Minister of State for National Development Desmond Lee has said he is taken aback with Workers’ Party chief Low Thia Khiang’s remarks to the media that residents of his Aljunied-Hougang-Punggol East Town Council need not worry about its poor performance in service and conservancy charges (S&CC) arrears management and corporate governance.

The Workers’ Party-managed town council (TC) was the only one out of 16 which was banded “red” in the recently released Town Council Management Report.

On Friday (Nov 7), the Ministry of National Development released a statement from Mr Lee where he took issue with Mr Low’s comments in a Lianhe Zaobao article dated Nov 6. “He explained that poor financial management does not impact the TC’s operations and services, and therefore residents’ safety and the living environment. He added that S&CC arrears were a common problem, which he also experienced in Hougang, and that residents would eventually pay up; ‘it was a matter of time’,” said the Minister of State.

Mr Lee said he disagreed with Mr Low’s “sanguine assessment”, and said the sharp increase in S&CC arrears has serious implications for residents. Part of Mr Lee’s statement is reproduced below:

“As at April 2013 (when his TC last reported a shocking arrears rate of 29 per cent), 39,000 households in AHPETC were effectively subsidising 16,000 households who did not pay their S&CC.

If this trend continues, the TC’s finances must surely decline and the TC will not be able to sustain its operations. The delivery of essential services must then be affected, to the detriment of residents. We should bear in mind that all TCs have to replace at their own cost, critical infrastructure, like lifts and water tanks and carry out all sorts of other building, mechanical and electrical repairs.

Mr Low disclosed that Hougang TC had a similar approach to S&CC arrears management. Indeed, its S&CC arrears rate was 7.8 per cent in FY10, the highest amongst all TCs.

But what Mr Low did not disclose is that in the same year, Hougang TC’s own independent Auditor raised concerns regarding the adequacy of the TC’s operating funds to support its daily operations. This is because Hougang TC’s finances were in deficit – it had by then wound up with a net operating deficit of about S$92,000 and an accumulated deficit of about S$9,000.

What Mr Low also did not disclose is that Hougang managed to avoid a cash flow problem only after he merged Hougang with Aljunied after GE 2011. The two TCs’ finances were then co-mingled. Before merger, Aljunied had an operating surplus of $3.3m. Within two years, the merged AHPETC’s financial position has deteriorated rapidly. The operating surplus of $3.3m Aljunied had in FY10 had turned into an operating deficit of S$734,000 in FY12.

AHPETC’s financial position today may in fact be worse. For the TC has not submitted its FY13 financial statements, despite repeated reminders. It has also stopped submitting its monthly S&CC arrears report since May 2013, again despite repeated reminders. This was 10 months before the AGO Audit started in Feb 2014, so it could not be because of the AGO Audit.

And yet Mr Low says AHPETC “has no cash flow problems”. I hope he is correct.”

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