Gov’t has a case but why the contradictory message?

Gov’t has a case but why the contradictory message?
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The price of water must reflect its scarcity and must therefore be priced “fully”, the Minister for the Environment and Water Resources, Masagos Zulkifli, told Parliament on Tuesday.

Mr Masagos was replying to questions from Members of Parliament on the recent increase in the price of water for households and businesses.

The minister said “water is a strategic issue and a matter of national security for Singapore”, reiterating what Minister for National Development and Second Minister for Finance, Lawrence Wong, had said on 23 February.

“There are indeed concerns about our supply including the state of Linggiu reservoir,” Mr Wong said. “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.”

In his reply in Parliament, Mr Masagos took some time to explain the details of why it was necessary to up prices by 30%, including the increasing costs of treating effluent for NEWater.

You can read his explanation here.

“It is the job of my ministry and PUB to plan and build the infrastructure, which we will do, but it is only through right pricing that we can have everyone valuing water as a strategic resource and consciously conserving it,” he said.

While the minister insists that the price hike is to nudge consumers to “consciously conserve water”, the government handouts of subsidies seem to run counter to this.

In his reply to MPs who said the increase in price would affect lower-income households and smaller businesses, Mr Masagos played down the concerns.

According to the Straits Times, the minister in fact “stressed that for three quarters of the businesses here, the 30 per cent increase in water prices translate to an increase of less than S$25 a month in water bills.”

This would be about $0.83 a day.

And as for the households, with “the additional U-Save rebates, one- and two-room HDB households will also not experience any increase in their bills, while other HDB households will see water bills go up by between S$2 to S$11 a month.”

In effect, Mr Masagos is implying that the price hike is a mere drop in the well in the wider cost structure.

“Overall, water will still be affordable because it will remain at about 1 per cent of the household income,” he said.

How then, by the minister’s own dismissal that water price is a big portion of household income, even after the hike takes effect from July, would the message of conservation get through?

Is the minister himself not subverting his own argument – on the one hand, that the hike is to reflect the cost of water and for consumers to consciously conserve water; and on the other, to provide subsidies and utility vouchers to consumers to blunt the effect of the price increase?

As some have asked: why provide subsidies or utilities vouchers if the aim of increasing prices is to compel consumers to use less or conserve water?

Such seemingly contradictory messaging leads to distrust of the government’s real intent which, some suggest, is simply to add collect more funds to government coffers amid the economic slowdown.

This was what Workers’ Party MP, Leon Perera, had raised in his speech in Parliament.

“The timing of these price hikes seem more synchronised to the political cycle than to the economic cycle,” Mr Perera said, referring to recent increases in various charges, including gas, parking, diesel usage, and now water.

“Why introduce all these price hikes now at a time of economic fragility, when they could tip some SMEs 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?”

Mr Masagos did not seem to have replied to Mr Perera’s questions which, to many, are valid ones.

Why indeed raise the price of all these things at an uncertain time?

Having said that, we should also not dismiss the government’s case that treatment costs and the situation at the Linggiu reservoir are concerns, going forward.

But the government must do a better job of explaining the situation, instead of putting out what looks like contradictory messages.

Nonetheless, at the end of the day, whether prices are increased or not, we should all value and conserve water.