More subsidies for buses?
Govt to look into better aligning the way it funds public buses and trains
By Christopher Tan, The Straits Times, 1 Jun 2012
THE Government is looking at how to improve the financing framework for public buses, which are becoming less profitable to run compared to trains.
If implemented, the changes will better align the way subsidies are given for the two modes of operation.
A revised edition of the Land Transport Master Plan, due some time next year, could spell out these changes, he added.
'It is worthwhile for us to think a bit more deeply into how we ought to look at bus financing in order for it to be a stepping stone to doing some things that we want to do,' Mr Lui said.
The Government has been giving the rail sector sizeable subsidies since the first MRT lines were built in the 1980s.
The state pays for infrastructure and the first set of operating assets, such as trains. The operator pays for subsequent sets of operating assets at subsidised rates.
But this is changing, starting with the operating contract for the upcoming Downtown Line.
The state will continue to pay for and build the infrastructure but will lease operating assets to the operators.
Subsidies for bus operations are less direct.
Public buses are exempted from certificates of entitlement and recently, the Additional Registration Fee, which is a vehicle registration tax.
They are also allowed to stay on the road for 20 years, twice as long as almost all other vehicles, and a nominal rent is charged for the space bus interchanges take up.
Taxpayers also pay for bus stops and interchanges.
But the Government has shown its willingness to grant more assistance to buses.
In March, it said it would put out a $1.1 billion plan to buy and pay for the running costs of 550 additional buses.
Mr Lui also announced in March that bus operators will get advertising revenue from bus stops. Bus depots and parking spaces will now be built by the Government, too.
The Government might do even more. Mr Lui has raised the possibility of the state owning the entire fleet of buses and leasing them to operators.
With this, there is also the possibility of operators bidding for bus routes to run, rather than being awarded them by the regulator as is currently the practice.
But for that to happen, licensing issues also have to be sorted out. In the interview, the minister pointed out the difference in the length of operating contracts between bus and rail operators.
'The bus licences expire in 2016. The train licences expire in 2027, 2032, 2048,' he said.
The longer a business has a contract, the better its chances of recouping its sunk costs.
According to their financial statements, SMRT and SBS Transit had profit margins of 16 and 14.6 per cent for their MRT operations last year. But their bus operations incurred losses.
Mr Lui explained that if the Government were to introduce competitive tendering to its public transport sector in the future, this financial anomaly might prove to be a hurdle because the rail lines will invariably look more attractive to bidders than the bus routes.
'I cannot always be sure that I can couple it (bus routes) with a rail licence. So the bus financials on their own ought to be viable, sustainable over the long term.'
Mr Lui was asked if Singapore would consider adopting aspects of the Hong Kong model, where the rail operator foots the bill for infrastructure and operating assets, but is given rights by the government to develop land around train stations.
The minister said that in Singapore, the Government has more control over when it wants to start building a line and also where the line goes to.
And its decisions are not clouded by real estate developmental considerations, he added.
'I'm not saying that they're wrong and we're right... but at the end of the day, the developers are not doing you a favour, you know.
'It's going to be money that you would otherwise be able to get as a result of putting up that piece of land for competitive tendering,' Mr Lui said, adding that proceeds from land sold around MRT stations benefit current and future generations of Singaporeans.
Steering clear of roller-coaster COE cycle
By Christopher Tan, The Straits Times, 1 Jun 2012
THE certificate of entitlement (COE) system is here to stay, but there may be room to tweak it further.
One change being considered is a flatter supply pattern over the long term, instead of the current roller-coaster cycle seen since the quota system started in 1990.
Transport Minister Lui Tuck Yew hinted at one way of doing this: tempering the huge supply of COEs that is due between 2014 and 2018 so as to mitigate the next cyclical dry spell.
The bonanza is expected to be fuelled by the record number of cars registered between 2004 and 2008. Such vehicles will reach their 10th year and be scrapped by 2014-18; and COE supply is tied to the number of cars scrapped.
'Because, all things being equal, come 2021, 2022 and so on, I will again face a situation like today,' he said, referring to the current supply crunch which has seen COE premiums exceeding $90,000 for bigger cars.
He said this 'save from the future in order to fund the far future' method should bring about 'a higher degree of stability' in the supply situation.
The minister would not comment on whether removing taxis from the cars-up-to-1,600cc COE category - a call made by the motor trade - is being considered, but 'there are a number of other things that we are just mulling over'.
One thing that is certain though: the COE system is staying. Mr Lui said the quota system gives the Government absolute control over the number of vehicles that is added to the road each year - even though statistics show success has been patchy - and that is something registration taxes cannot guarantee.
'If the economy is doing superbly well and the wealth effect comes into play, you may well see people growing the car population beyond whatever number that you have set,' he said.
'Then I really have to do a lot more on ERP (Electronic Road Pricing) and, of course, the parking operators will also have to jack up their prices.'
But what is wrong with ramping up usage charges, as the end game is controlling congestion and not car ownership per se?
Mr Lui said: 'It is a delicate balance. Those who already own a car may tell you, let's not do so much on ERP... let's put the lid on having new cars.
'Those who are aspiring car owners may say, let me have a chance... and we ought to do more on congestion and parking charges.'
Asked if distance-based ERP will help raise usage charges, he reckons the technology for this satellite-based charging system may not be mature yet. In any case, 'we are in no hurry to go and proliferate the ERP network - that is not the intention at this point in time'.
On the issue of why Hong Kong has been able to keep a lid on car ownership without COE or ERP, Mr Lui said it is not because people there do not want to own cars but their housing 'is much more expensive than in Singapore'. He also pointed out that Singapore's gross domestic product per capita is 'quite a bit higher' than Hong Kong's, an indication that Singapore's standard of living is higher.
He acknowledged, however, that Hong Kong's 'public transportation is indeed a good one'.
He revealed that the Government is looking at other ways to make cars more accessible to Singaporeans, such as by promoting car-sharing.
This is something that the Land Transport Authority has been looking at already, he said, acknowledging that 'there are times when public transport will not do, there are times when even a taxi will not do'.
Since NTUC Income started the first car-sharing outfit in 1997, the popularity of the scheme has varied with the cost of cars. Today, there are two operators, down from four some five years ago.
The minister's thoughts on...
Why merging Land Transport Authority and Urban Redevelopment Authority won't work
Transport planning is linked to urban planning, but the current separation of the Land Transport Authority (LTA) and Urban Redevelopment Authority is sound.
The statutory boards, including the Housing Board, share information on planning parameters and work closely together, noted Mr Lui Tuck Yew.
But putting them all under one ministry like the Ministry of National Development (MND) could be complicated: The LTA has 'challenging' responsibilities as regulator and developer, he said.
'In MND, I think Minister Khaw (Boon Wan) has his hands very full overseeing housing-related matters both private as well as public and sometimes you wonder if it would not make it even more complex and complicated to put everything together under one ministry.'
He added: 'What we have today in terms of the agencies... taking a whole-of-government approach, I think, is reasonably sound.'
Why Government can't seem to match demand with supply
It takes 10 years to build a new MRT line, and three years to take delivery of a new train.
So the most careful plans to match demand and supply can still be tripped by population changes in the intervening years, Mr Lui noted.
'It's not like you can turn it on, like switching on a light,' he said.
And if service standards expected of operators are to be raised even further than they are now, operators themselves must be financially viable.
Bus operations, however, have been in the red, he said, suggesting a relook at their financing model.
'If in the longer term, it's not financially viable, you have a different set of problems and challenges that you have to deal with.'
So how confident is he that the transport infrastructure will be able to cope with the future increase in population?
'I think it's hard to nail a point and say I'm 90 per cent confident or 95 per cent confident.
'But if we look at what we are trying to do both in terms of keeping a much tighter control on the number of people coming into Singapore... and on the supply side... what we're going to do over the next three, four years or so... plus the new lines that are coming in, plus buses and so on, I think it will be in a better situation than what we have today.
'In terms of reliability too, both for buses and trains, we ought to be in a better position than what we have been.'
What his first year as transport minister has been like
Asked about his most difficult decision or his personal reflections on his first year tackling Singapore's transport issues, Mr Lui said he preferred not to focus on himself or his personal challenges.
He would rather dwell on the challenges and efforts of his ministry, as well as areas where it is prepared to be more flexible, such as shorter operating hours for Electronic Road Pricing in the evenings and starting the charges in the downtown area later on Saturday afternoons.
Said the former navy chief and chief executive officer of the Housing Board: 'It's a challenging portfolio without doubt and feedback, inputs, they all help.
'Ultimately, having considered it all as best as we can, we just have to try and make the best possible decision and hopefully leave sufficient room to, for those who are sailing, to tack, starboard and port without having to do a complete U-turn, you know, dismantle things we've done in the past.'
No comments:
Post a Comment