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Unfounded claims from LTAs train purchases for SMRT

~by: Ng Yi Shu~

A recent report detailing the purchase of trains for the North-East Line and Circle Line has got netizens abuzz around allegations of LTA using taxpayer costs to benefit SMRT and SBS Transit, the private train operators.

Under the Land Transport Authority [i] of Singapore Act, the Land Transport Authority has the duty to “plan, design, construct, manage, operate and maintain the railway in accordance with this Act and the Rapid Transit Systems Act” as well as “to approve and regulate the operation of the railway in accordance with this Act and the Rapid Transit Systems Act.”

An article[ii] on The Online Citizen also detailed how the different organisations were responsible for different aspects of the rail system. To quote:

“SMRT is a publicly listed company. It was incorporated into the Singapore Stock Exchange in the year 2000, and is majority owned by Temasek Holdings (stake: 54%). SMRT enjoys an annual turnover of nearly S$700 million and has total assets worth more than S$1.4 billion.

SMRT manages the train system and is responsible for the maintenance, operation, repair and security of the train network.

However, SMRT does not build or own the physical infrastructure within which its trains operate. The physical infrastructure is built, owned, and maintained by LTA using taxpayer dollars. SMRT leases the physical apparatus from LTA in order to run the train system. Only the rolling stock and detachable assets belong to SMRT.”

Legally, LTA owns the rail infrastructure while SMRT and SBS Transit act as rail operators. Hence, there seems to be no real legal issue surrounding the tender of contracts to purchase trains for the rail operators.

In essence, LTA, SMRT and SBS are part of a public-private partnership (PPP). The public sector (i.e. the LTA) acquires and pays for the infrastructure on behalf of the community and is ultimately responsible for the delivery of services (the main reason LTA enforces fines) while the private sector only provides for the delivery of services for a long period of time[iii] (i.e. a 30 year operating licence agreement between our rail operators and LTA).

Last year’s major rail disruption had shown the problems endemic to our rail system – SMRT’s profit orientation and LTA’s lack of enforcing maintenance checks on rail networks allowed lower spending on maintenance and cost-cutting to take place at the risk of passenger safety. However, this only points to SMRT being profit-oriented in nature.

The claim that both LTA and the rail operators are ‘socialising costs, privatising profits’ may hence seem to be unfounded – for now.