Despite earning criticism earlier this year that higher public transport fares are necessary to combat rising subsidies and increased public transport operating costs, Transport Minister Khaw Boon Wan welcomed the Public Transport Council’s (PTC) announcement today (8 Oct) that public transport fares will be hiked by a maximum 7 per cent from the end of the year.
In July, Mr Khaw left netizens fuming after he said in Parliament that higher public transport fares are necessary to combat rising subsidies for the young, elderly and underprivileged and to manage rising public transport expenditure.
Revealing that the Government is currently subsidising more than 30 per cent of public transport operations and that higher fares are needed to keep subsidies in check, Mr Khaw said:
“Between 2016 and 2017, the total cost of running the rail network has increased by around $270 million. As the fares paid by commuters do not cover operating costs, the rail companies are operating at a loss.
“In the latest reported financial year, SMRT Trains incurred a loss of $86 million. SBS Transit’s train division also lost tens of millions of dollars.”
The increased expenditure in the public transport sector has been due to the Government’s efforts to raise rail reliability, in the wake of the many train breakdowns, service disruptions, MRT tunnel flooding and Joo Koon train collision in recent years. There is speculation that these issues erupted in recent years due to poor maintenance practices in the past.
Asserting that the MRT network has improved seven-fold from 2015, Mr Khaw said that the Public Transport Council (PTC) fare adjustments were not implemented to the full extent of what the formula allowed until recently and said that “we must have the discipline to implement the formula fully”. He asserted:
“If we had strictly followed PTC’s fare formula, the operators would have been better able to cover the costs of the intensified maintenance. But we must have the discipline to implement the formula fully, as we adjust fares over the next four years.
“In due course, the PTC will need to review the fare adjustment mechanism to reflect the increased operating cost to support the intensified maintenance, and the additional operating subsidies from the Government to the MRT system.”
Singaporeans sharply criticised the Minister for making an assertion that the people need to compensate for the subsidies to the needy receive and high operating costs especially when transport costs rose to improve public transport reliability due to recent debacles.
Some agreed that this was an example of “privatising profits and socialising losses,” while many others called on Mr Khaw and the top management of SMRT and SBS Transit to reduce their large pay packages to compensate for the subsidies and operating costs themselves.
Despite public dissatisfaction, the PTC announced today that public transport fares will go up by seven per cent for adult commuters and four per cent for concession cardholders. Both SMRT and SBS Transit had applied for the seven per cent fare increase.
PTC chairman Richard Magnus revealed that the fare hike would allow fare revenue to rise by about S$132.5 million, with SMRT Trains earning about S$40.2 million more in train revenue and SBS Transit Rail earning about S$18.8 million more.
The fare hike will see bus fare revenues increase by about S$73.5 million. This amount will be used by the Government to offset bus operation subsidies.
Responding to the fare hike on Facebook, Mr Khaw wrote that the PTC has to play a “balancing act” in distributing the burden of high costs between commuters and taxpayers. Asserting that the authorities “try to keep the increase as low as possible so that it affects as few people as we can” in each fare adjustment review, he said:
“Public transport fares are jointly funded by commuters and tax-payers. Distributing the burden between the two groups requires sound judgment. We entrust this responsibility to the Public Transport Council which comprises a group of wise men and women drawn from various sectors.
“When fares are adjusted downwards, for example in recent years, this job is relatively easy. But when fares need to go up, as for example when oil price increased drastically last year, PTC’s job becomes more challenging.”