I refer to the article "SMRT, SBS apply to raise bus, train fares" by T Rajan(Straits Times, Aug 2).
Imposing fines on transport operators may result in the additional costs of meeting the new service standards and fines being passed on to commuters.
A more effective deterrent to ensure service standards, may be to peg some element of failure to meet service standards, to the formula for fares adjustment.
For example, service standards lapses, may be equated to a slight drop in percentage, for the 50 per cent of wage increase and inflation in the fares adjustment formula, or a reduction in the maximum 1.7 per cent fares increase allowed.
With the recent increase in taxi fares, more people may take buses and the MRT.
Consequently,the revenue and profits of transport operators may rise.
Therefore, I would like to suggest that more time be given to assess the impact of the taxi fares increase, before the Public Transport Council (PTC) makes a decision on the fares increase application.
The main reason given for the fares increase, is the rising costs of diesel fuel.
Why not consider reducing the tax on diesel, so that it can be passed on to commuters ?
The fact that the cost price of Ultra-low sulphur diesel has fallen substantially since April, by nearly US$9 to US$86 a barrel, should also be considered.
The fare adjustment formula is pegged to the change in average wages and inflation (CPI).
It is the lower-income group that has no choice but to use public transport.
Therefore, I would like to suggest that some adjustments be considered to take into account the declining wages and relatively higher inflation of the lower-income group.
Although workers were paid 4.3 per cent more last year, household incomes for the 11th to 20th percentile fell 4.3 per cent per annum from 2000 to 2005. The 21st to 30th percentile dropped by 0.5 per cent and the 31st 40th percentile rose by just 0.3 per cent.
As to inflation, the lowest 20 per cent group's CPI rose by 1.6 per cent per annum, compared to a decline of -0.6 per cent for the highest 20 per cent income group. Last year, these two groups'inflation was 1.3 and – 0.1 per cent respectively.
The CPI increase for the lowest 20 per cent group, was the highest amongst all income groups.
If this trend of declining wages and higher inflation continues, the current formula may hit the lower-income most in the future. As there are about 420,000 cars (390,000 private cars plus 30,000 other cars) in 2004, according to the Land Transport Authority's web site, instead of just taking the CPI and wage increase of the entire population, more weightage should be given to reflect the CPI and wage change of those who have to use public transport.
The cost of living has also climbed with Singapore moving from 34th to 17th position in 2006, according to the Worldwide Cost of Living Survey 2006.
There has also been a slew of increases recently,for electricity, refuse collection fees,hawker food prices with the upgrading of several market and food centres,and taxi fares.
The resident unemployment rate has also risen from 3.4 to 3.8 per cent, with 87,600 Singaporeans and permanent residents unemployed.
SMRT's fiscal first quarter profit rose 6.8 per cent to $27.4 million, and Comfort Delgro, SBS Transit's parent group posted a net profit of $55.3 million for the quarter ended March 31, 1.3 per cent higher than a year ago. These are even before the taxi fares increase which may further increase ridership and profits.
The rising profits of the transport operators, which I understand has been the case after the previous two fare hikes, should also be taken into account in the formula.
In the final analysis, perhaps, the ultimate measure of whether the formula is fair, is whether the transport operators' profits continue to rise.
The buses and MRT are essentially a monopoly as there is no duplication of routes. The fare adjustment formula enables operators to keep increasing fares and profits, because rarely has there ever been a year when both average wages and inflation have declined.
Leong Sze Hian
