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Motoring News

Govt agrees to new fare subsidies

Rest of panel proposals accepted as well, as minister pledges affordability

The Straits Times - November 12, 2013
By: Christopher Tan

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Govt agrees to new fare subsidiesCommuters at Raffles Place MRT Station during peak hour on Oct 7, 2013. The Government has accepted all the recommendations on public transport fares made last week by the Fare Review Mechanism Committee, Transport Minister Lui Tuck Yew said yesterday. --

THE Government has accepted all the recommendations on public transport fares made last week by the Fare Review Mechanism Committee, Transport Minister Lui Tuck Yew said yesterday.

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.

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