Tan Kin Lian's Blog: Subsidy for public transport

Sunday, April 25, 2010

Subsidy for public transport

Many people may not realise that public transport is subsidised in Singapore. The government pays for the huge cost of the infrastructure for the MRT system. The public is free from this high cost and has to pay for the operating cost plus the operator's profit margin. I was told that the bus opeators received quite significant subsidy (but details are not available to me). This is why train and bus fares are much cheaper than in some cities, such as London.

I feel that taxis should also be considered as public transport and should receive some subsidy, although not to the same extent as for buses and trains. This will make taxi fares less costly and encourage more people to take taxis, rather than to drive private cars.

A taxi can be used several times a day, and can replace 5 to 10 private cars. It create employment for taxi drivers and allows the commuter to relax, read or communicate on the mobile phone. This improves the productivity. There is less need to build more parking spaces for the private cars.

There may be a fear that lower taxi fares will entice people to use taxis instead of buses and trains. The impact is likely to be small, as taxis will still cost 3 to 5 times of the other modes of transport. The real impact wil be to reduce the demand for private cars.

I hope that the policy makers will review their thinking and consider taxis as another form of public transport and be eligible for some subsidy or be relieved from some taxes or levies, such as ERP.

Tan Kin Lian

7 comments:

EC said...: Thanks for the comment.

I have been a uni student in London, and I disagree that public transport in London is much more expansive than Singapore.

Based on their income I would think that London's public transport (bus and tube= our MRT) may be comparable or even cheaper than Spore...

Looking at the absolute amount (exchange rate) London's transport is definitely more expansive but this is distorted due to the relative strength of GBP against SGD, a fairer way would be to look at the costs relative to their earning power.; April 25, 2010 12:15 AM
Anonymous said...: Because the infrastructure is built using tax payers money, the operators should not be allowed to run it as a monopoly business!; April 25, 2010 9:39 AM
Steve Wu said...: The government has always claimed that it has provided a huge subsidy for public transport, particularly for the MRT system. However, on closer inspection, we should discover that it is a matter of creativity accounting.

In particular, the land costs have the subject of much manipulation.

1. Private land had been compulsorily acquired through the Land Acquisition Act. As a matter of principle, the private owners were disallowed to share the appreciation of land as a result infrastructure enhancement. Prior to 2007, they were even compensated BELOW the market value. As an extreme example, the Teochew Khong Hou Sua cemetery in Bukit Panjang was acquired by the government more than 25 years ago but the owners of the burial plots were NOT compensated at all. Parts of the cemetery is being developed into a train depot for the Bukit Timah Line.

2. State land are systematically over-valued to give an impression of greater subsidy.

3. The government creamed the profits of the appreciation of the related and/or adjacent land. These profits did not appear in the balance sheet. For example, the government sold The Atrium@Orchard (above Dhoby Ghaut MRT) for $840m in 2008.

The MRT, as a national project, is very unlikely to have a negative balance sheet over the appropriate time frame. It may be worthwhile to pull publicly available information together to confirm it.; April 25, 2010 10:32 AM
Anonymous said...: You should have given 70% subsidy to the poor for a $1million sum assured premium each.

What don't you do it?

NATO = No Action Talk Only; April 25, 2010 6:00 PM
F said...: Dont be evil Singapore.
A small piece of land is set aside for MRT station. By doing so, the land area adjacent to it can be tendered at astronomical prices. Who pays? I eat a bowl of noodles at Ion Orchard. The cost is priced into my noodles, making my cost of living exceptionally high. No wonder I am out of job. I have become too expensive for my boss to hire. Who should compensate me for my woes. I like to hold my Govt responsible. The money goes to them, but they did not circulate the wealth. The money went elsewhere, never to be seen by me again.
The money went down the drain. In bad investments in western economies. Even China. We still owe a part of Suzhou Industrial Park? Or have we given up on the Park? Has it achieved its objective as a long term investment?
UBS is another good example. The convertible notes were converted into ordinary shares on maturity. A huge paper loss? Do you say it is a paper loss when the transaction was executed and closed out? I'd call it a loss, paper or realized.; April 25, 2010 9:32 PM
Anonymous said...: I cannot fathom the rationale that taxi is a good alternative form of public transport that should be encouraged and subsidised. Each taxi is on the road much more often than a privately owned car and hence contribute more intensely to road congestion throughout the day. If it works out to be cheaper to use the taxi than to own a car, then taxi fare is probably underpriced. If more people give up their cars and take taxis instead, the no. of taxis on the road will have to be increased to cope with the higher volume and that will at best neutralise the decrease in private car ownership. In any case, considering the small capacity of a taxi, it is unwise to suggest it as a viable replacement for car ownership which will ease traffic congestion. A private minibus system found in many cities across the globe will be a more viable alternative which can ferry large groups of people and also create jobs for the minibus owners.; April 25, 2010 10:01 PM
Reservist said...: Let NS men be insured for free.
My son has to pay Aviva $12 a month to be insured against death and permanent disability, deducted from his $420 monthly pay. Yes, great, MINDEF has helped by giving an extra $20 to help offset this cost.

My son is worth $100,000 only when he dies while in uniform. Can I hire a foreigner to take his place?

Stupid me, I should have migrated 10 years ago and return as a foreign talent.; April 25, 2010 10:23 PM