By Pritam Singh, MP Aljunied GRC
The 30% water price hike announced during the Government’s presentation of Budget 2017 was met with a wide range of reactions by Singaporeans, ranging from bewilderment to resignation. Already reeling from a series of price increase announcements from the end of December 2016 including a rise in HDB car park charges, electricity tariffs and Service and Conservancy Charges, the steep rise in the price of water over two years came like a bolt of lightning for many Singaporeans.
In her comments to the media after the Minister of Finance’s Budget speech, one PAP MP was quoted as saying, “I think the increase in water prices is just to bring up awareness of the importance of water.”
Amongst many ordinary Singaporeans however, such a position could not have been more incredible and detached from reality. At Hammer outreach events and from discussions with Singaporeans in the heartlands, the view of many ordinary citizens was markedly different.
“Aiyah, the PAP did this because they got 70% of the vote at the general elections! No need to consult or explain anything loh!”
In fact, on 17 August 2015, then-Minister of the Environment and Water Resources (MEWR) Vivian Balakrishnan told Parliament that there was “no need for an adjustment (of water prices) at this point”.
Coming less than one month before the 2015 General Elections, it was an important and noteworthy reply. The Minister added that water scarcity was NOT the key issue – but real variable of concern was the price of energy and the cost of producing water.
Fast forward less than two years later, most Singaporeans wanted to know why the water increase was timed this year in view of the PAP Government’s earlier position in 2015, especially in view of a slow economy. Did energy prices suddenly increase by 30%?
They also wanted the Government to explain the 30% water price rise, fearing a knock-on effect on food and beverages like coffee. But rather than to provide an explanation, the Government changed tack, returning to the water scarcity mantra which only in 2015 the MEWR Minister framed as an energy security issue, contingent on the price of energy.
When Minister in the Prime Minister’s Office, Chan Chun Sing stood up to speak in Parliament on the water issue during the course of the Budget 2017 debate, the matter was framed as such – “Do we agree that water is existential to our country’s survival? Do we agree that we should price water properly?”
However, the public expectation of a reply from the Government went far beyond these apparently fundamental issues. In fact, it was apparent that people wanted to understand the mechanics of how the Government prices water, especially in view of improvements in water processing technologies over the years. In the course of the 2017 budget debate, the WP MPs put a series of questions on the matter to the Government.
Selected extracts of parliamentary speeches made by WP MPs:
Ms Sylvia Lim
Ms Sylvia Lim (Aljunied): Yesterday, the Minister for the Environment and Water Resources gave various reasons for the water hike. But these reasons are longstanding. The justifications, such as increased cost of production, the need to build more desalination plants and so on, did not come up suddenly.
For the last 17 years that the water price was unchanged, did it not cross the Government’s mind before this year that it would want to raise the price of water? By contrast, there is a two-year lead time for the impending carbon tax, which the Government is announcing ahead of its implementation in 2019. This lead time is welcome, as it will enable businesses and consumers to prepare, such as by strategising and investing in energy-efficient measures.
Coming back to water, why was it not possible to prepare Singaporeans for the increase to take effect in July this year, with an announcement similarly two years ahead of time – in July 2015? Perhaps, in July 2015 was not a good time to make such an announcement.
Mr Png Eng Huat
Mr Png Eng Huat (Hougang): Can the authority share how much losses it has made supplying water to Singaporeans since 2000 to warrant such a hefty increase? Minister Masagos has stated in his reply to my Parliamentary Question that the current national average water consumption has dropped about 11% as compared to 10 years ago. The number of households that consume more water than the national average today remains stable in the past decade at 40%. If we look at the per capita usage, water consumption in Singapore is about 5% to 70% lower than that of London, Melbourne, Tokyo, Hong Kong and New York.
What do all these numbers say? They basically say Singaporeans understand the scarcity of water and we have been doing our part to conserve this precious element all this while. The Minister also acknowledged that and he cautioned Singaporeans not to be complacent and to save more water wherever possible. Singaporeans have done that before and I am quietly confident Singaporeans will do just that, going forward.
Mr Dennis Tan
What puzzles me, is that the Finance Minister has mentioned in his Budget Statement, that water is essential to our survival, so the pricing of water must reflect the higher production cost of desalinated water and NEWater. My question is, we have had desalination and NEWater plants for some time now. In recent years, water reservoirs, desalination plant and water supply from Malaysia and other water issues have been better resolved. We already have more choices when it comes to water supply. Then, why the sudden mention of higher cost of water? Why was this not mentioned in recent years?
Mr Pritam Singh and Minister Masagos
Mr Pritam Singh (Aljunied): …I would like to ask the Minister how does PUB assess when to increase the price of water because according to the PUB’s Annual Report, the net income of the PUB – after Government grants and contributions to the Consolidated Fund and tax – was actually higher between the years 2013 and 2015, as compared to between 2010 and 2012. Between 2013 and 2015, it was about $550 million and between 2010 and 2012, it was $339 million….
Mr Masagos Zulkifli: I thank the Member for asking these questions. On the issue of the books in PUB, I think it is very complicated for me to attempt to simplify what the numbers really mean. Our books are in accruals and our budget is in cash, and we have to reconcile them. What we will do is I will ask the Minister for Finance to look at the whole-of-Government approach in funding our water infrastructure. I think that makes more sense. Because there are some parts which are Government-funded and some parts which are PUB-funded, and it does not add up, if we look at each book separately….The price of water, as it stands today, that we have proposed to increase, is the Long Run Marginal Costs (LRMC), which is the price of producing the next drop of water. And, therefore, for whatever reason, the next drop of water that we need to draw will be coming from desalination as well as NEWater. So, it is already priced in. The problem is not the price. The problem is what will we do, what can we do, to prevent that from happening. Because it is not just an issue of supply; it is a very complicated issue should that situation ever occur to us.
The line of questioning taken by the WP MPs focused on whether the Government had properly justified the water price hike and if an assessment was made on the impact of such increases on the people, bearing in mind that water is a critical public good and a necessity for everyday life. A 30% water price hike would inevitably have a cost of living impact, affecting all Singaporeans.
In contrast, Minister Chan Chun Sing concluded his budget speech by arguing that a responsible government would not distort the market and would price essentials properly instead of creating subsidies that would burden future generations. However, this was not the issue in question. On the contrary, the imperative was simply on a responsible government to justify how it prices water.
Unfortunately the Government did not attempt to explain the mechanics of how it prices water in detail either to the WP MPs in Parliament or to Singaporeans outside of it. It came as no surprise after the Budget debate for Prime Minister Lee Hsien Loong no less to concede that the 30% water price hike could have been better explained to Singaporeans before its announcement. Ironically in fact, Parliament was the best platform for the Government to have done so.