On February 20th, Minister for Finance Mr Heng Swee Keat delivered the annual budget address to Parliament. In his speech, Minister Heng announced a litany of measures designed at strengthening Singapore’s economic resilience and future proofing our workforce. However, the highlight of Minister Heng’s budget address was ultimately the controversial 30% hike in water prices and the introduction of carbon taxes by 2019.
30% Water price hike
These latest announcements raised eyebrows for several reasons. While Minister Heng made the case for an upward review by stating that prices have remained unchanged for 17 years, he did not provide statistics on the cost of water production – a key determination of price. While the 30% hike will be executed over 2 stages, it’s impact on lower income households is still substantial. Businesses, which are unlikely to be spared will see the cost of monthly utilities increase. These added costs will unsurprisingly, be passed to consumers in the form of pricier goods and services. Ultimately, it’s you – the average Joe that will suffer the double whammy of higher utilities and consumer prices with no guarantee that water consumption will fall.
The idea of carbon taxes sounds progressive and noble in theory; taxing the big polluters in a bid to reduce carbon emissions and tackle Climate Change. However, when applied to a real world scenario, the effectiveness of a carbon tax is hampered by several factors. Big oil companies, refineries and energy giants will continue to churn out the abundant supply of fossil fuel based energy as long as demand for them remains high. While the world is gradually shifting towards clean renewables, fossil fuels remain the cheapest and most abundant form of energy. Until such a time when the supply of clean renewable energy can be readily available to meet the demands of the economy, carbon taxes will have little to no impact on reducing carbon emissions. On the contrary, we’d only be artificially increasing the cost of energy which opens the door to a host of other problems.
The added costs that come from carbon taxes can simply be written off by big oil by passing them to consumers. Delivery companies, retail stores, supermarkets, restaurants – basically any business that relies on the supply chain and the transportation of goods will see an increase in operating expenses.
Once again it’s YOU, the average citizen who must foot the bill. When electricity bills go up or food courts start charging higher prices because it costs more to transport fresh ingredients, you are indirectly paying for the carbon tax. This despite the fact that you only contribute a minuscule fraction of the total carbon footprint. Until we develop a mature renewable energies industry, carbon taxes won’t be effective in reducing our carbon footprint.
Whether it’s the price of water or carbon taxes, Budget 2017 will most certainly have adverse consequences on Singapore’s middle and working class already squeezed by the high cost of living. Neither out of touch comments made by elitist MPs in their ivory towers or token gestures like GST vouchers are going to help alleviate the financial burdens of Singaporeans.