CENTRAL PROVIDENT FUND BOARD (Recovery of CPF moneys from people affected by compulsory acquisition of land)

Dr Lau Teik Soon asked the Minister for Labour whether, in view of the financial need to initiate the relocation process, the Central Provident Fund (CPF) Board will refrain from recovering CPF moneys from the 20% advance compensation payment of those affected by the compulsory acquisition of land for the North-East MRT line and comprehensive development and to do so only after they have received the remaining compensation.

Dr Lee Boon Yang: Mr Speaker, Sir, CPF savings are meant for a member's retirement needs. That is why all moneys withdrawn under the CPF housing schemes must be returned to the member's CPF account, together with any accrued interest, when the property is sold or transferred. The rationale is no different for properties acquired under the Land Acquisition Act.

When the advance payment of compensation package was introduced, Government made a conscious decision not to interfere in the financing arrangements that affected land owners may have made for the acquired properties. This position is applied equally to all parties which have claims on the compensation awards, including the CPF Board and the lending banks.

Those who face a cash flow problem already have a way out, which is to surrender the title and undertake to deliver vacant possession before they are paid the full 100% compensation award, part of which they can use as payment for an alternative property.

Let me add that Land Office will expedite the processing and payment of the awards. Priority will be given to individual owners with genuine cash flow problems. If the land owners wish to, they can occupy the same property on rental until it is required by the authorities for development.

In view of the above, my Ministry is unable to accede to the Member's request for CPF Board to refrain from restoring CPF moneys from the 20% advance compensation payment to CPF members.

Dr Lau Teik Soon (Thomson GRC): Sir, in view of the fact that the CPF Board is a statutory board, unlike the commercial banks, and also the owners are being asked to move out because of the compulsory acquisition, and they need the money to assist them in the relocation and pay the initial payments for their next home, will the Minister re-consider his decision?

Dr Lee Boon Yang: Mr Speaker, Sir, in fact, we have considered all these factors that the Member has brought up and, as I said in my main answer, the solution to members who are affected by cash flow problems is to now opt to surrender the property to the Land Office and to collect the 100% compensation award which, as I said earlier on, the Land Office will expedite the processing of such claims and the affected land owner or property owner can get the full payment quickly and he can proceed to make arrangements for alternative premises, whether it is a shop or a home. But in so far as the CPF money that has been used for the purchase of this property is concerned, the present rule must apply because, as I said, not only will such owners face similar claims by the lending banks, they also have to ensure that they are able to meet their obligations to the banks that have loaned them the money. Even if the CPF Board does not want to make a claim, the banks may well proceed to make the same claim. So there is no assurance that this method will solve the problems of the affected property owner. The best solution is to opt to surrender the property, collect the full compensation and then make arrangement to buy an alternative property. In the interim, he can continue to occupy the premises and pay a small rental to the Land Office.

Dr Lau Teik Soon: Will the Minister review the situation in view of the fact that we are here discussing moneys which are rightfully that of the home owners and it is with a statutory board, not a commercial bank, and also that the home owners will return the money to the CPF after they have received the total compensation? All they need is the initial money to pay for the downpayment for their next home. And in view of the fact that they are being moved out because of compulsory acquisition by the Government, will the Minister show some compassion for them?

Dr Lee Boon Yang: Mr Speaker, Sir, of course, I am very sympathetic to those property owners whose properties have been acquired. The question of why these properties have been acquired had been discussed at length on other occasions. I think right now we are talking about whether the 20% upfront compensation should be left entirely to the discretion of the property owner or should be utilised as he had already committed himself to, ie, when he took money from the CPF account to purchase this property, he had allowed a charge to be placed on the property. Whether the property is subsequently sold, transferred or acquired by Government makes no difference. He should refund the money that he has first received in payment for the property to the agency which has a charge on the property. We have to maintain this principle. Otherwise, we could allow ourselves to be caught in all kinds of situations. In future, there will be other claims and requests and the protection of the CPF savings will not be complete. Our concern right now is to ensure that the members' CPF savings are properly protected.

I agree that he is in a difficult position because his property has been acquired, but the solution to his problem cannot be to waive the protection that is necessary for his CPF savings. The solution for him is, as I said earlier on, to take the 100% compensation that is available to him immediately. It would be made available as soon as his case is reviewed by the Land Office. The Land Office has assured me that they would expedite all such cases to ensure that compensation awards are paid expeditiously. I think that is the only solution.

Dr Lau Teik Soon: Sir, in view of the fact that the home owners need time to purchase their next home and the fact that they will return the charge, which is rightfully the CPF, at a later date after they have received full compensation, will the Minister use his discretion, and I understand that he has the discretionary power, to intervene to prevent the CPF from immediately imposing the charge?

Dr Lee Boon Yang: Mr Speaker, I have tried to explain to the Member that even if the CPF Board were not to proceed with the charge to seek the reinstatement of the CPF savings that have been withdrawn, it does not mean that the member can enjoy the full 20%. It may well be that he has to meet his obligation under his mortgage. The banks may also want to make their claim. So the solution as advocated by the Member is incomplete because although the CPF Board may be prepared to waive the charge, private lending banks may not want to waive the charge. So the member will still have the same problem. The real solution for the member who has a cash flow problem now in trying to find alternative premises is to take up the offer of the Land Office: take full compensation, remain on the property for as long as he needs to during the transitional stage and then move out when his new property is ready or when it is required for development.

Dr Lau Teik Soon: Sir, I agree with the Minister that if it is a charge by a commercial bank, the home owners will have no choice. But in view of the fact that this charge is by the CPF Board, which is a statutory board, and it is a matter of time that they will eventually return the moneys to the CPF Board, will the Minister reconsider his decision? Because many of them are in financial difficulties and they need the money to put the downpayment for their next home and they are moving out in view of Government acquisition, not of their own choice.

Dr Lee Boon Yang: Mr Speaker, Sir, some property owners have also taken up bank loans apart from withdrawing money from their CPF accounts to finance the purchase of their properties. Therefore, it is not only a case of settling the issue with the CPF Board. There are other lending institutions involved too which have also placed equal charges on these properties.

Dr Lau Teik Soon: Mr Speaker, Sir, the Minister is not answering my question. My question is: if the charge is by the CPF Board, not a commercial bank, will the CPF give this concession?

Dr Lee Boon Yang: Mr Speaker, Sir, the answer is no.