Nationalising Public Transportation – Is it feasible?

Azhar Khamis /

The Workers’ Party manifesto for the 2011 election contains a proposal to nationalise our public transportation system for trains and buses.

Lim Hwee Hwa, former Second Transport Minister, said then that the government had considered the idea before, but did not think it was feasible and that commuters would even be worse off, citing how other countries have failed in doing so. She did not delve into any specifics.

Is it really not feasible for us to have a nationalised public transportation system?

To answer that question, we probably need to analyse the current system first.

The current public transport system for buses and trains are run by public listed companies with shareholders to answer to and is inevitably profit driven. As no company is willing to operate at a loss in the long run, profits will rule over everything else at the end of the day.

It sounds as if making a profit is a sin. It’s definitely and absolutely not.

However, there are 3 key points that explain why our current public train and bus services, with its profit-generating factor, is actually putting commuters at the losing end.

Firstly, profits made by the transport companies are guaranteed by national policies. The government has openly said that these companies must continuously be profitable to ensure that service standards will not suffer. Profit and loss (P&L) is synonymous with any business but in this case, the companies are ‘protected’ from loss.

Secondly, this ‘protection’ is accorded to two companies only, with no signs that the privilege will ever be revoked. SMRT and SBS Transit are the only two companies allowed to provide public train and bus services as they have been for many years and probably will be for many years more.

Thirdly, the government, hiding behind pseudo private companies in the name of GLCs, is a major shareholder of one of these profitable companies. Temasek Holdings is the biggest shareholder (54.37%) in SMRT, indirectly owning it. Singapore Labour Foundation, a statutory board, also has shares in ComfortDelgro who is the major shareholder of SBS Transit.

Looking at the above 3 points, isn’t our public transportation system already considered nationalised when the government has significant shares in the only two companies that provide the service?

Is there any difference between the current system and a nationalised one? Yes, there is – profits.

So back to the question – is it feasible to have a nationalised public transportation system? Yes it is. We simply need to remove the profit-making portion.

We are a small country, therefore competition in public train and bus services is practically non-existent and the current government is fully aware of this. How else can we explain the reason why

– only two companies allowed to operate train and bus services

– the two companies area of coverage do not overlap, each having their own profitable domain

– fares are practically the same regardless which bus or train service you commute on

Since there is no competition to begin with, why the need to privatise our train and bus services and then have a Public Transportation Council (PTC) with 16 council members, excluding support staffs, to regulate something that can’t be regulated anyway?

With a nationalised public train and bus service, the system is owned by the government and managed by LTA who will then appoint a company to operate this system through profitable contracts.

The company need not even be paid as they can generate revenue through rights to sell advertising space on the trains and buses and collect rentals from retail space in train stations and bus interchanges.

With no shareholders to answer to, the cost to operate this system will then be collectively paid for by commuters without anyone making a profit out of it.

If done correctly, a nationalised public transportation system will definitely be beneficial to commuters.

Profits is NOT the only way to ensure good service as claimed by the government.