Singapore train operators claim fares are unsustainable and need to be re-adjusted. That may be true. But without identifying the true nature of the problems, a fare hike is just a knee jerk reaction, not a long term solution.
PAP has provided 4 reasons which are fallacies of arguments from authority. They should be debunked:
Fallacy #1: Inflation pushes cost up -- manpower is a prime cost but has been contained by importing cheaper foreign labour and suppressing wages.
Fallacy # 2: High price of oil -- Energy cost is heavy but price of oil has never been cheaper since coming down from the heights of 2007-2014.
Fallacy # 3: Fares have not been raised for many years -- This really shows crap mentality. The fact that fares have not been raised for years is not a cause to increase it.That fares have not been raised were due to 2 reasons:
(1) Train operation contract provides for a regulated pricing formula with a price cap. Operators take full farebox revenue risks. Fares cannot be increased beyond the contracted cap. Operators can apply to increase fares yearly, but it cannot go beyond the cap.
(2) During 2002-2012 under Saw Phaik Hwa' watch, neglect of maintenance meant a lot of cost savings which led to good profits. Short term good bottom lines traded for long term systems deterioration. But shareholders were pleased and the CEO got her bonus shares. So well done, there were good profits, no need to increase fares in those years.
Fallacy #4 : Singapore train fares are very affordable. This is so silly. The fact that fares are affordable is not a reason to raise it. The Palovian report by the Straits Times in October 2018 that Singapore has the 2nd most affordable train fares is the same old Machiavellian move of the PAP to soften the ground before they move in for the kill. It was a report by the Nanyang Technological University commissioned by the regulating authority, PTC. The finding was Singapore has the 2nd most affordable train fares out of 12 cities surveyed. The NTU report can be argued against in so many ways. It looked at an affordability index based on certain criteria which did not take into consideration many other critical factors that differ from city to city -- like cost of living, like alternative private vehicles are the most expensive in the world. It was also based on the population above the 2nd quintile household group, the very people who can afford some price increases. Should'nt the focus be on those below the 2nd quintile?
The government owes it to the people to provide satisfactory account on two issues:
(a) Increased density of population over the years must have improved economies of scale significantly. From 2008 to 2018 daily ridership increased by 100% to 310,000 trips. Given that the major variable labour cost have been contained by importing cheaper foreign sources and price of oil has fallen, where did the benefits of improved economies of scale and doubling of farebox revenue go?
(b) Ten years of neglect in maintenance under CEO Saw Phaik Hwa caused serious systems deterioration leading to breakdowns, accidents, and poor service delivery. The increase in running cost in the last 3 years is mostly attributable to heavy maintenance refocus to plug the long term damage done under CEO Saw. The PAP should do the right things:
- Stop the juvenile jibes of 'if you want better service, be prepared to pay more". Their people caused service deterioration due to sacrificing maintenance for profits.
- Admit increased cost of operation is due to beefing up maintenance.
- Explain who made M/s Saw Phaik Hwa CEO in 2008. She was a round peg in a square hole -- a retail executive with zero experience in urban rail transit operation. Folks will remember her lavish lifestyle, her Ferrari, Mercedes, close to S$2m salary, and share options. Most of all, we remember her famous quote:
"People can board the train - it is whether they choose to."
- Convince commuters why they think another army general CEO is not yet another round peg.
The PAP's narrative is but a collection of red herrings to deflect focus on the real cause for the non-sustainability of train fares. Serious mistakes have been made, but the PAP will make no admission. The root cause is the failure of the Singapore model for running a mass rapid transport system. Period.
A follow up blog explains why PAP's model for Singapore mrt is the root cause of fare unsustainability and why it guarantees a perpetual upward revision.
See Singapore MRT model to blame for fare unsustainability
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