By Gordon Lee
The Singapore Government recently announced reforms to the way in which public bus services in the island state would be procured. Under the proposed new system, all bus infrastructure and operating assets will be owned by the Government. Bus operators would then bid to operate bus routes for a fixed fee, for a contract length of five years with a possible two-year extension.
Explicitly citing the example of London, the Singapore Government has committed itself to a long overdue change. The main benefits of the new regime are:
- Reduced barriers to entry hence encouraging competition instead of the existing duopoly
- Better ability to hold bus operators to account (with enhanced competition and the carrot of a contract extension)
- Sustainable bus industry with the public purse bearing the revenue risk
- Greater control by the Government over operating assets
The last point is an important one. As the Government directly owns the buses, it is better able to direct the purchase of buses, and to ensure that buses have standardised technology (e.g. smartcard readers, bus announcement systems, bus tracking system for real-time passenger information, etc.) without the need to negotiate the contract with each individual bus company.
Standardisation improves the commuter experience, contributes to economies of scale, and is better able to take into account the needs of the disabled. For example, bus services in London are standardised through the Transport for London (TfL) branding and the world famous roundel sign. Buses are strictly regulated and have to be of the same red colour and have (roughly) the same specifications. The iBus system which makes stop announcements is also very useful for the unfamiliar commuter and the blind.
My main recommendation is that there be revenue-sharing with the bus operating companies operating the bus route so that they have an incentive to ensure that commuters pay their fares. This will not cost the public purse as with effective competition, bus operators would bid lower in response to their anticipation of an additional revenue stream. The proportion of revenue shared should strike a balance between (1) providing bus companies an incentive to enforce the payment of fares and (2) giving bus companies certainty of revenue to maintain competition and good service provision.
Author’s note: London’s buses though not publicly owned are highly regulated. On this point, London could take a leaf out of Singapore’s book.
Editor’s note: There are still some uncertainties about how the contracts will be managed by the government, and if such a system does indeed produce healthy competition. Nevertheless, the move does reflect a departure from the earlier mode of operation in Singapore’s public transport system.