PUBLIC TRANSPORT FARES

Debate resumed.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, to begin with, I would like to declare the fact that I am a Board Member of the Comfort Group, a company that is engaged in land transportation business, primarily in taxis, but has a small subsidiary in the chartered bus business.

Mr Speaker, Sir, Mr Tan Soo Khoon and the PAP Members who spoke before me have already touched on the public sentiments regarding this round of public transportation fare increases. Such fare increases affect the majority of the commuters, with the greatest impact on the lower income. So, not surprisingly, this is always a topic that would arouse public outcry, whether such increases are made during boom times or in a recession. Although the quantum of the increases this round is small, people feel helpless and frustrated that there is no viable alternative available to them.

Unfortunately, Sir, this time round, the matter is made even much worse simply because the timing was so bad. Our economy is just turning the corner in the recession. Unlike Mr Tan, I think there is actually a clear trend that the economy is turning around. The benefit of the turnaround, though, has not percolated down to the masses yet, and many of us are still feeling the impact one way or another. Thus, even though the PTC had disclosed in detail the factors it had considered and had explained the reasons for its decisions, the majority of commuters are still unhappy with the rulings.

The Feedback Unit has received numerous similar public comments regarding this, and I would like to thank Mr Tan for moving this Motion to allow Members of like mind to speak on this topic. I, too, would like to call upon the PTC to review, not so much the quantum of the increases but, perhaps, take into consideration the timing of the increases.

Mr Speaker, Sir, I feel, however, that since the PTC is getting so much negative vibes that, in the interest of a more balanced and less emotional debate, I would like to put our public transportation system in its proper context. We should realise that the public transportation sector in Singapore, including the rail and the scheduled bus services, is a regulated industry. I would like the House to think about what is meant by a "regulated industry". It is not a free market, freely competitive industry. It is a regulated industry. So, for instance, when Mr Tan, in his speech, talked about SIA being very responsive to market forces, he should realise that SIA, in the international marketplace, is in a freely competitive marketplace with many players whereas, in Singapore, in the public sector, especially in public transportation, we have designed it to be a regulated industry. So, if we want to complain about how the system is being regulated, we should indeed go back to square one and ask whether we should have a regulated industry or a free market industry.

Since we are on the subject of SIA, let me also say that many of us have in the past complained that SIA fares have been very high, that it is a cartel and, in fact, Singaporeans pay more buying their tickets in Singapore, compared to those bought in Hong Kong or KL. So, we cannot mix the SIA example with the public transportation example in Singapore.

Like all regulated industries, it is the job of the regulator to ensure a prescribed level of service in the industry in exchange for a guaranteed return for the operators. I think we must all accept this. If we do not, then we are not talking like for like. The return for the operators would be typically measured in terms of percentage returns based on a certain basis, such as return on investment or return on equity, whichever is appropriate. In other words, in regulated industries, the operators are given a guaranteed return and are rewarded, in most cases, on a cost-plus basis. For the regulatory environment to operate well, the regulator should be an independent body that is fair to the commuters and operators, and it is not influenced by the operators.

Sir, the Government, as well as this House, should desist from interfering with the work of the PTC. Otherwise, we might as well perform this role ourselves. Maybe the House should sit as PTC and decide what is a fair adjustment.

Thus, I believe that the choice of members of the PTC is important. I agree that it is not appropriate that the operators sit as members of the PTC, but as resource members. Despite all the criticisms, I must also say that the PTC has so far done a reasonable job, balancing the interests of all parties involved. This, Mr Tan Soo Khoon himself has also conceded. It has resisted requests for fare increases from the operators for several years before granting this current round of increases. I really do not envy the men and women serving on the PTC. Theirs is a thankless task, and we should not make their job any more difficult.

Sir, once we have established the regulatory regime, with the PTC as a fare approving body, then we would expect to see the following sequence of events. This is already a given. So, from time to time, when the transport operators come to PTC with their hats in their hands and reams of data to show that the costs have gone up, returns on investments have declined, what would the regulator or PTC do? It is their job to determine whether the operators have met the various performance standards. And, if they do, then the regulator would determine whether the return on investment has indeed fallen below the target. If all these factors are met, then the regulator really has not much option but to approve fare increases. If we accept that this is the way the system is supposed to work, then we should ask ourselves whether this was what happened in this recent round of fare adjustment.

As far as I can tell, the PTC has acted quite independently, using its best judgment. So, I believe that Mr Low is mistaken to point the finger at the PAP Government, claiming that, because of ownership, we have allowed the Government-owned company to raise fares to squeeze the people. In fact, if Mr Low is unhappy with the way the PTC was set up, he could suggest a different way to regulate the public transportation sector. But, given this is how the PTC is supposed to work, I believe he is off the mark.

As in the case involving IDA and SingTel that was in court recently, any time a regulator interferes with the market, causing the operator to have a lower rate of return, I believe the operator has a case to seek compensation from the Government. I also believe that it is not a matter whether the company is still making money or not. This is a matter whether the company is making the appropriate rate of return than existing at the outset of the regulatory regime. Of course, we could debate whether the PTC has been too generous with the operators and accepted too readily SBS Transit and SMRT's request that they should continue to earn a high rate of return based on historical norm.

I think there is a point here that we can debate. Based on the rate of return on equity, SBS' rate of return seems rather high, with ROE at 24.7% in year 2000, and 17.8% in year 2001. Thus, it is not surprising that people get angry when the companies raise fares in a recession where almost all other companies are showing lower profits or outright losses. So the argument should be: why is it that SBS Transit and SMRT are not prepared to earn a lower rate of return, like everybody else in a recession? Perhaps the PTC should disclose to the public what is the ROE that transport companies are permitted to achieve in a non-competitive environment. Perhaps they can also disclose what is the target rate of the ROE that companies are allowed to achieve. If the PTC can do this, I believe that it will be easier for it to win over the support of the commuters.

Mr Speaker, Sir, so long as we have two bus operators running our public transport sector, this scenario that I have painted out earlier would play out again and again. I suggest that we take a leaf out of how IDA regulates the mobile phone industry. In that case, as Mr Chiam has pointed out, IDA terminated SingTel's monopoly and allowed new entrants into the market. With StarHub, M1 and Virgin Mobile in the market, the consumers now get better service and value for money. In fact, so much so that one of the companies declared recently that it is pulling out from the marketplace. I suggest that the Minister seriously consider introducing greater competition in the scheduled bus service by perhaps splitting up SBS Transit into two or more companies, or allow other companies to enter into the market. I am sure that the Minister could see the merit of greater competition, not free market competition, but greater competition, as IDA was part of his portfolio not so long ago. Opening up the market for greater competition has also been advocated by Christopher Tan in Business Times and Yeoh Kok Seng in the Today newspaper.

Mr Speaker, Sir, listening to Mr Low Thia Khiang, I am reminded almost like standing at a street corner rally during the 1960s. He uses 1960s' leftist jargon to appeal to the segments of society that would find his pitch attractive. He tried to paint the PAP Government as incentive-technocrat, out to squeeze the last drop from the poor to fatten the coffers of the bus companies. I think his suggestion for a non-profit corporation is seductive. However, as we all know, public transportation has a consumption element in it. If we price the service below cost, we would distort the allocation of resources and encourage unnecessary consumption. We would also encourage dependency that would be difficult to unwind in future. So by thinking through the consequence of subsidies, I am sure Singaporeans would see through the fallacy of his logic.

Sir, I think some of the models which have been advocated, eg, running public transportation along the line that he has proposed, is already in operation in China. If he has visited China, he would know that in some Chinese cities, where bus transportation companies are still state-owned, the buses are rickety, and many of them have no lights in them. If you travel in such buses at night, it is pitch dark inside. To improve their bus system, the Chinese have been inviting foreign participation in their bus operation, as they know that these state-funded operations are being run to the ground. Does he know that SBS Transit has invested in the public bus operation in Shanghai? And with competition, the bus service in Shanghai has improved dramatically. So the very same company that we are berating this afternoon is earning accolades for its bus operation in Shanghai.

Mr Speaker, Sir, I believe that the process of arriving at this round of fare increases could have been done better. We could have taken into consideration the number of unemployed workers in Singapore and the sentiments of Singaporeans in general. On the other hand, I would submit that the basic philosophy of a bus transport system is correct and that the regulatory framework is a sound one. Thus, Mr Low's criticism of Government is unjustified. His suggestion of increasing subsidies for commuters is based on unsound principles that have proven not to work elsewhere.

In conclusion, Sir, I would urge the Minister to consider my suggestion of introducing greater competition into public transportation, especially the bus sector. 3.55 pm

Mr Chay Wai Chuen (Tanjong Pagar): Mr Speaker, Sir, I would like to speak on this motion in the name of Mr Tan Soo Khoon on the public transport fare hikes. I want to thank him for this opportunity to ventilate my views.

So far, the discussion on the latest PTC's decisions on public transport fare hikes have been rather emotional. I can understand the sentiment, given the state of the economy, unemployment, difficulties that people are facing and the likely statutory charges that would come up in the months to come.

If I were to look at the rationale given by the PTC on its decision, I would classify them into four main groups. The reasons given are, firstly, on the viability of public transport companies if the fares are not increased; secondly, the CPI + X formula, giving justification for small increases versus big increases; thirdly, the issue of wages and operation costs; and, lastly, the issue of productivity and quality of service and equipment necessary to sustain the quality in our public transport service.

I have no reasons to doubt the statement of the PTC in saying that it has improved "the process of scrutinising operators' bus and train accounts and its financial performance. Operators have been prudent in containing cost and not been profiteering at the expense of the commuters." However, the public would like to ask questions on how the decisions on this latest fare hikes are arrived at. Hence, I believe transparency in its decision-making process is vitally important, and perhaps is lacking in this respect. In this instance, I think this opportunity is given to the Minister to explain and to justify the PTC's decision with respect to this monitoring of key performance indicators.

On the first reason that the viability of public transport companies is at stake, I think this is only one part of the issue. Companies which exist by public charter must perform certain social roles and undertake some measure of social responsibility. Of course, they must run their business efficiently for shareholder value. Because they exist on public charter, they have to fulfill certain public objectives. And in times like this, I think there can be merit for considering some factors in delaying the decision or in modifying the rates of increase. I think it is not something so contradictory that it cannot be managed. Running such a business, of course, is not so easy, but balancing this role is necessary. That is why we have to hire the best management for the job. Otherwise, we will be having a family of clerks to do it.

Is the rationale on the viability of the bus transport companies valid? Some figures have been given just now. I believe that the public transport companies concerned here are not about to go under. What has their performance been up to now? If we look at the financial figures, and some have been given just now, I do not think the figures justify the decision. If we look at the return on assets for SBS Transit for the financial year ending 31st December 2001, it is 13.5%; return on equity for the same period, 17.8%; the gearing of the company, that of debt to equity, nil; net earnings, 7.3%. If we look at these figures, one would generally come to the conclusion that SBS is reasonably sound and quite profitable. Perhaps the Minister can use this opportunity to explain how the PTC came to the conclusion that viability of the public transport companies was at stake. If we look at the SMRT, again the return on asset (ROA) is slightly smaller, 4.6%; its return on equity is 8.3%; net earnings, $56.8 million, which is about 11% of sales.

Of course, the ROE, in the case of the SMRT, cannot be so high because it has such a big infrastructural asset to maintain. I would say that perhaps in considering the financial figures for these two companies, it is of some merit to the Minister to explain to us how the PTC came to the conclusion that the two companies' viability are at stake. Of course, we understand that SBS Transit is taking over the North-East line. And for this current year, there may be some start-up operational expenses for the first 10-11 months before the North-East line starts running by the end of this year. So there could be expenses that it has to incur in this instance. But this is really start-up cost of operation.

The other group of factors that we have to look at is the justification given by the PCT on the CPI + X formula. I believe there are many ways to interpret this CPI + X formula, and it is not exactly quite clear which is a plus and which is a minus. What do I mean? X can be a dummy for cost increases or productivity increases. Of course, management would have to manage this part of it. But as presently constituted in the formula, that formula is a justification for the PCT to arrive at 2.2% increase. I think we have to differentiate between productivity increase in the X and operational cost increases in the X. What do I mean? If productivity increases in the transport companies, naturally, this increase suppresses X, that means X would have a lower value to rise. Operational costs, in terms of equipment, TV monitors on the buses, fanciful bus-stops, air-conditioned halls, these could add to increases in the X. So, when the public transport companies go to the PTC to justify for the increase in X, is there some anomaly in the CPI + X formula that we have to look at? Otherwise, productivity increase has no incentive to gain from CPI + X, because it suppresses X, whereas other cost increases in putting up equipment, fanciful features, frills that Mr Tan Soo Khoon talked about add to the X factor, and justification for fare adjustment.

Sir, I am not arguing that public transport companies should not be allowed to raise fares, as allowed by the PTC. The question is whether this is the right time. I can understand that there is never a right time for raising fares, but in times like this, when the economy is suffering from a recession, when there are difficulties faced by our people, I think there has to be some cause for concern for the public transport companies to raise fares at this stage.

Times are bad. We are told there is no sacred cows that will be left unexamined. The GST is going up next year. While we ask our people to tighten their belts, I think we should also be sensitive to the threshold of pain they can bear in these uncertain times. I understand that the Government will not allow public transport companies to raise fares next year when the GST goes up. Would it not have been better had the PTC delayed the fare hikes till January next year, together with the GST implementation, so that it is manifestly evident to the public that such an increase at that time, as opposed to now, would include the GST increases, which will be absorbed in this current fare adjustment?

Finally, I would like to urge the Government to bear in mind the views expressed by Members and to consider this in reviewing the work done by the PTC.

Mdm Halimah Yacob: Sir, I rise in support of the Motion. Let me start by saying that I acknowledge that we have an efficient public transport system that is comparable to the best in the world. And I wish to pay tribute to our public transport workers for their dedication and hard work. I think we owe it to these men and women who are in the public transport service for the excellent work that they have done. From a rickety bus system, we now have one of the most efficient transport systems in the world.

I also understand the plight of public transport workers who are by no means highly-paid income earners. Productivity of bus companies has increased, and in line with our wage guidelines, I think they should look forward to some reasonable wage increases. It is therefore unfortunate that wage increases have been cited as one of the key reasons for the increase in public transport fares. Let me now define what I see as the issue before the House today.

At the heart of the current debate, in my view, is the question of what should be the role of our public transport companies. The companies see themselves as business entities, but Singaporeans obviously disagree. Singaporeans see public transport companies as serving public interest, and therefore having a strong social responsibility towards the public. This element of public interest and social responsibility is particularly important considering that public transport companies here operate in an environment, as my other colleagues have mentioned, where there are virtually no competitors. This does not mean that public transport companies cannot make money, or should be operated at a loss. The issue here is whether making profits should be the over-riding consideration for public transport companies, as we have heard several speakers mentioning. In other words, the profit and shareholder value motivations of public transport companies must be balanced against the public need for an affordable and efficient public transport system. Obviously, Sir, the public is not convinced that there is a balance in this case. They know that last year, as we have already heard, SBS Transit made a healthy profit of almost $40 million, and a healthy return on equity of 17.9%. Hence, there is no danger of an imminent collapse if fares are not increased.

Also, the recent announcements on corporate tax reductions will benefit transport companies in terms of higher profits. So the public finds it bewildering that bus companies should cite loss of revenue as a reason for its increase in fares. Sir, as mentioned by other colleagues as well, contrast this with the response of two other transport operators. When asked whether they would increase their fares, both the 1,000 strong Singapore School Transport Association and the CityCab and Tibs taxis, have said publicly that they will not increase their fares despite their higher operational costs because of the poor economic situation. In fact, the President of the Comfort Taxi Operators Association said in a public interview that increasing fares would mean that passengers will run away, particularly in this situation of economic hardship.

Hence, Sir, there is an issue of public accountability here, and the clarifications and explanations to-date have not been able to convince people. I really hope that the Minister can give this House clearer and more incisive explanations and allay the fears of the public. I have the following suggestions to make and also some questions which I hope the Minister could address.

In approving fare increases, I would like to ask whether the PTC had taken into account the economic situation, the unemployment rate, and the increased hardship that such a fare increase would cause to the people. There are strong sentiments against these increases because many Singaporeans have lost their jobs, do not enjoy pay increases in many cases, and those who are still employed live in constant fear of losing their jobs. We may argue that only 5% are unemployed, but this figure is actually much higher compared to previous years, and those who are unemployed now take a longer time to find a job. To me, a reasonable fare increase cannot refer to the amount of the increase or the need for companies to earn revenue alone, but must take these factors into consideration.

I would also like to ask whether in approving the fare increase, the PTC had factored in the 2.5% reduction in corporate tax which the transport companies would enjoy on this year's income. Has that been factored in when the bus companies talked about loss of revenue as a reason for increasing fares? The Government's objective in reducing corporate tax by 2.5% is to help companies to reduce operational costs. Instead of passing on this benefit to commuters, it is unfortunate that the transport companies have decided to further increase cost for commuters.

I would like to touch on the formula of CPI+X, which my Parliamentary colleague Mr Chay Wai Chuen had mentioned just now, and to ask whether there is a need to revisit this formula. I note that this formula was set many years ago, but the economic environment today has changed. If companies are already making good profits, this formula seems to allow companies to increase fares so long as there is an increase in the operating costs. It gives the impression that transport companies do not have to contain costs and, secondly, it guarantees them good profits all the time.

Sir, in 1996, the Cost Review Committee, in its

conclusion, said the following:

"An affordable and highly convenient public transport system would have to be provided to offer Singaporeans an attractive alternative to having their own cars, as cars are likely to be very costly given Singapore's shortage of land."

Sir, we all agree that private ownership of cars will become more expensive. We also agree that too many private cars would clog up our roads. So, we agree that a better alternative will be to develop an efficient and affordable public transport system. Public buses are by far the most efficient means of road transportation for a large numbers of commuters, particularly during the rush hour. If this is the case, then should not the policies that are in place reflect this thinking? In particular, Sir, I would like to ask the Minister to explain what is the rationale for imposing the ERP on public buses, which the bus companies have cited as being one of the reasons for the increase in their costs. Lest I be misconstrued, I am not arguing for a subsidy or subsidisation of our public transport system. But I think a policy is developed on the ERP for a particular objective - to prevent clogging of the roads; people are discouraged from using private cars; they have to rely on public transport unless we expect them to walk. So I would like to know, and I am sure Singaporeans are asking this question as well, what is the rationale then for imposing the ERP?

Sir, the transport companies have just introduced cost saving methods, such as the ez-link card, which will reduce underpayments and other forms of fare abuses. The strategy of differentiating payments for those who use the ez-link card and the normal fare card, as against those who pay cash, would also mean that there will be further manpower savings as it will need less staff for cash handling. Hence, the transport companies, in my view, should have waited and assessed the impact of such measures before asking for fare increases. In fact, it would have been better if the ez-link card had been in place for a number of months or even one year, so that people could switch, and therefore have some additional savings by using the ez-link card, where the fare increase is much lesser. Unfortunately, the ez-link card has just been introduced, I think it is less than a few months, but immediately we now have the fare increase without enabling people to benefit more and assessing its impact.

I also note that the ez-link card requires a $3 deposit, which is $1 more than the normal fare card. This by itself, in my view, will generate a fair amount of income for transport companies. And therefore it makes it quite unbelievable that they could cite revenue loss as a basis for the increase.

Sir, in recent years, transport companies have been constantly upgrading in various areas. The question I would like to ask is: are these upgradings necessary, are they useful, are they needed by commuters, and are the costs of these upgradings passed on to the commuters? It does not really help when shortly after the bus companies announced about the setting up of the Toa Payoh airconditioned interchange, fares went up. In the public's mind, such costs are borne by the commuters, although not everyone wants an air-conditioned bus interchange.

Sir, I would like to make a special appeal for feeder bus users who are usually the HDB heartlanders. I think there is a strong argument to moderate the fare increase for feeder service as this is heavily used by housewives, retirees and students. The feeder service used to be 15 cents but now it is 80 cents. I recall a recent conversation with my daughter who is in Primary 6. She said that some of her friends hate me. And they hated me because they said that "your mother increased the bus fare from 70 cents to 80 cents", and I said, "Please, I am not the bus company. Please explain to your friends." She said, "Ya, it is very unfair" but that is what they said. "You have increased the feeder bus service to 80 cents, by 10 cents." Now that is the sentiment of the people, the young, their mothers who were using it, talking to them, and this is what is being reflected in the conversations.

Now, if our argument is that support and assistance to the people must be focused and directed to those who really need them, then, in my view, it is appropriate that we look into feeder service differently as the bulk of the users are HDB heartlanders from the lower income group.

Finallly, Sir, I would like to ask whether there is any coordination in the increase in fees amongst the various Ministries and public service providers. Is anyone monitoring and actually assessing the cumulative impact of all these increases on the public? Would the Government consider setting up an inter-Ministry Committee to monitor and assess the cumulative impact of cost increases? I fear, Sir, that as more and more public services are corporatised or privatised, everyone will decide on their own pricing policy, without taking into consideration what impact this would have collectively on people.

In conclusion, I would like to reiterate my earlier point that public transport companies are not just commercial entities, but have a social responsibility and they must, and will be, subject to public scrutiny if they raise their fares. I would also like to call upon the Government to consider carefully before approving any further increases of public services or Government rates of charges. Please consider the anxieties and concerns of people. When I ask people nowadays how is your work. The answer is invariably, "Okay, but for now." During good times, when jobs are secure, people's ability to absorb shocks is better. But when times are bad, with every price change, no matter how small, instead of creating a ripple, will result in a whirlpool.

On this note, I support the Motion, Sir. 4.15 pm

The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, thank you for letting me join in this debate.

First of all, let me say that I am glad that we are having this debate in this House, at this time. It has already been raging in the media, in the coffee-shops, on the buses and trains, for quite a while now. So, it is good that we now move this debate into this House, to give MPs the chance to give voice to their feelings and their concerns, the frustrations and the fears, anxieties of their constituents. For this, we must thank the movers of the Motion, Mr Tan Soo Khoon, Dr Tan Cheng Bock and others. This does not mean, however, that I agree with the Motion, but I will come to that later.

This debate is also important because it provides an opportunity for the Minister to explain, once again, the rationale for its policies and to clarify any misunderstandings and to provide the facts. And, it is important, because this is what Members of this House have been elected to do. To reflect sentiments from the ground, yes, but also to listen carefully to all the arguments, so as to arrive at decisions which are what we believe to be in the best interest of the country and our constituents.

This debate is taking place amidst high public interest and high expectations. Some Members feel that the issues go beyond bus fares - issues like Government not listening to the people, Government not being sympathetic, and so on. I would touch on these points later. But I urge Members, if we are going to have a rational and a considered debate, to remember ultimately what this debate is all about. It is about our land transport policy, specifically our public transport policy. It is about the role that it plays in improving our quality of life and our standard of living. It is about how we finance it, how we regulate it, and what are the role and responsibilities of the various stakeholders. By this, I mean not just the commuters, the people, but also the service providers and the State. In the most immediate, it is about whether fees should be increased, fares should be increased; if so, when and by how much.

Let me, first of all, state my position. I support the necessity for increases in public transport fares provided, of course, that they are properly justified. The harsh reality is this: there is no free lunch. I would elaborate on this point later. Where it is justified, I further support the principle that it is better to have small regular increases which, in fact, means increases even when the companies are profitable, as opposed to large increases coming infrequently, for example, when the companies are losing money. To the extent that the recent fare hikes adhere to this principle, I support them.

I would like to reassure Members of this House, including Mr Chiam, that this does not mean that I am not speaking up for the common man. Indeed, if I may remind Members, if the PAP Government had not acted in the interest of the common man, if we had let them down, if we had not been able to demonstrate clearly that our policies, sometimes not very popular, have brought them a better life, then we would not be in Government today.

Before I proceed any further, let me say that it is not my intention to justify the increase in public transport fares. That is for the public transport companies to do. That is for the PTC to assess and to recommend and, finally, for the Ministry of Transport to endorse. Neither realistically do I hope to change the minds of Members of this House who oppose the fare hikes or the many commuters who are affected by this increase. But what I do hope to do is to shed some light on this issue and help to bring about a more informed debate.

First of all, let me say that this is not the first time that public transport fares have gone up. It is also, I dare say, not going to be the last time. I was with the Ministry of Communications for 11 years from 1988 to 1999, three years as a Minister of State and eight years as the Minister with responsibility for land transport. One of the most difficult and unpleasant things I had to do was to allow the public transport operators to raise their fares. Let me assure Members of this House that no Minister for Transport, indeed no Minister, wants to allow any fares, fees or rates to go up if he can help it. Indeed, life would be so much more pleasant and so much simpler if we did not have to do unpleasant things.

Indeed, as Minister for National Development, I have not escaped having to do unpleasant things. Mr Tan Soo Khoon in his speech just now mentioned one of these things. He said that HDB is raising carpark charges in spite of public feedback. I have explained in this House why HDB has to raise carpark charges. It is because HDB's mandate is to provide subsidised public housing. It is not to provide subsidised carparks. Any subsidy for carparks will eventually, sooner or later, flow through and have to be borne by all HDB residents, whether or not they own cars. That is the reason why carpark charges have to be raised in order to reduce the subsidy and, hopefully, we can close the gap.

I have also explained in this House, in answer to questions from Mr Tan, why HDB is doing so in September. This is because, in September, road taxes will be reduced, and so we feel that it would be better to wait until September so that HDB residents will not feel the pinch. So, I wonder which part of my explanation was not clear to Mr Tan. He may disagree with the policy, although he knows that this is not a new policy. In fact, this policy was enunciated in the House when he was in the Chair, by the former Minister, Mr Dhanabalan, as early as 1989. He may also disagree with the timing, but if not at the time when the car owner is getting something back from the Government, then when?

Sir, I come back to the question about fare increases. The first question then we have to ask ourselves is: can we avoid having to increase fares? Is there another option? Is there another way of doing this? Some Members of this House have made some suggestions. Some people argued that one way to avoid increasing public transport fares is for the Government to step in and subsidise public transport. This is the subsidy argument. I think this argument was made by Mr Low Thia Khiang and others. There are others who feel that we can bring fares down by opening up the market to more competition. Again, I think this is something that has been brought up by quite a few Members. Others feel that the public transport operators should improve their productivity rather than raising fares. And, finally, a few argued that they should cut cost by providing a no-frills service.

Sir, let us consider each of these suggestions one by one.

Let me take subsidy first. The Government has explained many, many times why subsidising public transport is subsidising consumption which, in turn, creates distortions in demand and supply. In other words, if you subsidise consumption, people are going to want more and more, because they do not have to pay for it. If we start with public transport, what about other equally essential items, like water, food and electricity? Should we not also subsidise food, electricity and water? I am sure Members are familiar with the arguments. But, to me, perhaps the most powerful reason why we should dismiss this option is that, ultimately, we all end up paying for it. The experience of many countries which have gone this route, with the best of intentions, mind you, end up having to provide for a bigger and bigger subsidy, which eventually means higher taxes. So, remember that there is no such thing as a free lunch.

Let us take the second proposal - competition. This is a common belief that if only we had more transport operators, competition would bring fares down. These sentiments are understandable. After all, look at what happened in the telecommunications industry. Let me caution, however, that it does not necessarily follow that the same will happen in the public transport industry, because the nature of both industries is not the same. In the 60s and the early 70s, we had a total of 11 bus companies in Singapore. Older Members of this House, especially those over 50, which incidentally include myself, will remember the situation then. Services were unreliable; buses broke down very frequently; they were packed like sardines; and the competition for passengers resulted in dangerous driving behaviour. Unpopular routes were poorly served, if at all. They all wanted to serve the best routes, the most popular routes. The situation improved when the 11 companies were amalgamated, first, into three companies, and then into one, which was called SBS in 1973. Even then, the Government had to take the unprecedented step of seconding a team of civil servants from various Ministries to help manage SBS and to ensure that the public transport system, which was an essential part of the system, of the whole infrastructure of Singapore, did not collapse. I was one of those who was seconded to SBS.

With the merger, we were able to rationalise bus routes, decentralise repairs and maintenance, and to achieve economies of scale for the purchase of new buses and spare parts. Service conditions of bus workers improved significantly. New productivity measures such as double deckers and one-man operation were introduced. As a result of this, service quality went up, fares were held steady for many years while SBS was financially viable. The final stage in this transformation was a successful listing of the company. As a result, many Singaporeans who were bus commuters also became shareholders of SBS. In a sense, SBS became some sort of a cooperative with widespread shareholdings among bus workers as well as commuters. Over time, the shares went up in value; so, many commuters decided to take profit. It was a win-win situation.

In the 1980s, competition was reintroduced in some form when licences were given to Trans-Island Bus Services (TIBS) to operate bus services in the northern part of Singapore. With this move, there was now a basis for comparison of performance and some competition, although not direct. Supplementary bus services provided by school buses were also introduced to complement certain routes at peak hours.

What is the situation today? Has the bus service improved today, compared to the yesteryears? Based on my own experience then and now, I can say without hesitation that it has improved by leaps and bounds. You look at the buses that are running on the roads today. I still remember the bone-shakers we had in the 70s. They were hot and stuffy. They were very difficult to drive and for the drivers, it was not a very pleasant thing to drive SBS buses. I know because I did take my Class 4 licence on one of those old bone-shakers. At that time, I wondered whether we could ever afford the lovely buses that we saw in Europe and in other developed cities. Today, our commuters are able to enjoy the same standard of buses as the ones we see running in most cities in developed countries - airconditioned, low steps, sturdy, automatic transmission power steering, and so on.

Sir, I am not suggesting that public transport operators today have no more room for improvement. Far from it. There are still too many lapses of service which we cannot and should not condone. They should be more responsive to commuters' request for new services. Service attitude of some drivers can be improved. More buses on some routes would be welcomed. But like all things, let us see their performance in perspective. Let us give credit where credit is due.

I relate this to illustrate the point that competition and having more bus companies is not the magic solution, the panacea to our problem. Indeed, the opposite can be true that a well-regulated monopoly, or duopoly, with some competition at the fringes can be the better solution. This has been borne out not only by our own experience but that of places, like Hong Kong, where bus services are also not subsidised.

What about productivity? Can transport operators increase their productivity further and not have to raise bus fares? The answer must surely be yes. But I believe that the huge productivity gains of the past, such as the ones through the use of high capacity buses, like double deckers and articulated buses, like the introduction of one-man operation (OMO), are no longer repeatable, which means that the fare increases can no longer be held down for as long as it had in the past. Nevertheless, the PTC should continue to insist that productivity is a key determinant of any request to raise fares.

Finally, what about cutting down on the frills, a so-called no-frill service. The assumption here is that by removing the frills - the airconditioned interchanges and TV on buses - cost can be reduced so that fares do not have to go up. Sir, I know for a fact that the airconditioned interchange that is co-located with the HDB hub at Toa Payoh Town Centre is paid for by LTA, and not by SBS. I am also told that the TV sets on buses are paid for by advertisers, and not by SBS. So, this way of cutting costs is out since costs are not incurred by the bus operator in the first place.

What about other cost-cutting measures? The surest way to cut costs is to lower the level of service, in other words, to reduce the number of routes or the number of buses plying certain routes. Are commuters prepared to wait 10 minutes when they are now waiting 5 minutes? Or are they prepared to wait 30 minutes, instead of 15 minutes, during off-peak? Are they prepared to endure more crowded trains? I doubt that commuters will accept this. And I do not blame them. We have come to enjoy a high standard of living which must not be going backwards. But at the same time, we must be prepared to pay a reasonable price for a reasonable service because there is no such thing as a free lunch.

The issue boils down then to what is a reasonable service. Is 10 minutes reasonable? Is walking 200 metres to the nearest bus stop reasonable? Is having to change buses to arrive at one's designation reasonable, and so on and so forth? If you ask people, they will give you various answers. So who decides? And we have placed this responsibility on the PTC.

Next, what is a reasonable fare? Should we peg fares to affordability, like we do for HDB flats? Again, if you ask different people, opinions will differ. And again, we have given this unenviable task to the PTC. We said to them, do a performance audit of the operators, check the accounts, make sure they are operating efficiently, let them earn reasonable profits, so that they can reinvest in the business, expand, improve the level of service. Like Dr Wang, I do not envy the Chairman of PTC and its members.

Mr Speaker, Sir, I have attempted to establish that, like many issues facing Singapore as a country with limited resources, there are no easy solutions, no painless options. In this case, we cannot avoid increases in bus and MRT fares from time to time. But what we can and must do is to look for the least painful solution if there is such a thing.

I believe that we have the framework in place. The PTC is the body that is entrusted to regulate service levels and fares. I believe that the principle of small increases is the better way to go, rather than large increases. But within this framework, I think we can still make further improvements. And one that I would support is the call by some Members to expand the representation of the PTC to include members from all walks of life. And I see no reason why this should not include some Members of this House.

Applications for fare increases can then be subject to greater scrutiny and, if it is passed, it can get better acceptance. Now, I realise that this suggestion does not mean that future fare increases will not be a problem. It will still be so. People will still be unhappy. Questions must still be asked but, hopefully, we can shed more light rather than heat in the public debate.

Sir, coming back to this fare hike, as I said at the outset, I am not in favour of reviewing the decision. It has been made, we should abide by it. But we should also recognise that there are people who will be hard hit by it, especially those who have just been retrenched or are still jobless, who have suffered pay cuts, who have school-going children who depend on public transport. We should provide help to this group of people. And indeed, we have.

In case Members have forgotten, we still have the Economic Downturn Relief Scheme (EDRS). Every month in my constituency, my CCC considers and approves hundreds of applications for the EDRS, amounting to a few hundred thousand dollars. And the same, I am sure, is happening in every other constituency. We also have various financial assistance schemes within each of our constituency. This is in addition to the many support programmes, such as the Rental and Utilities Assistance Scheme, introduced in the off-Budget package last year, sharing of Budget surpluses through the New Singapore Shares, and so on. So, it is quite wrong to suggest that the Government is not aware of the problems faced by those who have been hard hit by this fare increase.

Indeed, if nothing else, this debate can serve to highlight that such schemes are available, and if anyone wishes to avail himself of these schemes, he can do so. If he is not familiar, he can go and see his MP and he will be able to advise him where to get help.

Finally, Mr Speaker, Sir, let me say that we have appointed the PTC to regulate the public transport industry, its level of fares and its services. We have set the framework for it to deliberate on these applications. These are men and women whom we have appointed, and I believe that they have exercised their responsibilities to the best of their abilities. Their recommendation has been endorsed by the Ministry, I am sure, after much deliberation.

Therefore, Mr Speaker, Sir, I do not support the motion standing in the name of Mr Tan Soo Khoon and others, as it calls for a review of the PTC's decision. However, I do support the suggestion by Members of this House that we should review the composition of the PTC in order to improve the decision-making process.

Sir, I thank you for your indulgence.

Mr Low Thia Khiang: Mr Speaker, Sir, may I have your permission to clarify some of the points raised by the Minister?

Mr Speaker: Clarification, yes. But you cannot speak any more. You have spoken once.

Mr Low Thia Khiang: Yes. He said that I am asking for subsidy for public transport. Indeed, I am not. In my speech, I said that we are not asking for subsidy, but merely questioning why should public transportation companies make money by providing public transport. Should the Government not look at another model of providing public transport? At least, it could have a federation of transportation companies to run the public transport services on a cost recovery basis, and treat public transport as a public service. I am not saying to subsidise, but to recover cost. Why should they make money, and should it be profit-oriented for providing such a service? Where is the justification?

Mr Mah Bow Tan: Mr Speaker, Sir, the question of subsidy has indeed been raised as one of the ways of avoiding a fare increase, and the arguments that I made are against this idea of subsidy. Mr Low's point about having the public bus transport service as a not-for-profit service is an option. But then, again, when it comes to not for profit, there is still the element of having to provide for the cost, and there is still the need for the fares to be increased from time to time to take care of increases in cost. So, even if there is a not-for-profit model, as Mr Low suggested, that does not mean that the fares will never go up.

Mr Low Thia Khiang: Another clarification, Sir. Does the Minister agree that the moment the profit factor is removed, there will be less controversy, even if there is a need for the fares to be increased? It is justified based on why there is a need to increase, rather than on return on equity or return on capital investment. Will it be better?

Mr Speaker: It is not a clarification, Mr Low. It is a question.

Mr Steve Chia Kiah Hong (Nominated Member): Mr Speaker, Sir, the speakers before me have done a good job, reflecting the public's unhappiness. But I must still go on and have my say because more voice will add to the strength and support for this Motion. Minister Mah has disagreed with certain issues, one of which is subsidy. I disagree and I do not buy his argument for not subsidising.

We are an active society. This Parliament House is not static. We argue and debate over an issue to come to a conclusion and, for every case, we decide whether it is worth the subsidy. So, it is not that because we subsidise public transport, we are going to subsidise for many other issues that come along the way. I do not think that is the case. Every case has its own merit to be debated in Parliament.

Mr Speaker, Sir, it was not too long ago when this Government boasted about more good years, more jobs, more investments, more wealth-creation and more economic prosperity for Singaporeans. This Government has gone further to boast about reaching to the Swiss standard of living and about a world-class transport system. These days, we can only hear the Ministers telling Singaporeans to lower their expectations, not to be too fussy and to accept lower paying jobs. More retrenchments are expected to be on the way.

So, what happened to those promises? What happened to the PAP's "More Good Years"? Where are all the new jobs that this Government promised during the last election? The Government claims that we have reached the Swiss standard of living. I do not see it at all. What I, and many other Singaporeans see, are rising costs and charges. The economy is in recession. Yet, the cost of living is going up. The biggest culprit creating this rising cost is the Government and Government-linked public service providers. If this is the notion of the Government's Swiss standard of living, then I believe many Singaporeans would rather not have it. Are Singaporeans being conned?

The Government boasts that we have a world-class transport system. Again, like many Singaporeans, I do not see it. The newspaper reports that the LRT in Choa Chu Kang constantly breaks down. Many commuters staying in outlying areas have to change a few buses or trains just to get to work every morning. During peak hours, the buses and trains are constantly packed like sardines. Sometimes you have to skip and miss a few buses or trains before finally boarding one. Is this the Government's idea of a world class transport system? I wonder. Has the Transport Minister ever squeezed in with the crowd during peak hour traffic?

If there is anything in a class of its own about our transport system, it is what Singaporeans pay to own a car. The Government discourages car use, and wants to encourage Singaporeans to take public transport. But what could be worse than being forced to take public transport? It is being told that the public needs to pay more money to these public transport operators so that they can maintain their profit margins. Otherwise, we are told, these monopolies will lose money and commuters will be worse off.

The public transport operators are the only two listed companies in Singapore, whose profits and shareholders the Government indirectly protects, and the Government happens to be the biggest shareholder of one. By listing these transport operators, the Government cannot be allowed to evade its social responsibility to provide efficient and affordable public transport. Just like security, education and healthcare, public transport is one of the key services that the Government is required to provide.

If the Government is not willing to subsidise the cost of providing this essential service, then the Government should seriously look into liberalising this transport sector and allow for more competition. Citizens pay taxes so that the Government can provide for these essential services. It is not to give higher pay and higher bonuses. The Government cannot regulate public services, demand high profits for the operators, continue to collect taxes and shirk its social responsibilities, all at the same time.

While this and consistent future fare hikes may not mean much to the well-rewarded high income-earners and civil servants, the bulk of aged low income families will have more difficulties in trying to make ends meet.

Coming back to the question on the kind of profit margins these operators want, is earning more than $50 million every year not good enough? When times are good, and everyone is making a lot of money, nobody would be so pissed off with a fare hike. Commuters can accept and tolerate it. But now ---

Mr Speaker: Mr Chia, I suggest you not use the words "pissed off".

Mr Steve Chia Kiah Hong: Yes, Sir.

But now, the economy is so bad. So many people are being retrenched, and many more are having their pay cut or frozen. Many businesses are suffering. Transport operators are not the only ones. So, why should their profit margins be protected at all? These transport monopolies cannot simply go to the public ATM - which is all the transport commuters - and press them for more monies when their profits drop. Nobody will dispute a fare hike if there is a genuine need. But this latest increase is clearly just aimed at boosting their already fat profit margins. At such a difficult time, wide margins are unrealistic.

Despite the public's many protests and unhappiness, the Government went on to support this hike. Why is the Government so insensitive and uncaring? Is it taking the public's overwhelming support at the last election for granted? This current fare hike is so revolting, because the operators have yet to explain specifically why it is needed satisfactorily. Let us not talk about previous or future hikes. Given current circumstances, with SBS Transit and SMRT still highly profitable, why should this hike be allowed to take place at all? What we, Singaporeans, really need and want to know are:

1. How has this profit margin been worked out?

2. Is this a reasonable margin in these recession times when everybody is feeling squeezed?

3. What are the specific investments these operators have actually made to justify the fee hike?

4. Are these investments what the commuters really need? If not, why should they be made to pay for these unnecessary extras like expensive plasma screen TVs?

5. More importantly, have the operators improved the connectivity and frequency of buses and trains to a satisfactory level?

6. Finally, what will happen if they do not raise the fares this time round? Will they really go bankrupt?

In short, show us how these operators do their sums. Let us see where the major expenditures go. The nation is certainly not short of accountants and interested individuals to scrutinise their numbers. This hike should not take place just because the Public Transport Council, whose members have a vested interest, thinks that it is all right to do so.

Therefore, I support the call to review and reject this latest fare hike. Why must the public pay more when there is a recession? The PTC needs to re-examine its formula on how it approves fare increases.

Mr Speaker, Sir, I will now move on to urge the Government to ensure that the prices of public services are not unreasonably increased during these difficult times. Just eight months after the November General Election, Singaporeans have been informed of so many increases in fees and charges for public services. Since May, refuse collection fees have gone up. Just last week, transport fares and utility fees have also gone up. Come September, it will be carpark charges. Then, maybe telephone charges. Soon, more ERP. Then, night ERP. Next January, we will have GST. What else? And what is next?

It seems that many Government-related agencies and companies are upping their fees and charges to increase their profits in this difficult time, before the GST increase sets in. It was recently announced that the Government wants Singapore to be a broadcasting hub. The Media 21 Report sought additional funding for various initiatives to make this a reality. These are additional public investments. The question is: are we then to expect higher TV and radio licence fees soon to recoup these additional investments? On Sunday, we read that the CEO of the zoo had resigned. One reason cited is that he is not good in financial matters. A new CEO with good business figures will be selected to replace him. The question is: are we going to see a hike in the zoo entrance fees soon?

With the Government and Government-linked companies leading the way to price increases, it is quite certain that private businesses will follow soon to jack up prices to maintain their profit margins. Their reasoning is simple: if the Government can do it, why not they? Already, a number of private car-park operators have announced that they are raising their charges too. Parking charges at various shopping centres and office buildings are likely to go up by as much as 20 cents per hour. Soon, to cover their rising operating costs, hawkers and small business operators are going to jack up prices too. Thanks, but no thanks to the Government, prices will spiral up.

Luckily, Singaporeans have a Committee to Combat Profiteering. It is headed by the hon. Member from Joo Chiat. This Committee can check hawkers and retailers if they increase prices unreasonably. However, it has no power to challenge the Government and these public service providers if they profiteer. The Government and the GLCs are clearly the biggest culprit in this series of price hikes, not the small hawkers and retailers who are suffering from price increases themselves.

In closing, I would like to quote a recent Straits Times forum page writer:

"While we may not have much choice about who sells us (the) services, we can choose which countries to live in.. Given Singapore's relatively short history, we should not be surprised if people choose pragmatism over patriotism, (and vote with their feet.)"

I can only hope that the Government is not driving our citizens to despair and leave Singapore. Singaporeans are not asking for much. They just want a place where they can work hard, make enough money to start and build a family, and retire without worrying about "money no enough".

The Government can try to be a lot nicer and more caring by not being too greedy and sucking up the people's money too much. This is all we ask. The people's welfare is paramount for, without them, there can be no nation. Can the Ministers please take heed?

Mr Inderjit Singh (Ang Mo Kio): Sir, thank you for allowing me to join in. Frankly, I was a bit confused at the direction the NCMP was going as I could not understand some of the things he was saying. For example, I am surprised that the NCMP feels that the transport system is not world-class. I am sure that he does not really mean it, as we do indeed have an excellent transport system not matched by many. The issue at hand that we are debating today is - and this is a question he should really ask - at what cost are we having such a world-class transport system? This is the issue that he should have focused on.

The other point the NCMP added to the Motion - which again confused me - was that he wanted to reject the latest fare increases in addition to the review question. While I can understand the NCMP's desire to have more power than what he already has - as an MP without a constituency - it is equally important to understand the mechanics of the whole process.

Sir, the PTC, as I understand it, does not report to Parliament and we should, therefore, not be unrealistic about what we can or cannot do. In the case of this Motion, we really have to urge the PTC, and the Government for that matter, to initiate the process to review, if we carry through the Motion - and we are not in a position to reject the increases or the decisions of the PTC - instead of having a disruptive process where Parliament gets in the way of the Government and other agencies, I feel that the current process works well. Furthermore, there is a lot more value for our Members today in this debate to address the root cause of the issue of what caused the fare increases this time round. Hopefully, by understanding the root causes, we can put in place systematic changes and new processes which will be acceptable to all of us, and I hope to talk about these during my speech today.

Sir, I support the Motion in the name of Mr Tan Soo Khoon. I have a few issues with the way the Public Transport Council operates, and the operating principle it uses to determine and approve fare increases when requested by the transport operators. I believe that the issue with the recent fare increases lies not with the PTC alone, but also with the Government, which sets the agenda and the charter of the PTC. Until and unless the Government steps in and changes the charter of the PTC, I am afraid that we will continue to see problematic decisions, as we have experienced this time round.

Sir, I agree with Dr Wang that the PTC was just doing its job, and a job that is designed by the Government. I feel that it is about time that we reviewed the charter, which was established in 1987 and modified about 10 years later. Similarly, I would like to see changes in the composition of the PTC, as have been suggested by many Members, to better reflect the views of consumers and the public who use public transport daily, and also to have members who understand the mechanics of business a lot better.

Sir, first, on the charter. I would like to urge the Government, and particularly the Minister for Transport, to take the opportunity to learn from the mistake this time round and to put in place a revised charter and set out new objectives and guidelines which can better serve the purpose of the commuting public. The view many people have right now is that the PTC seems to be a body which watches over the interest of the transport companies more than the public. Why is this so? I believe this is because of the charter, the roles and the guidelines which the Ministry has given them. So, in a way, it is not fair to put the entire blame on the PTC. They were basically designed to fulfill certain objectives, as they have been doing all along. Times have changed and we have to change with times. We have to therefore change the objectives to better achieve the results that we want to achieve for all the stakeholders. The stakeholders in this case are the public, the Government and the transport companies. Such a revised charter needs to be better balanced to place a heavier weightage on the impact on the commuting public.

Some of the things which need to be reviewed include the process through which decisions are made. For example, can I ask what are the benchmarks the PTC and the Government use to determine the required profitability level for the transport companies? We cannot use internal data alone, because we have an almost monopoly situation for all our transport companies, especially if we look at the way routes are allocated to each operator. It is not even a duopoly. It is a monopoly, especially if we consider the Government's unwillingness to open up the transport sector to competition. Frankly, I wonder why the Government is so reluctant to allow more competitors, as many Members have asked. Sir, I also disagree with the Minister for National Development's argument that competition will not work in this case. Just like transport companies, the telecommunication industry too has had heavy infrastructural costs. If competition works in the telecommunication industry, why can it not work in the transport companies? About 15-20 years ago, we would never have believed that competition would have been good for telecommunications, and the results have shown that it has worked for all of us. The Minister also quoted two extreme examples. One was of the rickety buses of the 1960s, which I also rode on. It was a completely chaotic environment - no proper rules and regulations, no regulators, or perhaps no good regulators. Then, we have the other extreme of a monopoly situation today, which seems to have worked. It is arguable whether competition will or will not work. I think we should experiment with this, by introducing one more transport company and see the results. We should not, just because it has worked in the past, believe that changes are not going to be good for us in the future.

I would also like to see benchmarks being used with operators from other countries in the way the PTC makes its decision on setting new prices. In this respect, I would like to ask the Minister: what is the pre-determined profit level that we have to set for transport companies, before which they are allowed to ask for fare increases? In fact, I would like to ask if there should even be a profit criterion in determining fare increases, perhaps in determining other things. Frankly, I am amazed that we are giving so much of protection for publicly listed companies. It is precisely this type of involvement that creates an uneven playing field for many more private sector players. How I wish that the Government also provides the industry I am operating in that type of protection, so that I do not have to worry about profitability and I do not have to worry about downturns. My point is that sometimes, companies have to face the real situation of profitability, and losses at some other time. We would probably have a lot more stronger companies and in that process, create a lot more efficiency in the whole system.

The second issue is related to the charter which I am not convinced that the PTC has done a thorough job in reviewing the cost reduction efforts of transport companies before allowing them to increase fare prices. The excuse that the companies use is that they are seeing increases in cost and want to be compensated for these increases. My argument is that in the last two years, companies in Singapore should have seen a reduction and not an increase in cost. Given the recession, wage costs should have come down. The Government allowed rentals to come down, property tax is down and many other charges came down, as a result of the recession that we saw two years ago. So where are the cost increases coming from? I therefore repeat that I am not convinced that the review was thorough enough. Such a situation would create inefficient and unproductive companies and we should not accept these things. Even if costs may have increased, the PTC should have convinced itself that the transport companies did do their best in putting in place serious cost reduction and productivity improvement measures before agreeing to allow any fare increases. In examples in my industry, in a recession like this, we have to talk about cost reduction, in the range of 20-30%, and even 40% sometimes just to survive. I do not see the transport companies having shown they have tried to do that. In the review of the charter, we must insist on a better methodology to review cost increases, cost reduction, productivity improvement, and set a benchmark of performance before any transport company becomes eligible for fare increases. The fact that all transport companies are allowed to increase fares in tandem this time round also puts to question the assessment of operating cost impact for each of the companies, the fact that we allow all of them to increase at the same time. I cannot believe that both companies have similar rate of cost increases.

The second issue is one of composition of the PTC. I feel that we should have more people from the private sector involved, particularly industry captains from different industries, especially those who face stiff competition in their industry. Such people would be able to ask better questions related to cost increases, cost reduction efforts and productivity improvements, return on investments and other financial measures to determine the true efficiency of the transport companies before agreeing to any fare increases. In my opinion, with the heavy Government representation and the representation of the transport companies, this important role cannot be well-performed. So, I call on the Government to review the composition of the Council as soon as possible so that this would give confidence to Singaporeans that their interest would be taken care of in the future.

Another issue I have is on how this round of increases took place. It is my impression that the fare increases, which the PTC just approved, seem to have been a result of a set piece of standard operating procedures (SOPs) which the Government seems to have adopted many years ago. The people responsible in executing these SOPs just went on to implement this set piece without due consideration of what is really happening in the real world. What probably went wrong this time is that the SOP did not consider the economic condition of the country and the financial position of Singaporeans. I feel that the people responsible for initiating the PTC review should have been more sensitive to the real world problems and not just implement the SOPs which may have been set many years ago. In this respect, Sir, I feel that the Government and the civil service need to come out with more convincing answers to the questions on issues like price increases. The attitude reflected in the replies, especially those given in the newspapers' Forum pages are no longer acceptable and reflect a certain level of arrogance in the replies. I think this is something that is not convincing enough for Singaporeans.

In conclusion, I feel that the real issue at hand is that we have been using a PTC system and a charter, which is now out-dated, and there is an urgent need for this to be reviewed. It is understandable why the PTC ended up allowing a fare increase this time round because the PTC and its charter have been designed to allow this to happen. Had the guidelines been different, I am sure the decision would have been different. For example, at this point of time, many Singaporeans actually shifted from using their private cars or taxis to buses and the MRT. I can almost predict that the public transport companies would have seen an increase, and not a decrease of revenue this time round. How then could the PTC have approved the fare increases this time? We therefore need a new formula that would determine a new balance for the future.

Mrs Lim Hwee Hua (Marine Parade): Sir, even as I rise to comment on the Motion, I am mindful of the financial challenges that Singaporeans face which this economic downturn has presented, and that many have been unemployed for a prolonged period of time. Sir, I accept that the Public Transport Council can be requested or urged to broaden their considerations and to be more exhaustive in their deliberations.

But I cannot support the motion that the PTC be asked to review their decision, let alone have the Government stay, revoke or reject the PTC's decision, as suggested by Mr Chiam See Tong and Mr Steve Chia. Doing so would question the very existence of and the purpose for constituting the PTC. It would threaten the very independence that was crafted into the Bill back in 1987.

Sir, at that time, one of the main functions was to consider applications for fare adjustments, taking into account two frequently divergent objectives: firstly, for transport operators to remain financially viable whilst, secondly, safeguarding public interest. The basis is that if transport operators are not viable and have to offer poorer quality of service, then commuters at large would suffer. Yet, Sir, commuters' interests and ability to afford the proposed fare hikes must weigh heavily, especially in difficult times. Hence, the Public Transport Council, understandably, has a difficult balance to strike and on an on-going basis. I would agree with Mr Tan Soo Khoon that perhaps there could be more disclosure on the criteria for evaluation of proposals, whether it is for new services or for fare adjustments, and to have more transparency on the process itself. Or perhaps, the composition of the Public Transport Council should be re-looked at to ensure that, firstly, there is a wider representation of views and interest and, secondly, there is a clear management and separation of conflicts of interest.

Sir, on competition, although Mr Mah Bow Tan has explained why free market competition is not necessarily desirable, I would like to echo the call to the Minister for Transport to review the competitive and regulatory framework for transport services. I believe the circumstances are different and should justify a fresh review.

Regardless of any changes to the transport services sector, or to the composition of the PTC, the PTC's very independence of the Minister and Ministry officials that was conceived at the outset, must be preserved. Sir, to make a villain of the PTC, as alluded to by Mr Steve Chia and Mr Low Thia Khiang, is unwise. Any hint of moderating or influencing the decision of the PTC cannot be allowed, without a debate on the very existence of the PTC itself, its integrity, its very institution, an existence that this very House had created back in 1987. Hence, while I am in total sympathy with the plight of families in need, I caution against unwittingly destroying the very integrity of the Public Transport Council. 5.10 pm

The Senior Minister of State for Transport (Mr Khaw Boon Wan): Mr Speaker, Sir, thank you for allowing me to join in the debate.

Like the MPs who have spoken earlier, I know many Singaporeans are unhappy over the transport fare increases. There is a general sense of unhappiness, and not just from bus commuters. They are frustrated that the Government seems to be hearing-impaired, or deaf to their pleas, at a time when we are still not yet out of the recession. I face this unhappiness too when I walk around my constituency.

Their sentiments have been well expressed by the MPs before me. I would not repeat them. We need to respond to these concerns. As a responsible Government, we cannot govern in a vacuum. To govern effectively, we need the understanding of the people. Rising Aspirations

I spent many years running public hospitals. I acquired a habit of walking the hospital wards, talking to patients and their relatives. They came from all walks of life, from the middle class to the lower income groups.

But regardless of their background, they all have aspirations for a better life. This is as it should be. As Singapore graduates from third world to first world status, Singaporeans naturally expect to live like their counterparts in the first world.

We therefore have high expectations of our public transport service. We demand continuous improvement - more choices, greater frequency, strict punctuality, greater comfort, no breakdowns.

When I grew up in the kampong, I was used to waiting, without any shelter, often for an hour, before a dirty, hot and noisy bus would finally turn up. It was a different lifestyle then. People were more patient. Nowadays, my daughters would give me an earful if the MRT service was disrupted, even for a few minutes. Fare Increases are Inevitable

The Government is committed to meeting the rising aspirations of Singaporeans. We are committed to making continuous improvements. And over the years, our transport operators have, by and large, been able to meet these higher demands. But it is not realistic to expect such improvements to come with no adjustments in fares. It is just not possible to deliver better services at the same price over a long period of time.

Mr Chiam said that if only public transport could be like the mobile telephones where you see prices coming down with more and more competition. In telecommunication, it is possible, thanks to technology breakthroughs. Prices, in fact, have dropped. Unfortunately, in most other industries, such opportunities are not easily available.

Because public transport is labour-intensive, cost increases due to wage increases are hard to avoid. Like other workers, transport workers deserve pay rise too. Let us be fair to the many honest, hard-working bus drivers, train operators, who work long hours, often past midnight, so that the rest of Singapore can work all day, and play all night.

This is not to say that there is no scope for productivity gain. There is. And it is precisely productivity gains which have largely allowed the PTC to moderate transport fare increases over the years. First, two-men-operated buses became one-man-operated. Next, single-deck buses became double-deck buses. Then, we joined two buses into one, to save one driver.

And it is not just productivity gain through hardware. The quality of bus drivers and train operators today is quite different from the old days. They are now better trained and better skilled. And they also need to be IT-literate, given the penetration of IT and Internet into public transport. In a few years, with 3G, with wireless Internet, I expect buses and trains to become mobile offices where commuters continue to work and play while moving from one place to another. So the demand on our transport operators to be more sophisticated in its service offering is bound to rise further. And we will push the transport operators to seek productivity gains. But let us be honest, we cannot avoid some fare increases once in a while.

Unfortunately, in the heat of the debate, both in the media and in the coffee shops, some misunderstandings have cropped up, and we need to first correct such misinformation, before we can choose the best course forward.

Misunderstanding No. 1 - fare increases are due to frills - air-conditioned interchanges, fanciful bus shelters, TV in buses. Many said "Commuters do not need them, remove them and fare increases can be avoided."

Whether these are frills, we can debate about it. But the key point is that the transport companies did not pay for any of these. They got them for free. Government pays for air-conditioned interchanges. Why? Government decided on air-conditioned interchanges because integrating the interchanges into high-rise commercial buildings makes much better use of land, instead of keeping bus interchanges as stand-alone buildings. But having integrated them into buildings, air-conditioning them becomes necessary. Likewise, fanciful bus shelters and TV Mobile, are services provided by other private companies because they expect to make money through advertisements.

Since the transport companies did not pay for any of these services, they did not, and would not have been allowed to use these to ask for fare increases. In other words, commuters are not made to pay for these.

Misunderstanding No. 2 - fare increases are to fatten the profits of bus and train operators. Is it really? This can be easily verified. You cannot hide fat profits. In any case, management has no incentive to hide fat profits, as otherwise their bonuses would get affected. The big problem in Wall Street today is that some management has been tempted to produce fat profits through creative accounting. The fact is that our transport operators are not making fat profits. Yes, I have heard Mr Tan Soo Khoon quoting various figures to show the point that they are making fat profits. But if I were the bus and train operators, and I notice quite a few of them in the public gallery, I will immediately push out data to show to the rest of Singapore that indeed this is not the case.

Misunderstanding No. 3 - fare increases are due to losses by transport operators in non-transport activities. Some people have speculated that huge losses by transport operators in properties and newspaper venture have caused the fares to be increased. Again, this is simply not true. We require all non-transport activities of the operators to be run by separate companies. They are fully ring-fenced from the basic public transport activities.

Misunderstanding No. 4 - fare increases are not opposed by an uncaring PTC. Some people feel that PTC is on the side of the operators and is only interested in ensuring their profitability. They complain that PTC is not diligent in protecting consumer interests, and this criticism is most unfair.

Let us check the record. PTC, as Mrs Lim Hwee Hua pointed out, was set up 15 years ago, 1987. Over this period, average wages in Singapore have more than doubled. To be precise, 136%. The general price level, CPI, has gone up much less, by 29%. On the other hand, transport fares have lagged behind wage growth by a very big margin, and have largely kept pace with general inflation. In fact, depending on which criteria you use, one can argue that the average bus fares have been below the CPI increase over this period. So the fact is that PTC has actively protected the interests of the commuters. PTC members are serious, caring individuals, doing a national service, and doing a good job to the best of their ability. They certainly do not deserve the abuse which has been thrown on them over the last few weeks. The Chairman of PTC incidentally is in the gallery up there.

In forming the PTC, we have deliberately included members from all walks of life, to give it a wide representation. In the current composition, it includes an accountant, an industrialist, a labour unionist, a media editor, an economist. While transport operators are also members of PTC, they cannot take part in decisions in which they have an interest, such as fare revisions. They are there so that the PTC will have first-hand knowledge of the industry that it is regulating. Nevertheless, we need to address the widespread concern of Singaporeans and respond to their grievances. But in so doing, we should not inadvertently undermine the foundation which has delivered the present state of our public transport system.

Yes, our public transport system is not perfect. The MRT and LRT can go with less breakdowns. Buses can still be more punctual, and commuters would like to see many more bus services added even when the loading is not great. And, we will certainly work with the PTC, the operators, with the commuters, to make our public transport system better. But if we take a pause, and think back on what we had 10 years ago, 20 years ago, it is a vast improvement. And for those who have used public transport in other cities, whether in the first world or in the third world, they know that we have not done too badly.

Just last week, someone e-mailed me to relate the experience of one Singaporean now working in London. According to him, it has now become common for people to expect to come in late to office because the trains there frequently break down at peak periods.

I used to be amused by the picture of the old rickety Indian bus, overflowing with commuters. Some have to climb onto the roof where, in fact, the best "seats" are. The next best "seats" are for those who recklessly hang themselves outside the bus by clutching onto doors and windows. Those with seats inside the bus turn out to be the most uncomfortable - hot, steamy, sweaty and suffocating! But you have to see it with your own eyes to appreciate this experience.

So, the fact is that over the years, we have evolved a good public transport system, and it rests on four key pillars:

Pillar No.1 - Responsive to Rising Expectations. The operators know that they have to be responsive to the rising expectations of Singaporeans. As education and income level rises, our service level has to rise to match it.

Pillar No. 2 - Leveraging on Private Enterprise. We let private enterprise operate the service. This is to take advantage of the financial discipline of the market, and their greater capacity for innovation and speedy execution. There were some suggestions from Steve Chia just now, or is it Low Thia Khiang, "Forget about profit motive. Move to cost plus". Yes, we can do that. But then it would immediately lose the incentives. Profit is not a dirty word. It is precisely because of profit that drives innovations.

From the discussion this afternoon, I gather there is not a good appreciation of the CPI + X framework. But time does not allow me to go into the nitty-gritty of this system. But the CPI + X system was precisely to allow us to incentivise operators to innovate and to seek out and benefit as much productivity gains as they could, subject to the framework within which they are entitled to certain price increases. Then, it is the job of the PTC to decide what is a reasonable rate of increase, and that is the CPI + X framework. So, if you fully understood what the CPI + X framework is supposed to achieve, all this discussion about profitability and so on is irrelevant. It has nothing to do with profitability. Within this CPI + X framework, we decide what is a reasonable rate of fare increases which is commensurate with the affordability level of the population, then it is the job of the operators to go all out to make profit out of this approved system. That is the only way to drive innovation. That is the only way to drive productivity.

Pillar No. 3 - Targeting Government Subsidy on Infrastructure. We provide a huge Government subsidy, but we have been careful to target it at infrastructure and capital investment. We cannot leave public transport purely to the market, because then many Singaporeans would not be able to afford the full fare of public transport. So there is a role for Government in funding, but we have deliberately not subsidised the operational cost of public transport. The operators will have to make the operation viable.

I was delighted to read the Streats' article last week, July 2, in which it quoted a Madam Soh Lay Hoon who stays in Jurong but works in Ang Mo Kio. Her house is about a 10-minute walk from the Jurong East MRT station. She can either walk there or take a feeder bus. She chooses to get up just a little bit earlier so that she can walk to the station in time. That way, she saves on shuttle fares every day. This is a very sensible, down-to-earth approach. Now, do we want to distort such sensible decisions by, for example, subsidising feeder fares?

Pillar No. 4 - Preserving the Independence of the Regulator. We set up an independent regulator to regulate the transport operators. When PTC was set up 15 years ago, there was a full debate in this House. I was then a young civil servant and I remember the debate. This House gave birth to the PTC. Mr Tan Soo Khoon and several veteran MPs in this House could claim paternity to the PTC. We know that public transport fares had to be adjusted periodically if we are to enjoy continuous service improvements. But fare adjustments are unpopular and we should try to de-politicise it as much as possible, if at all possible. In fact, a point was brought up during the debate in 1987 on whether some MPs should sit in the PTC. It was quickly rejected as unwise. Instead, the independence and professionalism of the PTC was stressed by several MPs, both during that debate, as well as this afternoon.

We can argue over the composition of the PTC, whether we could widen its representation to include, eg, grassroots leaders, as suggested by some MPs, or to exclude the transport operators. We can debate whether the PTC could have better explained its recent decisions to the people. We can discuss whether PTC should revise its modus operandi, eg, to make its deliberations more transparent.

There is nothing wrong in criticising the decision of the PTC. They have a difficult job of balancing, not profitability, but the long-term interests of commuters and the short-term effects on them. Inevitably, judgment has to be made. We can certainly disagree with PTC's judgment, as honest people would. But we cannot fault them for not being diligent. They are certainly not apologists for operators, as Mr Tan Soo Khoon put it this afternoon.

But we certainly should not inadvertently weaken the PTC by undermining the independence of this important public institution. To weaken the PTC will, in fact, be to go against commuters because PTC is there to protect them. We should strengthen PTC; we should not weaken it.

I, therefore, have grave misgiving about the Motion as currently worded. The first part on urging the PTC to review its decision must surely undermine it. If we over-ride the PTC, by getting it to reverse its decision, or even if by getting them to delay the hike, as suggested by, I think, Mr Leong Horn Kee, then what is the point of appointing the PTC? Fare Increases During Recession

But MPs are correct to say that the timing of the fare increase is bad, as we are still recovering from the recession. PTC is, of course, fully aware of the economic backdrop, but it operates on the principle that regular small fare increases are better than large infrequent increases. It is to make it easier for commuters to adjust. I support this principle. But PTC may want to revisit this principle, to see if there is scope to apply it with greater sensitivity at times of recession. Certainly, fare increases can be better explained.

I would, therefore, urge Mr Tan Soo Khoon and others to relook the Motion to see how it can be amended to make it clearer on the follow-up action of the PTC without undermining its authority or independence.

Mr Yeo Guat Kwang (Aljunied): (In Mandarin): Mr Speaker, Sir, in the face of globalisation of the economy and jobs are under threat, we are treated with waves of increases in prices and charges. Accordingly, this round of bus and MRT fare hikes gives rise to worries and concerns to the people. We should have no difficulty understanding why the people have so much grouses and unhappiness, despite the fact that the Consumer Price Index (CPI) has been dropping over the last six months. So, to a certain degree, the total cost of living has not been as bad as what many people have perceived it to be. But the more important thing is that the Government must assure the people that when times are bad, and when the people are pressurised with a rising cost of living, it remains pro-people and cares for the people. In this round of public transport fare increase, we can see that a lot of people are very unhappy. But the fare increases have already come into effect from 1st July. Any amount of argument and deliberation will not able to turn back the clock. It is a done deal. Or is it really so?

In my view, there are four lessons that we should learn from this round of public transport fares increase. They are:

(1) Implement only when all systems are ready.

(2) Balance between profitability and public interest.

(3) The timing is everything.

(4) The need for greater transparency.

Why do I say the systems are not in place? I say no because of two reasons. First, the implementation of the ez-link card is not fully on track. Senior citizens who have applied for the card have not yet received them. TransitLink only decided last week to issue interim cards to senior citizens. I am glad it has done so, as otherwise the senior citizens would have no choice but to pay higher fares using the existing magnetic farecards. But the problem does not appear to be confined to senior citizens. Students are also waiting for their ez-link cards to be issued.

Second, the teething problems of the ez-link card have not been fully resolved. Judging from various feedback, the problems with the ez-link cards faced by commuters are very real. My residents told me that adjusting the fares at this moment is unfair to the senior citizens, because many of them have yet to receive their ez-link cards they had applied for. This is to say that we are forcing the senior citizens to pay more when they use the public transport system.

Last week, it was announced that provisional ez-link cards would be issued to the senior citizens. I am not sure whether this can effectively solve the problem of these senior citizens. Moreover, the students are still waiting for their ez-link cards. Under such circumstances, many citizens are not able to use the ez-link card, and when they continue to use the TransitLink card, they have to pay higher fares. To them, the increase is not 3 cents but 5 cents. To those who are not used to the automatic system, they have to pay cash and, hence, to them, the increase is 10 cents. If we can wait until the ez-link card is completely in place, then make the fare adjustments, the inconvenience to the people will be reduced.

Secondly, we must balance between the transport companies' profits and public interest. People, in general, are unhappy with the fact that the public transport companies are asking for fare increase despite the fact that they are making huge profits and thus no urgency to increase fares. There is an article in the Straits Times suggesting that public transport should be a service to the people and not for profit. Therefore, there is no need to rush into fare increases at this time of recession. The article commented that the thing that hurt the commuters most was the Government's failure to see beyond rational argument and its inability or unwillingness to empathise with the people. These are strong words.

In another newspaper, Streats, a similar view was also reflected. It was felt that in recent years, the public transport system seemed to have lost its original direction. The writer said that fare prices and services should not be entirely determined by cost and profits alone. Should public transport operators be entirely profit-oriented? The writer claimed that our public transport policy has lost its direction, and this is a question that many people have raised and, I think, it is necessary for us to study the issues closely.

Undoubtedly, our public transport operators are listed companies. According to the public, they are making money, especially, recently, when the whole economic environment is bad, they are still profitable companies. Sir, let us look at the past records. There were no changes to the fares from 1982 to 1990. Between 1990 and 1996, the average fare went up by 1.3%. In 1996, however, it was reported that SBS and TIBS lost $9.6 million and $5.6 million respectively. Thus, in 1997, PTC agreed with the bus companies to increase the fares by 5 cents across the board. But in order to reduce the impact, the 1997 adjustment was only confined to the non-airconditioned buses only. For those who took airconditioned buses and paid with their fare-cards, they did not have to suffer the fare hike. As for MRT, only those who travelled with single journey ticket needed to pay 10 cents more. In the next three years, 1997-2000, the fare was not adjusted. I was particularly impressed that in 1999, the bus operators gave a 5% rebate to all commuters. Then, in 2000 and 2001, new fare stages were added, and commuters on feeder services had to pay 10 cents more respectively. Fortunately, with these moderated adjustments, the operators are still making money. The question is thus: why increase when they continue to make such high profits? I think this is one question that many people are asking.

I believe that many people are not happy with the work of the PTC. But, of course, we must also calmly look at the contributions by the PTC over the past few years. We must look at the facts objectively. Look at these facts:

• For those who use farecards, there has been no increase in fares for passengers travelling short distances below 14 fare stages, in airconditioned buses since 1990, the fares remained between 60 cents and $1.20.

• Over the past decade, fares have gone up primarily for long distances, so as to better reflect costs and cut down the indirect subsidy of short distances over longer ones.

• When fares go up in the past, those who use farecards continue to enjoy transfer rebates, thus minimising the impact of fare increases.

• In this round of adjustments, senior citizens travelling longer distances in the MRT actually pay less, from 70 cents to 64 cents.

In my view, the PTC has done a reasonable job drawing the line between profitability of transport operators and maintaining public interest, and allowing the operators to remain profitable without profiteering. But this begs a further question - last year, the PTC turned down the applications to increase fares due to the prevailing economic conditions then, why can it not do so again this year? After all, the economic situation has not really improved that much. Why can they not postpone the increase? Many people feel that the timing is wrong.

Timing is everything, especially when we have many bad news. The Ministry of Manpower has also told us about the highest record of unemployment in the second half of the year. The unemployment rate will be raised from 5% to 5.5%. To Singapore, which has been enjoying full employment for many years, this is a hard reality to accept. At this time, the announcement of fare increases will give rise to more concern and worry on the part of the people.

From another angle, I feel that PTC has not done very well to a certain extent this time round. In the past, whenever the fares were increased, some form of rebates for those who have to transfer from one service to another was given to compensate for the increased fares. But this time, they have not given any discount. I do not know why they cannot do it this time. To the ordinary workers, if they have to take a shuttle bus to the MRT and then hop on to another shuttle service to get to the final destination, the effect on them is not 3 cents, but 3 cents plus 4 cents plus 3 cents, ie, a total of 10 cents. So, to those who do not know how to use the ez-link card, such as the senior citizens, then it is 10 cents plus 10 cents plus 10 cents. So two ways, it is 60 cents. I do not understand why we cannot arrange for some rebates for commuters who have to transfer from one service to another.

Lastly, CASE has always been advocating strongly and consistently that there must be transparency in our commercial organisations. The PTC announced the fare increases on 11th June. So far, we have not heard further from them. No explanation has been given. So from 11th June until now, the various views have been expressed and reflected very strongly in the media. But the PTC and their operators have been keeping quiet all this time. Until two weeks ago, suddenly, they issued a long reply. My residents commented, "Such a long reply, how to read?". So, nobody knows what is actually happening. This is a very disappointing situation.

We often say, what goes up must come down. By the same logic, what goes down, must come up. However, people hope that this applies only on the share market. When we talk about bus fares and public service charges, it can only go up but never come down. People find this hard to accept. We must let our people understand why this is the case. I think some sort of clarification or explanation is necessary. Transparency is very important.

As in the film, "I Not Stupid", we must not be treated as though we are all ignorant people. If necessary, the authority must explain to the people so that they can understand. Let me give Members another example. On 2nd of July, there was a report in Streats where one commuter was quoted as saying, "If our people want to enjoy a world-class transport system and not willing to pay more, then it is a joke. Because we all know that there is no free lunch."

Sir, I believe that when prices are increased, if it is explained properly, our people will understand the situation better, and thereby be more amicable to such additional burden. We must not ignore the feelings of the people. We must explain to the people the circumstances why it is necessary to take certain action. The bus operators must also tell the people clearly, whether they have done their best to improve productivity to save cost. Mr Tan Soo Khoon had made a comparison with the Hong Kong situation - why Hong Kong could do it while Singapore could not. More importantly, if we do not explain clearly to our people, then more people will fail to understand and they would feel more painful, more disappointed and more worried.

Sir, overall, I endorse the principle that small increases from time to time are better than one large increase all of a sudden. But to most people, I think the adjustments here and there - a little bit here, a little bit there, a little bit everywhere - and if we add up all the little bits, it is one big deal. Many people find this hard to swallow. This is a very important issue that we must rectify and find a solution. Most importantly, I hope that the lessons learnt this round can be registered beyond this round of fare increase. They too are pertinent for other service providers, especially for those who are reported to be contemplating fee increases, such as school bus operators and SingTel. I hope that they can learn the lesson and increase their transparency, and they should explain clearly to the people the rationale for their intention.

Before I conclude, I would like to ask the Government a few questions. First, on statutory costs. From the public debate and public transport operators' reply, it appears that statutory cost is one of the key factors that drives up fares. My question to SMRT and SBS is: what is the extent of statutory costs in operating their businesses? Further, I understand that the Government has allowed public buses to enjoy concessions in road taxes and exemption from COE, why can the Government not exempt public buses from ERP charges? Surely, this will further cut down statutory costs and give one less reason for bus operators to increase fares.

Second, on the airconditioned bus interchange. SBS has clarified that the cost of building the airconditioned interchange at Toa Payoh was borne by the Government. I am concerned that operational and maintenance cost that operators have to bear in future can be very high, and it will become a key factor for future fare increase. My question is: what is the estimated operational cost of running an airconditioned interchange compared to a non-airconditioned one?

The SBS also said that it does not get any rental income from tenants at the interchanges and neither do the tenants help pay for upkeep of common areas. I have several questions to the Government: did the Government allow SMRT to get rental income from the tenants at the MRT stations? If so, would this arrangement be extended to public bus operators to offset cost of maintaining the interchange?

In its letter published in the newspapers on 24th June, the SBS said that "If we are able to work with the authorities to share some of the cost of maintaining the interchange for instance, it will also not be a factor when considering future fare increases." I was surprised by SBS' statement. If the Government can defray the costs of maintaining interchanges, SBS' operational costs will surely go down, and this must certainly be a factor for SBS to consider in future fare increase.

I hope that the SBS, LTA and the Minister for Transport can address the various questions that we raised in this House and those raised by the members of the public.

Mr Gan Kim Yong (Holland-Bukit Timah): Mr Speaker, Sir, while there are early signs of our economy bottoming out, it is still some time yet for a broad based recovery to materialise. The employment situation, in particular, is likely to worsen before it improves. The Government has repeatedly called on the people to be patient and flexible. We are asked to tighten our belts and accept lower pay so as to stay employed. We are urged to make sacrifices so that we could bring in new investments and restart the economy.

The people having been convinced, we took the bitter medicine, albeit with a bit of sugar. However, such sacrifices should be borne by all in an equitable manner. It therefore should not surprise the Government when our people reacted strongly when the various Government agencies and the public transport operators raised their charges one after another.

Sir, feedback from our residents showed that the decision of the Public Transport Council to allow bus and MRT to raise their fares has probably pushed our people over their tolerance limit. They came to me and said, "Towkay, tong mui teow loh ler."

Sir, they raised three issues with me. Firstly, they questioned the basis for the increase. Secondly, they wanted to know whether the timing of the increase is appropriate. Lastly, they were worried and uncertain about future increases.

Sir, firstly, the basis for the increase. The Public Transport Council claimed that the increase is in accordance with an agreed formula, the famous CPI + X. Questions were raised on the basis of this formula. Why should the PTC adopt a formula that allows the operators to increase their fares according to CPI increases, let alone the plus X factor? The Government has stated clearly that it is not its intention, nor its policy, to subsidise public transport and that the public transport companies should operate on a commercial basis. However, by adopting a formula that is pegged to CPI + X factor, is the Government not endorsing a form of subsidy, and yet this subsidy does not come from the Government, or from the commuters?

This is particularly hard to justify since both SBS as well as MRTC have been profitable. The fare increases will add a significant amount to their bottom line. Yes, we must allow our companies to make profit, even if they are providing essential services. These are what companies are for. Their shareholders must see a return. But their return must be taken in context. The reality is that many companies have suffered lower income, if not losses, over the last two years.

Take the listed companies, for example. On average, listed companies in the year 2001 saw a reduction of over 40%, on average, in their profits. Many of them have to adopt aggressive restructuring and cost reduction programmes just to stay alive. Some have to accept short-term losses to ensure long-term viability. These are inevitable outcomes in time of a severe economic downturn. If the public transport operators are truly commercially run, they will not be able to escape similar challenges. However, let us take SBS, for example. They suffered only a 20% drop in their profits in the year 2001. They have performed better than the market, in general. The public transport operators made proposals to the PTC for rate increases. But do the commuters have a chance to make proposals to the PTC, or representation to the PTC, to object to these increases, or to propose a reduction instead?

Sir, I would like to argue that a more equitable basis to determine bus and MRT fare adjustments should take into account the performance of the overall economy as well. Even if CPI goes up, which may be possible even in a recession, fare increases may still not be justifiable if the overall economy and companies, in general, are not doing well. This is, in fact, the situation we are in right now. Indeed, if the economic performance had been taken into account, the PTC might have taken a different view and its decision might have been different.

Perhaps we should consider introducing some competition. Singapore Airlines reacted very quickly to the changes in industry by initiating fare cuts to maintain its market share. They need to do this because of international competition. PSA also finally acknowledged the threat from competition and decided to reduce its fares. But there is no competition in bus transport or MRT. When we raised the ERP, commuters can choose not to drive and take the bus instead. But when we raised bus and MRT fares, our commuters do not have the alternatives. I would like to urge the Government to consider allowing some form of competition.

Sir, the second issue is regarding the timing of the increase. The absolute dollar amount of the increase may not be as much an issue as the timing of the increase. PTC should be applauded for its efforts in deferring fare increases in previous years in view of the difficult economic environment then. The economy has not fully recovered. In fact, it has somewhat worsened, especially in the employment situation. Many people have lost their jobs. More have taken a pay cut to save their jobs. With reduced income, our people would be very wary of cost increases, especially in the essential services.

Sir, we are like sailing through a storm in a boat, faced with economic difficulties. Yet, in the middle of the storm, the passengers were asked to top up their fares. So, the question is: is it the right time to ask them to top up their fares? As a result, many have wondered why the PTC could not have deferred the increase for, say, another six to nine months, when the outlook will be a little bit clearer. Alternatively, PTC could approve the increase but defer the implementation to next year. This way, commuters would also have more time to prepare for the increases and they would probably accept PTC's decision more readily, knowing that PTC has taken the current economic and employment situation into account.

Thirdly, our people are fearful of what else is there to come. First, the Government increased the ERP, citing its objective and intention to curb usage of private cars and to encourage the use of public transport. Then, we increased the public transport fares, apparently in contradiction to the Government's policy. In between, there were increases in HDB carpark charges, electricity rates and others. I understand that SingTel has also submitted application to increase its fixed line charges. With almost monthly announcements of rate hikes in one form or another, residents have become very wary of more such increases to come. They come away with a strong sense of frustration. Over time, the frustration will turn into desperation, and desperation will turn into anger and disappointment.

I would like to urge the Government to assure the people that it will critically scrutinise future increases in Government-related rates and fees and that, unless absolutely necessary, fee adjustments would be deferred until the economy recovers strongly. I would also like to urge the Government to disclose early impending fee hikes, if any, and to give more time before implementation, so that our people would have sufficient time to make their own plans or adjustments. It does not help to keep proposed fee hikes under wraps and spring a surprise on our own residents.

Mr Speaker, Sir, we understand that the PTC has a tough and thankless job. But its decisions will affect the entire population, some more than others. In fact, the lower income families will be affected more than those who own cars. It is, therefore, important for the PTC to take into account not just the CPI but all relevant factors, such as the economy and the employment situation, before arriving at its decisions. It should also be more transparent in its decision making process, so that our people can be assured that their interests are being taken into account.

The Government has been fearful of bending to public pressure and of adopting populist policies. But this is probably not an issue of whether the fare increases are popular or not. The issue is obvious: we are debating whether the approach is appropriate and the increases are timely. We are all talking about remaking Singapore now. So, let us acknowledge that perhaps the process of the fare hikes could have been better handled, and let us work together to improve the process. I believe that, this way, we will then be able to continue to enjoy the confidence, the endorsement and the commitment of our people.

Dr Amy Khor Lean Suan: Mr Speaker, Sir, let me state at the outset that, like many of my colleagues before me, I believe, on the whole, Singapore operates a fairly efficient and effective transport system. In general, despite occasional hitches and some desired service improvements, such as in the case of the LRT, buses and the mass rapid transit are comfortable, on time and carry commuters to their destinations without much fuss.

But the widespread unhappiness over the fare hikes - grudgingly accepted by many commuters from 1st July onwards, for lack of other options - cannot be dismissed as simply the grumblings of a complaining and self-serving electorate. The outcry has taken place amidst a very difficult and uncertain economic situation, a slew of pronouncements on fee increases and fears - repeatedly acknowledged by the Government - of mounting job losses. Even analysts, who are normally guided by hard numbers and cold rationale, were puzzled over the fare hikes, as both SBS and SMRT have registered decent profits for last year when the economy was in recession.

Ironically, this has also come at a time when civil servants are reminded by their chief of the need to formulate policies that are reasoned, ie, appealing to the mind and reasonable, ie, appealing to the heart. Or, to quote a Chinese phrase, he qing he li which, loosely translated, means "in accordance with emotional sensibility and logical reason". It is interesting to note that in the Chinese phrase "emotional sensibility" actually precedes "logical reasoning".

Without unjustly elevating the importance of this issue, I would venture to say that, in effect, there is a real danger that all the recent rhetoric of a more open, consultative and responsive government will fall on deaf ears, if we do not take heed of the emotional undertones surrounding this issue and squarely address them.

Sir, although my colleagues before me have already eloquently highlighted and debated on the many reasons for the public disquiet over the recent fare hikes, I feel that as this matter affects the purse strings of some seven out of 10 Singaporeans and tugs at the emotional heartstrings and logical reasoning of even non-commuters, I am duty bound to give my take on this matter, based on feedback I have received from my residents as well as other Singaporeans who have written or spoken to me.

I would like to particularly reiterate three nagging issues which, I hope, the Minister can address in order to allay public consternation over these hikes.

Firstly, the timing of the fare hikes. Quite apart from any reasoned, logical argument, the fare hikes, although small, should not have been approved in such times, when economic conditions remain harsh, the unemployment rate is growing and there is, to quote DPM Lee himself, "breakneck disquieting change". A deflationary environment generally gives rise to price falls, and so the combination of higher parking charges, higher electricity tariffs, higher GST and higher public transport fares is particularly hard to swallow. Furthermore, rising costs in many industries do not naturally translate into higher prices.

Ultimately, in a competitive environment, prices are set in the user market by the forces of demand and supply. For instance, as quoted by my colleague, Mr Tan Soo Khoon, the 25th June issue of Streats quoted the Chairman of the Singapore School Transport Association as saying, "The economy is so bad, how to increase fares? If parents cannot afford it, they might decide to send their children to school by other methods, and that will make it worse for us. Even if an increase is necessary, it would be better to wait until next year." Indeed, following this, the 2nd July issue of Streats further reported that the school bus fees will be raised by between $10-$40 per month, but probably from next year, when the economic storm would have most likely passed over. This begs the question: why can the public transport operators not do likewise? Granted there is, of course, never a good or right time to raise fares but, surely, the transport operators and PTC could not have picked a worse time. Indeed, many would agree that there could definitely be a better time to do so.

[Mr Deputy Speaker (Mr Chew Heng Ching) in the Chair]

6.10 pm

Dr Amy Khor Lean Suan: Secondly, on communication of the fare hikes. Sir, I am also somewhat concerned about the manner in which the PTC's decision on the fare hikes has been communicated, or perhaps not communicated to the commuting public. This, in my view, has exacerbated the problem and deepened the bitterness of the citizens. As one Singaporean wrote to me, it is not so much the issue of affordability that has got the normally passive "boh chap" public infuriated, but rather that it was uncompassionate and weakly justified. It went against the spirit of "he qing he li".

The PTC was reported as saying that annual reviews of fare proposals are the norm so that there should be no surprises from now on, implying that the public should be prepared for annual fare increases, thus giving ex ante justification to future hikes, even before they happen. Coming at a time when the Government is earnestly re-looking at every nook and cranny on how to reduce costs, this is an especially difficult pill to swallow. Furthermore, the rationale cited for the increase is that the higher fares are meant to cover public transport service improvements and wage increases. The public, and I myself, Mr Deputy Speaker, Sir, confess that we have great difficulty coming to grips with this line of reasoning at a time when many Ministers are urging wage restraint and belt tightening.

It has also been said that the bus and public transport companies need to earn a reasonable rate of return for their shareholders. What is a "reasonable" rate of return that is acceptable for public transport companies? It must be noted that the transport operators are much like monopolies for the routes they cover and, as one of the PTC's term of reference is to review applications for fare hikes taking into account the need for operators to remain financially viable, it would appear that the financial viability of the operators is virtually guaranteed. This being the case, the risk to the operators is low and, thus, the expected rate of return to the operators should also correspondingly reflect this low risk. Minister Yeo cited the practically default risk-free Government bond rate, and concluded that the 6% return that SMRT was expected to earn after the fare hike was "reasonable". Accepting the fact that listed companies need to show a reasonable rate of return and profit figures, it is conceivable that, like all business entities, these profit figures and, thus, the rate of return, would fluctuate over time. In fact, many private companies are losing money or just breaking even, under current adverse economic conditions.

Hence, in such times, it is only reasonable that transport operators should not expect their desired rate of return or the level of profit to be maintained. Therein lies the public's alarm over the justification that has been given - that public transport operators need to make a reasonable rate of return, as if maintaining their rate of return or level of profit is a birthright. It can, of course, be argued that public interest is not safeguarded if listed transport companies operate at a loss, since service standards will plummet and these companies, to protect their shareholders, will cut corners. While this may be true in the long term, it is hard to accept this in the short term when the transport companies are still showing healthy profits and when the rest of Singapore Inc. are reeling from the effects of recession.

Sir, I would like to ask the Minister if the public transport companies have proven to the PTC that they will be in the red in the next six to 12 months, if fares are not increased? If so, what are the compelling reasons and information that had been offered in support of their claim? Even accepting the rationale that small regular hikes are better than big jumps, have the transport operators shown the PTC that if the hikes were deferred for, say, a year, there would be a need for increases that would be so astronomical as to be clearly unpalatable to commuters? If so, what is the magnitude of increases they are forecasting?

Thirdly, I would like to highlight the issue on the role of the PTC. Like many of my colleagues before me, we feel that central to this whole debate about the fare hikes is the role of the PTC, which has come under the spotlight. In the present scheme of things, the PTC is the watchdog to ensure that the increases in fares are not excessive. The recent episode, however, does raise some questions as to what exactly PTC does in discharging its duties as a final arbiter in the pricing of public transport fares.

What exactly is the PTC's role? The Public Transport Council Act states that the PTC fulfills several functions, one of which is to review any application by public transport companies to revise fares.

Section 24 of the Act specifically states that in carrying out this review role, the PTC must take into account two factors, namely, the need for the applicant to remain financially viable and the need for public interest to be safeguarded. The Act does not spell out in what manner these two somewhat conflicting objectives are to be balanced. Presumably, that becomes an administrative choice for the PTC to make, having regard to the circumstances.

There is currently quite a widespread public perception that the scales have tilted in favour of the former, perhaps at the expense of the latter.

Another aspect of the PTC's role, which has come under scrutiny, is the formula employed to cap any approved increases in transport fare, CPI + X%. We are told that they rely on the formula of CPI + x% as a capping for the fare hike in any one year. X, we are also told, takes into account service improvements and is pegged at 1.5% per annum from 2001 to 2005. How is this 1.5% determined?

Given the formula, how does the PTC evaluate the case for fare hikes and how does it finally decide on the actual quantum of increases? What factors does it really consider?

Is this in the interest of the shareholders or the interest of the commuting public? How does the PTC ensure that all relevant factors, including the state of the economy and the employment situation are adequately and appropriately taken into account?

Furthermore, what is the nature of X? How does it account for service improvements? And by what measures are these service improvements determined? And whose measure is it, the transport companies or the commuting public? These are some questions that arise as one looks.

Yet, another aspect is the composition of the PTC. An examination of the present composition reveals that the majority of the members comprise professionals, academics and Government officials, many of whom, it would be fair to say, do not take public transport. The composition could thus be changed or widened to include more union members and grassroots leaders who are more attuned to the needs of the public transport users and thus can give better feedback regarding public transport service, reliability and ground sentiments.

All said, Mr Deputy Speaker, Sir, I think the Public Transport Council should be public enough for its deliberations and decisions to be made more transparent. After all, the PTC Act states that every member, officer and employee of the Council shall be deemed to be public servants.

It would therefore not be too much to ask the PTC to solicit as much feedback as possible, especially from commuters and those that can appropriately represent them before any decision on fare hikes is made.

Additionally, the PTC must list and explain in greater detail the factors it considers when deciding on such changes. In order for the decision to go down well with the public, it must be reasoned and reasonable. Surely, the public interest is served by doing so.

Ultimately, because our system is a monopoly, the real answer must lie in the controlled introduction of a competitive element that acts as check and balance price increases and the degree to which the so-called service improvements are truly what the consumers desire. A watchdog can only do so much.

It is noted that the Minister for Transport has already indicated that the Government is prepared to allow additional players to operate feeder services in HDB towns on a trial basis. Sir, I would like to urge the Government to implement this as soon as possible to inject more competition, provide commuters some choice and also establish additional pricing benchmarks.

Sir, in conclusion, I would like to urge this Government to re-look at our public transport policy and make changes, such as to the mechanism for fare increases so that equity, as much as efficiency, will characterise our approach to the electorate.

With regard to this current unfortunate increase in public transport fares, I appeal to the Government to prove the cynics wrong by taking concrete steps to show that it has listened to the people and taken heed of their concerns and frustrations. I would urge the Government, at the minimum, to look at ways to mitigate the impact of the recent fare hikes, particularly on Singaporeans who cannot afford the fare increases, such as the unemployed and the poor.

Sir, I beg to support the motion.

Assoc. Prof. Low Seow Chay (Chua Chu Kang): (In Mandarin): Mr Deputy Speaker, I support the Motion standing in the name of Mr Tan Soo Khoon. Our recession has not fully recovered. Many ordinary citizens are faced with the predicament of wage-cut or retrenchment and, all of a sudden, the Public Transport Council announced that it had agreed with the public transport operators' request to increase the bus and MRT fares. The reason given for the fare hike was that the profit was not enough for the operators.

At this time of difficulty, increasing the fares of the bus and MRT is adding more problems to our citizens. On top of that, there were various increases, for example, refuse charges, electricity tariffs, etc. So, people cannot help but ask why has the Government not taken into consideration the problems in this time of recession. The Government should be more sensitive in dealing with all future price increases.

With this recent increase in bus and MRT fares, on the surface, it is just an increase of three cents per trip. But, taking a conservative number of three million passenger-trips per day, there is an additional $24 million of profit after tax for the operators. What is the implication of this? Now, the public transport company's net profit is about $100 million. This three-cent adjustment would have generated an additional 24% increase in the after-tax profit for the public transport operators. As it is, the public transport operators are already making profits, the 24% increase would push the profits to an unbelievable high figure. Why do I say that? From the annual report of the SBS bus company, we could see the net tangible asset per share has increased by 10 cents every year, from 30 cents in 1997 to 60 cents in 2000. It meant an average growth of 25% in the NTA every year. The same was also reflected in the annual net profit after tax from 1998, 1999 and 2000. The after-tax profit is more than 20% of its net assets. These public transport operators have earned more than 20% in profit from our commuters, and yet they feel that this was not enough. They want to increase another 24% in their profit through this fare increase. If they do this now, it is very insensitive and many people are already saying that these public transport companies are too greedy. The bus companies are earning more than 20% of profit. Is it reasonable?

This is a very interesting question. As we all know, in all investments if the risk is greater, the return must be higher; otherwise, the investors would have lost everything if anything goes wrong. But for those investments with little or no risk, should the return on investment be as good as those with a high risk? This is something that the PTC should look into. As we all know, if we want to invest conservatively in a safe and secure environment, we can always put our money in fixed deposits or buy some securities or bonds. We can only earn about 5-6% in returns.

But let us look at the public transport operators' investments. There are a few characteristics. First, in Singapore, there are two monopolised territories for these two companies to operate. Sir, the citizens have no choice. They have to take the bus services provided by these two operators. There is definitely no competition in the market and through TransitLink, Government had restructured all those unprofitable routes to cut loss and, of course, their profits would go up. For those bus routes which are not so profitable, they can use other means. For example, they would ask the PTC to make some fare adjustments so that their profits could be secured.

This is a sure-win investment for the public transport companies. The risk is almost zero. In a risk-free investment, yet they are making profits of more than 20%. In my personal view, their profit is much too high. I hope that the Government could look squarely into this matter. Do not allow these public transport operators which are operating on a monopoly and with no risk any more protection to secure hefty profits. We should alleviate the burden of the commuters.

This present round of price hike is wrong, in timing and in magnitude. I think the PTC should look seriously into this matter. They should not side the operators at the expense of our commuters. I think they should look after the interest of the commuters first, the ordinary citizens of Singapore.

Mr A Nithiah Nandan (Nominated Member): Mr Deputy Speaker, Sir, I was a member of the Cost Review Committee. It was convened twice in 1993 and 1996. At that time, people were very unhappy about the cost of living. In 1996, people were concerned about transport cost. At the same time, they were concerned about other costs - medical treatment, housing, education. The Cost Review Committee also looked at the plight of the poor and the elderly. It also studied household debts and warned against over-consumption in housing. The impact of GST was also examined. The reports of the Cost Review Committee are still worth reading. Perhaps the relevant Ministries can update the information. This would tell us whether costs have gone up unreasonably and whether anything needs to be done. A study of the old reports would also tell us the basic components in the cost of different services. I think it would be good for all Singaporeans to understand these bread and butter issues.

Sir, people are unhappy today because they are worried. Business in the HDB heartlands is still poor. Workers are worried about jobs. Wages have been trimmed. So, of course, they worry when prices go up. And public transport cost is a big item of expenditure. They have to spend on transport every day. So, when fares go up, they get very upset. They worry more about whether they can cope. Worse still, what if they lose their jobs?

The feedback I got is not that they object to fare increase. They know that fellow workers in public transport also have to earn a living. What people are unhappy about is the timing. Is the fare increase reasonable? Sir, the Cost Review Committee recommended that fare increases be made in small steps so that people can cope.

Last year, for those who paid cash, feeder bus fares, ie, airconditioned buses, went up by a big jump, from 60 cents to 70 cents. That rankles, and it still rankles. Now, it goes up another 10 cents, together with other fare adjustments. The story is the same for non-airconditioned buses. It went up from 50 cents to 60 cents, and now to 70 cents. Those who use the ez-link card can now pay 58 cents for non-air-conditioned buses and 63 cents for airconditioned buses. After one week, most commuters find the change not so significant, but there are others who do. The feeder bus fare is still high in their view, especially for short distances. I think the problem is not whether the fare increase is large or small. It is how it is implemented. Why the hefty jump in feeder fares? Hardest hit are the housewives and retirees. Why not small steps? I cannot understand why the old fare card cannot allow increases of less than 5 cents. If there was a software or hardware problem, why was it not fixed earlier?

Now, there is the ez-link card. It is new. Surely, the public transport operators must expect teething problems in implementation. If so, was it wise to raise fares at the same time? Do they know that those who do not use cards are the poorest Singaporeans? They cannot afford it. They do odd jobs, and so they do not have enough money to store in the card, or they are afraid to use it, especially the old. So they use cash. The fare increase is highest for those who pay cash. So those who cannot afford it are the ones who pay most. Should not the public transport operators do something for them? The basic issue seems to be not so much whether fares can go up, but the timing. How it is done, and whether public transport operators understand their customers? Maybe it will help if the public transport operators appoint one or two laymen, people who can understand their customers, on the Board of Directors. Maybe it will also help if there is more than just one unionist on the Public Transport Council to provide a stronger voice for the working class.

Mr Seng Han Thong: (In Mandarin): Mr Deputy Speaker, Sir, when someone mentions 9-11, we know he is referring to the tragedy that happened to the World Trade Centre in New York, an event that shocked the whole world.

In Singapore, an announcement by the Public Transport Council (PTC) on 11th June created a storm in Singapore, and the general public here responded almost immediately with unhappiness, to a magnitude rarely heard of in the past. I shall call it the "6-11" event.

The people, in general, commented that what should not have gone up, have gone up, but those that should have gone up, do not go up. In a time of economic downturn, the various charges - tariffs, fees, prices, bus fares, parking, ERP etc, - ought to have gone down to alleviate the burden of the people, but they have gone up instead! Other things such as wages, share market, etc, should have gone up, but they tumbled down.

This "6-11" event has brought about a big debate in the media and at the coffee shops. As to the media debate, generally, we see all sorts of topics discussed and debated in the various language newspapers. But since 6-11, we read nothing but complaints and arguments against the bus and MRT fare hikes. We have read the reply of the Prime Minister, the Minister for Transport and other leaders. As mentioned by some Members of Parliament who have spoken before me, members of the public were asked whether they had read and understood these explanations. More often than not, they would reply that they had not because the speeches were complicated or too lengthy. Those who had the time to read these speeches did not understand them. Those who could understand them did not read them. This is what the Hokkiens would say, khua bo (see no), and bo khua (no see).

The general feeling, as reflected in the media, is that the Government has its reasons but it cannot explain it clearly to the people. In the coffee shops, we hear people complaining that the Government has not been fair to them. They said, "The Government says business cost is high. To save the companies and our jobs, they cut our wages. They compare our wages to those in China. Then, when Government says our bus fares are cheap and affordable, they compare them to those in the United States and Europe. Why does the Government not compare our bus fares with China and Vietnam, and our wages with Europe and USA instead? You cannot compare our durian with the lychee in China, and our pineapple with the grapes in the USA. Let us compare apple with apple, or orange with orange."

After "6-11", whether it is in the public media or in the coffee shops, the general feeling is unfavourable to the Government. While the Government has the reasons but cannot explain them, the people have their grievances and who is going to listen to them.

We have so many Members taking part in this debate on the Motion. I am joining in not just to add a number. I also have something to say. I had taken public buses during my school days. To get home from school, I had to take two buses. Very often, in order to save 5 cents, I would walk all the way from Tuan Mong School in Tank Road, took a short-cut and cut across Fort Canning Hill to take a bus along Dhoby Ghaut to get home. This was to save one bus-trip from Tank Road to Dhoby Ghaut. On one occasion, I was robbed of my wrist-watch when I was walking across King George V Park. My father bought me another watch. It was subsequently that I learnt that he had to borrow money to buy me the watch, as he realised the importance of keeping time. So, I empathise with the poor people. I know and could appreciate that to the poor people, 5 cents is not a small matter. To them, every cent counts. Of course, time has changed.

I was a Director of SBS for three years. I subsequently resigned to avoid a conflict of interest. During those three years, I had the opportunity to learn and understand the operation of the SBS. At one of the shareholders' meetings, a shareholder asked, "I have been buying your shares, why are your share prices not going up? What have you people been doing? I am an old man. Why is it that you never give concessions to the senior citizens? Why is your dividend so little?" These three questions are easy to answer. You want your share prices to go up, you must make more money. When you make more money, you can then give more dividends. When you want to make more money, you cannot afford to give concessions to the senior citizens or even the shareholders. You have the answer, but it hurts the feelings of people. I know the difficulties of the bus operators.

Even now, I occasionally travel by public buses. People have asked me, "You are a Member of Parliament, why are you taking public buses?" I do so to have a first-hand feel of the bus commuters. I have a better understanding of the behaviour of the commuters and their expectations. I realise that our bus services have changed, but there are certain aspects which remain unchanged. Mr Khaw Boon Wan said that there were some misconceptions over the grounds for this round of fare hike, and he mentioned the four pillars of the public bus services. I agree with his views.

Mr Deputy Speaker, Sir, in this debate on the Motion before the House, there is no question of who wins or who loses. At the end of the day, all of us in this House, and the people outside this House, will have a better understanding of the rationale and background of the decision-making process. I say after the debate, we will be clearer about the reasons and Singapore can progress. To complement SMS Khaw Boon Wan's four misconceptions and four pillars, let me present my four views.

First, the Government must know the background of the people they talk to. The feedback is that the Ministers' speeches are long, and the Ministries' press releases too technical and too academic - too many statistics, too many figures. People do not understand. When they do not understand, there will be misunderstanding. Ministers and senior civil servants must know who are the people they are talking to. Speak the language they understand, so to speak. We must tailor our text to suit the audience.

Secondly, check the timing whenever you want to increase fees. We are not against fare increases but please, pick the right time to implement them. This time round, we see and hear price increases, one after another, and sometimes everyone is rushing to increase the fees, and at this time of recession too! So, when we want to up the prices, we must look at the timing. The timing must be good.

Thirdly, we must see long term. Both the people and the Government must always bear in mind the long-term implications of all changes. Just now, former Speaker Mr Tan Soo Khoon said that people were remarking that all these price increases were carried out only after the General Election. If we are not careful, one of these days, the PAP may just disappear, and it will be a very sad day indeed. So, do we want the PAP Government to disappear just because of this fare increase? One must look at the long term.

Finally, I hope that the enterprises, the Government and the people will look at the big picture. Our region is in trouble. We are in for uncertainty. Everybody must look at the big picture. This is very important.

In short, my four views are, first, the Ministers and senior civil servants must know their target audience when they speak. Secondly, when we increase prices, we must watch the timing. Thirdly, when we do things, all must look at the long-term implications; and, fourthly, everybody must look at the big picture.

SMS Khaw Boon Wan talked about a woman who chose to walk instead of taking a feeder bus. Let me tell a little joke to conclude my speech. When the fares for feeder bus went up last year, some people remarked that instead of taking the feeder bus, why do you not chase after them instead of riding in it. This way, you keep fit and, at the same time, save on the bus fares. That being the case, why chase the feeder bus? Why do you not chase the taxis instead? This way, you save more!