Rigour of Regulation of Public Transport Operators

Mr Laurence Lien asked the Minister for Transport in respect of the public transport sector how does LTA regulate the public transport operators apart from imposing service standards, in particular (a) how does it ensure that its oversight framework over the maintenance and operations of the public transport system is robust; (b) how does it use codes of practice to exercise oversight; and (c) how does it ensure that the officers in charge of enforcement and compliance are well-skilled to do their jobs and are not subject to regulatory capture.

Asst Prof Tan Kheng Boon Eugene asked the Minister for Transport (a) how many former officers of his Ministry and LTA are currently in the employment, or serving on the boards, of SBS Transit Ltd and SMRT Corporation Ltd; and (b) what are the safeguards in place to ensure that the likelihood of 'regulatory capture' is minimised.

Mr Lui Tuck Yew: As regulators of the public transport sector in Singapore, the Land Transport Authority (LTA) and the Public Transport Council (PTC) are responsible for issuing the licences for operating the Rapid Transit Systems (RTS) and public buses respectively. To safeguard commuters' interests, these licences stipulate service quality standards for the Public Transport Operators' (PTOs') compliance, in the form of Operating Performance Standards (OPS) for rail, and Quality of Service (QoS) standards for buses.

The existing regulatory framework operates under the principle of regulating key performance outcomes through outcome-based indicators on the public transport services provided by the PTOs. This is intended to provide operational and management flexibility for the PTOs to deliver these outcomes. Such an approach is consistent with the practice of regulatory regimes overseas, like Hong Kong 2 . For instance, bus QoS standards require bus operators to keep their respective bus breakdown rates below 1.5% per month. As for the RTS operators, they are required to meet a set of Operating Performance Standards (OPS) covering train service availability and severity of service disruptions. If their preventive or corrective maintenance activities are inadequate, there would be an impact on service performance and this would then show up as instances of non-compliance with LTA's OPS requirements, for which penalties could be imposed. By and large, such an approach should provide reasonable safeguards and deter the PTOs from inadequate maintenance or failure to perform timely upgrade or replacement of their operating systems.

Let me also assure Members that for RTS operations, LTA, as the regulator, puts in place additional checks and processes to complement this outcome-based regulatory approach. Firstly, LTA requires the operators to prepare and submit detailed maintenance plans for review once every two years. These maintenance plans are expected to be comprehensive and robust.

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Secondly, where a more prescriptive approach is required, LTA would issue Codes of Practice (COP) that govern the maintenance and operations of the RTS as well as provision of rail services, for the operators' compliance. LTA can also impose penalties on the operators for failure to comply with the COPs. Since 2006, LTA has issued seven COPs, which amongst other requirements, impose maintenance parameters and audit checks on Permanent Way and civil structures, and, more recently, the requirements on incident management of service delays and disruptions that operators are required to meet.

Thirdly, on safety-related aspects, LTA requires the RTS operator, under the Licence Agreement, to engage a competent external safety assessor to conduct an independent audit of its Safety Management System (SMS) on a five-yearly basis, and for a Professional Engineer to carry out five-yearly structural inspections of the infrastructure. LTA also audits the operators' SMS yearly, alternating between MRT and LRT lines, to ensure that the operator has carried out its operating and maintenance procedures and processes as set out in the SMS. In addition, LTA, on its part, conducts regular inspections of the tunnels and viaducts and MRT/LRT stations, with a keen focus on safety-related aspects.

Notwithstanding these measures, we acknowledge that the issue of regulatory capture 3 cannot be taken lightly. We will continue to review our regulatory framework to ensure their relevance, and will step up our oversight where necessary. For example, since 2007, the PTC has progressively tightened the QoS standards to meet the expectations and needs of bus commuters. Since the severe rail service disruptions on 15 and 17 December 2011, LTA has also been reviewing the overall rail regulatory framework with a view to making it more robust, going forward. We will also further strengthen our existing benchmarking framework amongst local and international operators, which would incentivise the operators to strive towards better efficiency and performance.

Going forward, in line with the policy objective of introducing greater contestability in the RTS, shorter rail operating licences of about 15 years will be issued for the new lines, starting from the Downtown Line (DTL). With a shorter tenure, the incumbent PTOs are kept on their toes so as to maintain a positive track record that would stand them in good stead for future tenders. We will likewise expect to reap such benefits in the bus industry when we inject contestability through competitive bus route tendering in the longer term.

To ensure that the officers in charge of regulation and compliance are suitably trained, LTA will, from time to time, identify appropriate training courses and organise relevant study trips to enhance their technical knowledge and build up their internal expertise. As part of LTA's regulatory team, there are also officers who have formerly worked in local or overseas PTOs. They bring with them actual operating experience that help LTA to better appreciate the PTOs' operating environment and realities. To further develop our regulatory capability, LTA is also in frequent contact with its overseas counterparts to exchange perspectives and best practices, such as in the areas of performance monitoring and incentive framework. As new RTS lines are added to the network, LTA will also accordingly ramp up their manpower in the engineering and regulatory aspects to provide oversight on the PTOs' maintenance and operations.

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To remain as attractive organisations to existing and potential employees, we will need to adopt a balanced and practical approach in designing our human resource policies. Given the limited pool of expertise, it would not be in our interest to adopt an over-zealous approach in tightly restricting the future career options of employees, or to impose onerous requirements on the operator to submit information relating to the employment history of their employees. For that reason, to respond to Asst Prof Eugene Tan's question, we do not specifically track the number of former employees of MOT or LTA who have joined the PTOs. Instead, what is more important is to ensure that we have safeguards in place to prevent a "conflict of interest" situation where an officer could make use of sensitive information or knowledge acquired during office. To achieve this, many public sector agencies, including MOT and LTA, have put in place a framework that restricts designated officers from joining an external entity that is related to their area of work within a "cooling off" period, which is typically about one to two years.