Profit from $1.1b bus package will go back to government

[CKP]

Any profit from $1.1b bus package will go back to government, says DPM Tharman

 

By Hetty Musfirah | Posted: 01 March 2012 1641 hrs

 

SINGAPORE: Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that any profit made from the $1.1 billion package for public transport operators (PTO) to grow their bus fleet will go back to the government.

 

Mr Tharman said $280 million is budgeted for the purchase of 550 buses over the next five years, while the remaining $820 million is to cover the net operating costs of the buses for 10 years.

 

He said the 550 additional buses is projected to be a loss-making operation, and so the $1.1 billion package is expected to cover the losses.

 

Mr Tharman said the government will scrutinise operators' accounts. And should operators ever turn a profit or make lower losses, the government funding will be reduced correspondingly.

 

A review will also be conducted in five years to check parameters of the agreement.

 

Mr Tharman said: "The $1.1 billion package is expected to cover the losses of the 550 buses, in other words, the additional costs, net of revenue of the $1.1 billion package. $280 million is budgeted for the purchase of the 550 buses over the next five years and $820 to cover the net operating costs for 10 years.

 

"This is based on the best estimates currently. However, we will be monitoring and scrutinising the PTOs' actual costs, for both the purchase and the running of the buses. Should their losses turn out to be lower than expected, the government funding will be reduced correspondingly. So one way or another, there are no profits to be made from the 550 buses."

 

"We expect them to make losses based on their all existing parameters. If we are lucky and somehow the system is re-engineered, so that the losses are less than expected, or most unlikely if they turn a profit, that will not come from the government, the $1.1 billion will be reduced, as their losses are reduced, and if they make a profit, it all comes back to us.

 

"So none of the $1.1 billion will go towards profits of the public transport operators. It will be ring-fenced, their accounts will be scrutinised, we will be paying according to what the costs actually are. There is a review in five years to check the parameters of the agreement."

 

Mr Tharman said the package is a subsidy for commuters and not a subsidy for operators.

 

He said without the government stepping in to help boost bus capacity, the significant service levels improvements would only be achievable if fares are raised sharply.

 

He added that if operators had to do it on their own, their fare revenues would have had to go up, by about 12 to 13 percent. And this translates into an increase in passenger fares, of about 15 cents per journey.

 

Mr Tharman said: "How much is 12-13 percent? In the last five years, since 2006, fares went by 0.3 percent, so 12-13 percent is quite a significant leap compared to what we have seen in the last five years. That would have been the only way for us to achieve the service levels improvements if the government has not stepped in.

 

He said the $1.1 billion government package, or $110 million each year, is to step up bus service levels well beyond the current service levels required of the operators.

 

He said it will increase bus capacity on existing heavily-utilised routes, making them less crowded and giving commuters more pleasant journey.

 

The number of new bus services will be added to improve connectivity.

 

He said the PTOs will have to improve service levels as a condition for the government's investment.

 

Mr Tharman said: "We cannot simply mandate the PTOs to add the 550 buses. First, because it goes significantly beyond the current service levels of the current regulatory framework. Second, the PTOs bus operations are already running operating losses and the additional 550 buses in particular are projected to be a loss-making operation.

 

He said despite the government package, and independent of the government package, regular and incremental fare increases will continue to be necessary as wages and operating costs rise.

 

He said this is so that bus industry can stay financially viable.

 

Mr Tharman said the government will also continue to make sure that needy commuters get adequate assistance for their transport expenses.

 

- CNA/de

 

 

Should not "profits" go back to taxpayers instead of the government?

 

 

 

[Acemundo]

my next question is, are they sure they can get sbs, smrt to track and accurately and truthfully allocate the revenue back to the cost that govt pumped in such that the profit is measurable?

[Porche]

chun bo losses, then take some existing lines for private operators to try. They are running good profit on some express service to city areas.

[CKP]

my next question is, are they sure they can get sbs, smrt to track and accurately and truthfully allocate the revenue back to the cost that govt pumped in such that the profit is measurable?

 

And is the above process fully transparent to the public, or is it another case of an opaque process (aka "trust us because do not challenge the wisdom of this government") unless an MP request the above process to be made transparent in a parliament sitting"?

 

The taxpayers are mindful of previous statements made by this same government extolling and praising their model of privatised public transport (efficiency, service, against nationalisation etc) before this 1.1 billion... ahem.., "bailout".

 

Edited March 1, 2012 by CKP

[JackRabbit]

my next question is, are they sure they can get sbs, smrt to track and accurately and truthfully allocate the revenue back to the cost that govt pumped in such that the profit is measurable?

 

 

this is another tharman wayang la... in 5 years, who remember this $1billion or will Tharman still retain his job after 2016 to answer to this?

[CKP]

this is another tharman wayang la... in 5 years, who remember this $1billion or will Tharman still retain his job after 2016 to answer to this?

 

Yup, probably they will "chut" their old pattern of quietly shifting goal posts.

 

Less than year ago during GE, Tharman promised 30% increase in real wage over 10 years.

 

Then less than one year later after GE, his boss LHL "shifted goal posts" and said 20% increase is achievable.

 

Edited March 1, 2012 by CKP

[LoverofCar]

KNN..how come the profit not going back to rebate or cheaper fare for the people?

[Blackyv]

whenever they say they loss money, we all know they will recover those lost from somewhere else... anyone know where else they could recover that billion from?....

[Blackyv]

Yup, probably they will "chut" their old pattern of quietly shifting goal posts.

 

Less than year ago during, Tharman promised 30% increase in real wage over 10 years.

 

Then less than one year, his boss LHL "shifted goal posts" and said 20% increase is achievable.

 

 

 

by the time old man gone, they will say "consider lucky to have 10% gain over 10yrs" .. ..

[Quirky]

So, will fares on these 550 buses be free? Or at greatly reduced fares?

[Acanthus]

So what happen if SBS and SMRT assign these 550 buses to those super ulu routes with very low ridership?

 

then can say to the $1.1 billion after 5 years liao. Sounds like a good way to.... errmmm...."put money into washing machine"

Edited March 1, 2012 by Acanthus

[Gukubird]

Wow, Transport fare will increase again so that GOV will have profit?

[Blackyv]

Wow, Transport fare will increase again so that GOV will have profit?

 

 

are you sure only gov will have profit?...

[KARTer]

Gahment needs such profits to fill blackholes elsewhere.......

 

Any profit from $1.1b bus package will go back to government, says DPM Tharman

 

By Hetty Musfirah | Posted: 01 March 2012 1641 hrs

 

SINGAPORE: Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that any profit made from the $1.1 billion package for public transport operators (PTO) to grow their bus fleet will go back to the government.

 

Mr Tharman said $280 million is budgeted for the purchase of 550 buses over the next five years, while the remaining $820 million is to cover the net operating costs of the buses for 10 years.

 

He said the 550 additional buses is projected to be a loss-making operation, and so the $1.1 billion package is expected to cover the losses.

 

Mr Tharman said the government will scrutinise operators' accounts. And should operators ever turn a profit or make lower losses, the government funding will be reduced correspondingly.

 

A review will also be conducted in five years to check parameters of the agreement.

 

Mr Tharman said: "The $1.1 billion package is expected to cover the losses of the 550 buses, in other words, the additional costs, net of revenue of the $1.1 billion package. $280 million is budgeted for the purchase of the 550 buses over the next five years and $820 to cover the net operating costs for 10 years.

 

"This is based on the best estimates currently. However, we will be monitoring and scrutinising the PTOs' actual costs, for both the purchase and the running of the buses. Should their losses turn out to be lower than expected, the government funding will be reduced correspondingly. So one way or another, there are no profits to be made from the 550 buses."

 

"We expect them to make losses based on their all existing parameters. If we are lucky and somehow the system is re-engineered, so that the losses are less than expected, or most unlikely if they turn a profit, that will not come from the government, the $1.1 billion will be reduced, as their losses are reduced, and if they make a profit, it all comes back to us.

 

"So none of the $1.1 billion will go towards profits of the public transport operators. It will be ring-fenced, their accounts will be scrutinised, we will be paying according to what the costs actually are. There is a review in five years to check the parameters of the agreement."

 

Mr Tharman said the package is a subsidy for commuters and not a subsidy for operators.

 

He said without the government stepping in to help boost bus capacity, the significant service levels improvements would only be achievable if fares are raised sharply.

 

He added that if operators had to do it on their own, their fare revenues would have had to go up, by about 12 to 13 percent. And this translates into an increase in passenger fares, of about 15 cents per journey.

 

Mr Tharman said: "How much is 12-13 percent? In the last five years, since 2006, fares went by 0.3 percent, so 12-13 percent is quite a significant leap compared to what we have seen in the last five years. That would have been the only way for us to achieve the service levels improvements if the government has not stepped in.

 

He said the $1.1 billion government package, or $110 million each year, is to step up bus service levels well beyond the current service levels required of the operators.

 

He said it will increase bus capacity on existing heavily-utilised routes, making them less crowded and giving commuters more pleasant journey.

 

The number of new bus services will be added to improve connectivity.

 

He said the PTOs will have to improve service levels as a condition for the government's investment.

 

Mr Tharman said: "We cannot simply mandate the PTOs to add the 550 buses. First, because it goes significantly beyond the current service levels of the current regulatory framework. Second, the PTOs bus operations are already running operating losses and the additional 550 buses in particular are projected to be a loss-making operation.

 

He said despite the government package, and independent of the government package, regular and incremental fare increases will continue to be necessary as wages and operating costs rise.

 

He said this is so that bus industry can stay financially viable.

 

Mr Tharman said the government will also continue to make sure that needy commuters get adequate assistance for their transport expenses.

 

- CNA/de

 

 

Should not "profits" go back to taxpayers instead of the government?

 

 

[KARTer]

So what happen if SBS and SMRT assign these 550 buses to those super ulu routes with very low ridership?

 

then can say to the $1.1 billion after 5 years liao. Sounds like a good way to.... errmmm...."put money into washing machine"

Using good money to chase bad money??!,

[Pchmj]

I don't understand how profit goes back to govt, by tax or what? Unless you tell me SBS/SMRT earn $10mil and all this $10mil goes to govt.

[Wind30]

walao.

 

our ministers are really getting stupid.

 

First they say cannot nationalise Bus operators because the profit incentive will spur the operators to cut cost and be more efficient.

 

Now they say 1.1billion give to bus operators, any profits will go back government???? are they crazy? like that what sort of profit incentive you are talking about?

 

might as well admit they are wrong and take up WP's suggestion and nationalise the bus services. Because what they are doing is similar to the nationalising the bus services except it is a half measure and subjected to ambiguity and abuse.

 

 

[Dark]

I dun understand, $1.1b is for purchase of 550 buses and to cover 10 yrs of operating costs including manpower cost, whatever fare collected for these 550 buses will be pure profit. So how can it possibly operate at a loss?