Raising bus fares leads to greater efficiency?

I found it odd, to say the least, for the Minister to suggest that fare increases will incentivise PTOs to provide better service and be more efficient. There is little incentive for PTOs to be more efficient if they know they can count on receiving more fare revenue whenever their costs go up. Neither is there much incentive to improve service beyond the minimum standard set by the regulator, when the PTOs are primarily accountable to their shareholders, not the public.

I have spoken at length in Parliament about the deep shortcomings of the profit-oriented public transport model that we currently have in Singapore. Here is some excerpts of what I said during the debate on the Land Transport Authority of Singapore (Amendment) Bill on 9 July 2012.

I was asked on Thursday by the Straits Times for my thoughts on Transport Minister Lui Tuck Yew’s Facebook post explaining the impending rise in bus fares. Mr Lui said that “The purpose of fare increases is not to boost the short term profits of PTOs (public transport operators). It is also not just to improve salaries of bus drivers but to improve service to commuters while keeping public transport operations commercially viable.”

I found it odd, to say the least, for the Minister to suggest that fare increases will incentivise PTOs to provide better service and be more efficient. There is little incentive for PTOs to be more efficient if they know they can count on receiving more fare revenue whenever their costs go up. Neither is there much incentive to improve service beyond the minimum standard set by the regulator, when the PTOs are primarily accountable to their shareholders, not the public.

I have spoken at length in Parliament about the deep shortcomings of the profit-oriented public transport model that we currently have in Singapore. Here is some excerpts of what I said during the debate on the Land Transport Authority of Singapore (Amendment) Bill on 9 July 2012:

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