Foreign Minister Vivian Balakrishnan yesterday described the latest comments by Malaysian Prime Minister Mahathir Mohamad on the water issue as a "red herring".

"The 1962 Water Agreement is not about who is richer or poorer. It is about the fundamental principle of respecting the sanctity of agreements," he told the House.

In calling for Johor to speak up against the 1962 Water Agreement, Tun Dr Mahathir had asked how Singapore, as "a rich nation", could pay "such an unreasonable rate" for raw water sold by Malaysia under the water pact, when Malaysia was a poorer country by gross domestic product per capita.

This was "morally wrong", Dr Mahathir had said at the Johor government's retreat with the federal Cabinet in Putrajaya two days ago.

The remarks prompted Mr Vikram Nair (Sembawang GRC) to raise the issue at the debate on the Foreign Affairs Ministry's budget.

Responding, Dr Balakrishnan said Dr Mahathir had used "strong, emotive words, no doubt intended to rouse public opinion".

In his rebuttal, he reiterated that the water pact was guaranteed by Singapore and Malaysia in the 1965 Separation Agreement.

Any breach of it would call into question the Separation Agreement, which is the basis for Singapore's existence as an independent sovereign state, he said.

"Therefore, Malaysia and Singapore must fully honour the terms of the 1962 Water Agreement, including the price of water that is stipulated in it. And our longstanding position has been that neither Malaysia nor Singapore can unilaterally change the terms of this agreement between our two countries," he added.

He stated again that Malaysia had lost its right to review the price of water. In fact, Malaysia has previously acknowledged that it chose not to seek a review in 1987 because it benefited from the pricing arrangement under it.

Dr Mahathir, who was Malaysia's prime minister from 1981 to 2003, explained in 2002 that his country did not ask for a review in 1987 as it knew that any revision would also affect the price of treated water sold by Singapore to Malaysia.

Today, Singapore continues to sell treated water to Malaysia in excess of its obligation of five million gallons a day (mgd) under the water agreement, at Malaysia's request.

Singapore has been selling 16mgd of treated water to Johor, Dr Balakrishnan added. It does so at a fraction of the cost of treating that water, he said. "In other words, for every gallon, we are subsidising.''

On top of this, PUB also receives additional requests to supply additional treated water to Johor from time to time. For example, between Jan 2 and 4 this year, Singapore supplied a further 6 mgd of treated water over and above the 16 mgd, when Johor needed more water because its water plants experienced disruption owing to pollution.

Dr Balakrishnan also highlighted how PUB and Johor signed an agreement in 1990 to build the Linggiu Dam, to increase the yield of the Johor River.

Johor owns the dam, but Singapore paid more than $300 million for its construction and operational costs, as well as compensation for the land used for the Linggiu Reservoir, among other things.

"If Malaysia had exercised the right to review the price of water in 1987, Singapore might well have made different investment decisions on developing the Johor River," he said.

He added that Singapore has so far spent more than $1 billion on water projects in Johor to help ensure not only PUB's waterworks but also that Johor's own waterworks can reliably draw water from the Johor River.

Dr Balakrishnan said that in periods of dry weather - which Johor is coincidentally experiencing now - Singapore continues to provide Johor with treated water at its request.

"We do so out of goodwill, without prejudice to our legal rights under the water agreement.''

He added: "We are permanent neighbours and we want to be good neighbours and we have never shied away from dealing with difficult bilateral issues."

This is why, he said, Prime Minister Lee Hsien Loong proposed to Dr Mahathir last November that their attorneys-general meet to better understand each other's positions on whether Malaysia still had the right to review the price of water under the current pact.

The attorneys-general met last December, he added. "Unfortunately, their discussions were overshadowed by the Johor Baru Port Limits and the Seletar Instrument Landing System procedures issues that we are now trying to resolve."

Still, they will continue their discussions in due time, he said.

Summing up, he said that after Separation in 1965, Singapore chose a "different and unique fundamental philosophy of governance" and had taken a different development path. "Singapore has no natural resources, we are even short of water, but Singaporeans have long internalised that no one owes us a living. We have provided a framework where all our citizens strive to do their best, and achieve our potential by dint of our efforts."

He said Singapore takes a zero tolerance policy towards corruption, and the Government plans and invests for the long term, as exemplified by the 2019 Budget.

"We honour and fulfil our international agreements and commitments. As a result of that, businesses have the confidence to invest and grow in Singapore and... we invest in infrastructure ahead of time."

Dr Balakrishnan said: "I will let members of the House and fellow Singaporeans decide for yourselves whether we have been 'fair' or, to quote Dr Mahathir, whether we have been 'morally wrong'.

"I think the answer is obvious."