20 May 2015

The Absurdity Of Giving Half Of Conservancy And Service Fee Grants

According to the Ministry of National Development ("MND"), all town councils are entitled to grants-in-aid (also known as the conservancy and service fee operating grants)[1].

MND has, however, withheld the grants-in-aid to Aljunied-Hougang-Punggol East Town Council ("AHPETC") for the financial years ended 31 March 2014 and 2015 because MND considered it to be unconscionable to give the grants-in-aid, which are public moneys, without proper safeguards, inasmuch as AHPETC's audited financial statements were qualified[2].

Notwithstanding that and in response to AHPETC Chairperson Sylvia Lim’s appeal, MND offered to disburse half of the grants-in-aid provided AHPETC comply with the law[3].

In an earlier article Technically Insolvent Town Councils, I showed that no town council managed to achieve a surplus before grants-in-aid for the financial year ended 31 March 2014. Consequently, no town council would have been able to comply with the Town Councils Act's requirement to transfer the requisite amounts from the conservancy and service fees to the sinking fund without the grants-in-aid.

If any town council manages to achieve a surplus before the government grant-in-aid, it probably means that the town council is collecting too much conservancy and service fees from the HDB properties under its management or spending too little on operating expenditure (neither of which is desirable) or both.

MND's offer to disburse only half of the grants-in-aid is nonsensical because few town councils would have been able to achieve a surplus with half of the grants-in-aid.

This is what the other town councils' surplus/deficit would have looked like had they received only half of the grants-in-aid for the financial year ended 31 March 2014.[4][5]

Town CouncilOperating Income Transfer to Sinking Fund


$'000
Surplus / Deficit Before Government
Grant-in-aid


$'000
Half of
Government Grant-in-aid Less
Transfer to Sinking Fund
$'000
Surplus / Deficit




$'000
Ang Mo Kio
-17,576
-6,153
4,135
-2,019
Bishan Toa Payoh
-11,517
-1,277
2,500
 1,222
Chua Chu Kang
-17,468
-1,267
2,180
   913
East Coast
 -8,547
-1,371
1,624
  253
Hollang-Bukit Panjang
-9,574
-2,075
1,422
 -652
Jurong
-14,107
-3,517
2,375
-1,142
Marine Parade
-11,114
-5,030
3,057
-1,974
Moulmein-Kallang
  -8,707
-3,963
2,552
-1,411
Nee Soon
-13,721
-2,952
2,468
  -485
Pasir Ris-Punggol
-20,673
-3,017
2,321
  -696
Potong Pasir
 -1,230
  -577
  254
  -323
Sembawang
-14,296
-4,336
2,028
-2,309 
Tampines
-14,980
-2,480
2,120
 -360
Tanjong Pagar
-15,795
-6,334
4,835
-1,499 
West Coast
-15,014
-5,560
2,823
-2,737
Numbers may not add because of rounding

The majority of the town councils — including Minister for National Development Khaw Boon Wan's Sembawang Town Council and Minister of State for National Development Desmond Lee's Jurong Town Council — would not have been able to transfer in full the minimum amount required under the Town Councils Act to be transferred from the conservancy and service fees to their sinking funds if MND had halved the grants-in-aid for the financial year ended 31 March 2014.

Presumably, neither will AHPETC.

Is this what MND is trying to prove — that AHPETC will not have enough money even after getting half of the grant-in-aid — even though most of the other town councils would have faced the same difficulty?

Whatever MND's motivations are, it is clear is that MND should give AHPETC the full amount of the grants-in-aid that it has withheld for two years without any further delay.

It is unconscionable to let the residents suffer.

The Town Councils Act entrusts and devolves the management of (the HDB properties in) a town and its town council to the elected Members of Parliament of the electoral constituencies that constitute the town. MND should stop interfering in the management of the town and the town council, and leave the matter firmly in the hands (and the ballot papers) of the residents of the town.

That is what accountability is about.

Otherwise, the Town Councils Act should be scrapped and the management of all HDB properties should be returned to the HDB where it originally and rightfully belongs.

---------------
Notes

1. MINISTRY OF NATIONAL DEVELOPMENT MND’s Response to Media Queries on AHPETC’s Media Release on 14 May 2015 14 May 2015.

2. Ibid.

3. Ibid.

4. The grants-in-aid shown in the table comprise the conservancy and service fee grant and the GST subvention grant, less the amounts (about one-third of these two items) required to be transferred to the sinking fund. This latter amount to be transferred to the sinking fund is separate from the amount to be transferred to the sinking fund from the operating income (i.e., conservancy and service fees collected).

5. The grants-in-aid shown in the table do not take into account any amounts received from the Citizens' Consultative Committees, which are not granted by MND. In addition, such amounts are required to be fully transferred to the respective town councils' town improvement and project fund.

Aljunied-Hougang Town Council did not receive any amounts from the Citizens' Consultative Committee in Aljunied or Hougang for the financial year ended 31 March 2013, according to its audited financial statements (Punggol East was not part of AHPETC then). AHPETC's audited financial statements for the financial year ended 31 March 2014 are not available.

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