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Transport fares: Up again?

Leong Sze Hian and Joshua Chiang /

We refer to the report “PTC to review fare adjustment formula after 2012”  (Channel News Asia, Jul 14).

Fares formula valid until end 2012?

It states that “[t]he Public Transport Council (PTC) will review the fare adjustment formula for subsequent years after 2012 when the validity of the current formula ends”.

The current formula is : 0.5 CPI (Consumer Price Index)  + 0.5 WI (Average Wage Increase) -1.5%

On what basis does the statement say that the current formula’s validity ends in 2012? What is it that will make the formula invalid, and thus open for review, only after 2012?

The last fare increase was in 2008 at 1.7 percent. If the current application by transport operators for an increase of 2.8 percent is passed, it would mean a total fare increase of 4.5 percent for the period of 2008 till now. During the same period, real median wages have DECLINED by 3.9 percent.

Surely, a formula that may result in a total fare increase against a real median wage decrease over the same period needs to be reviewed now, and not until 2013!

In the same article, Transport Minister Lui Tuck Yew reportedly said it is “usually the profit incentive of commercial enterprises that spurs efficiency and productivity improvements.”

In this connection, the distance fares were implemented last year when for the first time in the history of the current formula, the result would have been a decrease in fares for all commuters across the board!

While the PTC should be allowed to “deliberate on the fare adjustment proposals properly and to come to its decision”, surely it should not be allowed to do another fait accompli on commuters.

As to the Ministry of Transport (MOT) saying the deliberations will bear in mind the interests of commuters and “long-term viability of the public transport operators”, as the Workers’ Party’s statement on 14 July has pointed out, with a total profit of $215.4 million last year, surely the “long-term viability of the public transport operators” may not be at risk if the fares increase application is rejected.

Higher service standards: Really?

The Transport Minister also argued that nationalizing the public transport system has “serious downsides” as commuters and taxpayers - including those who do not take public transport - are likely to end up paying more and that they may also see lower service standards over time.

He added that there will be “little incentive to keep costs down, if a nationalised public transport operator works on a cost-recovery basis and depends on the government for its funding”.

Has the Minister forgotten that the operators’ reason for applying now for a fare increase is due to “costs pressures”?

Also, going by the Minister’s reasoning, shouldn’t we be privatising more Government agencies and monopolistic providers of public goods and services, instead of maintaining or creating new ones?

Does he not wonder how most other countries do it with public transport operators that are truly “public”?

Whilst on the subject of “lower service standards over time”, we must say that we have to agree that transport service standards have been deteriorating over the last few years in Singapore.

We have noticed a trend, when taking the MRT or buses during peak hours, that more commuters may be travelling in the reverse direction to their destination so that they do not end up seeing so many trains and buses go by filled to the brim, had they waited at their normal stops. This may actually result in more commuters being unable to get on board even as trains and buses just depart from their terminals, because more people are travelling backwards towards the terminals.

In spite of this trend which is clearly a deterioration in service standards, we still have one of the most expensive fares in the world, primarily because we do not have unlimited travel monthly passes like almost all other developed countries like Hong Kong, Malaysia, the United States and the United Kingdom.

Record profits again?

Since it was said in conjunction with the implementation of distance based fares last year that the operators' would lose out in revenue, because two-thirds of commuters would pay less, why is it that the combined profits of the two operators have once again hit a record high for last year?

This, like practically every reason (or as some may say- every conceivable excuse), given for increasing fares in the past, has failed the ultimate test of eventual statistical outcomes.

P.S. Leong Sze Hian has written more than 50 articles about public transport over the last decade or so.