Rest of panel proposals accepted as well, as minister pledges affordability
By Christopher Tan, The Straits Times, 12 Nov 2013
THE Government has accepted all the recommendations on public transport fares made last week by the Fare Review Mechanism Committee (FRMC), Transport Minister Lui Tuck Yew said yesterday.
These include funding two new fare concessions - for low-income workers and people with disabilities - with tax revenue. It will be the first time the Government subsidises fares this way.
While concession details, such as the amount and who qualifies, are still being worked out, Mr Lui hinted strongly that the discounts will be substantial. "It is my intention to ensure that the discounts given will more than offset any fare increase in the next fare exercise," he said in Parliament.
The next fare revision will be in the first half of next year, he said.
Mr Lui tasked the committee in February to examine affordability. Yesterday, he pledged that fares "will not become less affordable for the average commuter, and will be considerably more affordable for the low-income and disadvantaged groups. This is my intention and I have every confidence we can achieve it".
While the Public Transport Council (PTC) will take into account the adjustments that were allowed for last year and this year but were not made, Mr Lui urged it to keep the next increase within this year's average national wage rise. Public transport operators are allowed to apply for fare adjustments annually but these are subject to the PTC's approval.
The balance can be kept for 2015 via a rollover mechanism recommended by the review panel.
Other recommendations include having public transport firms contribute 20 to 50 per cent of each fare rise to the Public Transport Fund, which disburses fare vouchers to the poorest households. Mr Lui cited this feature of the new fare formula in his reply to Mr David Ong (Jurong GRC), who asked if it could factor in the profitability of operators.
Responding to Dr Lily Neo (Tanjong Pagar GRC) on what could be done to prevent the needy from falling through the cracks, he called on MPs to help pinpoint those who qualify for fare vouchers.
Mr Lui also said the new formula, based on core inflation (excluding property and car prices), average wage increase and an energy component, is "an improvement over the old". While it better reflects operators' cost structure, he said it does not let them pass increases directly to commuters.
In a year when electricity and fuel prices soar, the new formula could lead to a bigger increase than the old one, he added. But when inflation is driven primarily by property and car prices, the new formula may result in a smaller rise than before.Non-Constituency MP Gerald Giam asked why service quality could not be in the formula to spur operators to do better.
Mr Lui said the formula should be "as straightforward as possible", and service quality is best addressed by regulatory standards. This way, service can be raised without a direct impact on fares.
Key changes
- Govt-subsidised fares
About 500,000 low-income workers and people with disabilities are set to pay lower fares than they do now.
- Beyond physical handicap
People with disabilities include those with other handicaps.
- Higher full fares likely
Full-paying commuters may face a bigger-than-usual rise at the next fare adjustment next year because of enhanced benefits for tertiary students and pre-schoolers, among others. Also, fare adjustments were suspended last year and this year.
- Cap on fare increase
Hike likely to be capped by this year's average wage rise, with the remainder rolling over to 2015.
- Donation from fare hike
Transport firms will give part of revenue from rise in fares to a fund, to enhance travel vouchers for the poor.
- Low take-up of vouchers
Greater effort to lift take-up rate.
Only half of 200,000 were taken in 2011.
Not practical to include quality of service in fare formula, says Lui
By Woo Sian Boon, TODAY, 12 Nov 2013
It would not be practical to include public transport operators’ quality of service in the fare formula as Singapore uses a unified fare structure for its transport system, said Transport Minister Lui Tuck Yew yesterday.
Speaking in Parliament, Mr Lui was addressing feedback — including a call from the Workers’ Party — that the service quality component should have been included in the new fare formula that was proposed by the Fare Review Mechanism Committee (FRMC) in its report last week.
Mr Lui said that the FRMC’s aim was to keep the fare formula relatively straightforward. It would be “challenging to try to give differentiated fare increases to different public transport operators (PTOs) on account of service quality issues” due to the unified fare structure.
However, Non-Constituency Member of Parliament Gerald Giam pointed out that many commuters associated service quality with their willingness to pay higher fares. Adding the service quality component, he felt, would spur operators to do better in terms of service.
In response, Mr Lui said this might lead to increased costs, which will then be directly passed on to commuters. “I suspect the PTOs (might) also say, well, what about the cost increases that are associated with any service quality improvements, would that also be included in the formula?”
He reiterated that not having service quality as part of the fare formula does not mean that we are not raising service levels, or that we are letting the public transport operators off easily.
He noted that the Public Transport Council can increase operating performance standards, which include service levels, for the transport operators, and the Government has also increased penalties for service lapses.
'A certain tension' in funding of fare concessions
By Christopher Tan, The Straits Times, 12 Nov 2013
COULD the Government have funded all public transport fare concessions? Or should some be borne by full-paying fares?
It should be a combination of both, Transport Minister Lui Tuck Yew said yesterday, replying to Mr Cedric Foo (Pioneer).
To roll out discounts that will "more than offset" the next round of expected fare increases for about 500,000 low-income and disabled commuters would entail "quite a substantive amount", Mr Lui said.
"I think the Fare Review Mechanism Committee realised that if all these were to be cross-subsidised by full fare-paying commuters, it would be a heavy burden on them," he added.
The committee was "conscious of this fact" and came up with "some very balanced recommendations", Mr Lui said.
These are: that the Government fund the two new concessions while full fares will cross-subsidise other benefits, such as free travel for children below age seven and enhanced concessions for polytechnic students.
At the same time, the committee "was also mindful that if all the concession schemes... were to be borne by the Government, there would be the lack of that tension in the system, so to speak", the minister said.
"So they retained the existing mechanism where... existing schemes would be borne by the rest of the commuters," he added.
"So I think there's a certain tension and a certain balance that they're trying to achieve."
Mr Foo, who is also the chairman of the Government Parliamentary Committee (GPC) for Transport, was concerned that even if only some of the concessions were subsidised by full-fare commuters, fare increases may eventually "affect the affordability" for these commuters more than those getting the concessions.
Mr Foo told The Straits Times later that the minister did not address his question directly, "but obliquely", when he said the Public Transport Council should keep the next fare rise within the range of this year's average wage increase.
"It would be better if the average wage increase of the second quintile is taken," he said, referring to the income group just above the bottom 20 per cent who take public transport.
Separately, Mr Foo said he hopes such concessions can be higher when these concession pass holders commute outside the peak periods.
"If a person with disability is not also a low-income worker, then he is probably not working and we can grant even higher subsidies for non-peak as he visits hospitals, pursues leisure interests, etc," he said.
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