COPYRIGHT (AMENDMENT) BILL

Column: 799

COPYRIGHT (AMENDMENT) BILL: Order for Second Reading read.

The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Column: 800

Background

As background, Members of the House may recall that in November last year, we amended the Copyright Act to strengthen our copyright regime and to ensure that it remained relevant in the face of technological advancement. Several of the amendments were also to fulfil the copyright aspects of our United States-Singapore Free Trade Agreement obligations.

The Bill today, Sir, seeks to clarify and refine the law to address issues in the implementation of some of the provisions in the Copyright Act. This is in response to feedback received after the last round of amendments came into force in January this year. Due to the very fast pace of developments in digital technology in an online environment, let me say that we can expect refinements to the law to deal with various practicalities that arise from time to time.

Sir, we made available a consultation draft version of the Bill on the website of the Intellectual Property Office of Singapore from 21st March to 19th April this year. All feedback, including responses from IP rights organisations and user groups, was carefully considered, and adjustments made to the proposed amendments, wherever appropriate.

Let me turn to the key features of the amendments.

Temporary reproductions/user caching

First, amendments to the provisions dealing with temporary reproductions and user caching. Sir, when a user receives or makes an electronic communication, or surfs the Internet, incidental copies of material are automatically made on the

Column: 801

user's computer. For example, when an Internet user visits a website, a copy of the website content is automatically made by the user's computer, primarily to speed up the loading of the webpage on a repeat visit. These copies are made automatically, and involve no direct action by the user. As such, the user should not be held liable for any copyright infringement occurring under such circumstances. Therefore, the existing Copyright Act exempts the making of such incidental copies from copyright infringement. Clauses 2, 4, 9 and 15 of the Bill amend sections 38A, 107E, 193E and 252D respectively to clarify, for avoidance of doubt, that the exemption only applies to short-lived incidental copies, and not to long-lasting copies even if they are made automatically.

Mr Speaker, Sir, clauses 2 and 4 of the Bill also stipulate that the exemptions under sections 38A and 107E do not apply if the material or the communication itself is infringing. In addition, these provisions do not authorise any subsequent use of the short-lived incidental copies. These conditions are further safeguards against abuse of the exemptions which are intended for cases of innocent technical copying.

Limitation of Network Service Provider (NSP) liability

Next, let me now turn to limitation of liability for Network Service Providers or NSPs. Sir, under the existing framework, NSPs must satisfy certain conditions to qualify for exemption from liability to the copyright owner for monetary relief. The proposed amendments affect two of these conditions, namely, the issue of acquisition of knowledge and the issue of financial benefit.

Column: 802

Acquisition of knowledge

On acquisition of knowledge, a condition for exemption from liability to the copyright owner for monetary relief is that if an NSP has knowledge of infringing material on its network or on another network to which it refers or links a user, the NSP must expeditiously take reasonable steps to remove or disable access to this material.

Currently, there are two conditions which must be satisfied before an NSP which is not an individual will be treated as having any knowledge. First, the actual or constructive knowledge must be acquired by a representative designated by the NSP to receive take-down notices from copyright owners. Second, any communication conveying such knowledge to the designated representative must be in the form of a prescribed notice.

Sir, we intend to strike a better balance between the interests of NSPs and copyright owners, and therefore, clause 7 and clause 12 amend section 193D(2), (3) and (5) and section 252C(2), (3) and (5), respectively, to do away with the condition that the actual or constructive knowledge must be acquired by a designated representative, and to allow the notice to be substantially in accordance with the prescribed form, without the necessity for strict conformance.

Financial benefit

I turn to the other condition for an NSP to qualify for limited liability which is, that it must not receive any financial benefit directly attributable to the infringement.

Sir, the Copyright Act currently sets out the conditions that determine if an NSP has received financial benefit. First, financial benefit does not include any benefit the NSP receives merely for

Column: 803

providing online services. Second, financial benefit can only be said to be linked directly to the infringing activity if the NSP knew at the time it received the benefit that copyright infringement was involved.

However, Sir, NSPs may be able to profit from infringing activity while still enjoying limited liability.

Therefore, clauses 7 and 12 amend sections 193D(6) and 252C(6) to replace the two conditions with factors which the courts can now consider in determining whether a financial benefit is directly attributable to an infringement. These factors are: firstly, the industry practices in relation to the charging of services by NSPs; secondly, whether the financial benefit was greater than the benefit that would usually result from charging in accordance with accepted industry practices; and finally, all other matters that the court considers relevant.

This change gives our courts a wider discretion in determining whether, on the facts of any particular case, an NSP should enjoy limited liability and would allow new developments, and innovative services and pricing policies, to be taken into account. Overall, we believe the amendments will provide a better balance of interests between copyright owners, NSPs and subscribers.

Mr Speaker, Sir, NSPs have expressed concerns that, in order to avoid or limit liability, they may, as a result of the amendments, be compelled to police their networks for infringing materials to ensure that they are not receiving financial benefit that involves infringing activities. This is because not having knowledge of infringing material will no longer automatically exempt NSPs from being considered to have received a financial benefit. Such policing could result in an undue burden for NSPs.

Column: 804

To address this concern, clauses 5 and 14 provide for the new sections 193A(3) and 252CF(2), respectively, which clarify, for avoidance of doubt, that NSPs do not need to monitor their services nor affirmatively seek facts indicating infringing activity. NSPs are also not obliged to gain access to, remove or disable access to online material where such conduct is prohibited by law.

_Liability for authorising infringement
_

Next, I turn to NSP liability for authorising infringement. Sir, under our copyright framework, a person who "authorises" copyright infringement by the provision of facilities may, under certain circumstances, be liable to legal action. An NSP, by the nature of its business, may thus fall into this category. Sir, in order to ensure that NSPs are not subject to unreasonable accusations of authorisation liability, sections 193DA(5) and 252CA(5) of the existing Copyright Act provide that an NSP cannot be treated as having authorised an infringement simply because it has done one of three enumerated acts. These are, firstly, that the NSP has provided a facility that was used by another person to carry out the infringing activity; secondly, that the NSP has received a notice informing it of the infringing activity; and, thirdly, that the NSP has acquired any knowledge of the infringing activity.

Clauses 8(c) and 13(c) amend section 193DA(5) and 252CA(5), respectively, to allay concerns raised by copyright owners that the current wording might be misconstrued as immunising an NSP against authorisation liability even in a clear case involving such liability. The question of an NSP being liable for authorising infringement will continue to be left to the Courts to decide, based on the facts of each case.

Column: 805

_Restoration of online material
_

Let me now turn to the restoration of online material. As Members may recall, the take-down and restoration procedure for NSPs provides that when an NSP receives a take-down notice from or authorised by a copyright owner relating to any material on a website, it will remove or disable access to the material if the material is on a website hosted on its network, or disable access to the material if the material is on a website hosted on another network. If the person who made available the material on the website disagrees, he can in turn file a counter-notice to have the material or access restored. If the copyright owner wishes to stop the restoration, he can institute court proceedings and inform the NSP of these proceedings before the material or access is restored. If no such action is taken, the NSP will proceed to restore the material or access.

Mr Speaker, Sir, the current provision does not specify the exact window within which the copyright owner must take legal action to stop the material or access from being restored, or exactly when the NSP should restore the material or access. Clauses 8(a) and 13(a) amend sections 193DA(2) and 252CA(2), respectively, to provide for specific time periods within which these actions must be undertaken by the relevant parties. Specific time periods will give certainty to all relevant parties of the expected actions on their part.

Sir, the amendments also provide that if the material was removed, or access to the material was disabled, in reliance on a take-down notice, the NSP must give a copy of the counter-notice to the copyright owner (or his representative) who furnishes the take-down notice, unless prohibited by privacy or data protection laws. The particulars on the

Column: 806

counter-notice may assist the copyright owner in determining his next course of action.

Just to conclude on NSP provisions, these provisions do not mean that an NSP is automatically liable for copyright infringement and monetary relief payable to copyright owners if it chooses not to meet the conditions to qualify for limited liability. Where the conditions are not met, the NSP's liability will simply be governed by the general provisions of the Copyright Act. This position does not change with this latest round of amendments to the NSP provisions. Overall, the amendments provide a better balance between the interests of NSPs, website owners and copyright owners.

_Rights management information and circumvention of technological measures
_

Next, let me turn to rights management information and circumvention of technological measures.

Members would recall that the previous amendment to the Copyright Act criminalised certain prohibited acts in relation to rights management information and the circumvention of technological measures, if they are committed wilfully and for the purpose of obtaining a "commercial advantage".

Sir, clauses 16 and 17 amend the relevant sections 260 and 261C to expand the scope of criminal provisions to include acts wilfully committed for "private financial gain". Let me explain that this is necessary because in this digital age, it is possible for a person to potentially cause as much harm for private financial gain as for commercial purposes. The courts will determine on the facts of each case whether the act was committed for "private financial gain".

Column: 807

Conclusion

To conclude, Sir, these amendments, most of which are fairly technical, are important, and will fine-tune and enhance our copyright regime and provide a better balance between the interests of end-users, NSPs and copyright owners.

Sir, I beg to move.

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. - [Prof. S Jayakumar].

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

Column: 807

TOWN COUNCILS (AMENDMENT) BILL: Order for Second Reading read.

The Minister of State for Trade and Industry (Mr Heng Chee How): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

_Objective
_

Sir, the proposed amendments to the Town Councils Act will provide the legislative framework for Town Councils to carry out their own lift upgrading works using part of their sinking funds. This will help to speed up the lift upgrading programme and help us achieve our objective of providing direct lift access for all eligible HDB blocks within 10 years.

This Bill will introduce a new section on 'Lift Upgrading Works' under Part IVA of the Town Councils Act. It also seeks to widen certain powers of Town Councils to facilitate their day-to-day operations. The Bill will also impose penalties on a Town Council and its respective Chairman and Secretary, if the Town Council were to utilise its operating and sinking funds

Column: 808

for purposes not specifically authorised in the Act or its subsidiary legislation.

Let me now explain the various key provisions.

Town Councils' Lift Upgrading Programme

The Bill will empower Town Councils to carry out their lift upgrading works under the Town Council Lift Upgrading Programme (or TC-LUP). We will allow Town Councils to use up to 10% of their residential sinking funds for the TC-LUP. Clause 6 will introduce a new Part IVA on lift upgrading works by Town Councils. The manner in which Town Councils can implement the TC-LUP largely mirrors sections 65A to 65L of the Housing and Development Act, which cover the upgrading works carried out by the HDB. Amongst other things, this means that precincts proposed for TC-LUP have to be gazetted before they can be upgraded, and Town Councils will have the power to recover improvement contributions from their residents who benefit.

To implement TC-LUP, Town Councils will need to obtain HDB's prior approval and the support of at least 75% of residents in the block who will benefit from the lift upgrading works, the same as for HDB's upgrading programmes. HDB's prior approval is necessary, because as the lessor of HDB flats, it has an inherent responsibility to ensure that any improvement works that are carried out are carried out safely.

Currently, Town Councils are similarly required to obtain HDB's permission as landowner prior to carrying out improvement works to the common property in HDB estates.

Under the TC-LUP, residents will need to co-pay for the lift upgrading works, similar to HDB's LUP. This is to ensure that residents carefully consider their need for lift upgrading when voting for the TC-LUP.

Column: 809

Clause 6 of the Bill will empower Town Councils to recover from residents benefitting from the lift upgrading works their share of the TC-LUP costs. The contribution that Town Councils recover from each resident household benefitting cannot be lower than what residents would have paid had HDB carried out the same lift upgrading works in the precinct. Clause 6 also prescribes how Town Councils can impose interest and a penalty for late payments; how they can recover unpaid payments, including the sale of the flat as a last resort; and also the order of charge in which the sale proceeds of a flat will be disbursed.

As with HDB's upgrading programmes, residents who benefit from TC-LUP will be allowed to use their CPF balances to pay for their share of the TC-LUP costs. Clause 12 will make related amendments to the CPF Act to allow this. It will also create a charge on the HDB flat to secure the repayment to the CPF of the amount withdrawn for the TC-LUP works.

_Offences for the misuse of Town Council funds
_

I shall now move on to the rationale for introducing offences under the Act if Town Councils were to use their funds in a manner not specifically authorised in the Act.

Sir, the control and use of Town Council funds are set out under section 33 of the Town Councils Act. Section 33(6)(a) provides for the circumstances under which Town Councils can use their sinking fund monies, while section 33(6)(b) allows Town Councils to disburse monies from their operating funds to carry out the duties and functions of Town Councils under the Town Councils Act or any other written law.

Town Councils have been in existence for 16 years. They have built up

Column: 810

substantial amounts of sinking funds and accumulated surpluses.

The sinking funds of Town Councils largely comprise S&CC contributions from residents. They are meant for the long-term cyclical maintenance of HDB estates. Works like the replacement of roofing systems, water tanks and electrical sub-systems, repainting, and major repairs and maintenance of common property, are necessary to ensure that our HDB estates are well maintained and provide a conducive and safe living environment for residents. The sinking funds need to be safeguarded so that they can finance these maintenance works when they are due.

Currently, there are no provisions under the Town Councils Act to take to task Town Councils that misuse their funds. Although this is not

a concern today, we need to strengthen the corporate governance of Town Councils going forward. This is the rationale for introducing provisions under the Town Councils Act that will make it an offence if a Town Council uses its funds in a manner not specifically authorised in the Act.

Clause 7 of the Bill will allow Town Councils to use their sinking funds to implement the TC-LUP. It will also make the contravention of section 33(6)(a) and (b), which governs the use of the Town Council's operating and sinking funds, an offence under the Town Councils Act. The penalty for the offence will be a fine of up to $5,000. The principal officers in charge of running the Town Council, that is, the Town Council Chairman and its Secretary, will also be liable if the Town Council commits such an offence with their consent or due to their negligence.

I earlier mentioned that Town Councils would be allowed to use up to 10% of their sinking funds to implement the TC-LUP. As a policy, we will only allow

Column: 811

Town Councils to implement the TC-LUP for blocks where the cost per benefitting unit does not exceed $5,000 per benefitting unit. We need to set a reasonable limit so that, within the budget, the benefits of lift-upgrading are spread amongst many blocks as possible. In other words, Town Councils do not use a disproportionate amount of their TC-LUP budget on a small number of blocks where the lift upgrading works are very costly. Clause 6 of the Bill will empower the Minister to make rules relating to the TC-LUP. In making these rules, we will make it an offence if a Town Council exceeds its expenditure limit of $5,000 per benefitting unit under the TC-LUP. As with clause 7, the Town Council Chairman and the Town Council Secretary will also be liable if the Town Council commits such an offence with their consent or due to their negligence. However, the Rules will be crafted with sufficient flexibility so that Town Councils will not be unfairly penalised if the cost per benefitting unit exceeds $5,000 under extenuating circumstances.

Let me reiterate that the penal clauses proposed in the Bill are very specific. They are to safeguard the use of Town Council funds, ensuring that Town Councils do not use their funds in an unauthorised manner or exceed the TC-LUP cost cap. These penal clauses will not cover other infringements under the Act.

Amendments to other sections

Sir, I shall now go through the other proposed amendments in the Bill.

Clause 2 amends section 3(2) of the Act to extend the timeframe for Town Councils to be constituted after the publication of the polling results of a Parliamentary election from the current eight days to 14 days. This will give MPs and the relevant Government agencies more time to work out the boundaries of

Column: 812

the new towns, and to prepare and publish the required Orders.

Section 19 of the Act prescribes the functions of Town Councils. Currently, Town Councils can make improvements to common areas in HDB estates, subject to HDB's consent. They can also use their funds to maintain facilities outside common property, with the approval of the Minister. Clause 3 amends section 19 to empower Town Councils to also erect, repair and maintain facilities outside common property upon the Minister's approval and with the appropriate landowner's agreement. Clause 7 amends section 33(7) to clarify that Town Councils may use their funds for these purposes, ie, to erect, repair and maintain facilities outside common property, again subject to the Minister's approval and the landowner's agreement. These provisions will give Town Councils more leeway to propose improvement works within their towns, which will benefit their residents.

Clause 4 amends section 21(1) to clarify that Town Councils will be required to repair and maintain facilities erected outside common property upon the approval of the Minister and the consent of the landowner. This is to ensure that Town Councils are responsible for upkeeping those facilities outside common property which they have requested to build.

Section 23 of the Act currently allows Town Councils, through their staff or agents, to enter a HDB flat to carry out works in the discharge of their duties and powers under sections 21 or 22 of the Act. However, it does not provide for Town Councils to carry out investigations before proceeding with the repair works. Clause 5 amends section 23 to enable Town Councils to carry out such investigations within the flats after giving sufficient notice to the owner.

Column: 813

Clause 8 amends section 39(14) to include the Personal Representative of a deceased lessee as a party who will be liable for any outstanding S&CC due from the deceased lessee. This is to overcome the operational constraints faced by Town Councils today in recovering outstanding S&CC in cases where the lessees have passed away.

Section 44 of the Act currently provides for the recovery of outstanding S&CC by creating a charge on the flat, prescribing the conditions under which a flat may be sold, and the order in which the proceeds are to be disbursed upon the sale of a flat. Clause 9 amends section 44 to alter the priority of payments to various parties in the event of a sale of flat to facilitate the recovery by Town Councils of unsecured payments under the TC-LUP.

Clause 10 amends section 46 to enable Town Councils to offset their legal costs against the fines collected, before paying the balance amount into the Town Council fund. This amendment was proposed by the Town Councils to address the administrative constraints they face today in the prosecution of offenders under the Act or their by-laws. Under current provisions, Town Councils are required to pay all the fines and moneys collected from the composition of offences into the Town Council fund, before drawing from the fund again to pay for their legal costs.

Section 50 of the Act currently provides that the Minister may appoint any person to exercise or perform certain powers of a Town Council subject to certain timelines stipulated in the Act. This section has not been invoked. As section 50 is intended to address emergency situations, clause 11 amends this section to shorten the notice period the Minister must give to the Chairman of

Column: 814

a Town Council before he invokes his power to appoint another person to take over the powers and duties of the Town Council from 21 to seven days. It will similarly shorten the time given to the Chairman to make representations to the Minister from 21 days to seven days.

Finally, clause 13 seeks to make two related amendments to the Housing and Development Act. The first amendment seeks to extend the power to declare precincts for upgrading works, which is currently vested with the Minister for National Development, to the Minister of State for National Development. This is in anticipation of the larger number of precincts that will be declared for upgrading works, as we speed up lift upgrading. The second amendment is to bring the provisions under section 65H on the recovery of improvement contribution from the sale of flat in line with that under the new Part IVA of the Town Councils Act. It essentially requires HDB to defer the sale of a flat with outstanding improvement payments from the lessee if the flat has movable properties of sufficient value which could be sold to offset the debt.

Sir, I beg to move.

Question proposed.

Dr Amy Khor Lean Suan: Sir, the Prime Minister's announcement in January this year that the timeframe to complete lift upgrading will be shortened from 15 years to 10 years has brought cheer to many HDB residents. Allowing the Town Councils to use up to 10% of their sinking fund to undertake lift upgrading would help the Government achieve this 10-year target. This should benefit countless residents staying in the close to 4,000 blocks with lifts yet to be upgraded.

However, Sir, the proposed amendment to the Town Council Act to empower Town Councils to carry out lift

Column: 815

upgrading works has raised some issues. I would like to highlight five of these areas. Firstly, the timeframe to complete lift upgrading. The majority of the blocks in my ward were built before 1990. Many residents are asking me when they would be able to benefit from the lift upgrading programme. In their view, the 10-year timeframe is still too long. Many of the elderly folks tell me that since they are already so old, they may not have many more days to enjoy the use of the lifts. Sir, I am sure this is a common sentiment among the older residents in other estates.

Sir, the Minister for National Development noted in Parliament in March this year that there were some 3,000 high-rise blocks and 800 low-rise blocks that were still waiting for lift upgrading Of these, some 95% are eligible for lift upgrading under the new criteria which incorporate a cost cap of $30,000 per benefitting unit. If the target of completing the lift upgrading programme within the next 10 years is to be achieved, then, on average, some 360 blocks would have to undergo lift upgrading annually. I would like to ask the Minister if indeed, on average, some 360 blocks or thereabouts would undergo lift upgrading every year, starting from this fiscal year. If not, how is the Ministry planning to meet the target timeframe of 10 years? Furthermore, I would like to ask the Minister if the Ministry now has a more accurate estimate of how many of these blocks are eligible for lift upgrading under the TC-LUP. It was noted by the Minister in March that approximately 300 to 400 blocks could benefit under the TC-LUP. I would also like to ask how is the Ministry coordinating with the Town Councils and the HDB for the implementation of their respective LUP programmes, so that the LUP can be completed as soon as possible with minimum overlap and maximum efficiency.

Column: 816

Sir, while the effort to shorten the cycle of lift upgrading from 15 to 10 years is commendable, I urge the Government to look at more ways to further shorten this period. If the programme were to be completed in the next 10 years, it would, in effect, have to take some 15 years to complete the entire programme since its inception in 2001. For instance, my parliamentary colleague, Mr Ang Mong Seng, had previously suggested reducing the period between the announcement of the LUP and the commencement of the works. He also suggested looking into more innovative and effective ways to make lift upgrading more economical and also to hasten the process. I would like to ask the Minister if any headway has been made regarding these proposals.

Secondly, the proportion of sinking fund available for lift upgrading. Under the proposed section 33(6) of the Town Councils (Amendment) Bill, Town Councils can use a portion of the sinking fund to meet the cost and expenses of the TC-LUP. This requires the Minister's approval or direction and it only can be done with the consent of the owner of the non-common property. It is understood that up to 10% of each Town Council's sinking fund for residental properties, calculated as at 31st March 2004, can be used to fund the lift upgrading. However, the total amount of this sinking fund spent for the lift upgrading works must not exceed $5,000 per benefitting unit, excluding the lessee's co-payment.

Town Councils comprising older estates, with HDB blocks constructed before 1990, will have many blocks to be upgraded despite the fact that the LUP, IUP-Plus or MUP is still ongoing. For these older estates, this 10% of sinking fund cap as at a specific date may only cover a small proportion of the blocks in the towns that are eligible for LUP. This restriction will retard the speed at which all blocks in the estate can be fully

Column: 817

upgraded. Perhaps the Ministry could consider allowing a variation to this cap to enable TCs to accelerate their LUP. Every quarter, the Town Council contributes 30%, 35% or 40% of the service and conservancy charges to the sinking fund, as prescribed by the Town Council Rules. At the end of each financial year, the Town Council would know the sinking fund balance of that year. As the amount contributed and expended from sinking fund for each year can be calculated, perhaps the Ministry could look into allowing up to 10% of the surplus sinking fund contribution for that financial year after the accounts are audited to be transferred for Town Council-LUP. More blocks within that town could then benefit from the TC-LUP. This should help to speed up the lift upgrading programme significantly for residents, especially in precincts with a high proportion of flats built before 1990.

Thirdly, the provision for recovery of the improvement contributions. Section 44 of the existing Act provides for the recovery of conservancy and service charge from the sale of flat. This section is triggered when the conservancy and service charges remain unpaid on the expiry of 90 days after the Town Council had served on the owner of the flat a written demand of such charges. Before serving or publishing a notice of sale to declare its intention of selling the flat, the Town Council needs to obtain the prior written approval of the HDB. Under the proposed amendment, a similar provision is now introduced under section 24F for recovery of improvement contributions for the lift upgrading works under TC-LUP. However, there are differences. Under section

24F(1), the expiry period provided for is three months, instead of 90 days, although the practical difference is likely to be small. But it could be between 90 and 91 days. More importantly, unlike the existing provision, the new section

Column: 818

24F(5) provides that the Town Council may proceed to sell any flat which is subject to a charge without any mention of the need to first obtain approval from the HDB. HDB, as both reversionary owner and quite commonly the mortgagee, should surely be consulted before such drastic action is taken.

Sir, there is also some worry on the ground that, without additional safeguards, the Town Council may irresponsibly invoke this section and cause hardship, especially among the lower income families, the elderly who have little or no savings and no means of support, as well as those who may be facing temporary financial hardship due to retrenchment. There is a need to reconcile the two provisions on the recovery of conservancy and service charge under the existing section 44 and the recovery of improvement contribution under the new section 24F in order not to avoid confusion and for consistency and clarity. Explicitly stating that HDB's approval is needed before the Town Council can invoke section 24F to sell the flat to recover the improvement contributions would help allay some of the concerns of owners. Furthermore, it would be helpful if the Ministry could give assurance that the various modes of payment for the improvement contributions that are currently available to lessees under HDB's LUP, such as longer instalment payments and deferred payments for residents aged above 55 years, are also available to residents under the TC-LUP as indeed they ought to be.

Fourthly, the penal provisions. It is stated that any contravention of the provisions of the Act could subject the Town Council to be convicted of an offence and the sentence may be a fine of up to a maximum of $5,000. In addition, if the Town Council is guilty of an offence, the Chairman, Secretary or person who acts in such capacity may also be liable to the same maximum fine if

Column: 819

the offence is committed with the consent, connivance or neglect of that person. This clause is expanded to all expenditure from the Town Council fund - be it sinking fund or operating fund - and the Chairman, Secretary or any person would be fined if he has consented to or is in connivance with or has been negligent.

Sir, like MOS, I am all for sound corporate governance, whether the organisation is a commercial entity, a charitable or community institution, particularly in the light of recent events. However, while the counsellors can be likened to a company board of directors who have a fiduciary duty to the shareholders of the company, many counsellors have neither the technical training, nor the ability to keep an eagle eye on the affairs of the Town Council. Many of the Town Council members are volunteers and grassroots leaders. The duty by association thus appears very onerous and will discourage capable, honest and genuine people to serve in such capacities because they now run the risks of being sentenced for acts of negligence they were not totally responsible for. Is this clause really necessary as all persons in any event are subjected to the Penal Code? If any person has been guilty of, say, criminal breach of trust or misuse of funds, he will be brought to task under the more generic Penal Code. Is there a real need for such penal provisions in the Town Councils (Amendment) Bill which may breed a mentality of "spend less, less mistake made" or shao zuo shao cuo .

Fifthly, the provision for the eligible low rise blocks in upgraded precincts and ineligible high rise blocks. Sir, the Ministry's decision to include low rise blocks in the lift upgrading programme is indeed welcome. I would like to ask the Minister of State whether all the low rise blocks eligible for lift upgrading subject to a cost cap have been identified and made

Column: 820

known to the Town Council and grassroots organisations. Additionally, I would like to ask the Minister of State how the Ministry intends to handle those low rise blocks which are eligible for lift upgrading but are located in precincts which have already been upgraded under the MUP, IUP Plus or LUP. When will these blocks be able to benefit from the lift upgrading programme? The Ministry has also announced a cost cap of $30,000 per benefitting unit for its lift upgrading programme in order to maximise the number of blocks that can benefit from this programme. It was reported in the press that about 190 blocks had been identified to be too costly for lift upgrading. Considering that lift access is much coveted and would be even more so as the population ages, those blocks which are not eligible for lift upgrading may suffer from poor demand if existing owners were to sell their units. There could be a risk of such blocks suffering more quickly from urban blight with many vacant units as owners are unable to sell off their flats in the open market. I would like to ask the Minister if the Ministry has any alternative plans for these blocks which do not qualify for lift upgrading under the current criteria, such as Selective En-bloc Redevelopment for these blocks.

Mr Speaker, Sir, in conclusion, I would like to commend the Ministry for shortening the timeframe for the implementation of the lift upgrading programme from 15 to 10 years, and for initiating the Town Council lift upgrading programme. The announcement to focus more on LUP and to include low rise blocks in the programme is also timely and a welcome move. It shows that the Government is sensitive and responsive to the needs and feedback of the public. I would like to urge the Ministry to take into account the issues and concerns I have raised and further improve the LUP programme to benefit more residents.

Column: 821

Subject to this qualification, Sir, I support the Bill.

Mr Chiam See Tong (Potong Pasir): Thank you, Sir, for allowing me to join in this debate. I support this Bill in principle on the grounds that at least the Minister still allows Town Councils to replace lifts with their sinking funds. Other than that, I notice that this Bill has not lived up to the spirit of the Town Councils Act when it was first enacted in 1988.

[Mr Deputy Speaker (Mr S Iswaran)** **in the Chair]

5.07 pm

When the Town Councils were formed, they were touted to be a progressive move. With the formation of Town Councils, residents in HDB flats were supposed to be given a bigger say in running the estate and that they would be developed into more responsible residents. Residents from then on can be developed into active participants in the affairs of their estates rather than only onlookers, and expect everything to be done for them. I do not see a more liberalising of the Town Councils Act in this new amendment.

Sir, may I comment on section 24D(3) and (4). I shall now read the relevant parts of the two sections. Under section 24D(3), it reads, "the amount of improvement contribution payable by the owner of a flat shall be determined by the Town Council whose decision shall be final" and section 24D(4) reads, "Any improvement contribution determined by a Town Council in respect of any lift upgrading works in a precint shall not be less than the improvement contribution that the Board might have determined ... if the Board had carried out similar upgrading works in that precinct.". Sir, I am surprised that the Minister wants to

Column: 822

make this law because he is presuming that the Town Councils cannot get a similar job done cheaper than the HDB and even when a Town Council can get a similar job done cheaper, it is not allowed to get the job done at a lower price. I wonder why the Minister wants the Town Council to pay more when it can save costs for its residents.

A case in point, Sir, is the recent lift upgrading carried out by my town council at Potong Pasir, Lorong 8 Toa Payoh. We replaced 29 lifts there at a cost of just over $2 million. The estimate of the HDB for that similar job like ours is about $4 million. In such an instance, is the Potong Pasir Town Council supposed to charge flat owners improvement contributions based on $2 million or $4 million? Under this Bill, the Potong Pasir Town Council will have to make residents pay their lift improvement contributions based on the higher cost at $4 million because the amendment seems to say that the Town Council cannot charge anything cheaper than the price paid by the Housing and Development Board for similar work done. This, of course, shall make the Town Council richer. But the flat owners would be terribly dissatisfied and unhappy.

The new section 33(6B) is particularly worrying and I strongly object to it. This section makes the Chairman and Secretary of the Town Council personally liable for certain breaches of the Town Councils Act. I see that it is completely unnecessary to implement criminal elements into the Town Councils Act, especially with such a severe punishment, ie, a maximum fine of $5,000. This kind of draconian punishment will certainly hold back the Chairman and Secretary of the Town Council from showing initiative to do good for the residents.

An example is the recent planting of 20 trees at Potong Pasir. Residents there requested for the trees to be planted by the side of the footpath linking the MRT

Column: 823

station and Blk 147 at Potong Pasir to give them shade. The land is not a common property but belongs to SLA, but managed by the HDB. The Potong Pasir Town Council wrote to the relevant authorities to obtain permission to plant those trees. There was delay, overly delay, as usual. After six months of correspondence, the Town Council was told that permission had been given to the Potong Pasir CCC to plant those trees. Members may think that this is laughable. But it is true. At Potong Pasir, the CCC wants to do the work of the Town Council at its own expense. Anyway, in this instance, the Potong Pasir CCC, after having been granted permission to plant the trees, was dragging its feet. On our part, we waited for a whole month and still the trees were not planted. As a result, my Town Council wrote to the HDB to tell them that if the trees were not planted within 14 days, the Potong Pasir Town Council shall go ahead to plant the trees, as requested by the residents. Failing a reply from the HDB and no sign of any trees planted by the CCC, the Potong Pasir Town Council went ahead to plant the 20 trees along that footpath. The HDB, of course, quickly got wind of it and was angry.

I believe the law is amended today to give the HDB powers to deal with such a situation where a Town Council goes into land that is not common property. The law is now amended to give the HDB powers to prosecute the Chairman of a Town Council who orders the trees to be planted on land which is not the common property without ministerial approval. So there you are, Sir, that is the reason for the criminal element in the amendments.

These amendments make the Chairman or Secretary criminally liable. I would say this is purely on political grounds because a Member of Parliament who is the Chairman of a Town Council can be debarred for five years without being dishonest or corrupt but for doing

Column: 824

good deeds, albeit maybe a breach of the Town Councils Act after its amendments. A case in point is the case which I have just cited. The Potong Pasir Town Council Chairman or its Secretary

can be fined up to $5,000 for planting trees at the request of the residents on land which is not the common property. In this case, the Potong Pasir Town Council has not acted irresponsibly, because it has given an undertaking to the HDB to maintain the trees and to pay for any damage caused by any of those trees. Those trees, by the way, are healthy and thriving well, and they are enjoyed by the residents. The HDB did not take any legal action against the Potong Pasir Town Council or any of its officers or Chairman or Secretary for planting those trees outside the common areas.

The next matter I want to comment on is the provision whereby powers are given to the HDB to force a sale of a flat where the owner fails to pay up his lift improvement contribution. I do not support this amendment. I think it is too harsh. How can you force a man and his family onto the streets just because he owes the Town Council some money? I have been running a Town Council for about 16 years, and I think this amendment is not necessary. It is too drastic. In our worst case scenario, our Town Council, in fact, sits it out when a flat owner owes us service and conservancy charges until the owner sells his flat then we recover all the arrears of the service and conservancy charges. I think other Town Councils can do the same, even in the case of improvement contributions.

Sir, if my Town Council, a very small one, can do it, I cannot see why other Town Councils with more funds cannot do likewise, ie, not to force a tenant to sell his flat to pay up his arrears, either in service and conservancy charges or in lift upgrading improvement contributions. In the case of lift upgrading, I think the

Column: 825

Town Councils should firstly accumulate enough sinking funds before embarking on a lift upgrading programme. In such a situation, there is no need to get contributions from flat owners. In any event, I think it is cruel to forcibly evict a man and his family from his lodgings. I think the adults of that family can still bear the trauma, but the children's emotions may be hurt irreparably.

Sir, another comment I would like to make is section 24(B). Under this new section, Sir, I would like perhaps some clarification from the Minister because, to me, it would appear that the Minister must declare a part of the precinct first before lift upgrading can be carried out in those blocks situated in that precinct. Is that right? Sir, what happens if there is a conflict between the Minister and the Town Council where the Town Council wants to improve the lifts of certain parts of the town but the Minister wants it to choose some other parts and there is a disagreement? I see that there is no provision of appeal in this part of the amendments. Maybe a section allowing appeal, when there is a disagreement between choice of precincts between the Minister and the Town Councils, should be made. And the appeal, I would suggest, Sir, should be made to some other body, or perhaps even a single judge, rather than to the Minister, because he is an interested party.

Dr Teo Ho Pin (Holland-Bukit Panjang): Mr Deputy Speaker, Sir, I wish to declare my interest as Chairman of Holland-Bukit Panjang Town Council.

Sir, I support the purpose of the Bill, which is to provide a legislative framework to empower Town Councils to carry out lift upgrading works and improvement projects outside its common property. In view of a fast ageing population in Singapore, it is crucial that

Column: 826

we expedite the HDB Lift Upgrading Programme so that all HDB blocks can attain 100% lift access at every floor level. The HDB Lift Upgrading Programme has benefited many residents, especially the elderly, handicapped, sick and young children. In order to expedite this programme, the Ministry is now proposing to tap on the Town Councils' sinking funds to co-pay the Town Council Lift Upgrading Programme. In addition, the Bill also empowers a Town Council to erect, repair, and maintain facilities on non-common property in its town. This amendment will provide more flexibility for Town Councils to meet the needs of its residents.

Basically, the proposed Bill has widened the scope of Town Councils' roles and responsibilities with regard to lift upgrading and the maintenance management of facilities or non-common properties within its town. However, the proposed Bill raises fundamental questions on the roles of Town Councils and various Government agencies in the management of our built environment.

Sir, I wish to highlight three concerns regarding the Bill as follows:

Use of Town Council's sinking fund for lift upgrading

Sir, although the Ministry has provided guidelines on the proposed use of the sinking fund for the Town Council Lift Upgrading Programme, which is at 10% cap, there are certain practical problems in implementing the programme.

First, the use of sinking fund will deplete the reserves of the Town Councils. The Town Councils have accumulated healthy sinking funds over the last 15 or 16 years. The purpose of the sinking fund is to carry out future cyclical works of HDB blocks, which are ageing. On paper, it looks as though Town Councils have lots of money in their

Column: 827

sinking funds. But, in reality, the accumulated sinking funds may not be adequate to carry out future cyclical works unless more service and conservancy charges are collected. This would pose undue financial burden on our residents.

Over the years, the Town Councils have prudently managed to save much expenditure on their cyclical works. This is attributed to the Government's HDB upgrading programmes. Most Town Councils would normally time their cyclical works so that these works need not be carried out in precincts selected for HDB upgrading. In this way, monies were saved, thus reducing the financial burden of residents having to pay higher service and conservancy charges. But, once the upgrading of the older estates is complete, the newer HDB high-rise blocks may not be suitable for HDB upgrading programme. Newer HDB blocks were built with higher plot ratios, and do not provide much scope for upgrading. The designs of these blocks are also more complex and sophisticated. These 20, 30 or 40 storey blocks are also more costly to maintain as they have different types of façade treatments and installations. The increasing price trends of building materials, labour and utilities have also imposed heavy financial burden on the Town Councils. Thus, I would caution against the use of the present accumulated sinking funds for Town Councils' Lift Upgrading Programme, which is very costly. The Lift Upgrading Programme is actually not cyclical work. It is a form of upgrading work to alter the design of HDB blocks.

Furthermore, based on the criteria as given by the Ministry, only some blocks are eligible for the Town Council Lift Upgrading Programme. But these blocks are scattered all over the estates as they were built at different times and with different designs, ie, some with standard corridors and some with staggered

Column: 828

corridors. Therefore, if the Town Councils were to carry out Lift Upgrading Programme for these blocks, there will be frequent construction works going on in different parts of the estates. This will cause much disruptions and inconveniences to our residents.

Furthermore, these upgrading works are "piecemeal" in nature, and do not enjoy any economies of scale. While I support the empowerment of Town Councils to carry out lift upgrading, I would propose that the Ministry consider integrating the Town Council Lift Upgrading Programme into the HDB's Lift Upgrading Programme. The Town Councils can co-pay the contribution for those blocks eligible for Town Council lift upgrading. In this way, we can expedite and better coordinate the Lift Upgrading Programme for our residents.

Erect, repair and maintain facilities on non-common property

Sir, clauses 3 and 4 of the Bill amend the Town Councils Act to expand the functions of a Town Council to include the erecting, repairing and maintaining of facilities on non-common property in the town. Although Town Councils manage the HDB estates within their defined town boundary, there are many public and private amenities in the town, such as covered linkways, footpaths, parks, drains, roads and open fields.

HDB residents are usually more familiar with Town Councils due to the daily presence of our Town Council staff in the estates. Many do not understand which parcel of land within a town belongs to which landowner. As a result, Town Councils often receive requests from residents concerning matters outside their scope of work. These include problems like cleanliness, pest control, mosquito breeding, overgrown trees and shrubs, illegal structures and requests for improvement projects relating to land

Column: 829

parcels belonging to HDB, SLA, LTA, ENV, PUB and even some private landowners.

This lack of understanding or confusion by residents has inadvertently increased the workload of Town Councils. It has also conveniently allowed various Government agencies to "transfer" their responsibilities to the Town Councils. Sir, this situation is unfair and unhealthy, as the added responsibilities have affected Town Councils in their delivery of services. It has also increased their cost of operations.

While the Town Councils are prepared to act as managing agents for a public authority or community-based association to provide facilities on non-common property in their town, I do not think the Town Councils should be held responsible to repair and maintain these facilities. Town Council funds should be used solely for the maintenance and management of common property for the common benefit of residents in their respective towns. Very often, facilities on non-common property are costly to erect and maintain. These include covered linkways, footpaths, lightings, landscaping and football fields. These facilities will add an undue financial burden on the Town Councils and their residents. Instead, we must ensure that the respective public authority or community-based organisation be held responsible for providing such facilities. This will provide a better check and balance approach in the provision of facilities on non-common property in a town. It will also ensure that such facilities are properly thought through, implemented, and properly maintained in a sustainable manner in the long run.

Column: 830

Criminal penalties for the misuse of Town Council funds

Sir, I

support the approach of encouraging more self-management of the Town Councils. At present, there are sufficient checks and balances in the Town Councils Act and other legislation to ensure the proper management of our towns. As we further empower and entrust Town Councils to take on more responsibilities, we should also review the Town Councils Act to facilitate self-management and self-responsibility.

Therefore, it may not be necessary for the Town Councils Act to impose criminal penalties on the Chairman and Secretary for the misuse of Town Council funds. There are existing legislation to prevent such abuses.

The introduction of criminal penalties for the Chairman and Secretary runs contrary to the spirit of entrusting elected members to run the Town Councils and encouraging self-management. Sir, we must understand that Town Councils are merely managing agents helping HDB (who is the land and building owner) to manage the common property of a town. Thus, it is not appropriate to impose such criminal liabilities on the Chairman and Secretary of the Town Council. Instead, HDB and Town Councils should design a corporate governance framework where there are joint responsibilities and liabilities of both parties should there be any misuse of Town Council funds.

Sir, the recent review of the Building Maintenance and Strata Management 2004 Act has decriminalised many non-compliances of the Act so as to facilitate self-management. Similarly, I would urge the Minister not to introduce criminal penalties in the Town Councils Act. On the contrary, we should make more provisions to encourage Town Councils to develop self-management capabilities.

Column: 831

Sir, although the proposed amendments to the Town Councils Act will not involve the Government in any extra financial expenditure, it will however help many Government agencies to save financial expenditures in the provision of facilities on non-common property in a town. Sir, may I seek clarification from the Minister as to whether various Government agencies will continue to manage and provide facilities such as covered linkways, footpaths, landscaping and other public amenities on non-common property in a town. If the proposed amendment is part of the devolution of Government's services to the Town Councils, there must be corresponding provisions of financial resources to the Town Councils for the proper management of such public amenities.

Sir, I support the Bill.

Dr Lily Neo: Mr Deputy Speaker, Sir, thank you for allowing me to join in the debate on the Town Councils (Amendment) Bill.

Sir, I strongly support the lift upgrading programme that enables lift access on every floor in HDB flats to improve the living environment of residents. Such lift upgrading to HDB flats has been done solely by the Ministry of National Development so far. Now, the Town Councils will also be conducting such lift upgrading. My concerns are several on this issue.

But before I go into it, may I remind Mr Chiam See Tong that there are 14 Town Councils that are chaired by PAP MPs, myself included. Therefore, rules with regard to criminal offence by Town Council Chairman are also applicable to all the 14 PAP MPs as well and not only to the two Opposition MPs. Therefore, it cannot be politically motivated, as suggested by Mr Chiam See Tong.

Column: 832

This Bill will inadvertently raise the expectations of residents towards lift upgrading. It is probable that, henceforth, residents may view lift upgrading obligatory on the part of Town Councils. It is likely therefore residents will compare the "works" of the 14 Town Councils on lift upgrading undertaken and make increased demands on their own Town Councils.

The use of sinking fund for upgrading of lifts will mean lesser funds for other cyclical works such as repainting, reproofing and other estate maintenance and improvement works. This is more acute for those town councils with lesser sinking funds and even more critical for Town Councils in older estates that require progressively higher demand on cyclical works due to older HDB flats.

Those active Town Councils with the capacity of doing more lift upgrading will have lesser precincts left for MND to offer for LUP. Therefore, the allocation of funds from MND for such works will be skewed towards less active Town Councils. This may discourage those active Town Councils in the long run and they may opt to leave lift upgrading to MND instead and save their own funds for cyclical works.

The recovery of the costs for the improvement contributions will be undertaken by the Town Council under this Bill. Sir, I feel that this will place Town Councils under a new task that is demanding. HDB will be in a better position to assume this role with existing software and hardware to efficiently manage such recovery of improvement contributions. There is no necessity for duplication of such set-ups by involving the 14 Town Councils. Individual set-up by the 14 Town Councils will cost a great deal and a waste of resources. One large recovery centre in HDB should have better "economy of scale" to deal with such recovery, especially in cases with smaller scale of improvement contributions.

Column: 833

The upgrading of lifts in HDB flats involves detailed planning of sites and designs and engagement of architects and engineers as well as the awarding of projects to contractors. This will best be carried out by HDB with the many years of experience rather than leaving them to the 14 Town Councils which have to start from scratch.

The lift upgrading requires residents to co-pay and majority "yes" votes will be necessary to proceed with upgrading. Sir, my concern is on those HDB blocks that had undergone previous Main Upgrading Programames but are still lacking lifts going to the top floors of these HDB flats due to technical constraints in the past. Due to newer technology, according to MND, these HDB flats are now eligible for lift upgrading that will allow the lifts to serve residents on the top floors of such HDB blocks. As these residents had shared the upgrading costs with HDB in the past, they may be reluctant to contribute a second time. Moreover, cost sharing for the upgrading involving and benefiting only the higher floor units may cost too much as there will be lesser units to share the payments. May I ask whether the Minister of State will waive the rules on co-payment and voting for such lift upgrading? Will HDB absorb the residents' share for such upgrading so that Town Councils do not spend beyond their stipulated permissible amount?

This Bill does not cater for instalment payment schemes like those offered by HDB. Should there not be a new section inserted to cater for instalment payment schemes instead of demanding full payment within one month from the date of the issuance of the payment advice, as set out in the Bill?

Sir, the latest Household Expenditure Survey showed that the monthly incomes of the poorest 20% of households fell by

Column: 834

3.2% a year between 1998 and 2003 and households grew smaller with fewer working people. Those in this group are the ones that most likely are staying in older flats which are eligible for lift upgrading but have dwindling free disposable income. They are the ones most likely also to have the least spare savings for improvement contributions. How do we assist those who really do not have the means for the improvement contributions?

This proposed amendment will empower Town Councils to sell a flat if the improvement contributions are not settled after 90 days of the Town Council serving a written demand on the flat owner (under a new section 24F). Should Town Councils take such a draconian action as selling the flat? Would not such demands be too harsh on these residents?

The Bill gives Town Councils the power to enter a resident's flat to value the movable properties for the purpose of seizing those movable properties to satisfy the judgment sums or arrears. Sir, Town Councils should only consider seizure of the movable properties in the flat if, in their fair opinion, they have exhausted all enforcement processes and have the view that seizure of the movable properties is the only way to recover such judgment sums or arrears. Moreover, the entering of a resident's flat to value the movable properties is an infringement of privacy.

I hope the Minister of State can address all the issues raised on this Bill.

Assoc. Prof. Ong Soh Khim: Mr Deputy Speaker, Sir, thank you for allowing me to join in the debate on this Bill. I would like to make a few observations which I would appreciate it if the Ministry could look into them.

Just as a recap, when the HDB LUP was first launched in March 2001, the

Column: 835

cost of the lift upgrading work was co-shared between the Government, the Town Council and the flat owner. And to ensure that the flat owner's share of the lift upgrading cost is affordable, the Government subsidises 75% to 90% of the cost of the lift upgrading works and the actual proportion would depend on the flat type and the block configuration.

From my understanding, based on the information from the HDB's website, Town Councils are already allowed to use their sinking funds to co-pay for the HDB LUP programme. Again, an example from the website is that for LUP, for a typical four-room flat in a standard block, the Government would pay about $10,000 while the Town Council and the flat owner would each pay about $900, ie, the Town Council's share and the flat owner's share are equal. Flat owners in a segmented block would pay a higher amount because the lift upgrading would actually benefit less people.

However, there is also the cap where the Government would cap the maximum amount per household at $3,000. In the current Bill, the Town Councils are allowed to use their sinking funds for lift upgrading subject to certain guidelines that the Minister for National Development announced in Parliament on 7th March 2005, so that there are enough sinking funds for long-term use. One guideline states that the Town Council would be allowed to select HDB blocks where the Town Council's share of the upgrading cost per benefitting unit does not exceed $5,000. An observation here is that there is no guideline on the selection of HDB blocks with regard to the flat owner's share of the upgrading cost. Would the Ministry consider setting a guideline that Town Council would only be allowed to select HDB blocks where the flat owner's share of the upgrading cost per benefitting unit does not exceed $3,000 or even less, similar to the HDB's LUP programme?

Column: 836

A second guideline states that flat owners would co-pay for the works in the same proportion as the HDB LUP. Hence, that means that they would co-pay about 5%-12.5% of the total upgrading cost, depending on the flat type. An observation here again is, by comparing with the HDB LUP co-sharing package, does this mean that in the Town Council LUP, the owner's share would also be raised to $5,000, like in the Town Council's share of $5,000?

Sir, the cost-sharing package in this Town Council LUP programme is actually not clear as compared to the cost-sharing package in the HDB's LUP programme. I would like to urge the Ministry to provide more details so that residents can make a more informed decision during the poll for the Town Council's LUP.

The next area that I would like to touch on is the help measures. Currently, HDB has several measures and instalment plans to help flat owners who have difficulty in paying their share of the cost for upgrading programme and this includes extending the repayment period for the cost of up to 25 years, allowing the flat owners to defer payment for a certain period of time until they sell their flats to ensure that these flat owners can benefit from the upgrading. However, the new section 24F is contrary to the objective of these help measures that serve to ensure that flat owners would benefit from the lift upgrading. The new section 24 empowers Town Councils to sell a flat where any improvement contribution payable in respect of the flat remains unpaid 90 days after the Town Council has served the owner a written demand for payment. Is it not an irony when a household has voted for lift upgrading in his block only to be forced to sell his unit in that block of flats because of a change in his financial situation, for example, due to retrenchment or even chronic illnesses, such that he is not able to pay his share of the upgrading cost and hence be deprived of it?

Column: 837

Consider another scenario of a household who did not vote for the upgrading programme because they knew their financial situation did not allow

them to do so, but LUP was implemented in their block of flats because more than 75% had voted for it. Eventually, this household could not afford to pay for their share of the LUP cost and had to be forced to move out of their block of flats. Sir, it is no fault of theirs and it would not be fair to such households to force them to move out of the block.

Sir, we also need to look at the role of the Town Councils. Town Councils are separate legal entities formed under the Town Councils Act to manage and maintain the common areas in HDB estates. The functions of the Town Councils are to control, manage, maintain and improve the common property of HDB's residential flats and commercial property within the Town Council. Town Councils are not financial institutions to have the power to seize movable properties in flats or to seize flats for sale.

Earlier, we have seen reports in the newspapers of households living in darkness, without water and electricity supplies, because they could not pay their utility bills. Are we going to see families without a roof over their heads because they could not pay the upgrading cost and their flats are being sold by the Town Council?

One might argue that this is the ultimate last resort that the Town Council will do for cost recovery in upgrading programmes. Hence, if this is indeed going to be the ultimate last resort, should we not now take a step back and look at the current help measures to analyse why these help measures are not effective in helping residents pay their share of the upgrading cost, if indeed these current help measures are not effective?

Column: 838

One might also argue that this empowerment is to allow the Town Council to take action against those flat owners who can afford but refuse to pay up, ie, in Hokkien, the chau kuan residents, and that the existing provisions in the Act already allow Town Councils to sell a resident's flat if he is not able to pay his S&C charges. Sir, this does not mean that because the current provisions in the Act already allow for the sale of a resident's flat for outstanding S&C charges, it is therefore okay for the Town Council to now sell a resident's flat for outstanding upgrading charges. Can the Town Council elaborate on the current measures of identifying who are the genuine residents who cannot afford to pay and who are the chau kuan residents?

One might also argue that $3,000 in the HDB LUP scheme and $714 for the Town Council LUP, as quoted in the Today newspaper on 18th July 2005, are not a big sum of money. However, to the low-income earners, especially the bottom 20%, who live from hand to mouth, whose next month's wage is often spent before it even comes, where there is no extra money in their CPF accounts to pay for these upgrading charges due to the increase in MediShield premiums, some might really lose the roofs over their heads due to outstanding payments of these lift upgrading costs.

Hence, Sir, I urge the Ministry to reconsider the option of sale of a resident's flat by the Town Council. Should repossession and sale of flat be considered as an option at all in the upgrading cost recovery by the Town Council?

Lastly, I would like to touch on the misuse of Town Council funds. I welcome the new section 24I which spells out the penalties for the misuse of Town Council funds in order to strengthen the corporate governance of Town Councils to ensure that funds are used only for the purposes

Column: 839

spelt out under the Town Councils Act. The penalty is a fine of up to $5,000 if sinking funds are used for other than the purposes specified under the Act.

Sir, Town Council's sinking funds are built up from residents' S&C charges over the years. This is for long-term cyclical maintenance of the estates and to provide a good and safe living environment for residents. The Government has the responsibility to ensure that Town Councils use the funds appropriately for the benefit of the majority of their residents over the long term, and that no funds are being misused.

As opposed to Dr Amy Khor's and Dr Teo Ho Pin's views, I feel that this section is absolutely necessary. In fact, is not a penalty of $5,000 too lenient as compared to the "penalty" that a resident will face in the case of outstanding S&C charges, which is the sale of his flat by the Town Council? Can the Ministry also elaborate on what are the current checks and regulations that it has in place to prevent misuse of such funds?

Mr Low Thia Khiang (Hougang): Sir, I would like to query the rationale and logic of the amendment concerning lift upgrading under the new Part IV-A. Before moving into the details of the amendment, I would like to look at what is the current position of LUP before the Act is amended and what is the effect after the amendment which allows Town Councils to do lift upgrading.

Sir, based on the information from the HDB's website as cited by Prof. Ong just now, the HDB will pay 75% to 90% of the cost of lift upgrading works. For example, for lift upgrading of a typical 4-room flat, the HDB pays $10,000 whilst the Town Council and the resident each pays about $900. Say, for a block of 100 units of 4-room flats, effectively, this would mean that the cost for LUP is about

Column: 840

$1.18 million. Of this, HDB pays $1.003 million with the balance of $177,000 shared between the Town Council and the residents.

With the amendment today, the HDB will no longer pay its portion of LUP cost undertaken by the Town Council. Instead of paying $88,500, ie, 50% of $177,000, based on the above example, the Town Council will now have to cough out $1.092 million from its sinking fund.

Sir, nothwithstanding the Bill limiting the cost of TC-LUP to $5,000, the fact is that the Government pays nothing under the amendment. I am therefore of the view that compared to the HDB-LUP programme in which HDB pays 75% to 90% of the cost, a Town Council which goes ahead with the TC-LUP on its own will have shortchanged the residents, as the entire cost of the LUP is paid from the Town Council's sinking fund, with individual residents co-paying part of the cost with their own money, and the Government pays nothing.

I understand from the Minister for National Development at the Budget debate that the rationale for this Bill today is the outsourcing of LUP from HDB to Town Councils. This will shorten the time required for the Lift Upgrading Programme from 15 years to 10 years. My question: what role, if any, is the Government playing in achieving the objectivie of shortening the time span besides amending the Act to allow Town Councils to use their sinking funds for lift upgrading?

Sir, Town Councils' sinking funds largely come from service and conservancy charges paid by HDB residents. Since the amendment requires Town Councils to use sinking fund to pay for LUP, with residents co-paying the rest, it is effectively HDB residents who are

Column: 841

paying for the lift upgrading programme if a Town Council were to proceed with the TC-LUP under the provision of this amendment.

The Minister of State may respond to say that the Government has also contributed to the sinking fund via SC&CC grant to Town Councils. However, I wish to remind the Government that in 1999, the Ministry of National Development decided that SC&CC grant to Town Councils was to be computed based on room types instead of the age of the flats. The grant for 5-room flats was removed. In addition, the grant for 2-room flats was also reduced by some 9%. Though there were adjustments made to increase the grants of 1-room and 3-room flats, the change in computation had nevertheless resulted in overall reduction of grants paid out by the Government to some 9%, based on my Town Council's calculations. Other Town Councils may be different.

Correspondingly, the portion of the grant to the sinking fund was also reduced. In 2004, the percentage of SC&CC to be allocated to the sinking fund was further reduced by 5%. Moreover, as the grants given by Government are for existing cyclical works, the above reduction of contribution into sinking funds would mean that without grants for TC-LUP, Town Councils and residents are actually made to bear much more than what they should. If the HDB's concern is the pace of lift upgrading, grants should be given to Town Councils for such a purpose. Otherwise residents whose Town Council carries out the LUP on its own will end up paying more than residents in areas where LUP is offered by the HDB. This is unfair in terms of how the Government applies its funds as it benefits only a sector of the population.

Column: 842

I also note that under the new section 24D(4), the improvement contribution for LUP to be paid by the residents "shall not be less than the improvement contribution that the Board might have determined under section 65D(2A) of the Housing and Development Act", which was mentioned by Mr Chiam as well. Sir, I wonder if the Town Council is able to get LUP done at a cheaper rate than the HDB. Why should the Town Council not be allowed to pass the savings to the residents?

Finally, I have not forgotten that the PAP Government still owes upgrading works to Hougang residents. Hougang has waited for more than 10 years for upgrading, whilst flats newer than Hougang in HDB estates of PAP wards are being upgraded, some even more than once. I think the Minister of State knows this very well. I wish to remind the Government that residents of Hougang are citizens of Singapore who pay taxes, do National Service and fulfil all duties towards the country. Do residents of Hougang constituency deserve this discrimination?

Sir, very soon, we will be celebrating the 40th anniversary of the birth of our nation. The discimination against Opposition wards in upgrading programmes for political purposes which has become a political reality here, serves as a reminder to us as a nation in which democracy, equality and justice are represented as stars on our national flag which we always fly high.

Mr Heng Chee How: Mr Deputy Speaker, Sir, I thank Members for contributing their views and perspectives. What I intend to do is to group some of the common topics and respond to them and then take up the individual comments by Members.

First of all, a comment about the objective of the TC-LUP and the use of up to 10% of the sinking fund. In terms of

Column: 843

the speed, originally, it was intended and it was hoped that we could complete the HDB lift upgrading programme in about 15 years. As it is now, there are some 3,000 blocks that remain eligible for lift upgrading, taking away those that have already been completed. We, like all Members, are keen to be able to speed it up. How do we intend to do that? I think some Members have also asked how do we intend to do that. There are a number of multi-pronged methods, eg, channelling more of the public housing budget towards LUP on the HDB side, enabling Town Councils if they so choose to mount Town Council-LUP projects; simplifying the finishes for lift works. Even for per project, you can simplify that and therefore the savings can then go towards initiating projects faster. And, overall, looking at lift technology, whether or not there might be scope to have different kinds of technology in future so that the cost of lift upgrading can be lowered over time by using these new methods. So through a combination of these methods, we, in MND, believe that it is possible to quicken the pace and bring it down from 15 years to 10 years.

Some Members have asked: is 10 years too slow? Dr Amy Khor mentioned that many of her residents very much look forward to it being further speeded up. Whilst the Government would like it to be as quick as possible, we also want it to be something that is practical and realistic. So it is a balance not only between the money that we have to do the lift upgrading but also in terms of the construction capabilities, and whether or not the sector will be able to take it all in.

In the balance, we believe that 10 years is actually a challenging target but an achievable one. So, we are shooting for 10 years as of now. Obviously, in the time to come, as we gain experience and if technology further improves, if there are opportunities to further speed up, then we are certainly open to reviewing. Our objective remains the same, ie, to have

Column: 844

this benefit enjoyed by as many of our residents as quickly as possible.

Town Councils would indeed play an important part in implementing lift upgrading in HDB estates because with the sinking fund available, and based on that $5,000 per benefitting unit cost cap, we think that there should be somewhere between 300 and 400 blocks that would be able to benefit if the TCs were to step in with the LUP on their end. If that happens, then, obviously, it is material to the speed at which all blocks in Singapore can enjoy lift to every floor.

Dr Teo Ho Pin, Dr Amy Khor and some other Members talked about how do we decide where to do these LUP works, which blocks belonging to the TCs that might be eligible and which blocks HDB will do. And if, in fact, the two are going to happen at around the same time, whether or not there could be a certain amount of consultation and coordination. Actually, as all Members will know, whenever there is, say, a MUP to be done and there are also re-roofing works that a TC might want to mount at that time, this consultation is something that is already happening on the ground. If the TCs are going to mount TC-LUP projects, then such consultation will also be part of the process, and HDB will work with the TCs in order to smoothen the process. But it is really not something that which block may be chosen for HDB-LUP or which block may be chosen for TC-LUP. It is not something that MND or HDB can unilaterally decide and then just tell the TCs, because there is a process every year where you are requested to nominate certain blocks for these upgrading projects. So you would not be able to do all of them, whether for HDB-LUP or for TC-LUP every year. It is also an iterative process where within the Town Council, and if it is a multi-ward Town Council, there has got to be also consultation within the Town Council in terms of its priorities.

Column: 845

Dr Lily Neo made the point about whether or not Town Councils looking after older HDB estates might be disadvantaged in terms of the sinking fund provisions. And if you have less there, then whether or not you might be able to proceed with enough speed and vigour in terms of your TC-LUP projects. If you look at the accounts of the various TCs, actually it is not true that the TCs looking after the older towns necessarily have less money in their sinking funds as compared with others. That is something which is not going to materially hamper any TC from undertaking these projects. It is quite the opposite actually. Some other Members - I think Dr Teo Ho Pin and Assoc. Prof. Ong Soh Khim - asked: if you start allowing TCs to use their sinking funds, when these sinking funds are meant for cyclical works, would it not then detract from the ability to undertake their core mission with these sinking funds? It is precisely for this reason that, on the one hand, we want to allow Town Councils to have the option to mount these lift upgrading projects if they want but, on the other hand, having to tap the sinking funds, we want to make sure that when you do tap those sinking funds, it does not detract you from the primary purpose of the funds, which is to provide for all those cyclical works. That is why there is a per benefitting unit cap, so that you do not overspend per unit basis. There is also a percentage cap on how much of your sinking fund you can actually use for TC-LUP. So it is up to 10%. In other words, the message that Government wants to send is flexibility but within rules of prudence.

Next, I would just like to address Dr Lily Neo's point about blocks that have already undergone MUP earlier but, at that time, technology did not allow the top floor of some of the blocks to get the lift. Now that it is technologically possible, they become, in principle, eligible. Again

Column: 846

being eligible does not necessarily mean that they will be offered in the immediate first phase. So, again, this is something that the Town Councils, if that block is chosen, would have to prioritise it against their other blocks. But, in principle, voting and co-payment would be required. If it is a TC-LUP, if you look at the kind of blocks that would be eligible, then the amounts that would be co-paid again would be relatively lower, simply because of how you choose TC-LUP blocks as against those that you would leave it to HDB to do under HDB-LUP. The other consideration is, of course, earlier on, when they voted under the MUP project, it was voted as an overall package. Therefore, when they are eligible for lift upgrading in this new exercise, then this is being offered to them anew and, again, they would have to indicate their decision. So, do not take the earlier vote one way or the other as binding on this one.

Prof. Ong and some other Members, I think Dr Lily Neo also, expressed concern about low-income households and whether or not some of these provisions might inadvertently actually cause them hardship. Definitely, it is not the intention of the Government to cause hardship to our low-income families. In fact, the entire purpose of this amendment, the one pertaining to TC-LUP especially, is to accelerate the benefit to all households so that everyone can enjoy lift to every floor as soon as possible. First of all, the amount that individual households will need to co-pay under the TC-LUP will be affordable, bearing in mind the $5,000 per benefitting unit cost cap and there is also a range of contributions. So the larger flat type will contribute more and the lower flat type will contribute less. Generally speaking, our low-income families, especially those who are staying in lower-flat type, would therefore find that the construction of the scheme is such that it is actually meant for their well-being.

Column: 847

Then there is this question: how do they actually pay - must it be a lump sum? That was the concern. No, it does not have to be a lump sum. If you look at how HDB goes around providing different options of payment for the HDB-LUP or MUP, there is a whole range of options. You can pay a lump sum, you can pay with your CPF, you can pay by instalments. So, all these options are also available for TCs to consider and adopt in order to help their low-income households. A word on that contribution, because I think there was a little bit of confusion over two sections and what do they mean that the TC can decide it has got to be not lower than the HDB. Mr Chiam made mention of that. That refers to actually the percentage rates at which the different flat types, as appropriate, would have to contribute to the cost-sharing, because it has to be co-paid. If you look at HDB, they have a certain percentage of co-payment, depending on the flat types. So, that is the contribution by the different households. It is to ensure consistency when the TC-LUP does it the same.

I just like to add also one remark, and that is a more general one pertaining to whether it is the provision for the sale of a flat or sale of a movable property within the flat and so on, when TC-LUP charges are owed and not settled within the notice period. First of all, these provisions are definitely not new. They actually, on the one hand, mirror the provisions in the Housing and Development Act. When the HDB does its HDB-LUP, these are the provisions. So, now that the LUP is going to be made available for Town Councils to mount, these provisions are then imported. At the same time, if you look at the Town Councils Act, these provisions are also already present there to enable them, as options, to collect their arrears on S&C charges. These are enabling provisions, they are not mandatory. It does not say that every TC must use these. Certainly, nobody says

Column: 848

that they must use it as a preferred option or first resort. Indeed, if you were to look at the track records of all Town Councils, I think Town Councils are very sympathetic towards the needs of their residents and they understand their difficulties. That is why I think all of us will agree that in every case, wherever possible, there will be discussions to see how to help them stretch the repayment of their arrears, eg, new instalment plans and restructuring of their plans. There are so many different ways before you would even try to do anything to seize and sell their movable property, not to mention their flat. So, if you look at the track records of how Town Councils have been so-called making use of these existing provisions in respect of S&C charges which, in many cases, would amount to much more than any of these TC-LUP charges can go up to, then you will know that these provisions are there but, on the ground, Town Councils would interact in a very positive way with the residents. It is something that the Ministry would really like the Town Councils to continue to make available different payment schemes, and continue to work with the residents for the betterment of the town and the quality of life there.

There are comments from various Members on the penalty clauses, eg, holding the Town Council Chairman and Secretary accountable if sinking funds are not used in the prescribed manner. For example, if you breach the cost cap in an intentional way, then that will constitute an offence. So, what is this all about? Before we have this amendment passed, Town Councils simply cannot use sinking funds to independently mount lift upgrading exercise. You can co-pay in an HDB lift upgrading exercise, but you cannot independently mount one. So this represents a relaxation of the Act to enable Town Councils to use their sinking funds to do that. I think Mr Chiam would also agree with me that with greater flexibility and authority, we should have

Column: 849

greater responsibility and accountability. So, this is two sides of the issue and this provision would enable us from the Government side, to signal very clearly where the lines are drawn. It is not meant to penalise, and certainly not meant to trap anybody politically, as Dr Lily Neo has correctly pointed out. The number of PAP Town Councils outnumbers the number of Opposition Town Councils by a multiple. And the same rule applies to all. So it is really to signal that with this relaxation, you have the flexibility as a Town Council to mount these exercises, but be careful. Because these moneys, as Prof. Ong Soh Khim has pointed out, were collected and they were put aside for cyclical works. Therefore, we want to make sure that people do not go overboard and intentionally breach these rules. Why? So that the Town Councils' work can be sustainable, viable and properly done. That is good governance. We just wanted to draw the line clearly. Everybody knows where it is and there is no misunderstanding so that these penalties, in fact, do not need to be used. We just hope that this signal is very clearly registered.

On non-common property, I would like to provide this clarification, and that is Town Councils can erect things on common property and then they repair and maintain them. Currently, Town Councils cannot erect things on non-common property but can maintain them, if they agreed. This relaxation or amendment would therefore give Town Councils, if they so wish, the option to erect

and then repair and maintain structures on non-common property subject to the Minister's agreement and subject to the land owner's agreement. Why are we doing this? It is certainly not to trap anybody into planting trees and then trap you under one of the other provisions. It is quite the opposite. We are doing this in response actually to

Column: 850

certain Town Councils which have looked at the entire town and said that, within this town, there are certain areas that they would like to do more and they would like to erect certain things on non-common property. But under the current provisions, they would not be allowed to do that. We are actually giving this leeway, and it does not mean that you have to do it.

So I just want to clarify with Dr Teo Ho Pin that this is not something where, as a result of such an amendment, the other agencies can stop doing their work or they just erect things on non-common property and then require the Town Council to maintain for them. That is not the case. What it says is that it gives you the opportunity, if you so choose, to erect on non-common property structures but, at the same time, not erect and disappear. Structures which you erect, you also repair and maintain. So this is actually to make it complete. That is the purpose of that particular section.

Mr Chiam talked about section 24B where he asked what if the Minister disagrees with the Town Council's Chairman on which precinct to gazette. If I may read section 24B, it says here, "The Minister may, after consulting the Board [and in this case, it means HDB] and the Town Council concerned, from time to time by order published in the Gazette, declare any housing estate or any part thereof within that Town Council's Town to be a precinct for the purposes of lift upgrading works in buildings therein". This gazetting is for the purposes of clarity, just as section 24B(4) that comes after that which enables the Minister of State to assist in the approval of this. So these are actually administrative measures to make clear and expedite the exercise. So it is not something that is put in there in order that the Minister can go and dispute with him. That is not the intention of this amendment.

Column: 851

Mr Low Thia Khiang spoke about the cost-sharing arrangement for HDB-LUP where the HDB pays for most of it and the remainder is co-shared between the Town Council co-paying with the household. His point is: why not ask the Government to then give the money to the TC so that the TC can mount this TC-LUP exercise by assisting the HDB? Did I understand you correctly?

Mr Low Thia Khiang: Can I clarify the point, Sir?

Mr Deputy Speaker: Carry on.

Mr Low Thia Khiang: The point is that, first of all, under the amendment, the Town Council will carry out TC-LUP. The Government pays nothing. It is paid by the Town Council and the residents. Why is it so in the first place? So I say, why not give a grant, because it is not fair for the Town Council to pay the lift upgrading entirely from the sinking fund because the sinking fund is also paid for by the residents. The residents pay into the Town Council's sinking fund to pay for lift upgrading and the residents pay again on the co-sharing. So the residents practically pay everything. The Government plays no role. The application of funds does not seem to be fair.

Mr Heng Chee How: I would like to make the following clarifications. If we were to do the HDB-LUP formula, then obviously it is a HDB-LUP. The TC-LUP is a different arrangement for the Town Councils who wish to do so in order to bring that benefit, if they feel that they want to, to their residents over and above whatever the HDB-LUP might be currently doing. If they want to split it up themselves, then it is something that they can choose to do. So this arrangement is to facilitate that. Even so, as he correctly pointed out, part of the sinking fund is contributed by the Government through grants. So it is not true to say that the Government had not co-paid a certain amount even in the TC-LUP exercise.

Column: 852

I think just now, he also mentioned that last year, the Government allowed for sinking fund contributions to be reduced from 35% to 30% and that actually already reduced the inflow into the sinking fund. But just to be correct, again, that was an option that was given to individual Town Councils to choose. And in fact, I do know for a fact that some Town Councils have chosen to keep it at 35% contribution into the sinking fund. So I just want to clarify that when we enable Town Councils to mount these exercises, it is to give an option to Town Councils that wish to do so within clear rules. It does not say that they must do it. If Mr Chiam's Town Council wants to do it and Mr Low's Town Council does not want to do it, then it is their call and it is a choice for their respective towns. Just like many of the other provisions, like erecting on common property, repairing and maintaining those things, it is really to say that if you choose to do something, then take care of it along the way, do not just build and disappear. So it is actually giving more leeway and more options. So when Mr Chiam spoke about these amendments not helping to enable Town Councils to move towards more self-management and giving residents more flexibility through the Town Councils, I think he got it wrong. It actually does enable a lot of that.

Mr Low Thia Khiang: Sir, the first clarification is concerning this enabling rule. Does the Minister of State agree that the residents whose lifts were upgraded under the TC-LUP will benefit much less if a block would be upgraded under LUP by the HDB?

Mr Heng Chee How: Why do you say that?

Mr Low Thia Khiang: Because, first of all, they have paid and the Town Council has paid through the sinking fund, which

Column: 853

is largely their money. The Government has paid nothing to the upgrading.

Mr Heng Chee How: By the very design of the Town Council LUP, I would imagine that the Town Councils that are interested in mounting such an exercise will carefully look at the blocks to see which are the ones that would be very cost effective to do, not only from the Town Council's point of view, but after netting out their share of up to $5,000 from the cost divided by the units, the amount that would have to be co-shared by the benefiting units of the blocks that they choose would be attractive to the households there. I would imagine that is how they would go about doing it and, if so, I would therefore surmise that the amount that they pay would not be out of proportion. So I think it is really not something that is created out of this scheme. It is something that each Town Council will have got to see how best to choose their blocks. And I cannot be advising Mr Low on how he runs his Town Council.

The Minister for National Development (Mr Mah Bow Tan): Mr Deputy Speaker, Sir, first, let me, on a point of order remind Members that when they speak, they should be addressing the Chair, rather than to talk to each other across the floor.

Next, I would like to respond to a point that Mr Low made just now about why he thinks that it is unfair for his residents if he were to implement the TC-LUP, instead of HDB-LUP. I suggest that he should go and talk to Mr Chiam about how to do it. Because Mr Chiam has a way of selecting certain blocks which are very cost effective and which will allow his residents to benefit from LUP, and he uses his sinking fund. I think he finds there is an advantage for him to do so. We are not, of course, by any stretch of the imagination, amending this Town

Column: 854

Councils Act for the benefit of Mr Chiam. Mr Chiam believes that we do it to fix him. But, of course, that is not true. What we are doing is to give all Town Councils in Singapore another option over and above what the Government is doing to bring a very, very important and a very beneficial programme to the residents. And that is the Lift Upgrading Programme. That is all we are doing. So I think for Mr Chiam, or in fact for Mr Low, to ascribe other motives to this is not very fair.

Assoc. Prof. Ong Soh Khim: Sir, as I understand from the MOS' reply, in the TC-LUP, there will not be any subsidy from the Government and, as I understand from the HDB website, the cost for lift upgrading could range from $10,000 to $30,000 per flat. In this case, there is a regulation that sets the TC's share of the cost in the TC-LUP to be $5,000. Does it mean that the residents would then have to pay $5,000? Would the Ministry consider setting a cap on the resident's share of the upgrading cost in the TC-LUP?

Mr Heng Chee How: Mr Deputy Speaker, Sir, as I had earlier responded to another Member, the Town Councils, when selecting the blocks, would take into account how much they would actually cost if they were to do it on the basis of this block versus that block, and they know that their own contribution on a per benefitting unit basis is capped at $5,000. Therefore, working backwards, they would know how much it would cost a benefitting unit if they would have to do it in that block. So through such background work and homework, they would actually know which blocks are best selected for TC-LUP. Because they also know at the end of it, it is not something where the Town Council or the Town Council's Chairman can then just dictate. It is also subject to a vote by the residents there. So if you do something that is out of proportion, they will vote against it.

Dr Teo Ho Pin (Holland-Bukit Panjang): Mr Deputy Speaker, Sir, I wish to declare my interest as Chairman of Holland-Bukit Panjang Town Council.

Sir, I support the purpose of the Bill, which is to provide a legislative framework to empower Town Councils to carry out lift upgrading works and improvement projects outside its common property. In view of a fast ageing population in Singapore, it is crucial that

Column: 826

we expedite the HDB Lift Upgrading Programme so that all HDB blocks can attain 100% lift access at every floor level. The HDB Lift Upgrading Programme has benefited many residents, especially the elderly, handicapped, sick and young children. In order to expedite this programme, the Ministry is now proposing to tap on the Town Councils' sinking funds to co-pay the Town Council Lift Upgrading Programme. In addition, the Bill also empowers a Town Council to erect, repair, and maintain facilities on non-common property in its town. This amendment will provide more flexibility for Town Councils to meet the needs of its residents.

Basically, the proposed Bill has widened the scope of Town Councils' roles and responsibilities with regard to lift upgrading and the maintenance management of facilities or non-common properties within its town. However, the proposed Bill raises fundamental questions on the roles of Town Councils and various Government agencies in the management of our built environment.

Sir, I wish to highlight three concerns regarding the Bill as follows:

Use of Town Council's sinking fund for lift upgrading

Sir, although the Ministry has provided guidelines on the proposed use of the sinking fund for the Town Council Lift Upgrading Programme, which is at 10% cap, there are certain practical problems in implementing the programme.

First, the use of sinking fund will deplete the reserves of the Town Councils. The Town Councils have accumulated healthy sinking funds over the last 15 or 16 years. The purpose of the sinking fund is to carry out future cyclical works of HDB blocks, which are ageing. On paper, it looks as though Town Councils have lots of money in their

Column: 827

sinking funds. But, in reality, the accumulated sinking funds may not be adequate to carry out future cyclical works unless more service and conservancy charges are collected. This would pose undue financial burden on our residents.

Over the years, the Town Councils have prudently managed to save much expenditure on their cyclical works. This is attributed to the Government's HDB upgrading programmes. Most Town Councils would normally time their cyclical works so that these works need not be carried out in precincts selected for HDB upgrading. In this way, monies were saved, thus reducing the financial burden of residents having to pay higher service and conservancy charges. But, once the upgrading of the older estates is complete, the newer HDB high-rise blocks may not be suitable for HDB upgrading programme. Newer HDB blocks were built with higher plot ratios, and do not provide much scope for upgrading. The designs of these blocks are also more complex and sophisticated. These 20, 30 or 40 storey blocks are also more costly to maintain as they have different types of façade treatments and installations. The increasing price trends of building materials, labour and utilities have also imposed heavy financial burden on the Town Councils. Thus, I would caution against the use of the present accumulated sinking funds for Town Councils' Lift Upgrading Programme, which is very costly. The Lift Upgrading Programme is actually not cyclical work. It is a form of upgrading work to alter the design of HDB blocks.

Furthermore, based on the criteria as given by the Ministry, only some blocks are eligible for the Town Council Lift Upgrading Programme. But these blocks are scattered all over the estates as they were built at different times and with different designs, ie, some with standard corridors and some with staggered

Column: 828

corridors. Therefore, if the Town Councils were to carry out Lift Upgrading Programme for these blocks, there will be frequent construction works going on in different parts of the estates. This will cause much disruptions and inconveniences to our residents.

Furthermore, these upgrading works are "piecemeal" in nature, and do not enjoy any economies of scale. While I support the empowerment of Town Councils to carry out lift upgrading, I would propose that the Ministry consider integrating the Town Council Lift Upgrading Programme into the HDB's Lift Upgrading Programme. The Town Councils can co-pay the contribution for those blocks eligible for Town Council lift upgrading. In this way, we can expedite and better coordinate the Lift Upgrading Programme for our residents.

Erect, repair and maintain facilities on non-common property

Sir, clauses 3 and 4 of the Bill amend the Town Councils Act to expand the functions of a Town Council to include the erecting, repairing and maintaining of facilities on non-common property in the town. Although Town Councils manage the HDB estates within their defined town boundary, there are many public and private amenities in the town, such as covered linkways, footpaths, parks, drains, roads and open fields.

HDB residents are usually more familiar with Town Councils due to the daily presence of our Town Council staff in the estates. Many do not understand which parcel of land within a town belongs to which landowner. As a result, Town Councils often receive requests from residents concerning matters outside their scope of work. These include problems like cleanliness, pest control, mosquito breeding, overgrown trees and shrubs, illegal structures and requests for improvement projects relating to land

Column: 829

parcels belonging to HDB, SLA, LTA, ENV, PUB and even some private landowners.

This lack of understanding or confusion by residents has inadvertently increased the workload of Town Councils. It has also conveniently allowed various Government agencies to "transfer" their responsibilities to the Town Councils. Sir, this situation is unfair and unhealthy, as the added responsibilities have affected Town Councils in their delivery of services. It has also increased their cost of operations.

While the Town Councils are prepared to act as managing agents for a public authority or community-based association to provide facilities on non-common property in their town, I do not think the Town Councils should be held responsible to repair and maintain these facilities. Town Council funds should be used solely for the maintenance and management of common property for the common benefit of residents in their respective towns. Very often, facilities on non-common property are costly to erect and maintain. These include covered linkways, footpaths, lightings, landscaping and football fields. These facilities will add an undue financial burden on the Town Councils and their residents. Instead, we must ensure that the respective public authority or community-based organisation be held responsible for providing such facilities. This will provide a better check and balance approach in the provision of facilities on non-common property in a town. It will also ensure that such facilities are properly thought through, implemented, and properly maintained in a sustainable manner in the long run.

Column: 830

Criminal penalties for the misuse of Town Council funds

Sir, I

support the approach of encouraging more self-management of the Town Councils. At present, there are sufficient checks and balances in the Town Councils Act and other legislation to ensure the proper management of our towns. As we further empower and entrust Town Councils to take on more responsibilities, we should also review the Town Councils Act to facilitate self-management and self-responsibility.

Therefore, it may not be necessary for the Town Councils Act to impose criminal penalties on the Chairman and Secretary for the misuse of Town Council funds. There are existing legislation to prevent such abuses.

The introduction of criminal penalties for the Chairman and Secretary runs contrary to the spirit of entrusting elected members to run the Town Councils and encouraging self-management. Sir, we must understand that Town Councils are merely managing agents helping HDB (who is the land and building owner) to manage the common property of a town. Thus, it is not appropriate to impose such criminal liabilities on the Chairman and Secretary of the Town Council. Instead, HDB and Town Councils should design a corporate governance framework where there are joint responsibilities and liabilities of both parties should there be any misuse of Town Council funds.

Sir, the recent review of the Building Maintenance and Strata Management 2004 Act has decriminalised many non-compliances of the Act so as to facilitate self-management. Similarly, I would urge the Minister not to introduce criminal penalties in the Town Councils Act. On the contrary, we should make more provisions to encourage Town Councils to develop self-management capabilities.

Column: 831

Sir, although the proposed amendments to the Town Councils Act will not involve the Government in any extra financial expenditure, it will however help many Government agencies to save financial expenditures in the provision of facilities on non-common property in a town. Sir, may I seek clarification from the Minister as to whether various Government agencies will continue to manage and provide facilities such as covered linkways, footpaths, landscaping and other public amenities on non-common property in a town. If the proposed amendment is part of the devolution of Government's services to the Town Councils, there must be corresponding provisions of financial resources to the Town Councils for the proper management of such public amenities.

Sir, I support the Bill.

Dr Lily Neo: Mr Deputy Speaker, Sir, thank you for allowing me to join in the debate on the Town Councils (Amendment) Bill.

Sir, I strongly support the lift upgrading programme that enables lift access on every floor in HDB flats to improve the living environment of residents. Such lift upgrading to HDB flats has been done solely by the Ministry of National Development so far. Now, the Town Councils will also be conducting such lift upgrading. My concerns are several on this issue.

But before I go into it, may I remind Mr Chiam See Tong that there are 14 Town Councils that are chaired by PAP MPs, myself included. Therefore, rules with regard to criminal offence by Town Council Chairman are also applicable to all the 14 PAP MPs as well and not only to the two Opposition MPs. Therefore, it cannot be politically motivated, as suggested by Mr Chiam See Tong.

Column: 832

This Bill will inadvertently raise the expectations of residents towards lift upgrading. It is probable that, henceforth, residents may view lift upgrading obligatory on the part of Town Councils. It is likely therefore residents will compare the "works" of the 14 Town Councils on lift upgrading undertaken and make increased demands on their own Town Councils.

The use of sinking fund for upgrading of lifts will mean lesser funds for other cyclical works such as repainting, reproofing and other estate maintenance and improvement works. This is more acute for those town councils with lesser sinking funds and even more critical for Town Councils in older estates that require progressively higher demand on cyclical works due to older HDB flats.

Those active Town Councils with the capacity of doing more lift upgrading will have lesser precincts left for MND to offer for LUP. Therefore, the allocation of funds from MND for such works will be skewed towards less active Town Councils. This may discourage those active Town Councils in the long run and they may opt to leave lift upgrading to MND instead and save their own funds for cyclical works.

The recovery of the costs for the improvement contributions will be undertaken by the Town Council under this Bill. Sir, I feel that this will place Town Councils under a new task that is demanding. HDB will be in a better position to assume this role with existing software and hardware to efficiently manage such recovery of improvement contributions. There is no necessity for duplication of such set-ups by involving the 14 Town Councils. Individual set-up by the 14 Town Councils will cost a great deal and a waste of resources. One large recovery centre in HDB should have better "economy of scale" to deal with such recovery, especially in cases with smaller scale of improvement contributions.

Column: 833

The upgrading of lifts in HDB flats involves detailed planning of sites and designs and engagement of architects and engineers as well as the awarding of projects to contractors. This will best be carried out by HDB with the many years of experience rather than leaving them to the 14 Town Councils which have to start from scratch.

The lift upgrading requires residents to co-pay and majority "yes" votes will be necessary to proceed with upgrading. Sir, my concern is on those HDB blocks that had undergone previous Main Upgrading Programames but are still lacking lifts going to the top floors of these HDB flats due to technical constraints in the past. Due to newer technology, according to MND, these HDB flats are now eligible for lift upgrading that will allow the lifts to serve residents on the top floors of such HDB blocks. As these residents had shared the upgrading costs with HDB in the past, they may be reluctant to contribute a second time. Moreover, cost sharing for the upgrading involving and benefiting only the higher floor units may cost too much as there will be lesser units to share the payments. May I ask whether the Minister of State will waive the rules on co-payment and voting for such lift upgrading? Will HDB absorb the residents' share for such upgrading so that Town Councils do not spend beyond their stipulated permissible amount?

This Bill does not cater for instalment payment schemes like those offered by HDB. Should there not be a new section inserted to cater for instalment payment schemes instead of demanding full payment within one month from the date of the issuance of the payment advice, as set out in the Bill?

Sir, the latest Household Expenditure Survey showed that the monthly incomes of the poorest 20% of households fell by

Column: 834

3.2% a year between 1998 and 2003 and households grew smaller with fewer working people. Those in this group are the ones that most likely are staying in older flats which are eligible for lift upgrading but have dwindling free disposable income. They are the ones most likely also to have the least spare savings for improvement contributions. How do we assist those who really do not have the means for the improvement contributions?

This proposed amendment will empower Town Councils to sell a flat if the improvement contributions are not settled after 90 days of the Town Council serving a written demand on the flat owner (under a new section 24F). Should Town Councils take such a draconian action as selling the flat? Would not such demands be too harsh on these residents?

The Bill gives Town Councils the power to enter a resident's flat to value the movable properties for the purpose of seizing those movable properties to satisfy the judgment sums or arrears. Sir, Town Councils should only consider seizure of the movable properties in the flat if, in their fair opinion, they have exhausted all enforcement processes and have the view that seizure of the movable properties is the only way to recover such judgment sums or arrears. Moreover, the entering of a resident's flat to value the movable properties is an infringement of privacy.

I hope the Minister of State can address all the issues raised on this Bill.

Assoc. Prof. Ong Soh Khim: Mr Deputy Speaker, Sir, thank you for allowing me to join in the debate on this Bill. I would like to make a few observations which I would appreciate it if the Ministry could look into them.

Just as a recap, when the HDB LUP was first launched in March 2001, the

Column: 835

cost of the lift upgrading work was co-shared between the Government, the Town Council and the flat owner. And to ensure that the flat owner's share of the lift upgrading cost is affordable, the Government subsidises 75% to 90% of the cost of the lift upgrading works and the actual proportion would depend on the flat type and the block configuration.

From my understanding, based on the information from the HDB's website, Town Councils are already allowed to use their sinking funds to co-pay for the HDB LUP programme. Again, an example from the website is that for LUP, for a typical four-room flat in a standard block, the Government would pay about $10,000 while the Town Council and the flat owner would each pay about $900, ie, the Town Council's share and the flat owner's share are equal. Flat owners in a segmented block would pay a higher amount because the lift upgrading would actually benefit less people.

However, there is also the cap where the Government would cap the maximum amount per household at $3,000. In the current Bill, the Town Councils are allowed to use their sinking funds for lift upgrading subject to certain guidelines that the Minister for National Development announced in Parliament on 7th March 2005, so that there are enough sinking funds for long-term use. One guideline states that the Town Council would be allowed to select HDB blocks where the Town Council's share of the upgrading cost per benefitting unit does not exceed $5,000. An observation here is that there is no guideline on the selection of HDB blocks with regard to the flat owner's share of the upgrading cost. Would the Ministry consider setting a guideline that Town Council would only be allowed to select HDB blocks where the flat owner's share of the upgrading cost per benefitting unit does not exceed $3,000 or even less, similar to the HDB's LUP programme?

Column: 836

A second guideline states that flat owners would co-pay for the works in the same proportion as the HDB LUP. Hence, that means that they would co-pay about 5%-12.5% of the total upgrading cost, depending on the flat type. An observation here again is, by comparing with the HDB LUP co-sharing package, does this mean that in the Town Council LUP, the owner's share would also be raised to $5,000, like in the Town Council's share of $5,000?

Sir, the cost-sharing package in this Town Council LUP programme is actually not clear as compared to the cost-sharing package in the HDB's LUP programme. I would like to urge the Ministry to provide more details so that residents can make a more informed decision during the poll for the Town Council's LUP.

The next area that I would like to touch on is the help measures. Currently, HDB has several measures and instalment plans to help flat owners who have difficulty in paying their share of the cost for upgrading programme and this includes extending the repayment period for the cost of up to 25 years, allowing the flat owners to defer payment for a certain period of time until they sell their flats to ensure that these flat owners can benefit from the upgrading. However, the new section 24F is contrary to the objective of these help measures that serve to ensure that flat owners would benefit from the lift upgrading. The new section 24 empowers Town Councils to sell a flat where any improvement contribution payable in respect of the flat remains unpaid 90 days after the Town Council has served the owner a written demand for payment. Is it not an irony when a household has voted for lift upgrading in his block only to be forced to sell his unit in that block of flats because of a change in his financial situation, for example, due to retrenchment or even chronic illnesses, such that he is not able to pay his share of the upgrading cost and hence be deprived of it?

Column: 837

Consider another scenario of a household who did not vote for the upgrading programme because they knew their financial situation did not allow

them to do so, but LUP was implemented in their block of flats because more than 75% had voted for it. Eventually, this household could not afford to pay for their share of the LUP cost and had to be forced to move out of their block of flats. Sir, it is no fault of theirs and it would not be fair to such households to force them to move out of the block.

Sir, we also need to look at the role of the Town Councils. Town Councils are separate legal entities formed under the Town Councils Act to manage and maintain the common areas in HDB estates. The functions of the Town Councils are to control, manage, maintain and improve the common property of HDB's residential flats and commercial property within the Town Council. Town Councils are not financial institutions to have the power to seize movable properties in flats or to seize flats for sale.

Earlier, we have seen reports in the newspapers of households living in darkness, without water and electricity supplies, because they could not pay their utility bills. Are we going to see families without a roof over their heads because they could not pay the upgrading cost and their flats are being sold by the Town Council?

One might argue that this is the ultimate last resort that the Town Council will do for cost recovery in upgrading programmes. Hence, if this is indeed going to be the ultimate last resort, should we not now take a step back and look at the current help measures to analyse why these help measures are not effective in helping residents pay their share of the upgrading cost, if indeed these current help measures are not effective?

Column: 838

One might also argue that this empowerment is to allow the Town Council to take action against those flat owners who can afford but refuse to pay up, ie, in Hokkien, the chau kuan residents, and that the existing provisions in the Act already allow Town Councils to sell a resident's flat if he is not able to pay his S&C charges. Sir, this does not mean that because the current provisions in the Act already allow for the sale of a resident's flat for outstanding S&C charges, it is therefore okay for the Town Council to now sell a resident's flat for outstanding upgrading charges. Can the Town Council elaborate on the current measures of identifying who are the genuine residents who cannot afford to pay and who are the chau kuan residents?

One might also argue that $3,000 in the HDB LUP scheme and $714 for the Town Council LUP, as quoted in the Today newspaper on 18th July 2005, are not a big sum of money. However, to the low-income earners, especially the bottom 20%, who live from hand to mouth, whose next month's wage is often spent before it even comes, where there is no extra money in their CPF accounts to pay for these upgrading charges due to the increase in MediShield premiums, some might really lose the roofs over their heads due to outstanding payments of these lift upgrading costs.

Hence, Sir, I urge the Ministry to reconsider the option of sale of a resident's flat by the Town Council. Should repossession and sale of flat be considered as an option at all in the upgrading cost recovery by the Town Council?

Lastly, I would like to touch on the misuse of Town Council funds. I welcome the new section 24I which spells out the penalties for the misuse of Town Council funds in order to strengthen the corporate governance of Town Councils to ensure that funds are used only for the purposes

Column: 839

spelt out under the Town Councils Act. The penalty is a fine of up to $5,000 if sinking funds are used for other than the purposes specified under the Act.

Sir, Town Council's sinking funds are built up from residents' S&C charges over the years. This is for long-term cyclical maintenance of the estates and to provide a good and safe living environment for residents. The Government has the responsibility to ensure that Town Councils use the funds appropriately for the benefit of the majority of their residents over the long term, and that no funds are being misused.

As opposed to Dr Amy Khor's and Dr Teo Ho Pin's views, I feel that this section is absolutely necessary. In fact, is not a penalty of $5,000 too lenient as compared to the "penalty" that a resident will face in the case of outstanding S&C charges, which is the sale of his flat by the Town Council? Can the Ministry also elaborate on what are the current checks and regulations that it has in place to prevent misuse of such funds?

Mr Low Thia Khiang (Hougang): Sir, I would like to query the rationale and logic of the amendment concerning lift upgrading under the new Part IV-A. Before moving into the details of the amendment, I would like to look at what is the current position of LUP before the Act is amended and what is the effect after the amendment which allows Town Councils to do lift upgrading.

Sir, based on the information from the HDB's website as cited by Prof. Ong just now, the HDB will pay 75% to 90% of the cost of lift upgrading works. For example, for lift upgrading of a typical 4-room flat, the HDB pays $10,000 whilst the Town Council and the resident each pays about $900. Say, for a block of 100 units of 4-room flats, effectively, this would mean that the cost for LUP is about

Column: 840

$1.18 million. Of this, HDB pays $1.003 million with the balance of $177,000 shared between the Town Council and the residents.

With the amendment today, the HDB will no longer pay its portion of LUP cost undertaken by the Town Council. Instead of paying $88,500, ie, 50% of $177,000, based on the above example, the Town Council will now have to cough out $1.092 million from its sinking fund.

Sir, nothwithstanding the Bill limiting the cost of TC-LUP to $5,000, the fact is that the Government pays nothing under the amendment. I am therefore of the view that compared to the HDB-LUP programme in which HDB pays 75% to 90% of the cost, a Town Council which goes ahead with the TC-LUP on its own will have shortchanged the residents, as the entire cost of the LUP is paid from the Town Council's sinking fund, with individual residents co-paying part of the cost with their own money, and the Government pays nothing.

I understand from the Minister for National Development at the Budget debate that the rationale for this Bill today is the outsourcing of LUP from HDB to Town Councils. This will shorten the time required for the Lift Upgrading Programme from 15 years to 10 years. My question: what role, if any, is the Government playing in achieving the objectivie of shortening the time span besides amending the Act to allow Town Councils to use their sinking funds for lift upgrading?

Sir, Town Councils' sinking funds largely come from service and conservancy charges paid by HDB residents. Since the amendment requires Town Councils to use sinking fund to pay for LUP, with residents co-paying the rest, it is effectively HDB residents who are

Column: 841

paying for the lift upgrading programme if a Town Council were to proceed with the TC-LUP under the provision of this amendment.

The Minister of State may respond to say that the Government has also contributed to the sinking fund via SC&CC grant to Town Councils. However, I wish to remind the Government that in 1999, the Ministry of National Development decided that SC&CC grant to Town Councils was to be computed based on room types instead of the age of the flats. The grant for 5-room flats was removed. In addition, the grant for 2-room flats was also reduced by some 9%. Though there were adjustments made to increase the grants of 1-room and 3-room flats, the change in computation had nevertheless resulted in overall reduction of grants paid out by the Government to some 9%, based on my Town Council's calculations. Other Town Councils may be different.

Correspondingly, the portion of the grant to the sinking fund was also reduced. In 2004, the percentage of SC&CC to be allocated to the sinking fund was further reduced by 5%. Moreover, as the grants given by Government are for existing cyclical works, the above reduction of contribution into sinking funds would mean that without grants for TC-LUP, Town Councils and residents are actually made to bear much more than what they should. If the HDB's concern is the pace of lift upgrading, grants should be given to Town Councils for such a purpose. Otherwise residents whose Town Council carries out the LUP on its own will end up paying more than residents in areas where LUP is offered by the HDB. This is unfair in terms of how the Government applies its funds as it benefits only a sector of the population.

Column: 842

I also note that under the new section 24D(4), the improvement contribution for LUP to be paid by the residents "shall not be less than the improvement contribution that the Board might have determined under section 65D(2A) of the Housing and Development Act", which was mentioned by Mr Chiam as well. Sir, I wonder if the Town Council is able to get LUP done at a cheaper rate than the HDB. Why should the Town Council not be allowed to pass the savings to the residents?

Finally, I have not forgotten that the PAP Government still owes upgrading works to Hougang residents. Hougang has waited for more than 10 years for upgrading, whilst flats newer than Hougang in HDB estates of PAP wards are being upgraded, some even more than once. I think the Minister of State knows this very well. I wish to remind the Government that residents of Hougang are citizens of Singapore who pay taxes, do National Service and fulfil all duties towards the country. Do residents of Hougang constituency deserve this discrimination?

Sir, very soon, we will be celebrating the 40th anniversary of the birth of our nation. The discimination against Opposition wards in upgrading programmes for political purposes which has become a political reality here, serves as a reminder to us as a nation in which democracy, equality and justice are represented as stars on our national flag which we always fly high.

Mr Heng Chee How: Mr Deputy Speaker, Sir, I thank Members for contributing their views and perspectives. What I intend to do is to group some of the common topics and respond to them and then take up the individual comments by Members.

First of all, a comment about the objective of the TC-LUP and the use of up to 10% of the sinking fund. In terms of

Column: 843

the speed, originally, it was intended and it was hoped that we could complete the HDB lift upgrading programme in about 15 years. As it is now, there are some 3,000 blocks that remain eligible for lift upgrading, taking away those that have already been completed. We, like all Members, are keen to be able to speed it up. How do we intend to do that? I think some Members have also asked how do we intend to do that. There are a number of multi-pronged methods, eg, channelling more of the public housing budget towards LUP on the HDB side, enabling Town Councils if they so choose to mount Town Council-LUP projects; simplifying the finishes for lift works. Even for per project, you can simplify that and therefore the savings can then go towards initiating projects faster. And, overall, looking at lift technology, whether or not there might be scope to have different kinds of technology in future so that the cost of lift upgrading can be lowered over time by using these new methods. So through a combination of these methods, we, in MND, believe that it is possible to quicken the pace and bring it down from 15 years to 10 years.

Some Members have asked: is 10 years too slow? Dr Amy Khor mentioned that many of her residents very much look forward to it being further speeded up. Whilst the Government would like it to be as quick as possible, we also want it to be something that is practical and realistic. So it is a balance not only between the money that we have to do the lift upgrading but also in terms of the construction capabilities, and whether or not the sector will be able to take it all in.

In the balance, we believe that 10 years is actually a challenging target but an achievable one. So, we are shooting for 10 years as of now. Obviously, in the time to come, as we gain experience and if technology further improves, if there are opportunities to further speed up, then we are certainly open to reviewing. Our objective remains the same, ie, to have

Column: 844

this benefit enjoyed by as many of our residents as quickly as possible.

Town Councils would indeed play an important part in implementing lift upgrading in HDB estates because with the sinking fund available, and based on that $5,000 per benefitting unit cost cap, we think that there should be somewhere between 300 and 400 blocks that would be able to benefit if the TCs were to step in with the LUP on their end. If that happens, then, obviously, it is material to the speed at which all blocks in Singapore can enjoy lift to every floor.

Dr Teo Ho Pin, Dr Amy Khor and some other Members talked about how do we decide where to do these LUP works, which blocks belonging to the TCs that might be eligible and which blocks HDB will do. And if, in fact, the two are going to happen at around the same time, whether or not there could be a certain amount of consultation and coordination. Actually, as all Members will know, whenever there is, say, a MUP to be done and there are also re-roofing works that a TC might want to mount at that time, this consultation is something that is already happening on the ground. If the TCs are going to mount TC-LUP projects, then such consultation will also be part of the process, and HDB will work with the TCs in order to smoothen the process. But it is really not something that which block may be chosen for HDB-LUP or which block may be chosen for TC-LUP. It is not something that MND or HDB can unilaterally decide and then just tell the TCs, because there is a process every year where you are requested to nominate certain blocks for these upgrading projects. So you would not be able to do all of them, whether for HDB-LUP or for TC-LUP every year. It is also an iterative process where within the Town Council, and if it is a multi-ward Town Council, there has got to be also consultation within the Town Council in terms of its priorities.

Column: 845

Dr Lily Neo made the point about whether or not Town Councils looking after older HDB estates might be disadvantaged in terms of the sinking fund provisions. And if you have less there, then whether or not you might be able to proceed with enough speed and vigour in terms of your TC-LUP projects. If you look at the accounts of the various TCs, actually it is not true that the TCs looking after the older towns necessarily have less money in their sinking funds as compared with others. That is something which is not going to materially hamper any TC from undertaking these projects. It is quite the opposite actually. Some other Members - I think Dr Teo Ho Pin and Assoc. Prof. Ong Soh Khim - asked: if you start allowing TCs to use their sinking funds, when these sinking funds are meant for cyclical works, would it not then detract from the ability to undertake their core mission with these sinking funds? It is precisely for this reason that, on the one hand, we want to allow Town Councils to have the option to mount these lift upgrading projects if they want but, on the other hand, having to tap the sinking funds, we want to make sure that when you do tap those sinking funds, it does not detract you from the primary purpose of the funds, which is to provide for all those cyclical works. That is why there is a per benefitting unit cap, so that you do not overspend per unit basis. There is also a percentage cap on how much of your sinking fund you can actually use for TC-LUP. So it is up to 10%. In other words, the message that Government wants to send is flexibility but within rules of prudence.

Next, I would just like to address Dr Lily Neo's point about blocks that have already undergone MUP earlier but, at that time, technology did not allow the top floor of some of the blocks to get the lift. Now that it is technologically possible, they become, in principle, eligible. Again

Column: 846

being eligible does not necessarily mean that they will be offered in the immediate first phase. So, again, this is something that the Town Councils, if that block is chosen, would have to prioritise it against their other blocks. But, in principle, voting and co-payment would be required. If it is a TC-LUP, if you look at the kind of blocks that would be eligible, then the amounts that would be co-paid again would be relatively lower, simply because of how you choose TC-LUP blocks as against those that you would leave it to HDB to do under HDB-LUP. The other consideration is, of course, earlier on, when they voted under the MUP project, it was voted as an overall package. Therefore, when they are eligible for lift upgrading in this new exercise, then this is being offered to them anew and, again, they would have to indicate their decision. So, do not take the earlier vote one way or the other as binding on this one.

Prof. Ong and some other Members, I think Dr Lily Neo also, expressed concern about low-income households and whether or not some of these provisions might inadvertently actually cause them hardship. Definitely, it is not the intention of the Government to cause hardship to our low-income families. In fact, the entire purpose of this amendment, the one pertaining to TC-LUP especially, is to accelerate the benefit to all households so that everyone can enjoy lift to every floor as soon as possible. First of all, the amount that individual households will need to co-pay under the TC-LUP will be affordable, bearing in mind the $5,000 per benefitting unit cost cap and there is also a range of contributions. So the larger flat type will contribute more and the lower flat type will contribute less. Generally speaking, our low-income families, especially those who are staying in lower-flat type, would therefore find that the construction of the scheme is such that it is actually meant for their well-being.

Column: 847

Then there is this question: how do they actually pay - must it be a lump sum? That was the concern. No, it does not have to be a lump sum. If you look at how HDB goes around providing different options of payment for the HDB-LUP or MUP, there is a whole range of options. You can pay a lump sum, you can pay with your CPF, you can pay by instalments. So, all these options are also available for TCs to consider and adopt in order to help their low-income households. A word on that contribution, because I think there was a little bit of confusion over two sections and what do they mean that the TC can decide it has got to be not lower than the HDB. Mr Chiam made mention of that. That refers to actually the percentage rates at which the different flat types, as appropriate, would have to contribute to the cost-sharing, because it has to be co-paid. If you look at HDB, they have a certain percentage of co-payment, depending on the flat types. So, that is the contribution by the different households. It is to ensure consistency when the TC-LUP does it the same.

I just like to add also one remark, and that is a more general one pertaining to whether it is the provision for the sale of a flat or sale of a movable property within the flat and so on, when TC-LUP charges are owed and not settled within the notice period. First of all, these provisions are definitely not new. They actually, on the one hand, mirror the provisions in the Housing and Development Act. When the HDB does its HDB-LUP, these are the provisions. So, now that the LUP is going to be made available for Town Councils to mount, these provisions are then imported. At the same time, if you look at the Town Councils Act, these provisions are also already present there to enable them, as options, to collect their arrears on S&C charges. These are enabling provisions, they are not mandatory. It does not say that every TC must use these. Certainly, nobody says

Column: 848

that they must use it as a preferred option or first resort. Indeed, if you were to look at the track records of all Town Councils, I think Town Councils are very sympathetic towards the needs of their residents and they understand their difficulties. That is why I think all of us will agree that in every case, wherever possible, there will be discussions to see how to help them stretch the repayment of their arrears, eg, new instalment plans and restructuring of their plans. There are so many different ways before you would even try to do anything to seize and sell their movable property, not to mention their flat. So, if you look at the track records of how Town Councils have been so-called making use of these existing provisions in respect of S&C charges which, in many cases, would amount to much more than any of these TC-LUP charges can go up to, then you will know that these provisions are there but, on the ground, Town Councils would interact in a very positive way with the residents. It is something that the Ministry would really like the Town Councils to continue to make available different payment schemes, and continue to work with the residents for the betterment of the town and the quality of life there.

There are comments from various Members on the penalty clauses, eg, holding the Town Council Chairman and Secretary accountable if sinking funds are not used in the prescribed manner. For example, if you breach the cost cap in an intentional way, then that will constitute an offence. So, what is this all about? Before we have this amendment passed, Town Councils simply cannot use sinking funds to independently mount lift upgrading exercise. You can co-pay in an HDB lift upgrading exercise, but you cannot independently mount one. So this represents a relaxation of the Act to enable Town Councils to use their sinking funds to do that. I think Mr Chiam would also agree with me that with greater flexibility and authority, we should have

Column: 849

greater responsibility and accountability. So, this is two sides of the issue and this provision would enable us from the Government side, to signal very clearly where the lines are drawn. It is not meant to penalise, and certainly not meant to trap anybody politically, as Dr Lily Neo has correctly pointed out. The number of PAP Town Councils outnumbers the number of Opposition Town Councils by a multiple. And the same rule applies to all. So it is really to signal that with this relaxation, you have the flexibility as a Town Council to mount these exercises, but be careful. Because these moneys, as Prof. Ong Soh Khim has pointed out, were collected and they were put aside for cyclical works. Therefore, we want to make sure that people do not go overboard and intentionally breach these rules. Why? So that the Town Councils' work can be sustainable, viable and properly done. That is good governance. We just wanted to draw the line clearly. Everybody knows where it is and there is no misunderstanding so that these penalties, in fact, do not need to be used. We just hope that this signal is very clearly registered.

On non-common property, I would like to provide this clarification, and that is Town Councils can erect things on common property and then they repair and maintain them. Currently, Town Councils cannot erect things on non-common property but can maintain them, if they agreed. This relaxation or amendment would therefore give Town Councils, if they so wish, the option to erect

and then repair and maintain structures on non-common property subject to the Minister's agreement and subject to the land owner's agreement. Why are we doing this? It is certainly not to trap anybody into planting trees and then trap you under one of the other provisions. It is quite the opposite. We are doing this in response actually to

Column: 850

certain Town Councils which have looked at the entire town and said that, within this town, there are certain areas that they would like to do more and they would like to erect certain things on non-common property. But under the current provisions, they would not be allowed to do that. We are actually giving this leeway, and it does not mean that you have to do it.

So I just want to clarify with Dr Teo Ho Pin that this is not something where, as a result of such an amendment, the other agencies can stop doing their work or they just erect things on non-common property and then require the Town Council to maintain for them. That is not the case. What it says is that it gives you the opportunity, if you so choose, to erect on non-common property structures but, at the same time, not erect and disappear. Structures which you erect, you also repair and maintain. So this is actually to make it complete. That is the purpose of that particular section.

Mr Chiam talked about section 24B where he asked what if the Minister disagrees with the Town Council's Chairman on which precinct to gazette. If I may read section 24B, it says here, "The Minister may, after consulting the Board [and in this case, it means HDB] and the Town Council concerned, from time to time by order published in the Gazette, declare any housing estate or any part thereof within that Town Council's Town to be a precinct for the purposes of lift upgrading works in buildings therein". This gazetting is for the purposes of clarity, just as section 24B(4) that comes after that which enables the Minister of State to assist in the approval of this. So these are actually administrative measures to make clear and expedite the exercise. So it is not something that is put in there in order that the Minister can go and dispute with him. That is not the intention of this amendment.

Column: 851

Mr Low Thia Khiang spoke about the cost-sharing arrangement for HDB-LUP where the HDB pays for most of it and the remainder is co-shared between the Town Council co-paying with the household. His point is: why not ask the Government to then give the money to the TC so that the TC can mount this TC-LUP exercise by assisting the HDB? Did I understand you correctly?

Mr Low Thia Khiang: Can I clarify the point, Sir?

Mr Deputy Speaker: Carry on.

Mr Low Thia Khiang: The point is that, first of all, under the amendment, the Town Council will carry out TC-LUP. The Government pays nothing. It is paid by the Town Council and the residents. Why is it so in the first place? So I say, why not give a grant, because it is not fair for the Town Council to pay the lift upgrading entirely from the sinking fund because the sinking fund is also paid for by the residents. The residents pay into the Town Council's sinking fund to pay for lift upgrading and the residents pay again on the co-sharing. So the residents practically pay everything. The Government plays no role. The application of funds does not seem to be fair.

Mr Heng Chee How: I would like to make the following clarifications. If we were to do the HDB-LUP formula, then obviously it is a HDB-LUP. The TC-LUP is a different arrangement for the Town Councils who wish to do so in order to bring that benefit, if they feel that they want to, to their residents over and above whatever the HDB-LUP might be currently doing. If they want to split it up themselves, then it is something that they can choose to do. So this arrangement is to facilitate that. Even so, as he correctly pointed out, part of the sinking fund is contributed by the Government through grants. So it is not true to say that the Government had not co-paid a certain amount even in the TC-LUP exercise.

Column: 852

I think just now, he also mentioned that last year, the Government allowed for sinking fund contributions to be reduced from 35% to 30% and that actually already reduced the inflow into the sinking fund. But just to be correct, again, that was an option that was given to individual Town Councils to choose. And in fact, I do know for a fact that some Town Councils have chosen to keep it at 35% contribution into the sinking fund. So I just want to clarify that when we enable Town Councils to mount these exercises, it is to give an option to Town Councils that wish to do so within clear rules. It does not say that they must do it. If Mr Chiam's Town Council wants to do it and Mr Low's Town Council does not want to do it, then it is their call and it is a choice for their respective towns. Just like many of the other provisions, like erecting on common property, repairing and maintaining those things, it is really to say that if you choose to do something, then take care of it along the way, do not just build and disappear. So it is actually giving more leeway and more options. So when Mr Chiam spoke about these amendments not helping to enable Town Councils to move towards more self-management and giving residents more flexibility through the Town Councils, I think he got it wrong. It actually does enable a lot of that.

Mr Low Thia Khiang: Sir, the first clarification is concerning this enabling rule. Does the Minister of State agree that the residents whose lifts were upgraded under the TC-LUP will benefit much less if a block would be upgraded under LUP by the HDB?

Mr Heng Chee How: Why do you say that?

Mr Low Thia Khiang: Because, first of all, they have paid and the Town Council has paid through the sinking fund, which

Column: 853

is largely their money. The Government has paid nothing to the upgrading.

Mr Heng Chee How: By the very design of the Town Council LUP, I would imagine that the Town Councils that are interested in mounting such an exercise will carefully look at the blocks to see which are the ones that would be very cost effective to do, not only from the Town Council's point of view, but after netting out their share of up to $5,000 from the cost divided by the units, the amount that would have to be co-shared by the benefiting units of the blocks that they choose would be attractive to the households there. I would imagine that is how they would go about doing it and, if so, I would therefore surmise that the amount that they pay would not be out of proportion. So I think it is really not something that is created out of this scheme. It is something that each Town Council will have got to see how best to choose their blocks. And I cannot be advising Mr Low on how he runs his Town Council.

The Minister for National Development (Mr Mah Bow Tan): Mr Deputy Speaker, Sir, first, let me, on a point of order remind Members that when they speak, they should be addressing the Chair, rather than to talk to each other across the floor.

Next, I would like to respond to a point that Mr Low made just now about why he thinks that it is unfair for his residents if he were to implement the TC-LUP, instead of HDB-LUP. I suggest that he should go and talk to Mr Chiam about how to do it. Because Mr Chiam has a way of selecting certain blocks which are very cost effective and which will allow his residents to benefit from LUP, and he uses his sinking fund. I think he finds there is an advantage for him to do so. We are not, of course, by any stretch of the imagination, amending this Town

Column: 854

Councils Act for the benefit of Mr Chiam. Mr Chiam believes that we do it to fix him. But, of course, that is not true. What we are doing is to give all Town Councils in Singapore another option over and above what the Government is doing to bring a very, very important and a very beneficial programme to the residents. And that is the Lift Upgrading Programme. That is all we are doing. So I think for Mr Chiam, or in fact for Mr Low, to ascribe other motives to this is not very fair.

Assoc. Prof. Ong Soh Khim: Sir, as I understand from the MOS' reply, in the TC-LUP, there will not be any subsidy from the Government and, as I understand from the HDB website, the cost for lift upgrading could range from $10,000 to $30,000 per flat. In this case, there is a regulation that sets the TC's share of the cost in the TC-LUP to be $5,000. Does it mean that the residents would then have to pay $5,000? Would the Ministry consider setting a cap on the resident's share of the upgrading cost in the TC-LUP?

Mr Heng Chee How: Mr Deputy Speaker, Sir, as I had earlier responded to another Member, the Town Councils, when selecting the blocks, would take into account how much they would actually cost if they were to do it on the basis of this block versus that block, and they know that their own contribution on a per benefitting unit basis is capped at $5,000. Therefore, working backwards, they would know how much it would cost a benefitting unit if they would have to do it in that block. So through such background work and homework, they would actually know which blocks are best selected for TC-LUP. Because they also know at the end of it, it is not something where the Town Council or the Town Council's Chairman can then just dictate. It is also subject to a vote by the residents there. So if you do something that is out of proportion, they will vote against it.