FY1415 Chairman's Review - The Workers' Party

THE YEAR IN PERSPECTIVE

It is with satisfaction that Aljunied-Hougang-Punggol East Town Council (AHPETC) presents this annual report enclosing its audited accounts for Financial Year (FY) 2014/15. This report is significant for several reasons.

First, the audited financial statements for the year are filed on time, and less than two months after the preceding financial statements for FY 2013/14 were filed on 30 June 2015.

AHPETC has managed to complete back-to-back audits and file these financial statements for FY 2014/15 by the MND’s deadline of 31 August 2015 for all Town Councils.

This timely filing required overcoming daunting odds, achieved through the concerted effort of many parties. These parties included AHPETC’s auditors, IT system vendors, financial consultants and the new in-house finance team put in place when AHPETC’s former Managing Agent contract expired on 14 July 2015. I also wish to express my gratitude to Vice-Chairman, MP Png Eng Huat, for coordinating this audit exercise and seeing it through to a successful conclusion.

Secondly, AHPETC’s updated financial statements show a marked improvement in its financial position, both on an annual and accumulated basis. Taking into account the S&CC operating grant withheld from AHPETC, AHPETC would be in a surplus position.

As at 25 August 2015, the Ministry of National Development (MND) had still not disbursed to AHPETC its annual Service & Conservancy Charges (S&CC) Operating Grant for FY 2014/15 of $7,191,770, which ordinarily would have been paid in April 2014. Without this grant, AHPETC showed an operating deficit for the year of $3,238,496. If the S&CC Operating Grant had been received from the government, the annual position for the year (after government grants) would have been a surplus of $1,651,706.

This turn-around from the annual deficits of the preceding two years to a budgetary surplus was brought about by a combination of factors. For FY 2014/15, AHPETC had higher revenue, reduced its general and administrative expenditure, and had savings in utilities due to the use of contestable energy.

As to the accumulated position, the financial statements show an accumulated deficit of $4,693,250. However, if the S&CC Operating Grant had been received, AHPETC would turn in a modest accumulated surplus of $196,952.

Going forward, AHPETC expects to consolidate and strengthen its financial position.

Thirdly, AHPETC has continued to improve its financial processes and management.

AHPETC has cleared most of the disclaimers from the previous annual audits. The remaining observations relate mainly to opening balance issues for which there are still information gaps and legacy issues. There are still areas to work on. AHPETC will continue to improve its financial management.

On the estate front, AHPETC continues to maintain and improve the estate.

During FY 2014/15, AHPETC increased its momentum in cyclical works and bringing improvements to the estate to improve residents’ living environment and amenities.

Significant improvement works were done.

AHPETC was the implementing agency for the Neighbourhood Renewal Programme (NRP) funded by the government. The NRP projects at Serangoon North and Eunos divisions were in full swing, with the former nearing completion. On the plans were two NRP projects announced in Hougang SMC and one in Bedok Reservoir-Punggol Division, which will progress further from FY 2015/16. When completed, NRP projects will bring new covered walkways, playgrounds, fitness parks and recreational spaces to residents.

To improve public accessibility to the Hainanese Market and Food Centre at Paya Lebar Division, AHPETC constructed a new platform lift at its own cost, catering particularly to disabled and senior residents. Playgrounds and fitness equipment in Eunos Division were substantially replaced.

AHPETC has also been nominating clusters across the town for the government’s Home Improvement Programme (HIP), which will bring repairs and upgrades to the internal units. In making and prioritising these nominations, AHPETC takes into account the age and condition of blocks as well as fairness in distributing HIP benefits across the different divisions of the town.

The pace of cyclical replacement works also picked up. AHPETC proceeded with repairs and redecoration (R&R) works (including re-painting) that were long overdue before 2011. Blocks in all seven wards – Hougang, Punggol East, Bedok Reservoir-Punggol, Eunos, Kaki Bukit, Paya Lebar and Serangoon – benefitted from fresh coats of paint and building repairs, with the eligible blocks due for painting by end 2016/early 2017. To stem roof leaks due to wear and tear over time, a re-roofing project was launched for 55 blocks at Bedok-Reservoir Punggol (Hougang), Eunos and Serangoon North. Façade and spalling concrete repairs, and other works were also done.

Going forward, residents can expect playground and fitness equipment upgrades, bin chute repairs, and other cyclical and improvement works.

CONCLUDING REFLECTIONS

Looking back on the last few financial years since the Workers’ Party (WP) took over the management of the town in 2011, the challenges faced were daunting.

Financial Accounting System Software

When WP assumed management of the former Aljunied Town after the General Election in May 2011, the financial and accounting software known as the Town Council Management System (TCMS) was terminated by Action Information Management Pte Ltd (AIM), an IT company wholly-owned by the People’s Action Party (PAP) whose directors were all former PAP MPs. This termination was possible as the former Aljunied TC management had sold the TCMS, developed with Town Council funds collected from residents, to AIM, under a contract that gave AIM the unilateral right to withdraw the system with one month’s notice if there should be “material changes to the membership of the Town Council”.

The incoming management had to upscale a town council financial accounting system designed for Hougang SMC, comprising about 9,000 units, to cope with more than 50,000 units in Aljunied-Hougang Town. By 2013, the system had to handle more than 70,000 units, due to the inclusion of Punggol East SMC following the Punggol East by-election.

Although the system migrated over from Hougang SMC is functional, it is highly customized for use in an SMC only. It is inadequate to cope with the voluminous activities of a bigger GRC town council like Aljunied TC; many of the functions were not automated and it could not churn out aggregated reports in the format specified by MND. We will continue to upgrade the system to meet the demands of running a large town council efficiently.

Limited Choice of Service Providers / Vendors

The TC had to call fresh tenders when the existing service providers / vendors of the former Aljunied TC and Punggol SMC did not want to continue or completed their contracts. The TC had to contend with sole or few bidders, and some sudden withdrawals. The following are some significant examples.

The TC called public tenders for the provision of managing agent (MA) services and Essential Maintenance Services Unit (EMSU) services in 2012. At the end of the exercise, only one company tendered.

When conservancy contracts were called for Kaki Bukit division in 2012, the company that was awarded the contract later indicated that it did not intend to proceed with the contract, resulting in the TC having to activate replacement contractors at short notice. In 2013, a similar situation took place at Punggol-East SMC, when tenderers who put in bids during the transition phase under the outgoing PAP management decided to withdraw their bids.

Higher Cost of Major Contracts

With limited choice from tenders, the TC was effectively a price taker.

For instance, cleaning costs are one of the major expenditure items for the TC. Compared to the contracts awarded by Aljunied TC before WP took over, the cleaning contracts awarded by the WP TC saw increases of between 13% to 88%.

Overdue Works to Implement

When WP took over in 2011, many cyclical works such as Repairs & Redecoration (R&R) works were overdue. AHPETC management has rolled out major projects in the last few years to catch up.

I am pleased to report that despite the challenges, services to the residents have not been disrupted. Nevertheless, there would be some aspects of the TC’s work where service levels can be improved.

I would like to thank all staff of AHPETC who have served the residents in various capacities, contributing to the progress we have made today. I also would like to thank residents of the town for their support and understanding, and for helping us to maintain a better living environment.

We have done our best to serve the residents of AHPETC town. I look forward to serving our residents better.

FY1415 Chairman’s Review