Not very good news?
Mr Steve Chia Kiah Hong asked the Minister for Transport whether it
is justified for Singapore Mass Rapid Transit to demand for more
fare hikes when it can register a 25.8% year-on-year increase in
net profit of $30 million for the third quarter of FY2006.
The Minister of State for Transport (Mrs Lim Hwee Hua) (for the
Minister for Transport): Sir, Mr Steve Chia asked whether there is
any justification for SMRT to demand for more fare hikes when it
registered a 25.8% increase in net profit. First, I would like to
note that the third quarter results recently announced by SMRT
represent the group results of SMRT Corporation. Besides local bus
and train operations where fares are regulated by the Public
Transport Council (PTC), the group also has taxi operations and
non-local public transport related businesses like engineering
consultancy and overseas investments.
On the issue of fare revision, this will be considered by the PTC
if and when SMRT decides to apply for one in May. As Members know,
PTC is an independent body comprising representatives from
different sectors of society, and its role is to regulate bus and
train fares to keep fares affordable for the public, while ensuring
the long-term viability of the public transport operators.
Under the new fare review mechanism implemented last year, the PTC
is required to examine, as a reality check, the
Return-on-Total-Assets (ROTA) achieved by the operators. This is to
ensure that the operators' returns from bus and rail operations are
not excessive when compared to those of other industries with
similar risk profile. This is to safeguard commuters' interests
when the PTC considers applications for fare adjustments.
I would like to assure Members that any fare revision applications
will be scrutinised by the PTC very carefully.
Mr Steve Chia Kiah Hong (Non-Constituency Member): Sir, may I ask
the Minister of State how much profit should these public transport
operators, whether as an individual unit or as a collective group,
continue to make before their demands for any kind of fare increase
become unjustifiable? That is, will there be a ceiling for their
profits where continued requests from them for fare increase become
unreasonable? And if there is such a ceiling for their profit, what
is that level?
Mrs Lim Hwee Hua: Sir, when the PTC decides on the fare increase
proposals, it will not just look at actual profits. In fact, they
will be guided by many other things, one of which, as I have
stated, is the Return-on-Total-Assets. In this regard, they could
look at the transport operators elsewhere and compare those numbers
to see whether these are reasonable. It will not be reasonable nor
practical to impose an absolute number.
