WATER CONSERVATION TAX AND TARIFF (Reduction)

Column No : 1968

WATER CONSERVATION TAX AND TARIFF:

(Reduction): 8.

Mr Steve Chia Kiah Hong asked the Minister for the Environment and Water Resources, in light of the four National Taps having been effectively set up and potable water no longer a limited and scarce resource, will the Government consider removing, or at least reducing, the water conservation and tariff tax on the household utilities bill.

Assoc. Prof. Dr Yaacob Ibrahim: Sir, for Singapore, water will always be a strategic resource. We have diversified our sources of water through the four National Taps strategy to ensure the long-term reliability and sustainability of our water supply. But even so, we cannot assume that water has now become an inexhaustible gift of nature. Water remains for us a limited and scarce resource, which we must economise and use wisely.

This is why in addition to having the four National Taps, we also encourage Singaporeans to conserve water. One of the mechanisms to do this is the Water Conservation Tax (WCT). The WCT and the water tariff are put in place, firstly, to enable PUB to recover the full cost of production and distribution, and secondly, to ensure that the total price to consumers reflects the marginal cost of the next available source of drinking water, which is desalinated water. On this basis, we have set the WCT and tariff such that most households today pay a total price of $1.52 per cubic metre. This is approximately the cost of producing and delivering desalinated water to households.

The price of potable water is benchmarked against the cost of desalinated water, and not NEWater. This is because NEWater is not supplied directly to homes - only a small amount is pumped into the reservoirs for indirect potable use. Most of the NEWater today is supplied to industries and commercial buildings for non-potable use, for which WCT is not levied.

With advances in technology and improved energy efficiency, the cost of desalination may come down in the future. Sir, we will continue to monitor this, and review water prices accordingly.

Mr Steve Chia Kiah Hong (Non-Constituency Member): A point of clarification, Sir. I am a bit confused. In the first place, the Government says that we have four National Taps and that water is no longer a limited resource. On the other hand, we are told that it is still a limited and scarce resource because we are still not fully sufficient. Are we or are we not fully sufficient since we have the ability to recycle used water into NEWater

and we can convert sea water into drinking water? Should we not remove this conservation tax and impose market price for water according to how much we charge?

Assoc. Prof. Dr Yaacob Ibrahim: Sir, to the best of my knowledge, no Member of this Government has ever said that water is no longer a limited resource. We have always said that water is a limited resource, and we must use it wisely.

Secondly, NEWater is not used for drinking. So we cannot assume that we now have NEWater and therefore we can do away with the water conservation tax. We have always benchmarked this against desalination because that is the next available drinking water. And as I mentioned in my reply, we are not standing still. We will continue to review the situation to see whether there is a case to be made to review the prices.

Sir, at the end of the day, the message to Singaporeans is that we now have the four National Taps. We are able to provide diversified sources of water, but it does not mean that we can now take a liberal approach and use water without any regard for conservation. I think it is important to remind Singaporeans that water is a scarce resource and we must use it wisely. But I agree with the Member that we should review the situation and see whether we can do away with the water conservation tax, and that is what my Ministry will continue to do.

Mr Low Thia Khiang (Hougang): Sir, I would like to ask the Minister whether he is aware that the Government increased the water conservation tax a few years ago when we had problems with Malaysia on the signing of a new water agreement and in anticipation that the price of water would go up quite tremendously. One of the purposes of imposing a higher water conservation tax was to get Singaporeans to get used to it. So, in view of the current situation and since we probably could get cheaper water resources compared to the price that Malaysia had demanded in the past, does the Minister feel that Government should review the water conservation tax rate now? Because the Minister said that he is going to review the tax. Can we know when, and what is the likelihood of the review? Reviewing the tax can be up or can be down. Can he let us know?

Assoc. Prof. Dr Yaacob Ibrahim: Sir, I would like to ask the Member which source of water is much cheaper. He says there are now much cheaper sources of water.

Mr Low Thia Khiang: I suppose the cost of NEWater and desalinated water is cheaper. With the advancement of technology and depending on how one looks at it, compared to what Malaysia had demanded in the past, I think we probably have cheaper water sources.

Assoc. Prof. Dr Yaacob Ibrahim: Sir, first of all, we are not going to drink NEWater and, secondly, the cost of desalination is still much higher, even though the technology has improved. So we will continue to monitor the technology and see whether we can bring down the cost. That we will do in the best interest of Singapore and Singaporeans. But, meanwhile, the water conservation tax will remain because there is still a strong message that we have to send to Singaporeans - that we need to conserve and use water wisely. As I mentioned earlier in my reply, we will continue to review the situation. As to when, we will keep the Member informed, Sir.

Mr Steve Chia Kiah Hong: Sir, another clarification as I am getting confused. Since we are not drinking NEWater, why is the Government bottling NEWater and distributing it for people to drink? Why are we pumping NEWater into the reservoirs if we are not drinking NEWater? Why are we doing this?

The Deputy Prime Minister and Minister for Home Affairs (Mr Wong Kan Seng): To educate the Member!

Assoc. Prof. Dr Yaacob Ibrahim: Sir, as DPM has replied on my behalf, it is to educate the Member.

The purpose of bottling NEWater is really to get Singaporeans used to the idea of NEWater. We have mentioned this before in Parliament. The former Minister for the Environment had mentioned that we added only a small amount to our reservoir, because no country in the world drink it directly. So, at the end of the day, this is a practice to get Singaporeans ready. And as Members can see, during major occasions such as National Day, Singaporeans show that if we have to, we will drink it. But I think the more important message is that we get Singaporeans comfortable with the idea of NEWater.

Mr Speaker: Prof. Ong, last question.

Assoc. Prof. Ong Soh Khim (Nominated Member): Sir, with the recent mention of new R&D emphasis on water and environmental technology, can the Minister share with this House and the public on what are some of the new technologies that the Ministry, together with the R&D agencies, is exploring to diversify our sources of water supply?

Assoc. Prof. Dr Yaacob Ibrahim: Sir, I do not think I should pre-empt the NRF. They are still looking into it. I think at a good time, Dr Tan will reveal to the public what are the research areas.