Did Lui Tuck Yew quit to take the rap?

Transport Minister Lui Tuck Yew's shock resignation has fuelled talk that he is the fall guy for the mounting unhappiness over rail disruptions. Or that he fundamentally disagreed with the way public transport is structured here. Is there any credence to the speculations?

Is Mr Lui Tuck Yew taking the rap for the rail breakdowns that do not seem to go away? Is the People's Action Party dropping him because it feels he may be a liability in the coming general election?

Looking at the timing of the Transport Minister's shock resignation, observers would be forgiven for such speculations.

The announcement of Mr Lui's decision came on Aug 11, just a month after Singapore's worst rail disruption. On July 7, trains ground to a halt for more than two hours on the most heavily used North-South and East-West lines, affecting more than 250,000 commuters in the evening peak.


Transport Minister Lui Tuck Yew visiting a station to assess how SMRT staff were handling the situation in the wake of the December 2011 rail disruptions. Mr Lui, who announced his decision to leave politics on Aug 11, remains the only transport minister here who has taken an operator to task publicly. SHIN MIN FILE PHOTO

Breakdown statistics had been less than rosy in the lead-up to that incident. Years after a public inquiry found that poor maintenance was largely responsible for the two crippling rail disruptions in December 2011, the number of major train incidents has not fallen.

 

Last year, there were 12 MRT delays that lasted more than 30 minutes - a four-year high.

In the first half of this year, there were already seven.

The LRT (Light Rail Transit) network is not faring any better. There have been eight major incidents so far this year, compared with five for the whole of last year and 10 in 2013.

In total, Singapore's rail network had 15 major disruptions in the January-June period. That works out to an average of 2.5 per month - up significantly from the 1.7 registered in 2011, which, until now, was the worst year for rail disruptions.

All that, despite the millions in tax dollars spent on a lengthy public inquiry that spelt out detailed steps to be taken to prevent the most disruptive kind of breakdowns.

If Mr Lui's resignation is his way of taking responsibility for the recurring rail incidents, it is honourable of him. Fairly or unfairly, the buck stops at the top.

That Mr Lui had been appointed second defence minister just three months earlier in May lends credence to talk that the July 7 breakdown was the last straw that broke the camel's back.

But from a national perspective, his resignation does not solve anything.

As Workers' Party chief Low Thia Khiang rightly pointed out when asked to comment on Mr Lui's decision, "resignation does not solve the problem...

You have to stay on to solve the problem as a minister".

The Workers' Party had long campaigned for nationalising public transport, and Mr Low raised this obliquely when talking about Mr Lui's decision to quit.

He asked: "Was it because, philosophically, how they treat transport is not correct and not convincing to the Minister for Transport?"

Mr Lui himself put this to rest at a subsequent interview with The Straits Times.

He said the present operating model "can be improved but is fundamentally a sound one".

"All this talk about privatisation, nationalisation and whatever, frankly, I'm quite agnostic to whatever you term it," he said.

PRIVATE OR PUBLIC OPERATOR

Indeed, the debate over whether transport should be run by the private or public sector is an old one.

Those who favour privatisation tout superior efficiency as the top reason. This, however, has been challenged in recent years. Recent studies suggest that it matters little whether an infrastructure or service is in private or public hands.

Simply privatising a service does not necessarily make it better. History is replete with examples of privatisation failing miserably in the public transport arena.

British rail lines in the 1800s were built and run by private businesses. It led to unfettered competition, resulting in financially strapped companies which drew circuitous routes to avoid costly tunnelling.

It was the same story with Melbourne's rail lines and tramways in the early 20th century. Because of competition, there was no coordination, resulting in gaps between services.

For a more recent example, look to Britain's privatisation of its bus services in the Margaret Thatcher years. The outcome? Uncontrolled competition, cherry-picking of routes and diminished service standards. These eventually led

to a steady decline in ridership (except in London), prompting calls for re-nationalisation.

Singapore, too, had its own taste of this. Before SBS Transit was formed in 1973, the island was served by several operators. It was an era of rickety, overcrowded buses and drivers racing one another to bus stops to pick up fares.

So, while privatisation in itself may seem like a good idea, there has been enough evidence to show that public transport in a laissez-faire environment rarely serves consumers well. A strong government hand is often necessary to ensure that service standards are met, and operators do not get into wasteful competitive practices or profiteer.

After decades of deregulation and privatisation starting from the 1970s, countries are beginning to realise that public sector involvement is crucial to the success of public transport.

HYBRID MODEL

Nationalisation is far from a cure-all, either. First, it does not guarantee efficiency. Going by the number of financial lapses flagged regularly by the auditor-general, having a state-run public transport system would not necessarily result in a better deal for commuters or taxpayers.

Second, nationalisation spooks investors. SMRT Corp and SBS Transit today, Singapore Airlines tomorrow?

Yet, state-run transport has worked well in some cases. The Taipei metro, owned and operated by Taipei Rapid Transit Corp, ranks consistently high in customer satisfaction and yet has been able to produce surpluses (profits).

Then, of course, we have the hybrid system which we are now moving towards: where the Government owns all fixed and operating assets, and contracts private companies to run services via competitive tenders.

This, too, has been criticised. London, which started bus contracting more than 30 years ago, has seen its bus subsidies climbing year on year.

According to a 2013 government report, bus subsidies have risen from £24 million or 2 pence per passenger trip in 2001 to £393 million (S$864 million) or 17 pence per passenger trip in 2012.

But supporters of the system point out that service standards have risen too, and that many commuters travel for free.

Singapore's first public bus contract was won by Anglo-Australian group Tower Transit. Based on rough calculations, its winning bid translates to $252,727 per bus per year. That compares with around $154,500 per bus per year under the current regime, based on the combined bus revenue of SBS Transit (financial year 2013) and SMRT (FY2014) divided by their combined fleet.

The estimated cost of the tax-funded Bus Service Enhancement Programme is $185,000 per bus per year, after factoring in the resale value of the first 550 buses after the 10-year programme ends.

While this may not be an apple-to-apple comparison because, in bus contracting, the Government buys and owns all operating assets and infrastructure, one thing is clear - there is no free lunch.

Better service comes at a price.

And whatever model Singapore adopts, there is no running away from the fact that the Government will continue to face some heat when things go south. Because public transport is a public good, commuters are bound to hold those in public office accountable.

Is Mr Lui's move a demonstration of accountability? If it is, it may alas be a misplaced one. For the minister has done much to improve public transport since taking over the white-hot portfolio from Mr Raymond Lim four years ago.

While many of the things he rolled out were already in the blueprint stage during his predecessor's time, it was Mr Lui who executed them. And he executed them well, mostly.

What distinguishes Mr Lui's stint as transport minister is that his policies were full of heart. Stepping out of the hard pragmatism that has characterised Singapore for the last few decades, he put in place welfare initiatives to better shield lower-income groups from fare rises. More concessions for the disabled, the elderly and polytechnic students were also introduced during his tenure.

These were among the first things he said he would look into when he became transport minister in 2011. And he delivered.

On the rail reliability front, the number of shorter MRT disruptions (over five minutes) has fallen year on year - from 1.75 delays per 100,000 train-km to 1.17 last year.

With time, the number of major incidents should likewise be contained - especially with the new penalty framework which

Mr Lui has also been instrumental in introducing. The framework allows for an errant rail operator to be fined up to 10 per cent of its annual fare revenue for an affected line. According to analysts, SMRT could face a fine of up to $50 million for the July 7 incident if it is found to be negligent.

Previously, the maximum fine was $1 million - hardly a deterrent for a company that made an average of more than $100 million in net annual earnings in the last five years.

On the other hand, a fine of $50 million - or even $20 million - will shake the most lackadaisical operator from its slumber.

Mr Lui remains the only transport minister here who has taken an operator to task publicly. In 2012, he personally summoned SMRT's top honchos to voice his displeasure over a spate of breakdowns that had taken place even as the inquiry into the 2011 incidents was going on. The indignity of that occasion must still smart today.

In short, the minister has shown himself to be a leader with head, heart and gall in the right places.

Whoever becomes the next transport minister is quite likely to harvest the fruits of Mr Lui's labour.

So, why then would anyone in Mr Lui's position leave now? The only plausible reasons are that he is doing it for a larger good (of his political party), or for a higher personal calling.

Whichever the case may be, one other thing is clear: his successor has extraordinarily huge shoes to fill.

A version of this article appeared in the print edition of The Straits Times on August 20, 2015, with the headline 'Did Lui Tuck Yew quit to take the rap?'. Print Edition | Subscribe