DISTANCE-BASED FARE STRUCTURE

DISTANCE-BASED FARE STRUCTURE: 1.

Dr Lim Wee Kiak:

Dr Lim Wee Kiak asked the Minister for Transport in light of the dataset error resulting in miscalculations in the bus fares between North Bouna Vista Road and Commonwealth Avenue (a) whether there are errors in the fare structures in other locations; (b) how many commuters have lodged refunds for being overcharged; (c) what is the estimated total amount overcharged before the error was rectified; and (d) what are the measures taken to ensure that this does not recur.

Dr Lim Wee Kiak asked the Minister for Transport with the unhappiness expressed by various commuters following the recent introduction of the distance-based fares: (a) what is the Ministry doing with the feedback given by the commuters; (b) when can the public expect a further review of the current distance-based fare structure; and (c) whether the Ministry will consider having the transport operators return a portion of the profits to the commuters through a rebate or loyalty scheme.

3.

Er Lee Bee Wah asked the Minister for Transport following the implementation of the distance-based fare

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system (a) why do commuters have to pay more for single bus or train ride when these services are designed precisely for such single trips; and (b) whether commuters should be rewarded with lower fares for choosing longer and more inconvenient routes.

4.

Ms Irene Ng Phek Hoong asked the Minister for Transport in view of the travel patterns of the elderly in Singapore (a) what will be the impact of distance fare on them; and (b) whether the maximum long-distance fare for the elderly can be lowered as they may find it physically taxing to make bus-MRT-bus transfers to enjoy the benefits of distance fares.

5.

Dr Lily Neo asked the Minister for Transport (a) what is the percentage of senior citizens who have to pay more for their public transport since the introduction of distance fares; (b) what is the percentage of such increased fares; and (c) whether he will consider implementing measures to reduce their burden.

6.

Mr Zaqy Mohamad asked the Minister for Transport (a) whether the Ministry has conducted any formal surveys on the actual percentage of commuters who have had increases or reduction in their fares since the distance-based fare system was introduced; and (b) what is the impact on senior citizens.

7.

Ms Sylvia Lim asked the Minister for Transport (a) whether the new system of distance-based fares will increase travel stress during peak hours by encouraging more commuter transfers and creating more congestion points; and (b) prior to implementation, what assessments were made of its impact on specific groups of commuters, such as senior citizens.

The Minister for Transport (Mr Raymond Lim Siang Keat): Mr Speaker, Sir, may I have your permission to take Question Nos. 1 to 7 together?

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Mr Speaker: Yes.

Mr Raymond Lim Siang Keat: Sir, Members have raised several issues on distance fare. Let me start by explaining the rationale for distance fare.

Distance fare is a fairer fare system. Previously, commuters making transfer journeys were effectively paying more to keep the fares lower for commuters who take direct journeys. The Public Transport Council (PTC) has now removed this cross-subsidy or transfer penalty so that all commuters pay the same fare for the same distance travelled. This way, commuters can choose the best way to reach their destination without having to worry about paying extra fare if they make a transfer.

The concept of distance fare is therefore a good one. The issue now is in the implementation. In this regard, the PTC had to consider how to distribute the costs associated with implementing such a system. PTC sought to reduce the burden on commuters by having the operators bear the lion’s share of the costs. Dr Lim Wee Kiak asked if the operators would consider returning a portion of their profits to the commuters. The operators are in fact already bearing the larger part, about two-thirds, of the costs of the transition to distance fares. Overall, the operators have borne a permanent reduction in fare revenue of about $88 million per year, as a result of distance fare.

For the remainder of the cost, the PTC had the unenviable task of distributing it amongst the various commuter groups – between direct and transfer travellers, short and long distance travellers as well as adults, senior citizens and student/child travellers. If the PTC lowers the costs for one commuter group, another commuter group would have to pay more. Thus, if fares were to be lowered for commuters

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travelling long distances as Er Lee Bee Wah and Ms Irene Ng had suggested, it would mean that the fares for another group of commuters who travel shorter distances would go up. To find the appropriate balance, PTC followed the principle of benefiting as many people with lower fares as was possible. However, as distance fare corrects the earlier inequity of fares between direct and transfer journeys, the fares for some direct journeys have to go up in conjunction with lower fares for transfer journeys with the removal of the transfer penalty.

In studying the impact of distance fares on commuters, the PTC used actual travel data from the fare system, which represented the prevailing travel patterns of commuters. This is far more comprehensive than a survey, as the data is derived from actual fares paid by the entire population of commuters using contactless smartcards. The PTC’s projected impact analysis showed that 63% of all commuters would see fare savings in their weekly public transport spending under distance fares compared to the restored fares upon the expiry of last year’s temporary rebate of 3%. As for the commuters who do not see immediate benefits in terms of lower fares now, they may benefit in the future as their travel patterns may change and new rail lines and connections open. We are already seeing this happening with the opening of the Circle Line from Dhoby Ghaut to Marymount.

Mr Zaqy Mohamad asked if surveys were conducted to validate the projected impact analysis since the distance-based fare system was introduced. The PTC has indeed conducted a post-implementation validation exercise, not based on just a survey but using the actual fare data collected in July under distance fare. In all, PTC took data from 24 million

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journeys made over a one-week period for this analysis. The exercise confirmed that the impact of distance fares on commuters is very close to what PTC had expected. Overall, 68% of all commuters saw average weekly fare savings under distance fare, slightly above the 63% originally projected. This may indicate that some commuters have already started to optimise their journeys by taking advantage of the flexibility under distance fare to choose less circuitous routes to their destinations.

Ms Irene Ng, Dr Lily Neo and Mr Zaqy Mohamad have asked about the impact of distance fare on senior citizens. For senior citizens, the PTC had in fact tried to do as much as possible to ensure there is a clear majority who would benefit from distance fare. Under distance fare, senior citizens enjoy a 25% discount from adult fares. To reduce the impact on senior citizens travelling long distances, the fares were set such that they do not have to pay any additional fare for journeys longer than 7.2 km. The outcome was a fare structure that would provide seven in 10 senior citizen commuters (70%) with fare savings. Again, these projections have been validated by the actual fare data collected in July, which show 74% with fare savings and 26% with fare increases. At the extreme ends, 5% of senior citizens save more than $2.30 weekly, while 5% see an increase of more than $0.77 weekly.

Ms Irene Ng mentioned that the elderly may find it physically taxing to make transfers to enjoy the benefits of distance fare. It is a misconception that commuters need to make transfers to benefit from distance fare or that the PTC is forcing senior citizens to make transfers. What the PTC has done in introducing distance fare is to ensure that transfer journeys do not result in higher fares than equivalent direct trips. There is therefore no financial incentive under distance fare for commuters to transfer if the direct journey

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is of the same distance. However, if a commuter is able to shorten his travelling time or distance by making transfers, distance fare gives him the option to do so. This increases the flexibility for commuters rather than reducing it.

On Ms Sylvia Lim’s question on whether distance fare will increase travel stress during peak hours by encouraging more commuter transfers and creating more congestion points, our assessment is that the opposite would occur. Commuters would now be incentivised to choose the shortest distance possible – be it a direct or transfer journey – to get to their destination, thus, making the most efficient use of public transport resources.

Dr Lim Wee Kiak has asked about the extent and impact of the distance discrepancies and the measures taken to prevent such errors in the future. Given the scale of the exercise in introducing distance fare, it is inevitable that there would be teething issues during implementation. LTA has acted on commuters’ feedback and made the necessary adjustments to the system. To date, errors have been found in the distance data for 13 bus stop pairs which represent 0.2% of the total number of bus stop pairs in the system. These were due to errors in the dataset caused by ground changes, such as road diversions. Most discrepancies were in the range of 0.2 to 0.3 km, which is only a fraction of the 1-km fare band. The number of commuters affected by these errors is likely to be small as only journeys that cross over to the next fare band as a result of the discrepancy are affected.

As at 9th August, TransitLink has provided refunds for a total of 38 claims due to distance errors. Going forward, the PTC has put in place a regular review process to ensure that the fare system is updated and reflects the changes that occur on the ground.

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Dr Lim also asked whether there should be a review of the distance-based fare structure. This initiative was previously debated in this House and there was strong support for it as a fairer system for all. The distance fare system is a sound concept that will serve us for the long run. As PTC Chairman Mr Gerard Ee has said, it would take time for people to get used to it and feel the benefits. We recognise that there are adjustments involved in the transition to distance fare, and that some commuters have to pay higher fares because of the change. However, we ask for commuters’ understanding as we are moving towards a fare system which is fairer for all.

For low-income families including senior citizens who may need assistance with fare increases under distance fare, the Government will continue to assist them through various community-led initiatives and work support schemes under the Community Development Councils and the CCC ComCare Fund.

Dr Lim Wee Kiak (Sembawang): Mr Speaker, I thank the Minister for his comprehensive answer. I guess this is a hot issue on the ground. The commuters are usually at the shorter end of the stick when dataset errors occur. One of the issues is: can the Minister make the refund process less onerous? To claim 20 cents, they have to go on the Internet to fill in a form and so on. With the smart card system, can this be done automatically?

Secondly, the PTC is going to review the dataset. I would like to ask how often will this dataset be reviewed and what is there to ensure accuracy? My other question on distance fare is: during the initial assessment, how did PTC come up with the statement and the conclusion, and what were the assumptions that were made? Now that a review has been done on the actual fares collected and given the

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discovery that there is a slight difference, could the Minister share the detailed results with the public to allay fears that fares are going up?

I would also like to ask if PTC took into account the expiry of the 3% rebate that was introduced as a temporary measure during the recession. If that was taken into account, would all the assumptions still be valid? As for senior citizens, the starting fare is now lowered to 53 cents compared to before –

Mr Speaker: Your question is too long, Dr Lim.

Dr Lim Wee Kiak: Can the Minister provide the percentage of senior citizens who are travelling less than 5.2 km and, hence, will benefit from the new fare structure?

Mr Speaker: I would appreciate it if Members could keep their questions short, please.

Mr Raymond Lim Siang Keat: I think the Member has taken the full allotment for the year for supplementary questions. Let me take the questions one at a time.

First, can the refund be made less onerous? I think TransitLink has tried its best to make it as simple as possible. For commuters who want to claim a refund because of this error, they can do so in three ways: they can call, they can go online and they can go to the ticketing office. After verification of the claim, TransitLink would then send each commuter two vouchers for two single trip rides, regardless of distance. On average, the claim for distance discrepancy is about 10 cents. The operators have given the commuters a voucher which is higher than that value and, with that, the commuters can hop on not just the basic bus services but also

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the express and premium bus services. Can this refund be done automatically? The current system does not allow that. We need to look at the issue in perspective. The occurrence is 0.2 % of all the bus stop pairs in our system. I do not think what TransitLink is providing now is onerous. There are different ways of claiming – call, go online, go to the office. And they will post the vouchers to the commuters. Commuters do not have to go back to their office.

Second, the review process going forward. PTC has instituted a review process. Whenever there is a permanent change to the system, the operators are required to report that every quarter. The Land Transport Authority (LTA), being a third party, would run audits on the system.

Third, the post-implementation validation results and sharing the information with the public, which I have just done so. I have spoken in Parliament – this is quite a public platform. It will be taken note of that this is where we stand now.

Fourth, the 3% rebate. PTC took the period after the fares had been restored as the starting point for the fare system. This is the correct position because the 3% rebate was just temporary. Regardless of whether PTC had implemented distance fares or not, the fares would have been restored. They took that as the position and benchmarked it from there.

The last question: how many senior citizens had benefited, ie, those travelling less than 5.2 km? If Members look at the data that we have, 75% of senior citizens take at least one journey per week that is less than 5.2 km. They would benefit. This is not the only thing. Senior citizens who take transfer journeys will also benefit. The latest data we have – ie, post implementation – is that 64% of the senior citizens would take at least one transfer journey a week. When we

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combine this information and look at it on a weekly basis, we have about seven in 10 senior citizens benefiting with distance fare.

Dr Lily Neo (Jalan Besar): Thank you, Mr Speaker. I would like to ask the Minister whether it is correct to say that about one in three senior citizens has to pay more for his or her public transport since the introduction of distance fares. Therefore, is this policy not affecting the group that can ill afford the fares hike, some as much as 20% to 30%? Is the Minister aware of the frustrations and anger of many being voiced loudly and clearly on the ground? Therefore, should there not be a review to assist this group?

Mr Raymond Lim Siang Keat: Sir, the Member is right that some senior citizens would face significant fare increases. That is right. The PTC agonised over this but it had to make a decision on what is the best fare structure that will benefit commuters as a whole. I mentioned earlier in my main reply and I think it is worth explaining to Members again the sort of fare structure they have decided upon for senior citizens. In the past, in the old system, if a senior citizen was to take two bus trips to complete the journey from A to B, he would have to pay the same flat rate twice. So there is an additional penalty in there. If he was to take two bus trips to complete the journey in 2007, the fares would come up to about 109 cents, ie, before the transition to distance fare. Today, they will pay a maximum of about 86 cents. Previously, because it was not distance based, even if he travelled a short distance, he paid 109 cents the minute he took two bus trips. Now they pay up to 86 cents. If distance is less than that, they would not pay 86 cents. So that is the first thing for senior citizens when they make transfers. The other thing the PTC did, which I mentioned earlier in response to Dr Lim Wee Kiak's question, is that for shorter distances, they have

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brought fares down. If you look at where the starting point was previously, it would have been 72 cents after the fares were restored. This is the starting rate for senior citizens. Now it is 53 cents when they take an air-conditioned bus service. And if they take a feeder bus service, they pay 53 cents regardless of distance travelled, whether to the market or within the neighbourhood. The third thing which the PTC did was to cap the maximum distance for senior citizens. They capped it at 7.2 km, that means anything above 7.2 km, they do not pay an additional charge. This means that the discount is higher than 25%. They have this base of 25% less than adult fares, but the minute they cross 7.2 km, the discount actually shoots up, higher than 25%. This is what the PTC has done. As I have said, the PTC deliberated over this at great length because they understood exactly what the Member said that some commuters would be affected. Nevertheless, we recognise that senior citizens are a diverse group and some would, indeed, like she said, have difficulty coping with this fare increase. Rather than adjust this balance, which I have just described, which benefits about seven in 10 senior citizens, the way to proceed to help senior citizens who have difficulty coping with the fare increases is through a more direct and targeted way. Members, please use your welfare fund or ComCare Fund to help them – as what Mr Gan Kim Yong did in Chua Chu Kang. That is an option.

Mr Zaqy Mohamad (Hong Kah): Questions for the Minister. I understand that when we embarked on this, the fare structure was predominantly based on distance. Last week, in a media interview, the PTC came out to say that they also took into account time travelled and waiting time. I was wondering if the Minister could clarify whether these are the only two factors or are there also other factors involved in the fare structure.

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Mr Raymond Lim Siang Keat: This question actually relates to the MRT network. The way our system works is if you go from A to B, you zap in at A and when you go out at B, you zap out. The system cannot track how you get from A to B. It cannot postulate whether you took this or that way, the interchange where you hopped on. It will not know as it cannot track your route. So the PTC had to make an assumption for a case like this. The working assumption they take is that, by and large, when commuters get into the system, they try their best to find the fastest way to get from A to B. So they said, "Okay, the fastest way. So what is the fare for the distance travelled in the fastest way?"

Er Lee Bee Wah (Ang Mo Kio): Thank you, Mr Speaker. I would like to ask the Minister how many students would have to pay more after the implementation of distance-based fare. I read in TODAY where one writer mentioned that from the same bus stop at Ang Mo Kio MRT station, he took three different buses and was charged three different fares. If this is totally distance-based fare, how is this possible?

Mr Raymond Lim Siang Keat: I do not know the details of the specific case that the Member brought up from the TODAY paper. We can look into that. But the earlier question is one I can answer when she asked the balance of benefit for students. I will give Members the impact based on the data tracked after 3rd July. For students, 76% saw weekly savings and 24% saw an increase.

Ms Irene Ng Phek Hoong (Tampines): Thank you, Sir. Can I ask the Minister for an assurance that, given that distance fares are based on the distance travelled on the fastest route, which includes walking time and waiting time, senior citizens are not unfairly penalised for being less mobile and less savvy about the routes to take? Can I also ask the

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Minister: given that the Minister is encouraging the constituencies to buy public transport vouchers to give to the needy who cannot afford the increase in public transport fares, can he encourage the public transport operators to pick up the charge of printing and handling the public transport vouchers because then it will reflect the true dollar value of the vouchers to our residents from our welfare fund?

Mr Raymond Lim Siang Keat: The first question is really the issue of the mobility of senior citizens. We are concerned that they are less mobile and whether this system would unfairly penalise them. I think it is useful to make a few points here. I said this in the main reply but I think it is worth repeating. Dr Lim Wee Kiak tells me this time round, I have to go very slowly and explain this. So I am going to do this. First, it is not the intention of distance fare to penalise those who are less mobile. What distance fare does is to ensure that if a commuter travels the same distance either by a direct or a transfer journey, he pays the same fare. As the fare is the same, distance fare does not force us to make transfer journeys in order to benefit. Instead distance fare allows us to choose the best way to get to our destination without worrying about paying extra if we do make a transfer. Thus, the aim is to make the fare system fairer rather than to force commuters to make transfers. The second issue about senior citizens – senior citizens are a diverse group. Senior citizen concession card holders start at the age of 60. Yes, some do not make transfers, but many others do. Prior to distance fare, 62% of senior citizens took transfers at least once a week. The PTC took this into account in its decision to implement distance fare for senior citizens. The feedback they received in the run up before the implementation of distance fare was that senior citizens who took transfers felt that they were being unfairly penalised as the fare system

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required them to pay more to keep fares low for other senior citizens. The PTC decided that a fairer fare system is for all senior citizens to pay the same for the same distance travelled. After distance fare, the latest July 2010 travel data showed that 64% of senior citizens now made at least one transfer journey a week. Similarly, just as there are senior citizens who take long direct journeys, there are others who take shorter journeys who have benefited from the lower fares which I mentioned earlier, in answer to Dr Lim Wee Kiak. Just as I mentioned in my reply just now, the PTC had to find an appropriate balance here. Lowering, say, the maximum fares on long distance journeys would benefit transfers and long distance travellers, but those who make shorter journeys would have to pay more as a result. I know for a fact that if the PTC could have benefited all commuters, they would have done so, 100% of commuters. Mr Gerard Ee, the PTC Chairman, said as much but as he pointed out, this is not possible. If PTC lowers the cost for one group of commuters, another group or groups would have to bear this cost. Of course, different people may have distributed the cost differently, as it is a matter of judgment what the appropriate balance is. But the outcome of any judgment will involve some groups seeing immediate benefits and others paying more in this transition to a better and fairer fare system. Under our public transport framework, we have entrusted this decision to the Public Transport Council. I believe that they have tried their best. On the Member's second question of whether the public transport operators will pick up the tab for the vouchers, it is a commercial decision. It is something that we can put to them, and it is something that they have to consider.

Mr Speaker: Mr Baey, last question.

Mr Baey Yam Keng (Tanjong Pagar): Thank you, Sir. I would like to ask the Minister to clarify if the flat rate of 60

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cents per trip for senior citizens is applicable only after 9.00 am. Therefore, does the same time condition apply for the new cap of 86 cents for a journey of two bus trips? If so, can that condition be removed or reviewed? I remember the Ministry's answer about that being a decision made by the commercial transport operators. Given the fact that PTC is now playing the role of balancing how the savings arising from the waiver of transport penalties are being distributed across the different commuter segments, can the PTC make a decision to extend concessionary travel for senior citizens at all times in order to promote a more elderly friendly society?

Mr Raymond Lim Siang Keat: I personally am sympathetic to this. The concession hours start from 9.00 am. But under our structure, the Member is quite right that the public transport operators have to make this decision. It is part of their business decision because any decision that they make on concession means that somewhere else in the system that cost will have to be borne. So this is where we are. The PTC will take in all these relevant feedback. I think the next time when they review the fares, they will look into all these feedback.