Mr Speaker, Sir, I beg to move, “That the Bill be now read a Second time.”

Objective

2. Sir, the proposed amendments to the Town Councils Act will provide the legislative framework for Town Councils to carry out their own lift upgrading works using part of their sinking funds. This will help to speed up the lift upgrading programme and help us achieve our objective of providing direct lift access for all eligible HDB blocks within ten years.

3. This Bill will introduce a new section on ‘Lift Upgrading Works’ under Part IVA of the Town Councils Act. It also seeks to widen certain powers of Town Councils to facilitate their day-to-day operations. The Bill will also impose penalties on a Town Council and its respective Chairman and Secretary, if the Town Council were to utilise its operating and sinking funds for purposes not specifically authorised in the Act or its subsidiary legislation.

4. Let me now explain the various key provisions.

Town Councils’ Lift Upgrading Programme

5. The Bill will empower Town Councils to carry out their lift upgrading works under the Town Council Lift Upgrading Programme (or TC-LUP). We will allow Town Councils to use up to 10% of their residential sinking funds for the TC-LUP. Clause 6 will introduce a new Part IVA on lift upgrading works by Town Councils. The manner in which Town Councils can implement the TC-LUP largely mirrors Sections 65A to 65L of the Housing and Development Act, which cover the upgrading works carried out by HDB. Amongst other things, this means that precincts proposed for TC-LUP have to be gazetted before they can be upgraded, and Town Councils will have the power to recover improvement contributions from their residents.

6. To implement TC-LUP, Town Councils will need to obtain HDB’s prior approval and the support of at least 75% of residents in the block who will benefit from the lift upgrading works, the same as for HDB’s upgrading programmes. HDB’s prior approval is necessary, because as lessor of HDB flats, it has an inherent responsibility to ensure that any improvement works are carried out safely. Currently, Town Councils are similarly required to obtain HDB’s permission as landowner prior to carrying out improvement works to the common property in HDB estates.

7. Under the TC-LUP, residents will need to co-pay for the lift upgrading works, similar to HDB’s LUP. This is to ensure that residents carefully consider their need for lift upgrading when voting for the TC-LUP.

8. Clause 6 of the Bill will empower Town Councils to recover from residents benefitting from the lift upgrading works their share of the TC-LUP costs. The contribution that Town Councils recover from each resident cannot be lower than what residents would have paid had HDB carried out the lift upgrading works in the precinct. Clause 6 also prescribes how Town Councils can impose interest and a penalty for late payments; how they can recover unpaid payments, including the sale of the flat as a last resort; and the order of charge in which the sale proceeds of a flat will be disbursed.

9. As with HDB’s upgrading programmes, residents who benefit from TC-LUP will be allowed to use their CPF balances to pay for their share of the TC-LUP costs. Clause 12 will make related amendments to the CPF Act to allow this. It will also create a charge on the HDB flat to secure the repayment to the CPF of the amount withdrawn for the TC-LUP works.

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Offences for the Misuse of Town Council Funds

10. I shall now move on to the rationale for introducing offences under the Act if Town Councils were to use their funds in a manner not specifically authorised in the Act.

11. Sir, the control and use of Town Council funds are set out under Section 33 of the Town Councils Act. Section 33(6)(a) provides for the circumstances under which Town Councils can use their sinking fund monies, while Section 33(6)(b) allows Town Councils to disburse monies from their operating funds to carry out the duties and functions of Town Councils under the Town Councils Act or any other written law.

12. Town Councils have been in existence for 16 years. They have built up substantial amounts of sinking funds and accumulated surpluses.

13. The sinking funds of Town Councils largely comprise S&CC contributions from residents. They are meant for the long-term cyclical maintenance of HDB estates. Works like the replacement of roofing systems, water tanks and electrical sub-systems, repainting, and major repairs and maintenance of common property, are necessary to ensure that our HDB estates are well-maintained and provide a conducive and safe living environment for residents. The sinking funds need to be safeguarded so that they can finance these maintenance works when they are due.

14. Currently, there are no provisions under the Act to take to task Town Councils that misuse their funds. Although this is not a concern today, we need to strengthen the corporate governance of Town Councils going forward. This is the rationale for introducing provisions under the Town Councils Act that will make it an offence if a Town Council uses its funds in a manner not specifically authorised in the Act.

15. Clause 7 of the Bill will allow Town Councils to use their sinking funds to implement the TC-LUP. It will also make the contravention of Sections 33(6)(a) and (b), which govern the use of the Town Council’s operating and sinking funds, an offence under the Town Councils Act. The penalty for the offence will be a fine of up to $5,000. The principal officers in charge of running the Town Council, that is, the Town Council Chairman and its Secretary, will also be liable if the Town Council commits such an offence with their consent or due to their negligence.

16. I earlier mentioned that Town Councils would be allowed to use up to 10% of their sinking funds to implement the TC-LUP. As a policy, we will only allow Town Councils to implement the TC-LUP for blocks where the cost per benefiting unit does not exceed $5,000 per benefiting unit. We need to set a reasonable limit so that, within the budget, the benefits of lift-upgrading are spread to as many blocks as possible. In other words, Town Councils do not use a disproportionate amount of their TC-LUP budget on a small number of blocks where the lift upgrading works are very costly. Clause 6 of the Bill will empower the Minister to make rules related to the TC-LUP. In making these rules, we will make it an offence if a Town Council exceeds its expenditure limit of $5,000 per benefitting unit under the TC-LUP. As with Clause 7, the Town Council Chairman and its Secretary will also be liable if the Town Council commits such an offence with their consent or due to their negligence. However, the Rules will be crafted with sufficient flexibility so that Town Councils will not be unfairly penalised if the cost per benefiting unit exceeds $5,000 under extenuating circumstances.

17. Let me reiterate that the penal clauses proposed in the Bill are very specific. They are to safeguard the use of Town Council funds, ensuring that Town Councils do not use their funds in an unauthorised manner or exceed the TC-LUP cost cap. These penal clauses will not cover other infringements under the Act.

Amendments to Other Sections

18. Sir, I shall now go through the other proposed amendments in the Bill.

19. Clause 2 amends Section 3(2) of the Act to extend the timeframe for Town Councils to be constituted after the publication of the polling results of a Parliamentary election from the current 8 days to 14 days. This will give MPs and relevant Government agencies more time to work out the boundaries of the new towns, and to prepare and publish the required Orders.

20. Section 19 of the Act prescribes the functions of Town Councils. Currently, Town Councils can make improvements to common areas in HDB estates subject to HDB’s consent. They can also use their funds to maintain facilities outside common property, with the approval of the Minister. Clause 3 amends Section 19 to empower Town Councils to also erect, repair and maintain facilities outside common property upon the Minister’s approval and with the appropriate landowner’s agreement. Clause 7 amends Section 33(7) to clarify that Town Councils may use their funds for these purposes, i.e. erect, repair and maintain facilities outside common property, again subject to the Minister’s approval and the landowner’s agreement. These provisions will give Town Councils more leeway to propose improvement works within their Towns, which will benefit their residents.

21. Clause 4 amends Section 21(1) to clarify that Town Councils will be required to repair and maintain facilities erected outside common property upon the approval of the Minister and the consent of the landowner. This is to ensure that Town Councils are responsible for upkeeping those facilities outside common property which they have requested to build.

22. Section 23 of the Act currently allows Town Councils, through their staff or agents, to enter a HDB flat to carry out works in the discharge of their duties and powers under Sections 21 or 22 of the Act. However, it does not provide for Town Councils to carry out investigations before proceeding with the repair works. Clause 5 amends Section 23 to enable Town Councils to carry out such investigations within the flats after giving sufficient notice to the owner.

23. Clause 8 amends Section 39(14) to include the Personal Representative of a deceased lessee as a party who will be liable for any outstanding S&CC due from the deceased lessee. This is to overcome the operational constraints faced by Town Councils today in recovering outstanding S&CC in cases where lessees have passed away.

24. Section 44 of the Act currently provides for the recovery of outstanding S&CC by creating a charge on the flat, prescribing the conditions under which a flat may be sold, and the order in which the proceeds are to be disbursed upon the sale of a flat. Clause 9 amends Section 44 to alter the priority of payments to various parties in the event of a sale of flat to facilitate the recovery by Town Councils of unsecured payments under the TC-LUP.

25. Clause 10 amends Section 46 to enable Town Councils to offset their legal costs against the fines collected, before paying the balance amount into the Town Council fund. This amendment was proposed by the Town Councils to address the administrative constraints they face today in the prosecution of offenders under the Act or their by-laws. Under current provisions, Town Councils are required to pay all the fines and moneys collected from the composition of offences into the Town Council fund, before drawing from the fund again to pay for their legal costs.

26. Section 50 of the Act currently provides that the Minister may appoint any person to exercise or perform certain powers of a Town Council subject to certain timelines stipulated in the Act. This section has not been invoked. As Section 50 is intended to address emergency situations, Clause 11 amends this section to shorten the notice period the Minister must give to the Chairman of a Town Council before he invokes his power to appoint another person to take over the powers and duties of the Town Council from 21 to 7 days. It will similarly shorten the time given to the Chairman to make representations to the Minister from 21 days to 7 days.

27. Finally, Clause 13 seeks to make two related amendments to the Housing and Development Act. The first amendment seeks to extend the power to declare precincts for upgrading works, which is currently vested with the Minister for National Development, to the Minister of State for National Development. This is in anticipation of the larger number of precincts that will be declared for upgrading works, as we speed up lift upgrading. The second amendment is to bring the provisions under Section 65H on the recovery of improvement contribution from the sale of flat in line with that under the new Part IVA of the Town Councils Act. It essentially requires HDB to defer the sale of a flat with outstanding improvement payments from the lessee if the flat has movable properties of sufficient value which could be sold to offset the debt.

28. Sir, I beg to move.

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