New fare hike may hit elderly and poor the most. By Leong Sze Hian.

Much ado about nothing, PTC?

Leong Sze Hian / Columnist

Senior citizens and poor may be hit most by fare hike

I refer to the Public Transport Council’s (PTC) press release on the increase in public transport fares from 1 October 2008.

The question that may perhaps be foremost on most people’s minds, seems to be absent from the 13-page report - What will be the projected increase in profits of the two transport operators ?

In this connection, since the “public transport operators will receive, an overall net adjustment of 0.7% (or about $ 10.1 million) to the public transport system’s total fare revenues”, does it mean that the projected increase in profits may only be just over a million dollars ?

I estimate this figure to be only about $ 1.6 million, based on SBS and SMRT ‘s Profit to Revenue Ratio of 7 and 19 per cent respectively.

In my view, one of the issues with the review of past fare increases, was that almost every time, the exhortations that costs were rising and would impact transport operators’ profits, ended up with ever increasing record profits for operators like SMRT, whose profits increased by 18 per cent per annum from 2002 to 2008.

Unless there is an estimate of the projected profits, there may in a sense, be no benchmark for profits pre and post-fare increase to be evaluated.

Looking at the details of the increase, I believe the brunt of the increases may be borne by senior citizens and the lower-income, as they are the ones who may more likely take feeder and direct bus services - these being the cheapest travel options. The four cents increase for feeder bus and senior citizen concession EZ-link fare (shortest distance), is an increase of six per cent, on top of the about 7 per cent per annum increase from 30 to 67 cents from 1995 to 2007 for feeder fares.

This translates to an increase of 137 per cent in feeder fares from 1995 to 2008.

So, perhaps the key question and statistic, may not be that “a majority of commuters (64%) will benefit directly from the transition to distance-based through fares”, but who are, and how much more the 36 per cent may be paying - senior citizens and the lower income ?

With regards to the ROTA (Net Profit after tax/Total Assets) comparison with various companies which ranged from 2.8% to 10.1%, why does a public transport company like SMRT have a ROTA of 11.1%, which is higher than all the other transport and non-transport companies ?

In fact, SMRT’s ROTA increased by 85 per cent, from 6.0% in 2004, to 11.1% in 2007.

Why do we only compare Singapore’s fares with cities that have some of the highest median incomes in the world, namely Hong Kong, London and New York ?

Moreover, cities like London and New York, have discounted multi-modal monthly unlimited ride passes for all including subsidies for senior citizens, which Singapore does not have.

So, average fare comparisons may not be very appropriate.

Finally, I am somewhat puzzled that the Transfer Rebate increase by 10 or 12 cents (SBS will bear 6 cents), and by 14 cents (SMRT will bear 7 cents), do not seem to match “the transport operators will absorb a larger share of the cost of the increase in transfer rebate (i.e. 10 cents).

Isn’t SBS’s absorbing 6 cents out of say 12 cents, and SMRT’s 7 cents out of 14 cents, equal to about half the 15 cent rebate, i.e. about 7.5 cents instead of “(i.e. 10 cents)” ?

So, are they absorbing about two-thirds (10 divided by 15 cents) or half (7.5 divided by 15 cents) of the transfer rebate ?

Furthermore, how does a rebate of 10 or 12 cents (SBS) and 14 cents (SMRT), become a 15 cents rebate ?

Given the above apparent anomaly, are the revenue increase and fare adjustment figures correct ?

(I stand corrected if I am wrong, as I am just an ordinary citizen, trying my best to analyse the complexities of the fare increase ?

By the way, since the projected increase in profits may be just over a million dollars, and motor vehicle revenues was about $ 3.4 billion, why not just take $1+ million and do away with the new fare increase, which may affect the lower-income and senior citizens more adversely ?


Come join us at Hong Lim Park tomorrow (Saturday, Sept 13) at 5pm. Take the train to Clark Quay station and follow the signs in the station. Use “Exit A” and you’ll be right at Speakers’ Corner.

We will have six speakers who will share their views on the hike and on public transport.