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

About 80% of Singapore’s resident population live 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 (“TCs).

There are various reasons for this. I will mention 3:

a. First, it holds the elected MP to account for and also gives his or her residents a greater say in the management of the common property within the public housing estates. That is, local political accountability.

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

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

Over the years, TC’s operations have evolved. Apart from routine repairs, servicing and maintenance, horticulture, conservancy and cleaning works, TCs also undertake improvement and upgrading works funded either fully or substantially by the Government.

TCs derive their revenue from 2 sources:

a. First, Service & 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.

b. Second, Government grants. They come in several forms:

i. We have the S & CC Operating Grant.

1. This is allocated based on the number of HDB flat units and flat types. Smaller flat types get higher grants.

2. Currently, the grant stands at $33.70 per month for 1-room flats, $26.20 per month for 2-room flats, $17 per month for 3-room flats and finally, $9 per month for 4-room flats.

ii. We also have GST subvention grants.

c. There are separate grants which may only be used in relation to lifts. They are the:

1. Lift Enhancement Programme funding of 90% of the costs.

2. Matching grant for Lift Replacement Fund of 50% of the costs; and

3. Lift Maintenance Grant ($600 per lift).

The current model of estate management through TCs 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 proceed to highlight now.

First, HDB BTO flats in mature estates.

a. Since 2001, HDB has undertaken many BTO development projects to address the housing needs of Singaporeans.

b. A good number of these projects may be found in mature estates. They are usually much taller skyscrapers of between 35 to 40 storeys high so as to optimise the usage of the land.

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

d. Upon completion, the Town Council will have to manage the new BTO developments in addition to the mature estate.

e. 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.

i. 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 5 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 central green spine or relax in the resting shelters along the way”

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

g. 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.

h. I recently filed a PQ 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 the Town Councils.

i. The Hon Minister made several points of which I highlight 2 in my speech:

1. First, that TCs are consulted prior to tender.

a. 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.

2. The hon Minister also said that HDB’s estimates may differ from TC’s estimates as TCs might enjoy economies of scale.

3. Respectfully, where there are BTO flats in mature estates, the situation is usually the opposite.

a. The reality is maintenance costs for these skyscrapers are significantly higher than maintenance costs for the older housing estates.

b. Let me provide 3 “concrete” examples:

i. All the “verdant green gardens”, “green spines”, etc 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.

1. This alone drives up costs.

ii. For high rise BTO skyscrapers, HDB has installed Pressure Reducing Valves at various floors of each block TCs 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.

iii. On the final eg, Sir, may I have your permission to show an object? I am holding a paver which was used to pave the driveways in a HDB BTO development within my constituency.

1. This paver was made in UK. Truly “enhanced” and unique!

iv. These pavers were used to pave the driveways in a BTO housing estate.

1. Without a doubt, they look beautiful on completion.

2. Inevitably, however, pavers buckle. Indeed, many already have damaged car tyres.

3. To replace them and ensure the same look and feel, the TC would have to purchase them from UK.

i. With respect to the hon. Minister, there is no economy of scale that TCs can leverage on for these costs. I am not making an argument to trade off aesthetics for costs — all I am asking for is for deeper reflection on the implication of each decision at the construction and design stage. This cannot happen unless our policy set out the correct 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.

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

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

b. One thing that needs to be appreciated is that townships managed by TCs are not homogenous.

i. Where a TC entirely manages a non-mature BTO estate, there may be no issue.

ii. But where a TC 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 :

a. I had earlier explained the structure of S & CC grant from the Government.

i. It does not take into account the higher maintenance costs of BTO flats with the unique features that are not found in mature estates.

b. On the other hand, S & CC by residents are all put in a common pool and are fixed based on flat type.

i. There is currently no uplift in S & CC for BTO units in the by-laws passed by all 17 TCs.

ii. Owners of DBSS units are charged higher S & CC but that is not directly relevant here.

c. This raises an issue of equity which must be addressed immediately.

i. As it stands, costs for maintaining TCs estates have been escalating whilst revenue is generally flat.

ii. If this carries on, TCs will be looking to raise S & CC. The equity issue must be dealt with firmly beforehand.

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 PQ highlighting the problem of slippery and wet drop off points, walkways, etc at HDB BTO developments arising from design issues.

a. The hon Minister suggested that such feedback be channelled by the TC to HDB and HDB will decide how best to deal with these matters.

i. I did just that. The response by HDB was that the TC should undertake the recommended works using CIPC.

ii. The problem however is that 10% of the CIPC funding comes from TC revenues; the bulk of it is S & CC from residents.

1. This exacerbates the cross-funding issue that I highlighted earlier.

iii. 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 not address design limitations of built features at the new BTO units.

I now turn to the TC’s responsibility in maintaining infrastructures at common properties in mature estates.

Infrastructures are built not to last forever.

a. There is a lifecycle involved beyond which they must be renewed.

b. Also, for each infrastructure, there is 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 TCs should not be undertaking such projects if they are to be funded by S & CC.

a. Residents’ S & CC should be used for maintenance per se and not be used to replace or extend the life of such infrastructural works.

i. 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 PQ 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.

a. The Hon Minister’s position is that the responsibility lies with the TC.

b. Respectfully, I suggest that:

i. TC should not be undertaking these infrastructural related works, which by the way are not cheap, unless they are fully funded by the Government.

ii. I accept that one possible solution is incorporating these works through the Neighbourhood Renewal Programme which is 100% funded by the Government:

1. But this is not an elegant solution as NRP cycles don’t necessarily coincide with infrastructure life cycles or timed to occur when repairs are needed because infrastructure tolerances are exceeded.

2. 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 etc.

I pause here to summarise the three main points I have made so that hon Members can see the solution that may be already emanating. First, having TCs 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, TCs also achieve less economies of scale than HDB, simply because of its size.

Second, the issue of parity between old flats and new 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 becomes less relevant than the type of flats.

Third and relatedly 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 which begs to be asked is this: is the “town” the right boundary, or the right unit of measurement, for such works? And hence, are town councils the right vehicles?

Aside from the three points above which relate mainly to infrastructure, I now come to human resource management at TCs.

i. These property officers form the backbone of all TCs.

ii. 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.

b. Having spoken to several of them and their managers, the common grouses are:

i. Tough work conditions; and

ii. Lack of career prospects from within the organisation.

1. This requires some explanation:

a. For property officers who are employed directly by TCs, the sense amongst some is that the organisations are too small to accommodate their personal growth.

b. For the property officers who are employed by the management agents of TCs, the scale issue is addressed by the management agents’ ability to deploy property officers across properties that they maintain.

i. Still however, the management agents lose property officers to bigger organisations such as HDB which values the skills and experience acquired by them.

c. 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.

d. 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 should 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.

a. I am not suggesting that it is a broken system now.

b. But if we don’t do anything, I fear it will eventually be.

So what areas should his Ministry look at? I suggest 2 areas.

a. We recall that the three main motivations for the TC are — local political accountability, community and identity, efficiency through decentralisation.

b. First, on the latter point, I think there is merit in re-looking at centralisation of resources again with HDB to conduct maintenance services:

i. This will reduce opportunities for the misalignment of incentives I spoke of. It will also 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.

ii. It will also allow for the provision of maintenance services at a much higher economy of scale, and a deeper level of expertise.

1. This will in turn taper the increase in maintenance costs.

2. Already, with Progressive Wage Models implemented for cleaning jobs, maintenance costs has increased at a faster pace than revenue.

3. We need to exhaust all other ways to reduce costs before making the decision to increase S & CC;

iii. We 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.

iv. Issues of turnaround time for a centralised body to deal with complaints, which was a problem in the 1980s, can be managed effectively through advances in technology made since then. And of course, we now have the Municipal Services Office!

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

c. Alternatively, if it is felt that the responsibility should still be sited with the Town Council, I think there is merit in relooking at the funding models.

i. In particular, the criteria for S &CC grants; and

ii. Ensuring that S & CC by residents are not used for renewal of infrastructure and dealing with design issues in BTO developments.

b. This allows us to retain the political accountability for MPs in reflecting the residents’ concerns and preferences relating to their homes and public spaces.

c. Mr Speaker, 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 of the three main features of the 1989 Town Councils Act, while closing some of its current operational gaps.

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