TOWN COUNCILS (AMENDMENT) BILL

Order for Second Reading read. 8.35 pm

The Parliamentary Secretary to the Minister for National Development (Mr Koo Tsai Kee): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Town Councils (Amendment) Bill seeks to amend sections 21, 33 and 38 of the Town Council Act. This Bill seeks to improve the financial management of Town Councils by making changes to the use and regulation of their funds. At the same time, the amendment widens the powers and duties of Town Councils to enhance their operational efficiency and effectiveness. Changes to Town Councils' Funds

Let me talk about the proposed changes to section 33. The Bill seeks to make three changes to Town Councils' funds under section 33.

At present, Town Councils are allowed to use their funds for the maintenance of facilities erected on common property in their towns. However, some improvement works put up by the Citizens' Consultative Committees (CCCs) under the Community Improvement Projects Committee (CIPC) scheme, or by Town Councils themselves during their Interim Upgrading Programmes (IUPs), were erected on non-common property in their towns. These facilities are mainly for the use and enjoyment of HDB residents living in the vicinity. Although funding was available for the construction of these facilities, there is no provision for their maintenance. Allowing the Town Councils to use their funds to maintain these facilities should therefore be viewed as an extension of the Town Councils' services to better address the needs of residents. In practical terms, Town Councils would also be in the best position to maintain such facilities which are not on common property. The Bill therefore seeks to allow Town Councils, with the approval of the Minister for National Development, to use the Town Councils' funds for the maintenance of facilities erected on non-common property in their towns.

Next, the Town Councils Act currently does not allow Town Councils to make inter-activity transfer of funds in their sinking funds. Funds set aside for activities under "Market and Food Centres" cannot be used for activities under "Other Commercial Property". In reality, however, the market and food centres are an integral part of the shopping/commercial activities of the Neighbourhood Centres/Town Centres, as both activities, the market and food stalls and the commercial activities, complement each other. To streamline the financial operations of Town Councils, the Bill proposes to merge "Market and Food Centres" with "Other Commercial Property" under a single combined category called "Commercial Property". With this, their respective operating funds will be merged, as will their respective sinking funds. This will allow Town Councils to use the funds for the management, maintenance and improvement of the common areas for all types of commercial property within the Town.

In addition, the Bill proposes to give the Minister for National Development the flexibility to prescribe the accounting method for the minimum amount of service and conservancy charges (S&CC) to be credited to the sinking funds established for residential and commercial properties. Prescribing the use of the accrual accounting method, which is based on the amount of S&CC collectible, will require Town Councils to reflect the S&CC arrears of their sinking funds in their financial statements. This will highlight the level of funds available for cyclical repairs and maintenance when the time comes.

Discretion to Levy Different Rates of Charges

I move on now to section 38. Currently, section 38 of the Act only allows Town Councils to levy different rates of charges, ie, S&CC charges, for different types and uses of flats and stalls by way of by-laws. The Bill seeks to provide Town Councils the flexibility to levy different rates of charges for the same type of flats and stalls in accordance with such criteria as they may determine. For example, Town Councils could levy higher charges for upgraded flats and stalls as it costs more to maintain the upgraded facilities and the environment surrounding it. While this Bill allows Town Councils, if passed by Parliament, to charge different rates for the same flat type, I understand from the news report that the PAP Town Councils are unlikely to change the present S&CC charges. Similarly, differential charges could be levied according to the level of service and types of facilities required by residents. For example, some blocks of flats may require more cleaning compared to a different block of flats of the same type. So Town Councils will have the flexibility to charge different S&CC charges on the same flat type because it costs more to maintain a particular block of flats. The amendment is also necessary to give effect to the policy decision to levy different rates of charges for the same flat type, based on criteria such as citizenship of the lessee/tenant and whether or not he has any interest in other immovable property.

Contribution to the Premium for Fire Insurance

I now move to section 21 of the proposed amendment. At present, HDB has a Board-wide Fire Insurance Policy to safeguard its properties, including the common property. Although it is the responsibility of the Town Councils to maintain and manage the common property, the Town Councils are not required to contribute to the insurance premium. Section 21 is therefore amended to make it the duty of Town Councils, as the estate managers, to contribute towards the cost of fire insurance taken up by HDB for common areas of the residential and commercial properties in their towns.

The Bill also includes consequential amendments to effect all the above changes.

Sir, I beg to move.

Question proposed.

Mr Ang Mong Seng (Bukit Gombak): (In Mandarin): Mr Deputy Speaker, Sir, the idea of Town Councils was first started in 1986 as a pilot project. In 1989, the Town Councils Act was passed and many town councils were established. They gradually took over the management, repair and maintenance of common property from HDB. At the moment, there are 16 town councils all over Singapore.

After many years of hard work, the town councils have matured. Now, apart from maintenance and repair of common property, town councils also organise various activities to educate the residents to keep their estates clean with the hope that they will cooperate with the town councils to create a better and cleaner environment for everyone. This will also help to enhance the social cohesion by inculcating in them the "kampong spirit" for harmonious community living.

Through various community activities, the town councils, together with grassroots organisations and the CDCs, have identified themselves with the people and have also served as a bridge between the people and the Government. When the country is in crisis, the Government and the people will be able to work together to tide over the difficult time. The Government's recent $10.5 billion package of cost-cutting measures has received resounding support by the people. We hope that this tripartite cooperation package will show good results to overcome our economic difficulties.

We must encourage our town councils, grassroots organisations and CDCs to carry on organising more community activities so as to further enhance our social cohesion. On the other hand, the grassroots leaders need proper places and facilities to organise their activities. There are reserved vacant lands which are now in the charge of HDB. The Minister has suggested that this should be transferred to the town councils for maintenance and management. This is a good decision. These vacant lands scattered all over the various HDB estates can provide more space for grassroots leaders and town councils to organise their community activities, such as National Day dinners, the Senior Citizens' Week celebrations, Town Council Day and Residents' Day. This will play an important role in enhancing our social cohesion.

Mr Deputy Speaker, Sir, in order to give more effect to the implementation of the new amendments, I have three suggestions for the Minister to consider. Town Councils should be given the authority to use the Town Council Development Fund for maintenance and management of the vacant land. In this connection, the Bill must authorise the town councils to collect land-use and temporary licence fees from organisations which apply to use these lands. The Ministry may want to consider having the vacant lands included in the IUP and MUP to provide residents with a better living environment.

I support the Bill.

Mr Chiam See Tong: Mr Deputy Speaker, Sir, I must first of all declare my interest in this Bill. I am the Chairman of the Potong Pasir Town Council.

Sir, the amendments to the Town Councils Act contain in this Bill are controversial. The Government seems to be blowing hot and cold at the same time. I would like to cite examples of what happened at Potong Pasir. Whenever the Potong Pasir Town Council attempts to install a new facility in a building or do anything on the land, the HDB shall step in and refuse to give its consent on grounds that it is the owner of all HDB buildings and lands on which those buildings are sited. The true situation in Potong Pasir Constituency is that the Town Council there cannot even knock a single nail in any building in an HDB estate without first getting permission from the HDB. The question therefore we ask is: what is the status of Town Councils? Do we have the right to do things independently? The answer is yes and no. As far as the day-to-day running of the Town Council is concerned, we have some measure of independence of action, but even that is whittled down by the amendment that is before us. Basically, as I see it, the Town Councils are nothing more than agents of the HDB. We are cleaning and property managing agents. That is what we are, although we are given a glorified name of a Town Council.

The Potong Pasir Town Council has taken the HDB to court on the interpretation of section 19 of the Town Councils Act, and the court ruled that the HDB is the property owner and we need to seek its permission to install new facilities. Only recently, the HDB and the Potong Pasir CDC jointly put up a notice board on a land under the jurisdiction of the Potong Pasir Town Council. For any other body which does that, that party would have to seek our Town Council's permission and obtain a TOL for doing so. But when the HDB and the Potong Pasir CDC put up such a notice board, they blatantly bypassed us with arrogance, because they did not even, as a matter of courtesy, inform the Town Council of what they were doing. The Potong Pasir Town Council, of course, took the notice board down. But soon after, we received a threatening letter from the HDB claiming that it is the owner of the land and has the right to erect a notice board on that land. The Potong Pasir Town Council did not want to confront the HDB in court again, so we re-erected the notice board at its original place, which is land under our care and management.

As regards the amendment under clause 2, the HDB now wants the Town Council to pay for premiums for the insurance it takes up for fire risk in relation to the common property. No doubt, under the Town Councils Act, all common properties at HDB estates are under the control and management of the Town Councils, but still the HDB is the owner of those common properties, as it has claimed whenever its rights of ownership are infringed. Normally, it is the owner of the building that takes up the insurance policy against fire risk. And even under the Land Titles (Strata) Act (Chapter 158), which is the equivalent law, it is the management corporation, comprising subsidiary proprietors, which is the required body to insure the subdivided buildings which in part form the common property. The main difference between the requirement to insure under the Land Titles (Strata) Act and this amendment is that under the former law, it is the owner of the property or the subsidiary proprietors which are required to insure the property.

In the case of HDB flats, when this amendment is passed, ultimately it is the lessees who shall pay for the insurance premium for the common property. The lessees are not the owners of that property. The Government now wants HDB residents who are not owners of the common property to bear responsibility of that property which is not theirs. The HDB, as owner of the common property, is shamelessly shirking its responsibility. When it comes to claiming its right over the common property, the HDB is doubly fast in doing so. But when it comes to bearing the responsibility as to the liabilities, such as paying for insurance premium, the HDB is now passing the duty to the residents. Is this the sort of example the Government wants to set for the people of Singapore? To tell the people of Singapore - you can enjoy the benefits but abandon the responsibilities and liabilities.

As regards clause 3(b), I would say that the determination of the rates of the conservancy and service charges should be left to the Town Council and not to the Minister. The way I see it, the Government wants a hand in it. Because, as regards the service and conservancy charges, the Government wants to squeeze as much political advantage out of them as possible. With this amendment, the Government can control how much the residents should pay for their S&CC. The Government subsidises the S&CC of the HDB residents out of the goods and services tax (GST). The Government knows how much GST it has collected and how much of it can be disbursed so as to achieve a position of revenue neutral, as far as the GST is concerned. It is all a clever juggling of money. The Government collects from the people. It collects the GST on the one hand and disburses them as subsidies to the HDB flat dwellers on the other. The only problem is that the majority of people who pay for the GST are HDB residents. They comprise 85% of Singaporeans. They pay taxes out of their pockets on the one hand for goods and services they consume and, on the other hand, they get back in terms of S&CC subsidies. The only problem is that, on average, an HDB resident shall get back less than what he pays out in GST.

It would appear to me that the amendment under clause 3(d) is a conflict with section 3 of the Town Councils Act (Chapter 329A). Under that section, the Town Councils are constituted to control, manage, maintain and improve the common property of residential property in HDB housing estates. The amendment allows the Town Council to pay for improvements which are not in the common property. In principle, this is wrong. What I was going to say is: why should the majority of residents pay to improve the property of a citizen who may or may not be a resident in HDB flats for his sole benefit? But now I am told that what the Government wants is for the Town Council to pay for facilities that are put up through CIPC funds by the CCC. Again, I think that is wrong. If the CCC can put up any facility or any community works, then, I think it is up to the CCC to maintain it. Of course, if the Town Councils were told and if they agree to put up those facilities, maybe there is a moral duty to pay. But if the CCC puts up such facilities, like in our Potong Pasir Town Council, they put up some signages in Sennett Estate, which we were never told, I do not think the Town Council at Potong Pasir should be made liable to maintain those facilities.

If this amendment is allowed, there shall be a loophole for favouritism and even cronyism. I do not think that this is a good amendment. If the amendment is to be allowed at all, it should be left to the Town Council to have the last say and not the Minister. It is cronyism because, under section 3 of the Town Councils Act, it allows the Town Council only to spend money to maintain, manage common property. But now this amendment is going to allow the Town Council to manage and pay out of Town Councils' funds for properties which are not in the common areas.

I would like to also comment on clause 4 of the Bill. Since the Town Councils Act was formed about 10 years ago, the Town Councils have always levied service and conservancy charges at one rate for one type of flats, shops or stalls. This is pursuant to the present section 38 of the Town Councils Act which clearly states that the Town Council can levy different rates for different types of residential, commercial property and stalls and also in respect of their uses. Now all this seemingly is to be changed. If I read the amendment correctly, the Town Councils are allowed, after this amendment, to charge different rates for, say, 3-room or 4-room flats. The amendment also mentions something new, that is, a class of owners. Nowhere in the main Act does it mention the class of owners of flats. This is appearing in the new subsection (10A):

"Without prejudice to the generality of subsection (10), a Town Council may differentiate the rates of charges to take into account any grants-in-aid made under section 41 which are expressed to be for the benefit of any class of owners of flats."

This is something new. Because this new class of owners of flats is never mentioned in the Town Councils Act. So really this amendment is not very clear to me. Maybe the Minister can explain further.

Mr Koo Tsai Kee: Mr Deputy Speaker, Sir, I thank the two Members, Mr Ang Mong Seng and Mr Chiam See Tong, for raising relevant queries. I want to thank all the Members of Parliament who are still sitting around and listening carefully at this hour of the day.

Mr Ang Mong Seng raised three points. The first is whether we could allow Town Councils not just to repair and maintain but also to manage vacant land. I think there is a misunderstanding here but I will clarify later on. The second point Mr Ang raised was to allow Town Councils to issue TOLs for use of such vacant lands so that Town Councils can collect the fees for functions held on non-common property. The third point he raised was whether we would allow IUP and MUP funds to be extended to works on non-common property.

When the Town Councils Act was enacted on 29th June 1988, the objective was, and still is today, to control, maintain, manage and improve the common property. That has not changed. But over the years, some things have changed. For example, we have IUPs, we have extensive use of CIPC funds. On rare occasions, will the CCCs seek permission to fund a project from a common property to a non-common property? For example, a short linkway from a HDB block to a bus stop. That linkway crosses from a common property to a non-common property, ie, crosses into State land. In these circumstances, funds are available for the Town Council, acting on behalf of the CCC, to build the linkway using IUP or CIPC funds. But the Town Council could not maintain or manage the part of the linkway which stands on non-common property. So this Bill serves to allow Town Councils certain flexibility to use the operating funds to maintain and manage the facility on non-common property. It is not, as Mr Ang misunderstood it, to manage the non-common property land itself. The land belongs to the State. HDB is made an agent of the State. We are saying that we allow the Town Councils to use the money to repair, maintain, improve and even replace those facilities that stand on non-common property. So I think that is quite clear now. But I will take up Mr Ang's suggestion and ask HDB to liaise with Land Office and see what we can do.

The other point I want to clarify is that the non-common property land usually belongs to the State, which is reserved land, and the State will have some use for the land in the long term. So it would be difficult for the Government to allow Town Councils to manage the land. I hope those points will clarify Mr Ang's queries.

Now, I come to Mr Chiam See Tong. Mr Chiam is very suspicious. He thinks that this Bill is to fix him. Far from it, it is not. Because what fixes him, fixes all the other 14 PAP Town Councils. So we are actually suffering more than him. But I will go through some of his points. First, he said that we treat him differently. In fact, the treatment is the same. If any PAP Town Council wants to do any permanent work on the common property, it has to seek the land owner's, which is HDB, permission to do so. Usually, HDB does not say no, provided certain conditions are complied and provided the Town Council funds the project. So this applies to him at the same time. The recent incident which he brought up was when he put up a signboard without seeking permission from HDB.

Mr Chiam See Tong: You put up.

Mr Koo Tsai Kee: But you took it down.

Mr Chiam See Tong: Yes.

Mr Koo Tsai Kee: Anything that stands on HDB land belongs to HDB. You are not supposed to remove, paint or vandalise it. But it is a small incident. We have to enforce it legally. Otherwise, it will become a precedent. If he wants to put up any signboard, he can just write to HDB. And if they are not objectionable, I do not see any reason why he cannot put it on Government land.

Mr Chiam See Tong: Can I seek a clarification?

Mr Koo Tsai Kee: Yes.

Mr Chiam See Tong: The land is under our jurisdiction. The land is part of the common property in which we have control and we have management of it. Therefore, if anyone wants to put anything on that land, he should seek our permission. But in the case of HDB and CDC, they did not bother. They brushed us aside and went ahead and put it up. The next morning we saw a strange board there. Naturally, we took it down. We even have a by-law to say that if anybody wants to put anything on the land under our control, he should seek our permission.

Mr Koo Tsai Kee: In that particular incident, the CCC did seek the permission of HDB but they did not seek the Town Council's permission because it is the managing agent, but not the landlord. So that is the technical legal point which he conceded and he put back the signboard. Anyway, that is not a very serious allegation he has made. There are other more serious ones.

On the insurance of common property, he said that it goes against the spirit of the Town Council. He said that the common property belongs to HDB, so HDB should insure the common property and not ask the Town Council to share this premium burden. Over the last few years, from 1991 to 1997, the fire claims had gone up almost two-fold, from about $315,000 to $776,000. A lot of the fires were actually caused by debris collected in the common areas, like lift lobbies and corridors, and the debris should have been removed by the Town Councils. It is due to the negligence of the Town Councils that these fires were started in the first place. There is a moral hazard here. If we do not ask the Town Councils to bear a part of the premium, then the Town Councils will not remove the debris diligently. No doubt, the Town Councils have no control over who throws the debris, but nonetheless it is the duty of the Town Council, as the managing agent of HDB, to remove the debris whenever they occur. There is a moral hazard there. If we do not ask the Town Councils to pay part of the premium, they will just sit back, take it easy, and more fires will take place and the premiums will snowball.

When HDB insures the Town Councils against fire risks, HDB insures it board-wide, that means, it will take up insurance for all the common property owned by HDB. It does not discriminate against certain Town Councils. It does not ask certain Town Councils to be a bit more diligent or pay more. We think that that is wrong. From now onwards, we look at individual Town Council and say, "If you are more responsible, if you clear the debris quickly and if there are less fire incidents in your Town Council, we will ask you to pay less or maybe even nothing." If there are a lot of fires in a particular Town Council, the Town Council has been negligent in clearing all the debris and fires keep on occurring at the same few blocks, then we have to penalise that Town Council. We have not worked out the exact co-payment part. But we will make sure that it would be equitable, transparent and affordable, and I can come here and defend it. So I hope he is convinced that we are not going after Potong Pasir Town Council. The culprits could be a PAP Town Council, I really do not know.

On S&C charges, Mr Chiam See Tong said that S&C charges should be left to the Town Councils. That is what it is. It is up to him to levy X$ for 3-room type, Y$ for 4-room type, and Z$ for 5-room type. And we have not changed that principle. It is up to him. We do not tell him how much to charge. What we do is to give him the flexibility to charge different types of rates on the same type of flats. Let me give an example. When the Town Councils Act was enacted, we thought that the older flats would cost more to maintain. So we gave more grants to HDB. HDB gave more grants to Town Councils for older flats. But over the years, we find that when we upgrade an old flat, let us say, an upgraded 3-room flat, the cost of upgrading and maintenance goes up because we put in more lifts, faster lifts, more landscaping and more lighting points. So it would cost more.

Mr Chiam See Tong: Can I clarify, Mr Deputy Speaker?

Mr Deputy Speaker: Mr Koo, are you giving way?

Mr Koo Tsai Kee resumed his seat.

Mr Chiam See Tong: I am saying that the Minister has the last say. The Minister may, from time to time, prescribe a minimum amount of the service and conservancy charges which are paid, or are due and payable, or both, to a Town Council under section 38. So the amount is actually determined by the Minister. The Minister will say, "Look, you cannot charge at this rate. You must charge at another rate." because he feels that that is the minimum rate he should charge. So the S&CC is finally the Minister's decision. It is not the Town Council, unless I am wrong.

Mr Koo Tsai Kee: I think you are wrong there. I think you have read the part on the sinking fund.

Mr Chiam See Tong: Okay, you may be right there.

Mr Koo Tsai Kee: So he is convinced that we are giving Town Councils the flexibility of charging different rates for the same flat type because we find that upgraded flats cost more to maintain than older flats. We also recognise that for different group of flats, for example, we have standard 4-room flats, 4-room design-and-build flats and 4-room design-plus flats, the design-plus and design-and-build flats actually cost more to maintain than a normal standard 4-room flat because they are more luxurious and have more landscaping and things like that. Whether the Town Council wishes to charge different rates, we leave it to the Town Council.

Since he mentioned about sinking fund, we find that some Town Councils are less than diligent in collecting their arrears from the residents. In other words, if they are supposed to collect Y$ from the residents per month in S&CC, they only collect X$, so they have a shortfall. What they do is they send a portion of the X$ into the sinking fund. We find the sinking fund is growing very slowly. We fear that when the time comes for cyclical upgrading, like re-roofing or changing of lifts, there may not be enough money in the sinking fund. This comes about because the MPs may want to be popular and may be less than diligent and he may not want to antagonise the residents. So we want the Town Councils to now reflect the arrears portion in the financial statements. So the residents and the public will know that there is a significant amount of arrears which were not collected and that amount should go into the sinking fund. In other words, we are going for a collectible system and the accounting should be in an accrual system. The Minister will direct on that.

I think I have covered most of the points raised by Mr Chiam. Unless I have not done so, he can seek clarification.

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. - [Mr Koo Tsai Kee].

Bill considered in Committee.

[Mr Deputy Speaker in the Chair]

Clause 1 -

The Chairman: In page 1, line 5, the citation year "1998" will be changed to "1999". This will be done.

Clause 1 ordered to stand part of the Bill.

Clauses 2 to 5 inclusive ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.