National Development Minister Khaw Boon Wan said in Parliament on Monday that his ministry gives "the same latitude" to all political parties in town council transactions with political affiliates.
It did not interfere when such transactions happened in town councils run by opposition parties like Workers' Party (WP) and Singapore People's Party (SPP), he said.
He was speaking at the end of a debate on a ministerial statement on town councils, sparked by a controversial sale and leaseback of software from PAP town councils to PAP-owned company Action Information Management, an issue first raised by the WP.
Earlier in the debate, WP MP Pritam Singh noted that the Town Council Act did not prohibit transactions between town councils and party affiliates, and suggested that laws be put in place to ban transactions with political party-owned companies.
Ms Sylvia Lim, chairman of Aljunied-Hougang-Punggol East Town Council (AHPETC) also questioned why MND had used the appointment of FM Solutions and Services (FMSS) as an example of such a transaction, when responding to media queries earlier this month.
Delivering a fierce rebuttal to WP MPs, Mr Khaw said if such transactions were to be banned, then his ministry would also have to ban transactions with companies owned by former party members and party supporters - as is the case with FMSS.
He spoke in detail about the circumstances surrounding the appointment of FMSS by the WP. The company was formed by former Hougang Town Council employee Ms How Weng Fan and her husband
Mr Danny Loh, a long-time contractor of services to that town council.
He said the couple are WP supporters who acted as assentor and proposer for the WP's team of candidates for Ang Mo Kio GRC in the 2006 general election.
Mr Khaw also noted that FMSS was awarded several contracts by AHTC. "When we talk about public interest, how would Ms Sylvia Lim characterise the FMSS transactions?... Would she take the position that contracts given to close party associates be prohibited?" he asked.
Meanwhile, Non-Constituency MP Mrs Lina Chiam of the Singapore People's Party (SPP) was appointed Potong Pasir Town Council secretary in 2010 and paid a monthly salary, he said.
Mr Khaw said his ministry did not interfere in any of these transactions as it applies the "same fair consistent approach applied to all political parties, whether PAP, WP or SPP."