For decades, the government claimed to be faithfully wed to Self-reliance. Users must pay the full cost of services, otherwise Singapore will slide into the purgatory called a “welfare state”. At the same time, corporations charged with delivering those services must ensure they run a lean outfit, and what better way to ensure that than to subject them to the discipline of the market, the thinking went.
And so bus services were corporatised (“privatised” they call it — though how accurate that term is, we shall see) and told to sink or swim on their own.
Now rumours abound that the government has left the marital bed, and is having an affair with a new sweetheart called Subsidies.
Deputy Prime Minister and Minister of Finance Tharman Shanmugaratnam confirmed as much when he announced a week ago that the government was giving $1.1 billion to the two public bus operators. Like diamond necklaces given to many a lover, there is no contractual condition attached that is firm enough for clawback should ardour be spurned.
Where does that leave Self-reliance? Is she divorced or not? The situation looks very messy indeed, and there may well be loud denials, though of what precisely (denial of divorce? of messiness?) may never be clear. They are just loud.
* * * * *
Tharman announced that the bus operators are expected to put out 800 new buses over the next five years, of which 550 would be paid for by the government and 250 by the two bus operators. Interestingly, he did not say how many old buses would be withdrawn from service over the same period and thus what the net increase would be. There is the loose remark in the Straits Times that the new buses will “bump up the public bus fleet by 20 per cent” but given this newspaper’s history of uncritical reporting and the absence of information about prospective vehicle retirements and replacements, such a statement is less than credible.
What I can find from SBS Transit’s 2010 Annual Report (page 15) is that its bus fleet numbers 3,003 vehicles, while SMRT has “more than 950 buses” (SMRT’s 2010 Summary Annual Report 2010, page 4). Since each bus is allowed an operational life of 17 years (based on my recollection of a news article I saw recently), this means each year the bus operators retire and presumably replace about 235 vehicles — a figure that is suspiciously close to the 250 buses they themselves have to pay for, as announced by Tharman.
I may be wrong and the 800 new buses would represent a net increase, but if so, would someone please point me to where it’s been said otherwise? What I can see on the Finance Ministry’s website is only this: “The Government will partner public transport operators (PTOs) to add 800 buses over the next five years, or a 20% increase. The Government will provide funding for 550 buses, while the public bus operators will add another 250 buses. The Government will be funding running costs over 10 years. $1.1 billion will be set aside for a Bus Services Enhancement Fund for these commitments.”
* * * * *
That said, the biggest issue is not that of numbers, but of moral hazard, despite the emollient words used here:
Of the 800 buses, 550 will be paid for by the Government, and the rest by operators SBS Transit and SMRT Corp.
The additional buses, equivalent to 20 years’ worth of fleet growth, will bump up the public bus fleet by 20 per cent. Their arrival depends on how quickly bus manufacturers can supply the fleet, and – more crucially – how quickly drivers can be hired.
All in, the Government is handing out a $1.1 billion aid package meant to cover the operating costs of the vehicles over 10 years. It is understood to include salaries for drivers.
Finance Minister and Deputy Prime Minister Tharman Shanmugaratnam had announced the measure in his Budget speech last Friday, and had said the $1.1billion was a ‘one-off’ measure.
For the bus operators, it will not be a case of generating additional revenue out of capital assets they will have obtained for free. Sources reckon the operators will be ‘persuaded’ to increase service frequency and raise drivers’ salaries, so the net effect may well be revenue-neutral to the operators.
— Straits Times, 22 Feb 2012, ‘Most of 800 new buses to roll out in 2 to 3 years’ , by Christoper Tan
It is already unacceptable that the government gave SBS Transit and SMRT sectional monopolies. (The term oligopoly is often used, but since the two companies don’t even run the same routes, I think the term ‘sectional monopolies’ is more accurate). Surely, in return for the right to operate sectional monopolies, the companies are expected to provide all the necessary levels of service and growth that are needed? It is not even that the government has been tight-fisted about approving fare increases. Almost every year, there has been an increase, and approvals to fare increase requests are liberally given on the basis that the companies should not be held back from being profitable.
But what the new scheme creates is a class of assets, together with their operating costs, paid for by the public. Yet the profits from the application of these assets, including profits from economies of scale, flow into private purses — the directors, managers and shareholders.
Is this not a form of corruption?
The government may say that the reality is that the companies are unable to fund the rapid expansion in fleet sizes that is needed to satisfy public demand. They may say SBS Transit made “only” S$14.8 million on bus operations revenue of $549 million in Fiscal Year 2010. (See 2010 Annual Report, page 81. It appears that this figure represents profit before tax). SMRT’s bus revenue for FY 2010 was S$199.7 million, on which it made an operating loss of S$1.9 million. (See 2010 Summary Annual Report, page 4). Unless commuters are prepared to stomach huge fare increases, there is no way fleet expansion can come about.
But what happened to the old compact where they were supposed to run a lean outfit? Weren’t they supposed to find their own cost savings so they could invest for the future? Didn’t they have an obligation to grow supply in tandem with demand?
As for not being able to find enough drivers because pay is too low, isn’t that a problem any commercial enterprise is supposed to solve by itself? Must ministers rush in with sweeteners to “persuade” the company to raise salary levels? If SBS Transit and SMRT can rely on such kindness, why not Tan Ah Kow and Sons Pte Ltd?
I anticipate the argument that unlike other businesses, the bus companies weren’t free to set their fares, so how could they be expected to generate enough money to invest for growth? This is a bit of a canard because in competitive markets, companies can’t set prices freely either; they have to watch the competition. Sectional monopolies face no competition. Restraints on price-setting occur in both situations. Stop pleading special treatment.
Moreover, if the bus companies are supposed to operate like any commercial enterprise and need to fund a large expansion, why couldn’t these companies do as other corporations do and go to the bond market to raise the required capital, paying the market rates of interest?
It annoys me that this and other alternatives seem not to have been considered. For example, if the government still thinks it is wise to put S$1.1 billion into augmenting bus services, why not treat it as an injection of equity capital, thereby diluting private shareholdings (so existing shareholders get less of a free lunch)? Alternatively, why not set up a third bus company, wholly owned by the government, that competes with the two incumbents? To commuters, it is still the same — more buses on the road — but this at least avoids moral hazard.
* * * * *
It’s not as if the warning signs had not been seen earlier. Several years before, even the Ministry of Transport realised that leaving it to the bus companies to propose routes left much to be desired. Perhaps complaints that bus companies were plying routes that served their bottom lines more than public needs finally got through the ministry. Then-transport minister Raymond Lim instructed the Land Transport Authority (LTA) to take over the job of designing the bus network by the end of 2009.
Speaking during the budget debate in parliament on 12 February 2009, he said:
When LTA takes over bus network planning, a single agency would be able to plan the entire transport network – bus, rail and roads – holistically as one integrated system, from the commuter’s point of view. Centralised planning will allow us to make the entire public transport journey, from the start to the end, as integrated and as seamless as possible, so that travel is faster and more convenient. For example, feeder bus routes will be reviewed to provide more direct and faster connections to the bus interchanges and MRT stations.
[snip]
Once the new bus network has been implemented, LTA will then look at how best to package the bus routes for competitive tendering. . . . We are not looking at competition ‘in’ the market where operators compete head-to-head for market share. Experience elsewhere has shown that in the public transport sector, this type of competition will destroy integration and lead to wasteful duplication. Instead, we are looking at competition ‘for’ the market where the operators compete to provide a package of bus services or run a rail line. By introducing greater contestability to the public transport sector, commuters will benefit as the operators would be incentivised to improve efficiency, service quality and innovation. Thus the public interest is best served not by simply having a single public transport operator . . . . but by ensuring there is the threat of competition to keep these dominant market players on their toes.
— Parliamentary Reports, 12 February 2009.
It has been three years since. How many route improvements have we seen? How many new routes added? Has there been any competitive tendering? Do you get the feeling that the incumbent interests of the bus companies might have stymied change?
But there was one bit in Raymond Lim’s speech that is heavy with irony today, though you ought to substitute “financial viability” with the less euphemistic term “profitability” :
Financial viability is an important discipline that bears highlighting. . . . If the system is not financially sustainable, the impact may not be felt immediately. But over time, it will pull down the quality of the whole system, as the network will not be able to generate enough revenue for the operator to invest and upkeep the quality of bus services.
— ibid.
So, for all the care, concern, and dollops of indulgence for SBS Transit’s and SMRT’s bottom line, guess what, they still didn’t invest in sufficient capacity growth.
* * * * *
But let me speak plainly. It’s no use just bitching about the bus operators, for we shouldn’t deceive ourselves: improving our public transport is going to cost some. It was always a mirage to think that the “user pays” rule is enough for a public service that must remain affordable to the less well-off. This old notion that we can run a country without transfer subsidies is being shown for what it has always been — an illusion. The hope that by corporatising public services, the government can duck hard questions, is being shown for what it is too — cowardice, laziness and a swooning delusion that people will automatically believe that some other party is responsible for any mess just because the government has said so.
The big danger right now is the messiness that comes from refusing to admit that they have been wrong. Denial makes things worse. Denial continues this half-baked scheme where semi-private entities (chimeras, I call them) are supposed to provide public services but when they fail, it is the public purse that is opened up. Meanwhile fat salaries and dividends continue to be paid to a privileged few in the name of “market rates”.
Instead of feeding these grotesque chimeras with S$1.1 billion dollars, we should slay them. Nationalise.
Yawning Bread 
Excellent Article. Hope these points are seized by the oppos and voice it in the parliment.
Several terms come to mind:
“too big to fail”
“private profits, public risks”
If SBS and SMRT are unable to deliver, perhaps the contract for running the public transport system should be awarded to some other company that can.
To make the companies learn and grow, they need to be weaned and face the consequences. not always turn around and cry to their ‘parents’. Somemore the monies are people’s money not govt’s money. Bad custodians.
Thanks Yawning bread. Now I wish some of the daft 60.1% would realise they need to open up their mind and read more than the Straits times.
2 thumbs up article. If I hv more thumbs, I’ll put them all up
Great write up , Alex 1
Thanks for all the research into this mess of a hand-out that just had too many loose ends.
Dear Alex, do you know that our bus fare are artifically low ?? how can the bus operation be competitive when there is big hoo haa everytime fare are hike…
One should pay what you used for.
Do you know what Nationalisation mean? it mean socialisation of loss making bus operation, if you dunno please do not talk big.
“it mean socialisation of loss making bus operation”. That’s right; that’s another way of saying “subsidies and transfer payments”. Nothing wrong with that. Socialism is not evil, you know.
I agree, transportation ahould be nationalized. This whole country belongs to the nation, not the govt, not the ruling party. As long as we pay tax, we have a stake in it. Tell me has anyone seen how much 1.1 billion is.
“As long as we pay tax”
Even if we don’t pay tax.
Remember, things work because we consent to live under rules where we recognize things like private ownership over property that the owners do not physically possess or manufacture, and inheritance and the list goes on.
Don’t let the rich con you that they are doing you a favour by living in the same country as you. Their “wealth” is meaningless without your recognition of it.
One thing I want to debunk. Welfare and socialism are not magnanimous concessions of the well off to the rest of society.
The well off cannot be well off unless the rest of us consent to live under rules where the well off benefit more.
Welfare and socialism are the bargaining chips in the generations old game we play with them. It’s not “charity”. It’s “rent”.
do you know you are contradicting yourself, you complain of moral hazard and then you say Nothing wrong with “socialisation of loss making bus operation”…
have gone thru the number, the bus companies wun make money from this they will make losses….
this moral hzard you talking about is actualy subsidy to the bus communter… ok you kick up a big fuss over this but whole sale ownership of loss making bus operation is okay you are not making any sense here,,,,
if transport companies are really so profitable as you claim, can I ask how you many shares of the 2 companies do you own???
this is matter of transparency
I can tell you here I dun own any shares, I dun commute by car or own a car, I commute by buses and rail… but I wan better bus services and I will pay for it, I dun wan to have to be forced to take a cab because of sucky services,,,But I am willing to pay what I use cause I am not a cheapo…
what is your agenda!!!!??!?!
If the upper classes had people like “bus lover”, we would all be better off.
Unfortunately people like “bus lover” are all in the “99%”.
The upper classes are happy that people like “bus lover” keep the working classes paying their way.
How else can we afford sinecures and corporate bailouts and monopolies?
What do you think that S$1.1 billion is?
This 1.1billion is subsidy to help the company make more profit of which goes into the pockets of the board members and not to the people. Their loss needs to scrutinized and made accountable to the people. This is siphoning of money into pockets of a few already big salary earners, exarcerbating income inequality not based on merits.
Citizens are told to not rely on subsidies because it will make them weak. Agree. Companies should not rely on subsidies as well especially of oligopolies. They as private companies should attract worthy people who knows how to maximise the usage of their revenue with the nature of the market. The ‘artificial low fare’ is balanced by the oligopoly. With no competition, their share of ridership is a given. Why do they need to change the units, put in tv units that no one wants, run buses like freezers for several routes? The subsidies from the govt only makes them sluggish, complacent and spendthrift. By pushing these companies under ‘private’ holdings, govt removes access for wider public scrutiny, giving them ‘sovereign’ rights to not be answerable for bad performance other than the frequent compromise on security.
This privatisation provides neither security nor innovation and higher risk of non-transparency. If this is the case, we lose nothing in moving it back to nationalised transportation. A more direct hit on the governments pockets that should be highly transparent and accountable to the people. Then expenses will drop not having to reward the shareholders through dividends.
“socialisation of loss”
This happened for corporations and rich people in the late 90’s (Asian Financial Crisis). Look for companies with hyphenated names. There is no equivalent of “bus lover” in that social class, they mostly quietly took the bailouts – guilt for taking handouts is so working class.
What wrong with making loss in the bus operation ? Everyone contribute to tax of Singapore government.
Dont tell me a simple transportation as a slight warfare system to Singaporean also cannot ?
Why must keep sucking blood from stone ?
If you dont know , please do not talk big. Keep continue PLP your master
Bus fares here are not “artificially low”. It costs more to travel in Singapore by public transport than in HK and Taiwan.
comfirm PAP man!
1.1 billion dollars for 550 buses are they bullet proofed? What are the specifications for all these buses? Who accepted the tender price for the buses? Is it possible that mistakes are made to agree to pricing of the buses? What are country of origin of these buses?
DOES THE CITIZENS OF SINGAPORE HAVE THE RIGHTS TO QUESTION THE MINISTER IF WRONG DECISIONS ARE BEING MADE BY THE MINISTER AND CABINET FOR THE PURCHASES OF THE BUSES USING STATE FUNDS WHICH THE CITIZENS FIND QUESTIONABLE.
The $1.1 billion is not just for the vehicles, but for all their operational costs (including salaries of drivers, and I assume maintenance and spare parts) for 10 years.
Fully agree with you. Nationalization is the way to go. It wouldn’t be too difficult since Temasek Holdings is the majority shareholder.
I am surprised that they do not do a sweatheart deal like some of the local govts. do in the States. The local govt. loans the money to the transport company. The transport company buys buses from a company whos owner just happens to be a brother in law to some one in the local govt. Then after a period of time the govt forgives the loan.
u have cut to the core n called a spade a spade indeed and called out the Chimeras. What the government has done with the $1 billion outright purchase of these buses is shocking! is it even constitutional or legal for the public listed Bus company to accept this and make money from something they didnt pay for? Where is the corporate governance of this privatised company? As for using taxpayers money to subsidise the bus purchases is it even constitutional? The government’s reactions of late post GE smacks of a rudderless team that is trying to do quick fixes with elections issues such as transportation. as with many other actions by their Chimeras and civil service, the actions show little thought about consquences and implications. it is like trying to plug a ship full of holes without thinking through the big picture of what r the options, what is right or wrong and what is best for the people and the country. Our government owes the people an explanation and apology for this. it is not too late for them to consider other more proper ways such as perhaps converting the $1 billion to a corporate loan to the SBS.? am no business expert but like many people i can at least recognise the subsidy as wrong. will they ?
Was about to say we need more lawyers in Parliament, then realised that there are many but with weird sense of justice. So how to cry foul ?
“She” is divorced, but “He” held “Himself” liable for maintenance. In this case, a $1.1 billion instalment and god knows how many other instalments in the future.
Since the objective is to increase public bus fleet by 20%, and presumably both operators are unwilling (or cannot afford) to invest on their own, I wonder why the government did not consider bringing in new players into the market. I am sure bus operators across the causeway would be more than happy to compete. Not only will this add some real competition, it certainly also increases capacity which is what the intent really is.
lol…the article said govt is behind sbs, and how they enjoyed monopoly of the transport system, which i agree. then the last sentence is “nationalise”???? i think you are contradicting yourself, dear author.
the problem is lack of free-market competition. more competition –> lower costs, higher quality 🙂
inefficiencies, rising costs, poorer qualities in monopolies are expected….. the real disease is the lack of free-market competition
nationalising just transfers monopoly ownership to another bunch of people
You have a point. Nationalisation can only work when there are democratic checks and balances to hold the government accountable,
Services to the Public must never endanger Dividends to Shareholders. Profits are paramount, especially for the major 55% shareholder. This small $1.1 billion contribution from the Public purse will ensure these profits in the near future. If it doesn’t work, another small increase in fares should certainly be considered.
@The, this is not evil “socialisation of loss making bus operation” like other stupid countries.
This is “subsidies, payments & government intervention to ensure continued profitability of private source of revenue”.
Be glad for this proper use of your CPF monies.
Right, man. I vaguely remember my late father telling me that SBS dividends were more or less guarantteed by you-know-who.
Back then, the Governmnet of the day, deem it necessary to interven and put in technocrates to revamp ALL the bus companies.
I would rather, they now take a bolder step by nationalising both the Bus operation & the MRT. Will have no quarrel with S$1.1B or S$10B for that matter.
Another point, I mentioned else where is that NOmore Bendy Buses be purchased. Some planners/engineers seem ignorant of safe Turning radius needed on our roads.
Or that 95% or more lanes on our roads were meant for passenger cars, not trucks, not buses. ( my oberservation, so I stand corrected)
“Is this not a form of corruption?”
Guess which government in the world will always tell you the same old excuses that
“we are different and unique from other countries”
when it comes to government-invested company engaing in price fixing and collusion, government official in conflict of interest in multiple roles, dubious accounting practices and secrecy of state monies that go unaccounted for etc , serious lack of transparency and accountability, hiding behind their own make-up law for justification (oh what we do is legal nevermind if it is against moral or conscience or good business-practice).
It is a shame that in this age of internet, certain government still hookwink the people, still thinking that the local are daft and stupid .
Many years ago, I worked in an airline that is now a well known brand.
I was a young man and I suggested that other airlines were using this and that euipment for their in flight service.
My manager ( then ) with great aloofness, said: ” we are known for our innovative ideas.. we do not ‘copy’ others!!”
Since then, I never offered any opinions to anyone in Government or GLC or associated with them.
They are truly in a world all by themselves.. I would leave them alone if not for their annoying habit of introducing policies that affect me.
I have never voted for them anyway.
I can’t help bringing up Silvia Lim’s speech in 2006 when she first became an NCMP. She touched on major concerns likely to affect our society on larger scale if PAP doesn’t pay heed earlier.
http://theonlinecitizen.com/2006/12/ncmp-sylvia-lim-population-immigration-and-rooting-singaporeans/
The 2006 election rally at Raffle Place still live vividly in everyone mind when LHL grumbled about spending ALL HIS TIME fixing his opponent that would threaten his term to come up with “GOOD” policies. Indeed, after receiving strong mandate in 2006, he still screwed up most of his policies as witnessed in the last watershed election
Weak leadership and poor foresight resulted in problems intertwined across the society, not just isolated to transportation. Adding insult to injuries is being deaf to all criticisms even when they came from reasonable opposing voices. Couple of PAP back-benchers criticized Silvia for trying to push panic button in 2006, 5 years later who is more panicky? PAP!
“Raiding” our $1.1bil reserve to salvage a profit-oriented entity is one of those signs pointing to society already in crisis as Silvia has rightfully foretold in 2006. We have heard SMRT is not going to be perfect, our DBS is facing security issues, the freaky flood is not going away due to limited space, and now Gan Kim Yong is clamoring for more overseas Singaporean doctors to return home because our hospitals are over-stretched. All of a sudden, local bred assets became so valuable and deserved better notice when they were overlooked in the past? What were the reasons behind Singaporeans wanting to live and work overseas in the first place; this is something PAP should do soul searching. However, I believe the findings will not be very far from the reason facing our unimpressive fertility rate – stress, cost, human rights issue and many more policies that make Singaporeans weary every passing day.
If LKY was worried about freak elections, I have already found PAP’s flaw freakier.
Excellent article. Thanks, Alex.
We need more people like you to analyse what’s wrong with the way Singapore is managed
You fine them a few hundred thousands for security lapses, then give them a billion to buy buses. Looks like net profit to me. Oh I can’t wait for the fares to hike again because of “increased operational costs” from running these additional buses.
“You fine them a few hundred thousands for security lapses,”
And that goes into their operating costs – which are then passed on to us!!
Hi Alex,
As much as I agreed with you to nationalise, I very much doubt the PAP government will. It is in a way admitting they have been wrong for the past decades. Plus these issue of nationalising the transport companies has been brought up by oppositions in several occassion and more recently by WP. Hence I feel the more they will deny.
And therefore now we have this new “sweetener” trying to undo what is wrong. Will it work? Frankly I don’t think so.
I’ll say bring back the prviate bus operators. Not the ultimate solution but at least It will certainly increases some capacity
Great analysis, Alex. Would love to see bus services nationalised. Similar scenario in the UK, where privatisation of train services has been pretty disastrous.
Particularly disturbed by this sentence: “Sources reckon the operators will be ‘persuaded’ to increase service frequency and raise drivers’ salaries, so the net effect may well be revenue-neutral to the operators.” Nice reporting, Straits Times. Unattributed quote hedged with “reckon” and “may well be”, so essentially meaningless. Also, sinister scare quotes around “persuaded”. Persuaded as in… bribed? Threatened? What?
Mr Alex, this is a fine commentary you have here. But I would like to ask what are some ways we can explore to hopefully dissuade our Government from pumping our taxpayers’ money into these privatised entities? Will a petition with a certain number of signatures submitted to Ministry of Transport evoke a certain effect?
Exactly what i had in mind when govt announced the ‘free gift’ from taxpayers…
Alex, excellent article. Many thumbs up.
I agree with AXT. The PAP govt will never nationalise. They will never admit they are wrong. So they are now using taxpayers money to shore up the abilities of these public-listed transport companies to meet their social obligations. This is a really a very sad state of affairs. And disgusting too.
I believe this won’t be the last time taxpayers monies will be used to “bail” out these transport companies.
My question is, does the PTOs have foreign investor?
Almost surely, since they are listed on the stock exchange.
this use of public money for a private company is one of several things happening now which do not make sense, and raise Red Flags. what is being done for bus companies now means it can be repeated for Any publicly listed company… so where does it stop? also, if a publicly listed company is unable to run itself properly, then why are its managers getting high financial rewards? why reward – or even retain – people who cant do their job? at least Saw PH got the retail aspects singing, tho she flopped on actual transport.
then there is the matter of scholarships for foreigners. if prvt cos, stat boards and such want to give foreigners scholarships, let them go advertise in those foreign countries. scholarships offered in spore must be for singaporeans. otherwise, where does it end? is it acceptable tt the argument of meritocracy be applied to the choice of ministers? let us scour the world for the best, since there seems to be such a problem getting quality here. it says a lot that, in his parl speech during the min pay debate, lee hsien loong said that all but the DPMs and one min are on the lowest pay scale. some of those mins have been there for quite a bit….
there are also the odd arguments for not holding a by-election in hougang. so how any seats can be left empty before a by-election is called? going by the reasoning flown by an MP, it would seem to be at least 40. half of spore.
then, as u stare out your shoe-box flat at the curtained window of your neighbour – these days, flats have no view – other questions arise: Why are we in this pickle? What happened to far-sightedness? How come a top-class edu system cant produce pple bosses here want to hire? What happened to the old maxim of not flashing your cash? How is it education has not taught us basic consideration? How do scholars learn when their mistakes are swept under the carpet and they ar nevertheless promoted? How do academic results indicate ability in the real world? How do u cater to 6.5mill pple when you cant cater to 5.2mill? What happens when all your cpf is spent on your home and you are old and no one wants to employ you? Why do we expect rookie MPs to perform at the same level as those who’v been 10 yrs in the job but are obviously still not up to snuff? Why the heck are any of us still here when the sporean is considered a dog, daft and sub-standard? And why is this useless lot being asked to plse breed?
Couldn’t agree more with the call to nationalize the transport companies.
It didn’t come as a surprise that the government decides with essentially a $1.1 billion subsidies to SBS and SMRT. Afterall, Singapore’s economy growth has been partly fueled by corporate subsidies to MNCs and GLCs.
It’s a matter of time that due to incompetent management that the Government have to resort to their most hated “welfare state” to stay in power.
Let’s ask the question no one is looking at. We all know the powers to be way of giving you X to get back 2X or 3X afterwards. This 1.1B handout may the the first hand out a chicken then almost 2/3 of it back game play.
All cars in Singapore by the time we buy them have around 1.75% duty of them attached by various names which mean the paid price is 2.75 of the base cost. If bus are not exempt from these duties it means that the on surface 1.1B given to buy the buses, apron 0.69999B get returned to the government in the form of duties. No a bad PR move. Big flashy front move that costly a fraction of what was told it costs.
Looking at a posting on the SMRT annual report figures – some thing seems wrong. SMRT only makes 3% profit on turnover ? A run through of their expenses in the P&L would give a great insight where the profit went. If you pay a CEO almost 2 million that is like 0.4% of your turnover (grossly high) what of the rest of her crew. One wonders how much the guys who are working to run the business actually get by this I mean the drivers, the mechanics, the interchange staff. It seem to have certain similar look to some other pay scheme that is held in high regard here. In this kind of industry, the main costs are fuel, maintainnece, salaries, fleet replacement. Rentals should be non existence since the land where depots and offices are their own.
Are you referring to Certificates of Entitlement? It was mentioned in the Sunday Times (26 Feb 2012) that public bus companies are exempted
I hope some of the money is going to be used to teach the drivers how to drive properly
In Western Europe, you can stand in buses without holding on to anything – even when the bus is slowing down or accelerating.
1stly, your article is a big flaw and attempts to dissect each component as though as they are independent. Its like saying you shouldn’t have menses, but because you are female you have it.
Why not start your own bus company and tender for the bus routes instead of expecting a nanny state to do all the work?
“Why not start your own bus company and tender for the bus routes instead of expecting a nanny state to do all the work?”
And your comment is one big flaw because there ***are*** people who want to do it but the govt under pressure from duopoly won’t allow it. Know about something first before you write about it.
Alex. have you noticed that your wildest, staunchest opponents make the same hysterical “You are bloody wrong” comments in bad grammar? Their arguments, if you can call it that, sound like a PAP suit minus the O Level passes.
Bravo for including their comments from the desperate lap dogs, I’m just curious if they are the same guys assigned to flame your blog or they are just random volunteers clocking in some brownie points.
what do people want exactly? LTA ordering the two bus companies to take out bank loans or issue bonds to buy new buses to expand services, and pass on the interest bill to passengers in higher fares?
taking YB’s two suggestions
1. reat it i.e. $1.1B as an injection of equity capital, thereby diluting private shareholdings — that requires the approval of existing shareholders, who will meet, discuss, complain, write to ST forum/TemasekReview… that might be very transparent, but is transparency the Government’s favorite objective? it obviously would not be quick
2. set up a third bus company, wholly owned by the government, — then we would have the government directly competing with two “private” companies; further, by losing their duopoly, the companies may well need to be compensated; while I am not clear about the terms of their existing franchise, I remember that when Singtel lost its telecom monopoly to allow M1 and Starhub to get licenses, the government paid a compensation of $1B or thereabouts
the $1.1B subsidy is of course contrary to the government’s past policy and is ideologically untidy, but it gets the buses on the road quickly and is not affected by all those objections swirling around; Singapore Inc plows forwards in its usual way
I will respond to your points in a separate post. Too long for a comment here.
I agree that it is best to nationalise public transport since all these smart CEOs cannot even run monopoly businesses. I never understand why they have to aircondition bus terminals when commuters are more concerned with getting home or work quickly and not shopping or eating. It is a grave mistake to donate 1.1b of our money. I don’t think we will see any returns.
Taking into account the operating costs, $1.1 billion is still a lot of money. It doesn’t even justify the need for removing more seats, so they can cram more “sardines” into the tin can.
It also calls to question why better maintenance isn’t being performed on the buses. Is it actually more cost efficient to routinely replace a fleet of buses instead of repairing and upgrading them?
This article… all thumbs up, way, way up! I used to pay only 25 cents for feeder bus service not that long ago (not my grandfather’s time, not even my father’s time… all you PAPAYA assholes out there), now it is a @#$%& 73 cents per trip!! WTF!!!
Aiya, the driving now is pretty bad too.
Then what about the service? SBS hires people who can’t speak or understand English. Many fail to even know their route. WTH, right? Why should we pay premium pricing to get kicked around?
I miss the old uncles from the 80s. They behaved a bit loudly but at least they knew their routes! Er… not those who anyhow changed their routes and threatened to beat you up, if you dare to complain. I’ll put up with the Ah Beng songs, whistling and the rack of gold chains if they can just get me to my destination and drive smoothly.
if the government is so sure of the expected increased demand for the buses, it seems to me its a clear cut ‘sure earn money’ business.
if this is so, why is the bus companies not loaning $ to buy bus, just to capture this increase demand?
Why government need to give free $?
i really do not understand the rational behind.The government is going to use tax payer money to purchase new fleet of buses for public listed companies .
If the bus company belong to the nation or the government i will fully support such initiative with both hand up ! but this arrangement i cannot comprehend .
Can someone from the MOF enlighten my thought ?
may be soon tax payer money will use to buy machinery for other listed company in town such as St James , bread talk , osim etc
Dear Alex and netizens,
It is good to see and read many different views in this good article. Look at the big picture. Is there a correlation between the bus subsidy and the flat downgrade? We were told to sell 3 room for a studio, but the bulk of the proceeds goes to cpf. Now the 1.1B is a gift to the two profitable public transport operators. TH is the main and major shareholder. Just thinking aloud that the money from taxpayers can be siphoned ‘legally’ from within. Why they need to move these monies?
If TH is not the main player, would you think the govt be transferring from the right hand to the left?
These two operators are public listed companies. If they need funding for expansion or whatever reasons, they should approach their shareholders and the financial institutions. We are NOT a welfare state. They are profitable for a numbers of years and one of the operators is expanding into battery manufacturing (a deviation from their main operation). This funding is not acceptable and should be debated in Parliament to reverse his plan.
We have FTs in our Cabinet ‘deserving’ millions of dollars from taxpayers. Taxpayers pay them MILLIONS with these real talents but we are plight with numerous problems and social ills. All taxpayers should stand firm and engage them. It is our hard-earn money!!!
The 2 transport operators seem to be nationalising (aided by our government) their “loss-making” or “less profitable” line of business and privatising other more profitable business segments (eg. trains and taxis)!!
LOL, after all those years of profitability and ploughing the profits back to the Singapore Government Treasury by the SMRT and SBS. The sudden realisation was that it (…profits) had come at the cost of capital investments and those years of under-investments now have come to haunt the government as public transportation cannot meet the public expectations of a reliable and efficient service.
Corporatisation of public transportation companies is an oxymoron – a contradiction of providing public goods & services and private management focus on profits and shareholders returns.
Public transportation, in the eyes of economists, remains a public service provider much like public housing, healthcare and education. Profits should not be the focus of a public transportation company but rather service efficiency and productivity to ensure a smooth and non-disruptive transport of the masses.
To come soon after the housing (HDB) debacle is an indication that our million-dollar ministers are not justifying their huge pay packets! The common denominator is that the Singapore government unlike in the past (without the million dollar pay issues) are currently reactive, not proactive in managing problems.
To increase immigration many times from 2003 till to date and not preempting infrastructural needs of an increasing massive population is just poor management or rather, not seeing any big picture!
Ex-MND Minister Mah Bow Tan’s non decision or action in building more HDB flats as the population bulges due to immigration was pure mismanagement. What was he doing during those years? Likewise, the hiccups in public transportation are not an exception but rather a recurring affair. Currently, land public transport is not time effective due to road traffic congestion and greater numbers of private vehicles on the road. Will more buses solve the problem or accelerate the grid-lock?
“the Singapore government unlike in the past”
With LKY out of the cabinet, there are now no Ministers who can say things in a cutting pithy manner (remember S Rajaratnam and Goh Keng Swee). They all sound like middle managers.
It’s a symptom of something deeper.
a thought just crossed my mind that if they can do this subsidy openly for this issue, one wonders what else has been done for other govt related companies closer to the heart n further up the totem pole all in the name of what’s “best” for the nation. not implying anything here but their action with the billion dollar subsidy just beggars such million dollar questions.
Govt using taxpayers money to help SBS and SMRT to build roads, build tracks, buy trains and buy buses is not new but service level had decreased over the years instead and getting worse.
When security lapse at SMRT depots, it is not government responsibility but SMRT as private company is liable but when comes to using taxpayer’s money, SMRT and SBS are public companies and public transport.
Since all along SMRT and SBS as private companies are using taxpayers money anyway, might as well follow WP manifesto and nationalise Public Transport like the old days of 1980s-1990s.
what do u think of giving transport vouchers to low income workers for their journey to their workplaces?
This is what they always claim to be 1st world standard, first in the world to pay highest salary to the CEO for running a 1st world train services to that of 3rd standard and now using taxpayers’ money to beef up its low standard.
This $1.1 billion subsidies should be claimed back from the ex-CEO of SMRT.
Period
This is my first time visiting your site,cos I am just curious.the govt have $ to subsidize the buses but no $ to subsidize the so call welfare-group,they call it welfarezimm.needs duck/chicken eggs to be throw at them.say no money,but suddenly got $1.billion to gave away,recently saw many senior citizen went about ESP.new circle lines, cos they are bore at home.some traveling alone to beat dementia,depression I think.I am one myself,I don’t travel for the sake of traveling,I found the fares also not cheap although I have subsidize fares,and use up very quickly.even the taxi I could hardly afford,unless I have very heavy loads to carry.I think the govt is so very stingy to subsidize.only knows how to makes profit.for ie.there is only one bus that goes to labordor park only on sat/sun why can’t it let a private bus operate there.I went there and found the place very relax.only you own a private car then you can access there or by taxi,during weekdays.so you see if never makes money the buses never goes there.
This is as usual the government artifically supporting private business.
No one has wanted an inquiry into the knowledge and competence of the people running these companies , their profits , efficiency and pay structure.
Thank goodness the government only has a city to run and not a real country