Formula almost guarantees fare increases

ST Forum


Jul 30, 2011

Formula almost guarantees fare increases


THE Public Transport Council’s (PTC) reply on Thursday (“Net fare adjustments went down, not up: Transport council”) to my letter (“…And why this hike isn’t”; July 15) states that “the PTC implemented the full fare reduction of -2.5 per cent allowed under the fare formula last year”.

The 2.5 per cent reduction was based on an estimate of the transport operators’ data, following the change to distance-based fares, which estimated that about two-thirds of commuters would pay less, with one-third paying more

Had the fare adjustment formula been applied last year, the result would have been a historical first based on the formula, as fares would have gone down across the board for everyone.

The fare formula has practically guaranteed fare increases in about seven out of every 10 years, because average wages and inflation have risen every year, in excess of the productivity extraction component, except for 2009.

This is why I support the recent call by Mr Cedric Foo, chairman of the Government Parliamentary Committee for Transport, for the fare formula to be reviewed now, instead of the PTC’s statement that it will be reviewed only after next year when the validity of the current formula ends.

As to the PTC’s rebuttal that I should have, in fairness, used nominal wage data instead of real wage data in comparing the transport fare hike and inflation rates against wage growth, my view is that the debate and analysis on fares should not be confined to the way the formula has been formulated.

From the perspective of ordinary Singaporeans, should fares go up when their real wages are down?

When real wages drop, one already has less money for expenses, so why increase the cost of basic necessities as well?

Leong Sze Hian



About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.