Oral Reply to Parliamentary Question on Fare Review Exercise

Mr Mohd Fahmi Bin Aliman asked the Minister for Transport

a.     how many public transport fare hikes are there in the past two years;

b.     what are the underlying reasons for such fare hikes in the past two years; and

c.     apart from the one-off public transport vouchers given to lower and middle-income Singaporeans, whether additional measures will be put in place to alleviate the increased financial burden on lower-income Singaporeans in the long run.

Mr Gerald Giam Yean Song asked the Minister for Transport given that 10.6% of the maximum allowable public transport fare adjustment quantum in the Fare Review Exercise (FRE) 2022 will be carried over to future exercises

a.     whether this will be on top of the maximum allowable fare adjustment quantum for future FREs;

b.     when is the earliest time it will be effected; and

c.     whether cost of living concerns will be considered in deciding whether this quantum will be effected.

Mr Chua Kheng Wee Louis asked the Minister for Transport with regard to the additional Government subsidy of about $200 million in 2023 to support the public transport system

a.     what is the amount of subsidy granted to (i) each public transport operator and (ii) households, respectively; and

b.     whether the subsidies granted are in addition to or negates the need to implement the 10.6%- point fare increase for consumers that is carried over to future fare review exercises.

Mr Gerald Giam Yean Song asked the Minister for Transport given that 10.6% of the maximum allowable public transport fare adjustment quantum in the Fare Review Exercise (FRE) 2022 will be carried over to future exercises

a.     for each year between 2018 and 2022, what have been the Excess Wait Time (EWT) scores of (i) all buses operated by each public bus operator and (ii) service number 228;

b.     whether the Public Transport Council took into account the EWT and On-Time Adherence scores of bus services when deciding on the 2.9% fare increase for the 2022 fare review exercise; and

c.     if not, why not.

Mr Saktiandi Supaat asked the Minister for Transport with regard to the 2022 Fare Review Exercise (FRE)

a.     what are the factors influencing the Public Transport Council’s decision to carry over the 10.6% of the maximum allowable fare adjustment (MAFA) to future FREs;

b.     what is the annual funding gap between fares collected and the necessary operating expenses in relation to public transport for the past 10 years and its future outlook; and

c.     what is the amount of Government expenditure required to eliminate or ‘reset’ all accumulated MAFA to date.

Reply by Minister for Transport S Iswaran:

1.     My reply will also address a question by Mr Saktiandi Supaat for a subsequent sitting on the topic of public transport fare adjustments.

2.     In setting public transport fares, the Public Transport Council (PTC) aims to ensure that fares keep up with costs increases over time, while ensuring affordability. The fare formula therefore comprises component indices such as core inflation, wage growth, and energy prices, which reflect the cost drivers of providing public transport services. The output of the fare formula sets the cap of how much fares can increase each year. The PTC then considers various other factors before exercising its judgment on the actual fare increase to implement, and how much to carry over to future Fare Review Exercises (FREs).

3.     First, the PTC considers overall economic growth, wage growth, unemployment rate, and other metrics that reflect the state of Singapore’s economy at the time of each FRE.

4.     Second, the PTC also considers social factors to ensure that public transport, as an essential service, remains affordable to all Singaporeans. As wages have risen over the past decade, households have been spending a lower proportion of their income on public transport. For the second decile of households, representing lower-income public transport users, this has fallen from 3.5% in 2012 to 2.5% in 2021. For the second quintile, representing average public transport users, the figure has also fallen, from 2.3% to 1.8%.

5.    In this year’s FRE, the fare formula output set the maximum allowable fare adjustment at 13.5%. One main reason is that energy prices increased by 117%. However, the PTC decided to implement a much lower increase of 2.9%, after considering the economic and social impact on commuters. The remaining 10.6% will be carried over to future FREs. This means the Government has to provide additional subsidies of about $200 million in the coming year to make up for the shortfall. This benefits all commuters as it defrays the overall fare increase. Without this additional support, commuters would have to pay a much higher fare increase of 13.5%.

6.    At each FRE, the PTC will consider both the carry-over from previous FREs, as well as that year’s fare formula output. The PTC will continue to consider the economic and social impact when it decides on the fare adjustment in future FREs.

7.    Over the past decade, we have steadily enhanced the quality of the public transport system, with a bigger network, higher frequencies, and more reliable services. The PTC has implemented the fare formula output, with only the 10.6% from this year’s FRE carried over for now – all other carried-over amounts from the past have already been implemented. Despite this, fares have not kept up with costs of running the public transport system. The Government has stepped in with funding to bridge the gap, and ensure the continued operation of public transport services. The sum is now more than $2 billion a year. With the additional subsidy of about $200 million in the coming year, the total subsidy will be even higher.

8.    Mr Gerald Giam has asked whether the PTC decides fare adjustments based on bus service reliability. We have made steady improvements over the past decade, with maximum scheduled frequencies during peak periods falling from 30 minutes to 15 minutes today. In terms of the Excess Wait Time (EWT) and On-Time Adherence (OTA) scores between 2018 and 2022, all services have met the required standards.

9.    Looking ahead, we need to ensure that fares keep pace with the rail expansions and cost increases. Otherwise, our public transport system will become financially unsustainable, to the detriment of commuters and taxpayers. When the PTC reviews fares, it will continue to ensure that any increases are subject to economic and social reality checks.

10.   We are committed to ensuring that public transport fares remain affordable. Today, seniors, students, lower-wage workers, and persons with disabilities are eligible for concession fares, and increases in their fares are typically less than that for adult commuters. The Government has also made available Public Transport Vouchers to cushion the impact of fare increases for eligible households. For this year’s FRE, these vouchers will offset about half a year’s fare increase and will cover up to the 30th percentile of income-earning households, or the 40th percentile of all resident households. We will continue to address the needs of vulnerable commuters through the provision of Public Transport Vouchers.