The Business Times

Get ready to fork out more for water

Lee U-Wen
Published Fri, Feb 24, 2017 · 09:50 PM

1. What was the most interesting thing that happened this week?

There was certainly enough going on in Singapore and around the region in the past few days to satisfy the appetites of even the most hardcore news junkies out there.

Many are still transfixed over the murder of North Korean leader Kim Jong Un's estranged half-brother, Kim Jong Nam, in Kuala Lumpur. The drama escalated this week when Malaysian police claimed that someone had tried to break into the morgue where the body is being held. There are lots of questions still unanswered and it will be fascinating to see how the investigations unfold.

History was made when Israel's Benjamin Netanyahu made a two-day official visit to Singapore, making him the first sitting Israeli prime minister to come here. His trip reciprocates Prime Minister Lee Hsien Loong's visit to Israel in April 2016.

However, the story that caught my attention the most this week came during the Budget 2017 speech in Parliament on Monday, when Finance Minister Heng Swee Keat announced that water prices in Singapore will go up by 30 per cent (including taxes).

This will be done in two phases, starting from July this year; the price rise is to ensure that Singapore has a continued supply of water for the future.

2. Why is this a big deal?

Any price increase, in this case for a basic necessity such as water, is hard to stomach, particularly during an economic downturn.

The reactions from various quarters started flying in as soon as Mr Heng finished this portion of his speech and the media began breaking the news online.

Companies, especially those in the hotel and F&B sectors, are now busy doing their sums on how much more it will add to their operations costs.

Every household in Singapore will be affected in some way too, although the government was quick to stress that measures will be put in place to help people, in particular the low-income group, cope with the increase in their utility bills.

But this may well be one price hike that indeed is "the right thing to do", to the extent that it spurs households - and all users - to be conservative-minded when using water.

3. Did we see it coming?

For many, the price increase came out of the blue. On hindsight, it shouldn't have been a complete surprise, given that it has been 17 years since water tariffs last went up. Prices for most things in Singapore usually don't stay stagnant for that long.

PUB, the national water agency, later explained that the cost of developing and operating Singapore's water supply system has more than doubled in 15 years. Back in 2000, it cost about S$500 million to run the system; in 2015, the sum had nearly tripled to S$1.3 billion.

4. Should anyone be concerned?

HDB households who are already struggling to cope with the rising costs of living will naturally be sweating the most, but the vast majority of them will get some financial help.

Those living in one- and two-room flats now spend about S$26 a month on water; their monthly bill will go up by S$9 when the full increase takes effect. They will benefit from S$10 in rebates to tide them through.

Residents in four-room flats can expect their monthly water bill to go up from S$42 to S$54. But with a S$7 rebate, this group should have a more manageable rise of S$5 a month.

5. What happens now?

We know that the hike will take place in two phases - from July 1 this year, and from July 1 in 2018. All eyes will also be on the upcoming Budget debate and Committee of Supply debates in Parliament, which will take place from Feb 28 to March 10. The water price increase will surely crop up as lawmakers press the relevant ministers for more clarity and assurance.


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