In the aftermath of the 7 May 2011 general election, a creeping policy U-turn is becoming discernible in transport and housing policies. There is no grand change of heart yet, but with each announced step, the government is turning its back on its former policy of protecting corporate profitability at the expense of service delivery.
That former policy was demonstrated in a number of ways. For example, when the Northeast metro line was opened in 2003, the ministry allowed SBS Transit, the operator, to keep Buangkok and Woodleigh stations closed because there wasn’t enough traffic to justify costs. SBS Transit, which had most of the bus routes through the northeast corridor, also discontinued several bus services that ran parallel to the line for part of the distance, in order to drive passengers onto the metro line, regardless of whether those commuters’ final destinations were anywhere along the line.
Recall the ‘bus rationalisation’ exercises that riled residents. Whenever a new rail line is built, most trunk bus services running parallel to it are removed.
Hougang and Serangoon residents had the most recent bitter taste of this policy thinking – when the North East Line starting running in 2003. No fewer than a dozen bus services were removed from the corridor. Besides SBS Transit and SMRT services, supplementary Scheme B buses – run by private operators – were also ‘rationalised’.
— Straits Times, 11 June 2011, Go bigger on buses, even as rail network expands, by Christopher Tan
Meanwhile, the Housing and Development Board (HDB) put virtually all its housing program on a Build-to-order (BTO) basis. Under BTO, construction tenders are not even called until a project has pre-sold 70 percent of the flats within it. Another way of looking at it is this: the first 70 percent of buyers have no certainty when or whether their apartment blocks will be completed. The aim of this policy is to sustain pent-up demand — never mind the frustration it causes citizens — in order to protect the profitability of the HDB.
This madness can be traced to the 1980s, when in the wake of the Thatcherite revolution in Britain, the Singapore government embraced the idea of “privatisation” — with a twist. Most of the time, what happened was corporatisation, where an erstwhile government department was reconstituted as a corporate body charged with paying its own way. This idea swept though the transport, housing, health, telecom and power generation sectors, among others. However, in most of these sectors, the second, and essential, part of privatisation was not carried out, that of opening up all these sectors to competition. Instead, the newly-corporatised units continued to enjoy either legal or effective market monopoly (or duopoly) through subsequent regulatory actions of the government.
There were also complaints that these bodies were filled with ex-civil servants, ex-military officers and People’s Action Party (PAP) stalwarts. For example, a quick look at the 2010 Annual Report of SBS Transit will reveal that the non-executive chairman of the Board of Directors, Lim Jit Poh, is a “a former top civil servant” (page 8), while the Chief Executive Officer, Gan Juay Kiat, “started his career in the Singapore Armed Forces where he held several senior command and staff appointments” (page 9). The board also comprises at least two former PAP members of parliament whose names I recognise: Chin Harn Tong and Wee Siew Kim.
Gan Juay Kiat earned a total compensation of between $500,000 and $750,000 in 2010 (see page 76 of the Annual Report). About half was salary and half bonus. The other eight directors (all non-executive) earned a combined $333,000 in directors’ fees, or an average of $42,000 each.
Between the need to go easy on these amakudari personalities, and the dogma of trickle-down economics, the social responsibility of government was all but forgotten. Trickle-down was the convenient excuse to look away. If corporations remain profitable, they would have the means to provide good service, it was believed. Having the means was confused with actually providing it. The possibility that making profits might be achieved at the expense of good service (especially in the absence of competition) seemed to have been ignored.
Not any more. After the erosion of vote-share in the general election, the PAP realised that it cannot be business as usual from now on. Khaw Boon Wan, taking over the housing ministry, announced that he was tweaking policy:
In his Housing Matters blog, Minister Khaw said that he has ordered the HDB to ramp up capacity and to bring forward projects scheduled for early next year to this year.
In line with this, the HDB has confirmed that it will be able to raise the number of build-to-order (BTO) units from the earlier planned record number of 22,000 to 25,000.
He said he also told HDB to “build ahead of demand” by tendering projects as soon as architectural drawings and documents are ready.
At present, a tender is called only after 70 percent of orders have been confirmed, hence the term BTO.
“Given robust demand, I told them to proceed to build, knowing that the orders will definitely come,” he said. “We can return to normal BTO approach after we have stabilised the situation.”
— Yahoo News Singapore Scene, 28 May 2011, HDB ordered to ramp up building of flats. Link.
He is abandoning the 70-percent rule for the time being, building ahead of demand instead to ease the backlog. What he hasn’t yet done is to ease the pricing problem, an equally big issue.
Meanwhile, Lui Tuck Yew, the new transport minister, acknowledged problems with public transport. After personally riding trains and buses soon after taking over the ministry, he announced that:
. . . the Government will be working with the two bus operators to add ‘significant capacity’ to the bus network in the next three to four years, as new rail projects are being built.
He said that if it were left to the bus operators to add capacity to the overall system, they would take a ‘relatively cautious and gradual’ approach.
‘We are mindful that sometimes, it may not be at the speed necessary given the bottlenecks that we face in the transportation network,’ he said after the launch of tunnelling works for the MRT’s Downtown Line Stage 2 in Bukit Timah.
‘So, it is necessary for the Government to work together with the operators so that we can inject this capacity in a very timely fashion,’ he said, but did not elaborate.
Mr Lui, who took over the transport portfolio on May 18, said that adding significant capacity to Singapore’s public transport system was ‘very, very high’ on his to-do list.
‘We do need to buy more trains, we will build more lines, but they will take time to come into effect,’ he said, noting how rail projects can take seven to eight years to materialise. ‘So, for me, buses will be a matter of high priority in the coming months.’
— Straits Times, 9 June 2011, Coming your way: More buses, travel information, by Christopher Tan
But who will pay for the new buses? One idea being examined is that of the government buying and owning the vehicles and letting SBS Transit ad SMRT operate and maintain them, just like the arrangement for train sets. These two companies have the duopoly for public transport in Singapore. With this, the government is taking back responsibility for public transport, now acutely aware that despite the mantra of privatisation, in citizens’ minds, public transport has never left the responsibility of government. Actually, the previous transport minister, Raymond Lim, made the first U-turn, when he took back control of route planning. He must have realised that these corporate entities were not all that interested in planning routes that catered to commuter needs.
Frankly, I am not sure why Lui should be so quick to let SBS Transit — the larger of the two bus operators — off the hook by musing about the government paying for buses. SBS Transit made an after-tax profit of S$54.3 million on revenue of S$720.9 million (7.53 percent), which translated to an 18 percent Return on Shareholders’ Equity (page 6 of Annual Report). This is not particularly rich, but should it be when it is one of a protected duopoly?
No doubt the details will be picked apart and argued over, but the significance is still worth noting. At long last, the government is paying more heed to its social responsibility. Finally, it realises it cannot go on prioritising the concerns of the big corporations, the rich and the powerful. But this is only just the beginning. It is very easy, after giving a few sops to the angriest of the citizens, to revert back to form, since its powers of coercion and muzzling remain in place. It still has not embraced the idea of greater competition for government-linked companies; it has not even begun to question amakudari and the distortions this practice brings.
Keep up the pressure, not just on transport and housing, but over a slew of other issues fundamental to liberty, democratisation and the citizens’ right to speak up. Without these, the U-turn will not be permanent.