SMRT

SMRT:

(Fine for train disruptions): 19.

Mdm Ho Geok Choo asked the Minister for Transport how SMRT paid the fine for the train disruptions in January 2008 as there have been concerns from the public that this cost is funnelled down to the commuters.

Mrs Lim Hwee Hua (for the Minister for Transport): Mr Speaker, Sir, LTA imposed a fine of S$387,176 on SMRT for the 7-hour disruption to its train services between Pasir Ris and Tanah Merah MRT stations on 21st January 2008.

I would like to assure Members of the House that the cost of the fine is not passed on to commuters. Fare increases are regulated by the Public Transport Council (PTC) and capped by a fare adjustment formula. Any fare increase is determined by macroeconomic factors, such as the overall price inflation and the growth of average wages in the whole economy. It is not a cost-plus formula where any increase in the operator’s costs can be met directly by higher fares.

Mdm Ho Geok Choo: I would like to ask the Minister whether such a fine as

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the one levied in January 2008 is considered an increase in operating costs and, if so, whether it is factored in the computation of fares for consumers. Second question: what are the processes that are in place to make transport providers account for fare increases besides the annual review of maximum fare increase allowable by the PTC? Can the Minister elaborate on these safeguards and the enforcement mechanism for them? And the last question: given the rapidly increasing inflation rates, would the Ministry be reconsidering the formula for the PTC's review of fares, which currently factors in the CPI and the change in monthly wages?

Mrs Lim Hwee Hua: Mr Speaker, Sir, I believe I have answered the first part of Mdm Ho's question, but let me just reiterate that this is not a cost-plus formula where the operators can just simply pass on the costs that they have incurred, whether it is by way of imposed penalties or for other reasons. In terms of the safeguards on the use of the fare review mechanism, we have the Return On Total Assets which is really a reality check, and that has been applied to good effect last year.

Her other question about inflation is really captured in the formula which is currently all-embracing and which also serves to reflect the actual cost that is being felt throughout the whole economy and not just by the transport operators themselves.