Nov 18, 2008
Town councils' exposure: $16m
Another $3m invested in Pinnacle Notes Series 6 could be at risk
By Goh Chin Lian
EIGHT town councils (TC) run by the People's Action Party have about $16 million invested in troubled structured products.
The lion's share of $12 million is from two TCs: Holland-Bukit Panjang ($8 million) and Pasir Ris-Punggol ($4 million).
The products include Minibonds linked to bankrupt US investment bank Lehman Brothers and the now worthless Merrill Lynch Jubilee Series 3 LinkEarner Notes.
Dr Teo Ho Pin, chairman of the Holland-Bukit Panjang TC as well as coordinating chairman for the 14 PAP town councils, disclosed this yesterday.
Earlier in Parliament, Senior Minister of State (National Development) Grace Fu identified the two TCs when she was asked whether a stricter cap on risky investments was needed.
In his statement, Dr Teo defended the TCs' investment strategy, saying the funds are diversified across deposits, securities and other financial products.
Surely there must be some accountability for this. Unlike Temasek and GIC, town councils have no way of pretending that their money is not public money.
This is not the first time I am criticising how the town councils handle public money. You can read this post that I wrote last year: You Give Your Money To Your Town Council So That It Can Play The Stock Market.
Maybe I should change the title of my current post to "You Give Your Money to Your Town Council So That It Can Buy Lehman Minibonds".
The fact that town councils invest your conservancy fees into stocks, shares, bonds and structured products really just goes to show that Singaporeans have been paying way too much in conservancy fees.
What do town councils need so much money for, anyway? As of last year, they had more than $1,000,000,000 of excess cash in their sinking funds! Surely it doesn't cost that much to build a few playgrounds and basketball courts, and to pay some Bangladeshi workers to clear the rubbish and sweep the floor every day.
Note that town councils aren't responsible for maintaining everything in your HDB estate. Organisations like the National Parks Board pay for the maintenance of the parks; while the Land Transport Authority pays for maintaining the roads and bus-stops; the Singapore Sports Council pays for the maintenance of the public swimming pools and sports stadiums etc.
In yesterday's Straits Times, Dr Teo Ho Pin, coordinating chairman for the 14 PAP town councils, is reported to have said that town councils need to build up their sinking fund for long-term improvement works, like replacing lifts every 28 years.
Seems like a poor excuse to me.
Under the Lift Upgrading Programme, the town council pays only a very small fraction of the overall cost. For example, according to the HDB website, on average the town council pays only 7.6% of the cost of upgrading the lift for a 4-room flat in a standard block, or approximately $900.
Holland-Bukit Panjang and Pasir Ris-Punggol lost $12 million. That could have upgraded lifts for more than 13,000 flats. All at one go ... and not over the next 28 years!