1 Mr Leon Perera asked\tthe Minister for Finance if he can provide an update on the CEO succession process at Temasek Holdings.
\tThe Senior Minister of State for Finance (Ms Indranee Rajah) (for the Minister for Finance): Mdm Speaker, Deputy Prime Minister Tharman Shanmugaratnam had explained in Parliament in 2009 that the Chief Executive Officer (CEO) succession planning at Temasek is a key responsibility of its Board of Directors.
The Temasek Board conducts annual leadership succession reviews as a matter of good governance. As reported annually since 2004 in the Temasek Review, the Temasek Board has a board committee which reviews and makes recommendations to the Temasek Board on management leadership development and succession planning for key positions. This includes Board as well as CEO succession plans.
For CEO succession, the Temasek Board reviews and tracks a list of candidates annually. These include those from within the company as well as those from outside Temasek, both in Singapore and abroad. This confidential list of candidates ranges from those who can step in immediately, to younger candidates who could be potential successors beyond the five-year period. The Temasek Board meets with potential successors regularly to get to know them and assess their suitability, including young potential candidates early in their careers, inside as well as outside of Temasek.
The timing and candidate for CEO succession are the purview of the Temasek Board. As Temasek is a Fifth-Schedule Company under the Singapore Constitution, the CEO's appointment is subject to the concurrence of the President.
Mdm Speaker: Mr Leon Pereira.
\tMr Leon Perera (Non-Constituency Member): Madam, I thank the Senior Minister of State for her detailed answer. Just a few supplementary questions. Would the Senior Minister of State be in a position to share why the CEO succession was deemed necessary and timely in 2009 when one attempt was made but, subsequent to that, there has not been a succession event that has occurred? Is it in the view of the Board that it has become less necessary or is it because of the inability to find a suitable candidate?
Secondly, if it is in relation to finding a suitable candidate, with your permission, Mdm Speaker, may I quote very briefly from the Hansard?
Mdm Speaker:\tVery briefly, please.
\tMr Leon Perera: The then Finance Minister referred to a longer-term pipeline of future CEO candidates within Temasek on 24 March 2009. He said, \"The current candidates for future CEO succession within Temasek mostly in their late 30s or 40s include Singaporeans as well as foreigners.\" This was after Mr Goodyear had been announced already. So, there would appear to have been a longer-term pipeline of candidates then in 2009.
If the answer is the inability to find suitable candidates, I would like to ask why some of those candidates that had been identified then were not considered and have not been already put in place.
The third and last supplementary question is: does the Ministry recommend any retirement age for senior management positions for Temasek and the Government of Singapore Investment Corporation. I ask that because I know that some private equity companies do have strict retirement age policies.
\tMs Indranee Rajah: Mdm Speaker, I thank the Member for his supplementary questions. The short answer is that all the questions that the Member has asked are really a matter for the Temasek Board. They would have to review as to when it is timely to have somebody come in, who those candidates ought to be. As I had explained in my earlier answer, they do this review regularly. As to when a new CEO may come in, that will really depend on the Board.
The important thing to understand is that Temasek operates as a commercial entity. So, this is not something where the Government interferes with that management. They approach it the same way any other corporation or commercial entity does, which is, you determine when you think is the best time or if there is a need to have a change of CEO or a succession. As and when the need arises, you will do what is necessary.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"MediSave Withdrawal Limit","subTitle":null,"sectionType":"OA","content":"2 Er Dr Lee Bee Wah asked\tthe Minister for Health (a) in the past three years, how many requests for MediSave withdrawals above the capped limit have been received; (b) of these, how many have been approved; and (c) whether the Ministry will review the cap on use of MediSave in line with the rise in medical cost.
\tThe Minister of State for Health (Mr Chee Hong Tat) (for the Minister for Health): Mdm Speaker, from 2014 to 2016, the Ministry of Health (MOH) received an average of about 200 appeals each year for usage of MediSave beyond the withdrawal limits. These appeals are considered on a case-by-case basis and about half of them were approved. Factors taken into consideration in reviewing these appeals include whether there are special circumstances, such as more complex treatment than expected due to unforeseen complications, or the family facing difficulties due to exceptional circumstances like unemployment or retrenchment.
MediSave withdrawal limits are set to be sufficient for the vast majority of subsidised healthcare expenses, after Government subsidies and MediShield Life payouts are taken into account. In recent years, we have enhanced our subsidies for drugs and outpatient care, as well as introduced new MediSave coverage for outpatient scans, and flexible MediSave use for those aged 65 and above. The introduction of MediShield Life in November 2015 also provided additional support for large hospital bills for all Singaporeans. From January to June 2016, MediShield Life and MediSave together were able to cover more than 90% of the post-subsidy bill for inpatient hospitalisation and day surgeries.
Beyond Government subsidies, MediShield Life and MediSave, low-income Singaporeans who require further financial assistance can approach medical social workers at our public healthcare institutions to apply for MediFund.
Madam, MOH will monitor the affordability of subsidised care and regularly review the MediSave withdrawal limits. We will also continue to consider appeals for usage of MediSave above the withdrawal limits.
Mdm Speaker: Er Dr Lee Bee Wah.
\tEr Dr Lee Bee Wah (Nee Soon): Mdm Speaker, I have two supplementary questions. I have a resident who is 77 years old. He has $100,000 in his MediSave. He has used up the $600 which is the cap for computed tomography (CT) scan for the abdomen, pelvis and bone. Now, he needs $1,000 for prostate magnetic resonance imaging (MRI). Apparently, his request was rejected. I would like to ask the Minister of State, in this case, how best can we help him or what is the Minister of State's advice.
The second question is that for those who are aged 65, can we revise the cap, especially for those who have a bigger sum in their MediSave?
\tMr Chee Hong Tat: Madam, I thank Er Dr Lee Bee Wah for her supplementary questions. The best way to deal with such cases would be for the Member to write in to MOH and we will take a look on a case-by-case basis at the circumstances of the situation that her resident is facing.
As for the Member's second point with regard to the limit for those who are aged above 65, I think that was why we introduced Flexi-MediSave. It is because we recognised that when people age and if they have sufficient balances in their MediSave, this is something which we want to help them with, to defray their out-of-pocket expenses. This limit is something which we can review from time to time to ensure the affordability of our healthcare services for Singaporeans.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Utilisation of CHAS Blue Card Subsidies","subTitle":null,"sectionType":"OA","content":"3 Er Dr Lee Bee Wah asked\tthe Minister for Health (a) how many CHAS blue card holders have used up the maximum amount of subsidies they are entitled to in the past three years; and (b) whether the Ministry will increase the $480 annual cap on CHAS subsidies for chronic conditions.
\tThe Minister of State for Health (Mr Chee Hong Tat) (for the Minister for Health): Mdm Speaker, between 2014 and 2016, there was an average of about 550,000 Community Health Assist Scheme (CHAS) blue cardholders. Each year, about 2% of them use the maximum subsidies for the treatment of chronic conditions.
Besides CHAS, the Ministry supports chronic disease patients who seek care and treatment at general practitioners (GPs) in other ways. For example, patients can use up to $400 per year per MediSave account under the Chronic Disease Management Programme to defray their cash payment for the treatment of 19 chronic conditions. Through initiatives, such as the Family Medicine Clinics and upcoming Primary Care Networks, we are also providing support to selected GPs to deliver more effective chronic disease management for patients.
Mdm Speaker: Er Dr Lee Bee Wah.
\tEr Dr Lee Bee Wah (Nee Soon):\tJust now, the Minister of State mentioned that the amount per MediSave account, including their children's accounts, and for those cases where their children do not have money to support them, is there any other way that we can seek help for our residents?
\tMr Chee Hong Tat: Madam, I thank Er Dr Lee Bee Wah for her supplementary question. As I had mentioned in my earlier reply to the Member, for patients who require further financial assistance, they can approach our medical social workers in the public healthcare institutions. We will look at each case and see how best we can help.
In cases where a patient's MediSave is inadequate, the patient can first look at whether the children's MediSave can be tapped on. I believe that family support is important. So, that would be the first area that we can tap on. But if the children's MediSave accounts are also inadequate and the patient requires more assistance, they can approach medical social workers at our public healthcare institutions. We will see, for each case, how best to assist them.
Mdm Speaker:\tOrder. End of Question Time. Introduction of First Reading Bills.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Stamp Duties (Amendment) Bill","subTitle":null,"sectionType":"BI","content":"First Reading
The Second Minister for Finance (Mr Lawrence Wong): Madam, I have a Certificate of Urgency signed by the President in respect of the Stamp Duties (Amendment) Bill, to be laid upon the Table.
[(proc text) Certificate of Urgency signed by the President in respect of the Bill, laid upon the Table by the Minister. (proc text)]
Mdm Speaker:\tThe Certificate is in order. Minister, please proceed.
Mr Lawrence Wong: Mdm Speaker, I have the President's recommendation for the introduction of this Bill. I beg to introduce a Bill intituled \"An Act to amend the Stamp Duties Act (Chapter 312 of the 2006 Revised Edition).\"
[(proc text) Bill read the First time. (proc text)]
Mr Lawrence Wong:\tMdm Speaker, copies of the Bill and a handout have been provided to the Clerk, who will distribute them to Members now. [Copies of handout distributed to hon Members.]
Mdm Speaker: Second Reading what day?
Mr Lawrence Wong:\tNow, Madam.
Mdm Speaker:\tSo be it.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Stamp Duties (Amendment) Bill","subTitle":null,"sectionType":"BP","content":"
[(proc text) Order for Second Reading read. (proc text)]
The Second Minister for Finance (Mr Lawrence Wong): Mdm Speaker, I beg to move, \"That the Bill be now read a Second time.\"
The Stamp Duties (Amendment) Bill 2017 will have its three readings done in a single Parliament Sitting today. We adopt this approach because the measure involved is market-sensitive and needs to be effected shortly after the Bill has been announced. In order to read the Bill three times in single Parliamentary Sitting, the Ministry of Finance (MOF) has sought and obtained the President's certification that the urgency exists for this Bill under Standing Order 86 of the Standing Orders of the Parliament of Singapore.
The Bill introduces a new stamp duty treatment for the acquisition and disposal of equity interests in property holding entities (PHEs). PHEs are defined as entities whose primary tangible assets are residential properties in Singapore. This new stamp duty treatment addresses the stamp duty rate differential that presently exists between the direct acquisition or disposal of residential properties and the acquisition or disposal of equity interests in entities whose primary tangible assets are residential properties in Singapore. This Bill, if approved by Parliament, will take effect on or after 11 March 2017.
Let me explain this existing stamp duty rate differential. Currently, the acquisition of shares in companies is subject to 0.2% stamp duty, based on the purchase price of the value of the shares. There is no stamp duty on the acquisition of equity interest for other types of entities, such as partnerships and trusts, or the disposal of equity interests in all types of entities, including companies. This treatment applies even when the entity's assets mainly comprise residential properties in Singapore.
In comparison, the purchase of residential properties in Singapore attracts Buyer's Stamp Duty (BSD) of 1% to 3% and Additional Buyer's Stamp Duty (ABSD) of up to 15%. Both BSD and ABSD are based on the purchase price or the value of the properties. The sale of residential properties in Singapore may also be subject to Seller's Stamp Duty (SSD). There is, therefore, a stamp duty rate differential between the buying or selling of residential properties and the buying or selling of equity interest in entities holding residential properties. With ABSD and SSD remaining relevant in our property market, we have decided that it is timely to close this stamp duty rate differential.
The Bill thus seeks to apply new duties to the acquisition and disposal of equity interest in entities whose primary tangible assets are in residential properties in Singapore under specified circumstances. These new duties, which I henceforth refer to as Additional Conveyance Duties (ACD), will apply irrespective of whether the equity interest in PHEs is acquired or disposed of for bona fide business reasons. This is just like how we currently levy BSD or ABSD, and ABSD or SSD, on the purchase or sale of residential property, even if the purchase or sale is for bona fide business reasons.
The new ACD will apply, in addition to the prevailing stamp duty of 0.2%, for the transfer of shares in companies. I should highlight that the measure will not impact the ordinary buying and selling of shares by retail investors in entities listed on the Singapore Stock Exchange. Currently, they are not subject to share duties where the shares are scripless and no document is executed for the transfer of such shares. Rather, ACD is aimed at the transfer of equity interest in PHEs by significant owners of such entities.
Madam, I will now elaborate on the key features of the new measure. Specifically, an entity is regarded as a PHE under two circumstances. The first category of entities holds residential properties directly. To establish if such an entity is a PHE, we will apply a significant asset test. An entity can be a PHE if 50% or more of its total tangible assets is residential properties in Singapore. We will call this a Type One PHE.
There is also a second category of entities that have indirect holdings of residential property through Type One entities in which they have at least 50% equity interest. The entity may also own some residential properties directly. For such an entity, it will be considered a PHE if it meets two criteria. First, it beneficially owns at least 50% equity interest in a Type One PHE. Second, it meets the significant asset test as mentioned above. In other words, the total value of the residential property it hence owns indirectly through these Type One PHEs, as well as the value of the residential property it may own directly, comprises 50% or more of its total tangible assets.
ACD will apply to acquisition or disposal of equity interest by owners with significant equity interest in the PHE. To be considered a significant owner, one has to either presently hold at least 50% equity interest in a PHE or hold at least 50% interest after the equity acquisition.
In determining whether the 50% ownership threshold for significant ownership is met, we will take into account the equity interest held by associates. Examples of associates include a parent company and its subsidiary or, in the context of individuals, a father and his children, husband and wife.
We will also cover arrangements under which individual buyers act in concert to purchase shares with the objective of avoiding the new duties. This serves to mitigate any potential attempt to circumvent the 50% ownership threshold through its associates and thus avoid ACD for purchase or sale of its equity interest in a PHE.
The computation of ACD will be based on the prevailing market value of the underlying residential property at the time of the qualifying acquisition or disposal of equity interest, in proportion to equity interest.
With the new measure, an acquisition of equity interest in a PHE will be subject to ACD for the buyer, if the buyer is already a significant owner at the time of acquisition, or becomes a significant owner thereafter.
ACD for the buyer comprises two components. First, 1% to 3% on the value of the underlying residential properties which mirrors the existing BSD. Second, a flat 15% on the value of the underlying residential properties, which is similar to the existing ABSD for residential properties. This flat 15% rate applies irrespective of whether the buyer of the equity interest is a Singaporean, a Permanent Resident, a foreigner or a non-individual entity.
Likewise, a disposal of equity interest will be subject to ACD for the seller if: (a) the disposal is made after the seller has become a significant owner; (b) the equity interest disposed of is acquired on or after 11 March 2017; (c) the equity interest disposed of is held for three years or less from the time of acquisition.
ACD will be set at a flat rate of 12% for sale of equity interest within three years of purchase, similar to SSD for residential properties. This flat rate applies, irrespective of the holding period for the equity interest which is disposed. I should also clarify that once a person acquires equity interest on or after 11 March 2017 in a PHE and becomes a significant owner of such a PHE, ACD on sale of equity interest will continue to apply and to such time that the owner has disposed completely of all the equity interest in the PHE.
To deter potential attempt by the buyer and seller to circumvent the provisions for the new duties, the Bill includes a specific anti-avoidance provision. This provision charges the new duties notwithstanding the conditions are not met, for instance, if an arrangement was made with the purpose of allowing an entity to be no longer a PHE. The duty is not chargeable if the Commissioner is of the opinion that the arrangement was not carried out to avoid the duty.
The remaining legislative changes are mostly technical in nature. On that, Mdm Speaker, I beg to move.
[(proc text) Question proposed. (proc text)]
Mdm Speaker: Mr Yee Chia Hsing.
Mr Yee Chia Hsing (Chua Chu Kang): Madam, I would like to thank MOF for introducing this Bill.
I brought up this issue during the Budget Debate last Wednesday, asking that we review the concept of ownership for residential properties to include beneficial interests instead of just looking at the registered owner. I had proposed that if a residential property is held by a corporate entity or a special purpose vehicle, and the shares of the company are transferred from seller to buyer, the normal residential stamp duties should apply.
I am pleasantly surprised by the speed that my suggestion has been taken up. I do not think the Ministry could have come up with the Bill within such a short time, so I am sure the Ministry had been looking at this issue for some time.
Madam, as our Government's spending on health, infrastructure and social support increases, we face an urgent need to increase our revenue to fund this spending.
Quoting recent newspaper articles after Minister Lawrence Wong talked about this during his Committee of Supply (COS) speech, this move is seen by some industry players as plugging an existing regulatory loophole. I would like MOF to consider if a separate taskforce can be set up specifically to look at whether there are other loopholes across the various Ministries which we have to plug.
Madam, the task of closing a loophole should not be left to the individual Ministries since we usually need a fresh pair of eyes to look at an issue. This taskforce should also look at other creative ways to increase Government revenues. I hope the Ministry will be able to find more revenue sources which are both progressive, in that only the rich pays, and discretionary, in that they have a choice. The increase in Additional Registration Fee for luxury cars in early 2013 is one such example of a tax which is both progressive and discretionary.
In terms of finding new sources of revenue, for instance, we may consider whether it makes sense to tender out car registration number plates with alphabet series which are no longer available. For example, I think a two-letter SG series number plate will be very well received.
Madam, we have just concluded our Budget Debate and COS for the various Ministries over the past two weeks. As a responsible and prudent Government, we have always tried to run a balanced Budget. But it will become increasingly challenging as our population ages.
I hope that with additional revenue sources which are both progressive and discretionary, we will not need to increase other taxes which may impact low- to middle-income families. Madam, I support the Bill.
Mr Lawrence Wong: Mdm Speaker, we all take pride in the efficiency of the Government but I can confirm that this did not happen just after Mr Yee's speech in the Budget Debate.
It is something that we have been monitoring quite carefully and we have been studying this. As Members can appreciate, the design of the scheme itself and the issues at stake are quite complex. So, we have been studying this very carefully before working out the measures that have been proposed today.
I should also clarify that the motivation for this Bill is not to raise revenue. It is not a revenue-raising measure per se but the motivation for doing this is to remove the existing differential in the stamp duty rates, which I have explained earlier.
With regard to revenue issues, we have already spoken about this at length during the Budget Debate. The Minister for Finance has highlighted our approach for new sources of revenue in his round-up speech and we had a discussion on this in the COS for MOF as well. We are studying all options carefully to determine the best way to raise revenues to support our future expenditure needs. Mdm Speaker, on that note, I beg to move.
Mdm Speaker: Mr Liang Eng Hwa.
Mr Liang Eng Hwa (Holland-Bukit Timah): Mdm Speaker, I want to also express my support for this amendment to address the stamp duty rate differential and also to urge the Government to continue some form of demand management measures for our property, so that we have a stable property market.
I just have one question for the Minister. Does this new Bill provide some flexibility to address, should, in the future, the property players come up with more ingenious or some creative way to counter this? Are there provisions for that without having to come to Parliament to do another amendment?
Mr Lawrence Wong: Madam, I can confirm that that is, indeed, the case. We will have to continue to study this. After putting in this measure, I think there will be adjustment in the way industry players respond to this, so we will have to monitor very carefully. Indeed, we have also put in place, as I mentioned in my Second Reading speech just now, a specific anti-avoidance provision for the new measure, which will have the ability to cover arrangements that have the effect of reducing or avoiding liability of the new duties.
We have also put in place flexibility provisions so that even after this measure, we can make further changes if need be.
Mdm Speaker: Mr Louis Ng.
Mr Louis Ng Kok Kwang (Nee Soon): Madam, just some clarifications or concerns on the ground. One, whether the Minister feels this stabilises the property market, especially the high-end market which has been quite sluggish. Two, the real problem really seems to be an oversupply of private properties, whether the Ministry will also address this. Third, while we pass this Bill with such haste, will this not actually just result in a huge transaction in the next few hours?
Mr Lawrence Wong: Madam, on the third point, as I have mentioned, this is not done in haste. If this was done in haste, we would have probably done it much earlier. But we took time to study, to carefully consider the measures before putting it together. We are doing it three Sittings in one, not to rush through but because of the market sensitivity of the measure.
On the impact of the property market and the broader issues of high-end residential property market, whether there is, indeed, an oversupply, that is a separate matter regarding property market conditions in general. I do not want to get too much into that debate but it would suffice to say that our aim is to ensure a stable and sustainable property market in Singapore. That is what we seek to do and we are continuously monitoring the property market conditions to achieve this objective.
Mdm Speaker: Mr Cedric Foo Chee Keng.
Mr Cedric Foo Chee Keng (Pioneer): I support the Bill because it levels the playing field for payment of stamp duties. May I ask the Minister what impact this Bill would have on the property market? In other words, how prevalent is this PHE practice and would this Bill result in sudden movements in the market?
Mr Lawrence Wong: Madam, I do not want to speculate on the impact at this juncture. We would not know how prevalent it is because the people who are doing this today, doing this share transfer, are not required to declare. So, we do not have data on the numbers who are doing it.
I would not want to speculate on the impact. We know that there is a differential which we are closing today. We believe it is the right thing to do and we had taken time and effort to study this to make sure that whatever measures we are putting in place are balanced, appropriate and do not also impact negatively on legitimate business transactions. That is what we have done.
Mdm Speaker: \tMr Gan Thiam Poh.
Mr Gan Thiam Poh (Ang Mo Kio):\tMay I seek clarification from the Minister whether the transfer of equities by way of gifts is exempted? In the case of, let us say, the parents transferring the share to their children, and also transferring due to death of the shareholders, and so transfer to the beneficiaries, would that also be exempted? Also, I know the tax is on the underlying residential property value. In the case of a distress sale, in a hurry, how would you determine the value of the asset?
Mr Lawrence Wong: Madam, the circumstances under which transactions will apply are very clearly laid out in the Bill, so we will use this to apply and see whether any transactions would qualify or would need to pay for the additional new duties. The criteria and the test that we have laid out are very clearly spelt out, so we will use this objectively.
On valuation, there are clearly spelt out valuation methods to do valuations. I do not think we need to get into a debate on that. I think these valuation methodologies are already in place today to value properties. Mdm Speaker, I beg to move.
[(proc text) Question put, and agreed to. (proc text)]
[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]
[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Lawrence Wong.] (proc text)]
[(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Companies (Amendment) Bill ","subTitle":null,"sectionType":"BP","content":"[(proc text) Order for Second Reading read. (proc text)]
The Senior Minister of State for Finance (Ms Indranee Rajah): Mdm Speaker, I beg to move, \"That the Bill be now read a Second time.\"
The Companies Act was last amended in 2014, mainly to implement the recommendations of the Steering Committee for the Review of the Companies Act. Since then, the Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (ACRA) have undertaken another review of the Companies Act to ensure our regulatory regime continues to remain robust, relevant and in line with international norms.
The Ministry of Law (MinLaw) has also considered the recommendations of the Insolvency Law Review Committee (ILRC) and the Committee to Strengthen Singapore as an International Centre for Debt Restructuring to enhance Singapore's debt restructuring framework.
These reviews have prompted the current amendments which fall into three categories. First, amendments to improve the transparency of ownership and control of companies in line with certain international norms. Second, amendments to reduce the regulatory burden and improve the ease of doing business and, third, amendments to enhance our debt restructuring framework. Several rounds of public consultation on the proposed amendments were conducted and the feedback has, where appropriate, been incorporated into the amendments.
Mdm Speaker, let me now take Members through the key amendments in the Bill. First, improving transparency of companies. The first set of amendments seeks to make the ownership and control of business entities more transparent and thus reduce opportunities for the misuse of corporate entities for illicit purposes. This will help Singapore to better meet the recommendations of the Financial Action Task Force (FATF).
FATF is an intergovernmental body that sets global standards for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
As a member of FATF, Singapore undergoes mutual evaluations by FATF. In Singapore's fourth mutual evaluation last year, FATF assessed that Singapore has a strong framework for anti-money laundering and countering the financing of terrorism. FATF also recommended some areas for improvement. One of these was to enhance the access of law enforcement agencies to information on the beneficial ownership of legal persons.
Singapore is also a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes (GF). Amending our laws will enable us to better implement international standards on tax transparency.
Let me now elaborate on two key changes under this category of amendments. The first pertains to registers of controllers, members and nominee directors. We are requiring three new registers to be maintained by companies.
First, clause 47 will require locally incorporated companies and foreign companies registered in Singapore to maintain registers of their controllers at prescribed places. A controller, or more commonly known as the beneficial owner, refers to an individual or a legal entity that has interest in or significant control over the company.
The Bill defines \"significant control\" and \"significant interest\" and uses a 25% threshold to help companies determine when control and interest are significant. The 25% threshold is consistent with those in the FATF's guidance documents, the United Kingdom's (UK's) legislation on registers of people with significant control, and the European Union's Fourth Anti-Money Laundering Directive.
Companies will be required to take reasonable steps to identify and obtain information on their controllers, including sending notices to potential controllers or persons who have information about the controllers. Besides companies, the Bill will introduce obligations for two other groups of persons.
First, any person who receives a notice from the company must provide his particulars to the company if he is a controller. If the person is not the controller, the person must provide any information on the controller that he is aware of to the company. Second, controllers will be required to provide and update their particulars to the companies.
Mdm Speaker, the topic of transparency of beneficial ownership continues to gain international attention and momentum. Internationally, there are discussions about central or public registers of controllers and the automatic exchange of beneficial ownership information.
At the Group of 20 (G20), there is greater focus on ensuring availability of beneficial ownership information of legal persons to regulators and law enforcement agencies. The Bill only requires companies to maintain non-public registers of controllers. However, this information must be provided to the Registrar and law enforcement authorities upon request. The Bill also provides a reserve power for the Minister to direct the Registrar to maintain a central register of controllers should it become necessary to do so.
Let me now deal with the next register. Clause 46 will require foreign companies registered in Singapore to maintain public registers of their members. This brings the position of foreign companies into alignment with the current requirement for locally incorporated companies. The change will not impose any additional compliance responsibility for foreign companies which already maintain registers of members in their place of incorporation.
Clause 47 will require locally incorporated companies to maintain the third new register, which is the register of nominee directors. The Bill will also require nominee directors to disclose their nominee status and the particulars of their nominators to their companies. This mitigates the risks of money laundering and terrorist financing being done through nominees.
Next, record retention, or the second key change. When a company is wound up, clause 38 will require the liquidator to retain the company's records for at least five years, instead of the current two. Furthermore, a company that is wound up by its members or creditors will not be allowed to destroy records early. Such a company will have to retain its records for at least five years.
For a company that has been struck off and dissolved, clause 39 will require its former officers to similarly retain all books and papers of the company for at least five years, including its accounting records and registers. The five-year period takes reference from standards under FATF and GF. The changes will allow enforcement agencies to access past records for their investigations.
These amendments will boost Singapore's ongoing efforts to maintain our strong reputation as a trusted and clean financial hub. We intend to effect these amendments by 31 March 2017. To help companies prepare to comply with these new requirements, existing companies will have a transitional period of 60 days from the commencement of the law to maintain the registers of controllers. ACRA will also issue further guidance to companies. This includes samples of the notice that companies can use to send to their shareholders, directors and any other relevant persons to assist them in obtaining the information required for their register of controllers.
Mdm Speaker, I move next to the second set of amendments. These seek to reduce the regulatory burden and improve the ease of doing business. There are three key changes.
First, clause 42 introduces an inward re-domiciliation regime in Singapore. Foreign corporate entities will be allowed to transfer their registration to Singapore, besides the current options of setting up a subsidiary or branch in Singapore. Inward re-domiciliation is akin to changing \"corporate citizenship\". Transfer of registration will thus be useful to foreign corporate entities that wish to retain their corporate history and identity. Foreign corporate entities may choose to re-domicile for various reasons, such as for a more conducive regulatory framework or to be closer to their shareholders or operational base. A foreign corporate entity that is re-domiciled to Singapore will be required to comply with the requirements of the Companies Act like any other Singapore company.
Second, clauses 9 to 10 and 14 to 16 will align the timelines for holding annual general meetings (AGMs) and filing annual returns with the companies' financial year end. The Bill will require listed companies to hold AGMs and file annual returns within four months and five months after their financial year end respectively. Non-listed companies must hold AGMs and file annual returns within six months and seven months after their financial year end respectively.
The Bill also exempts all private companies from holding AGMs, subject to safeguards. This will be in addition to the current regime whereby private companies can dispense with the holding of AGMs if all shareholders approve. The Bill also includes safeguards, such as allowing any shareholder of a private company to ask for an AGM within prescribed timelines.
Third, clause 6 will remove the requirement for a common seal to execute documents, such as deeds, and for certain documents, such as share certificates. The use of common seals has become outdated. Jurisdictions, such as Australia, Canada, Hong Kong, New Zealand and the United Kingdom (UK) no longer require the use of common seals. The Bill will allow companies to execute documents by having them signed by company officers who are duly authorised to do so.
However, notwithstanding this amendment, companies can choose to retain the use of a common seal based on their business needs.
Mdm Speaker, I will now move on to the debt restructuring amendments.
Debt restructuring refers to the process undertaken by companies in financial difficulty to renegotiate the terms of their debts and save their businesses. The need for debt restructuring is on the rise globally. Recent high-profile cases include Hanjin Shipping's attempted rehabilitation in Korea and ongoing efforts for Singapore-listed businesses like Swiber and Ezra.
A successful restructuring averts liquidation and allows the company to continue as a going concern, which benefits not only the company owners but also employees who keep their jobs and others who rely on the company for their own businesses. It also allows the company's creditors to receive a higher repayment under the restructuring proposal than in liquidation.
While Singapore is already a regional forum of choice for restructuring, these amendments will enhance Singapore's restructuring processes which are schemes of arrangement, under section 210 of the Bill, and judicial management, under Part VIIIA of the Bill; and improve our capability to deal with cross-border insolvencies and restructurings.
These proposed changes will further enhance our restructuring framework and status as a centre for international debt restructuring. With this background in mind, let me explain the key amendments relating to restructuring.
I will first cover amendments to the schemes of arrangement.
In a scheme, the company presents a debt restructuring proposal at meetings of its creditors or classes of them. If the proposal is approved by a majority of creditors that hold 75% of the company's debts at these meetings and is sanctioned by the Court, the proposal becomes binding on the creditors.
The key amendment is clause 22, which introduces a new set of provisions that apply to schemes which implement debt restructuring proposals. These provisions adapt parts of Chapter 11 of the United States (US) Bankruptcy Code (Chapter 11). I will highlight the key features of these new provisions.
First, moratorium. The provisions will allow the Court to order a moratorium in favour of a company that is proposing or intends to propose a scheme. The moratorium prevents creditors from taking action against the company, such as commencing legal proceedings or enforcing security rights, and gives the company breathing room to put forward the restructuring proposal.
Features of Chapter 11 that will be adapted include: providing an automatic moratorium on filing an application, for a period of up to 30 days; allowing the Court to give the moratorium worldwide effect; and extending the moratorium to related entities relevant to the restructuring.
Finally, the new provisions will provide for carve-outs from the moratorium through subsidiary legislation. This will address situations where the moratorium may cause disproportionately adverse effects on certain transactions. An example is contractual obligations under set-off and netting arrangements.
Next, rescue financing. The next feature of Chapter 11 that is being adapted are rescue financing provisions. Rescue financing consists of new loans which provide working capital during the restructuring. Without rescue financing, a viable company may be unable to restructure, but lenders may be reluctant to provide additional financing to troubled companies.
To facilitate rescue financing, the Court will be empowered to order that rescue financing be given super-priority. That means priority over all other debts or to be secured by a security interest that has priority over pre-existing security interests, provided the pre-existing interests are adequately protected. This is consistent with the approach in Chapter 11.
Third, cram-down provisions. Another feature adapted from Chapter 11 is to allow the Court to approve a scheme even if there are dissenting creditor classes, but provided safeguards are met.
Presently, the Court can only sanction a scheme if the requisite majority approval has been obtained from all classes of creditors. These provisions, therefore, prevent a minority dissenting classes of creditors from unreasonably frustrating a restructuring that benefits creditors as a whole.
Fourth, pre-packs. The final feature adapted from Chapter 11 are provisions for pre-negotiated restructurings between the company and its key creditors or \"pre-packs\". Other creditors will not be affected as the pre-pack is sufficient to save the company.
The new provisions facilitate approval of these pre-packs as the Court may dispense with calling creditor meetings if certain safeguards are met.
I will now move on to amendments relating to our judicial management scheme. Judicial management is a temporary Court-supervised procedure where a company unable to pay its debts is managed by a judicial manager.
Clause 25(a) will allow the Court to make a judicial management order when a company \"is likely to become unable to pay its debts\", as opposed the current \"will be unable to pay its debts\". This will allow the judicial management process to commence earlier in the day, when the prospects of saving a company are higher.
Clause 25(d) will allow the Court to make a judicial management order despite objections from certain secured creditors if the prejudice caused to unsecured creditors is disproportionately greater. Presently, the Court cannot grant a judicial management order if these secured creditors oppose the application.
Clause 28 will introduce rescue financing provisions, which mirror the provisions introduced for schemes of arrangement.
These three enhancements to the judicial management regime will improve its efficacy as a corporate rescue process.
I will now turn to amendments pertinent to cross-border cases, which are increasingly common because businesses conduct their operations and dealings all over the world.
Clause 40 sets out a list of factors for the Court to consider when deciding whether a foreign company has substantial connection to Singapore in order for it to be wound up under this Act.
The impact of this list goes beyond winding up, as a foreign company that can be wound up under this Act may make an application for a scheme of arrangement or judicial management. This list will provide greater certainty to foreign debtors that wish to restructure in Singapore.
Clauses 41 and 50 adopt the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency (1997), which is a well-understood and internationally respected framework that governs the recognition and assistance of foreign insolvency proceedings.
Clause 45 abolishes the current rule that requires liquidators of foreign companies to \"ring fence\" Singapore assets and pay off debts incurred in Singapore first. However, \"ring fencing\" for specific financial entities, such as banks and insurance companies, will still be retained.
These amendments will provide greater certainty of outcome in cross-border cases and significantly enhance Singapore's capability in dealing with cross-border insolvencies.
In conclusion, the transparency-related amendments will enable Singapore to better mitigate the risks of money laundering and financing of terrorism. The Bill will also reduce the regulatory burden on companies and improve corporate governance in Singapore.
The enhanced debt restructuring framework will give business entities in financial difficulties greater flexibility to restructure and survive. Together with the new inward re-domiciliation regime, these amendments will increase our competitiveness and strengthen Singapore as a leading financial centre. Mdm Speaker, I beg to move.
[(proc text) Question proposed. (proc text)]
Mdm Speaker: Mr Edwin Tong.
Mr Edwin Tong Chun Fai (Marine Parade): Madam, before I start, I would like to declare my interest as having been a member on ILRC and also on the Committee to Strengthen Singapore as an International Centre for Debt Restructuring, mentioned by the Senior Minister of State earlier. I will focus my speech on the third basket of the amendments which the Senior Minister of State has mentioned earlier.
Mdm Speaker, the ability to restructure the business of a distressed company and rehabilitate it back to good financial health is as important as setting up a good business in the first place. Where such restructuring is carried out successfully, cost efficiently and relatively quickly, all stakeholders, including creditors, investors, shareholders and employees, benefit. For companies that have fallen on hard times, but with a sound underlying business, restructuring is preferable to the alternative of liquidation. It preserves value. In contrast, in a liquidation, the company's assets will be broken up, sold for recovery and distributed to creditors, usually at fire sale prices.
Further, in an economic downturn, our restructuring regime allows struggling companies to quickly resume normal business operations which enhances the growth and sustainability of our economy.
The need for Singapore to have a robust insolvency framework is underscored by the difficulties which the global economy has faced in recent times. In 2016, we witnessed increasing global uncertainty, climbing interest rates and a downturn in oil prices. Global corporate defaults were at their highest since the 2008 financial crisis, economic growth slowed and the economic outlook was severely dampened.
In Singapore, we have not been spared. In the first half of 2016, there were 118 winding up applications in Singapore, out of which 85 companies were then put into liquidation. This is high when compared to the previous 10 years. In the second half 2016 alone, companies like Swissco Holdings, Swiber Holdings, Technics Oil and Gas Ltd, Ezra Holdings, all major players in the beleaguered oil offshore and marine industry, went into one form of insolvency arrangement or another.
The adverse run-on effects of the insolvency and collapse of a company cannot be underestimated. It is not just the closure of a business, but also the loss of jobs and livelihoods for many. The offshore and marine industry, probably the hardest hit sector in the recent downturn, has some 88,000 workers employed in that sector alone. The threat of the loss of jobs in this industry as well as others is thus a real issue, close to the hearts of many Singaporeans. There are also other stakeholders whose interests we need to consider, such as financial institutions with loan exposures to distressed companies. The rehabilitation of such companies in financial trouble is, therefore, not just about crunching numbers, generating business or increasing profits. There is a wider social interest at stake.
It is in this context and backdrop that this Bill has been introduced, and it is aimed at several key objectives.
First, it seeks to set up a more conducive legal framework with a view to ultimately saving businesses, preserving values and jobs. Second, it aims to make our insolvency and restructuring laws more robust, more rescue-friendly but, at the same time, nimble and nuanced enough to balance and protect the competing interests of relevant parties. Third, I would suggest that this is also timely for the reasons the Senior Minister of State has mentioned. Since the last amendment to these regimes, the way we do business now is very different; there are a lot of cross-border aspects of the business, and many companies are located in several parts of the world. For example, a company may be headquartered in one country but have branches in others, and therefore, assets, interests, creditors or debtors are located across different jurisdictions.
There had been a slew of enhancements to the regime and, as a practitioner in this area, I can say that it has been broadly welcomed by insolvency practitioners from the finance industry, banks and the companies. I wish to focus on five of those amendments which the Senior Minister of State has mentioned.
First, the proposed section 211B(1) widens the circumstances in which a company can obtain a moratorium when seeking such a scheme or compromise. The moratorium is crucial because it suspends actions against a debtor company. Without a moratorium, a scramble usually takes place when creditors think that someone else is going to steal a march on them and, consequently, everyone moves in to liquidate the company. This undermines any prospect of being able to reach a more beneficial arrangement. It drives a company towards litigation and, ultimately, kills value in the company. In contrast, a moratorium holds the line and keeps all creditors on an even keel. This is vital, so that companies in distress can have some \"breathing space\" in order to put in place an effective and mutually beneficial rescue plan.
In that context, the automatic 30-day moratorium upon an application being made in Court is very much welcomed. This is necessary to give efficacy to the moratorium. At the same time, the Bill also strikes a balance between the interests of the debtor company and its secured and unsecured creditors. The company is required to give information on its financial affairs to its creditors. The Court takes all of this into account and is then empowered to grant a number of different restraining orders which can be ordered individually or in combination, as necessary or as appropriate. As such, the Court can bespoke the scope of the moratorium and its terms to fit the specific circumstances of each case and need not order a moratorium over security enforcement, if necessary.
Second, the new cram-down provisions which the Senior Minister of State mentioned will better allow judicial control of schemes. As the Senior Minister of State outlined, the current regime requires there to be a threshold of 75% by value and 50% in number before a scheme can even be presented to Court. In other words, the Court will have no jurisdiction to entertain any scheme proposal that does not even meet this threshold.
In the case of some companies, one class of creditors could have just a very few number of creditors and this could then, by way of this very minority number of creditors, derail the entire scheme. Commentators have said that this is a \"major impediment\" to the success of the scheme for distressed companies.
The new cram-down provisions, however, meet this criticism nicely. They allow the company or one of its creditors to apply to Court for approval of the scheme, notwithstanding that it is objected to by a class of creditors. At the same time, there are safeguards to protect these rights of the objecting creditors. The Court must be satisfied that the scheme does not discriminate unfairly among the classes and it must be fair and equitable to the dissenting class of creditors. Very often, a minority number of creditors hold a tactical leverage in restructurings to try to negotiate a better position for themselves, even if they hold only a small percentage of the debts. I, therefore, think this change is a welcome one, which calibrates the playing field a little more in favour of the debtor company and its majority creditors, without compromising the position of other dissenting creditors.
Third, it will now be easier for companies to apply for judicial management. Under the current Companies Act, the Court must be satisfied that the company \"is\" or \"will be\" unable to pay its debts, before allowing the application to succeed.
As noted by ILRC in 2013, this strict test causes companies to turn to judicial management only when they are already hopelessly insolvent, by which time, it would often be too far gone for a judicial manager to be effective in turning the company around. And that perhaps explains why judicial management in Singapore has been less successful in rehabilitating companies.
This, in my view, is a pity, as judicial management is otherwise a very useful option in our arsenal of restructuring tools. A Court-appointed Judicial Manager is usually an independent professional advisor, coming in to manage the affairs of a company in a difficult period, lending assurance that the creditors to the company need. To allow the judicial management regime to be more effective, it ought to be possible to implement it at an earlier stage to give distressed companies a real prospect of success. That is why I welcome the amendments which allow for a company to be placed into judicial management as long as it \"is likely to become\" unable to pay its debts. This is a lower threshold and, in my view, a far more sensible one.
Fourth, rescue-financing will now be encouraged under the Companies Act. New financing is often crucial for ailing companies, as it provides funds, for example, to pay urgent operational expenses, provide working capital and so on.
Quite understandably, however, an insolvent company in such a situation is unlikely to be flushed with options when it comes to new financing. Financial institutions will not want to risk throwing good money after bad. As such, companies in financial distress typically face severe liquidity problems, meaning they cannot meet their current liabilities. It would be futile to put such a company into a scheme or judicial management without also having the ability to facilitate a financial solution to its liquidity problems. The rescue finance provisions, therefore, provide an option for companies to get new funds in as part of their restructuring exercise.
The amendments incentivise and encourage financial institutions to provide rescue financing, by giving the Courts the power to grant priority or security in relation to the debt created under the rescue financing arrangements. In this respect, the new provisions allow a variety of options with varying degrees of guarantee of recovery. For example, the Court could order that the debt rank in priority or it could order that the debt be secured by a security interest that ranks higher than an existing one.
At the same time, the Bill also introduces safeguards which will be scrutinised and policed by the Courts. It is only allowed in appropriate circumstances and the Court must be satisfied that there is \"adequate protection\" given to an existing security interest holder. This, as the Senior Minister of State mentioned, draws inspiration from the US Chapter 11 model. The rationale for the above safeguard was that new lending should create new value for the company such that it is in a position to protect the interests of the security holder, whether by cash payments or by providing another form of security. In this way, the Courts are called upon to \"assess the viability of the purpose behind the proposed financing\".
The Bill facilitates rescue financing for distressed companies whilst also managing any entailing risks. The US experience in Chapter 11 proceedings has been that rescue financings are invariably value enhancing and are usually associated with a higher probability of successful recovery. I hope that, with these amendments, the same will be seen in Singapore.
Finally, I look at the last amendment in the context of the UNCITRAL Model Law being adopted. The Model Law was designed not to make insolvency laws in different countries uniform, but to supplement existing laws.
As I previously mentioned, it is now commonplace for businesses to be cross-border. The insolvency practitioner managing the restructuring will then have to coordinate different moving parts, grapple with foreign procedures, regulations, laws and the like. A degree of cooperation is thus much needed between the Courts and the insolvency practitioners from different countries. It is far more productive and cost-efficient for cross-border insolvencies to be coordinated from one \"main\" jurisdiction.
Currently, the provisions in the Companies Act do not assist in the facilitation of cross-border insolvencies. Take the example of a company in Singapore which wants to enter into a scheme of arrangement but has subsidiaries in other jurisdictions where the real value resides. It would be no use for the holding company to apply for a scheme and a moratorium in Singapore, only to have creditors take action against his other assets located in other jurisdictions. In fact, this was an issue which came up in a recent High Court decision in the Pacific Andes case.
This is where the UNCITRAL Model Law comes in to supplement our insolvency laws. Under this framework, a foreign insolvency practitioner can apply to the Singapore Court for recognition of insolvency or restructuring proceedings in another country. When recognition is granted, the Court then has a range of options from which to grant relief.
Likewise, a scheme manager in Singapore can go to a jurisdiction which has adopted the Model Law for assistance. For example, he can go to a foreign court to ask for a moratorium. Other countries, like Singapore, which have adopted the Model Law, include the US, the UK, Australia, Japan and Korea, amongst others, and these are the leading jurisdictions in which restructurings take place.
Finally, Madam, in connection with the cross-border efforts, I note also that our Singapore Courts have recently embarked on a novel and ground-breaking initiative. In October 2016, the Singapore Judiciary hosted the first Judicial Insolvency Network conference. This led to guidelines for the communication, coordination and cooperation in cross-border insolvencies. Singapore, Delaware and New York have already signed up to it, with Australia, England and Wales expected to follow. These are major restructuring jurisdictions, and the ability to hold joint-hearings, such as by video conference, with the objective of increasing cooperation, aligning positions and cutting costs, can only benefit the insolvent company.
Madam, the amendments in this Bill are critical to the enhancement of Singapore as an international debt restructuring hub. London and New York have long been regarded as the dominant force in this area. In a recent publication by Global Restructuring Review on 1 March 2017 just last week, it was reported that this \"traditional hegemony of London and New York\" is facing competition from Singapore, following the concerted push to make ourselves a leading restructuring hub for the Asia Pacific.
The amendments which this Bill seeks to introduce are an integral part of that effort. With that, I support the Bill, Madam.
Mdm Speaker: Mr Dennis Tan.
Mr Dennis Tan Lip Fong (Non-Constituency Member): Madam, I wish to declare that company and insolvency laws form part of my legal practice areas.
This Amendment Bill came up for First Reading only last Tuesday. Today, after eight days of the Budget and Committee of Supply debates, this Bill is up for Second Reading and debate. A large part of this Bill is the result of the recommendation by ILRC back in October 2013. Much time has elapsed since then. The Bill is finally out. I hope all Members have time to digest the Bill in such a short time, as we ought to. But, Madam, can the Members not have more time to consider such Bills properly before it is put up for Second Reading?
Madam, under this Bill, there are quite a lot of changes to the Companies Act. There are various amendments relating to corporate secretarial and filing requirements. I am agreeable to these proposals as they aim to improve practices and reduce regulatory burden.
I have two clarifications for the Senior Minister of State. One of the amendments involves the dispensation of compulsory AGMs. On this issue, may I ask the Senior Minister of State whether ACRA does provide for public access suitable literature or other resources on minority rights? If not, will the Government consider doing so in light of the proposed changes? I believe this will be useful to some shareholders as they grapple with the changes in the law.
Additionally, would the Government look into the possibility of streamlining the filing obligations of companies such that the annual ACRA filings can be combined with the Inland Revenue Authority of Singapore (IRAS) tax filing into a composite submission? I believe this will make compliance easier and businesses do not need to grapple with different deadlines and different filing obligations.
Madam, this Bill also seeks to introduce an inward re-domiciliation regime to allow foreign companies to transfer their registration to Singapore. I support the intention of allowing foreign companies to re-domicile as a Singapore company if this may help to attract existing foreign companies to relocate their operations and headquarters to Singapore and bring more business and investments to Singapore or enhance Singapore as a key corporate hub and business centre.
However, I have some concerns. I hope we may not, by these provisions, end up encouraging corporate inversion without bringing real gains to Singapore. Will the companies suffer reputational damage in their home countries for reasons of tax avoidance? Will Singapore, by encouraging corporate inversions, draw the ire of other countries? Will we, for example, go the way of, say, Ireland and draw the ire of countries like the US?
Two years ago, Australian companies BHP Billiton and Rio Tinto were under the spotlight from the Australian tax authorities for what was described as the \"Singapore Sling\" tax avoidance scheme where they were said to have channeled profits through marketing hubs in Singapore. The Australian tax authorities seemed to have accepted that they were for legitimate business activities and they were under legitimate tax avoidance schemes. Nevertheless, it appears from media reports that our so-called \"Singapore Sling\" schemes were not as welcoming to the Australian taxmen as the real McCoy usually served to Aussie tourists in the Long Bar at Raffles Hotel.
While I recognise that: (a) it is our sovereign right to decide freely on how we want to tax and the rules therefor; and (b) that we need to always make our tax regime attractive in many ways to attract companies to come to Singapore. Nevertheless, as a country, how we organise our tax regime must also be welcomed by other countries within the international tax environment.
In recent years, and as we have certainly seen after the Panama Papers episode, popular opinion around the world on the issues of tax avoidance practices has started to change. Tax avoidance practices, which used to be carried out without any questions asked, together with the reputation of certain once popular offshore tax havens, have taken a beating. I am sure the Government has considered these issues. Nevertheless, these are my concerns and I hope the Senior Minister of State can provide some assurances.
I move on to debt restructuring and judicial management. Part of the major changes to this Bill consists of various new provisions relating to debt restructuring proposals. Among other things, new features for schemes of arrangements include enhanced moratoriums against creditor action. The Court will also be allowed to approve rescue financing provided for debt restructuring and to give such financing super priority over existing creditors' claims. Schemes of arrangement can also be approved even if some creditors object.
The Bill is also making it easier for companies to apply for judicial management and there are also provisions for super priority for rescue financing in judicial management. I understand that such priority for rescue financing, together with cram-down provisions, are concepts which are borrowed from US bankruptcy law. The Bill will also make judicial management available to foreign companies. Madam, I welcome these provisions.
On 1 September 2016, the Korean shipping conglomerate, Hanjin, obtained a rehabilitation order from the South Korean courts to protect itself from creditors and to allow it to restructure its debts. On 17 February 2017, after five-and-a-half months, we read from media reports that the Seoul Central District Court had declared Hanjin bankrupt.
After the rehabilitation order, we read in media reports of their ships being turned away by container terminals, ships abandoned without sufficient funds for operation or to pay its crew, desperate cargo owners trying hard to retrieve their cargo still stuck in containers onboard the Hanjin ships.
With the insolvency declared last month, I wonder whether Hanjin or any of its creditors have really benefited from the initial order for protection. What did the initial order for insolvency protection do for all its creditors? In reality, I understand that many debts owed to many shipping and other businesses worldwide are still unpaid.
In Singapore, many Singapore companies on the brink of insolvency often apply to the Singapore High Court for some variants of \"insolvency protection\" measures whose stated aims usually include restructuring business or restructuring debt payments. These may be in the form of schemes of arrangements, restructuring their debt obligations and payments, or by way of judicial management, giving a chance to rehabilitate themselves with the hope of being restored. Some of these schemes or measures have worked in some cases but, quite often, these schemes did not work to revive and sustain the ailing companies and eventually the companies had to be wound up. At best, it may buy some time before a company or its key and usually secured creditors work desperately to see if they can avoid writing off the huge amount of securitised loan granted to the ailing company or its vessels.
Meantime, by applying for judicial management or scheme of arrangement, it stalls the efforts of other creditors who may otherwise have different recourse to pursue their debts, whether in the same jurisdiction or even abroad. These trade creditors may have already commenced actions in court, even obtained judgment or, through admiralty claims, have arrested ships in Singapore or elsewhere. With the judicial management and scheme of arrangements applications, the company would have also applied for stay of such proceedings effectively, making these proceedings ineffective. The regime now will allow debtors to buy some time before they go. These provisions have often been used to the advantage of troubled companies as well as their banks. This Bill will now provide greater powers. At the end of the day, like in the Hanjin case, unsecured creditors will quite often end up with limited or no recovery.
Madam, I support the proposed amendments on debt restructuring and judicial management in so far as they will, hopefully, provide ailing companies with more meaningful options of recovering from their near insolvent situations.
That said, I hope that in the application of these laws, the Courts will not allow the balance to be shifted too far away with the interest of unsecured trade creditors in favour of ailing companies and their secured creditors. I hope the Courts, as the gatekeeper, will continue to vigorously scrutinise the viability of all schemes, proposals and applications put forward by ailing companies in their application to the Courts and the applicants can be called to account for the viability of their proposals.
Madam, oftentimes, such applications are taken out at short notice. This is often the case even though many ailing companies would usually have much time to sort out their problems. If the Courts should require more time to scrutinise the viability of proposals made, then that should override any arguments of urgency. Similarly, all creditors should be given sufficient time to scrutinise all such applications before an order is granted.
In my view, in fairness to all creditors and in the interest of resolving their debt situation, ailing companies should be encouraged to consider any application for debt restructuring or judicial management a little earlier than it is usually being done now. And with the new provisions, certainly in judicial management, I hope this will definitely be done now.
Madam, before I move on to another area of the Bill, may I seek a clarification from the Senior Minister of State regarding clause 25(f) where the Bill will empower the Minister to prescribe the class of companies in relation to which the judicial management order must not be made? May I know what are the limitations intended here?
I next move to the UNCITRAL Model Law on Cross-Border Insolvency. The Bill adopts the UNCITRAL Model Law on Cross-Border Insolvency. In a globalised world, many companies and businesses operate globally and when somebody's company runs into problems, insolvency issues may also turn cross-border. With businesses and assets in multiple countries, this is unavoidable. When rules of insolvency may vary from country to country, it may bring complications to insolvency procedures or proceedings with companies with businesses, assets and debts in multiple jurisdictions.
Though relatively few countries have ratified the UNCITRAL Model Law on Cross-Border Insolvency, for the reasons I have given above, I am of the view that we should support ratifying and applying the Model Law in Singapore. Another reason to support this will be the fact that Singapore is a key legal hub in the world and, with an increasing number of international corporate players having a base here and doing business in Singapore. Finally, the fact that some of the signatories include key legal jurisdictions like the UK, US and Australia, makes it a more cogent case for Singapore to apply the Model Law.
Madam, ultimately, whether the introduction of the Model Law or other measures in this Bill, such as super priority for rescue financing or other proposed amendments to debt restructuring and judicial management provisions in the Bill, I hope the amendments to our insolvency law today will help to enhance the reputation of Singapore as both a leading international hub in the world as well as a leading hub in the world for insolvency work. Madam, in closing, I support the Bill.
Mdm Speaker: Mr Louis Ng.
Mr Louis Ng Kok Kwang (Nee Soon): Madam, I rise in support of this Bill which, I trust, will solidify Singapore's drive to be a regional debt restructuring and corporate rehabilitation hub in Asia.
Similar to how Singapore adopted the Model Law on International Commercial Arbitration due to globalisation and commercial realities, the need to adopt the Model Law on cross-border insolvency arose out of similar circumstances.
Just as how Singapore made it easy for anyone in the world to start a business in Singapore, it is imperative to make it easier to restructure businesses in Singapore. In this regard, a harmonisation of relevant rules and a universalist approach to insolvency should be employed.
Madam, I note that adoption of the Model Law is not a full-scale one. Article 25 was amended by substituting \"shall cooperate\" to the maximum extent possible with foreign courts or foreign representatives to \"may cooperate\" instead. Can the Minister clarify why this amendment was made?
Also, in relation to cross-border insolvency is the abolishment of the ring-fencing mechanism, which has been criticised by practitioners local and abroad as contrary to internationally-accepted standards of a fair and equitable cross-border insolvency regime. In this regard, the abolishment should assist in Singapore's ambition to become a debt restructuring hub.
Local creditors should also not be overly worried that this amendment gives them no protection. In this regard, I note that a long list of financial institutions could still receive some protection. Further, some creditors may rely on Articles 6, 21 and 22 of the Model Law to ensure that their interests are protected under certain circumstances.
Next, I support the amendment to allow foreign companies to transfer their registration of incorporation to Singapore. This move allows Singapore to remain competitive, facilitate the relocation of companies to Singapore, and keep pace with other jurisdictions that have embraced this re-domiciliation mechanism.
However, can the Minister clarify if re-domiciled companies could represent to counterparties and the public that they are Singapore-incorporated companies upon issuance of the Notice of Transfer, or could they make only such representations after ACRA is satisfied with the submission of documents evidencing de-registration in its prior place of incorporation?
I also note that we will introduce how a financial year is to be calculated. This is a required addition in view of the fact that lodging of a company's annual returns is to be done within a prescribed period after the end of its financial year, instead of the AGM under this Bill.
The proposed section 198(2) provides that the first financial year must be no longer than 18 months, unless ACRA approves on the application of the company. Can the Minister clarify under what conditions will a company's application be approved?
On the retention of books and papers after a company has been struck off, may I clarify why the period is five years when a person may, within six years, after the name of the company has been struck off, apply to the Court to restore the struck off company to the Register?
Lastly, on foreign entities hoping to register in Singapore. While I note that the Ministry is retaining the 60-day period for newly-registered companies to prepare all share or debenture certificates, there should also be an option for an extra 30 days − in cases where companies have more elaborate tools of debt which require in-depth legal support in their countries of origin. This option will enhance the attractiveness of our regulatory regime for companies planning to register a new entity in Singapore. Will the Ministry consider this?
Madam, I stand in full support of this Bill which would serve well to assist Singapore's drive to become an international hub for debt restructuring.
Mdm Speaker: Mr Henry Kwek.
Mr Kwek Hian Chuan Henry (Nee Soon): Mdm Speaker, I rise in support of the Bill. The amendments to the Companies Act is ground-breaking in at least two ways: the incorporation of elements from US Chapter 11 into our corporate insolvency regime which has English roots; and two, the adoption of the UNCITRAL Model Law on Cross-Border Insolvency.
We can all agree that this Bill would serve to bring about significant changes to our corporate insolvency regime, which will strengthen Singapore's role in debt restructuring.
This could not come at a more opportune time. Why? First of all, companies in the maritime and oil and gas industries have a tough time due to the decline in oil prices from two years ago. While oil prices are creeping up, a bit slowly, several Singapore Stock Exchange (SGX)-listed oil and gas companies have already gone into insolvency proceedings or are facing impending insolvency petitions from creditors.
Two, small and medium enterprises in Singapore are coping with economic challenges to maintain their competitiveness. More private funding sources would be required to make capital expenditure in order for them to improve their business models and expand their businesses beyond Singapore.
Three, the Committee on the Future Economy (CFE) Report proposes creating more favourable conditions to attract venture capital and private equity firms to set up shop in Singapore. With the amendments, it is now easier for companies to apply for a judicial management order. There will also be enhanced moratorium, rescue financing, cram-down and other enhancement provisions for the schemes of arrangements. The legal community whom I spoke to found this revised Companies Bill timely and appropriate. They are also appreciative of MinLaw's consultative approach in the revision of the Companies Act.
Let me talk about cram-down provisions before suggesting a related refinement for MinLaw to consider for further refinement of the law. Cram-down provisions were introduced to prevent creditors from undermining a scheme of arrangement when introduced. The introduction of cram-down provisions is important to facilitate the timely rescue of a company in financial distress where time is of the essence and a long-drawn out process to resolve differences will not be in the best interests of keeping the company as a going concern.
Having the Court to decide on whether a cram-down provision is to be applied against dissenting creditors to a scheme of arrangement who are not being unfairly and inequitably treated in the proposed scheme would be ideal and there is no lack of jurisprudence in the US on this and, certainly, the case law there would help form our jurisprudence in this area in time to come.
What I think we could do to create a further improvement to the cram-down provisions would be to introduce some form of shareholders' cram-down. These provisions would prevent de facto shareholder veto in schemes involving debt-equity swaps where shareholder approval is required. Such provisions would encourage experienced international distressed financiers with the experience and know-how in nursing companies back to health to invest due to potential upside they can enjoy with debt-equity swaps. I believe that MinLaw considered this proposal but was not in favour of it. But let me give an example how this could help.
Let us consider a hypothetical situation of a company with a good track record of commercial excellence that, as a result, experiences a strong brand equity in the market. And let us say that this company falls in bad times and experienced cash flow issues and was eventually placed under judicial management. The company has many good ongoing prospects from across the region from which the company could continue as an ongoing concern. There are private equity investors who are interested to provide rescue funding to this company but would demand for debt-equity swap provisions in their rescue financing arrangements so as to enjoy the upside on the company's revitalisation.
This would require shareholders' approval. Unfortunately, due to the unwillingness of some existing shareholders with sufficient voting rights who will veto this shareholder approval for the debt-equity share swaps, the rescue financers could not get the deal they are looking at and thus dropped out of the rescue financing. Without equity participation, rescue financing would simply be less attractive and rescue financers will not be incentivised to provide the expertise in such rescue.
This example that I illustrated will, hopefully, show it might be worthwhile for MinLaw to study how shareholder cram-down provisions could be advantageous to attracting experienced distressed asset investors who bring their expertise in corporate governance, corporate restructuring and distressed company management who would often want to enjoy the upside from equity participation should such rescues be successfully executed. Mdm Speaker, with that, I stand in support of the Bill.
Mdm Speaker: Mr Patrick Tay.
Mr Patrick Tay Teck Guan (West Coast): Mdm Speaker, I rise in support of the proposed amendments to the Companies Act to adopt the recommendations in the report of ILRC and the report of the Committee to Strengthen Singapore as an International Centre for Debt. In the current landscape, it is, indeed, timely to enhance the robustness of our corporate rehabilitation regimes to facilitate and raise the success rates of corporate rescues.
However, while we endeavour to make these corporate rehabilitation regimes more accessible to companies, let us not forget to ensure that our workers, the lifeblood of companies, are taken care of as well.
When the survival of the company hangs in the balance, workers face many unknowns. Will the company be able to pay them their salaries? Should they continue to work for the company? What happens when they are not paid while the company is undergoing rehabilitation? Would they be able to provide for their families and meet their personal financial obligations? What happens when rehabilitation efforts fail? I will focus on two pressing concerns. First, when workers are not paid their salaries while the company undergoes rehabilitation; and second, the impact on workers' salary claims when rehabilitation efforts fail and the company is wound up.
First, statutory moratoriums and impact on workers' salary claims. In our existing judicial management regime, the making of the judicial management order brings into force a statutory moratorium. While the statutory moratorium is in force, no other proceedings or legal process shall be commenced or continued against the company except with the consent of the judicial manager or with leave of the Court. The policy intent behind the institution of the statutory moratorium makes good sense and many jurisdictions have in place similar regimes. It allows the company to continue its business with reprieve from creditors while it attempts to nurse itself back to financial health or to achieve a more advantageous realisation of the company's assets than would be effected on a winding up.
The statutory moratorium is clearly geared to the interest of the company in distress and the ambit of the moratorium has been interpreted in a purposive manner to include processes initiated whether in Court or by way of arbitration or a step in such a process. This would presumably extend to criminal proceedings and quasi-legal proceedings, such as the bringing of trade disputes to the Industrial Arbitration Court.
In the course of my interactions with workers from unionised and non-unionised companies, I have come across cases where workers ended up at the receiving end of such statutory protection. In one particular case, workers of a company placed under judicial management had not been paid their salary for more than six months. The judicial manager was silent when asked of his plans for the workers.
Some of the workers left the company while others continued to turn up at work out of loyalty and in the hope that the company would turn around. The workers could not take legal action against the company to recover their unpaid wages as the moratorium was in force. In order to do so, consent of the judicial manager or leave of Court was required. Leave of Court is sought by filing an originating summons in the High Court and workers who were already in financially dire situations lacked resources to do so.
In the media, we have also seen reported cases of workers in similar situations. In November 2016, British taxi-hailing app service, Karhoo, abruptly shut its offices around the world just a year into commencing business and was put into administration in the UK. In a bid to turn the business around, employees had reportedly been working unpaid for six weeks but were left in the lurch by its sudden closure. In addition to unpaid salaries, Singapore employees were also owed Central Provident Fund (CPF) payments.
In another case, when Vela Diagnostics came under judicial management in Singapore in February 2015, staff were informed that they could not be paid until new funding from investors was secured. The Ministry of Manpower (MOM) had stated that they were unable to assist employees of a firm under judicial management as MOM was not able to inquire into salary claims of employees covered under the Employment Act while the statutory moratorium was in force, except with the consent of the judicial manager or with the leave of the High Court. One former employee, owed about $13,000, resigned in April 2015 to start a new job because he could not afford to keep waiting for his salary to come in. Others struggled in their financial commitments while staying with the company in the hope that investors could be secured. Vela Diagnostics was eventually brought out of judicial management in September 2015 and thereafter settled all salary claims. By this time, the workers who had stayed on with the company would have worked for almost six months without pay. Well, not all cases get resolved in the same way or end happily.
While Karhoo has been brought out of administration in the UK by foreign investors, monies owed to former Singapore employees were not repaid immediately. These workers have no recourse except to await distribution of Karhoo's assets following the closure of its operations in Singapore. While it is not refuted that workers benefit from successful rehabilitation of companies in distress, more can be done to ensure that workers' interests are protected whilst the company undergoes rehabilitation. Companies need workers in order to rehabilitate. Workers should not be bearing the manpower cost of the rehabilitation efforts of the company.
Second, winding up and impact on workers' salary claims. This leads me to my second area of concern, that is, the impact on workers' salary claims when rehabilitation efforts fail and the company is wound up. For every successful rehabilitation, there will be other attempts at rehabilitation which meet with no success. In a review conducted by ILRC in 2013, it was found that between 1996 and 2000 and between 2001 and 2010, there were only 52 successful judicial management cases out of 194 cases, or 26.8% reviewed. In unsuccessful cases, the companies would be wound up and the workers would be left with little or no recourse for outstanding salaries except to await distribution of the assets of the company. Depending on the assets available for distribution, they may receive a few cents for each dollar owed, or nothing at all if the assets were secured assets.
Under the law, secured creditors are paid first out of the assets that comprise their securities, and the remainder of the assets, if any, will be distributed among the preferred creditors in the priority set out in the Companies Act and, any balance remaining, to unsecured creditors. Under section 328 of the Companies Act, outstanding salary claims are ranked second in the list of preferred creditors, subject to a cap of five months' salary or S$12,500, whichever is less, while outstanding contributions to provident funds rank fifth. Workers owed wages due to their employers experiencing financial difficulty and insolvency are a real issue which needs to be addressed. Last year, we heard of the case of Mr Islam Rafiqul, a construction worker, who was owed over $7,000 in wages. Although the Labour Court had ruled in his favour, he was not able to seek any recourse as his employer, a sole proprietor, refused to comply with the order, citing financial difficulties. According to MOM, of an approximated 450 unresolved salary-related claims before the Labour Court last year, a vast majority of the claims were unresolved because the employers, 199 out of 208, had either stopped operations or faced impending shutdown of business due to financial troubles. Viewed collectively, and given the unknown probability of success of rehabilitation, a worker who stays on with a company while it undergoes rehabilitation may become worse off than another worker who had chosen to cut his losses and leave his company earlier.
While the proposed amendments seek to facilitate rehabilitation and raise success rates of corporate rescue by expanding the scope of the moratorium for schemes of arrangement and making it easier for companies to apply for a judicial management order, we must be careful that we do not inadvertently transfer the risk of rehabilitation to the workers who choose to stay with the company while it undergoes rehabilitation.
In the ILRC's Report 2013, the committee opined that one of the impediments to the judicial management regime being an effective rehabilitative regime is its inability to ensure that key management and employees will continue to work for the company. This makes it more difficult for the judicial manager to maintain continuity in the company's business or operations. Without sufficient safeguards of workers' interests, there is little assurance to workers to stay on with the company as it undergoes rehabilitation. Some may argue that workers who have been owed wages should be treated like any other creditor of the company and that existing preferential status in the event of winding up is sufficient. In response to that, I wish to highlight that workers and trade creditors differ in bargaining status vis-a-vis the company. For workers, their wages are usually their only source of income, whereas trade creditors have other revenue streams to rely on in the event of default. When entering into employment contracts, workers also do not have the means to factor in the risk of their employers' inability to pay them, unlike trade creditors who can factor such defaults into their pricing or lending rates.
For these reasons, I propose that we look further into safeguarding workers' interests by considering the implementation of some of the following measures.
First, an exception to the statutory moratorium could be made for MOM to be allowed to investigate and take action against companies for unlawful labour practices under the Employment Act while the moratorium is in place without having to seek the consent of the judicial manager or leave of Court. By the same token, there should also be an exception to allow unions to refer their industrial disputes to the Industrial Arbitration Court during the moratorium without the need of leave of Court nor the judicial manager's consent.
Second, MOM could set up a fund to provide relief to workers who have not been paid their wages while the employer is undergoing rehabilitation or due to the employer's insolvency. Previously, Minister Lim had announced that a short-term relief fund would be set up to help local vulnerable workers where companies are not able to pay up on claims heard by the Employment Claims Tribunal and this is a step in the right direction. In the UK, employees can tap on the National Insurance Fund while, in Australia, employees can seek relief under the Fair Entitlements Guarantee (FEG) scheme when the employer is in liquidation, subject to eligibility requirements.
Third, priority of payment of outstanding salary in the event of winding up could be reviewed or a process for expedited payment of outstanding salary could be put in place. In Canada, the Wage Earner Protection Program Act allows expedited payment of wages and benefits, up to an annual cap, owed to workers whose employer has become insolvent. Once the worker is paid, the Government assumes the worker's place as a creditor in the insolvency, as well as the risk of recovering the amounts paid.
Fourth, with an increasing share of professionals, managers, executives and technicians among employed residents, about 55% in 2016, and median gross monthly income from work, including employer CPF contributions, of full-time employed residents at $4,056 in 2016, it may be timely for a review of the cap of $12,500 under section 328 of the Companies Act.
In conclusion, a better corporate rehabilitation and insolvency regime is one which facilitates the rehabilitation of distressed companies while providing sufficient safeguards for workers who are the most vulnerable in the process. We can surely do more to protect our workers in this regard.
Mdm Speaker: Mr Murali Pillai.
Mr Murali Pillai (Bukit Batok): Mdm Speaker, I declare my interest as a disputes lawyer in private practice.
The Companies (Amendment) Bill implements various changes in the Companies Act, such as providing for enhanced moratoriums against creditor action in judicial management, rescue finance and cram-down provisions. These measures, once implemented, will have the effect of strengthening Singapore's insolvency framework and enhance Singapore's standing as an international centre for debt restructuring. I welcome these timely changes to the Companies Act.
Besides these amendments, other amendments address key findings in the FATF's 4th mutual evaluation of Singapore's anti-money laundering and counter-terrorism financing regime.
The FATF Mutual Evaluation Report highlighted that companies in Singapore, including foreign companies registered in Singapore, are vulnerable to criminal misuse. The FATF Report also noted that the Commercial Affairs Department has observed that there has been an increase in the number of money laundering cases involving shell companies established by non-residents based overseas since 2012.
The new Part XIA of the Companies (Amendment) Bill requires companies to keep a register of controllers and nominee directors. The identification of controllers and nominee directors of companies increases transparency and facilitates investigation of serious economic crimes committed by the individuals associated with such companies. Greater scrutiny would have a deterrent effect on companies and their officers.
In my speech, I will focus on the proposed FATF-related amendments to the Companies Act and comment on three areas.
First, the Bill proposes to amend the Companies Act to require non-listed locally incorporated companies and foreign companies to maintain registers of controllers and to take reasonable steps to find out and identify registrable controllers of the company. This is likely to raise corporate administrative and compliance costs for such companies. While this initiative is welcome in playing our part in the global fight against financial crime, I note that there are a number of major countries which have not at this stage implemented a register of controllers of companies. For example, the US, Canada and Australia, which have been rated by FATF between 2015 and 2016 as being partially compliant or non-compliant with the FATF recommendations of transparency and beneficial ownership of legal persons and legal arrangements in their mutual evaluation reports, do not yet have an equivalent register. Australia is in the midst of consulting on this. Amongst the major financial centres, only the UK has, since last year, implemented a Register of Persons of Significant Control. Hong Kong is currently looking at requiring firms incorporated in the city to disclose their beneficial ownership by 2018.
In a different but similar context in 2014 relating to Singapore's intention to adopt the Organisation for Economic Co-operation and Development (OECD) pact to swap tax information aimed at ending offshore tax evasion, our then Finance Minister Mr Tharman Shanmugaratnam highlighted that Singapore would adopt the standard as long as rival wealth management centres do the same. The Minister explained that there must be a level playing field to minimise regulatory arbitrage. Similarly, in the present context, given that the implementation of a register would increase administrative compliance costs for companies operating in Singapore, should we consider putting this provision into effect only when there is a level playing field when the major financial centres also implement their equivalent?
Second, the proposed section 386AD of the Bill imputes the state of mind of the corporation's officers, employees or agents to the corporation itself in respect of offences under the proposed new Part XIA. This means that where the officer, employee or agent had a particular state of mind when engaging in conduct within the scope of his or her actual or apparent authority, this would be evidence that the corporation had that state of mind for the purpose of any criminal proceedings against the company for an offence, such as the company's failure to send notices to the persons whom the company knows or has reasonable grounds to believe, knows the identity of its registrable controller, or the company's failure to send notices to a controller if it knows or has reasonable grounds to believe that the particulars of the controller have changed.
Such legal attribution is necessary as companies may only act through natural persons. However, the proposed amendment adopts a standard of attribution which is lower than and a departure from the existing legal standards. Under the existing standards, to establish corporate criminal liability, the mental element of an offence must be attributed to \"the directing mind and will of the corporation\". The \"directing mind and will of the corporation\" usually refers to superior officers who carry out management functions, and not any officer, employee or agent of the company. This threshold is not easy to meet, especially where larger companies are involved, and it is often difficult for prosecutors to prove that the \"directing mind and will\" of the company had knowledge of the criminal conduct to pin liability on the company.
I quote the then Attorney-General Mr Steven Chong, Senior Counsel, speaking at his Keynote Address at the Cambridge Symposium for Economic Crime in 2012, \"In today's financial industry, most large organisations have hierarchies which are quite complicated and unavoidably so, due to the specialised nature of professional expertise. Unfortunately, this has made it easy for top executives to feign ignorance when fraudulent behaviour is uncovered, especially since they have every incentive to state that they were unaware of wrongdoings in their organisations.\"
The Attorney-General had gone on to suggest that a measure to counter this would be to impose legal requirements to increase disclosure requirements to facilitate the identification of the executives responsible for the misdeeds.
Seen in this context, the proposed amendments to stipulate a lower standard of attributing the state of mind to the corporation to pin corporate liability is understandable and justified. In these circumstances, why limit the application of the lower standard in section 386AD of the Bill only to offences under the new Part XI A? Should this lower standard be of general import and apply to other financial crimes?
In my Parliamentary Question to the Minister for Home Affairs last month, I asked whether the Minister would consider introducing an offence for commercial organisations that fail to prevent the commission of economic crimes by persons who act on their behalf, such as employees and contractors. The Ministry's reply was that the current legislative and regulatory levers that we have to take action against errant companies are adequate and there is no need at this point for a specific provision to penalise a company for failing to prevent a crime from taking place. The Minister also stated that the Companies Act imposes various obligations on company directors to ensure that companies adopt good corporate governance practices.
Implementing \"failure to prevent\" offences is yet another way to make it easier to pin liability on companies for acts of their employees and agents. This is the route that the UK has taken in its Bribery Act, by making corporations liable for failing to prevent bribery by associated persons. The UK is now consulting on whether to expand this to other forms of financial crimes.
The FATF Mutual Evaluation Report made the following findings on Singapore: \"Singapore's status as both a major global financial centre and an international transport hub makes it vulnerable to becoming a transit point for illicit funds generated throughout East and Southeast Asia. Legal persons, including foreign companies registered in Singapore, are vulnerable to criminal misuse.\" Given the FATF's report stating that companies in Singapore are vulnerable to criminal misuse, does the introduction of section 386AD signal a shift in the standard of attributing states of mind to corporations in respect of other serious economic crimes?
Finally, the register of controllers is a useful resource and tool in the arsenal to increase transparency and facilitate criminal investigations. Banks and other financial institutions also play an important role in ensuring that their institutions are not used as conduits for money laundering and terrorism financing. However, I note that the proposed framework expressly prohibits companies from disclosing or making available for inspection the register of controllers to the public. This restriction on access to this register is an anomaly, given that all other registers as they exist now, such as the register of shareholders and directors, are publicly available and may be inspected.
In contrast, in the UK, the information in the register has to be filed at the UK Companies House and is available online. The registers are also open to public inspection. However, the residential address and date of birth of individuals concerned will not be provided except to credit reference agencies and certain public authorities. Only the individual's name, month and year of birth, nationality and service address will be publicly available, together with details of the interest concerned. Applications may be made to keep all information private where there is a risk of violence or intimidation in the event that the information is public.
I recognise that the issue of whether information on the register, which contains personal information, should be published and easily accessible to the public is contentious. However, there is value in allowing certain prescribed categories of private institutions, such as financial institutions, access to the register, as this would facilitate these institutions' conduct of due diligence on their customers or in respect of the financial transactions that they may facilitate. I propose that we consider whether wider access to these registers of controllers is beneficial and should be allowed to certain specified categories of persons. Notwithstanding my comments, I support the Bill.
Mdm Speaker: Senior Minister of State Indranee Rajah.
Ms Indranee Rajah: Mdm Speaker, I thank all Members for their comments and support of the Bill. Let me first address the specific questions that Mr Henry Kwek, Mr Patrick Tay and Mr Louis Ng have raised on the restructuring-related amendments.
Mr Henry Kwek suggested introducing cram-down provisions to bind shareholders to restructuring proposals. Shareholders' cram down exists in Chapter 11, but Chapter 11 is an insolvency process that reorganises both the debt and equity of a company. By contrast, the new provisions support creditor schemes, which only bind the company's creditors. The current cram-down provisions ensure that the scheme distributes a company's property to its creditors in a fair and equitable manner and are not concerned with adjustments to shareholder interests.
In order to justify cramming down shareholders' rights, shareholder meetings must be called and the company should be shown to be insolvent. Neither requirement exists in the current framework, so a fundamental paradigm shift to the regime is required to introduce shareholder cram down.
The current scheme process is familiar and has worked well. So, at this stage, we have improved the process by adapting elements of Chapter 11 that mesh well with our scheme framework, instead of moving to a different system.
Next, Mr Patrick Tay had made several suggestions to protect employees' claims for unpaid salaries. I think it is important to distinguish between two scenarios here. One is where it is a restructuring scenario and the other where it is a liquidation scenario. So, for the proposals concerning employee preferential debts in a winding up, these are related to corporate liquidation, and reforms to that process will be tackled in later phases of amendments to the insolvency framework. They are not pertinent to this set of amendments.
With respect to this set of amendments on restructuring, Mr Patrick Tay asked a question on whether or not you could exempt employee claims from the moratorium. But I think that would defeat the purpose of a moratorium. See, with restructuring, what you are really trying to do is: the company is in trouble, it is bleeding, it has got a problem. You are trying to give it breathing space where it is kind of like a \"time out\". And the \"time out\" enables you, hopefully, to get in rescue financing or to see how to restructure it so that it can continue as a going concern.
If it is done well and done properly, then these employees, hopefully, will be able to get their salaries and continue to hold on to their jobs. The difficulty of exempting them from a moratorium is that just as you are talking to somebody who is prepared to give you rescue financing, then suddenly an employee claim comes and then another group of employee claims comes. And the management is trying to fight and hold off these claims as you are talking with the people who are going to put in financing. It does not enable the management to focus on getting the company back on its feet. So, the restructuring context is slightly different and the whole idea of the moratorium is to give the company time to take stock of all the different debts and try to get it back on its feet, hopefully, for the betterment of all the creditors, including the employees, and have the employees continue in employment.
Moving on, Mr Louis Ng queried why Article 25 of the Model Law was amended. States are given the flexibility to modify this Model Law and many jurisdictions have adopted the Model Law with amendments. The amendments to Article 25 have been made to give our Courts flexibility in cooperating with foreign courts and practitioners. It is also in line with other jurisdictions, such as the UK.
In this regard, Mr Edwin Tong has noted that the Supreme Court of Singapore has adopted the Judicial Insolvency Networks' Guidelines on Cooperation and Communication in Cross-border Insolvency Cases. These guidelines are a bespoke framework which will guide our Courts on communication and coordination with other courts in cross-border insolvency matters. Additionally, aside from Singapore, the guidelines have also been adopted by the US Bankruptcy Courts of Delaware and the Southern District of New York. Other courts are also expected to adopt these guidelines in the near future.
Let me next address the specific questions raised on other amendments in the Companies (Amendment) Bill. Mr Louis Ng has asked whether companies that have re-domiciled to Singapore under the new inward re-domiciliation regime can represent themselves as Singapore-registered companies upon issuance of the Notice of Transfer by ACRA, or only after ACRA is satisfied with the submission of documents evidencing de-registration in the company's prior place of incorporation.
Under the new regime, a re-domiciled company will be treated as a Singapore-registered company upon issuance of the Notice of Transfer. However, if the company subsequently fails to submit documents showing its de-registration from its country of domicile, ACRA may revoke its registration in Singapore.
Mr Louis Ng has also suggested giving re-domiciled companies an additional 30 days, on top of the proposed 60 days, to issue share and debenture certificates. The proposed 60-day period in the Bill is equivalent to that of public companies to issue share and debenture certificates. The proposed period is sufficient for re-domiciled companies since the certificates will be for existing shares or debentures that are issued under the law of jurisdiction from their home jurisdiction. Furthermore, the interest of the share or debenture holders in obtaining the certificates also have to be considered.
Mr Louis Ng has asked about the circumstances under which the Registrar will approve a company's application to have its first financial year longer than 18 months. It is not prudent to comprehensively set these out as the reasons will vary with the unique circumstances of each company. The registrar will assess each application based on its own merits.
Mr Louis Ng's other question is on the five-year record retention period for struck-off companies. The Bill sets out the minimum retention period. We have set it at five years after considering the five-year period set by FATF and GF. The UK and Hong Kong also adopt similar periods.
Let me now turn to Mr Murali Pillai's comments on the register of controllers. First, Mr Pillai has asked whether the Government has considered delaying the implementation of the register of controllers until such time when there is a level playing field amongst major financial centres.
There is strong and growing international momentum to increase transparency of beneficial ownership through the implementation of registers of controllers. In June 2015, the European Union issued the Fourth Anti-Money Laundering Directive to require member states to maintain central or public registers of beneficial owners. Australia and Hong Kong are also conducting public consultation on similar reforms. We are also mindful of the impact of these changes. Thus, the Bill will only require companies to maintain the registers. We have also not gone as far as to require a central or public register of controllers.
Second, Mr Murali Pillai has asked about the amendment on establishing the state of mind of an entity for the purposes of criminal proceedings. Specifically, Mr Pillai has asked why the amendment adopts the \"agency principle\" and not the common law position on \"identification principle\".
Before I address this comment, let me first provide the context of the amendment and elaborate on the \"agency principle\" and the \"identification principle\" cited by Mr Pillai. The Companies Act contains offences that apply to companies. As a company is a legal entity, it can only act through individuals. The agency and identification principles are used to determine the state of mind of a company when ascertaining whether the company committed an offence. The \"agency principle\" states the mind of a corporation's officer, employee or agent as that of the company.
In contrast, the \"identification principle\" takes into account a narrower range of individuals, usually the senior management and company directors.
For the register of controllers, the amendment on the state of mind of an entity uses the \"agency principle\". This is because the proposed obligations for companies, such as sending notices to potential controllers, are likely to be performed by companies' officers and employees. The provision is also a standard clause in recent Bills, such as the Info-communications Media Development Authority Act 2016, SkillsFuture Singapore Agency Act 2016, Credit Bureau Act 2016 and the Government Technology Agency Act 2016.
Mr Murali Pillai has also suggested giving financial institutions access to the register of controllers to facilitate their customer due diligence processes. We have considered this issue carefully as the issue was also raised during our engagement with stakeholders. There were concerns about privacy and potential misuse if the register of controllers is available for public inspections. Such concerns apply even if access is limited to certain professional intermediaries. As this will be a new register, we decided to take a more conservative approach by restricting access to the register only to the Registrar and public agencies for the purpose of administering and enforcing their respective laws.
Let me now turn to some of the comments and questions raised by Mr Dennis Tan. I think the Member's first comment was why it was necessary to bring this Bill so quickly. He appreciated that there was a report but he had hoped for more time to consider.
In fact, the restructuring amendments on which the Member spoke were contained in the report for the recommendations to enhance Singapore as a restructuring hub. That report came out on 20 April 2016, and it has been in the public domain. We went for public consultation in October and December 2016, and effectively, substantively, the provisions that we are putting in place now are the same. There is very little change from the report because the comments that we got back were really sort of finetuning comments.
The Government gave its response on 20 February. We brought it in at this time really because, given the current economic climate, we do not want to lose the opportunity of Singapore being a restructuring hub with these enhanced provisions as soon as possible.
Mr Dennis Tan may recall a Pacific Andes Resources Development case. That was heard in September of last year and our High Court held that we did not have the jurisdiction to grant the worldwide moratoriums. That restructuring did not take place here.
In this current environment where you can actually see that there are many companies which have a need for restructuring, we felt that it was imperative to put these amendments in place as soon as possible, so that our Courts will not lose the opportunity to hear such restructuring cases and it would also be good for our professionals, especially those in the restructuring space, because the sooner this is in place, the sooner our people will be able to get their share of the work and do the restructuring work that is very much clearly in demand out there.
Mr Dennis Tan also asked whether ACRA will provide some literature on minority rights in view of these amendments. And the answer is yes. ACRA will put the materials on its website after the Bill is passed and it will continue to engage with companies to disseminate information to the minorities who will know what their rights are. I think that is an important thing to do.
Mr Dennis Tan also raised the point about inward re-domiciliation and said that he hoped that this would not incur the ire of some other countries. We certainly hope not. In so far as tax and corporate re-domiciliation are concerned, it is very important to establish or reiterate that, from the Singapore perspective, we are a jurisdiction where there must be substantive activity for tax purposes. We certainly do not wish to be a centre where you just come here purely for tax purposes without any underlying substantive activity. And we abide by the arms-length principle for pricing of related party transactions and there are also mechanisms in place for the exchange of information among tax authorities. So, I think the underlying principle here is that we are a substantive jurisdiction and not one of those where you can just come here purely for tax purposes.
Finally, Mr Dennis Tan asked about clause 25 and the portion which allows for the Minister to designate certain institutions. This relates to the carve-out of entities from judicial management. The thinking for this is really to consider excluding financial institutions. This was done with input from the Monetary Authority of Singapore (MAS). And the reason is that, for financial institutions, there is a bespoke resolution regime which is administered by MAS to restructure these entities. So, there is a specialist route or track for financial institutions.
Our current provisions already carve out some financial institutions like banks and insurance companies. What the amendments do is they will allow the Minister to designate some additional financial institutions but, primarily, it is because it is a specialist track and this is something which really best comes under the purview of MAS. Madam, with this, I beg to move.
Mdm Speaker:\tAny clarifications? Yes, Mr Edwin Tong.
Mr Edwin Tong Chun Fai: The Senior Minister of State mentioned that the sooner this is emplaced, the better. May I ask when it is intended that this be gazetted and to be taking effect?
Ms Indranee Rajah:\tAs soon as possible after this Bill is passed.
[(proc text) Question put, and agreed to. (proc text)]
[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]
[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Ms Indranee Rajah.] (proc text)]
[(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]
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The Senior Minister of State for Finance (Ms Indranee Rajah): Mdm Speaker, I beg to move, \"That the Bill be now read a Second time.\"
The proposed amendments in the Limited Liability Partnerships (Amendment) Bill are intended to align with the changes in the Companies (Amendment) Bill, which has just been passed.
The first set of amendments is to implement transparency-related changes. Like companies, limited liability partnerships (LLPs), will be required to maintain registers of controllers at prescribed places. Obligations similar to those required of companies will apply to LLPs, recipients of notices from LLPs and their controllers. The Minister will also be empowered to direct the Registrar to maintain a central register of controllers of LLPs in the event a central register becomes a new internationally-agreed standard.
Besides the register of controllers, the LLP Act will be amended to implement three changes on record retention.
First, to require the liquidator to retain the LLP's records for at least five years, instead of the current two. Second, not to allow an LLP that is wound up by its partners or creditors to destroy records early. Such an LLP will have to retain its records for at least five years. Third, to require former partners or managers of an LLP that has been struck off and dissolved to retain its accounting records and registers of controllers for at least five years.
As with the changes for companies, we intend to effect the transparency-related changes for LLPs by 31 March 2017. Existing LLPs will have 60 days after the laws are effected to comply with the new requirements. The Accounting and Corporate Regulatory Authority (ACRA) will publish guidance to help LLPs comply with the new requirements.
The final set of amendments will remove the requirement for a common seal. With the change, LLPs can execute documents by having them signed by two partners of an LLP, or a partner of an LLP in the presence of a witness who attests the signature. Notwithstanding the change, LLPs can choose to retain the use of a common seal based on business needs. Mdm Speaker, I beg to move.
[(proc text) Question proposed. (proc text)]
Mdm Speaker: Mr Louis Ng.
Mr Louis Ng Kok Kwang (Nee Soon): Madam, this Bill, viewed together with the Companies (Amendment) Bill, displays our Government's efforts to make continual improvements to our business regulatory landscape and I stand in support of it.
The Bill allows our businesses to continue operating with minimal costs while adhering to statutory requirements and ensures that our regulatory regime keeps up with the times.
I note that a public consultation on the proposed changes for companies and LLPs was held via the feedback unit Reaching Everyone for Active Citizenry @ Home (REACH) as the Senior Minister of State just mentioned. A detailed summary of feedback received was also published online, and the Ministry of Finance (MOF) and ACRA even went as far as to publish the corresponding responses to each category of feedback.
This high level of stakeholder engagement is a welcome initiative and I would like to commend this effort. I am also heartened by the fact that many of the proposals from the public were taken into serious consideration, resulting in some amendments to the Bill. As I mentioned in my Budget speech, I believe there is merit in greater engagement with stakeholders before the proposal of each Bill. We should always listen to feedback, spot gaps and co-develop solutions with the community.
Madam, I would like to seek a few clarifications with regard to this Bill.
Firstly, I have spoken to members of the business community and many have welcomed the removal of the common seal. This is a positive step to reduce auxiliary costs of doing business in Singapore. Today, we are able to use cheaper alternative methods, such as electronic signatures sent with official emails, to ensure the authenticity of documents.
Moving forward, I would like to ask if the Ministry would be conducting a thorough review to identify and subsequently remove similar non-essential costs when incorporating businesses. For example, will ACRA be doing another round of review to streamline regulatory fee structure? Considering that the last review was done more than two years ago, it would be timely to conduct another one soon. This will go a long way in supporting entrepreneurs and startups, as they can then allocate resources to essential needs.
Secondly, we are extending the period for which the liquidator of an LLP that is wound up must keep the books and papers of the LLP from a minimum of two years to a minimum of five years. This will improve transparency and enhance confidence in our regulatory environment, as creditors, accountants and other stakeholders will have a longer period of access to key business documents.
I also applaud the removal of the option for LLPs to destroy records early if they are wound up by partners or creditors. This prevents the destruction of potential evidence of fraudulent business practices. However, a longer period of retention will result in higher costs of storage for businesses. The cost will have to be borne by the owners of the businesses and it is important to ensure that it is kept within reasonable limits. The higher costs could also mean that when company assets are rounded up, creditors end up with less, which might be unfair to them. In this regard, is the Ministry exploring more cost-effective means of technology to ensure the retention of key documents of the wound-up LLPs?
In addition, as I raised earlier in the Companies (Amendment) Bill, why is the retention period increased to five years? I would like to ask how we have determined five years to be the optimal period of retention. And I note again that the retention of books and papers after a company has been struck off, we are similarly increasing that period to five years.
Madam, these comments notwithstanding, this Bill assures businesses operating in Singapore that the Government will do all it can to protect their interests, and I stand in support of it.
Ms Indranee Rajah: Mdm Speaker, I thank Mr Louis Ng for his comments and support of the Bill and his positive acknowledgement of MOF and ACRA's stakeholder engagement efforts. I would also like to thank the respondents who took part in the engagement for their useful feedback. Let me address the two questions from Mr Louis Ng.
Mr Louis Ng's first question is whether MOF will conduct a thorough review about our corporate regulations to remove unnecessary costs for the business community. He has also suggested that ACRA conduct another review of regulatory fees. We would like to assure Mr Louis Ng and the House that MOF and ACRA regularly review our corporate regulations to ensure that our regime is robust and yet business-friendly.
Apart from reviewing the laws, MOF and ACRA also review ACRA's regulatory fees every few years. In the fee review in 2014, ACRA also streamlined over 100 ad hoc and routine transactions, resulting in reduced costs to businesses. We will continue to monitor areas where we keep business costs reasonable.
On the second issue of record retention, Mr Louis Ng has asked whether MOF is exploring most cost-effective means of technology for retaining records of wound -up LLPs. Liquidators of wound-up LLPs will have the flexibility to decide how the records should be kept. The law does not prescribe the format for keeping records. The business community should explore and adopt the most cost-effective means to keep their records.
Mr Louis Ng has also asked for the rationale for the minimum retention period of five years. This period is equal to that for companies. In determining the period of retention, we took into account international standards, such as the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes standards, as well as the minimum retention period of five years in jurisdictions, such as Hong Kong and the United Kingdom. Mdm Speaker, I beg to move.
[(proc text) Question put, and agreed to. (proc text)]
[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]
[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Ms Indranee Rajah.] (proc text)]
[(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Trustees (Amendment) Bill","subTitle":null,"sectionType":"BP","content":"[(proc text) Order for Second Reading read. (proc text)]
The Senior Minister of State for Law (Ms Indranee Rajah): Mdm Speaker, I beg to move, \"That the Bill be now read a Second time.\"
Singapore is one of the leading financial centres of the world. We have earned a reputation for being a clean and trusted international financial centre. We have anchored our financial sector on three pillars.
First, building a strong legal and regulatory framework.
Second, implementing a robust regime of supervision to monitor compliance by all regulated sectors.
Third, staying committed to cross-border cooperation in the global combat against transnational financial crime.
We will continue to ensure that our legal and regulatory framework is responsive to the evolving threat of cross-border financial crime, such as money laundering, terrorism financing and tax evasion. Financial crime has become increasingly sophisticated. Company and trust structures are sometimes used to facilitate movement of funds for money-laundering, terrorism financing and tax evasion purposes.
There have been increased efforts globally to enhance the transparency of trusts and company structures. This will facilitate the more efficient tracing of assets which, in turn, will assist the investigation and prosecution of financial crime. As a responsible member of the international community, Singapore has done and will continue to do its part to combat financial crime.
In this regard, Singapore is a member of the Financial Action Task Force (FATF), an intergovernmental body which sets standards and promotes implementation of anti-money laundering and terrorism financing measures. Singapore is also a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes (GF), a multilateral body which promotes and implements international standards on tax transparency. As a member of FATF and GF, Singapore has regard to the standards promulgated by these international bodies and participates in the peer assessment exercises conducted by these bodies on its members.
In September 2016, the National Steering Committee for Combating Money Laundering and Terrorism Financing announced that Singapore will follow up on certain areas of improvement recommended by the FATF assessors. This included enhancing the transparency on beneficial ownership of companies, limited liability partnerships and trusts, and ensuring that such information is more readily accessible to law enforcement agencies.
To this end, the Bill introduces a framework for the Minister for Law to prescribe the necessary regulations, so as to give effect to the FATF recommendations and GF requirements concerning beneficial ownership and identity information and/or the keeping of accounting records in relation to trusts.
Similar amendments were introduced in respect of companies and limited liability partnerships (LLPs) by way of the Companies (Amendment) Bill and the LLPs (Amendment) Bill which were passed in this House earlier today.
Before I take the House through the main features of the Bill, let me first outline the existing legal regime concerning trusts and trustees.
Trusts are essentially relationships or vehicles in which property is vested in a person known as a trustee. The trustee is obliged to hold and manage such property for the benefit of other persons known as the beneficiaries. Trusts can be created by the act of an individual declaring his intention to create a trust. For example, an individual may create a trust and appoint a trustee to manage the assets of his estate. Such trusts are broadly termed as \"express trusts\". Trusts can also arise by operation of law. These include resulting trusts and constructive trusts, which are deemed at law to be constituted when certain legal conditions are fulfilled.
Trustees are obliged to discharge certain duties. These duties may be prescribed by common law, that is, law developed based on decisions by judges in individual cases. These include the duties to be familiar with the terms of the trust, to be familiar with the state of the trust property and safeguard the trust assets, and to furnish the accounts of the trust for inspection on request.
Trustees' duties may also be prescribed by statute or any other regulation. For example, section 3A of the Trustees Act imposes a statutory duty on trustees to exercise reasonable care and skill in the discharge of their powers of investment and any duty in relation to the investment of trust funds.
The Bill introduces a new Part VII to the Trustees Act, which will apply to an express trust that is governed by Singapore law, administered in Singapore, or in respect of which any of the trustees is resident in Singapore. In respect of the express trusts covered by the Bill, the Bill empowers the Minister to, amongst others, impose the following duties on the trustees.
First, the Minister may require the trustee to obtain, maintain and keep up-to-date information relating to and records of the trust. These include (a) the identity and particulars of the parties relevant to the trust, which include the settlors, trustees, beneficiaries and those who effectively control these parties; (b) the identity and particulars of an agent of, or a service provider to, the trust; and (c) accounting records relating to the trusts and information on the assets of the trust.
Second, in prescribed transactions, the Minister may require the trustee to disclose to the other party in the transaction that the trustee is acting for the trust. This ensures that accurate information of a trust is readily available to the relevant law enforcement agencies when they require it through the exercise of their investigative powers.
Some of these duties already exist under the common law. For example, in discharging the obligation to understand the terms of the trust, a trustee must necessarily obtain information on the identities of the beneficiaries or class of beneficiaries of a trust. In addition, a trustee is also obliged to keep and furnish accounts of the trust on request and to be familiar with and preserve trust property.
The proposed amendments will reinforce the pre-existing duties of trustees under common law. They will also give more clarity to trustees on the expected standards that they should meet.
From a law enforcement perspective, the proposed amendments ensure that information relevant to a trust is ready and available. This enables authorities to more quickly obtain information of a trust that is under investigation. Such greater transparency minimises the abuse of trust structures to conceal assets for money laundering, terrorism financing and tax evasion purposes.
To discourage the breach of regulations, the proposed amendments empower the Minister to prescribe breaches of the regulations as offences punishable by way of a fine. Having regard to the comparative severity of the existing sanctions under the Trustees Act in respect of other offences, the maximum fine for such breaches is $1,000, which is a proportionate sanction for the purposes of Part VII.
Finally, the Bill empowers the Minister to exempt certain express trusts or classes of express trusts from the proposed Part VII of the Trustees Act. An exemption may be granted having regard to various factors, such as whether the trustee is already subject to pre-existing laws which prescribe similar or analogous standards as those found under Part VII; or whether the activities of a trust are already subject to regulatory oversight or supervision. For example, trust companies are presently already subject to the regulatory oversight by the Monetary Authority of Singapore (MAS).
Additionally, under the regulatory notices issued by MAS, regulated trust companies are already required, when acting as trustees, to discharge duties which are similar to those envisaged under Part VII. Breach of such regulatory notices may render trust companies liable for an offence punishable by way of a fine not exceeding $1 million.
To sum up, the amendments contemplated are part of a concerted effort to ensure that legal entities, such as companies and LLPs, as well as legal arrangements, such as trusts, do not readily lend themselves to financial crime.
We will continue to monitor domestic and international developments in combating transnational financial crime to ensure that any vulnerabilities to our legal and regulatory framework are accurately identified and swiftly addressed. Mdm Speaker, I beg to move.
[(proc text) Question proposed. (proc text)]
Mdm Speaker: Ms Thanaletchimi.
Ms K Thanaletchimi (Nominated Member): Mdm Speaker, I support the Bill as it will enhance Singapore's reputation as a trusted international financial centre and reinforce our commitment as a responsible member of the international community to global efforts in countering money laundering, terrorism financing and tax evasion.
The changes will further help to make the ownership and control structures of trusts more transparent and improve financial record-keeping by trustees.
Madam, I would like to seek clarifications on the following.
The Mutual Evaluation Report (2016) provides a comprehensive report of the anti-money laundering and combating the financing of terrorism measures in place in Singapore. It analyses the level of compliance with the FATF 40 recommendations and provides recommendations on how the system could be strengthened. Some of the amendments in this Bill are the result of the recommendations.
The report specifically highlighted the lack of enforceable obligations on trustees to collect beneficial ownership information relating to a trust beyond the immediate beneficiary. Similarly, the GF requirements may also change, subject to the findings of FATF on the study of the Singapore financial actions landscape and requirements set by GF and the Organisation for Economic Co-operation and Development (OECD).
The amendment Bill in section 84A(1)(a) and (b) provides for the Minister to make such regulations that are necessary to give effect to the FATF recommendations and GF requirements. As such recommendations and requirements may change from time to time, how will the details of the changes be made known and what is the lead time given to the affected parties to comply?
As a further clarification to section 84A(2), will trustees be allowed to authorise a relevant agent, that is, the support staff managing the trust, to upkeep the obligations required under 84A(2)?
Mdm Speaker: Mr Louis Ng.
Mr Louis Ng Kok Kwang (Nee Soon): As an international financial and trade hub, our doors are wide open, putting Singapore at risk of becoming part of the global transfer of illicit funds.
This was all the more evident when the 1Malaysia Development Berhad (1MDB) saga unfolded in 2016, implicating our private banks. Last year also saw the Indonesian amnesty on overseas funds which revealed that $72.4 billion was sitting in private bank accounts on our shores.
As such, I welcome these amendments to the Trustees Act, bringing Singapore closer to international standards on measures to combat money laundering, terrorist financing and tax evasion. I wholeheartedly support our nation taking up a more a constructive role to tackle key problems faced by the international community.
Section 84A(2)(g) provides that we may impose a fine of up to $1,000 for non-compliance with regulations. However, for individuals engaged in these illicit activities, such as money laundering and tax evasion, this would have little deterrent effect, in view of the broader financial gains they stand to reap. Will the Minister consider reviewing this?
To ensure that investigators will have ready access to the necessary information, has the Ministry considered the viability of setting up a central registry of all trusts that have connections to Singapore? Currently, ACRA maintains basic ownership information of companies and LLPs. An equivalent body could be set up to record legal and beneficial ownership information for trusts. This has been done in France and South Africa.
This will speed up investigations by our local agencies and our responses to requests for information from foreign authorities. The authorities will also be able to avoid alerting suspected individuals when carrying out their investigations. Speed and secrecy are of the essence where monies can be easily moved with the push of a few buttons. The legitimate concerns of confidentiality for those who use trusts to arrange their personal financial affairs may be addressed by limiting access to the registry to competent authorities.
Next, another area I would like to highlight is the lack of criminal sanctions for trustees who fail to discharge their duty of care under the Trustees Act. In contrast, it is an offence for directors or officers of a company to breach their duties to use reasonable diligence under the Companies Act. Has the Minister considered whether equivalent criminal sanctions may be appropriate under the Trustees Act?
Next, while FATF has largely commended steps taken by Singapore to address anti-money laundering and terrorism financing, it also noted other areas of weaknesses. For example, there are no strong sanctions when accountants fail to comply with money laundering and terrorism financing obligations. Precious stone and metal dealers are still not yet subject to the full range of money laundering and terrorism financing requirements. Are there plans to bring our legislative framework in line with the FTAF's recommendations in other aspects? Will the Anti-Money Laundering and Countering of Financing of Terrorism (AML/CFT) Steering Committee of the Ministry consider setting out a national strategy to ensure a coherent and coordinated approach across the board?
The 1MDB saga shook our private banking system last year. We sent a strong message against using our financial system for illegal purposes by closing down BSI Bank and Falcon Bank, prosecuting senior officers and levying heavy fines on other banks.
This is a success story showing what we can achieve when the Public Service functions as one. I would like to commend the AML/CFT Steering Committee that has the difficult task of coordinating the work of over 20 Government agencies. The effectiveness of the whole-of-Government approach we have taken when it comes to money laundering and terrorism financing is a model for interagency cooperation in all other aspects of the Public Service. Madam, I stand in support of the Bill.
Mdm Speaker: Senior Minister of State Indranee Rajah.
Ms Indranee Rajah: Mdm Speaker, I thank the Members who have spoken for their support of the Bill.
Ms Thanaletchimi asked how changes in the FATF Recommendations and GF requirements would be made known and about the lead time that will be given to affected parties to comply with the revised requirements. In the event that the FATF Recommendations and GF requirements are revised, we will first study such revisions closely to see if we need to make corresponding amendments to our laws.
If amendments are made to the subsidiary legislation, these will be publicised through the Government Gazette. MinLaw and the relevant agencies may also consider public education campaigns to effectively communicate the changes and ease the transition process. In determining an appropriate date for the commencement of the revised legislation, we will take into account the complexity of the revisions and the extent to which they differ from the existing regime. If the changes are significant, we will provide a longer lead time before the revised rules take effect. These steps will help affected parties to understand the changes and give them sufficient time to adapt to them.
Ms Thanaletchimi also asked whether a trustee may authorise an agent to fulfil the trustees' obligations under section 84A(2). There is nothing in the law today that prevents a trustee from doing so. This is a matter which we are presently reviewing in the preparation of the regulations to be made under section 84A(2).
I turn now to the four issues raised by Mr Louis Ng.
First, the Member asked if the maximum fine quantum of $1,000 for breaches of the regulations ought to be raised, to better deter illicit activities, such as money laundering and tax evasion. The underlying financial wrongdoing is actually already criminalised under existing legislation, such as the Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act and the Terrorism (Suppression of Financing) Act.
The proposed amendments to the Trustees Act supplement this by making trust information available to our law enforcement authorities when required. Prescribing a criminal sanction for such breaches already underscores the seriousness of a breach, and Singapore is one of the first few common law jurisdictions in the world to criminalise such breaches.
In the circumstances, my Ministry assessed that a fine not exceeding $1,000 would be appropriate as it balances the need for deterrence with the need for a proportionate sanction. That said, given that this is an evolving regulatory space, we will continue to monitor the domestic situation as well as international best practices and respond accordingly.
Second, Mr Louis Ng asked if the Ministry has considered the viability of setting up a central registry of all trusts that have connections to Singapore. We have considered the issue but, at present, have no plans to set up such a registry. There is no clear evidence that having a central registry would strengthen Singapore's regime for countering financial crime.
Third, Mr Louis Ng asked if criminal sanctions ought to be prescribed for a trustees' failure to discharge his statutory duty of care under the Trustees Bill. It must be borne in mind that the aim of criminal liability is to protect a wider public interest. We have already proposed to criminalise breaches of a trustee's record-keeping and transparency obligations. Where a trustee acts so egregiously to commit fraud or criminal breach of trust, he or she can be prosecuted under the criminal law. We have not seen any trend or development indicating a need to criminalise breaches of a trustee's statutory duty of care.
Finally, Mr Louis Ng asked if there were any plans to enhance our legislative framework with regard to the regulation of accountants and precious stones and metal dealers. The short answer is yes, we are looking into it.
Since 2014, Singapore has implemented a cash transaction reporting regime for precious stones and metal dealers. This was to reduce the risk of money laundering and terrorism financing associated with transactions involving precious commodities. In September 2016, the National Steering Committee for Combating Money Laundering and Terrorism Financing announced that it will study how the regulatory regime for this sector can be further strengthened.
Accountants, on the other hand, have to comply with the Ethics Pronouncement 200 (EP 200) issued by the Institute of Singapore Chartered Accountants in November 2014. EP 200 sets out the applicable anti-money laundering and counter-terrorism financing requirements and guidelines for professional accountants in Singapore.
In addition, public accountants are regulated under the Accountants Act and the rules and standards prescribed under it. Following the Companies (Amendment) Bill, which has just been passed by this House, consequential and related amendments to the Accountants Act will be made to give more bite to the applicable rules and standards for public accountants, including EP 200.
As Mr Louis Ng noted, a whole-of-Government approach is essential in developing a coordinated strategy to combat financial crime. This has been and will continue to be Singapore's approach. Mdm Speaker, I beg to move.
[(proc text) Question put, and agreed to. (proc text)]
[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]
[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Ms Indranee Rajah.] (proc text)]
[(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Town Councils (Amendment) Bill","subTitle":null,"sectionType":"BP","content":"[(proc text) Order for Second Reading read. (proc text)]
The Senior Minister of State for National Development (Mr Desmond Lee): Mdm Speaker, I beg to move, \"That the Bill be now read a Second time.\"
The Town Councils Act, administered by the Ministry of National Development (MND), establishes the legal framework for Town Councils to control, manage, maintain and improve the common property of Housing and Development Board (HDB) housing estates for the benefit of residents living in those estates.
When Town Councils were formed in 1989, the intent was to give elected Members of Parliament (MPs) the autonomy and latitude to run their own towns. MPs were empowered to engage residents directly, understand their concerns and work with them to shape their living environment. Each town could then develop a distinctive character of its own, under their MP's stewardship. In turn, MPs would be directly accountable to their constituents for their performance, through the ballot box.
To quote then First Deputy Prime Minister Mr Goh Chok Tong at the Parliamentary debate in 1988, I quote, \"This Bill will contribute to the attainment of the two philosophical objectives. First, it transfers some powers from HDB to the MPs and grassroots leaders. It gives them, and the residents, greater power and responsibility to manage their own affairs and to participate in their estate's development. Second, because MPs will have increased authority and responsibility, voters will be more likely to vote carefully and sincerely and choose honest and effective MPs.\"
Mr Goh Chok Tong added that the formation of Town Councils would provide political parties without any track record with a platform to prove their mettle. To quote him, \"If a party can manage Town Councils well, it will prove its competence in at least one area − good administration – which is the prerequisite of any government.\"
Mdm Speaker, the raison detre of Town Councils remains relevant today. Through Town Councils, MPs and Town Councillors have partnered residents to shape their living environment, respond to residents' needs and enhance their sense of belonging to the community.
However, over the past 28 years, we have learnt useful lessons from the management and operations of Town Councils. Today, Town Councils serve more than 3.2 million residents and collectively manage over $1.6 billion worth of public and residents' monies. This is a significant increase from 2.4 million residents and $300 million in the early 1990s.
Residents' expectations of their Town Councils have also risen. They expect greater accountability and better performance, especially in areas, such as estate cleanliness and maintenance, where the results are visible and immediate. But the challenge lies in less tangible areas, like financial management and corporate governance. These are just as important, if not more, given the potential downstream impact of financial insolvency and loss of public funds if Town Councils are not managed well. But governance lapses and poor management of a Town Council's finances could remain unnoticed until much later, when significant damage or losses have already occurred. Ultimately, residents are the ones who will be saddled with the consequences.
So, residents have a right to expect responsible governance from their Town Councils. As public institutions entrusted with millions of dollars received from residents and the Government, Town Councils should be held to at least the same standards of governance as charities and public-listed companies.
As the former Minister for National Development Mr Khaw Boon Wan said in Parliament in 2015, MND can no longer take a light-touch approach and assume that the people running Town Councils will all be responsible. There is a need to ensure proper systems, accountability and governance to safeguard residents' interests. For instance, Town Councils may take the easy way out − make short-term, populist measures, such as lowering service and conservancy charges (S&CC), at the expense of their long-term financial health and the well-being of residents. We have also seen in recent years serious deficiencies in some Town Councils' governance and financial systems as well as regulatory breaches, but there were few direct levers to put things right. While most Town Councils have been cooperative, MND has limited powers under the current Town Councils Act to look into suspected irregularities or enforce the rules set out in the Act if they are not complied with. MND has powers to step in, only as a last resort, and in very limited circumstances. And this is why Parliament unanimously passed a Motion in February 2015 that called for, among other things, I quote, \"strengthening of the legislative framework for Town Councils\".
The amendments to the Town Councils Act seek to address the limitations of the current legislative framework, while adhering to the original spirit and intent of the Act. Town Councils will continue to manage our Towns autonomously and can decide how best to serve their residents' interests. But the Act will establish the required standards of transparency, public accountability and performance for Town Councils and provide for more effective oversight of Town Councils to safeguard the interests of residents.
Mdm Speaker, this Bill caps a detailed review process spanning almost four years. As early as 2013, we engaged all the Town Councils on key proposals that would impact their operations, such as financial sustainability and Town Council handover arrangements. The Lift Replacement Fund in this Bill addresses a shared concern raised at one of these sessions, on the long-term adequacy of Town Councils' Sinking Funds.
Over the last few years, we have heard from Members through debates in this House on Town Council-related issues. We have also received feedback from members of the public on these matters through letters to MND or HDB or to the media and, more recently, in October last year, MND held a month-long public consultation on the proposed amendments in the Bill. All Town Council chairmen were also invited to provide their feedback on the proposed amendments. The feedback that was received and MND's responses to them were also published online.
We would like to thank Members of this House and the public for all their contributions and feedback. We have carefully considered all the views and incorporated them, where appropriate, in the process of drafting this amendment Bill.
Madam, let me introduce the main provisions of this Bill, which I will broadly categorise into four categories: first, clarifying Town Councils' roles and functions; second, improving Town Councils' governance and accountability; third, strengthening Town Councils' financial management; and fourth, enhancing MND's regulatory oversight.
First, the Bill clarifies the roles and functions of Town Councils. Clause 11 reiterates that the Town Councils' core function is to manage the common property of their towns and emphasises that Town Councils are to do so for the benefit of their residents. In relation to this, the Bill sets out to clarify some areas that are not explicit in the current Act. First and foremost, Town Councils have a duty of care to their residents.
Clause 12 clarifies that Town Councils are not to carry out commercial activities that are inconsistent with their core functions. Such activities include setting up subsidiary companies to carry out commercial activities which are not related to their core function to manage common property. Town Councils are clearly not set up for these purposes and residents should not be made to bear the uncertainties and business risks associated with such commercial ventures. Some Town Councils have asked if this restriction extends to the fund investments that Town Councils currently carry out to counter inflation. It does not. Town Councils can still invest their funds, subject to guidelines under the Town Councils Financial Rules (TCFRs) that limit risk exposure.
Second, Town Councils do not own the common property and neither is their power unfettered. Under the existing Act, Town Councils may already set and collect charges but only for uses prescribed by MND and are not entitled already to charge HDB for the use of common property. This will continue to be the case going forward. In addition, it will now be an offence for a Town Council to impose unlawful charges.
Another area that the Bill will clarify is the Town Councils' relationships and interactions with HDB and other statutory authorities. It makes two fundamental points clear.
First, as the owner of common property in HDB estates, HDB has landowner rights, including the use and access to common property. Clause 29 reaffirms the status of HDB as landowner and emphasises that Town Councils must not perform their functions or exercise their powers in a way that is inconsistent with HDB's title and rights as landowner.
Second, Town Councils are subordinate to public law. They cannot hamper statutory authorities carrying out their statutory functions to ensure public health, safety and order, or undertaking works, for instance, Smart Nation initiatives, to improve the quality of life of residents in and around the town.
Clause 14 requires Town Councils to cooperate with these agencies and public officers and grant them access to and use of common property, for instance, allowing the National Environment Agency (NEA) to install closed circuit television (CCTV) cameras to catch or deter high-rise littering.
If a Town Council unreasonably delays, hampers or obstructs the work of the agency or its officers despite receiving ample notice, the agency may have to, with HDB's consent as landlord, issue a notice to the Town Council, and non-compliance with the notice without reasonable excuse will be made an offence.
Lastly, the Bill will make it clear that Town Councils have a role to play during public emergencies. Clause 14 allows MND to direct Town Councils to make emergency-related preparations, for instance, to ensure that essential services remain available. Where reasonable, MND may provide grants or reimbursements to Town Councils to defray costs incurred.
I should emphasise that the provisions I just described merely spell out what is already expected of all Town Councils today. They do not curtail the broad autonomy and latitude that Town Councils currently enjoy.
The amendments give Town Councils greater clarity on the activities that are part of their core functions and those that are not. Town Councils should focus on their core function of managing HDB estates and not take on unnecessary commercial and financial risks that detract from their core mission.
At the same time, there is no reason why Town Councils, HDB and other public agencies should not work collaboratively to further residents' interest, or to safeguard public health, public safety and public order.
Next, let me move on to provisions that improve Town Councils' governance and accountability to residents. The issue of governance of Town Councils has been a subject of much discussion and cause for concern, as seen from recent events. This House has spoken unanimously and agreed on the need to strengthen the legislative framework for Town Councils, and the question is how and by how much. As a regulator, MND seeks to promote good governance, without unduly hampering the Town Councils' operations and autonomy.
The first suite of enhancements seeks greater transparency and public accountability from Town Councils by raising the standard of disclosure on three fronts: (a) key personnel appointments, (b) financial reporting and (c) Town Councils' compliance with other governance standards.
First, on Town Councils' key personnel. Town Councils will be required to notify the public and MND of key personnel changes within the Town Council, through amendments to clause 10. Clause 9 of the Bill clarifies the definition and treatment of conflicts of interest scenarios.
The new section 15A extends conflict disclosure requirements beyond Town Councillors, to committee members, employees of the Town Council or anyone who is delegated with the responsibilities of the Town Council. This will better manage any risk of conflicts that may arise in Town Councils' management and operations. The Town Council Secretary will be required by law to keep a register of all conflict disclosures.
Second, on financial reporting. To strengthen public and regulatory oversight of Town Councils' finances, clause 21 now specifies a timeframe of six months from the financial year (FY)-end for Town Councils to submit their audited statements to MND for presentation to Parliament. Town Councils are also required to publish the statements for public access and viewing. It will be an offence if a Town Council, without reasonable excuse, persistently fails to submit its financial statements on time.
Third, on governance. Clauses 23 and 31 expand the scope of rules that MND can prescribe and Town Councils must comply in the areas of finance and governance. These include rules for Town Councils to disclose their compliance with governance standards.
MND will work with Town Councils to finetune these reporting instruments and roll them out in due course. In particular, we will work with Town Councils to develop a Code of Governance for Town Councils. This will take reference from similar Codes for Charities and Companies, which seek to strengthen accountability and boost public confidence in the respective sectors. The Code will cover best practices that Town Councils are encouraged to adopt through a comply-or-explain regime.
Besides strengthening disclosure requirements, the Bill also seeks to strengthen internal controls in relation to potential conflicts of interest within a Town Council and related parties. Clauses 8, 13 and 16 disqualify the Town Council's Managing Agent (MA) and its appointed auditor from concurrently holding key roles in a Town Council, at the Town Council, Town Councils' committee and executive levels.
These roles pose a conflict of interest risk because the Auditor is tasked to conduct an independent and objective assessment of the Town Councils' finances. The MA provides a significant proportion of Town Councils' services and could stand to gain from how contracts are awarded by the Town Council.
We have intentionally nuanced these prohibitions, as disqualification is a heavy bar. It is certainly not our intention to stop individuals with the relevant skillsets and experience, for example, in audit and estate management, from serving residents in the Town Councils.
The scenario that we want to avoid is one where a person wields significant influence or power in two conflicting roles, for example, as General Manager of the Town Council and the Chief Executive Officer or Managing Partner in the Town Council's MA.
Non-C-suite executives and other regular employees of the Auditor and MA are not barred from double-hatting in the Town Council. Nevertheless, we will require, in clause 9, Town Council staff to make disclosure of interests to the Town Council and to recuse themselves from decision-making if there is potential conflict.
Next, I will move on to enhancements in the Bill that aim to strengthen the way Town Councils manage their finances. Earlier this year, we announced a series of steps that MND will take to ensure that Town Councils take a long-term view of their finances and start setting aside monies for big ticket items, such as lift and other asset replacements.
The provisions in the Bill give legislative effect to some of these measures.
First, the Bill will require Town Councils to establish a Lift Replacement Fund (LRF) that is ring-fenced for lift-related replacement and upgrading works. Clause 18 ensures that Town Councils set aside sufficient funds in the LRF, as lift expenditures are large and backloaded. The detailed mechanics of LRF, such as the minimum contribution rates, will be set out in the subsidiary legislation. As announced earlier, additional grants will also be provided to help Town Councils accumulate sufficient funds.
Second, the Bill empowers MND to make rules for Town Councils to prepare and maintain long-term financial plans. Clause 23 will instil greater financial discipline among Town Councils to review their financial positions regularly and to make timely adjustments to their financial plans in response to changes in the operating environment.
Third, the Bill introduces safeguards that avoid service disruptions, if a Town Council is on the brink of financial insolvency. Clause 23 allows MND to make rules under the TCFR that prescribe Town Councils' course of action in such scenarios. This could include the appointment of advisors to advise the Town Council on the proper management of its affairs.
Madam, I will now move on to MND's powers as regulator. Under the current Town Councils Act, MND's regulatory levers to secure compliance from Town Councils with the law are limited. While MND is responsible for administering the Act, it lacks powers to require Town Councils to submit any information beyond their annual financial statements.
In addition, MND lacks the regulatory levers to intervene where there is a detected non-compliance with the Act. There are only three narrow areas where non-compliance with the Act is now an offence: one, the misuse of Town Council funds; two, the contravention of Lift Upgrading Programme Rules; and three, the failure to provide information to the auditor without reasonable excuse.
This is neither desirable nor tenable. As regulator, MND must also have powers to conduct regular health checks for Town Councils, look into suspected irregularities and, where necessary, take prompt and effective actions to safeguard residents' interests.
Clause 24 of the Bill thus introduces a new Part VI A that allows MND to take the necessary investigative and enforcement actions to address potential regulatory breaches or systemic weaknesses in the Town Councils in a timely and calibrated manner.
First, in addition to the annual financial reporting, MND may periodically conduct compliance reviews to check for regulatory compliance. These are basically health checks, in the form of risk-based audits on different aspects of Town Councils' operations. The objective is to assess if there are specific areas of non-compliance, process gaps or areas for improvement.
MND will appoint inspectors, who may be public officers or professionals with the relevant qualifications and experience, to conduct these reviews. During these reviews, Town Councillors and staff will have to answer queries from the inspectors and produce documents upon request. At the end of the review, the inspectors' findings and recommendations for improvement will be presented to both MND and the Town Council.
Second, if there are reasonable grounds to suspect a material irregularity in a Town Council's affairs, MND may direct an investigation to be undertaken to establish if there was a contravention. Town Councillors and Town Council staff will be expected to extend their full cooperation to the inspectors during the investigation.
Third, where the compliance reviews or investigations throw up deficiencies in the running of a Town Council or irregularities in its financial affairs, MND may follow up by issuing a rectification order. This rectification order will specify remedial actions for the Town Council to address the irregularity and a timeframe to do so. At the end of the specified period, the Town Council is to report on the action it has taken.
Finally, as a last resort, the Minister may put the Town Council under Official Management, if there is urgency to act as the health or safety of the residents is under threat. To be very clear, this provision of last resort is not new and is already present in the current Town Councils Act. The Bill merely repeals the provision under section 50 and reintroduces it in the new section 43G.
The various steps that I have just outlined enable MND to take timely action and calibrate its enforcement approach according to the action, or inaction, of the Town Council. In practical implementation, MND will first seek to engage the Town Councils to understand the situation and determine the severity of any contravention. Town Councils will continue to be responsible for correcting any lapses or management deficiencies that are uncovered in the course of the compliance reviews and investigations. As I have said earlier, the findings by the inspectors will be shared with both MND and the Town Council.
While the Bill has introduced stronger enforcement powers to investigate and require Town Councils to take specific remedial actions, they will generally be exercised when a Town Council is uncooperative or recalcitrant, refusing to correct irregularities despite due and fair notice.
In addition to the three penalty provisions in the Town Councils Act, the Bill will introduce new penalty provisions to hold Town Councils accountable in three key areas.
One, annual audit and disclosure of information. The Bill will make it an offence when Town Councils fail to provide regular submissions relating to audit and governance or fail to cooperate with requests for information relating to governance. Two, responsible financial management. Town Councils can be taken to task for flouting financial rules or specific instructions to rectify their contraventions. Three, abiding by public laws and cooperating with public authorities. Town Councils can be taken to task for making unlawful collections or putting public health and safety at risk. Where applicable, we have benchmarked the penalties to those for similar offences under the Charities Act.
We all recognise and accept that Town Councils and their key decision-makers have to act honestly and responsibly. This is reflected in section 33(6B) of the current Town Councils Act where key decision-makers in the Town Council, namely, the Chairman and Secretary, are held equally liable for the offence committed by the Town Council, if the offence was committed with their consent or connivance.
The Bill extends this existing treatment and penalties to the new offence provisions, so as to hold culpable parties accountable. This sets the tone for the leadership of Town Councils and underscores the point that there would be stern consequences for key decision-makers who abet poor governance or fail in their fiduciary duties.
To streamline the enforcement process, clause 26 will also empower MND to offer composition for some of the offences. This is an existing provision. This will enable MND to take mitigating or aggravating factors into consideration when deciding whether to compound an offence or proceed to recommend prosecution to the public prosecutor.
Besides what I have covered above, the Bill includes amendments to clarify existing definitions and processes. It also covers Town Council handover processes which have been a subject of review, and a handover guide in 2013.
Mdm Speaker, the Town Councils (Amendment) Bill balances two objectives − to preserve the autonomy and latitude of Town Councils, while protecting residents' interests and public monies.
These amendments have adhered 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 general public expect of our Town Councils, standards that this Parliament voted for in February 2015 to strengthen through legislation.
With a stronger regulatory framework, MND will play a more effective role to safeguard residents' interests and public funds. We hope that these amendments can give residents greater assurance that their housing estates are properly managed and S&CC monies are used for their benefit. Mdm Speaker, I beg to move.
[(proc text) Question proposed. (proc text)]
Mdm Speaker: Dr Teo Ho Pin.
Dr Teo Ho Pin (Bukit Panjang): Mdm Speaker, I wish to declare my interest as the Chairman of Holland-Bukit Panjang Town Council and also the Coordinating Chairman for the 15 People's Action Party (PAP) Town Councils.
Mdm Speaker, I rise in support of the Bill. The proposed amendments to the Town Councils Act will further improve corporate governance, transparency and public accountability of the Town Councils.
As elected MPs running Town Councils, we owe a duty of care to our residents and the public to manage our HDB estates properly and in compliance with the Town Councils Act and financial rules. We must also ensure that Town Councils get value for money when procuring products and services. This includes providing fair and open competition, proper tender evaluation and awarding contracts to ensure public accountability.
Against this backdrop, the 15 PAP Town Councils support the amendments which will guide all Town Councils to better serve our residents. While MND has so far adopted a light-touch approach as regulator, I appreciate that a \"light-touch\" does not mean \"no touch\".
Recent events have also shown us that not all Town Councils act decisively to rectify problems that surface. At the end of the day, MND must be given the powers to move in and nip the problems in the bud and ensure that public interest is not compromised.
Madam, the PAP Town Councils have been doing their level best to serve their residents and comply with the Town Councils Act and financial rules. We look forward to working with MND to identify ways in which we can continue to improve to serve our residents better.
Madam, I wish to highlight three areas of the Bill which I hope the Minister can clarify and make provisions to ensure compliance by all Town Councils.
First, keeping proper accounts and financial statements. Madam, the Town Councils Act was passed in August 1988 to give elected MPs the authority and responsibility to manage public housing estates in their respective constituencies. This arrangement enables elected MPs to manage and serve their residents and, more importantly, ensures that they are accountable to their residents when running the estates.
Over the past 28 years, many elected PAP MPs have run Town Councils to serve their residents. These PAP Town Councils have always practised financial prudence to ensure that they provide quality maintenance services to their residents. The PAP Town Councils have also been diligently submitting their audited accounts, financial statements and annual reports on time to Parliament for the purposes of public accountability.
Madam, I fully support the amendments as set out in clause 20 of the Bill which repeals and re-enacts section 35 of the Town Councils Act which states the duty of the Town Council to keep proper accounts and manage its monies properly. I also agree to the implementation of the new requirement as stipulated in section 38. This requires all Town Councils to submit their audited accounts and financial statement within six months after the close of the FY to the Minister. This requirement is necessary as it will ensure that all Town Councils will not only keep proper records of their accounts, but also have their accounts properly audited by independent auditors.
In particular, I believe the new requirement under section 38 (13A) will further strengthen corporate governance. This amendment to the Act will require Town Councils to display their audited accounts, financial statements and the auditor's report at an online location accessible to all residents within 30 days after it has presented the report to Parliament. This results in greater transparency and will allow Town Councils greater accountability to their residents. In this regard, I propose that the Ministry set down rules pertaining to the format and presentation of the audited accounts and financial statements, so as to facilitate greater understanding of the accounts by the residents.
Two, handover process of Town Councils. Madam, in every General Election or by-election, many Town Councils undergo a handover process upon change in electoral boundary and elected MPs, between members of the same political party or between different political parties.
In such instances, most Town Councils follow the handing and taking over guidelines provided by MND to effect the handover. Generally, most Town Councils have not encountered any major problems when taking over the property data, financial data, contracts and work in progress from the previous staff in the Town Councils who were managing the information.
Moreover, the Town Councils which are taking over would usually set up their own computer systems to manage both their accounts and estates in order to serve their residents better. However, sometimes, miscommunication may occur.
Madam, in order to avoid any finger-pointing or confusion, I support clause 3 of the Bill which introduces a new section 3(3A) setting out the arrangements that are vital in ensuring a smooth handover of responsibilities between the incoming and outgoing Town Councillors. However, in order to enhance the effectiveness of this clause, I would urge the Ministry to lay out clear rules and procedures for Town Councils to comply with. This would include rules and procedures for the listing of property database, customer information, assets and liabilities, ongoing contracts and work in progress.
In the interest of fairness, the Ministry can also appoint an independent auditor to oversee both the handing and taking over of all Town Councils. Further, in the event of a dispute amongst the Town Councils, the Ministry can mediate or arbitrate the conflict and propose an amicable solution that will better serve the interests of the residents.
Third, handing over of new housing estate. Madam, finally, I wish to highlight my concerns with regard to the proposed amendment in clause 28 of the Bill which introduces a new section 54A that attempts to facilitate a smoother handover in relation to the control and management of common property in new housing estates.
Although HDB has developed a comprehensive management system to ensure the quality of new flats, building defects are still commonly found in flats that HDB hands over to the Town Councils. Common defects include frequent lift breakdowns, water leakages and seepages, wall and ceiling plaster cracks, and incomplete external site works. Most of these defects can often be attributed to either poor or impractical designs, or shoddy workmanship during construction.
Town Councils frequently experience great difficulty in getting the relevant consultants and contractors to rectify the defects properly and promptly due to their lack of authority over them. As a result, this has caused much anxiety and unhappiness amongst flat owners, MPs and Town Council staff.
Madam, instead of reminding Town Councils of their duty to manage common property, HDB should first take responsibility to ensure these new flats and common property are properly built to meet the expectations of flat owners. This includes ensuring that all defects identified during the defects liability period are properly rectified before it is handed over to the Town Council for management.
Thus, I would propose that HDB adopt the practice by private developers, where they will be required to take charge of the management of new flats and common property during the defects liability period. In this way, HDB will be directly responsible in ensuring the quality of both the design and construction of new flats which satisfy the needs of the flat owners before these flats are handed over to the Town Councils for management.
Mdm Speaker: Mr Pritam Singh.
Mr Pritam Singh (Aljunied): Mdm Speaker, before I begin, I would like to declare my interest as the Chairman of the Aljunied-Hougang Town Council.
Mdm Speaker, this amendment Bill does not seek to review the original objectives of the Town Councils Act that is on the Government's agenda. We are debating this Bill with a view to improve the existing Act. I do not oppose the objective per se but, as an Opposition MP, my experience is that Town Councils operate quite differently by design in PAP and Opposition wards and, as such, are inevitably judged by different yardsticks.
The Workers' Party (WP) does not oppose raising governance standards for Town Councils, but we have specific concerns over the new Part VI A of the Bill which gives intrusive oversight powers to MND directed by political officeholders of any incumbent government, not just the PAP.
We believe an independent entity of inspectors, not appointed by the Government, should resolve disputes if and when they occur between MND and the affected Town Council, a point that Ms Sylvia Lim will build upon.
Let me reiterate. The additional scrutiny on Town Councils is not objectionable. It is the identity of the scrutiniser that warrants scrutiny. According to then Deputy Prime Minister Goh Chok Tong, there were two philosophical objectives behind the original Town Councils Act.
Firstly, it purported to transfer some power from HDB to the MPs and grassroots leaders. It gives the MPs and residents greater power and responsibility to manage their own affairs and to participate in the estate's development.
Secondly, because MPs will have increased authority and responsibility, voters will be more likely to vote carefully and sincerely to choose honest and effective MPs. However, the transfer of power from HDB to the MPs and, I stress, grassroots leaders, is only partial in an Opposition Town Council as the grassroots are, by design, not part of the Opposition Town Council's firmament.
This is because the Government cannot reconcile that an Opposition MP and, by extension, an Opposition Town Council, would support the Government's plans. It is also instructive that nowhere does the grassroots, Community Improvement Projects Committee (CIPC) or the People's Association appear in the Town Councils Act. Yet, the grassroots were acknowledged as a conspicuous and central part of the Town Council system when the Bill was debated in 1988. This is because the Town Councils Act was legislated to serve a dominant one-party state and, to that end, Government-sanctioned grassroots organisations do not work with elected MPs in Opposition Town Councils. This remains a fundamental omission vis-a-vis the operation of Town Councils in Opposition wards.
I have spoken on how the grassroots have a significant say on estate upgrading via CIPC funding in this House previously and I do not repeat those points here. The same can be said about the political control of critical Town Council management systems and software by politically influenced entities.
One can just compare the amount of state resources extended via the CIPC committee through the grassroots in PAP Town Councils compared to Opposition Town Councils. Certainly, lesser taxpayer funds to Town Councils will inevitably lower the esteem of Opposition-run Town Councils with attendant political ramifications. While I believe this should change and a fairer system ought to take form, as a political realist, I can see why the ruling party will rather institutionalise the status quo.
In view of some fundamental disparities between the Opposition and PAP Town Councils in practice, WP would have approached this amendment Bill with the words of the then Deputy Prime Minister Mr S Dhanabalan in his round-up speech on the original Town Council Bill some 30 years ago. He said, \"The question really is not better or not there is a political purpose. The question is: is the purpose a good one for Singapore? Will it make for a better Singapore? Will it make for a more stable and secure Singapore? Will it make for a better life for our citizens? That is the question we ought to ask.\"
I would like to state for the record that WP is under no illusion that the purpose of the Town Councils Act is undeniably political. And since 1988, PAP politicians have come up openly to say so. So, that point has been settled. But the former Deputy Prime Minister's subsequent questions remain relevant today.
To that end, WP does not oppose five of the six amendments proposed in the Explanatory Statement to the Bill, namely, to promote and strengthen effective and efficient governance and accountability of Town Councils; to foster a culture of personal integrity and accountability for administrative officials of the Town Council; to ensure sound financial management; to promote better governance and to clarify the role of Town Councils in emergency planning.
However, the introduction of oversight mechanisms and monitoring powers over the Town Councils that are in the hands of the Government has the potential for abuse. This will not necessarily ensure good outcomes for Singapore but rather politically good outcomes for any ruling party.
Central to the working of the Town Councils are the powers of the elected MPs in relation to MND. Critical to the success of the Town councils is the protection of the MPs' autonomy, guaranteed as a political space for the MPs to work with local residents so that the same residents voting in the General Election can judge the MPs' performance.
If we return to the speech of the then Deputy Prime Minister Goh Chok Tong during the 1988 debate, he raised three important points. First, it was not the original intention that HDB become the management corporation for 80% of the population. Such an over-centralisation is undesirable. Second, when our people become too dependent on HDB, it will lose self-reliance and its responsibility for their own surroundings. In a sense, they will expect HDB to fix and do everything. Third, as such, to preserve the political autonomy of the MPs and self-reliance of the people, HDB should only intervene when there are hazards to public health, public safety and public order.
In principle, clause 24 of the Bill is problematic on these three points by reversing and diminishing the political autonomy of the elected MPs in relation to MND, which overseas HDB. If citizens know that MND will intervene when the town is not run effectively, then whether the candidates standing for election are honest and effective enough to run the Town Council potentially becomes irrelevant. As envisaged by the Town Councils Act originally, voters are responsible for the MPs they choose to run their towns and represent them in Parliament. If they do not like what they see, they can vote under-performing MPs out at the next elections.
MND having oversight over the Town Council does not mean just over-centralisation potentially but it also leads the two political pervasions. First, it risks politicisation of the Public Service where MND risks becoming a tool of the ruling party of the day to fix the Opposition. Second, it causes the elected MPs to answer to the unelected bureaucracy, subordinating the elected mandate of MPs to the Executive branch.
I would suggest to this House that there is a better way to move forward on this point while retaining the proposed oversight powers sought by this Bill that will, at the same time, preserve the central feature of Town Councils – the political autonomy of MPs.
Those oversight powers should be in the hands of independent parties not linked to the Ministry or the Government in general. This is critical to preserving the Town Councils as a ballast to our democracy. I would take the point made by hon Member Dr Teo Ho Pin about the potential of introducing an independent auditor during the time when an estate is handed over, especially between political parties. I think that concept should be pursued.
To conclude, Mdm Speaker, as late as 2009, a Straits Times report quoting the then Senior Minister Goh Chok Tong noted that in spite of the Town Councils' existence, residents did not seem to take a greater interest in the estates they lived in. It was noteworthy that one public poll commissioned by the Straits Times in 2013 found that close to 80% of those polled wish to have HDB replace Town Councils in the provision of services to residents. In fact, the same call was made more recently in the public consultation on this Bill.
It would be helpful if the Government looked into why many Singaporeans, or at least the polled Singaporeans, are not as enthusiastic about Town Councils in spite of its objectives, not all of which are necessarily objectionable. I do think there is much value in getting MPs involved in local politics and the nitty-gritty of constituency work. In spite of the different realities on the ground and the treatment between Opposition and PAP Town Councils, particularly as a result of the grassroots and, by extension, losing PAP political candidates to the People's Association, WP is determined to make the best of less than an equitable situation, managing it not with the cards we wish we had, but those that are in our hands.
Mdm Speaker: Mr Pritam Singh.
Mr Desmond Lee: Madam, may I ask the hon Member for the purpose of me giving a fuller reply to his points later. Two clarifications. Firstly, with respect to his proposal for an independent person to exercise the powers under Part VI A, he was relying on what Dr Teo Ho Pin had mentioned, an independent auditor. Can he explain what his proposal is, so that I can better understand it?
Secondly, he referred to a 2009 Straits Times report as well as a subsequent poll, and I quote him, \"Eighty percent of the people polled wanted HDB to take back estate management\". That is what the poll said, but can I understand in this House what is his position and what is the position of WP in respect of the position of Town Councils in our elected system?
Mdm Speaker: Mr Pritam Singh.
Mr Pritam Singh: I will take the second question first. The 2013 poll polled 50 people and 41 of them wanted estate management returned to HDB. But to clarify, as I mentioned in my speech, there is value in having MPs run Town Councils. That position remains. It is not the position that the poll suggested. What the poll is telling us is that the public may have a different view about it and that is something for MND to consider.
The Senior Minister of State's first question was with regard to the inspectors who, under clause 24, could come into a Town Council. I would suggest that the provision that the Town Councils Act currently provides for, which is, for an independent agent to potentially look into issues which MND feels the Town Council ought to, is potentially sufficient. Because it is working in the current context as the Senior Minister of State would know in the case of Aljunied-Hougang Town Council. The key point is that if there is an independent individual, I think that will be a better position or better outcome for Singaporeans.
Mr Desmond Lee:\tI thank the Member for his clarification. On his second point, he said that if the auditor or the inspector is an independent inspector, he would support Part VI A. If I were to explain to him that Part VI A allows for MND to appoint independent auditors who would then conduct compliance reviews or investigations and who are then required by the legislation to report to both MND and the Town Council, would that change his and his Party's position?
Mr Pritam Singh:\tSenior Minister of State, I would suggest that it would, provided you can provide us with more details on how those independent investigators would be appointed. There is potential to review the position.
Mr Desmond Lee: I will explain later.
Mdm Speaker: Mr Zainal Sapari.
Mr Zainal Sapari (Pasir Ris-Punggol): Mdm Speaker, I would like to declare my interest as the Chairman of Pasir Ris-Punggol Town Council in speaking on this Bill.
As a Town Council chairman who has had to hand over a constituency to another Town Council in 2013 and then take it back again in 2015, I can understand very well the need to have some of these amendments.
Mdm Speaker, under the current Act, to ensure public accountability, Town Councils are required to submit their annual audited financial statements as soon as practicable. The new amendment under section 38(11) requires a Town Council to submit these documents within six months after the close of the FY. I would like to seek a clarification on whether this applies to the audited financial statements on distribution of assets and liabilities for the purpose of the handover after a General Election.
Let me share my Town Council experience. After the by-election in 2013, Punggol East was handed over to the Aljunied-Hougang Town Council (AHTC). Pasir Ris-Punggol Town Council (PRPGTC) took 8.5 months to submit our audited financial statements on the distribution of assets and liabilities.
On the other hand, in 2015, after the General Election when Punggol East returned to PRPGTC, AHTC took 15 months in total. AHTC gave PRPGTC three different sets of audited financial statements on three different dates. AHTC withdrew the first and second sets on 26 January 2017, when PRPGTC perhaps identified some discrepancies in the first audited statements. AHTC only recently submitted the third. PRPGTC is looking through this third set carefully and we have already identified several discrepancies. There are two key learning points.
First, could the Minister consider setting a reasonable deadline for the preparation and submission of audited financial statements on the distribution of assets and liabilities if section 38(11) does not apply to the audited financial statements on the distribution of assets and liabilities?
Second, PRPGTC could have submitted our audited financial statements on the distribution of assets and liabilities earlier if both Town Councils could have agreed in writing on the allocation method to be used to distribute the assets and liabilities as required by our own auditors.
Hence, I would like the Minister to consider including in the Bill the allocation method to be used to determine the distribution of assets and liabilities or, alternatively, for the Bill to allow the Minister to determine the method to be used during the handover process.
Another area that I would like the Minister to consider is allowing a Town Council to maintain two separate financial accounts pending the submission of an unqualified audited financial statements of a constituency the Town Council is taking over.
PRPGTC has had an excellent record where our annual financial statements were all unqualified. To meet MND's statutory requirement for the submission of annual audited financial statements in August 2016, PRPTC had included Punggol East Single Member Constituency's (SMC's) unaudited financial statements into the PRPTC's FY2015/2016 audited financial statements. Our earlier request to maintain two separate accounts was denied by MND.
PRPGTC's FY2015/2016 audited financial statements were then qualified on the basis that the audit of the financial statements of Punggol East SMC as at 30 November has not been completed. It was unfortunate that the poor practices and failure of compliance by the outgoing Town Council then \"contaminated\" the entire set of accounts for the whole of PRPGTC, through no fault of our own.
The submission of audited financial statements is a standard practice and part and parcel of ensuring good governance. If a Town Council maintains good and proper Town Council record, it is a straightforward process. But if the appointed auditors are unable to verify the accounts due to lack of information, it is usually an early sign of poor financial and corporate governance.
I also am heartened to note that the Town Councils Act, section 3, has been amended to address the boundary change. The new amendment under section 3(3A)(e) requires the outgoing Town Council to provide another Town Council with all documents, information and other assistance as the Town Council may reasonably require to manage the area and serve the residents.
In our experience, despite the assurance of cooperation from the outgoing Town Council management, PRPGTC faced a lot of challenges to be operationally ready by 1 December 2015 to serve Punggol East due to the lack of documents and insufficient information provided to us. This directly affected our ability to serve the residents and had caused inconvenience to many households.
Operational difficulties faced by PRPGTC included being unable to share with residents the breakdown of S&CC arrears owing to the Town Council because AHTC's record only showed a lumpsum owed without showing a detailed monthly breakdown of the payment arrears.
PRPGTC also had to manage cases of residents accumulating arrears because they were not informed by AHPETC prior to 1 December 2015 that their general interbank recurring orders (GIRO) arrangements had been stopped. All of this essential information was not shared and affected the residents.
As such, with reference to section 3(3A)(e), I would like to ask the Minister if the incoming Town Council can apply to the Minister to instruct the outgoing Town Council to provide more data or information as required by the incoming Town Council. This is important because the lack of complete documents and information can hamper the ability of the incoming Town Council to serve and thereby causing much inconvenience to the residents.
I also support the amendments in the Bill to improve MND's regulatory oversight to ensure Town Councils comply with the Act and Rules. All Town Councils manage a substantial amount of money, and non-compliance by Town Councils can have repercussions downstream. Hence, it would be prudent to ensure MND has regulatory oversight.
One of the regulatory issues where compliance is required by a Town Council is to ensure quarterly transfers of the S&CC fees collected into the sinking fund. Failure to perform this quarterly transfer could imply two things. First, the Town Council is not doing their job well to manage their accounts; or second, the Town Council has overspent on routine maintenance and, hence, do not have sufficient funds to make the required sinking fund transfer. If MND has greater oversight, such a Town Council should be brought to task to observe the regulatory requirement and this will ensure that any regulatory non-compliance problem is detected early and solved before it escalates into a huge mess.
On the topic of accountability, the current Town Councils Act only holds two positions responsible, the Chairman and Secretary, for any cases of criminal liability. Clause 25 introduces a new section 48A that imposes on the Chairman or Secretary of a Town Council, or any person who was purporting to act in any such capacity, criminal liability for certain offences committed by the Town Council in certain circumstances.
I support this amendment because Town Council operations do require some decision-making to be done by various key officers or Town Councillors. As such, this amendment would ensure the key officers could be held accountable for their decision-making.
The KPMG report on AHTC illustrates the need for this amendment where several problems were uncovered. The Nanyang Technological University's (NTU's) accounting professor El'fred Boo was quoted during an interview with Channel NewsAsia (CNA) that the findings have, I quote, \"serious and grave implications for the parties involved in the AHTC scandal, including a potential basis for filing criminal charges if a deliberate intent could be established\".
Prof El'fred Boo further added, I quote, \"One of the major findings centred on a series of payments of at least S$23 million, which, in the absence of approved controls in a severely weak control environment amid a conflict-of-interest situation, could suggest that the agent is approving and making payments to itself. This was corroborated by instances of overpayments, and payments without approval and certification of work performed\".
The involvement of many individuals appointed by the Town Council illustrates the need why they need to be held accountable, other than the Chairman or Secretary, if criminal intent can be established. Mdm Speaker, please allow me to continue in Malay.
(In Malay): [Please refer to Vernacular Speech.] Mdm Speaker, the amendments in the Town Council (Amendment) Bill will ensure better public accountability and strengthen financial management in the Town Councils. In addition, these amendments would ensure that any inconvenience to residents would be minimised following changes to a Town Council after a General Election.
As Town Councils manage a substantial amount of public funds, the proposed regulatory oversight by MND will ensure that problems that are identified early can be nipped in the bud before they become a liability to all the residents if funds are mismanaged. The amendments would ensure that the key Town Council personnel will be held accountable if there is evidence of criminal intent in their decision-making while managing Town Council affairs.
Mdm Speaker:\tMs Sylvia Lim.
Ms Sylvia Lim:\tMadam, I have clarifications for the Member.
Mdm Speaker:\tYes, please.
Ms Sylvia Lim:\tYes, I will start off my clarifications before Mr Singh does. Clarifications for Mr Zainal Sapari. He was going on about the handover of Punggol East and saying that Pasir Ris/Punggol East Town Council had a lot of operational problems and so on. But I am quite surprised to hear that because can he not confirm that AHTC and PRPGTC have actually met many times for the handover and has he ever raised these problems to our Chairman?
Mdm Speaker:\tMs Lim, can you please address your comments to me?
Ms Sylvia Lim: Yes, sorry, Madam. That was the first clarification. The second clarification is that the Member talked about late transfers of sinking funds and his observation was that it could only mean that we have overspent our routine funds and so on. But does he not agree that if a Town Council is deprived of Government grants, that could also be a reason why it may not be able to make timely sinking fund transfers?
The third point is that the Member quoted a professor talking about the KPMG past payment review where the professor mentioned that there could be some criminal liability involved. I would like to ask Mr Zainal Sapari whether he has actually read the report and whether there is any finding of criminal intent.
Mdm Speaker: Mr Zainal Sapari.
Mr Zainal Sapari: Madam, let me answer the clarification sought by Ms Sylvia Lim. On the issue whether we have met several times to resolve some of these operational issues, yes, I think we have met several times. But during many of these meetings, while there is assurance of cooperation, our Town Council faced a lot of challenges. For example, data were provided in the PDF format instead in the format that we could actually use. We were also not given the information that we required in a timely manner and these all affected our ability to be able to serve our residents.
On the second point, with regard to the late transfer of sinking funds, I did not make any specific reference to any Town Council. I just said that if a Town Council is late in the transfer of sinking funds, it could imply the two things which I have mentioned in the speech. And I would like to state, looking at the records of AHTC, the transfer of sinking funds was late even before Government transfers were being withheld.
Then, on the third point about the quote that I cited from Prof El'fred Boo of criminal liability, I have read actually the report by KPMG. As to whether there is criminal liability, it is not for me to establish whether there is criminal intent.
Mdm Speaker: Ms Lim.
Ms Sylvia Lim:\tI would like to clarify with the Member about his reading of the KPMG report. My question is very simple − whether there was any finding that there is criminal intent.
Mr Zainal Sapari:\tMdm Speaker, as I have mentioned, whether there is any finding of criminal intent is for other Government agencies to establish.
Mdm Speaker: Mr Pritam Singh.
Mr Pritam Singh: Can I just ask Mr Zainal Sapari, Ms Sylvia Lim asked him a question when there were these alleged difficulties that he mentioned at the operational level, did he write to, at least, the Chairman, myself or the vice-chairman of the Town Council what those problems were, so that we could help him resolve them? Because my understanding was we actually tried to work as best as we can in the circumstances that we were in to ensure a smooth handover.
With regard to the earlier comment made about some delay in handover of financial statements, eight and a half months and so forth, can I just ask the Member Mr Zainal Sapari when Punggol East was transferred to AHPETC after the 2013 Elections, when was the last instalment of sinking funds made by PRPGTC to AHTC? And how does that compare with the final instalment that was made to PRPGTC, as has been reported in the media today, I believe?
Mdm Speaker: Mr Zainal Sapari.
Mr Zainal Sapari: With regard to the first clarification whether we had engaged the Chairman of the Town Council, these are all done by the Secretariat, by the Town Council staff, to actually work directly with the staff from AHTC. What was shared with me was information that was told to me by my staff.
On the second point with regard to the transfer, we did explain, we did make the first transfer of $10 million within three months of the handover. The subsequent amount was eventually transferred to AHTC after we have resolved all the accounts.
Mdm Speaker: Mr Pritam Singh.
Mr Pritam Singh: With regard to the reply to the first question, the point remains that it was open to Mr Zainal Sapari to write to me and he chose not to.
On the second point, I believe that the final transfer of the sinking funds or outstanding funds to AHTC was made in September 2014, some one-and-a-half years after the by-election in Punggol East SMC. I believe the deadline is not too different from the final transfer or final instalment made by AHTC to PRPGTC.
Mdm Speaker: Mr Zainal Sapari.
Mr Zainal Sapari:\tMdm Speaker, with regard to the second clarification, the thrust of my speech was not with regard to the amount that is being transferred; really, to the operational difficulties that PRPGTC faced when we were unable to get complete information or information that was given to us was after some time had actually lapsed.
Mdm Speaker: Mr Low Thia Khiang.
Mr Low Thia Khiang (Aljunied):\tMadam, the Member chose to repeat the allegation made by the NTU professor. I would like to ask him what is his view. He has read the report, that is what he said. Was there a finding in the report that there was criminal intent? That is question number one. Number two, since he has read the report, if there is no such finding, what is his view?
Mdm Speaker: Mr Zainal Sapari.
Mr Zainal Sapari: Mdm Speaker, with regard to the first clarification by Mr Low Thia Khiang whether there is a criminal intent based on the report, it is not for me to establish.
With regard to the second question, what is my view, that is the whole purpose of having this amendment − it is to make sure that we improve on our financial governance.
Mdm Speaker:\tCan I advise Members to address the Chair and not to talk to each other? Mr Png Eng Huat.
Mr Png Eng Huat (Hougang):\tMadam, I just want to ask the Member as this is the first time I am hearing that the data transfer and all these were having a lot of problems, that some of them are in PDF. We actually engaged the same contractor that did the transfer from Potong Pasir Town Council to the PAP Town Council. It is the same contractor and there is no issue raised. Actually, along the way, we keep asking the contractor any major issues, but there were no issues raised. So, this is the first time that I am hearing this. So, maybe the Member can explain what are these issues with the data transfer?
Mr Zainal Sapari: Mdm Speaker, during the meeting, all the issues that we raised are on the record. I do not have the records now. We could always share later on with AHTC, if it so desires, what were some of the information given to us and they were not complete for us to be operationally-ready.
Mdm Speaker: Senior Minister of State Desmond Lee.
Mr Desmond Lee:\tMadam, I have a point of order. This is the Second Reading, the purpose of which is to debate the principles behind the Bill. I understand that Mr Zainal Sapari had raised this as an example of certain concerns that he hopes the Bill will address. I also understand the Members from WP have got different points of view, and I think that has been registered. We will just seek Madam's leave to allow the principles of this Bill to continue to be debated as part of Second Reading.
Mdm Speaker:\tI agree entirely with the Senior Minister of State Desmond Lee. We are not debating specific issues here. We are debating about the general principles of the Bill. Can Ms Sylvia Lim please proceed with your speech?
Ms Sylvia Lim: Mdm Speaker, I will focus on the conflicts of interest and the proposed mechanism for oversight by the Ministry. And in doing so, I will draw on my experience as the former Chairman of AHPETC and as the current Vice-Chairman of AHTC.
First, conflicts of interest. A key feature of this Bill is on conflicts of interest, as provided in clauses 8, 9, 10 and 13. First, let me say that WP agrees that conflicts of interest should be managed carefully. This certainly applies to Town Councils which handle tens of millions of dollars of public funds each year by way of S&CC payments from residents and Government grants.
The Bill recognises that conflicts of interest will arise from time to time and need to be managed. Indeed, the practice of declaring potential conflicts of interest and recusing oneself from decision-making is unobjectionable and has been in place in our Town Council since inception.
The Bill focuses on the potential conflicts that can arise where a Town Council appoints an MA to manage the Town. Clause 13 introduces a new section 20(1A) that a person who exercises a significant influence over the MA cannot hold a Town Council position of Secretary, General Manager, Finance Manager or their deputies.
The post of Town Council Secretary/General Manager (GM), is an onerous one involving both compliance with regulations and leadership of a large operation. Where town management is outsourced to an MA, the person appointed to assume the heavy duties of Secretary or GM will not be a junior staff from the MA. In fact, we know that prior to General Election 2011, Aljunied Town Council was managed by an MA where the Town Council Secretary/GM was the Managing Director of the MA. So, conflicts of potential conflicts exist in PAP Town Councils as well. Can the Minister tell the House how many of the current slate of Town Council Secretaries and GMs will have to leave their posts when this provision is effective?
Earlier in his Second Reading Speech, Senior Minister of State Desmond Lee mentioned that it would catch officers in the C-suite. But as it is phrased, it is about people having significant influence. I would argue that it is likely to be larger than the C-suite. So, I think the Ministry should clarify this point.
Madam, as far as conflicts of interest are concerned, we feel that in one respect, the Bill does not go far enough. The proposed section 15(2) will require the Town Council Secretary to maintain a Register of Declarations of interests and potential conflicts of interest made by Town Councillors. This Register of Interest of Declarations is to be kept and maintained by the Town Council Secretary, and each disclosure is to be brought up at the relevant Town Council meetings. In our view, this is useful but does not go far enough. Instead of just maintaining the Register, we would call for all such registers to be published for the scrutiny of residents. On our part, we are ready to publish the declarations related to AHTC.
Next, I move on to the proposed mechanism for oversight. I now turn to clause 24 which introduces a new Part VIA on Oversight and Monitoring of Town Councils. Part VIA introduces new sections 43A to 43H, basically giving tremendous power to the Minister to devise strategies for compliance reviews on Town Councils and for the Minister to order investigations into particular Town Councils.
These new provisions give the Minister powers that he did not have before. This Bill presents an about-turn from the original intent of Town Councils, which was to empower MPs to run towns with minimal interference from the Government. These new provisions are also a likely response to the Court judgment in the case filed by the Ministry against AHPETC, where it was held by both the High Court and the Court of Appeal that the Ministry was not the proper party to sue Town Councils. The Courts analysed that the framework of the Town Councils Act clearly showed that the Minister was only entitled to intervene in very few and specific circumstances and did not have a general power of oversight. Insofar as this Bill purports to enable the Ministry to manage or even curtail a Town Council's work, this goes against the original intent of forming Town Councils in the first place.
Madam, what is even more disturbing to me is the vast new powers given to the Minister to order investigations into the affairs of a Town Council if there are \"reasonable grounds to suspect a material irregularity in or affecting the conduct of a Town Council's affairs\". He may also order such an investigation if a Town Council under a compliance review does not produce certain information required by the review.
First, I would like to point out that there is already an existing framework in place. As it stands, Town Councils undergo annual audits, and auditors flag out issues on an annual basis. Where there is concern about a particular Town Council, the Auditor-General's Office (AGO) can be called in, just as the Government did to AHPETC in 2014. The AGO team would devote time and expertise to unravel any matters and issue public reports. Matters can also be referred to law enforcement agencies, if warranted, as with the case of the Ang Mo Kio Town Council's GM being referred to the Corrupt Practices Investigation Bureau (CPIB). So, why the extreme step of giving the Minister investigative powers over Town Councils? Furthermore, what amounts to \"a reasonable suspicion of a material irregularity\" is very subjective. The Bill does not even require any irregularity to be proved, just a suspicion of a material irregularity. What would trigger such an investigation is purely up to the Minister to interpret.
Secondly, and more importantly, Madam, the scheme, as proposed, perpetuates the biggest conflict of all. Who is the gatekeeper of this regime? The Minister for National Development. But the Minister himself is supposed to be running a Town Council, too, as are his Senior Minister of State and Minister of State. His bosses, the Prime Minister, the Deputy Prime Ministers and the Coordinating Minister for Infrastructure, are all also running Town Councils. Their comrades in arms are running all the Town Councils in Singapore except one − our WP Town Council. Is the Minister a suitable gatekeeper, with these massive conflicts of interest?
It is not possible to argue that the Ministry is a politically neutral body, as recent history, unfortunately, belies that claim. Singaporeans will recall that during the General Election campaign in 2015, the Ministry was an active campaigner against WP, issuing statements practically daily on the alleged misconduct of AHPETC. After Polling Day, the Ministry took a break and little was heard for weeks.
To take another example: we have also seen past records of how the Ministry advised a PAP Town Council how to make good a breach of TCFRs quietly behind closed doors, without any media release on the same. These are but two examples of the double standards practised by the current Government. It is, in our view, dangerous to arrogate to a partisan Minister the solemn duty of overseeing Town Councils, which are essentially political institutions.
Furthermore, according to the new section 43E, the persons the Minister will appoint as inspectors of Town Councils include public servants and HDB employees. Is this tenable? These civil servants depend on their jobs to support their families. Do we expect these HDB officers to issue stinging reports against the Town Councils run by the Prime Minister or the Minister for National Development? If they do, they should be ready to throw in their resignations.
From the corporate governance standpoint, experts have noted that having Town Councils report to MND is problematic. For instance, it was observed by Assoc Prof Mak Yuen Teen that the current model had MPs as Town Councillors responsible for Town Councils that are overseen by MND. But MND was also accountable to the same people who are Ministers or MPs. He said, \"I think this creates, at least, perception issues… that the system might be unfair or lenient to Town Councils because the PAP dominates the Government\".
Madam, the scheme proposed in Part VIA does not serve the public interest but the interest of the incumbent Government. We reject this scheme as being fundamentally flawed.
Having said that, Madam, we have two suggestions on how the public interest may be safeguarded in the context of Town Councils.
First, while we cannot accept what is proposed in Part VIA, we totally support the principle that Town Councils should be subject to regular audits and checks due to the significant amounts of public funds they manage. In our view, instead of having the Minister direct partisan investigations, we should revive the audits by AGO. Town Councils were in the past audited by AGO and we believe that AGO should be tasked to audit Town Councils on a rational basis, that is, a few Town Councils should be picked each year for audit.
Madam, AGO is an Organ of State under the Constitution. It fiercely defends its independence and has earned a good reputation for highlighting problems in Government departments and Statutory Boards. Such a scheme of AGO audits would engender greater confidence that the exercise is impartial and focus on what the public interest is, safeguarding of public monies.
Our second suggestion involves the resolution of disputes or differences between MND, HDB and other Government agencies on the one hand, and Town Councils and residents on the other hand.
The new section 21A will require Town Councils to work cooperatively and collaboratively with HDB, NEA and others. There seems to be a presumption in the Bill that the Government agency is always right, that Town Councils have no legitimate case, and Town Councils should simply comply with what HDB or NEA tell them to do. Town Councils will be liable to fines if there is non-compliance. This is not a balanced prospective.
I will just give three examples to illustrate. For instance, HDB may wish to erect structures which will become a burden for the Town Councils to maintain; or Government agencies may require information from Town Councils in certain prescribed formats, which non-PAP Town Councils will incur significant time and cost to produce; or HDB may take a hands-off approach when Town Councils or residents face problems with the Design, Build and Sell Scheme (DBSS) flats, resulting in slow resolution or non-resolution of issues by the developer. It may be natural for HDB to defend its own interest but that does not equate to the public interest.
Currently, the dispute resolution mechanism between Government agencies, Town Councils and residents is the Courts. This is not ideal as Court processes are time-consuming and costly to Town Councils and residents. Going to Court is also adversarial in nature and would jeopardise the relationship between the Government, the Town Council and residents.
It is necessary to put in place a simple mechanism to help resolve issues that crop up from time to time between MND, HDB, NEA and other agencies and Town Councils and residents. We suggest the setting up of an independent housing tribunal that tries to mediate and adjudicate disputes relating to the management of public housing. The tribunal should be chaired by a Judge and have members who are qualified in relevant fields, such as engineering, architecture, project management and horticulture.
The tribunal could function with procedures which are low-cost and less formal. Where the tribunal makes a decision, its decisions will be binding, unless on an error of law, which would be appealable to the Courts. The setting up of such a tribunal would go a long way towards having a more considered and just resolution of disputes, and residents will automatically benefit.
Madam, let me conclude. For the reasons I have stated, the Bill has some merits, such as explicitly requiring management of conflicts of interest and accountability which we fully support. But there are other parts, such as the new Part VIA which are fundamentally flawed to the extreme conflicts of interest they perpetuate. The provisions are also prone to abuse by the incumbent Government. We ask the Government to remove clause 24 that introduces the new Part VIA and instead use the existing laws and rotational audits by AGO to safeguard the public interest. In addition, we ask the Government to set up a housing tribunal along the lines of independence suggested. If the Government cannot agree to remove clause 24, WP will oppose the Bill.
Mdm Speaker: Mr Lim Biow Chuan.
Mr Lim Biow Chuan (Mountbatten): Mdm Speaker, I declare my interest in speaking on this Bill as Chairman of Marine Parade Town Council.
According to the Town Councils Act, the role of the Town Council is to control, manage, maintain and improve the common property of the residential and commercial property in an HDB estate. On the ground, the actual work of the Town Council is very wide-ranging. For example, it is the Town Council that ensures that the common areas of the HDB estates are cleaned, that rubbish is cleared from rubbish bins, that rubbish chutes are flushed regularly, that the lights at the common corridors, void decks, car parks and other common areas are properly maintained, that the lifts are maintained and repaired whenever they break down.
In addition to the daily maintenance work of the HDB estate, the Town Council also carries out cyclical works like major repainting works, renewal and replacement of roofing system, replacement of water tanks, pumps and water supply system, fire-fighting and protection systems, water pipes and water pump sets and lifts.
These cyclical works involve huge expenses as the scope of the work is much larger. Many Town Councils also carry out improvement projects like installing children's playgrounds, fitness corners and building covered linkways.
The annual budget of most Town Councils range between $30 million and $40 million. This is a large sum of money. The revenue of the Town Council comes mainly from S&CC collected from residents and from Government grants. From the S&CC collected, Town Councils will have to set aside a proportion of its revenue to a sinking fund to cater to the future expenses for its cyclical works. Most Town Councils would need to set aside millions of dollars in its sinking funds because such cyclical works involve huge capital expenses. The Town Council needs to ensure that they have enough funds in its sinking funds to cater for future cyclical expenses as and when they are required.
Mdm Speaker, I have been involved in the Town Council since 1990. I served 16 years in the Legal and Finance committee of Jalan Besar Town Council and then moved on to serve in the Marine Parade Town Council from 2006 to today. Over these past years, a large part of my time doing Town Council-related matters is spent on reviewing contract awards. It is critical to ensure that contracts awarded by the Town Council are all done above board and that commercial decisions by the Town Council are made without any self-interest involved.
Many of the contracts awarded by Town Councils to their contractors are of high value and in the hundreds of thousands of dollars. Just to give the House a flavour of the amount involved, in a recent tender to carry out repairs and redecoration of 15 blocks of flats and a hawker centre, the tender bids alone were all above $1.6 million. So, these are large sums of money involved.
Because of the large sums of moneys involved and given the fact that the Town Council handles funds collected from the public, I support any rules to tighten financial management and to introduce rules of governance. I wish to touch briefly on four points in the Bill.
First, clause 9 talks about conflict of interest and disclosures. The requirement to disclose conflicts of interest at clause 9 is nothing new. It is already in section 15 of the existing Act. In many charities and voluntary welfare organisations (VWOs), similar requirements on disclosures are also imposed. What is fundamental to every organisation dealing with the award of contracts is the need to keep the system transparent and to have good governance. Otherwise, if a Town Council member with a business interest in a major project does not declare his interest, he may then be able to persuade members within the same committee to award a contract to him at an inflated price. In such a case, there is likelihood of abuse of the system. At the end of the day, the interest of the residents would suffer as the Town Council may be paying above market prices to its contractor who has a vested interest in serving in the Town Council. It also begs the question as to who is looking after the interest of the residents if there is conflict of interest.
I also support the amendment to extend the conflict of interest disclosure requirements to the Secretary, an employee, a staff or MA of the Town Council. Senior staff members of the Town Council sometimes do have influence over members of the Council because of friendship built up over the years. These staff members should also be required to disclose their interest in any contracts to be awarded by the Town Council to their company or to their associates. Otherwise, it would be easy for staff members to persuade Town Council members that the best contractor in any tender is their own company in which they have a vested interest. Given that the Town Council awards contracts of large values regularly, it would be easy for someone with a vested interest to benefit from these contracts.
Clause 21 of the Bill requires the Town Council to submit its audited financial statements to the Minister within six months after the close of FY. This is a common requirement for many Accounting and Corporate Regulatory Authority (ACRA)-registered companies. I was surprised that this six-month deadline was not a previous requirement. Submission of audited financial accounts to the Government is important because if there are any issues with the accounts, it is important that all parties sit down quickly to find out what these issues are and how to resolve them. It is also a form of public accountability because the Government gives each Town Council grants worth millions of dollars every year.
Next point, clause 14, interaction between Town Councils and statutory authorities. Clause 14 of the Bill introduces a new section 21A which imposes on the Town Council an obligation to work with HDB and any statutory body performing the functions listed at section 21A(1)(b) of the Bill.
I understand the intent behind the clause is to ensure that Town Councils do not impede the work of a statutory body for the purposes stated at section 21A, that is, to secure public safety, ensure public order, prevent disease or injury or create and maintain a healthy environment. In principle, I agree with this purpose. These are all clearly meant for the benefit of the residents of the HDB estate and to improve their quality of life.
However, I wish to raise an issue which the Town Council faces on the ground. To cite an example, Town Council issues summonses or notices to shopkeepers to keep the common area free of clutter. The shopkeeper may choose to pay the fine. Then, when a statutory body like the Singapore Civil Defence Force (SCDF) inspects the place, they ignore the fact that the Town Council has been trying to enforce the regulations. They ignore the fact that the Town Council does not have power to take injunctions against a recalcitrant shopkeeper. Instead, SCDF issues a summons to the Town Council for failure to comply with safety regulations.
Is there a better way in which the Town Council can work with HDB or statutory bodies to address such issues? If a Town Council is fully cooperative and wishes to ensure that there is compliance with the regulations imposed by the Government, can the Government agency consider that Town Council's efforts and attempts in getting the residents or shopkeepers to comply with the law? You see, even PAP Town Councils are not immune from the arms of the Government agencies.
Next point is clause 18 which talks about the lift replacement fund. This clause introduces a new requirement for the Town Council to establish a lift replacement fund. And each Town Council is required to set aside part of its sinking funds for the lift replacement fund. In Marine Parade, there are about 1,400 lifts. In some of the bigger towns, like Ang Mo Kio, there are more than 2,000 lifts. Each lift would have an operational lifespan after which the Town Council would eventually have to replace the lift. Thus, for older estates, if the flats are more than 30 years old, the lifts are likely to be 30 years old and prone to frequent breakdowns due to its mechanical age. Setting aside a lift replacement fund is a prudent and responsible thing to do. Otherwise, years from now, when the time comes to replace these lifts because they are no longer serviceable, then it is foreseeable that the Town Council may not have sufficient funds to pay for the replacement costs of all the lifts.
In some private estates, if a situation like this happens, the residents would be forced to pay a special capital levy of a large sum of money to pay for the lift replacement. The alternative is for the residents to do without the lift.
Thus, it is financially prudent that the Town Council set aside part of its sinking fund collection now to ensure that the Town Council does not have to suddenly raise funds to pay for a large bill when the time comes to pay for the lift replacement. It would be irresponsible for any Town Council to kick the can down the road and leave it to future residents to solve the problem of raising funds to pay for lift replacement.
When the Bill was tabled, one of the things that caused me some concern was clause 25 of the Bill. The clause inserts a new section 48A to the Town Councils Act and introduced the concept of personal liability for the Chairman or Secretary of the Town Council. Thus, if a Town Council had committed an offence under section 21A(4) or section 43D(4) of the Town Councils Act, not only would the Town Council be subject to a fine, the Chairman or Secretary of the Town Council would also be guilty of the same offence if the provisions of section 48A(1)(b) are met.
The clause does seem onerous for the Chairman and the Secretary as it involves personal liability for the two office bearers. If found guilty, the Chairman or the Secretary would be liable to a fine or to imprisonment.
I agree that if a Chairman or Secretary had consented or connived to effect the commission of an offence, or if that person had, by act or omission, knowingly been concerned in or is a party to the commission of an offence by the Town Council, then some degree of penalty on a personal basis is warranted. However, sub paragraph (iii) of section 48A(1) seems to place a heavier burden on that person. And in some circumstances, it is really not so easy to determine whether a person knew or ought reasonably to have known that the offence by the Town Council would be committed. Can the Senior Minister of State clarify under what circumstances would this clause be invoked?
Before I close, Mdm Speaker, allow me to comment on some of the views expressed earlier by hon Members of the House. As far as I can recall, Hougang Town Council has been in existence for many years. What I know is that Mr Low Thia Khiang had managed his Town Council well for many years. He gathered his own group of supporters and he was elected again and again. At the end of the day, if WP is able to manage the Town Council well and with proper governance, then clause 24 or Part VIA will not be implemented. The Government will not come in. It is for this reason we have clause 24 or Part VIA of this Bill. If my Town Council is badly managed, then I will expect that the Government will look after the interest of the residents and would interfere and would ensure that the compliance of the Town Council is taken seriously.
As an example, if Mr Pritam Singh's Town Council chooses not to transfer monies into its sinking fund, or uses its revenues for its routine operational expenses only, should the Government not be concerned that his Town Council is unable to carry out its functions, to carry out cyclical works in the future? Should the Government then do nothing to protect the interests of its citizens? So, for that reason, Mdm Speaker, I do support clause 24 Part VI A of the Bill.
Mdm Speaker, if this Bill is passed, it would really mean more work for each of the Chairman of every Town Council. However, I have no doubt that it is the right and responsible thing to do, as it would result in better public accountability and strengthen financial management. It is good and for the benefit of the residents and, therefore, I support the Bill.
Mr Low Thia Khiang (Aljunied):\tMadam, may I have a clarification?
Mdm Speaker:\tYes, Mr Low.
Mr Low Thia Khiang:\tThank you, Madam. I wish to thank Mr Lim Biow Chuan for his comment on Hougang Town Council (HTC). Yes, WP has been managing the Town Council in the past 20 years without major problems or hiccups. I would say that even today, if you look at the management of a Town Council, whether it is AHPETC or HTC, we manage the Town Council relatively well, if you look at the Town Council Management Report of HDB. What the problem is, is financial accounting problem. Why are we having the problem? We have explained here before. But I would like to say and reiterate again − I would say that the problem is thanks to the company called Action Information Management Pte Ltd (AIM). We lacked the financial accounting system that is able to cope and manage a large Group Representation Constituency (GRC) —
Mdm Speaker: Mr Low Thia Khiang, you should confine your clarification to what Mr Lim Biow Chuan said.
Mr Low Thia Khiang:\tYes, Madam. I wish to inform the House that we have a new tender for a new financial accounting system and we expect things to be improved.
Mdm Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.15 pm.
Sitting accordingly suspended
at 3.48 pm until 4.15 pm.
Sitting resumed at 4.15 pm
[Mdm Speaker in the Chair]
[(proc text) Debate resumed. (proc text)]
Mdm Speaker: Mr Charles Chong.
Mr Charles Chong (Punggol East): Mdm Speaker, I had been Chairman of a Town Council previously and I understand some of the challenges which are involved in running a Town Council.
This Bill is of great interest to me as the number of the prudential safeguards sought in the Bill are relevant to the circumstances in which I took over Punggol East SMC following the 2015 General Election.
Many of the points that I intended to make have already been said by PRPTC Chairman Mr Zainal Sapari and I will not repeat them. I will confine my remarks to the Bill to these prudential safeguards.
The last amendment of the Town Councils Act took place in 2005 and one of the changes which was effected then was the creation of an offence for the usage of funds in a manner not specifically authorised by the Act. The change was intended to, in the words of the then Minister of State Mr Heng Chee How, \"to strengthen corporate governance of Town Councils going forward\".
That was and remains a very relevant goal. There is much public interest in and scrutiny of the way public bodies conduct themselves these days. This is a good thing. It keeps the Government and public entities on their toes. This interest and scrutiny are even more pronounced when matters relating to public funds are concerned and I believe it is the right thing that we hold ourselves to the highest standard when it comes to stewardship of public money.
The expanded conflict of interest provisions in clause 9 of the amendment Bill, therefore, seeks to achieve this by requiring conflicts which members of Town Council may have in relation to a particular issue to be placed on record and by requiring a suspension of the exercise of powers of staff of a Town Council who may be in a position of conflict. While these are improvements over the current provisions, the provision set out in clause 9 of the Bill does not quite seem to go far enough.
On this point, I seem to strangely be in complete agreement with Ms Sylvia Lim. The Bill requires a Town Council member's interest to be recorded in the register of interest and for the Town Council staff to refrain from exercising the relevant power until the Town Council has been given approval. What appears to be missing is an element of public accountability in the sense that these conflicts can be approved by the Town Council itself without input from MND or HDB.
Given that such conflicts of interest may be connected to the spending of public money, I believe that it would be in the interest of Singaporeans if, first, any such conflict that has been raised are publicly notified to residents of the town and, secondly, if the matter involves the expenditure of Town Council funds, for the approval of HDB to be required to proceed with the matter notwithstanding the conflict.
Knowing that conflicts of interest are to be publicly scrutinised is something which would be beneficial to the governance structure of the Town Councils. In addition, requiring a third party to approve conflicts of interest will avoid any allegations of whitewashing of conflicts of interest which may otherwise arise.
Clause 14 of the amendment Bill proposes a change to set out clearly the relationship between Town Councils and statutory authorities and would require Town Councils to comply with certain directions of the authorities.
I agree with this approach. While Town Councils are run autonomously, they are not autonomous self-governing regions which are not subject to the laws of the land. Town Councils were constituted to serve a specific purpose for the residents living within a particular town. The Town Councils Act deems members, officers and employees of Town Councils to be public servants for the purpose of the Penal Code.
Whilst this confers certain additional protections, it does mean that they are, in certain respects, held to the highest standard than the man-in-the-street. Town Councils deal with public funds. They should also not seek to frustrate the functions of Government bodies by being uncooperative or non-responsive.
The proposed new section 48A gives further bite to the proposed section 21A by stipulating that the Chairman or Secretary of the Town Council may be personally liable for a Town Council's breach of section 21A. This would certainly help encourage the leadership of Town Councils to provide all necessary cooperation to various Government agencies. I welcome this change. The last thing you would want in the middle of an investigation is to be stonewalled. And the possibility that the Chairman or Secretary will be personally liable will certainly encourage them to get the Town Council to act more expeditiously or to cooperate with Government agencies charged with fact-finding.
The final change I would like to speak about is clause 20 of the amendment Bill which amends the provisions of the Town Councils Act relating to financial reporting. The current version of the Town Council Act already provides for the implementation of financial rules but the amendment Bill gives them bite.
Again, this is a welcomed change and now puts the rules on a statutory footing. The amended Town Councils Act will require Town Councils to, amongst other things, ensure timely collection of money payable and ensure money is properly spent by Town Councils. The proposed power of inspection and the power to require compliance reviews are also a welcome change. Town Councils which are managed properly should not be too concerned with these. And the changes will provide residents in the town with confidence that the Government is able to intervene, at an early stage, if there are concerns about governance in the town.
Mdm Speaker, some will see the changes proposed to be introduced by the Bill as a political act by the PAP Government to make running a Town Council more difficult for the Opposition. On the contrary, it imposes an equal burden on all Town Councils. There are currently 16 Town Councils, 15 of which are run by PAP. The changes to the Town Councils Act apply equally to PAP-led Town Councils as they do to AHTC which is led by WP.
The Government is actually raising standards in respect of conflicts of interest, financial reporting and general prudential matters. There is no free pass given to the PAP or the WP Town Councils. The amendment Bill is a clear demonstration of a commitment to clean governance which has always been one of this Government's guiding principles. What is of singular importance at the end of the day is that the public interest is preserved and that public funds are safeguarded even if it comes at the expense of more stringent requirements on the part of persons who are directly involved. I would be surprised if any Member would disagree with this objective.
Mdm Speaker, with your permission, allow me to address some of the points raised by Mr Pritam Singh and Ms Sylvia Lim. Mr Pritam Singh, if I heard him correctly, implied that the Town Councils (Amendment) Bill amendments are targeted at WP politically, and that it gives advantage to the PAP Town Councils.
Mdm Speaker, the amendment Bill applies across the board, both to PAP Town Councils and AHTC. There are only two targets here. One, incompetent governance of Town Councils and, two, attempts to frustrate investigations by the Government into the affairs of the Town Councils.
It is true that the amendment Bill does address conduct which WP engaged in in respect of the handover of funds attributable to Punggol East SMC. But that episode simply demonstrates how the existing framework and legislation were insufficient to protect the public good or the interest of residents in Punggol East. The Government surely cannot be expected to sit back and let this sort of event take place a second time. The Government would be remiss in its duty to Singaporeans if it allowed what happened to Punggol East to ever happen again.
There is also an implication by both Mr Pritam Singh and Ms Sylvia Lim that MND may not be neutral but may be partisan and will favour PAP Town Councils. I think this is merely a red herring. MND has taken firm action in respect of AHTC only because AHTC has not met the standards required to protect the public interest in its running of its town.
I can say with a high level of certainty that if AHTC held itself to the same high standards to which other Town Councils adhered to and conducted their affairs, with the same concern for proper governance as the PAP Town Councils, they would not have issues with MND. MND is acting in the interest of the public and not in the interest of PAP. While there are lapses in governance, even in the Prime Minister's constituency, as mentioned by Ms Sylvia Lim, these will be highlighted and dealt with transparently and decisively.
In addition to Mr Low Thia Khiang successfully running HTC, Mr Chaim See Tong ran Potong Pasir Town Council for many years, over two decades, without running into the same sort of mess which AHTC now finds itself.
In addition, it is not only MND which has raised concerns about the goings-on in AHTC. It is well documented that neutral parties − KPMG, the Courts, the Accountant-General's Office − have all raised concerns about the affairs at AHTC, in particular, AHTC's own auditors have not been able to issue a set of unqualified accounts in the last five years.
KPMG, an independent professional firm, has also used very strong language in describing the affairs at AHTC. Among other things, KPMG referred to pervasive control failures, inadequate qualified personnel and so on. I believe AHTC has only resolved less than half of the audit points which it is meant to address. It appears that some progress has been made. But should all these points have arisen in the first place? With that, Mdm Speaker, I would strongly support the Bill.
Mdm Speaker:\tMs Sylvia Lim.
Ms Sylvia Lim: I have a clarification for Mr Chong. In his speech, he was making a vague reference to AHTC's handling of funds vis-a-vis Punggol East. I am not sure what he is complaining about. Is he still sticking to the statements he made during the election campaign that $22.5 million worth of sinking funds handed over to us have been unaccounted for? That was the phrase that he used.
My second question is about control failures. He mentioned that AHTC has control failures and that these control failures should not have happened in the first place. Is he saying that PRPGTC has no observation points in their annual audits from the auditor?
Mdm Speaker: Mr Charles Chong.
Mr Charles Chong: Mdm Speaker, I will address the Member's second question first. Pasir Ris-Punggol and other Town Councils may have comments on it but none so bad as AHTC. We have so many agencies, the Courts and so on putting their concerns in.
On the first issue, at that time, after the elections, AHTC had yet to return the $20 million of sinking funds that we have transferred to AHTC. That amount has been returned but the final accounts which they had sent to us, we received only on 24 February. And it showed, by their calculation, that they still owed us more than $4 million.
They have paid that back after we served a letter of demand on them. But we are going through the accounts to ascertain if there are more funds owed to us. And we will let them know in due course after the auditors have examined their latest statement of accounts which we received only on 24 February this year.
Mdm Speaker: Mr Pritam Singh.
Mr Pritam Singh:\tMdm Speaker, I would just like to clarify, when the Member refers to the letter of demand, is he referring to it in the legal sense of the word? Secondly, can the Member clarify what was the total amount that has been transferred to PRPGTC for Punggol East SMC in sinking funds by AHTC?
Mdm Speaker: Mr Charles Chong.
Mr Charles Chong:\tMdm Speaker, I am surprised that Mr Pritam Singh has asked that because I believe he was the recipient of that letter of demand that we served on him. On the amount that was transferred to us, they had returned us $20 million which we had transferred to them. But in the two and half years that Punggol East was under control by them, they have not been able to account for it until just a short time ago, 24 February. And even then, I think they have submitted three sets of accounts to us at different times, and all of those indicated that they had owed in sinking funds more than $4 million to $5 million. And I think that money would not have been transferred if we had not served our letter of demand on them.
Mdm Speaker:\tAgain, Mr Pritam Singh, last clarification. Let us not convert this into a debate on the specific issues. But this is a debate on the general principles of the Bill. Last clarification.
Mr Pritam Singh: Yes, Mdm Speaker, I recognise that but Mr Charles Chong has made certain insinuations which have to be corrected in the public interest. With regard to the comments made about financial statements which had been given to PRPGTC but then taken back by AHTC, the first set of accounts putting up the position of Punggol East SMC was handed over to Pasir Ris Punggol on 27 September 2016. This was then clarified. There were issues in there which PRPGTC wanted to meet AHTC to clarify. We did arrange for a meeting and our auditor actually met with officials from PRPGTC on 14 November.
I am a bit surprised to hear about these, almost complaints about \"Look, the money has not been given\" and so forth. I would like to remind Mr Charles Chong that the final instalment from PRPGTC to AHTC in 2013 after the by-election of 2013 was made in September 2014. It is not very much longer than the final transfer that we have just made yesterday.
Mdm Speaker: Mr Charles Chong.
Mr Charles Chong: Okay, I am equally surprised that Mr Pritam Singh is unaware of it. I think, as the Member mentioned, the first set of accounts that they sent to us in 2016, we found so many discrepancies that we sent it back. After the meeting, which was called and discussed, they agreed that there were discrepancies and, therefore, they withdrew that set of accounts.
The second set of accounts were sent recently, and they also voluntarily withdrew it for whatever reason, because they did not have enough time to examine it. And then they followed up with a third set of accounts on 24 February 2017. We are still trying to ascertain whether that is accurate, and it is a qualified account by the way.
Mdm Speaker: Dr Janil Puthucheary.
The Minister of State for Communications and Information and Education (Dr Janil Puthucheary): Mdm Speaker, I beg your indulgence. This point is not about the principles of the debate, but I have to clarify a comparison that Mr Pritam Singh is making, where the delay in transfer from PRPGTC to AHTC is being compared with the reverse transfer. The reasons for the delay in both cases are quite different.
In the first instance, where there was a delay of transfer to the new Punggol East Town Council under WP, the issue was about an agreement about the terms and conditions and the liabilities and so forth. The delay in the other direction, which Mr Charles Chong has just talked about, is as a result of what has happened under the WP Punggol East Town Council, we were unable to ascertain how much should be transferred in the first place.
There was a discrepancy between the first and the third sets of accounts that the WP themselves had submitted, so they were unable to ascertain, I believe, how much they should be transferring to us. If they were able to ascertain how much they were transferring to us, then there was no reason for it to be in three tranches, the last of which was only a few days ago, after the most recent sets of accounts.
So, the comparison between those two sets of delays is entirely false. There was a delay on both sets, but the comparison is entirely false, because the reasons for the delay are entirely different.
Mdm Speaker: Mr Pritam Singh.
Mr Pritam Singh: Mdm Speaker, I would not belabour this point. Yes, it is good to know that Minister of State Janil recognises that there was a delay for both different occasions, but the fact remains that the reason why those accounts were withdrawn was because Pasir Ris-Punggol said there were some problems with them. And in the right spirit, I believe we told the auditors: \"Come, let's sit down. Let's talk about it then\". [\tInterruption] So, I am not sure what is so objectionable to the Minister of State Janil.
Mdm Speaker: Mr Louis Ng.
Mr Louis Ng Kok Kwang (Nee Soon): Madam, I declare my interest as the Chairman of Nee Soon Town Council. Madam, this Bill helps to improve the governance of Town Councils and I stand in support of it.
I am encouraged by the new section 19(4) curbing substantial trading or financial activities. This new addition reinforces the spirit of the Act: that Town Councils should not lose sight of its core objectives, which is to manage the living conditions of residents and not take on ancillary activities which may not necessarily contribute directly to the interests of residents.
Having said that, can the Minister clarify what exactly is meant by \"substantial trading or financial activities?\" Will the Ministry be publishing clearer guidelines with regard to this?
Next, with regard to the interaction between Town Councils and Statutory Boards, which many members have highlighted, according to section 21A, Town Councils must comply with any directions from Statutory Boards, so long as the directions belong to the broad categories listed in the section, and failure to comply would result in criminal conviction. While this section ensures that Statutory Boards may carry out their work efficiently, it does not appear to provide any firm platform for Town Councils to raise their concerns or reject a direction from a Statutory Board on reasonable grounds. In this regard, can the Minister clarify if there are such guarantees in place for Town Councils to raise their concerns about directions from Statutory Boards?
Next, I note that the Minister may pass model by-laws, and Town Councils can amend the model by-laws and pass its own by-laws. However, by-laws made by the Town Councils must not be \"inconsistent\" with the model by-laws. The Bill further states that model by-laws could be made at any point in time.
How will the Ministry determine if the by-laws are \"inconsistent?\" Who will determine this and is there an appeal process? Can the Minister provide more clarifications about the model by-laws and whether a draft will be released to the Town Councils for our input and feedback soon?
I have no doubt that by-laws set by the Minister or Ministry would be done in the best interests of the residents. However, we need to have sight of what the model by-laws would be and knowledge of whether consultations and the frequency under which these would take place.
Finally, I note that this Bill does not address the issue of the handing and taking over of sinking funds when there is a change in the management of Town Councils. As Members of this House are aware, different Town Councils may adopt different calculation methods of how much sinking fund is to be transferred, whether it be by number of blocks in precincts or by the unused balance sinking fund. May I take this chance to request that the Ministry study this matter and amend or pass the relevant laws to resolve this matter, thereby providing clarity to the relevant parties, moving forward? Madam, notwithstanding the comments above, I stand in support of the Bill.
Mdm Speaker: Dr Chia Shi-Lu.
Dr Chia Shi-Lu (Tanjong Pagar): Mdm Speaker, I rise in support of the amendment to the Town Council Act and declare my interest as the Vice Chairman of the Tanjong Pagar Town Council.
The Town Council, as we all know, is the key instrument through which the elected MP for that constituency is able to directly influence the living environment of his constituents, and the performance and integrity of the Town Council serves as a bellwether of the Member's fidelity to his or her residents. I feel that this municipal role of a sitting Member should not change, as the separation of the municipal and legislative roles will dilute the relationship between an MP and his constituents or could even result in unproductive conflicts.
Nonetheless, it has to be acknowledged, as many Members have done, that the Town Council is primarily a custodian of the properties within the Town, but also has heavy responsibilities regarding the immediate day-to-day upkeep of the precincts and also the long-term maintenance and rejuvenation of the Town, a key case in point being the need to plan for the replacement of lifts. Unlike the management of private housing projects, the Town Council has to factor in future large infrastructure investments into their operational considerations.
Over the past decade, if we look around us, there has been an increasing number of municipal councils around the world which have become insolvent, often, we must say, from factors beyond their direct control, for example, pension obligations, reductions in their traditional tax bases or even large lawsuits. One of the reasons is also that in many of these countries, there is a lack of regulatory oversight and also of intervention.
All of these town councils do have some form of audit and, many times, the audits do show this inexorable deterioration in their finances, but nothing can be done in most of these cases because the government of the day of that country did not have the ability to step in and correct the cause when it had to be done.
And so, it is here that I disagree with the WP position that we should just remain with the current state of affairs and rely on the AGO because that was the system that we had in the past. Audits and surveillance are really no substitutes for regulation or the proper intervention, when needed.
Here, I take an example from a field that I am very familiar with. As a doctor working in a hospital, we have audits and we have heard that in other countries, for example, in the UK, when audits show deficiencies in care − which have led to problems of loss of life, to mobility for the patients − many of these cases, because there was no direct regulatory intervention, it took a long time before the audit results would go to the proper people so that the proper steps could be done.
So, I think that this is the same situation here. There should be, in addition to an audit system or surveillance system, the proper regulation and also the intervention must be there to come in when needed, in this particular case, to safeguard the welfare and the benefits of the residents.
The next question, of course, is: should MND not be the regulator? Well, if MND should not be the regulator, then who else should it be? I think it is a fallacious argument to always try to set up a new committee, which is supposedly independent, every time we need regulation. I think we can suggest it in certain circumstances, but I do not think that is the way most governments work, because the whole thing becomes very unwieldy.
I also think we should give credit to the rule of law in Singapore and to our civil servants who perform their roles without fear or favour. If we keep on playing the persecution card and say that the cards are always stacked against us, there is no end to this argument and it is very hard for our nation to progress. That is why, in my opinion, MND is probably the best body in this particular case to step in when necessary, when Town Councils are in need of help.
I would like to move on to seek some clarity on the provisions for Town Councils which may be facing insolvency or have, perhaps, become insolvent. I understand that MND adheres to the principle that Town Councils should remain autonomous entities, but that should not preclude them from some protections as, ultimately, it will be the residents who bear the consequences. For instance, municipalities in countries like Germany and Canada cannot become bankrupt, as their public debts are implicitly guaranteed by the state.
Could I ask that perhaps some considerations should be given to the fact that Town Councils could also be afforded some protections against claims? For instance, limits can be imposed on certain of its liabilities.
I would also like to seek three further clarifications from the Minister.
First, on the amendment of section 38 regarding the timely submission of audited accounts, in the event that the Town Council is in default and unable to produce the audited accounts and a fine is imposed, is this fine to be paid from the Town Council's coffers, or by the Committee or the Chairman of the Town Council?
Second, with regard to section 31 − I know that Senior Minister of State Desmond Lee may have talked about it earlier − could I just confirm that Town Council staff and/or members of the MA will be barred from sitting on the Town Council Committee?
Finally, can the Ministry share some details of the proposed Code of Governance to encourage best practices? I support the Bill.
Mdm Speaker: Ms Thanaletchimi.
Ms K Thanaletchimi (Nominated Member): Mdm Speaker, I declare my interest in this Bill as a dwelling resident of an HDB estate run by a Town Council. I am glad and fortunate to be living in Ang Mo Kio GRC, a precinct well-run by Dr Intan Azura. I truly believe in governance and accountability to every Town Council resident, for that matter. So, let me give a different perspective as a resident of a Town Council.
Madam, the amendments to the Town Councils Act, if passed, will, indeed, further strengthen Town Council governance as it demands greater transparency and gives the MND more power to compel Town Councils to declare their financials in an appropriate and timely manner.
The amendments will help tighten financial discipline and strengthen accountability and transparency by requiring Town Councils to submit the audited financial reports within six months of the FY and keep a registry of disclosures on conflicts of interest involving staff members or employees. This is important as residents do pay conservancy charges and it is important that they know where the money goes to. It further stresses that Town Councils that fail to comply with the Act will be fined up to $5,000 and key decision-makers can be prosecuted for the failure.
Madam, it is, indeed, notable that the Bill also proposes for a Code of Governance, setting out standards which Town Councils need to adhere to. In view of the fact that Town Councils in the first place were created to decentralise the estate management of the residential town, therefore, do the amendments intend to include a provision to allow different Town Council management regimes in the future?
If, or should the Town Council fail or does not perform satisfactorily or perform up to par, how would the Ministry, as the body with regulatory and oversight over the Town Council, deal with it? Madam, notwithstanding these, I rise in support of the Bill.
Mr Ang Wei Neng (Jurong): Mdm Speaker, please allow me to declare my interest as I am the Chairman of Jurong-Clementi Town Council.
Clause 18 of the Town Council (Amendment) Bill seeks to amend section 33 to establish a new sinking fund called LRF. This is to recognise that many lifts and lift parts need to be replaced before the end of the lifespan of the lift, as stipulated during the procurement phase.
Otherwise, most, if not all the Town Councils, will not have sufficient sinking funds to do the replacement. At the same time, I am glad that MND is co-funding LRF, matching 50% of the Town Council's contributions to LRF.
As we debate the Town Council (Amendment) Bill, I have one suggestion and two clarifications for MND on points mentioned by the Senior Minister of State earlier.
Although HDB procures the lifts while Town Councils maintain the lifts, I would like to suggest that HDB need to have a mindset that HDB has a large stake in maintaining the lifts. In this way, HDB will go all out to obtain feedback from the party that maintains the lift and incorporate the feedback when procuring the next batch of lifts. For example, HDB needs to take greater cognisance of the lifecycle costing of the lifts, compared to the purchasing cost of the lifts.
In addition, HDB could also stipulate that the lift suppliers have a guarantee that all the lift spare parts, especially the parts that are under the sole proprietary right of the lift supplier, would be available throughout the lifespan of the lift at the inflation rate stipulated upfront. This will help to mitigate the issue of high lift maintenance costs and unavailability of spare parts.
As for the clarifications, I note that under clause 18 (l) of the Bill, the Town Council can now transfer whole or part of the surplus of its operating fund at the end of a FY to LRF. Could I clarify whether the transfer of the surplus to LRF will also attract MND's co-funding even though the Town Council has already met its minimum obligation to transfer 40% of the operating revenue to the sinking fund?
Meanwhile, I am also glad that MND will be providing a grant of $600 per lift owned and maintained by the Town Councils. Could I clarify if the Town Councils are obliged to contribute 40% of the $600 grant to the sinking fund? If so, this will mean that the net grant by MND to offset the lift maintenance cost is only $360 per lift instead of $600.
I hope the Minister can consider my suggestion and answer my two clarifications. Mdm Speaker, in Mandarin, please.
(In Mandarin): [Please refer to Vernacular Speech.] Mdm Speaker, I speak with a heavy heart as I join this debate on the Town Councils (Amendment) Bill. After the amendment, as the Chairman of a Town Council, I could go to jail if the Town Council is not managed appropriately. The highest punishment under clause 48A(1) is one year's imprisonment, or a fine of $5,000, or both. Why should I go to jail for mismanagement of the Town Council if I am not corrupt?
Town Councils manage funds running into hundreds of millions of dollars. Collected from the monthly S&CC paid by residents, these funds are the people's money and, of course, they should be well managed. The amendments this time will require the Town Councils to manage their funds properly and set out the accounts clearly. If a Town Council is not appropriately managed, its accounts not set out clearly, and it repeatedly disregards the authority's request to correct the errors by continuing to do what it did before, then the chairman will be prosecuted. MPs are representatives of the people, in charge of funds running into the millions, of course, they have the responsibility to run the Town Councils well.
Some people may ask, why should MPs manage the Town Council? Why not let the HDB manage the Town Councils directly? Honestly, when managing a Town Council, MPs must manage things big and small. Projects worth millions of dollars must be examined carefully to see whether the tenderers are capable and the price is reasonable or not. It is also important to make sure there is no nepotism when awarding the contract, to avoid being accused of corruption. For small things, matters, such as complaints about neighbours throwing sanitary napkins from high floors, must also be handled. Is this not troublesome? Some say, as representatives of the people, MPs just need to manage the big things of the country, and that the small things can be handled by the civil servants. But is it so?
It is said that whoever can be trusted in small things can be trusted in big things and whoever is dishonest in small things will be dishonest in big things, too. Those who do small things may not be able to do big things but those who cannot even do small things well cannot be expected to do big things.
And this is the purpose of letting MPs run the Town Council. When an MP advocates transparency in Parliament, we must see whether accounts of the Town Council that he/she is managing are transparent and in order. When an MP says in Parliament we must greatly reduce foreign labour, we must also see whether his/her Town Council can do without even one foreign worker. When the MP says in Parliament that we shall not raise the price of anything, we must see whether his/her Town Council can, without raising S&CC, give annual increments to the Town Council's staff and cleaners, and pay for the ever-increasing lift maintenance cost. In other words, without raising S&CC, can the Town Council afford to pay for higher lift maintenance cost and annual increment of its staff without running into a deficit? If, indeed, a deficit appears, how is it going to be tackled?
Running a Town Council is like running a local government. Clause 24 empowers the Town Councils to introduce by-laws. For example, the residents are not allowed to park or hold an event in certain areas. If the resident contravenes this rule, the Town Council can impose a fine. If an MP can manage the Town Council well whereby the public area is clean, the lifts are running smoothly and the accounts are kept orderly and balanced, then the people will feel assured that this MP can do bigger things, such as organising a government.
But if an MP cannot manage the Town Council well, say the estate is not clean, the accounts are in a mess and every year there is a deficit, then how can we expect this MP to manage the country well? Like in a certain Town Council, its accounts are so messy that even their own independent auditor dare not approve the accounts. I work in a listed company and I understand the importance of external auditing. If a listed company's accounts cannot pass external auditing, it means that the company's accounts are problematic and the shareholders will ask questions. If a listed company cannot pass external auditing, the share price of the company will drop significantly and the shareholders will lose confidence in the company. However, the particular Town Council that cannot even pass external auditing is still untouched even today. I am surprised.
Today, the very purpose of this amendment is to strengthen the transparency and control of the Town Councils to prevent similar mishaps from happening. I, therefore, support this amendment.
Mdm Speaker: Mr Darryl David.
Mr Darryl David (Ang Mo Kio): Madam, before I begin, I wish to declare my interest as the Vice-Chairman of Ang Mo Kio Town Council.
Mdm Speaker, the amendments proposed in the Bill are meant to promote and strengthen effective and efficient governance and accountability of Town Councils and to ensure financial and infrastructure stability and sound financial management. I have just quoted a passage from the Bill itself.
One would be hard pressed to argue against having a stronger governance framework as this would only serve further to safeguard residents' interest and public funds from potential abuse and mismanagement. I do believe many of my colleagues in the House have taken that point of view as well.
While I do support this Bill, I would like to speak on two specific areas that in my opinion warrant closer scrutiny. The first is the amendment suggested in clause 14 of the Bill where it was stated in absolute terms that Town Councils must work cooperatively and collaboratively with HDB or any statutory authority or public officer when they discharge their duties or risk being penalised for non-compliance. My belief is that all collaboration between the Town Council and the other public agencies will always start with the right assumption that all agencies are working towards providing the best quality of service and benefits for residents, regardless of whichever Town Council or agency may be serving the residents in.
While the amendments of the Bill will vest HDB and any statutory authority with the power to enforce penalties on Town Councils if they are deemed to be non-compliant to the agency's request, I hope that this power will be exercised only when HDB and the other statutory authorities have exhausted all other means of bringing that particular Town Council in line with its mandated duty of serving the interests of the residents. This power should not be invoked in the first instance when there are differences in opinions of how duties are to be performed. I would urge HDB and other public agencies to carefully study the merits of differing opinions offered by Town Councils before arriving at the conclusion that the powers proposed in the Bill should be invoked.
Also, Madam, I would like to comment on some speeches earlier which seem to suggest that perhaps the agencies, be it HDB, NEA or even MND, could be impartial or even biased in executing their services and duties, depending on the Town Councils they were serving. To do so would be a very unfair comment on some of our public agencies and our public officers. I can honestly say that in my dealings with our agencies, it has not always been smooth. I have had instances where we have had disagreements and different points of view. But to suggest that the officers in these public agencies are not capable of being unbiased, not capable of being fair in their judgement, would, to me, be an insult to these officers. I would just like to state that for the record, Mdm Speaker.
I would also like to suggest that the Government also clarify the scope of responsibility of Town Councils and other public agencies when it comes to managing places that currently fall in areas where there are overlapping responsibilities. Let me give a specific example to illustrate my point. There was an incident that was an accident in my division a few weeks ago where a driver inadvertently reversed his car into the walls of a childcare centre at high speed and demolished the walls of the centre. Thankfully, it was a weekend and the centre was closed because the place where the car ended up was where the children normally sleep. If it had happened the next day, I shudder to think of the consequences, Madam.
We are now evaluating the design of the car park and all the car parks in our estate and plan to build safety bollards in car parks and/or void decks that have significant congregations of people where such accidents could possibly happen. The common areas in the void deck are being managed by the Town Council, the car park was designed and built by HDB. My question is: which agency should be responsible for the billing of the bollards, in this instance, where safety issues have risen from an inherent design flaw or a wrong decision of a car park that was designed and built by HDB? Should HDB take responsibility even if the areas of the bollards that are to be constructed happen to be managed by the Town Council?
I am sure that there are many such examples across the island and I hope there can be greater clarity on the scope of duties and responsibilities of Town Councils and public agencies in grey areas where the lines of responsibility are not so clearly delineated.
The second point, Madam, is on clause 18 which is about the setting up of the sinking fund to cover the costs of lift replacement and lift upgrading works. Given the large majority of residents in Singapore live in high-rise public housing, lifts can be viewed as a form of vertical public transport system that ferry people to their homes. A lift breakdown is extremely disruptive to residents' lives, especially for young children, the physically disabled and the elderly who might have trouble using the stairs. It is important that all these undergo regular maintenance services and the frequency of such preventive maintenance will only increase with the passage of time as lift parts get worn out at an exponential rate from age and heavy usage.
To finance the growing needs to maintain and service the lifts, I agree that more Town Council funds should be set aside specifically for the purpose of lift maintenance and replacement. The cost of lift maintenance is likely to increase exponentially over time, especially when ageing estates need to replace entire batches of lifts when the lifts reach the end of their service lifespan. So, I hope that the Government will continue to provide the grants to Town Councils to defray the servicing and replacement cost of lifts and also adjust the quantum of both grants from time to time.
Madam, there are approximately 63,000 passenger lifts in Singapore, with a disproportionately high number of those lifts located in public housing estates. Indeed, it was recently mentioned in a CNA report that Singapore would need an additional 1,000 lift technicians over the next three years in order to meet our overall lift maintenance needs. I do believe this point was highlighted by Minister Lim Swee Say during the recent Committee of Supply (COS) debate.
The lack of skilled technicians in lift servicing is a worrying concern since the demands for these technicians will only increase over time and the biggest bugbear that prevents new entrants from entering the sector is the relative tough job that technicians need to do and the lack of career prospects.
Given that we need more than 1,000 technicians over the next three years and the relative difficulty in attracting Singaporeans and locals into the sector, would HDB and MND work with MOM to get special dispensation with regard to the foreign worker quota for this job category? I believe the waiver of the foreign worker quota will, in the short and medium term, help alleviate the shortage of manpower in the sector while we attempt to build a stronger Singaporean Core in this area of work. I stress the aim must be to build a stronger Singaporean Core in this area of lift technicians and their similar skillsets and capability.
Madam, by and large, the proposed amendments in this Bill are meant to strengthen the regulatory and corporate governance framework of Town Councils which can only be beneficial to the residents and that they are things we should be focusing on regardless of all the discussions we have had. Strengthen the regulatory and corporate governance framework and benefit the residents. As such, I complete my speech in support of the Bill.
Mdm Speaker: Senior Minister of State Desmond Lee.
Mr Desmond Lee: Mdm Speaker, I thank the various Members who have spoken and their comments. This House has broadly affirmed the need to strengthen Town Councils' public accountability and for 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 far more fundamental in nature.
Let me first address the broader, more fundamental points. Both Mr Pritam Singh and Ms Sylvia Lim emphasised that they want the Town Councils' framework to be depoliticised. I have explained at the start of the debate what the purpose of the Town Council framework is. And Mr Singh, on behalf of WP, accepts 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 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, contribute ideas, demonstrating their thoughtfulness, 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 as well as the 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. So, for instance, MPs may espouse the virtues of openness and transparency but are they really practising what they preach when they run an organisation?
So, in short, Madam, the Town Council framework has served as a 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 Council still hold true. I am glad Mr Singh, on behalf of his Party, agrees 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.
Madam, Ms Sylvia Lim said that the regulatory powers introduced in this Bill, in particular Part VIA, gave MND too much power to intervene or even interfere in the affairs of Town Councils. 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 Town Councils operate, for instance, Town Councils being subordinate to public laws and statutory authorities carrying out statutory duties. These minimise ambiguity on the ground. The Bill also puts in place safeguards and compliance mechanisms to enable MND as a regulator, as 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, that is, 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 have an honest opinion as to whether their management style is for the short term or 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, which should do so as they are obliged to do.
Madam, Ms Sylvia Lim expressed concern about the independence of MND, the appropriateness and independence of MND as a regulator for Town Councils. She says the new enforcement powers of the Town Councils (Amendment) Bill 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, quite unwarranted and, perhaps, are indicative of the world view from which the WP comes from. That when a political entity and 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 ombudsmen for every aspect of his work, especially when it relates to issues that may pertain to the politics of the land.
First, let us all go back to fundamentals, and Mr Singh and Ms Lim are both lawyers, so they will understand this. When a government is 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, such as the Police, NEA, CPIB, the Inland Revenue Authority of Singapore and so on. And we are not unique in that sense. We are not a unique system to do this. And as a Parliamentary majority, the Government can and is obliged to make laws in the public interest. But, 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 the Town Councils have been fined, some other Town Councils have been censured, embarrassed by agencies when they 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 Ang Mo Kio Town Council. Is there an allegation or claim that the officers of CPIB will fear investigating Ang Mo Kio Town Council? Are they timorous souls?
I fear that the allegation goes a bit too far. Because these powers, Madam, 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. It 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 the 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 officials or the MND political officeholders have to be recused, then some other Minister will have 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 every now and so often, pointing to shadows, claiming conspiracies.
Madam, when prosecutions are instituted, as is 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 these should stand.
Mr Pritam Singh and Ms Sylvia Lim called for the appointment of independent persons. Ms Sylvia Lim mentioned independent ombudsman. Mr Singh talked about independent auditor or accountant. But these so-called independent ombudsman or independent accountants have to be appointed by somebody vested with the authority to take charge of the matter, somebody responsible for the policy of the issue.
So, will the allegations of biasness and partisanship really ever end? What about officeholders of other Ministries and agencies who may be responsible for the 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 eyes of people and the protection of the Courts to ensure that the executive powers of the Government are exercised fairly?
Madam, let us look at what happened thus far for the AHTC or AHPETC saga. The whistle was first blown by AHPETC's own external auditors in 2011. The subsequent audit was carried out by AGO, an independent audit office which Ms Sylvia 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 which came up with an independent report on the serious allegations of possible civil and criminal liability. And now, at HDB's request, firm request if I may say so, 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 over whom the review or investigations are being carried out. In most instances, consistent with the political philosophy underlying Town Councils, we expect that the Town Councils will, in a light touch scenario, on their own accord, resolve 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 an investigation needs to be carried out, MND is prepared to appoint independent auditors and professionals to carry out investigations and they will then have to report both to MND and the Town Council, as required by law.
Having said all this, 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 step up into politics and are elected by people into government are to be distrusted, that they will, in full glare of the public, misuse laws? Or was it really 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.
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, reporting to 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 of Singapore. Their lawyer argued explicitly in Court with his client behind him on AHTC's behalf that even if there was mismanagement of misspent funds, their view was that there was nothing that could be done, other than through the ballot. So, is it a willingness for appropriate independent, fair, justifiable regulatory oversight, or is there a preference for no oversight whatsoever?
Madam, MND will and has always exercised its regulatory powers with due care and regard to people and the residents' public interests, as it has always done. Apart from the public eye, there is always the recourse of the Courts under the framework of judicial review. Ours is a system where the rule of law and any abuse of public powers are subject to the jurisdiction of the Courts. I am sure Mr Singh and Ms Lim understand that very well.
Madam, Ms Sylvia Lim has 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 claimed 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 interests. They understand the imperatives, they understand the need for fairness. They have their own mind and own heart and will act and do what is right. And in MND, we have a team of public officers overseeing Town Council matters fulltime. We have no doubt that these officers will 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 the Town Councils' existence.
Madam, Ms Sylvia Lim has made an insinuation about public officers acting in partisan ways and she cites a number of examples, the details of which are not in our possession today. But each year, MND receives the 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 public servants undertake for every Town Council as they are submitted to this House.
In fact, this is exactly what MND Secretariat did, I am told, for AHTC's FY2015/2016 accounts yesterday. It was submitted six months late. I am told that the Secretariat wrote to the Town Council to point out certain errors and mistakes which were not publicly disclosed.
Next, I would address questions posed by different Members on specific regulatory powers, why they were introduced and the mechanisms for enforcement.
A few MPs have 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 the 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 a fine imposed on a key decision-maker, or a person purporting to act in that capacity, it is to be borne by the individual who is found liable for the offence and not be 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 Bill which disqualifies people who have significant influence over the MA from being appointed to key officers in a Town Council. The legislation is quite clear on this phrase. But Ms Sylvia Lim talked about the GM of the Aljunied Town Council, from I think CPG or one the subsidiaries, when she took over. Back then, under the Financial Reporting Standards (FRS), CPG would not be a related party but FM Solutions and Services (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.
Members also sought clarification on the code of governance. MND will introduce this code of governance in consultation with Town Councils. Amongst 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 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 controls, systems and policies to protect stakeholders' interests and to safeguard Town Councils' assets.
Madam, Town Councils today generate revenue from S&CC charges that residents pay as well through activities, such as charging for the use of common property and for the use of advertising spaces in the towns. This is within the remit of Town Councils' 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. So, to Mr Louis Ng's question on what \"substantial trading\" means, the new provision prevents Town Councils from undertaking risky ventures, by deviating from the key mandate, for example, using Town Council 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 on the Town Councils' purse as a consequence.
As mentioned, this does not prevent the Town Councils from investing in stocks, funds and securities with advice from a qualified person or licensed body, subject to the existing safeguards in the TCFRs.
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 Town Councils unreasonably prevent 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 where public health, public safety and order are at stake.
One example is where HDB's lift upgrading works were once held up by a Town Council which refused to apply for the relevant licences required from the Energy Market Agency (EMA). 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. They 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 every resident's mailbox key to the Town Council, a request that was turned down by HDB. Some Town Councils raised questions when the Land Transport Authority stopped paying the Temporary Occupation Licence (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 authorities are 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 WP 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, they will ask the Town Council and tell them they 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 to try and arbitrate the matter, our public officers will do so.
I will assure Ms Sylvia Lim that under the Bill, if a compliance order has to be issued, it will be because the agencies see that it is necessary to carry on to do what it needs to do on common property. If the Town Council, for whatever reasons, still refuses and believes that 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 Council would have a platform to raise concerns or reject a compliance directive by statutory authorities. In my earlier response to Ms Syvia Lim, I have shown that this, in fact, would be woven into the process.
Mr Louis Ng asked about the model by-laws. To clarify, the intent to scope these by-laws narrowly is so as not to fetter the autonomy of Town Councils. Town Councils will still have autonomy to set the by-laws. But the provisions in the model by-laws would only relate to certain aspects of the management of common property, such as rules on damage of 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 purposes.
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 would next address points made on the provisions 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 will 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 and as a reality check for themselves 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 the 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 Shi-Lu's suggestion on having the state guarantee all the debts of Town Councils, we will have to study very carefully how the examples he 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. 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. So, even in lift maintenance, there are both immediate maintenance and repair needs, and more long-term replacement, maintenance needs that may require it to be split into the two accounts, that is, operating and the sinking fund types 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 may fall outside the scope of this Bill.
Members have highlighted that on the ground and in practice, the responsibilities of Town Councils vis-a-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-over/taking-over guide in consultation with various Town Council Chairmen. The guide clarifies some of the points raised today, such as 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 the need to tally overseas votes. Second, to clarify that the 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, transfers 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.
Mdm Speaker:\tSenior Minister of State, we should ask the Leader to move a Motion to extend your time?
Mr Desmond Lee: Yes, Madam.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Time Limit for Senior Minister of State's Speech","subTitle":"Suspension of Standing Orders","sectionType":"OS","content":"The Leader of the House (Ms Grace Fu Hai Yien):\tMdm Speaker, may I seek your consent and the general assent of Members present to move, \"That the proceedings on the item under discussion be exempted from the provisions of Standing Order No 48(8) to remove the time limit in respect of the Senior Minister of State's speech?
Mdm Speaker: I give my consent. Does the Leader of the House have the general assent of hon Members present to so move?
[(proc text) Hon Members indicated assent. (proc text)]
[(proc text) With the consent of Mdm Speaker and the general assent of Members present, question put, and agreed to. (proc text)]
[(proc text) Resolved, \"That the proceedings on the item under discussion be exempted from the provisions of Standing Order 48(8) in respect of Senior Minister of State Desmond Lee's speech.\" − [Ms Grace Fu Hai Yien.] (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Town Councils (Amendment) Bill","subTitle":null,"sectionType":"BP","content":"[(proc text) Debate resumed. (proc text)]
Mdm Speaker: Senior Minister of State Desmond Lee.
Mr Desmond Lee: 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 am 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 three 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 that are developed. It will also arrange for a meeting with the Town Council on site one 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 Committee of Supply (COS) debate 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 the Building and Construction Authority (BCA), HDB, Town Councils and the industry.
Madam, I thought it would be useful, since many Members asked about LRF and the long-term sustainability of lifts, to talk about this so that all of us here understand the challenges that we collectively face. As I have 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 and to agree to requests to build. It is less attractive to talk about the long tail of maintenance. But let us accept that this is 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 backloaded, 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.
Mdm Speaker, with your permission, I will show a slide very quickly on the screen that will expedite the explanation.
Mdm Speaker:\tYes, please. [A slide was shown to hon Members.]
Mr Desmond Lee: Lift replacements require significant expenditure. Based on our projections, over the next 30 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 backloaded, occurring beyond 2025. So, 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 infrastructure.
Last September, we asked Town Councils to give us a sense of their financial projections over the next 10, 20, 30 years. We accept that the further you look ahead, the less reliable are 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 and announced some changes earlier. As the chart on the screen shows, Town Councils will have to set up a dedicated 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 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 lifecycle 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 LRF more quickly. This will cost over $50 million a year to the Government. 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.
As the chart on the screen shows, the extra funding that 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 Goods and Services Tax (GST) Subvention Grants and the S&CC rebates, 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 our finances, start saving now and gradually build up our sinking funds and LRF over time. This is a responsibility 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) to cause Management Corporation Strata Titles (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 an 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, with everyone contributing their fair share towards improving our living environment rather than leave future generations to bear the costs.
Madam, I would round up by outlining what this Bill means for Town Councils and our residents. First, the new provision holds Town Councils to higher standards of governance, transparency and accountability in carrying out their duties. This is the right thing to do and Singaporeans expect this of Town Councils.
At the same time, 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.
Mdm Speaker, I believe all Singaporeans elect their MPs in good faith. But recent developments suggest that we cannot assume that MPs will always act in the residents' best interests.
Our 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' interests 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. [Applause.]
Mdm Speaker: Mr Pritam Singh.
Mr Pritam Singh:\tMdm Speaker, I would just like to clarify with the Senior Minister of State the early suggestion of the AGO doing rotational audits at various Town Councils, would the Ministry consider that as a way to improve the current Town Council governance structure?
Mr Desmond Lee:\tMadam, I said earlier that for section 43B, which is for investigations, they will be carried out by independent professionals and auditors or by AGO.
Mdm Speaker: Ms Sylvia Lim.
Ms Sylvia Lim: Madam, four clarifications for the Senior Minister of State. Earlier in his speech, he alluded to the Court case which MND brought against AHPETC and the position that we took at the time. I would like to clarify that we took the position based on legal advice and, as it turned out, the Court did rule that MND was not the proper party to sue the Town Council in that instance.
Secondly, regarding civil servants, the Senior Minister of State seems to suggest that I am implying that civil servants are not responsible or somehow biased. Let me just clarify that as a former civil servant myself, I do recognise that civil servants do their best to act responsibly. But in this case, what Part IVA is expecting HDB employees, for example, who are appointed as inspectors, to do is to possibly make adverse findings against their political masters. The investigation will be triggered by the Minister for National Development himself. While he may want to do the right thing or the public servants may want to do the right thing, the reality is such. I think those of us who are realists will know the problem.
Thirdly, regarding the issue of whether MND is the proper entity to implement or to supervise Town Councils as such, as the Senior Minister of State has repeated many times, fundamentally, Town Councils are political institutions. To vest a political officeholder with the decision-making power over political institutions, is just not tenable. As I mentioned in my speech, it is not just my view, but it is also the view of some corporate governance observers who have mentioned that, at least in terms of perception, it just does not look right. He also mentioned that MND has also been so-called quite nice to AHTC by writing to us to tell us that our accounts, maybe there are some things that we need to clarify but, at the same time, we see a media release yesterday, nicely timed for today's debate. So, this is just another example of the Ministry's behaviour.
For now, one last clarification. I am not too clear about what the Senior Minister of State meant regarding the conflicts of interest and the C-suite, which he talked about in his opening speech. Currently, the way the provisions are worded, so long as this person has a significant influence over the business of the MA, that person would not be able to be a Town Council Secretary or GM. The point is, is it just the Chief Executive Officer (CEO)? What is the meaning of significant influence? It cannot just be at that level.
Mr Desmond Lee: Madam, the first question was about whether MND was the right party to sue, what the Court found and what her lawyer said. AHTC, when it was brought to Court, was asked to respond to an application by MND to let the Court appoint an independent auditor to look into its difficulties. It was not a case of MND asking the Court to allow MND to go in. It was MND asking the Court to appoint an independent auditor. The first key point that struck us was that AHPETC or AHTC resisted that Court application as framed.
The point about MND being found by the Court not to be the right party had nothing to do with this point about whether anything could be done if there was mismanagement. It was purely based on the Court's reading of whether it was MND or HDB, and ultimately, they said it was HDB. And HDB made the application to the Court of Appeal.
The key point I would like this House to take away is that while Ms Sylvia Lim talked aspirationally about the need for independence, an independent oversight, what the Town Council was arguing in Court was that, where there was mismanagement of funds, nothing could be done beyond the ballot box.
The second point was about civil servants and about whether they are prepared to make adverse findings against political masters, I think she has just contradicted herself. First, she says on the one hand, she said her former colleagues are people of integrity and of spine and steel, and will do what is right, as is the ethos of this Public Service. And on the other, in a backhanded way, she says they will kowtow their timorous souls. In fact, that is what she is saying.
I think we object to that. Our officers are brought up with an ethos of integrity, service and excellence. There is, indeed, now ongoing, a CPIB investigation into certain individuals, or an individual in the Ang Mo Kio Town Council. That is reported in the news. What is Ms Lim's analogy extending to that case going to be?
Third, MND being political because the Minister is a politician and that Town Councils are political and, therefore, the Ministry should not be a regulator. The Ministry has been the regulator for 28 years. Yes, we have more powers today to intervene, but these powers are because the unspoken compact when the Town Councils were formed 28 years ago has been broken. That compact is premised on Town Councillors and elected Members, recognising the electoral accountability, the visibility to the residents, would do what is right to fix the problems and would proactively do it, as has been wont of many Town Councils by the Government who would report to CPIB and the Police when things are wrong.
But in AHPETC's case, despite its external auditor's findings, despite the AGO's report, despite the findings by the High Court and Court of Appeal, and despite KPMG's report, take the view that, \"Come, the reports do not say that definitively; yes, there is a cloud, but you prove it and I will sit tight.\"
Even today, we have to wait for an independent panel, external from the Town Councillors, to take decisive action.
So, when it comes to whether MND is the appropriate regulator, I think it is. We have indicated to Mr Pritam Singh that in regard to clause 43B, it would be an independent auditor, independent individual, who will conduct investigations of all Town Councils.
As to conflict of interest, Madam, we have to decide where to draw the line. Where there is a conflict of interest, the first basis, the first thing you do, is to declare it, have it registered and recuse yourself. Do not take part in the decision because you are conflicted.
But we have gone much further to say that if you are a person wielding significant influence over the MA, you are not allowed to occupy key offices in the Town Council. We have to strike a balance between a recusal process and an absolute prohibition. And I think we have taken a high-water mark.
Mdm Speaker:\tMs Lim, we are going around in circles, as you can see. Do you want to make another clarification?
Ms Sylvia Lim:\tTo ask a question, Madam.
Mdm Speaker: Yes, please proceed.
Ms Sylvia Lim:\tYes, Madam. To follow up on what the Senior Minister of State mentioned about the AGO, our proposal is that the AGO does rotational audits of all Town Councils. I think what the Senior Minister of State is responding to is that he is saying that under Part VIA, if the Minister should instruct so, the AGO may be activated. Fundamentally, to ensure an even keel and uniform standard throughout all the Town Councils, we see great value in getting the AGO to do rotational audits of Town Councils, whether or not the Minister triggers them.
Mr Desmond Lee: Madam, each year, Town Councils already have to be audited by external auditors and the AGO has decided that individual Town Councils can suggest auditors, which have to be approved. That is the case every year.
Madam, Ms Lim is confused between the annual financial audit and the audit in Part IVA. In Part IVA, there are two kinds of interventions. One is health checks, compliance reviews; and the other is where there are investigations arising from a reasonable suspicion of wrongdoing. In the latter, I have explained to Mr Pritam Singh that in regard of the investigation into Town Councils, it will be carried out by independent professionals. The AGO can already be triggered under the clauses in the Audit Act, as had been the case for AHPETC.
[(proc text) Question put, and agreed to. (proc text)]
Mdm Speaker: Ms Lim, do you wish to record your dissent?
Ms Sylvia Lim: Yes, Madam, we would like the WP Members' dissent to be specifically recorded that we cannot accept the Bill because of Clause 24.
Mdm Speaker: Can those who wish for their dissent to be recorded please stand up?
[(proc text) Hon Members Mr Low Thia Khiang, Ms Sylvia Lim, Mr Png Eng Huat, Mr Muhamad Faisal Bin Abdul Manap, Mr Chen Show Mao, Mr Pritam Singh, Assoc Prof Daniel Goh Pei Siong, Mr Dennis Tan Lip Fong and Mr Leon Perera stood at their seats for their dissent to be recorded. (proc text)]
[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]
[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Desmond Lee.] (proc text)]
[(proc text) Bill considered in Committee; reported without amendment. (proc text)]
[(proc text) Question for Third Reading put, and agreed to. (proc text)]
Mdm Speaker: Members who are against it, please stand up. Yes, your dissent is recorded.
[(proc text) Hon Members Mr Low Thia Khiang, Ms Sylvia Lim, Mr Png Eng Huat, Mr Muhamad Faisal Bin Abdul Manap, Mr Chen Show Mao, Mr Pritam Singh, Assoc Prof Daniel Goh Pei Siong, Mr Dennis Tan Lip Fong and Mr Leon Perera stood at their seats for their dissent to be recorded. (proc text)]
[(proc text) Bill accordingly read a Third time and passed. (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Adjournment","subTitle":null,"sectionType":"OS","content":"[(proc text) Resolved, \"That Parliament do now adjourn to a date to be fixed.\" – [Ms Grace Fu Hai Yien.] (proc text)]
Adjourned accordingly at \t6.00 pm.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"HDB Lifts Able to Accommodate Standard-size Ambulance Stretchers in Emergencies","subTitle":null,"sectionType":"WA","content":"1 Mr Ong Teng Koon asked the Minister for National Development whether there are plans to ensure that all HDB lifts are able to accommodate standard-size ambulance stretchers in the event of emergencies.
Mr Lawrence Wong: Most of the lifts in Housing and Development Board (HDB) residential blocks meet the minimum internal lift car dimension requirement as stipulated by the Building and Construction Authority's Building Control Regulations. However, some of the lifts in older HDB residential blocks may have smaller lifts that do not meet this minimum requirement. These lifts can accommodate a wheelchair, but not an ambulance stretcher in an inclined position. HDB will work with the respective Town Councils to see what can be done for these lifts.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null}],"writtenAnswersVOList":[],"writtenAnsNAVOList":[],"annexureList":[],"vernacularList":[{"vernacularID":3636,"sittingDate":null,"vernacularTitle":"Vernacular Speech by Mr Zainal Sapari","filePath":"d:/apps/reports/solr_files/20170310/vernacular-10 Mar 2017 - Mr Zainal Sapari - Town Council Bill.pdf","fileName":"10 Mar 2017 - Mr Zainal Sapari - Town Council Bill.pdf"},{"vernacularID":3637,"sittingDate":null,"vernacularTitle":"Vernacular Speech by Mr Ang Wei Neng","filePath":"d:/apps/reports/solr_files/20170310/vernacular-Ang Wei Neng TC Bill 10 March 2017-Chinese amended WN.pdf","fileName":"Ang Wei Neng TC Bill 10 March 2017-Chinese amended WN.pdf"}],"onlinePDFFileName":""}