Roadworks’ fees increase by 25 times? – $52m? – Won’t pass to consumers?

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Higher road works charges

I refer to the article “Higher road works charges from July 1 to reduce traffic disruptions” (Straits Times, Mar 31).

No more $165 per job?

It states that “The Land Transport Authority (LTA) is revising its fees for road work applications from a flat rate of $165 to include a time- and distance-based charge. The price also goes up during peak periods.

Additional $60 per peak hour + $0.30 per meter per hour?

With the new formula, a five-hour closure for a 5m lane of road will cost more than $300 if the work begins at noon. After midnight, the fee will be more than $150.

The authority explained that it has seen an “increasing trend” in the number of permits issued annually – from an average of 725 a month in 2010 to 1,000 last year.

Around three-quarters of these involve constructing and repairing utility lines, and take an average of around two weeks to finish.

The new fee structure states that for every peak hour, the base amount is $60, with an additional 30 cents for each metre of road lane closed.”

Increase in revenue of … ?

What is the estimated additional revenue from this increase in charges?

Increase about $307.50 per day? 

Does it mean that the increased charges per day (using the example cited in the subject news article) are about $307.50 ($60 x 5 hours + $0.30 x 5m x 5 hours)?

Increase about $4,305 per job? 

Compared to the old flat charge of only $165 for the whole job (“a flat rate of $165 for each application regardless of the time taken and amount of road space“) – does it mean that the average two weeks’ job’s increase is about $4,305 ($307.50 x 14 days)?

2,500% increase?

So, it works out to an increase of about 2,509 per cent ($4,305 divided by $165)!

Additional revenue of $52m?

With an average of two weeks for 1,000 permits a month – does it mean that the additional revenue in a year is about $51.7 million ($4,305 x 1,000 x 12 months)?

Won’t pass on the increased costs ($52m?) to consumers?

As to “M1 said the hike will mean higher business costs, but insisted that it does not plan to pass this on to customers. Instead, it “will look at ways to minimise such costs”.

StarHub said that it is reviewing the effect of LTA’s new charges” – how likely is it that the huge estimated increased costs illustrated above will not be passed on to consumers?

Improve co-ordination & productivity?

Instead of simply increasing the charges by about 25 times – why not work with the authorities in charge of our national productivity improvement initiative, to try to make the LTA’s co-ordination and scheduling of road works more efficient, and also with the entities that apply for roadworks to try to enhance their productivity to shorten the length of time required for each job.

Due to increase in population & infrastructure?

After all, I believe entities do not apply for roadworks unless it is absolutely necessary, and given the rapid increase in the population and infrastructure – it may be inevitable that the number of roadworks’ applications (“increasing trend”) may have to go up.

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as 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), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.