Changes to Town Councils Act passed in Parliament

Changes to Town Councils Act passed in Parliament

With the changes, town councils will have to adhere to higher standards of corporate governance and transparency.

Man in park near HDB flats
File photo of Bishan-Ang Mo Kio Park. (Photo: TODAY/Christopher Toh)

SINGAPORE: Changes to the Town Council Act were approved by Parliament on Friday (Mar 10).

The changes, which were first mooted in 2013, are aimed at giving the Government greater oversight over town councils, as well as the power to investigate and take to task errant ones.

Currently, town councils are not compelled to give the Ministry of National Development (MND) any information beyond annual financial reports. MND also does not have any powers to investigate irregularities or non-compliance.

“With a stronger regulatory framework, MND will play a greater role to safeguard residents’ interests and public funds,” said Senior Minister of State for National Development Desmond Lee, in moving the Town Councils (Amendments) Bill for a second reading.

“We hope that these amendments give residents greater assurance that their housing estates are properly managed, and S&CC monies are used for their benefit.”

Mr Lee also stressed that the amendments adhere to the “original spirit and intent” of allowing town councils to operate autonomously, while establishing “the necessary standards” of governance, public accountability and transparency that residents and the public can expect.

He explained some of the main provisions of the Bill, which he classified into four key categories.

MAIN PROVISIONS OF THE BILL

Firstly, the Bill sets out to clarify some areas that are not explicit in the current Act with regard to the roles and functions of town councils. Town councils have a duty of care to residents, he said, and so they are not to carry out commercial activities that are inconsistent with their core functions. This could include the organising of trade fairs, or setting up subsidiary companies to carry out commercial activities.

The Bill also clarified town councils’ relationships and interactions with the Housing and Development Board (HDB) and other statutory authorities. In particular, as the owner of common property in HDB estates, HDB has landowner rights, including the use and access to common property. Town councils are also subordinate to public law and cannot unreasonably hamper Government agencies carrying out works to improve the quality of life of residents, or in ensuring public health, safety and order, he added.

Second, the changes also improve standards of governance and accountability. For example, town councils will need to notify the public and MND of key personnel changes within the town council. And if there are instances of a conflict of interest, the town council’s secretary will need to keep a register of all conflict disclosures.

Town councils will also need to submit their audited statements to MND for presentation to Parliament six months from the end of the financial year. This, said Mr Lee, is to strengthen public and regulatory oversight of their finances. Town councils are also be required to publish the statements for public access.

As part of the changes, a town council’s managing agent and its appointed auditor will be disqualified from concurrently holding key roles in a town council, at the town council level, town councils’ committee and executive levels.

Third, the Bill also aims to strengthen the way town councils manage their finances. For example, town councils will need to establish a Lift Replacement Fund that is ring-fenced for lift-related replacement and upgrading works.

It also introduces safeguards that avoid service disruptions if a town council is on the brink of financial insolvency.

Fourth, the Bill will enhance MND’s regulatory powers. Clause 24 of the Bill introduces a new Part 6A, which Mr Lee said will allow MND to take the “necessary investigative and enforcement actions” to address potential regulatory breaches or systemic weaknesses in the town council.

In addition to the annual financial reporting, MND may periodically conduct compliance reviews to check for regulatory compliance, he added. “These are basically health checks, in the form of risk-based audits on different aspects of town councils’ operations,” he explained. “The objective is to assess if there are specific areas of non-compliance, process gaps or areas for improvement.”

He added that MND will appoint inspectors, who may be public officers or professionals with relevant qualifications and experience, to conduct these reviews.

The Bill also introduces new penalty provisions to hold town councils accountable in three key areas, which Mr Lee elaborated on.

First, it will become an offence when town councils fail to provide regular submissions relating to audit and governance, or fail to cooperate with requests for information related to governance.

Second, town councils can be taken to task for flouting financial rules or specific instructions to rectify their contraventions.

Third, town councils can also be taken to task for making unlawful collections, or putting public health and safety at risk.

Source: CNA/lc

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