Friday, February 24, 2012
Public Transport Options
I was quite amused by Finance Minister's Budget statement for this year even though I wasn't really paying much attention to it. The spending of $1.1 billion on buses for private transport companies (providing public transport) stands up like a sore thumb among the lengthy budget statement (as usual).
I waited for some a couple of days to see whether the other opposition parties have anything to say about this one but unfortunately, I hear nothing about this from opposition parties so far (well, please update me if I am wrong) amidst some comments made by people writing to ST forum and bloggers like Lucky Tan.
PAP has started its privatization of government assets and companies in late 1980s and 1990s. Vital strategic assets like telecommunications, public utility as well as public transport companies were all "privatized" amidst the fact that the government still maintain as major shareholders of these companies. It isn't really a clear cut kind of privatization but when these companies want to raise tariffs and fares, the excuse that these are "private companies" which will have to make profits is always used to justify such moves.
Some opposition parties like Workers Party has called for the Nationalization of the public transport companies (i.e. Comfort Delgro/SBS Transit, SMRT). Other opposition party like National Solidarity Party has called for more liberalization of the public transport sector which it believes more competition will help to keep the whole system more efficient and hopefully, more cost effective for commuters. PAP government has resisted both calls.
Due to the ill-conceived explosive FT policy which jack up the population rapidly over the decade, the public transport system has come under tremendous strains. Last year major break downs of the MRT train system has set the major alarm that the train system has been overstressed. The mid-term strategy would be divert the heavy use on MRT to the bus system before it could come up with a comprehensive plan of solving the congestion in the train system. Buses operating parallel to the MRT services will be needed to provide alternative mode of transport to the train.
PAP's controversial plan of pumping $1.1 billion taxpayers' money into the bus companies to help them increase their buses (550 buses at $1.1 B = $2 million per bus! Really overpriced.) is a desperate move to help solve the congestion problem. However, it is done without much serious thought on the implications. This move will open up the can of worms for future government to justify spending public money on "private companies" as a form of subsidy. It has broken PAP's own golden rule of "market principles".
Some PAP minister has commented that by spending $1.1B to help the transport companies, it will help to "prevent fares" from increasing so that the commuters will not suffer. First of all, Singaporeans had already suffered once the public money is spent because the money comes from everybody, via taxation like GST and Income taxes. Furthermore, if the companies are to raise funds to invest in these buses, these buses would generate revenue and profits to pay up for the initial capital cost in terms of depreciation. If PAP is serious about "privatization" and adhering to market principles, it should allow these companies to function as it is. Especially so when these companies are already enjoying monopoly power and domination over the public transport sector.
For private companies, especially for public listed companies like SMRT and SBS Transit, there are numerous ways of raising funds from the financial market. They could issue bonds or issue more shares. They could borrow from banks as well. There are no lack of financial tools for them to meet their needs.
If the government is to spend over a billion on these companies, it must well nationalize these companies! Else, how could it account for the taxpayer's monies spent on private companies for them to make more money?
The other option is to liberalize the public transport industry. New investors may be interested in breaching the gap of demand and supply.
From an overall strategic view, Singapore has too many taxis per capital than Hong Kong. The main reason for such phenomenon is due to the existence of two types of Minibus system in Hong Kong which covered the needs of the middle class in providing a mode of transport which could rival taxi services.
In terms of efficient use of limited resources such as fuel and public roads, minibus proved to be the preferred system than taxi. Each Minibus could carry 16 passengers at any one time while Taxi could only carry 4. Most of the time, during peak hours, taxi normally carry 1 passenger who rush for work.
Taxi has no fixed timing and routes which make it ineffective at certain times. During certain hours, you could hardly find any taxi available due to changing shifts or taxi waiting for change in surcharge to kick in. The Dual-Minibus systems in Hong Kong provide a stable, cost effective and efficient alternative to the taxi system.
Red Top Minibus
The Red Top Minibus system provides the comfort of seating as well as flexible alighting and boarding points along the routes at a very reasonable price. The Red Top Minibus drivers could switch routes according to peak and off-peak hours. This provide stable and yet flexible adjustment to demand due to different timing.
Green Top Minibus
The Green Top Minibus system has more fixed time tables and routing as compared to the Red Top Minibus. It serves those less travelled routes or unprofitable routes well, especially those private estates at a slightly higher fare.
I believe Singapore needs to cut down on the reliance of taxi or even decrease the number of taxis by substituting it with the more cost effective and resource efficient Minibus system. The minister of transport should come up with more effective strategic plans instead of just throwing more money into private transport companies.
For a start, the population of taxi should be curbed/reduced and taxi operators should be encouraged to divert resources to run a comprehensive minibus system. This will relieve the strains on the road network as well as the train system.
I believe that the designs of bus terminals around Singapore could only cope with a certain number of long haul buses. If there is a need to increase the number of fleets drastically, the infrastructure may not cope. For the long term strategy, we may have to increase the number of bus operators to three with new infrastructure built.
LTA has spent much time studying the Hong Kong model but it seems too reluctant to come up with a comprehensive public transport plan to overhaul the present system. It is totally irresponsible for the Ministry of Transport to take the easier way out by throwing more money instead of thinking long term and the overview of the whole system.
Goh Meng Seng