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Fare reduction in 2016? Dream on?

In Infrastructure on 26/01/2015 at 4:45 am

Transport Minister Lui Tuck Yew said last Monday that commuters could see fares fall by about 1% in 2016 because of a drop in energy prices last year.

Three amber signs that this will not happen? Or should that be three straws in the wind? Constructive nation-building CNA carried three stories on 22 January and 23 January that could indicate that even if oil prices remain at the US$50 level (or even below US$100), public transport fares will rise.

Fare review formula review : PTC

The overhaul of the bus industry would require the fare review formula to be relooked, with the Public Transport Council (PTC) having to consider, among other things, whether to apply different sets of fares for a period of at least a few months in 2016 when some bus routes would be under the new bus contracting model while others would not.

The bus contracting model – under which the Government will own all bus operating assets and collect the fares, while operators run the services – will be implemented in phases, starting from the middle of 2016.

Three packages of routes, making up about 20 per cent of routes, will be tendered out first. The remaining 80 per cent will be grouped into nine packages, which will be run by incumbents SMRT and SBS Transit on negotiated contracts under the contracting model, for about five years after their Bus Service Operating Licences expire on Aug 31 next year. After the negotiated contracts expire, more bus services will be gradually tendered out.* (CNA)

“Energy costs are not the biggest contributor to fare rises”

So said Nanyang Technological University transport economist Walter Theseira in another article

SIM University’s urban transport management expert Park Byung Joon said bus and trains operations are not making “huge money”. “We are not in the government contracting model (for buses) yet, we are still in the operating mode (where) the expenditure has to be recovered from fares,” he added.

Dr Theseira said a large part of the increase year to year is usually due to the rise in labour cost and other operating expenses, while fuel cost is not a “large explanation” for the increase in prices over time.

While energy prices have been high over the past few years, they have also been stable. “Usually, year on year, public transport becomes more efficient, so the fuel cost component will be dropping over time,” he said.

National University of Singapore transport researcher Lee Der Horng said while no one likes to see a hike, there is a price to pay if Singaporeans want to see a better public-transport system. “And I think the key thing in this whole exercise is that the authority or Government must make sure fares are affordable, especially to low-wage workers, minority groups, senior citizens and students>”

Fares not tied closely to changes in oil price.

That is a key finding of a study by Boston Consulting Group, which shared the report exclusively with Channel NewsAsia.

Boston Consulting tracked changes over the past 17 years and it found that bus and MRT fares increased at a much slower pace than oil prices.

[W]ages rose steadily between 1997 and 2014 – the Consumer Price Index (CPI) rose at a slower pace for the first 10 years, before picking up pace from 2008. …fare increases have lagged behind wages and consumer prices … fare increases kept pace with CPI for about the first 10 years, before slowing down. It added that Singapore is one of few cities in the world that keeps its transport costs low.

“The state actually invests in majority of the infrastructure – so the MRT, LRT lines, the bus interchanges, they have been built by the state there is an expectation that the public transport operators should achieve efficiency and productivity improvements every year,” said Partner and Managing Director of Boston Consulting Group Singapore Dinesh Khanna.

“So even if you are expecting inflation to go up, fares should be growing at rates lower than inflation. Over the past few years, the state has also subsidised and put in place more concession fares for the senior citizens and other important interest groups.”

So are we screwed yet again?

Maybe an election in 2016 will stay the instincts of the Pay And Pay administration?

Finally MPs who can afford not to take public transport (think monthly allowance of S$15,000 each which makes them outearn president Xi: they each earn in two months whay he earns in one yr) pontificate

MP Seng Han Thong, who is deputy chair of the Government Parliamentary Committee (GPC) for transport, said the middle-income group would be most affected by the fare hike. However, as buses and trains improve connectivity, it would benefit this group.

GPC chairman Cedric Foo (Pioneer) added that those who “fall between the cracks”, such as the jobless, could apply for public-transport vouchers.

MP Lim Biow Chuan noted that a person who takes two public-transport trips a day would see increases of about S$1 a month. “It’s still bearable.”

What are you waiting for? Go buy SBS, ComfortDelgro and SMRT.

————————–

*Rest of article

RELOOKING THE FARE REVIEW FORMULA

The existing fare review formula is valid from 2013 to 2017, but PTC Chairman Richard Magnus said it could be relooked before the new model is implemented. He added that it would be a challenge to review fares for the routes under the existing and new models, as well as those in transition. “We will need to begin to rethink how fares will be then,” he said.

On whether there would be different sets of fares, he cited social equity and distribution as factors for consideration.

Nanyang Technological University transport economist Walter Theseira said that under the new model, the Government could keep fares down, “effectively throwing money into a loss-making operation”. “It changes the nature of how subsidies are provided to the system,” he said.

National University of Singapore transport researcher Lee Der Horng said there was also room for the PTC to make the formula more responsive to inflation, wage levels and energy prices, though he acknowledged that it takes time for the relevant data to be available. Under the existing formula, there is a one-year lag in the indices used for computation.

SIM University urban transport management expert Park Byung Joon saw the merits of the current approach. “The whole idea … is that we want to avoid a situation (where there is) see-sawing (of fares) every time fuel prices go up and down.”

 

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  1. Wait till 6.9million and ERP will be $100, COE more than a million and retired sinkies sell their HDBs and move to Batam!

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