This is the speech I delivered in Parliament today during the debate on the Land Transport Authority of Singapore (Amendment) Bill, which gave legislative backing to the $1.1 billion Bus Services Enhancement Programme.
The Land Transport Authority (Amendment) Bill gives the Government the powers to fund and implement the Bus Services Enhancement Programme (or BSEP), which was announced during Budget 2012. The BSEP provides for the purchase of 550 new buses over the next 5 years, the hiring of over a thousand bus drivers, and the funding of the maintenance and operational costs for these buses.
I support the objective of the BSEP, which is to improve and expand the range and reliability of bus services provided to commuters. Like most commuters, I hope to see more frequent and less crowded buses, especially during peak hours.
However, I have several concerns about how the Government is going about achieving this intended outcome.
Planning and regulatory failures
The plans to increase the bus fleet to ease commuters’ woes are long overdue. Over the past 10 years, Singapore’s population has grown by over one million people, yet the pace of expansion of our transport infrastructure and operations has not kept pace.
The Government’s failure to expand our transport infrastructure and operations in tandem with the influx of foreigners has led to the current situation of long waiting times, overcrowded buses and trains, and very frustrated commuters.
The Government has belatedly realised that the quality of service (QoS) standards that the public transport operators (PTOs) signed up to previously are not sufficient to meet the needs and expectations of commuters.
Who established these service standards? Is it not the Public Transport Council (PTC), which is an agency under the Ministry of Transport?
Why did the PTC set the bar for QoS standards so low? For example, the current QoS allows for bus loading of up to 95% capacity. This is a very generous allowance, considering it includes standing passengers, not just sitting passengers. I have boarded such packed buses before, where I have found myself standing on the entrance stairs, barely able to even reach the fare card reader to tap my ezLink card.
Despite this, both bus operators failed to meet the standards in 3 of the 6 months in the most recent QoS reporting period . They were issued paltry fines in the magnitude of $100 each time they were caught not meeting these standards.
Now the Government wants to set slightly more stringent QoS standards for the PTOs. Among these, the bus loading limit will be lowered from 95% to 85%.
If the Government had set these more stringent QoS standards earlier, and rolled them out more gradually over the past 10 years in anticipation of our population boom, there would be no need to suddenly ramp it up now. Bus operators could have planned their purchases of new buses and factored them into their annual cost projections.
This might have cut into their profit margins, but taxpayers might have been spared having to fork out $1.1 billion to help the operators meet these sudden new standards.
The Government needs to answer for this planning and regulatory failure.
A related question I have on the QoS is whether it is really the case that the Government cannot increase the standards without breaching the contracts with the bus operators. I understand the PTOs operate on 10-year contracts. When were the current contracts signed and when will they be up for renewal?
According to the PTC website, the QoS standards were revised in August 2007, August 2008 and August 2009. Obviously these were done mid-way during the contract. Why are we being told now that the Government cannot revise the QoS standards without compensating the PTOs?
Scrutinising the costs
A second broad concern I have about the Bill is how is the Government is going to ensure that the subsidy does not get used, either directly or indirectly, to improve the bottom lines of our very profitable PTOs.
During the Committee of Supply debate in March, the Transport Minister said he was going to “scrutinise the PTOs’ actual costs for the purchase and running of the buses” to ensure that PTOs do not profit from this subsidy. Unfortunately, the Bill does not prescribe any mechanism for this scrutiny.
Is there any process in place to prevent the PTOs from acquiring spare parts or maintenance equipment, or conducting staff training using BSEP funds, that can be used to benefit the rest of their fleet?
How will the LTA prevent the PTOs from making the BSEP buses run only the unprofitable routes in far flung areas, while running the profitable routes using their own buses?
In short, how is the Government going to prevent BSEP funds from cross subsidising other parts of the PTOs’ operations?
Will the operations and accounting for the 550 buses be managed by the PTOs, who will then report the figures to LTA and seek funding accordingly? Will LTA take at face value all the figures the PTOs report to them? How will LTA audit the reporting?
Will the establishment of the BSEP mean that LTA will need to set up another department to manage and audit the operations of the PTOs? How many more staff is LTA going to have to hire to manage this 550 bus operation? How much is it going to cost? Is this cost going to be part of the $1.1 billion package or is it extra?
Who is going to fund the operations and replacement of the 550 buses after the 10 years are up? Is this the last such subsidy that taxpayers are going to give to PTOs? If not, are we on a path to permanent operational subsidies being given to these two listed companies?
Public transport model
During the COS debate earlier this year, the Transport Minister, in arguing his case for having profit-oriented companies run public transport operations, said that “the profit incentive drives the operators towards higher efficiency and productivity, which keeps costs as low as possible”.
This sounds ironic in light of all that has happened under in the past year.
Commuters have experienced the most serious and sustained series of MRT breakdowns in its 25-year history. It was not just the December 15 and 17 stoppages, but several other disruptions on the Circle Line, the LRT, the Northeast Line and the East-West Line that took place after that, some of which occurred as the MRT Committee of Inquiry (COI) was underway.
Now despite all the official justifications for the BSEP, there is no running away from two facts: One, that bus service standards are not up to the mark and, two, the government is stepping in to the tune of $1.1 billion to subsidise the service recovery.
What higher efficiencies has the profit-oriented model brought us? We have not seen an improvement of service quality, but a deterioration, especially over the past 5 years. We have seen fares increase but yet the government still needs to pour in billion dollar operational subsidies. We have seen trains breakdown due to underinvestment in maintenance, yet these companies are reporting hundreds of millions of dollars in profits each year. Since 2003, SMRT and SBS Transit have paid over $1 billion in dividends to their shareholders.
Public transport is an essential public good just like education, healthcare and public housing. The returns from this public good benefit more than just the commuters themselves. When commuters are able to get to work quickly, conveniently and in comfort, their companies benefit from their more productive work. By allowing them to reach home on time after work and with less frustration, they can build better relationships with their families, and perhaps even help to raise our nation’s total fertility rate.
The economy and society benefit when we have good and affordable public transport. These positive externalities do not show up in the balance sheets of the PTOs.
The BSEP seems to recognise that greater government investments are necessary to rectify the market failure in the public transport industry. With this Bill, the LTA will not just be a regulator, but will purchase the buses and fully fund their operations. Effectively the LTA, which is a government agency, is going to be the de facto owner of a fleet of 550 buses plying our roads.
However it is neither here nor there. The BSEP does not introduce any competition to spur efficiency and service improvements, yet we do not have a full public monopoly that reaps be benefits of direct control, with profits being reinvested to improve service quality. It is the worst of both worlds.
The public transport model has a great bearing on the long term outcomes of our public transport system. The focus of our bus and train operators should be on improving service quality to meet or exceed commuters’ expectations, not maximising profits for their shareholders.
Mr Deputy Speaker, as a daily commuter myself, I share the concerns of many Singaporeans about the quality, comfort and affordability our buses and trains. The public transport failures of the past few years have caused much angst among Singaporeans. It is incumbent upon this Government to set things right, both in the short term as well as in the long term.