SINGAPORE: Taxpayers in Singapore subsidise about S$1 for every trip made on buses and trains here, said Senior Minister of State for Transport Janil Puthucheary on Wednesday (Oct 9) during an interview with CNA938.
According to figures released by the Land Transport Authority (LTA) earlier this year, 7.54 million trips are made on buses and trains here daily.
Dr Puthucheary was discussing the reasons for the 7 per cent public transport fare increase announced by the Public Transport Council on Tuesday. This increase, which will kick in on Dec 28, will see fares go up by 9 cents per journey for adult commuters paying by card.
Though public transport fares were able to cover the cost of operating buses and trains here in the past, increasing costs have meant taxpayers have had to bear the burden of subsidising costs such as infrastructure investments, Dr Puthucheary said.
“The key issue is that costs for the operators have risen quite significantly, up to 30 per cent over the last few years; and our fares have not in any way kept up with that,” he said.
INCREASED GAP BETWEEN COSTS AND REVENUES
Rail operator SMRT Trains – which operates the North-South, East-West and Circle Lines, as well as the upcoming Thomson-East Coast Line - reported a net loss of S$155 million for the financial year ending in March.
The train division of SBS Transit – which runs the North-East and Downtown Lines – lost "tens of millions of dollars" in the last financial year, with losses of S$125 million for the Downtown Line over the past three years.
Both companies had applied for the 7 per cent increase, citing rising costs due to increasing expenses in areas such as maintenance and manpower.
“We've had the opportunity to increase fares a lot more (in the past few years) but we haven't, as a result of which the gap between the costs to the operators and how much revenue has been generated (has increased),” said Dr Puthucheary.
The fare increase will help close this gap, he told hosts Arnold Gay and Yasmin Jonkers.
He noted that rail reliability in Singapore had improved substantially over a relatively short period of time.
LTA figures show the MRT network here managed to clock 955,000km between delays of more than five minutes as of June this year – up from just 181,000km two years ago.
But these improvements have come at a cost, with Dr Puthucheary noting both rail operators have had to ramp up hiring rail engineering talent to enhance maintenance capabilities.
National University of Singapore transport economist Timothy Wong, who was also part of the radio interview, said subsidising public transport helps encourage its use and promote the country’s car-lite vision.
“But at the same time, if we don't allow fares to increase so that they (transport operators) don't have revenue, as cost efficient as they are, they're not going to be profitable,” he said.
Dr Wong added that it would be a “huge concern” if transport operators were unable to make profits, as this might discourage companies worldwide from participating in Singapore's rail industry, creating a less competitive environment.
And while the perception exists that public transport operators should not focus on profitability, this “competitive dynamic” helps reduce costs, said Dr Puthucheary, noting that public transport fares here are among the lowest in the world.
A study of 12 major cities by the Nanyang Technological University last year ranked Singapore second in terms of public transit affordability, just behind San Francisco.
Dr Puthucheary said the fare increases over the past two years have allowed for concessions to be extended to more people.
This has allowed polytechnic students – who previously had to pay adult fares – to enjoy student concessions, which will see their fares capped at 63 cents per trip, as with junior college and Institute of Technical Education students.
Dr Puthucheary also noted that the Transport Ministry is also expanding its Public Transport Voucher exercise to assist lower-income households, with one in five households now eligible for vouchers of S$50 to cover their transport expenses.
Despite the increase in fares, public transport will continue to be subsidised, he said, with the main concern being by how much, to ensure funds are not diverted away from other areas.
This is because transport is an essential part of day-to-day life, he said.
Dr Puthucheary said that having a well-functioning transport system was going to be key to normal, day-to-day functions in Singapore. He added that it was also vital to Singapore's future and "the kind of city that we want to be: A dynamic, growing economy creating opportunities".