Khaw refutes WP chief’s suggestion that SMRT is a moneymaking machine

Transport Minister Khaw Boon Wan refuted Worker’s Party chief Low Thia Khiang’s suggestion that SMRT is there to make money for the Government, in Parliament yesterday, asserting: “There are easier ways to make money. You don’t have to use SMRT to make money.”

When Low Thia Khiang then questioned how the Ministry of Transport, SMRT and Land Transport Authority (LTA) can work together but still have a system of checks, Khaw audaciously brought up the allegations of poor town council governance Low’s party grapples with, with the ongoing AHTC lawsuit:

“There’s no free lunch, Mr Low. He knows it, he runs town-council. He needs to balance the accounts too. And he knows the importance of governance. So, when your team fails him, what does he do? So those things are important lessons for everyone. What happens in SMRT, I think has applications to the others as well.”

Khaw then claimed: “It may sound to him as schizo[phrenic], but we are quite clear in our mind and it can be done.”

We re-publish the transcript of their exchange here:

LOW THIA KHIANG: The minister just now expressed his disappointment that Mr Lim Boon Heng, CEO of Temasek Holdings took too long to appoint a new chairman of SMRT. But he must not forget that the mission of SMRT is to make money for the government. I’m of the opinion that the multiple problem (sic) congregated today of the train services, the core of the problem is money.

The government wanted to have the cake and eat it, expecting profits from train operator and at the same time also expect efficiency, tip-top maintenance work. I noted the minister is steering the existing framework of checks and balances between the ministry which holds the pursestring, the regulator, LTA, and also the operator, towards one team.

I have two clarifications for the minister. First, the Ministry of Transport, the LTA, and SMRT each has a role to play, how does the minister ensure that each of them, still can play the functional role well, when they work as a team and become good friends.

Second clarification, hammering everyone to work together to solve the problem now as a team is important, but what about instituting a structural system of checks that should be embedded to ensure efficiency, honesty, and integrity. Thank you.

KHAW BOON WAN: Before I reply to your two clarifications, I think I must disagree with your comment. Your preamble: That SMRT is there to make money for the government. There are easier ways to make money. You don’t have to use SMRT to make money.

What – is the same thing with the restructured hospitals, which I have a lot more experience. We need to provide a public service. So the reason we restructured is so that we can exploit the commercial discipline – the financial discipline of the commercial sector, so that in the process of providing this public service, you can get the best cost-effectiveness of the operation achieved. And it’s the same thing with the SMRT. We could have done it as a government department. But I think the decision was not wrong. To put it as a corporatised company, fully owned by the government, they know and the leadership of such company must know, and Mr Seah knows that this is, for example, an engineering outfit. Making money is not your objective, but you must not lose money. There must be financial discipline. Cannot just anyhow go and spend money, buy this, buy that, gold plate everything -and then, of course, you can have a marvellous operation and so on, but at great cost to who? It’ll be to the taxpayers.

There’s no free lunch, Mr Low. He knows it, he runs town-council. He needs to balance the accounts too. And he knows the importance of governance. So, when your team fails him, what does he do? So those things are important lessons for everyone. What happens in SMRT, I think has applications to the others as well.

How do you achieve one team, and yet be clear at the boundary? There are different roles we play. I thought I explained that in my statement. We are all very clear. As far as LTA is concerned, three roles and an unspoken fourth role. But the importance of working as one team is especially at the stage of SMRT which is in, whereby you have to renew the assets of North South East West line, if you cannot work as one team, I think there will be trouble, as there were trouble in the past.

And that’s why it’s so important, that they function as one team, so each time a problem crops up, we settle it as one team. But that doesn’t mean that we blur the boundary and therefore forget about individual roles and checks and balances. So I think yeah it may sound to him as schizo[phrenic], but we are quite clear in our mind and it can be done.