Price hikes of essential services unavoidable, but needy households will get help: PM Lee

IN TIMES of slow growth and high inflation, the government cannot completely avoid raising the prices of some essential public services even as it strives to keep overall costs low, said Prime Minister Lee Hsien Loong on Wednesday (Nov 22).

“If they are not essential, we can delay them for a while longer, or at least moderate the immediate increase,” said PM Lee in a speech at the National Trades Union Congress’ national delegates’ conference.

He cited the upcoming 7 per cent increase in public transport fares that will come into effect from Dec 23. The government will absorb two-thirds of what the increase should be, a move that will cost S$300 million this year alone, he said.

“But some price increases will not be avoidable. Pushing them off to the future doesn’t solve the problem,” said the prime minister.

The government’s approach would be to proceed with the price hikes as planned, but provide more generous and targeted support to households which need more help when necessary.

That is why the Assurance Package has been enhanced several times this year to provide more vouchers, rebates and special payments to families in need, said PM Lee, adding that such an approach has worked.

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“What we are doing keeps public services financially sustainable and of a high standard for the long term, while in the short term, households get extra help according to their needs so that we share the burden fairly,” he said.

“Singapore premium”

In his address, PM Lee highlighted how the government’s twin priorities of being both “pro-growth” and “pro-worker” have ensured that Singaporeans can benefit fully from economic growth.

Singapore’s unique model of tripartism has created a “Singapore premium” – where companies and investors are prepared to pay more to take advantage of the country’s harmonious industrial relations and business-friendly environment.

But even as the ruling People’s Action Party government introduces policies to improve people’s lives, it also does its best to keep the cost of government “as low as possible”, said PM Lee.

He noted that while living standards have risen, so have Singaporeans’ expectations and aspirations.

“Although incomes have risen steadily year after year, many households still feel the pressures of the cost of living,” said PM Lee.

The government does its utmost to moderate these pressures on households by running a lean and efficient government, and by ensuring that essential public services – such as public transport, water, electricity and healthcare – are run efficiently and cost-effectively.

“By keeping government spending and taxes low, workers can enjoy the fruits of their own labour directly,” said PM Lee. “This is better than having to pay a big share of what you earn in taxes to provide supposedly ‘free’ services to the public.”

The government has also avoided putting the whole burden of public services on taxpayers, only requiring users to pay “reasonable charges” to use these services.

At the same time, it requires the operations to break even, to put pressure on operators to run efficiently and keep costs down. “This translates to cost savings for Singaporeans,” said PM Lee.

He also addressed the view that public service operators should not aim to earn a profit at all. This would be the wrong approach, he said, as it does not incentivise operators to run these services efficiently.

“It is better to let them earn a reasonable profit, so that they have the resources to reinvest to improve services, and the incentive to do so,” he added.

“Overall, this approach has worked well,” said PM Lee, and this strategy has moderated the cost of living for all households. But for those who still need extra help, the government has provided targeted and direct assistance in the form of cash or vouchers.

“This is much better than subsidising water or electricity across the board, as some countries do,” he said, adding that households which benefit the most from such across-the-board subsidies are usually the ones using the most water or electricity.

With cheap water and electricity, households also have no incentive to conserve as they do not bear the proper costs, said PM Lee.

“The government, and hence taxpayers, end up spending much more, but households who need the most help benefit much less,” he said. “That is why our strategy is the better one.”

NTUC’s progress

Separately, at the conference, NTUC secretary-general Ng Chee Meng gave an update of the union’s progress and key achievements.

In a report, he set out three areas in which NTUC is seeking to innovate to better serve its members and workers’ evolving needs, aspirations and concerns.

Firstly, NTUC will continue to innovate the structure of its trade unions to protect and advance the interests of all workers in wage negotiations, workplace matters and job security.

Second, it will refresh its membership model to meet members’ evolving needs. As at September, the union’s total membership reached a record high of 1,189,547.

Lastly, NTUC will focus on innovating its training model to help workers improve their employment and employability.