ERPZ Stop Mugging. Start Learning.

Educating about Transport

By Kevin

Colourful Choices

As we all move forward in our personal development, we realise that including the citizens in policy decisions and complex issues that involves their personal welfare is important. I was really heartened to see Lui Tuck Yew takes his time to write Facebook notes that intelligently engages the public - the ones explaining the formula PTC used for manage the fares and also the issue on quality of service. It is important to show that while there may be some problems with the system, it can never be perfect and that we need to get together and work on it. Suggestions should come forth, without fear of being shot down even if they may be truly dull (I personally don't agree with public transport nationalization).

As Tim Harford said, we should acknowledge the complexity of the world and stop suffering from the God Complex - leaders who have the courage to say, "I've no idea if this works but information I gathered point this way; there's a chance we may fail but let's work together to try something else if that really happens."

Using moralistic arguments or trying too hard to stand by an action that have been taken usually produce flawed arguments that reduces a leader's credibility. Bear in mind that there's no end to issues of 'fairness'. Lim Boon Heng's statements cited in this article is such a grave disappointment. It's amazing how the reporter arranged the quotes to stay perfectly objective while surfacing the flaws of the argument made. Given the education levels of Singaporeans today, it seemed somewhat embarrassing that our leaders are trying to bullshit us this way:

"You know raising bus fares is unpopular," he said. "But if we cannot raise bus fares, how will that impact your fellow workers? I am sure you will understand that it is not fair if they cannot get wage increases."

"But their wage increase will be funded by fare increases, which adversely impact the public."

[...]

"But from the worker's perspective, when there are millions in profits, they want the employer to pay them better wages," Lim added.

"To them, millions of dollars in profits is a lot of money, and the commuting public feels fare increases are not justified."

SMRT posted net earnings of S$161.1 million for the financial year that ended this March, while SBS Transit had a net profit ofS$54.3 million for last year.

And what's wrong? There's no way to argue that fare hikes are for the transport workers. We all know that financial accounting puts down wages and salaries of workers of the firm as expenses in the income statement. Millions of dollars of profits are basically fares/revenues that did not go to the transport workers. Of course, they went to the people who contributed the capital and own the firm. Who is to guarantee that a fare hike would mean money is directed to the workers? If we want the wages of the workers to rise, why can't we reduce the profits of the owners instead? The last thing we need is the nationalization of public transport; what we need is perhaps better regulation. Perhaps PTC and NWC can work together, and negotiate both the fares and the wages?

Extra platform should be at Clementi and not Jurong East...

I could do a deeper analysis of SMRT and SBS Transit's patterns of cost and revenue and we could see profit margins have been constant or steadily increasing over the years. If it's been increasing, we can conclude that either the owners have exercised good cost control but refused to share some of the profit gains with the workers, or that hikes in fare so far have mainly been used to raise profit margins rather than to defray costs.

Let's use SMRT's figures as a demonstration: In 2007, fares rose 1.1%, FY2007 profit margins was 10.5%; in 2008, fares rose 0.7%, FY2008 profit margins was 13.5%; in 2009, fares fell by 4.6%, profit margins soared to 18.5% and then finally in 2010, fares were raised 0.5% and profit margins dipped a little to 18.2%. I'm not sure if my simplistic comparison of the time series of these figures distorts reality but I leave intelligent readers to arrive at their own conclusions. But I do want to remind readers that it is possible for fare reduction to invite more commuters, improve the green-ness of our economy, while providing that very profit boost that can be poured into investing for more capacity to reduce the overcrowding - perhaps already demonstrated by some figures I've presented.