NSP Press Release on Fare Hike

I will be writing on issue of Bus Fare hike later but for the moment, this is the NSP press release:

Press Release - Burden of Fare Hikes on Commuters is Unjustified
Wed, Sep 12, 2007

The National Solidarity Party (NSP) condemns the latest approval of bus fare hike by the Public Transport Council (PTC). Fare hikes have become an annual ritual which highlights the sordid mechanism behind the regulation of standards and fares by the PTC.

The Chairman of PTC Mr. Gerald Ee acknowledged that “the current service frequency was not good enough when 'operational deviation' was factored in”. The tightening of the basic Quality of Service (QoS) by the PTC therefore constitutes a tacit admission that the service standard for buses has dropped below the mark of decent acceptability for some years, even as fare hike applications continue to be favourably approved year after year.

The PTC stated that it was "mindful not to increase the cost of compliance" to Public Transport Operators (PTOs), thus opting to phase in the new standards in 2 years, with fines thereafter of up to $10,000 per month for each instance of non-compliance.

The NSP would like to punctuate the salient point that such punitive fines will unavoidably result in either the passing of the cost liability to commuters, or in an invariable reduction in service standards not directly measured by the QoS such as interior ambience and comfort of ride.

The NSP strongly recommends that fare hike applications by PTOs be dismissed until the basic service standard is first achieved within the stipulated 2 years, and subsequently maintained for at least 5 years thereafter, subjected to a stringent and transparent process of annual assessment.

Mr Gerald Ee’s assumption that Singapore’s economic growth automatically translates to affordability for bus commuters is questionable. In the latest hike, the highest increment was for the shortest trips. This will hurt the heartlanders most as they are often those with low or no income. Affordability is a nonsense reason for a fare hike, especially since public transport is an essential service.

Singapore’s “economic growth” has seen workers in the lower 40% of the population suffering little or no improvement in their salaries. Their misery is compounded by the fact that the inflation rate for the lowest 20% continued to peak well above that of the highest 20% income earners, even surpassing the general household inflation rate. And this is despite the occasional government handouts. Those with ‘extra’ money would prefer to save it or spend in on other essentials instead of ‘squandering’ it on increased bus fares.

In the latest quarterly financial report of SBS Transit, fuel cost decreased by 6.6%, while operating profit increased by 36.9% as compared to the corresponding quarter last year. Profit after tax to shareholders increased by 25%. Manpower cost increased by a manageable 4.4% which was more or less offset by the decrease in fuel cost. For SMRT, cost of staff and fuel decreased, while profit after tax increased by a whopping 38.5%.

The impressive double-digits profits of PTOs far overshadow the meagre pay increment of many citizens. It is hence dishonourable to further fatten the coffers of the PTOs by diluting the citizens’ hard-earned gains.

The PTC acknowledged that Singapore has a “restricted number of service providers and an absence of real market competition”. The unchallenged business position of the existing PTOs will allow their businesses to continue to stay attractively profitable for the foreseeable long-term without needing to rip more from commuters. This is evident from the rapid expansion of profitable businesses of the PTOs both at home and overseas.

The NSP would like to pound on the need for improvements to the grotesquely inadequate fare formula, a demand which have been repeated incessantly by the indignant public.

The formula must include elements which incorporate the degree of compliance to the QoS. The PTC must recognise that the lower and lower-middle income group constitute the bulk of public transport commuters. The formula must thus factor in their (low) earning power and relatively higher incurred inflation, and not merely incorporates the national average which skews in favour of the well-to-do who do not generally commute by bus.

Finally, the profits of the PTOs and their payouts to shareholders must be considered in the equation. If necessary, the PTC should oblige these lucrative PTOs to raise extra funds from their benefited shareholders instead of exploiting the lack of viable alternatives for the people through constant fare hikes. It is preposterous for the PTC to safeguard the interest of the shareholders of PTOs at the expense of commuters.

The NSP hopes that the members of the PTC can step onboard public transports more regularly to enable them to empathise with the commuters, and recognise their fair rights and interests.

Central Executive Council
National Solidarity Party