Someone took the trouble to sieve through the old newspaper and came up with a copy of the ST dated 9 Jul 86 with Yeo Ning Hong announcing the opening of the MRT. He said that ‘One thing was certain…Because the Govt will be paying for the construction of the stations and lines, fares on our MRT will be lower than fares in other MRT countries where commuters will have to repay the capital cost and financing of the construction of their systems…He pledged that the private company which will be set up to operate the MRT will not be allowed to profit at the expense of the public. The principle for fare setting was clear. Fares will be kept as low as possible, consistent with collecting enough revenue to meet the running cost of the MRT, replace parts and equipment regularly and provide company shareholders with a reasonable return.’
How far have the govt and the SMRT deviated from this original pledge with their new formula for fare increases? The cost of building the MRT was borne by public fund, not from the shareholders. The principles of lower fares, enough to repay capital cost and financing of construction should be fairly clear. The part about replacement of cost for parts and equipment is also not difficult to understand. Only the last part, provide company shareholders with a reasonable return can be subject to different interpretations. What is reasonable? From whose perspective?
What is interesting to note is that the current formula to adjust fare hikes which is directly linked to returns to shareholders does not include parts and equipment replacement cost and financing cost. The formula has been changing over the years with no reference to the original position and pledge.
Is the pledge another nice to have aspiration not meant to mean anything? What were the factors in the latest formula? The 2012 formula which was also used for the 2014 fare hike includes the consumer price index, wage index and productivity gains. There was no direct reference to replacement cost of parts and equipment or profits for shareholders.
Obviously the 1986 pledge was not in the radar of the Fare Review Mechanism Committee. The 1986 pledge and the principle of lower fares were no longer factors for consideration. Forgotten, not important any more, dumped into the waste bin?
Does it matter if the pledge by the former Transport Minister and the original principle are disregarded and ignored or discarded? Or they are actually following closely to those principles pledged by a past minister?
Chua Chin Leng AKA RedBean
*The writer blogs at http://mysingaporenews.blogspot.com/