While speaking in Parliament on Monday (8 July), Transport Minister Khaw Boon Wan revealed that the Government is currently subsidising more than 30% of public transport operations, and it would not be sustainable to continue this practice of relying on government subsidies to fund public transport infrastructure.
He said that the total cost of running the rail network has increased by around S$270 million between 2016 and 2017, adding that the rail companies are “operating at a loss”, as the fares paid by commuters do no cover operating costs.
SMRT Trains, he added, incurred a loss of S$86 million, while SBS Transit’s train division also lost tens of millions of dollars, as seen in the latest reported financial year.
If that is not all, Mr Khaw also highlighted that the Government has spent “around S$1.9 billion to take over ownership of all rail operating assets”.
Although the S$1.9 billion is a one-time expense, the Government is also responsible for the “proper and timely renewal” of these assets, which is “a huge and continuing financial liability”, said Mr Khaw.
As such, the Transport Minister stressed that Government subsidies given out “have exceeded their intended scope of funding the civil infrastructure and the first set of operating assets”.
“With intensified maintenance to reach the current level of reliability, the Government operating subsidies have increased further. Over the next 5 years, the Government expects to spend S$4.5 billion on operating subsidies, so this is nearly S$1 billion a year. And this will be on top of the government spending of S$25 billion on civil infrastructure, to build and to equip new lines,” he explained.
Having said that, although Mr Khaw did not openly say that the fares will go up, he hinted that higher fares would be necessary to keep Government subsidies in check in order to avoid further losses.
He also added that the Government will continue to operate under the current Public Transport Council (PTC) fare formula, which is valid till 2023. “But we must have the discipline to implement the formula fully, as we adjust fares over the next four years,” he said.
He added, “In due course, the PTC will need to review the fare adjustment mechanism to reflect the increased operating cost to support the intensified maintenance, and the additional operating subsidies from the Government to the MRT system.”
Mr Khaw also mentioned the system will have to be funded by either taxpayers or commuters, and “we’ve just got to find that balance”.
After a video of Mr Khaw speaking regarding this in Parliament was posted on TOC’s Facebook page, netizens slammed him for hinting that the fares may go up. They said that it’s the Government’s job to serve the public, and public transportation is something that the citizens paid for via their taxes so the Government should do everything in their power to give the best. Some mentioned that “public transport system globally have rarely be profitable”, so subsidies are an integral part in providing efficient and affordable public transportation.
Others asked why are the funds collected in road taxes, COEs, PARFs, parking fees and others not enough to cover public transportation’s cost.
A bunch of online users also said that it’s “ridiculous” for the Government to say that they don’t have enough money to provide subsidies and asking “suffering commuters” to pay for it. This is because the Government is still paying high salaries to the top management and Ministers, which is why it’s puzzling for them to now tell that they are running at a loss.
Facebook user Alex Zwm said that the people “need accountability to the actual expenses of the costs of running the public transport system”. He said instead of the Government saying that they must increase prices because of rising costs, these companies should “be subjected to public scrutiny of their costs since tax payer monies are being used to subsidize the overall costs”.