77
have been carefully considered, and| it does not follow that because they were not incorporated they had not been considered.
the
was
Mr. Lo further in the opening of his speech indicated that he had hoped that the revised scheme of water finance would result in reduced charges but I think I may say that my own object and the object of the Government in attempting revision of
finances water entirely independent of any desire to reduce or to increase these charges. The object was to find out what, on a fair calculation, was the true cost of the undertaking, and the burden that should be borne by the water and then to distribute the that
fairly burden
between different classes of consumers.
Burden of Charge
consumers
I understand from Mr. Lo that he fully expects the principles of that procedure and it is only on the details of the estimates of costs and the method of
the distributing burden of charge that we differ. I propose therefore to go through the principal points made by Mr. Lo and other members who have spoken on the subject. Firstly, there is the question of the charge of Peak con- sumers on which, I think, there is a good deal of misapprehension. On the surface it looks as if the Peak resident is being benefited by a reduction in charge from a net 85 cents per unit to 45 cents, but this is because the majority of the Peak residents kept the whole or a great
of part
their water within free allowance. The net result is that in future they are going to pay for every gallon consumed at a lower rate they have formerly paid for. If these charges had been in force in 1937, the Peak residents, as a whole, would have to pay in addition to the two per cent., $12,203 as com- pared with $7,088 actually paid, that is they were to pay more than $5,000 extra as a result of this change.
Secondly, as regards this $1 charge, which is stated to apply to the Peak. It does not apply only to the Peak re- sidents. It is more properly to be regarded as a charge for water used in flushing. All water in the Peak is available for that use and there- fore $1 is charged all over the Peak, but this is also charged on every property, including a considerable part in the mid-levels, where water | is used for flushing, and the reduc- tion will apply to these properties equally.
Lower Total Charge
con-
Much more important is the fact that for the poorer class properties, the Chinese tenements, there is no doubt whatever that the revised scale of charges will result in a lower total charge on the basis of 1937 sumption of water than the present charges, inclusive of the two per cent. rates in both cases. That is because the average Chinese tenant used such a great deal of water in excess of his free allowance that the reduction in costs more than offsets the increased charge on what was formerly allowed free. A number of typical properties have been examined and in every case it has been found that this is the result. I imagine I cannot quote
a particular case in Council but I shall be quite happy to let Mr. Lo or any member have the figures if they desired to see them. The people who will pay more are the residents in
SOUTH CHINA MORNING POST
16th September, 1938.
(5 5 )
better class domestic properties, the Peak, the large office blocks, hotels, etc., in the centre of the district, but the poor people will definitely pay less.
The next point is the continuance On that of the two per cent. rates. I venture to suggest that all the criticisms that have been made were made because they assumed that the rate is paid by the landlord and so is borne by the landlord. It may be paid in the first occasion but I cannot believe that the rates are not in- corporated in the rent, and if the rates are reduced in course of time, the rent would be adjusted and eventually the tenant pays and not the landlord. Therefore, the criticism that the landlord are being asked to bear the burden of the military It is the contribution is not true. general community, in its capacity as the occupier of the house, who is paying that taxation.
Rates Compared
revenue
a
Next, Mr. Lo differs from me in my comment that the rates here are on the whole low. Well, possibly our standards differ. I come from England where the rate of 40 per cent. is regarded as extraordinary low. I think it may be found that rates in Singapore are substantially higher than here and in comparison of the proportion of the rates to the total taxation I think it is forgotten
is also that this Government municipality and that no municipal taxes are paid. Indeed, I think the total rates paid in England are cer- tainly not less than 1% of the aggre- of the central and I gate
and in governments, raunicipal addition, of course, in England the owner or occupier of the property has to pay income-tax, so I don't argued be seriously I think it can
that the rates here are higher.
Finally, on the question of the two per cent. rates. It is suggested that it is immaterial whether the charge collected in that way is transferred As I said, a to the water charges. transfer of that kind will be a trans- fer from the better-off class of the community to the poorer class and if Mr. Lo says the landlord bears the weight it would be even more that obvious that
of transfer a nature, which I don't think in view of what he said subsequently, is right.
Exceptional Period
The next point is in regard to the estimates of revenue. He took the figures of the first half of 1938, an exceptional period and at a time when the population of the Colony was artificially swollen and when water consumption was abnormally high. I don't think, therefore, that it would be in the least imprudent to frame and to govern the water charges or undertakings on the basis of six of an exceptional period months. But in any case, Mr. Lo ignored the fact that additional con- sumption meant additional expenses, and apart from the inevitable in- crease resulting from the actual in- crease of consumption, the increased expenses would have gone a very long way to offset the increased
revenue.
On the expenditure side, the prin- cipal criticism is as to the charge for renewals. Here, I think perhaps too much emphasis has been laid on
ex-
the past because no such contribution has
on been calculated past penditure, but the real purpose of such contribution is to provide for the future. From time to time re- newals are required, for insta .ce such expensive repairs as to amount to renewals. Unless money is set aside to provide for these renewals, they have got to be financed by new loans
from money or by
found general revenue. It is always very pleasant to finance new works out of loans but it is never sound, and I am quite certain that if this water undertaking were in the hands of a public utility company it will cer- tainly put something aside year to provide provision for the renewals. I am equally certain the provision is not less than as proposed by the Government. It may, for instance, be instructive to compare a provision of that nature made by a utility company in this Colony. The Telephone Company, which is permitted by its ordinance, set aside depreciation of its provisions for capital and also contributions to a reserve fund designed to pay off the whole of the company's capital within the period of its extensions. In this case we merely set aside a small provision to provide for future capital replacements.
Instructive Criticisms
every
we
In that connection the criticisms of the Economic Commission which Mr. Lo referred to, are very instructive. They objected to provisions for de-
the preciation, including
P.W.D. figures, because, among other grounds, the same provision was not ear-marked or created in the reserve fund. This
is precisely what intend to do, to set aside a separate fund, which will not be available for general revenue. So I venture to think that the Economic Com- mission's opinion now will be very different. Looking at it from this point I don't think it matters very much whether the original capital expenditure was found from water revenue itself or from general re- venue of the Colony because it still remains desirable in my view to make special provisions.
on
Finally, on this point, Mr. Lo re- ferred to the opinion I previously expressed as regards the effect of this particular issue military con- tribution. My first answer to that is the question of balance of advan- tage and the military contribution is only one factor. But my second answer, which is perhaps more con- vincing, is that I received a private but none the less authoritative hint from the Colonial Office that it was not sufficient to assume that in future loan from the water account would be exempted.
Finally, all three Members have criticised the general basis of the charge and Mr. Lo suggests that I had myself admitted the desirability of an initial supply at a nominal charge. I don't think that is quite what I said. I think in Paragraph 12 of my original memorandum, I suggested it might be desirable to charge much higher rates for supplies over and above the minimum, but I don't think I contemplated a nominal charge for a minimum supply. I think I had in mind the present charge for supplies and something much higher for further supplies.