S. Iswaran: Government exploring the best cost-sharing option for subsidising public transport

Transport Minister S. Iswaran said in Parliament on Tuesday that the review of the public transport fare formula takes into consideration the best option for cost-sharing between existing commuters and future generations of taxpayers for subsidised public transport.

In August, the Public Transport Council announced that it will commence a review of the public transport fare adjustment formula and mechanism in consideration of the changes in the public transport industry and commuting patterns.

Such reviews are usually done once every five years, and the current reviews are targeted to be completed by the first half of 2013. The review also aims to better maintain the balance to keep public transport fares affordable while ensuring the financial sustainability of the public transport system.

Bukit Panjang SMC MP Liang Eng Hwa had filed a question asking the Minister, how the Government determine the current annual amount of public transport subsidies, and in light of rising costs, whether the Government will consider reviewing this amount.

In his reply, Iswaran said that “From 2012 to 2021, operating costs for public transport increased by 7% per year on average. This was not matched by revenue growth. Consequently, government subsidies have been increasing.”

“The Government currently subsidises public transport services by more than $2 billion annually or $1 for every journey. In addition, we have committed over $60 billion to expand and renew the rail network over the next decade.”

The Transport Minister added that as with other subsidised services, the Government has to consider how best to share the cost between users, and current and future generations of taxpayers.

“We have a fare formula to ensure that commuters pay a fair share of the costs, by accounting for key cost drivers for public transport – wages, energy, and inflation,” added Iswaran.

The Minister explained that the government is also mindful of the need to support those with greater needs and fewer means and that the fare formula is being reviewed to ensure robustness and relevance, in light of changes in the industry and in commuting patterns.

“We keep fares lower for concession groups such as seniors and students and provide public transport vouchers to low-income families.”

“As we continue to expand the public transport network, and operating costs also rise with inflation and other cost drivers, we will continue to seek an optimal balance between the fiscal sustainability of Government spending on public transport and ensuring affordability of public transport fares, especially for the vulnerable segments of our society,” added the Transport Minister.