Debate on ministries' budgets

Khaw: Fares to go up as operating costs rise

Commuters should see public transport service standards rising in the coming years as the Government continues to invest in buses and trains. But they can expect fares to creep up as well.

During a debate on his ministry's budget yesterday, Transport Minister Khaw Boon Wan said: "The investments we are making to improve the transport system are huge."

He pointed out that his ministry's budget is now the second largest among ministries, after the Defence Ministry, and ahead of the Health, National Development and Education ministries.

"Over the next five years, we will provide subsidies of about $5 billion for public bus services and $4 billion to renew our rail operating assets," Mr Khaw said. "Another $20 billion will be invested in infrastructure to further expand the public transport network."

As a result of these investments, service standards will improve. For instance, the bus contracting model had already resulted in additional capacity for more than 100 bus services.

Mr Khaw also noted that rail reliability has improved significantly, with the North-South MRT line - Singapore's oldest - clocking more than 600,000km before a fault occurs, for January and February this year. This is nearly double the standard the line - which has just had its signalling system upgraded - achieved last year .

According to the minister, these improvements to public transport services have increased operating costs by about 60 per cent.

This cost increase has been borne by the Government, but Mr Khaw indicated that commuters are likely to have to share the inflated expenditure eventually.

"Our transport fares are affordable," he said, adding that the Government measures affordability by tracking the percentage of income which lower-income Singaporeans spend on public transport.

"While transport fares must be affordable, we must be careful that they are not priced too cheaply, as maintaining a high quality transport system requires resources," he noted. "Cheap fares are popular, but they are not sustainable."

Mr Khaw said he agreed with Ms Cheng Li Hui (Tampines GRC), who asserted that fare adjustments had lagged rise in operating costs. "I agree with Ms Cheng Li Hui that the current formula is inadequate," he said. "It can be improved to better track total costs."

The minister said the Public Transport Council is currently reviewing the fare formula. "I am confident that they can work out a fair and sustainable arrangement," he added.

Mr Sitoh Yih Pin, chairman of the Government Parliamentary Committee for Transport, asked the minister how long high expenditure for Singapore's transport system would last.

He pointed out that the Transport Ministry's budget this year had increased by more than half, from $9 billion last year to $13.7 billion this year.

Mr Khaw said much of the increase was attributable to capital expenditure on new projects such as Changi Airport Terminal 5, which "may take more than a decade" to complete.

New MRT projects "are also multi-year projects", he added.

"So, it imposes a heavy responsibility on us to make sure that we spend every single dollar very carefully, and at the same time be on the lookout for ways and means to save money."

A version of this article appeared in the print edition of The Straits Times on March 08, 2018, with the headline 'Khaw: Fares to go up as operating costs rise'. Print Edition | Subscribe