Budget 2017: Water prices to rise by 30% over 2 years

Monica Kotwani Channel NewsAsia 20 Feb 17;

SINGAPORE: Water prices will increase by 30 per cent in two phases over the next two years, starting from Jul 1 this year. This is the first time in almost 20 years that the Government is revising water prices.

Finance Minister Heng Swee Keat announced this in his Budget address on Monday (Feb 20), almost two weeks after Environment and Water Resources Minister Masagos Zulkifli indicated the Government’s intention to do so.

In his speech, Mr Heng said prices need to reflect the rising costs associated with supplying water. He said the cost of producing water has increased with the Government building more desalination and NEWater plants, as well as laying deeper pipes amid an urbanised environment.

Mr Heng said that such costs are necessary investments. “Water sufficiency is a matter of national survival,” he said. “Imported water and local catchment water currently meet more than half of our water demand, but both sources depend heavily on weather conditions.”

Earlier this year, there was a fear that Singapore’s supply of water from the Johor River could be significantly affected if 2017 turned out to be a dry year. The Linggiu Reservoir, which is a critical factor in Singapore being able to abstract water from the Johor River, saw historically low water levels in 2016.

Mr Heng said the increase in water prices will be seen through the restructuring of the Sanitary Appliance Fee (SAF) and the Waterborne Fee (WBF) into a single volume-based fee. Providing more details, national water agency PUB said these two fees currently go towards meeting the cost of treating used water and maintaining the used water network. The single volume-based fee is a better reflection of the volume of used water discharged, it said.

INCREASES TO WATERBORNE FEE, WATER TARIFF AND WATER CONSERVATION TAX

PUB said the WBF fee will increase to 92 cents per cubic metre for households that consume 40 cubic metres of water or less each month, from July 2018. A second tier of the fee will be introduced at a rate of S$1.18 per cubic metre for households which use more than 40 cubic metres. PUB said this is to discourage households from using excessive amounts of water.

The potable water tariff and the water conservation tax will also be adjusted. For example, the tariff for households that consume more than 40 cubic metres of water a month will eventually increase to S$1.52 from July 2018, up from the current S$1.40. Water conservation tax, which is based on the water tariff, will go up to 65 per cent from July 2018, up from the current 45 per cent, for households that consume more than 40 cubic metres of water each month.

The above changes will see the price of water going up by 30 per cent, PUB said.

Mr Heng, however, said that for 75 per cent of households, the increase in monthly water bills will be less than S$18 from July 2018. For three-quarters of businesses, the increase will be less than S$25 a month.

The Finance Minister added that the Government will introduce measures to help lower- and middle-class income households offset the increase.

These include an increase in the GST voucher - Utilities-Save (U-Save) rebate to offset utilities bills; a one-off GST Voucher - Cash Special Payment of up to S$200 for eligible recipients; an extension of the rebate for service and conservancy charges (S&CC) and a personal income tax rebate of 20 per cent, capped at S$500.

WATER PRICES FOR NON-DOMESTIC SECTOR

Water prices for the non-domestic sector, which makes up 55 per cent of total demand, will also be revised. PUB said that from July 2018, the water tariff for such consumers using potable water will be increased to S$1.21 per cubic metre, up from the current S$1.17. The water conservation tax will increase to 50 per cent of the water tariff, up from the current 30 per cent. PUB said the adjustments will take place in phases over two years.

Mr Heng said a water conservation tax on the sector’s use of NEWater will also be introduced. This will be at 10 per cent of the increased NEWater tariff, starting from July this year.

- CNA/mo


Water prices to go up by 30% by July 2018
NEO CHAI CHIN Today Online 20 Feb 17;

SINGAPORE — Turning on the tap will be more costly from July, when the first of two rounds of water price hikes takes effect. Water prices will go up a total of 30 per cent by July next year, said Finance Minister Heng Swee Keat in his Budget speech on Monday (Feb 20).

For the average household living in a public flat, this will mean forking out roughly S$9 to S$15 more a month before the Government’s additional U-Save vouchers.

After the additional U-Save rebates, one- to two-room flat households would see their water bill go down by S$1, while an executive flat household would see a smaller increase of about S$11 in its water bill.

Three- to five-room flats will likely fork out S$2 to S$8 more a month. Currently, Housing and Development Board households pay about S$26 to S$49 a month for water.

Earlier this month, Minister for the Environment and Water Resources Masagos Zulkifli had declared water prices would go up after remaining unchanged for 17 years. The scarce resource has been underpriced and the increases are due to higher operational costs and greater investments in water infrastructure.

Singapore’s water comes from four “national taps”. About half is imported from Malaysia, and the rest is from local catchment areas, NEWater (treated used water) and desalination. But Singapore has had dry weather and Johor has experienced water supply issues in recent years.

Water sufficiency is a matter of national survival, said Mr Heng. “We have priced water to reflect the higher costs of desalination and NEWater production because every additional drop of water has to come from these two sources,” he said. “The cost of water production and transmission has increased as we build more desalination and NEWater plants, and lay deeper pipes through an urbanised environment… We need to update our water prices to reflect the latest costs of water supply.”

The increase consists of higher water tariffs and water conservation tax, as well as restructured waterborne and sanitary appliance fees for used water. The sanitary appliance fee — presently S$2.80 per fitting — will be combined into the waterborne fee, which goes towards treating used water. From July, the waterborne fee will be 78 cents per cubic metre for households that use less water, and the fee will go up to 92 cents from July next year. The waterborne fee will be over S$1 per cubic metre for larger domestic consumers who use more than 40 cubic metres per month.

The increase in prices is in line with what water policy experts like Professor Asit Biswas and Dr Cecilia Tortajada have proposed in recent years. In their latest commentary on Monday, they said water should be priced to provide a sustainable financial model, while targeted subsidies should be given to poorer households.

Consumers like Serene Choo, 33, said the increase would add to household expenditure. “I think the price increase is inevitable and is linked to economic and environmental factors,” said the mother of two. Her water bill, at around S$17 per month, is already below the national average for a four-room household and Mrs Choo said cutting down would be tough as daily activities such as cooking, washing and bathing still need to carry on.

For non-domestic users such as building owners and industry, water prices will increase by 27 per cent. From S$2.15 per cubic metre, the price will hit S$2.74 per cubic metre from July next year — the same price as smaller domestic users. Those that use NEWater will have a new water conservation tax imposed, comprising 10 per cent of NEWater tariffs.

Mr Lee Soon Kiat, executive committee member of the Singapore Semiconductor Industry Association, hoped the government could provide more one-time grants for companies to explore water recycling and conservation. Wafer fabrication, semiconductor and electronics firms make up 13 per cent of non-domestic water demand and while the industry understands why the Government is making water more costly, it is also concerned about losing competitiveness to other countries, he said.

Property firm CDL’s chief sustainability officer Esther An said the tariff hikes are expected to increase operating costs of the properties it manages, which will give “additional impetus” to water conservation efforts. CDL will step up its engagements of tenants in this regard, she said.

About 25 per cent of water usage at its buildings is currently NEWater, which has helped the company to achieve savings as NEWater is cheaper than potable water. Its measures to save water include water-efficient fittings and rainwater harvesting systems at its developments and the deployment of grey water membrane filtration plants at worksites to recycle construction water for cleaning and desilting, added Ms An.

Singapore consumes about 430 million gallons of water per day, with homes consuming 45 per cent and the non-domestic sector taking up the rest. By 2060, total water demand could double, with the non-domestic sector accounting for about 70 per cent. By then, NEWater and desalination will meet up to 85 per cent of Singapore’s future water demand.

The average person uses about 151 litres of water a day and PUB aims to cut consumption to 140 litres per day by 2030. ADDITIONAL REPORTING BY SIAU MING EN


Need to 'bite the bullet' in raising water prices: Indranee Rajah
Lianne Chia Channel NewsAsia 21 Feb 17;

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 people can 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.”

HELP FOR BUSINESSES; CHANGING MINDSETS AMONG OTHER TOPICS DISCUSSED

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’.”


Businesses say they will take water price hike in their stride
NEO CHAI CHIN and JEONG HONGBIN Today Online 22 Feb 17;

SINGAPORE — When Finance Minister Heng Swee Keat announced on Monday (Feb 20) that water prices would go up by 30 per cent, the news did not give laundromat chain founder Tan Tiong Peng a “heart attack” — thanks to his decision to invest in water-efficient machines when he started the business in 2010.

Like other businesses interviewed on Tuesday, Mr Tan felt the quantum of increase was “big” and would add to the cost of operations. But despite higher water prices, the businesses said workers’ salaries, electricity and rental costs form a much greater bulk of their costs.

If they do pass on the costs to customers, water prices would not be the sole factor, some said.

“It would be to defray escalating costs of rental, workers’ salaries, gas and water,” said Mr Tan, whose Wonder Wash and SQ Laundromat brands have close to 70 self-service outlets including franchises.

Water-efficient washing machines use up to 40 per cent less water than ordinary machines, and Mr Tan said water currently amounts to about 2.5 per cent of his company’s revenue. In contrast, rentals amount to 40 to 50 per cent of revenue.

“It didn’t give me a heart attack when the minister announced it. If it was for rentals, I might have (had one),” quipped Mr Tan.

He added that he “fully understood the rationale”. In his Budget statement, Mr Heng had said water sufficiency is a matter of national survival and prices have to reflect the fact that Singapore is deriving more of its supply from NEWater and desalinated water.

Water prices will go up by 30 per cent for domestic users by July next year, and a partial increase will take effect on July 1 this year. From S$2.10 per cubic metre, domestic users will pay S$2.39 from July 1, and S$2.74 a year later. Households that use more than 40 cubic metres per month will pay more.

The average Housing and Development Board household will pay about S$1 less to S$11 more per month after additional U-Save rebates.

For non-domestic users, prices will go up by 27 per cent, from S$2.15 per cubic metre to S$2.74 next July.

For Laundry Loft director Kevin Soh, water makes up about 10 per cent of operating costs but he has no plans at the moment to pass the increase on to customers.

The shop opened last March at Big Box in Jurong East and Mr Soh said he began exploring ways to optimise the use of gas for the water heater late last year, after realising it was boiling water unnecessarily at times. He has identified a solution and will be modifying the system soon. “We hope to cut gas costs by 20 to 30 per cent,” said Mr Soh.

Other businesses are hoping for enough rain and pressing on with efforts to save water.

A spokesperson from Island Landscape and Nursery said it collects rainwater in a pond, which it uses to water the plants. Water is needed for daily use but forms a smaller part of its costs than labour and electricity, she said.

Royal Plaza on Scotts encourages guests to re-use towels and linen if they are staying at the hotel for more than a night. It signed up last year for a water efficiency management plan by national water agency PUB. Sub-meters have been installed in various areas to monitor water usage and checks are done to ensure there is no leakage.

The hotel cut water usage by 13 per cent last year compared to 2015, said general manager Patrick Fiat. The 390 cubic metres of water consumed daily includes potable water for guests and NEWater for its plantroom.

“The higher cost of operations may lead to a price adjustment. However, the impact will not be immediate as price positioning is dependent on a variety of factors such as the market environment and economy,” said Mr Fiat.

Hawkers told TODAY they would try to cut usage by not leaving taps running and by reusing water to clean dirty floors, but some felt it was not possible.

“We don’t think we’ll be able to save a lot of water,” said Adam Road food centre Western food stall worker Lim Siew Leng. “Everything we need to wash…so we would have to raise the price if necessary.”

Domestic users also said they would try to save water. Manager Betty Lim, 34, whose household consists of eight adults and three children, said she would encourage the children not to take long showers, and might switch to more water-efficient taps and washing machine.

Mother-of-two Wyoen Yin, 37, said she would use water from the washing machine to clean the toilet or to wash the car.

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