PTC intends to continue taking ‘gradual approach’ to future fare adjustments: Chee Hong Tat

SINGAPORE – Singapore’s regulator for public transport fares intends to continue taking a “gradual approach” towards future fare adjustments to mitigate the impact on passengers, said Transport Minister Chee Hong Tat.

Mr Chee on Oct 16 set out the Public Transport Council’s (PTC) approach to fare reviews in response to questions from MPs about the upcoming fare increase announced in September.

Bus and train fares will go up by 10 cents from Dec 28 for adults who pay by card, after the PTC decided to raise fares by 6 per cent in 2024 to help operators cover rising costs. Fares were also raised in 2023, 2022 and 2021.

The latest fare hike means that an adult passenger taking the MRT from Tampines to Raffles Place will pay $2.02 from Dec 28, up from $1.92 now.

Public transport fares are likely to continue rising due to a 12.9 per cent hike that the PTC has rolled over to future fare review exercises.

The Government will provide an extra $250 million in subsidies to cover the deferred increase in 2025, on top of the $2 billion it already forks out to fund bus and train services. This is to ensure the financial viability of the public transport operators here, and ensure service standards, including any planned improvements, are not compromised, Mr Chee told MPs.

Responding to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), Ms Poh Li San (Sembawang GRC) and Nominated MP Neil Parekh, Mr Chee said the promise of additional government subsidies gave the PTC the assurance to grant a smaller fare increase in 2024, knowing that the higher costs of providing public transport would be accounted for.

The minister noted that the 6 per cent hike that the PTC granted this time is less than a third of the maximum allowable increase of 18.9 per cent for 2024.

This 18.9 per cent figure comprised a 3.3 per cent hike based on the fare adjustment formula, which takes into account core inflation, wage growth and changes in energy prices, as well as a deferred 15.6 per cent hike that had been rolled over from 2023.

However, while the Government has stepped in over the past few years to cover deferred fare hikes, Mr Chee said these additional subsidies are ultimately borne by current and future generations of taxpayers.

“We should therefore gradually close the gap over time where possible, which is what PTC is doing for this year’s fare review,” he added.

Asked by Mr Parekh what steps the operators have taken so far to improve their service levels given the recent fare increases, Mr Chee said the Land Transport Authority (LTA) has put in place different measures to hold them accountable.

Operators will be fined for lapses and given incentives for good performance, he added.

“There are carrots and sticks within the system to incentivise the rail and bus operators to maintain high service and reliability standards, without directly using the fare review exercise to achieve this outcome,” he said.

Responding to Ms Poh on how Singapore’s fare hikes compare with those in other large cities such as Hong Kong, Taipei and Seoul, Mr Chee said different cities have different fare structures and revenue models.

Cities such as Hong Kong and London have adjusted their fares every year, he noted, while others like Seoul kept fares unchanged for many years before making significant increases in the past one to two years to account for higher costs.

He said the PTC’s approach is to ensure that fare adjustments are gradual, so the impact on commuters is more manageable.

The council also monitors the proportion of household income that is spent on public transport, an indicator of affordability, he added.

For lower-income households, this proportion stood at 2.4 per cent in 2023, down from 3.1 per cent in 2014. For the average public transport user, the proportion was 1.7 per cent in 2023, down from 2.2 per cent in 2014. In 2024, the proportion of household income spent on public transport is expected to remain similar to 2023 levels.

When there are fare increases, Mr Chee said the Government also provides public transport vouchers to cushion the blow on lower-income households.

These vouchers cover a part of the fare increase, and given the concerns over cost of living, he said the Government decided to raise the income eligibility criterion for the vouchers from a monthly household income per person of $1,600 to $1,800, so 60,000 more households qualify.

The Government has also raised the voucher amount from $50 to $60, which Mr Chee said will cover about six months of the pending fare increase.