Public transport fare increases

The Workers’ Party (WP) has, in our 2006 and 2011 Manifestos, called for the MRT and public buses servicing major trunk and inter-town routes to be brought under a National Transport Corporation which will oversee and provide universal transport service to all. The National Transport Corporation should not be profit-oriented but should aim to provide public transportation services on the basis of cost and depreciation recovery.

The WP has, in our 2006 and 2011 Manifestos, called for the MRT and public buses servicing major trunk and inter-town routes to be brought under a National Transport Corporation which will oversee and provide universal transport service to all. The National Transport Corporation should not be profit-oriented but should aim to provide public transportation services on the basis of cost and depreciation recovery.

This would avoid a situation like we have seen on Monday where, despite earning profits of $215.4m last year, the two public transport operators are still applying for what threatens to be the single biggest fare increase to hit commuters in recent years. (I note that SMRT’s and SBST’s profits for the year ending March 31 were $161.1m and $54.3m respectively.)
Having a National Transport Corporation would not necessarily mean higher subsidies or a loss-making endeavour. If competently run, the Corporation could reduce costs associated with the duplication of functions and roles.

We have seen many examples of efficiently run publicly-run service providers in Singapore in the past. It is a fallacy to think that the two public transport operators today represent genuine competition which imposes market discipline that ensures

efficiency and good performance.

This was my response to media queries I received on Tuesday (12 July 2011) regarding public transport fare increases:

———

The Workers’ Party (WP) has, in our 2006 and 2011 Manifestos, called for the MRT and public buses servicing major trunk and inter-town routes to be brought under a National Transport Corporation which will oversee and provide universal transport service to all. The National Transport Corporation should not be profit-oriented but should aim to provide public transportation services on the basis of cost and depreciation recovery.

This would avoid a situation like we have seen on Monday (11 July 2011) where, despite earning profits of $215.4 million* last year, the two public transport operators are still applying for what threatens to be the single biggest fare increase to hit commuters in recent years.

Having a National Transport Corporation would not necessarily mean higher subsidies or a loss-making endeavour. If competently run, the Corporation could reduce costs associated with the duplication of functions and roles.

We have seen many examples of efficiently run publicly-run service providers in Singapore in the past. It is a fallacy to think that the two public transport operators today represent genuine competition which imposes market discipline that ensures efficiency and good performance.

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* SMRT Corporation’s and SBS Transit’s profits for the year ending March 31 were $161.1 million and $54.3 million respectively.

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14 thoughts on “Public transport fare increases”

  1. What competition are we talking it is just like another big “FAMILY”. Take our newsprint what competition it is another “BIG FAMILY”.

  2. To the 60% the next five years you will REPENT (the once upon a time famous word) as uttered by a equally famous man.

  3. 1) I support WP’s cause in ensuring that public transport becomes affordable to the passengers.

    2) I have read through WP’s 2011 manifesto on transport. I have a few key questions regarding the proposal mentioned in the manifesto.

    3) Firstly, is it actually possible to nationalize SMRT & SBS in Singapore’s legal context?

    4) Secondly, it seems to be universally true that profit-motive is the cornerstone of free market economy. Once nationalized, I assume that the National Transport Corporation (NTC) will be managed by civil servants, like those in statutory boards. Since the civil servants will not be the direct stakeholders of the NTC, it is possible that they may “slack off” and not care about efficient running of the NTC. Thus, how does the WP propose to solve this potential problem of efficiency?

    5) Lastly, in the manifesto, page 43, it is mentioned in Point 3 that “The National Transport Corporation should be allowed to operate shops andoutlets within the property under its control to cross-subsidise its operation.” Is this a signal that NTC may not be sustainable on its own?

    6) I have commented recently on this issue with my own proposals. I would like the WP to consider this as a feedback proposal from the ground. http://www.temasekreview.com/2011/07/14/public-outcry-over-lui-tuck-yews-support-for-impending-fare-hike/#comment-466359

    7) Thank you very much.

  4. Beside the caption above, a more discoursing issue is Business Times today, July 17th, that reported intera alia “A nationalised public transport operator that depends on government funding and which operates on a cost recovery basis would have little incentive… to keep costs down. Cost increases will be passed on to commuters … Not only would people have to pay more, nationalising the operators could result in a stagnation of service quality or efficiency over time.”

    I have never, never come across a more MORONIC and DELUSIONAL statement than that. I will tell you WHY !!! It is similar to the infamous statement uttered that if you find the cost too high, you can don’t buy, you can walk awa.

    First cost recovery basis is TOTAL recovery basis. It must encompass operational and capital expenditure. In a nationalised govt board, the initial seed funding must come from the Govt just as in a public company, the funding must be from the shareholders.

    To be viable, all such operations whether NATIONALISED, PTE or PUBLIC must keep costs down as much as practical based on cost effectiveness. Added to spur this key effectiveness in management is incentive, lots of it so that consequent net profitable returns are in these trade-offs.

    Cost increases need not pass on to commuters if maximum efficiency is properly managed with the best in industrial engineering. If such cost increases should be borne by the commuters, they are no more than the minimum of such true and accurate incremental uncontrollable costs totally devoid of the capitalist element of net profit upping to please the shareholders. And WHO ARE THESE MAJORITY SHAREHOLDERS, the commuters or the rich who wants to be richer at whose expense??? It is an insidious manipulation of additional indirect toll on the citizens first and the rest of the population, second. Such cost increases are by all means always lesser than the fare increases which are invariably more than the actual cost increases because of the added element of profit to the shareholders. This can be attested by all the successive incremental annual profits in the last 3-year financial statements.

    Resulting in stagnation of services, etc ???? The operatiors are not daft if they want to stay alive, keep their jobs and be in sync with the govt. They have to work their butts out, be smarter, be faster, be better and be cheaper. Otherwise they are incompetent and must be replaced.

    Those replusive statements were, perhaps, made with the delibitating British experience in mind. We would be idiots and downright stupid to catch on the British disease. They are still going down the gutters. If you want to know, I can explain further what are the axes they are trying to grind. Read in between the lines on “trade-offs” are no more dividends for majority shareholder, Temasek and no more corporate taxes to be collected from these transport operators. Down the line, these mean no fare increases for the commuters which is the right thing to do. Transform and nationalise. Show your sincerity to the Citizenry.

    As Mr Ho K P explained in his recent article last week that there is more than meets the eye what the President latent powers are. There is more than meet the eye what the real objective of fare increases are.

  5. The WP appears to have lots of half baked economists. Transport economists will tell you that the only countries where there is a nationalised operator is one that is losing money i.e. making a loss. The government should not be in the transportation bsusiness. There are certainly room for improvement on what we have today, but WP is just angling popular support when you say nationalise the system.

    Show me a country with a nationilsed transport system that is not a burden to tax payers ….

  6. “Show me a country with a nationilsed transport system that is not a burden to tax payers …”

    Sure. Why don’t you show us transport economists who would tell us that ‘the only countries where there is a nationalised operator is one that is losing money i.e. making a loss’?

    Care to put your money where your mouth is?

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