Need to 'bite the bullet' in raising water prices: Indranee Rajah

Need to 'bite the bullet' in raising water prices: Indranee Rajah

The Senior Minister of State for Finance was responding to questions on 938LIVE's Talkback on Tuesday (21 Feb) about why the water price increase could not have been held off till the economy improves.

SINGAPORE: Increasing water prices is a necessary measure to ensure future supplies, and Budget 2017 was the appropriate time for the rise, said Senior Minister of State for Finance Indranee Rajah on Tuesday (Feb 21).

Speaking on 938LIVE radio’s Talkback call-in show, Ms Indranee was responding to questions about the increase, including whether it could have been held off for a while until the economy improves.

“You can put it off this year. But then next year you don’t know what the economy will be like,” she said. “You sometimes just have to bite the bullet and say, this is a critical resource, you’ve got to ensure future supply, so the time to do it is now.”

In this year’s Budget statement, Finance Minister Heng Swee Keat announced that water prices will increase by 30 per cent in two phases over the next two years. This is the first time in 17 years that the Government is revising water prices.

But Ms Indranee emphasised the importance of helping those who might have problems coping with the increase. “That is why you’ve got measures like the GST U-Save, GST special cash payment … these are measures which are targeted at those who are having some difficulty in managing the increase in cost.”

The increase in water prices was a hot topic for listeners. One point raised a number of times was why the increase was not done gradually over the last 17 years. To that, Ms Indranee reiterated that there is never actually “a good time” to raise water prices.

“We’ve looked at this, and this is the appropriate time going forward, because we’re planning for the future and the levels at the Linggiu Dam were a good reminder of this.”

Another listener pointed out a possible knock-on effect the price increase could have on goods and services, particularly for food and drinks at coffee shops.

In response, Ms Indranee said that it all comes back to how the Government can help people increase their incomes, and how the revenue that comes into the household can be increased so “all the other things” can be managed.

“The key to that lies in the economy,” she said. “That’s why you see the first part of the Budget is really targeted at growing businesses, helping them stay afloat in this economy, helping them to access new opportunities, and making sure that our workers are able to get training.”


Other topics brought up during the show included help for businesses and the middle class.

While the measures in the Budget are about looking for the long-term, host Bharati Jagdish pointed out that some chambers of commerce are saying that help is needed with immediate business costs like rentals. “So while some of these measures take into account long-term benefits, what about the here and now?” she asked.

In response, Ms Indranee gave some examples of ongoing direct help for businesses like the Wage Credit Scheme and the SME Working Capital Loan. She said the Government understands the difficulties and challenges that businesses are going through, but raised the question of what the right way to assist would be.

“Is the way to assist giving direct grants? If you give direct grants, where is that money coming from? It comes from taxes. Who’s paying the taxes? It’s businesses and individuals,” she said.

“If you don’t generate growth, then you don’t have the taxes,” she added. “So it all comes back again to trying to make sure that you generate an economy that grows, so that everyone can benefit.”

She also pointed out the need to change mindsets in order to increase productivity. For schemes to be effective, she said people and businesses need to “really take this on board” and with “the right mindset.”

“It’s always difficult to restructure…and there is obviously some pain involved in the restructuring, but we’ve got to move towards that step by step,” she said, explaining how the aim in this year’s Budget is to help businesses by helping them to get productive.

“The strategy is really not to be ‘here is a direct angpao’, but the strategy has to be ‘here are the ways in which you can get more productive, become more innovative, and scale up so you can grow your business’.”

Soundcloud: Interview with Indranee Rajah

Source: CNA/lc