I am
irate by the recent spate of train breakdowns and some horrifying bus accidents
[Link]
in the month of April. Not only by the direct impact of these breakdowns and
accidents that affect human lives, time, cost and productivity, but also of the
fact that commuters and taxpayers are taken for a ride by private transport
companies and relevant government bodies.
Despite
being slapped with a price hike (Sep 2011) in exchange of a promise of enhanced
level of service, commuters are told to endure persistent train breakdowns/disruptions
and the increasingly unreliability of our train and buses--I personally have
the fortune to encounter a total of 4 breakdowns and accidents within a year on
SMRT buses as a less-than-regular bus commuter. In addition to the price hike, respective
bills of $1.1 billion to purchase buses and $900 million (co-share between SMRT
and LTA) to fix train problems will be further charged to public funds.
To further
rub salt into the wounds, Singaporeans were being blamed for the use of $1.1
billion public funds as Singaporeans “don’t want to wait so long” as described
by Ms Josephine Teo [Link].
On the contrary, Singaporeans have waited many, many years, long enough before
the 2 massive train breakdowns in December 2011. Prior to that, all feedback on
excessive crowdedness on our public transport was disregarded as noise.
Persistent
train breakdowns do not occur overnight but more as the consequence of prolonged
negligence and lack of robust maintenance, coupled with the ill-preparedness of
SMRT towards increased ridership as a result of the large influx of immigrants.
In simple term, our public transport system has been overloaded. Nothing substantial
was done to cope effectively in meeting increased demand apart from introducing
price hike.
Both
SMRT and SBS are afterall public-listed private companies. They charged
commuters for their transport service, using public-funded infrastructure. However,
as private companies, they share their profits among their shareholders yet expecting
public funding to bring their ever-deteriorating service level to an acceptable
level.
Is
this not socializing costs and privatizing profits over here?
It should
not be what PM Lee Hsien Loong has remarked [Link],
that the government has “to allow transport companies to break even and to make
reasonable profits”, as it is neither the responsibility of the government nor
the public in ensuring “reasonable” profits for private companies where profits
are retained within its shareholders.
SMRT
and SBS are far from struggling to break even (See Figs. 1 and 2). Moreover, where
do we draw the line between reasonable and unreasonable profits? How much do these
companies want? Do they want $50 million, $200 million or $2 billion a year?
(Source:
SMRT Annual Financial Reports)
Fig.
1 Net profit of SMRT for financial years
between 2002 and 2011.
Fig.
2 Net profit of SBS for financial years
between 2002 and 2010.
Operating costs versus net profit
Between
2002 and 2008, SMRT (See Fig. 3) has been gaining year-to-year increase in net
profit, peaking at approximately $161 million for the years 2009, 2010 and 2011
respectively. In a span of a decade, net profit has risen almost three times of
that in 2002. Although operating costs have been rising over the years, it has
not been rising proportionately to its net profit growth.
Between
2008 and 2011, during which we witness a growing population and thriving
tourism, the percentage of operating costs incurred against net profit rose surprisingly
small. The proportion spent on operating cost as compared to net profit, is
less than that in 2002 where ridership was much lower than in 2011. We have to
come back to the same question again: how much profit does SMRT want?
Fig.
3 Net Profit of SMRT for financial years between
2002 and 2011.
Conflicts of interests: public, private
and government (Temasek Holdings)
From
a SMRT shareholder perspective, SMRT has witnessed almost three times increase
in its basic earnings per share (Fig. 4). It rose from 3.8 cents in 2002 to 10.6
cents within a decade. Shareholders stand to gain on earnings per share while commuters
experience a fall in service level on our trains. From overcrowded to frequent
breakdowns/disruptions. Apparently, the welfare of shareholders surpassed that
of the commuters. This is a clear demonstration of the conflicts of interest
between the general public and the private companies involve in public
transport.
Fig.
4 Basic Earnings Per Share of SMRT
Adding
to the confusion is the fact that SMRT is 54.28% (as of 16 May 2011) owned by
Temasek Holdings, a government investment body. It has to account to Temasek
Holdings which is its biggest shareholder. Are there not a huge conflict and a
confusion of roles between the public, private companies and government over
here?
While
it is the government’s role to protect the public’s interest, it also demands SMRT
to maximise profits at the expense of the public so as to contribute substantially
towards annual net profit. Where does the government’s interest genuinely lie
then? With the people or with the private company? Such overlap of roles does
not bode well for our public transport system.
Unavoidable and unacceptable
It
is “unavoidable” that a profit-driven private company has more to account to
its shareholders than its customers.
Precisely
such is unavoidable, that it is the sole responsibility of relevant government
bodies to ensure stringent monitor on these privately-owned public transport
providers. As a responsible and vigilant regulator, it should pre-empt problems
instead of waiting for them to surface. And when problems occur, neither should
it lower the public’s expectations so as to condone breakdowns and disruptions
which could be avoided in the first place.
While
understanding that some disruptions are unavoidable, nevertheless, it is not an
excuse to disguise irresponsible regulation and negligence. Ultimately, lowering
commuters’ expectation does not resolve the actual problems on the grounds.
