Who will bear the cost? Chee Hong Tat shares why suggestions on freezing public transport fares are 'not sound'

Proposals on expunging, or even freezing future public transport fare hikes are "not sound", Acting Transport Minister Chee Hong Tat told Parliament on Tuesday (Oct 3).

Such measures will affect the longer-term reliability and financial sustainability of the public transport system to the detriment of Singapore and Singaporeans, he added.

On Sept 18, the Public Transport Council (PTC) announced that starting Dec 23, public transport fares for adults who pay by card will rise by up to 11 cents, with the overall cost of bus and train rides going up by seven per cent.

Although public transport operators SBS Transit and SMRT Trains had applied for the full 22.6 per cent hike in 2023, PTC said that the remaining increase of 15.6 per cent will be postponed to future fare review exercises.

After the announcement, several Members of Parliament (MP) had filed parliamentary questions on this issue, as this year's fare hike is the steepest since the one in 2019. The 11-cent increase is also the highest on record, according to The Straits Times.

In Parliament, MP Louis Chua (WP-Sengkang) asked whether there are plans to expunge the 15.6 per cent fare increase that was deferred.

MP Don Wee (PAP-Chua Chu Kang) asked if the PTC can impose a moratorium on future fare increases, since the public transport operators have been profitable over the past years.

But Chee expressed his concerns about these suggestions, pointing out the public transport fare formula reflects "real cost" increases in Singapore's economy, such as energy costs and wages.

"If the deferred fare amount is 'expunged', as Mr Louis Chua proposed, or if fares are frozen for future years as Mr Don Wee suggested, it does not mean that these costs of running the public transport system will simply disappear into thin air," the Acting Transport Minister said.

"I would like to ask Mr Chua and Mr Wee to clarify whether they are proposing for the operators to absorb this cost, or for taxpayers to bear a larger cost burden to provide higher government subsidies on a permanent basis?

"If it is the latter, they should elaborate how such a move will be funded every year and whether they are proposing for Singaporeans to pay additional taxes to do so? I hope that is not what they have in mind."

Chee shared that bus services in Singapore are operating at a loss which means that the Government needs to provide about $1 billion in subsidies for buses every year.

SBS Transit reported a loss of several million dollars for their rail operations while SMRT Trains reported an operating profit of $6 million, which represents a profit margin of less than one per cent.

Making "populist moves" of expunging or deferring future public transport fare hikes will result in larger losses and higher government subsidies, said the Acting Transport Minister.

"It's not the responsible thing to do. We need to be clear that government subsidies are ultimately borne by current and future generations of taxpayers."

To ensure that public transport remains affordable for commuters, Chee said that concession groups such as seniors, students, lower-wage workers and persons with disabilities enjoy discounts of up to 70 per cent off adult per-journey fares.

The transport ministry will also introduce measures, which are expected to benefit about 60,000 commuters, such as a new discounted Workfare Transport Concession Scheme monthly pass. 

After the price hike, the PTC will also require rail operators to contribute a proportion of their increased fare revenue to the Public Transport Fund - a total of $16 million in the coming year.

The monies will be used to provide Public Transport Vouchers to help cushion the impact on lower-income households, said Chee.

ALSO READ: Singapore transport fare to rise by up to 11 cents: 8 tips to save money on bus and MRT fares

chingshijie@asiaone.com