SMS S Iswaran's answers on electricity fare hike and whether the Govt is continuing to monitor the impact of cost increases to Singaporeans

Question No 808 of Notice Paper No. 255 of 2008

Name and Constituency of Member of Parliament
Mr. Sam Tan Chin Siong, Member for Tanjong Pagar GRC

Question

To ask the Minister for Trade and Industry in view of the fact that the latest round of electricity fare hike follows a series of price increases for daily essentials, will the Government consider taking steps to ensure that public and/or private agencies do not collectively increase prices at the same time.

Note: The above Question was originally directed to the Minister for the Environment and Water Resources (vide Q.*808 in Notice Paper No. 251 of 2008).

Question No 812 of Notice Paper No. 255 of 2008

Name and Constituency of Member of Parliament

Ms. Irene Ng Phek Hoong, Member for Tampines GRC

Question
To ask the Minister for Trade and Industry (a) whether the Government is continuing to monitor the impact of cost increases on Singaporeans and is taking steps to assist households which need help; and (b) whether a national committee should be set up to review the cost increases over the past year, to oversee the impact of rising inflation on Singaporeans, and to coordinate the price increases in the various sectors, given public concerns over the spate of sudden increases.

Note: The above Question was originally directed to the Prime Minister (vide Q.*812 in Notice Paper No. 251 of 2008).

Answer
1.Mr Speaker Sir, first, let me sketch out the outlook for inflation for 2008 and 2009, before I proceed to answer the questions from Mr. Sam Tan and Ms. Irene Ng.

2.Inflation in Singapore has started to ease. CPI inflation peaked in 2Q08 and is likely to decrease for the rest of the year. On a year-on-year basis, CPI inflation has come down from the high of 7.5 per cent in the second quarter of this year, to 6.4 per cent in August. This reflects mainly the moderation of global food and oil prices, as well as the washing out of the impact of the GST increase in July last year.

3.For 2009, the Monetary Authority of Singapore expects a reduction in headline inflation to 2.5 to 3.5 per cent, down from the 6 to 7 per cent this year.

4.Ms Irene Ng has asked if the Government will set up a national committee to review cost increases. Mr Sam Tan has also asked if the Government will take steps to ensure that private and public agencies do not raise prices at the same time. Much of the price increases that we have experienced can be traced back to increases in external prices, especially the price of oil. Higher oil prices have translated into higher pump prices, taxi fares, airfares and electricity tariffs. Several of these price increases are therefore happening at around the same time because they have the same underlying cause.

5.Should the Government step in to intervene? Our principle of allowing market forces to work has worked fairly well. We should let prices reflect the true cost of goods and services. Artificially suppressing prices encourages over-consumption and is not sustainable in the long run. In regulated sectors such as public transport, telecommunications and utilities, we also have regulatory bodies to ensure that price increases proposed by the industries are not out of line with underlying cost increases.

6.For services provided by Government agencies, the Government’s approach has been to charge realistic fees that reflect the cost of delivering the services.

7.The Government has been and will continue to monitor the impact of cost increases on Singaporeans very carefully. This is an o-going exercise in the Government. There is therefore no need to establish a national committee to do this. Where necessary, the Government can step in to provide targeted assistance to Singaporeans who might need help to cope with the cost increases. This the Government has done over the past few years.

8.Last year, the Government announced the GST Offset Package, which included GST credits, Senior Citizens’ Bonus, U-Save rebates and top-ups to post-secondary education accounts. The Government has structured these packages so that lower-income Singaporeans, who have been more affected by inflation, receive more benefits.

9.I understand the concerns that Singaporeans have towards rising cost pressures. The practical steps that the Government has taken will go some way towards providing relief. Should the inflation situation worsen, the Government is also prepared to adjust its assistance schemes to help Singaporeans cope.