Wednesday 13 November 2013

Govt agrees to new fare subsidies recommended by Fare Review Mechanism Committee; Implementation likely to be in 1st half of 2014

Rest of panel proposals accepted as well, as minister pledges affordability
By Christopher Tan, The Straits Times, 12 Nov 2013

These include funding two new fare concessions - for low-income workers and people with disabilities - with tax revenue. It will be the first time the Government subsidises fares this way.

While concession details, such as the amount and who qualifies, are still being worked out, Mr Lui hinted strongly that the discounts will be substantial. "It is my intention to ensure that the discounts given will more than offset any fare increase in the next fare exercise," he said in Parliament.

The next fare revision will be in the first half of next year, he said.

Mr Lui tasked the committee in February to examine affordability. Yesterday, he pledged that fares "will not become less affordable for the average commuter, and will be considerably more affordable for the low-income and disadvantaged groups. This is my intention and I have every confidence we can achieve it".

While the Public Transport Council (PTC) will take into account the adjustments that were allowed for last year and this year but were not made, Mr Lui urged it to keep the next increase within this year's average national wage rise. Public transport operators are allowed to apply for fare adjustments annually but these are subject to the PTC's approval.

The balance can be kept for 2015 via a rollover mechanism recommended by the review panel.

Other recommendations include having public transport firms contribute 20 to 50 per cent of each fare rise to the Public Transport Fund, which disburses fare vouchers to the poorest households. Mr Lui cited this feature of the new fare formula in his reply to Mr David Ong (Jurong GRC), who asked if it could factor in the profitability of operators.

Responding to Dr Lily Neo (Tanjong Pagar GRC) on what could be done to prevent the needy from falling through the cracks, he called on MPs to help pinpoint those who qualify for fare vouchers.

Mr Lui also said the new formula, based on core inflation (excluding property and car prices), average wage increase and an energy component, is "an improvement over the old". While it better reflects operators' cost structure, he said it does not let them pass increases directly to commuters.
In a year when electricity and fuel prices soar, the new formula could lead to a bigger increase than the old one, he added. But when inflation is driven primarily by property and car prices, the new formula may result in a smaller rise than before.

Non-Constituency MP Gerald Giam asked why service quality could not be in the formula to spur operators to do better.

Mr Lui said the formula should be "as straightforward as possible", and service quality is best addressed by regulatory standards. This way, service can be raised without a direct impact on fares.

Key changes
- Govt-subsidised fares
About 500,000 low-income workers and people with disabilities are set to pay lower fares than they do now.
- Beyond physical handicap
People with disabilities include those with other handicaps.

- Higher full fares likely

Full-paying commuters may face a bigger-than-usual rise at the next fare adjustment next year because of enhanced benefits for tertiary students and pre-schoolers, among others. Also, fare adjustments were suspended last year and this year.
- Cap on fare increase
Hike likely to be capped by this year's average wage rise, with the remainder rolling over to 2015.
- Donation from fare hike
Transport firms will give part of revenue from rise in fares to a fund, to enhance travel vouchers for the poor.
- Low take-up of vouchers
Greater effort to lift take-up rate.

Only half of 200,000 were taken in 2011.

Not practical to include quality of service in fare formula, says Lui
By Woo Sian Boon, TODAY, 12 Nov 2013

It would not be practical to include public transport operators’ quality of service in the fare formula as Singapore uses a unified fare structure for its transport system, said Transport Minister Lui Tuck Yew yesterday.

Speaking in Parliament, Mr Lui was addressing feedback — including a call from the Workers’ Party — that the service quality component should have been included in the new fare formula that was proposed by the Fare Review Mechanism Committee (FRMC) in its report last week.

Mr Lui said that the FRMC’s aim was to keep the fare formula relatively straightforward. It would be “challenging to try to give differentiated fare increases to different public transport operators (PTOs) on account of service quality issues” due to the unified fare structure.

However, Non-Constituency Member of Parliament Gerald Giam pointed out that many commuters associated service quality with their willingness to pay higher fares. Adding the service quality component, he felt, would spur operators to do better in terms of service.

In response, Mr Lui said this might lead to increased costs, which will then be directly passed on to commuters. “I suspect the PTOs (might) also say, well, what about the cost increases that are associated with any service quality improvements, would that also be included in the formula?”

He reiterated that not having service quality as part of the fare formula does not mean that we are not raising service levels, or that we are letting the public transport operators off easily.

He noted that the Public Transport Council can increase operating performance standards, which include service levels, for the transport operators, and the Government has also increased penalties for service lapses.

'A certain tension' in funding of fare concessions
By Christopher Tan, The Straits Times, 12 Nov 2013

COULD the Government have funded all public transport fare concessions? Or should some be borne by full-paying fares?

It should be a combination of both, Transport Minister Lui Tuck Yew said yesterday, replying to Mr Cedric Foo (Pioneer).

To roll out discounts that will "more than offset" the next round of expected fare increases for about 500,000 low-income and disabled commuters would entail "quite a substantive amount", Mr Lui said.

"I think the Fare Review Mechanism Committee realised that if all these were to be cross-subsidised by full fare-paying commuters, it would be a heavy burden on them," he added.

The committee was "conscious of this fact" and came up with "some very balanced recommendations", Mr Lui said.

These are: that the Government fund the two new concessions while full fares will cross-subsidise other benefits, such as free travel for children below age seven and enhanced concessions for polytechnic students.

At the same time, the committee "was also mindful that if all the concession schemes... were to be borne by the Government, there would be the lack of that tension in the system, so to speak", the minister said.

"So they retained the existing mechanism where... existing schemes would be borne by the rest of the commuters," he added.

"So I think there's a certain tension and a certain balance that they're trying to achieve."

Mr Foo, who is also the chairman of the Government Parliamentary Committee (GPC) for Transport, was concerned that even if only some of the concessions were subsidised by full-fare commuters, fare increases may eventually "affect the affordability" for these commuters more than those getting the concessions.

Mr Foo told The Straits Times later that the minister did not address his question directly, "but obliquely", when he said the Public Transport Council should keep the next fare rise within the range of this year's average wage increase.

"It would be better if the average wage increase of the second quintile is taken," he said, referring to the income group just above the bottom 20 per cent who take public transport.

Separately, Mr Foo said he hopes such concessions can be higher when these concession pass holders commute outside the peak periods.

"If a person with disability is not also a low-income worker, then he is probably not working and we can grant even higher subsidies for non-peak as he visits hospitals, pursues leisure interests, etc," he said.

One-off public transport voucher 'worth too little'
Applying for it a hassle, so poor go elsewhere for aid, say MPs, help agencies
By Lee Jian Xuan And Janice Tai, The Straits Times, 15 Nov 2013

The lukewarm response to the one-off vouchers that are meant to help the poor cope with fare hikes could be due to the amount offered and hassle in applying for them, MPs and help agencies told The Straits Times.

In Parliament on Monday, it was revealed that just over half of the 200,000 public transport vouchers available for needy residents to offset the fare increase in 2011 were taken up.

And this was after the Government had made two public announcements for applications.

"Maybe we could increase the amount given and simplify the administration so more people will come forward," MP for Holland- Bukit Timah GRC Liang Eng Hwa said.

Needy residents who qualify for the Citizens Consultative Committees (CCC) Comcare Fund have to go to the Community Clubs and Centres to apply for the vouchers, which are only given once and usually vary between $20 and $40.

If successful, they will only be notified about a month after the CCCs have processed their applications.

Ms Rachel Lee, assistant director of Fei Yue Family Service Centre, said the low take-up could be because the poor are turning to welfare organisations that have longer-term schemes to help them cope with fare hikes.

"They prefer to apply for something longer term, and not go through the trouble just for a one-time small sum," she said.

Still, a People's Association spokesman said grassroots leaders do look out for residents who qualify for the vouchers during house visits and community events and encourage them to apply.

First given out in 2004, public transport vouchers are disbursed to poor Singaporeans in years when there are fare hikes.

Financing for the vouchers comes mainly from the Public Transport Fund, which was set up by the Government, but transport operators SBS and SMRT contribute to it as well.

The Transport Ministry said it will look into improving the application process and distribution of the vouchers, and raising awareness for the scheme.

Several MPs told The Straits Times about their efforts to distribute the vouchers to needy residents.

MP for Woodlands ward in Sembawang GRC Ellen Lee said that her team had some leftover vouchers after giving them away.

"We have a list of the families who are on social assistance, and we go to them," she said.

But MP for Tanjong Pagar GRC Lily Neo, whose Kreta Ayer ward is home to many low-income residents, ran out of vouchers within a week during the last distribution.

"With the one-off voucher, the money runs out very quickly especially if you make daily trips," she said. Instead, Dr Neo suggested that giving a concession pass for transport to these residents will be more useful.

Transport Minister Lui Tuck Yew said on Monday that his ministry is looking into introducing such a pass to provide discounted fares for lower-income and disabled commuters.

Commuters who qualify for the vouchers said that a concession pass would be more effective in helping them cope with their transport expenses.

"It's a good idea. I don't go out much because the money I spend on fares is used up very quickly," said Madam Tina Many, 57, who spends one-sixth of her $600 monthly income on transport.

* New bus and train fare adjustments to be announced by March
By Christopher Tan, The Straits Times, 19 Nov 2013

ADULT riders face the sharpest rises while disadvantaged commuters are tipped to get the biggest cuts when bus and train fares are revamped early next year.

Applications for fare adjustments are now open and public transport operators must apply by Dec 19, said the Public Transport Council yesterday.

"This combines the exercise for 2013 with that for 2012, which was suspended pending the work of the Fare Review Mechanism Committee," said a council statement, adding that it will announce its decision by the first quarter of next year.

Combining the two years will result in a 6.6 per cent allowable fare increase - the highest in history.

But Transport Minister Lui Tuck Yew told Parliament last week that any increase should not exceed this year's average wage rise. That number is not out yet, but economists predicted it could be up to 5 per cent.

If so, the remainder of the allowable fare hike - which represents a percentage increase of total annual fare revenue - will be rolled over to 2015.

Observers said the fare increases will be distributed among commuter groups, with some bearing more than others.

Dr Park Byung Joon, head of the Urban Transport Management Programme at SIM University, said low-income commuters and those with disabilities are likely to see the biggest cuts, "of at least 50 per cent, if not more".

But as these two concessions are funded by the Government, they will not directly influence how fares for other commuters will be adjusted.

Enhancements to other concessions which the fare committee recommended - such as those for polytechnic students and pre-school children - will be cross-subsidised by full-paying fares.

That means adult fares are likely to see the biggest jumps.

"Someone has to pick up the bill for these, and it'll be regular commuters like you and me," said Dr Park.

The Public Transport Council said it will "pay particular attention to fare affordability for lower-income groups".

It added that it will also factor in all the new and enhanced concessions "to ensure that public transport fares remain affordable".

A spokesman for SMRT Corp said: "We seek a better alignment between fares and operating costs, and will be submitting our application for a fare review in the coming weeks."

Rival SBS Transit is likely to do the same.


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