Second Reading Speech on Land Acquisition (Amendment) Bill by DPM Prof S Jayakumar, 11 Apr 2007

11 APR 2007

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 benefits 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.

Singapore today has become more developed and urbanised. Land acquisitions now affect far more people than those carried out in the 1970s or 80s. 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 2 dates: the date of acquisition or the statutory date (which is a date in the past), whichever is the lower [S33(1)(a)]. 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 [S33(5)(e)].

Sir, this “whichever is lower” provisions in the present LAA 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.

First, we will remove the alternative dates for determining the statutory compensation and move away from using a past statutory date of 1 Jan 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 that land would have been valued had it been sold in the open market.

Thirdly, the so called 2-year [S33(5)(a)] and 7-year [S33(5)(c)] rules that limited the payment of compensation will be removed as they are no longer applicable. The 2-year rule disregards the value of the improvements made by the owner of land within 2 years in contemplation of the acquisition. The 7-year rule disregards any increase in value that is attributable to infrastructural works done by the Government within 7 years prior to the acquisition. It is no longer meaningful or significant to isolate and quantify the increase in value due to such works as improvements made by 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 [S33(5)(f)] and acquired land that is devastated or affected, directly or indirectly, by fire, explosion, thunderbolt, earthquake, storm, tempest, flood or any act of God [S33(2) & S33(3)]. Such land if acquired will be assessed no differently from other acquired land, in line with this move towards market value compensation.

Sir, I beg to move.

Last updated on 25 Nov 2012