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Govt's move to fund bus purchases sparks public concern

The government's move to spend S$1.1 billion over the next 10 years to fund the purchase of 550 SBS Transit and SMRT buses has sparked concerns among some Singaporeans.

SINGAPORE: The government's move to spend S$1.1 billion over the next 10 years to fund the purchase of 550 SBS Transit and SMRT buses has sparked concerns among some Singaporeans.

A few have written to the government's feedback portal REACH, questioning why the government is using public funds to help profit-driven companies.

SBS Transit and SMRT are public-listed private enterprises.

Analysts said the government's move to help the two public transport operators grow their bus fleet does not mean a free lunch for them. They said commuters would stand to benefit from higher service standards, which are likely to be imposed on SBS Transit and SMRT.

Observers said the government's move is not unique. In affluent cities in Europe and Australia, private operators receive public-funded buses in order to achieve a more efficient transport network.

Assistant Professor Paul Barter from the Lee Kuan Yew School of Public Policy said: "In Singapore, if the government is going to be helping a private sector operator in this way, we would not do it in an open-ended way.

"We will need to set higher service standards. If we are giving money for the buses, we expect higher service in return. It would not just be a gift. There would be expectation of improved service."

Analysts said although the two operators are making profits overall, they have been weighed down by bus operations.

Latest data showed SBS Transit incurring an operating loss of S$6 million due mainly to increased fuel and staff costs.

Meanwhile, SMRT said it incurred a higher operating loss of S$1.7 million due to the same reasons.

So the assistance will come in handy to help boost capacity and meet the anticipated growth in demand.

Analyst John Rachmat from the Royal Bank of Scotland said: "The situation is such that the bus operations are not generating enough profits for the operators.

"In fact, in many cases, (they) are incurring losses. So if this continues, there will be no new investments in buses in Singapore and as a result, the public will suffer from more overcrowding."

With the government's funding for additional buses, "hopefully, what we will see is a lot more frequent bus services, a lot lesser overcrowding and more profits for the operators because that will be the reason for them to deliver the better services," said Mr Rachmat.

"In a way, they will earn more profits but in exchange for that, the public will see a lot better bus service in Singapore."

Observers believe the S$1.1 billion fund will not only go towards helping operators grow their fleet.

Given the big sum of money, there are indications it could also help operators get the manpower they need to run the buses.

They could increase salaries to make the job more attractive, particularly to Singaporeans.

Minister of State for Transport Josephine Teo said with the government chipping in to buy new buses, public transport operators must improve their service standards.

Mrs Teo on Wednesday defended the government's move to co-fund new buses at a post-Budget dialogue organised by feedback unit REACH.

"What Singaporeans want is quicker solutions," she said.

"They don't want to wait so long. So it's with Singaporean needs in mind that we assessed that the better way to do it, the faster way to do it, the more efficient way of doing it, is to partner the existing public transport operators to deliver the increased capacity."

Charles Chong, a member of the Government Parliamentary Committee (GPC) for Transport, said: "With the grant, I think this eliminates some of their excuses...that they can't get drivers (because) they can't pay them enough."

"This grant should not be used to bump up profits for shareholders -- it is meant really to help serve the public better, because you are using public funds for this; the expenditure should benefit the public," he added.

Mr Chong said operators are expected to bump up bus frequencies and serve more areas.

Analysts said they believe the operators will see operating costs going up in the short run. But the higher costs are unlikely to be transferred to commuters as higher fares.

Details on the S$1.1 billion fund are expected in the upcoming Budget debate.

Source: CNA/wk/ir


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