Lagging bus fares may play catch-up
AS THE Government prepares to take over the reins from private bus operators, Transport Minister Lui Tuck Yew said fares will have to go up to keep the new bus contracting model financially sustainable.
He pointed out that operating costs had been allowed to "well exceed the fare increases" each year, over the last decade.
From 2005 to 2012, bus fare was increased annually by an average of 0.3 per cent, while wage and fuel increases have been "much higher".
"So there will be a need for us to make sure that we have regular fare increases of the right quantum and, in this, we will continue to be guided over the next few years by the formula that has been established by the Fare Review Committee," he said.
Mr Lui was replying to Christopher De Souza, an MP for Holland-Bukit Timah GRC, who had asked how fares would be kept affordable in the long run.
In May, the Government announced that it will take over the ownership of all buses and depots, collect fare revenue and tender out bus routes to private operators for between five and seven years.
Subsidies will be given to private bus operators to run the routes, while keeping fares affordable for commuters.
Mr Lui declined to reveal the extent of the subsidies, lest it "skews the bids against us".
But he said that, regardless of industry model, the overall cost will be paid by either commuters, in the form of fares, or taxpayers, in the form of government subsidies.
He noted that there would be a need to "judiciously assess" all requests, be it to operate new bus routes or raise service standards.
"Because if you operate more and more new routes and the ridership is low, well, the Government and, indirectly, taxpayer takes on the burden of making sure that it is financially sustainable," he explained.
Similarly, he said the raising of service standards must be done carefully so as not to "overstep and, hence, ultimately result in a much bigger bill in terms of the subsidies".
Gerard Ee, former chairman of the Public Transport Council, told My Paper that there were years when the fare formula had indicated a need for an increase, but it was held back due to circumstances such as a poor financial outlook.
But as always, the challenge with fare increases is finding the balance between expectations and what one is willing to pay at the end of the day, he said.
"If commuters want higher standards, someone has to pay for it."
He added that many also forget the complexity of the process. More buses on the road also means more bus captains will be needed, which could then lead to salary adjustments to attract applicants.
"There is a whole chain of effects; it is not so easily done."