S&CC and water fee hikes – households hit with double whammy in 3 days

S&CC and water fee hikes – households hit with double whammy in 3 days
Share this article on:

Householders who are worried about the slowdown in the economy now have more to be concerned about – in the last 3 days, they have been hit with a double whammy of costs increases.

Come 1 June, they will have to pay higher service and conservancy charges (S&CC), and the following month will see them footing a higher water bill.

We will leave the water fee hike for another time. For now, we take a look at the rise in S&CC.

The hike in S&C was announced 3 days ago, on 17 February, by the 15 town councils run by the People’s Action Party (PAP). The 16th town council is managed by the opposition Workers’ Party, which has not announced any similar increases.

The last time such a hike was made was in 2014/15, involving 8 PAP town councils.

In a statement to the media about the latest round of change in fees, the town councils said the move will take place in 2 phases – one in June this year, and the second in the same month next year.

The first increase will range from S$0.50 to S$9 a month; while the second one will see an increase of S$0.50 to S$8 a month.

The statement said that the move was necessary to “keep up with rising costs associated with maintaining our estates.”

According to media reports, one of the reasons for the increase is cleaning costs. This make up about 20 per cent of the town councils’ annual expenditure. The town councils explained that cleaning companies needed to “spend more on mechanisation, training and progressive wages for workers.”

Unsurprisingly, many have criticised the move, and have questioned the town councils’ reasons.

For example, the town councils cite “progressive wages for workers” which has made it necessary to increase fees.

TODAY, 17 Feb 2017

From 2015, all “cleaning firms must pay cleaners minimum basic wages according to the jobs they do.”

The requirement would see cleaners’ pay rise from $850 to a minimum of $1,000.

The change, however, only affects cleaners who are Singapore citizens or Permanent Residents.

It is unclear how many of such workers are employed by the town councils, but PAP MP for Marine Parade Town Council, Lim Biow Chuan, was reported then to have dismissed any suggestions that the new law would affect town councils.

“Town councils have already adopted the progressive wage model,” Mr Lim said in 2015.

The PAP town councils, when asked about the new law, said that:

“Housing Board residents need not worry that higher pay for cleaners alone will lead to higher service and conservancy (S&C) charges.”

“Town councils say that higher cleaning costs on their own will not lead to higher fees, as cleaning charges make up only a fraction of estate maintenance costs,” the Straits Times said.

Straits Times, Jan 2014

So why are the town councils now citing “progressive wages for workers” as a reason for the hike in S&CC, if such costs “make up only a fraction of estate maintenance costs” which residents “need not worry” about?

It is perhaps better for the town councils themselves to explain this seeming contradiction.

There is also the question of why fee increases are now made virtually every year. In the last 5 years, there have been 4 increases, along with the ones in 2010 and 2012. Although the town councils say help will be rendered to those in need of it to pay their utilities bills, and with the government also providing rebates, questions still remain.

How much have costs gone up? Would the town councils be able to provide more details other than hoping the public will take whatever they say at face value?

This is not to deny that there has been an actual upward trend in maintenance and cleaning costs.

For example, the new rule rolled out in 2016 for town councils to set aside 14 per cent of their income for the lift replacement fund, on top of sinking funds and other commitments, has put a strain on town council finances. This is despite grants from the government which have not been raised for some time.

In 2010, chairman of the PAP, Khaw Boon Wan, revealed that the total balance in the PAP town councils’ sinking fund was S$2 billion.

In September 2016, Minister for National Development, Lawrence Wong, said that the sum is now half of that – S$1 billion.

“This may sound like a healthy amount, but it is still not sufficient to cover the cost of future lift replacements, which is estimated at almost $3 billion from now to 2035 for some 11,500 lifts across all HDB estates,” he said.

With ageing HDB flats, upgrading and maintenance are indeed issues which need to be addressed, and it is good that town councils are forward-looking and preparing for this.

But the question which needs to be asked is this: have government policies been thoroughly thought-through before implementation?

Has the new rule of requiring town councils to set aside 14 per cent of their income for the lift replacement programme, and the introduction of the progressive wage model for cleaners, inadvertently forced the town councils to raise S&CC?

These, together with the rise in other costs, mean households have been hit by more than a double whammy this time.