Khaw Boon Wan: Government don’t need SMRT to make money

Minister of Transport Khaw Boon Wan had stated in Parliament on Tuesday that despite the inherent conflict of interest between Land Transport Authority (LTA), Temasek Holdings as the government investment body and SMRT as a 100% owned company under TH, the three can work as a team with proper checks and balances.

Mr Khaw was responding to queries by MP for Hougang SMC Low Thia Kiang during Parliament on Tuesday (7 November) who filed the last question on the issue of MRT tunnel which was being flooded on 7 October.

Mr Low said, “The minister just now expressed his disappointment that Mr Lim Boon Heng, CEO of Temasek Holdings took too long to appoint a new chairman of SMRT. But he must not forget that the mission of SMRT is to make money for the government. I’m of the opinion that the multiple problem (sic) congregated today of the train services, the core of the problem is money.”

He then stated that the Government expect profits from train operator, adding that at the same time it also expect efficiency, “tip-top” maintenance work.

“I noted the minister is steering the existing framework of checks and balances between the ministry which holds the purse string, the regulator, LTA, and also the operator, towards one team,” he added.

Mr Low noted. “First, the Ministry of Transport, the LTA, and SMRT each has a role to play, how does the minister ensure that each of them, still can play the functional role well, when they work as a team and become good friends,”  and then said, “Second clarification, hammering everyone to work together to solve the problem now as a team is important, but what about instituting a structural system of checks that should be embedded to ensure efficiency, honesty, and integrity. ”

Responding to this, Mr Khaw stated that he disagrees with Mr Low comment, saying that SMRT is not there to make money for the government.

“There are easier ways to make money. You don’t have to use SMRT to make money,” he stated.

The Minister then said, “What – is the same thing with the restructured hospitals, which I have a lot more experience. We need to provide a public service. So the reason we restructured is so that we can exploit the commercial discipline – the financial discipline of the commercial sector, so that in the process of providing this public service, you can get the best cost-effectiveness of the operation achieved.”

“And it’s the same thing with the SMRT. We could have done it as a government department. But I think the decision was not wrong,” he added.

Mr Khaw then said, “To put it as a corporatised company, fully owned by the government, they know and the leadership of such company must know, and Mr Seah knows that this is, for example, an engineering outfit. Making money is not your objective, but you must not lose money.”

“There must be financial discipline. Cannot just anyhow go and spend money, buy this, buy that, gold plate everything -and then, of course, you can have a marvelous operation and so on, but at great cost to who? It’ll be to the taxpayers,” he added.

The Minister then took the opportunity to point at the Aljunied-Hougang town council run by Mr Low, saying, “There’s no free lunch, Mr Low. He knows it, he runs the town council. He needs to balance the account too. And he knows the importance of governance. So, when your team fails him, what does he do? So those things are important lesson for everyone. What happens in SMRT, I think has applications to the others as well.”

Mr Khaw then stated that there are different roles that SMRT, LTA and MOT play.

“I thought I explained that in my statement. We are all very clear. As far as LTA is concerned, three roles and an unspoken fourth role. But the importance of working as one team is especially at the stage of SMRT which is in, whereby you have to renew the assets of North South East West line, if you cannot work as one team, I think there will be trouble, as there were trouble in the past,” he said.

He then noted that the important thing is that they function as one team, so each time a problem crops up, they are able to settle it as one team.

“But that doesn’t mean that we blur the boundary and therefore forget about individual roles and checks and balances. So I think yeah it may sound to him as schizo(phrenic), but we are quite clear in our mind and it can be done,” he ended.