Measures to Protect Interests of Residents of Town Councils

Mr Alvin Yeo asked the Minister for National Development what measures are available to the Ministry to protect the interests of residents in relation to Town Councils who fail to observe good corporate governance and responsible accounting practices.

Mdm Speaker, Town Councils were set up in 1989 by an Act of Parliament to serve two objectives.

Firstly, Town Councils were set up to give authority and responsibility to elected Members of Parliament (MPs) to take charge of their constituents' estate and to allow each Town to develop its own distinctive character under the MPs' leadership.

Secondly, Town Councils, so set up, made MPs accountable to their voters for the running of the estate, as these voters can take the MPs' performance into account when they next go to the polls.

In line with these objectives, the Town Councils Act and the Town Councils Financial Rules give the elected MPs much latitude to run the Town Councils within broad and general rules of governance. For instance, there are only three offences in the Town Councils Act. These relate to the misuse of Town Councils' funds, contravention of the Town Council - Lift Upgrading Programme (LUP) rules, and the wilful withholding of information required by an auditor without reasonable cause. These attract fines.

In extremis, should the Town Council fail to maintain the estate properly or if there is a need to remove any imminent danger to residents, the Minister for National Development can intervene in the operations of the Town Council and to appoint someone else to perform the Town Council's duties.

In general, the Town Councils are expected to manage their own affairs and to be accountable to their resident-voters. Town Councils are required, for instance, to keep proper accounts, which must be audited annually. The audited reports must be promptly submitted by the Town Councils to MND for tabling to Parliament. MND will make public its concerns and observations so that residents are informed and can hold the Town Council to account, in line with the objectives for setting up Town Councils. To encourage strong corporate

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governance and promote greater public accountability, MND regularly publishes the Town Council Management Report so that residents know how their Town Councils are performing.

While the Town Councils Act may have limited enforcement powers, the actions of Town Council officials as individuals are, of course, subject to the laws of the land beyond the Town Councils Act, no different from any other person. Criminal and civil liabilities apply when their actions amount to transgressions of such laws.

The Town Councils Act was drawn up to allow MPs latitude and autonomy so that they can be directly accountable to their constituents for their performance. While residents can hold their Town Councils to account in areas such as cleanliness and maintenance of the estate, it is difficult for residents to exercise effective oversight in other areas of Town Council operations, such as financial management.

Town Councils are entrusted to deliver essential municipal services and also manage large sums of public monies. MND is studying the framework to see what can be done to ensure better protection of public funds.