A Case to Review the Model of Estate Management for Public Housing in Singapore

ADJOURNMENT MOTION

The Deputy Leader of the House (Mr Zaqy Mohamad): Mr Speaker, Sir, I beg to move, "That Parliament do now adjourn."

Question proposed.

A Case to Review the Model of Estate Management for Public Housing in Singapore

7.19 pm

Mr Murali Pillai (Bukit Batok): Sir, about 80% of Singapore's resident population lives in public housing. How the common areas in the public housing estates are managed, therefore, is a point of tremendous public interest.

In the beginning, HDB and its predecessor, SIT, not only built flats but also managed the common property within the housing estates. Since 1989, with the enactment of the Town Councils Act, the responsibility to manage, maintain and improve common property was vested in the respective Town Councils. There are various reasons for this, I will mention three of them.

First, it holds the elected Members of Parliament to account for, and also gives their residents a greater say in, the management of the common property within the public housing estates, that is, local political accountability.

Second, it allows for each town to develop its own distinctive character and instil in the residents an enhanced sense of belonging and pride in their immediate surroundings, that is, community and identity.

Third, by replacing a top-down central management approach with a divested organisation structure, it will allow for a faster turnaround to address residents' complaints, that is, efficiency through decentralisation.

Over the years, Town Council operations have evolved. Apart from the routine repairs, servicing and maintenance and so on, Town Councils also undertake improvement and upgrading works funded, either fully or substantially, by the Government.

Town Councils derive their revenue from two sources. First, service and conservancy charges (S&CC) collected from residents and tenants of commercial units within the township. This forms the bulk of the funding for estate management.

Second, Government grants. They come in several forms. We have the S&CC Operating Grant. This is allocated based on the number of HDB flat units and flat types. Smaller flat types get higher grants.

Currently, the grant stands at $33.70 per month for 1-roomers; $26.20 per month for 2-roomers; $17 per month for 3-roomers and, finally, $9 per month for 4-roomers. We also have Good and Services Tax (GST) subvention grants.

There are also separate grants which may only be used in relation to lifts. They are the Lift Enhancement Programme, Matching Grant for Lift Replacement Fund and Lift Maintenance Grant.

The current model of estate management through Town Councils has been in force for 32 years without much change. The model has worked reasonably well. The question is whether it can work even better today and whether it will remain high functioning tomorrow, especially in light of certain developments which I will now proceed to highlight.

First, HDB Build-To-Order (BTO) flats in mature estates.

Since 2001, HDB has undertaken many BTO development projects to address the housing needs of Singaporeans. A good number of these projects may be found in mature estates. They are, usually, much taller skyscrapers of between 35 and 40 storeys high, so as to optimise the usage of the land.

They are also popular and often oversubscribed. One driver for this is that it allows young couples starting families an opportunity to purchase BTO units near their parents, who may be living in the older part of the township.

Upon completion, the Town Council will have to manage the new BTO developments in addition to the mature estate. In accordance with HDB's mission "to deliver affordable homes of quality and value", our BTO developments give private condominium developers a run for their money. There are so many beautiful features packed into our BTO developments. I have reviewed several brochures issued by HDB for BTO developments in mature estates highlighting these features.

Let me read an example from a 2011 brochure of a BTO development involving five blocks, ranging from 23 to 38 storeys in height offering 1,232 units: the idea of "housing within a garden is realised by shaping the development as an extension of the park connector. Be sheltered from the hustle and bustle of urban life with the central green spine that runs through the development, connecting the surrounding park connectors to form a green network. Residents can stroll along the green spine or relax in the resting shelters along the way."

No doubt, these enhancements were, and are still, being driven by rising expectations of Singaporeans. I have no quarrel with that.

An issue arises when we realise that maintenance costs for these extra features in the BTO developments are also "enhanced". These features are not found in mature HDB estates.

I recently filed a Parliamentary Question with MND asking about maintenance costs for these BTO estates and what steps are taken to ensure that they are within the average maintenance costs undertaken by Town Councils. The hon Minister made several points, of which I will highlight two in my speech.

First, he said that Town Councils are consulted prior to tender. Respectfully, based on my personal checks, it seems HDB did not undertake this as de rigour. I am personally aware of instances where such consultation did not happen.

The hon Minister also said that HDB's estimates may differ from Town Councils' estimates as Town Councils may enjoy economies of scale. Respectfully, where there are BTO flats in mature estates, the situation is usually the opposite. The reality is maintenance costs for these skyscrapers are significantly higher than maintenance costs for the older housing estates. Let me provide three "concrete" examples.

All the "verdant green gardens", "green spines" and so on described in the brochures would have to be maintained, not by general landscaping contractors, which is the usual case in mature HDB estates, but specialist contractors. This alone drives up costs.

For high-rise BTO skyscrapers, HDB has installed pressure reducing valves at various floors of each block. Town Councils are to regularly check the valves and run diagnostics when residents encounter problems, such as "water hammering". There is no such issue arising in mature estates.

On a final example, Sir, may I have your permission to show an object?

Mr Speaker: Yes, you may. Just do not throw it at anyone, especially in my direction. [Laughter.]

Mr Murali Pillai: Sir, I am holding a paver which was used to pave the driveways in a HDB BTO development within my constituency. This paver was made in the UK – truly "enhanced" and unique!

These pavers were used to pave the driveways in a BTO housing estate. Without a doubt, they look beautiful on completion. Inevitably, however, pavers buckle. And, indeed, many have already damaged car tyres. To replace them and ensure the same look and feel, the Town Council would have to purchase them from the UK. With respect to the hon Minister, there is no economy of scale that Town Councils can leverage for these costs.

I am not making an argument to trade off aesthetics for costs. All I am asking for is a deeper reflection on the implication of each decision at the construction and design stage. This cannot happen unless our policy sets the right regulatory incentives. Our current model may have some tension, as I shall explain.

Prior to 1989, since HDB would have been in charge of both developing and maintaining the housing estate, it would be able to get a better sense of the maintenance costs for developments and factor that in, directly, because, ultimately, HDB has to balance its books.

Thirty years later, it seems to me that there are warning signs that this ability may have hollowed out or that it is not foremost in the minds of the officers, given that there is no incentive to look at maintenance, only development.

What I have described has the hallmarks of, or, if not an outright moral hazard, at least a misalignment of incentives developing between HDB and the Town Councils. While not contradictory, we can appreciate that what motivates a developer is not what motivates a maintenance contractor.

One thing that needs to be appreciated is that townships managed by Town Councils are not homogenous. Where a Town Council entirely manages a non-mature BTO estate, there may be no issue. But, where a single Town Council manages an estate comprising both mature HDB estates and BTO developments, the situation can be markedly different and, therefore, must be addressed. The question of parity and fairness needs to be asked.

The second problem is the potential for cross-subsidisation by flat owners from older HDB housing estates for residents in BTO flats. I had earlier explained the structure of S&CC grants from the Government. It does not take into account the higher maintenance costs of BTO flats with these unique features that are not found in mature estates.

On the other hand, S&CC by residents are all put in a common pool and fixed, based on flat type. There is no uplift in S&CC for BTO units in the by-laws passed by all 17 Town Councils. Owners of DBSS units are charged higher S&CC, but that is not directly relevant here.

This raises an issue of equity which must be addressed immediately. As it stands, costs for maintaining Town Council estates have been escalating whilst revenue is, generally, flat. If this carries on, Town Councils will be looking to raise S&CC. The equity issue must be dealt with first.

The potential issue of cross-subsidisation also rears its head when dealing with problems associated with BTO design features in common properties. I recently filed a Parliamentary Question highlighting the problem of slippery and wet drop-off points, walkways and so on at HDB BTO developments arising from design issues.

The hon Minister suggested that such feedback can be channelled by the Town Council to HDB and HDB will decide how best to deal with these matters. I did just that. The response by HDB was that the Town Council should undertake the recommended works using Community Improvement Projects Committee (CIPC). The problem, however, is that 10% of the CIPC funding comes from Town Council revenues, the bulk of it is S&CC from residents. This exacerbates the cross-funding issue that I highlighted earlier.

Also, CIPC is a finite "pot". All things being equal, CIPC should be utilised to build facilities at the mature estates. Many of them were originally built without drop-off points and sheltered walkways and did not address design limitations of built features at these new BTO units.

I now turn to the Town Council's responsibility in maintaining infrastructures at common properties in mature estates.

Infrastructures are built not to last forever. There is a lifecycle involved beyond which they must be renewed. For each infrastructure, there is also a built-in tolerance limit beyond which the infrastructure may have to be strengthened or repaired.

For works to upgrade infrastructure to last beyond its lifecycle or repairs to infrastructure damaged because tolerance limits are exceeded, it is my respectful view that Town Councils should not be undertaking such projects if they are to be funded by S&CC. Residents' S&CC should be used for maintenance per se and not be used to replace or extend the life of such infrastructural works. This should be the case even if the Government funds 90% of the costs through CIPC, leaving 10% to be funded by S&CC.

Again, recently, I filed a Parliamentary Question to understand the Ministry's position on whose responsibility it is to repair scupper drains around mature estates, which have been misaligned owing to soil movements. The hon Minister's position is that the responsibility lies with the Town Council.

Respectfully, I suggest that Town Councils should not be undertaking these infrastructure-related works, which, by the way, are not cheap, unless they are fully funded by the Government.

I accept that one possible solution is incorporating these works through the Neighbourhood Renewal Programme (NRP) which is 100% funded by the Government. But this is not an elegant solution, because NRP cycles do not coincide with infrastructure life cycles or timed to occur when repairs are needed because infrastructure tolerances are exceeded. Also, the NRP budget is finite and residents may not necessarily be happy that the budget is utilised to repair drains or other parts of the infrastructure when it can be used to renew amenities, such as playgrounds, BBQ pits and so on.

I pause here to summarise the three main points I have made so far, so that hon Members can see the solution that may already be emanating. First, having Town Councils separate from HDB creates two sets of incentives – one for the developer and one for the maintenance contractor. These incentives can be perverse in some cases. From a purely economic point of view, Town Councils can achieve less economies of scale.

Second, the issue of parity between old flats and new ones becomes important, and the drawing of lines becomes less that of a town, than that of old estates versus new. In this case, the boundaries of a town become less relevant than the type of flats.

Third and related to the boundaries issue, the same argument arises for the blurring of boundaries between maintaining old infrastructure and building new ones. Given this, a question that begs to be asked is this: is the "town" the right boundary, or the right unit of measurement, for such works? Hence, are Town Councils the right vehicles?

Aside from the three points above which relate to mainly infrastructure, I now come to the issue of human resource management at Town Councils. Anecdotally, I have noted that there is a relatively high turnover amongst all Town Councils at the level of resident-facing property officers. These officers form the backbone of all Town Councils. They are the ones who, on a day-to-day basis, ensure that rubbish is duly collected every day from each block, common areas are swept and cleaned, the lifts are working and the various issues that pop up without notice from time to time are attended to.

Having spoken to several of them and their managers, the common grouses are tough work conditions and the lack of career prospects from within the organisation.

The latter point requires some explanation. For property officers employed directly by Town Councils, the sense amongst them is that the organisations are too small to accommodate their personal growth. For the property officers who are employed by the management agents of Town Councils, the scale issue may be addressed by the management agents' ability to deploy property officers across properties that they maintain. Still, however, the management agents lose property officers to bigger organisations, such as HDB, which values their skills and experience.

In the pre-1989 situation, HDB would have been the employer of these property officers. Doubtless, it is a much bigger organisation which would have allowed for these officers to attend skills upgrading, provide regular career progression and even lateral transfers to other areas of operations.

If we are serious about wanting to ensure a reasonable standard of maintenance in our public housing estates, the human resource management issue must be tackled decisively. There must be an Industry Transformation Map for this sector. We need to build a deeper pool of expertise in management of townships.

Sir, the intent of my speech is to make a case for the hon Minister to urgently review the current model of estate management. I am not suggesting that this is a broken system now. But if we do not do anything, I fear it will be.

So, what areas should the hon Minister be looking at? I suggest two.

We recall that the three main motivations for the Town Council are – local political accountability, community and identity, and efficiency through decentralisation.

First, on the latter point, I think that there is merit in relooking at centralisation of resources again with HDB to conduct maintenance services. This will reduce opportunities for the misalignment of incentives I spoke about. It will eliminate turf wars that happen from time to time between HDB and Town Councils on issues, such as source of water leaks, whether from external walls or from within the units. It will also allow for the provision of maintenance services at a much higher economy of scale and a deeper level of expertise. This will, in turn, taper the increase in maintenance costs.

Already, with Progressive Wage Models implemented for cleaning jobs, maintenance costs have increased at a faster pace than revenue. We need to exhaust all other ways to reduce costs before making the decision to increase S&CC.

We also will have an opportunity to convince property officers to stay in their jobs, because their employer is a big organisation that will invest heavily in the upgrading of their skills, and provide promotion and transfer opportunities.

Issues of turnaround time for a centralised body to deal with complaints, which was a problem in the 1980s, can be managed more effectively now through advances in technology. Of course, we also have the Municipal Services Office.

On the second point of local community and identity, the Town Councils can retain the responsibility to take up project work, such as NRP, CIPC, ROS and so on, which, usually, involve deep consultations with residents. Such works will enable the Town Council to develop its precinct's own unique character.

Alternatively, if it is felt that the responsibility should still be sited with the Town Council, I think there is merit to relook at the funding models, in particular, the criteria for S&CC grants, and ensuring that S&CC by residents are not used for renewal of infrastructure and dealing with design issues in BTO developments.

This allows us to retain the political accountability for Members of Parliament in reflecting the residents' concerns and preferences relating to their homes and public spaces.

Mr Speaker, Sir, this is a simple reimagining of the model of management of one of our key public resources. I have argued for a new model, which retains all the three main features of the 1989 Town Councils Act, while closing some of its current operational gaps.

I look forward to hearing the hon Minister's response to my speech.

7.37 pm

The Senior Minister of State for National Development (Ms Sim Ann): Mr Speaker, Sir, I thank Mr Murali Pillai for sharing his views on how we can improve the way we manage our HDB estates.

Let us revisit the rationale for forming Town Councils, which we did back in 1989.

The purpose was to give elected Members of Parliament the autonomy to run their own towns and, thereby, let towns develop a distinctive character, guided by the needs of residents.

It is also a testing ground for Members of Parliament to win, and retain, the trust and confidence of their residents. Not only are Members of Parliament expected to represent voters in Parliament, they are also required to pay close attention to the management and maintenance of our HDB estates.

This is a role that comes with custodial and financial responsibilities. It is a uniquely Singapore approach to governance.

The simplest way to describe the relationship between HDB and Town Councils is that the former builds while the latter does everything else – manages, maintains, replaces and repairs. To fund these activities, the Town Council collects Service and Conservancy Charges (S&CC) from HDB households. But that leaves out many important nuances.

First, the Government does not leave it to Town Councils to raise the funds required from HDB households alone. We support them through S&CC operating grants. In FY2020, the Government provided $146 million in operating grants to Town Councils. In addition, the Government also provides about $132 million worth of S&CC rebates, tiered according to flat type, to help residents pay for their S&CC. This compares against a total S&CC collection of $770 million from residential units for that year.

Second, the Government provides additional funding for replacing or maintaining major infrastructural items, such as the Lift Replacement Matching Grant and the Lift Enhancement Programme (LEP).

Third, major efforts to renew HDB towns are heavily funded or even undertaken by the Government through dedicated programmes like the Neighbourhood Renewal Programme (NRP) or Remaking Our Heartlands (ROH).

It is understandable for Town Councils to question whether the parameters under which they operate are fair and reasonable. After all, they have important responsibilities. They are subject to laws and regulations and are also accountable to residents. I see the hon Member's speech in this light and welcome it.

The key points raised by the Member are tension between HDB's role in building and Town Councils' role in maintaining public housing estates, and whether HDB or the Government can undertake the maintenance of public housing estates.

I will address these and the other points made by the Member about Town Councils' challenges and financial sustainability.

First, the Member expressed concerns about the maintenance costs of features in new BTO developments, some of which have higher maintenance costs, due to the need for specialist contractors or equipment.

Sustainability and maintainability are factors that HDB considers when designing new BTO projects. BTO projects adopt design for maintainability principles, including the appropriate choice of materials and finishes and proper detailing for durability and maintenance. HDB also seeks Town Councils' feedback on whether there are features that may affect maintenance.

That said, many other factors besides downstream maintenance costs, are considered at the design stage. Otherwise, we would end up with cookie-cutter precincts that cannot reflect the aspirations of homeowners or the changing demands of urban living.

The building of skyrise greenery is a good example. Incorporating more greenery into our compact and high-rise urban environment is an important solution for tackling urban heat. But such features must be thoughtfully designed to keep maintenance costs manageable.

The key is to ensure good feedback loops between HDB and Town Councils pre-tender and during construction, so that adjustments can be made promptly to address potential maintenance issues. Such feedback loops should continue after residents move in and add to HDB's experience when designing subsequent projects.

We value the Member's feedback and will review our processes to ensure that ease of maintenance is given due priority. We also agree that HDB should deal with design issues that might not have been evident upstream and which present themselves upon project completion promptly.

Regarding the dislodged pavers that the Member has mentioned, indeed, there were issues. While HDB had tested the pavers for durability prior to approving their usage, following feedback from the Town Council, HDB investigated and found the profile and interlocking effect of these pavers to be not as effective as the typical interlocking tiles. Hence, HDB will be replacing the pavers and bearing the costs fully. HDB has incorporated this learning and will avoid using such pavers in future projects.

The Member has suggested that the Government should fund the costs of replacing infrastructure beyond its lifecycle, and repairs to infrastructure damaged because tolerance limits are exceeded.

Today, Town Councils can already fund such cyclical works through the Sinking Fund and, for lifts, through the Lift Replacement Fund. Town Councils have to apportion at least 40% of their income to these funds and a similar percentage of Government grants are also channelled to these funds. Hence, the Government already co-funds such infrastructural works.

The use of S&CC to defray cyclical maintenance and replacement costs in HDB estates is no different from the practice in private condominiums where maintenance fees are used to pay for the cyclical maintenance and replacement of infrastructure, except that the Government provides significant support for public housing – both in terms of funding and otherwise. Town Councils should, thus, continue to set aside funds from S&CC collected for long-term cyclical replacement works.

The Government is committed to continue to work with Town Councils to ensure their long-term financial sustainability. We provide substantial grants to Town Councils, with Government funding amounting to about $1.2 billion over the last five years. We further provide S&CC rebates directly to residents, to help those who require more assistance.

We recognise that Town Councils face various cost pressures, due to a mix of internal and external factors, including tightening manpower, economic uncertainties caused by the pandemic and global supply chain disruptions.

These inflationary pressures affect all sectors, including the Government, which also has to manage a tight fiscal situation. Hence, the solution cannot simply be for the Government to take over estate management or to fully fund cost increases.

Ultimately, any long-term increases in costs will have to be borne in one way or another by all of us. Town Councils, being responsible for estate maintenance, play an important role in managing cost increases and apportioning costs among different households. This is why Town Councils have the full autonomy to set S&CC rates, including differentiated rates, to achieve both financial sustainability and equity.

Nonetheless, let me assure the Member that the Government will continue to partner Town Councils closely in this endeavour. MND will be open to considering appropriate further measures, if necessary, to cushion the impact of rising costs on residents, especially those in greater need of help. We will also review the structure of S&CC operating grants regularly to ensure that it reflects the profile of our public housing stock, subject to the Government's fiscal position.

The Member has highlighted the high turnover of Town Council property officers due to tough working conditions and lack of career prospects.

We empathise with this. Manpower challenges are not unique to Town Councils and are faced by organisations across Singapore, including the public sector.

We recognise the demanding nature of property officers' work. They need to have the technical competency to maintain infrastructure and also soft skills to manage multiple stakeholders. The Government has, thus, been providing significant support to help Town Council officers acquire the necessary skills to handle their work.

These include: (a) regular training and sharing sessions to deepen their technical and case management skills; (b) providing technical advice for complex maintenance cases; and (c) establishing clear progression pathways for the facilities management (FM) workforce, including Town Council property officers.

Under the Built Environment Skills Framework, FM workers can improve competencies in key transformation areas through training and advance to higher wage bands.

As some maintenance issues like cleanliness are attributable to human factors, we also strive to tackle these upstream and promote positive behavioural norms. For example, the Municipal Services Office has been coordinating public education efforts. These include strengthening norms that discourage high-rise littering and pigeon feeding.

Mr Speaker, the Town Council concept goes beyond the physical management of a town. It represents an important partnership between the elected Members of Parliament and the residents in co-creating their living environment. An effective Town Council can build a town into a distinctive, cohesive and vibrant community with a unique identity that is endearing to its residents.

I am heartened that the Member seeks to improve upon our unique approach to local governance and set out his views in a detailed and thoughtful speech. However, we would think very carefully before re-centralising township maintenance, as the Member has suggested because devolution is at the heart of the Town Council concept.

But the Member has provided very helpful reminders to HDB and MND on giving due priority to maintenance costs when designing and building HDB towns and keeping a close track on how the costs of running HDB estates should be managed and apportioned between different stakeholders.

We are committed to doing both. Township management is perhaps not the most exciting of topics, but one that affects the day-to-day experience of many Singaporeans. I thank Mr Murali Pillai again for the opportunity to respond to his ideas and set out MND and HDB's thinking on this subject.

Question put, and agreed to.

Resolved, "That Parliament do now adjourn."

Adjourned accordingly at 7.49 pm.