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HomesingaporeTiered pricing for utilities, nationalising public transport among WP’s proposals in parliament...

Tiered pricing for utilities, nationalising public transport among WP’s proposals in parliament to ease costs of living

SINGAPORE: Members of Parliament (MPs) on Tuesday (Nov 7) debated for over seven hours on how to ease cost-of-living pressures on Singaporeans in areas such as utilities, transportation and housing, before the House eventually approved an amended motion on the issue.

The debate had arisen from the original motion, filed by Leader of the Opposition Pritam Singh and his Workers’ Party (WP) colleague Louis Chua, that read: “That this House calls on the government to review its policies so as to lower cost of living pressures on Singaporeans and their families”.

MP Liang Eng Hwa (PAP-Bukit Panjang) proposed amendments to the motion to read as follows: “That this House acknowledges that cost of living is a global concern, and calls on the government to continue pursuing policies that together lower cost of living pressures on Singaporeans and their families, without undermining our fiscal sustainability and burdening future generations of Singaporeans.”

While WP MPs as well as Non-Constituency MPs (NCMP) from the Progress Singapore Party (PSP) accepted the third portion of the amendment on fiscal sustainability, they rejected the first two portions.

Mr Singh, who is also WP chief, acknowledged the various measures implemented by the government, including rebates and hand-outs, to help Singaporeans deal with rising costs. 

However, he reiterated that his party disagrees with the continuation of the status quo as the word “continue” might suggest, and urged the government to review its policies as his party proposed various “structural changes”, which all eight WP MPs took turns to raise in Parliament.

A total of 20 MPs — including two political office holders, both NCMPs from PSP and a Nominated MP — spoke during the debate from about 2.15pm to 9.45pm.

Here are some of the key recommendations raised by WP – spanning areas such as utilities, healthcare, public and private transport as well as housing – and the government’s responses to them:

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REVIEW WATER, ELECTRICITY TARIFF STRUCTURE

Mr Singh urged the government to study introducing more tiers in water tariffs and a graduated water conservation tax regime, in order to better reflect water usage, incentivise water conservation and lower costs for households.

This comes after the government announced an upcoming hike of 18.2 per cent in household water prices in two phases, starting from next April.

Water prices comprise three components — tariff, conservation tax and waterborne tax — and rates are divided into two tiers based on consumption: A lower rate for usage of 40 cubic metres and below, and a higher rate for consumption above 40 cubic metres.

Mr Singh suggested:

A five-tier tariff structure reflecting water consumption of 0 to 10, 10 to 20, 20 to 30, 30 to 40 and over 40 cubic metres, noting that a three-tier system was implemented previously in SingaporeA graduated water conservation tax regime from 30 per cent for those using 10 cubic metres of water and lower, up to 60 per cent for those using the highest tier of water

In the same vein, MP Sylvia Lim (WP-Aljunied) suggested introducing tiered pricing for electricity tariffs.

Ms Lim quoted a World Bank Study of 60 countries that found using tiered pricing made a material effect on affordability.

She also suggested having lower electricity rates during non-peak hours to discourage usage during peak hours, an approach called time-of-use pricing.

“It is well known that a key driver of the costs of producing electricity is not the total load, but the peak hour load,” she said.

She added that such an approach has already been done for business consumers, and a similar one for households called the Residential Demand Response programme will be piloted here in the second half of next year.

Government’s response: Fully priced, but targeted help

Acting Minister for Transport Chee Hong Tat said that given the importance of water security to Singapore’s survival, “we must right-price water to reflect its scarcity” and encourage sustainable, prudent use.

“This means the same rate is paid by everyone, from the very first drop used by the household, so that all users take into account the scarcity value of water,” he said.

He said that 96 per cent of users already use less than 40 cubic metres of water.

“Having additional tiers below 40 cubic metres would mean that all households, rich or poor, pay a water price lower than its scarcity value for the first block of consumption,” said Mr Chee, who is also Senior Minister of State for Finance.

Mr Chee said that instead, the government prices water fully, before offering U-Save rebates to help households that need it the most. For industry users, the government instead works with them to improve efficiency in their water usage.

NCMP Leong Mun Wai (PSP) asked if the government can consider charging higher tariffs for large consumers of water such as industrial users so that they can foot the bulk of the rising cost of water production instead of the average Singaporeans.

Mr Chee reiterated the government’s current approach on targeted rebates for households, which do not apply to industrial users.

On electricity tariff, Mr Chee said that “the same rationale applies”, namely to reflect the cost of producing electricity fully and then providing targeted rebates.

Mr Chee said that the government agrees with Ms Lim’s second suggestion of time-of-use pricing, which is why the pilot will be launched next year.

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NATIONALISING PUBLIC TRANSPORT, REJIG COE SYSTEM

MP Gerald Giam (WP-Aljunied) noted that the public transport model is a hybrid of government ownership over assets and operating contracts for services provided by public transport operator companies.

This model, he argued, gives rise to inefficiencies and additional costs. Instead, he suggested revisiting WP’s National Transport Corporation idea first mooted in 2006.

He argued that the proposal would yield economies of scale, while substantial profits that typically go to operators and shareholders can be redirected to commuters instead.

This would entail a publicly-owned, non-profit entity overseeing the planning and operation of all bus and rail services here. Instead of being driven by profits, service standards of this corporation will be improved through the setting of stringent key performance indicators, he said.

MP Jamus Lim (WP-Sengkang) said that the degree of the government’s cut-and-fill approach to smoothen the supply of Certificates of Entitlement (COEs) for cars is not enough to “move the needle”.

He suggested relooking how COE categories are segmented, and hiving off those for private-hire cars from privately owned cars.

NCMP Hazel Poa (PSP) also suggested looking into a point-based system to give an advantage to households that have a higher need for a car to own one – as opposed to just being dictated by who can afford sky-high COEs.

Government response: Nationalisation not “guarantee” of better system

On the calls to nationalise the public transport system, Mr Chee said that Singapore does enjoy a well-functioning public transport system “overall”, with public transport expenditure as a percentage of household income declining over the years.

While there are areas of improvements, “nationalising is not an assurance of guarantee” of better outcomes for commuters, said Mr Chee.

Overseas examples such as in the old Soviet Union have shown that using key performance indicators may not work and is not a substitute for the profit motive and competition under Singapore’s model to help spur transport operators to continuously improve and boost their productivity.

On Ms Poa’s suggestion of a point-based system to give more advantage for families to own cars, he said that while he understands where she was coming from, “it is not so simple in practice”.

He cited how there are many families with dependents such as a young child or an elderly parent and “it will be very challenging to determine who is more deserving of a car” given their their different circumstances and needs.

Instead, the government makes mass public transport affordable and accessible, and complements this with other transport options to meet the differing needs of Singaporeans.

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MAKING HOUSING MORE AFFORDABLE

MP Louis Chua (WP-Sengkang) argued that housing affordability remains a challenge due to increases in Housing and Development Board (HDB) resale prices despite additional cooling measures such as tighter housing loan criteria introduced in September last year.

Housing affordability should also take in the concerns of those who are renting from the open market, Mr Chua added, as increases in rent prices would affect groups such as young Singaporeans who have not been able to purchase a flat but may need their own space. 

He argued for an increase in supply for both the purchase and rental market.

Government’s response: Supply is catching up

Senior Minister of State for National Development Sim Ann said that the government has broadly maintained measures of public housing affordability, while addressing three main imbalances that have affected recent housing price movements: The delay of the HDB building programme in the last three years due to the COVID-19 pandemic, a significant rise in HDB resale prices, and the pricing of Build-to-Order (BTO) flats in mature estates. 

Ms Sim said that HDB has completed close to 75 per cent of projects delayed by the pandemic, and the anticipated catch-up in BTO supply would help to moderate demand for resale units. 

On boosting supply of public rental flats, Ms Sim said that most of the younger Singaporeans the government has engaged have indicated a preference to own homes rather than to rent. 

To meet this “strong desire for home ownership” in Singaporeans, Ms Sim said that building HDB flats for sale would be a priority, while public rental options will continue to be available for those unable to purchase a home.

Ms Sim said that HDB is “already doing all it can on the supply side” and has activated more levers to manage demand, such as by prioritising BTO flats for young married couples. 

GOVERNMENT NOT “PROFIT SEEKING”: CHEE HONG TAT

Mr Chee and Mr Leong also crossed swords at one point in the debate.

Mr Leong said the government is “profit seeking” and uses a “market model” in implementing its policies, while the opposition parties bring feedback from the ground on “the social aspects” of policies.

Mr Chee rejected this characterisation, saying that it was “uncalled for”. He cited the example of how the government greatly subsidises public transport operations, and asked the NCMP to withdraw his statement.

After Mr Leong declined to do so, Mr Chee reiterated that the social aspect of policies is “very much top of mind” for the government as can be seen in past Budgets.

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WIDER MEASURES ENSURING “SUSTAINABLE” HELP

During the debate, Mr Leong proposed an “integrated” relief package which, among others, includes reducing the Goods and Services Tax (GST) to 7 per cent and introducing a minimum living wage with a take-home component of S$1,800.

Similarly, Mr Chua urged the government to defer the GST hike next year, adding that even a delay of a year would be helpful, while the remaining WP MPs also put forward proposals aimed at addressing different costs.

MP Dennis Tan (WP-Hougang) spoke about beefing up financial assistance for targetted groups, and improving means testing for such subsidies.

MP Faisal Manap (WP-Aljunied) called for a more holistic way of assessing the effectiveness of Singapore’s social safety net while MP He Ting Ru (WP-Sengkang) suggested improving measures to rein in the costs of maintaining healthy living, including food.

On calls to delay the GST hike, MP Sitoh Yih Pin (PAP-Potong Pasir) said: “Honestly, Mr Speaker, I think the opposition MPs have been milking the GST cow for a very long time.

“So maybe, I just want to say if you really must milk something, go and milk another cow,” he added. 

Meanwhile, other PAP backbenchers like Tin Pei Ling (MacPherson) and Saktiandi Supaat (Bishan-Toa Payoh) shared anecdotes about how their residents benefited from the slew of existing measures from the government, while others like MP Yeo Wan Ling (PAP-Pasir Ris-Punggol) highlighted how Singaporeans have stepped forward to help fellow citizens to complement government’s assistance, and how this should be encouraged.

In his speech, Mr Chee said that while the increasing cost of living affects everyone globally, Singapore has been affected to a lesser degree than some countries, given the wider approach that the government has taken to cushion global inflation pressures.

These include tightening the monetary policy and strengthening the Singapore dollar to contain imported inflation, as well as keeping the economy competitive to create good jobs, which in turn would fuel wage growth in the long run.

He acknowledged that regardless of these measures, Singaporeans still feel the pinch of rising costs, and the nation has to brace for future uncertainties in the external environment going forward.

“But what is clear is this: The government understands the concerns of Singaporeans, and we stand ready to support Singaporeans where needed,” he said.

This article was originally published in TODAY.

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