Thursday, May 03, 2012

Worker's Party's idea on transport comes to the fore....

During the 2011 General Election, WP released a manifesto that proposed we re-nationalize our transport system combine rail and bus to create operating efficiency and savings by cutting down on management overheads.

Here's WP's Eric Tan describing the idea at a rally speech in Bedok. The part on transport is 16 minutes into the video:

In today's Today (3 May), it was reported that analysts examining SMRT's financial statement and the expenditure needed for upgrades and maintenance feel that there may be a need to re-nationalize the SMRT:

In the 2012 Budget, our transport ministry proposed to allocate $1.1B to SBS Transit for the purchase of buses[Link].  Recently, the LTA announced that it will finance part of $900M cost to upgrade the required to  upgrade the SMRT system. Analysts believe that the upgrade will strain SMRT's financial health unless LTA finance a significant part of the $900M. It is always controversial for govt to inject money into private companies that are still paying dividends to shareholders. How do we account for this money? How much profit should the transport companies be allowed to make after receiving govt funding?

The $1.,1B to be used for buying buses is double the entire capitalization of SBS Transit of $521M. The govt can buy the entire bus company privatize it and still have some spare.change.
The bus company makes $36M in profits a year. This large part of money goes out as dividends to shareholders. It can be used for maintenance or paying the low wage workers in the company more - SBS has 5300 bus drivers [Link] $36M translate to $500 more per month for each bus driver.

Once our public transport system was privatized, there is a limit to the amount influence the govt has over it. There is a limit to the improvement in service quality because private companies have to take care of the bottom line and govt cannot just inject money into them to improve the service quality. The primary purpose of privatization was to improve efficiency however much of the efficiency  is gained within the 1st few years of privatization by cutting waste  -after that, the disadvantages of privatization start to emerge.

Going forward, the govt can't just keep injecting money into these private companies to ensure they maintain their service standards and don't falter with poor maintenance. Just maintaining basic service quality at acceptable levels won't give us the big leap in improvement in quality of life we want to be able to look forward to as Singaporeans.  Re-nationalization is one approach worth considering and it is far more workable than the current setup in which govt depend on private for-profit companies to deliver and have limited control over them when they don't.



30 comments:

Anonymous said...

SMRT and SBS do not have a free hand to raise fares to cope with rising costs like persistent high oil price. So, it is only right that LTA should inject money for the upgrades since SMRT do not owned the rail assets.

Lucky Tan said...

anon 17:56,

But SMRT was still giving out pretty generous dividends to shareholders in its latest quarterly report.

How do we justify the use of public money when SMRT uses the entire rail asset to make money but the cost of upgrade has to be borne by tax payers while shareholders collect dividends?

Lye Khuen Way said...

Like Lucky, I disagree with Anon 17:56 that it is only right that LTA step in to inject money.
The logical and widely adopted model worldwide is Not to privatize these public services.

Whether it was WP's idea or some others, the Authority ought to have thought through and re-organized the SBS /SMRT & ComfortDelgro when signs of dis-function start appearing years ago. Way before the floodgate was opened for the so called FTs.

Anonymous said...

"Going forward, the govt can't just keep injecting money into these private companies to ensure they maintain their service standards and don't falter with poor maintenance."
Lucky Tan

Why can't?

Going forward, do you think there will be a better alternative to the PAP?

Or rather not you, but the majority 60%?

Anonymous said...

The problem is the WP may have good ideas, Lucky Tan may have good ideas, BUT they simply cannot be the govt!

WP because they don't win enough seats, and worse even lost one after they had won! And lost not through elections!

And Lucky Tan did not even want to contest last GE!

So like that how to put their good ideas into action??

Anonymous said...

"Just maintaining basic service quality at acceptable levels won't give us the big leap in improvement in quality of life we want to be able to look forward to as Singaporeans."
Lucky Tan

Come on lah, there are already 101 things where there is no improvement in quality of life for Singaporeans.

And public transport is just only one of them!

So what's the big deal about no improvement?

Anonymous said...

"But SMRT was still giving out pretty generous dividends to shareholders in its latest quarterly report."
Lucky Tan 3/5/12 18:06

That's why talented Singaporeans have invested in SMRT shares and make money! Or spend their time to analyse and think how to make more money!

Where got time to criticise govt or try to be a better alternative to PAP?

So that's why I also don't really blame the opposition for what they are lah. And the 60% why they voted PAP.

Anonymous said...

In the early days of MRT operation, the trains were operating in near perfect condition. There was hardly any significant breakdown.
During this period, PAP boosted that perfect MRT operation was the result of PAP's effort and the perfect operation of MRT trains was PAP's achievement.

Now, during these few years, when MRT trains break down in the East-West, North-South or Circle Line,
PAP says that the train breakdown is SMRT problem,
the train breakdown is not PAP's problem.

Now, during these few years, when MRT trains break down in the North-East Line,
PAP says that the train breakdown is SBS problem,
the train breakdown is not PAP's problem.

If PAP is to nationalize the train operation and the train breakdown subsequently, how is PAP going to push the problem of train breakdown to anyone?

By the above logic, there is no way for PAP to nationalize the train operation. PAP is not so stupid to
embrace the train into their care.

What we can see about PAP is that when MRT trains were running perfectly well, PAP wanted to take credit for the good train performance.
When there are frequent MRT train breakdown, PAP want to distance itself from the train breakdown and push the train breakdown problem to the train companies.

Anonymous said...

The current model socialise the cost and privatise the profits...such model is fine for the PAP. The question is whether it is fair to singaooreans

Jamesneo said...

PAP will never consider nationalization because they have totally fall for the neoliberal doctrines of the IMFS.

Anonymous said...

The mediocre papist Leegime has screwed up the lives of ordinary Singaporeans bigtime. How long more can u tolerate such ineffective government ? They have been fooling Singaporeans thru half-truths, lies and withholding of vital informations. They have been using the controlled media to indoctrinate Singaporeans.

Anonymous said...

Think all this talk over the last 3 months has caused negative fatique.

There wont be much comments now.

So many balls have been thrown into the other side of the court and only one ball came back... the Prof's idea ain't gonna work.

A debate ( if this is one ) can be only if there is a dialogue with opposing views.

Its missing here.

Anonymous said...

"PAP will never consider nationalization because they have totally fall for the neoliberal doctrines of the IMFS."

y should they nationalize and lose the opportunity to call for private funds while still calling all the shots in management affairs & extract the benefits.

Cynical Investor said...

Actually it seems that WP has dropped the idea. No mention of it in parly debates. It was No NS Puthu that raised the possibility. WP was silent.

I tot maybe it waz because Eric Tan had left the WP and it was his baby. But SgDaily posted a link on FB a few weeks ago showing that Eric's gd buddy Gerald Giam had raised the issue outside of parly last July.

Holmes would be asking,"Why didn't the dog bark".

Anonymous said...

//Holmes would be asking,"Why didn't the dog bark".//

This dog is not barking cos it doesn't want to attract the lion too much & give the latter the opportunity to maul the former down. The dog will just let the other hyenas to do its job outside the arena while the lion can't do much. One fine day, this dog may just swagger to take over the lion's place.

Anonymous said...

If SMRT and SBS are truly private companies, they would have been able to raise fares by at least 50% now to cope with rising costs. But they cannot as LTA force them down. Hence, those that talk about SMRT and SBS socialising the costs and privatising the profits are talking NONSENSE.

Ng Eng Hou said...

Actually HK has a privatized public transportation system that is functioning relatively well.Just don't know, what's going on with Singapore. Perhaps the privatized public transportation system may not be suitable for Singapore.

I advocate converting SMRT and SBS Transit into some kind of social enterprises so that management can pay more attention to service instead of profit maximization which can cause them to cut corners to grow profits. At the same time, I also advocate lowering down the barriers for real private operators to come in.

The main problem we us is as a country, we're relatively poorer than HK, whose average personal incomes are higher than us here. With their higher incomes, they can afford to pay for improved services, but not us, who are still struggling.

Current state of affairs is tough for those public transport operators - no control over both costs and revenues - this is a a model for guaranteed losses most of the time.

Either nationalize or convert to social enterprises model!

Anonymous said...

Lucky, do you know how many cronies and elites are sitting pretty on these companies. If these loyalist lose their jobs, the emperor and his family will be in trouble.

Anonymous said...

To Anonymouns 4/5/12 10:27 and Anonymouns 3/5/12 17:56:

SBS and SMRT are granted sectional monopolies in exchange for regulated fare increases.

One could argue instead, that their profits are bolstered by the sectional monopolies and free (or almost free) infrastructure assets presented to them.

Anonymous said...

For other business, if product or service no good, you sure lose customers and no business.

But public transport sure have customers and business what, even if service no bloody good, right? Because the alternative for customer is very expensive what.

And these customers are the majority of voters.

And some more majority voters (60%) still vote PAP what. Because PAP is the best available to vote for what.

So what's the issue for public transport companies and PAP?

Anonymous said...

"So what's the issue for public transport companies and PAP?"
Anon 4/5/12 13:09

No issue lah. At most the customers or voters or Lucky Tan complain & complain only what. So let them complain lah.

Anonymous said...

The PAP will make the govt foot the bill. Private interests will be protected. Make as much noise as you guys want but the PAP will not change its economic ideology. The more threat and cracks there are in its failed ideology, the more the PAP will stubbornly cling on to it. And then a tippin point will be reached, game over, for everyone.

Anonymous said...

I hope SBS and SMRT will not nationalize. I was one of the few who managed to buy their shares cheap. The dividends over the past decade has been good.

Public commuters need to put up with their daily inconvenience of train breakdowns and overcrowding so that shareholders like myself can collect more dividends.

Please be understanding.

Anonymous said...

Lucky Tan,
may you find this information useful

"What stake does Temasek Holdings hold in SMRT Corporation?
Temasek Holdings owns 54.3% of SMRT Corporation as at 16 May 2011."
http://www.smrt.com.sg/investors/FAQs.asp

In other words, left hand money from tax money go into right hand into Temask holding since they are the largest shareholder.

Isn't surprising to us that there is little convincing investigation going since PM's wife is implicated ? Is it me to feel that the management of smrt trying to get out of blame and push to "little people " ?

Isn't this obvious conflict of interest to cut cost of maintenance and manpower are what cause the sad state of transport affair ?

Anonymous said...

Can anyone explain why are we bailing smrt and our public bus transport company when most of the profit goes into temasek holding and hojinx ? and they are not even liable to be accounted to the public ? For how long they going to exploit the public and shortcharge us ?

Anonymous said...

Supposing some PAP Ministers (or their wives) own quite a big chuck of SMRT shares and then they go ahead and inject money to publicly listed SMRT to purchase buses which means increasing the net assets worth of SMRT.

So will this not be interpreted as putting public taxpayers' monies into the PAP Ministers' pockets if they do own SMRT shares by proxy?

How does one justify using public taxpayers' monies to bail out a publicly listed company ? Where is the clear dividing line between which publicly listed company would be eligible to public funds ? Based on whether they are related to the PM's wife ?

The questions will be endless and which public listed company will be next in line to qualify for such aid from the Govt ? And will this not open up a can of worms if some hanky panky is happening behind the scenes ?

And then SMRT will continue to get away scot-free each time they ask for the next fare increase ?

WTF will PAP do next ?

Anonymous said...

Supposing some PAP Ministers (or their wives) own quite a big chuck of SMRT shares and then they go ahead and inject money to publicly listed SMRT to purchase buses which means increasing the net assets worth of SMRT.

So will this not be interpreted as putting public taxpayers' monies into the PAP Ministers' pockets if they do own SMRT shares by proxy?

How does one justify using public taxpayers' monies to bail out a publicly listed company ? Where is the clear dividing line between which publicly listed company would be eligible to public funds ? Based on whether they are related to the PM's wife ?

The questions will be endless and which public listed company will be next in line to qualify for such aid from the Govt ? And will this not open up a can of worms if some hanky panky is happening behind the scenes ?

And then SMRT will continue to get away scot-free each time they ask for the next fare increase ?

WTF will PAP do next ?

Anonymous said...

PAP is a shitty government. Whatever profits the transport companies made go to the shareholders- primarily Temasek Holdings. When it comes to the big bills for maintenance of our MRT and purchase of more buses due to the poor management of CEOs appointed by our super PAP talents, the money comes from the tax-payers. Open your eyes and see how PAP care for its citizens. Privatise the profits and socialise the costs. Only a government that cares will consider nationalising the transport companies and run them to cover only costs.

Anonymous said...

Smrt is too big and dangerous to be privatised from the start by those who do not know the best.

Anonymous said...

The solution to the problem is easy.

Get people to read all the alternative literature other than The States Times and Channel News Asia.

It's that easy. Recommend to you friends Temasek Review, The Online Citizen, Diary of a Singaporean Mind and all the critical blogs on the internet.

Are you doing so?