Fiscal burden of public transport spending must be balanced, says Khaw

SINGAPORE – Taxpayers have been increasingly subsisiding the higher operating costs of the public transport network, a situation that is not sustainable going forward, Transport Minister Khaw Boon Wan said on Wednesday (March 8) as he asked commuters to be ‘understanding’ when fares were to be adjusted upwards.

The Public Transport Council (PTC) will be reviewing the fare formula which will expire after the 2017 fare exercise, the minister noted at the ongoing Committee of Supply debate on the Transport Ministry's budget.

“But remember, the PTC cannot always bring good news, sometimes they have to adjust fares upwards. And when they do, I hope commuters will be understanding.” Mr Khaw added.

In his speech, he laid out the projected higher investments and expenditures for the public transportation network in the years ahead.

The Government expects to subsidise public bus services by some S$3.5 to S$4 billion over the next five years under the new Bus Contracting Model, where it is responsible for buying and replacing buses.

Fare revenue, he said, is not sufficient to cover operating costs, which incurs a huge deficit. “As fares have not kept up with rising costs, taxpayers have to subsidise more and more of the operation costs, especially as we have been raising service standards significantly,” he said.  

The Government is also expected to spend S$4 billion on replacing rail assets under the transition to the New Rail Financing Framework, on top of the S$20 billion it is spending on building new public transport infrastructure.

In earlier years, taxpayers were funding the construction of transport infrastructure, and commuters bore the operating costs through transport fares. But that is not sustainable given the rising costs.

Although the Government will continue subsidising public transport heavily, in the long term, a balance must be found for the fiscal burden to be borne by commuters, taxpayers and operators, he said.