Wednesday, April 25, 2012

Complicated arrangement between LTA and SMRT

According to this news report, the SMRT will be spending $900 million for the maintenance and repair of the MRT system. Part of the cost will be borne by the Government, through the Land Transport Authority (LTA).

http://www.channelnewsasia.com/stories/singaporelocalnews/view/1197159/1/.html

This seemed to be a complicated arrangement and has ethical issues. SMRT is a listed company owned by shareholders and has the aim to maximise its profits, subject to service standards stipulated by the LTA and fare oversight by the Public Transport Council. The LTA is an agency funded by the Government and eventually the taxpayers.

The taxpayers are not told how the complicated financial arrangement is being decided. In my view, the considerations for the cost sharing, should be publicized for public scrutiny.

It is better to remove all these complicated arrangements and adopt a new model, i.e. let the train service be operated by a public corporation, i.e. one that is owned 100% by the state. The public corporation should decide on the fares, capacity, routes and schedules. The operations can be contracted out to a contractor like the SMRT.

I read that this was the model used by London Transport for the buses. I am not sure how their Underground system, similar to our MRT, is being managed.

It is likely that the London model will not be considered in Singapore, as our ministers and top civil servants are quite comfortable in the Singapore model of "no responsibility". They prefer to outsource all the problems entirely to the "market", so they do not have to decide on fares and operational issues.

As they have now learnt to their embarrassment, the problems do not go away. They come back to hit them in a bigger way. With so many train breakdowns and other operational and financial issues, perhaps our ministers will now re-think the London model?

Tan Kin Lian

1 comment:

  1. Govt prides on itself in the past,
    "No bailing out Companies, even SIA could be taken over, no free social welfare services, this will bankrupt the country."
    Look, what is happening now, the Authorities keep on bailing out listed GLC Transport Companies to the tune of $b taxpayers money.
    The Govt should add, yes, no bailing out incompetent Companies, but the 2 transport GLC Companies differ, DELGROW and SMRT are my Companies. If they are private, we won't bail them out, they jolly well finance themselves or be eaten
    up.
    FT former SMRT CEO and Temasek Holdings were more intent on padding up their pockets, neglecting the maintenance of the rails for decades by stinging on staff and materials, and reaping in huge profits through property retail renting.
    Finally it becomes the case of cents wise but dollar foolish. Now who says SMRT have been making money, in fact they are losing money, now reduced to having to be bailed out by taxpayers.
    Thumbs down investing in this share, with its short sighted management. This counter is joining another GLC listed Company, NOL, would be forever losing money. Both NOL and SMRT, and DELGROW may be as well be nationalised, it's self deceiving.
    cannot make money means cannot make money, why continue feet dragging.
    A Company cannot perform a dual function well, serving a public service and at the same time make money for its public shareholders, human greed would lead to shortchanging on quality to add to the bottom line, esp with a FT at the helm, who is more interested in boosting her bank account first, other things come second.

    ReplyDelete