Law passed to strengthen town council governance

In explaining the importance of town councils, Senior Minister of State for National Development Desmond Lee said they serve more than 3.2 million residents and collectively manage over $1.6 billion in public funds.
In explaining the importance of town councils, Senior Minister of State for National Development Desmond Lee said they serve more than 3.2 million residents and collectively manage over $1.6 billion in public funds.ST PHOTO: KUA CHEE SIONG

Regulations part of wide-ranging changes to clarify town councils' role, boost financial management

Town councils that fail to submit their audited financial accounts on time would have committed an offence under a new law passed by Parliament yesterday.

Another offence introduced in the new Town Councils Act is failing to keep a record of the conflicts of interest declared by town councillors and employees when dealing with, say, contracts.

A town council will also run afoul of the law when it carries out commercial activities, such as organising trade fairs, which are not part of its core functions.

The penalties include a fine of up to $5,000 when town councils fail to comply.

The regulations are part of wide- ranging changes that Senior Minister of State for National Development Desmond Lee said would clarify a town council's role, improve governance and strengthen financial management.

 
 
 
 
 
 

His ministry will also have greater regulatory oversight of town councils, a change opposed by the Workers' Party (WP).

Mr Lee said the changes will boost the transparency and public accountability of town councils.

The new law follows a review of the Town Councils Act that was mooted in 2013, following heated parliamentary debates on the running of town councils and the handover of Aljunied GRC, which the WP took over from the People's Action Party after the 2011 polls.

The amendments are the most sweeping since town councils were introduced in 1989.

In explaining their importance, Mr Lee said town councils serve more than 3.2 million residents and collectively manage over $1.6 billion in public funds. This is a sharp rise from 2.4 million residents and $300 million in the early 1990s, he noted.

People's expectations of town councils have also risen. "As public institutions entrusted with millions of dollars received from residents and the Government, town councils should be held to the same standards of governance as charities and public-listed companies," he said.

The robust debate involving 14 MPs lasted three hours. Eventually, all nine WP MPs voted against it.

The law's key changes include:

• Town councils must submit audited financial reports within six months of the financial year ending.

• Conflict of interest when handling say, contracts, must be declared and a record kept by the town council secretary. Those who must declare such conflict include town councillors, employees or anyone delegated with town council responsibilities.

• The ministry now has powers to do regular checks on the financial health of town councils and investigate suspected irregularities. It can appoint inspectors, who could be public officers or professionals, to do it. Key town council officers found guilty can be fined up to $5,000, jailed for up to a year, or given both punishments.

But the stronger enforcement powers to investigate and require specific remedial actions to be taken "will generally be exercised when a town council is uncooperative or recalcitrant, refusing to correct irregularities despite due and fair notice", said Mr Lee.

The WP's Mr Pritam Singh (Aljunied GRC), in opposing it, said: "The MND (Ministry of National Development) risks becoming a tool of the ruling party of the day to fix the opposition."

But Mr Lee stressed that the new law seeks to preserve the autonomy and latitude of town councils while protecting residents' interests and public funds.

"With a stronger regulatory framework, MND will play a more effective role in safeguarding residents' interests," he added.

A version of this article appeared in the print edition of The Straits Times on March 11, 2017, with the headline 'Law passed to strengthen town council governance'. Print Edition | Subscribe