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Why public transport fares should not be raised

by: Dr Wong Wee Nam/

The issues at the General Election 2011 were the high cost of living, the income gap between the rich and the poor, the terrible public transport squeeze, the exorbitant HDB prices and the overpopulation of the country by foreign imports. With their votes, the people sent a clear signal what their dissatisfactions were. In a humble post-election display, the PAP admitted these were problems that needed to be looked into. It appeared that Singaporeans were finally going to see some real changes.

It did not take them too long to be disappointed.

Those who hoped for the better will need to take note of what Dr Vivian Balakrishnan said shortly after being elected. He told the media, “The election has been a good learning journey and at the strategic level, many PAP policies are right but their implementation and communication can be improved.”

So it is not that the policies are wrong and need to be changed. What needs to be improved is communication. In short, what it means is that the right words can make a person feel the suffering less.

Alas, if only psychotherapy could help compensate for a bad policy, then we should just use propaganda to keep a people happy. Unfortunately with the new media, this method of satisfying the population no longer works.

The Role of a Government
To see whether there is going to be any improvement in the lives of the citizens, we must first see what the role of the government is. Is it to take care of people or is it to take care of the interests of the big businesses or corporations?

In a caring society, the job of the government is to look after the people’s interests first. It must not pander to the lobby of the big businesses at the expense of the common people. The lack of a minimum wage and allowing the excessive import of cheap foreign workers are good examples of a pro-business government.

Basically, the job of a government is to provide social goods, distribute income and wealth and stabilise the country through high employment, price stability and economic growth. If the government does none of these, the people will suffer.

In social services that everyone needs, it is the role of the government to see that the charges are maintained at a level so that the lower economic group would not be deprived of their usage. If transport costs become too expensive, it would not only deprive the poor of its usage, it will increase the cost of living as well as business costs. The same goes for public utilities. If basic health care cost is priced beyond the reach of the lower income group, they will just remain sick and untreated.

Thus, unless the PAP government sees its job as primarily to look after the people’s interests first and not assist the big corporations as much as it had in the past, the policies are not going to change much.

The Status Quo
A lot of our public services like transport, utilities and telecommunications have been made to be run like businesses. State monopolies have become privatised monopolies. As a result, profits become a big consideration for these privatised State agencies. A business that has a government as its partner is such a potent force that it can ensure profit for the agency and leave its citizens helpless. It does not need business acumen but edict to be profitable. Such a business effectively makes money from the taxpayers whose money had been used to build the infrastructure needed to start and run it in the first place.

The latest public transport furore is a good indication of how much the PAP is prepared to change. Transport is an economic necessity and a social good. The roads and the rails are built with taxpayers’ money. With regulated non-duplication of services and a captive market, the transport operators are actual monopolies with guaranteed profits.

This is why all these years they have been raking in huge profits. Yet recently, without any good explanation, both SBS Transit and SMRT have applied for a maximum increase of 2.8 percent for bus and rail fares.

Unfortunately, Transport Minister Mr. Lui Tuck Yew, instead of coming to the defence of the commuters, noted that the profit incentive of commercial enterprises spurs efficiency and productivity improvements.

At a National Day celebration in his Teck Ghee Constituency, Prime Minister Lee Hsien Loong also pointed out that from time to time, fare increases cannot be helped.

“We have to allow the transport companies to break even and to make reasonable profits so that they can provide good service.”

Competition is said to increase efficiency and keep costs down. However, this does not apply to the public transport services in Singapore. By not having duplicated services, there is no real competition amongst transport operators in Singapore.

It is no surprise then that these two public transport operators do not reduce their fares independently of each other to compete, but instead apply together to raise their fares. Is this how competition works? It appears to work more like a cartel.

Looking at the good returns they have been getting all these years, there is no good reason for the fares to be increased at this moment. The cost of living is still rising, the wages are still being depressed and the population is still increasing. If the hawkers who are struggling to make a living can be asked not to raise their prices, there is no reason why the transport companies cannot be asked to keep down their fares.

Unlike the hawkers, this is no sacrifice to the transport companies at all. With an increasing population, more and more people are being squeezed into the buses and the MRT trains. The sheer volume will ensure a tidy profit as any further increase in numbers will not incur further variable costs.

The profits of the transport companies over the years diagrammatically appear like the chart below. With such an appearance, these companies do not look like going to be folding up soon.

Should the transport companies then be allowed to increase their fares?