Debated in Parliament on 5 Aug 2014.
Order for Second Reading read.
Mdm Speaker, I beg to move, "That the Bill be now read a Second time."
Madam, this Bill seeks to amend the Land Acquisition Act (LAA) to enhance the compensation framework for landowners who have part of their land acquired and to improve the efficiency of the land acquisition process.
I will now take the House through the main features of the Bill.
The first concerns the application of the betterment levy. When the Government acquires part of a landowner's land, the value of the remaining portion of land held by the landowner could increase due to the use that the land acquired will be put.
At present, section 33 of the LAA requires such increase in value to be deducted from the statutory compensation the landowner is given for the acquired land. This is known as the betterment levy. Clause 12 of the Bill removes the requirement for such increase to be deducted. Landowners will, therefore, receive compensation equivalent to the full market value of the acquired land.
This amendment continues in the spirit of the previous set of amendments to the LAA in 2007 which pegged compensation for acquired land to the market value which a bona fide purchaser would reasonably be willing to pay for the property.
The second amendment enables the Management Corporation of strata-titled developments to act on behalf of individual unit owners when common property is acquired. Today, when small parcels of common areas, such as carpark lots or grass verges in strata-titled developments are acquired, unit owners must go through the entire acquisition process individually even if their own units are not affected by the acquisition and even if their share of the compensation is not significant. And this has resulted in inconvenience to individual unit owners.
The Bill amends the LAA and the Building Maintenance and Strata Management Act (BMSMA) to allow the Management Corporation (MC) to represent individual unit owners when common property is acquired. The MC will also be able to use the MC's fund for
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acquisition-related expenses. This amendment will minimise inconvenience to individual unit owners, as well as allow for quicker progress of the acquisition proceedings and disbursement of compensation.
Finally, the Bill makes several technical and housekeeping amendments. I will highlight two such amendments. The first relates to the posting of notices on acquired land. At present, the LAA requires the Collector of Land Revenue to post hardcopy notices on the acquired land when possession is being taken, in addition to serving the notice on interested persons.
Clause 7 amends the LAA such that notice may be served in ways other than posting notices on the acquired land. The modes of service are currently set out in section 45 of the LAA and include hand delivery, fax or pre-paid registered post.
The second concerns the power of the Appeals Board to award costs against persons who are not parties to the appeal. This gives the Appeals Board similar powers as the Courts to order costs against non-parties who, for instance, unnecessarily or unreasonably prolong the proceedings or add to the legal costs incurred. Non-parties will be given an opportunity to be heard before the Appeals Board before an order to pay costs is made. Mdm Speaker, I beg to move.
Question proposed.
Mdm Speaker, the gist of the Land Acquisition Bill is the proposal to compensate landowners better by removing the Betterment Levy through clause 12 of this amendment Bill – a levy which off-sets some of the gain in the value of the remaining land after the acquisition is complete, in section 33 in the original Bill.
It is not unusual for the value of land to increase after the Government completes infrastructure projects near to the target acquired land. Such infrastructure may include MRT lines or public parks.
We are doubtful about the rationale behind the Government's removal of the levy. First principles would require that landowners understand that the land value increases only because of the development plans that are funded by taxpayers. Should landowners be compensated because of the infrastructure requirements so badly needed by the nation? Yes, but only to the extent of fair value, and fair value should be determined without
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consideration of the developments.
Could this be a form of institutionalising the ex-gratia payments to a landowner that are sometimes made over and above the statutory compensation? The ex-gratia payment scheme was initiated around 1982 to cushion the financial hardship that may be faced by owners of the acquired land. These ex-gratia payments sometimes amount to a substantial proportion of the total compensation offered. While it is, of course, a form of goodwill, the criticism is that it can seem rather arbitrary, as the criteria for deciding on an ex-gratia payment is not made public, to our best knowledge.
Perhaps this is also a belated response to complaints over the land acquisition projects of the 1970s and 1980s, when kampong settlers and landowners were forcibly relocated and given a poor compensation deal by the Government. Indeed, they were the ones who should have deserved a better deal from the fruits of Singapore's rapid development. The situation in the present time, however, is dramatically different.
If we are to now increase the compensation for landowners, taking into consideration the benefits of the public developments, we will be losing taxpayers' money to enrich the landowners on an "after the fact" basis. This is quite different from a developer who takes a bet on the future master plan of the estate.
On non-lot acquisitions in strata title developments, clause 2 firmly establishes that the Management Corporation Strata Title (MCST) is the body that acts on behalf of subsidiary proprietors in a non-lot acquisition in relation to a strata title plan.
Of course, this is mainly a clarification of existing laws, such as in section 2(2)(i) and section 40(2) in the original Act, which may potentially disqualify the MCST from acting in such a case. But what measures are there, above and beyond that which is already in the BMSMA that ensures that the MCST is more consultative with its subsidiary proprietors in the event of a land acquisition case?
For example, what is the process in order for the MC to obtain consensus from all the subsidiary proprietors to agree to the proposed compensation from the Government and to pass resolutions needed to sell any common property that is comprised in the strata title plan? And what percentage of votes is needed from the subsidiary proprietors to secure the agreement to accept the proposed compensation? In the case of those subsidiary proprietors who disagree with the compensation, what is the recourse for them?
If the Government intends that goodwill be extended in the event of land acquisition – which MinLaw has implied in this proposed removal of the Betterment Levy – then we
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believe the powers of the MCST should also be calibrated as they are empowered to receive all monies from a collector as an award of compensation under the LAA for any non-acquisition relating to its strata plan.
Senior Minister of State for Law.
Mdm Speaker, I thank the hon Member for her comments. I think they can be broken down into two categories. First, her comments in relation to the Betterment Levy; and, second, her comments in relation to the MCST and how it would conduct itself in the event of a land acquisition process.
With respect to the Betterment Levy, it is not the case that one is unjustly or unfairly enriching the owner. The situation here is this. Let us say you have an acquisition of part of an owner's land – let us say the part that you are acquiring is Part A and the part that is left behind is Part B. Previously, if after having acquired Part A, the value of Part B goes up when we compensate the owner for Part A, what we would have done is deduct the increase in Part B, so, effectively, the owner gets less. In this instance, what we are saying is that we will no longer deduct the increase to Part B which may have arisen as a result of whatever development taking place around that land.
In this way, the landowner benefits and, ultimately, the objective is to ensure that when the Government acquires Part A, the landowner receives a fair market value for Part A. That, as I indicated in my speech earlier, is the spirit of the previous set of the amendments to the LAA in 2007, which is to peg the compensation for acquired land to the market value which a bona fide purchaser would be reasonably willing to pay for the property and that is a fair and just compensation for the owner.
I think the Member had also asked whether we were, in this way, institutionalising ex gratia payments. The answer is "no"; they are two separate concepts. This is removal of the Betterment Levy on compensation for acquired land in a part-acquisition. The ex gratia is a separate thing and will be applied depending on the circumstances of each case. In some cases – I think the last one, if I recall correctly, was for Pearl Centre – what had happened was there were differences in the market value subsequent to the acquisition and it was felt appropriate in that instance that some ex gratia payment ought to be made to ensure that the owners received a fair value or fair compensation for the acquisition.
With respect to the second query raised by the hon Member, in other words, the MCSTs and how they will deal with the monies that come into their hands or how they will ensure
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that the common property is dealt with properly, the short answer is that the MCSTs will have to act in accordance with the legislation and their by-laws. Each MCST has by-laws which regulate the way in which they ought to deal with their members. It is incumbent upon the MCSTs to ensure that they follow the rules and regulations in the legislation and their by-laws. If they have breached these in any way, then the members will have recourse, either to the Strata Titles Board or, alternatively, to the Courts. But it is also incumbent upon the MCSTs to remember that in situations of these cases, they are actually acting, in effect, as agents for the other members, and they will have to act in good faith and they will have to conduct themselves properly and ensure that the monies are accounted for and dealt with properly.
*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. – [Ms Indranee Rajah].*
*Bill considered in Committee; reported without amendment; read a Third time and passed.*
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