Land Transport Authority of Singapore (Amendment) Bill

Debate resumed.

Mr Seah Kian Peng: Mr Gerald Giam. Make it short.

Mr Gerald Giam Yean Song: Mr Deputy Speaker, Minister asked for my response to what he says on the international trend towards privatisation. From the research I have done, most cities are actually not moving towards what some economists call the "passive franchise model" that we have in Singapore. They are actually moving towards more government control and government planning, where the governments control the whole network and they give out contracts to operators. In fact, in many European cities, the government just pays the operators to run the service but they collect all the fares. So, the operators do not even have any revenue risk in that. That is the model that a lot of countries are moving towards. In fact, as a country becomes more developed, it moves from the deregulated model to a more regulated model.

Mr Lui Tuck Yew: At the end of the day, are these being run by private operators, too? If you take away the revenue risk from them, is it not more favourable for the operators?

Asst Prof Tan Kheng Boon Eugene: Sir, I would like to ask the Minister to elaborate on how the operational planning powers that would be given to the LTA explicitly would not conflict with its role as a public transport regulator.

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Mr Lui Tuck Yew: Within the LTA, even though it is under one organisation, the regulatory part is separated from the planning and development portion, both for buses as well as for trains. The question really is, should we pull out the regulatory part altogether and put it in a different entity? That was possibly what you were alluding to in your earlier comments. The difficulty is this: let us say, if I were to use trains as an example, and possibly this subject will come up tomorrow, there are potentially three entities that are competing for the same expertise and talent – the operator, the developer who is going to build the new lines and so on, and the regulator.

Today, LTA, being both developer and regulator within the same organisation, is able to bring in young engineers who find that it is actually very exciting work. They plan, design, build the new line and then some of them can potentially be pulled out, put into the regulatory arm where their expertise in planning and developing puts them in good stead. And after a point in time, some of them can be rotated back to another line to do the same planning, development, design and so on. The concern is whether a pure regulator alone would be able to attract as well as to retain the right type of people in the face of steep competition for the same kind of expertise between the operators and between the operator and the planner and the developer. Hence, while I recognise that we should try to make sure that they are as separate as possible, I am not in favour of having separate bodies trying to attract as well as, more importantly, to retain the same talent as well as to give them the right amount of training and the expertise level in order for them to be able to do their respective jobs appropriately.

Mrs Lina Chiam: Sir, I thank the Minister for taking such pains to answer all the questions. Thank you very much. And since I am one of the last ones to ask one question, I think I did ask you a question that, if ever this amendment Bill is passed – I believe it will be – will the Minister consider setting up a committee of review consisting of some independent members of the public to oversee the funds, the control of the funds?

Mr Lui Tuck Yew: Actually, we have to provide an annual report to Parliament on the utilisation of the funds. This is also the answer that I gave to a written question from Mr Pritam Singh some months ago. So, there is already existing legislation that requires us to produce a report that Parliament can then consider on the utilisation of the funds.

Mr Deputy Speaker: Mr Gerald Giam. Keep it short. This will be the last clarification.

Mr Gerald Giam Yean Song: Thank you, Mr Deputy Speaker. I just want to correct myself about the revenue risk. What I meant was a fare revenue risk in that model which I am not pushing for actually. I am just trying to illustrate that there is that trend towards more regulation. In that model, the operators are just paid a certain amount to service that route.

Regardless of the fares that come in, it goes to the Government. My main point in all these is that the reason why we feel that there is a need to have more regulation and more control by the Government, is that we feel that there is a need to have the profits not going to shareholders but recycled back into the system where it contributes to better maintenance and buying more buses, where the operators or the single operator – the public monopoly – can do that, rather than giving the money to shareholders whenever it makes a profit.

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Mr Lui Tuck Yew: Thank you, Mr Deputy Speaker. The Government does do quite a lot of what the Member is saying, which is central planning, deciding on which route, in fact to the extent of which new route to introduce when, how many buses that will require and then holding the operator to delivering the standards that are expected of them. And as I have said earlier also, we set the standards, we decide on the fares so they do not have carte blanche in order to maximise profits.

The challenge to date – again, as I said earlier – is that the bus financials have actually deteriorated over quite a period of time because the fares have not been keeping with the increases in wages or in fuel. Therefore, if you look at the trend of the profit margins, both operators are now in the negative and we have to try to make sure that we improve on this, otherwise all that we are talking about will not come to pass.

Question put, and agreed to.

Bill accordingly read a Second time.

Question proposed that the House immediately resolves itself into a Committee on the Bill.

7.32 pm

Asst Prof Tan Kheng Boon Eugene: A Point of Order. Can I confirm that we have a quorum? Thank you, Mr Deputy Speaker.

Mr Deputy Speaker: I will ask the Clerk to take a count. We will pause, and I will ask the Clerk to activate the Members to come in.

Notice taken that 21 Members were present.