The Singapore government “cannot completely prevent prices from increasing” even as it has adopted the best approach to lessen the burden of Singaporeans, said Prime Minister Lee Hsien Loong on Sunday (19 August).
Amidst rising water prices and fluctuating electricity tariffs, “the government has tried to keep inflation low and prices stable,” PM Lee noted while delivering the Mandarin portion of his 15th National Day Rally speech at the Institute of Technical Education Central in Ang Mo Kio.
For instance, while water prices have gone up recently, the increase is its first in nearly 20 years.
“We put off the increase for as long as we could,” said PM Lee. “But in the end, we had to do it, because the cost of producing clean water has increased significantly over the years.”
The country also needs to build more NEWater factories and desalination plants to produce its own water in Singapore, he added.
Stressing that water will always be the country’s “precious resource”, PM Lee added that it is also “a strategic and security issue as well as a sensitive foreign policy matter”.
“This was the case 53 years ago. This is still the case 53 years later,” he said.
Describing the issue of electricity tariffs as “more complicated”, he noted that the current rate of 23.65 cents/kwh is more affordable than it was in the third quarter of 2008 at 25.07 cents/kwh.
Singapore’s electricity tariffs are dependent on the fluctuations in oil prices as the nation uses natural gas – all imported – to generate almost all of its electricity, he explained.
“Some people have asked: ‘why should electricity tariffs be in step with energy price fluctuations? Why can’t the government fix the electricity tariff?’,” added PM Lee.
Explaining that Singapore is not an oil producing country, he noted that fixing electricity tariffs will mean costly subsidies that are not financially sustainable in the long run.
Secondly, those who consume more electricity will receive more subsidies – the wealthy, he added.
“Subsidising the cost of electricity by fixing a low tariff is not the best way to help low income families,” said PM Lee.
A more effective way is to give direct subsidies to low-to-middle income families for their utility bills, such as U-Save rebates, he explained.
U-Save rebates were increased last year, where households in one- and two-room HDB flats will receive close to $400 of U-Save rebates this year, which is about four months’ worth of utility bills, PM Lee said.