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Government fees freeze doesn’t address real concerns

By Andrew Loh

It is interesting to note that the Finance Minister announced the extension of the freeze on government fees and charges only on the third day of the Budget debate – after criticisms of it not doing enough to alleviate Singaporeans’ concerns about inflation.

According to Channel NewsAsia (CNA), “the one-year freeze on government fees, which kicked in last July, will be extended till the end of 2008.”

Now, the natural question to ask would be, “What are these government fees which are being suspended?”

Again, according to Channel NewsAsia, these include “fees charged on all government-provided services such as school fees, ITE and polytechnic fees, charges in public car parks, and all licence fees.”

Going back to a CNA report on the original suspension, announced in Nov 2006:

“The government will also continue to absorb the GST for education and subsidised healthcare services. The freeze also means no increase in HDB car park fees, conservancy charges and business licence fees for a year.”

The Straits Times, in an article titled “Govt to freeze fees for one year after GST hike” on December 1 2006, reported the following:

“The freeze on fees will cover, among other things, HDB carpark fees, passport and birth certificate costs, TV and radio licence fees and conservancy charges.

Businesses can also look forward to paying the same amount for registration and safety fees, and work permit and visa fees for their workers, among others.

The GST for all school fees and health care for subsidised patients would continue to be absorbed, for good, said the Finance Ministry in a statement.”

A careful look at the items suggests to me that the freeze is not going to help much. Lets have a look at some of the price increases the past year.

In 2007:

Jan: NUH’s A&E fee raised from $70 to $80. (link)

Feb: KK Women’s and Children’s Hospital hikes ward treatment fees. (link)

May 14: NUH increase ward charges for B2 and C-class wards by $2, increases of 4 and 8 per cent. (link)

May 29: New fee hikes at public hospitals and polyclinics. A NEW round of fee hikes is underway at most public hospitals and some polyclinics. Subsidised patients at four public hospitals will now pay $24 or $25 for every visit to a specialist clinic, up from about $21. All 18 polyclinics, which used to charge a standard consultation fee of $8 for adults, now charge anything from $8-$8.80. (link) (link) (link)

June 29: Fees up by 14% on average at NUS. Two days before the higher 7-per-cent GST kicked in on July 1, prospective students of the continuing education arm of the National University of Singapore (NUS) received news that fees for many courses had gone up — by an average 14 per cent. (link)

July 15: Electricity tariffs to be raised by almost 9% for July to September. (link)

July 25: Hospital bills up 10% to 30% across all ward classes. (link)

July (CPI): Transport and communication prices moved up by 1 per cent, reflecting mainly dearer petrol and higher car prices. (link)

Aug 6: ERP rates at Orchard, YMCA and Fort Canning Tunnel to go up. From August 6, cars passing the Orchard, YMCA and Fort Canning Tunnel gantries will be charged an additional $0.50. That makes it $1 per entry. Rates for motorcycles will also double to $0.50. Goods vehicles and small buses will now be charged $1.50. Heavy goods vehicles and big buses will be charged $2. (link)

Sept 11: Adult EZ-link fares for buses upped from October. From 1 October, adult EZ-link fares for buses will increase by between one and two cents. But there will be no increase for train fares. (CNA)

Sept 25: Electricity tariffs to go up because of higher oil prices. Barely 2 months after the increase of 9% in July, electricity tariffs will again go up later this year because of higher oil prices. SP Services said electricity tariffs will be raised by an average of 0.86 cent, or 4.29 percent, per kilowatt-hour, for the three months from October to December. (CNA)

Oct 30: ERP rates going up again for third time this year. Electronic Road Pricing (ERP) rates are going up again for the third time this year. (CNA)

Dec 10: ComfortDelgro raises taxi fares. Commuters will pay between 18 per cent and 49 per cent more for a taxi ride home from the city from 5pm to midnight. (Straits Times) (CNA)

Dec 28: Electricity tariffs to go up. Highest since 2001. From next month (Jan 2008), electricity tariffs will go up nearly 6 per cent, to 22.62 cents per kilowatt-hour (kwh). (Straits Times)

In 2008:

Jan 08: Motorists to face five new ERP gantries. MOTORISTS can expect to pay more over the next few months to use the roads when five new ERP gantries are up, many in the heart of residential areas. (Straits Times) (Straits Times)

Feb 14: Varsities up tuition fees by 4% to 20%. TUITION fees at the three local universities will go up by between 4 per cent and 20 per cent for the new batch of undergraduates entering in August. (Straits Times)

(For a list of price hikes in all areas, click here.)

Now, lets take a look at three of the individual items on the list of fees being suspended.

School fees:

While “the GST for all school fees …would continue to be absorbed”, course fees and tuition fees for tertiary institutions have been raised quite significantly – by 4 per cent to 20 per cent.

HDB carparks:

Carpark charges may be frozen but the introduction of more ERP gantries in the past year – with extended hours and higher charges - more than make up for any loss of revenue for the government. (See here, here and here.)

Healthcare:

The GST for healthcare will be absorbed by the government. However, the freeze does not address the continuing healthcare inflation, which is the highest among the components in the Consumer Price Index.

It is also important to note that the freeze regarding healthcare is only for the GST charged – and not on the absolute dollars increase in charges. KK Women’s and Children’s Hospital, NUH and the polyclinics have all increased their charges the past year.

As for the freeze on the other items on the list, I think we can all agree that they are not of any significant help at all to the average Singaporean - passport and birth certificate costs, TV and radio licence fees, registration and safety fees, work permit and visa fees, etc.

Significant omissions

The government, for whatever reasons, seems either reluctant or unable to do much in the main areas of concern – particularly food, transport and utilities, which affect every Singaporean everyday.

To be fair, food inflation is hard to manage, and external circumstances play a part in this. However, government-linked companies like NTUC supermarkets can do more.

In a Channel NewsAsia report in February 2007:

“Singapore's largest supermarket chain, NTUC FairPrice has committed a $5.5 million relief package to cushion the impact of the increase in Goods and Services Tax (GST).

The GST will be raised by two percentage points to 7 percent from July 1.

FairPrice will absorb the GST hike for six months.

But this will only apply to 400 essential items.”

That is for 2007. I am not sure if NTUC has made similar commitments for 2008.

In the areas of transport (particularly public transport) and utilities, certainly the government can also do much more.

The almost-annual increase in public transport fares the last 8 years or so has given the transport companies record profits each year. Yet, the government seems totally unable to say no to them raising fares every year.

In the area of utilities, electricity prices have gone up. Prices for household use are “adjusted” every quarter, that is every three months. (Look at the fine print on your monthly bills.) These adjustments take place whether oil prices increase or not.

In a letter to the Straits Times last year, in June 2007, my colleague Leong Sze Hian wrote:

“Over the last 12 months or so, there have been media reports about increases or announced increases in electricity, taxi fares, development charge for non-landed residential sites, refuse collection fees, food courts upgrading and food prices, bus and MRT fares, one- and two-room HDB rental, university fees, Goods and Services Tax (GST), postage, property tax, registration fees for medicines, polyclinic fees, hospital fees, car park charges, Electronic Road Pricing (ERP), Nets charges, ElderShield premiums, removal of medical fees guidelines, plastic bags, hospitals means-testing, electronic share application fee, a second postage rates increase, and now cable TV, et cetera, in chronological order.

With the economy booming, resulting in increased revenue, profits, surpluses, possibly lower costs due to economies of scale, et cetera, why is it that prices can only go up but never lowered, or at least kept level?

With the assurance that government fees will be frozen for one year after the GST hike, I hope that particularly those fees for essential goods and services that are not in the ‘frozen list”, like electricity, taxi fares, ERP, bus and MRT fares, university fees, health-care costs, et cetera, will not continue to rise again soon.”

Looking at the entire picture, while GST offsets are welcome, they do not really address the cause of inflation. For while the GST is at 7 per cent, price increases are more than that. Furthermore, the freeze is temporary and ad hoc while price increases are permanent.

Singaporeans end up with a double whammy – a higher GST and higher prices in absolute dollars as well.

Will a freeze on charges of non-essential items really help address inflation worries? I think the Finance Minister needs to do more to convince Singaporeans, and not just extend the suspension and only after a public outcry.

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