Transport Minister indicates that public transport fares may go upwards

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Speaking at the  Committee of Supply debate on the Transport Ministry’s budget, Transport Minister Khaw Boon Wan said that the Public Transport Council cannot always bring good news and that sometimes they have to adjust fares upwards. The Minister hopes that commuters will be understanding when such an increase happens after the 2017 fare exercise.

PTC announced in October last year that fares will be reduced by 4.2 percent from 30 Dec 2016. PTC promised that a further 1.5 percent reduction will be carried forward to the 2017 fare review exercise.

A total reduction of 5.7 per cent is the maximum quantum allowed in the fare adjustment formula, which takes into account wages, core inflation and energy costs.

In 2015, transport fares were cut by up to 1.9 percent.

“But remember, the PTC cannot always bring good news, sometimes they have to adjust fares upwards. And when they do, I hope commuters will be understanding.”

The Minister said that the Government will subsidise public bus services by about $3.5 to S$4 billion over the next five years under the new Bus Contracting Model (BCM). The Government is is responsible for buying and replacing buses under the BCM.

“As fares have not kept up with rising costs, taxpayers have to subsidise more and more of the operation costs, especially as we have been raising service standards significantly,” he said explaining that fare revenue is not sufficient to cover operating costs.

Besides spending $20 billion on building new public transport infrastructure, the Transport Ministry will also spend $4 billion to replace rail assets under the transition to the New Rail Financing Framework.

The model of the earlier years, where taxpayers fund the construction of transport infrastructure while commuters bore the operating costs through transport fares is not sustainable given the rising costs, he added.

Mr Khaw assured Singaporeans in his speech that his Ministry will continue to subsidise public transport heavily in the long term; but that a a balance must be found for the fiscal burden to be borne equally by commuters, taxpayers and operators.

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