Timing of water price hike more synchronised to political than economic cycle, says WP

Timing of water price hike more synchronised to political than economic cycle, says WP

The opposition politicians also call for a more in-depth explanation from the Government on water pricing methods, while voicing concern over the impact on costs of living.

SINGAPORE: The opposition Workers’ Party (WP) on Tuesday (Feb 28) questioned the timing and impact of the 30 per cent water price hike announced as part of Budget 2017 last week.

Non-Constituency Member of Parliament (NCMP) Leon Perera suggested that recent Budgets from the ruling People’s Action Party (PAP) Government trended towards “racking up a surplus in the early part of the Parliamentary term and then incurring deficit spending towards the end of the term close to the General Election (GE)”.

Mr Perera said the timing of various price hikes seemed “more synchronised to the political cycle than to the economic cycle”.

“Is this the right time to raise the electricity tariff? The gas price? Parking fees? Diesel usage costs? And last but not least, to raise the water price?” he asked.

“Hitting the economy with these multiple price hikes within the space of a few months may make good political sense, because people have three years to forget them before the next General Election. But do they make good economic sense?” he said.

“Why introduce all these price hikes now at a time of economic fragility, when they could tip some SMEs (small- and medium-sized enterprises) at the margins over the edge, when they increase the hardships faced by Singaporeans beset by job market insecurities? Why not introduce some of them later when there is an upswing in external demand?”

water prices - annoucned at budget 2017


MP for Aljunied GRC Pritam Singh called for “a deeper explanation from the Government about how it prices water”. “Can the Government also share how much it costs each desalination and NEWater plant to produce water today, especially since some of these plants operate on a private-public partnership basis? How do they compare with plants run directly by the PUB?” he enquired.

He then asked if the falling water levels in Malaysia’s Linggiu Reservoir had an impact on the water price revision, “especially since the Government’s position as late as 2013 confirmed no need to raise water prices”.

Mr Singh said he wondered if the reservoir’s water levels dipping to zero per cent would result in another rise in water prices. “That would also prompt a corollary question as to whether the latest water price revision was set with a view to account for the complete failure of the Linggiu Reservoir,” he added.


NCMPs Dennis Tan and Daniel Goh both expressed fears over the water price hike having an impact on the cost of living.

Speaking in Mandarin, Mr Tan said: “The companies and industries affected most would be those in F&B. How can the Government ensure the rise in water tariffs will not cause prices to increase in hawker centres, coffeeshops and other products as well?”

Mr Tan added that he was concerned by the volume-based duty of S$0.10 per litre on diesel.

“I can understand the pollution reasons but I question if it’s wise to time it now when the present economic situation is not healthy,” he said. “Can the Government assure the people that transport costs of taxis and buses etc will not increase?”

Diesel taxes infographic

“Although the Government has announced GST vouchers to give some rebate to some families, most Singaporeans, industries and companies will not fulfil the criteria and not receive anything, or else just a token rebate,” he argued.

Meanwhile, Associate Professor Goh described the water price hike as “ominous” as he urged the Government to strengthen safety nets for middle-income households in particular.

“The 30 per cent hike in water price and the carbon tax when implemented will have knock-on effects on the costs of living, as all areas of everyday life are affected by the use of water and electricity,” he said.

“Middle-income households do not have the benefit of the enhanced financial transfers to low-income households to soften the impact of the water price increase … (They) will feel the head-on impact of the increase in costs of living most strongly.”

High-income earners will also be subsidised many times more than middle-income workers when it comes to the Personal Income Tax Rebate of 20 per cent, capped at S$500, said Assoc Prof Goh.

gst u-save - budget 2017

Earlier, Mr Perera said Budget 2017 had “not made a decisive shift towards building local enterprises as an engine of value creation alongside MNCs and GLCs” and this was a "huge missed opportunity” he said. “We also … can and should do more to enable our students to understand how entrepreneurship is both a viable and a socially meaningful calling. Right now, I fear that most aspiring students dream of becoming civil servants or working in an MNC.”

He also said Budget 2017 initiatives did not do enough to foster risk-taking. “It is no coincidence that the countries with the most innovative companies and disruptors are also the countries that have a larger role for social safety nets and risk pooling,” he said. “We must create enough security and confidence for Singaporeans to become the disruptors and not the disrupted.”

“While we do recognise the positive moves in Budget 2017, we question the timing of some of the measures that will raise costs as well as their necessity and justification,” Mr Perera concluded. “We question whether more can be done to support a beleaguered economy.”

“And above all, we question the missed opportunities to make decisive, bold moves in local enterprise development, risk-pooling and education to pivot Singapore towards truly finding its place in the sun in the 21st century.”

Source: CNA/jo