Acting transport minister to parliament: Delayed fair hike won’t disappear magically

He said we can’t assume that future fare increases will stop without consequences.

Acting Minister for Transport Chee Hong Tat explained to the parliament that the government will continue to ensure that transport fares alterations will remain affordable.

He was replying to parliamentary questions on the benefits of the fare increases to consumers and the profitability of public transport operators.

Chee further explained that wage costs are based on the national wage index to allow public transport salaries competitive.

The fare formula also includes productivity contribution to encourage operators to cut costs. This formula also prevents operators from relying all their costs on commuters.

“I had earlier mentioned that the fare formula reflects real cost increases in our economy, such as energy costs and wages,” said Chee.

“If the deferred fare amount is ‘expunged,’ as Mr Louis Chua proposed, or if fares are frozen for future years as Mr Don Wee suggested, it does not mean that these costs of running the public transport system will simply disappear into thin air,” he added.

He then explained that they deferred transport fee increases by implementing an overall fare “increase of 7.0% – which is less than a third of the maximum allowable fare increase of 22.6%. The remaining 15.6%-points will be deferred to future years.” 

This funding gap was resolved by providing $300m of additional subsidies in 2023, “which is $100 million more than the previous year.”

“This amount is on top of the $2 billion annual subsidies to fund bus and train services. In addition, the cost of public transport infrastructure is also fully funded by the Government,” he added.

He said it is wrong to assume that removing the deferred fare increase or freezing future fare hikes will have no consequences to public transport.

“Making such populist moves will further enlarge the funding gap over time which must be supported by higher government subsidies funded by taxpayers. It is not the responsible thing to do,” he said.