Tuesday, 27 January 2015

Restoring Public Trust in Singapore

Singapore’s Public Transport Social Enterprise (PTSE).
Public Transport works better when the Community Drives Them.

The latest arbitrary, non-transparent and unreasonable public transport fare hike creates a severe Crisis of Public Trust with serious far-reaching social consequences.  Despite facing sharply reduced fuel and energy costs and expecting to earn huge bumper profits for this year (2014-2015) into possibly 2017 and beyond, it is reported that both ComfortDelgro and SMRT have cited incredulous rising costs and lower profits to justify a public transport fare hike of 2.8% effective April 2015.  And surprisingly, the Public Transport Council (PTC) agreed to the unjustifiable and indefensible fare increase.
Indeed, their Betrayal of Public Trust has finally come to a head as our public transport operators (PTOs) traded social conscience and responsibility for profits as they gradually erode the sacred Social Contract in Public Transport with Singaporean commuters.

The Betrayal of Public Trust
The PTO case in support of their claims of rising costs and lower profits has not been made available by the PTC to the commuting public.  Never mind that the formula used by the PTC to “compute” fare increase is mathematically flawed and the summation of unrelated indices of unequal base further makes their derivative meaningless.

No valid reason can be evinced to justify the application by the PTOs, ComfortDegro and SMRT, to increase bus and train fare at this time (January 2015).  At worst, there should be no fare increase, and at best a voluntary fare reduction of at least 2% should have been made by the PTOs for 2015 onwards.

According to an independent DBS Bank report BEFORE the fare increase announcement, earnings by ComfortDelgro and SMRT are estimated to increase by 4% and 7% respectively, mostly resulting from the sharp 50% oil price drop over the past 6 months and which is expected to remain low and lower in the near future.  Energy and fuel account for 9% to 14% of our PTO costs.  DBS Bank estimates that every US$5 per barrel drop in oil price could translate into 6% and 3% increase in earnings for SMRT and ComfortDelgro respectively, all else being constant.

DBS Bank has in fact revised SMRT earnings upwards to 4%-9% for its strong earnings recovery in 2014 and further expects SMRT to benefit more from the slump in oil price than ComfortDelgro.  ComfortDelgro is also projected to grow a strong 15% in 2014, as well as in 2015 and the following years, also on the basis of lower oil prices.  It also benefits from the $1.1billion the Singapore Government agreed in 2013 to provide for the purchase and maintenance of new buses over 10 years from 2014. In 2015, it would therefore receive another $110 million from this public handout, thereby subsidising its hitherto huge corporate profits.

The truth is that the PTO awaits huge public subsidies and do not provide reserves from their profits for public transport operating assets development, investments and timely replacement. As further evidence of grossly negligent management due diligence and responsibility, their Annual Reports also provide no indications to confirm any long-term strategic planning, fiscal prudence, and the efficient allocation of resources for assuring commuter quality in public transport services. Commuters are therefore constantly plagued by overcrowding, delays, breakdowns and other manifestations of inefficiency, poor management and poor service standards. 

In further violation of their public duty commitment to make all fare increase “affordable”, the new fare increase has to be subsidised by a further $7.5million in the form of 250,000 public transport vouchers @ $30 each to help “needy” commuters.  It would have been a better commonsense not to increase fare at all!  In making unjustified and un-affordable fare increases, the case of PTOs’ betrayal of the public trust is undeniably conclusive and decisive.

Public Transport Social Enterprise (PTSE) Solution
It is imperative now to re-configure and re-calibrate Public Transport operations as commuters remain shocked by the relentless onslaught by private PTO entrusted with their monopolistic operations of managing crucial public transport services.  Even the Consumers Association of Singapore (CASE) fails to grasp, comprehend and understand the profiteering case for its natural intervention. In the wake of the failure of PTOs to act in the best socially responsible manner, the solution is to replace them with Social Enterprise organisations.   

A Social Enterprise is a business organisation that focuses on creating social impact by tackling social issues, improve communities, improve life-style and improve the environment. A social enterprise applies commercial strategies to maximize community and social benefits rather than maximizing profits for private shareholders.  It reinvests profits back into the business and the Community. Hence when social enterprises make a profit, society will profit at the same time. NTUC Fairprice, NTUC Income and the former NTUC Comfort are just some of our very successful social enterprises.

Public Transport Social Enterprises (PTSE) are the best solutions to save public transport commuters and our future generations from the unquenchable appetite of greedy profiteering PTOs as we have known them in the recent past decades. The era of a new Public Transport Social Contract begins with PTSE.  Some key characteristics with PTSE are:

[1] A Mindset Change and Strategic Leadership
The PTSE goal is nothing less than to change the world of Public Transport for the common good of Singapore commuters and Singapore overall. Our mission is to produce abundant outstanding social value as successful social enterprises. Strategic leadership with enhanced social responsibility values are needed to steer PTSE onto the higher ground to embrace a natural tripartite partnership with public transport commuters and government.  Visionary PTSE leadership bridges the nexus between long-term sustainability and social profitability to make them its twin business goals.

At the core of everything is to deliver direct social impact through service quality, productivity and efficiency. Specifically, the vision is to empower a continuous enjoyment of public transport at a constant low and lower fare through continuous social investments and responsible management.  PTSE also supports unique value innovations to harness renewable natural energy, and deploy developing technologies in clean, cost-effective alternative energy methods eg electric cars, electric bus, driver-less vehicles for a better public transport experience.  

[2] Community Profit-Sharing
Under a Commuters Profit-Sharing (CPS) Scheme, the profits of PTSE companies at the end of the financial year can be proportionally shared in the 30:30:40 ratios. PTSE profits are shared between the Singaporean commuters, the PTSE companies and the government.  The government takes 30% of the profits and the PTSEs retain another 30%.  The remainder 40% is shared with Singaporean commuters in some relation to their total spending during the year. 

This CPS Scheme also acts like a profits buffer which returns “excessive” profits to its stakeholders, trims “excess” fares and regulate for a normal, reasonable level of returns on assets deployed. In this way, community profit-sharing creates a balanced Public Transport eco-System for Future Generations. The Management and employees of PTSE also enjoy gain-sharing bonuses for quality service, efficiency and productivity, even as the Government obtains early returns for its social investments in public transport infrastructure and operating assets similar to its social investments in schools and education, and national defense.

Singaporean commuters (including fare-paying children) can register up to two MRT Transit Farecards or Cashcards in their name.  An added condition could be that only commuters who have expended more than $300 per Farecard or Cashcard per year would qualify for the profit sharing. The computer should be able to keep track of each Card’s spending and add back the appropriate profits effortlessly. Such commuter information is used to add back profit-sharing amounts, via the Fare Machine, into their respect Farecards or Cashcards at the end of each financial year. 

A simplified method could be to add back profits according to spending groups of, say, $300-$1000, $1000-$2000, $3000- , and so on.  This is a matter of details, and the public commuters can participate by suggesting the best model as the profit-share basis. 

The reasons for sharing profits only with Singaporean commuters is because the public assets deployed eg land, land clearance, underground infrastructure, above ground infrastructure and planning inputs were invested by earlier Singapore pioneer generations for the benefits of future Singapore generations.  For example, the initial MRT network was constructed at a cost of S$5 billion, the largest public works project at that time (1983).  Expansions to the MRT network have also incurred many more S$billions of public funds.

[3] Public Transport Commuters Consultative Council (PTCCC)
The Public Transport Council (PTC), by its due diligence failure to prevent the latest unjustified and un-affordable fare increases, has lost considerable standing and credibility in the eyes of the commuting public and Singaporean observers. It is created by law with the twin responsibility of safeguarding the interests of the public and ensuring the long-term viability of public transport operators, among various other tasks.

We need to replace and enlarge the PTC to be more inclusive and effective. The new National Public Transport Commuters Consultative Council (NPTCCC) is created and it in turn forms Community Public Transport Commuters Consultative Committee (CPTCCC) in each and every community constituencies.  The NPTCCC/CPTCCC embraces social responsibility and transparency as its twin operating guide and the values of honesty, mutuality and trust in directing its conduct.  Membership is voluntary and includes adult Singaporeans, grassroot community leaders, college students, employers, active-agers, house-wives, and any public transport commuters. Only 10% of CPTCCC are non-public transport commuters. 

The NPTCCC in conjunction with the CPTCCC decide on fare increase as well as management and employee performance bonuses.  New, objective and socially inclusive and equitable metrics are needed for fact-based discussions and decisions.

The NPTCCC is supported by a Professional Resource Panel consisting of relevant professionals such as transportation scholars, public accountants, HR professionals, lawyers, road engineers, town planners and statisticians. NTSE companies as well as relevant Government Agencies eg LTA, HDB, ROV, MOM, MHA … etc are also represented so as to provide adequate information for NPTCCC/CPTCCC fact-based decision-making. Market Research companies are engaged to provide regular and timely survey of commuters’ feedback as well as surveys of critical incidents.  These Reports are made available to the NPTCCC and CPTCCC, and downloadable from the NPTCCC web-site for registered readers.   

The NeXT Steps ….
The road to create Singapore’s Public Transport Social Enterprises begins with a strategic plan and time-table to re-acquire all public transport operating assets in the hands of current PTOs. SMRT is originally created by public funds. It can now be dissolved and re-constituted into a new PTSE directly owning at least 80% of its operating assets. Remaining SMRT private shareholders can convert into new PTSE shares, but they must buy-in to the PTSE social objectives and be entitled participation in the PTSE Community Profit-Sharing arrangement. The operating assets funded by public funds in ComfortDelgro are to be re-acquired and transferred to another PTSE.  

ComfortDelgro can choose to retain by buying over these assets at market values; and it would also be charged market prices for use of public property like industrial land, bus lanes, bus stops as well as their constructions and maintenance.  Or, ComfortDelgro may apply to be engaged instead as a Management Agent and earn a management fee with bonuses contingent upon meeting various profits as well as customer service, efficiency and productivity targets.  Management Agents have no say in the setting of fares.  In any case, all license for the operation of mass public transportation like train and buses shall henceforth be issued to PTSE only.

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