Transport fare formula review amidst hints of hike

An SMRT train travelling along the tracks as it approaches Kallang MRT station on 19 January 2017.

The Public Transport Council (PTC) has started its review of the formula through which bus and train fares are adjusted yearly, amid hints of a possible hike.

The PTC said yesterday that it would propose improvements to the formula, given the changes in the public transport industry.

With the Government taking ownership of bus and rail assets and stepping up efforts to ramp up services, the burden of subsidising public transport has effectively shifted to the taxpayer.

PTC chairman Richard Magnus hinted at the possibility of a fare increase in his blog post yesterday. “Service improvements come at a cost,” he said.

Mr Magnus noted how the public transport system has evolved since 2013 – when the current formula was introduced – through the injection of more trains and buses, and greater service reliability.

He also highlighted that over the next five years, close to $4 billion will be spent on subsidising public bus services, and another $4 billion on replacing rail assets. This is in addition to the $20 billion that the Government has committed to building new infrastructure.

Mr Magnus added that “there will need to be equitable cost sharing among commuters, taxpayers and public transport operators”, and that there was a need to consider the long-term financial viability of the public transport system.

However, he added: “We will ensure that fares will remain affordable for our commuters.”

Transport Minister Khaw Boon Wan also raised the possibility of higher transport fares last month. He had said in Parliament that it was not sustainable for taxpayers to increasingly subsidise the costs of running the public transport system.

Referring to the PTC, he said that the council “cannot always bring good news”. In December, overall fares fell 4.2 percent. But Mr Khaw said: “Sometimes, they have to adjust fares upwards. If they do, I hope commuters will be understanding.”

The PTC added that it targets to complete the review by the first quarter of next year, and apply the new formula starting from that year’s fare review exercise.

Compared with past fare formula reviews, which were conducted by a committee of representatives appointed by the transport minister, this review will be led by the PTC, the council told The Straits Times.

Since becoming a corporate body last year, the PTC said it has been given the mandate to advise the minister on public transport.

Associate Professor Michael Li, a Nanyang Technological University transport economist, said the current formula is based on the public transport operator’s costs and expected profitability, and does not factor in the Government’s investments in improving services.

“Taxpayers’ money is for public use, and public transport is just one aspect. The Government has to balance the use of public funds, such as for other purposes, like in healthcare and education, as well,” he said.

But he added that the public may not react well to a fare hike if they do not see a visible improvement in services, especially during peak hours.