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Shanmugam’s chart raises questions about PAP TCs’ MA rates

By Terry Xu

In Parliament yesterday, the Workers' Party faced a barrage of accusations against its Aljunied-Hougang-Punggol East Town Council (AHPETC).Law Minister, K Shanmugam, was one of those who had strong words for the WP-run town council.

He said “that WP took money from the man in the street and gave it to FMSS, to their friends" and described the town council's finances as a "sorry state of affairs".

He also took particular issue with the fees which FM Solutions and Services (FMSS) charges AHPETC.

They are higher than in other town councils, Mr Shanmugam claimed.

From July 2013 to July 2014, FMSS charged $7.43 for each residential unit and $14.92 for each commercial unit, compared to $4.80 to $6.65 for units of each type, charged by the managing agents of the PAP town councils, Mr Shanmugam said

In other words, he claimed that FMSS charges the highest rate among all the managing agents.He handed out charts showing a table of the MA rates for the different town councils to the Members of Parliament to illustrate his point.

Chart by K Shanmugam

However, upon closer inspection, the MA rates presented by the Law Minister appear to be lower than what Ms Lim would have expected.

An apparent anomaly were the residential and commercial unit rates which Mr Shanmugam’s chart indicated were the same.

AHPETC’s chairman, SylviaLim noticed this and highlighted this to Mr Shanmugam.

"From what I know, MA rates are usually different from residential units and commercial units,” Ms Lim said. “But in your chart, they are all the same. So I would like minister to clarify that there has been no mistake in this chart and it is really the fact that all this MA are charging the same rates for commercial and residential units because from the data that I have, even the MA for PAP town councils, such as CPG, from the Aljunied town council records that we have, the MA rate for commercial units was 12 dollars and something. So I think minister may want to check his chart."

Mr Shanmugam got up and replied to Ms Lim immediately, "I can answer your answer straight away. You should look at annex 3 and you will see in the first page that the MA rates once they are done on a weighted average basis, these figures are accurate, [I’m] told by MND.”

However Ms Lim was unconvinced.

She said, "Minister, I would still request it to be checked because I don't think it is correct."

WP’s secretary-general Low Thia Khiang also told Mr Shanmugam that the rates cannot be the same.

Mr Shanmugam replied that he would check the rates for accuracy.

Indeed, looking  at the figures, one would come to wonder if the figures are correct.

Did FMSS overcharge the residents and business owners under AHPETC? 

MA rates are based on what the Managing Agent charge the town council to manage the estate based on the number of residential units and commercial units.

table of chart AHPETC
Table of chart released by Ministry of National Development

Although AHPETC never did say what their total units were for the town council, based on the audit by the Auditor General and given that 7.42% of all households in arrears for March 2013 is 4,379 units, this gives us an estimate about 59,016 households under the charge of  AHPETC for FY2012/2013

It is to be noted that Punggol East SMC is not included in the annual report for FY2012/13.

Using the rate given in the chart, the total amount that is to be paid by AHPETC to FMSS for the residential units is thus $5.26 million.

managing agent fee
MA fees charged to AHPETC in FY 2012/2013

While it is unknown how many commercial units there are, working the sum backwards using the total sum of $5,308,536 paid to FMSS, we get about 271 commercial units. But we have to note that the sum may include parking lot fees.

change in household
Screencap of Pasir Ris Punggol Town Council's write up

To use another town council as an example, say Pasir Ris Punggol, according to the chart from Mr Shanmugam, the managing agent charges $5.50 for both residential and commercial units.

The total amount payable to Pasir Ris Punggol town council's managing agent is claimed to be $7.35 million.

PP managing fee
MA fees charged to Pasir Ris Punggol Town Council in FY 2012/2013

For its 98,000 residential units, the town council is expected to pay $6.46 million for FY2012/13.

EM services
EM services write up of its services.

Given that EM services stated that it only manages just over 10,000 retails shops and office commercial units. Its hard to imagine that the remaining $855,000 of the expenses is for commercial units alone.

Managing agent for pasir ris punggol 20132014
MA fees charged to Pasir Ris Punggol Town Council in FY 2013/2014

In FY2013/2014, the town council made a pay out of $6.49 million to its managing agent. Given that the households is then 85,000 after Punggol East SMC is taken out from the town council, it should make a payout of about $5.61 million for the residential units. This leaves $888,000 to be accounted for, the number of commercial units is again unlikely to be more than 10,000 as EM services do not manage so many commercial units as stated.

Given that the removal of Punggol East SMC should reduce the number of units in Pasir Ris Punggol Town Council, instead the estimated figure actually went up which would hint that the MA rates should be much higher than stated in the chart.

Also it would seem that the managing agent charged a much higher amount of agent fees to the town council despite the drop of 13,000 units. We can compare the spending of the TC in the earlier part in 2012 and 2013, (7,315,258 versus 6,498,180). If we were to drop the amount of spending based on a proportionate drop due to the reduction of town council units. the spending should be at about $6.34 million for 2013 but instead the amount was 150,000 more than what it should.

So if both town council have the same number of commercial units and AHPETC is charging the highest MA per household and commercial unit based on the rate chart that the law minister provided, then why is Pasir Ris Punggol GRC which the chart says charges only $5.50 for its residential and commercial units, paying so much more for its MA fees even after taking out 13,000 units away after the loss of Punggol East SMC?

AHPETC's $5.3 million versus PPTC's $7.3 million.

CCK Town council hosehold
70,000 units for residential and commercial units for Chua Chu Kang Town Council.

So going further, and using Mr Shanmugam's chart, we examine  a similar sized town council like Chua Chu Kang Town Council for comparison.

The 70,000 household and commercial units would be charged at $5.06 each, which would cost the TC $4.25 million a year.

CCK managing agent fees
MA fees charged to Chua Chu Kang Town Council in FY 2012/2013

However, from Chua Chu Kang Town Council's annual report in FY2012/2013, the total amount made payable to the managing agent is $4.54 million for the fiscal year.

The sampling of the rates versus actual payment to the managing agents begs the question of whether the chart depicting "cheaper" rates presented by the Law Minister is really accurate.

And Mr Shanmugam should have been able to quote from the back of his mind that his GRC pays the same amount to its managing agent, if he was involved in the running of the town council.

It seems that Ms Lim is indeed correct and that Mr Shanmugam should check his facts and figures which he said was confirmed by the MND.

Edit: The numbers for Pasir Ris Punggol should reflect 98k for the number of households for FY2012/2013 and earlier, the total sum paid was a sum of two fiscal year instead of one. The article has been edited to reflect the corrections.