Parliament: Town councils to meet higher governance, transparency standards under proposed changes to law

Proposed changes to the Town Councils Act will require town councils to submit audited financial reports within six months of the end of the financial year, among other things.
Proposed changes to the Town Councils Act will require town councils to submit audited financial reports within six months of the end of the financial year, among other things. PHOTO: ST FILE

SINGAPORE - Town councils will be required to adhere to higher standards of transparency and governance under changes proposed as the Government seeks to amend the law to give it greater oversight in the governing of town councils.

Under the proposed changes to the Town Councils Act, town councils will have to submit audited financial reports within six months of the end of the financial year, and keep a registry of conflict of interest disclosures from its staff, among other things.

Town councils that fail to do so can be fined.

For instance, the secretary of the town council can be fined up to $5,000 if he fails to keep a registry of conflict of interest disclosures. Town councils can also be fined up to $5,000 if they do not submit audited financial statements on time.

The wide-ranging changes were tabled in Parliament on Monday (Feb 6) by Senior Minister of State for National Development Desmond Lee.

They are meant to clarify the roles of town councils, and are expected to improve governance and strengthen financial management, as well as give the MND more regulatory oversight.

The review of town councils was announced in 2013, following a heated debate in Parliament between the Government and its Members of Parliament, and those from the Workers' Party (WP), on the running of town councils and the handover in Aljunied GRC after the 2011 polls.

In 2015, the Auditor-General's Office flagged major governance and financial lapses in the WP-run town council after a special audit. The Aljunied-Hougang Town Council, formerly Aljunied-Hougang-Punggol East Town Council, has failed to submit clean accounts.

Currently, MND has no power to compel town councils to give information on its finances and there are no penalties if a town council refuses to do so.

If the proposed changes are passed by Parliament, the ministry will be able to appoint inspectors to investigate if town councils have flouted regulations, and issue an order to town councils specifying remedial action to take, among other things.

Town councils can be fined for not complying, and if key decision makers have been found liable, they too can be taken to task.

The MND said the fines and penalities have been benchmarked against the Charities Act, since town councils and charities are both run autonomously, manage public funds and consist of volunteers.

Another key change will prevent the shareholders and executive decision makers of the town council's auditor and managing agent to be appointed town councillors. They will also not be allowed to hold key posts such as town council secretary, general manager and finance manager. These changes are meant to reduce conflicts of interest.

MPs will debate the amendment Bill after the Budget debate.

First introduced in 1989, town councils were set up to give MPs the authority and responsibility to take charge of their constituents' estate.

MPs would also be directly accountable to their voters, who could take into account how they fared in running the town councils.

In its statement, MND said the proposed amendments "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".