TODAYonline

Clearing the air

Ong Dai Lin

dailin@mediacorp.com.sg

RESIDENTS have been wondering why town councils accumulate sinking funds, how these are managed, and have called for more clarity about their investments.

Yesterday, Dr Teo Ho Pin, coordinating chairman of the 14 PAP town councils, issued a reply to these questions, which appeared in recent letters to the press.

But not all queries were addressed. For instance, will service and conservancy charges increase if town councils are unable to recoup the losses?

When contacted, Dr Teo told Today that residents do not have to worry, as “whether town council charges increase is not dependent on town council investment returns”. “Town council charges are used for current maintenance charges and the funds in the sinking funds are used for cyclical maintenance like maintenance of lifts,” he said.

When asked if town councils might lose more money from their other investments, Dr Teo said that he did not have the details of their investments and declined comment about his town council, Holland-Bukit Panjang.

Other questions that residents had raised included whether there is a cap on surplus funds that can be accumulated by town councils and what amount is considered to be sufficient.

According to some town councils’financial reports, the annual surpluses ranged from $345,000 (Holland-Bukit Panjang) to $4.373 million (Ang Mo Kio-Yio Chu Kang). Generally, the surpluses exceeded$2 million.

Town councils get their operating income from S&C fees, agency fees and other income. For example, Holland-Bukit Panjang collected $36 million in the financial year which ended in March. But it transferred $11 million to its sinking funds, which was the minimum required of it by law, leaving it with a deficit after expenditure is taken into account. But with Government grants, given to all town councils, it ended with a surplus. Its sinking funds, from residential and commercial properties, was about $116 million. Other town councils, for example, have sinking funds of about $182 million (Ang Mo Kio-Yio Chu Kang) and $62 million (Tampines).

Going forward, will town councils rethink their investment strategies, residents also asked.

With the uncertain investment climate ahead, it will be timely to review the investment strategy, Dr Teo told 938LIVE.

“The government has given a two-year guarantee for deposits in the bank, so I think it’s prudent for town councils to put more money in fixed deposits ... We can also consider putting more investments in government securities,” he said.