SINGAPORE: Minister for National Development and Second Minister for Finance Lawrence Wong has said he understands the concerns that many people have over the water price increase, but "there is never an ideal time" for a rise.
Speaking at Channel NewsAsia's Singapore Budget Forum which was broadcast on Thursday (Feb 23), Mr Wong said the Government had deliberated this very carefully.
“There are indeed concerns about our supply including the state of Linggiu reservoir. So when you look at the overall situation and bearing in mind that water for us is a matter of national survival, it’s a matter of strategic importance, we felt that we have to make the increase now,” he explained.
Finance Minister Heng Swee Keat had announced during his Budget speech on Monday that water prices will be increased by 30 per cent in two phases starting Jul 1. The increase will be less than S$25 a month for three-quarters of businesses, and less than S$18 for 75 per cent of households, once fully phased in.
Highlighting that the Government will be giving out GST vouchers to help households offset the increases in water prices, Mr Wong said there are other schemes to help families in exceptionally difficult circumstances.
“We are mindful that everyone may be in different circumstances and even the rebates might not be enough for some, so we will look at different ways to help them … There is a range of local financial assistance schemes, including through ComCare, that we can provide for those in need," he said.
CARBON TAX: FOLLOWING UP ON CLIMATE CHANGE PLEDGE
Mr Wong also addressed business concerns about potential cost increases on manufacturing arising from a carbon tax to be implemented from 2019. “We are very mindful of this and that’s why we are not the first to have a carbon price or a carbon tax. We have looked at other jurisdictions and we are starting with a carbon tax in the range of what other jurisdictions are doing,” he said.
Japan, Sweden, Denmark and Ireland are among those reported to have implemented a carbon tax. Singapore would be the first country in Southeast Asia to do so.
Mr Wong said what is more important is for the carbon tax to shape businesses models and investment decisions for companies, especially those in the power and petrochemicals sectors. For instance, businesses could consider investing in less carbon intensive and more energy efficient forms of technology.
Mr Wong highlighted the importance of tackling climate change and keeping to Singapore’s international commitments. “We made a pledge and in Singapore, when we make a pledge we follow through on the pledge, so this is our way of reducing greenhouse gas emissions and doing our part to fight climate change.”
Singapore signed the Paris Agreement in 2016 along with nearly 200 other countries. It is the most comprehensive climate change agreement, in which Singapore pledged to cut its emissions intensity by 36 per cent below 2005 levels by 2030.
DON’T LEAVE A DEBT FOR FUTURE GENERATIONS
Mr Wong also touched on another announcement of concern for businesses and Singaporeans - the possibility of an increase in taxes in the future.
“We don’t overspend and leave a debt for future generations to bear - that has not been our philosophy … our philosophy in Singapore has always been that we work hard so that our next generation can have a better life," he said. "So I think it’s our responsibility to now start thinking about where the revenue streams are that can help cover all these increases in expenses. We will make a decision in good time.”
But Mr Wong also pointed out the importance of remaining competitive. He said: “Whatever we do, (we have to) make sure we still keep our economy competitive and dynamic. If we can grow and create jobs, we can also provide the resources to ensure that all Singaporeans benefit.”
Speaking on the programme, Maybank Kim Eng Research senior economist Chua Hak Bin agreed that there are challenges in ensuring a sustainable fiscal position. “It’s interesting that the tax review is taking place at the same time there is competition from the rest of the world. Thailand has cut its (corporate income) tax rate to 20 per cent. Indonesia and the US are contemplating cutting (corporate income) taxes to 15 per cent.”
Mr Wong agreed, but pointed out that tax incentives are not the only tools in Singapore’s arsenal to attract investments and foreign companies: “Tax is not the only lever we have in competition … it’s a wrap around strategy, where you provide land, training, logistics for companies and I think that is what we are good at.”