My eatery business and SMRT/SBS

I am going to set up an eatery business. With no doubt, you have to pay for the food and beverage that you have ordered. The price of what you’ve paid would go towards the payment of the rent for my eatery, the cost of ingredients, the maintenance of the eatery stall, the labour and of course, contribute to my profits.

However, on top of the price of the products that you consume, you have to fork out part of your personal savings too, to pay for the tables and chairs that you have to eat at and to sit on and not forgetting the cooking equipment too.

When I run out of cash flow, don’t demand to know why is that so in spite of yielding yearly net profits from my business, I do not have sufficient cash to send my cooking equipment for regular maintenance checks, therefore you have the responsibility of subsidizing me further for the maintenance of my eatery as the increasing number of patronage is stressing out the hardware of my eatery!

When operating and ingredient costs increase, expect a price hike. You expect wage increase every year don’t you? And so do my kitchen staffs! Although I pay them more or less the same wage as in the 90s and continue to source outside the country for cheaper labour to exploit.

If the gas cooker broke down due to excessive usage, you have to bear with me and don’t expect any discount in price for the food but expect longer waits than usual. Yes, you have to pay more to get inferior service.

You cannot patronize another eatery because, as you are already made aware, that I am the only provider around.

Do you find that reasonable for a consumer to stomach?

Think along the line of SMRT and SBS Transit’s way of conducting business.

Privatizing profits and socializing costs

SBS Transit yields yearly NET profits between 2004 to 2010. Between 2003 to 2009, net profits are growing steadily and peaked at $54.2 million in 2010, despite “increasing costs” and growing population/commuters.

Year/net profit ($m)	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
	50.9	39.6	34.6	19.0	49.2	51.3	56.1	50.0	40.5	54.6	54.2

(Compiled from the Annual Financial reports of SBS)

It is always expected of the public to foot the bill for rising operating costs and fuel costs…..so as to safeguard the minimum ceiling of profits for such private companies.

But the Dec 2011 NE line broke down saga exposed the fact that corners were cut in track maintenance. And there has been no substantial increase in the wages of our transport workers. (I remember clearly before 1995, a bus driver was already approximately 2K gross salary per month; 3K inclusive of allowances, as I was surprised to know that the pay, inclusive of allowance, surpassed that of the starting pay of a Arts faculty graduate. In 2011, Tan Chuan Jin made known that bus drivers earn a 2K gross per month. )

Price hike to cover operating or what-so-ever costs were just another way of maintaining the same profit margins and any shortfall shall be borne rightly by the consumers.  

Now, the public has to share the burden for capital assets purchases too.

A privatized company is entitled to profit taking. No one would challenge that.

But how much of that profit should be forked out from the public’s purse?

Where is the fine line between public and private?

When the security at the train depot was breached in 2010, our minister (here) reiterated that it is “not fair for taxpayers to pay for the security of all these profit-making companies”. Simply, the responsibility of security in the public area was passed on to the profit-making SMRT, despite knowingly, train stations and trains come under the public domain in every sense. Otherwise, how else would one explain the presence of anti-terrorism officers patrolling train stations and trains?

Yet, $1.1billion was budgeted from the public funds in 2012 to purchase capital assets for SBS, which is also a private company, to improve the ever deteriorating bus services. As we can see from the chart above, SBS is making yearly INCREASING NET profits between 2007 to 2009 against a backdrop of “increasing operating costs and fuel costs” and increased ridership due to the influx of immigrants. Increased ridership fattens the profits of this company at the expense of commuters, having to compete for limited space with new commuters. Even in 2010 when SBS’s profit did not increase, it however maintained in the higher bracket of its profits.

$1.1 billion will be injected into this private company whilst the net profits will retain among its shareholders.

Where do we draw the line then, between what should be rightly public and what should remain in the private pockets of the few individuals?