Town Councils (Amendment) Bill 2017 Round-Up Speech By SMS Desmond Lee

Mar 10, 2017

Mdm Speaker, I thank the Members for their comments. The House has broadly affirmed the need to strengthen Town Councils’ public accountability and the need for oversight on Town Councils. Most issues and questions raised today pertain to the details of the proposed amendments and how they will play out in practice, whereas a few were more fundamental in nature.

Let me first address first, the broader, more fundamental points. Both Mr Pritam Singh and Ms Sylvia Lim emphasised that they want the Town Council framework to be depoliticised. I have explained at the start of this debate what the purpose of the Town Council framework is, and Mr Singh, on behalf of the Workers' Party, accepted this premise.

The purpose of the Town Council framework is to establish a more direct nexus between elected Town Councillors, their management of Town Councils to deliver services in our housing estates, and their resident voters, and to allow our housing estates to develop a more distinctive character of their own, with direct involvement of their elected MPs, guided by the needs of residents.

As a political framework, Town Councils allow residents to see a side of their MPs that their performance in Parliament may not be able to demonstrate. Here in this House, MPs speak, argue, persuade, and contribute ideas, demonstrating their thoughtfulness and mental acuity, their oratorical skills, and their sense of empathy and compassion, largely through speeches and ideas.

But in the day-to-day running of the Town Council and their estate, people can judge for themselves a different perspective – whether their MPs can really do things, or not. Is the estate clean? Are there improvements to the estate? Are there improvements to the environment? And is the Town Council financially sustainable and run honestly?

They can see for themselves the governance style and philosophy in action, and not just in word. For instance, MPs may espouse the virtues of openness and transparency, but are they really practicing what they preach when they run an organisation? In short, the Town Council framework has served as neutral training ground for MPs and political parties – to show whether they have what it takes to run a public entity and manage an estate and, by extension, the Government and the country.

More than 25 years on, the objectives of the Town Councils still hold true today. And I’m glad that Mr Singh, on behalf of his party, agreed with that. At the end of the day, if the Town Council is properly managed and the estate is well-run, people may continue to support you at the ballot box. And the converse is equally true.

Mdm Speaker, Ms Sylvia Lim said that the regulatory powers introduced in this Bill, in particular Part VIA, gives MND too much power to intervene, or even interfere, in the affairs of the Town Council. Allow me to reiterate the following key points.

The proposed amendments do not fundamentally alter the character of Town Councils, or their roles and functions. Under the revised Act, Town Councils will continue to enjoy broad autonomy and be empowered to run their estates, as they have been for the past 28 years.

But these powers are not, and should not, be unfettered. Town Councils will continue to exercise autonomy to run their estates, but within broad rules laid down to ensure proper governance and to safeguard public interest. Autonomy does not give anyone a blank cheque to run down the Town Council or the estate, misuse funds, mismanage the system, or break clearly established rules.

The Bill simply provides clarity on some of the existing boundaries within which TCs operate. For instance, Town Councils are subordinate to public laws and statutory authorities carrying out their statutory duties. These minimise ambiguity on the ground.

The Bill also puts in place safeguards and compliance mechanisms to enable MND, as regulator, which it has always been, to exercise more effective oversight of Town Councils on residents’ behalf.

In fact, some of the provisions in the Bill enhance the direct accountability that Town Councils are premised on – accountability to residents and voters. For example, the Bill requires Town Councils to publish their key appointments and financial statements. Town Councils are also required to keep long-term projections, so that they get an honest opinion as to whether their management style is for the short term, or is for the long haul.

Unless the situation is so dire that the health or safety of residents is at risk, MND will not step into the shoes of Town Councils, to do as they are obliged to do.

Madam, Ms Sylvia Lim expressed concerns about the appropriateness and independence of MND, as a regulator of the Town Councils. She said that the new enforcement powers under the Town Councils Act are too wide-ranging and may be wielded as a political tool, because the head of the Ministry is a political officeholder. These are serious allegations, and quite unwarranted, and perhaps are indicative of the world view of the Workers' Party– that when a political entity or a politician gets into power, there is no trust in his integrity; there is no trust in the voter. He must be checked, fettered, locked up, chained, that you need an ombudsman for every aspect of his work, especially when it relates to issues that may pertain to the politics of the land.

First, let us go back to fundamentals. Mr Singh and Ms Lim are both lawyers. They will understand this. When a Government elected by the people, political officeholders will helm the executive arm, and be responsible for all the Ministries and agencies, including those that have law enforcement, regulatory and licensing powers – the Police, the National Environment Agency, CPIB, IRAS and so on. And we are not unique in that sense, and this is not a unique system. With a parliamentary majority,the Government can and is obliged to make laws in the public t Madam, these powers, and the laws that are made, have to be used judiciously, fairly, justifiably and even-handedly. In the case of the Town Councils Act, they have to be applied across all Town Councils, regardless of political affiliation.

Some Members have spoken about how their Town Councils have been fined. Some other Town Councils have been sanctioned, embarrassed by agencies, when it is announced what has happened in the media. Even the Prime Minister’s Town Council, when allegations were made, they took the first step to make a report, and now CPIB is investigating. Is there an allegation or claim that the officers from the CPIB will fear investigating Ang Mo Kio Town Council? Are they timorous souls? I fear the allegation goes a bit too far. Because these powers are derived from the people, and given with their trust and confidence. Trust and confidence are fragile things. There is no sweeping of things under the carpet. Our history has shown that this Government, this party will act against wrongdoings, and will not sweep things under the carpet. The recent Ang Mo Kio Town Council case is a case in point.

In the event of a conflict of interest, there are established and appropriate ways to deal with it. In the case of the Town Councils Act, if the Minister is required to recuse himself, then other officeholders will have to step up and exercise those powers, with the same good faith, and with the same obligations as the Minister. And if all the MND officeholders have to be recused, then some other Minister has to be appointed to exercise those powers. If these powers are used in an unjustifiable manner, for whatever reason, public trust will be seriously eroded. We can certainly count on members of the Opposition, acting as sentinels, to make allegations ever now and so often, pointing to shadows and claiming conspiracies.

Madam, where prosecutions are instituted, as envisioned possibly under the Town Councils Act where there is wrongdoing, there is also the office of the Public Prosecutor who decides if charges should be filed, and the Judiciary who decides if they should stand.

Mr Singh and Ms Lim call for the appointment of independent persons – Ms Lim mentioned independent ombudsman, Mr Singh talked about independent auditor or accountant. But these so-called independent ombudsmen or independent accountants have to be appointed by somebody – somebody vested with the authority to take charge of the matter, somebody responsible for the policy of the issue. So will the allegations of bias and partisanship really ever end? What about officeholders of other ministries and agencies who may be responsible for enforcement agencies or licensing agencies which might incidentally apply to Town Councils? Or to members of political parties? Card-carrying members? Or to vocal pro-opposition members? Does Ms Lim then say you need to have one law and one system for the common man, and an independent ombudsman for all these other people that she has identified? Or should we have one law of the land, and one system for everybody under the rule of law, under the scrutiny of the people and the protection of the Courts to ensure the executive powers of the Government is exercised fairly.

Madam, let us look at what has happened thus far with the AHPETC saga. The whistle was first blown by AHPETC’s own external auditors in 2011. The subsequent audit was carried out by the Auditor-General’s Office (AGO), an independent audit office, which Ms Lim referred to in her speech. It made very serious findings about mismanagement, improper payments, conflict of interest, poor record keeping and internal processes. Equally serious conclusions were drawn by the Judiciary – both the High Court and the Court of Appeal, when the matter was brought to Court in 2015. Pursuant to a Court order, AHTC appointed KPMG, who came out with an independent report – with serious allegations of possible civil and criminal liability. And now, at HDB’s request, a firm request if I may add, and confirmed through a Court order by the Court of Appeal, AHTC has delegated decision-making on recovery of losses and further action to an Independent Panel, comprising Mr Philip Jeyaretnam, Mr N Sreenivasan and Mr Ong Pang Thye, three eminent professionals.

With the amendments to the Town Councils Act, none of these avenues, and options will be abrogated. I certainly hope Mr Singh and Ms Lim do not also dispute the fairness and independence of these platforms. In fact, for the purposes of compliance reviews and investigations under the Bill, MND can similarly appoint an independent auditor or independent panel as inspectors to carry out the review. These inspectors, as I have said in my opening speech, must report to both MND as regulator, and the Town Council for over whom the review or the tion is being carried out. In most instances, consistent with the political philosophy underlying Town Councils, we expect that the Town Council will, in a light touch scenario, on their own accord, resolve the issues identified by the inspectors promptly. If so, MND will not need to step in to issue any rectification order. But in any event, MND’s rectification order can only reflect what the Town Council ought to have done in the first place and will not require the Town Council to take any action over and above what is necessary to bring the Town Council into compliance with the Town Councils Act and its subsidiary legislation.

Madam, in the Town Councils (Amendment) Bill, there is section 43A on compliance reviews, or health checks; and section 43B on investigations. When investigations need to be carried out, MND is ready to appoint independent auditors and professionals to carry out investigations, and they will have to report to both MND and the Town Council as required by law.

Having said all these, perhaps let us go back and ask what really is AHTC’s position on regulatory oversight. Is it, as I said earlier, a cynical fear that people who stepped up into politics and are elected by people into the Government are to be distrusted, that they will, in full glare of the public, misuse laws? Or maybe it’s the case that Ms Lim is concerned about real problems being investigated by MND. But to really know what it is, let us look at what was said in Court, recorded by Court transcripts. This was when HDB sought the Court’s intervention in 2015 to appoint an independent auditor to look into AHTC’s problems and to take necessary action. We wanted, or HDB applied for the Court to oversee this, the court to appoint an auditor, and for this auditor to be an independent auditor not reporting to HDB or MND, but reporting to the Court, acting professionally and independently.

To our surprise, AHTC fought the application, and tried to stop an independent auditor from being appointed by the Supreme Court. Their lawyer argued explicitly in Court, with his client seated behind him, on AHTC’s behalf, that even if there was mismanagement or misspent funds, their view was that there was nothing that could be done, other than through the ballot box. So is it a willingness for appropriate, independent, fair, justifiable regulatory oversight, or is there a preference for no oversight whatsoever?

Madam, MND will exercise its regulatory powers with due care and regard to people and the residents’ public interest, as it has always done. Apart from the public’s eye, there’s always the recourse to the Courts, under the framework of judicial review. Ours is a system of rule of law, and any abuse of public powers is subject to the jurisdiction of the Courts, and I’m sure Mr Singh and Ms Lim understand that very well.

Madam, Ms Lim also, perhaps in the heat of the moment I hope, makes very serious allegations against public servants. This has been a difficult two weeks for public officers – first, some claim that they have no heart and now they have a black heart.

Madam, these are public officers – Singaporeans – day in day out working in the public interest. They understand the imperatives, they understand the need for fairness, they have their own mind, their own heart and will act and do what is right. And in MND, we have a team of public officers overseeing Town Council matters full time, and we have no doubt that these officers carry out their duties professionally and objectively in serving the interests of residents and Singaporeans. This is what our public servants do and what this team of officers and their predecessors have been doing for the past 28 years of Town Councils’ existence.

Madam, Ms Lim made some insinuations about public officers acting in a partisan way. And she cites a number of examples, the details of which are not in our possession today. But each year, MND receives Town Councils’ submitted financial statements and gives them the opportunity to correct inconsistencies and accounting errors in their accounts, part of due diligence that MND’s public servants undertake for every Town Council as it is submitted to this House. In fact, this is exactly what the MND Secretariat did, I am told, for AHTC’s FY15/16 accounts yesterday, which was submitted six months late. I’m told that the Secretariat wrote to the Town Council to point out certain errors and mistakes which were not publicly disclosed.

Next, I will address questions posed by different Members on specific regulatory powers, why they were introduced, and their mechanisms for enforcement. A few MPs sought clarifications on the penalty provisions.

Dr Chia Shi-Lu asked if fines against Town Councils will be paid out of Town Councils’ funds. They will. This is no different from how Town Councils, companies and charities pay for fines imposed by other agencies for regulatory infringements.

Mr Lim Biow Chuan sought clarity on what key decision makers would be held personally liable for an offence. This is not new. There are penalty provisions under the existing Town Councils Act that hold key decision makers in the Town Councils such as the Chairperson and Secretary liable for offences committed by the Town Council with their consent and connivance. So there is that mental element necessary. This treatment will be extended to the new offences under the amended Act.

Mr Zainal Sapari suggested making it mandatory for Town Councils to purchase professional liability insurance, to provide protection from claims arising from the negligence of key decision makers. There is nothing to stop a Town Council from purchasing such insurance, if they see value in doing so. It is for individual Town Councils to decide.

I will clarify though, that if a fine imposed is on a key decision maker, or a person purporting to act in their capacity, it is to be borne by the individual who is found liable for the offence and not paid from the Town Council’s funds.

Madam, just by way of correction, earlier in my Second Reading speech, I mentioned that the power of composition is an existing power. I would like to take this opportunity to clarify that it is not. It is a new power that gives the regulator the opportunity to have a gradation of remedies and actions and levers, depending on the severity of the infraction.

Ms Sylvia Lim asked about the conflict of interest provision that is embedded in the Act, which disqualifies people who have significant influence over the managing agent (MA) from being appointed to key offices in the Town Council. The legislation is quite clear on this phase. But Ms Lim talked about the GM of the Aljunied Town Council from CPG or one of the subsidiaries, when she took over. Back then, under the FRS, CPG would not be a related party. But FMSS would be, because of the personal, direct, pecuniary financial interest that both Ms How Weng Fan and the late Mr Danny Loh held in the MA. So I think that makes it quite clear.

MPs also sought clarifications on the Code of Governance. MND will introduce this Code of Governance, in consultation with Town Councils. Among other objectives, the Code promulgates greater transparency and accountability in Town Councils’ decision making, by setting out principles of good governance, and highlighting best practices that can guide the Town Councils in executing their fiduciary responsibilities and improve accountability and disclosure.

This Code is likely to take some reference from provisions in the Code of Governance for Charities and Institutions of a Public Character (IPCs) and the Code of Corporate Governance for Companies, and may cover the principles and mechanisms to ensure independent decision-making and manage potential conflicts of interest. Practices that ensure robust risk management, and well-documented internal control systems and policies, to protect stakeholders’ interests and to safeguard Town Council’s assets.

Madam, Town Councils today generate revenue from S&CC charges that residents pay, as well as through activities such as charging for the use of common properties as well as advertising spaces in the towns. This is within the remit of Town Council’s role to manage common properties, subject to the rules. Town Councils may also invest their funds to counter inflation subject to safeguards in the Town Councils Financial Rules.

To Mr Louis Ng’s question on what “substantial trading” means, the new provisions prevent Town Councils from undertaking risky ventures by deviating from their key mandate. For example, by using Town Councils’ funds to set up and run subsidiary companies, or carrying out activities under the aegis of the Town Council which are unlicensed, and incurring fines as a consequence.

As mentioned, this does not prevent the Town Council from investing in stocks, funds and securities, with advice from a qualified person or licensed body, subject to the existing safeguards in the TCFR.

To allay Mr Darryl David’s and Mr Lim Biow Chuan’s concerns, the requirements for Town Councils to cooperate with Public Agencies cater to scenarios where a Town Council unreasonably prevents a government agency from carrying out its statutory duties in HDB estates.

This is a rather extreme scenario and we do not expect this to be an ordinary occurrence. While there are challenges on the ground, by and large, Town Councils and agencies have worked well. The key is that parties involved maintain open communications, and work together to find solutions that best serve the residents.

Notwithstanding that, the amendments provide an avenue for MND to intervene when critical works are delayed or hampered, at the expense of residents’ safety, health and well-being.

To be clear, this provision only kicks in when a Town Council unreasonably refuses to grant access or support when public health or public safety or public order is at stake.

One example is where HDB’s Lift Upgrading works were held up by one Town Council which refused to apply for the relevant licenses required by Energy Market Authority. Other statutory authorities have also met with resistance from some Town Councils on the installation of monitoring devices like surveillance cameras, and the maintenance of common property. For example, one Town Council refused to allow NEA to deploy surveillance cameras to catch high-rise littering in 2014. That same Town Council also refused to repair a resident’s letterbox. It wanted HDB to require all residents to sign an undertaking to maintain their own letterboxes. If they refused to sign it, the Town Council wanted HDB to hand over a copy of all their residents’ mailbox keys to the Town Council, a request that was turned down by HDB. And some Town Councils raised questions when LTA stopped paying TOL fees for traffic monitoring equipment installed on HDB rooftops.

Some of these incidents were amicably resolved after MND stepped in. But other cases simply failed to find proper closure. Before I end this point, I would like to address Ms Sylvia Lim’s concerns that this Bill somehow gave the impression that the Town Council is always wrong and the public authority is always right. The Town Council has a specific remit – it is a public authority, a public body, constituted by an Act of Parliament. But it is also a statutory body with political characteristics, a point which I think the Workers’ Party also accepts. The public agencies responsible for public health, public safety and public order are national authorities charged with very important functions. The first approach will be and has always been to discuss the matter with the Town Council. For instance, if NEA needs to prevent killer litter and needs to put in a camera, it will ask the Town Council and tell them I need to put it here for whatever reason. And if there are legitimate reasons why the Town Council refuses, then the agencies and the Town Council should discuss. And if MND needs to come in and try to arbitrate the matter, our public officers will do so. I would assure

Ms Lim that under the Act, if a compliance order has to be issued, it will be because agencies see that it is necessary to carry on to do what they need to do on common property. If the Town Council, atever reason, still refuses and believes it is correct, then it should fight the matter in Court. Let the judge decide as to whether the Town Council had reasonable cause to refuse to comply with the compliance order.

Mr Louis Ng also asked in this regard, if the Town Councils will have a platform to raise concerns or reject a compliance directive by statutory authorities. And in my earlier response to Ms Lim, I assure you that this will, in fact, be woven into the process.

Mr Louis Ng asked about the model by-laws. To clarify, we intend to scope these by-laws narrowly so as not to fetter the autonomy of Town Councils. Town Councils will still have autonomy to set their by-laws. The provisions in model by-laws will only relate to the management of common property, such as rules on damage to common property or the erection of unauthorised structures on common property. These are areas where although we want Town Councils to set their own rules and have flexibility, there are certain areas where we would need uniformity for national purpose. These by-laws will provide a common baseline for all Town Councils to build upon, and ensure that there is some consistency in the management of common properties across Towns.

Town Councils can still introduce additional by-laws based on their needs, as long as they are not inconsistent with the model by-laws.

I will next address points on the provisions made relating to the financials of Town Councils, raised by a number of Members of this House. The Bill pushes Town Councils to regularly review their long term financial health, and most, if not all the Members who spoke support this intent, and I thank them.

I fully agree with Dr Chia Shi Lu that we should avoid a situation where a Town Council becomes financially insolvent, as it will ultimately be the residents who bear the consequences. This is why we have, in the Bill, focused on pre-emptive measures. By putting in place mechanisms for Town Councils to prepare their long-term financials, a reality check for themselves, and to review their financial positions regularly. This puts in place early warning signals, so that a Town Council at risk of insolvency sometime down the road can take timely steps to improve its cash flow situation and financial health, rather than wait for the situation to become dire.

But if it comes to that, MND will now have powers to make rules that prescribe steps that Town Council should take, or should not take. This includes the appointment of independent advisors to advise the Town Council on the management of its affairs, with the hope that it will turn the ship around.

As for Dr Chia’s suggestion on having the State guarantee all the debts of Town Councils, we will have to study very carefully, how the examples you cited in Germany and Canada do it, while avoiding, I hope, the problems of serious moral hazard. We certainly do not want Town Councils to take on more risks than necessary, in the belief that the Government will bail them out should things go wrong.

Mr Ang Wei Neng asked whether Town Councils can be allowed not to set aside part of the Lift Maintenance Grants to their LRFs – Lift Replacement Funds. To clarify, this grant, like other grants provided to the Town Councils, are meant both for immediate need as well as for long term use. Even in lift maintenance, there are both immediate maintenance and repair needs, and more long-term replacement needs, that may require it to be split into the two accounts – Operating and the Sinking Fund type of accounts. But we will take Mr Ang’s suggestions and concerns into account.

Let me cover some of the more technical clarifications, some of which fall outside the scope of this Bill.

Members have highlighted that on the ground and in practice, the responsibilities of Town Councils vis-à-vis other agencies and each other may be fuzzy, and good partnership is key. Not everything can be clarified in legislation, which articulates broad frames and principles. Sharp delineations of turf are often not possible, and sometimes may lead to perverse outcomes. In areas where there is less clarity, I urge members to be guided by what would most benefit residents. Where there are gaps, we will continue to work with Town Councils and Town Councillors to clarify mutual or overlapping responsibilities, as we have done with handover guidebooks, circulars, and the Code of Governance that we will be developing in consultation with Town Councils.

Several Members, including Dr Teo Ho Pin, Mr Zainal Sapari and Mr Louis Ng, among others, suggested that MND introduce more specific guidelines and rules to facilitate handovers between Town Councils following an Election. Indeed, this is important. A smooth changeover of Town Councils ensures continuity in services to residents.

MND has taken steps to facilitate this. In 2013, we developed a Town Council handing/taking-over guide in consultation with various Town Council Chairmen. The guide clarifies on some of the points raised today – the respective roles and responsibilities of the handing-over and taking-over of Town Councils, and includes a checklist of the matters to be mutually agreed upon by the two Town Councils. “Mutually agreed upon” is an important phrase.

We circulated the guide to Town Councils before the 2015 General Election to provide a clear and easy reference for changeover of Town Councils. The Bill allows MND to make subsidiary legislation in relation to post-election handovers between Town Councils. This is not new as MND has already been making such Town Council Orders after elections. Nevertheless, there are some amendments to the existing provisions to provide greater clarity and guidance, such as, first, clarifying what happens in exceptional scenarios when the election results of some constituencies are delayed, for instance, due to need to tally overseas votes. Second, to clarify that Minister can require an outgoing Town Council to furnish all the necessary information and documents relating to the transfer of an estate to the taking-over Town Council.

This is still work-in-progress and we will take into account Members’ feedback as we continue to look into how we can better facilitate Town Council handovers going forward.

Notwithstanding these improvements, the willingness of both sides to cooperate with each other on the transfer of the assets and information is key to a seamless transition. The legislative requirements have been kept broad, because not every detailed situation can be anticipated, and to also allow Town Councils some latitude to discuss the issues that arise and to reach an amicable resolution that benefits their residents. Nevertheless, if there are irreconcilable differences in opinion, MND can and has facilitated discussions between Town Councils, and made itself available to mediate any differences. In the event of an impasse, the Minister can require an outgoing Town Council to furnish the necessary information to the taking-over Town Council.

Madam, at the heart of it, transfer of Town Councils or transfers between Town Councils post-GE are changes of local government. Town Councils are political entities. The key, as I said earlier, is a willingness to work with each other despite being of different partisan colours, to show maturity and to emphasise that the focus is ultimately on residents.

Madam, I come now to the points raised by Dr Teo Ho Pin and I thank him for highlighting issues surrounding the handover of new developments to Town Councils. A moment ago, I talked about the handover between Town Councils. Now, I’m talking about the handover from HDB, of new BTOs to Town Councils. We accept there is always room to do better. HDB is continually seeking to improve its handover processes with Town Councils. As Members know, HDB has developed a handover procedure booklet which details various proposed improvements to the handover process. The proposed improvements are as follows.

First, HDB will notify Town Councils of the completion of common property 3 months in advance, so as to allow Town Councils to plan their resources early, and to arrange for subsequent meetings. After that, HDB will arrange for a briefing to the Town Council on the essential mechanical and electrical (M&E) systems at the development. It will also arrange for a meeting with the Town Council on site, 1 month before completion so that the Town Council can take a look at the development, and raise feedback early.

This draft booklet was sent to all Town Councils on 1 March this year for comments. We hope Town Councils will give HDB their feedback, and work with HDB to refine the procedures, which we will continue to improve along the way.

Various members also raised concerns about the performance of lifts in HDB estates. We have covered this fairly comprehensively during MND’s COS a few days ago. In essence, our approach is to ensure that our lifts remain safe and reliable. An approach which requires multi-pronged support, from BCA, HDB, Town Councils and the industry.

Madam, I thought it would be useful – since many Members asked about the Lift Replacement Fund, and about the long-term sustainability of lifts – to talk about this so all of us here understand the challenges that we collectively face. As I’ve said at MND’s COS, as our estates age, all of us, including Town Councils, will need to do more in maintaining and replacing our estate infrastructure, such as lifts, facades, water tanks and roofs, so that our estates remain liveable and safe. It is easy to build and continue to build. It’s less attractive to talk about the long tail of maintenance. But let’s accept that it’s an essential part of city living.

Since Town Councils bear the responsibility for the eventual replacement of estate infrastructure and such expenditures could be large and back-loaded, Town Councils need to take a longer-term view of their finances, plan ahead, and start saving today for the expenditures.

A good example is the maintenance and replacement of lifts, which many Members talked about. To keep them reliable and safe, lifts need to be maintained regularly and replaced every 25 to 30 years, depending on specifications.

Lift replacements require significant expenditure. Based on our projections, over the next thirty years, Town Councils will need to progressively replace about 24,000 lifts across all HDB estates, at an estimated cost of about $6 billion. Many of the costs are back-loaded, occurring beyond 2025. Therefore, while Town Councils’ current sinking fund balances, which may total up to $1 billion, seem healthy, they are not sufficient to cover the cost of future lift replacements, let alone other works like cyclical repainting and replacement of other key estate infrastructure.

Last September, we asked Town Councils to give us a sense of their financial projections over the next 10, 20, 30 years. And we accept that the further you look ahead, the less reliable your projections. The Town Councils are aware that at their current levels of income and sinking fund contribution rates, they are unlikely to have sufficient funds for the replacement costs for the long term. Some may even fall into deficits even earlier.

That is why we have reviewed the Town Councils’ projections, we have announced some changes earlier. As the chart on the screen shows, Town Councils will have to set up a dedicated Lift Replacement Fund (LRF) which will be created by this Bill, that is ring-fenced for the replacement of lifts and lift parts. Town Councils will have to set aside a minimum of 14% of their S&CC income and government grants into the LRF, and a minimum 26% to the general Sinking Fund.

The minimum contribution rate for the LRF could have been higher if we had sized it based on a full life-cycle costing approach for lifts, a point which Mr Ang Wei Neng had asked about. However, we decided to ease in the changes for Town Councils and provide significant government financial support to help Town Councils and residents with these costs.

MND had earlier announced the set of new grants and measures to provide additional financial support for Town Councils. First, a $450 million Lift Enhancement Programme over 10 years to help Town Councils fund the cost of lift enhancements. Second, additional matching grants to match half of Town Councils’ quarterly contributions to their LRFs, to help Town Councils build up their LRFs more quickly. This will cost the Government over $50 million a year. Third, a Lift Maintenance Grant to help Town Councils cope with higher lift-related servicing and maintenance costs, estimated at about $13 million a year.

The extra funding Town Councils will receive adds up to more than $100 million a year, or a billion dollars over the next 10 years. This is a substantial package, which is on top of the current S&CC Operating Grants that we issue to all Town Councils, and GST Subvention Grants, all of which amount to more than $120 million a year. This effectively doubles the amount of annual funding that Town Councils currently receive.

While the Government has taken the lead to share significantly in the costs of maintaining and replacing estate infrastructure, this is very much a shared responsibility. Town Councils need to do their part – to plan their finances, start saving now and gradually build up their Sinking Funds and Lift Replacement Funds over time. This is the responsible thing for all Town Councils to do.

We have seen how the dynamics have played out in private condominium estates. Immediate pressures from residents at Annual General Meetings (AGMs) cause MCSTs to kick the can down the road and avoid raising their Sinking Fund contributions. But when there are major estate infrastructure works, these MCSTs find themselves unable to carry them out. All residents living at that point in time at the estate will then have to cough up a tremendously large amount of money to replace say a lift or old water tank. This is not how we should operate in our public estates. We should prepare and save for our collective future and not kick the can down the road. Everyone contributes their fair share towards maintaining our living environment, rather than leave future generations to bear the costs.

Madam, I’ll round up by outlining what this Bill means for Town Councils and our residents.

First, the new provisions hold Town Councils to higher standards of governance, transparency and accountability when carrying out their duties. This is the right thing to do, and Singaporeans expect this of their Town Councils.

Second, the Bill puts in place a system for regular reporting and calibrated actions, along with the necessary levers for enforcement. These will allow more timely and effective interventions to be taken, when residents’ interests are put at risk.

Madam Speaker, I believe all Singaporeans elect their MPs in good faith. But recent developments suggest that we cannot always assume that MPs will always act in the residents’ best interest.

While Town Councils continue to have broad autonomy and latitude in deciding how best to manage the estates under their charge, the Government also has a responsibility to put in place a framework of good governance and accountability, and to request for information, investigate and intervene, when the trust is breached or when things go wrong.

Taking a light touch approach does not mean that the Government adopts a no touch policy. At the end of the day, the Government’s overriding considerations must be to safeguard residents’ interest and public funds.

This Bill will set a strong foundation for the good governance of our Town Councils, taking into account developments over the years and building on 28 years of experience operating Town Councils. I thank Members for their support.