Thursday, 22 January 2015

Should Singapore Nationalise Our Public Transport Companies?

Let The People own MRT and Public Transport
Time to Nationalise MRT and Public Buses
Thinking the Possible ….
A year of bumper profits for SMRT.  Global oil prices have dropped by more than 50% in the last 6 months and would fall further in 2015 and not expected to recover much over the next few years. Gas prices have begun to follow the decline and the costs of grid electricity generation by our gas-fed power stations would reduce even further.  Public transports especially buses and taxis would have their fuel bills greatly reduced. The fuel costs of MRT trains, mostly grid electricity, should also fall accordingly.

In the light of mostly good news for MRT and public transport operators, 2015 should also have been a great year for MRT and public bus commuters.  
But, HOLD Your BRAKES, People … !

Remember January 2014 last year? That’s when SMRT announced that its profit had fallen by more than 40% and therefore it had to raise its fare, which it did by 3.2% last year in 2014.

Then suddenly in January 2015, SBS and SMRT both apply for fare hikes citing rising costs and lower profits. And without showing any statistics for its pleading of rising costs, public transport fares will increase 2.8% by April 2015.  This is truly unbelievable!

Just three months ago in October 2014, SMRT actually reported that its PATMI (profit after tax and minority interests) for the 2nd quarter (July-Sep 2014) of the current financial year rose sharply by 75.5% year-on-year to S$25.3 million!  Its operating profit for the same quarter also increased 66.5% compared to a year ago to S$33.3 million!

With fuel costs sharply down and huge bumper profits, whither rising costs, SMRT?  And SBS, have you not heard that oil prices has dropped by more than 50% in the last 6 months?

Of course from a strictly business profit-making perspective without any social consideration, the commuter “cows” can still be squeezed and milked for more revenue, when one can usually get away without any consequences.  This is especially so when bus and MRT commuters are captive customers and have no viable alternatives other than bicycling or expensive motoring.

This is perhaps the BEST time to consider again The Big Question: Should the MRT and public buses be Nationalised for the Greater Social Good?  The answer is a resounding “Yes”!

The Case for Nationalisation has never been stronger and is overwhelmingly compelling now given the profiteering tendency of the MRT and public bus companies.

The usual counter-argument that private companies are more efficient is no longer tenable in the light of the latest arbitrary, non-transparent and unreasonable public transport fare hike. 

Using S$7.5million of public funds to subsidise already highly profitable private companies is NOT efficient, and a really BAD idea.

The fact that government would have to further subsidise this latest fare increase in order to neutralize its impact on more than 1.1 million commuters strengthens the Case for Nationalisation, since record profit spikes accompanied by drastically reduced fuel costs were unable to even sustain or satisfy the corporate greed of these “private” companies (and their share-holders, presumably). 

In addition, the following factors make the conclusive and decisive Case for the Nationalisation of MRT and public buses at this time:
  1. They are profitable without any government subsidy in their operations;
  2. Their profits have to be subsidised by the government;
  3. They are efficiently and professionally managed;
  4. Great majority of people constitutes their vast captive customer base;
  5. Lower fuel costs make the MRT & public buses even more profitable;
  6. Much public assets are used by MRT & public buses at very low charges;
  7. Profits of MRT and public bus companies are not shared with the public;
  8. It is socially inequitable to privatise profits from public assets use;
  9. Profit-sharing reduces transport costs for the lower income commuters;
  10. Remove the corporate temptation to profiteer from the powerless public commuter.

Unlike the nationalisation decisions in other countries mainly to bail out inefficient, badly managed loss-making companies, the Nationalisation of MRT and public bus companies in Singapore will significantly boost their profits, enlarge social equity and improve the income level of the lower income cohorts, even at the previous levels of MRT and bus fares. 

In the Nationalised MRT and public bus companies, the use of public social assets does not have to be charged at all.  This boosts profits immediately as the accounting system is re-calibrated to reflect the social investments, and thereby lowers overall costs to boost profits even at lower fare levels.  Social equity and justice is restored and preserved. Profit-sharing with commuters can reduce their transport cost (MRT and public bus) which is currently about $250-$450 per month per person. This constitutes about 15%-35% of the individual monthly salary of most commuters and would increase their income by a significant quantum.  

Returning Profits to Singaporean Commuters  
Under a Commuters Profit-Sharing (CPS) Scheme, Singaporean commuters (including fare-paying children) can register up to two MRT Transit Farecards or Cashcards in their name.  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.  The profits of nationalised  MRT and public bus companies at the end of the financial year can be proportionally shared in the 30:30:40 ratios.

Profits are shared between the Singaporean commuters, the national companies and the government when MRT and public buses are nationalized.  The government takes 30% of the profits and the nationalized MRT/public bus companies retain another 30%.  The remainder 40% is shared with Singaporean commuters in some relation to their total spending during the year.  An added condition could be that only those Cards that expended more than $300 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. 

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.

Foreigners are already rewarded by their enjoyment of our fine and efficient MRT and public bus transport systems for work, living and tourism.  
On our 50th anniversary, we need to embark on a long and serious re-consideration of the Big Question of Nationalising our profitable transport companies so as to moderate their temptation to profiteer by injecting social responsibility values into its leadership and management.  


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