Cost of operating Singapore’s water system more than doubled from 2000 to 2015: PUB

Lianne Chia Channel NewsAsia 23 Feb 17;

SINGAPORE: In 2000, it cost half a billion dollars to operate Singapore’s water system. But by 2015, the amount had gone up to S$1.3 billion, national water agency PUB said on Thursday (Feb 23).

In response to queries from Channel NewsAsia, a PUB spokesperson said that the amount includes water treatment, reservoir operations, NEWater production, desalination, used water collection and treatment, and the maintenance of the islandwide network of water pipelines.

In this year’s Budget statement, Finance Minister Heng Swee Keat announced that water prices would 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.

In his speech, Mr Heng added that water prices need to reflect the rising costs associated with supplying water.

PUB said that this includes costs like chemicals, materials and manpower. As Singapore develops and operates its water supply system in an increasingly urbanised environment, more expensive methods of development are also needed, it added.

“For example, laying pipelines in built-up areas requires a more expensive method of pipe-jacking as compared to a conventional open cut method,” said PUB.

Furthermore, since the last water price revision in 2000, it has had to deal with rising resource costs and more expensive methods of development. Major investments were also made in water infrastructure.

PUB said it invested a total of about S$7 billion in water infrastructure from 2000 to 2015.

But in the next five years alone, from 2017 to 2021, its investment will be about S$4 billion.

“This is to meet growing demand and to boost the resilience of the water system, especially to face the challenges posed by climate change,” it said.

- CNA/lc

Operating cost of water system jumped S$0.8b in 15 years
Today Online 24 Feb 17;

SINGAPORE — It cost about S$1.3 billion to operate Singapore’s water system in 2015, compared with S$0.5 billion in 2000, national water agency PUB has disclosed.

Over those 15 years, it invested about S$7 billion in water infrastructure, and will pump in about S$4 billion over the next five years from 2017 to 2021 to boost the infrastructure and resilience of the water system to meet growing demand.

The agency shared these figures in response to TODAY’s queries on how it determined the 30 per cent hike in water price that was announced in the Budget statement on Monday.

The increase includes all the components of the total water price, namely the water tariff, the water conservation tax and used water charges.

PUB said that in 2015, the S$1.3 billion was spent on water treatment, reservoir operations, NEWater production, desalination, used water collection and treatment, and the maintenance of the island-wide network of water pipelines, among others.

“Over the last 17 years, costs have increased and adjustments are needed to reflect the latest costs of water supply. The increase in water price will also allow us to continue investing ahead of time so all of us can continue to enjoy a high quality and reliable water supply,” a PUB spokesperson said.

Water is priced to reflect the cost of water supply and the scarcity value of water, PUB said.

The total water price is pegged to the long-run marginal cost of water supply — or how much it costs to supply and convey the next drop of water, which is likely from desalination and NEWater.

Speaking at Channel NewsAsia’s Singapore Budget Forum yesterday, Minister for National Development Lawrence Wong said that he understands the public’s concerns over the price hike, but added that “there is never an ideal time” to raise prices. He highlighted that “water for us is a matter of national survival ... of strategic importance”.

Water prices will go up 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.

Mr Wong said the Government would give out Goods and Services Tax vouchers to help households offset the increases.

“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.


Never an ideal time for water price hike: Lawrence Wong
Channel NewsAsia 23 Feb 17;

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, which set a target to cut 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.”

- CNA/sl


Water price hike a key concern at post-Budget forum
FARIS MOKHTAR Today Online 24 Feb 17;

SINGAPORE — The impending increase in water prices was a key issue raised at a post-Budget forum yesterday, with participants voicing concerns over whether rebates would help to mitigate the higher costs, as well as the trickle-down effect that the hikes would have on prices of other goods, such as coffee and tea.

Attended by about 120 members of the public, the forum — organised by public feedback unit Reach — was the first such exercise held since the Budget was unveiled on Monday.

Since the Budget statement was delivered, REACH has received more than 1,000 items of feedback through its platforms, with the top three concerns raised being the water price hike, support for young families and the personal income tax rebate.

Taking the first three questions from the participants who touched on the water price hike, before the session was closed to the media, Senior Minister of State for Finance and Law Indranee Rajah, who chaired the session, reassured them that the U-Save (Utilities-Save) rebates, which the Government will be giving out, would lessen the cost burden on households.

She noted that those living in one- and two-room flats will not, on average, see any increase in their monthly water bills, while families staying in three-room flats and above will see, on average, an increase of about S$2 to S$11 in their monthly water charges.

Announcing the Budget on Monday, Finance Minister Heng Swee Keat said water prices will rise by 30 per cent from July 2018, with the first of two rounds of water price hikes to kick in this July.

Addressing the trickle-down effect that the water price increase would have on the cost of other goods such as coffee and tea, Ms Indranee stressed that the cost of such goods “should not and ought not” go up.

She noted that, currently, firms are charged S$2.15 per cubic litre for the portable water that they use, and after the full water price hike kicks in next year, this will go up to S$2.74 cents, an increase of 59 cents. This, she added, would have very minimal impact on the price of coffee and tea.

Speaking to reporters, Ms Indranee said that there is a need to price water based on market realities, to take into account the cost of producing water, such as manpower and infrastructure cost.

“When you get the right pricing and you just charge that completely down the line, obviously there will be people who are affected and who may not be able to afford it,” said Ms Indranee.

“So, what you do is you step in, you intervene and you assist, which we have in this case done with the U-Save rebates.”

However, some participants, such as 65-year-old retiree Teo Yeok Tee maintained that it is unfair to impose an increase across the board on the basis of wanting to encourage water conservation because there are households which do conserve water.

Others, such as Madam Chen Li Ying, 49, agreed with the move which would help to ensure a sustainable supply of water.

“But I think the Government could spread out the increase over three years instead of two years. This will really soften the blow for households, especially those struggling financially,” she added.


Raise water prices by as much as 100% to reflect production cost: Economist
Liyana Othman Channel NewsAsia 25 Feb 17;

SINGAPORE: Faced with the news that the price of water will increase by 30 per cent over the next two years, Professor Ng Yew-Kwang is of the opinion that the hike should be even larger, to reflect the cost of water production.

"In my view, it's too little," he told Channel NewsAsia on Friday (Feb 24). "From an overall economy point of view, we can increase it even more.

"I would prefer at least 50 per cent - if not (a) 100 per cent (hike)," said the Nanyang Technological University economics professor.

Prof Ng pointed out that water prices have not been raised since 2000 – nearly two decades ago. He added that it is also costly to produce water - and how much the public pays has to reflect this.

National water agency PUB earlier revealed that the cost of operating the country's water system has more than doubled in that time: It cost half a billion dollars to operate Singapore's water system in 2000, and the amount had gone up to S$1.3 billion by 2015.

The Government also said it would invest more in water infrastructure to meet growing demand and boost Singapore's water resilience, especially in the face of climate change.

Following the hike, Singapore's water prices will be on par with European countries like Germany and Denmark, said Prof Ng.

"If you compare internationally, to other Asian cities like Taipei, Hong Kong and Beijing, Singapore's prices are higher. But if you take into account the income level, then it's not high.

"If you compare it with other European countries, their prices are much higher."

Prof Ng said that in most countries, water prices tend to be too low, rather than too high, as the public thinks water, which is essential to life, should be free.

"If consumers pay less, then the government will have to make up the difference. Then that means the government has to collect taxes from other sources … That has a disincentive effect.

"As long as the price of water is not more than the price of production, increasing the price towards cost of production will increase efficiency by encouraging consumers to save appropriately."

Water prices will be raised in two phases, first in July and again next year.

But Prof Ng said that increasing the price at once, instead of in phases, would be more effective in changing habits.

"If you increase it in two steps, then each step is not very significant," he said. "People don't even notice it and will forget about it soon. But if we have a one-step significant increase, then it has a shock effect.

"If you want to do it in steps, then it should have been increased 10, five years ago. In my view, it's already too late because popularly, water is perceived to have low prices and hence maybe the Government was hesitant to increase the prices to make the public happy.

"But from a purely economic point of view, water prices should have been increased many years ago."

Industries that use a lot of water in their operations - like manufacturing and construction – are expected to feel the pinch.

"What businesses are really feeling is not just about the water, but the fact that costs are high and that this is an added factor to increase in costs," said Mr Kurt Wee, president of the Association of Small and Medium Enterprises.

He added that the price hike is expected to be passed on to consumers.

"Businesses will price up the costs of their goods and services accordingly. There's no doubt about that because there's no way that businesses can keep absorbing costs.

"And we're in the climate where demand is falling; businesses are experiencing a shrinkage of demand. So I'm quite sure it will be passed down to the customers."

However, businesses like food court operator Kopitiam will be absorbing the added costs. Water bills for its stall holders are projected to increase by S$30 to S$60.

The company will also encourage stall holders to conserve water. "We are thinking of installing a prepaid meter where they can monitor their water usage, so they are more conscious of how much water they are using," said Mr Vincent Cheong, corporate communications manager at Kopitiam.

He added that the company has urged stall holders not to increase the price of food and drinks.

- CNA/dt


Budget 2017's water price hike: What you're not hearing about the 30% increase
Peter Lin AsiaOne 24 Feb 17;

At the Budget 2017 announcement, there were many important points raised by Finance Minister Heng Swee Keat, and we'd like to talk about as many of them as possible. But Singaporeans seemed fixated on just one issue - the price of water.

And it's not surprising, when you think about it. Just like water makes up 70 per cent of a human body, many Singaporeans think "the 70 per cent" are to blame for this newly announced price increase of 30 per cent.

30%! So much!

Knowing that the increase would be significant, Environment Minister Masagos tried to cushion the blow by announcing much earlier in the month that there would be a water price increase. But even then, I don't think anyone expected such a significant increase.

It was only at Budget 2017 where the actual specifics were revealed. Minister Heng, in his Budget speech, tried to defend the increase by providing four main points: that production of water through desalination and NEWater plants were costly, the last time they increased the price of water was in 2000, the increase would be phased in slowly, and lastly, that households will be given rebates to defray the increased costs.

How is water priced in Singapore?

Assuming you're not one of the three people who look at their utilities bill regularly, here's the surprisingly complicated water pricing structure in Singapore.

Firstly, there's the basic Water Tariff, which for households is currently $1.17 per cubic metre before GST if you use less than 40 cubic metres per month (i.e. anyone who doesn't live in a bungalow), and $1.40 per cubic metre if you use more than 40 cubic metres of water a month (i.e. people who can afford it). The Water Tariff makes up the bulk of your water cost each month.

Secondly, there's a Waterborne Fee and the Sanitary Appliance Fee. The Waterborne Fee is a variable fee and is currently charged $0.28 per cubic metre based on your usage. The Sanitary Appliance Fee is a fixed fee charged at a flat rate of $2.80 per fitting per month based on how many toilet bowls your property has. These two charges help offset the cost of maintaining, operating and expanding the country's sewage systems.

Still with me? Good.

The third and final fee is the Water Conservation Tax. The government introduced this tax back in 1991 and set it at 30 per cent of the Water Tariff if you use 40 cubic metres of water or less each month, or 45 per cent of the Water Tariff if you use more than 40 cubic metres of water each month. It doesn't represent the cost of producing water, it's just a way to encourage you to conserve it.

So how does the announced increase in water price affect these charges?

The main point is that the increase affects ALL the various charges. What's interesting is how they've increased at different rates. Most households in Singapore use 40 cubic metres of water or less each month. The Water Tariff, for us, will only increase from $1.17 per cubic metre of water to $1.19 later this year, to $1.21 per cubic metre from July 2018. That's just an increase in 4 cents, or 3.4 per cent of the current Water Tariff.

Over the same period, our Water Conservation Tax will increase from 30 per cent to 50 per cent of the Water Tariff, or an increase of 26 cents per cubic metre of water, or a 76.4 per cent increase of the current Water Conservation Tax. While this seems like a significant amount, it's in line with the Government's consistent call in the past 25 years to conserve water.

However, what is very curious is the decision to merge the Waterborne Fee with the Sanitary Appliance Fee. The official reason is to be "more reflective of the volume of used water discharged". In other words, just because your household has three toilet bowls doesn't mean you go to the toilet three times more than the household with only one toilet bowl. That seems fair.

What doesn't is how the Waterborne Fee has now jumped from $0.28 per cubic metre of water to $0.92 per cubic metre of water over the next two years. That's a 64 cent increase per cubic metre of water, or a seeming 228 per cent increase!

Thanks to PUB here's a quick table of the new water price changes:

And yes, these values are pre-GST.

That's not how math works

Before you jump on the comments box and start flaming me for being a sensationalist troll, I know that I haven't included the Sanitary Appliance Fee. But let's look at a scenario - an HDB 5-room flat that, according to Singapore Power's website, uses just 17.5 cubic metres of water a month. Let's assume there are two toilet bowls in the flat.

The Waterborne Fee would currently be $4.90, and the Sanitary Appliance Fee would be 2 x $2.80 = $5.60, for a total of $10.50.

Come July 2018, the Waterborne Fee (which includes the Sanitary Appliance Fee) for the same amount of water usage would be $16.10. Even though it's not a 228 per cent increase, it's still a 53.3 per cent increase, and that's still pretty alarming.

But all that being said, let's just put things in perspective

Assume you live in a 5-room HDB flat that uses an average of 17.5 cubic metres of water a month. Currently, you'll be paying $37.10 a month.

By July this year, assuming the same water usage, water will cost you $41.85 a month. By July 2018, assuming the same water usage, it'll set you back $47.95 a month.

Yes, that's almost a 30 per cent increase, but in real terms, it's only $10.85 more a month by 2018. It's not that much more.

All in all, over the next two years, assuming your water usage stays constant, you'll be paying $1,012.50 for water, about $122.10 more than you normally would. But here's the thing, as the owner of a 5-room flat - you'll also be getting up to $260 in U-Save Rebates during that time, so there's still a net benefit from the government.

The water price increase seems to be mainly to discourage businesses from wasting water, and with the U-Save rebates, is designed not to have a major impact on Singaporeans. But since this is just one of many small cost increases in Singapore over the past couple of months, one is led to wonder why our government seems determined to give us so many bitter pills to swallow.


PUB makes a profit thanks only to govt grants: Maliki
Pearl Lee, The Straits Times AsiaOne 27 Feb 17;

National water agency PUB made a profit of more than $160 million last year only because it received about $200 million in grants.

Without the government grants, PUB would have been operating at a deficit, said Senior Minister of State for Defence and Foreign Affairs Maliki Osman yesterday.

The East Coast GRC MP was responding to a participant who asked about PUB's profitability at a post-Budget dialogue with about 100 Malay residents.

On Friday, socio-political site States Times Review published an article stating that PUB is going ahead with a 30 per cent increase in water prices despite posting a profit of $166 million last year.

But Dr Maliki told residents the profit must be seen in the context of the subsidy that PUB received from the Government.

As with previous forums, the increase in water prices was a top concern for residents. Some were worried about its impact on consumer goods and the prices of food and drinks sold in coffee shops.

Water prices will increase by 30 per cent in two phases from July butthose living in public flats will receive rebates to help them cope.

Dr Maliki yesterday explained to residents that 1,000 litres of water are now sold at $2.15. With the hike, the price will go up to $2.74. Assuming that amount of water can make 5,000 cups of coffee, the increase in price for one cup of coffee would work out to be a fraction of a cent.

Read also: Singapore to raise water price by 30 per cent over two years

He told residents that the authorities cannot stop coffee shops and hawker centres from raising prices, if the establishments can justify the increase. But the price increase should not be solely due to the hike in water prices, he said.

He also urged residents to inform the authorities if they find cases of unjustified price increases.

Mr Zahri Ahmad, a 55-year-old Simei resident, said the Housing Board could install sensor taps in homes as part of its Enhancement for Active Seniors programme, as elderly people with dementia may forget to switch off the taps.

Dr Maliki said he would relay the suggestion to HDB but noted that residents could also install thimbles in their taps to save water.

Other topics discussed include the higher housing rebates, the economy, jobs and community services such as aid for disabled people.

Marine and offshore technology student Amirul Mustaqim Irwan, 23, said he is concerned about the disruption of jobs as manual tasks in shipyards are being replaced by automation.

The final-year Ngee Ann Polytechnic student said: "I've been checking out several training schemes but I'm also keeping my options open. I may enter another field altogether if the prospects are better."

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