SMRT

Column: 465

SMRT

4.

Mr Steve Chia Kiah Hong asked the Minister for Transport what is the justification for the 175% increase in SMRT's first quarter profits, considering that the projections made at the time of the application for higher fares were that SMRT would run at a loss, or at least become less profitable unless the fare hikes were approved.

Mr Yeo Cheow Tong: The Public Transport Council (PTC) has put in place a robust framework to regulate bus and train fares to ensure fares remain affordable to the public. In approving fare increases, it has to balance commuters' interest and the long-term viability of the public transport operators. All fare proposals are scrutinised stringently to ensure that fare increases are soundly justified on the basis of unavoidable cost increases and investment in service improvements.

In the 2002 fare review, the PTC was satisfied that operating costs of SMRT trains and buses (then TIBS) had increased significantly in the previoustwo years due to inflation and investments in service improvement. It was on this basis that SMRT was granted a fare increase of 2.5% for trains and 2.2% for buses (then TIBS). The increase was within the annual fare cap of 2.5% derived from the CPI+X formula, and much lower than the 6.9% actual increase in cost incurred by the operators.

SMRT has explained its first quarter profits as part of its quarterly release of financial results and in response to letters in the forum page. As highlighted by SMRT, its profits in thefirst quarter of 2003 were badly depressed because of the SARS outbreak. In addition, it had benefited from various cost cutting measures such as the delayed replacement of non-safety related assets and reduction in staff and related costs like the CPF cuts. In fact, because SMRT was able to undertake stringent measures to contain operating costs last year and achieve a profit, there was no need for a fare increase this year.