LEVY ON COURSE FEE COLLECTIONS (Rationale of imposition by People's Association)

Mr Charles Chong asked the Minister for Community Development and Sports (a) what is the (i) rationale for the People's Association (PA) imposing a 10% levy on the course fee collections from Community Centres (CC) and Residents' Committees (RC) from 1st September 2004, (ii) approximate cost incurred by PA in providing support to trainers and private operators in the running of the CC/RC courses and activities, and (iii) estimated amount that will be generated as a result of the proposed levy; and (b) how does PA intend to ensure that individual trainers and private operators absorb the levy rather than pass it on to residents in the form of higher fees, reduced service or reduced share to the CCs and RCs.

The Minister of State for Community Development and Sports (Mr Chan Soo Sen) (for the Minister for Community Development and Sports): Mr Speaker, Sir, the 10% levy was imposed on the course fee collections because the People's Association (PA) has been incurring higher costs over the year providing capital, manpower and operating expenditures to support Community Clubs/Community Centres (CCs) as well as Residents' Committee (RC) centres. It also provides trainers and course operators a wide range of support. These overhead costs are not charged to the trainers and course operators. This is obviously not a sustainable state of affairs. Hence, PA has decided to recover part of the costs by levying a 10% share of course fee collections in two stages: 5% from 1st September 2003, and 10% from 1st September 2004.

The current manpower cost of supporting CC and RC courses amounts to about $5 million per year. In addition, about $3 million per year is spent on maintaining facilities needed to conduct the courses. The total cost incurred by the People's Association in supporting trainers and private operators in the running of the courses is therefore about $8 million a year. This cost does not include the expenses incurred by PA in upgrading the trainers as well as in upgrading the facilities.

CC and RC centre course fee collections range from about $15 million to $20 million annually. Therefore, the 10% levy means PA would eventually receive between $1.5 and $2 million per year. In the first year, only half of this amount will be collected. Hence, the collection of 10% levy recovers only a small part of PA's cost in organising the courses. This is just a small sharing of costs by the trainers and operators with the PA.

The PA does not think the levy will lead to reduced service or reduced share to the CCs and RCs. Conducting courses at the CCs and RCs remains attractive to the course operators. At 40%, the total levy collected by CCs/RCs and PA remains lower than the private sector. The CCs and RCs continue to give good support to the course operators.

As for the course fees, the CCs and RCs have agreed to PA's appeal to hold course fees at current level for at least six months until February 2004. Beyond that, course fees will depend on the willingness of the customers to pay. However, the course operators need not increase course fees to cover the 10% levy if they do not want to, because they could recoup by increasing productivity, such as by taking two or perhaps three additional participants per course.

Mr Charles Chong (Pasir Ris-Punggol): Mr Speaker, Sir, is the Minister of State aware that some of these operators have contractual agreements which would be valid beyond 1st January 2004? Does PA intend to honour these contractual agreements with the operators?

Mr Chan Soo Sen: What type of contractual agreements? PA can look at them.

Mr Charles Chong: Mr Speaker, Sir, may I draw the Minister of State's attention to a letter which was sent out to all grassroots leaders. In the letter, it says that "where there are contractual agreements with private operators, PA, CCs or RCs will renegotiate to apply 5% of the share for the PA at the first opportunity on or after 1st September 2003, and in no case later than 1st January 2004". Some of these RCs have contractual agreements with the operators which last for two years, and these go beyond 1st January 2004. So, will these contracts be honoured?

Mr Chan Soo Sen: As I have said earlier, we will look at the contractual agreements specifically and then advise the Member.

Mr Speaker: Mr Charles Chong, could you please raise your hand first so that I know you want to speak?

Mr Charles Chong: I am sorry. Mr Speaker, Sir, could I have a clearer response from the Minister of State? Do we honour these contracts or do we not honour these contracts?

Mr Chan Soo Sen: The Member has quoted the word "negotiate". We will negotiate with the intention of complying with the circular that has been sent. But if there are very, very strong contractual agreements that affect the ability to reach an agreement, PA is prepared to look at it on a case-by-case basis.

Mr Tan Soo Khoon (East Coast): Mr Speaker, Sir, if increasing cost is of great concern to the People's Association, can the Minister of State explain to this House why is it necessary to have the logo of the Residents' Committee changed at such a time? How much did the whole exercise cost the PA, and how much would it cost all the RCs in Singapore to effect the change?

Mr Chan Soo Sen: Can the Member repeat the part about the increase as I could not quite get him?

Mr Tan Soo Khoon: I said that if increasing cost is of great concern to the PA, why did the PA feel it necessary to change the RC logo at this point of time. How much does the whole exercise cost the PA and how much would it cost all the RCs in Singapore?

Mr Chan Soo Sen: I do not have the cost figure for the changing of the logo. But the change of logo is a separate issue. We have come to the stage where we feel that it is good to review the logo. In fact, quite a number of Members of this House had also given feedback that it was about time to consider the change of logo. We therefore conducted that particular review. A design competition was organised and a new logo was introduced by looking at some winning designs and modifying to suit our needs.

Mr Sin Boon Ann: Would the Minister of State not agree with me that if the cost is going to be passed on to the residents, imposing a levy of 5% at this moment may not be an appropriate time because, ultimately, it would be the residents who end up picking up the 5% levy rather than the trainers?

Mr Chan Soo Sen: I think we can accept that there is no good time to impose an additional levy, and we did say that, because of the economic condition, we asked the RCs to hold the cost to the residents for six months and they have agreed.