Why is hike in water price such a hot issue?

First, water affects EVERY single one living in Singapore from individuals in the households to coffee shop owners and to businesses trying to fight business cost increases.

Second, the quantum of price increase is 30% in two phases as the headline number provided in the main Budget speech. More details were provided in the Annex of the Budget Speech but were not elaborated upon. To many people including businesses, 30% jump is hard to stomach after 17 years of no increase.

Third, if water is a scarce resource and of national security and the idea is to get consumers to conserve water usage, there are other ways to achieve besides water price increase. Why increase water prices and then offer U-Save subsidies to offset price increases of consumers staying in HDB flats (including all flat types up to Executive flats)? Isn’t that defeating the purpose?

Fourth, if cost of production of water has increased over time with new ways of processing water like NEWater and desalination, water tariff can gradually increase over time much like the adjustable electricity tariff and not as a lump sum at one go.

Water Conservation Tax

There is this element known as Water Conservation Tax in total water bill. Currently, it is set at 30% on water usage (water tariff). This tax will rise to 50% come 1 July 2018. For users of water, they can conserve water usage and reduce the conservation tax in dollar term. This is fair as everyone from those staying in public housing to private residential property is treated equally in national water conservation effort. (Much like GST concept, you use less you pay less) Subsidies should not be given on this.

Matter of Public Communication

The unhappiness of the people can be reduced if public communication by the government can zoom in on the need to conserve water since it is of vital national security. When this is considered, the price increase can be addressed only fairly and not as it is now.

Carrot and stick approach to water conservation

The stick is in the form of water conservation tax. I can offer a suggestion on a carrot approach. Offer cash rewards on conservation effort to consumers of water. If a household can reduce water consumption by x percentage (x is number) from its last year’s recorded monthly average, reward the household with cash to offset its water bill for the month. With reduced usage of water at national level because of the incentives, production of water can be reduced. Money drives behaviour better than just talk of importance of conserving water.

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