Major changes proposed for Town Councils Act

The Aljunied-Hougang Town Council at Block 701, Hougang Avenue 2.
The Aljunied-Hougang Town Council at Block 701, Hougang Avenue 2. PHOTO: ST FILE

Feedback sought on amendments to ensure more regulatory oversight, better governance

Town councils may be penalised in future for not submitting their audited financial reports, under wide-ranging proposals to change the law governing town councils.

The Ministry of National Development (MND) is seeking public feedback on 12 amendments to the Town Councils Act, which will give the ministry more regulatory oversight, clarify the roles of town councils, improve governance and strengthen financial management.

In a statement yesterday, MND said the proposals "seek to ensure that town councils deliver essential public services in a consistent, fair and sustainable way that serves the interest of residents, while retaining the autonomous nature of town councils".

It added: "The review also recognises that the public expects transparency and accountability from town councils as they manage public funds and take responsibility for maintaining a good living environment for residents."

Among the changes is one that will give the ministry more bite in taking town councils to task if they withhold information from it, or fail to submit audited financial reports. Penalties will be introduced for such "clear and egregious contraventions".


There are no such penalties currently and the ministry has no power to compel town councils to give information on their finances.

Town councils will also be required to submit audited financial statements and reports to MND within six months after the close of the financial year, under another change.

MND also proposed a code of governance. Town councils will have to declare if they have adhered to it or if they do not comply in certain areas.

Another proposed change has to do with setting up a dedicated Lift Replacement Fund. Town councils currently have to set up an operating fund for daily operations and a sinking fund for cyclical works. The new fund will pay for the replacement of lifts.

MND said the proposed changes to the law have been adapted from the Charities Act, where appropriate, given that both town councils and charities are run autonomously, manage public funds and consist of volunteers.

The move comes after a strategic review of town councils, first mooted in 2013 following heated parliamentary debates on the running of town councils and the handover in Aljunied GRC, which the Workers' Party (WP) took over from the People's Action Party after the 2011 polls. The review was raised again in Parliament in February last year after the Auditor- General's Office found major financial and governance lapses at the WP's Aljunied-Hougang-Punggol East Town Council.

The proposed changes are the most sweeping since town councils were introduced in 1989 to give MPs the responsibility for running their own estates so they are accountable to their voters.

A version of this article appeared in the print edition of The Straits Times on October 19, 2016, with the headline 'Major changes proposed for Town Councils Act'. Print Edition | Subscribe