PUBLIC TRANSPORT FARES (Motion)

1.38 pm

Mr Tan Soo Khoon (East Coast): Mr Speaker, Sir, I beg to move,

That this House, being aware that Singaporeans are suffering from the effects of a recession, mindful that many Singaporeans, in particular the unemployed, are having difficulties making ends meet and agreeing with the Prime Minister that this is not the best time to increase bus and MRT fares, (a) urges the Public Transport Council to review its decision on the increase in public transport fares; and (b) further urges the Government to take steps to ensure that the prices of public services are not unreasonably increased during these difficult times. [*The motion also stood in the names of Dr Tan Cheng Bock, Mr Leong Horn Kee, Dr Wang Kai Yuen, Mr Chay Wai Chuen and Dr Amy Khor Lean Suan.]

Sir, on 11th June 2002, the Public Transport Council announced increases in the fares of public bus and train operations. These increases, already operative since 1st July, are as follows: adult bus fares and adult MRT/LRT fares by 3 cents and 4 cents respectively for commuters using ez-link cards. For those using magnetic fare cards and those paying cash, the increases went up by 5 cents and 10 cents respectively. There were also other increases affecting students, NSmen and senior citizens.

Since the announcement of the increases, there has been a huge public outcry over these increases. Many have questioned the explanations put forward by the PTC and the two operators, SBS Transit and SMRT Corporation, and many more question the timing of these increases.

Sir, several Members had submitted Questions for Oral Answers on this issue, but I felt that merely asking questions would not do justice to the groundswell of discontentment, and we would just get a reply from the Minister for Transport. We will probably ask some supplementary questions, get some answers, but with the limited time available for questions, at the end of it, we will all go home less than satisfied. And we would have failed to articulate many of the concerns on the ground, and the House would not have been able to take a position on the issues. I, therefore, decided to table this motion and got the support of five of my colleagues, the maximum allowed under Standing Orders, but I am glad to see that we have a long list of Members who are waiting to speak on this subject.

Sir, what are the issues that face us in debating this motion? Let me start by explaining the different parts of the motion.

We are in the midst of the worst recession since independence 37 years ago. There are no signs on the horizon that there is going to be an economic recovery in the near future. Yes, we may get promising statistics in one month for our manufacturing sector or for exports. But in another month, these figures can come down. So there is no definite trend that the outlook will improve very soon. It is still early days to draw any conclusion. Unemployment has exceeded 100,000 and most who have lost their jobs cannot find any work at all. In some cases, there are many who want to work for less pay but the jobs are just not there. Even the gainfully employed have difficulties making ends meet, what more the unemployed.

The announcement by the PTC of the fare increases therefore came as a rude shock to Singaporeans, as they felt that it could not have come at a worse time. The Deputy Prime Minister and Finance Minister had told the House in May, when making his Budget statement, that the PTC had decided that there would be no need to raise fares next year as a result of the increase in GST. Little did we know that what the PTC meant was no increase next year did not mean no increase this year! I do not know if you would call this twisted or sardonic humour, but I think it is, almost for sure, not funny at all to Singaporeans. How sure are we that, next year, we will not be told again by the PTC that never mind the increase in GST, but operating and maintenance costs have gone up again and therefore we have to have another increase in fares.

The Prime Minister has come out to question the timing of the increases. On 17th June, he was quoted in the press as having said that this is not the best time to put up the increases, and I think the House should endorse what he had said.

The House must therefore solicit some definitive response from the Government at the end of this debate. I have asked that the PTC review its decision and I will elaborate further on this later. We need to know how the PTC arrives at its decision, whether the reasons put forth by the transport companies for the increases are justifiable, and we need to know how the PTC intends to act with regard to future requests for fare increases. We need to know if the PTC will not just respond to the requests of the transport companies, but whether it intends to respond also to prevailing economic circumstances and to the needs of the commuters.

This debate is not just about bus and MRT fares. It also has to do with the slew of increases in charges of other public services that have taken place, or are about to take place. Sir, I believe that this is the main cause of discontent on the ground. Consider this: GST up, ERP up, petrol up, car park charges up, telephone charges soon to be up, and, of course, unemployment is up, retrenchment is up. Morale is upside down, and so is our pay, it is down. People are not only fed up, they are frightened about their future. As a cartoon in a local newspaper puts it graphically, all these price increases, to parody the title of a movie that was just shown, add up to "The Sum of All Fears" for Singaporeans. The public transport fare increase has become the single issue on which to peg all other frustrations, and some of these may not even have to do with price increases. This issue has become a lightning rod.

Sir, I was therefore appalled by the response of the Minister for Transport when he was asked by the press what he thought of the price increases. He said, "While unemployment has gone up, 95% of Singaporeans are still working." Well, really! Sir, he is telling us what is the big deal, only 5% are not working, so what is all the fuss about. Well, let me tell him that 5% unemployed is just 5% too much. Will we next be telling these 5% of the population that if they cannot have food on their table, it is all right because the other 95% of the population can feed themselves?

Many Singaporeans have already lost their jobs, and many more have taken pay cuts. So, let us not make callous remarks to dampen morale even further.

The Minister has also refuted the allegation that the transport companies are profiteering from the price increases. He said:

"They must have a rate of return that is reasonable and which is not excessive. You cannot control them to the extent that they lose money."

Sir, both transport operators have cited increased costs, such as wages, the increases in CPF contribution from 12% to 16% since January last year, and investments in service improvements, as reasons for asking for the increases in fares. The PTC has said that it wants them to remain financially viable.

Now, Sir, there was a time when CPF contributions were reduced from 20% to 12%, but I do not recall the transport companies reducing their fares.

This question of wage increases, which they have used as a reason, perplexes me. Today, in Singapore, the Government, the trade unions and the employers are all calling for wage restraint. Wages are frozen. Bonuses are lowered. You are lucky if your wages have not been cut. So, what is this wage increase that the two companies are talking about? Is it to get more staff to provide for new operations and new routes? Would the new revenue from new routes not cover the wages of additional staff? Or are they telling us that the staff has actually got wage increases?

Sir, I have here a report in today's Straits Times headlined "Slashing of staff and fuel costs helps SIA stay in the black." It says:

"The national carrier cut staff costs by some 14.5% or $188 million to a total figure of $1.13 billion [a cut of 14.5%]. This was despite a larger staff strength with the company employing 3.9% or 539 more staff ."

Now, how is it that SIA can rein in its staff costs and enjoy savings in its wage bill even though it had a larger staff strength? It too had to face larger contribution to the employees' CPF. The answer is simple. Singapore Airlines is in a business that is highly competitive. Not only that, last year, as everyone knows was the most difficult year for the airlines business, especially after the September 11 attacks. SIA was confronted with the first possible loss in its history. It did what many sensible businesses in such times do to stay alive. It imposed wage cuts from 2.5% to 15%. When passenger load factors fell, did it increase ticket prices to make up for the loss in revenue? As many Singaporeans happily found out, SIA slashed prices so that it could keep its planes flying.

So, there we have it. Three companies are operating in the broader transport sector. One proves itself to be highly cost-efficient, overcoming all odds to turn in another profitable year in a highly competitive industry. Two other companies in a highly protective environment, perpetually grousing about higher costs and demanding more from its customers.

SBS Transit also says that its ridership fell by 3% last year and in the first four months of this year, it fell another 2.8%. I now have one question to ask. According to the Chairman of SBS Transit in his year 2001 Annual Report, TIBS took over 17 SBS services and this transfer of the 17 services to TIBS had an impact of $13.9 million on the bottom line of SBS Transit. It was SBS who chose to lose this source of income by giving up the routes. It therefore lost ridership because it gave up the routes to its competitor. Is it justifiable to use this as an excuse to make up for its loss in revenue and make the customers pay more?

Even if they tell me that this is not the reason but that there are just simply less people taking their buses these days, then let me say that what SBS is doing to overcome the situation is certainly very unorthodox business practice. Any businessman will tell you that if you find your customers running away, the last thing you do is to increase the prices of your products or services. What you do is to hold on to your prices, or you reduce prices, you give discounts, you run promotions, take a cut in your margins and keep the goodwill of your customers during the bad times, and not frighten them away with even higher prices so that they will run into the arms of your competitors.

But our two transport operators can do this because there is no competitive environment in their business. The two companies do not compete with one another on the same routes, so that is why, even during a recession, they can put up prices with such impunity. There is simply no incentive for them to find ways to do things better and more economically to keep the loyalty of their customers. It is a question of take it or leave it.

Now, let me illustrate this point further. I have here a news report from the South China Morning Post of Hong Kong dated Friday, 5th July. The headline reads "MTR [that is the mass transit rail] extension fares undercut buses". It says:

"Hong Kong MTR announced that its fares will be up to 23% cheaper than travelling by bus when a new service starts on 18th August. Fares on the rail will also fall between 2.9% and 22% lower than on comparable bus routes operated by three other bus companies. In addition to the lower fares, MTR will also grant a promotional discount of $2 for Octopus card users [Octopus card is their equivalent of our fare card] for two weeks after the new service commences."

Sir, the report then goes on to say:

"The announcement prompted some bus operators to consider cutting fares to remain competitive. A First Bus Company [this is one of the bus companies] spokeswoman said the company welcomed competition."

"A Kowloon Motor Bus Company added it may review routes and fares. ." This report adds that the bus companies would consider rearranging their routes and reduce the number of stops to cut their fares. An MTR official then responded by saying that the MTR fares "were set in accordance with affordability, market competition and economic conditions. We don't take into account bus company fares but we would like to pledge value for money ."

I think they did take into account the bus fares. That is why the MTR lowered their fares. But note what the MTR spokesman said, he used the words, "value for money." That is the basis of competition. You add value to every dollar your customer pays so that you can retain their loyalty. In the Hong Kong MTR, they have just, not too long ago, added glass doors at their stations, like what we have in our MRT system, and these doors open only when the trains arrive. It is a safety feature. They have also added, not too long ago, display signs that tell you when such and such a train will arrive. But they did not pass on all these costs to commuters. That is value for money. That is part of the service.

But, in Singapore, any slightest service improvement becomes a frill, or is a frill that no one asked for, and they will ram the costs down your throats: TV Mobile, plasma information screens, piped-in radio programmes, etc.

SMRT has justified the higher operating costs by pointing to examples, such as its new information system and even things like adding more benches for us to sit down at station platforms. Another reason it has given is that it will incur another $4 million in expenditure to run the new service to Changi Airport. Well, are you not supposed to collect revenue from a new service that will cover your operating costs? I remember that, for years in this House, Members were clamouring for this service to Changi Airport, and we were always told that it could not be done because there was just not enough passenger traffic. But we were finally told that we could have it as the service was found to be viable. So what is this passing of an additional cost to run the line to Changi to commuters?

Look at what they do in Hong Kong. They run a new line, but they do not tell commuters that it is going to cost them more money to run the service, and so they have got to raise fares throughout the whole island. They reduce prices for the new line in order to compete.

Sir, I heard that the buses are also to be linked to a Global Positioning System so that fare stages will be automatically updated instead of being done manually as they are being done now, and costly panels will be provided at bus stops and LRT stations to provide real-time information. How much will these cost? Do we really need them? Do these add value to customers? I think the management of these companies should realise that all commuters want is to get from one point to another without all these frills that they will have to pay for ultimately.

Sir, not everybody wants to travel first class. For the majority, all they want is a no-frills economy class trip. What is the point of spending all that money on things that your customers do not seem to appreciate and you tell them that they have to pay for it?

What about retaining customer loyalty? Not too long ago, Hong Kong MTR gave a rebate to its passengers. If they used their farecard 10 times within a week, they gave the commuters a rebate. Until last week, they ran another promotion. Use their farecards 10 times in a week and they get a free lunch voucher with Tai Ka Lok, a fast-food chain, and, this week, it is even better: use the same card for 10 times within a week and they get a voucher for dinner.

Now, how is that for competition? Hong Kong MTR does not need to hide behind the skirts of any public transport authority to tell them how to stay alive. They know what to do. Many of us who have been to Hong Kong and travelled on their buses and their MTR know that they do not boast of a world-class transport system - not that ours is anyway - but they have a system that is efficient, reliable and at reasonable prices.

But what is the situation here? If we recall, last July, SBS and TIBS feeder fares went up by 10 cents. The Singapore School and Private Hire Bus Owners Association sought the PTC's permission to run feeder services, as the Association felt that it could provide lower fares than SBS and TIBS. What was the response of the PTC? Instead of allowing the competition, which would have meant lower prices for everyone, the PTC rejected the application on the grounds that the private operators would not be able to provide "a seamless, integrated transport system that gives maximum convenience to commuters." These are the PTC's own words, "a seamless, integrated transport system that gives maximum convenience to commuters." In other words, in order to compete with SBS and TIBS, the private bus owners would have to provide for a fare card system which, of course, is a non-starter for them, considering the large amount of investments in technology for a fare card system. I understand that such an investment would cost them millions of dollars.

To the PTC, the word "seamless" means only a fare card payment system when you travel by the two bus companies and by rail. But, to the customers, "seamless" means getting to point A and point B, and maybe to point C, and he does not care if it is an SBS or TIBS bus that comes along, as long as the bus gets him to where he wants on time and at a low price. Singaporeans would have gained, but competition was nipped in the bud by the PTC.

The PTC said further that the private bus operators could not pick only the profitable routes, as this went against the principle of balanced coverage which SBS and TIBS had to observe. In other words, they cannot cherry-pick their routes. It claimed that it wanted a level playing field. Yet, it forgot that the playing field was already not level when it allowed SBS and TIBS to offer charter bus services, which had all along been the domain of the private bus operators. The private bus operators were also trying to make up for under-provided feeder routes at that time in the new towns like Punggol and Sengkang, which were just not well served by the big boys. But, I suppose, this did not figure in PTC's reasoning.

So, the PTC calls it levelling the playing field. I think it was just plain keeping out the competition and, in the end, it was the common man who lost.

What about the viability of the two big companies? The Minister also says let us not wait till they go bust before we increase prices, and that they have to make a certain amount of profits on their assets to make them viable. He says that if they do not get their fare increases, they are going to make losses and they would not be viable. Sir, does he not know that in a recession almost every business is just making less today?

Let us take a look at how profitable or unprofitable SBS Transit and SMRT are. SBS Transit made profits, after tax, of $21 million in 1997, $35 million in 1998, $42 million in 1999, $51 million in 2000, and $39 million in 2001.

Yes, profit figures do not tell the whole picture, but let us look at their return on equity, which is the paid-up capital and reserves combined. For SBS Transit, return on equity: 24.4% in 1997, 30.6% in 1998, 28.3% in 1999, 24.7% in 2000, and 17.9% in 2001.

To the shareholders of SBS Transit, it must be a good investment. Each SBS share has a par value of 25 cents. Last year, shareholders were rewarded with a dividend return of 34%, in spite of the dip in profits. In the previous years, they got between 12% and 49%. In fact, in 1997, shareholders received a very nice 36 cents for each 25-cent share that they owned. Total payout to shareholders in the last two years: $27 million was given to shareholders in 2000 and, in 2001, shareholders received a total of $19 million.

Let us now look at SMRT. SMRT is a little complicated. It was Singapore MRT Ltd, and then it became SMRT Corporation when it was listed as a public company in July 2000. So, I will just take it from that year. In the reporting period before it was listed, SMRT Corporation made a profit of $180 million. For the financial year ending 31st March 2001, it earned $102 million and, for the year ending 31st March 2002, ie, just ended not too long ago, it earned $56 million, all at the group level. Return on equity: 26% in 2001 and, for last year, 14%.

Let us take a look at SMRT Corporation's dividend payout. Each SMRT share has a par value of 10 cents. For the year ended 31st March 2001, it declared three dividend payments amounting in total to a dividend rate of 46%. For its latest reported year, the dividend payout rate was 28%. Total amount of money paid out to shareholders: $52 million in 2001, and $32 million in 2002.

Both SBS Transit and SMRT Corporation have policies of paying half their yearly profits to their shareholders. Members might recall that in 1978, when SBS was listed, the Government actually guaranteed shareholders a dividend rate of 71/2%, because it was the first time the Government was allowing the use of CPF funds to members of the public to buy shares of companies listed on the Stock Exchange, and it wanted to provide this form of assurance and to encourage members of the public to invest in SBS. In 1993, this guarantee was withdrawn as SBS had in fact been paying more than 71/2% and, as we have seen, with the type of dividends that it has been paying in the past few years, the guarantee would have been superfluous.

The return on equity of both SBS Transit and SMRT Corporation exceeds the ROEs of many other companies in the broad transport sector of companies listed on the Stock Exchange.

So, there you have it, two highly profitable companies making very good returns for their shareholders. And do not forget that from next year on, they will pay less corporate tax.

Mr Speaker, Sir, I have nothing against shareholders receiving what is rightly due to them for their investments. Do not get me wrong. And the shareholders must be happy if we look at the share prices of both companies today. They have always been quite consistent. Based on their share prices, SBS Transit and SMRT offer respectable dividend yields of 5% and 4% respectively to their shareholders. And the market cannot be wrong about the profitability of these companies. That is why the share prices of these companies have remained strong.

Sir, I wish I had bought shares in SBS Transit and SMRT instead of in SingTel, but that is another story for another day. Maybe the Government should have given us loyalty shares in these two companies instead and we would not be complaining so much, and we would all be shareholders of two very profitable companies and then we do not mind paying 3 cents more because, at the end of the year, we will get such nice dividends.

But to tell us that these two companies are going to run into great financial straits if they do not increase their fares now? These are companies tottering on the edge of bankruptcy? It is more like the case of Money Not Enough for these two companies. And to use scare tactics - if you do not give us this increase we would be in trouble - and try to wring the necks of poor commuters, I say each and every Singaporean should rise and tell them, "Give us a better line because I Not Stupid."

It, therefore, brings me to the question of what is the role of the PTC in all this. How does it come to the conclusion that if fares are not increased, then the operations would not be viable? Is it, in fact, the duty of the PTC to ensure the profitability of the transport operators, or are they supposed to ensure that everyone - the bus companies, you and I - get a fair shake? I think the PTC must remember that it should not become the apologist for the transport operators.

What are the chief executives of SBS Transit, SMRT and TIBS doing on the PTC? They would be there armed with facts and figures to support their arguments. But should they not be asked to appear before the PTC to state their case, instead of being part of the PTC? How can the players in the game be the referees at the same time?

Mr Speaker, in my Motion, I have asked that the PTC review these fare increases. I could have used the words "reverse its decision", but I do not want to undermine the work of the PTC because, in a lot of other areas, I can say that the PTC does good work. So, I do not want to adopt a confrontational approach. And I chose the word "review" to give it more leeway and allow it to come up with other options. Perhaps it could be some ingenious way, as the Hong Kong MTR has gone about to keep its commuters happy, or maybe the two companies, SBS and SMRT, can think of something and consider making a gesture to Singaporeans in order to sweeten the ground which is, certainly, in a very sour mood now. Why can the two companies not show some compassion for those who have been very badly hit by the economic downturn? I think a reasonable gesture on the part of SBS Transit and SMRT will go some way to alleviate some of the pain that Singaporeans are going through. Ultimately, the Government has an overriding responsibility in easing the pain of its citizens in times like this. It is, after all, through Temasek Holdings, the main shareholder of SMRT and, therefore, the largest beneficiary of the profits made by SMRT. SBS Transit's largest shareholder is Delgro Corporation, which owns 75% of shares in SBS Transit. I do not know who owns Delgro. All the large shareholdings are in the hands of nominee companies and investment funds. But I hope that the shareholders of Delgro will understand that when they are in a privileged position to run a country's bus service on what is practically an exclusive basis and, on top of that, they are going to get to run a rail line soon, they have to realise that apart from ensuring that they get a fair return on their investments, they also have a social obligation to ensure that the services their company provides remain affordable and that it does not cause undue burden to the people, and that in times of great difficulty, that obligation becomes even more.

And, of course, the greatest obligation is on the part of the Government which must ensure that all public services remain affordable. If the Prime Minister says that this is not the best time to increase public transport fares, then it is also not the best time to increase the prices of many other public services. The Ministry of National Development wants to increase carpark charges very soon, on the grounds that it needs to cover the cost of building their carparks, ie, the cost of building carparks has increased. Sir, I pointed out in the Committee of Supply that the cost of building carparks today, as given by the Minister, is in fact cheaper than the cost of building the carparks years ago. The Minister could not give me a satisfactory reply and he is now just proceeding ahead to raise carpark charges. This is just one example of the Government going ahead with a price increase, even though its arguments for doing so have been shown to be unsound. There are many other examples, but I will leave these to my colleagues to elaborate.

In the end, people are once again asking: is the Government listening or not? People are angry today because they feel that there are just too many increases in such a short space of time and, not only that, during the worst of time. There never will be a correct time for any price increase, but they are asking why it has got to be now, when they are out of jobs, or when those with jobs are earning less, or are unsure of whether they will still have their jobs tomorrow. The Government asks us to tighten our belts, even earn less, do not be fussy if we earn less. But how can they if the Government is putting up the prices of things which are essential to them?

So I say, let us keep everything in check. We are not asking for hand-outs. We are not even asking Government to subsidise the bus services. But when you are providing essential public services, do strike a balance between making money and making the services affordable. When people are already suffering, do not add more pain.

The Prime Minister has asked: should we be doing the right thing or should we be doing the popular thing? Let me answer by saying this. Recently, private school bus operators have been slapped with an increase in the insurance premiums on their vehicles of between 140-500%. The Singapore School Transport Association has advised its members not to raise fares for school children, at least for now. The Association's Chairman has been reported as saying that raising fares now would not be desirable. I quote, "The economy is bad, how to increase fares?" These are words from the small guys. Does this not say it all?

Sir, this is the anger on the ground. Let me put it squarely to the Government by relating an encounter that I had with a perfect stranger just a few days ago. He expressed his anger and frustration at all the price increases to me in a very cool way. He was not saying it very loudly, but in a very calm way. He told me that he observed that every time after an election, the PAP increased prices and by the time the next election came, people would have forgotten and they would just vote for the PAP again. He then smiled at me and said, "Mr Tan, just tell your leaders, next time round, we would not forget."

Sir, I beg to move.

Question proposed.

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, I rise to support the motion standing in the name of my Parliamentary colleague, Mr Tan Soo Khoon.

There are two parts to this motion.

The Minister for Transport (Mr Yeo Cheow Tong): Sir, I would like to raise a point of clarification based on what Mr Tan Soo Khoon had said just now. He quoted DPM's speech during the recent Budget debate, and gave the impression that PTC would not be approving any bus fare increase this year. Sir, far from it. DPM was, in fact, very clear about this. Let me quote what DPM said. He said:

"The Public Transport Council (PTC) is currently evaluating proposals from the transport operators to revise fares. PTC is only considering revisions to catch up with operating and maintenance cost increases over the past year."

He went on to say:

"The public transport operators have raised with the PTC the issue of the GST increase next year. After considering their views, with the likely increase in GST to 5% and the proposed cut in the corporate income tax, the PTC has decided that there is no need to raise fares next year as a result of the GST increase. The transport operators have accepted this decision."

Sir, I hope that Mr Tan would get his quotes correct. I would reply to his other points later on.

Mr Tan Soo Khoon: Sir, in the Budget Statement, I think the Deputy Prime Minister did say that the PTC has decided that there would be no need to raise fares next year as a result of the increase in GST. That was what I said. I did say that if that was what was stated, the PTC meant no increase next year, but what we did not know was that there would be increases this year.

Mr Yeo Cheow Tong: This is precisely what I have just said. The DPM did not give any impression at all to the House that there would be no increase this year. I think Mr Tan, in delivering his remarks, has inadvertently or deliberately created the impression that the DPM had, in fact, misled the House. There is no such thing. The record is very clear.

Mr Tan Soo Khoon: Sir, in my speech, if you could look at the verbatim reports, I do not think that I have given the impression that DPM was deliberately setting out to mislead the House.

Mr Yeo Cheow Tong: Anyone who has been in this House and who has heard him cannot be under any other different impression.

Dr Tan Cheng Bock: Mr Speaker, Sir, there are two parts to this motion. I shall respond to the second part first, because it is a call on the Government to go slow on increases in the cost of services.

In moving the motion, Mr Tan Soo Khoon outlined his reasons why he thinks that the rise in public transport fares and other fares should be avoided during the current recession. He has made a thorough analysis of the transport companies to show why he thinks that this rise in bus fares is not justified. I do not want to go over the grounds he covered and probably, I would not be able to do it so well. He has done a good job. But I will reinforce some of the salient points that he has made. He reflected the sentiments and frustrations of Singaporeans very adequately, and I share his concerns and hope our leaders are listening.

In rising to support him, I am drawn back to a session I had with some Singaporeans on current issues, including the rise in bus fares, electricity tariffs, MRT fares, HDB parking fees, ERP charges and so on. In the course of the discussions, I was reminded by one of the members of the public that we have been testing the limits of tolerance of Singaporeans with each increase. He said that we are over-confident and, in a way, arrogant, because we have just won the GE with 75% majority. He reminded me that they gave us this high mandate, because they had hoped that the PAP can help better improve their lives in these times of need. And also, as promised in our manifesto, he said that Singaporeans truly believe that the PAP is the only party that can help them out of this recession. But now, it seems that we are making life more and more tough for them. Within six months of GE, a rash of price increases - how not to feel betrayed, they complained.

On the one hand, Singaporeans are asked to tighten their belts through various measures, such as wage restraint, no bonuses and more and more job losses through restructuring. They now face a series of increasing costs in their daily lives. He said that he and his friends are dead water. Those of you who understand Hokkien - I am a Hokkien speaker - "dead water" literally translated means "si chui", as opposed to "wa chui", which means alive, flowing.

An hon. Member: "Chou chui"!

Dr Tan Cheng Bock: Not "chou chui", please. It is different. "Chou chui" means smelly water. He said that in a flowing stream, "wa chui", there is hope, something would come by to keep them alive. They are hoping that after GE, Government would do something to create more jobs, hold prices and give them a better chance of survival. Now, he feels that he is "si chui", dead water, and dead water gets evaporated every day. The various increases evaporate whatever savings he has, slowly but surely. He said the Government always justifies by saying that there is no such thing as wrong timing. The Government's action in this economic downturn is not bad timing. Sir, if you had listened to what my colleague has just said about the person who complained to him about this poor economic condition, you will understand why. Of course, Singaporeans cannot understand. Unemployment is now almost 5%, and if this is not bad, then what is bad?

Sir, if in spite of the poor state of the economy we allow the fare increases, are we not ignoring the plight of the people? We seem to be concerned, like my colleague said, about the return of equity for companies, even though these companies are still making good profits. We talk about high cost structures in our economy, yet we do not try to delay the increases.

Another person, who is usually very quiet, got up to tell me and he said "You", meaning the PAP, "are so powerful that you cannot see the wrong in yourself." This statement got me thinking, very profound. But it tells something. Are we so powerful that we can go along with all these increases? We allow bus operators to sit in PTC, as Mr Tan Soo Khoon has said, and we see no wrong. We cannot see their vested interest and conflict of interest in such an arrangement. And no wonder writers in the forum page have always asked for an independent PTC panel. Perhaps, after this debate, there should be a review on the composition of the PTC.

He was also saying that we "see no wrong in ourselves" by quoting PSA. Yes, look at PSA - a hardened stand, defended almost to death, even when faced with fierce competition on our doorsteps. They were probably thinking of protecting their profits, their return on equity - too cocksure of their so-called "other advantages". They were unable to see the wider implications until they lost two of their largest customers.

On the Motion before the House which calls for the PTC to review its decision on the increase in public transport fares, I think Mr Tan Soo Khoon has elaborated on this, and he did a marvellous job. But I would still like to add a few points to what he has said. It may seem odd that we should be asking for a review when the fare hike is already in place but, like what he said in the press, we had no opportune time. Parliament sat a few days after the fare increases were implemented. Singaporeans must try to understand how the decision to raise fares came about. I think what they want is more transparency. Even I, like them, cannot understand why the PTC turned down an earlier request, in 2001, for an increase in fares because of unfavourable economic situation. Then, suddenly, it changed its mind this year and opted for an increase, when the poor economic situation has not changed. Has the economic situation improved in 2002 to warrant this change in decision? Yet, this House was told by the Finance Minister in the last Budget debate that 88,000 Singaporeans were out of work, and now my colleague has told me that it is 100,000. Unemployment has reached 4.5% by the end of last year, and the figure is still going up.

Another reason cited for the increases is ERP and road taxes added to the cost. I checked with LTA, because I am on the LTA Board. For the year 2002, the projected increase in ERP cost alone, according to SBS, is $0.7 million. But this House must know that when ERP was implemented in 1998, it was decided that ERP charges should apply to all vehicles which use roads, and that includes public buses. Just like other road users, they also contribute to road congestion. However, to offset the cost implication of introducing ERP, the road tax of public buses was reduced by $3,900 for each single-decked bus, and $3,500 for each double-decked bus. The overall road tax savings for the public bus operators, TIBS and SBS included, amounted to $13 million annually. Now this more than offset the ERP charges of about $4 million paid by the public bus operators today. The ERP charges on public buses therefore do not contribute to cost increases for the operators. My other colleagues must have more to say and I would not want to dwell any further on this.

Surely, if the current recession has been thrown out as a consideration for the increase, then the more compelling reasons must have prevailed, and given more weightage by PTC, to protect the profitability of the bus companies. Now, is there a formula or magic number to this? While I support the Motion, I can quite understand the bus fare increase is but one issue, like what Mr Tan Soo Khoon has said, and it so happened that the level of tolerance has reached a high level. And, again like what my colleague, Mr Tan Soo Khoon has said, the bus fare increase is probably the lightning rod, receiving all the flak. This debate should be seen as an eye-opener for the Government not to take the people for granted. For such public services, where there are no true competitive forces, Government should not allow any increases without acceptable reasons.

Mr Chiam See Tong: Sir, I am heartened to hear the two Tans who spoke before me. I would like to commend them. At least, now I know that there are PAP Members in the PAP Backbench who do care for the common man in the street.

Mr Speaker, Sir, I rise in support of the Motion. I say it is very unfair for the Public Transport Council to allow the bus and MRT fares to be increased at this point of time when times are hard. The worse effects of the recession are still not over. Workers who have been retrenched are still suffering, the majority of whom have not been re-employed. They are still floundering in the wilderness of unemployment. The Government, instead of helping them ease their suffering, is making the situation worse for the unemployed. With this bus fare hike, they have to pay more for one of their essential needs - transportation. With the fare hike of between 3 cents and 10 cents, the average worker shall probably have to pay about 10-20% more for bus rides, taking into account the over-payment they shall have to make with the introduction of the ez-link cards due to the fault in their cards, and also their forgetfulness. Why squeeze the poor workers at this point of very difficult times? I would like to call on the Government to get the PTC to revoke forthwith the decision to increase bus fares, which have been increased with effect from July this year, and to freeze the bus fare hike for at least one year, or until the economic situation significantly improves.

As we can see, the Government shall also be the beneficiary when there is a bus fare hike. The Government shall be assured of payments of the proposed increase in GST and the ERP charges. As for the ERP charges, it was reported that the Government shall collect something like $4.2 million a year from buses in Singapore. Buses may have to pay more ERP charges when the night ERP charges come into effect. The bus companies are, in a way, a means for the Government to transfer the commuters' money into its own pocket. The bus companies' excuse for fare hikes is the increased cost, especially of staff salary. They say that they have to pay more CPF to their workers when the employer's CPF component was restored a further 4% in January 2000. However, the CPF paid by bus companies to their workers are still lower than the pre-1998 level, when the cost cutting measures were put into effect.

The SMRT Corporation reported in the Straits Times of 24th June 2002 that "the cost of operation, both systems, train and bus, has increased 3.1% despite efforts made by the company to contain costs and improve productivity. The SMRT Manpower Productivity in terms of train-kilometre operated per staff member has improved by 4.8% from FY 2001 to FY 2002 through skills training, automation and reviewed processes." It would appear then that the staff salary increases have been mitigated by the improved productivity.

The fact remains that the two major bus companies in Singapore, namely, the Singapore Bus Services Transit (SBS Transit) and the Trans Island Bus Service (TIBS) enjoy all the bus business in Singapore. They form a duopoly. They share all the well-designated routes in Singapore, and they annually make good returns or profits. SBS Transit reported last year, despite a dip in profits of 22%, it still made $39.6 million. This was reported by Mr Tan Soo Khoon just now. When SBS Transit was formed out of a large number of small bus companies in the 1970s, the Senior Minister, who was the Prime Minister then, was so confident of its success that he could promise shareholders of at least, or a guaranteed, minimum of 5% annual return. I believe, that promise has very much been exceeded. I believe that the SBS Transit is now paying shareholders something like 17% dividends. So the major bus companies in Singapore are definitely making good profits.

Sir, I believe the Government has no qualms about treating public bus companies as purely profit-orientated companies, and are not too concerned about their role as providers of public service. I personally feel that in our present Singapore context where the two major bus companies are so protected, they should show an interest in providing public service. They must have the public responsibility because for a large number of Singaporeans that is their only means of transportation. Therefore, they cannot increase their fares on a regular basis to ensure that every year they make hefty profits. If bus companies want to be treated as purely commercial entities, then they must be subjected to the open market competition. The Government should not protect just two bus companies but allow free open market competition. Allow as many bus companies to operate as the market can take. With free open market competition, bus fares shall surely drop, and not steadily increase as in the present case. See what has happened in the case of telephone companies. With competition, SingTel rates have dropped drastically, which the paying public benefit greatly. The public not only save on their telephone bills but also get better service.

Another issue with the bus service is the recent introduction of the ez-link cards to replace the TransitLink farecards. I have been told that in the case of the ez-link cards, there are possibilities of over-payment on the part of commuters. Commuters nowadays board a bus and, if a commuter is using the ez-link card, on entering the bus, the maximum fare is automatically deducted from his ez-link card after tapping it on the card reader. When the commuter reaches his destination, he taps his card at the exit card reader. Any balance of the maximum fare is credited back to the commuter's ez-link card. Should there be a malfunction of the ez-link card before he alights from the bus, nothing shall be credited back to the ez-link card of the commuter, which means that he has to pay the maximum fare; currently, up to $1.53 for air-conditioned trunk services and up to $2.13/$2.28 for SBS/TIBS express services. Commuters know that if they forget to tap their ez-link cards, they shall be charged the maximum fare. However, how many know that if the ez-link system malfunctions in any way, they shall also be charged the maximum fare? In addition, a transfer will be classed as a new "ride", and they will lose the transfer rebate of 25 cents for trunk services and MRT rides.

One commuter complained to me that he experienced out of 10 bus and MRT journeys, including transfers, when using the ez-link card, he encountered ez-link malfunction twice, ie, about 20% error rate, after which he immediately stopped using his ez-link card for several weeks. The commuter has requested me to ask the Minister what is the error rate of the ez-link card on buses.

In my view, a 20% error for 10 bus rides is unacceptable. I understand that the ez-link card has been introduced only recently. Perhaps the Minister should request the bus companies to have a longer testing period of the ez-link card until September this year, as originally announced, before the bus operators be allowed to use the ez-link card again.

Apparently, it is difficult to collect a refund for over-payment. This prompted one, Mr J Seow, to write to the tabloid, Streats, on Monday, 17th June 2002 issue, advising other readers:

"Do not bother to claim your refund should you forget to tap your ez-link card when you alight from the bus. . It is not worth the hassle." If that were truly the case, then I wonder why the PTC should allow bus companies to use the ez-link card system to collect fares at all, if the error rate remains at 20%.

Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Speaker, Sir, thank you for allowing me to join in this debate on the motion concerning public transport fares. I would like, first, to express my appreciation to Mr Tan Soo Khoon for taking the effort to raise this Motion and to make a very thorough and eloquent speech, and also my other colleague, Dr Tan Cheng Bock - both of whom I call them the two "big guns" or "big Tans", from our Backbenchers group - for supporting this Motion. Particularly, I would now like to commend Mr Chiam as well for coming up to speak in support of this Motion and join us on our side, the PAP Backbenchers. Thank you, Mr Chiam. He is looking more and more like a PAP MP!

Sir, I agree to support Mr Tan Soo Khoon in moving this Motion, because the subject concerns practically all Singaporeans. I wish to highlight that the Motion actually contains two important limbs. The first limb is to urge the Public Transport Council to review its decision on the increase in public transport fares. The second, and perhaps a more important limb, is to urge the Government to take steps to ensure that the prices of public services are not unreasonably increased during these difficult times.

First, on public transport fare increases. The increase in public transport fares has caused residents to be greatly concerned. This is evident by the large number of letters to the press. For us as MPs, it is evident by the frequency and the ferocity in which residents raise these questions and issues with us, when they meet us on the ground. I recently conducted a house-to-house visit to an HDB block in my constituency, followed by a typical dialogue session with my residents. Unlike the past, when the usual complaints were about local and estate issues, I was most taken aback that the difference this time round, the most common complaint lately was regarding public transport fare increases and other price increases. During a recent dialogue session with a small group of residents, they pleaded and argued most furiously and emotionally against all these unfair fare increases.

Some residents even took the trouble to pen down their thoughts and submit petition letters to me. Allow me to read a quotation from one petition that I received from a resident, a Mdm Lee. She actually wrote a two full-page, well-typed out petition. Let me read some sections of it. She said:

"Well, my sons and I are grateful to the ruling party for the good life we had in the past. However, the recent economic crisis has dampened our spirits somewhat.

We are also very anxious in regard to the never-ending news of steady increases in necessities such as transport, food, utilities, telephone bills, etc, and with rumours of more to come."

I repeat, she even said `with rumours of more to come.'

Then, she went on to say:

"An old lady was overheard complaining loudly in the market that whatever monies the Government had given out (CPF and New Singapore Shares) are now being recouped back and with interest too! She was very bitter and I don't blame her as many people also agreed with her. Many are saying that the carrots given out were because of the elections and now after the elections, prices of everything have gone up."

Sir, this letter actually reflects very truly and accurately the sentiments on the ground.

Let us now examine the PTC approved fare increases to see whether it is fair or unfair.

As Mr Tan Soo Khoon has put forth and analysed very closely the accounts of SBS and SMRT, he finds it hard to justify fare increases, based on the fact that they actually achieved good operating performances in the last few years. I wish to reiterate and support Mr Tan's point. In fact, I have a one-page summary here. One can actually get a copy quite easily from the SGX website on SBS Transit. I have attached it to my speech for the reporters to take a look. This one-page summary is produced by the company itself, not prepared by me. It actually tells a very interesting picture of the health of SBS Transit. It shows the performance in the last five years. From 1997 to 2000, SBS Transit has been consistently achieving revenues of above $500 million because people take buses, whether it is in good or bad times. Its after tax profit has actually been increasing since 1997. As Mr Tan has quoted, from $21 million in 1997 all the way up to $50.9 million in 2000. In these four years, its profit went up 2 1/2 times. Last year, in 2001, the profit went down to $40 million, versus $50 million in the year before in 2000, just a drop of $10 million. And now we see that it is coming to the PTC to ask for fare increases so soon.

Looking at its capital reserves, it actually has very good capital reserves. It has been growing from a smallish $88 million in 1997 by nearly three times increase to $222 million in 2001. Its equity and capital reserves have increased to $222 million in 2001. On return of capital, as Mr Tan has stated, it has a very high return on equity, ranging from 30% in good times down to 18% last year. But 18% is still a very good return on equity for any company, especially during bad times.

If we study the accounts for year 2001, the company actually has achieved, in the last five years, a total after tax profit of $190 million. On the $40 million of returns, based on the $555 million revenue last year, it actually has a 7% return on revenue, which, again, is a very respectable and a very good figure during bad times. In fact, if we look at this one-page chart [indicating], we cannot see a single red mark in this report card, which indicates it is indeed a very healthy company. Why are we saying that this company now needs more fare increases? The same can be said of other operators, like SMRT as well.

Therefore, I would like to support Mr Tan's contention that the price increase is difficult to be supportable, based on the argument that transport companies are not making enough money. In fact, on the contrary, they have high reserves, high revenues and high earnings. Therefore, people can accept that fare increases are unavoidable, but they cannot accept unfair fare increases.

It is, therefore, unfortunate that the Public Transport Council (PTC) has decided to allow public transport fares to increase during this uncertain economic period. Although the fare increases are already implemented from 1st July, that means, from early this week, and this debate can only be held after the fare increases were implemented, I would like to join my colleagues, Mr Tan Soo Khoon and Dr Tan Cheng Bock, to urge, in our Motion, that the PTC review its fare increases. If the PTC is open-minded and enlightened enough to perhaps even consider postponing the fare increases, so that, at least, there is a stay or suspension of the fare increases.

Some people, especially the political leaders, may say that it is not good to set a precedent that public pressure can cause the PTC to revise its decisions, and that we cannot govern the country by just listening to the wishes of the people. However, I contend that there are indeed occasions when it is correct and prudent to listen to the people. This is one such occasion. If this is done, the people and the Government would appreciate each other better.

Therefore, I would like to state that, contrary to the constant refrain that we cannot govern by giving in to the wishes of the people, I wish to say that the PTC, as well as the Government, would be viewed positively if it would reconsider the fare increases. It would demonstrate that we have public bodies and a Government that could be attuned to the ground and concerns of the people, and be prepared to review policies and regulations when circumstances show the need to do so. Such a bold Government, in fact, would be well liked and well praised by the people.

Mr Speaker, Sir, I would like to make a few additional suggestions with regard to the PTC. First, I support Mr Tan and Mr Tan - as I have said, the double "Tans" - that to demonstrate that the PTC consists of members that are independent, I would, therefore, like to suggest that the Council should not include representatives from the public transport operators. If need be, transport operators can be enlisted to give technical or professional input on specific subjects. But they do not need to be represented on the Council. I understand that the transport operators are excluded from the Council's deliberations on fare increases. But, nevertheless, the public could still be mistaken that the transport operators could be unduly influencing the other Council members, because they sit in the same Council.

Secondly, I would like to suggest that a wider representation of members from grassroots bodies be included in the Council. Perhaps, even to include people who actually take public transport regularly, and not people who do not normally take public transport.

Thirdly, the Council may wish to conduct more public forums and talks to better place and explain their work, especially pertaining to reviewing of fare increases. Sir, I go on to the future increases in the prices of other public services. I would like to move on to this point which concerns and worries the people even more, which is with regard to future increases in other public services, as expressed by my resident, Mdm Lee. This concern is prompted by the recent decision of the Government to increase GST from 3% to 5%. Though this GST increase is only to be introduced from next year, in fact, we could notice that many retailers have already increased their charges. Common examples are the price of a cup of coffee from 60 cents to 70 cents (more than 2% of GST), and a bowl of noodles from about $2.50 to $3.00 by some hawkers. Less fishballs, maybe even less noodles as well. Then, there have been indications that there may well be other increases by the public bodies on the cards, like Singapore Power and SingTel. We know that HDB is already going to increase the carpark charges from 1st September this year.

Sir, I wish to stress that it is very important for the Government to retain the trust and confidence of the people. The Government has recently won a renewed 5-year mandate with resounding support of 75% of the people's votes. With this strong endorsement, the Government can go about managing the country with confidence. However, I wish to warn that this trust of the people is like a contract. The people's mandate is given on a contractual obligation of the Government that the people's welfare and well-being is taken care of. If there is a spate of unreasonable, unfair fare increases during this period when people are facing a severe economic difficulty and higher unemployment, this trust can be fragile and easily broken.

In conclusion, Sir, I wish to earnestly and sincerely urge the Government to be very mindful about the difficulties faced by the people. There is a large segment of the population who have great faith in the Government, but they are facing difficult times. Future fare increases should be deferred as far as possible so that the negative impact can be mitigated.

Mr Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.25 pm.

Sitting accordingly suspended at 3.03 pm until 3.25 pm. Sitting resumed at 3.25 pm