Quenching the future: Today’s Singaporeans paying the price

The recent surge in water prices paints a disconcerting picture: the Singapore government, under the ruling party, appears to be shifting the financial burden of its policies onto ordinary Singaporeans.

Singapore’s national water agency, PUB, has announced an 18% increase in water prices over the next two years, attributing it to rising production and supply costs since 2017.

Currently, most households pay S$2.74 (US$2.01) for every 1,000 litres of potable water.

This price adjustment will add an extra 50 cents per cubic metre, split into two increments: 20 cents in 2024 and 30 cents in 2025.

By the end of 2025, PUB projects that most households will see a modest increase in their monthly bills, not exceeding S$10.

The business sector will encounter varying impacts. While three-quarters of businesses will see a monthly increase of less than S$25, hawkers can expect an average rise of less than S$15.

It’s the households with a water consumption exceeding 40 cubic metres a month that will be most affected. Their rate will increase by 70 cents for every additional cubic metre consumed, tallying to S$4.39 by 2025.

Simultaneously, the price for NEWater — Singapore’s treated reclaimed wastewater primarily used for industrial and cooling purposes — will climb by 17 cents, again in two phases.

Several factors underpin the water rate surge, including a significant 37% hike in electricity market tariffs, a 35% increase in construction costs, rising expenses for essential water treatment chemicals, and augmented maintenance costs.

At first glance, the rationale behind the price hike seems clear. Factors like rising operational costs, infrastructure investments, and increasing electricity tariffs dominate the list. But this overlooks burgeoning maintenance costs brought about by increased manpower expenses. Evidently, water production and supply have become more expensive.

However, there’s more beneath the surface.

Demand for water in Singapore is forecasted to nearly double by 2065. As climate change impacts amplify, there’s a palpable strain on both local water catchments and imported sources.

To combat this, PUB is directing resources towards developing NEWater and desalinated water. While these alternatives are undeniably more resilient, they’re also energy-intensive and come with a hefty price tag.

Interestingly, according to PUB’s annual report, of its S$1.55 billion expense, S$539 million went to maintenance, S$378 million to depreciation, S$283 million to manpower, and S$138 million to electricity.

PUB’s 2022 annual report

Several questions emerge. Are consumers bearing the costs of depreciation, even though PUB gains income from the equipment? What exactly comprises the maintenance costs? And is the expense of producing desalinated water in Singapore increasingly becoming – disproportionately – a major contributor to the overall costs?

It raises the paramount question: if consumers are shouldering costs chiefly because of PUB’s facility expansion to increase capacity, will PUB reduce costs for consumers once it recoups its investment from the new plants? Or will it quietly rake in more profits?

After all, while plant depreciation may be an accounting loss, the facilities continue to treat water, generating revenue for PUB.

The heart of the matter isn’t just about rising costs or the need for more infrastructure; it’s about who’s being asked to foot the bill.

The non-domestic sector in Singapore currently uses about 55% of the water supply, a number projected to jump to 70% by 2060. This indicates that the surge is more attributed to economic activities, such as data centres or wafer manufacturing plants, than individual consumption.

Moreover, with Singapore’s birth rate at a historic low and the population expected to rise due to foreign immigration, it’s plausible that the current generation is bearing the costs for a future they might not be a part of.

Historical data offers insight. Between 1985 and 1994, water consumption shot up from a yearly rate of 3.3% to a high of 6.5% (240 million gallons daily). Today, Singapore requires 430 million gallons daily.

This aligns with the population increase from 3.4 million in 1994 to 5.6 million in 2022. However, while the overall population saw notable growth, the citizen count grew only by 27%. This misalignment raises questions about proportionate consumption in relation to population growth.

There’s a broader critique here concerning the government’s fiscal approach. It seems profits from expanded activities are either retained or funnelled to government-linked companies under Temasek, benefiting from economic growth.

Meanwhile, the majority of consumers bear the rising costs. It echoes an age-old concern of “privatizing profits and socializing losses.”

Furthermore, the price of raw water, despite disputes with Malaysia’s Johor, will remain unchanged until 2061, a stark contrast to the escalating costs burdening Singaporean consumers.

While the importance of water security is irrefutable, it’s essential to pinpoint the reasons behind Singapore’s water issues. They seem to stem more from booming construction, commercial activities, and population growth than from an increase in consumption by longstanding residents.

The assumption that technological advancements are merely in response to increased consumption deserves scrutiny.

Is it fair for today’s consumers to fund expansions intended for future users? It mirrors the dilemma faced by Changi Airport passengers, who are paying for Terminal 5, a service they might never use.

In the words of the late Lee Kuan Yew, “What’s wrong with collecting more money?” The real concern, however, is: who is ultimately paying the price?