MND studying town council framework to see how to better protect public funds: Khaw

The National Development Ministry (MND) is studying the town council framework to see what can be done to ensure better protection of public funds, said its minister Khaw Boon Wan on Monday.

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Oral Answer by MND on town Councils failing to observe good corporate governance and responsible accounting practices:

Mr Alvin Yeo: To ask 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.


Town Councils (TCs) were set up in 1989 by an act of Parliament to serve two objectives.

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

Secondly, TCs, 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 (TCs Act) and the Town Councils Financial Rules give the elected MPs much latitude to run the TCs, within broad and general rules of governance.

For instance, there are only three offences in the TCs Act - these relate to the misuse of TCs' funds, contravention of the TC-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 TC 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 TC and appoint someone else to perform the TC's duties.

In general, the TCs are expected to manage their own affairs and be accountable to their resident-voters.

TCs are required for instance to keep proper accounts, which must be audited annually. The audited reports must be promptly submitted by the TCs to MND for tabling to Parliament.

MND will make public its concerns and observations so that residents are informed and can hold the TC to account, in line with the objectives for setting up TCs.

To encourage strong corporate governance and promote greater public accountability, MND regularly publishes the Town Council Management Report (TCMR) so that residents know how their TCs are performing.

While the TCs Act may have limited enforcement powers, the actions of TC officials as individuals are of course subject to the laws of the land beyond the TCs Act, no different from any other person.

Criminal and civil liabilities apply when their actions amount to transgressions of such laws.

The TCs 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 TCs 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 TC operations, such as financial management.

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