In a supplementary question, Mr Singh asked why the recent increase was of such a short interregnum as compared to before the last price revision in 2017. He also asked if there was space to delay an increase. 

“Is there any scope, policy space for the government to delay this increase with a view towards the profits generated by the authorities vis-a-vis water and the supply of water?”

Dr Khor replied that the cost of producing and supplying water has exceeded current water prices due to the cost pressures mentioned, resulting in a need for a price revision to ensure that PUB is able to sustainably cover operating costs and continue to invest in water infrastructure. 

Responding to Mr Singh’s query on profits, Dr Khor said: “If you look at the financial statements of PUB, in 2020, net operating income was +S$10 million but in fiscal year 2021, net operating income, before government grant, is -S$109 million and it has actually widened to -S$264 million.”

While she noted that it has become positive after government grants, she added that whatever was generated in terms of net income was ploughed back and reinvested to fund the operating expenditures of the water system – and it was not enough. 

PUB had to borrow from the market and issue bonds –  for example S$800 million in green bonds last year – to fund long-term infrastructure projects. 

“So there is no profit. Everything is actually reinvested or used,” Dr Khor said. 

For his second question, Mr Singh asked if the government would reconsider the utility of the water conservation tax. 

A water conservation tax is one of the three components of water pricing, the other two being a tariff and a waterborne tax. The water conservation tax is a percentage of the tariff and is meant to encourage water conservation. All three components will see an increase this time round for domestic and non-domestic potable water.

Mr Singh said that household water consumption patterns have been on a downward trend and questioned the relevance of the water conservation tax as compared to the implementation of more water-efficient features in the household.

“(Water efficiency features are) a more effective policy tool to encourage a lower consumption of water and achieve the outcome that the ministry is looking at with regard to ensuring that every Singaporean sees the first drop of water as a very scarce resource,” Mr Singh said. 

He asked if the water conservation tax was achieving the policy purpose that it was intended for, or if water efficient features were a likelier source of realising water savings among households. 

Dr Khor responded that both were needed. 

“The water conservation tax, really is a tax … to incentivise to reflect the scarcity value as well as to incentivize consumers to use water wisely.”

Mr Leong asked if it was possible to replace the two-tier pricing with multiple bands instead. 

“This is fairer because, as you have said, most of the future increase in water consumption will come from the larger users in the non-household sector,” he said. 

Potable water currently costs S$2.74 (US$2.01) for every 1,000 litres, or per cubic metre, before tax for most households, up to 40 cubic metres. 

Households that consume more than 40 cubic metres a month currently pay S$3.69 per cubic metre for the exceeded amount. Less than 4 per cent of households do so, Dr Khor noted in her reply to Mr Leong. 

She added that the average household consumes about 15 cubic metres of water each month.

The higher pricing was to encourage those who use more water to “use water wisely and conserve water”, she said. 

Mr Leong also asked if the ministry could confirm that the current water pricing fully took into account the cost of producing water from local sources. 

“If so, can Singaporeans expect that – barring unforeseen changes in the ingredient cost, including energy – the water price will not shoot up drastically after the expiry of the Johor water supply agreement in 2061?”

Dr Khor replied that to ensure water security, Singapore uses a blend of sources from local catchment, imported water, desalinated water and NEWater. 

“When I say cost of producing the next drop of water … we also take into account investments, long-term investments to meet future water demand. And that will take into account the fact that water demand will increase and we will have to invest in additional capacities,” she said.