Saturday 25 February 2012

Budget 2012 - Boosting Bus Capacity

'Most of 800 new buses to roll out in 2 to 3 years'
By Christopher Tan, The Straits Times, 22 Feb 2012

THE majority of the 800 additional buses which the Government will co-fund to expand capacity will likely be rolled out in the next two to three years.

Sources close to the discussions between the authorities and public transport operators told The Straits Times yesterday that the remainder will arrive within the announced five-year time frame.

Of the 800 buses, 550 will be paid for by the Government, and the rest by operators SBS Transit and SMRT Corp.

The additional buses, equivalent to 20 years' worth of fleet growth, will bump up the public bus fleet by 20 per cent. Their arrival depends on how quickly bus manufacturers can supply the fleet, and - more crucially - how quickly drivers can be hired.

All in, the Government is handing out a $1.1 billion aid package meant to cover the operating costs of the vehicles over 10 years. It is understood to include salaries for drivers.

Finance Minister and Deputy Prime Minister Tharman Shanmugaratnam had announced the measure in his Budget speech last Friday, and had said the $1.1billion was a 'one-off' measure.

For the bus operators, it will not be a case of generating additional revenue out of capital assets they will have obtained for free. Sources reckon the operators will be 'persuaded' to increase service frequency and raise drivers' salaries, so the net effect may well be revenue-neutral to the operators.

Raising drivers' salaries will be key to filling the 1,300 to 1,500 jobs created by the fleet expansion. Unattractive pay has long been recognised as the chief reason bus operators fail to hire and retain drivers. About 1,000 drivers quit every year.

Govt taking new route with $1.1b funding for buses
By Christopher Tan, The Straits Times, 22 Feb 2012

THE $1.1 billion package to ramp up bus capacity signals a new long-term financing framework for this mode of public transport, sources close to talks between the authorities and bus operators have said.

The subsidy indicates that the Government has recognised it has to step in to ramp up the capacity of the bus network, following complaints by commuters about overcrowded buses, route configuration and long waits.

These problems, a result of a spike in demand for public transport, have seemed to defy all previous measures to raise service standards, including fines.

Members of Parliament (MPs) are also aware of how the bus network has fallen short, from their dealings with their constituents. Holland-Bukit Timah GRC MP Liang Eng Hwa, for example, said: 'If it is left to the two operators, they will not be able to gear up at the pace the Government wants. You need intervention to fast- track that process.'

Aside from the tab for 550 new buses, the package covers the total operating cost for the vehicles for 10 years, including salaries of bus drivers.

The consensus is that those salaries must go up.

The general secretary of the National Transport Workers' Association, Mr Fang Chin Poh, said: 'Now, with government support, the public transport operators can save a lot of money. They should raise the salaries to attract more Singaporeans to the job.'

He proposed raising the basic monthly salary of a bus driver from the current $1,375 to $1,500 or $1,600; overtime pay and other perks could add another $500.

'The current salary is not competitive in the Singapore market or even in Malaysia. Many jobs pay between $1,000 and $2,000,' he said.

Transport economist Michael Li from the Nanyang Business School agreed that bus drivers' pay is too low to be attractive to locals, while immigration rules make for the other hurdle in attracting foreign drivers.

'Public transport is a necessity to the general public, and we need to make this job attractive to locals, or we'll continue battling the issue of locals being unwilling to get into this profession,' he said.

Direct financial subsidies to the bus sector have been until now unheard of, but the two bus operators here have thus far been exempted from bidding for Certificates of Entitlement, which practically all other vehicle buyers must secure; they have also recently been granted waiver for the Additional Registration Fee, the main vehicle tax, and duty on diesel, which until a few years ago was dutiable.

Further to this, they have been allowed to keep their buses on the road for 20 years, twice as long as almost all other vehicles, and they are charged a nominal rent for the space their interchanges take up.

These perks however pale in comparison to what the Government gives the rail sector: It has committed nearly $70 billion to date to infrastructure and rolling stock to the rail operators.

Nee Soon GRC MP Lim Wee Kiak said he wanted to know whether the package for the bus operators is conditional.

'What is the expected performance or required deliverables by the public transport operators?' he asked, noting that financial penalties had failed to raise or sustain standards before.

Transport analyst John Rachmat of the Royal Bank of Scotland Asia Securities read the aid package as 'a complete change' for the sector.

'My eyes popped when I read it,' said the analyst, who has long lamented that the status quo is 'a marriage between public goods and private profits', which puts a heavier burden on the operators.

The Straits Times understands that the financing framework for both rail and buses will be reviewed periodically.

Introducing more contestability into the industry, for example through requiring operators to bid for rights to operate defined route parcels, has not been ruled out.

Govt should not fund bus purchases
WHILE it is commendable that the Government finally recognises the problems commuters face in taking public transport, I am puzzled why it is tapping public funds to aid the purchase and running costs of 550 new buses for SMRT and SBS Transit, which are public-listed ('Govt to co-fund bus fleet expansion'; last Saturday).

The Government has always defended its privatisation model and maintained that the companies must be privately operated; and that listing them publicly is the best way to ensure that our public transport system operates efficiently and effectively.

Furthermore, the Government has also mentioned that profits from the privatised entities would ensure that sufficient re-investments are made to upgrade and expand the system.

As public-listed firms, SMRT and SBS Transit have various ways to raise funds to buy buses. These options range from bond issues to the sale of new shares.

So there is no need for the Government to fund such purchases and their operating costs, especially when SMRT and SBS Transit have earned substantial profits over the years, which should allow them to make such investments.

By channelling public funds, is the Government tacitly agreeing to a not uncommon view that public transport should not have been public-listed?

If so, the Government should re- examine its current policy to focus the public transport system on serving citizens' needs over profit-driven aims that will satisfy shareholders.
Hoo Hoe Keat
ST Forum, 22 Feb 2012

Bus purchase plan called into question
Dialogue participants raise concerns about Govt pumping in $1.1b
By Phua Mei Pin, The Straits Times, 23 Feb 2012

THE Government's decision to pump $1.1 billion into purchasing 550 new buses came in for questioning by Singaporeans who took part in a dialogue on the Budget last night.

Participants at the dialogue organised by government feedback unit Reach said they were puzzled by the Government's move to inject such a large sum into the public transport operators, whose profits would ultimately go to private shareholders.

Grassroots volunteer Kunasegarn Mudaliar said he was 'surprised' that the public transport operators were being 'rewarded'.

Another grassroots volunteer Ricky Chua said that there was public concern that the operators would profit from this injection by the Government.

They were reacting to the announcement by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam last Friday that the Government will partner the public transport operators over the next five years to increase the bus fleet by 20 per cent, or 800 buses.

The operators will purchase 250 buses while the Government will pay for 550.

Mr Tharman had said in his speech that the increase in bus capacity would reduce crowding and waiting times.

But last night, corporate trainer Lu Kee Hong, 54, asked Minister of State for Finance and Transport Josephine Teo and Reach chairman Amy Khor at the dialogue: 'Should public transportation be privatised or should it be nationalised?'

Mrs Teo said in reply that the $1.1 billion injection was aimed at improving public transport service while extension work was under way for the rail systems.

As increasing the bus capacity would raise costs for transport operators, a bigger bus fleet could lead to higher fares.

'Between funding this through a big increase in fares and the Government coming in to inject into the system the resources to purchase these additional 550 buses, we thought it is a better thing to do (the latter),' she said.

'The starting point is the commuters,' she added.

As to whether the public transport operators should be nationalised, that would require detailed study. While such studies were ongoing, 'we don't want to hold back the improvement to the bus services', she said.

Beyond the bus issue, the dialogue, which had 180 participants, surfaced mostly kudos for the Budget's measures to support disabled, elderly and lower-income Singaporeans.

Retiree William Teo, 68, said: 'I would say this is a great Budget... I am sure it is the result of many years of feedback.'

There were also suggestions to help improve on the Budget measures, such as showcasing employers who employed the elderly and disabled, and finding more ways to help the disabled enter mainstream workplaces.

The tenor of the dialogue reflected the sentiments in close to 400 responses that Reach received in the five days since the Budget speech.

Some of those responses made the point that boosting bus capacity should be fully funded by operators.

There was also some concern about the impact on local businesses of reduced foreign labour.

However, the majority of feedback focused on the Budget measures to support older Singaporeans and those with disabilities.

The general view was that the Budget was 'a step in the right direction', according to a Reach statement.

Reach will also host a chat on its Facebook page on Sunday evening.

Buses the way to go
Editorial, The Straits Times, 23 Feb 2012

THE Government's decision to fund the purchase and running costs of 550 new buses for SMRT and SBS Transit, the two listed public transport operators, might appear to some to be a case of unnecessary largesse. But the decision to do so is justified given the pressing need to resolve acute problems that commuters face, especially during peak-hour travel times. These range from overcrowding to long waiting times. The new buses will form a large part of a fleet of 800 additional buses. Most are now likely to be on the roads in the next two to three years, with the rest arriving within a five-year timeframe. Their inclusion should go a long way in addressing and providing quicker relief to the woes commuters come up against in their daily travel pattern. It will also be a welcome supplement to a rail network that has had its own share of problems such as overcrowding and delays.

Even as work proceeds to double the rail network to about 280km by 2020, questions have been raised as to whether even that will be sufficient to cater to a predicted 10 million trips a day that commuters will be making by then on all modes of public transport. But fixes are also needed sooner. While bus operators have previously announced plans to ramp up their fleets, the decision by the Government to step in is aimed clearly at helping them accelerate the process. It also reflects the reality that while the MRT has grown to become an integral part of Singaporeans' travelling plans and habits, extending its network and frequency is a more complex, costly and time-consuming undertaking. The bus option would provide a quicker fix - although there are associated concerns, including congestion, routes and timings. But the operators' experience in managing this key mode of the public transport system and a determination to give commuters a smoother and more efficient system suggest that these issues can be overcome without too many problems.

The more serious challenge that operators face - and hence where the Government's assistance will resonate more significantly - is in the area of attracting and retaining drivers. As it is, about 1,000 drivers leave every year. To keep them, salaries need to be raised and working conditions improved. The Government's $1.1 billion aid package is understood to include covering some aspect of drivers' salaries. It will allow operators to take on more Singaporeans and perhaps reduce dependence on foreign drivers, a number of whom have been the subject of complaints over service standards. If these latest moves succeed in providing commuters with the kind of qualitative improvements they have been demanding in service and frequency of the public transport system, then it will be money well spent.

Budget 2012: $1.1 billion Bus Services Enhancement Fund

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