PROPOSED AMENDMENTS TO THE TOWN COUNCILS ACT

Introduction

1.    The Ministry of National Development (MND) is proposing amendments to the Town Councils Act (TCA).

Background

2.    Town Councils (TCs) were introduced in 1989 by an Act of Parliament to serve two objectives. First, TCs were set up to give elected Members of Parliament (MPs) the authority and responsibility to take charge of their constituents' estate and allow each Town to develop its own distinctive character under the MPs' leadership. Second, MPs were made directly accountable to their voters for the running of their estates, as the voters could then take into account the MPs' performance in running the TC when they go to the polls.

3.    Recognising the political nature of TCs and the context in which they operate, the TCA and subsidiary legislation gave the elected MPs latitude to run the TCs within broad rules laid down to ensure proper governance and safeguard public interest. TCs otherwise had significant autonomy to manage their affairs. For example, each TC had the power to make its own by-laws, set its service and conservancy charges (S&CC) and determine its enforcement policy. In the administration of the Act, latitude has always been given to MPs, across political parties, to exercise autonomy and judgement on how best to perform their core functions and serve their residents' needs and interests.

Rationale for the Review

4.    The review of the TCA was first mooted in May 2013 by then-Minister for National Development Mr Khaw Boon Wan. In a Ministerial Statement on TCs, Minister Khaw said that although TCs had largely fulfilled the original objectives for which they were set up, it was timely after more than 20 years of TC operations to review and update the administrative and regulatory framework for TCs.

5.    Later, in February 2015, Parliament debated a motion on the Auditor-General's Office (AGO) Report on the special audit of the then Aljunied-Hougang-Punggol East Town Council (AHPETC). The AGO report found deficiencies in AHPETC's financial and accounting systems, record-keeping and safeguards, and concluded that "until the weaknesses are addressed, there can be no assurance that AHPETC's financial statements are accurate and reliable and that public funds are properly spent, accounted for and managed". In his speech, Minister Khaw informed Parliament that MND would address the weaknesses in the current TC regulatory framework as the light-touch approach under the current TCA was no longer tenable. Regardless of which party was running the TC, there was a need to ensure that proper systems, accountability and governance were in place, to safeguard residents' interests.

6.    Minister Khaw had then set out the three key areas which the amendments to the TCA had to address:

1. Make clear that TCs were subordinate to and must comply with the authority of public law and of government agencies charged with enforcing the law. While TCs were statutorily vested with the function and duty to manage and maintain common property, they did not own the common property and their powers were not unfettered;


2. Strengthen TCs' corporate governance and financial accountability, to ensure that TCs planned and used their finances in a sustainable way. This included spelling out the duties and responsibilities of the town councillors and elected MPs and the penalties if they failed to perform those duties; and
   
   
3. Strengthen MND’s regulatory oversight with powers to collect information and conduct investigations, and a stronger penalty framework to enable the government to take errant TCs to task for non-compliance.

7.    All 85 MPs who were present in Parliament supported the motion to strengthen the legislative framework for TCs, to hold those responsible for their good management to proper account. Therefore, MND proposes to amend the TCA to tighten the current legislative framework to better safeguard residents' and public interests.

Scope of Proposed Amendments to the TCA

8.    The proposed amendments seek to ensure that TCs deliver essential public services in a consistent, fair and sustainable way that serves the interest of residents, while retaining the autonomous nature of TCs. The review also recognises that the public expects transparency and accountability from TCs as they manage public funds and take responsibility for maintaining a good living environment for residents.

9.    Bearing these in mind, MND is proposing to amend the TCA to:

1. Clarify the roles and functions of TCs;


2.  Improve TC governance;


3. Strengthen financial management in TCs; and


4. Enhance MND’s regulatory oversight.

Given the similarities between TCs and charities (both entities are run autonomously, manage public funds and consist of volunteers who help out on a part-time basis), MND has taken reference from provisions in the Charities Act, where appropriate, and adapted them for the purposes of the TCA.

10.    MND’s proposals are as listed in the attached table below.

11.   Members of the public can submit their comments and suggestions by 17 November 2016, via the following channels:

• Email to:     feedback@mnd.gov.sg


• Fax to:        6325 7254


• Post to:       Ministry of National Development
                     5 Maxwell Road #21-00,
                     Tower Block MND Complex,
                     Singapore 069110
                     Subject: Proposed Amendments to the Town Councils Act

12.    We regret that we will not be able to individually acknowledge or address every comment or suggestion that we receive. We will not disclose the identity of person(s) providing the feedback, to maintain the confidentiality of feedback received.