LAND ACQUISITION ACT (Compensation at current market value)

[Mr Speaker in the Chair]

Mr Chiam See Tong asked the Minister for Law whether he will review the Land Acquisition Act to pay compensation at current market value for land compulsorily acquired as Singapore is now a first-world developed country.

The Senior Minister of State for Law (Assoc. Prof. Ho Peng Kee) (for the Minister for Law): Mr Speaker, Sir, MinLaw has an ongoing review of various legislation. The relevant provisions of the Land Acquisition Act referred to by the Member will be included in that review. In fact, Dr Amy Khor and Mdm Cynthia Phua, during the Committee of Supply debate this year, made similar requests for review.

Sir, the current approach in the Act is to peg compensation to the market value of the property as at the date of gazette notification or a statutory date, which at present is 1st January 1995, whichever is lower.

Although the approach in this provision has not been amended, Government, in fact, has regularly reviewed the statutory date to ensure that compensations are generally in line with market levels. Previous statutory dates were 30th November 1973, 1st January 1986, and 1st January 1992. We have not changed the current statutory date of 1st January 1995 because, given the depressed state of the property market, current values are below 1995 values. This means that, today, the statutory compensations paid to affected owners are already at current market value. When circumstances require it, Government will continue to update the statutory date of compensation.

In addition, the Government introduced an ex gratia payment scheme in 1982 to cushion any financial hardship faced by owners of acquired properties. This scheme was initially introduced to top up statutory compensation to market value, should the statutory compensation be lower than market value. Since 1982, we have considerably expanded the scope and quantum given under the scheme. For example, whilst the scheme originally was available only to owner-occupied residential properties, today, owners of other types of properties, whether owner-occupied or not, are eligible to be considered for ex gratia compensation.

Whilst, as I have said, we are prepared to review the relevant provisions, let me say that I do not agree with the suggestion inherent in Mr Chiam's question that we can completely jettison the Land Acquisition Act and its provisions because Singapore is better off now than before. Whether or not Singapore is a first-world developed country today, one feature about Singapore will never change, namely, that we are a small country and land is, and will always be, a scarce commodity.

The Land Acquisition Act has made possible some of the important developments in Singapore, including our public housing programmes and other physical infrastructure, such as our ports, expressways and mass rapid transport system.

For future developments in land scarce Singapore, it is obvious that we will continue to need the Land Acquisition Act. Of course, we will need to address and review the question of how we must strike a balance between the interests of the individual landowners and the wider interests of the public good, which is to press on with development projects for public purposes without unduly increasing the taxpayer's burden.

Dr Amy Khor Lean Suan (Hong Kah): Sir, I would like to ask the Minister to explain the rationale for the $1 compensation for the land acquired from Faith Assembly of God Church at Kim Keat Road.

Assoc. Prof. Ho Peng Kee: Sir, Dr Amy Khor refers to the recent case, publicised in the media, about the acquisition of part of the land of the Church at Kim Keat Road. Let me explain this case in greater detail.

Sir, the Chief Valuer's Office accepted the recommendation of a private valuer on its panel and valued the strip of land acquired, which is about 200 square metres, at a nominal $1. In making this award, the Chief Valuer's Office applied existing law, including relevant provisions of the Land Acquisition Act and the Planning Act, which takes into account the zoning of the acquired land. On that basis, the Collector's award of $1 was determined. On a legal basis, Government stands by this award.

Nevertheless, after further reviewing the case, Government has decided to give an ex gratia payment to the owners. Let me explain why. Before 1998, the portion of land, which has now been acquired, which formed a small part of a larger piece of Church land was affected by a road widening line. The affected portion was at that time not zoned as road. If the affected portion had been acquired before 1998, the statutory compensation would have been computed taking into account the existing use prior to acquisition, ie, carpark use. In that event, more than nominal compensation would have been given. In 1998, after amendments were made to the Land Acquisition Act and the Planning Act, the portion which was previously affected by a road line was zoned road in the Master Plan. This was a change in planning practice so that the Master Plan would better reflect planning intention. The rezoning led to a valuation of a nominal $1 as there is no market value for a strip of land zoned road. But it was not Government's intention to change the compensation approach when it designated road lines as road zones under the Master Plan. In short, there was an unintended effect when it came to valuing the affected strip of land for compensation purposes upon acquisition. Hence, the $1 nominal compensation was an unintended consequence.

The Minister for Law and I asked our officials to see how we can help the owners in this case. On review, we determined that this case is a special one relating to a specific situation. Given what I have said earlier, Government has now decided to make an ex gratia payment to put the owners in the position they would have been, with regard to compensation, as if the land affected was acquired before 1998, ie, based on a road line instead of a road zone. On this basis, a payment higher than $1 in statutory compensation will be given.

We have informed the Church of this and we are working on the final amount with the Chief Valuer.

Dr Amy Khor Lean Suan: Sir, I would like to ask the Minister that in the light of the review of the Faith Assembly of God Church's case, how would this affect the compensation for the Chuan Park's case, which is also a $1 compensation?

Assoc. Prof. Ho Peng Kee: Sir, we must not mix the two cases. Like I have said, the legal basis is important for computing the compensation award. What is the legal position which justifies the valuation of $1?

For the Chuan Park situation, it is entirely different, based on the provisions of the Land Acquisition Act. There is a provision in the Land Acquisition Act which takes into account any increase in value going to the owner whose land has been acquired and who has got remaining land. In other words, for Chuan Park, in fact, only 0.6% of the land was acquired out of the entire piece of land and the benefit to the owner arising from the proximity of the MRT station has been estimated at about $18 million. So there is this set-off provision in the Land Acquisition Act. Hence, based on this set-off position, a $1 nominal compensation will be given to Chuan Park owners. Chuan Park owners have appealed. I think we should leave it to the Land Appeals Board to decide on this case.

Mr Chiam See Tong (Potong Pasir): Sir, the payment of $1 for compulsory acquisition of land is almost like an outright confiscation. This is certainly a violation of human rights. If it violates human rights, does is also not violate the terms of the agreement made between Singapore and America under the FTA?

Assoc. Prof. Ho Peng Kee: Sir, Mr Chiam's premise is that the award violates human rights, but I have said that it is based on the law. Land acquisition in Singapore is something which has gone on for a long time, and $1 cases, as I have explained before in this House, are given. But when $1 awards are given, they are based on valuation principles which can be defended. So there are established categories where $1 awards may be given. For example, if there is a strip of land, part of a larger piece of land, set aside for public purpose such as a road or drainage purposes for which gross plot ratio has been transferred to the adjoining land so that the land ought to be vested in the Government, when we acquire, benefit already has accrued to the owner of the land in terms of higher and more gross floor area, then we give $1.

Another instance, for example, will be when we acquire a splay corner or backlane, incapable of independent development, it is $1. Or another established category is when the owner has sub-leased the land to a sub-lessee for 999 years, so that the sub-lessee gets substantive and substantial compensation, the owner who only has a small reversionary interest gets $1. So we must not be fixated by the $1 compensation and say that it is unfair.

I agree that the Church's case has aroused some interest. The Minister and I do look at these compensation awards. Because we feel that in this case, something is not quite right, that is why we asked our officials to take a look at it. We then found this unintended effect and we are now prepared to come forward and give ex gratia payment. I think that is an important point.

Mr Chiam See Tong: Sir, it is true that under the Land Acquisition Act, there are many cases in which the Government can pay a $1 compensation. But the point is that the payment of $1 compensation, even if it is defensible under our law, violates human rights. My question is: if it is a violation of human rights, does this also not violate the terms of the FTA?

Assoc. Prof. Ho Peng Kee: How could it be a violation of human rights when we are acting in accordance with our laws? Is the Member saying that all our laws are in violation of human rights? In any case, an important point is that there is the Land Appeals Board. We have an Appeals Board which is currently presided over by an ex-Judicial Commissioner and he is assisted by Assessors. Anybody who is not happy with the compensation - many of the landowners whose properties are acquired may not be happy - there is this recourse. That is an important point. Certainly, the Board is properly constituted. The process for judicial review is there and the valuations are given according to accepted valuation principles. I do not see any violation of human rights.