ARCHITECTS BILL

Order for Second Reading read. 1.20 pm

The Minister for National Development (Mr S. Dhanabalan): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Architects Bill will repeal and re-enact with changes the existing Architects Act (Cap 12). The main objective of the Bill is to permit registered architects to team up with allied professionals to form multi-discipline partnerships and limited liability companies.

Mr Speaker, Sir, the existing Architects Act provides for the registration of architects in Singapore. This is to regulate their qualifications and their practice. At present, architects are allowed to practise only as sole proprietors or in partnership with members of their own profession. This restriction severely hampers the growth of our architectural consultancy firms.

In the case of partnerships, every partner has to shoulder the onerous burden of unlimited liability for acts committed by other members of the partnership. This discourages the formation of large consultancy firms. The partnership cannot also expand easily without the unanimous consent of all the partners. Every introduction or retirement of a partner is regarded as a cessation of the previous partnership. Clients often react adversely to such changes and interruptions.

Mr Speaker, Sir, today's development projects are bigger in scale and far more complex. These projects require integrated design inputs from a team of architects, engineers and allied professionals.

Several developed countries including the USA, the UK, Canada and Australia have, for some years now, liberalised their rules to allow architects and engineers to practise through limited liability companies. Even Malaysia and Hong Kong have similarly liberalised their laws. These countries have created a conducive legal environment for their consultancy firms to expand and compete favourably in the international consultancy market. Our consultants are at a disadvantage when competing in overseas markets as they lack the size and track record to compete with the established consultancy companies from the other countries.

In revising the existing Act to allow multi-disciplinary corporate practices with limited liability in Singapore, my Ministry has studied the corresponding legislation of the above-named six countries and we have learned from their experience. We have adopted or adapted parts of their legislation that are applicable to our conditions. Sufficient safeguards have been incorporated in the new Bill to protect public interest and to ensure that commercial considerations do not compromise the professionalism of incorporated consultancy firms. I will discuss these safeguards in further detail.

To protect consumer interests, the Bill contains the following provisions to ensure that the professional accountability of registered architects is not diminished in any way:-

First, all professional services must still be provided under the control and management of a registered architect;

Second, all architectural plans must be signed by registered architects; and

Third, any consultancy firm constituted as a limited liability company must have at least $1 million paid-up capital and be insured against professional liability.

To safeguard the professional character of consultancy firms, the Bill contains the following provisions to ensure that the consultancy firms remain under the control of professionals:

(1) Every director of the company's board must be either a registered architect or an allied professional; and

(2) Not less than two-thirds of the shareholdings of the company must be owned by registered architects and allied professionals. The Minister may, however, specify a lower proportion in relation to a particular company.

Mr Speaker, Sir, Members may like to note that all the other countries also maintain regulatory safeguards to ensure professional accountability. However, most do not impose on these companies special requirements of paid-up capital, shareholding and directorship. While such liberalisation is our long-term aim, my Ministry prefers a cautious approach of gradual liberalisation.

The Bill will also introduce the use of practising certificates for registered architects. Unlike the present Act, the Bill provides that once an architect is registered, he will remain as a registered architect until he is de-registered by the Board of Architects. However, he cannot practise architecture in Singapore unless he has a valid practising certificate, which is issued on an annual basis. This requirement eliminates the current problem where an architect can escape disciplinary action by simply failing to renew his registration, thereby getting himself de-registered. This follows the provisions of the Medical Profession Act.

Under the Bill, the Board of Architects will have greater disciplinary powers and new grounds for disciplinary actions, mainly to deal with misconduct, if any, by multi-discipline consultancy companies.

The functions of the Board of Architects have also been expanded to allow the Board to establish trust funds, either alone or jointly with other professional bodies, in order to promote learning and education connected with architecture.

The Architects Bill is linked to the Professional Engineers Bill, which I will be moving later, and the Land Surveyors Bill, which the Minister for Law will be moving at the next sitting, through the definition of allied professionals for the purpose of multi-discipline corporate practice. They should therefore be considered together by Parliament and brought into operation simultaneously.

This Bill marks an important milestone for the course of professional practices in our construction industry. The Bill has been drafted by the Attorney-General, in consultation with the Board of Architects, and officers from my Ministry. The views of the Singapore Institute of Architects have also been sought and taken into account.

I would however like to give an opportunity to individual professionals, as well as other professional bodies in the construction industry, to present their views on the new provisions which affect them. Therefore, I propose to refer the Bill to a Select Committee.

Sir, I beg to move.

Question proposed.

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, I rise to support the Bill.

This Bill is important because it affects the work of the architects. In fact, this Bill is linked, as the Minister has rightly pointed out, to the Professional Engineers Bill.

I would just like to ask the Minister a few questions. Some of the questions do cover the Professional Engineers Bill which the Minister will be moving later. So I hope he does not mind if I ask questions that cover both Bills.

The first question I would like to ask is how do the existing Architects Act and the Professional Engineers Act presently restrict architects and professional engineers to practise only as sole proprietors or in partnerships consisting only of members of the same profession.

The next question is: what are the advantages for architects to practise in the form of companies? The profession of architecture, like all other professions, requires the qualified person to be professionally responsible for his work. Thus, the new Act in allowing the practice to be incorporated into a company negates his professional responsibility. Will the responsibility of an architect be reduced as allied professionals become his partners of an architectural practice?

Mr Chng Hee Kok: Mr Speaker, Sir, I rise in support of the Bill. The intent and scope of this Bill is similar to the Professional Engineers Bill which follows, and my comments on this Bill applies to both Bills.

Singapore has one of most vigorous building programmes in the world. Our rate of building - both residential and commercial - surpasses most major cities. The world's tallest hotel, the most successful public housing programme, architectural flair and engineering ingenuity, I think Singapore has them all. To maintain this reputation of impeccable expertise, regulatory legislation governing the industry should correspond with this milieu of increasing professionalism.

The three Bills to tighten control of architects, engineers and land surveyors and promote large multi-disciplinary professional consultancies in the building industry are therefore very timely.

While Singapore enjoys the reputation of being relatively corruption free, we all know that private businesses can never be totally free of corruption, ie, illegal gratification to allow the cutting of corners and the substitution of inferior materials. Any dishonest act, fraud or accepting of illicit commissions may result in wrong or poor choice of materials. This will compromise the integrity of the design and the building. The result is putting at risk many lives. I think the New World Hotel tragedy is still fresh in our minds.

The three new Bills will raise safety standards and cope with all conceivable contingencies, be it a high-rise fire or a mild earth tremor. Although no one can prevent natural disasters, such as earth quakes and typhoons, we can reduce their adverse impact and minimise the incidence of man-made crisis through proper control on the conduct of people responsible. We may not be able to prevent a crisis, but we can at least prevent such a crisis from becoming unmitigated disasters.

Being a small country with our people as our greatest asset, optimising use of such limited resources is paramount. Formation of larger and multi-discipline consultancies, as encouraged by the Bills, is a step in the right direction. The pooling of resources will result in economies in use of administrative and management resources. It will also improve the quality of our manpower.

The end result, it is hoped, will be to help local firms compete better and more effectively against foreign corporations and more successfully in the international arena.

I wish, however, Sir, to raise one point with regard to the powers endowed upon the new Boards of Architects and Professional Engineers. Under clause 30 of the Professional Engineers Bill, the pecuniary penalty that may be imposed on an engineer is $20,000 whereas that to be imposed on an architect under clause 27 of the Architects Bill is only $10,000. I cannot see why there is this distinction when in reality the architect is as influential, if not, more so than an engineer in a building project. The proposed penalties for the engineer and architect should, in my view, in fact be reversed. If nothing else, they should remain the same. I hope this matter will be taken up at the Select Committee level. I welcome and support the Minister's intention to commit this Bill to a Select Committee.

Mr Leong Chee Whye (Nominated Member): Mr Speaker, Sir, I would appreciate very much if the Minister for National Development could comment on the merits and demerits of a system of regulation and licensing that separates the private sector members from the public sector members of the same profession.

Sir, clause 3(1) of the Architects Bill and, for that matter, if I may refer also to clause 3 of the Professional Engineers Bill, exempt specifically acts and omissions of Government, including acts and omissions of public officers, from the provisions of the Bills. I am aware that the existing Acts which these new Bills intend to replace also carry the same clauses. But in the eyes of a layman, it would appear strange that the same people in the same profession, doing comparable jobs, should be treated differently, perhaps even discriminatingly. Whether a building or a structure is built by Government or by the private sector, it should have the same professional standards, not just for the submission of plans but for the entire professional practice. Of course, we are aware that there are differences between Government buildings and Government practices compared to the private sector. Government organisations do not carry the same liabilities as those in the private sector. Correspondingly, public officers carry a lower risk and therefore the reward considerations are different. At the same time, we are also aware that public officers in fact do apply themselves to obtain the same high professional standards that are set out in the Bills but they do so voluntarily, not compulsorily.

There is also no doubt that Government itself has good internal disciplines and standards that ensure the practices for the public sector are unquestionably high. Yet, in spite of this, and perhaps because of this, I would urge the Minister to consider whether it is in fact better to give greater transparency to the kind of internal regulations that are available now in the Government Ministries by writing them into the Bills and then making exceptions so that public officers, where it is necessary, can be treated differently.

Why do I press for a more uniform system of handling for the same profession even though I feel that it is possible that you will get more inconveniences within the Ministry and perhaps even more internal cost? But there are benefits to a more equitable system that we should consider. A more even-handed system of regulation within the same profession will be in the public interest as well as in the interest of the profession, particularly since it is Government's intention to equate pay and compensation of the private sector with the public sector. It allows people in the same profession to sit down together and consider their common aspirations, their common problems, sympathetically. Hopefully, the results of such an exercise would be better understanding, better laws for the future, lower costs for buildings in both the public sector as well as the private sector.

Sir, we are moving into a very challenging decade and to maintain our competitiveness, we must require that the public sector work hand in hand with the private sector. Therefore, it is imperative that we should try our utmost to break down any walls that exist between the two sectors.

I know that today our regulators and public servants are doing their best to reach out and understand, but allow me to share with you my experiences. In the past, as a civil servant, I tried my best too to understand and to work closer with private enterprises and citizens in order to further their interests. But there was always a gap that existed between us. Today, I believe I know why the gap exists. It is as if a rock wants to come closer to an egg. Can a rock truly understand the fragility of an egg?

Sir, we already have today one of the world's best operating environments for business. If we are to progress we may need a rethinking of the fundamentals to carry us to new heights. In the words of George Shaheen, world-wide managing partner of Andersen Consulting:

"Breaking down walls ... reshape the very boundaries of a business. An organisation is a living, evolving entity. All the parts must be aligned to support a clear corporate vision. If we manage any of these elements in isolation, that effort is bound to be, at best, disappointing, and possibly disastrous."

Mr Dhanabalan: Mr Speaker, Sir, first of all, I want to thank the Members who have spoken in support of this Bill.

As I pointed out in my speech, this Bill is related to the other two Bills, the Professional Engineers Bill as well as the Land Surveyors Bill. I am not surprised that many of the comments made in fact straddle all these Bills.

Dr Tan Cheng Bock raised the question of the advantages of corporate practice and the disadvantages of the present sole proprietorship or partnership requirement. Sir, section 17 of the present Architects Act prohibits a person who is not an architect from offering architectural services. If a team of architects and engineers forms a partnership and carries on business as a firm, that firm will contravene section 17 because the engineers in such a firm will be purporting to offer architectural services when they are in fact not registered as architects. Similarly, architects in an engineering partnership cannot offer engineering services. So when a partnership, whether it is a partnership of architects or engineers, offers to do something, all the members in the partnership are in fact offering to do the same. So obviously, engineers cannot offer to do what the architects offer and vice-versa.

A company incorporated under the Companies Act is a separate legal entity from its shareholders. But section 8 of the Architects Act only allows natural persons who possess the prescribed qualifications to be registered to offer the services of architecture. So even if all the shareholders are architects, the company, as a distinct separate legal entity, cannot offer, because the company cannot be registered as an architect. The company is therefore prohibited from offering architectural services under the present Architects Act, and the same comments apply to the Professional Engineers Act. So these sections in the present Acts, in fact, restrict both architects and engineers from practising together because every partnership must be made up of people of the same profession. But once they form themselves into a company, as will be allowed under the provisions of the Bill, the company is a separate legal entity and distinct from its shareholders. The company continues whoever leaves or joins, and it is not affected by the death, bankruptcy or retirement of any of the shareholders or directors or employees of the company.

As I mentioned in my Second Reading speech, at present, when you want to bring in a new partner, all the partners have to agree, and legally the partnership has to cease and a new partnership has to be formed. And all the people for whom the partnership is doing work will have to be informed that the old partnership has ceased and a new one will take over the responsibilities and liabilities and so on. Many clients are very upset because they do not know whether the responsibilities and liabilities that they have entered into with the old partnership will be carried over into the new partnership. But a company can carry on regardless of who owns it, or who are the directors, or who are its employees. It is a separate and distinct entity. Of course, a company has to comply with the formalities and the requirements laid down in the Companies Act and this relates to all aspects of the company's formation and operation. But this is not an onerous requirement, because there are many compensating advantages. For one thing, it is easier to raise finance for a company than for a partnership as the security can be more readily created by the assets of the company. The tax position also is very much simpler for a company and overall taxation is likely to be lower since the company tax is lower than the highest personal income tax. All salaries, including directors' fees, are deductible before the calculation of profit for corpo- rate tax purposes. Moreover, an interest in a company may be given more readily than in a partnership. In other words, you can bring in new shareholders much more easily than you can bring in a partner into a partnership, and you can bring in new people either by making them directors, employing them, or making them shareholders, and you can bring in non-architects. Another important advantage is that it is far more easy to remove an unsatisfactory director than it is to remove a partner.

So for these reasons, architects have for some time been very keen that they should be allowed to form themselves into limited liability companies. But, of course, not all architects may choose to follow this route. Architects can choose the most suitable form of practice for their particular circumstances, according to their size, their aspirations and the type of clients they have. And there will be many architects who may still prefer to continue to work as partnerships. So they can, under the Act. It gives them various options.

Dr Tan also raised the question of professional responsibility. The architect's professional responsibility, or in the case of the engineer, his professional responsibility is not diminished in any way by practising in a corporate framework. An architect, for example, practises his profession in two distinct ways: one, which is professional; the other, commercial. The incorporated company allows wider scope for the practice to expand, as I have already explained. But the registered person who signs the plans, whether as an architect or engineer, is governed by a set of professional code of conduct provided under the Act in his personal capacity, and he is personally liable for disciplinary action should he breach any of these provisions in the Act. There is therefore no reduction in the professional responsibility of an architect or engineer if he chooses to have his practice incorporated as a company.

Now I come to the questions raised by Mr Chng. I think basically he made the point that the quality of buildings has to be ensured. Of course there are many things that go into this, not just architects and engineers, but also the provisions in the Building Control Act, and so on. I think Members will remember that as a result of the Hotel New World disaster, the whole Building Control Act was amended and there is far more teeth in the Act now to ensure that buildings are properly constructed.

Mr Chng also raised the question of penalty - why under the Professional Engineers Bill it is $20,000, and under the Architects Bill it is $10,000. I think it is a bit invidious to make comparisons. Some may say that the architect dresses up a building, but the engineer in fact provides the structure. So while the building may look ugly, you can live in it. If the building is weak and it collapses, the responsibility is that much more. But I take the point and I think we should consider this matter at the Select Committee stage.

Mr Leong Chee Whye, Nominated MP, touched on clause 3(1) of the Architects Bill and also clause 3 of the Professional Engineers Bill. This is a standard clause. And as he pointed out, it is in the present Act and it is also found in many other Acts. It does not mean that a Government officer is free from liabilities. This Bill that we are now considering covers the registration of Architects and the practice of the profession in the architectural field. This registration as architects does not apply to the Government. Government of course employs architects who are qualified and they may be graduates, or with other qualifications. But the Government buildings under the Building Control Act are not required to comply with the provisions of the Building Control Act. We went through this quite extensively when we considered amendments to the Building Control Act. And the point we made was that in fact the Government buildings are subject to far more stringent requirements than the private sector buildings.

It is not intended that by putting in this clause public officers will be free from any liability. If a public officer, acting on the direction of the Government, does something and, say, a building collapses, people are hurt or killed, the Government can be sued. In fact, the officer concerned can also be sued although he will be indemnified by the employer, in this case, the Government. He can also be sued. But what this means is that - this is a strictly legal point, and in fact I wish I had the Minister for Law here to expand on this - the engineers and architects who work for the Government need not go through the process of registration.

All the other points that the Member has made that the professionals in public sector should work closely with the professionals in the private sector - I take them completely, and I think they are very valid and we are doing everything possible to have more cooperation and exchange of ideas. There are many things that we do in Government which we do not publicise or do not make known to the professionals in the private sector. For some time now, I have made it a practice to tell the Public Works Department that every time they do something new, they should bring around private architects and private engineers to show them what has been done so that they can in turn learn and apply it in the private sector. When HDB introduced a system of quality checking of buildings and how to rate the quality of a building which finally resulted in the "CONQUAS" system, architects were brought to HDB projects and they were given a briefing during the visit on how this is done.

Similarly, one of the new growth fields in Singapore is retrofitting. My Ministry's building has just gone through a major retrofitting exercise and it will be holding a seminar to explain to the private sector architects and engineers the problems involved in retrofitting and so on. So there is this kind of cooperation. There is an on-going process and programme to disseminate the experience in the public sector to the private sector. But if Mr Leong Chee Whye wants to pursue this matter further, he can always make a submission to the Select Committee.

Question put, and agreed to.

Bill accordingly read a Second time.

Resolved,

That the Bill be committed to a Select Committee consisting of Mr Speaker as Chairman and such Members as the Committee of Selection may nominate. - [Mr Dhanabalan].