By Linette Heng and Koh Hui Theng
"Certainly, the intent is not for this Government to give money to the operators in order to fatten their bottom line." - Mr Lui Tuck Yew (above) on the Government spending S$1.1 billion on Bus Services Enhancement Programme
He was expected to make a statement on the findings of the Committee of Inquiry into the massive MRT service disruptions of Dec 15 and 17 last year. But he ran out of time.
Transport Minister Lui Tuck Yew spent more than two hours in Parliament yesterday fielding questions from MPs about the S$1.1 billion Bus Services Enhancement Programme (BSEP), where the Government will pay for 550 new buses and their operating expenses - including drivers' salaries - for 10 years.
He was doing this as part of the second reading of a Bill to amend the Land Transport Authority of Singapore Act to allow for the roll-out of the programme.
Should bus services be nationalised?
Mr Lui said for many cities in the US, Europe, Australia and Asia, the move is actually towards privatisation, with some government intervention.
London, for example, was into competitive tendering, privatised amenities, sometime in the mid-80s.
Over the next 15 or so years, cost per vehicle km came down by more than 45 per cent, (after) inflation adjusted.
In Sydney and New Jersey where bus services are run by both the government and private companies, the costs of private companies are 30 per cent and 35 per cent lower.
Mr Lui added that nationalisation is not the way to go as it will cost even more for the Government to run the services by themselves.
Should there be a third operator?
The ministry must first ensure that bus financials are right, said Mr Lui. So companies are prepared to step in and provide the service when future routes are put up for competitive tendering.
This was in response to Non-Constituency MP Lina Chiam's question if they should relook bus licensing to improve the competitiveness of bus services.
Mr Lui also said that it is difficult to see two different operators running two routes in a coordinated manner to benefit commuters, considering there might be different standards.
Should the cost of new buses be 'clawed back' from the operators?
The balance between fares and cost will give some idea of the financial health of the bus and transport industry.
But Mr Lui said fare increases are nowhere near what the cost increases have been in recent years.
Trends show fares over the last five years (2006 to 2011) have cumulatively increased by 0.3 per cent. Yet, operators' profit margin has gone down.
Last year, for the first time, it was negative for both operators. This was due to costs like fuel and wages, which went up by more than 30 and 25 per cent respectively.