by MP for Aljunied GRC, Sylvia Lim
LUP is a government programme where the bulk of the cost is supposed to be borne by the government, with the balance co-shared between residents and Town Councils, each paying between 5 to 12.5% (e.g. Hansard, 21 Sep 2004).
However, based on the accounting used by HDB, Town Councils are paying much more and are subsidising HDB’s share. This is because HDB’s definition of LUP cost is different from what a common person understands.
HDB defines LUP cost as “total cost of lift upgrading minus Town Council’s share of the lift overhaul cost”.
What then is lift overhaul? During LUP, new lift shafts are erected. Once operational, HDB requires one or two of the existing lifts to be shut down. According to HDB’s logic, the shutting down of these lifts is deemed an overhaul; TC has to pay HDB the overhaul cost, as overhauls are cyclical works to be done by TCs.
The overhaul cost is based on a 28 year life span for a lift. If the lift is 24 years old now, TC has to pay the depreciated portion i.e. 24 out of 28 years of value, based on HDB’s costings, which cannot be challenged. This could easily work out to about $100,000 for each lift. For 10 blocks, the TC would be required to pay a substantial amount of $1,000,000 just for shutting down of lifts!
There are several issues here.
First, using the word ‘overhaul’ to cover shutting down is convenient to HDB, but does not square with the usual meaning of ‘overhaul’!
Second, from the TC perspective, it is not justifiable to pay HDB $100,000 per lift where no physical overhaul work was done but the lift instead became extinct.
What HDB is bearing is not based on the total bill of the LUP but a lesser amount after first making the Town Council pay to HDB part of the total LUP bill through such “lift overhaul” costs. This results in a significant drain on the TCs’ Sinking Funds, way above the one-off Lift Upgrading Programme Assistance provided by HDB.
How does HDB justify such an accounting?