Thursday 7 November 2013

Fare concessions for more commuters: Fare Review Mechanism Committee Report 2013

Subsidised fares for needy, disabled to be funded by Govt under proposals
By Christopher Tan, The Straits Times, 6 Nov 2013

A WIDER spectrum of commuters could get concessions for public transport, through subsidies from the Government and full-paying fares.

The public transport Fare Review Mechanism Committee also recommends adjusting the fare formula to make it a more balanced one that reflects changes in fuel and electricity costs, and excludes rises in property and car prices.

If the recommendations are accepted, 1.7 million commuters will get concessions - up from 1.2 million today.

The proposed changes seek a "judicious balance" between the interests of all public transport stakeholders, said committee chairman Richard Magnus at a briefing yesterday.

The 85-page report recommends that subsidised fares for low-income workers and people with disabilities be funded by the Government.

Other concessions, including free travel for children under the age of seven, better discounts for polytechnic students and a monthly pass for commuters making frequent trips, should be shouldered by those paying full fares, it said.

The Government said it will respond to the report next week. But Transport Minister Lui Tuck Yew said on Facebook yesterday that he is "generally in favour" of the Government funding "the proposed new concession schemes for the disadvantaged groups".

It was Mr Lui who tasked the committee to examine the affordability of public transport fares.

To that end, the committee has recommended two layers of checks on affordability. One is public transport expenses (excluding taxis) as a percentage of household income of the 21st to 40th percentile group, which averaged $3,877 last year. The second is the same expenses as a percentage of income for the 11th to 20th percentile group, which was $2,073.

If either rises, a fare revision can be suspended.

Mr Magnus said the lowest- income earners as a group was not tracked as there were "enough social safety nets" for this group.

In fact, the committee recommended that transport companies contribute 20 per cent to 50 per cent of each fare adjustment to a fund that dispenses travel vouchers to the neediest families.

The committee said the formula that determines fare adjustments should change too. The biggest change is the inclusion of an energy index - to reflect the rising cost of power and fuel as a proportion of an operator's expenses.

The inflation component in the current formula is also to be tweaked - to exclude home and car prices. The new fare formula, if accepted, would apply from this year to 2017, said Mr Lui.

Government Parliamentary Committee for Transport chairman Cedric Foo described the concessions proposed as "very comprehensive". "It does speak of inclusiveness, and is the way forward for us as a society," he said, adding that more could have been done for national servicemen.

Polytechnic student Zhang Binbin, 18, described the recommended improved concessions as "fairer treatment", and said they "will be very beneficial for a lot of us".

Fellow polytechnic student Winona Kang, 18, exclaimed "shiok!", the local slang expressing sheer happiness.

Key recommendations
- Government to subsidise bus and train fares of low-income workers and the disabled.
- Changes to fare concessions include: free travel for children aged below seven, monthly passes that adults and senior citizens can buy to cap their transport expenses, and a big discount on fares for polytechnic students.
- Tracking a broader range of commuters to ensure fares remain affordable for lower-income households.
- Public transport operators to donate between 20 and 50 per cent of each fare rise to a fund for needy commuters.
- Fare formula to include a new energy index to better reflect costs plus an inflation component that excludes home and car prices.
- Public Transport Council to have flexibility to defer and "roll over" fare adjustments to the following year.

Monitor impact on lower-income: Panel
Vital for larger segment of public transport users to be studied, it says
By Royston Sim, The Straits Times, 6 Nov 2013

IN A bid to ensure transport remains affordable in future, a review committee has recommended concessions for more commuters and monitoring the impact of transport fares on lower-income households.

The 14-member committee has proposed that the Public Transport Council (PTC) monitor the affordability of fares for the second decile income group, or the 11th to 20th percentile. The average monthly household income for this second-poorest group last year was $2,073.

The PTC is already monitoring fare affordability for the second quintile income group, which had an average monthly income of $3,877 last year. This 21st to 40th percentile group represents the average public transport commuter.

The committee has also proposed that affordability be measured by taking a household's monthly public transport expenses, which exclude taxi expenses, as a percentage of its monthly income. Currently, taxi expenses are part of the measurement.

The fare review committee felt it was important to capture a larger segment of public transport users to ensure that the impact of transport expenses on lower- income households is reflected.

Said committee chair Richard Magnus: "It is important that we track fare affordability carefully so that we know how much targeted assistance should be granted."

Besides this additional check, the committee has proposed a raft of new or enhanced concessions that will benefit about one million people if approved.

It suggested that the Government subsidise discounted fares for lower-income workers and those with physical disabilities.

The committee noted that reduced expenses for low-income workers could allow them to take up jobs farther from home.

As public transport is a "social good", concessions for the disabled should be "inclusive as far as possible", the committee said.

It calls for free travel for children aged below seven. Currently, those below seven but taller than 0.9m must pay child concessionary fares. Netizen Baba Salam said: "It's now fair for parents with taller kids. What a relief!"

Another recommendation is an "appropriately priced" adult monthly travel pass to cap the expenditure of heavy public transport users.

Senior citizens should also get a new concession pass, on top of their discounted fares.

All hybrid bus-train concession passes should also be cheaper to facilitate multi-transfer journeys, the committee said. Now, such passes are priced at the combined cost of bus and train passes.

Singaporean students studying full-time locally in private institutions should also receive concessions, though the committee said such discounts may have to be rolled out progressively.

Addressing a long-standing bugbear, the committee has asked for cheaper tertiary concession passes. And polytechnic students should pay charges closer to those their junior-college peers pay.

Government Parliamentary Committee (GPC) for Transport deputy chairman Seng Han Thong said the recommendations were pragmatic and that commuters would welcome them. The challenge is that "someone has to pay for the concessions", he noted.

Transport GPC member Ang Hin Kee believes the measures will help reassure the needy that public transport will remain affordable. "The concessions are very targeted and aim to do more for them. That is the right approach to consider," he said.

Singapore Polytechnic student Brendan Tan, 20, does not buy the tertiary concession pass now, as he feels it costs about the same as what he spends every month on public transport - about $100.

He said: "It's good that something is finally being done about it after so many pleas. After all, we are still studying."

Operators asked to share gains from hikes with needy
By Royston Sim, The Straits Times, 6 Nov 2013

PUBLIC transport operators will have to share gains made from future fare increases with the needy if the Government backs a recommendation by a review committee.

The Fare Review Mechanism Committee recommended that the operators be required to contribute 20 to 50 per cent of the expected increase in fare revenue to the Public Transport Fund. The fund pays for transport vouchers for low-income commuters.

The Public Transport Council (PTC) should determine the quantum based on an operator's profitability, said the committee, which was set up to look into public transport fares.

Committee chair Richard Magnus said yesterday: "We think it is appropriate that the (public transport operators), besides having to fulfil their duties to their financial shareholders, also have to recognise their public service role."

But the committee, while asking operators to give to society, has also tweaked the fare formula to ensure their businesses remain financially sustainable.

The current formula pegs annual fare changes to inflation, wages and the productivity of operators SBS Transit and SMRT.

Mr Magnus said it is broadly sound but should be updated with an energy component to better reflect rising costs in that area.

Fuel and electricity costs comprised 23 per cent of the operators' expenses in 2011, up from 16 per cent in 2005.

The committee had proposed to add a new energy index to the formula to better represent changes to operational costs. The index gives equal weight to electricity and fuel costs.

Mr Cedric Foo, the chair of the Government Parliamentary Committee for Transport, noted that energy and fuel are not fully represented in the consumer price index (CPI) - the formula's inflation component.

While the CPI does reflect such costs, he said the weightage is smaller than what the transport operators incur.

SMRT spokesman Alina Boey said the energy index is a "welcome" measure that will address challenges of increased fuel and energy costs.

The proposed new formula will also use the core CPI, which excludes accommodation and private transport. Participants of focus group discussions had indicated that these items were not relevant to public transport and should be excluded.

The wage index component of the formula remains unchanged, while the productivity extraction has been revised to give operators incentives to improve output and share their gains with commuters.

PTC chairman Gerard Ee felt the new formula is "an improvement", as it is more specific and focused. However, he noted that the council will have to study the report in detail and await the Government's response next week.

The committee has also recommended that the PTC be allowed to "roll over" a portion of the fare adjustment quantum in a particular year to the next, or defer fare exercises if the economy is poor, for instance.

It said this flexible mechanism will smooth out any large fare increases yielded by the formula while providing operators with fair compensation for cost hikes.

In a Facebook post, Transport Minister Lui Tuck Yew said this mechanism will help avoid excessive fare hikes in any one year.

"My own view is that any fare increase should be below the average national-level wage increase for that year," he added.

A fare revision formula with a lot more heart
By Christopher Tan, The Straits Times, 6 Nov 2013

THE recommendations of the Fare Review Mechanism Committee demonstrate a fine balancing act.

They seek to ensure bus and train fares remain affordable to the people who rely the most on public transport, and yet strive to ensure the long-term commercial viability of transport operators.

While they did not deviate from past principles that have shaped fare formulae here, the new direction clearly embraces a lot more heart, and is generally more equitable to all parties.

In focus is the proposed fare revision formula. Housing and cars are to be removed from the inflation component, which will now focus on core inflation. This will shield public transport users from the effects of rocketing certificate of entitlement (COE) and property prices.

An energy component is proposed, to better reflect the growing impact of electricity and fuel in an operator's basket of expenses. But the weightage of the productivity component is to be cut from 1.5 to 0.5, so commuters benefit less from an operator's efficiency gains.

The new formula would have resulted in a 2.1 per cent rise in fares if it were applied this year - curiously identical to what the old formula would have thrown up.

The difference is that operators must contribute 20 per cent to 50 per cent of a fare hike to a fund that dispenses transport vouchers to the lowest-income group.

These vouchers may last longer, if a suite of proposed concessions are accepted. At the forefront are concessions for lower-income workers and people with disability.

Thus far, Singapore has adopted a pragmatic stance - that the neediest among us should find relief from the various welfare schemes. The suggestion that the Government funds blanket concessions for the two groups signals a major shift in policy - even if transport company SBS Transit did mull over discounts for the disabled four years ago.

How meaningful the shift is now depends on the quantum of concessions the Government will decide upon, and the number of people it will grant them to. Of course, there will be quarters asking why the Government cannot foot the bill for all concessions.

For instance, government subsidies in Britain allow various groups of commuters to travel for free. These include those over 60 years, the disabled, and children up to the age of 15. Those between 16 and 18 pay concessionary rates. Card users also enjoy a daily cap of £4.40 (S$9) regardless of the number of trips they make.

That, of course, comes at a cost to taxpayers. According to a recent British government report, subsidies have risen from £24 million or 2p per passenger trip in 2001 to £393 million or 17p per passenger trip last year.

In other words, there is no free lunch. But the principle of using tax revenue to subsidise public transport is sound. A 2007 World Bank study suggests that it is the most progressive method. It found that funding concessions via general taxation instead of cross-subsidies (from other types of users) "would significantly improve the distributive impact of this policy".

Still, recommending that the Government fund two concessions is a step in this direction.

And seen in the light of recent moves to improve the lot of public transport commuters - from the infrastructural investments to the stricter enforcement of service standards - the significance of the fare review recommendations becomes weightier.

Significant too is the new affordability indicator recommended by the committee. On top of tracking how much the second quintile income group (representing the average public transport commuter) spends on transport, it says the second decile group (the second poorest group) should be tracked too.

Again, this ensures fares are kept affordable to more people in the low-income segment.

The only move that jars is the removal of taxi expenditure from the affordability indicators, as many in poorer households take taxis because they need to - for instance, aged or disabled members of the family who are not physically able to take a bus or train.

This is likely to paint a rosier picture of the transport expenses that such a family has to bear.

And it may be the splinter that festers in an otherwise sound, prudent and well thought out plan to make fares equitable to all.

Transport experts laud fare recommendations
But they wonder if different model could serve operators, public better
By Royston Sim And Christopher Tan, The Straits Times, 7 Nov 2013

WHILE transport experts hail the recommendations by a fare review committee as progressive, they say Singapore should shift to a regime where the interests of transport operators and commuters need not be poles apart.

The Fare Review Mechanism Committee on Tuesday released an 85-page report that sought to strike a "judicious balance" between two somewhat divergent goals: affordability of fares and profitability of private operators.

It recommended a slew of concessions that could benefit up to a million commuters, while also tweaking the fare formula to better reflect cost pressures faced by operators SMRT and SBS Transit.

Transport economist Anthony Chin from the National University of Singapore lauded the recommendations. But he said the bigger question is whether the current model here, a model based on nationalisation or the "London model" will serve both the public and transport players better.

Associate Professor Chin favours the London model - one whereby operators bid for routes and revenue risk is assumed by a government. That means the government collects fare revenue, faces market uncertainties, such as fuel cost fluctuations, and offers concessions to commuters as it sees fit.

Firms that exceed set service standards get a bonus at the end of their contract with the government, while those that fail are penalised. In such a market, the presence of "credible (competitive) threat keeps operators on their toes", he said.

Associate Professor Paul Barter, who teaches transport policy at the Lee Kuan Yew School of Public Policy, has previously said the London model allows for a better way for subsidies to be handed out.

Government Parliamentary Committee (GPC) for Transport chairman Cedric Foo felt the fare framework recommended by the committee was sound but still not ideal.

Having contestability in the market will allow an operator to to operate a network at the lowest feasible cost level and still meet prescribed service standards, he said. Still, he noted that any changes here will have to wait till the authorities' existing agreements with transport operators expire in 2016.

In a statement yesterday, the Workers' Party noted that the committee's scope did not include a review of the existing transport model, but said: "It should not be the Government's responsibility to safeguard the profits of SMRT and SBS Transit, which are commercial entities."

It suggested that the Government should explore incorporating service quality into the fare formula as this "directly impacts the public transport experience of commuters".

Transport GPC member Lim Biow Chuan supports the proposed concessions for those who need more help, such as low-income workers and the disabled.

In a Facebook post, Transport Minister Lui Tuck Yew said he is "generally in favour" of the committee's suggestion that the Government fund concessions for those two groups.

On Mr Lui's comment, Prof Chin said: "It's a gradual shift to a new direction. In Singapore, it's never a Big Bang change."

Poly student cheers cheaper concession pass
By Pearl Lee, The Straits Times, 7 Nov 2013

TEENAGER Carissa Chua spends about $150 each month taking the bus and train daily.

While she can opt to buy the monthly bus and train concession pass for tertiary students at $97, the Ngee Ann Polytechnic student does not.

"It is better if I buy the concession, but I can't fork out the lump sum. I'd rather top up my ez-link card every week than be almost $100 poorer immediately," said the 17-year-old international business diploma student.

She earns her own monthly pocket money - about $400 - by working part- time at ice-cream parlour Baskin-Robbins.

The only child of a housewife and a dispatch rider added that $97 is "really very expensive", compared with what junior college students pay, especially for those like her from less well-to-do backgrounds.

So it was good news to Carissa that the Fare Review Mechanism Committee has made a recommendation to the Ministry of Transport to sub-divide the tertiary monthly concession pass, so that polytechnic students pay less - closer to what is paid by JC and secondary school students.

Currently, those students pay $27.50 for bus concession, $25 for train concession, and $52.50 for a hybrid of both.

Polytechnic and university students pay $52 for the bus concession, $45 for the train concession, and $97 for the hybrid pass.

Carissa said she would buy a pass if she did not have to fork out such a large lump sum.

It is expected that polytechnic students will still pay more than JC and secondary students, if the recommendation is accepted.

Fellow Ngee Ann Polytechnic student Athanasius Koh said it was not realistic to expect the polytechnic concession rates to be the same as those for JC students. "But cheaper is always better than nothing," said the 18-year-old, who is studying for a mass communications diploma.

Nee Soon GRC MP Lee Bee Wah, who has previously urged the Government to look into lowering concession prices for polytechnic students, said the review committee's proposal is "a step in the right direction".

"But I hope more can be done, such as making polytechnic students pay the same amount as those in junior colleges," she said.

Holland-Bukit Timah GRC MP Liang Eng Hwa echoed her sentiments, saying that he hopes the monthly concession scheme can be simplified "by putting polytechnic and junior college students in the same category".

Disabled can 'move around more'
By Priscilla Goy, The Straits Times, 7 Nov 2013

WHEELCHAIR user Vinayagan Mohan spends about $70 a month on bus and train fares, mainly to commute from his home in Serangoon to his office near Tai Seng MRT station.

The 25-year-old, who promotes training programmes to companies, is on job probation and earns about $700 a month.

As he spends a considerable amount on fares relative to his salary, the fare review committee's proposal to allow the physically disabled to enjoy concessionary bus and train fares was welcome news for Mr Vinayagan.

"With the concessions, we can use the savings for other things, such as medical bills, or save more money for our families," he said.

Mr Vinayagan left previous jobs in Paya Lebar and Orchard as he needed to take taxis because of the distance between his home and workplace.

He was spending up to $400 a month on taxi fares then.

Associations that cater to the disabled also welcomed the recommendation.

Handicaps Welfare Association president Edmund Wan said: "The subsidies would give the disabled more savings, and encourage them to move around more, integrating with the rest of the community."

Ms Judy Wee, vice-president of the Disabled People's Association and a wheelchair user, said: "It could encourage the disabled to come out (of their homes), and join the workforce."

But she questioned how "disability" would be defined under the proposal, and whether concessions would be extended to those with learning or mental disabilities.

Currently, the physically disabled have to pay full adult fares. Members of the Singapore Association of the Visually Handicapped may have their bus fares waived at the discretion of bus drivers.

Low-income subsidy 'helpful' for cleaner
By Priscilla Goy, The Straits Times, 7 Nov 2013

CLEANER Sim Ai Song walks 20 minutes with his two children to primary school every morning - just to save on transport fares.

He then takes the train from the nearby Commonwealth MRT station to Raffles Place MRT station to go to work.

In the early afternoon, he takes the train back and makes that same 20-minute walk home with his children, aged seven and 10.

Mr Sim said he welcomed the Fare Review Mechanism Committee's recommendation to subsidise bus and train fares for low-income workers.

The 54-year-old sole breadwinner for his family earns about $500 a month as a part-time cleaner and spends close to $100 a month on public transport.

"I need to save money in whatever way possible. So having cheaper bus and train fares would definitely be helpful," Mr Sim said in Mandarin.

In its report to the Ministry of Transport that was released on Tuesday, the committee said reduced transport expenses for low-income workers could allow them to take up jobs further from home.

Currently, they may receive public transport vouchers, but often, this happens only after fare review exercises are done. They also need to apply for the vouchers at local community centres or clubs.

Mr Sim said he knew of the vouchers, but has never applied for them, as he does not know if he would be eligible.

Ms Charis Kuang, centre manager for Care Corner Family Service Centre (Woodlands), said the subsidies would be helpful. "Transport costs can easily take up 10 to 20 per cent for the low-income group. With the savings, families can spend more on food or their children's education."

Better value monthly pass
By Lee Jian Xuan, The Straits Times, 7 Nov 2013

A CHEAPER monthly pass could soon be on the cards for frequent commuters, if recommendations by the Fare Review Mechanism Committee (FRMC) are taken up.

The new pass could benefit up to 100,000 people if implemented, said Mr Richard Magnus, the committee's chairman, at a media briefing two days ago.

Currently, an ez-link season pass for unlimited train and bus rides costs $190. A pass that permits four train rides and unlimited bus rides each day would set users back by $170.

But these prices do not translate to "meaningful savings" for commuters, said Dr Park Byung Joon, head of the Urban Transport Management Programme at SIM University.

For example, a commuter making two daily round trips from Loyang to Clementi would pay roughly $160 each month, he noted. "To make the pass more attractive, it may be necessary to provide a bigger discount."

Commuters shared his sentiments.

"$190 is a lot. My workplace is rather far from my home, but I still wouldn't pay that much," said writer Danielle Han, who estimates her transport bills to be about $100 a month.

The 23-year-old travels from her home in Bukit Batok to Bartley every day, changing trains twice. She then takes a bus to her workplace in Bartley Road.

Office manager Pamela Lee, 49, said the most she would pay for an unlimited pass is $120. "As long as it includes travel on weekends, I think it is a fair price. I would buy it," said Ms Lee, who commutes by train and bus from her home in Tiong Bahru to work in Boon Lay daily.

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