ng Kah Ting asked the Minister for National Development, since it is the declared policy of the Government to periodically review the rates of compensation for those affected by resettlement, (a) if his Ministry will now consider an upward revision of existing rates in the light of inflation; and (b) whether his Ministry will expedite the payment of compensation during clearance.

Mr Lee Yock Suan (for the Minister for National Development): Mr Speaker, Sir, resettlement compensation rates were revised twice in the last 24 months. In March 1981, rates were increased by 30% across-the-board. In December 1981, rates were again increased by 50% for squatter houses and ancillary farm structures. Inflation during 1982 has been low, amounting to only 3.9%. There is, therefore, no compelling reason for another upward revision of resettlement compensation. The current compensation rates are still adequate. Nevertheless, I wish to assure the hon. Member for Punggol that resettlement rates are regularly reviewed by my Ministry and will be increased when the need arises.

As regards the second part of the Member's question, as a general rule, the Resettlement Department releases ex gratia compensation to squatters soon after they accept alternative HDB accommodation. However, delays in the payment of resettlement compensation sometimes occur. The assessment of compensation is both time-consuming and tedious. Improvements belonging to each squatter have to be recorded, measured in prescribed ways, and assessed for payment according to prevailing rates. These assessments require the verification and approval of the HDB's internal auditor before payments can be made. As far as possible, the Resettlement Department will expedite payments to squatters after they accept allocation of HDB flats.

Mr Ng Kah Ting (Punggol): Mr Speaker, Sir, in view of the announcement by the Hon. Minister for National Development that prices of HDB flats will go up in the next two to three years, does not this become a more compelling reason for the compensation rates, whether they are ex gratia or otherwise, to be revised?

Mr Lee Yock Suan: Sir, I think hon. Members will recall that in his announcement, the Minister for National Development mentioned that the increase in the prices of HDB flats for 3- and 4-room flats will not exceed 7 1/2% this year and next year and at most 10% for 5-room flats this year and next year. At the moment we do not yet know what the increase will be. These figures represent the upper limits and until that time, I think the compelling reason is not there. Even then the proposed increases, I think you will agree with me, are very moderate.

Dr Augustine H.H. Tan (Whampoa): Sir, is the Hon. Minister of State aware that he has just contradicted himself over the rate of inflation?

Mr Lee Yock Suan: Sir, I think the two things may not be quite related. The figure I gave was the Consumer Price Index. Here, we are talking about the cost increases of HDB flats on contracts which have already been awarded and actually dependent also on some of the past years' inflation rates.

Dr Augustine Tan: May I ask the Hon. Minister of State which is the relevant rate of inflation, if one were considering relocating one's housing - the CPI or the rate of increase of HDB housing?

Mr Lee Yock Suan: The rate of increase in housing, obviously. But there are other factors too, for example, disturbance allowance and so on, which depend on the cost of living. In fact, the 50% increase in December 1981 was more than adequate to compensate for the 38% average increase in HDB prices in 1981.

Dr Augustine Tan: Do I take it then that the Hon. Minister of State will agree with me that future rates of increase in compensation should reflect the rate of increase of HDB prices?

Mr Lee Yock Suan: The compensation rates are made up of a whole mixed bag of items. There are fruit trees, concrete structures, and so on. So I do not think it is quite fair to relate one to the other. This proposal has been made in the past that we should, in fact, index the compensation rates to HDB flat prices. But I think you will agree these two are not actually or completely a one-to-one relationship.

Mr Tang See Chim (Chua Chu Kang): Would the Minister of State at least relate the compensation rate to the main house?

Mr Lee Yock Suan: Mr Speaker, Sir, this will be one of the factors which we will consider in our review.