Ever since the formation of the Committee of Assessors in 1800, local authorities have played a crucial role in Penang's administration. This third tier of governance ripened as George Town evolved from a municipality to become the first state in the nation elevated to a city. Civic elections were similarly contested on a party basis after its revival in 1951, only to be suspended in 1965.

A Commission of Enquiry was established in July 1966 to investigate the City Council's management affairs and the passing of the City Council of George Town (Transfer of Functions) Order 1966 effectively transferred all functions of the City Council to the Chief Minister of Penang.

Another wave of change occurred in the May 1969 elections when the Parti Gerakan Rakyat Malaysia (Gerakan) defeated the Alliance, making Dr Lim Chong Eu the second Chief Minister of Penang. On assuming the position of Officer Administering the Council, Dr Lim was confronted with the challenge of revamping local government in the state.

This chapter highlights the transformation of local authorities upon Dr Lim's takeover in the early years of 1969 until the implementation of the Local Government Act of 1976. While Dr Lim envisaged a system of improved efficiency and a smooth compliance with state decisions and policies upon the implementation of the 1976 Act, he did not expect the Act to alter the landscape of local government in Penang altogether.

The George Town Enquiry and the Suspension of Local Elections

The rattling of the George Town Council began in June 1963 when D.S. Ramanathan, once elected Socialist Front Mayor of George Town, rocked the council at a meeting with accusations of malpractices and improprieties.115 These allegations effectively tarnished the council's public integrity, and a month later, the State Secretary announced the setting up of a Commission of Enquiry, known as the George Town Enquiry to investigate Ramanathan's accusations. What was obvious was that the council's affairs were being sensationalised under a charged political climate.

By March 1965, following the outbreak of the Indonesian Confrontation, local elections nationwide were suspended under the Proclamation of Emergency. In the case of the Seremban Council, suspension followed corruption charges. A year later, Johor became the first state to abolish local governments (Tennant 1973:79).