PUBLIC TRANSPORT FARES (Motion)

[Mr Speaker in the Chair]

Debate resumed.

Mr Low Thia Khiang (Hougang): (In Mandarin): Mr Speaker, Sir, while the economy is still gloomy, and the people have yet to recover from the shock of an impending GST increase, the Public Transport Council just could not wait to rub salt into the wound of the people. It claimed that this pinch of salt ought to be rubbed in earlier, and that it is better to do so early than having to pour sulphuric acid later on.

Surely, business is business. As a public listed company, the investors' concern is on the return on investment of the public transport companies. However, return on investment is linked to the investment risk. This is a common knowledge to the investment community. Under the Government's regulation, the two companies monopolise the public transport market and do not have to face competition. It is a low-risk business with steady revenue. How can one ask for a high return on such a low risk investment? This cannot be so if we compare it with high-risk businesses, such as the disk drive industry where losses can amount to a few tens of millions of dollars just within a few months. In this difficult time where companies are slashing prices for survival, the basic principle of low risk low return could be easily appreciated by the investors, let alone that the public transport companies are still enjoying handsome profits.

The Temasek Holdings, under the Government, is the major shareholder of SMRT with 62% of the total shares issued. I am sure they have a say in deciding whether to ask for a rise in the MRT fares to increase profit. SMRT initiated a fare hike. Is the Government saying that they are not happy with the present return on investment?

DPM Lee said that if we do not increase GST, Singapore would run into a "chronic" structural deficit. Therefore, the people must share the burden. PTC said that if the bus and MRT fares are not increased, the public transport companies will not be able to offset the rise in operational cost and their profits will go down. Therefore, the people would have to share the burden. It seems that Singaporeans have a lot of burdens to share in. Of course, when we do business, we want to have profits. But the crux is that when the infrastructure used by the MRT and the bus companies to operate their businesses, such as the MRT stations, the rails, the bus interchanges and the bus stops, are built with funds from taxpayers' money, public transport cannot be an ordinary business. It is a public service, a business which concerns the interest of the general public. Especially in Singapore, where car ownership and car usage is extremely expensive, public transport is an essential service that is required by the people on a daily basis. It is an important part of composition in the public service, and any increase in fares would inevitably create an impact on the people, particularly in this difficult time.

In fact, the thrust of the matter is not whether this is the best time to increase bus and MRT fares, or for the PTC to review its decision on the increase in public transport fares, as stated in this Motion before the House, or a question of what is a reasonable profit and return . The fundamental question is: should public transport service be run as a business? To further extend this question, is the philosophy of profit-making in providing public services as adopted by the PAP Government the real issue that needs to be scrutinised? DPM Lee has just said recently that Singapore is in a stage of economic transition where the days of high growth and high employment rate have passed. At this time, when our economy is going into a transition, the ordinary people are affected the most. Although we are not a welfare state, the Government should not neglect the welfare of the people. The Government must try to help them to alleviate their burden, and public transport policy is one of the items that the Government should look into.

We should question the PAP Government on its profit-driven policy through privatisation in providing public services. We are pursuing a market economy, but when the environment changes, when the gap between the rich and the poor has widened, when the poor get poorer and the rich get richer, the contradictions surrounding these changes would become more and more acute. This round of fare hike has generated a strong dissent among the people, and this is not just a momentary reflex. The policy of allowing the public transport service to be operated by private companies whose objective is to make profits needs to be re-examined.

As taxpayers, Singaporeans are paying for the building of the infrastructure necessary for the operations of the bus and MRT services. Why should we be also asked to bear the burden of ensuring that these companies meet their projected or desired profits? If we analyse the present model, the Government has increased its taxes - GST, COE, ERP to control car ownership - and, therefore, collects a lot of revenue from these sources. With this taxpayers' money, it builds the infrastructure for the MRT and buses, and then leave the operations of public transport to the private companies for profit-making. The major shareholders of these companies are, more often than not, holding companies under the Government. At the same time, the Government imposes limits on the life-span of buses, increases their ERP charges, builds airconditioned bus interchanges, thereby building up what it calls a "world-class" public transport system to show off to the world. By doing so, it has increased the operational costs of these companies. It seems that the Government is doing a good job in protecting the interest of the people and balancing the demand of the public transport operator. Indeed it is not the case. Through the PTC's guideline of so called balancing the interest between the public and the operators, the Government allows the companies to increase their fares from time to time, in the name of recovering the increase in operational cost, and thereby the people are the ones who have to bear the burden .

As the tax collector and also the major shareholder of the public transport companies, the Government stands to gain by higher tax revenues and dividends when the fares go up and the companies' profits escalate. So it is a win-win situation for the Government, but the people end up paying higher fares.

The Workers' Party has all along held the view that public services should not be profit-oriented. We also proposed that the Government set up a national transport enterprise to take over the operation of buses and MRT so that we can have a better integrated service and, most importantly, this national transport enterprise is not profit-oriented but run on a cost-recovery basis. Of course, with the Workers' Party's recommendation, the Government will say, "This is like restarting state-owned enterprises and it would not be in line with the global trend." But to us, it is more important whether the interests of the people can be better protected. The Government can say that this has been proven to be not feasible in the other countries. But has the PAP Government been emphasising, again and again, that the situation in our country is different from others? What cannot be done in other countries can be easily implemented here, eg, GST, ERP, etc, and the Government is always proud of its achievements in this respect. In the same breath, why can the Government not differentiate itself from the rest of the world and take back the function of running a state-owned public transport company, whose business objective is to provide public service and not to make profit? The Government may respond that competition will be removed and service quality will deteriorate if our proposal is implemented, but where is the competition when the current service routes between these two companies are not overlapping, and these companies can even join effort in pushing for a fare hike?

The Government may also claim that without the pot of gold at the end of business operation, there will be no incentive for the public transport operators to improve themselves, as such efficiency will go down. But let us take a look at our armed forces and educational institutions. They are all public services with no element of profit; is the Government saying that they are not efficient? The HDB has persistently claimed that it has been subsidising public housing. Every year, they run into losses; yet, its achievement and efficiency is something that the Government is so proud of. So, what is motivating them? Why can we not adopt the HDB model and let a state enterprise operate public transport without having profits as their aim? Moreover, we are not asking for additional subsidies besides continuing with the current funding in building infrastructure. Comparing to the current model, what is removed is the source of conflict, ie, profits, as the proposed enterprise is operating on a cost recovery basis. They could try to break even with a prudent fare structure, while striving to provide quality service with the objective of maximising benefit to our people.

Mr Speaker, Sir, with this economic transition, all our people should put up a concerted effort to tide over the difficult times. The Government should also respond to the sacrifices made by the people by lightening their burden. One aspect is to temper its current policy on providing public services with more rational and humane measures, so that we can come out from the crisis as a more cohesive nation.