Hansard, Thursday, 12 February 2015

1 Mr Gan Thiam Poh asked the Minister for Transport why LTA is not in favour of revamping the existing COE bidding system to allow (i) only the applicants to bid for themselves; and (ii) Pay-As-You-Bid by applicants.

(for the Minister for Transport): Mdm Speaker, both issues raised by Mr Gan were suggested as possible ways to ease COE prices in 2013 and the Land Transport Authority (LTA) had consulted extensively on them. Views on banning dealers from bidding for COEs were mixed.

Some felt that dealers provided a convenient service when bidding on buyers' behalf. This approach also allowed the cost of the COE to be financed together with the vehicle cost in a loan package. Others noted that banning dealers from bidding would not lower the price of COEs as the dealers' bids were ultimately a reflection of the underlying demand and buyers' willingness to pay. Some also pointed out that a ban on dealers bidding could be easily circumvented, for instance, by the buyer providing personal details to the dealer to bid in his name.

On the other hand, arguably, having a wider pool of bidders can make the auction and price discovery process more robust. On balance, the LTA decided to maintain the current system which gives vehicle buyers the flexibility to bid for themselves or have dealers bid on their behalf.

The Pay-As-You-Bid model was also consulted on. It should be noted that, empirically, 80%-90% of the successful COE bids are typically clustered within 5%-10% of the final COE price. This suggests that the current bidding model is fairly robust, with not many extreme bids. In fact, experts in auction theory agree that the current system, which prices all COEs within a category uniformly, incentivises bidders to bid their true valuation. It also levels the playing field between the well-informed and the less-informed participants and it is the most efficient allocation mechanism.

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In contrast, under a Pay-As-You-Bid system, bidders are likely to have to spend more time and transactional costs monitoring the bidding and adjusting their bids incrementally.

That said, whatever the debate on the merits and demerits of different auction models, we should acknowledge the fact that COE prices are fundamentally dependent on demand and supply.

2 Dr Lim Wee Kiak askedthe Minister for Transport (a) when will the framework to regulate the use of drones be legislated; (b) what controls are currently in place as interim measures to monitor the use of drones in the public domain; (c) whether drone owners are required to register their equipment to own and operate a drone; (d) how can an individual or a private enterprise protect its privacy and security against anyone using a drone to pry into his property; and (e) whether a person can fly a drone across sovereign borders and, if not, what are the penalties.

(for the Minister for Transport): Mdm Speaker, there are existing regulations for unmanned aircraft operations under the Singapore Air Navigation Order. Unmanned aircraft weighing more than seven kilograms without its fuel are subject to the same strict regulations and controls as manned aircraft, such as registration, airworthiness and flight operations requirements. For unmanned aircraft weighing seven kilograms or less, a permit from the Civil Aviation Authority of Singapore (CAAS) is required if the aircraft operates within five kilometres of an aerodrome, or at an altitude higher than 200 feet above mean sea level when outside five kilometres of an aerodrome. All operators of unmanned aircraft, regardless of whether a permit is required under current regulations for operating such an aircraft, are responsible for operating their unmanned aircraft with the safety and security of others in mind.

My Ministry and CAAS, together with other Government Ministries and agencies, have started a review of the regulatory framework. The review will address how we can facilitate the increasing usage of unmanned aircraft while managing the associated safety and security concerns. We are assessing the feasibility of differentiated levels of oversight for different uses. We are also studying if there is a need to register unmanned aircraft systems and specifying where such systems can or cannot operate. We will be consulting the relevant stakeholders in the coming months.

On the concern over security and privacy, incidents, where a person is found prying into another person's property using an unmanned aircraft, will be assessed on a case-by-case basis, taking into consideration the context and circumstances. As a general principle, enforcement action will be taken against the person carrying out activities which constitute

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an offence under existing laws, such as the Penal Code.

With regard to the operation of unmanned aircraft across international boundaries, there are international rules which prohibit such movements, unless authorisation has been issued by the States in which the flight is to operate. Prior coordination with the appropriate air traffic services authority is also required for operation over the high seas. In Singapore, contravention of these rules may lead to a fine not exceeding $100,000 and/or imprisonment for a term not exceeding five years.

Mdm Speaker, let me thank the Senior Minister of State for answering the question. I would like to ask the Senior Minister of State a few supplementary questions. First, how many of these permits have been issued for those who operate unmanned aircraft of less than seven kilograms? Secondly, how long will this study take and when will the study be concluded so that we roughly know the timeline, as given by the Ministry, since the Ministry is reviewing the rules? I am also a bit concerned about mass events, such as marathons and even our National Day Parade, where we see drones flying around. How do we know these are authorised drones or not? Will they pose a security threat to all of us?

Madam, I thank the Member for his questions. The first one is related to how many permits were granted for unmanned aircraft below seven kilograms of weight. First, to share what the number of applications was: just in the month of January 2015 alone, there were 70 applications. This is a six-fold increase over the average of 12 applications per month a year ago in 2014. How many of those applications were approved and permits granted: between 60% and 70% were approved and just 20%-30% were not approved.

The second question was about the review period. This is a multi-agency effort and, as we are doing a review, we are also taking a closer look at countries, such as the US and Australia, who are similarly looking into their regulatory framework. There are obviously lessons to be learnt and also experiences to be shared. The consultation with the relevant stakeholders is going to take place in the next few months. We will have to look at how extensive the regulations are going to be and then we will be able to say with a firmer sense the timeline required. In relation to Dr Lim's interest, I think we can keep him posted on the progress.

Mdm Speaker, I would like to ask the Senior Minister of State to clarify regarding the 20%-30% that are not approved. What are the reasons for rejecting these applications?

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Madam, the main reason is really safety, especially if there are manned aircraft flying nearby. We do not want to compromise safety. So, those were the main reasons that the 20%-30% were not approved.

3 Mr David Ong asked the Minister for National Development (a) how many new Senior Activity Centres (SACs) at HDB blocks of rental flats and Studio Apartments have not taken over the premises at the contracted deadline last year; and (b) what are the main reasons for the delays.

(for the Minister for National Development):Madam, HDB works closely with the Ministry of Social and Family Development (MSF) in setting up SACs in Studio Apartment developments and rental blocks.

For SACs at Studio Apartment developments, the SAC operator will generally take over the SACs when HDB completes the construction of the facility.

Last year, HDB completed the construction of 11 SACs at Studio Apartment developments. In three of these cases, the appointed operators of the SACs requested for a later takeover as they had to manage their manpower and resource constraints.

HDB and MSF have been working closely with the operators to ensure that these SACs are opened promptly. They are now committed to commence the centres in April or May 2015.

Mdm Speaker, SACs encourage our elderly to remain socially engaged and to stay active. They also come with alert alarm systems which give peace of mind to the elderly as they can activate the alert systems during times of emergencies. So, two supplementary questions, Madam. One, I am not sure if more SACs in the pipeline will be delayed; so, what measures are there for HDB to have a prompt handover to MSF, so that the senior residents' social needs and safety will not be compromised due to such delays? Can the Ministry also work with MSF to make operational the alert alarm systems so that senior residents can be better served when they move in?

Madam, we agree with Mr Ong that we should not compromise the safety of our senior residents in the SACs. As mentioned earlier, of the 11 that were developed last year, three of the operators requested for a slightly delayed takeover period. Otherwise, HDB and MSF work very closely together. The operations are

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such that HDB builds the SACs, hands over to MSF, MSF works with the operators for a prompt delivery of the SACs following internal renovations and installing of all the other equipment. For these three, they had some challenges with regard to their manpower. But I think they will engage the Advisors on the ground to try and expeditiously provide their services and facilities and to make sure that the SACs are functional.

MSF will continue to work very closely with all the operators. From HDB's point of view, we will work with MSF to ensure that the timeline of the availability of the facilities to be handed over matches the ability for the operators to be ready and to provide the necessary services.

Mdm Speaker, I would like to ask the Minister of State about SACs located at rental blocks. I understand some of them have difficulties doing outreach to the senior citizens, because they do not have access to the database of residents staying there. Is HDB able to facilitate this outreach, for example, by writing to the senior residents based on HDB's records – just a letter from HDB, perhaps in four languages, to inform residents that there is this new facility and encourage them to take part in the activities over at the SACs?

Mdm Speaker, certainly, for rental flats, MSF assesses the need for SACs based on the parameters and the number of elderly in the rental blocks. MSF works very closely with the appointed operator or appointed VWO to encourage them to do the outreach to the residents. We appreciate the issue of confidentiality. We can work with MSF on Mr Baey's suggestion on whether HDB can protect the confidentiality and write to the residents to facilitate their understanding of such services that are available. These are some things that MSF and HDB can work together, to ensure that residents are well aware and, certainly, take advantage of services made available to them.

4 Mr Gan Thiam Poh asked the Minister for National Development (a) to date, what is the number of single applicants who have applied and are yet to secure their 2-room BTO flats; and (b) what is the estimated waiting time for these singles to secure their flats.

(for the Minister for National Development): Madam, from July 2013, singles were allowed to buy 2-room Build-to-Order (BTO) flats. Since then, about 18,300 singles have applied and about 9,000 are able to select a flat. The remaining 9,300 did not have a chance to select a flat. Some may have gone on with other housing plans. Many will try again at upcoming BTO launches.

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HDB does not have the waiting time statistics, as it will vary according to factors, such as the popularity of the BTO projects and the applicants' preferences.

As a new scheme, some pent-up demand is expected. HDB has ramped up the supply from 2,600 units of 2-room BTO flats in 2013 to about 5,000 units in 2014. Singles' application rates have accordingly fallen, from a high of 58 applicants to one flat in July 2013, to 13 applicants to one flat in November 2014. We will continue to help applicants to secure their flat more quickly.

Mdm Speaker, I thank the Minister of State for the comprehensive reply. For this year's 16,500 BTO flats, may I know what is the percentage that would be 2-room flats made available to singles?

Madam, we have announced that we will launch about 16,500 BTO flats, of which about 5,000 would be 2-room flats. Not all of these 2-room flats are for singles. As the Member mentioned earlier, the quota is such that we reserve about 30% of the 2-room flats for singles, because we also need to meet the needs and demands of our first-time families, as well as second-timers who require smaller flats. But our experience is such that where there are leftovers from the families and second-timers, these leftover 2-room flats will then be allocated to singles. If we talk about 5,000 out of 16,500 launches for this year, one-third will be 2-room flats that will be launched by HDB.

Mdm Speaker, with the demand from newly-weds easing now – because I do not see so many of them coming to my Meet-the-People Sessions (MPS) now – can the Ministry consider allocating a higher quota for singles?

We are monitoring the situation but, as mentioned earlier, our data show that for 2013 and 2014, although the quota for singles is 30%, the gross figure shows that about 77% of the 2-room flats were allocated to singles. Even if the quota today stays at 30%, the actual numbers that were taken up or allocated to singles are much higher. We will continue to monitor the situation. As Er Dr Lee Bee Wah said, if the demand from first-timers, as well as families, is coming down, we will consider the possibility of increasing the quota for singles. But we will continue to monitor the situation.

My next question is whether HDB will consider giving an extra chance for those repeated so-called unsuccessful applicants after each failure.

Madam, I think we have to be fair to all applicants. But as we treat the cases of families or first-time applicants, sometimes we also take a look at those who have applied many, many times and have had difficulties and we try to look at

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them on a case-by-case basis to try to assist them accordingly. We can also assist singles in that manner; looking at the circumstances of their situation and the number of times they have not been successful in applying for a flat.

By and large, as mentioned earlier, the proportion has come down and the number of singles who have been able to secure their 2-room flats is much better. As we go on in the future, we suspect that as we meet the pent-up demand, things will stabilise and they will be able to get their flats in due course.

5 Mr Gerald Giam Yean Song asked the Minister for Manpower since the launch of WorkPro (a) what is the total amount of funding support disbursed, with a breakdown by funding support type; (b) how many companies have applied for and received WorkPro funding support; (c) what is the average grant disbursed to each successful applicant; (d) what proportion of the amount budgeted for WorkPro in 2014 has been utilised; and (e) how does the Ministry increase awareness among companies, especially SMEs, of the funding available under WorkPro.

(for the Minister for Manpower):The WorkPro programme was launched in April 2013. As of December 2014, over 1,500 companies have tapped on WorkPro. On average, each WorkPro company will receive around $29,000 to put in place progressive workplace practices. This will benefit a total of 58,000 workers. A total of $43.2 million or 27% of the overall budget has been committed so far. As many companies are still in the midst of implementing their projects, the total sum disbursed is $7 million as of December 2014. Companies can continue to tap on the budget until March 2016.

There are three main grant components under WorkPro. First, the Age Management Grant encourages employers to acquire knowledge and implement age-management practices to better manage a multi-generational workforce. Its take-up has been encouraging – a $28 million budget has been committed.

Second, the Job Redesign Grant provides support to employers who wish to go further to implement job and process redesign specific to their employees' and business needs. As of December last year, about $2 million has been committed.

Third, the Work-Life Grant encourages employers to implement flexible work arrangements (FWAs) at the workplace. To date, $13.2 million has been committed.

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Our tripartite partners, NTUC and the Singapore National Employers Federation (SNEF), are actively reaching out to employers, including SMEs, to highlight the importance of preparing for an ageing workforce. Firstly, they do so through regular outreach and briefings to employers on WorkPro, which take place three to four times every month. Secondly, they also target suitable recruitment events and job fairs to promote WorkPro to employers and individuals. Thirdly, NTUC and SNEF, together with the Government, have also profiled success stories at platforms, such as the Age Management Seminar, and through mainstream media. This helps to raise the awareness of WorkPro and showcase employers who had gone the extra mile to put in place age-management practices.

To further increase awareness among SMEs, WDA taps on its partnership with SPRING's SME centres to promote enterprise-related schemes, including WorkPro. As a result of the concerted outreach efforts, the SME take-up of WorkPro amongst companies has been positive, with SMEs forming 88% of WorkPro employers.

We will continue to work closely with our partners to raise awareness and sustain interest in WorkPro amongst companies, including SMEs.

I thank the Senior Minister of State for the reply. I have several supplementary questions.

Firstly, I heard the Senior Minister of State say that there are 1,500 companies that have taken up WorkPro so far. So, given that there are over 180,000 businesses in Singapore, are the Senior Minister of State and the Government satisfied with the take-up rate of WorkPro so far? Secondly, does the Ministry have a yearly target for the number of companies that will take up WorkPro and what is this target? Thirdly, can I clarify with the Senior Minister of State that she said that, last year, 27% of the budget for WorkPro was used up? If that is the case, why is that percentage so low?

As I have said, what we have done is to have a budget for a three-year programme, WorkPro, April 2013 to March 2016, $160 million. Even before WorkPro was implemented, actually, since 2004, we have been encouraging employers to implement progressive workplace practices. Under the previous schemes, ADVANTAGE! Scheme, WoW! Fund, as well as Flexi-Works!, we have reached out to more than 3,700 companies which have benefited from these schemes, and the majority of them are SMEs.

For this particular programme, WorkPro, which replaces the three programmes and enhances the programmes, over one-and-three-quarter years, we have reached out to and benefited 1,500 companies and committed a budget of $43.2 million, which is about 27% of

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the total budget.

We do not have a target for the number of companies that will come on-board. What we do is to work with our programme partners to reach out widely to as many companies as possible, and that is why we have about three to four outreach and briefing sessions every month, working with SPRING's SME Centres, as well as through mass media platforms. The idea is to reach out to as many companies as possible to get them on-board.

In order to improve take-up of the schemes, we have also been closely monitoring the effectiveness and accessibility of the programmes together with our partners and reviewing or enhancing them where appropriate.

The take-up for Age Management Grant – because there are three components – is actually very encouraging. As I have noted, $28 million have already been committed. For Job Redesign, one of the reasons we have identified for the low take-up is because many companies, particularly the SMEs, do not have the expertise to implement job and work process redesign. Therefore, we are encouraging them to send their employees for some of the courses conducted by WDA which will equip them with the knowledge to implement job and process redesign, as well as working to build up local capabilities to help these companies to implement job and process redesign. We will provide the details once these are ready.

The other area we have identified, which is the WorkLife component, there has been feedback as to why some companies do not take it up. For instance, one feedback is that companies say they may not need to actually incur any expenses in implementing flexiwork, for instance, staggered hours. Therefore, if you go on a reimbursement model, it is not an incentive because they do not actually incur cost.

We have revised WorkLife in July last year and streamlined the scheme requirements in order to allow more companies to be eligible for the scheme. One of the things we have done, for instance, is that under the Development Grant portion, we have allowed companies, once they have implemented flexiwork and then put it into a policy, they will be able to get the first $20,000, whilst the second $20,000 under the Development Grant will be on a reimbursement basis.

We have also streamlined the documentation requirements. For instance, instead of requiring the companies to submit, say, three to six months' worth of a list of the names of employees who have regularly used flexiwork arrangements, we now require them to only submit the most recent one month's list of employees who have actually taken up flexiwork arrangements. This has helped. Since we implemented this, the number of employers who

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have come on-board this scheme has significantly increased in the last two quarters of last year. I think that more will come on board. We will proactively reach out and encourage companies to come on-board and utilise the schemes to implement age- and family-friendly workplace practices.

Whilst we are mindful and do want to ensure that this scheme is accessible to all companies, I think we also need to be mindful that we need to balance this outcome with good governance for the funds, because we are, ultimately, accountable. The companies must also show commitment, value the schemes, as well as take ownership of the schemes.

Madam, I would like to thank the Senior Minister of State for her comprehensive answer. As a matter of priority, I do not know whether the Senior Minister of State agrees that schemes like WorkPro are much more important than other incentive schemes like Special Employment Credit (SEC). There is some overlap between them, as the Ministry has also clarified before.

Because process redesign, job redesign, are much more urgent, is it possible to look at companies which are already eligible for Special Employment Credits and approach them because of the overlap in eligibility criteria and let them know that they are also eligible for WorkPro incentives and encourage them to embark on job redesign?

I thank the Member for his suggestion. Just to reiterate that we try all ways and means to reach out to the companies. For SPRING's SME Centres, for instance, I personally know that the staff go down to every company, small or big, to sell to them these programmes and to encourage them to take them up.

WorkPro, as the Member has noted, is one amongst several schemes we have to encourage companies to put in place progressive workplace practices, as well as to employ older workers, mature workers, back-to-work workers. All these schemes work in combination to achieve the objectives that we are trying to achieve.

For SEC, it is a direct incentive for employers who employ older workers. We will take the Member's suggestion to reach out to these companies, although I am pretty sure that this might have been done at some level. But we will take up his suggestion.

6 Ms Foo Mee Har asked the Minister for Law what measures are being considered to ensure that debt collectors are bound by a code of conduct which defines the tactics and

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practices that may be employed in collecting debts.

(for the Minister for Law):Madam, creditors, such as banks, licensed moneylenders or judgment creditors, can and do take steps to recover their debts and may engage debt collectors to do so on their behalf. The actions taken by creditors or debt collectors in collecting debts cannot contravene the law. So, for example, the Penal Code makes it an offence if hurt or threatening behaviour is involved. In addition, the new Protection from Harassment Act provides civil and criminal remedies against unreasonable harassing behaviour.

Where licensed moneylenders are concerned, the Registry of Moneylenders conducts checks to ensure that persons who have previously engaged in criminal conduct are not allowed to assist in any aspect of the moneylending business, including the collection of debts. Borrowers who encounter criminal behaviour from licensed moneylenders or their debt collectors should report the matter to the Police or the Registry of Moneylenders. Moneylenders found to have committed offences may have their licences suspended, not renewed or revoked by the Registry.

The Advisory Committee on Moneylending was set up last year to review the moneylending regime. The Committee will also be looking at the conduct of debt collectors engaged by moneylenders. The Committee targets to issue its final report by the first quarter of 2015.

Madam, I thank the Senior Minister of State for her response. I have two supplementary questions. I understand that there are boundaries that debt collectors do not cross over as they can be prosecuted because it becomes criminal. But given that some of the tactics they employ may not cross that line, and given the prevalent use of abusive practices by debt collection agencies or moneylenders, I would like to ask the Senior Minister of State whether she would consider instituting laws that govern fair debt collection practices, such as those that have been implemented in Malaysia, Thailand and the United States. Secondly, will the Senior Minister of State specifically consider prohibiting tactics, such as those that we often hear from our residents, for example, contacting persons other than the debtor in an effort to recover debts, such as harassing family members and relatives; exposing the debtor's indebtedness to other people in an effort to humiliate him, such as faxing demand letters to people's workplaces; carrying out debt collection activities —

Ms Foo, please keep your supplementary questions short.

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Yes. And carrying out debt collection activities at disruptive frequency and unreasonable hours of the day.

Madam, I thank the Member for her supplementary questions. Actually, we can look at it at three levels. The first level is really where debt collectors engage in criminal conduct. This clearly steps across the line. So, for example, you could have people causing hurt or behaving in an intimidating or threatening manner. That is criminal and it falls within the area of criminal sanctions and penalties. And, for those, there is a clear legislative regime to work towards that.

The examples that the Member cited actually fall into another category. I think what the Member is saying is that there are some types of conduct which are not clearly criminal offences but are, nevertheless, harassing in any event. This is where the Protection from Harassment Act comes in, because that came into force only very recently. Prior to that, a large amount of this type of conduct really did not have much redress. But now that you have the Protection from Harassment Act, there are actually two options under that Act. There are some acts which will, again, fall into a criminal category and then there are some, like faxing letters, turning up at the workplace, which may not necessarily be criminal but they do cause alarm, distress and harassment in any event, in which case, there are civil remedies and the borrower can actually go to the State Courts and file a complaint.

Then I think there is one more category which the Member is urging us to look at, which is that, apart from these sanctions, can we consider guidelines or an indication to the industry of what are the appropriate practices to follow? That is something which currently falls within the purview of the Advisory Committee on Moneylending. The report is expected, as I have indicated earlier, in the first quarter of 2015. So, what MinLaw would like to do is to wait for the report, then we will review it and see if there are steps that should be taken in this regard.

7 Mr Yee Jenn Jong asked the Minister for National Development from 2012 to 2014 (a) what are the number and percentage of Government infrastructure projects procured that exceed the value of S$10 million that have been awarded to the lowest bidder; and (b) how many of these tenders have been awarded, taking into consideration the productivity of building methods as a tender award criterion.

Mdm Speaker, all Government projects which exceed the value of $10 million each are evaluated under the Price-Quality Method (PQM), where the productivity of building method would be taken into consideration for award. The

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Government awarded about $43.5 billion worth of construction projects between 2012 and 2014. About three-quarters of the 590 projects above $10 million during this period went to the lowest bidders.

I thank the Senior Minister of State for the reply. I have a few supplementary questions. One is on the viability of bids that are low. There have been some fairly prominent national infrastructure projects that have been stalled because the contractors may have gone bust. And some industry observers have called these "suicide" bids. So, is there any observation about the correlation between project failures or substantial delays due to low or unrealistic bids? Second, I would like to ask about the weightage that is allocated to productivity factored into the consideration for tender awards. The Senior Minister of State said that there are some considerations in terms of productivity. Generally, how much would this be factored in, like a certain percentage of the weightage, and how does it vary from project to project? Lastly, I would like to ask if the Ministry provides some sort of incentives for contractors to employ higher productivity methods for the public sector projects.

Mr Lee Yi Shyan: Madam, I thank the Member for his supplementary questions. Some of the stalled or delayed projects have high visibility obviously because of publicity. But, on the whole, if you look at the Government projects that have been given out, the number of projects that became non-viable because of financial difficulties or other reasons remains quite low. For instance, LTA awarded in the last 10 years more than a thousand projects, but there were only three that stalled.

In terms of productivity weightage, under PQM, it ranges from 80-20 to 60-40. So, in the straightforward projects where it is only construction, when the design is given, the weightage for quality and productivity is about 20%. In a design-and-build project, where there is a lot more complication, then the quality weightage is higher, at 40%.

As to further incentives to help the industry to upgrade, this is the emphasis of our work in the Ministry. In fact, I lead a Committee that studies ways where we can further enhance the programmes that BCA already has in helping companies to invest in automation equipment, in upgrading their workforce and benchmarking themselves against the best practices in the industry, both domestically and internationally. Obviously, we are very interested in the subject and we want to achieve bigger improvements in the years to come.

8 Mr Zainal Sapari asked the Minister for National Development (a) for the years 2013 and 2014, how many potential HDB flat buyers were not able to take possession of their new HDB flat due to a cash shortfall after a reassessment of their HDB Loan Eligibility (HLE); (b)

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whether HDB can consider refunding the whole deposit for the purchase of a new flat to buyers who cannot take possession because of the new HLE assessment; and (c) whether HDB can consider allowing the purchase of the new flat to be completed based on the first HLE offered to the buyers.

(for the Minister for National Development): Mdm Speaker, HDB conducts a second credit assessment before it disburses a housing loan to flat buyers when the keys are ready for collection. This usually occurs a few years after the first credit assessment and an HLE letter is issued. The second assessment is to check that the flat buyers' financial positions have not deteriorated in the intervening years and that they are still able to service the monthly mortgage instalments.

In 2013 and 2014, 51 flat buyers were unable to take possession of their new flats after the second credit assessment. If a flat buyer does not proceed with his flat purchase, 5% of the purchase price will be forfeited to HDB. HDB will try to help such families, for example, in cases of genuine financial hardship, HDB may consider refunding the forfeited amount.

It would not be prudent to complete the purchase if the buyers are no longer able to service a housing loan. It would merely be creating a potential loan defaulter down the road with many other new problems for the family.

I thank the Minister of State for his reply. Given the possible financial hardship that the applicants might face when they are due to collect their keys to the BTO flat, what assistance or help could HDB render them to help them with ownership?

Mdm Speaker, HDB will assess the circumstances of each case and work with the flat buyer to achieve a sustainable housing option. For example, HDB may offer a cheaper flat that is within the buyer's budget at the point in time, so as to ease their financial burden. And as I have said earlier, HDB may also consider a waiver of the financial forfeiture to help hardship cases so that they are able to build up their finances to buy a flat in the future.

9 Ms Tin Pei Ling asked the Minister for Manpower whether the Ministry can consider requiring employers to offer health insurance coverage, other than MediShield Life, for senior workers who are above the re-employment age ceiling but are still fit and keen to

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work.

(for the Minister for Manpower):Our employment laws, in general, stipulate basic labour standards and we allow employers room to provide additional benefits relevant to their circumstances. In this case, the Employment Act stipulates that employers have to pay for their employees' medical consultation fees while they are in employment.

We are, however, happy to note that many employers have gone beyond these basic requirements to also provide health insurance for their employees, so as to attract and retain valued workers. A survey conducted by the Ministry of Manpower (MOM) found that about six in 10 companies with at least 25 employees provide inpatient medical benefits for their local employees in 2013. Of these companies, 86% provide such medical benefits through group medical insurance. As for re-employed workers, a separate survey found that around nine in 10 companies continued to maintain their inpatient medical benefits when re-employing them at the age of 62.

At the same time, the tripartite partners have been encouraging employers to enhance the portability of their medical benefits. On its part, the Government provides incentives for employers who do so by way of higher tax deductions for medical expenses of up to 2% of total employees' remuneration. Employers can also enjoy the additional tax deduction when they make ad hoc Medisave contributions for their employees.

A tripartite workgroup is looking at ways to enhance portable medical benefits to complement MediShield Life, which, when implemented at the end of 2015, will provide lifelong healthcare insurance protection for all Singaporeans. This includes older citizens, regardless of whether they continue to be employed.

I thank the Senior Minister of State for the reply. I would like to ask: would the incentives that the Senior Minister of State has highlighted also apply to older workers who have been retained by the company beyond the re-employment age of 65 and would there be other forms of protection that MOM may require of the companies to offer their older workers beyond the re-employment age of 65? This is because some of these workers would still like to remain active even as they grow older and they feel that they are fit enough to continue to remain economically active.

As we have announced earlier, we are taking a promotional approach now to encourage employers to employ their workers even beyond the re-employment age of 65 before we look into reviewing and extending the re-employment age beyond 65 to 67, as legislation. As long as the workers are re-employed by the company,

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regardless of their age, companies would then be required, for instance, if they are manual workers, or if they are non-manual workers but with a salary of $1,600 and below, to provide workmen injury insurance, because this is required under the law.

As regards inpatient medical benefits, as I have noted, most of those who have been re-employed under the current legislation have retained their inpatient medical benefits and we will continue to encourage companies to do so. And as I have noted, we are also working through a tripartite working group to encourage companies to implement portable medical benefits for their employees and these should also extend generally to workers, regardless of their age, if they are re-employed.

10 Ms Lee Li Lian asked the Minister for Communications and Information with regard to M1's outages in October 2013 and February 2014 and IDA's assessment that M1 has "taken all reasonable measures" to test the Radio Network Controller (RNC) software upgrade before implementing it and that there has been "no undue delay" to the service restoration (a) what are all the reasonable measures that had been undertaken by M1; (b) whether IDA's assessment of the investigation into the outages is publicly available online; (c) whether there is any roll-back plan and whether a roll-back has been effected; and (d) if so, how long did it take to make the decision to do the roll-back.

Madam, IDA has completed its investigation into the two M1 service disruptions which occurred on 16 October 2013 and 4 February 2014. Summaries of the cases, the investigation outcomes and IDA's determinations were published on IDA's website on 5 January 2015.

Mdm Speaker, allow me to explain to the House what happened in both incidents. The first service disruption occurred on 16 October 2013. New software was being installed onto one of M1's core network elements, called RNC. Upon installation, M1 observed abnormalities in the network and immediately started investigations. After carrying out initial diagnostics with its vendors, M1 could not identify the cause. Hence, M1 decided to uninstall the new software in the RNC and to "roll-back" to the original version. This step is a common industry practice when trying to isolate a problem that could arise from new software installation. The "roll-back" was done about two hours from the time of the disruption. However, I understand that the problem persisted and so, logically, M1 started to troubleshoot the other network components associated with the RNC. M1 subsequently established that there was a software bug in the Media Gateway and the disruption was subsequently resolved within an hour thereafter.

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IDA assessed that the preventive measures undertaken by M1 for this incident were reasonable. Firstly, M1 had carried out thorough testing of the software, including interoperability and compatibility, prior to the installation. Secondly, M1 successfully attempted the same software upgrade on another RNC in September 2013. Thirdly, the test cases adopted by M1 were extensive and comprehensive as M1 combined different test scenarios into each test case. This assessment was corroborated by IDA's third-party external consultant, whose advice IDA had sought for this case. Mdm Speaker, on service restoration which I elaborated upon earlier, IDA also assessed that there was no undue delay by M1 in troubleshooting, isolating and restoring services.

For the 4 February 2014 incident, investigations started as soon as M1 received feedback from some subscribers that they were unable to make calls and send messages. M1 found a software bug which caused the mobile site switches to perform in an unstable manner. This, in turn, led to congestion at the various network layers. As this incident was not triggered by any network changes or recent software installation, roll-back was not necessary. To rectify the situation, M1 re-initialised the switches, as well as other critical network elements, and services were fully restored thereafter.

In its assessment, IDA also found that there was "no undue delay" in service restoration during the 4 February 2014 incident. M1 promptly activated its vendors upon discovery of the incident. Given that neither M1 nor its vendor encountered similar issues previously, there was no workaround solution readily available. This meant that M1 needed time to locate the cause of the incident before deciding on the correct restoration action. It should also be noted that until the disruption on 4 February 2014, the same set of mobile site switches were deployed in many overseas operators' networks and were also deployed in M1's network for several years without incident.

Madam, both my Ministry and IDA fully appreciate the critical nature of mobile services and the importance that people place on these services for their everyday communication. This is why I have asked IDA to continue to ensure that our telco networks function optimally. I would like to assure the House that we remain committed to strengthening the resiliency of these networks, together with the operators. We expect operators to make sound technical decisions when designing and operating their networks. At the same time, we do not assess their culpability with perfect 100% hindsight. That would not be fair. Instead, we look at whether the decisions taken at the time were reasonable, based on the information available then to the decision-makers.

While no network service is immune to failure, telcos can definitely improve the way they update and assist their customers when disruptions occur. We should expect better service, and I have told IDA that M1's public communications during the incidents should have been better managed. Operators must provide early and timely updates to its

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customers when outages occur.

Punggol East): Madam, it is good to know that a roll-back plan was in place and had been activated. One supplementary question: does the Minister think that two hours is a good timeframe?

I think, under the circumstances, M1 did the best that they could, given the information they had. There is no standard in this world for us to judge whether two hours were adequate or inadequate. In hindsight, looking at all the actions they had taken, IDA and the Ministry are quite satisfied that two hours were a reasonable time for them.

11 Ms Rita Soh Siow Lan asked the Deputy Prime Minister and Minister for Finance in the effort to increase productivity of our workforce, what measures have been put in place to harmonise the upstream policies and processes (i) amongst the various Government agencies and (ii) within and across the different Ministries.

(for the Deputy Prime Minister and Minister for Finance): Mdm Speaker, the Government recognises that successful implementation of major initiatives will typically require aligning multiple stakeholder agencies.

For example, to better align productivity efforts in the construction sector, the Building Innovation Panel led by MND and BCA brings together nine regulatory agencies, including NEA, SCDF and LTA, to facilitate multi-agency evaluation and approval of innovative products or processes that improve construction productivity. The Panel has made it easier for several new technologies to be accepted for use in building projects in Singapore, such as Prefabricated Prefinished Volumetric Construction and Cross Laminated Timber. The use of new technologies and materials support the broader measures taken upstream, namely the higher requirements for development projects' buildability and constructability scores which are themselves the result of multi-agency deliberations. That is a sectoral example.

More broadly, we have also established tripartite and inter-agency platforms to coordinate and drive national efforts across different domains. This approach has been adopted for the long-term effort to restructure our economy towards higher skills and productivity, through the tripartite National Productivity Council (NPC). The NPC is supplemented by sub-committees with a sectoral focus.

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The multi-agency e-Gov Council is another case. It drives and coordinates the improvement of electronic services to businesses and citizens. A recent example is the processing of applications by property developers to pay an additional charge to enhance land value. By streamlining workflows and using a common IT platform, URA and SLA are able to process applications concurrently, reducing approval time.

The Pro-Enterprise Panel (PEP) is another mechanism to address rules and regulations that hamper productivity. Businesses that face challenges navigating regulatory requirements may approach the PEP, which comprises senior public officers and business leaders. Since 2000, the PEP has reviewed more than 1,800 suggestions from businesses on rules and procedures and accepted more than half of them. Besides the PEP, there is a Smart Regulation Committee, which was set up to promote good regulatory design and practices across the Government and to benchmark our regulations against international standards.

Madam, our systems and processes will continue to evolve. But we are committed to strengthening the coordination of policies and processes within the Government and with our partners and welcome suggestions on how we can do this better.

Madam, I thank the Senior Minister of State for her advice. I would like to touch on the area of procurement of Government projects where companies submit tender applications to each respective agency which requires that these companies fill in their respective information into a unique template, whereas the information required from these firms is often common. Having to produce and print out many copies of this paperwork is largely redundant.

In our quest towards a Smart City where information technology can be better harnessed, can the Senior Minister of State consider having a central depository that catalogues the information on companies, such as their registration status, as well as personnel track records, which could be updated on a regular basis? This would vastly improve the efficiency of the procurement process. Furthermore, incorporating technology, this system could be further automated to alleviate the burden on both ends, when it comes to extracting and processing critical information.

The second bit, because towards the current state of —

Ms Soh, can you please make your supplementary question short?

All right. Currently, the cost estimate for each individual Government project is done based on cost data obtained from previous projects which often do not have the environmentally sustainable features that the current policies advocate.

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Singapore's commitment to sustainability is to be proud of and we should revise current cost policies to reflect this commitment. Can the Senior Minister of State help to advance this approach?

Mdm Speaker, on the Member's first question, which relates to repetitive data requests, I thank her for her suggestion and we would be very keen to follow up with the Member and look at how we can, indeed, implement it. We agree that, as far as possible, if we can reduce the amount of effort required for data submissions by potential bidders, that is something that would be helpful. So, we will follow up with the Member separately.

On the Member's second question, I am not sure I understand it completely. So, maybe if I could ask her for a clarification, she mentioned cost estimates currently do not take into account environmental sustainability. I am not sure what the Member is asking me to help push.

Usually, for Government projects, projection of cost is based on work done before. In view of the quest towards sustainable green buildings, there are these sustainable features that we put into buildings and those are usually not updated in the data. As such, many a time, the cost does not allow you to do all the features that you want to fit in for Green Mark compliance or to give renewable energy projections. So, can the Senior Minister of State help in this area because it just is not commensurate?

Madam, I think it is probably best that we get the Building Construction Authority to follow up with the Member specifically to see how this element can be incorporated.

12 Mr Png Eng Huat asked the Deputy Prime Minister and Minister for Home Affairs what is the rationale behind imposing fines on Marina Bay Sands and issuing censures to Resorts World Sentosa in the recent enforcement actions for social safeguard breaches when both are repeat offenders.

(for the Deputy Prime Minister and Minister for Home Affairs):Mdm Speaker, the Casino Regulatory Authority (CRA) is empowered under the Casino Control Act to impose disciplinary actions on the casino operators for contravening the provisions of the Act or casino licence conditions.

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CRA considers various factors in determining the appropriate disciplinary actions to impose. These include the circumstances of the breach, the culpability of the operators and whether the operators have taken suitable preventive measures.

In addition to imposing disciplinary actions, CRA also requires the operators to implement corrective actions to prevent the recurrence of such breaches.

I just have one supplementary question. The two casino operators together have allowed more than 200 persons without valid levies, even excluded persons and minors, into the casinos for the past two years or so. So, is there a reason to show such leniency to these operators who are obviously not very good at implementing our social safeguards?

Madam, as I have said, the CRA has to take into account various factors in deciding what is the appropriate penalty to impose, assuming a breach has been disclosed. That includes the nature of the breach and also what measures the operators have put in place. The Member cites a number of 200. That, I think, is over a period of several years, and the Member has to compare that against a base load of how many visitors who go to the casinos, the number of repeat visitations they make. And when we take it as a proportion of that, it is probably in the third or fourth decimal place in terms of frequency or occurrence. We must ensure that the penalties we impose are proportionate.

The CRA has, at its disposal, a range of levers available to it and this is the judgement that is being rendered by the CRA Management and Board.

I thank the Second Minister for his clarification. Just a quick question. The number may not be huge, as the Minister said. But the question is: is the CRA or Ministry satisfied that the systems are in place, that when these breaches happen, these are already in the system or that they were not deliberately allowed to go in? Is the Ministry satisfied that the systems are in place to prevent future breaches?

Madam, to answer the Member's question: that is why culpability is a key factor, whether it is a knowing commission or something that happened incidentally. In general, the casino operators have been fairly responsive in implementing safeguards and enforcing them.

They are not necessarily fool-proof, as the case is apparent from some of the instances, but, by the same token, I think no matter how strong a system is, a determined individual would probably find a way to get around it. On balance, the penalties that have been

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imposed are proportionate to the seriousness of the offences that had been disclosed.

13 Dr Intan Azura Mokhtar asked the Minister for Social and Family Development (a) what is the progress on the establishment of 200 new childcare centres across Singapore; and (b) whether sufficient qualified and trained preschool teachers are ready to be deployed to these childcare centres.

14 Er Dr Lee Bee Wah asked the Minister for Social and Family Development (a) how many childcare centres in Nee Soon GRC do not operate at full capacity and how many more teachers are required for these centres to be operated in full capacity; (b) in the past one year, how many teachers have (i) been recruited through the Early Childhood Career and Education Fair; (ii) taken up the Traineeship Programme for the Early Childhood Sector run by the Workforce Development Authority (WDA); and (c) whether there are any other new initiatives to address the manpower shortage in the early childhood care sector.

Madam, may I have your permission to take Question Nos 13 and 14 together?

Yes, please.

Madam, our target is to add 200 new centres, or about 20,000 additional childcare places, from 2013 to 2017. We are on track to achieve this. Over the past two years, 17,000 new childcare places have been added.

On average, childcare centres in Yishun and Sembawang housing estates operated at about 90% of their capacity in 2014. This is typical for centres with sufficient staff. The Early Childhood Development Agency (ECDA) closely monitors childcare centre demand and will continue to expand capacity in estates with many young families to meet their needs.

To further expand capacity, we will need to attract and retain good early childhood professionals. ECDA has taken measures to support this. For example, ECDA organised an Early Childhood Career and Education Fair in 2014 which helped to fill over 200 positions. It also worked with WDA to launch a traineeship programme to give mid-career entrants an introduction to the early childhood sector. Fifty trainees have completed the programme to-date.

More recent initiatives include the introduction of a new ECDA Fellows programme to provide good performing early childhood professionals opportunities to take on sector-level

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leadership roles, as well as a new training award for Institute of Technical Education (ITE) students undertaking the Higher Nitec in Early Childhood Education.

ECDA will continue to work with the sector to put in place structured career pathways and develop early childhood professionals. Together, these initiatives will help us attract and retain the manpower we need for the sector.

Madam, I thank the Minister for the reply. May I just find out from the Minister who mentioned in an earlier Parliamentary Question (PQ) in a different parliamentary Sitting that the attrition rate of trained preschool teachers is quite high, at about 50%. Have we managed to bring this number down?

My second question is: I do hear from some preschool operators' principals that it is not easy to get teachers to join the sector even though there are programmes in place. What is the progress of, for example, the traineeship programme for the early childhood sector? Are we able to attract stay-at-home mothers, retirees or mid-career entrants to join the sector in order to make up for the shortage of teachers in this sector?

Mdm Speaker, yes, we have been working hard to bring down the attrition rate. We have a four-pronged strategy to reduce the attrition rate.

First, it starts from the selection process. We are instituting new measures to make sure that people who come on-board to take the courses are generally interested in the early childhood sector and not just take up the course and subsequently leave for another sector.

Second, we are continuing to make sure that we encourage the anchor operators to lead by example to help pull the sector along when it comes to fair remuneration for our teachers.

Third, we want to put in a professional development pathway for all our teachers, especially in the early years, which is why we have instituted a mentorship programme to guide the young teachers, especially in the critical first three years of their career development.

Last, but not least, the fourth prong in our strategy is to make sure that we continue to attract and retain good teachers and to have the community and all of us work together to give a sense of respect to our early childhood sector professionals.

On the Member's second question on traineeship, yes, we are seeing a gradual increase in the take-up rate and we have also started some pilot programme to allow stay-at-home

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moms who are prepared to work part-time to come in and join the sector as edu-carers. And hon Member Er Dr Lee Bee Wah would know, in her constituency, she has managed to help us place a few of these stay-at-home moms who came back to join us on a part-time basis to supplement the edu-carer manpower pool within the Yishun area.

Mdm Speaker, in Nee Soon South, I have 109 new BTO blocks and about 60% of the occupants have shifted in. The fact that I have residents coming to my MPS every week to ask for a place in a childcare centre shows that there are inadequate childcare places.

I understand that the Ministry has been working very hard to build more childcare centres, to recruit teachers, but then, there must be a certain timeframe that the parents can look forward to settling down in their new home, getting their children from their old place to the new place. Is there any framework that the Ministry is looking at?

The next question is on student care. I also have residents bringing up the issue of student care. Is this under MSF? If not, is MSF going to work with MOE on student care centres?

Mdm Speaker, indeed, for all the new towns, what we aim to do is to make sure that the space allocated and required for childcare centres are in-built and designed into the new buildings. For the new precincts, we have worked with MND to make sure that these places are already inside, so we do not need to go and look for void deck spaces. During the forthcoming Committee of Supply debate, I will reveal more details on other ways that we will alleviate the shortfall in childcare places for those precincts that have already been built and may not have sufficient void deck space.

For student care, the issue will be dealt with collectively between MOE and MSF. We are fully aware that today, the lifestyle needs of many families have changed. Many families have dual-income parents working and what they need for childcare places today – at least, the majority of them – will translate into the same need for the lower primary student care and upper primary student care places. MOE has a plan in place to expand the student care services available to all the primary schools progressively.

15 Mr Lim Biow Chuan asked the Minister for Culture, Community and Youth whether the Ministry will consider allowing free parking for the first two hours at all sports stadiums so as to encourage residents to use the sports facilities at the stadiums.

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16 Dr Benedict Tan asked the Minister for Culture, Community and Youth whether the Ministry will consider offering free parking at selected sports facilities during non-peak hours to promote the use of these facilities and, hence, physical activity.

Mdm Speaker, with your permission, I will take Question Nos 15 and 16 together.

Yes, please.

Madam, we are always open to ideas to improve sports participation and usage of our sports facilities. But there is also a need to ensure that the limited resources we have are put to good use and achieve their intended objectives. With free parking at sport facilities, there is a risk that the parking lots will be taken up by non-sport users. After all, many of our sports facilities are centrally located close to other amenities and transport hubs. Furthermore, there is no compelling reason why we should skew our support in favour of those who drive to our sports facilities, compared to the many who get there using public transport.

All things considered, therefore, we prefer to channel our resources to measures that can directly benefit all users of sports facilities. This is why we launched ActiveSG last year and we provided ActiveSG members with a $100 credit, which can be used at our ActiveSG sports facilities and programmes. Every Singaporean, whether they drive or take public transport, can be an ActiveSG member and enjoy the $100 credit. The response so far has been very good. And close to 700,000 members have signed up and many are actively using our sports centres and facilities and participating in a wide range of programmes that are available.

We are also building new sports facilities and improving existing ones, so that a majority of Singaporeans will have convenient access to sports and recreational facilities within a 10-minute walk of their homes.

I do run at a few stadiums and, each time I go there, I notice that the car parks are actually quite empty. Would the Minister not consider it such a waste of resources that available car park space is there but people who could have driven there to exercise are not using it? Otherwise, the sports stadium only benefits people who live around the stadium. So, will the Ministry consider allowing free parking just for two hours so that there is still some limitation on the use of car parks?

Madam, I thank Mr Lim for the feedback. If, indeed, the car parks are under-utilised, I think we should more closely examine whether there is a better use of

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the car parks and whether they can be converted to other facilities, like sports facilities, which can benefit more people. As I have said, we want to make the best use of our resources and assets. Space is certainly an important asset for us and we are always looking at how best to directly promote sports participation. If the concern is about under-utilisation of car park space and the fact that we are not making the best use of these space resources or assets that we have, then let us take a look at that particular issue.

17 Mr Lim Biow Chuan asked the Minister for Education whether all schools can make their sports facilities available to residents for use so as to encourage the sharing of sports facilities with the community.

(for the Minister for Education): The Ministry of Education (MOE) partners Sports Singapore (SportSG) and the People's Association (PA) to share sports facilities in schools within the community outside of school hours. Newer sports facilities, such as the indoor sports halls (ISHs), are designed with community sharing in mind.

School sports facilities are made available to the community, in partnership with SportSG and PA, based on the demand for such facilities. This year, more than half of our schools are involved in the arrangement to share their facilities, allowing the community to have access to about 150 school fields and 75 ISHs.

We will continue to work with SportSG and PA to make available additional school sports facilities to the community where there is community demand.

18 Dr Benedict Tan asked the Minister for Education whether it is possible to remove the requirement for the teacher in charge of CCAs to be physically present at training venues and leave the duty of care fully to the external CCA provider.

(for the Minister for Education): CCA is an integral part of students' holistic education. Through CCA, students discover their interests and talents while learning life skills, values and socio-emotional competencies.

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CCA activities are supervised as schools are concerned about the safety and well-being of students. The degree of supervision may vary, depending on the circumstances. As an example, for overnight or out-of-school CCA activities, CCA teachers will be present to provide more immediate response should somebody be injured. It would not be prudent to leave the duty of care fully to the external CCA provider in this case.

As far as possible, schools will match teachers to their assigned CCA based on each teacher's interests and experience, so that they can better encourage and nurture students' passion in that CCA.

MOE will continue to work closely with schools to enable students to develop holistically through CCAs in a conducive learning environment.

Madam, I thank the Senior Parliamentary Secretary for his reply. We know that our teachers already have a very heavy academic workload and it is difficult to match teachers' interests to the sports they cover. Some schools have cited the lack of resources for scrapping certain sports CCAs and one of the resource constraints is finding a teacher to be in charge of the sport and that is why I have suggested doing away with that requirement.

For all intents and purposes, the teacher is there for safety but when the school has already outsourced the coaching of the sport, let us say, badminton, to a professional service provider with a proper agreement which includes having the professional provider take care of safety, can we not just leave it to the professional provider to be responsible for safety and free up the teacher to do other academic duties?

Madam, I would say that this is a question of outsourcing tasks while, at the same time, retaining the responsibility. CCA is an integral part of education and we would like our students to learn not just to play the game. We want them to develop the right values, the ability to communicate and share wins and losses collectively. This is part of education. We would like teachers to be directly involved, apart from supervising or ensuring the safety of the students during CCA, in particular, games.

During training, it is important for teachers to be there. They may not be good at a game and may not be able to teach the students to play the games, but they would be there to supervise and build team spirit.

In some cases, the presence of teachers becomes even more critical. Where there are competitions, teachers may be adjudicators. They will have to mediate between the different stakeholders: organisers, parents, coaches and so on. It is, therefore, important for

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teachers to be there to supervise the training as well as during competitions as part of the holistic education for our students.

19 Ms Foo Mee Har asked the Minister for Trade and Industry (a) how successful have Government productivity schemes been in encouraging companies to innovate and invest in research and development; and (b) what more can be done to help companies starting on the innovation journey to qualify for Government support.

(for the Minister for Trade and Industry): Madam, there are various Government schemes to support our companies' innovation journey. SPRING offers the Innovation and Capability Voucher (ICV) scheme which provides support to SMEs for consultancy services and the implementation of integrated productivity solutions. Since 2012, SPRING has awarded around $65 million to our SMEs through 13,000 ICVs.

Another example is A*STAR's Technology Adoption Programme (TAP), which was launched in July 2013. Under TAP, teams of advisors link SMEs with providers of technological solutions, or work with public research institutions to develop innovative solutions for adoption. So far, A*STAR has engaged more than 6,000 companies and more than 1,200 companies have implemented technology solutions under the support of TAP.

For companies that are pursuing more advanced innovation projects, assistance is also available from SPRING's Capability Development Grant (CDG), which co-funds up to 70% of qualifying costs. This grant covers a broad range of productivity improvement areas, such as enhancements to workflow processes and technology innovations. In 2014, SPRING assisted more than 1,000 companies under CDG and provided over $100 million in funding support.

In addition, the Productivity and Innovation Credit (PIC) scheme provides tax deductions and cash payouts to help defray the cost of a broad range of investments along the innovation value chain, from simple purchases of IT and automation equipment to more complex R&D projects to acquire new knowledge and create novel products. In the Year of Assessment 2014, 54,000 companies made PIC claims.

To develop Singapore's innovation capabilities, SPRING set up seven Centres of Innovation (COIs) in our public research institutes and polytechnics. These cover specific industry sectors, in Electronics, Environment and Water Technology, Marine and Offshore Technology, Food Innovation, Supply Chain Management, Precision Engineering, and

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Materials. The COIs provide technical consultation and facilities to support our companies in developing and prototyping innovative products.

The results from these efforts have been encouraging. In the 2014 SME Development Survey conducted by the DP Information Group, 75% of the SMEs reported that they were planning to implement innovation in their companies. R&D investments by local SMEs have also increased. In 2012, local SMEs spent nearly $550 million on R&D activities. This is a 70% increase in R&D expenditure, compared to 10 years ago when local SMEs spent around $320 million.

I thank the Minister for sharing the very comprehensive range of initiatives. I have two quick supplementary questions, Madam. First, given the progress we are making in R&D, what is the R&D spend in Singapore as a percentage of GDP? Is there a target that our country aspires to? Second, based on the feedback on the ground from SMEs, they find that the hurdle to qualify for R&D support is quite high. Usually, they think it requires breakthrough technology or major breakthroughs, and their R&D is mainly on a more incremental basis. So, I would like to ask whether there is scope for R&D to be defined in a broader sense so that more companies can qualify and focus on the innovative part of the productivity journey.

Madam, I thank the Member for the questions. First, on R&D spending: if Members recall, our R&D spend through the national initiatives is around $16 billion over a five-year period. That was in the last cycle, which is from 2011 to 2015. That would average out to about $3 billion or so a year, which, in very broad terms, is about 1% of GDP. This is public R&D funding. The target is to try and attract at least $1-$2 of matching private sector R&D to that. That gives you a sense of the broad scope and that would, more or less, be in line with what is achieved in different countries, but there are variations according to the nature of their economy and the capacity of their private sector.

For the second point on R&D, I think the Member's point is that SMEs may be deterred because they think R&D means going for major breakthrough technologies as opposed to more incremental solutions which might be relevant to their operations. That is a very good point. That is, indeed, why, in the range of measures that we have talked about, it is not just about going for major R&D ventures to achieve the kind of breakthroughs the Member referred to, but also for companies to be able to adopt simple technologies to their operations. For example, A*STAR works on creating a bunch of turnkey solutions which are plug-and-play, for example, in the area of Radio Frequency Identification (RFID) tagging, where this can help in supply chain management, warehouse stock-taking and so on. For many companies, this is a simple plug-and-play solution. With the RFID tags coming down, this is something that the companies can adopt with a relatively small investment.

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We look at the whole range and the idea is to allow companies to come in and to make it as easy as possible for our SMEs to come and adopt technology for precisely the reason that the Member mentioned, which is, that technology can be used at any stage of development of a company.

20 Mr Zainal Sapari asked the Minister for Transport (a) what are the average number and percentage of motorcycles that were registered under the different classes of motorcycle licences in 2013 and 2014; (b) whether the Certificate of Entitlement (COE) for motorcycles can be separated according to the different classes of motorcycle licences; and (c) if he will consider allowing motorcycle owners to opt for an unlimited five-year COE renewal to help lower income families better manage the cost of owning motorcycles.

(for the Minister for Transport): Mdm Speaker, the average number of motorcycles registered per year in 2013 and 2014 is 9,898. Of these, 6,426 or 65% corresponded to a Class 2B riding licence, 1,342 or 14% to a Class 2A licence and 2,130 or 23% to a Class 2 licence.

Category D had been created as a separate category for motorcycle buyers so that they need not compete with other vehicle buyers when bidding for a COE. Splitting Category D further would result in a much smaller quota available in each sub-category. This may lead to more volatility in quota and prices.

Allowing unlimited five-year COE renewals for motorcycle owners may lead to fewer deregistrations and, therefore, fewer COEs available for bidding. This would disadvantage prospective motorcycle buyers, as they would have less of an opportunity to buy a new motorcycle if the COEs continued to be renewed instead of being released for bidding.

21 Mr Png Eng Huat asked the Minister for National Development (a) what is the current number of HDB flat owners who rent out their entire flat or at least a room; and (b) what is the breakdown of these owners by Singaporean and Permanent Resident.

(for the Minister for National Development): Madam, as at 31 January 2015, 87,900 households have rented out their flats or one or more rooms. Ninety-two percent are Singaporean households. The remaining 8% are Singapore Permanent Resident (SPR) households, almost entirely subletting just their rooms. Since January 2013, HDB has disallowed SPR households

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from subletting their entire flats.

Mdm Speaker, I just have a quick supplementary question. How would HDB ensure that these flats are properly rented out, that is, the number of occupants are within legal limits and that the length of the tenancy or rental agreement is also within legal limits so that these flats do not function like mini motels.

Madam, I share the Member's concern to ensure that HDB flats are not used for purposes other than subletting according to regulations set out by HDB. Every lessee of the flats knows the regulations and, if they are subletting the rooms, they are supposed to register the number of tenants that they have in their rooms. HDB monitors that quite closely. We also require the help of local grassroots to let us know, should the tenancy breaches the agreement set out by HDB. It is a two-pronged approach: HDB will continue to do their spot checks from time to time to ensure that these flats are not sublet, not according to prescription. At the same time, we require local ground-up feedback so that we can continue to enforce, where necessary.

22 Mr Gan Thiam Poh asked the Minister for National Development (a) to date, what is the total number of flats available under the Sale of Balance Flats programme; (b) what is the breakdown of these flats by flat types and the number of units at each location; and (c) whether HDB will consider conducting a Sale of Balance Flats exercise at each quarter of the year instead of twice a year.

(for the Minister for National Development): Madam, HDB currently has about 10,000 balance flats. About 3,000 units are in the mature estates. About 4,000 units are 3-room and smaller flats. We plan to release them in two batches of about 5,000 units each. This will offer more choices of flat types in various locations and give applicants a better chance of success for each exercise. Nonetheless, we will review and fine-tune the marketing plan to see how best to complement the BTO exercises and support a stable housing market.

Can HDB make available such information as soon as possible and also, instead of twice yearly, can HDB conduct these sales quarterly so that the applicants can plan ahead?

Madam, as mentioned earlier, the current practice to offer BTO flats twice a year is to make sure we can consolidate a larger pool of flats to be made available. If we do this quarterly, then the number of flats will be lesser and the choices or options for applicants would be lower. Nonetheless, as mentioned, we will continue to

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review and fine-tune this process to make sure that it continues to support this stable housing market that we have.

Order. End of Question Time.

[Pursuant to Standing Order No 22(3), written answers to questions not reached by the end of Question Time are reproduced in the Appendix, unless Members had asked for questions standing in their names to be postponed to a later Sitting day or withdrawn.]

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"to amend the State Lands Act (Chapter 314 of the 1996 Revised Edition) to clarify the ownership of the subsoil below the surface of any land, to make related amendments to the Boundaries and Survey Maps Act (Chapter 25 of the 2006 Revised Edition) and the State Lands Encroachments Act (Chapter 315 of the 1985 Revised Edition), and to make consequential amendments to certain other written laws",

presented by the Senior Minister of State for Law (Ms Indranee Rajah); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

"to amend the Land Acquisition Act (Chapter 152 of the 1985 Revised Edition) to facilitate compulsory acquisition of stratum of airspace above or subterranean space below the surface of land, and to make related amendments to certain other written laws for that purpose",

presented by the the Senior Minister of State for Law (Ms Indranee Rajah); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed.

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[(proc text) Order for Second Reading read. (proc text)]

Mdm Speaker, I beg to move, "That the Bill be now read a Second time."

The Deep Seabed Mining Bill aims to establish a licensing regime to regulate the exploration for, and extraction of deep seabed resources by companies sponsored by Singapore.

Let me explain why we need to enact this Bill. This Bill will allow Singapore companies to enter the deep seabed mining industry. This is an emerging industry. We can leverage on our strengths and experience in the offshore oil and gas, the marine engineering as well as our trading sectors to capitalise on the growing opportunities in deep seabed mining.

Introducing this Bill will bring us in line with the provisions under the United Nations Convention on the Law of the Sea (UNCLOS) and the International Seabed Authority (ISA) regulations. The proposed licensing regime will ensure that our companies undertake deep seabed exploration and extraction activities in a responsible manner and not cause damage to the marine environment. Penalties will be put in place to serve as deterrence against potential violations or, in the event of non-compliance, to hold errant companies accountable for their actions.

Under UNCLOS, the Government bears a "due diligence" obligation to ensure that a company sponsored by Singapore carries out its activities in a manner which conforms with relevant provisions of UNCLOS, ISA regulations and its exploration contract with ISA. This obligation will be met by Singapore enacting this Bill to secure the sponsored company's compliance. In doing so, the Government will also be protected from any liability arising from environmental or non-environmental damage caused by any failure of a sponsored company to comply with its obligations.

The deep seabed licensing regime is established under Part II of the Bill, consisting of clauses 4 to 17.

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Let me highlight some of the key elements. It will be an offence for a Singapore company to engage in deep seabed mining without a licence issued by the Minister and a contract with the ISA. Offenders may be fined up to S$300,000 for an initial offence and they may be subject to a further fine not exceeding S$50,000 daily for a continuing offence, capped at S$500,000. As an added deterrent, individuals, including company directors who are complicit in the offence, may also be imprisoned for up to three months.

These penalties are benchmarked against those imposed by other countries which have enacted similar legislation, such as the UK. They are also pegged at a level to provide sufficient deterrent effect.

The Bill requires that companies meet certain conditions, such as having the technological and financial capabilities to carry out the activity that it wishes to conduct and undertaking necessary measures to minimise damage to the marine environment, before such a licence can be awarded. Mdm Speaker, I beg to move.

Question proposed.

Assoc Prof Fatimah Lateef.

Prof Fatimah Lateef (Marine Parade) : Mdm Speaker, there has been an increase and a growing interest worldwide in deep sea mining activities. The most critical concern will be sustainability of the environment and its protection and preservation. I support the Bill and would like to raise the following points.

First, how many, if any, Singapore companies and Singapore registered companies are involved currently, or have been involved, in these activities and expeditions? How have the numbers been and what is the trend over the last decade?

Second, recently, the Secretary General of ISA mentioned about the preparation of an exploitation code for deep seabed polymetallic nodules mining, capacity building and environmental protection. Will Singapore undertake these regulations, when ready, into our legislation, in support of, and upon passing this Bill today?

Third, how are contracts evaluated when they come through Singapore for an application? Do we have the relevant staff and expertise required for these evaluations, which should include geological, chemical and physical oceanographic information? Do we

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have trained personnel who are able to question and scrutinise these licence applications?

Fourth, Madam, many such contracts, when approved, are long term and will last, perhaps, 10 to 15 years or more. My question is: with such long duration, how will monitoring be carried out? And are these contractors required to submit regular reports, information and data? These data should not just be on the products or resources, but also on the environmental impacts. Will the annual reports of these companies also be made available to the licensing state?

Fifth, the ISA does have training and capacity building in deep sea mining and research. Are there Singapore companies involved in this and do we send contractors for this training when they make an application?

Sixth, pertaining to the certificate of sponsorship, with reference to Part I, clause 8, the phrase, I quote, "The Minister may sponsor a licensee's application to the ISA for a corresponding ISA contract", can I enquire what does the term "sponsorship" comprise: is it a letter of support, grant of a licence?

Finally, Madam, on the Seabed Disputes Chamber, can I ask the Minister for clarification on its functions, jurisdiction and how it will work with the various states in the event a case arises where an intervention is required? I support the Bill, Madam.

Minister Lim.

Mdm Speaker, I thank the Member for Marine Parade GRC for her support of the Bill. She raised several pertinent questions and sought some clarifications. Let me try and respond.

First, she asked how many, if any, Singapore companies are currently involved in deep seabed mining. Madam, to date, as far as we know, only one Singapore-based company – Ocean Minerals Singapore (OMS) – has notified us about its intention to undertake deep seabed exploration. This company is a joint venture between Keppel and Lockheed Martin.

Second, the Member asked about the preparation of the exploitation code by ISA and whether we would undertake regulations to enforce this code. Singapore is participating in ISA's deliberations together with other ISA members in the development of the exploitation code. This Bill, when enacted, will enable the Government to introduce further regulations should the need arise, to comply with evolving international standards and regulation of

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deep seabed mining.

Madam, the Member asked how would the contracts be evaluated and whether we have the capability to question and scrutinise these applications. Let me explain that deep seabed mining consists of two limbs. Any company wanting to undertake deep seabed mining has to apply for a contract with ISA. At the same time, they need the country where the company is based to sponsor that application. So, as far as the Singapore Ggovernment is concerned, we will evaluate applications from companies for sponsoring of the licence, from both the economic as well the environmental angles. So, to qualify, a company must possess the technological and financial capabilities to undertake the activities they plan to do; and, secondly, demonstrate that it has planned its activities in a manner that complies with the relevant regulations in order to minimise any potential damage to the marine environment.

To do so, we have set up an inter-agency taskforce comprising MTI, MEWR, MFA, MinLaw and AGC and this inter-agency taskforce has been formed to oversee such applications for licences and how we would want to sponsor the companies. And where necessary, this taskforce will consult external experts in the maritime and marine environment fields, some of whom are engaged by ISA.

The next question is how would monitoring be carried out, because such contracts may last 10 to 15 years. As part of ISA's regular monitoring mechanism, contractors are required to submit annual reports relating to the exploration activities that they have carried out in the deep seabed. Singapore will also require our licensed companies to file the reports with us on a regular basis and we will monitor our sponsored entities on this basis and will intervene if our companies are at risk of non-compliance.

The next question that the Member raised is about the training and capacity building that ISA has and whether any Singapore companies are involved in this. Currently, we are not aware of any Singapore companies involved in ISA's training programmes and capacity building.

On the certificate of sponsorship, the question is what this sponsorship comprises of. Basically, by issuing a certificate of sponsorship, the sponsoring government is declaring to ISA that we accept the responsibility to ensure that our sponsored entity will carry out its activities in conformance with UNCLOS and the ISA regulations. And in tabling this Deep Seabed Mining Bill, we are, in fact, establishing a framework for carrying out this responsibility.

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Finally, the Member asked about the jurisdiction of a Seabed Disputes Chamber and how it will work with the various states. The Seabed Disputes Chamber has jurisdiction over activities in the deep seabed and, if the Seabed Disputes Chamber were to find a Singapore-licensed company responsible in the dispute and orders compensation or reparation, then clauses 18 and 19 of our Bill will allow for such an order to be registered and thereafter treated as a judgment of our Court. And this will then allow Singapore to work with the ISA to enforce against any errant activities should the need arise.

Madam, I believe I have answered the questions.

[(proc text) Question put, and agreed to. (proc text)]

[(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)]

[(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Lim Hng Kiang]. (proc text)]

[(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]

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Mdm Speaker, may I seek your consent and the general assent of Members present to move that the proceedings on the next item under Minister Khaw be exempted from the provisions of Standing Order 48(8) to remove the time limit?

I give my consent. Does the Leader of the House have the general assent of hon Members present to so move?

[(proc text) Hon Members indicated assent. (proc text)]

[(proc text) With the consent of Mdm Speaker and the general assent of Members present, question put, and agreed to. (proc text)]

[(proc text) Resolved, that the proceedings on the next item be exempted from the provisions of Standing Order 48(8) in respect of Minister Khaw's speech. – [Dr Ng Eng Hen]. (proc text)]

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Mdm Speaker, I beg to move,

"That this Parliament:

notes with concern the Auditor-General's Report on the Audit of Aljunied-Hougang-Punggol East Town Council (AHPETC) (Paper Misc 1 of 2015), specifically its findings on:

the deficiencies in AHPETC's financial and accounting systems, record-keeping and safeguards;

the uncertain accuracy and reliability of AHPETC's accounts;

the lack of proper disclosure and oversight by AHPETC's Town Councillors, especially over related-party transactions and conflicts of interest; and

the risk that AHPETC has not properly managed and spent public funds;

calls on all Town Councils to uphold high standards of accounting, reporting and corporate governance so as to safeguard residents' interests; and

supports strengthening the legislative framework for Town Councils, in order to hold those responsible for their good management to proper account."

A copy of the audit report has been circulated to Members as Paper Misc 1 of 2015. It was also released to the public on Monday, 9 February 2015.

This is the first time in the history of Town Councils (TCs) that the Auditor-General (AG) has undertaken a special audit on a Town Council to look into concerns about its financial circumstances, under section 4(4) of the Audit Act. Let me explain how this came about.

Each year, Town Councils are required to submit their audited financial statements, auditor's report, and annual reports to my Ministry by 31 August, within five months of their financial year closure. MND will then table the reports to Parliament. All Town Councils have

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been able to meet the submission deadline, except AHPETC.

AHPETC have not submitted their reports on time ever since their formation in 2011. Their first set of reports for Financial Year 2011 was only submitted to MND on 11 January 2013, a delay of more than four months, after repeated reminders. Even then, their auditor's report was a qualified one, with the auditor making a Disclaimer of Opinion on the financial statements. The auditor listed four areas as the basis for their disclaimer. In audit terms, a Disclaimer of Opinion is a serious matter. It means that the auditors are unable to state that the financial statements provide a true and fair account of the Town Council's financial position.

In response, AHPETC assured MND that they had rectified most of the observations raised by their auditor and were in the midst of rectifying the others. That was in August 2013. MND decided to give the Town Council time to resolve their issues.

Unfortunately, the following year saw no improvement. Their second set of reports for Financial Year 2012 was submitted to MND on 10 February 2014, after another long delay of six months. And once again, their independent auditor, Foo Kon Tan Grant Thornton, submitted a Disclaimer of Opinion on AHPETC's Financial Year 2012 financial statements.

Not only was this the second consecutive year that the Town Council's independent auditor had submitted a Disclaimer of Opinion on AHPETC's Financial Statements, but they now raised 13 areas as the basis for their disclaimer. There were nine new issues of pressing concern, in addition to four areas identified by the auditor in the previous year, which remained unresolved contrary to AHPETC's assurance to MND. The auditor also issued a qualified opinion on AHPETC's other legal and regulatory requirements, stating that AHPETC had not complied with the provisions of the Town Councils Act and Financial Rules in various respects. The Town Council's financial accounting had further deteriorated.

This is a cause for serious concern. Town Councils collect substantial monthly Service & Conservancy Charges (S&CC) from their residents and their commercial tenants. Town Councils also receive large S&CC grants from MND. These are all public monies. As stewards of public funds, all Town Councils must keep proper accounts and records and maintain adequate control over their assets. Who has paid and who has not? How is the money spent? Is it properly used? Is anybody doing anything wrong? Is the Town Council solvent, being able to pay its bills on time? Does the Town Council have enough reserves in its Sinking Fund to replace major infrastructure when it is needed? For example, can the Town Council afford to replace the lifts when it is time to do so?

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These and many other questions directly affect the interests and safety of the residents. They are not trivial technical issues raised merely to satisfy the accountants or the auditors, or to meet financial regulations. Unfortunately, the observations in AHPETC's auditor's reports have raised serious questions about the reliability and accuracy of its financial and accounting systems.

That is why on 19 February 2014, at my request, the Minister for Finance exercised his power under the Audit Act to direct the AG to conduct a special audit of AHPETC's accounts. This was not a routine audit. AG was to ascertain whether AHPETC had taken all reasonable steps to safeguard the collection and custody of AHPETC's monies, ensure adequate controls over payments, and ensure that all legal provisions relating to AHPETC's monies were fully complied with. AG was to investigate the causes of Foo Kon Tan's Disclaimer of Opinion and ascertain the reliability and accuracy of AHPETC's financial management and accounting processes and systems.

The AGO report has set out clearly its approach and its findings. It is a sad commentary on the state of affairs at the AHPETC. In summary, the AG's investigation has uncovered major lapses. It found that AHPETC had failed to take all reasonable steps to safeguard the collection and custody of AHPETC's monies, ensure adequate controls over payments and fully comply with all legal provisions relating to AHPETC's monies. It concluded that the AHPETC had no proper accounting system, resulting in the Town Council's financial statements failing to "accurately reflect the state of affairs and transactions of AHPETC". It added that "there can be no assurance that AHPETC's accounts are accurate and reliable, or that public funds are properly spent, accounted for and managed". In other words, AHPETC's financial and accounting processes and systems are unreliable and their accounts, inaccurate.

Members can read the details in the AG's report. But let me just highlight four of AGO's key findings.

The AG has found that:

AHPETC did not transfer monies to its Sinking Fund as required by law;

AHPETC had inadequate oversight of related-party transactions involving ownership interests of key officers;

AHPETC had weak internal controls and systems to monitor payments received and made; and

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AHPETC had no system to safeguard important documents or keep proper accounts as required under the law and failed to provide key information required by its auditor and the AG.

As a result of these major lapses, the AG concluded that there was no assurance that public funds are properly spent, accounted for and managed by AHPETC.

Let me quote relevant sections from the AGO report to elaborate on these findings.

First, the AG found that, "AHPETC had not complied with the Town Councils Financial Rules. It failed to make the required transfers to sinking fund bank accounts".

All Town Councils are required by law to transfer 30% to 35% of their S&CC collections and grants received to their own Sinking Funds. These monies are the Town Councils' own savings, for the Town Councils to replace major infrastructures like lifts and to do major repairs and repainting. The transfers have to be made promptly, to ensure that the monies are safeguarded.

The AG found that more than a year after the end of each financial year, AHPETC still had not transferred the full sums required for their Sinking Fund. It owed $7.9 million for the Financial Year 2011 Sinking Fund and $3.9 million for Financial Year 2012.

In Financial Year 2012, AHPETC had $86 million in its Sinking Fund. Eighty-six million might seem like a lot of money. However, AHPETC has about 1,870 lifts which the Town Council needs to replace when their operating-life expires. In fact, over the next 10 years alone, it will need to replace 10% of the entire stock of lifts. This will cost $54 million, or 60% of the current Sinking Fund. So, that will leave only 40% of the current Sinking Fund for other major repairs and repainting works that also need to be done. Things can only get worse beyond that, because the bulk of the lift replacements – about 90% of the 1,870 lifts – are due after 2025. AHPETC needs to build up its Sinking Fund. If it continues to miss contributions to its Sinking Fund, the residents will eventually be living in blocks where lifts are unsafe or unreliable and other infrastructures often break down.

There is always the temptation, when a Town Council is financially strapped, to postpone saving, and say it will make up the shortfall later or, worse, to put its hand into the cookie jar, to draw from the savings to satisfy immediate needs. Just spend, use the savings first. Sounds appealing. But the Town Council will then be simply running down its reserves and mortgaging away the future of its residents. And that is why the Town Councils Act and Financial Rules enforce saving to pay for replacements and major repairs which have to be

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carried out in future.

Second, the AG found that, "AHPETC did not disclose fully the related-party transactions in its financial statements. It also did not adequately manage the conflicts of interests of related parties arising from ownership interests of its key officers".

The related parties were two companies, FMSS and FMSI, engaged by AHPETC to carry out managing agent services and essential maintenance and lift rescue services. FMSI was a sole proprietorship owned by the Secretary of AHPETC. The directors and shareholders of the other company, FMSS, were the Secretary, General Manager and Deputy General Manager of AHPETC. The Secretary and General Manager of AHPETC are, by the way, husband and wife.

The AG found that, "The key officers of AHPETC, that is, Secretary, General Manager and Deputy General Manager, who had ownership interests in FMSS and, at the same time, performed a role for AHPETC in approving payments to FMSS were in clear conflicts of interests. Hence, it was important for AHPETC to have put in place adequate mitigating controls to manage the conflicts of interests".

However, AHPETC did not properly oversee transactions with these companies owned by its key officers. The AG found that before AHPETC entered into contracts with these companies, "There was no documentary evidence that the AHPETC Town Councillors had specifically considered the ownership interests of AHPETC's Secretary, General Manager and a Deputy General Manager. These contracts amounted to about $25.9 million in total".

The AG also found that, "There were control weaknesses, and lack of documentary evidence that payments to the related parties were independently verified so as to ensure that work has been satisfactorily performed and payments were fully justified and correctly computed". The report cites "instances where the Secretary and General Manager issued payment claims as owner of FMSI and director of FMSS respectively, and subsequently, the same General Manager certified these payment claims and approved the payment vouchers in her capacity as an officer of AHPETC". In other words, it is very convenient – the husband issued the payment voucher and the wife approved the payment and the wife also signed the cheque. It is all in the family.

The AG concluded that, "Taken in totality, AHPETC did not adequately manage the conflicts of interest involved in related party transactions". This means that AHPETC may not have obtained the best value for the monies paid to these related parties. Or worse, there could be opportunities of wrong-doing or unethical practices which AHPETC may not be able

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to detect or prevent.

Compounding this risk, the AG found "lapses in internal controls, which exposed AHPETC to the risk of loss of monies, or valuables, commitment to expenditure without requisite approval as well as wrong payments for goods and services". The AGO report contained many examples of such lapses, including instances of a lack of segregation of duties within the payment process for many invoices to third-party vendors. For example, "the General Manager of AHPETC certified work done as well as approved the payment vouchers and cheques", to external vendors. This was in addition to the lapses in payment to the related parties owned by the key officers that I mentioned earlier.

Now, Town Councils award millions of dollars of contracts each year. Residents and taxpayers need to know that their monies are properly spent and they are getting best value for money. When these contracts are awarded to parties related to the Town Council, the Town Council needs to be upfront with its residents as well as with taxpayers at large, so that there is transparency and proper scrutiny. In total, AHPETC has close to $27 million worth of contracts with its two related parties, FMSS and FMSI. Of these, close to $6 million was given without tender.

Third, the AG observed that AHPETC did not have a system to monitor the scale of its S&CC arrears accurately. "The statistics on arrears that AHPETC submitted to MND as well as AHPETC's Finance and Investment Committee were unreliable". As a result, the AG concluded that, "There is no assurance that AHPETC is able to monitor and manage its S&CC arrears properly or present an accurate picture of arrears in its financial statements".

Each year, AHPETC collects about $37 million in S&CC from residents and tenants and receives another $7 million in grants from the Government. The Town Council also manages a reserve of about $90 million, accumulated from residents' monies and Government grants over the last 25 years. Without a proper accounting system, the Town Council cannot accurately ascertain how much of the arrears is recoverable. This means that the Town Council's financial position, as reported in its annual financial statement may, in fact, be overstated. If so, the Town Council may actually get into financial difficulties without realising it. There is also no assurance that Government grants, which are taxpayers' monies disbursed to the Town Council, are being safeguarded and channelled to the purpose for which they are given. And most fundamental of all, there is no safeguard against potential mischief and loss of public monies.

Fourth, the AG reported that AHPETC had no proper system to safeguard important documents and had weak accounting procedures. It did not provide key information required by its auditor and the AG. Without access to proper records, the AG, like the Town Council's own auditors, was unable to make a proper assessment of the Town Council's

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financial situation. As a result, the AG concluded that, "There can be no assurance that AHPETC's accounts are accurate and reliable".

Now, Madam, a key plank of Town Councils' accountability towards their residents is via their financial accounts, which have to be audited annually by an independent auditor and tabled to Parliament. AHPETC's failure to provide information to its auditor and the AG has completely undermined the system of accountability. While the Town Council framework is designed to give Town Councils maximum autonomy in their operations, it demands, in turn, that Town Councils account for their actions through proper accounting, governance and disclosure. AHPETC's repeated failure to do so shows a disregard for its obligation to account to its residents; and also disregard for this Parliament which the AHPETC's Chairman, Vice-Chairmen and their fellow Members of Parliament have solemnly sworn to serve in.

As the accounts are unreliable, we do not know the exact state of AHPETC's financial position. Based on their published reports, AHPETC's financial position has deteriorated sharply since Aljunied Town Council was merged with Hougang Town Council in 2011. The audited Financial Year 2010, financial stake accounts at Aljunied Town Councils, had reported an operating surplus of $3.3 million. By Financial Year 2012, the merged Town Council had incurred a $734,000 operating deficit.

Now, a Town Council runs a surplus if its income exceeds expenditure for that year; conversely, it runs a deficit if its expenditure exceeds income. In Financial Year 2010, the Aljunied Town Council's expenditure was less than its income and, hence, the Town Council had a surplus. But in Financial Year 2012, AHPETC's expenditure had exceeded its income, resulting in a deficit. In two years, AHPETC's income rose 14% as its population base had increased, but its expenditure had shot up disproportionately by 30%.

The deterioration of AHPETC's financial position was in part due to Aljunied absorbing Hougang and its bad finances. In Financial Year 2010, before merging with Aljunied, Hougang Town Council had an operating deficit of $92,000. It was also partly due to the abnormally large fees it paid to its Managing Agent, FMSS, which was fully owned by the key officers of AHPETC.

Mdm Speaker, the AG's findings confirm that something is seriously wrong at the AHPETC. They paint a picture of financial mismanagement, incompetence and negligence in corporate governance.

If an auditor makes such a finding on a listed company, it will immediately cause consternation among the shareholders, and a call for the removal of the CEO and the Board

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of Directors. In Japan, the Chairman and CEO would hold a press conference and take a deep bow. And in the good old days, they may even commit harakiri. Where there are breaches of the Companies Act, both the company as well as the individuals responsible could be charged and, if found guilty, punished with fines and/or jail terms for the individuals.

Even for charities, if their auditor makes such a damning finding, the Commissioner of Charities will haul up the Governing Board and key officers for a full inquiry. They will be suspended and eventually removed from their duties if the findings are borne out. They can also be charged and punished for any breaches of the Charities Act.

Town Councils are not regulated under the Companies Act or the Charities Act. As I explained in this House in May 2013, Parliament decided in 1989 to give elected Members of Parliament more authority and responsibility over the HDB estates in their constituencies in order to strengthen the nexus between the residents and their elected Members. The strategic intent was to bring home to the Members that how they manage and run their Town Council will affect their electoral fortunes at the next election and, to voters, that the Members of Parliament they elect will be responsible for looking after their housing estates. This would enhance accountability, push Members to focus on what mattered to the residents and, in turn, encourage voters to scrutinise more closely the capabilities and track record of election candidates. That is why the Town Councils Act deliberately takes a light-touch approach to regulation and enforcement.

However, light touch does not mean that the Members and the Councillors running the Town Council bear no responsibility and need not be held to account if the Town Council fails to perform. By law, the Members and Councillors are, ultimately, responsible for everything in the Town Council. They cannot simply delegate their responsibility away to their Managing Agent or any others.

Unfortunately, throughout this saga, we have found the Members of Parliament running the AHPETC to be evasive, unresponsive and misleading. In response to legitimate queries from auditors, my MND officials, their own residents and the media, they stone-walled, deflected the queries, made false or dishonest claims, raised irrelevant excuses and sought to confuse the public with a flurry of red herrings. Let me give four illustrations.

First, their lack of transparency – they failed to disclose things on time; they failed to submit reports they should be submitting. Every time we reminded them, again and again, they came up with yet another excuse.

AHPETC's FY2011 and FY2012 financial statements were late and its FY2013 statements are still outstanding. AHPETC's Service and Conservancy Charges (S&CC) arrears reports have

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been outstanding for nearly two years.

Financial incompetence aside, failure to carry out critical cyclical maintenance work is an even graver safety concern. For instance, even AHPETC's FY2013 cyclical maintenance works report which informs MND of any delays in replacing major infrastructure, was late for more than six months, incomplete and inaccurate. This is serious as it potentially impacts on public health and safety. For instance, we expect lifts to be replaced after 28 years. If the Town Council prolongs the replacement of a lift beyond the recommended operating-life, we require them to disclose it and declare that it remains in serviceable condition and has been duly certified by qualified personnel. But AHPETC does not seem to be exercised over such reporting. Each time MND officers update me on their Town Councils' submissions, it reads, "AHPETC still outstanding". Why this lack of transparency? Why are reports from AHPETC always outstanding?

Second, the Town Council appointed a related party, FMSS, as its Managing Agent. As I explained earlier, the owners of FMSS are Mr Danny Loh, who became the Town Council's Secretary, and Ms How Weng Fan, Mr Loh's wife, who became the Town Council's General Manager. There were occasions where Ms How certified work done, approved the payment voucher and approved the cheque from the Town Council to her own company.

The AG has found insufficient disclosure of the related-party transactions in AHPETC's financial statements and lack of evidence of safeguards to manage the conflicts of interests of related parties arising from the ownership interests of its key officers. Why did AHPETC not disclose these related-party transactions and take steps to prevent the risk of abuse when the companies it gave contracts to were owned by its key officers?

Third, FMSS was paid abnormally high fees. It was paid 20% more than the previous Managing Agent that ran Aljunied, 50% more than a comparable Town Council and more than any other Town Council. Why? When asked, the Town Council explained publicly that the higher rates included services which used to be contracted out, such as IT administration and maintenance, resulting in savings for the Town Council. Sounds like fair enough. But is it true?

In December 2012, in response to MND, the Town Council said, "It had moved on to upscale and develop the Financial System which was in use at the former Hougang SMC". So, it is not true. And what exactly is the capability of this "up-scaled and developed Financial System"? Apparently, it could not even track and make simple monthly arrears reports. To produce the reports, the Town Council told MND that they would require "manual counting and sorting".

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Fourth, their failure to deal expeditiously with problems – S&CC arrears being a prime example. Throughout this sad saga, what are the Members of Parliament of AHPETC doing? I do not expect them to take over the job of their Managing Agent, but I do expect them to exercise close supervision and, when problems arise or issues are highlighted, to step up, take responsibility, look into them quickly and address them squarely.

This is the accountability that we expect of all elected Members of Parliament or, for that matter, any company director or any member of the governing board of a charity. Instead, what we have consistently gotten from the Members of Parliament of AHPETC is side-stepping and avoiding responsibility – first "no response", then "in due course" and then followed by a series of excuses, blaming everybody else for their failure to perform.

Finally, last month, AHPETC declared that they had "embarked on a roadmap to enhance its aggregated arrears reporting module sometime in November 2014". This is their response to a problem in June 2013, 17 months earlier! Simply astounding.

Clearly, this state of affairs is unacceptable. MND will follow up in three ways.

First, MND expects AHPETC to follow up and remedy the problems and weaknesses listed in the AGO Report. It is already too late for AHPETC to submit their FY2013 financial reports on time. But MND expects them to submit an unqualified set of their FY2013 financial reports to MND by 30 June 2015, and FY2014 financial reports by 31 Aug 2015. These must be tabled to Parliament, just like the financial reports from all the other Town Councils.

MND further expects AHPETC to deal decisively with the gross incompetence of its Managing Agent. Please do something for the sake of your residents. There has been overpayment and public funds have been affected. Will the Town Council be suing the FMSS for return of money lost? Meanwhile, MND is studying what other legal recourse any aggrieved party may have.

Second, because of these serious problems, MND has withheld this year's FY2014 S&CC grant from AHPETC. The money has been put aside in a separate deposit account and will be paid out after the problems are fixed.

MND is mindful that the suspension does not unwittingly result in the Town Council not being able to pay its essential services, leading to hardship for the local residents. In fact, we are prepared to consider paying out the S&CC grants in full or, at least in half, if AHPETC could assure MND that the grants will be properly channelled to the purpose for which they are given.

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MND has asked AHPETC what measures they could institute to ensure this. AHPETC has not yet taken up MND's offer. On 12 November 2014, Ms Sylvia Lim replied MND to say that they are assessing the situation and will reply should they wish to take up the option of the half-grant. We are concerned, but we have not heard from her since then. Anyway, the earlier the AHPETC clean up the mess, the earlier we could resume payment of the S&CC grants. So, the ball is in the Town Council's court.

Third, MND will address the weaknesses in the current Town Councils regulatory framework. We can no longer take the light touch and assume that all Members of Parliament running Town Councils will be responsible. We will amend the Town Councils Act to ensure that the Town Councillors, including the elected Members of Parliament, carry out their duties and, if they do not, to institute a proper system of enforcement and penalties.

Regardless of which party is running the Town Council, there is a need to ensure proper systems, accountability and governance, to safeguard residents' interests. The Companies Act regulates companies closely. Boards of Directors are held to a high standard of fiduciary duties. The Town Councils Act has not and may not need to follow the Companies Act in full. But the basic need for accountability and good corporate governance must be followed and the legislative provisions strengthened as in the Companies Act.

After the Committee of Supply this year, MND will table a Bill to amend the Town Councils Act to tighten the current legislative framework, so as to better protect the public interest. Senior Minister of State Lee Yi Shyan has been working on this and will take the Bill through Parliament. But let me set out briefly three key areas which the amended Act will address.

First, at the fundamental level, we will make clear that Town Councils are subordinate to and must comply with the authority of public law and of Government agencies charged with enforcing the law. While Town Councils are statutorily vested with the function and duty to manage and maintain common property, they do not own the common property and their powers are not unfettered.

We have assumed that all Town Councils will follow this fundamental principle without needing to spell it out explicitly. But, sadly, AHPETC has proven us wrong. For example, we require all Town Councils to focus on their primary mission which is to maintain the common areas under their care. Town Councils are not set up like for-profit companies to make money. Town Councils should break-even with revenue from the S&CC collections and Government grants.

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For example, it is not their business to organise and operate trade fairs which compete with existing HDB shops as that would be unfair to the shops. That is why there are clear rules against such a practice. However, AHPETC has refused to comply with such rules, despite repeated reminders from MND and other Government agencies.

Second, we will strengthen Town Councils' corporate governance and financial accountability, to ensure that Town Councils plan and use their finances in a sustainable way. This will take reference from best practices in companies and other organisations, and include spelling out the duties and responsibilities of the Town Councillors and elected Members of Parliament and the penalties if they fail to perform those duties.

Third, we will strengthen MND's regulatory oversight with powers to collect information and conduct investigations and a stronger penalty framework. Currently, the Town Councils Act does not provide MND with any levers to cause Town Councils to comply, except for offence provisions in three narrow areas.

MND also lacks the power to investigate irregularities or non-compliance with the Town Councils Act, as it does not have the express authority to require Town Councils to submit any information beyond the annual financial statements. So far, MND has been relying on moral suasion and Town Councils' self-declarations.

For effective governance and regulatory oversight, MND requires powers to collect information and conduct investigations. This also has to be coupled with a stronger penalty framework, to enable the Government to take errant Town Councils to task for non-compliance.

Mdm Speaker, how Town Councils perform matters. How our public housing estates are managed impacts public health, public safety and the quality of life for millions of Singaporeans and the value of their flats.

Town Councils need competent, honest people and proper systems to serve their residents well. Good intentions and bland assurances alone are not sufficient. Elected Members of Parliament need to supervise the work of their Town Councils and their Managing Agents. While they enjoy wide autonomy, they also have huge responsibility and they are accountable to their residents. They have statutory duties but they are also subject to national laws.

Running a Town Council requires elected Members of Parliaments to govern, not just politick. Compared to the sound and fury of politicking, governing is long, tedious and unglamorous work. But good government is what secures a good life for Singaporeans, on a

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long-term, sustainable basis. Conversely, neglect of Government ultimately compromises residents' well-being. It may not show up immediately, but it will, eventually. Meanwhile, where serious problems have been identified, MND has to intervene to require the Town Council to remedy them.

Mdm Speaker, beyond ensuring that our HDB estates are well run, the Town Councils Act has a wider strategic objective: to ensure that any party aspiring to form the national government of Singapore first shows that it can run a Town Council competently. This aim remains sound. That is why, despite the problems that AHPETC has run into, we do not propose taking back the Town Council's powers and having HDB run everything again, like before. Instead, we will strengthen the Town Council framework to remedy the weaknesses in it, so that elected Members of Parliament have to perform and be held more tightly to account in running their Town Councils and towns.

Madam, I do not relish making this statement. Parliament should be about accountability and responsibility. Sadly, the AG's report has found the lack of accountability and failure to take responsibility on the part of AHPETC Chairman and her Councillors. I hope they will act speedily to remedy the problems. Mdm Speaker, I beg to move.

[(proc text) Question proposed. (proc text)]

Mdm Speaker, the Workers' Party supports the Motion. We treated the AGO audit seriously. I understand that the Town Council had made all efforts to respond to AGO's queries to the extent of the need to prioritise the audit over some other works due to manpower resource constraints.

The Chairman of the Town Council, Sylvia Lim, attended to AGO's audit personally. The staff employed by the Managing Agent working at the Town Council had undergone tremendous stress. They are overwhelmed by their workload amidst challenging conditions. I would like to thank them for putting in their best efforts.

We take the findings of the AGO seriously and have responded to details of the findings in writing to AGO. The Chairman and Vice Chairmen of the Town Council as well as other Members of Parliament from the Workers' Party, elected Members, will deal with the various findings of the AGO report.

I would like, first, to address the public misconception that the Managing Agent was given the contract without tender. Open public tenders were called in 2012 for the Managing

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Agent (MA) and EMSU contracts. The most recent tender for the MA contract was called in November 2014. However, tender was not called for the MA contract for the specific transition period between July 2011 and July 2012 and for the EMSU contract, the period between October 2011 and June 2012, due to the urgency to take over the management of the town and to ensure that major services were not disrupted to affect the lives of residents. The important point to note is that the Town Councils Act allows the Chairman of a Town Council to waive tender requirement under the circumstances.

Mdm Speaker, the fact remains that it has been a challenge for the Workers' Party, being an Opposition Party, to attract Managing Agents. When the public tender was called in 2012, three companies collected the tender documents and only one company submitted the tender. In a more recent tender, only one company, the largest Managing Agent managing PAP Town Councils, collected the tender document but no one submitted any tender.

What we learnt from this AGO audit is that we should have appointed a consultant to look at internal controls in compliance with the Town Councils Act while the elected Members of Parliament focused on taking over the management of the town to ensure that major services are not interrupted and residents' routine lives are not affected. This is something we will do if such a privilege should happen in future elections.

But the problem of professional town management in compliance with financial rules will remain a real challenge if there are no established Managing Agents who are prepared to do the job. It will seem that Managing Agents serving PAP Town Councils are unwilling to serve as Managing Agents in non-PAP Town Councils, and that the reason appears to be political rather than professional. It looks like the only option for any Opposition Party to take over a Town Council will be direct management. I did this in Hougang SMC when I took over the Town Council in 1991. However, at that time, the HDB provided computer and EMSU services and the Town Council paid a fee per month for the services. The Council recruited staff directly to manage the town. Hougang SMC is a compact town.

Currently, the only alternative Town Council financial accounting system was developed by Hougang SMC which had proven to be inadequate for a GRC town. Direct management means newly elected Members of Parliament will have to start from scratch to recruit and train staff to be familiar with HDB estate management, to start taking over management of the town within 90 days as required under the Town Councils Act. And, at the same time, to look for accounting software to transfer the account into a new system and pray that the system will work. If we are not able to do all these at the same time, we will be labelled as "incompetent".

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Hence, Mdm Speaker, under our current system, it seems to me that any Opposition Party which aspires to be elected in a GRC will have to build a town management team to train hundreds of staff officers first. Then, taking the advice of the Minister for National Development, start shopping for an off-the-shelf accounting software. If an Opposition Party aspires to be the next government, perhaps it may need to build an army of civil servants first. This is a strange political situation for any functioning democracy to be in.

The Workers' Party was fortunate to have a Managing Agent at least with the experience in managing the town of Hougang Single Member Constituency, and who was prepared to take the challenge of managing a much larger town, to enable us to take over the management of the Aljunied GRC town, without major disruption to the services affecting the lives of thousands of residents. We did also have a financial accounting system in place although it fell short of features and functions that managing a larger town requires.

I think this is not the way forward for the good of the nation. If we consider residents' interests as most important, then the Government must also protect residents' interests in the transition of town management from one Party to another Party. We are for transparency and accountability. We are not shy to support the Motion that is critical of us but we will address and remedy the issues raised by the AGO report.

In fact, you will see from the speeches of my colleagues, we have already taken concrete steps to address and remedy many of the issues. We are fully aware that if we overlooked certain matters, the PAP Government will be the first to take us to account. We are not daunted by it, as this is what a First World Parliament should be – keep whoever is in charge on their toes, to do the job properly and be accountable to the people.

AGO has taken a year to check the accounts of AHPETC for the Financial Year 2012/2013 and found lapses in several areas. It has not found the Town Council to be engaged in corrupt practices nor that any money had been lost or misappropriated after thousands of transactions were examined. We should put this episode in a proper perspective. Based on the Town Council Management Report, except for S&CC arrears management and corporate governance, AHPETC's performance in other aspects of town management is comparable to other Town Councils.

We support the Motion to strengthen the legislative framework for Town Councils. As we relook the legislative framework, we need to look at the de-politicisation of the transitioning process and the professionalising of town management so that the incoming Town Councils can work to achieve good management and not be left stranded. Newly-elected Members of Parliament should not be tested on whether they can build up town

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management systems from scratch, putting residents' interests at risk in the process.

Finally, Madam, I would like to thank the residents living in the towns of Aljunied, Hougang and Punggol East and the public for their concern and support. Despite the challenging political climate, the Workers' Party will continue to serve you to the best of its ability. Thank you.

I propose to take the break now. I suspend the Sitting and will take the Chair at 4.35 pm.

Sitting accordingly suspended

at 4.15pm until 4.35pm.

Sitting resumed at 4.35 pm

[Mdm Speaker in the Chair]

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Mdm Speaker, may I seek your consent and the general assent of the Members present to move that the proceedings on the item under-going discussion be exempted from the provisions of Standing Order 48(8) to remove the time limit in respect of my speech?

I give my consent. Does the Member have the general assent of the hon Members present to so move?

[(proc text) Hon Members indicated assent. (proc text)]

[(proc text) With the consent of Mdm Speaker and the general assent of Members present, question put, and agreed to. (proc text)]

[(proc text) Resolved, that the proceedings on the item under discussion be exempted from the provisions of Standing Order 48(8) in respect of the Member's speech. – [Ms Sylvia Lim]. (proc text)]

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[(proc text) Debate resumed. (proc text)]

Madam, we support the Motion and, as the Town Council Chair, I would like to put the concerns about the accounts of AHPETC in proper perspective.

As we have said before, we welcome the audit by the AGO. The Workers' Party believes in transparency and accountability. We have given whatever documents we could to facilitate the audit, including documents with mistakes made or that it embarrassed us. The Town Council has done its best to prioritise the audit with resources it has. The past year has been gruelling for the management and staff as we were running a "live" operation at the same time. The team auditing us consisted of eight members from the AGO and eight from Pricewaterhouse Coopers, a total of 16 for the past nine to 10 months. I wish to record my sincere thanks and appreciation to all those who worked long hours to complete the audit.

The Motion expresses concern about some aspects of the Town Council's accounts and record-keeping, particularly in FY2012, two years ago. We, the Members of Parliament for Aljunied, Hougang and Punggol East, are concerned about these matters. Some of the matters flagged out have already been addressed or improved upon; others are works in progress that require more time.

To facilitate the public's understanding of the key improvements we have made or are making, I wish to distribute Annex 1 to my speech. Madam, may I have your permission to distribute an annex?

Yes, please. [A handout was distributed to hon Members. Please refer to Annex 1.]

Members will see from the Annex 1 that some of the key improvements and updates have been tabulated in this two-page attachment and some of the Members of Parliament and myself will be taking Members through some of the specific changes later on.

Madam, in this debate, all the Members of Parliament of the Town will be giving more insight into specific areas to enable the public to have a better understanding of the matter and the actions we have taken and are taking in response to the AGO audit. I will focus on

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the findings about the Sinking Funds and related-party transactions.

First, Madam, the Sinking Funds. We note that there could be a misunderstanding amongst some members of the public that the Sinking Fund monies were somehow lost. This is not the case. At all times, the monies that were not transferred to the Sinking Funds were still in the Town Council's operating fund bank accounts. The issue picked up concerns the transferring of the monies from one bank account to another. Let me explain how the omission of the transfer arose before I go into the corrective actions taken.

Monies, such as income and Government grants, are first received into the Town Council's operating fund accounts. During FY2011 and 2012, the Town Council made some payments for Sinking Fund expenses out of the operating fund accounts, believing it could net off the Sinking Fund expenses before making the transfer to the Sinking Fund accounts later.

The Town Council accepts that it should have transferred the full amounts due to the Sinking Funds each quarter and should have paid Sinking Fund expenses directly from the Sinking Fund accounts. We have taken steps and made good the transfers. For FY2011 and FY2012, the necessary transfers have been done. We have also done the transfers for FY2013 and have been making transfers for FY2014. As for the errors in transfer amounts flagged by AGO, we have also made the corrections and payments.

AGO noted that the Town Council had wrongly used Sinking Funds for the Neighbourhood Renewal Programme (NRP). The TC had assumed that funds for NRP should be deposited into Sinking Funds and paid from there. However, as there was actually no legal requirement to keep the NRP funds in Sinking Funds, we have corrected this and, henceforth, transacted for NRP projects out of routine or operating funds. This error arose because the Managing Agent had not encountered managing an NRP project before and was not certain whether such NRP monies should be transacted out of Sinking Funds or operating funds. This was not a case of using the Sinking Funds for the wrong purpose.

Madam, there is still one issue to be attended to and, that is, the amount of GST refunds to be transferred back to Sinking Funds. This will take some time to unravel. Going forward, the Town Council will work with its IT system vendor to implement a function to capture Sinking Fund payments that attract GST. This will make it much easier to compute how much GST refunds from IRAS should go back into the Sinking Fund. The observation about the Sinking Fund lapses has, thus, been substantially addressed.

Next, Madam, I move on to related-party transactions. The Town Council has never disputed that the Town Council and its Managing Agent (MA), FM Solutions and Services Pte

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Ltd, are deemed to be related parties under the financial reporting standards. In a small set-up like FMSS, which focuses on managing one town, it is inevitable that the Directors of the company would be involved in holding key positions in the Town Council as well. This issue of RPTs in our Town Council has been the focus of much media attention. Misimpressions have been created that the TC Secretary and its General Manager were the main directors and shareholders of the company, are freely being given contracts without tender and paying themselves handsomely without accountability. Contract values have been highlighted in media headlines as if these were profit margins. It is necessary to highlight some key facts as these misimpressions need to be debunked.

One, the MA has no decision-making power in relation to the award of tenders. Tenders are awarded by a Tenders and Contracts Committee consisting of Members of Parliament and appointed Councillors with no interest whatsoever in the MA.

Two, the MA is not involved in evaluating any tender in which it is participating. When the MA and Essential Maintenance and Services Unit (EMSU) tenders are involved, the MA is excluded from the deliberations.

Three, the only time FMSS was appointed to provide services without tender was in 2011 in the aftermath of the General Election. These waivers were only for two contracts for very short periods of time. One, for MA services for one year; and the other for EMSU services for nine months. These were transitional arrangements. For all subsequent contracts involving FMSS, open tenders were called and advertised in the papers accordingly.

Five, for the first contract in 2011 for MA services, it was triggered as the incumbent MA, CPG Facilities Management, asked to be released from the contract with the TC for business reasons. There was an urgent need to put in place a computer system due to the termination of the former system in use. FMSS was appointed for a one-year period only to help the TC in the transition phase. Their rates were the rates that CPG FM charged the former Aljunied TC.

Six, for the first contract in 2011 for EMSU, there was no intention to waive competition. The TC's preference was to extend the existing contractors until a tender could be called for the whole Town. However, the existing contractors were not agreeable. FMSS was appointed to provide these services for nine months until the tender could be awarded for the Town. I shall elaborate more on this shortly.

Seven, in 2012, open tenders were called for MA services as well as EMSU services for the six wards in Aljunied-Hougang Town. For MA services, three companies purchased the tender documents, including EM Services, that is, the Managing Agent for many PAP Town

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Councils. When the tender closed, only FMSS tendered to be Managing Agent (MA) for AHPETC. Prior to submitting the tender, FMSS also submitted their declaration of interest in accordance with Town Councils Financial Rule 76, sub-rule (3).

Eight, as the Town Council was left to evaluate FMSS as the sole tenderer in 2012, the Town Council decided that it was prudent to have a tender process for MA services, subject to a voluntary audit. It called for quotations from three audit firms and appointed one firm to do the review. The agreed upon scope included considering whether the current procedures and practices were adequate to ensure that the procurement was made in the ordinary course of business and whether there were adequate controls to ensure that the award was conducted in an unbiased, objective, fair and transparent manner. It also covered assessing whether the evaluation and award of the tender was conducted in accordance with existing requirements and good corporate governance practices. The auditors examined the records of the evaluation done and also sat in on an evaluation meeting. After this voluntary audit in 2012, the Town Council was graded "A".

Nine, contrary to some misimpressions that the Managing Agent has a free hand to manage the Town Council, the Town Council, in fact, has in place various structures to oversee the work of the Managing Agent. I would like now to distribute Annex 2 to my speech showing the various committees and channels that aid monitoring of MA services.

Ms Lim, do not forget to ask for my permission.

Sorry, Madam. May I have your permission?

Yes, please proceed. [A handout was distributed to hon Members. Please refer to Annex 2.]

Thank you. Madam, as Members can see from Annex 2, this sets out, not just the composition of the Town Council itself, but also its constituent committees that oversee various aspects of work, such as estate, finance, tenders, audit, projects and so on. On the last page, Members will also see some additional channels by which the MA service levels are monitored by the Town Council, in particular, the Members of Parliament. Later on, my colleagues will also take Members through some of these points.

Madam, in relation to the related-party transactions, I would like now to talk about the disclaimer in the FY2012 financial statements on this point. In our Town Council's audit for FY2012, our auditors put in a disclaimer that because the project management fee details were not disclosed in the financial statements, they were unable to determine the

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completeness of the related-party disclosures.

The Town Council could not understand this at that time as there was no clarity of practice in the financial statements of Town Councils. For instance, the same auditors audited us earlier in FY2011 and only required the related-party disclosure to disclose MA fees. The former Aljunied Town Council Management also had related parties and yet there were no related-party disclosures in the financial statements which had no disclaimers.

Madam, the Town Council has no issue with disclosing the value of the related-party transactions. Moving forward, we have suggested that the Ministry make it clear which parties are considered related in the Town Council's context. Most Town Councils are managed by managing agents with the Town Council's Secretary and General Manager being fairly senior staff in their respective companies. Should all TCs then make such related-party disclosures?

Madam, I also note that due to certain media reports, there may be a misconception that the values of the project management fees and EMSU fees paid to the MA were not recorded in the financial statements. Madam, there are no off-book payments whatsoever. These fees are recorded in the Sinking Funds' and operating fund's expenses. The auditors' issue in FY2012 was that they wanted specific disclosures under a related-party transaction heading. So, I thought it is important to clarify that.

Madam, next, I would like to move on to the AGO's finding on the EMSU contract that was awarded for nine months in 2011. AGO has flagged several lapses relating to this, such as not planning properly so as to call a tender and lack of due diligence in assessing the fee proposal. We agree we should have handled the situation better. However, please let me explain the situation at the time.

The new team had just taken over management on 1 August 2011 and was focused on priorities, such as stabilising the estate management operations and also of upscaling the computerised financial accounting system to cater to the GRC accounts. At that time, the EMSU services for the six wards in Aljunied-Hougang Town were then provided by three different contractors due to electoral boundary changes for GE 2011. Aljunied GRC had four wards serviced by CPG FM, one ward drawn over from Marine Parade GRC being serviced by EM Services and Hougang SMC being serviced by FM Solutions & Integrated Services.

The TC had wanted to preserve the existing contractors until a tender could be called for EMSU services for the whole Town. There were verbal discussions with CPG FM to extend their contract for six months but, in the end, it did not materialise. By the time the official reply was received, it was mid-September, two weeks before the contract expired on 30

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September. The Town Council had appointed a committee to evaluate a proposal by FMSS to step in due to the urgency and the public interests.

The committee met on Sunday, 18 September 2011, and went through the proposal to use the existing rates charged by CPG FM and EM Services. Unfortunately, it was not noticed that for two of the items, the wrong multiplier was used. The items were costed per equivalent dwelling unit (EDU) rather than the correct unit which should have been per block and per lift.

There was a rounding off of a unit rate to two decimal places instead of three, resulting in an erroneous calculation. Approval was obtained from the Town Councillors via email for an estimated fee of about $70,000 when the fees should have been in the region of about $50,000. We have gone back to investigate the matter. Though the approval was for a fee of $70,000, the actual amounts billed by FMSS were lower, being about $67,000 to $68,000 each month. The TC has since calculated the amounts, using the correct multipliers. There was an unintended overpayment to FMSS for the nine months. A sum of about $122,000 has since been paid back to the Town Council to correct the error.

Why did the error occur? I bear personal responsibility as I was Chair of the Evaluation Committee. Despite the urgency of the matter, I should have ensured that the former contractor's invoices were sighted for comparison before the Committee accepted the pricing proposal and obtained the Town Council's approval. That said, the error was not deliberate. There was absolutely no intention on the part of the Committee nor the contractor to approve higher payment rates for this interim period of nine months.

Next, Madam, I move on to the issue of disclosures of the related-party transactions. It was pointed out that before entering contracts with FMSS, the relationships and extent of past or existing dealings should have been recorded, as considered by the Town Councillors. We note the advice and will exercise more diligence in detailing and recording the RPTs in future and discuss how to mitigate the risk. To this end, we will implement a checklist to be filled in by all tenderers and contractors to facilitate this.

I wish to highlight, however, that, in the circumstances, there was little risk that the Town Councillors did not know of the relationships and the past contracts. At the time the contracts in 2011 and 2012 were entered into, the appointed Town Councillors remained the same. They knew of the circumstances of the formation of FMSS and contracts being awarded to FMSS and their values. When the tenders from FMSS were received, the ACRA-profile of FMSS was submitted and considered by the committees evaluating the tenders.

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Next, Madam, I move on to the issue of oversight of payments. Much has been published about the fact that the Secretary and General Manager issued invoices, certified work done and approved and signed cheques to FMSS. Appendix C, Attachment 1 and its total amount for 84 invoices of $6.6 million have been the subject of a front-page headline on 9 February 2015. The Lianhe Wanbao headline was entitled "TC Secretary and GM pay their own companies $6.6 million" and it has caused the intended alarm. However, Madam, the alarm is not warranted. Let me explain why.

First, regarding cheque payments to FMSS, the Town Council had adopted an SOP on 8 September 2011, soon after the new management took over. It was the policy that no cheque to FMSS of whatever amount could be issued unless either the Town Council Chairman or one of the Vice Chairmen co-signed the cheque. Thus, it was not possible for FMSS to pay itself unless it was authorised by the Town Council Chair or Vice Chair who have no interest in FMSS whatsoever.

Secondly, out of the amount of $6.6 million in payments, about 96% of that, or $6.4 million pertained to agreed monthly sums for Managing Agent and EMSU services rendered. These were monthly sums under contracts approved by the Town Council where the rates were already approved.

Third, regarding the issue of segregation of duties, it is clear from Appendix C's list, if I may invite Members who have the report to look at Appendix C, the Attachment with the 84 invoices. Attachment 1 to Appendix C of the AGO report.

It will be seen from this list of 84 invoices that from item 30 onwards to item 84 – and this was following the appointment of a new finance manager – we adopted an approval process whereby there were three other persons who were not directors of the Managing Agent who were involved in the certification of work, issuing of payment vouchers and signing of cheques.

In other words, the segregation of duties was done on the Town Council's own initiative within FY2012 itself. It should be noted that the bulk of the invoices in Attachment 1 are subject to the improved approval procedure; 55 out of 84 invoices were subjected to this improved segregation of duties. As for the 11 invoices highlighted by Pricewaterhouse where the General Manager also certified the work done, these were invoices before July 2012 and nine of them pertained to agreed monthly fees for EMSU and Managing Agent services approved by the Town Council earlier, leaving just two items, amounting to $1,165, which were not such agreed monthly fees.

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Madam, at this stage, may I have your permission to distribute Annex 3 to my speech?

Yes, please. [A handout was distributed to hon Members. Please see Annex 3.] You can proceed with your speech.

Thank you, Madam. As Members can see from Annex 3, there are three key points which I wish to highlight in the annex. The first point is, again, to reiterate that out of the $6.6 million invoices, about 96% of them consist of monthly Managing Agent and EMSU payments which are based on fees approved by the Town Council earlier.

Second, the point raised where the GM certified work done and approved the payment, 99.9% of these 11 invoices were, again, such pre-approved rates which had been endorsed by the TC earlier of MA and EMSU services. And the listing of the 11 invoices can be seen in the table here and Members will see that these are, indeed, for Managing Agent and EMSU services. If I can ask Members to turn over the page of Annex 3, the third point I would like to highlight once again is that, as far as the segregation of duties is concerned, it can be seen from the Attachment 1, serial numbers 30 to 84 that, at this juncture, we had already implemented the segregation where non-shareholder officers were involved in the payment approval process.

Next, Madam, I would like to move on to the question which was asked of me and also of the Vice Chairs as to how we would verify that works were done before we signed the cheques. Madam, the three categories of works that these queries related to were FMSS' services for project management, MA services and EMSU services.

So, Madam, first, I would like to touch on project management fees. For projects, the cheque signer would usually see the architects' certificate and the quantity surveyors' calculations of the value of the works done. The project management fee is a fixed 3.5% of the works. The auditor said that they were unable to verify what was presented to the cheque signer at the time, namely, FY2012. The Town Council had explained that the supporting documents had been detached after the cheques were signed as they needed to be filed by the Estate and Projects Department. So, Madam, it should be remembered that these transactions took place in FY2012.

Next, for the MA payments, which are based on agreed monthly rates, the level of services provided is subject to evaluation on a daily basis. These include some of the channels that are mentioned in Annex 2, and I would not want to belabour the point. I think Members can read from Annex 2. If there are other best practices from other Town Councils which other Town Council Chairs would like to share on how they verify that the Managing Agent's monthly payments are due before signing the cheques, I would be very enlightened to hear

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what can further be done.

Next, Madam, for the EMSU services, how do we check whether the services have been rendered? Monthly reports are churned out to show performance based on time of response and actions taken based on various indicators.

Next, Madam, how are we going to manage the related-party transactions better? We have started to introduce more oversight into works and payments to the MA and, in this regard, Annex 2 is also relevant, which we distributed earlier. But I would also like to highlight a couple of points.

First, as regards project management, we continue to require the architects' and quantity surveyors' certificates before processing project management fees. Since April 2013, the Members of Parliament have started attending project meetings to assess the necessity for works and the details. Since late 2014, the Town Council's Estate and Community Liaison Committee has been tasked to approve works and project management fees before the works commenced. The Town Council Chair is also now asked to sign off on works orders before invoices are issued for project management fees.

Next, Madam, for MA and EMSU fees, additional procedures have been introduced. Instead of direct invoicing, a Works Order is raised by the Office Manager and countersigned by the Town Council Chairman. Thereafter, FMSS would raise its invoice, which is forwarded to the Finance Department. The payment voucher would be approved by the Deputy General Manager before the cheque is issued. These enhancements were noted by Pricewaterhouse in the report, Appendix C, at para 1.39.

Madam, going forward, we will draw up a checklist in assessing tenders and contracts to ensure that the necessary information is captured and presented to the persons deciding on awards. The decision-makers can then also decide on how best to manage the conflicts of interest.

Madam, before I end, I would like to just respond to three points raised by the Minister earlier when he presented the Motion. First of all, the Minister stated that the Town Council or the Members of Parliament had shown disrespect to the auditors and to Parliament by not providing information.

Now, Madam, this is not the case at all. I would like to highlight to the House that thousands of documents were given to the AGO and PricewaterhouseCoopers (PwC). As an example, they looked at 16,481 Works Orders. And if we looked at the appendices that are attached to the AGO report, they were actually much shorter than what they originally were,

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meaning the attachment which Pricewaterhouse included in the report saying that certain matters are outstanding.

Members who have the AGO report, if you care to turn, I would like to highlight certain things. Appendix C, this is page 3, Attachment 2. Members will see that there is one payment voucher outstanding but there were actually originally 22 requests; there is only one outstanding. Attachment 3, there are three items outstanding out of an original 75. And if Members look at Attachment 4, although the heading says "Outstanding contracts, quotations, supplemented agreement" and so on, if Members were to read the last column of that table, PwC's response, Members will see that, actually, the auditors confirmed that they have received most, if not all, of the documents. So, I urge Members to note that. We have done our best to provide whatever information we could to the auditors.

Next, Madam, the Minister highlighted the fact that our financial statements were late and, in particular, he mentioned the financial statements of FY2013/2014. Minister would, of course, recall that the AGO audit was called in February 2014 and continued from March 2014 all the way until January. So, all the papers were stuck for this audit and it was not reasonably possible for the FY2013 annual audit to commence while this audit was going on.

In his speech earlier, the Minister mentioned that some of the conditions that he might want to impose on the Town Council, going forward, is that he would require us to submit our financial statements for FY2013 and FY2014 within certain timelines, I believe he said June and August. Well, Minister, we are not certain whether we can meet these timelines but we will discuss with MND what is possible after discussion with our auditors.

Late for one year?

Because the AGO was in here and FY2013 ends in March 2014.

Madam, one more point which the Minister brought up was the issue of cyclical information. He mentioned that our Town Council was slow to submit the information to MND and I would like to just make a few points so that there is no unnecessary worry on the part of our residents.

First, I think the Minister would know that we have been corresponding with MND and making the submissions. Admittedly, we are late but we have submitted some things and we are discussing with MND on some of those issues. So, it is not as if we have not paid attention to it.

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Secondly, Madam, the Minister alluded to lifts and saying that there might be concerns about whether the lifts are overhauled in time and so on and so forth. So, I would like to just state some facts based on the information that I have.

The current state in our Town is that, in terms of lift overhauls, there are just 12 lifts that are overdue for overhaul, so we will be attending to them. Some of the other lifts are due for the Selective Lift Replacement Programme. All the parts, hoist ropes and all that are up-to-date. And for the battery replacements, we are replacing them on schedule as per the MND timelines. So, that is the situation with lifts. I just wanted to make that clear, so that the residents are not unduly concerned about those comments.

So, Madam, for now, let me round up. FY2012 was a full year of our operations in Aljunied-Hougang Town and, despite the almost year-long intensive audit, the 16 auditors have not uncovered any basis to suspect deliberate malpractice nor any loss of funds. There has been no finding that we have been dishonest or have falsified records. Despite the issues in financial management, our residents' interests have not been compromised.

Madam, I have set out the circumstances leading to the lapses in relation to the management of Sinking Funds and the related-party transactions, so that the public may more fully understand what led to them. We thank the public and, especially our residents, for their kind understanding and support of our work. We will continue to put in efforts to do better.

Mdm Speaker, the AG, in his report under section 3(2)(d), highlighted a lapse in internal controls with the possible effect of risking the loss of valuables and incurring unnecessary expenditure, as well as wrong payments for goods and services. In my following speech, I will speak on existing measures that have already been set in place to ensure that public monies are spent and utilised in the most appropriate and cost-effective manner. In doing so, I will elaborate on the points realised and substantiated by my colleague, Ms Sylvia Lim.

In AHPETC, we have in place several Committees to look into the different operational aspects of the Town Council, one of which is known as Estate and Community Liaison Committee (ECLC). Formed in 2012, this Committee is made up of a Chairman, elected Town Councillors and other members appointed by the elected Councillors. This Committee works closely with the Estate teams in the Town Council made up of property managers and property officers. The key purpose of this Committee is to advise on estate maintenance and

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improvements. This Committee that I chair meets on a monthly basis.

With the above in mind, please allow me to run through the procedures that are in place to consider any ad hoc or project-based repairs and/or improvements, such as Repair and Redecoration Works (R&R) and the Neighbourhood Renewal Programme (NRP).

The Estate Team made up of property managers and property officers, after consultation with the relevant Members of Parliament, will table proposals that pertain and relate to estate improvements at the monthly meeting. These proposals, divided in accordance with the respective wards or division that they belong to, will be discussed and deliberated on before any approval is granted. The entire process entails a proper and detailed account of the problem at hand, the rationale behind the works, the costs involved and the various standards obtained. Pertinent points of discussion often include whether a particular project, if necessary, is cost-effective and benefits the most number of residents.

Mdm Speaker, in the event that doubt arises, the ECLC Chairman and the Member of Parliament of that affected ward would conduct a site inspection, together with the Estate Team involved. At times, the Chairman of the Town Council, Ms Sylvia Lim, will also be present to advise and supervise the work. Thereafter, the matter will be further discussed at the next earliest ECLC meeting for an outcome.

In 2013, to further enhance the monitoring and scrutinisation process, another layer of checks was put in place. The ECLC Chairman, the Town Council Chairman and the divisional Member of Parliament are required to attend consultants' meetings for all ad hoc or project-based work. The proposals and the details of proposals, such as the use of materials, the quality of the workmanship, the cost-effective nature of the project and the maintenance value of the finished project, would be thoroughly deliberated, taking into consideration the maintenance expenses required over the long term. It is only after approval has been obtained at the consultants' meeting level would a particular item be proposed to the ECLC for consideration and deliberations.

Mdm Speaker, there are, indeed, areas that the Town Council and elected Councillors can further work on and improve upon. There should be greater safeguards that we can put in place to ensure greater accountability in the use of public monies. We have been honest in dealing with the lapses as highlighted in the AGO report and, as I have illustrated above, at present, there is a rigorous process in scrutinising proposals to ensure we are prudent in our expenditure.

The Town Council, together with the elected Councillors, does not take the public funds for granted and we will continue to exercise prudence in managing AHPETC and, at the same

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time, continue to serve our constituents to the best of our abilties. Madam, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] Madam, the Workers' Party supports the Motion. As a responsible and rational Party, we firmly uphold the principles of transparency and accountability in all that we do.

Throughout the audit, which took almost one year, we had cooperated with the AGO by providing them with all the documents and information as best as we could, even though certain documents revealed our mistakes and lapses. All these were done on the basis of transparency and accountability.

Madam, this Motion expresses concern over several aspects of AHPETC's accounting and record-keeping systems. We, the Members of Parliament of Aljunied, Hougang and Punggol East, are very concerned with the issues raised. We would like to state that some of the issues reported have been managed and corrected, while the rest are undergoing corrective actions and more time will be needed.

We suggest that the general public refer to the appendices contained in the AGO report about the steps that have been taken and are being taken by the Town Council to manage these issues.

Madam, although the audit was conducted for almost a year, AGO, however, did not find any basis that raise suspicions about the possibility of any misuse or loss of monies. Although there are lapses mentioned, the residents' interests are, nonetheless, not affected.

Finally, my fellow Members of Parliament and I would like to state our deepest gratitude to the residents of Aljunied, Hougang and Punggol East in particular and to Singaporeans in general, for their concern and support in this issue. With the trust placed upon us, despite the many challenges that we have to overcome, we, the Members of Parliament from the Workers' Party, will serve as best as we can to fulfil the needs of our residents. God willing.

Mdm Speaker, may I have your permission to speak in Mandarin?

(In Mandarin): [Please refer to Vernacular Speech.] In the last year or so, there was much discussion over the issue of AHPETC's financial situation and management efficiency, something that the people and media are concerned about. Now, questions and doubts over

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this issue are being cleared with the release of the AGO report. The operation of the Town Councils is about people's livelihood. Hence, MND must raise this issue in Parliament. I sincerely hope that, in this august chamber, we can find out where the problem lies and improve the Town Council's management and efficiency and clear people's doubts.

First, please allow me to explain the sequence of events so that we have a complete picture. During the 2011 election, the Workers' Party's slogan was to build a First-World Parliament. WP emphasised then that the benefit of a First-world Parliament was for the public to better scrutinise the policies, strengthen accountability and transparency of the Government. This slogan received support from the people of Aljunied GRC.

After the election, WP promised that they would do their best to manage the Aljunied-Hougang Town Council. In 2012, during the Hougang by-election, Ms Sylvia Lim, a Member of Aljunied GRC, emphasised that WP had a dedicated and experienced management team and that WP did a good job in managing Hougang Town Council before. Hence, they had the confidence to run Aljunied-Hougang Town Council well. During the 2013 Punggol East by-election, Mr Chen Show Mao, also a Member of Aljunied GRC, said WP would manage the Town Council in a proper and responsible manner. Then WP candidate Ms Lee Li Lian, too, said that she herself also had the expertise and experience in Town Council management, hence, they had the ability to manage the Town Council well. During this period, WP Members of Parliament frequently criticised the Government for lacking accountability and transparency and, at the same time, constantly emphasised how able and dedicated the WP team was.

Besides emphasising their own Town Council management ability, WP also targeted Town Councils managed by the PAP. At the Punggol East by-election rally, Ms Lim, as Chairman of the WP-run Town Council, revealed that when setting up the Aljunied-Hougang Town Council after winning the election, they discovered the dealings between PAP Town Councils and the company AIM. Ms Lim questioned that, for PAP-run Town Councils to sell a management system developed with public money to a PAP-linked company, was it in the public interest? She implied that this could create nepotism. Mr Pritam Singh, Deputy Chairman of the WP-run Town Council, also raised a series of questions. He said that for the first time in history, people had found out there were PAP-owned companies and Singaporeans wanted to know how many companies the PAP owned in Singapore and overseas. What do these companies do, who are the directors? WP Members of Parliament sounded very eloquent and righteous over this AIM issue. Maybe this is because when you care deeply, you also criticise strongly?

The PAP has explained in Parliament in detail over the questions WP raised. And because of this, the Government has also launched a formal investigation over the AIM transactions. The investigation showed that the AIM service did not harm residents' interest

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whatsoever; on the contrary, by providing services to 14 Town Councils, it achieved economies of scale and brought benefits to the residents. Minister for National Development Mr Khaw Boon Wan also pointed out that the PAP only had one company, which was AIM, whose purpose was to provide computer management services to 14 PAP Town Councils. Because the WP has taken a firm stand over the AIM issue and shown strong resolve of accountability, people felt that the slogan of building a First-world Parliament was not merely a slogan but a political vision.

The wheels of history keep rolling forward and things change all the time. While the memory of the AIM debate is still fresh in our mind, today we are here again discussing the Town Council management issue. However, this time round, it is the WP-run AHPETC that is in the spotlight and the situation is far worse. For the second consecutive year, the independent auditor appointed by the Town Council themselves issued a Disclaimer of Opinion over the Town Council's financial report. It is very rare for an auditor to do that. MND took this matter seriously and openly expressed its concerns. Deputy Prime Minister and Minister for Finance Mr Tharman Shanmugaratnam, at the request of Minister Khaw, instructed the AGO to audit AHPETC's last financial year's accounts. After a year's work, the AGO report was finally released a few days ago.

The AGO report showed that there were five major areas of lapses in AHPETC: first, it did not transfer monies into its Sinking Fund as required by law; second, it had inadequate oversight of related-party transactions; third, it lacks a system to monitor S&CC arrears; fourth, there were lapses in internal controls and procurement; fifth, there were no proper document keeping and safeguards. Minister Khaw just now moved a Motion regarding this report to strengthen the legislative framework and oversight of Town Councils. It is very appropriate.

When dealing with the AIM issue, the Government took it seriously and did not evade the questions raised by the WP. Now, the discussion focus is on the WP-run Town Council, the Government will treat it equally and take the same stance and attitude. This is because the incident is not just about the financial management, oversight and efficiency of the WP-run AHPETC, it also serves as an alarm to all other Town Councils, be they run by the ruling party or the opposition. The management of the Town Councils involves large amounts of public money and concerns the people's interests, therefore, it cannot be taken lightly.

The report showed that there were five major areas of lapses in the management and administration of AHPETC. Overall, I think two particular points demand special attention. First, how is the quality of the AHPETC management team? If the quality is good, then there should not have been so many lapses in compliance and oversight. This is in stark contrast to the WP claim earlier that their team was very competent, experienced and dedicated! Although, for the short term, these lapses in financial management and oversight will not

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impact the daily operations, such as cleaning, trash clearing and maintenance, if they are left unsolved, they will accumulate and eventually get out of hand; the consequence can be dire and will affect the residents' interests negatively.

Second, AHPETC did not properly manage the conflicts of interests brought about by key TC officers being directors or shareholders of other companies. The report discovered that the Secretary of AHPETC is also the owner of the company that provides EMSU to the Town Council; and the Secretary, General Manager and the two Deputy General Managers are also the directors or shareholders of the Managing Agent appointed by the Town Council. The General Manager and the Secretary had, on behalf of the MA, submitted 84 invoices worth $6.61 million to the Town Council. Among them, 11 invoices worth $1.69 million were verified by the General Manager and nine invoices worth $260,000 were verified by the Deputy General Manager. Payment of all these invoices was subsequently approved by the General Manager.