http://theonlinecitizen.com/2007/09/11/public-transport-uniquely-singapore-f1-or-f9/
Posted by theonlinecitizen on September 11,
2007
In light of the just-announced increase in transport fares (again),
theonlinecitizen has decided to publish this series of letters
which our writer Leong Sze Hian had sent to the press over the last
few years.
This is to allow the public to see for themselves if the
problems/questions regarding our transport system have been
addressed and if such almost-annual increase in transport fares is
justified.
Read also our earlier article: Fare hike for public transport in
October?
September 2007: More Congestion = More Revenue?
According to Christopher Tan, the editor of Torque Magazine (Sep
2006), Each year, motorists collectively cough up over $ 3 billion
in taxes, duties and levies
. (not including) electronic
road-pricing (ERP) and parking charges. Yet, annual transport
related expenditure is sometimes only a quarter of the transport
taxes collected.
So, why do we still have to raise public transport fares,
practically every year, to keep making record profits ?
The Land Transport Authority may need to try to think about
creative new ways to address our transport problems.
In a way, there may be little incentive, because worsening traffic
jams, may mean even more revenue, as ERP is raised, almost
relentlessly.
Despite ever increasing ERP rates, traffic woes seem to continue to
worsen, like on the Central Expressway (CTE).
Perhaps we could consider some measures along the lines of
penalties and fines for public transport operators who do not meet
standards, like arriving within 10 minute intervals during peak
hours. How about penalising LTA, if traffic jams worsen, by
transferring some of their revenue to subsidise public transport
fares ?
Now, that may really get them cracking - to try to think out of the
box !
The Ministry of Transport has said that SBS Transit earned $32
million but has $500 million of assets, so its return on assets
(ROA) was 6.5 per cent; SMRT earned $100 million but has $1.1
billion of assets yielding a return of 9.1 per cent. These returns
are healthy but not excessive, compared to companies with similar
industry structures and risk profiles.
The ROA should not be the only, or a very appropriate measure,
because in the case of the Singapore transport operators, a fair
share of the assets were built-up from the retained earnings of
ever increasing profits over the years.
Thus, in a sense, it was a self-perpetuating system under which the
people of Singapore, in a way, paid for the bulk of the accumulated
assets.
Other measures, like the transport operators ever increasing
profits and dividend yield relative to other listed companies,
could also be used in determining whether returns are healthy but
not excessive.
TRANSPORT VOUCHERS: According to the PTC, among commuters who have
to make a transfer (1 in 4 commuters), most require one transfer,
say from a bus to the MRT or to another trunk bus. The majority of
such journeys will see a fare increase of 3 to 4 cents.
If one makes two such journeys a day, the increase per year is
$21.90 to $29.20. If the average commuter affected by the fare
hikes pays five cents more a day, assuming 2 bus/MRT transfer trips
a day, the increase per year is $ 18.25. This is based on a
conservative assumption that one only makes two trips a day, that
is, travelling from home to only one destination, without going
anywhere else.
The present system of giving $20 transport vouchers is flawed
because the amount is only enough to offset one years fare
increase. What about the fare increases of the previous years? The
needy whose incomes are declining should be given transport
vouchers as a matter of course and not only when fares go up.
In 2005, the $4 million Public Transport Fund set up and funded by
SMRT, SBS, Comcare Fund, the 5 CDCs, SLF and NTUC, received more
than 92,000 applications for 80,000 vouchers worth $50 each. The
funding organisations pitched in with the $600,000 needed to pay
for the extra vouchers.
The total of $4.6 million divided by $20 means that about 230,000
people received about $20 each to help pay for the transport fares
increase in 2005.
Even if we assume that all the about 104,900 households in the 0 to
10th decile with no income from work are retirees and others who
can afford the fares increase, we are still missing about 147,640.
Does this mean that they did not apply for transport
vouchers?
January 2003 TAXI FARES more or less?:
The Land Transport Authority (LTA) has announced that taxi
operators will have to pay a new monthly licence fee of $25 per
vehicle. With almost 19,000 cabs here, thats $470,000 a
month.
It was reported in the media that LTA charges SBS Transit and Tibs
only $10,400 a year to monitor service levels of buses.
Why does it cost 540 times more to monitor taxis? Is it possible
for the LTA to give a more detailed breakdown of how it costs $5.6
million a year to monitor taxis?
Also, what is the annual surplus (profits) of the LTA? May I
suggest that some of the surplus be used to reduce the new $25
taxi monitoring fee?
The LTA said the fee is less than $1 a day a taxi, so we dont
think it will affect fares.
If the LTA is wrong, and fares are increased, I would like to
suggest that the new fee be adjusted to offset any fare increase,
so that the consumer does not end up having to pay more.
Under the new monitoring system, errant taxi operators could be
fined up to $100,000 for each contravention. If fares are
increased, is it possible for the LTA to use any fines received to
reduce the $25 fee too, so that the impact on consumers is
lightened?
In my opinion, there is also another issue. If, whenever the public
complains about the poor service of an essential product or
service, and the solution is for the relevant authority to charge a
new fee to monitor the service in order to improve it, the costs of
living and doing business in Singapore may continue to rise.
Perhaps, Singaporeans should not complain too much if the result is
having to pay more.
F5.March 2003 NORTH-EAST LINE pay more?:
Commuters will find out how much more they will have to pay for
trips on the North-East MRT line (NEL) in a few weeks time, when
SBS Transit submits its proposals to the Public Transport
Council.
In the Budget debate, MPs asked why it was not possible to have
uniform fares across all lines, and the Transport Minister said:
The other MRT commuters, especially those who do not use the NEL,
may object to having to pay more to cover the higher cost of the
NEL.
Singaporeans living along the NEL have in a sense been at a
disadvantage without the MRT for many years. They may now face
further disadvantages in having to pay more.
If this principle is applied to future MRT extensions, then new MRT
line users may have to keep paying relatively more, as it is likely
that costs may be higher due to inflation, state of the art
technology, etc.
I would like to suggest that a poll be conducted to find out from
Singaporeans what they prefer. I think one of the benefits of
getting more Singaporeans involved is to help dispel the notion
that issues are decided without taking into account their
feedback.
I think most Singaporeans may apply the principle of non sibi (not
for oneself), if asked to choose in a poll. Perhaps, Singaporeans
could be more involved in the decision-making process on such
similar issues in the future.
F6.March 2005 NAMING MRT STATIONS?:
In Kuala Lumpur, the Monorail stations have names like Bukit
Bintang Coca Cola and Titiwangsa Telecom because companies pay a
lot of money, which I believe is in the millions, to have their
names associated with a station.
I would like to suggest that we explore the possibility of having a
similar scheme in Singapore to allow companies to bid on an annual
or periodic basis for their names to be announced whenever a train
stops at a station.
With tens of thousands of commuters seeing daily the stations name
with the companys name, it may generate revenue which may be used
as a cushion against future MRT fare increases, or may even reduce
current fares.
I think the sky is the limit in view of the novelty and impact of
the advertising value potential.
For example, I understand that a company is paying the Land
Transport Authority (LTA) more than $200 million over 15 years or
so for the right to build and manage the advertising panels at some
bus and taxi shelters.
If some of this money is given back to bus operators, it may also
act as a cushion against future bus fare increases, or even lead to
a reduction in current fares. After all, in a sense, this money is
derived from bus operations in Singapore.
F7.May 2005 RAISING FARES again?:
SBS Transit has reported net earnings of $13m, and its pre-tax
profit was 3 per cent higher at $16.3 million for the first quarter
ended March 31, compared to the corresponding quarter last
year.
Rail losses in the first three months were merely $1.6 million,
67.3 per cent lower than in the same period last year, and if
things continue to improve at the same rate, losses for the full
year are expected to be less than half that of last year.
At this rate, the rail business could start turning a profit next
year. Non-transport income rose by 8.8 per cent to $5.3 million,
total assets rose by 2 per cent to $542.1 million, while total
liabilities shrank by 2.7 per cent to $245.7 million, and net asset
value per share is 99 cents, up from 94 cents previously.
In view of the above statistics indicating rising overall profits,
declining rail operations losses, increasing non-transport income,
higher assets and lower liabilities, and an increase in net asset
value, how can SBS Transit apply for a fare increase from July
1?
By almost any financial measure, the fare-increase application
should not stand on the merits of its application based on
financial data prior to the release of its March 31 first-quarter
results.
Why is it that the deadline for a fare increase application is just
before the release of the first quarter results?
I would suggest that future fare increase deadlines be adjusted to
ensure that the most current financial results are reported, and
also that the Public Transport Council evaluates the current
application using the latest results.
SBS Transit should be asked to re-submit its application to
incorporate the latest results.
Putting aside the one-off effect of Sars in 2003, SBS Transits net
profit rose 158 per cent last year. SMRTs full-year net profit
jumped 42 per cent to $127 million, compared with $89.5 million a
year ago.
In 2002, when SMRT raised fares, its profit increased 27 per cent.
In 2003, its profit increased 24 per cent.
If the new formula and criteria were applied in 2002, would the
quantum of the last fare hike be justified? As profits seem to keep
rising every year since the last fare increase, does it make you
wonder whether the fare increase was justified in the first
place?
F8.August 2006 PROFITS, PROFITS, PROFITS?:
SBS Transits announcement that its first-half earnings rose 6 per
cent to $26 million has comed just 10 days after its application to
increase bus and MRT fares. Once again, its profits have increased,
as was the case after the last two fare increases.
I would suggest that the Public Transport Council (PTC) takes the
above into consideration in deciding whether to approve its
application.
F9.November 2006 FARE CAP only affect less than 1%?:
SMRT has said that less than one per cent of passengers pays a
fare of $1.90 or more. Therefore, having a fare cap would benefit
only a small proportion of passengers, while transferring the cost
to others.
SMRTs reason for not having a fare cap as in other countries is
somewhat illogical because the fact that less than one per cent
pays more than $1.90 means that a fare cap would have very little
impact on the other 99-plus per cent who may have to share
transferring the cost to others.
It goes against the basic principle of public transport, which is
the sharing of costs, so that a minority will not be penalised,
since public transport is a necessity for those who cannot afford
private transportation.
The main reason why there is normally a fare cap in other countries
is to protect the small number of needy, who may be affected most
if there is no fare cap.
If we ask the other 99-plus per cent of Singaporeans, I believe
they would not mind sharing the cost for the benefit of the needy
among the less than one per cent. Why not conduct a poll of
Singaporeans?
In the Report of the Committee on the Fare Review Mechanism last
year, it noted that average fares in Singapore were lower than in
New York, London, and Hong Kong . However, all these cities have
fare caps and monthly passes, which Singapore does not have.
The monthly pass recently introduced by SBS Transit is only for
travel on SBS buses, and the price is high relative to other cities
of the developed countries.
Monthly passes in other cities are typically multi-modal or
multi-operator, if there is more than one operator.
The reports also cited the Household Expenditure Survey (HES) 2003
data that the lowest 20 per cent and second quintile group of
household income had average monthly household income of $1,279 and
$2,651 respectively.
However, the Department of Statistics (DOS) puts the two statistics
at $795 and $2,059. Why do the reports statistics differ from the
DOSs?
How has this discrepancy impacted on the computations on the
affordability of transport fares?
