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Leong Sze Hian & Andrew Loh Why the need to increase S&C charges when minister assured S'poreans town councils funds - which stood at S$2 billion in 2008 - were "in good shape"?

$2 billion in PAP town councils’ sinking funds but need to increase charges?

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By Leong Sze Hian & Andrew Loh

Jurong (JTC) and Aljunied Town Councils' (ATC) Service and Conservancy Charges (S & CC) will increase for all flat types on 1 April.

As Singapore is just coming out of its worse recession, with the economy contracting by two per cent last year and also contracting by 2.8 per cent on a quarter-on-quarter seasonally adjusted basis in the last quarter of last year, unemployment still high at an average of 87,000 for 2009, wages falling by 3.2 per cent in real terms in 2009, and wage cuts that may not have been restored, I would like to suggest that we be cautious in starting to raise fees so soon.

For example, it was also announced recently that  Polytechnic and Institute of Technical Education (ITE) fees will also go up from 1 April.

According to Jurong Town Council's annual report for 2008/2009, it had a surplus for the year of $1.5 million, and an accumulated surplus of $3.2 million.

This is after transferring $11.7 million to the sinking fund, giving a total reserve of $79.3 million.

For Aljunied Town Council, the surplus for the year was $2.8 million and total town council funds were  $59.5 million.

So, why is there a pressing need to increase S & CC so soon?

Even if we have to increase S & CC,  those in 1 and 2-room HDB flats should be spared, as their median monthly household income from work declined by a whopping 13.9 per cent in 2009, according to the Department of Statistics' Household Income Trends 2009 report.

Also, why is it that S & CC in the opposition wards Potong Pasir and Hougang are now lower than Jurong and Aljunied, for all flat types, except for 2-room flats in Hougang which at $28.50 is 50 cents more than Jurong and Aljunied?

According to media reports, Government grants in 2005 per household were $560 for Aljunied, compared to $114 and $111 for Potong Pasir and Hougang respectively.

For 2009, Government grants for Aljunied, Jurong, Potong Pasir and Hougang, were $9.1, $9.1, $0.75 and $0.94 million respectively.

So, even after adjusting for the smaller number of households in Potong Pasir and Hougang, it would appear that Government grants may still be substantially higher per household for Aljunied and Hougang.

If this is the case, why is it that S & CC in Aljunied and Jurong are higher, despite higher Government grants?

The fact that the last reported statistic that three to nine per cent of households were in arrears of more than three months on their S & CC, may indicate that many Singaporeans may still be in financial difficulties.

I hope that other town councils and service providers will not also increase their fees so soon too.

Readers will remember that in 2008, the Straits Times reported:

… the $2 billion in the sinking funds its [the PAP’s] 14 town councils manage is in good hands, said Mr Khaw Boon Wan, the party’s first organising secretary.

TOC had asked then:

It would thus seem that in a year which saw the worst financial crisis in decades, Singapore seeing record inflation and our town councils being affected by the collapse of Lehman Brothers, the town councils have been able to effectively double its sinking funds.

The question one would ask is: How did this happen? Were returns from investments so good? Or are town councils collecting unnecessary excess of service and conservancy charges?

How did the sinking funds grow from $1 billion to $2 billion within the space of one year in such an adverse economic climate?

Perhaps before PAP town councils are allowed to increase S&C charges, these questions should be answered first.

Straits Times, December 2008

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