Justification for the impending fare hike – SMRT need more profit?

Justification for the impending fare hike – SMRT need more profit?

By Philip Ang

I refer to Asiaone article “Concessions to cushion fare hikes“.

The government has once again cherry picked data to support another round of increase in fares for public transportation without first ensuring that the standard improves.

Minister Lui pointed out that “..fares have gone up by a cumulative 2.7 per cent from 2005 to 2011”.  While that may seem like an acceptable amount, he forgets to mention that train ridership has gone up from an average of about 33 million per month to 53 million over the same period.  link   Public transportation is now the preferred mode of transportation for foreign employees of construction companies where this wasn’t as so in the past.  On weekends, it is heavily utilized by local foreign workers.  Seats have been removed and there is even a peak hour of sorts.  Traveling on public transport has become stressful.

Prices of diesel increase justify fare hikes?

Mr Lui cited the “rise of diesel prices by about 90 per cent, as well as that of national average wages by about 30 per cent over the same period”.

Interesting fact – For FY 2013, electricity cost for SMRT rose only 1.7% while its diesel cost was reduced by 5.6 %.  SMRT press release 30 April 2013

The government has frequently cited rise in fuel prices (eg. 2011 SMRT applies for fare adjustment) to justify fare hikes. Strangely enough, the government remains silent when fuel prices decline.  Commuters’ interests have been sacrificed to pad the bottom line of PTOs.

SMRT not making money?

Another set of data which has been cherry picked pertains to SMRT net profits.  Lui cited SMRT net profits “went down by 50 per cent within the last two financial years”.

Another interesting fact – SMRT profits averaged $160,000,000 for the preceding 3 years. SMRT summary report 2013  (page 3)

If SMRT was not making so much money, the total compensation package for its former profit driven CEO should not have been $1,800,000 after inconveniencing commuters with a series of epic breakdowns.

smrtreturns

Well worth investment for Temasek Holdings

SMRT has been a money printing machine for Temasek Holdings which owns 54.28 per cent or 824,400,030 shares.  link (pg 38) SMRT was listed in 2000 at 61 cents. Temasek Holdings has recouped more than its initial investment after receiving 69 cents in total dividends. (till 2011)  SMRT dividends since 2001

Temasek Holdings total dividends since listing amounted to $568.8 million in 2011.  Looking at this another way, its initial investment has been more than recouped and the shares it currently holds are its profits. (at market price of about $1.30, more than double its investment)  For no reason acceptable to the general public, the government prefers to ‘lock up’ money which belongs to all Singaporeans in a ‘no-one-knows-where-the-money-is’ account.

Income not solely based on fares

smrtearningsSMRT business is not solely public transportation but includes retail and advertising.  Non-fare has exceeded fare earnings before interest and taxes (EBIT), currently at $93.7 million and $33.3 million respectively.  (SMRT Report pg 12 and 13)  Prime properties which were handed to SMRT on a silver platter by the PAP government belong to all Singaporeans and these have been reaping increasing returns.  SMRT cannot simply ignore this and attribute every fare hike to factors which affect only transportation i.e. fuel increase, fuel increase and fuel increase.

Singaporeans are not dumb to insist that there should be no fare hikes on the horizon.  What is not acceptable are the perpetually same reasons put forth and the manner of execution – forming pro business committee which offer ‘excuses’ to justify fare hike.

Instead of going the roundabout way wasting resources and time on administration, the issue of concessions is easily resolved with contributions from Temasek Holdings’ (SMRT) enormous profits.

Ordinary Singaporeans contribute directly to Temasek Holdings’ SMRT profits.  It is morally repugnant for a government to keep these profits for share investment/speculation while insisting on ordinary Singaporeans to cross-subsidise by means of another fare hike and pass the burden to them.

 

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