[h=2]Town Council fee increases – is it justified?[/h]
August 4th, 2012 |
Author: Contributions
Town Council S&CC Increases – Is it justified and has efforts to defray rising costs being totally exhausted?
Recently, 7 PAP Town Councils collectively announced in a press release that Service and Conservancy Charges (S&CC) shall be revised upwards from September 2012. Amongst the reasons, rising costs and inflation were cited as justification for the increase. Despite making conscious effort to control costs and expenses, the town councils stated that it is increasingly difficult to contain rising inflation every year without increasing S&CC collection.
The full and detailed financial statements of all town councils (TC) are posted on their websites. The transparency of TCs in publishing their financial statements is applauded. Since the income for the TC is monies collected from residents, every resident is therefore entitled to know how the collections are utilised in the management of their town.
Financial Surplus or Deficit?
The table below shows a snap-shot of the financial positions of the 7 town councils for the financial year ended 31 March 2011:
<TBODY>
</TBODY>
Note: All figures in $ million and are extracted from the income statements of the town councils as published on their respective websites.
It is interesting to note that if town councils are operated as a for-profit enterprise, the management for Tanjong Pagar Town Council and Holland-Bukit Panjang would have been taken to task for incurring deficit even after “Big Daddy” has lend a helping hand.
With the exception of Holland-Bukit Panjang and Tanjong Pagar, the bottom line for the other 5 TCs showed financial surpluses from $0.04 to $3.51 million. Why then the need to increase service and conservancy charges? Unless the government decides to pull the plug and withdraw the grant, which is politically risky for PAP, at least 4 TCs have healthy surpluses that it could even consider offering S&CC rebates to alleviate residents’ burden with the overall rising cost of living! It is bewildering then why TCs with financial surpluses join in the alliance and did the exact opposite by contributing to the nation rising inflation.
Prudent Utilisation of Scarce Resources
Water and electricity are scarce and expensive resources in Singapore. In commercial enterprises, business owners pay a lot attention to its use as it is a significant operating cost component. Since energy cost will continue to rise, business owners do not have the luxury to raise prices without losing competitiveness when countering energy increases. Hence for businesses to remain competitive, optimisation on the use of resources including water/electricity are often key targets of its cost control strategy.
Do town councils have the same mind-set of enterprising business owners in the prudent utilisation of scarce resources? Take a look at the table below:
<TBODY>
</TBODY>
Although operating incomes (number of property units) have largely remain constant for most TCs, utilities and lift maintenance expenses had however risen significantly across the board. While electricity tariffs had increased about 8% year-on-year, none of the TC financial statements had notes explaining the variance above the tariff increases. TCs should enlighten residents on the increase in utility expense beyond the tariff increase.
Wasteful Practices
A careful observation around the estate would easily revealed wasteful practices on usage of utilities. Since time immemorial, it is common to see conservancy workers undertaking block washing using water from the domestic water pipeline. This is expensive treated water that is ready for human consumption, yet it is flushed away so wastefully. In some countries, it is an offence to use treated water to wash floors, cars or watering plants. If TC is a for profit enterprise, cost conscious business operators would have installed a low cost water recycling system for block washing much like the auto car wash station.
Most lifts in TC do not have sensors to operate the lights and ventilation fan. The equipment remains operating and consuming electricity regardless of whether there are passengers or not. The potential energy saved from each lift could be quite significant in particular during the period from midnight to dawn. Multiply it with the average of 1000 lifts in each town, there is a huge electricity cost saving potential.
Some town councils attributed the rising lift maintenance expenses to the increase in the number of lifts and landings after Lift Upgrading exercise. Town councils had accepted the practice of lift maintenance companies charging by the number of stops. This is a simplistic and convenient cost charging model rather than being a fair and reasonable one. Consider a 9-storeys block with 2 lifts and 3 stops each before lift upgrading. Before upgrading, it is 6 stops and 18 stops after. The main and critical component of a lift system is the lift motor/traction hoist and the control mechanism. Regardless of number of stops, the time spent in maintaining the same number of critical components would not have increased 3 times. TCs should exercise more prudence in lift expenditures through exploring more equitable means of payment model for lift maintenance.
More Should Be Done
With an average of 400 to 600 blocks of flats in a town, there are good potential to identify/implement reduction opportunities for operating cost. Besides eliminating wasteful work methods and procuring cost effective outsourced services, more could be done to invest on energy conservation programs and technology to increase productivity and reduce cost. With very healthy accumulated surpluses, investing in the above programs would generate a better overall return for the residents than placing it in some financial instruments with no tangible benefits to the residents at all. Town council management should not take the easy way out and add to the woes of residents by contributing to the nation overall inflation rate.
.
Caroline Charles
Town Council S&CC Increases – Is it justified and has efforts to defray rising costs being totally exhausted?
Recently, 7 PAP Town Councils collectively announced in a press release that Service and Conservancy Charges (S&CC) shall be revised upwards from September 2012. Amongst the reasons, rising costs and inflation were cited as justification for the increase. Despite making conscious effort to control costs and expenses, the town councils stated that it is increasingly difficult to contain rising inflation every year without increasing S&CC collection.
The full and detailed financial statements of all town councils (TC) are posted on their websites. The transparency of TCs in publishing their financial statements is applauded. Since the income for the TC is monies collected from residents, every resident is therefore entitled to know how the collections are utilised in the management of their town.
Financial Surplus or Deficit?
The table below shows a snap-shot of the financial positions of the 7 town councils for the financial year ended 31 March 2011:
| Tampines | Chua Chu Kang | Bishan-TP | East Coast | West Coast | Holland-Bt Panjang | Tanjong Pagar | |
| Surplus /(Deficit) before govt grant | (0.59) | (2.08) | (3.08) | (3.15) | (3.63) | (4.74) | (9.32) |
| Surplus/(Deficit) after govt grant | 3.51 | 1.94 | 1.73 | 0.04 | 1.75 | (0.67) | (2.29) |
| Accumulated Surplus | 8.37 | 11.68 | 9.58 | 4.39 | 10.37 | 2.34 | 6.53 |
<TBODY>
</TBODY>
Note: All figures in $ million and are extracted from the income statements of the town councils as published on their respective websites.
It is interesting to note that if town councils are operated as a for-profit enterprise, the management for Tanjong Pagar Town Council and Holland-Bukit Panjang would have been taken to task for incurring deficit even after “Big Daddy” has lend a helping hand.
With the exception of Holland-Bukit Panjang and Tanjong Pagar, the bottom line for the other 5 TCs showed financial surpluses from $0.04 to $3.51 million. Why then the need to increase service and conservancy charges? Unless the government decides to pull the plug and withdraw the grant, which is politically risky for PAP, at least 4 TCs have healthy surpluses that it could even consider offering S&CC rebates to alleviate residents’ burden with the overall rising cost of living! It is bewildering then why TCs with financial surpluses join in the alliance and did the exact opposite by contributing to the nation rising inflation.
Prudent Utilisation of Scarce Resources
Water and electricity are scarce and expensive resources in Singapore. In commercial enterprises, business owners pay a lot attention to its use as it is a significant operating cost component. Since energy cost will continue to rise, business owners do not have the luxury to raise prices without losing competitiveness when countering energy increases. Hence for businesses to remain competitive, optimisation on the use of resources including water/electricity are often key targets of its cost control strategy.
Do town councils have the same mind-set of enterprising business owners in the prudent utilisation of scarce resources? Take a look at the table below:
| Variance: 2011 versus 2010 | Tampines | Chua Chu Kang | Bishan-TP | East Coast | West Coast | Holland-Bt Panjang | Tanjong Pagar |
| Operating Income | 0.4% | 0.3% | 0% | 1.9% | 0.9% | 0.9% | 5.1% |
| Utilities Expenses | 16% | 9.1% | 10% | 15% | 12.6% | 9.7% | 23.3% |
| Lift Maintenance Expenses | 1.5% | 8.5% | 20.7% | 17% | 8.4% | 13.3% | 4.8% |
<TBODY>
</TBODY>
Although operating incomes (number of property units) have largely remain constant for most TCs, utilities and lift maintenance expenses had however risen significantly across the board. While electricity tariffs had increased about 8% year-on-year, none of the TC financial statements had notes explaining the variance above the tariff increases. TCs should enlighten residents on the increase in utility expense beyond the tariff increase.
Wasteful Practices
A careful observation around the estate would easily revealed wasteful practices on usage of utilities. Since time immemorial, it is common to see conservancy workers undertaking block washing using water from the domestic water pipeline. This is expensive treated water that is ready for human consumption, yet it is flushed away so wastefully. In some countries, it is an offence to use treated water to wash floors, cars or watering plants. If TC is a for profit enterprise, cost conscious business operators would have installed a low cost water recycling system for block washing much like the auto car wash station.
Most lifts in TC do not have sensors to operate the lights and ventilation fan. The equipment remains operating and consuming electricity regardless of whether there are passengers or not. The potential energy saved from each lift could be quite significant in particular during the period from midnight to dawn. Multiply it with the average of 1000 lifts in each town, there is a huge electricity cost saving potential.
Some town councils attributed the rising lift maintenance expenses to the increase in the number of lifts and landings after Lift Upgrading exercise. Town councils had accepted the practice of lift maintenance companies charging by the number of stops. This is a simplistic and convenient cost charging model rather than being a fair and reasonable one. Consider a 9-storeys block with 2 lifts and 3 stops each before lift upgrading. Before upgrading, it is 6 stops and 18 stops after. The main and critical component of a lift system is the lift motor/traction hoist and the control mechanism. Regardless of number of stops, the time spent in maintaining the same number of critical components would not have increased 3 times. TCs should exercise more prudence in lift expenditures through exploring more equitable means of payment model for lift maintenance.
More Should Be Done
With an average of 400 to 600 blocks of flats in a town, there are good potential to identify/implement reduction opportunities for operating cost. Besides eliminating wasteful work methods and procuring cost effective outsourced services, more could be done to invest on energy conservation programs and technology to increase productivity and reduce cost. With very healthy accumulated surpluses, investing in the above programs would generate a better overall return for the residents than placing it in some financial instruments with no tangible benefits to the residents at all. Town council management should not take the easy way out and add to the woes of residents by contributing to the nation overall inflation rate.
.
Caroline Charles
