"WEAK" MRT STATIONS

Mr Chiam See Tong asked the Minister for Communications whether there are "weak" MRT stations in the existing lines and, if so, whether he will identify them.

Mr Mah Bow Tan: Mr Speaker, Sir, there are 42 stations on the existing North-South, East-West lines. Out of these 42 stations, two of the stations can be considered as weak. In other words, the daily patronage of these stations is very low. They are the Marina Bay and the Chinese Garden Stations.

The Marina Bay Station was built despite the low patronage because it is essential for the operations of the North-South line. The Station serves as a terminal station where south-bound trains turn back to head north.

In the North-East Line study, the consultants evaluated the proposed stations based on the projected morning peak hour passenger flow. The consultants projected that the proposed Potong Pasir Station will have a flow of 1,400 during the morning peak. This is about 14% less than the morning peak hour flow at the Chinese Garden Station.

Dr Ker Sin Tze: Sir, many residents in Paya Lebar do not understand why they should pay higher fares for the North-East line. Would the Minister explain the rationale for the proposed higher fares for the North-East line?

Mr Mah Bow Tan: Sir, the proposal to charge different fares for different lines has raised considerable interest. There have been mixed reactions. Some have considered it unfair. Others have counter proposed that fares should be raised across the board rather than specifically for the North-East line. I must say that the reactions were not surprising to me because, after all, if given a choice, who would want to pay more. But I take this opportunity to urge those people who reacted spontaneously to view this proposal in the overall context of building a massive project like the North-East line. And if they think through the issues involved again, I believe they will understand that it is not unfair, as originally thought.

What are the issues involved? The first is that the Government is committed to spending $5 billion to build the North-East Line. The people in the north-east are finally getting closer to their dream of getting the MRT. Yes, they have to wait in the queue, but there are many other areas of Singapore which are not even in the queue as yet.

The second issue really is: when do we start to build? When do we start work? The Government must have a rational basis for making such decisions, especially decisions which involve such a huge amount of money. In the case of the MRT extension, such a basis is that Government will build and pass on to the operator to run when the line is well used. The question is: how do we assess when it is well used? It is well used when the operator is able to recover the running cost of the system, in other words, labour cost, electricity cost, cost of maintenance and repairs and the cost of putting aside some money to buy the next set of trains. This is not a new condition. This is a condition that the Government has applied to the existing lines and also to the Woodlands extension.

Thirdly, in the case of the North-East Line, our consultants' study shows that the North-East Line can only meet this criterion of meeting the operating cost, not the capital cost, not immediately but in four years' time. So we have a choice. Either we wait four years or we find a way to start work sooner. How? By finding ways and means of improving this condition sooner. My Ministry is now looking at different ways to see how we can meet this condition earlier. If we succeed, we can bring the MRT to the North-East earlier. If we cannot, then we have no choice but to wait four years. This is where the different fare proposals come in. It was one of the proposals that we received. It is a proposal that I surfaced at one of the dialogue sessions that I had with some residents and grassroots leaders. It is one possible way for us to bring the MRT forward. There are other ways. One other possibility could be to defer construction of some of the weaker stations. We will consider all proposals. We will settle the final package soon.

Whether the North-East line is built now or later will depend not only on the Government but also on the people who will benefit from the line. It is based on the principle of partnership between the Government and the people. The Government undertakes to pay for the capital cost of the MRT line while the people agree to pay for the operating cost of the line. This is a win-win formula because the Government can then upgrade and improve the public transport service and, in the process, keep our traffic flowing, and therefore enhance our national productivity and effectiveness. The people can then enjoy a major upgrading of their quality of life and enhancement of their assets. It is a win-win situation.

This will not be the last MRT extension we will build. On the contrary, I hope that there will be not only MRT but also light rail transit (LRT) lines serving other parts of Singapore. It is therefore all the more important that we establish now a fair and workable principle to determine where and when we build our next MRT or LRT line. So I hope that residents, Members of Parliament and grassroots leaders see this proposal in the overall context of what we are trying to do to enhance and improve our public transport system.

Mr Low Thia Khiang: Is the Minister saying that if residents living along the North-East line agree to pay, let us say, 20 cents more, as proposed by the Minister, the Government will immediately build the line?

Mr Mah Bow Tan: Sir, one of the problems that we are facing in building the line now is the operating deficit. If we can work out, and if the people using the line can agree to paying a fare - I do not know how much more it would be - that will help to meet that operating deficit, then a major condition would have been met. The 20 cents more that I have suggested is a ball park figure. I do not know the exact number. We are now working out the numbers. I do not expect it to be more than that. However, it could be less than that. I am not sure of the exact number yet, but we will finalise the package soon and then we will present it for the information of the public.

Mr Goh Choon Kang (Braddell Heights): Can I ask the Minister that if the proposal is accepted, will there be a time frame for this higher fare?

Mr Mah Bow Tan: Sir, the general principle is that fares should cover direct operating cost. So as long as the fares cover the direct operating cost, then those fares will hold. I guess the Member is asking whether the higher fares will hold for a certain amount of time. I cannot answer that question explicitly. All I can say is that the general principle that the Public Transport Council adheres to in approving fares is to ensure that the fares are affordable and yet high enough to allow the operator to cover its direct operating cost plus, of course, make a reasonable return on its capital.

Dr Lee Tsao Yuan (Nominated Member): I appreciate that the basis for the Minister's position would be the user-pay principle and also no subsidy for operating cost. Would the Minister care to respond to two alternative principles? One is, instead of user-pay, to have a cross-payment and, secondly, instead of having no subsidy for operating cost, what about having a temporary subsidy for operating cost?

Mr Mah Bow Tan: Sir, the first proposal is one that has been made previously. It is a proposal that is obviously attractive to the potential users of the North-East line. However, I think we may have a different reaction when we put this proposal to all other users of the MRT system. That is the first point.

The second point is really that, as we expand the MRT system, we are going to face more and more the question of viability of each new line. If we were to operate on the principle that the new extension will be viable in its own right, then the chances of us expanding the MRT system will be that much better. If we were to go by the other principle of spreading the cost to all MRT users every time we expand the line, then I am afraid that the support for any new extension will be that much less. This is, however, another alternative that we could use. The experience that we have had every time we have to increase fares is that the PTC has to make sure that there is full justification for it. It is obviously easier to justify if the subsidy is kept within that particular extension rather than spread out across the whole system.

Mr Chiam See Tong: Who pays for the deficit at the two weak stations at Marina Bay and Chinese Garden?

Mr Mah Bow Tan: As I said, the Marina Bay Station is necessary because it is part and parcel of the operations of the existing North-South, East-West line. We need to have a station for the trains to turn back. We cannot be turning back the trains at the last station, which is Raffles City. Therefore, the station at Marina Bay has to be built, otherwise the system does not work.

Mr Chiam See Tong: The cost is spread out then.

Mr Mah Bow Tan: That cost is part and parcel of the cost of operating the North-South, East-West line.

Mr Chiam See Tong: Are there other weak stations for the North-East line from the section at World Trade Centre to Little India?

Mr Mah Bow Tan: As I have explained to the Member, the weakest station along this particular line is the proposed station located somewhere around Potong Pasir.

Dr Michael Lim Chun Leng (Cheng San GRC): What the people living along the North-East corridor want to know is whether the line will come early or not. The Minister himself had said just now that they could not commit. But I want to ask the Minister, since he has stated in public that he sees merit in the line coming early, whether he would personally state publicly that he and his Ministry support the building of the MRT line at the earliest possible moment, ie, as soon as possible.

Mr Mah Bow Tan: Sir, I have already mentioned in public that having looked at the transportation problems in that particular corridor, there is merit in building that line as soon as possible. However, I recognise that because of the high cost involved, I have to make a very strong case to particularly the Minister for Finance, because we have a criterion that needs to be met. Unless there are very, very strong reasons why that condition does not have to be met, then I think it is prudent for us to make sure that that particular condition, which is a very fair condition, is met in the case of the North-East line. As I said, this is a condition that has been applied to the existing MRT system. It is a condition that has been applied to the Woodlands extension. I think it is very fair for this same condition to be applied to the North-East line.

Having said that, the fact that the North-East line is next in line for an MRT system is a strong indication that the Government is committed to building the North-East line. It is in the queue. It is now a question of when we start work. I personally would like to see it start earlier because this would ease the congestion and enhance the public transport system in the area. We have, however, to make sure that the operating cost condition is met. This is a condition which is a very fundamental and fair one. This is a condition we will apply to other extensions as well. If we can find a way to meet this condition for the North-East line, then we will have the MRT to the North-East earlier than we expect.

Mr Low Thia Khiang: If the ridership of the North-East line increases after four years when the place is built up, would the Government reduce the fare?

Mr Mah Bow Tan: Sir, the fare will be set by what is possible to keep the MRT viable. It is not a question of reducing the fare. By that stage, depending on how the cost is, the fare may well be kept steady. So it is really a reflection of what the cost is going to be at that time. In the first few years, we know that the line will not be viable. So the fares may have to be higher. In subsequent years, it may well be that the fares need not be raised. That is a possibility, but I am not in a position at this stage to commit what the fares would be. The basic principle of setting fares that the PTC has used so far is to make sure that the fares are not so high as to allow the operator to make exorbitant profits but enough to allow the operator to have a reasonable return on his capital, ie, cover his operating cost plus a return on his capital. So what the fare level would be then, I am not in a position to say. But I do know that based on the existing fare structure, it is not possible for us to cover the direct operating cost or to meet the condition that I mentioned earlier for the first couple of years.

Dr Lee Tsao Yuan: Will the Minister not consider having a subsidy to cover operating cost, after all the projections do show that this is temporary? In terms of the provision of a public good, I think it is entirely in order for the Government, where the provision of a public good for the good of society is concerned, actually to subsidise part of the cost of the provision of the public good. In this case, it would be temporary in terms of covering the operating cost.

Mr Mah Bow Tan: Sir, let me point out that it is not just a question of covering the direct operating cost on a temporary basis. If we were to build the line earlier, there is an opportunity cost. This opportunity cost is a real cost. It is a cost for us to build or to spend something earlier than what we should be spending. In the case of the North-East line, the total expenditure for the North-East line is going to be something like $5 billion. The opportunity cost for this is going to be enormous.

What are the alternatives? The alternatives could well be that we use the savings from the opportunity cost in some other way. The amount could be used for implementing perhaps another CPF Top-up scheme. It is the same order of magnitude that we are talking about. Therefore, it is not just the direct operating cost but also the opportunity cost that we have to consider. So the passing mark or the hurdle rate for building an MRT extension is a very simple one of meeting the direct operating cost. It can be met very simply. As I said, one of the possibilities is to defer construction of weak stations. Another possibility is, rather than using the existing fare structure, to consider whether another fare structure might be possible to meet that deficit. 1.30 pm

Mr Speaker: Order. End of Question time.

[Pursuant to Standing Order No. 21(3), Written answers to Question Nos. 10 and 11 on the Order Paper are reproduced in the section, 'Oral Answers to Questions Not Reached' Cols.143 - 144). Question Nos. 12 to 15 have been postponed to the sitting of Parliament on 2nd November, 1995.]