I note that Second Finance Minister Lawrence Wong has chided the Workers’ Party (WP) for misunderstanding “basic accounting fundamentals” by querying why there is a need for the Public Utilities Board (PUB) to increase the price of water. According to reports, he said:
“PUB invests most of its capital reserve in property, plant and equipment (PPE) — such as the upgrading of waterworks, expanding water reclamation plants and investments in water treatment, said Mr Wong. The increase in capital reserve must be seen in conjunction with the agency’s growing asset base, said the minister, pointing to how its PPE account had grown from S$3.9 billion to S$7.1 billion over the same time period.”
This is in response to MP for Holland-Bukit Timah GRC, Liang Eng Hwa’s question to the Minister of Finance, asking if he will clarify the $5.3 billion of “Capital Reserves” in PUB’s accounts and whether this represents surplus funds that are at the disposal of the Government or PUB.
What Mr Wong doesn’t appear to have addressed on behalf of the Finance Minister, is why there was a need to increase its PPE by so much in the first place? Is the PUB investing correctly and efficiently? What are the investments they have made and why? Are Singaporeans benefiting from the PPE increase?
Secondly, had the WP not raised the question, would this issue of PPE increase even be explained to the public? Mr Pritnam has noted that he had earlier raised the topic of PUB’s capital reserve in his speech at the President’s Address in May, but his point was not discussed at the debate back then.
“the question of the quantum of the surpluses and the prospect of alternate revenue streams and future surpluses of many Government-Linked Companies and statutory boards to better cushion price hikes on Singaporeans needs to be looked at very closely and debated before prices go up. For example on the 30% water hike, how do future capital investments in water supply and transmission cohere with the large capital reserves of the national water agency which have increased consistently from around $3b in 2007 to more than $5b in 2016?” – Pritam Singh in his May speech
The opposition parties have a duty to question policies and shine spotlights on areas where explanations are needed. In turn, it is the duty of the government to account and be transparent. It seems odd that Lawrence Wong is chiding the WP for doing their job. The point Wong has failed to address is why the PPE needs to be increased in the first place. Instead, he has chosen to evade the real question by trying to make the WP look stupid. The issue here is not accounting fundamentals. Rather it is why such investments have to be made and whether too much has been spent on PPE.
Wong has lamented that the capital reserves are insufficient to cover PUB’s investments. Why then is the PUB making investments that it cannot afford?
Financial commenter, Chris Kuan has written that while WP got it wrong but he would have asked for the projected expenditure to see if PUB’s Capital Reserve is overfunded.
Again, there are many unanswered questions. Perhaps the PAP ministers are so used to doing things without the need for explanation or justification that they appear defensive in the face of any question. I think it is pretty obvious that the heart of the matter is why the 30% hike in water was necessary. It is disappointing that Wong has chosen to chide the WP for misunderstanding accounting fundamentals instead of dealing with the real question.
Is it a case that Wong just doesn’t understand the questions of the public or is he trying to deflect from answering the question?