Transport Minister’s logic

Transport Minister’s logic

Posted by theonlinecitizen on August 10, 2011

by: Leong Sze Hian/

The Transport Minister said that the opposition National Solidarity Party’s (NSP) proposal to introduce more competition among public bus operators, is not feasible because it would only lead to “cherry-picking” of the profitable routes among transport operators and might not benefit commuters.

I fail to understand the Minister’s logic as introducing more transport operators does not mean that the existing two operators will be released from their current obligations under the USO – universal service obligations – to run buses on non-profitable routes, so that there is a certain amount of cross subsidy that is taking place from the profitable routes to the non-profitable routes.

Like the Scheme B private bus operators scheme in the 1970s, more operators may mean more competitive fares, less congestion, more choices, routes, etc, for commuters.

2.5 per cent reduction? Really?

In this connection, with regard to the Public Transport Council’s (PTC) response to queries in the media about the fare adjustment formula, which is on its web site, that the PTC implemented the full fare reduction of –2.5 per cent allowed under the fare formula last year, I would like to point out that 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.

Actually, 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.

Fare formula skewed?

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

This is why I would again like to support Mr Cedric Foo, Chairman of the Government Parliamentary Committee’s (GPC) recent call for the fare formula to be reviewed now, instead of the PTC’s statement that it will only be reviewed after 2012 when the validity of the current formula ends.

Debate boxed-in by formula?

As to the PTC’s remarks that it is fairer to use nominal wage data instead of real wage data in any comparison of the transport fare hike and inflation rates against wage growth, I feel that the debate and analysis on fares, should not be confined to the way the formula has been formulated, because from the perspective of ordinary Singaporeans, should fares go up when their real wages are down?

When real wages are down, you already have less money for expenses – why increase basic necessities like public transport as well, when the combined net profits of the two operators are at record highs?

Increase fares = Lower wages?

With regard to former labour chief and minister Lim Boon Heng’s remarks that fare
increases also went towards funding pay rises for workers, and that whilst raising bus fares is unpopular – if we cannot raise bus fares, how will that impact workers as it is not fair if they cannot get wage increases, I understand that bus drivers who were typically paid a basic salary of about $1,400 in the past, now get only about $1,000.

The bottom line is that the total wage of bus drivers has generally declined over the years, despite fare increases


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.