BUS AND TRAIN FARES (Subsidy)

Mr Steve Chia Kiah Hong asked the Minister for Transport whether bus and train fares will be subsidised to lower the transport cost of workers if employer's CPF contribution rate is reduced by 6%.

The Minister for Transport (Mr Yeo Cheow Tong): Sir, the Government already heavily subsidises public transport by building and paying for the infrastructure, such as MRT stations and lines, bus interchanges and bus stops. For instance, the Government has spent over $10 billion to put in place the current MRT infrastructure. Without such subsidies, public transport fares would have to be much higher than what they are today. However, we do not subsidise the day-to-day operation of public transport services. This is to instil prudence, financial discipline and efficiency in the operators.

With over one billion trips made on public transport every year, it would cost taxpayers more than $100 million a year, if the Government were to subsidise fares by a mere 10 cents per trip. This is not sustainable. Besides, not every commuter requires this subsidy. It is better that we directly help those who are in real need through the public assistance scheme and other community financial support programmes.

The Government, the Public Transport Council and the transport operators are all aware that public transport fares need to be kept affordable, particularly during tough times. This is why there was no across-the-board fare revision this year. Also, arising from the Public Transport Council's efforts to moderate fares over the last 16 years since the Council's formation, overall fare increases have lagged significantly behind wage increases. Over the 15-year period from 1987 to the end of last year, fares for an 8 km trip on the bus increased by 14% (from 90 cents to $1.03 cents) while the same distance trip on the train increased by 30% (from 80 cents to $1.04 cents). In comparison, wages increased by almost 140% over the same period.

Let me assure Members that the Government will continue to review measures to help companies reduce their overall costs. In fact, one such measure will be announced by the DPM shortly.

Mr Steve Chia Kiah Hong: Sir, does the Minister agree with me that the Government can show greater appreciation for the workers' cooperation to the CPF cut by subsidising transport cost for the workers? Just as the workers are asked to tighten their belts, would the Minister agree with me that the Government also needs to do its part by helping to look into reducing the transport cost of the workers?

Mr Yeo Cheow Tong: Sir, as I have said just now, in fact, we have done a lot to ensure that the transport cost over the years has been kept under control. And as I mentioned just now, wages increased by 140%, bus fares increased by 14% and MRT fares only increased by 30%. So, we have done a very good job of ensuring that the fare increases are far below the wage increases.

Yes, the Government is concerned about the impact of the CPF cut. But, as we have mentioned, the CPF cut is to ensure that we are able to restructure the economy and help create jobs. This is the best way for the Government to help the people.

In terms of support, yes, the Government is looking into ways to provide additional support to the people. And if Mr Chia is patient, he will get news of this later on.

Mr Steve Chia Kiah Hong: Sir, does the Minister agree with me that looking from a group perspective, the transport companies - SBS Transit and SMRT - do not need the high fares on the NEL and the trains to survive, but that they do need high fares to continue to produce good profits for its shareholders?

Mr Yeo Cheow Tong: Sir, I think any analyst looking at the profits of the two transport operators will tell us that their profits are not astronomical. In fact, if we look at their return on capital applied, we will find that the return on capital is actually not high at all. In fact, it is very low.

Mr Steve Chia Kiah Hong: While there may be a low return on capital, would the Minister then agree with me that there is still profit? And if we are to change the transport operators and make them private as a not-for-profit company, the operators can then run their buses and train lines for years without having to raise any future fares?

Mr Yeo Cheow Tong: Sir, companies are set up to be viable. Even if the Government runs a company, we have to make sure that it is viable. Because if it is not viable, who is going to bear the cost of running that company? It must be the taxpayers. Do we want that in Singapore? The answer is no. It is better to leave it to the private sector. They will run the companies properly and ensure that the commuters have a good service at a very affordable fare. We went through this last year when we debated the bus fare increase and we have shown that the transport cost in Singapore, for the quality of service that we are getting, is actually low compared to many other cities elsewhere.

Mr Steve Chia Kiah Hong: Sir, the Minister just now said that if we subsidise 10 cents per trip, it will cost about $100 million a year. Can I clarify with the Minister whether the LTA is making big money for having awarded a $324 million 15-year contract to an advertising firm to run advertisement space in the 3,000-over bus stops and taxi shelters, whether this revenue can be used to subsidise transport companies, and where does the money go to?

Mr Yeo Cheow Tong: Sir, where does the money to build roads that Mr Chia travel come from? It is from taxpayers and from the other revenues that LTA raises. The money goes to paying for the building and repairing of roads, the street lights that we get from dusk to dawn, the building of the MRT system. That is where the money the LTA gets goes into. It does not go into anybody's pocket. Eventually, it goes to better the life of Singaporeans by providing them with a very good land transport infrastructure.