PTC has to set expectations right
Two transport experts welcome the new bus contracting model and suggest improvements.
Published on Jun 4, 2014 9:45 AM
AS A long-time advocate of the implementation of a full operating subsidy model for the public bus services in Singapore, I was delighted to read that the Government is moving to a bus-contracting model.
Under this model, the Government takes over the ownership of buses and assets, and contracts the running of bus routes to private bus operators for a fee. Fare revenue goes to the Government.
This is different from the current public transport model where the Government pays for and provides the infrastructure, such as railways and bus depots. The Government thus subsidises capital spending in public transport, especially for the MRT train system.
But these assets are held by the public transport operator, which has to pay operating expenses and the cost of depreciation for trains and buses. The operator recoups these in the form of fare revenue. In this way, it is ultimately the commuting public that pays these costs.
But commuters could expect only a level of service that the fare revenue could pay for. It has become increasingly obvious that the public demands a higher level of service than what is available with the current fare levels.
The concept of public transport has also evolved. No longer regarded simply as a service for people who do not own private vehicles, public transportation is also vital for the nation's economy and social integration. Once this latter concept is accepted, the idea that the Government should fund public transport whenever necessary should be embraced.
There are many ways that taxpayers' money can be used. One is to simply inject public money into private operators and hope, or pray, that they will spend the money wisely.
Another way is to nationalise public transport. In this model, the Government does not just own infrastructure and assets. It also takes on the responsibility of operating public transport on a daily basis.
Among the models available to policymakers, I believe the full operating subsidy model - known in Singapore as the government contracting model - is the best approach.
Under a nationalised public transport scheme, the Government must prepare daily operation plans, maintenance schedules, the recruitment of bus drivers and so on.
Some criticise this model on the grounds that it leads to the undesirable intrusion of Big Government. An equally important issue, perhaps, is whether it is practicable. It is always better if the relevant minister does not have to worry about whether there are enough bus drivers to run the system on a daily basis.
Under the government contracting model, however, the Government only needs to set the desired service level for the bus service and to evaluate the chosen operator based on the pre-specified quality standard. The details of running bus services will be the responsibility of the operator which offers the best price for delivering the service level specified by the Government.
If we believe in the power of the free market, we can be reasonably confident that competition among operators from all over the world will give the Government, and eventually Singaporean taxpayers, the best service and best price (or at least, something very close to it).
At the same time, however, it is important that local officials have the tools necessary to ensure that the system works smoothly.
The role of the Public Transport Council (PTC) may need to be expanded beyond setting fares. After all, the service level required of bus operators will be higher than what can be afforded by fare revenue alone. The difference between the two will have to be borne by the Government.
If commuters pay lower fares, taxpayers will have to pay more to cover higher public subsidies. Through the fare adjustment exercise, the PTC will determine the portions recovered via fare revenue and taxpayers' top-up.
A fundamental truth in life is that we get what we pay for. The bill that taxpayers have to pick up could be huge. There must therefore be a mechanism by which a consensus can be reached on the desired level of service and how it will be financed.
In addition to the fare adjustment exercise, the PTC may have to take on the vital role of striking a balance between the desired service level and the price people have to pay.
The writer is head of the master's programme in urban transport management at SIM University.