With all the buzz and debate on the sale of the town councils’ software to AIM, I thought it may be of interest to republish an old article about town councils.
Published by The Online Citizen on December 2, 2007
By Leong Sze Hian and Andrew Loh
The following article was first published here in TOC on the 2nd of Oct 2007. The Straits Times has a report titled “New rule to safeguard council funds“, December 2nd 2007, which addresses some of the issues in our article.
In a report titled “Punggol 21 Plus masterplan is a long-term one: Grace Fu” on the 15th of September 2007, Channelnewsasia website stated:
“But according to feedback to HDB, 81 percent of residents said they were willing to pay more for service and conservancy to enjoy the new flat designs. About half of them said they were willing to pay above S$10 more than the usual rates.”
The report did not reveal the details of the “feedback” which HDB had received. How the percentage of 81% was arrived at was also not revealed.
We have managed to obtain copies of the financial reports of 6 Town Councils (TC) out of the 16 TCs in Singapore, for the financial year 2005/2006. These 6 Town Councils are:
– Aljunied Town Council (pdf file)
– Bishan-Toa Payoh Town Council (pdf file)
– East Coast Town Council (pdf file)
– Holland-Bukit Panjang Town Council (pdf file)
– Hougang Town Council (pdf file)
Unfortunately, we have not been able to obtain a copy of the Pasir Ris – Punggol and Potong Pasir Town Councils’ Financial Reports.
Going through the 6 reports above, what is evident is that most of these town councils have substantial funds in their accounts.
For example, the Sembawang Town Council has $269 million in its funds, with $237 million going into its Sinking Fund. Aljunied TC has $93 million ($67m going into its Sinking Fund) and Bishan-Toa Payoh $139m ($96m going into its Sinking Fund.) Opposition-held Hougang Town Council has $14 million in its Sinking Fund.
(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.) (Ministry of National Development)
So, where do these funds come from?
Service and Conservancy Charges (S&CC)
The 6 Town Councils collect Service and Conservancy charges from residents and businesses within their constituencies. For residential properties, they range from the lowest of $18.00 (1-room flat in Hougang and Hong Kah GRC) to the highest of $80 (executive flat in Bishan-Toa Payoh GRC) per month.
(Figures derived from the town councils’ websites. East Coast, Jurong and Marine Parade Town Councils do not list their S&CC charges on their websites.Figures for Hougang are before the latest revision on Oct 1st, 2007.))
Renting out of facilities
Town councils also rent out facilities to residents and businesses. For example, in Aljunied GRC, void decks, banner arms, acrylic panels for advertisements and event halls can be booked for use. The charges are anywhere from $25 per month for an acrylic panel to $2,000 a day for use of the event hall at the town centre for commercial purposes. (link)
According to this website, carparks at Hong Kah GRC “are managed by the Town Council for the HDB on an agency basis”. We are unsure if other town councils also run or manage carparks.
Government grants received by the town councils include Service and Conservancy Grant, Citizens’ Consultative Committee Grants and the Community Improvement Projects Committee fund (CIPC).
According to the Straits Times’ report of March 25, 2006, “The gathering storm”:
“Taking into account all the grants from the Government, the Aljunied Town Council, for example, gets $560 per household for the financial year ending March 2005.
The grants include funds from the Community Improvement Projects Committee (CIPC), which is controlled by the Ministry of National Development.
In contrast, government grants came up to just $113 per household in Potong Pasir.”
In another report on the same day, “Hougang’s Low may be ‘heart’ to beat”, the Straits Times reported:
“Government grants came up to about $111 per household in Hougang in 2004-05. By contrast, neighbouring Aljunied Town Council, which has access to funds such as the government-controlled Community Improvement Projects Committee (CIPC), got $560 per household for the same period.”
One therefore will have to question why the Aljunied Town Council charges more for S&CC than Potong Pasir and Hougang, across the board – from 2 rooms to executive flats – when the Aljunied TC is getting more government grants than the two opposition wards.
In one instant, a one-roomer’s S&CC in Aljunied Crescent rose from $3.50 to $18.50 from 1994 to 2005 – an increase of about 428 per cent.
Community Improvement Projects Committee (CIPC)
The Straits Times, June 2006, (link) reported what the Minister for National Development, Mr Mah Bow Tan, said:
“Turning to the question of the funds from Community Improvement Projects Committee (CIPC), a source of funds controlled by the National Development Ministry for minor improvement work in the estate, Mr Mah revealed that a town of 100,000 households could stand to get a few million dollars of funding a year, depending on the projects its grassroots leaders proposed.”
Opposition-held wards Potong Pasir and Hougang have long complained that CIPC funds are not made available to them, unlike PAP-held ones. The funds are “always disbursed through Citizens’ Consultative Committees (CCCs), which have PAP politicians as their advisers”, according to the Straits Times report.
CIPC funds are “used to build amenities such as street soccer courts, playgrounds and sheltered linkways, but cannot be used for major projects like lift upgrading”, the report says.
Town councils also invest their funds to generate more revenue. Details of such investments are not readily available, however. There are no breakdown of any such investments in the financial reports.
How much of your S&CC goes into the Sinking Fund
The minimum amounts to be paid, by property type, into the Sinking Funds are as follows: (link)
i) 1-room to 3-rooms – 30% of the conservancy and service fees and grants-in-aid
ii) 4-rooms – 35% of the conservancy and service fees and grants-in-aid
iii) 5-rooms – 35% of the conservancy and service fees
iv) Executive – 35% of the conservancy and service fees
v) Shop with living accommodation – 35% of the conservancy and service fees
vi) Commercial property – 35% of the conservancy and service fees
In a recent letter sent out by the Hougang Town Council, which is run by the opposition Workers’ Party, in September 2007, residents in Hougang were informed that S&CC were being raised – with effect from 1st Oct 2007. The letter said:
“Further, with the compulsory transfer of 80% of its accumulated surplus into the Sinking Fund as required under the Town Councils Act after the last General Elections, there is also no longer reserved funds which were accumulated in the past years through prudent management to cushion the shortfall which would have allowed the Town Council to further delay a revision of the sc/cc.”
One wonders if this has anything to do with crippling the opposition Town Councils from undertaking lift upgrading works. In a 2005 newsletter, the Hougang Town Council revealed:
“The residents did not have to pay as the Town Council was able to carry out the upgrading with funds from its accumulated surpluses.” (link)
So, the question is: Why is more than 1/3 of S&CC and 80% of the accumulated surpluses required to be transferred to the Sinking fund?
*Hougang’s last revision of the S&CC was in 1997. PAP-run Town Councils last raised theirs in 2004.
Death does not mean you don’t have to pay
Lastly, according to the Ministry of National Development website, with regards to deceased persons with outstanding S&CC Charges:
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 lessees have passed away. (link)
Questions to ask before government allows S&CC to be raised again
In light of all the above information, and in anticipation of a potential hike in S&CC among all Town Councils, perhaps we should be asking some questions of the town councils and the government – before town councils again propose raising S&CC charges, as the channelnewsasia report on Punggol 21 quoted above seems to suggest they might.
Here are 20 questions to ask:
1. Why does the Sembawang Town Council (STC) need to have $269 million of funds? In contrast, for example, Aljunied has $93 million and Bishan-Toa Payoh has $139 million.
2. Why is the percentage of S&CC amounts to be put into the Sinking Fund so high? Why are town councils like Sembawang apportioning 39%, which is 11.4% more than the prescribed minimum?
3. What is the purpose of Sembawang Town Council accumulating $237 million in its sinking fund? Aljunied and Bishan-Toa Payoh have $67 and $96 million respectively. In contrast, Hougang Town Council has only $14 million.
4. Since only 10 per cent of the Sinking Funds can be utilised for lift upgrading, with the primary purpose of the sinking fund as stated above, why do we need to accumulate so much ? How often are works such as “the replacement of roofing systems, water tanks and electrical sub-systems, repainting, and major repairs” undertaken to warrant such huge reserves in the Sinking Fund?
5. Hougang has $14 million. How much funds do the opposition held town
council (OHTC) of Potong Pasir have relative to STC and other town councils?
6. Are OHTCs collecting too little, or is STC or other town councils collecting too much?
7. Are there any guidelines on how much town councils should collect in growing the Sinking Fund?
8. Are not both OHTCs and other town councils subject to the same guidelines?
9. Do OHTCs and other town councils collect as much as 39 per cent of S & CC (like STC) for the sinking fund? For example, the percentage for Aljunied and Bishan-Toa Payoh is 35 per cent.
10. What is the accumulated Sinking Fund to household ratio for each and every town council?
11. How many HDB flat-owners are in arrears on their S & CC? (HDB provided financial assistance to 28,386 HDB flat-owners last year.)
12. What is the rate of increase in S & CC over the last few years for OHTCs, relative to PAP-run town councils?
13. For one 1-room HDB flat renter in Aljunied Crescent, S & CC went up from $3.50 to $18.50 from 1994 to 2005 – about 428 per cent. Annual inflation during this 11 years was less than 2 per cent. How is it that the 1-room S & CC works out to an annual compound rate of increase of about 16 per cent per annum?
14. To what extent has the high proportion of S & CC chanelled to the Sinking Fund, resulted in higher increases in S & CC?
15. What is the norm for the percentage of private condominiums’ maintenance charges that go into the sinking fund? What is the norm in other countries’ town councils?
16. Why did the Pasir Ris-Punggol Town Council recently increase their late payment charge to a 2 per cent penalty interest per month for S&CC arrears late payments?
Why is the late payment penalty so high? It is equivalent to the 2% charged on credit cards which we believe is the highest for credit facilities in Singapore.
What are the late payment charges for Hougang and Potong Pasir town councils?
17. The S&CC for Pasir Ris – Punggol, Potong Pasir and Hougang town
councils for 3, 4 and 5-room flats are, respectively:
$36.50, $50.50, $63.50 (Pasir Ris – Punggol)
$35.50, $46.00, $58.00 (Potong Pasir)
$36.00, $48.00, $59.50 (Hougang)
Why is it that Punggol-Pasir Ris charges 2.8, 9.8, 9.5% more than Potong
Pasir, and 1.4, 5.2, 6.7% more than Hougang, respectively?
18. Why are PAP-run town council charging more for S&CC when they have economies of scales. For example, Yio Chu Kang Town Council has been “merged” with Ang Mo Kio Town Council (link) and Nee Soon Central and Nee Soon East Town Councils with Sembawang Town Council. (link)
19. Why was the Town Councils Act amended after the last General Election, such that there is now a compulsory transfer of 80% of the accumulated surplus to the Sinking Fund? As explained in Hougang Town Council’s letter to residents in September 2007, it “is also no longer (able to use) reserved funds which were accumulated in the past years through prudent management to cushion the shortfall which would have allowed the Town Council to further delay a revision of the S & CC”.
20. Has anybody ever asked the above questions?
Inform residents about funds collected
Before the government or town councils increase S&CC further, even for new towns like the upcoming Punggol 21-plus, these questions should be satisfactorily answered.
The Pasir Ris – Punggol Town Council should also make its latest financial report easily available to residents so that residents can make an informed decision on whether they would be willing to pay more for S&CC.
And while we’re at it, the HDB, which was quoted by the CNA report, should also reveal how they arrived at the conclusion that “81 percent of residents said they were willing to pay more for service and conservancy to enjoy the new flat designs. About half of them said they were willing to pay above S$10 more than the usual rates.”
One can only wonder if the “81% of residents” who “said they were willing to pay more for service and conservancy charges” are aware of the substantial funds which the town councils have already accumulated, along with substantial government grants for PAP-run Town Councils.