PUBLIC TRANSPORT FARE REVISION

PUBLIC TRANSPORT FARE REVISION: 13.

Dr Lim Wee Kiak asked the Minister for Transport (a) including the current transport fare revision, how much has the public transport fare increased over the last five years; (b) on which socio-economic group relative to real wage increase over the last five years does this increase have the greatest impact; and (c) what is the Ministry doing to mitigate the impact.

The Minister for Transport (Mr Raymond Lim Siang Keat): Mr Speaker, Sir, our approach is to allow small and regular public transport fare adjustments to help cover operating cost increases and to fund investments such as new buses and train upgrades. The fare adjustment mechanism protects the public by capping the allowable fare increase instead of letting the public transport operators (PTOs) charge what the market can bear, and by requiring the PTOs to share productivity gains with commuters. Fares have increased by 5.3% over the last five years, including this year's fare increase. This works out to be an increase of about 1% per year, which lags average wage increases of 3% per year between 2002 and 2006.

To ensure that fares remain affordable to the majority of commuters, the Public Transport Council (PTC) tracks the proportion of income that an average commuting household spends on public transport. Based on surveys, this corresponds to the second quintile (which is the 21st to 40th percentile) household income group. This proportion has been falling from 7.0% in 2003 to 6.5% in 2006. So fares have remained affordable for the general public.

However,

we recognise that low-income households, ie, those in the bottom 20%, may need additional help to cope with transport fare increases. As such, between 2005 and 2007 when fares were raised, the Government, the public transport operators as well as community organisations contributed some $8.6 million in the form of public transport vouchers for such households. This year, the Government has also committed $10 million to a Public Transport Fund to be given out over three years to provide additional help to lower-income households.

To help low-income families cope with increases in public transport fares as well as deal with larger cost of living concerns, over the past six years, the Government has provided assistance of more than $17,500 to a typical low-income household. This comes from the various assistance schemes such as the Progress Package, New Singapore Shares, Economic Restructuring Shares, CPF Top-Ups, rebates on utilities, rentals, service and conservancy charges and the GST Offset Package. Low-income households and workers will also be receiving more help under the Workfare Income Supplement Scheme.

Let me assure the Member that the Government will closely monitor the affordability of public transport fares of needy households and provide targeted help to those who need it most.

Dr Lim Wee Kiak (Sembawang): I thank the Minister for the comprehensive answer. With the escalating oil price and the likelihood that it will remain high, how will the high oil price impact the public transport sector and the cost to the people? And what are the measures that the Ministry of Transport is taking to mitigate this particular impact? Will the Ministry consider liberalisation of the public transport sector to a more competitive one, instead of the current duopoly? And, lastly, can the Minister give us some updates on the current status of the land transport review, if possible?

Mr Raymond Lim Siang Keat: The way the review takes place when it comes to public transport fares, we do not have a direct feed through of the operators' costs. The Member is asking what happens if the oil price has gone up, fuel costs have increased and is there a direct feed through? No, it does not happen that way. We use macro structural factors. So, if you look at the formula, the formula basically takes the CPI and the wage index and then you subtract off the productivity gains. This is to address the concern the Member has - that if there is a direct flow through, the fare will go up. So this is why we say that there is a cap to prevent that.

On the Member's second question on the liberalisation of public transport sector, as part of the land transport review, these are some of the suggestions that have been put forth and it is something that the Ministry will consider. We hope to complete the review by the end of this year and by early next year, we will make announcements on what are some of the key initiatives of the land transport review.