[MyPaper] Taxi woes and the ghost of 1985
WHENEVER the state of the taxi
service is discussed, my mind goes back to 1985.
That, in my view, was the last
time the Government tried to tackle the problem in a fundamental
way.
But that experience was so
painful, no transport minister since has had the appetite to take
on the issue.
Which is why the problems
persist, almost 30 years on.
What is the issue?
The Straits Times carried
several stories in recent weeks of taxi queues in the city during
the evening, with waiting times much longer than they were a year
ago.
A Sri Lankan businessman was
quoted as saying: "It's the worst thing I hate about Singapore -
standing in taxi queues."
One statistic alone tells the
story of how poorly the service here compares with that in other
cities: Singapore has 29,000 taxis, Hong Kong has only 18,000. But
despite their fewer numbers, Hong Kong taxi drivers make more than
a million trips a day, compared with fewer than a million
here.
So, what's
happening?
That 1985 saga was
instructive. I know because I was in the thick of it as a young
officer at the then Communications Ministry.
The problem then was exactly
the same as it is now. Commuters complained they could not get a
taxi when they wanted one, that taxi drivers were choosy, refusing
to pick up passengers headed for certain destinations, or
disappearing just before midnight when the surcharge kicked
in.
Sounds familiar?
At the ministry, it seemed
like a straightforward analysis - taxi fares in Singapore were too
low, relative to buses and the cost of owning a car. If four people
shared a cab, it would be cheaper than taking the bus.
The solution? Raise taxi fares
substantially to reduce demand, and solve the problem once and for
all.
But that wasn't all - taxi
diesel taxes were also increased to make the cost of owning and
running them closer to that of a privately owned car.
The theory was sound but,
alas, we guessed wrongly how sensitive commuters would be to a big
fare hike.
Demand for taxis plunged so
much that taxi drivers' earnings went down despite the higher
fares.
There was an uproar: Commuters
were unhappy over the increased cost, and taxi drivers were up in
arms that their earnings had gone down.
The Government had to do an
embarrassing U-turn, moderating both the fare and tax increases of
the original plan.
More significantly though, and
with serious implications for the future, it backed off from trying
to intervene in the taxi business.
So fares were later
deregulated and no longer decided by government but left to taxi
companies to determine. The number of taxis on the road was also
left to the market until recently.
But the problems have not gone
away, hence the spate of newspaper reports lately.
Many suggestions have been
made to improve the situation - getting rid of the surcharges,
simplifying the fare structure, imposing a minimum cruising
mileage, and so on.
Indeed, the Land Transport
Authority has just announced changes to the rule requiring
operators to have a certain proportion of their fleet on the road
during peak hours.
These moves are worth
trying.
But I am afraid they will not
solve the problem unless Singapore is clear about the role of taxis
in its overall transport system.
Unless this is settled, the
patchwork of measures that have been tried over the years will
continue to frustrate.
Unlike buses and the MRT,
which run on fixed routes, taxi demand is more unpredictable,
driven by those whose needs cannot be met by public and private
transport.
This includes regular bus and
MRT commuters who occasionally use taxis, tourists, and even
motorists who sometimes find it more convenient not to
drive.
How to devise a system to meet
so many of these different needs with no obvious pattern to
them?
It turns out that getting the
price right is the most important.
If it is set too low, demand
will surge and service levels will deteriorate unless the roads are
flooded with taxis, which isn't possible without causing serious
traffic congestion.
If it is set too high and
demand collapses, neither commuters nor drivers will be happy, as
was the case in 1985.
Because it is so important to
get the price right, it cannot be left to taxi companies to decide.
They have other commercial considerations when setting the price
and may not necessarily take into account the proper role of taxis
in the overall transport system.
Indeed, as many critics have
pointed out, because their revenues come from renting the taxis
out, they have no direct interest in providing good service, apart
from meeting minimum regulatory standards.
For these reasons, the correct
fare level ought to be decided by the transport authorities, taking
into account the overall transport system.
In Singapore, this price
should be pegged between public and private transport.
One other factor needs to be
taken into account, which is often overlooked.
This is the effect price has
on taxi-driver behaviour.
If the price is set too low, a
cabby has to pick up many fares through the day to make a decent
living. Each fare then becomes relatively unimportant because it
represents a smaller part of his overall earnings, as he knows he
can pick up another fare just round the corner.
Taxi drivers operating in this
scenario would tend to be choosy about the fares they
pick.
On the other hand, if the
price is set higher and demand is lower, you can expect better
service as every customer would contribute a larger share to the
driver's earnings.
It's the difference between a
supermarket and a boutique.
Both types of taxi service can
be found all over the world - the supermarket model prevailing in
developing countries, whereas in, say, Tokyo or London, it's a
boutique service.
What's critical is that
whichever model is chosen must not result only in better service
for commuters but also give taxi drivers a better deal going
forward.
Their livelihood has to be a
priority because a good taxi service can happen only when cab
drivers believe there is a secure future for them, they earn decent
wages, and theirs is a profession that others respect.
So, whenever changes are made
to the taxi service, one critical question to ask is: Will taxi
drivers be better off as a result?
There is much work that needs
to be done to make these fundamental changes that will result in
permanent improvements to the taxi service: determining which taxi
model is best for Singapore, setting the correct fare level, the
number of taxis needed, the cost of owning and operating them, and
the way the business is operated.
These issues require decisions
that only the Government can make. But it has to first exorcise the
ghost of 1985.
