Increase in S&CC charges – figures don’t add up

By Leong Sze Hian

Eight town councils run by the People’s Action Party recently announced that they will be increasing their service and conservancy charges (S&CC). This will be rolled out in April.

I tried to collate the financial positions of the eight town councils from their annual reports. Only Nee Soon and Potong Pasir town councils did not have their annual reports on their websites.

Town CouncilSurplus for the yearAccumulated surplus*Surplus transferred to sinking fund
Ang Mo Kio$1,793,752$6,280,934$12,826,802
Marine Parade$1,338,567$4,632,719$13,125,951
Moulmein-Kallang$22,714$1,753,123cannot find
Pasir-Ris Punggol$1,700,416$5,144,495$10,808,955

* Transfer of accumulated surplus to sinking fund under section 34 of the Town Council Act

From the above, the six town councils had total surplus for the year of $8.7 million, accumulated surplus of $31.7 million and accumulated surplus of $62.1 million transferred to the sinking fund on 18 April 2011 under section 34 of the Town Council Act, which stipulates that upon the issue of a writ of election, 80% (100% if the party that wins is a different party) of the accumulated surplus to the sinking fund.

The Town Council Act effectively deprives the town councils and their residents from utilising the accumulated surplus for operating expenditure. Why would any Parliament have passed such a legislation?

Nevertheless, since all the six town councils had surpluses for the year and huge accumulated surpluses – despite the whopping $62.1 million transfer to the sinking fund on 18 April 2011 – why is there a need to raise S&CC?

The numbers get more perturbing when we calculate how much the increase will likely get the town councils.

TODAY, reported that “about half a million households here will have to pay more for their town councils’ S&CC, starting from April. The total S&CC increase, which will set in over two years, is between S$1 and S$15 a month, depending on the flat type.”

Let’s do a conservative count, and assume that the charges will increase by $3 on average across all households. From 0.5 million households, the eight town councils would have collected an additional $18 million in one year. This is over and above current S&CC collected. It also excludes S&CC for commercial properties, which would likely raise the total sum collected.

From having an annual surplus of $8.7 million, to now saying they need to make up an estimated $18 million every year – is that not rather drastic? Why do the town councils need this sudden financial boost? Did the government recently cut grants to town councils?