Hansard, 2002-07-09

asked the Minister for the Environment in view of our Prime Minister mentioning the possibility of joining our three main reservoirs into one huge catchment area, has his Ministry carried out an environmental impact study whether such a project should, in fact, be carried out.

asked the Minister for the Environment as the Prime Minister has exhorted us to be less reliant on Malaysia for our future water supply, one alternative source is NEWater where there is some public concern over its quality and hygiene standards of "real" cleanliness, what measures have his Ministry in mind to educate Singaporeans to accept NEWater.

Mdm Ho has asked that Question Nos. 1 and 2 be postponed. The Minister for Education is not here to answer Question Nos. 3 and 4. So, we shall proceed to Question No. 5. Mdm Halimah.

asked the Minister for Health since the Smoking (Control of Advertisements and Sale of Tobacco) Act came into force (a) how many persons have been prosecuted for selling or providing cigarettes to persons below the age of 18 years and what was the punishment meted out; and (b) what preventive measures have the Health Promotion Board taken to discourage cigarette smoking among those below 18 years and how effective have been these measures.

Mr Speaker, Sir, a total of 131 retailers have been caught selling or providing tobacco products to those aged 18 years or under since the Act came into force in 1993. First time offenders pay a compounded fine of $1,000. Repeat offenders are prosecuted in court. Sentences include fines of up to $1,500 and a 3-month suspension of the tobacco licence. Sir, on the second part of the question, since 1984, the Ministry of Health has been working with the Ministry of Education to reduce smoking rates among students. After the formation of the Health Promotion Board (HPB) in 2001, HPB has taken over the responsibility of driving and managing the programmes which are implemented in schools to encourage students to stay smoke free and to assist those who smoke to quit smoking. Programmes include: - Incorporating smoking as a topic in the school curriculum from Primary 3 to Secondary 4. - Use of student peer leaders to spread the smoke free message. - Training teachers to conduct smoking cessation programmes. - Providing schools with a grant for students to implement smoking control programmes. - Promoting soccer and rugby as healthy alternatives to smoking. - Commissioning theatre companies to perform skits to teach students about the harmful effects of smoking and ways to refuse offers of cigarettes. This year's National Smoking Control Campaign is targeted at youths, particularly those between 13-18 years. The measures taken over the years have been effective. A survey conducted among 13,111 secondary one to four students in 2000 showed that, among the respondents, about 96% know that smoking is harmful to their health and 94% know that secondhand smoke is harmful to them. Among those aged 18-19 years for which longitudinal data is available, the smoking prevalence has declined from 15% in 1992 to 11% in 2001. HPB will persist in its efforts to counter the influences on youths to smoke. It will look into new and innovative ways to promote the anti-smoking message to the youths in schools and also to out-of-school youths.

Sir, in the same survey cited by the Minister of State, it is also mentioned that one out of every four students managed to sneak a puff at least once, and also the 11% who are considered as smokers because they light up at least once a month. To me, this is alarming. There are two aspects to it: one is deterrent and the other is preventive. We are concentrating on the preventive part. On the deterrent part, 121 convictions for a period of nine years, which is 12 convictions per year, to me, this number is very small. Because, in a report in the Straits Times in February, an 18-year old said that one could actually get cigarettes from any void deck shop, because they do not ask for the age, identification papers, and so on. Sir, I would like to ask the Minister whether there is a mismatch, in terms of the actual incidence of smoking by persons below the age of 18 years and the rate of conviction, and whether there is a need for greater enforcement on the part of the Ministry.

Sir, I think both need to be done. We will work with the Police with regard to enforcement of the law. If there is any information as to where these cigarettes are sold, we will pass on the information to the Police who will enforce the law. We are also targeting on prevention. In fact, this year's mass media campaign will be on television, radio, newspapers and magazines, and we are targeting youths, especially those between 13-18 years of age. And we are using international celebrities, like Christy Turlington, a supermodel, Moby, a singer and DJ, as well as local sports celebrities, like Mark Cheng and U. K. Shyam to reach out to the youths to encourage them to stay smoke-free.

Sir, what specific programmes are being put in place to make sure that the neighbourhood provision shops do not really sell cigarettes to persons under 18 years of age without even asking for identification papers, or whatever? What specific programmes does the Ministry have in place to check this?

My Ministry does not enforce the law with regard to smoking. This is done by the Police which is under the Ministry of Home Affairs.

Sir, if the Ministry does not do enforcement, will the Ministry work with the Ministry of Home Affairs and the Police to ensure that a mechanism is put in place for this purpose?

Yes, we will work with them.

May I ask the Minister of State whether his Ministry will further facilitate by helping people to stop smoking by subsidising a drug, which can help people stop smoking?

In general, our current subsidy rules will apply to all medication. But if there is any specific drug that we should subsidise, and if the proposal is sent to us, we will consider it.

Sir, can the Minister of State consider working with the Ministry of National Development, in terms of letting out void deck shops to vendors, who could be restricted from selling cigarettes, because a lot of void deck shops are very near to the secondary schools?

Sir, we will be happy to work with other Ministries on this issue.

Will the Minister of State then endorse Nicorette patch, Nicorette stick and Nicorette sweet?

Sir, I will not endorse any particular product. If there are any specific schemes that Members of the House have which can help people stop smoking, they may send their ideas to the Ministry. I will study them in detail.

asked the Minister for Health if he will give the number of foreign junior doctors recruited over the past 3 years from neighbouring countries for our public hospitals with breakdown figures by nationality and university attended.

Mr Speaker, Sir, our public hospitals have recruited an average of 33 Malaysian and two Indonesian junior doctors annually over the past three years. Among these doctors, 62% of the doctors graduated from universities in Australia and 21% from universities in UK.

Sir, I have asked for the breakdown on the nationality and the university attended. Could the Minister of State be more specific, please?

As for the breakdown of universities, there are about 20 universities, and if Mr Speaker will give me the time, I will run through them as quickly as I can.

Go ahead.

From Australia, Adelaide University, 2 Malaysians; Flinders University, 1 Malaysian; University of Melbourne, 37 Malaysians; University of Monash, 5 Malaysians; University of New South Wales, 5 Malaysians; University of Queensland, 1 Malaysian; University of Sydney, 11 Malaysians; University of Tasmania, 1 Malaysian; University of Western Australia, 3 Malaysians. From Indonesia, Gadjah Mada University Indonesia, 2 Indonesians; Maranatha Christian University, Indonesia, 1 Indonesian; University of Indonesia, 1 Indonesian. From Ireland, Dublin University, 4 Malaysians; National University of Ireland, Dublin, 1 Malaysian; University College Dublin, 3 Malaysians. From Malaysia, University of Malaya, 3 Malaysians. From New Zealand, University of Otago, 3 Malaysians. From the UK, Charings Cross, 1 Malaysian; Edinburgh, 1 Indonesian; Imperial College School of Medicine, 2 Malaysians; London University, 4 Malaysians; University of Newcastle, 2 Malaysians; Nottingham University, 2 Malaysians; Queens University of Belfast, 2 Malaysians; University of Aberdeen, 1 Malaysian; University of Dundee, UK, 1 Indonesian; University of Leicester, 2 Malaysians, and University of Manchester, 1 Indonesian and 3 Malaysians.

The Minister of State has just mentioned a few universities from the neighbouring countries which were never recognised before. Will this not diminish the standard of our medical healthcare here? Will it not affect the excellent reputation which we have built up over the years? Is it right to take short cuts like this in easing the shortage of doctors in the public hospitals? May I ask the Minister of State whether now is the time to revisit and review the policy implemented in 1993 of not recognising 150 previously recognised foreign universities? Surely, it is better to recruit from such reputable previously recognised universities.

Sir, Dr Lily Neo refers to the MRA Schedule that came into force in 1993. The Ministry has received many requests for the MRA Schedule to be revised, in particular, to restore medical schools that were recognised prior to 1993 to the Schedule. Our position at this time is that there is no need to amend the schedule for the following reasons. The current shortage of doctors in the public sector is due to two main factors. Firstly, there was a marked reduction in the NUS medical school intake from 1991 to 1996. NUS has already increased its intake progressively from 1997 onwards. But the increase of junior doctors will only begin to enter the medical workforce from 2007 onwards. Secondly, there is a significant maldistribution of doctors between the public and private sectors. For example, while there is a shortage of junior doctors in the public sector institutions, there is a surplus of GPs. In addition, there are shortages in some specialties, due either to the rapid growth in demand or unpopularity of that specialty amongst trainees. The situation is compounded by the very long time - generally, six years - required to train a specialist. Our assessment is that an annual intake of 230-250 students into the Faculty of Medicine at NUS, supplemented by an annual intake of 50-80 foreign-trained doctors - many of whom would be returning Singaporeans - would be sufficient to meet our overall clinical service needs. Expanding the Schedule to address the present shortage will create more problems in the longer term by allowing a greater influx of foreign doctors that would continue after the manpower situation has eased. The current registration system already allows foreign-trained specialists from medical schools, both on and off the Schedule, to work in Singapore, under conditional registration, to support the delivery and development of our clinical services. The Schedule does not prevent or hinder the entry of foreign medical talent, especially in disciplines where local specialists are in short supply. In this regard, the Schedule does not impede or conflict with the plans to develop Singapore into a biomedical research hub, as well as a regional medical service hub. Both of these developments would require the inputs of fully-qualified specialists, rather than doctors with only basic medical degrees. Expanding the Schedule will increase the number of options that Singaporeans will have to study medicine abroad, if they are unable to enter the Faculty of Medicine at NUS. Given the popularity of medicine as a career and the calibre of students seeking admission, such an increase would have significant implications on our national talent spread.

Mr Speaker, Sir, the Minister of State did not answer my question on whether it will diminish our reputation and our standards by employing doctors from the neighbouring unrecognised universities.

Mr Speaker, Sir, from the list of universities, there are seven doctors from the University of Malaya and the University of Indonesia. When our hospitals went to recruit these doctors, they recruited the best from Malaysia and in Indonesia. The number is small, and they are working under supervision. I do not think our reputation will be in any way diminished.

Sir, we are talking about the principle of the issue here, and it does not matter whether it is one, seven or 15. May I ask the Minister of State whether it is right to take risks on the care of our patients in the public hospitals?

Mr Speaker, Sir, I would like to assure Dr Lily Neo that these doctors are excellent doctors, and there are excellent doctors in our neighbouring countries. If some of them are recruited, these are worthwhile foreign talent to have in our country.

Dr Neo, I think the assurance has been given, unless you want to pursue another question.

Sir, I would like to pursue on what the Minister of State said earlier. He said that these doctors are allowed to practise here under strict supervision. Can I seek a clarification on what he has said earlier?

Yes.

May I ask the Minister of State whether the senior doctors have enough time to supervise these junior doctors all the time? Are we not addressing the shortage of doctors? By having the senior doctors looking after the junior doctors, is it not defeating the purpose? Are we not talking about people's lives here? Why are we taking risks with the patients in our public hospitals?

Sir, junior doctors must always be supervised by senior doctors, whether they are local, UK, Australian or Malaysian graduates. We expect our senior doctors to supervise junior doctors. In time, our junior doctors will become senior doctors and supervise those who are junior to them. This is the normal practice in medicine.

Sir, I disagree with the Minister of State on that, because there are many types of registration. Is he saying that the local graduates are exactly the same? Surely, they are under different medical registrations.

Mr Speaker, Sir, a good doctor remains a good doctor, regardless of the registration category, the country they graduate from or their country of origin.

Mr Speaker, Sir, the Minister of State has said that there is a shortage of junior doctors. The question is: are the junior doctors being forced to work extended shift hours of up to 120 hours per work week, and will such punishing work schedules possibly endanger patient care?

We have taken steps in our hospitals to reduce and monitor the working hours of doctors. The recruitment of some of the foreign doctors will help to ease the workload of junior doctors in the hospitals. But by the year 2007, we expect the higher intake of medical students into the university to increase the supply in the hospitals, and a more permanent solution would be found at that time.

Sir, the Minister of State said earlier that the junior doctors are also recruited from universities not scheduled in the 1993 policy. Why can the Ministry not just acknowledge this in the open and be transparent, and say that this policy is void since it is not implemented?

Mr Speaker, Sir, our Ministry is transparent and the policy is in effect.

Mr Speaker, Sir, there is a shortfall of junior doctors until 2007. What is the Ministry going to do during this interim period to cover this shortfall of doctors?

Mr Speaker, Sir, to cover this shortfall, we have recruited doctors from the UK, Australia, New Zealand and the neighbouring countries. I had earlier given the House a list of doctors from Malaysia and Singapore.

Why did the Minister of State contradict himself? Earlier, he said that the policy was implemented and yet, in the next breath, he said that they had been recruiting doctors from Malaysia, Indonesia, Australia. These are not the universities in the Schedule at all.

Mr Speaker, Sir, there is no contradiction. We recruit foreign doctors during this period because there is a shortage. But corrective measures have been taken. The intake in the university has been increased, and it takes a long time to train a doctor. So these medical students will become doctors, and they will enter and work in the hospitals in 2007. The purpose of the Schedule is to ensure that there is an even distribution of talent amongst young Singaporeans in the various careers. If the Schedule is removed, then a greater number of Singaporeans would go abroad and study medicine if they cannot get into the medical school in Singapore. However, even if a doctor is from a university that is not in the Schedule, he can come back to Singapore and, under certain conditions, get himself registered. Basically, it would be under a conditional registration and he would have to sit for an examination. So, this has served to discourage too many Singaporeans from going into medicine.

The Minister of State just mentioned about conditional registration. Could he explain to the House the meaning of "conditional registration"?

It means he is registered under certain conditions. I have the list of conditions.

Dr Neo, I think we have spent enough time on this. I shall only allow you one last question.

Sir, the Minister of State has said that the shortage of doctors here is temporary. Can he assure the House that this assessment is correct this time, or is it going to be skewed again? How would he respond to the visiting Harvard don who said that Singapore needs another medical school to train more doctors, in view of the long-term needs of the life sciences?

Sir, I can assure the House that in 2007, we will have far more doctors entering the hospitals than we have today. As for the Harvard don's recommendation that we should have a second medical school, the Ministry of Education is studying this.

I hope that assurance will bring the Question to a close.

asked the Acting Minister for Information, Communications and the Arts whether he will consider requiring local television broadcasters to provide signing or captioning of important programmes, such as the news or the Prime Minister's National Day Rally speech, for the benefit of the hearing-impaired as signing is provided, for instance, in television news programme in Malaysia.

Sir, it is important that key programmes, such as the Prime Minister's National Day Rally speech, reach as many Singaporeans as possible. For the hearing-impaired, the full text of the English speech and translations of key points of the Mandarin and Malay speeches are available on MITA's website. However, there are practical difficulties in implementing Dr Khor's suggestion for signing and captioning. Broadcasters have considered such requests in the past, but felt it was not feasible due to lack of a regular pool of "sign" interpreters for `live' translations. Close captioning, an alternative system used in the US, UK and Australia, works by means of captions hidden in the video signal, to be recalled by viewers when needed. However, this concept has to be further studied, as it requires substantial high costs. Currently, broadcasters do, during `live' telecast of important speeches, provide summaries of main points made during the speech. CNA also provides news headlines in the form of "crawlers" throughout the day on its news programmes. MITA, therefore, does not make it mandatory for broadcasters to provide signing or captioning of TV programmes. However, SBA will further explore with broadcasters the possibility of providing the hearing-impaired with subtitles during major Government speeches.

Sir, the Minister mentioned about cost. Is it possible to know how costly this service would be? On the point about the lack of resources, there are a lot of signing classes that go on, especially through the YMCA, and people are certified. How does the Minister see this problem?

Mr Speaker, Sir, the costs, at best, are estimates at this point in time. MediaCorp had estimated previously that the cost of setting up a close caption system is about $250,000. But, more importantly, they also estimated that the annual operating cost of a close caption system could be close to $300,000. It is a fairly substantial cost, and it is a question then of costs and benefits. On the question of the shortage of signing personnel, the problem actually is a little bit deeper, and that is because there is not just one signing method. In the schools in Singapore, they teach something which is called "signing exact English", and that is a word for word signing. This is a fairly slow process because if everybody speaks at the rate I do now, one could keep up with word for word signing. But not everybody speaks at a very slow rate. So, this could present a difficulty. Many hearing-impaired people also adopt more of their own simplified signing, which captures the gist of the ideas. So, when we talk about a pool of people to do simultaneous translations, so to speak, into sign, we do not just require a person who can do exact word signing, but we also need somebody who understands the subject matter, is able to think on the spot, and can quickly capture the essence of the message and translate it. That is difficult. We do not have a lot of people that we can call on.

Sir, knowing the difficulties of providing signing for important programmes for the hearing-impaired, has the Ministry asked the broadcasters for the cost of providing at least sub-titling, if not close captioning for such important programmes? I would also like to ask the Minister to comment on the fact that as the Government does provide funds for public service broadcasts - in the case of MediaCorp, to the tune of some $80 million a year - is it not possible for the broadcasters to provide at least sub-titling for some programmes? The Ministry could consider providing some funds to the broadcasters to provide such services for important programmes like daily news, documentaries and educational programmes. Many of the hearing-impaired have equal intellectual capacity as their hearing peers, and they would be able to understand the full extent of the programmes, and watch such programmes with their families.

Dr Amy Khor, no speeches. Ask your questions, please.

I am sorry. I would like to inform the Minister that it was unfortunate that there was no sub-titling in the programme, "Changing Lives" that was shown on Channel NewsAsia in April 2002, which featured Ms Erica Levi. She is a well-known role model for the hearing-impaired community. The hearing-impaired could actually not get the full flow of the programme because there was not even subtitling for that programme.

Sir, Dr Khor's question is whether we could consider sub-titling. We have said that we would explore this. But sub-titling means that it is no longer signing. It is put into a form that is in a regular language, so to speak. If you are then talking about reading it off the television screen, you might also want to consider, in terms of the cost-effectiveness, whether it is not more practical to read it off the newspapers or the Internet. But notwithstanding that, we would consider whether for important speeches, we can have more sub-titling. Sub-titling can sometimes disturb other viewers. Also, we can only sub-title, at most, in one language, and we have got to decide which language we want to sub-title in. If we want to be able to reach to all the hearing-impaired, and we have got four official languages that we want to sub-title in, then we would see nothing else on the screen.

Sir, as most of the important programmes are broadcast in English, like the Prime Minister's National Day Rally speech, would it be all right to provide sub-titling in English? That is the feedback I have got from the hearing-impaired community. In addition, I would also like him to comment on what he said in Parliament yesterday that images and pictures on the television screen conjure very powerful messages. Together with the sub-titling, the hearing-impaired would have the full impact and implication of the speeches made.

Sir, I am very gratified that somebody listened to me yesterday. We said that we would consider. I would take up her suggestion.

Sir, coming back to the hearing-impaired and signing, I appreciate what the Minister has said about the signing differences. How would the Minister account for Malaysia having signing over their news? Is there something to be learnt there?

Sir, I am not familiar with which particular method of signing the Malaysians use over their news. But I am sure that there is something to be learnt there.

asked the Acting Minister for Information, Communications and the Arts whether his Ministry plans to approve Singapore Telecommunications' application to raise local telephone rates.

Mr Speaker, SingTel has submitted a proposal to IDA to raise its local telephone rates. In assessing the case for an increase, the key consideration is whether SingTel is incurring a deficit in providing fixed line local call services. IDA is currently auditing the data and information supplied by SingTel. The audit will take some time because there is a need for IDA to clarify the cost modelling and data with SingTel. IDA expects to complete its assessment, and reach a decision by the third quarter of this year.

Sir, in view of the difficult times that we are facing now and the many other increases from the various Ministries, would the Minister consider delaying this increase until the economy has recovered?

Mr Speaker, Sir, we have not yet determined that there will be an increase. I think we should first study the numbers to see whether or not there will be one.

asked the Acting Minister for Information, Communications and the Arts whether he is willing to set up two community children's libraries, one at Potong Pasir Estate and the other at Lorong 8 Toa Payoh both of which are within walking distance of the HDB flats in those two areas.

Sir, Mr Chiam is asking for two community children's libraries (CCLs) in Potong Pasir. I have stated the criteria for the National Library Board to consider setting up community children's libraries in this House on 14th May this year. These criteria are that there must be demand for such a facility and sustainable support from a broad-based community organisation to share the building and running costs.

Sir, I expected the answer. Again, it is a refusal. The refusal has been so consistent that I am beginning to wonder whether or not Opposition constituencies are discriminated against.

Mr Lim, do you want to reply to that?

He did not ask a question.

My question is whether or not Opposition constituencies are discriminated, as libraries are not allowed to be built there.

I am sorry, Mr Speaker. I mistook Mr Chiam's wondering for just thinking aloud. The criteria are objective and apply as much to PAP wards as they do to Opposition wards. The PAP wards have been able to meet these criteria, and I would urge Mr Chiam to consider. I have not said "no". I have just said that there are criteria. Others comply with them. Perhaps he should try to.

asked the Prime Minister whether he will allow opposition Members of Parliament to invite their grassroots leaders to attend the National Day function hosted by the President of Singapore at the Istana.

Sir, the National Day Reception at the Istana is hosted by the President to celebrate our National Day with representatives of key institutions in the public sector. Invitations are also extended to those who have made significant contributions to Singapore's development in the various fields, including from the arts, sports, the media, social/voluntary groups, the labour movement, professional bodies and business sector, as well as official grassroots organisations. As a Member of Parliament, Mr Chiam See Tong is a representative of a key institution of our society. Hence, he and his wife are invited to the Reception. The key leaders from official grassroots organisations, including those from Potong Pasir, are also invited. The Reception is however not for political parties and their activists. Hence, those who help him in his constituency's political work are not invited. The current guideline for invitation to the National Day Reception is rational and we feel that there is no need to change it.

Sir, in fact, I attended one of these National Day functions and was asked by a PAP MP. He said, "Chiam, what happened to your grassroots? Why aren't they here?" I want to ask the Minister of State whether or not PAP grassroots leaders are invited, other than the ones that he has mentioned.

Mr Speaker, Sir, I think I have provided answers to whatever questions the PAP MP has asked Mr Chiam. The answer is "no". I think as far as the PAP political party's activists are concerned, they would not be invited if they are only helping the PAP in their political work. I referred to official grassroots organisations. These are the grassroots leaders appointed by the People's Association under the People's Association Act. That is what I referred to as official grassroots organisations.

Sir, may I ask the Minister of State whether civil society activists like the Roundtable, AWARE, Think Centre, etc, would be invited to the function?

Civil society activists are invited but not all, because there are so many of them and the Istana ground is limited in space. They are invited from time to time. For different years, we invite different groups. I do not think the Think Centre has been invited yet.

Would they be considered for invitation, Sir?

We are not considering them for the time being.

Sir, are the invitations sent out directly to the grassroots leaders or through the MPs?

Invitations are sent directly to the grassroots leaders invited, not through the MPs.

How does the President's Office formulate the guest list? Does it accept recommendations from Members of Parliament?

They do not accept recommendations from Members of Parliament. For the official grassroots leaders, they accept recommendations from the People's Association.

Can I clarify with the Minister of State that for these functions, MPs have got no role to play with regard to the invitations?

MPs, as advisors to the grassroots organisations, do have a role to play in recommending grassroots leaders to be invited, but the final list is worked out by the People's Association before it is sent to the President's Office.

asked the Minister for Manpower (a) whether the CPF Board had made a mistake in rejecting Madam Jenny Koh's claim initially; (b) if so, has the Board apologised to her for causing so much distress at a time when she had to deal with the loss of her husband; and (c) what steps is the Ministry taking to prevent similar incidents from arising in future.

Mr Speaker, Sir, before I answer Question No. 11, may I have your indulgence to inform the Nominated Member that earlier on, when he raised Question No. 3, my colleague was not in the Chamber to answer his question and also Question No. 4. And with your indulgence, if time permits, before the end of Question Time, my colleague would seek your permission to answer Question Nos. 3 and 4. I will now turn to Question No. 11. Mr Speaker, Sir, the Home Protection Scheme (HPS) is a mortgage reducing insurance scheme that protects CPF members who have obtained housing loans from approved authorities against losing their flats purchased under the Public Housing Scheme should they become disabled or pass away before their loans are repaid. A CPF member would qualify to claim under the Home Protection Scheme if there was an outstanding loan to discharge. Sir, in Mdm Jenny Koh's case, based on the intended loan commencement date, 1st August 2001, as provided by the Housing and Development Board, the CPF Board had deducted the premium and sent Mdm Koh and her husband, the late Mr Yee, a certificate informing them that the cover commencement date was 1st August 2001. The cover under the Home Protection Scheme was premised on the condition that the purchase transaction would be subsequently completed. Sir, unfortunately, Mr Yee passed away before he completed the purchase transaction. In the light of this, the CPF Board took the position that a housing loan had not been taken, as Mr Yee was not the legal owner of the flat at the time of his sudden demise. Therefore, while we sympathised with Mdm Koh and her family, the Ministry was not able to accede to her appeals and had the CPF Board discharge his loan liability to HDB when there was no outstanding housing loan to discharge. Her subsequent appeals were rejected as the Board explained that the Home Protection Scheme (HPS) did not apply to Mr Yee since he had not withdrawn any monies from his CPF account to repay the HDB housing loan. This was premised on the interpretation of section 29(2) of the CPF Act which provides that the HPS applies to a member of the CPF Fund who had withdrawn monies standing to his credit in the CPF Fund to repay any instalment of housing loan. Prior to this case, the CPF Board's interpretation and procedures had worked well for practically all the Home Protection Scheme cases. In a way, Mdm Koh's case is exceptional as it involved the question of whether there is insurance coverage before a person becomes a legal owner of his flat. As hon. Members are aware, my Ministry conducted another review of the case and, in particular, the legislative framework which governed the scope and application of the Home Protection Scheme was re-examined. I thought this was necessary as I was concerned that there may be pre-existing ambiguity in the interpretation of the provisions governing the scope of the HPS. In this regard, guidance was sought from the Attorney-General's Chambers. Mr Speaker, Sir, the Attorney-General's Chambers has advised that the legislative scope of the Home Protection Scheme is provided under section 29(1) of the CPF Act and that this section did not require Mr Yee to complete the purchase transaction or to withdraw monies from his CPF account to repay the loan in order for the Scheme to apply to him. It was sufficient if there was a valid housing loan discharge and the Home Protection Scheme premiums had been deducted. Therefore, since there was in place an agreement for HDB to extend a housing loan to Mdm Koh and her late husband jointly, and the Home Protection Scheme premiums had been deducted from the CPF accounts of Mdm Koh and her husband, the CPF Board could discharge Mr Yee's liability to repay the housing loan to HDB. This review has brought about a favourable outcome for Mdm Koh. Sir, in the course of the review, the Board has also looked at past claims, rejection cases, in order to see if there were similar cases that require a re-look. The Board told me that there is only one case that might require re-consideration. This case is being reviewed now. Similar incidents are unlikely to occur in the future as we have now clarified the legal interpretation as to when the Home Protection Scheme coverage would take effect for cases of this nature. The CPF Board has also introduced new procedures to ensure that such cases will not be repeated. Sir, in fact, in order to avoid any ambiguity in the interpretation of the relevant provisions of the Act, my Ministry will consider amending the legislation. We intend to rephrase the legislation such that the Home Protection Scheme coverage for a member would begin once there is a valid housing loan agreement with the HDB or any other approved mortgagee and the HPS premiums are deducted by the CPF Board.

I thank the Minister for his long and very extensive explanation and clarification. The Minister has not answered my question. Has the Ministry and the CPF made a mistake in the interpretation of the law and, in this case, has an apology been made to Mdm Jenny Koh?

Mr Speaker, Sir, I thought I have explained to him the decision to reject the appeal was made on the best interpretation of the provisions in the CPF Act at that time. There is no question of a mistake. It was a question of how the interpretation, and subsequent review of the legislative intent, was made.

asked the Minister for National Development (a) how many complaints have been received by HDB from residents of unsatisfactory workmanship in the design and build of flats in New Towns such as Woodlands and (b) what is HDB doing to ensure better quality control to overcome such unsatisfactory workmanship.

Mr Speaker, Sir, under the Construction Quality Assessment System, known as CONQUAS in the trade, run by BCA, assessments of public and private residential projects have shown that, generally, the workmanship in HDB flats is comparable to the workmanship in private residential estates. The number of complaints that HDB receives concerning unsatisfactory workmanship in HDB flats varies across towns and design types. In the case of Woodlands, for every 1,000 flats completed in recent years, about 200 instances of unsatisfactory workmanship were reported within the defects liability period. As part of HDB's quality improvement system, regular reviews and analyses of public feedback are carried out so that continuous improvements to building design and finishes can be made. Over the years, Sir, HDB has pushed for the use of more pre-cast components in the construction of its flats to improve flat quality. HDB has also introduced several measures to further improve certain aspects of its flats, such as the tiles, doors, partition walls and sanitary fixtures. For example, HDB implemented an improvement programme for tiling works this year. Training workshops were held for contractors' supervisors and handbooks on tiling techniques were produced, to encourage implementation of good practices. Tilers, Sir, working in HDB contracts are also now pre-screened and approved to ensure that they are sufficiently skilled to carry out such works. Nonetheless, Mr Speaker, Sir, if Dr Maliki knows of any defects in his estate within the defect liability period, please inform us so that we can look at the nature of the problem.

I wonder whether the 20% complaint rate is acceptable to HDB, because 200 out of every 1,000 new flats with unsatisfactory workmanship is quite high. Secondly, what has the Ministry to say about the kind of quality control mechanism that is in place? Because it is rather disturbing to note that when HDB new flat owners come into their flat, they realise that there is unsatisfactory work done, and 20 out of every 100 flat owners would be facing the same problem. Can the Senior Parliamentary Secretary please clarify the quality control mechanism that is in place, and why is it that the problem still occurs?

Mr Speaker, Sir, Dr Maliki might have misread the statistics I quoted. There were 200 instances of unsatisfactory workmanship reported within the defects liability period for every 1,000 flats. In one flat, there may be two or three instances of defects, eg, the flat owner may say these tiles are not polished, those tiles are not polished, so there are two instances. So, it is not 200 flats out of 1,000 flats. It is 200 instances. Some flats have more complaints, some flats have less. Is the number acceptable? It is in the nature of construction that some defects do occur after completion of the flats. That is why, in all contracts, whether it is private condominiums, landed estates, or HDB flats, we provide a one-year defects liability period, for the contractors to move in to remedy the defects.

Sir, in my question, I asked specifically about design-and-build flats. Can I clarify with the Senior Parliamentary Secretary whether the statistics he quoted refer to all design-and-build flats or to all flats? Because the problem with design-and-build flats is that the flat owners will go in and expect everything has already been done, and they feel very disappointed when they find a lot of defects in their flats.

Mr Speaker, Sir, I think most of the flats in Woodlands that Dr Maliki referred to are of the premium type. So, they are either design-and-build, or design plus. These flats come with full finishings. They have completed kitchen, as well as tiles. Because the flats have more fixtures, there tends to be a little bit more defects. Compared, for example, to a plain vanilla 4-room flat, there are no kitchen fixtures, the floors are not tiled, so there is no question of tile complaints because there are no tiles. So, there are slightly more defects than the plain vanilla standard type of flats. In fact, instances of defects in Woodlands new town are lower than the global average across all towns.

asked the Minister for Trade and Industry (a) why was combustible works such as gas pipe testing in the Bukit Merah area carried out from 6 to 7 pm, when human traffic could be high and (b) in the Bukit Merah case, where work was carried out near a library and a petrol station, why was the area not cordoned off.

Mr Speaker, Sir, I thank Dr Chong for his question. I share his concerns and it gives us an opportunity to give some perspective on this. Why was it done in the first place? The reason is that parts of the existing network of gas pipelines in Singapore are ageing. It is more cost effective to rehabilitate the pipelines rather than to replace them with new ones. This will also avoid public inconvenience as our pipelines are laid under public roads. Now pipeline rehabilitation is an established practice in the gas industry world-wide since the mid-1970s, and the technology has been refined over the years. This technology is used in Japan, Europe and the USA. Why was it done when human traffic could be high? PowerGas had carried out high-pressure tests using compressed air on parts of the rehabilitated pipeline at Jalan Bukit Merah to check for their integrity. The international code of practice is for this test to be done over a duration of 32 hours. Pressure is gradually increased over 8 hours and then held at the final test pressure for 24 hours before being brought down gradually. As the test had to be done over an extended period, PowerGas was not able to avoid having the test done during the 6.00 pm to 7.00 pm period when traffic was high. So what next? PowerGas had submitted its investigation report to the EMA. EMA has formed a committee of experts from the LTA and MOM to consider PowerGas' report and recommend measures to prevent similar occurrences in the future. The Committee will also review the adequacy of current safety measures, such as advance notification to the public, the extent of public cordon area, and so on. Although PowerGas had cordoned off the most vulnerable parts of the rehabilitated pipeline, the Committee will be investigating why PowerGas had not cordoned off the entire area where the tests were carried out. The Committee targets its findings to be ready end July. The pipeline was not connected to the gas distribution system. So it was not combustible as the question suggested. Hence, there was no combustible gas in the pipeline and there was therefore no danger of any gas leakage, or any risk of fire. In the meantime, PowerGas will stop all high pressure testing until we know what went wrong, and how to prevent recurrences and enhance safety.

asked the Minister for National Development, in view of the glut in the property market whether (i) he will consider having a moratorium on the Selective En-bloc Redevelopment Scheme and, if so, (ii) for how many years.

Mr Speaker, Sir, the Selective En-bloc Redevelopment Scheme (SERS) is part of the Government's estate renewal plans for old HDB estates. It enables optimisation of land use, while enabling Singaporeans to upgrade to new and better housing. Existing community ties are also preserved. Through redevelopment, old estates are rejuvenated. Thus, SERS benefits both the nation and the residents. Identification of suitable precincts for SERS is an on-going process. It takes into account several factors, including the potential for redevelopment and the Government's budgetary position. The Government will continue to progressively announce precincts for SERS if suitable ones can be identified. It generally takes about 4-5 years after announcement for a SERS site to be ready for new development. Thus, the selection of new SERS sites now should not have an immediate impact on the property market.

Sir, I understand that 4-storey walk-up flats are also involved in this SERS programme. If these walk-up flats are pulled down, naturally high-rise buildings would be put up in their place. Would that not add to the glut in the property market if high-rise buildings are built in place of the walk-up flats?

In the first place, as I said, I think the glut in the property market is not something that is permanent. There is a cycle in the market. Eventually, the glut will be taken up, and there will be a new status quo in the market. So, it is not something that is permanent. If there is a permanent glut in the market, then I think we would all be in serious trouble. The SERS programme is a very long-term programme. What we have announced for SERS now, the redevelopment would only take place, say, five years at the earliest. By that time, hopefully, the glut would have been removed. I do not think the Member should have any cause for concern over that aspect. Yes, it is true that when we do SERS, we are going to increase the potential for redevelopment, ie, we tear down a 4-storey block, or even a 11-storey block for that matter, and we are going to build something which will be much more intensive. And that is one of the rationales for SERS. That is indeed what we are hoping to do. Because, in the long run, Singapore is short of land and we have to make sure that we maximise every piece of land that we have.

Sir, in view of the many properties in the market that are left unsold, would it be more rational not to add more new flats into the market? Probably, the Government can make sure that SERS programmes are carried out rationally so as not to add more property into the market.

I think there are two matters. One is the fluctuation in the property market. There is a glut at the moment. A few years ago, there was a shortage. So this is a natural fluctuation of the property market. Then there is the other matter which is SERS, which is a very long-term programme. We will do SERS as and when we find suitable redevelopment opportunities. These sites will either be redeveloped immediately, and the effects of this redevelopment will be felt, say, five years down the road, or we may decide to hold the sites as part of the land bank. So, whether we decide to build or not is a separate matter from SERS. But the idea of SERS is to free up land for redevelopment.

Since we have time and Mr Steve Chia has raised Question No. 3, would the Minister for Education give his reply?

asked the Minister for Education (a) what is the number of foreign students studying in Government aided and SAP schools and universities; (b) how many of these students are on Singapore scholarships; (c) why are some of these students paid allowances as high as S$1,700 per month to study here at the expense of our own Singaporean children; and (d) is there any particular Government aided or SAP school where the foreign out number local students.

Mr Speaker, Sir, my apologies for having arrived a little late this afternoon. On Mr Steve Chia's question with regard to foreign students, out of the 220,000 students in our secondary schools and Junior Colleges, 11,500 are foreign students. That is about 5%. Of these, about 2,200 (or 1%) are foreign scholars. For SAP schools, there are about 900 foreign students, or 6%, of which 420 students are scholars. At the university level, about 7,100 or 20% of the undergraduates are foreign students. Of these, 2,600 are scholars. There is no school or Junior College where foreign students outnumber local students or come anywhere close to doing so. Local students are not displaced by foreign students. The scholarship for a foreign student comprises school fees or tuition fees, accommodation and a monthly allowance of $200 for a secondary school or Junior College student, or $500 for a university student. Talented foreign students add value to our schools and our students. Through their interaction with our students, they provide a spur for our students and allow for a more diverse school community. When they stay on to contribute in Singapore after their studies, they help to contribute to our economy so that all Singaporeans benefit. Even if they decide to return home eventually, we would have a network of Singapore-educated friends abroad. This fraternity is a useful asset.

Sir, have any local students been edged out by these foreign students?

Sir, the short answer is no. If we look at the schools, we have expanded the number of places. We have provided for more autonomous schools, besides the independent schools, over time. All our schools are good schools, of course. But if we take those at the top end of the academic spectrum, there are now many more schools providing an excellent education and places for local students. So, there is no trade-off between the number of foreign students we take in and the number of local students able to get into the best schools. Likewise, if we look at the universities and polytechnics, we have greatly increased the number of places over the years for local students. So, there is no trade-off.

Mdm Ho, would you like to ask your question?

asked the Minister for Education are there sufficient numbers of pastoral counsellors in the schools, the polytechnics, and the universities to cope with the increase in counselling case-loads and what are the qualifications required of these counsellors.

Sir, our schools run a tiered counselling system to meet students' counselling needs. All teachers are in the first tier in dealing with students who need counselling and advice. They are all given training in Basic Counselling Skills. Pupils who need a higher level of help are referred to Teacher Counsellors. There are two in each school. These Teacher Counsellors are trained in more advanced counselling and crisis intervention skills. Pupils requiring further assistance are referred to educational psychologists and guidance specialists at the MOE, ie, the Psychological and Guidance Services Branch of the MOE. We have about 40 such specialists, all with post-graduate training in either education psychology or guidance and counselling. Schools are also provided with funds to engage part-time counselling services, and indeed this is quite prevalent. To further augment the counselling resources of schools and school clusters, the School Counsellor Scheme was introduced last year. We have trained suitable retired education officers under the scheme, so that schools can tap on them as additional counselling support. By July this year, 30 school counsellors will be deployed to our schools or school clusters to provide further counselling support. MOE is prepared to train more of such counsellors if schools need their services. More broadly, schools work with Family Service Centres, VWOs and the self-help groups. Taken in totality, we have a comprehensive network of support, and the Ministry and schools will be quite happy to work with the various agencies to improve our use of this network of support. Our universities, polytechnics and ITE run their own counselling services to meet the needs of their students. Qualified professional counsellors offer personal guidance and counselling supported by a network of para-counsellors drawn from among the academic staff. They provide a range of services, not just one-to-one counselling but also regular workshops and talks on topics like emotional health, building of relationships, and stress and time management. The universities, polytechnics and ITE have the autonomy to deploy their resources in ways that best serve their students, including providing more counselling services if they feel that this is necessary.

1.38 pm

Mr Speaker, Sir, I beg to move, That this House, being aware that Singaporeans are suffering from the effects of a recession, mindful that many Singaporeans, in particular the unemployed, are having difficulties making ends meet and agreeing with the Prime Minister that this is not the best time to increase bus and MRT fares, (a) urges the Public Transport Council to review its decision on the increase in public transport fares; and (b) further urges the Government to take steps to ensure that the prices of public services are not unreasonably increased during these difficult times. [*The motion also stood in the names of Dr Tan Cheng Bock, Mr Leong Horn Kee, Dr Wang Kai Yuen, Mr Chay Wai Chuen and Dr Amy Khor Lean Suan.] Sir, on 11th June 2002, the Public Transport Council announced increases in the fares of public bus and train operations. These increases, already operative since 1st July, are as follows: adult bus fares and adult MRT/LRT fares by 3 cents and 4 cents respectively for commuters using ez-link cards. For those using magnetic fare cards and those paying cash, the increases went up by 5 cents and 10 cents respectively. There were also other increases affecting students, NSmen and senior citizens. Since the announcement of the increases, there has been a huge public outcry over these increases. Many have questioned the explanations put forward by the PTC and the two operators, SBS Transit and SMRT Corporation, and many more question the timing of these increases. Sir, several Members had submitted Questions for Oral Answers on this issue, but I felt that merely asking questions would not do justice to the groundswell of discontentment, and we would just get a reply from the Minister for Transport. We will probably ask some supplementary questions, get some answers, but with the limited time available for questions, at the end of it, we will all go home less than satisfied. And we would have failed to articulate many of the concerns on the ground, and the House would not have been able to take a position on the issues. I, therefore, decided to table this motion and got the support of five of my colleagues, the maximum allowed under Standing Orders, but I am glad to see that we have a long list of Members who are waiting to speak on this subject. Sir, what are the issues that face us in debating this motion? Let me start by explaining the different parts of the motion. We are in the midst of the worst recession since independence 37 years ago. There are no signs on the horizon that there is going to be an economic recovery in the near future. Yes, we may get promising statistics in one month for our manufacturing sector or for exports. But in another month, these figures can come down. So there is no definite trend that the outlook will improve very soon. It is still early days to draw any conclusion. Unemployment has exceeded 100,000 and most who have lost their jobs cannot find any work at all. In some cases, there are many who want to work for less pay but the jobs are just not there. Even the gainfully employed have difficulties making ends meet, what more the unemployed. The announcement by the PTC of the fare increases therefore came as a rude shock to Singaporeans, as they felt that it could not have come at a worse time. The Deputy Prime Minister and Finance Minister had told the House in May, when making his Budget statement, that the PTC had decided that there would be no need to raise fares next year as a result of the increase in GST. Little did we know that what the PTC meant was no increase next year did not mean no increase this year! I do not know if you would call this twisted or sardonic humour, but I think it is, almost for sure, not funny at all to Singaporeans. How sure are we that, next year, we will not be told again by the PTC that never mind the increase in GST, but operating and maintenance costs have gone up again and therefore we have to have another increase in fares. The Prime Minister has come out to question the timing of the increases. On 17th June, he was quoted in the press as having said that this is not the best time to put up the increases, and I think the House should endorse what he had said. The House must therefore solicit some definitive response from the Government at the end of this debate. I have asked that the PTC review its decision and I will elaborate further on this later. We need to know how the PTC arrives at its decision, whether the reasons put forth by the transport companies for the increases are justifiable, and we need to know how the PTC intends to act with regard to future requests for fare increases. We need to know if the PTC will not just respond to the requests of the transport companies, but whether it intends to respond also to prevailing economic circumstances and to the needs of the commuters. This debate is not just about bus and MRT fares. It also has to do with the slew of increases in charges of other public services that have taken place, or are about to take place. Sir, I believe that this is the main cause of discontent on the ground. Consider this: GST up, ERP up, petrol up, car park charges up, telephone charges soon to be up, and, of course, unemployment is up, retrenchment is up. Morale is upside down, and so is our pay, it is down. People are not only fed up, they are frightened about their future. As a cartoon in a local newspaper puts it graphically, all these price increases, to parody the title of a movie that was just shown, add up to "The Sum of All Fears" for Singaporeans. The public transport fare increase has become the single issue on which to peg all other frustrations, and some of these may not even have to do with price increases. This issue has become a lightning rod. Sir, I was therefore appalled by the response of the Minister for Transport when he was asked by the press what he thought of the price increases. He said, "While unemployment has gone up, 95% of Singaporeans are still working." Well, really! Sir, he is telling us what is the big deal, only 5% are not working, so what is all the fuss about. Well, let me tell him that 5% unemployed is just 5% too much. Will we next be telling these 5% of the population that if they cannot have food on their table, it is all right because the other 95% of the population can feed themselves? Many Singaporeans have already lost their jobs, and many more have taken pay cuts. So, let us not make callous remarks to dampen morale even further. The Minister has also refuted the allegation that the transport companies are profiteering from the price increases. He said: "They must have a rate of return that is reasonable and which is not excessive. You cannot control them to the extent that they lose money." Sir, both transport operators have cited increased costs, such as wages, the increases in CPF contribution from 12% to 16% since January last year, and investments in service improvements, as reasons for asking for the increases in fares. The PTC has said that it wants them to remain financially viable. Now, Sir, there was a time when CPF contributions were reduced from 20% to 12%, but I do not recall the transport companies reducing their fares. This question of wage increases, which they have used as a reason, perplexes me. Today, in Singapore, the Government, the trade unions and the employers are all calling for wage restraint. Wages are frozen. Bonuses are lowered. You are lucky if your wages have not been cut. So, what is this wage increase that the two companies are talking about? Is it to get more staff to provide for new operations and new routes? Would the new revenue from new routes not cover the wages of additional staff? Or are they telling us that the staff has actually got wage increases? Sir, I have here a report in today's Straits Times headlined "Slashing of staff and fuel costs helps SIA stay in the black." It says: "The national carrier cut staff costs by some 14.5% or $188 million to a total figure of $1.13 billion [a cut of 14.5%]. This was despite a larger staff strength with the company employing 3.9% or 539 more staff ." Now, how is it that SIA can rein in its staff costs and enjoy savings in its wage bill even though it had a larger staff strength? It too had to face larger contribution to the employees' CPF. The answer is simple. Singapore Airlines is in a business that is highly competitive. Not only that, last year, as everyone knows was the most difficult year for the airlines business, especially after the September 11 attacks. SIA was confronted with the first possible loss in its history. It did what many sensible businesses in such times do to stay alive. It imposed wage cuts from 2.5% to 15%. When passenger load factors fell, did it increase ticket prices to make up for the loss in revenue? As many Singaporeans happily found out, SIA slashed prices so that it could keep its planes flying. So, there we have it. Three companies are operating in the broader transport sector. One proves itself to be highly cost-efficient, overcoming all odds to turn in another profitable year in a highly competitive industry. Two other companies in a highly protective environment, perpetually grousing about higher costs and demanding more from its customers. SBS Transit also says that its ridership fell by 3% last year and in the first four months of this year, it fell another 2.8%. I now have one question to ask. According to the Chairman of SBS Transit in his year 2001 Annual Report, TIBS took over 17 SBS services and this transfer of the 17 services to TIBS had an impact of $13.9 million on the bottom line of SBS Transit. It was SBS who chose to lose this source of income by giving up the routes. It therefore lost ridership because it gave up the routes to its competitor. Is it justifiable to use this as an excuse to make up for its loss in revenue and make the customers pay more? Even if they tell me that this is not the reason but that there are just simply less people taking their buses these days, then let me say that what SBS is doing to overcome the situation is certainly very unorthodox business practice. Any businessman will tell you that if you find your customers running away, the last thing you do is to increase the prices of your products or services. What you do is to hold on to your prices, or you reduce prices, you give discounts, you run promotions, take a cut in your margins and keep the goodwill of your customers during the bad times, and not frighten them away with even higher prices so that they will run into the arms of your competitors. But our two transport operators can do this because there is no competitive environment in their business. The two companies do not compete with one another on the same routes, so that is why, even during a recession, they can put up prices with such impunity. There is simply no incentive for them to find ways to do things better and more economically to keep the loyalty of their customers. It is a question of take it or leave it. Now, let me illustrate this point further. I have here a news report from the South China Morning Post of Hong Kong dated Friday, 5th July. The headline reads "MTR [that is the mass transit rail] extension fares undercut buses". It says: "Hong Kong MTR announced that its fares will be up to 23% cheaper than travelling by bus when a new service starts on 18th August. Fares on the rail will also fall between 2.9% and 22% lower than on comparable bus routes operated by three other bus companies. In addition to the lower fares, MTR will also grant a promotional discount of $2 for Octopus card users [Octopus card is their equivalent of our fare card] for two weeks after the new service commences." Sir, the report then goes on to say: "The announcement prompted some bus operators to consider cutting fares to remain competitive. A First Bus Company [this is one of the bus companies] spokeswoman said the company welcomed competition." "A Kowloon Motor Bus Company added it may review routes and fares. ." This report adds that the bus companies would consider rearranging their routes and reduce the number of stops to cut their fares. An MTR official then responded by saying that the MTR fares "were set in accordance with affordability, market competition and economic conditions. We don't take into account bus company fares but we would like to pledge value for money ." I think they did take into account the bus fares. That is why the MTR lowered their fares. But note what the MTR spokesman said, he used the words, "value for money." That is the basis of competition. You add value to every dollar your customer pays so that you can retain their loyalty. In the Hong Kong MTR, they have just, not too long ago, added glass doors at their stations, like what we have in our MRT system, and these doors open only when the trains arrive. It is a safety feature. They have also added, not too long ago, display signs that tell you when such and such a train will arrive. But they did not pass on all these costs to commuters. That is value for money. That is part of the service. But, in Singapore, any slightest service improvement becomes a frill, or is a frill that no one asked for, and they will ram the costs down your throats: TV Mobile, plasma information screens, piped-in radio programmes, etc. SMRT has justified the higher operating costs by pointing to examples, such as its new information system and even things like adding more benches for us to sit down at station platforms. Another reason it has given is that it will incur another $4 million in expenditure to run the new service to Changi Airport. Well, are you not supposed to collect revenue from a new service that will cover your operating costs? I remember that, for years in this House, Members were clamouring for this service to Changi Airport, and we were always told that it could not be done because there was just not enough passenger traffic. But we were finally told that we could have it as the service was found to be viable. So what is this passing of an additional cost to run the line to Changi to commuters? Look at what they do in Hong Kong. They run a new line, but they do not tell commuters that it is going to cost them more money to run the service, and so they have got to raise fares throughout the whole island. They reduce prices for the new line in order to compete. Sir, I heard that the buses are also to be linked to a Global Positioning System so that fare stages will be automatically updated instead of being done manually as they are being done now, and costly panels will be provided at bus stops and LRT stations to provide real-time information. How much will these cost? Do we really need them? Do these add value to customers? I think the management of these companies should realise that all commuters want is to get from one point to another without all these frills that they will have to pay for ultimately. Sir, not everybody wants to travel first class. For the majority, all they want is a no-frills economy class trip. What is the point of spending all that money on things that your customers do not seem to appreciate and you tell them that they have to pay for it? What about retaining customer loyalty? Not too long ago, Hong Kong MTR gave a rebate to its passengers. If they used their farecard 10 times within a week, they gave the commuters a rebate. Until last week, they ran another promotion. Use their farecards 10 times in a week and they get a free lunch voucher with Tai Ka Lok, a fast-food chain, and, this week, it is even better: use the same card for 10 times within a week and they get a voucher for dinner. Now, how is that for competition? Hong Kong MTR does not need to hide behind the skirts of any public transport authority to tell them how to stay alive. They know what to do. Many of us who have been to Hong Kong and travelled on their buses and their MTR know that they do not boast of a world-class transport system - not that ours is anyway - but they have a system that is efficient, reliable and at reasonable prices. But what is the situation here? If we recall, last July, SBS and TIBS feeder fares went up by 10 cents. The Singapore School and Private Hire Bus Owners Association sought the PTC's permission to run feeder services, as the Association felt that it could provide lower fares than SBS and TIBS. What was the response of the PTC? Instead of allowing the competition, which would have meant lower prices for everyone, the PTC rejected the application on the grounds that the private operators would not be able to provide "a seamless, integrated transport system that gives maximum convenience to commuters." These are the PTC's own words, "a seamless, integrated transport system that gives maximum convenience to commuters." In other words, in order to compete with SBS and TIBS, the private bus owners would have to provide for a fare card system which, of course, is a non-starter for them, considering the large amount of investments in technology for a fare card system. I understand that such an investment would cost them millions of dollars. To the PTC, the word "seamless" means only a fare card payment system when you travel by the two bus companies and by rail. But, to the customers, "seamless" means getting to point A and point B, and maybe to point C, and he does not care if it is an SBS or TIBS bus that comes along, as long as the bus gets him to where he wants on time and at a low price. Singaporeans would have gained, but competition was nipped in the bud by the PTC. The PTC said further that the private bus operators could not pick only the profitable routes, as this went against the principle of balanced coverage which SBS and TIBS had to observe. In other words, they cannot cherry-pick their routes. It claimed that it wanted a level playing field. Yet, it forgot that the playing field was already not level when it allowed SBS and TIBS to offer charter bus services, which had all along been the domain of the private bus operators. The private bus operators were also trying to make up for under-provided feeder routes at that time in the new towns like Punggol and Sengkang, which were just not well served by the big boys. But, I suppose, this did not figure in PTC's reasoning. So, the PTC calls it levelling the playing field. I think it was just plain keeping out the competition and, in the end, it was the common man who lost. What about the viability of the two big companies? The Minister also says let us not wait till they go bust before we increase prices, and that they have to make a certain amount of profits on their assets to make them viable. He says that if they do not get their fare increases, they are going to make losses and they would not be viable. Sir, does he not know that in a recession almost every business is just making less today? Let us take a look at how profitable or unprofitable SBS Transit and SMRT are. SBS Transit made profits, after tax, of $21 million in 1997, $35 million in 1998, $42 million in 1999, $51 million in 2000, and $39 million in 2001. Yes, profit figures do not tell the whole picture, but let us look at their return on equity, which is the paid-up capital and reserves combined. For SBS Transit, return on equity: 24.4% in 1997, 30.6% in 1998, 28.3% in 1999, 24.7% in 2000, and 17.9% in 2001. To the shareholders of SBS Transit, it must be a good investment. Each SBS share has a par value of 25 cents. Last year, shareholders were rewarded with a dividend return of 34%, in spite of the dip in profits. In the previous years, they got between 12% and 49%. In fact, in 1997, shareholders received a very nice 36 cents for each 25-cent share that they owned. Total payout to shareholders in the last two years: $27 million was given to shareholders in 2000 and, in 2001, shareholders received a total of $19 million. Let us now look at SMRT. SMRT is a little complicated. It was Singapore MRT Ltd, and then it became SMRT Corporation when it was listed as a public company in July 2000. So, I will just take it from that year. In the reporting period before it was listed, SMRT Corporation made a profit of $180 million. For the financial year ending 31st March 2001, it earned $102 million and, for the year ending 31st March 2002, ie, just ended not too long ago, it earned $56 million, all at the group level. Return on equity: 26% in 2001 and, for last year, 14%. Let us take a look at SMRT Corporation's dividend payout. Each SMRT share has a par value of 10 cents. For the year ended 31st March 2001, it declared three dividend payments amounting in total to a dividend rate of 46%. For its latest reported year, the dividend payout rate was 28%. Total amount of money paid out to shareholders: $52 million in 2001, and $32 million in 2002. Both SBS Transit and SMRT Corporation have policies of paying half their yearly profits to their shareholders. Members might recall that in 1978, when SBS was listed, the Government actually guaranteed shareholders a dividend rate of 71/2%, because it was the first time the Government was allowing the use of CPF funds to members of the public to buy shares of companies listed on the Stock Exchange, and it wanted to provide this form of assurance and to encourage members of the public to invest in SBS. In 1993, this guarantee was withdrawn as SBS had in fact been paying more than 71/2% and, as we have seen, with the type of dividends that it has been paying in the past few years, the guarantee would have been superfluous. The return on equity of both SBS Transit and SMRT Corporation exceeds the ROEs of many other companies in the broad transport sector of companies listed on the Stock Exchange. So, there you have it, two highly profitable companies making very good returns for their shareholders. And do not forget that from next year on, they will pay less corporate tax. Mr Speaker, Sir, I have nothing against shareholders receiving what is rightly due to them for their investments. Do not get me wrong. And the shareholders must be happy if we look at the share prices of both companies today. They have always been quite consistent. Based on their share prices, SBS Transit and SMRT offer respectable dividend yields of 5% and 4% respectively to their shareholders. And the market cannot be wrong about the profitability of these companies. That is why the share prices of these companies have remained strong. Sir, I wish I had bought shares in SBS Transit and SMRT instead of in SingTel, but that is another story for another day. Maybe the Government should have given us loyalty shares in these two companies instead and we would not be complaining so much, and we would all be shareholders of two very profitable companies and then we do not mind paying 3 cents more because, at the end of the year, we will get such nice dividends. But to tell us that these two companies are going to run into great financial straits if they do not increase their fares now? These are companies tottering on the edge of bankruptcy? It is more like the case of Money Not Enough for these two companies. And to use scare tactics - if you do not give us this increase we would be in trouble - and try to wring the necks of poor commuters, I say each and every Singaporean should rise and tell them, "Give us a better line because I Not Stupid." It, therefore, brings me to the question of what is the role of the PTC in all this. How does it come to the conclusion that if fares are not increased, then the operations would not be viable? Is it, in fact, the duty of the PTC to ensure the profitability of the transport operators, or are they supposed to ensure that everyone - the bus companies, you and I - get a fair shake? I think the PTC must remember that it should not become the apologist for the transport operators. What are the chief executives of SBS Transit, SMRT and TIBS doing on the PTC? They would be there armed with facts and figures to support their arguments. But should they not be asked to appear before the PTC to state their case, instead of being part of the PTC? How can the players in the game be the referees at the same time? Mr Speaker, in my Motion, I have asked that the PTC review these fare increases. I could have used the words "reverse its decision", but I do not want to undermine the work of the PTC because, in a lot of other areas, I can say that the PTC does good work. So, I do not want to adopt a confrontational approach. And I chose the word "review" to give it more leeway and allow it to come up with other options. Perhaps it could be some ingenious way, as the Hong Kong MTR has gone about to keep its commuters happy, or maybe the two companies, SBS and SMRT, can think of something and consider making a gesture to Singaporeans in order to sweeten the ground which is, certainly, in a very sour mood now. Why can the two companies not show some compassion for those who have been very badly hit by the economic downturn? I think a reasonable gesture on the part of SBS Transit and SMRT will go some way to alleviate some of the pain that Singaporeans are going through. Ultimately, the Government has an overriding responsibility in easing the pain of its citizens in times like this. It is, after all, through Temasek Holdings, the main shareholder of SMRT and, therefore, the largest beneficiary of the profits made by SMRT. SBS Transit's largest shareholder is Delgro Corporation, which owns 75% of shares in SBS Transit. I do not know who owns Delgro. All the large shareholdings are in the hands of nominee companies and investment funds. But I hope that the shareholders of Delgro will understand that when they are in a privileged position to run a country's bus service on what is practically an exclusive basis and, on top of that, they are going to get to run a rail line soon, they have to realise that apart from ensuring that they get a fair return on their investments, they also have a social obligation to ensure that the services their company provides remain affordable and that it does not cause undue burden to the people, and that in times of great difficulty, that obligation becomes even more. And, of course, the greatest obligation is on the part of the Government which must ensure that all public services remain affordable. If the Prime Minister says that this is not the best time to increase public transport fares, then it is also not the best time to increase the prices of many other public services. The Ministry of National Development wants to increase carpark charges very soon, on the grounds that it needs to cover the cost of building their carparks, ie, the cost of building carparks has increased. Sir, I pointed out in the Committee of Supply that the cost of building carparks today, as given by the Minister, is in fact cheaper than the cost of building the carparks years ago. The Minister could not give me a satisfactory reply and he is now just proceeding ahead to raise carpark charges. This is just one example of the Government going ahead with a price increase, even though its arguments for doing so have been shown to be unsound. There are many other examples, but I will leave these to my colleagues to elaborate. In the end, people are once again asking: is the Government listening or not? People are angry today because they feel that there are just too many increases in such a short space of time and, not only that, during the worst of time. There never will be a correct time for any price increase, but they are asking why it has got to be now, when they are out of jobs, or when those with jobs are earning less, or are unsure of whether they will still have their jobs tomorrow. The Government asks us to tighten our belts, even earn less, do not be fussy if we earn less. But how can they if the Government is putting up the prices of things which are essential to them? So I say, let us keep everything in check. We are not asking for hand-outs. We are not even asking Government to subsidise the bus services. But when you are providing essential public services, do strike a balance between making money and making the services affordable. When people are already suffering, do not add more pain. The Prime Minister has asked: should we be doing the right thing or should we be doing the popular thing? Let me answer by saying this. Recently, private school bus operators have been slapped with an increase in the insurance premiums on their vehicles of between 140-500%. The Singapore School Transport Association has advised its members not to raise fares for school children, at least for now. The Association's Chairman has been reported as saying that raising fares now would not be desirable. I quote, "The economy is bad, how to increase fares?" These are words from the small guys. Does this not say it all? Sir, this is the anger on the ground. Let me put it squarely to the Government by relating an encounter that I had with a perfect stranger just a few days ago. He expressed his anger and frustration at all the price increases to me in a very cool way. He was not saying it very loudly, but in a very calm way. He told me that he observed that every time after an election, the PAP increased prices and by the time the next election came, people would have forgotten and they would just vote for the PAP again. He then smiled at me and said, "Mr Tan, just tell your leaders, next time round, we would not forget." Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise to support the motion standing in the name of my Parliamentary colleague, Mr Tan Soo Khoon. There are two parts to this motion.

Sir, I would like to raise a point of clarification based on what Mr Tan Soo Khoon had said just now. He quoted DPM's speech during the recent Budget debate, and gave the impression that PTC would not be approving any bus fare increase this year. Sir, far from it. DPM was, in fact, very clear about this. Let me quote what DPM said. He said: "The Public Transport Council (PTC) is currently evaluating proposals from the transport operators to revise fares. PTC is only considering revisions to catch up with operating and maintenance cost increases over the past year."

He went on to say:

"The public transport operators have raised with the PTC the issue of the GST increase next year. After considering their views, with the likely increase in GST to 5% and the proposed cut in the corporate income tax, the PTC has decided that there is no need to raise fares next year as a result of the GST increase. The transport operators have accepted this decision."

Sir, I hope that Mr Tan would get his quotes correct. I would reply to his other points later on.

Sir, in the Budget Statement, I think the Deputy Prime Minister did say that the PTC has decided that there would be no need to raise fares next year as a result of the increase in GST. That was what I said. I did say that if that was what was stated, the PTC meant no increase next year, but what we did not know was that there would be increases this year.

This is precisely what I have just said. The DPM did not give any impression at all to the House that there would be no increase this year. I think Mr Tan, in delivering his remarks, has inadvertently or deliberately created the impression that the DPM had, in fact, misled the House. There is no such thing. The record is very clear.

Sir, in my speech, if you could look at the verbatim reports, I do not think that I have given the impression that DPM was deliberately setting out to mislead the House.

Anyone who has been in this House and who has heard him cannot be under any other different impression.

Mr Speaker, Sir, there are two parts to this motion. I shall respond to the second part first, because it is a call on the Government to go slow on increases in the cost of services. In moving the motion, Mr Tan Soo Khoon outlined his reasons why he thinks that the rise in public transport fares and other fares should be avoided during the current recession. He has made a thorough analysis of the transport companies to show why he thinks that this rise in bus fares is not justified. I do not want to go over the grounds he covered and probably, I would not be able to do it so well. He has done a good job. But I will reinforce some of the salient points that he has made. He reflected the sentiments and frustrations of Singaporeans very adequately, and I share his concerns and hope our leaders are listening. In rising to support him, I am drawn back to a session I had with some Singaporeans on current issues, including the rise in bus fares, electricity tariffs, MRT fares, HDB parking fees, ERP charges and so on. In the course of the discussions, I was reminded by one of the members of the public that we have been testing the limits of tolerance of Singaporeans with each increase. He said that we are over-confident and, in a way, arrogant, because we have just won the GE with 75% majority. He reminded me that they gave us this high mandate, because they had hoped that the PAP can help better improve their lives in these times of need. And also, as promised in our manifesto, he said that Singaporeans truly believe that the PAP is the only party that can help them out of this recession. But now, it seems that we are making life more and more tough for them. Within six months of GE, a rash of price increases - how not to feel betrayed, they complained. On the one hand, Singaporeans are asked to tighten their belts through various measures, such as wage restraint, no bonuses and more and more job losses through restructuring. They now face a series of increasing costs in their daily lives. He said that he and his friends are dead water. Those of you who understand Hokkien - I am a Hokkien speaker - "dead water" literally translated means "si chui", as opposed to "wa chui", which means alive, flowing. An hon. Member: "Chou chui"!

Not "chou chui", please. It is different. "Chou chui" means smelly water. He said that in a flowing stream, "wa chui", there is hope, something would come by to keep them alive. They are hoping that after GE, Government would do something to create more jobs, hold prices and give them a better chance of survival. Now, he feels that he is "si chui", dead water, and dead water gets evaporated every day. The various increases evaporate whatever savings he has, slowly but surely. He said the Government always justifies by saying that there is no such thing as wrong timing. The Government's action in this economic downturn is not bad timing. Sir, if you had listened to what my colleague has just said about the person who complained to him about this poor economic condition, you will understand why. Of course, Singaporeans cannot understand. Unemployment is now almost 5%, and if this is not bad, then what is bad? Sir, if in spite of the poor state of the economy we allow the fare increases, are we not ignoring the plight of the people? We seem to be concerned, like my colleague said, about the return of equity for companies, even though these companies are still making good profits. We talk about high cost structures in our economy, yet we do not try to delay the increases. Another person, who is usually very quiet, got up to tell me and he said "You", meaning the PAP, "are so powerful that you cannot see the wrong in yourself." This statement got me thinking, very profound. But it tells something. Are we so powerful that we can go along with all these increases? We allow bus operators to sit in PTC, as Mr Tan Soo Khoon has said, and we see no wrong. We cannot see their vested interest and conflict of interest in such an arrangement. And no wonder writers in the forum page have always asked for an independent PTC panel. Perhaps, after this debate, there should be a review on the composition of the PTC. He was also saying that we "see no wrong in ourselves" by quoting PSA. Yes, look at PSA - a hardened stand, defended almost to death, even when faced with fierce competition on our doorsteps. They were probably thinking of protecting their profits, their return on equity - too cocksure of their so-called "other advantages". They were unable to see the wider implications until they lost two of their largest customers. On the Motion before the House which calls for the PTC to review its decision on the increase in public transport fares, I think Mr Tan Soo Khoon has elaborated on this, and he did a marvellous job. But I would still like to add a few points to what he has said. It may seem odd that we should be asking for a review when the fare hike is already in place but, like what he said in the press, we had no opportune time. Parliament sat a few days after the fare increases were implemented. Singaporeans must try to understand how the decision to raise fares came about. I think what they want is more transparency. Even I, like them, cannot understand why the PTC turned down an earlier request, in 2001, for an increase in fares because of unfavourable economic situation. Then, suddenly, it changed its mind this year and opted for an increase, when the poor economic situation has not changed. Has the economic situation improved in 2002 to warrant this change in decision? Yet, this House was told by the Finance Minister in the last Budget debate that 88,000 Singaporeans were out of work, and now my colleague has told me that it is 100,000. Unemployment has reached 4.5% by the end of last year, and the figure is still going up. Another reason cited for the increases is ERP and road taxes added to the cost. I checked with LTA, because I am on the LTA Board. For the year 2002, the projected increase in ERP cost alone, according to SBS, is $0.7 million. But this House must know that when ERP was implemented in 1998, it was decided that ERP charges should apply to all vehicles which use roads, and that includes public buses. Just like other road users, they also contribute to road congestion. However, to offset the cost implication of introducing ERP, the road tax of public buses was reduced by $3,900 for each single-decked bus, and $3,500 for each double-decked bus. The overall road tax savings for the public bus operators, TIBS and SBS included, amounted to $13 million annually. Now this more than offset the ERP charges of about $4 million paid by the public bus operators today. The ERP charges on public buses therefore do not contribute to cost increases for the operators. My other colleagues must have more to say and I would not want to dwell any further on this. Surely, if the current recession has been thrown out as a consideration for the increase, then the more compelling reasons must have prevailed, and given more weightage by PTC, to protect the profitability of the bus companies. Now, is there a formula or magic number to this? While I support the Motion, I can quite understand the bus fare increase is but one issue, like what Mr Tan Soo Khoon has said, and it so happened that the level of tolerance has reached a high level. And, again like what my colleague, Mr Tan Soo Khoon has said, the bus fare increase is probably the lightning rod, receiving all the flak. This debate should be seen as an eye-opener for the Government not to take the people for granted. For such public services, where there are no true competitive forces, Government should not allow any increases without acceptable reasons.

Sir, I am heartened to hear the two Tans who spoke before me. I would like to commend them. At least, now I know that there are PAP Members in the PAP Backbench who do care for the common man in the street. Mr Speaker, Sir, I rise in support of the Motion. I say it is very unfair for the Public Transport Council to allow the bus and MRT fares to be increased at this point of time when times are hard. The worse effects of the recession are still not over. Workers who have been retrenched are still suffering, the majority of whom have not been re-employed. They are still floundering in the wilderness of unemployment. The Government, instead of helping them ease their suffering, is making the situation worse for the unemployed. With this bus fare hike, they have to pay more for one of their essential needs - transportation. With the fare hike of between 3 cents and 10 cents, the average worker shall probably have to pay about 10-20% more for bus rides, taking into account the over-payment they shall have to make with the introduction of the ez-link cards due to the fault in their cards, and also their forgetfulness. Why squeeze the poor workers at this point of very difficult times? I would like to call on the Government to get the PTC to revoke forthwith the decision to increase bus fares, which have been increased with effect from July this year, and to freeze the bus fare hike for at least one year, or until the economic situation significantly improves. As we can see, the Government shall also be the beneficiary when there is a bus fare hike. The Government shall be assured of payments of the proposed increase in GST and the ERP charges. As for the ERP charges, it was reported that the Government shall collect something like $4.2 million a year from buses in Singapore. Buses may have to pay more ERP charges when the night ERP charges come into effect. The bus companies are, in a way, a means for the Government to transfer the commuters' money into its own pocket. The bus companies' excuse for fare hikes is the increased cost, especially of staff salary. They say that they have to pay more CPF to their workers when the employer's CPF component was restored a further 4% in January 2000. However, the CPF paid by bus companies to their workers are still lower than the pre-1998 level, when the cost cutting measures were put into effect. The SMRT Corporation reported in the Straits Times of 24th June 2002 that "the cost of operation, both systems, train and bus, has increased 3.1% despite efforts made by the company to contain costs and improve productivity. The SMRT Manpower Productivity in terms of train-kilometre operated per staff member has improved by 4.8% from FY 2001 to FY 2002 through skills training, automation and reviewed processes." It would appear then that the staff salary increases have been mitigated by the improved productivity. The fact remains that the two major bus companies in Singapore, namely, the Singapore Bus Services Transit (SBS Transit) and the Trans Island Bus Service (TIBS) enjoy all the bus business in Singapore. They form a duopoly. They share all the well-designated routes in Singapore, and they annually make good returns or profits. SBS Transit reported last year, despite a dip in profits of 22%, it still made $39.6 million. This was reported by Mr Tan Soo Khoon just now. When SBS Transit was formed out of a large number of small bus companies in the 1970s, the Senior Minister, who was the Prime Minister then, was so confident of its success that he could promise shareholders of at least, or a guaranteed, minimum of 5% annual return. I believe, that promise has very much been exceeded. I believe that the SBS Transit is now paying shareholders something like 17% dividends. So the major bus companies in Singapore are definitely making good profits. Sir, I believe the Government has no qualms about treating public bus companies as purely profit-orientated companies, and are not too concerned about their role as providers of public service. I personally feel that in our present Singapore context where the two major bus companies are so protected, they should show an interest in providing public service. They must have the public responsibility because for a large number of Singaporeans that is their only means of transportation. Therefore, they cannot increase their fares on a regular basis to ensure that every year they make hefty profits. If bus companies want to be treated as purely commercial entities, then they must be subjected to the open market competition. The Government should not protect just two bus companies but allow free open market competition. Allow as many bus companies to operate as the market can take. With free open market competition, bus fares shall surely drop, and not steadily increase as in the present case. See what has happened in the case of telephone companies. With competition, SingTel rates have dropped drastically, which the paying public benefit greatly. The public not only save on their telephone bills but also get better service. Another issue with the bus service is the recent introduction of the ez-link cards to replace the TransitLink farecards. I have been told that in the case of the ez-link cards, there are possibilities of over-payment on the part of commuters. Commuters nowadays board a bus and, if a commuter is using the ez-link card, on entering the bus, the maximum fare is automatically deducted from his ez-link card after tapping it on the card reader. When the commuter reaches his destination, he taps his card at the exit card reader. Any balance of the maximum fare is credited back to the commuter's ez-link card. Should there be a malfunction of the ez-link card before he alights from the bus, nothing shall be credited back to the ez-link card of the commuter, which means that he has to pay the maximum fare; currently, up to $1.53 for air-conditioned trunk services and up to $2.13/$2.28 for SBS/TIBS express services. Commuters know that if they forget to tap their ez-link cards, they shall be charged the maximum fare. However, how many know that if the ez-link system malfunctions in any way, they shall also be charged the maximum fare? In addition, a transfer will be classed as a new "ride", and they will lose the transfer rebate of 25 cents for trunk services and MRT rides. One commuter complained to me that he experienced out of 10 bus and MRT journeys, including transfers, when using the ez-link card, he encountered ez-link malfunction twice, ie, about 20% error rate, after which he immediately stopped using his ez-link card for several weeks. The commuter has requested me to ask the Minister what is the error rate of the ez-link card on buses. In my view, a 20% error for 10 bus rides is unacceptable. I understand that the ez-link card has been introduced only recently. Perhaps the Minister should request the bus companies to have a longer testing period of the ez-link card until September this year, as originally announced, before the bus operators be allowed to use the ez-link card again. Apparently, it is difficult to collect a refund for over-payment. This prompted one, Mr J Seow, to write to the tabloid, Streats, on Monday, 17th June 2002 issue, advising other readers: "Do not bother to claim your refund should you forget to tap your ez-link card when you alight from the bus. . It is not worth the hassle." If that were truly the case, then I wonder why the PTC should allow bus companies to use the ez-link card system to collect fares at all, if the error rate remains at 20%.

Mr Speaker, Sir, thank you for allowing me to join in this debate on the motion concerning public transport fares. I would like, first, to express my appreciation to Mr Tan Soo Khoon for taking the effort to raise this Motion and to make a very thorough and eloquent speech, and also my other colleague, Dr Tan Cheng Bock - both of whom I call them the two "big guns" or "big Tans", from our Backbenchers group - for supporting this Motion. Particularly, I would now like to commend Mr Chiam as well for coming up to speak in support of this Motion and join us on our side, the PAP Backbenchers. Thank you, Mr Chiam. He is looking more and more like a PAP MP! Sir, I agree to support Mr Tan Soo Khoon in moving this Motion, because the subject concerns practically all Singaporeans. I wish to highlight that the Motion actually contains two important limbs. The first limb is to urge the Public Transport Council to review its decision on the increase in public transport fares. The second, and perhaps a more important limb, is to urge the Government to take steps to ensure that the prices of public services are not unreasonably increased during these difficult times. First, on public transport fare increases. The increase in public transport fares has caused residents to be greatly concerned. This is evident by the large number of letters to the press. For us as MPs, it is evident by the frequency and the ferocity in which residents raise these questions and issues with us, when they meet us on the ground. I recently conducted a house-to-house visit to an HDB block in my constituency, followed by a typical dialogue session with my residents. Unlike the past, when the usual complaints were about local and estate issues, I was most taken aback that the difference this time round, the most common complaint lately was regarding public transport fare increases and other price increases. During a recent dialogue session with a small group of residents, they pleaded and argued most furiously and emotionally against all these unfair fare increases. Some residents even took the trouble to pen down their thoughts and submit petition letters to me. Allow me to read a quotation from one petition that I received from a resident, a Mdm Lee. She actually wrote a two full-page, well-typed out petition. Let me read some sections of it. She said: "Well, my sons and I are grateful to the ruling party for the good life we had in the past. However, the recent economic crisis has dampened our spirits somewhat.

We are also very anxious in regard to the never-ending news of steady increases in necessities such as transport, food, utilities, telephone bills, etc, and with rumours of more to come."

I repeat, she even said `with rumours of more to come.'

Then, she went on to say: "An old lady was overheard complaining loudly in the market that whatever monies the Government had given out (CPF and New Singapore Shares) are now being recouped back and with interest too! She was very bitter and I don't blame her as many people also agreed with her. Many are saying that the carrots given out were because of the elections and now after the elections, prices of everything have gone up." Sir, this letter actually reflects very truly and accurately the sentiments on the ground. Let us now examine the PTC approved fare increases to see whether it is fair or unfair. As Mr Tan Soo Khoon has put forth and analysed very closely the accounts of SBS and SMRT, he finds it hard to justify fare increases, based on the fact that they actually achieved good operating performances in the last few years. I wish to reiterate and support Mr Tan's point. In fact, I have a one-page summary here. One can actually get a copy quite easily from the SGX website on SBS Transit. I have attached it to my speech for the reporters to take a look. This one-page summary is produced by the company itself, not prepared by me. It actually tells a very interesting picture of the health of SBS Transit. It shows the performance in the last five years. From 1997 to 2000, SBS Transit has been consistently achieving revenues of above $500 million because people take buses, whether it is in good or bad times. Its after tax profit has actually been increasing since 1997. As Mr Tan has quoted, from $21 million in 1997 all the way up to $50.9 million in 2000. In these four years, its profit went up 2 1/2 times. Last year, in 2001, the profit went down to $40 million, versus $50 million in the year before in 2000, just a drop of $10 million. And now we see that it is coming to the PTC to ask for fare increases so soon. Looking at its capital reserves, it actually has very good capital reserves. It has been growing from a smallish $88 million in 1997 by nearly three times increase to $222 million in 2001. Its equity and capital reserves have increased to $222 million in 2001. On return of capital, as Mr Tan has stated, it has a very high return on equity, ranging from 30% in good times down to 18% last year. But 18% is still a very good return on equity for any company, especially during bad times. If we study the accounts for year 2001, the company actually has achieved, in the last five years, a total after tax profit of $190 million. On the $40 million of returns, based on the $555 million revenue last year, it actually has a 7% return on revenue, which, again, is a very respectable and a very good figure during bad times. In fact, if we look at this one-page chart [indicating], we cannot see a single red mark in this report card, which indicates it is indeed a very healthy company. Why are we saying that this company now needs more fare increases? The same can be said of other operators, like SMRT as well. Therefore, I would like to support Mr Tan's contention that the price increase is difficult to be supportable, based on the argument that transport companies are not making enough money. In fact, on the contrary, they have high reserves, high revenues and high earnings. Therefore, people can accept that fare increases are unavoidable, but they cannot accept unfair fare increases. It is, therefore, unfortunate that the Public Transport Council (PTC) has decided to allow public transport fares to increase during this uncertain economic period. Although the fare increases are already implemented from 1st July, that means, from early this week, and this debate can only be held after the fare increases were implemented, I would like to join my colleagues, Mr Tan Soo Khoon and Dr Tan Cheng Bock, to urge, in our Motion, that the PTC review its fare increases. If the PTC is open-minded and enlightened enough to perhaps even consider postponing the fare increases, so that, at least, there is a stay or suspension of the fare increases. Some people, especially the political leaders, may say that it is not good to set a precedent that public pressure can cause the PTC to revise its decisions, and that we cannot govern the country by just listening to the wishes of the people. However, I contend that there are indeed occasions when it is correct and prudent to listen to the people. This is one such occasion. If this is done, the people and the Government would appreciate each other better. Therefore, I would like to state that, contrary to the constant refrain that we cannot govern by giving in to the wishes of the people, I wish to say that the PTC, as well as the Government, would be viewed positively if it would reconsider the fare increases. It would demonstrate that we have public bodies and a Government that could be attuned to the ground and concerns of the people, and be prepared to review policies and regulations when circumstances show the need to do so. Such a bold Government, in fact, would be well liked and well praised by the people. Mr Speaker, Sir, I would like to make a few additional suggestions with regard to the PTC. First, I support Mr Tan and Mr Tan - as I have said, the double "Tans" - that to demonstrate that the PTC consists of members that are independent, I would, therefore, like to suggest that the Council should not include representatives from the public transport operators. If need be, transport operators can be enlisted to give technical or professional input on specific subjects. But they do not need to be represented on the Council. I understand that the transport operators are excluded from the Council's deliberations on fare increases. But, nevertheless, the public could still be mistaken that the transport operators could be unduly influencing the other Council members, because they sit in the same Council. Secondly, I would like to suggest that a wider representation of members from grassroots bodies be included in the Council. Perhaps, even to include people who actually take public transport regularly, and not people who do not normally take public transport. Thirdly, the Council may wish to conduct more public forums and talks to better place and explain their work, especially pertaining to reviewing of fare increases. Sir, I go on to the future increases in the prices of other public services. I would like to move on to this point which concerns and worries the people even more, which is with regard to future increases in other public services, as expressed by my resident, Mdm Lee. This concern is prompted by the recent decision of the Government to increase GST from 3% to 5%. Though this GST increase is only to be introduced from next year, in fact, we could notice that many retailers have already increased their charges. Common examples are the price of a cup of coffee from 60 cents to 70 cents (more than 2% of GST), and a bowl of noodles from about $2.50 to $3.00 by some hawkers. Less fishballs, maybe even less noodles as well. Then, there have been indications that there may well be other increases by the public bodies on the cards, like Singapore Power and SingTel. We know that HDB is already going to increase the carpark charges from 1st September this year. Sir, I wish to stress that it is very important for the Government to retain the trust and confidence of the people. The Government has recently won a renewed 5-year mandate with resounding support of 75% of the people's votes. With this strong endorsement, the Government can go about managing the country with confidence. However, I wish to warn that this trust of the people is like a contract. The people's mandate is given on a contractual obligation of the Government that the people's welfare and well-being is taken care of. If there is a spate of unreasonable, unfair fare increases during this period when people are facing a severe economic difficulty and higher unemployment, this trust can be fragile and easily broken. In conclusion, Sir, I wish to earnestly and sincerely urge the Government to be very mindful about the difficulties faced by the people. There is a large segment of the population who have great faith in the Government, but they are facing difficult times. Future fare increases should be deferred as far as possible so that the negative impact can be mitigated.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.25 pm. Sitting accordingly suspended at 3.03 pm until 3.25 pm. Sitting resumed at 3.25 pm

Debate resumed.

(In Mandarin): Mr Speaker, Sir, while the economy is still gloomy, and the people have yet to recover from the shock of an impending GST increase, the Public Transport Council just could not wait to rub salt into the wound of the people. It claimed that this pinch of salt ought to be rubbed in earlier, and that it is better to do so early than having to pour sulphuric acid later on. Surely, business is business. As a public listed company, the investors' concern is on the return on investment of the public transport companies. However, return on investment is linked to the investment risk. This is a common knowledge to the investment community. Under the Government's regulation, the two companies monopolise the public transport market and do not have to face competition. It is a low-risk business with steady revenue. How can one ask for a high return on such a low risk investment? This cannot be so if we compare it with high-risk businesses, such as the disk drive industry where losses can amount to a few tens of millions of dollars just within a few months. In this difficult time where companies are slashing prices for survival, the basic principle of low risk low return could be easily appreciated by the investors, let alone that the public transport companies are still enjoying handsome profits. The Temasek Holdings, under the Government, is the major shareholder of SMRT with 62% of the total shares issued. I am sure they have a say in deciding whether to ask for a rise in the MRT fares to increase profit. SMRT initiated a fare hike. Is the Government saying that they are not happy with the present return on investment? DPM Lee said that if we do not increase GST, Singapore would run into a "chronic" structural deficit. Therefore, the people must share the burden. PTC said that if the bus and MRT fares are not increased, the public transport companies will not be able to offset the rise in operational cost and their profits will go down. Therefore, the people would have to share the burden. It seems that Singaporeans have a lot of burdens to share in. Of course, when we do business, we want to have profits. But the crux is that when the infrastructure used by the MRT and the bus companies to operate their businesses, such as the MRT stations, the rails, the bus interchanges and the bus stops, are built with funds from taxpayers' money, public transport cannot be an ordinary business. It is a public service, a business which concerns the interest of the general public. Especially in Singapore, where car ownership and car usage is extremely expensive, public transport is an essential service that is required by the people on a daily basis. It is an important part of composition in the public service, and any increase in fares would inevitably create an impact on the people, particularly in this difficult time. In fact, the thrust of the matter is not whether this is the best time to increase bus and MRT fares, or for the PTC to review its decision on the increase in public transport fares, as stated in this Motion before the House, or a question of what is a reasonable profit and return . The fundamental question is: should public transport service be run as a business? To further extend this question, is the philosophy of profit-making in providing public services as adopted by the PAP Government the real issue that needs to be scrutinised? DPM Lee has just said recently that Singapore is in a stage of economic transition where the days of high growth and high employment rate have passed. At this time, when our economy is going into a transition, the ordinary people are affected the most. Although we are not a welfare state, the Government should not neglect the welfare of the people. The Government must try to help them to alleviate their burden, and public transport policy is one of the items that the Government should look into. We should question the PAP Government on its profit-driven policy through privatisation in providing public services. We are pursuing a market economy, but when the environment changes, when the gap between the rich and the poor has widened, when the poor get poorer and the rich get richer, the contradictions surrounding these changes would become more and more acute. This round of fare hike has generated a strong dissent among the people, and this is not just a momentary reflex. The policy of allowing the public transport service to be operated by private companies whose objective is to make profits needs to be re-examined. As taxpayers, Singaporeans are paying for the building of the infrastructure necessary for the operations of the bus and MRT services. Why should we be also asked to bear the burden of ensuring that these companies meet their projected or desired profits? If we analyse the present model, the Government has increased its taxes - GST, COE, ERP to control car ownership - and, therefore, collects a lot of revenue from these sources. With this taxpayers' money, it builds the infrastructure for the MRT and buses, and then leave the operations of public transport to the private companies for profit-making. The major shareholders of these companies are, more often than not, holding companies under the Government. At the same time, the Government imposes limits on the life-span of buses, increases their ERP charges, builds airconditioned bus interchanges, thereby building up what it calls a "world-class" public transport system to show off to the world. By doing so, it has increased the operational costs of these companies. It seems that the Government is doing a good job in protecting the interest of the people and balancing the demand of the public transport operator. Indeed it is not the case. Through the PTC's guideline of so called balancing the interest between the public and the operators, the Government allows the companies to increase their fares from time to time, in the name of recovering the increase in operational cost, and thereby the people are the ones who have to bear the burden . As the tax collector and also the major shareholder of the public transport companies, the Government stands to gain by higher tax revenues and dividends when the fares go up and the companies' profits escalate. So it is a win-win situation for the Government, but the people end up paying higher fares. The Workers' Party has all along held the view that public services should not be profit-oriented. We also proposed that the Government set up a national transport enterprise to take over the operation of buses and MRT so that we can have a better integrated service and, most importantly, this national transport enterprise is not profit-oriented but run on a cost-recovery basis. Of course, with the Workers' Party's recommendation, the Government will say, "This is like restarting state-owned enterprises and it would not be in line with the global trend." But to us, it is more important whether the interests of the people can be better protected. The Government can say that this has been proven to be not feasible in the other countries. But has the PAP Government been emphasising, again and again, that the situation in our country is different from others? What cannot be done in other countries can be easily implemented here, eg, GST, ERP, etc, and the Government is always proud of its achievements in this respect. In the same breath, why can the Government not differentiate itself from the rest of the world and take back the function of running a state-owned public transport company, whose business objective is to provide public service and not to make profit? The Government may respond that competition will be removed and service quality will deteriorate if our proposal is implemented, but where is the competition when the current service routes between these two companies are not overlapping, and these companies can even join effort in pushing for a fare hike? The Government may also claim that without the pot of gold at the end of business operation, there will be no incentive for the public transport operators to improve themselves, as such efficiency will go down. But let us take a look at our armed forces and educational institutions. They are all public services with no element of profit; is the Government saying that they are not efficient? The HDB has persistently claimed that it has been subsidising public housing. Every year, they run into losses; yet, its achievement and efficiency is something that the Government is so proud of. So, what is motivating them? Why can we not adopt the HDB model and let a state enterprise operate public transport without having profits as their aim? Moreover, we are not asking for additional subsidies besides continuing with the current funding in building infrastructure. Comparing to the current model, what is removed is the source of conflict, ie, profits, as the proposed enterprise is operating on a cost recovery basis. They could try to break even with a prudent fare structure, while striving to provide quality service with the objective of maximising benefit to our people. Mr Speaker, Sir, with this economic transition, all our people should put up a concerted effort to tide over the difficult times. The Government should also respond to the sacrifices made by the people by lightening their burden. One aspect is to temper its current policy on providing public services with more rational and humane measures, so that we can come out from the crisis as a more cohesive nation.

Resolved, That the proceedings on the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Dr Lee Boon Yang].

Debate resumed.

Mr Speaker, Sir, to begin with, I would like to declare the fact that I am a Board Member of the Comfort Group, a company that is engaged in land transportation business, primarily in taxis, but has a small subsidiary in the chartered bus business. Mr Speaker, Sir, Mr Tan Soo Khoon and the PAP Members who spoke before me have already touched on the public sentiments regarding this round of public transportation fare increases. Such fare increases affect the majority of the commuters, with the greatest impact on the lower income. So, not surprisingly, this is always a topic that would arouse public outcry, whether such increases are made during boom times or in a recession. Although the quantum of the increases this round is small, people feel helpless and frustrated that there is no viable alternative available to them. Unfortunately, Sir, this time round, the matter is made even much worse simply because the timing was so bad. Our economy is just turning the corner in the recession. Unlike Mr Tan, I think there is actually a clear trend that the economy is turning around. The benefit of the turnaround, though, has not percolated down to the masses yet, and many of us are still feeling the impact one way or another. Thus, even though the PTC had disclosed in detail the factors it had considered and had explained the reasons for its decisions, the majority of commuters are still unhappy with the rulings. The Feedback Unit has received numerous similar public comments regarding this, and I would like to thank Mr Tan for moving this Motion to allow Members of like mind to speak on this topic. I, too, would like to call upon the PTC to review, not so much the quantum of the increases but, perhaps, take into consideration the timing of the increases. Mr Speaker, Sir, I feel, however, that since the PTC is getting so much negative vibes that, in the interest of a more balanced and less emotional debate, I would like to put our public transportation system in its proper context. We should realise that the public transportation sector in Singapore, including the rail and the scheduled bus services, is a regulated industry. I would like the House to think about what is meant by a "regulated industry". It is not a free market, freely competitive industry. It is a regulated industry. So, for instance, when Mr Tan, in his speech, talked about SIA being very responsive to market forces, he should realise that SIA, in the international marketplace, is in a freely competitive marketplace with many players whereas, in Singapore, in the public sector, especially in public transportation, we have designed it to be a regulated industry. So, if we want to complain about how the system is being regulated, we should indeed go back to square one and ask whether we should have a regulated industry or a free market industry. Since we are on the subject of SIA, let me also say that many of us have in the past complained that SIA fares have been very high, that it is a cartel and, in fact, Singaporeans pay more buying their tickets in Singapore, compared to those bought in Hong Kong or KL. So, we cannot mix the SIA example with the public transportation example in Singapore. Like all regulated industries, it is the job of the regulator to ensure a prescribed level of service in the industry in exchange for a guaranteed return for the operators. I think we must all accept this. If we do not, then we are not talking like for like. The return for the operators would be typically measured in terms of percentage returns based on a certain basis, such as return on investment or return on equity, whichever is appropriate. In other words, in regulated industries, the operators are given a guaranteed return and are rewarded, in most cases, on a cost-plus basis. For the regulatory environment to operate well, the regulator should be an independent body that is fair to the commuters and operators, and it is not influenced by the operators. Sir, the Government, as well as this House, should desist from interfering with the work of the PTC. Otherwise, we might as well perform this role ourselves. Maybe the House should sit as PTC and decide what is a fair adjustment. Thus, I believe that the choice of members of the PTC is important. I agree that it is not appropriate that the operators sit as members of the PTC, but as resource members. Despite all the criticisms, I must also say that the PTC has so far done a reasonable job, balancing the interests of all parties involved. This, Mr Tan Soo Khoon himself has also conceded. It has resisted requests for fare increases from the operators for several years before granting this current round of increases. I really do not envy the men and women serving on the PTC. Theirs is a thankless task, and we should not make their job any more difficult. Sir, once we have established the regulatory regime, with the PTC as a fare approving body, then we would expect to see the following sequence of events. This is already a given. So, from time to time, when the transport operators come to PTC with their hats in their hands and reams of data to show that the costs have gone up, returns on investments have declined, what would the regulator or PTC do? It is their job to determine whether the operators have met the various performance standards. And, if they do, then the regulator would determine whether the return on investment has indeed fallen below the target. If all these factors are met, then the regulator really has not much option but to approve fare increases. If we accept that this is the way the system is supposed to work, then we should ask ourselves whether this was what happened in this recent round of fare adjustment. As far as I can tell, the PTC has acted quite independently, using its best judgment. So, I believe that Mr Low is mistaken to point the finger at the PAP Government, claiming that, because of ownership, we have allowed the Government-owned company to raise fares to squeeze the people. In fact, if Mr Low is unhappy with the way the PTC was set up, he could suggest a different way to regulate the public transportation sector. But, given this is how the PTC is supposed to work, I believe he is off the mark. As in the case involving IDA and SingTel that was in court recently, any time a regulator interferes with the market, causing the operator to have a lower rate of return, I believe the operator has a case to seek compensation from the Government. I also believe that it is not a matter whether the company is still making money or not. This is a matter whether the company is making the appropriate rate of return than existing at the outset of the regulatory regime. Of course, we could debate whether the PTC has been too generous with the operators and accepted too readily SBS Transit and SMRT's request that they should continue to earn a high rate of return based on historical norm. I think there is a point here that we can debate. Based on the rate of return on equity, SBS' rate of return seems rather high, with ROE at 24.7% in year 2000, and 17.8% in year 2001. Thus, it is not surprising that people get angry when the companies raise fares in a recession where almost all other companies are showing lower profits or outright losses. So the argument should be: why is it that SBS Transit and SMRT are not prepared to earn a lower rate of return, like everybody else in a recession? Perhaps the PTC should disclose to the public what is the ROE that transport companies are permitted to achieve in a non-competitive environment. Perhaps they can also disclose what is the target rate of the ROE that companies are allowed to achieve. If the PTC can do this, I believe that it will be easier for it to win over the support of the commuters. Mr Speaker, Sir, so long as we have two bus operators running our public transport sector, this scenario that I have painted out earlier would play out again and again. I suggest that we take a leaf out of how IDA regulates the mobile phone industry. In that case, as Mr Chiam has pointed out, IDA terminated SingTel's monopoly and allowed new entrants into the market. With StarHub, M1 and Virgin Mobile in the market, the consumers now get better service and value for money. In fact, so much so that one of the companies declared recently that it is pulling out from the marketplace. I suggest that the Minister seriously consider introducing greater competition in the scheduled bus service by perhaps splitting up SBS Transit into two or more companies, or allow other companies to enter into the market. I am sure that the Minister could see the merit of greater competition, not free market competition, but greater competition, as IDA was part of his portfolio not so long ago. Opening up the market for greater competition has also been advocated by Christopher Tan in Business Times and Yeoh Kok Seng in the Today newspaper. Mr Speaker, Sir, listening to Mr Low Thia Khiang, I am reminded almost like standing at a street corner rally during the 1960s. He uses 1960s' leftist jargon to appeal to the segments of society that would find his pitch attractive. He tried to paint the PAP Government as incentive-technocrat, out to squeeze the last drop from the poor to fatten the coffers of the bus companies. I think his suggestion for a non-profit corporation is seductive. However, as we all know, public transportation has a consumption element in it. If we price the service below cost, we would distort the allocation of resources and encourage unnecessary consumption. We would also encourage dependency that would be difficult to unwind in future. So by thinking through the consequence of subsidies, I am sure Singaporeans would see through the fallacy of his logic. Sir, I think some of the models which have been advocated, eg, running public transportation along the line that he has proposed, is already in operation in China. If he has visited China, he would know that in some Chinese cities, where bus transportation companies are still state-owned, the buses are rickety, and many of them have no lights in them. If you travel in such buses at night, it is pitch dark inside. To improve their bus system, the Chinese have been inviting foreign participation in their bus operation, as they know that these state-funded operations are being run to the ground. Does he know that SBS Transit has invested in the public bus operation in Shanghai? And with competition, the bus service in Shanghai has improved dramatically. So the very same company that we are berating this afternoon is earning accolades for its bus operation in Shanghai. Mr Speaker, Sir, I believe that the process of arriving at this round of fare increases could have been done better. We could have taken into consideration the number of unemployed workers in Singapore and the sentiments of Singaporeans in general. On the other hand, I would submit that the basic philosophy of a bus transport system is correct and that the regulatory framework is a sound one. Thus, Mr Low's criticism of Government is unjustified. His suggestion of increasing subsidies for commuters is based on unsound principles that have proven not to work elsewhere. In conclusion, Sir, I would urge the Minister to consider my suggestion of introducing greater competition into public transportation, especially the bus sector. 3.55 pm

Mr Speaker, Sir, I would like to speak on this motion in the name of Mr Tan Soo Khoon on the public transport fare hikes. I want to thank him for this opportunity to ventilate my views. So far, the discussion on the latest PTC's decisions on public transport fare hikes have been rather emotional. I can understand the sentiment, given the state of the economy, unemployment, difficulties that people are facing and the likely statutory charges that would come up in the months to come. If I were to look at the rationale given by the PTC on its decision, I would classify them into four main groups. The reasons given are, firstly, on the viability of public transport companies if the fares are not increased; secondly, the CPI + X formula, giving justification for small increases versus big increases; thirdly, the issue of wages and operation costs; and, lastly, the issue of productivity and quality of service and equipment necessary to sustain the quality in our public transport service. I have no reasons to doubt the statement of the PTC in saying that it has improved "the process of scrutinising operators' bus and train accounts and its financial performance. Operators have been prudent in containing cost and not been profiteering at the expense of the commuters." However, the public would like to ask questions on how the decisions on this latest fare hikes are arrived at. Hence, I believe transparency in its decision-making process is vitally important, and perhaps is lacking in this respect. In this instance, I think this opportunity is given to the Minister to explain and to justify the PTC's decision with respect to this monitoring of key performance indicators. On the first reason that the viability of public transport companies is at stake, I think this is only one part of the issue. Companies which exist by public charter must perform certain social roles and undertake some measure of social responsibility. Of course, they must run their business efficiently for shareholder value. Because they exist on public charter, they have to fulfill certain public objectives. And in times like this, I think there can be merit for considering some factors in delaying the decision or in modifying the rates of increase. I think it is not something so contradictory that it cannot be managed. Running such a business, of course, is not so easy, but balancing this role is necessary. That is why we have to hire the best management for the job. Otherwise, we will be having a family of clerks to do it. Is the rationale on the viability of the bus transport companies valid? Some figures have been given just now. I believe that the public transport companies concerned here are not about to go under. What has their performance been up to now? If we look at the financial figures, and some have been given just now, I do not think the figures justify the decision. If we look at the return on assets for SBS Transit for the financial year ending 31st December 2001, it is 13.5%; return on equity for the same period, 17.8%; the gearing of the company, that of debt to equity, nil; net earnings, 7.3%. If we look at these figures, one would generally come to the conclusion that SBS is reasonably sound and quite profitable. Perhaps the Minister can use this opportunity to explain how the PTC came to the conclusion that viability of the public transport companies was at stake. If we look at the SMRT, again the return on asset (ROA) is slightly smaller, 4.6%; its return on equity is 8.3%; net earnings, $56.8 million, which is about 11% of sales. Of course, the ROE, in the case of the SMRT, cannot be so high because it has such a big infrastructural asset to maintain. I would say that perhaps in considering the financial figures for these two companies, it is of some merit to the Minister to explain to us how the PTC came to the conclusion that the two companies' viability are at stake. Of course, we understand that SBS Transit is taking over the North-East line. And for this current year, there may be some start-up operational expenses for the first 10-11 months before the North-East line starts running by the end of this year. So there could be expenses that it has to incur in this instance. But this is really start-up cost of operation. The other group of factors that we have to look at is the justification given by the PCT on the CPI + X formula. I believe there are many ways to interpret this CPI + X formula, and it is not exactly quite clear which is a plus and which is a minus. What do I mean? X can be a dummy for cost increases or productivity increases. Of course, management would have to manage this part of it. But as presently constituted in the formula, that formula is a justification for the PCT to arrive at 2.2% increase. I think we have to differentiate between productivity increase in the X and operational cost increases in the X. What do I mean? If productivity increases in the transport companies, naturally, this increase suppresses X, that means X would have a lower value to rise. Operational costs, in terms of equipment, TV monitors on the buses, fanciful bus-stops, air-conditioned halls, these could add to increases in the X. So, when the public transport companies go to the PTC to justify for the increase in X, is there some anomaly in the CPI + X formula that we have to look at? Otherwise, productivity increase has no incentive to gain from CPI + X, because it suppresses X, whereas other cost increases in putting up equipment, fanciful features, frills that Mr Tan Soo Khoon talked about add to the X factor, and justification for fare adjustment. Sir, I am not arguing that public transport companies should not be allowed to raise fares, as allowed by the PTC. The question is whether this is the right time. I can understand that there is never a right time for raising fares, but in times like this, when the economy is suffering from a recession, when there are difficulties faced by our people, I think there has to be some cause for concern for the public transport companies to raise fares at this stage. Times are bad. We are told there is no sacred cows that will be left unexamined. The GST is going up next year. While we ask our people to tighten their belts, I think we should also be sensitive to the threshold of pain they can bear in these uncertain times. I understand that the Government will not allow public transport companies to raise fares next year when the GST goes up. Would it not have been better had the PTC delayed the fare hikes till January next year, together with the GST implementation, so that it is manifestly evident to the public that such an increase at that time, as opposed to now, would include the GST increases, which will be absorbed in this current fare adjustment? Finally, I would like to urge the Government to bear in mind the views expressed by Members and to consider this in reviewing the work done by the PTC.

Sir, I rise in support of the Motion. Let me start by saying that I acknowledge that we have an efficient public transport system that is comparable to the best in the world. And I wish to pay tribute to our public transport workers for their dedication and hard work. I think we owe it to these men and women who are in the public transport service for the excellent work that they have done. From a rickety bus system, we now have one of the most efficient transport systems in the world. I also understand the plight of public transport workers who are by no means highly-paid income earners. Productivity of bus companies has increased, and in line with our wage guidelines, I think they should look forward to some reasonable wage increases. It is therefore unfortunate that wage increases have been cited as one of the key reasons for the increase in public transport fares. Let me now define what I see as the issue before the House today. At the heart of the current debate, in my view, is the question of what should be the role of our public transport companies. The companies see themselves as business entities, but Singaporeans obviously disagree. Singaporeans see public transport companies as serving public interest, and therefore having a strong social responsibility towards the public. This element of public interest and social responsibility is particularly important considering that public transport companies here operate in an environment, as my other colleagues have mentioned, where there are virtually no competitors. This does not mean that public transport companies cannot make money, or should be operated at a loss. The issue here is whether making profits should be the over-riding consideration for public transport companies, as we have heard several speakers mentioning. In other words, the profit and shareholder value motivations of public transport companies must be balanced against the public need for an affordable and efficient public transport system. Obviously, Sir, the public is not convinced that there is a balance in this case. They know that last year, as we have already heard, SBS Transit made a healthy profit of almost $40 million, and a healthy return on equity of 17.9%. Hence, there is no danger of an imminent collapse if fares are not increased. Also, the recent announcements on corporate tax reductions will benefit transport companies in terms of higher profits. So the public finds it bewildering that bus companies should cite loss of revenue as a reason for its increase in fares. Sir, as mentioned by other colleagues as well, contrast this with the response of two other transport operators. When asked whether they would increase their fares, both the 1,000 strong Singapore School Transport Association and the CityCab and Tibs taxis, have said publicly that they will not increase their fares despite their higher operational costs because of the poor economic situation. In fact, the President of the Comfort Taxi Operators Association said in a public interview that increasing fares would mean that passengers will run away, particularly in this situation of economic hardship. Hence, Sir, there is an issue of public accountability here, and the clarifications and explanations to-date have not been able to convince people. I really hope that the Minister can give this House clearer and more incisive explanations and allay the fears of the public. I have the following suggestions to make and also some questions which I hope the Minister could address. In approving fare increases, I would like to ask whether the PTC had taken into account the economic situation, the unemployment rate, and the increased hardship that such a fare increase would cause to the people. There are strong sentiments against these increases because many Singaporeans have lost their jobs, do not enjoy pay increases in many cases, and those who are still employed live in constant fear of losing their jobs. We may argue that only 5% are unemployed, but this figure is actually much higher compared to previous years, and those who are unemployed now take a longer time to find a job. To me, a reasonable fare increase cannot refer to the amount of the increase or the need for companies to earn revenue alone, but must take these factors into consideration. I would also like to ask whether in approving the fare increase, the PTC had factored in the 2.5% reduction in corporate tax which the transport companies would enjoy on this year's income. Has that been factored in when the bus companies talked about loss of revenue as a reason for increasing fares? The Government's objective in reducing corporate tax by 2.5% is to help companies to reduce operational costs. Instead of passing on this benefit to commuters, it is unfortunate that the transport companies have decided to further increase cost for commuters. I would like to touch on the formula of CPI+X, which my Parliamentary colleague Mr Chay Wai Chuen had mentioned just now, and to ask whether there is a need to revisit this formula. I note that this formula was set many years ago, but the economic environment today has changed. If companies are already making good profits, this formula seems to allow companies to increase fares so long as there is an increase in the operating costs. It gives the impression that transport companies do not have to contain costs and, secondly, it guarantees them good profits all the time. Sir, in 1996, the Cost Review Committee, in its conclusion, said the following:

"An affordable and highly convenient public transport system would have to be provided to offer Singaporeans an attractive alternative to having their own cars, as cars are likely to be very costly given Singapore's shortage of land."

Sir, we all agree that private ownership of cars will become more expensive. We also agree that too many private cars would clog up our roads. So, we agree that a better alternative will be to develop an efficient and affordable public transport system. Public buses are by far the most efficient means of road transportation for a large numbers of commuters, particularly during the rush hour. If this is the case, then should not the policies that are in place reflect this thinking? In particular, Sir, I would like to ask the Minister to explain what is the rationale for imposing the ERP on public buses, which the bus companies have cited as being one of the reasons for the increase in their costs. Lest I be misconstrued, I am not arguing for a subsidy or subsidisation of our public transport system. But I think a policy is developed on the ERP for a particular objective - to prevent clogging of the roads; people are discouraged from using private cars; they have to rely on public transport unless we expect them to walk. So I would like to know, and I am sure Singaporeans are asking this question as well, what is the rationale then for imposing the ERP? Sir, the transport companies have just introduced cost saving methods, such as the ez-link card, which will reduce underpayments and other forms of fare abuses. The strategy of differentiating payments for those who use the ez-link card and the normal fare card, as against those who pay cash, would also mean that there will be further manpower savings as it will need less staff for cash handling. Hence, the transport companies, in my view, should have waited and assessed the impact of such measures before asking for fare increases. In fact, it would have been better if the ez-link card had been in place for a number of months or even one year, so that people could switch, and therefore have some additional savings by using the ez-link card, where the fare increase is much lesser. Unfortunately, the ez-link card has just been introduced, I think it is less than a few months, but immediately we now have the fare increase without enabling people to benefit more and assessing its impact. I also note that the ez-link card requires a $3 deposit, which is $1 more than the normal fare card. This by itself, in my view, will generate a fair amount of income for transport companies. And therefore it makes it quite unbelievable that they could cite revenue loss as a basis for the increase. Sir, in recent years, transport companies have been constantly upgrading in various areas. The question I would like to ask is: are these upgradings necessary, are they useful, are they needed by commuters, and are the costs of these upgradings passed on to the commuters? It does not really help when shortly after the bus companies announced about the setting up of the Toa Payoh airconditioned interchange, fares went up. In the public's mind, such costs are borne by the commuters, although not everyone wants an air-conditioned bus interchange. Sir, I would like to make a special appeal for feeder bus users who are usually the HDB heartlanders. I think there is a strong argument to moderate the fare increase for feeder service as this is heavily used by housewives, retirees and students. The feeder service used to be 15 cents but now it is 80 cents. I recall a recent conversation with my daughter who is in Primary 6. She said that some of her friends hate me. And they hated me because they said that "your mother increased the bus fare from 70 cents to 80 cents", and I said, "Please, I am not the bus company. Please explain to your friends." She said, "Ya, it is very unfair" but that is what they said. "You have increased the feeder bus service to 80 cents, by 10 cents." Now that is the sentiment of the people, the young, their mothers who were using it, talking to them, and this is what is being reflected in the conversations. Now, if our argument is that support and assistance to the people must be focused and directed to those who really need them, then, in my view, it is appropriate that we look into feeder service differently as the bulk of the users are HDB heartlanders from the lower income group. Finallly, Sir, I would like to ask whether there is any coordination in the increase in fees amongst the various Ministries and public service providers. Is anyone monitoring and actually assessing the cumulative impact of all these increases on the public? Would the Government consider setting up an inter-Ministry Committee to monitor and assess the cumulative impact of cost increases? I fear, Sir, that as more and more public services are corporatised or privatised, everyone will decide on their own pricing policy, without taking into consideration what impact this would have collectively on people. In conclusion, I would like to reiterate my earlier point that public transport companies are not just commercial entities, but have a social responsibility and they must, and will be, subject to public scrutiny if they raise their fares. I would also like to call upon the Government to consider carefully before approving any further increases of public services or Government rates of charges. Please consider the anxieties and concerns of people. When I ask people nowadays how is your work. The answer is invariably, "Okay, but for now." During good times, when jobs are secure, people's ability to absorb shocks is better. But when times are bad, with every price change, no matter how small, instead of creating a ripple, will result in a whirlpool. On this note, I support the Motion, Sir. 4.15 pm

Mr Speaker, Sir, thank you for letting me join in this debate. First of all, let me say that I am glad that we are having this debate in this House, at this time. It has already been raging in the media, in the coffee-shops, on the buses and trains, for quite a while now. So, it is good that we now move this debate into this House, to give MPs the chance to give voice to their feelings and their concerns, the frustrations and the fears, anxieties of their constituents. For this, we must thank the movers of the Motion, Mr Tan Soo Khoon, Dr Tan Cheng Bock and others. This does not mean, however, that I agree with the Motion, but I will come to that later. This debate is also important because it provides an opportunity for the Minister to explain, once again, the rationale for its policies and to clarify any misunderstandings and to provide the facts. And, it is important, because this is what Members of this House have been elected to do. To reflect sentiments from the ground, yes, but also to listen carefully to all the arguments, so as to arrive at decisions which are what we believe to be in the best interest of the country and our constituents. This debate is taking place amidst high public interest and high expectations. Some Members feel that the issues go beyond bus fares - issues like Government not listening to the people, Government not being sympathetic, and so on. I would touch on these points later. But I urge Members, if we are going to have a rational and a considered debate, to remember ultimately what this debate is all about. It is about our land transport policy, specifically our public transport policy. It is about the role that it plays in improving our quality of life and our standard of living. It is about how we finance it, how we regulate it, and what are the role and responsibilities of the various stakeholders. By this, I mean not just the commuters, the people, but also the service providers and the State. In the most immediate, it is about whether fees should be increased, fares should be increased; if so, when and by how much. Let me, first of all, state my position. I support the necessity for increases in public transport fares provided, of course, that they are properly justified. The harsh reality is this: there is no free lunch. I would elaborate on this point later. Where it is justified, I further support the principle that it is better to have small regular increases which, in fact, means increases even when the companies are profitable, as opposed to large increases coming infrequently, for example, when the companies are losing money. To the extent that the recent fare hikes adhere to this principle, I support them. I would like to reassure Members of this House, including Mr Chiam, that this does not mean that I am not speaking up for the common man. Indeed, if I may remind Members, if the PAP Government had not acted in the interest of the common man, if we had let them down, if we had not been able to demonstrate clearly that our policies, sometimes not very popular, have brought them a better life, then we would not be in Government today. Before I proceed any further, let me say that it is not my intention to justify the increase in public transport fares. That is for the public transport companies to do. That is for the PTC to assess and to recommend and, finally, for the Ministry of Transport to endorse. Neither realistically do I hope to change the minds of Members of this House who oppose the fare hikes or the many commuters who are affected by this increase. But what I do hope to do is to shed some light on this issue and help to bring about a more informed debate. First of all, let me say that this is not the first time that public transport fares have gone up. It is also, I dare say, not going to be the last time. I was with the Ministry of Communications for 11 years from 1988 to 1999, three years as a Minister of State and eight years as the Minister with responsibility for land transport. One of the most difficult and unpleasant things I had to do was to allow the public transport operators to raise their fares. Let me assure Members of this House that no Minister for Transport, indeed no Minister, wants to allow any fares, fees or rates to go up if he can help it. Indeed, life would be so much more pleasant and so much simpler if we did not have to do unpleasant things. Indeed, as Minister for National Development, I have not escaped having to do unpleasant things. Mr Tan Soo Khoon in his speech just now mentioned one of these things. He said that HDB is raising carpark charges in spite of public feedback. I have explained in this House why HDB has to raise carpark charges. It is because HDB's mandate is to provide subsidised public housing. It is not to provide subsidised carparks. Any subsidy for carparks will eventually, sooner or later, flow through and have to be borne by all HDB residents, whether or not they own cars. That is the reason why carpark charges have to be raised in order to reduce the subsidy and, hopefully, we can close the gap. I have also explained in this House, in answer to questions from Mr Tan, why HDB is doing so in September. This is because, in September, road taxes will be reduced, and so we feel that it would be better to wait until September so that HDB residents will not feel the pinch. So, I wonder which part of my explanation was not clear to Mr Tan. He may disagree with the policy, although he knows that this is not a new policy. In fact, this policy was enunciated in the House when he was in the Chair, by the former Minister, Mr Dhanabalan, as early as 1989. He may also disagree with the timing, but if not at the time when the car owner is getting something back from the Government, then when? Sir, I come back to the question about fare increases. The first question then we have to ask ourselves is: can we avoid having to increase fares? Is there another option? Is there another way of doing this? Some Members of this House have made some suggestions. Some people argued that one way to avoid increasing public transport fares is for the Government to step in and subsidise public transport. This is the subsidy argument. I think this argument was made by Mr Low Thia Khiang and others. There are others who feel that we can bring fares down by opening up the market to more competition. Again, I think this is something that has been brought up by quite a few Members. Others feel that the public transport operators should improve their productivity rather than raising fares. And, finally, a few argued that they should cut cost by providing a no-frills service. Sir, let us consider each of these suggestions one by one. Let me take subsidy first. The Government has explained many, many times why subsidising public transport is subsidising consumption which, in turn, creates distortions in demand and supply. In other words, if you subsidise consumption, people are going to want more and more, because they do not have to pay for it. If we start with public transport, what about other equally essential items, like water, food and electricity? Should we not also subsidise food, electricity and water? I am sure Members are familiar with the arguments. But, to me, perhaps the most powerful reason why we should dismiss this option is that, ultimately, we all end up paying for it. The experience of many countries which have gone this route, with the best of intentions, mind you, end up having to provide for a bigger and bigger subsidy, which eventually means higher taxes. So, remember that there is no such thing as a free lunch. Let us take the second proposal - competition. This is a common belief that if only we had more transport operators, competition would bring fares down. These sentiments are understandable. After all, look at what happened in the telecommunications industry. Let me caution, however, that it does not necessarily follow that the same will happen in the public transport industry, because the nature of both industries is not the same. In the 60s and the early 70s, we had a total of 11 bus companies in Singapore. Older Members of this House, especially those over 50, which incidentally include myself, will remember the situation then. Services were unreliable; buses broke down very frequently; they were packed like sardines; and the competition for passengers resulted in dangerous driving behaviour. Unpopular routes were poorly served, if at all. They all wanted to serve the best routes, the most popular routes. The situation improved when the 11 companies were amalgamated, first, into three companies, and then into one, which was called SBS in 1973. Even then, the Government had to take the unprecedented step of seconding a team of civil servants from various Ministries to help manage SBS and to ensure that the public transport system, which was an essential part of the system, of the whole infrastructure of Singapore, did not collapse. I was one of those who was seconded to SBS. With the merger, we were able to rationalise bus routes, decentralise repairs and maintenance, and to achieve economies of scale for the purchase of new buses and spare parts. Service conditions of bus workers improved significantly. New productivity measures such as double deckers and one-man operation were introduced. As a result of this, service quality went up, fares were held steady for many years while SBS was financially viable. The final stage in this transformation was a successful listing of the company. As a result, many Singaporeans who were bus commuters also became shareholders of SBS. In a sense, SBS became some sort of a cooperative with widespread shareholdings among bus workers as well as commuters. Over time, the shares went up in value; so, many commuters decided to take profit. It was a win-win situation. In the 1980s, competition was reintroduced in some form when licences were given to Trans-Island Bus Services (TIBS) to operate bus services in the northern part of Singapore. With this move, there was now a basis for comparison of performance and some competition, although not direct. Supplementary bus services provided by school buses were also introduced to complement certain routes at peak hours. What is the situation today? Has the bus service improved today, compared to the yesteryears? Based on my own experience then and now, I can say without hesitation that it has improved by leaps and bounds. You look at the buses that are running on the roads today. I still remember the bone-shakers we had in the 70s. They were hot and stuffy. They were very difficult to drive and for the drivers, it was not a very pleasant thing to drive SBS buses. I know because I did take my Class 4 licence on one of those old bone-shakers. At that time, I wondered whether we could ever afford the lovely buses that we saw in Europe and in other developed cities. Today, our commuters are able to enjoy the same standard of buses as the ones we see running in most cities in developed countries - airconditioned, low steps, sturdy, automatic transmission power steering, and so on. Sir, I am not suggesting that public transport operators today have no more room for improvement. Far from it. There are still too many lapses of service which we cannot and should not condone. They should be more responsive to commuters' request for new services. Service attitude of some drivers can be improved. More buses on some routes would be welcomed. But like all things, let us see their performance in perspective. Let us give credit where credit is due. I relate this to illustrate the point that competition and having more bus companies is not the magic solution, the panacea to our problem. Indeed, the opposite can be true that a well-regulated monopoly, or duopoly, with some competition at the fringes can be the better solution. This has been borne out not only by our own experience but that of places, like Hong Kong, where bus services are also not subsidised. What about productivity? Can transport operators increase their productivity further and not have to raise bus fares? The answer must surely be yes. But I believe that the huge productivity gains of the past, such as the ones through the use of high capacity buses, like double deckers and articulated buses, like the introduction of one-man operation (OMO), are no longer repeatable, which means that the fare increases can no longer be held down for as long as it had in the past. Nevertheless, the PTC should continue to insist that productivity is a key determinant of any request to raise fares. Finally, what about cutting down on the frills, a so-called no-frill service. The assumption here is that by removing the frills - the airconditioned interchanges and TV on buses - cost can be reduced so that fares do not have to go up. Sir, I know for a fact that the airconditioned interchange that is co-located with the HDB hub at Toa Payoh Town Centre is paid for by LTA, and not by SBS. I am also told that the TV sets on buses are paid for by advertisers, and not by SBS. So, this way of cutting costs is out since costs are not incurred by the bus operator in the first place. What about other cost-cutting measures? The surest way to cut costs is to lower the level of service, in other words, to reduce the number of routes or the number of buses plying certain routes. Are commuters prepared to wait 10 minutes when they are now waiting 5 minutes? Or are they prepared to wait 30 minutes, instead of 15 minutes, during off-peak? Are they prepared to endure more crowded trains? I doubt that commuters will accept this. And I do not blame them. We have come to enjoy a high standard of living which must not be going backwards. But at the same time, we must be prepared to pay a reasonable price for a reasonable service because there is no such thing as a free lunch. The issue boils down then to what is a reasonable service. Is 10 minutes reasonable? Is walking 200 metres to the nearest bus stop reasonable? Is having to change buses to arrive at one's designation reasonable, and so on and so forth? If you ask people, they will give you various answers. So who decides? And we have placed this responsibility on the PTC. Next, what is a reasonable fare? Should we peg fares to affordability, like we do for HDB flats? Again, if you ask different people, opinions will differ. And again, we have given this unenviable task to the PTC. We said to them, do a performance audit of the operators, check the accounts, make sure they are operating efficiently, let them earn reasonable profits, so that they can reinvest in the business, expand, improve the level of service. Like Dr Wang, I do not envy the Chairman of PTC and its members. Mr Speaker, Sir, I have attempted to establish that, like many issues facing Singapore as a country with limited resources, there are no easy solutions, no painless options. In this case, we cannot avoid increases in bus and MRT fares from time to time. But what we can and must do is to look for the least painful solution if there is such a thing. I believe that we have the framework in place. The PTC is the body that is entrusted to regulate service levels and fares. I believe that the principle of small increases is the better way to go, rather than large increases. But within this framework, I think we can still make further improvements. And one that I would support is the call by some Members to expand the representation of the PTC to include members from all walks of life. And I see no reason why this should not include some Members of this House. Applications for fare increases can then be subject to greater scrutiny and, if it is passed, it can get better acceptance. Now, I realise that this suggestion does not mean that future fare increases will not be a problem. It will still be so. People will still be unhappy. Questions must still be asked but, hopefully, we can shed more light rather than heat in the public debate. Sir, coming back to this fare hike, as I said at the outset, I am not in favour of reviewing the decision. It has been made, we should abide by it. But we should also recognise that there are people who will be hard hit by it, especially those who have just been retrenched or are still jobless, who have suffered pay cuts, who have school-going children who depend on public transport. We should provide help to this group of people. And indeed, we have. In case Members have forgotten, we still have the Economic Downturn Relief Scheme (EDRS). Every month in my constituency, my CCC considers and approves hundreds of applications for the EDRS, amounting to a few hundred thousand dollars. And the same, I am sure, is happening in every other constituency. We also have various financial assistance schemes within each of our constituency. This is in addition to the many support programmes, such as the Rental and Utilities Assistance Scheme, introduced in the off-Budget package last year, sharing of Budget surpluses through the New Singapore Shares, and so on. So, it is quite wrong to suggest that the Government is not aware of the problems faced by those who have been hard hit by this fare increase. Indeed, if nothing else, this debate can serve to highlight that such schemes are available, and if anyone wishes to avail himself of these schemes, he can do so. If he is not familiar, he can go and see his MP and he will be able to advise him where to get help. Finally, Mr Speaker, Sir, let me say that we have appointed the PTC to regulate the public transport industry, its level of fares and its services. We have set the framework for it to deliberate on these applications. These are men and women whom we have appointed, and I believe that they have exercised their responsibilities to the best of their abilities. Their recommendation has been endorsed by the Ministry, I am sure, after much deliberation. Therefore, Mr Speaker, Sir, I do not support the motion standing in the name of Mr Tan Soo Khoon and others, as it calls for a review of the PTC's decision. However, I do support the suggestion by Members of this House that we should review the composition of the PTC in order to improve the decision-making process. Sir, I thank you for your indulgence.

Mr Speaker, Sir, may I have your permission to clarify some of the points raised by the Minister?

Clarification, yes. But you cannot speak any more. You have spoken once.

Yes. He said that I am asking for subsidy for public transport. Indeed, I am not. In my speech, I said that we are not asking for subsidy, but merely questioning why should public transportation companies make money by providing public transport. Should the Government not look at another model of providing public transport? At least, it could have a federation of transportation companies to run the public transport services on a cost recovery basis, and treat public transport as a public service. I am not saying to subsidise, but to recover cost. Why should they make money, and should it be profit-oriented for providing such a service? Where is the justification?

Mr Speaker, Sir, the question of subsidy has indeed been raised as one of the ways of avoiding a fare increase, and the arguments that I made are against this idea of subsidy. Mr Low's point about having the public bus transport service as a not-for-profit service is an option. But then, again, when it comes to not for profit, there is still the element of having to provide for the cost, and there is still the need for the fares to be increased from time to time to take care of increases in cost. So, even if there is a not-for-profit model, as Mr Low suggested, that does not mean that the fares will never go up.

Another clarification, Sir. Does the Minister agree that the moment the profit factor is removed, there will be less controversy, even if there is a need for the fares to be increased? It is justified based on why there is a need to increase, rather than on return on equity or return on capital investment. Will it be better?

It is not a clarification, Mr Low. It is a question.

Mr Speaker, Sir, the speakers before me have done a good job, reflecting the public's unhappiness. But I must still go on and have my say because more voice will add to the strength and support for this Motion. Minister Mah has disagreed with certain issues, one of which is subsidy. I disagree and I do not buy his argument for not subsidising. We are an active society. This Parliament House is not static. We argue and debate over an issue to come to a conclusion and, for every case, we decide whether it is worth the subsidy. So, it is not that because we subsidise public transport, we are going to subsidise for many other issues that come along the way. I do not think that is the case. Every case has its own merit to be debated in Parliament. Mr Speaker, Sir, it was not too long ago when this Government boasted about more good years, more jobs, more investments, more wealth-creation and more economic prosperity for Singaporeans. This Government has gone further to boast about reaching to the Swiss standard of living and about a world-class transport system. These days, we can only hear the Ministers telling Singaporeans to lower their expectations, not to be too fussy and to accept lower paying jobs. More retrenchments are expected to be on the way. So, what happened to those promises? What happened to the PAP's "More Good Years"? Where are all the new jobs that this Government promised during the last election? The Government claims that we have reached the Swiss standard of living. I do not see it at all. What I, and many other Singaporeans see, are rising costs and charges. The economy is in recession. Yet, the cost of living is going up. The biggest culprit creating this rising cost is the Government and Government-linked public service providers. If this is the notion of the Government's Swiss standard of living, then I believe many Singaporeans would rather not have it. Are Singaporeans being conned? The Government boasts that we have a world-class transport system. Again, like many Singaporeans, I do not see it. The newspaper reports that the LRT in Choa Chu Kang constantly breaks down. Many commuters staying in outlying areas have to change a few buses or trains just to get to work every morning. During peak hours, the buses and trains are constantly packed like sardines. Sometimes you have to skip and miss a few buses or trains before finally boarding one. Is this the Government's idea of a world class transport system? I wonder. Has the Transport Minister ever squeezed in with the crowd during peak hour traffic? If there is anything in a class of its own about our transport system, it is what Singaporeans pay to own a car. The Government discourages car use, and wants to encourage Singaporeans to take public transport. But what could be worse than being forced to take public transport? It is being told that the public needs to pay more money to these public transport operators so that they can maintain their profit margins. Otherwise, we are told, these monopolies will lose money and commuters will be worse off. The public transport operators are the only two listed companies in Singapore, whose profits and shareholders the Government indirectly protects, and the Government happens to be the biggest shareholder of one. By listing these transport operators, the Government cannot be allowed to evade its social responsibility to provide efficient and affordable public transport. Just like security, education and healthcare, public transport is one of the key services that the Government is required to provide. If the Government is not willing to subsidise the cost of providing this essential service, then the Government should seriously look into liberalising this transport sector and allow for more competition. Citizens pay taxes so that the Government can provide for these essential services. It is not to give higher pay and higher bonuses. The Government cannot regulate public services, demand high profits for the operators, continue to collect taxes and shirk its social responsibilities, all at the same time. While this and consistent future fare hikes may not mean much to the well-rewarded high income-earners and civil servants, the bulk of aged low income families will have more difficulties in trying to make ends meet. Coming back to the question on the kind of profit margins these operators want, is earning more than $50 million every year not good enough? When times are good, and everyone is making a lot of money, nobody would be so pissed off with a fare hike. Commuters can accept and tolerate it. But now ---

Mr Chia, I suggest you not use the words "pissed off".

Yes, Sir. But now, the economy is so bad. So many people are being retrenched, and many more are having their pay cut or frozen. Many businesses are suffering. Transport operators are not the only ones. So, why should their profit margins be protected at all? These transport monopolies cannot simply go to the public ATM - which is all the transport commuters - and press them for more monies when their profits drop. Nobody will dispute a fare hike if there is a genuine need. But this latest increase is clearly just aimed at boosting their already fat profit margins. At such a difficult time, wide margins are unrealistic. Despite the public's many protests and unhappiness, the Government went on to support this hike. Why is the Government so insensitive and uncaring? Is it taking the public's overwhelming support at the last election for granted? This current fare hike is so revolting, because the operators have yet to explain specifically why it is needed satisfactorily. Let us not talk about previous or future hikes. Given current circumstances, with SBS Transit and SMRT still highly profitable, why should this hike be allowed to take place at all? What we, Singaporeans, really need and want to know are: 1. How has this profit margin been worked out? 2. Is this a reasonable margin in these recession times when everybody is feeling squeezed? 3. What are the specific investments these operators have actually made to justify the fee hike? 4. Are these investments what the commuters really need? If not, why should they be made to pay for these unnecessary extras like expensive plasma screen TVs? 5. More importantly, have the operators improved the connectivity and frequency of buses and trains to a satisfactory level? 6. Finally, what will happen if they do not raise the fares this time round? Will they really go bankrupt? In short, show us how these operators do their sums. Let us see where the major expenditures go. The nation is certainly not short of accountants and interested individuals to scrutinise their numbers. This hike should not take place just because the Public Transport Council, whose members have a vested interest, thinks that it is all right to do so. Therefore, I support the call to review and reject this latest fare hike. Why must the public pay more when there is a recession? The PTC needs to re-examine its formula on how it approves fare increases. Mr Speaker, Sir, I will now move on to urge the Government to ensure that the prices of public services are not unreasonably increased during these difficult times. Just eight months after the November General Election, Singaporeans have been informed of so many increases in fees and charges for public services. Since May, refuse collection fees have gone up. Just last week, transport fares and utility fees have also gone up. Come September, it will be carpark charges. Then, maybe telephone charges. Soon, more ERP. Then, night ERP. Next January, we will have GST. What else? And what is next? It seems that many Government-related agencies and companies are upping their fees and charges to increase their profits in this difficult time, before the GST increase sets in. It was recently announced that the Government wants Singapore to be a broadcasting hub. The Media 21 Report sought additional funding for various initiatives to make this a reality. These are additional public investments. The question is: are we then to expect higher TV and radio licence fees soon to recoup these additional investments? On Sunday, we read that the CEO of the zoo had resigned. One reason cited is that he is not good in financial matters. A new CEO with good business figures will be selected to replace him. The question is: are we going to see a hike in the zoo entrance fees soon? With the Government and Government-linked companies leading the way to price increases, it is quite certain that private businesses will follow soon to jack up prices to maintain their profit margins. Their reasoning is simple: if the Government can do it, why not they? Already, a number of private car-park operators have announced that they are raising their charges too. Parking charges at various shopping centres and office buildings are likely to go up by as much as 20 cents per hour. Soon, to cover their rising operating costs, hawkers and small business operators are going to jack up prices too. Thanks, but no thanks to the Government, prices will spiral up. Luckily, Singaporeans have a Committee to Combat Profiteering. It is headed by the hon. Member from Joo Chiat. This Committee can check hawkers and retailers if they increase prices unreasonably. However, it has no power to challenge the Government and these public service providers if they profiteer. The Government and the GLCs are clearly the biggest culprit in this series of price hikes, not the small hawkers and retailers who are suffering from price increases themselves. In closing, I would like to quote a recent Straits Times forum page writer:

"While we may not have much choice about who sells us (the) services, we can choose which countries to live in.. Given Singapore's relatively short history, we should not be surprised if people choose pragmatism over patriotism, (and vote with their feet.)"

I can only hope that the Government is not driving our citizens to despair and leave Singapore. Singaporeans are not asking for much. They just want a place where they can work hard, make enough money to start and build a family, and retire without worrying about "money no enough". The Government can try to be a lot nicer and more caring by not being too greedy and sucking up the people's money too much. This is all we ask. The people's welfare is paramount for, without them, there can be no nation. Can the Ministers please take heed?

Sir, thank you for allowing me to join in. Frankly, I was a bit confused at the direction the NCMP was going as I could not understand some of the things he was saying. For example, I am surprised that the NCMP feels that the transport system is not world-class. I am sure that he does not really mean it, as we do indeed have an excellent transport system not matched by many. The issue at hand that we are debating today is - and this is a question he should really ask - at what cost are we having such a world-class transport system? This is the issue that he should have focused on. The other point the NCMP added to the Motion - which again confused me - was that he wanted to reject the latest fare increases in addition to the review question. While I can understand the NCMP's desire to have more power than what he already has - as an MP without a constituency - it is equally important to understand the mechanics of the whole process. Sir, the PTC, as I understand it, does not report to Parliament and we should, therefore, not be unrealistic about what we can or cannot do. In the case of this Motion, we really have to urge the PTC, and the Government for that matter, to initiate the process to review, if we carry through the Motion - and we are not in a position to reject the increases or the decisions of the PTC - instead of having a disruptive process where Parliament gets in the way of the Government and other agencies, I feel that the current process works well. Furthermore, there is a lot more value for our Members today in this debate to address the root cause of the issue of what caused the fare increases this time round. Hopefully, by understanding the root causes, we can put in place systematic changes and new processes which will be acceptable to all of us, and I hope to talk about these during my speech today. Sir, I support the Motion in the name of Mr Tan Soo Khoon. I have a few issues with the way the Public Transport Council operates, and the operating principle it uses to determine and approve fare increases when requested by the transport operators. I believe that the issue with the recent fare increases lies not with the PTC alone, but also with the Government, which sets the agenda and the charter of the PTC. Until and unless the Government steps in and changes the charter of the PTC, I am afraid that we will continue to see problematic decisions, as we have experienced this time round. Sir, I agree with Dr Wang that the PTC was just doing its job, and a job that is designed by the Government. I feel that it is about time that we reviewed the charter, which was established in 1987 and modified about 10 years later. Similarly, I would like to see changes in the composition of the PTC, as have been suggested by many Members, to better reflect the views of consumers and the public who use public transport daily, and also to have members who understand the mechanics of business a lot better. Sir, first, on the charter. I would like to urge the Government, and particularly the Minister for Transport, to take the opportunity to learn from the mistake this time round and to put in place a revised charter and set out new objectives and guidelines which can better serve the purpose of the commuting public. The view many people have right now is that the PTC seems to be a body which watches over the interest of the transport companies more than the public. Why is this so? I believe this is because of the charter, the roles and the guidelines which the Ministry has given them. So, in a way, it is not fair to put the entire blame on the PTC. They were basically designed to fulfill certain objectives, as they have been doing all along. Times have changed and we have to change with times. We have to therefore change the objectives to better achieve the results that we want to achieve for all the stakeholders. The stakeholders in this case are the public, the Government and the transport companies. Such a revised charter needs to be better balanced to place a heavier weightage on the impact on the commuting public. Some of the things which need to be reviewed include the process through which decisions are made. For example, can I ask what are the benchmarks the PTC and the Government use to determine the required profitability level for the transport companies? We cannot use internal data alone, because we have an almost monopoly situation for all our transport companies, especially if we look at the way routes are allocated to each operator. It is not even a duopoly. It is a monopoly, especially if we consider the Government's unwillingness to open up the transport sector to competition. Frankly, I wonder why the Government is so reluctant to allow more competitors, as many Members have asked. Sir, I also disagree with the Minister for National Development's argument that competition will not work in this case. Just like transport companies, the telecommunication industry too has had heavy infrastructural costs. If competition works in the telecommunication industry, why can it not work in the transport companies? About 15-20 years ago, we would never have believed that competition would have been good for telecommunications, and the results have shown that it has worked for all of us. The Minister also quoted two extreme examples. One was of the rickety buses of the 1960s, which I also rode on. It was a completely chaotic environment - no proper rules and regulations, no regulators, or perhaps no good regulators. Then, we have the other extreme of a monopoly situation today, which seems to have worked. It is arguable whether competition will or will not work. I think we should experiment with this, by introducing one more transport company and see the results. We should not, just because it has worked in the past, believe that changes are not going to be good for us in the future. I would also like to see benchmarks being used with operators from other countries in the way the PTC makes its decision on setting new prices. In this respect, I would like to ask the Minister: what is the pre-determined profit level that we have to set for transport companies, before which they are allowed to ask for fare increases? In fact, I would like to ask if there should even be a profit criterion in determining fare increases, perhaps in determining other things. Frankly, I am amazed that we are giving so much of protection for publicly listed companies. It is precisely this type of involvement that creates an uneven playing field for many more private sector players. How I wish that the Government also provides the industry I am operating in that type of protection, so that I do not have to worry about profitability and I do not have to worry about downturns. My point is that sometimes, companies have to face the real situation of profitability, and losses at some other time. We would probably have a lot more stronger companies and in that process, create a lot more efficiency in the whole system. The second issue is related to the charter which I am not convinced that the PTC has done a thorough job in reviewing the cost reduction efforts of transport companies before allowing them to increase fare prices. The excuse that the companies use is that they are seeing increases in cost and want to be compensated for these increases. My argument is that in the last two years, companies in Singapore should have seen a reduction and not an increase in cost. Given the recession, wage costs should have come down. The Government allowed rentals to come down, property tax is down and many other charges came down, as a result of the recession that we saw two years ago. So where are the cost increases coming from? I therefore repeat that I am not convinced that the review was thorough enough. Such a situation would create inefficient and unproductive companies and we should not accept these things. Even if costs may have increased, the PTC should have convinced itself that the transport companies did do their best in putting in place serious cost reduction and productivity improvement measures before agreeing to allow any fare increases. In examples in my industry, in a recession like this, we have to talk about cost reduction, in the range of 20-30%, and even 40% sometimes just to survive. I do not see the transport companies having shown they have tried to do that. In the review of the charter, we must insist on a better methodology to review cost increases, cost reduction, productivity improvement, and set a benchmark of performance before any transport company becomes eligible for fare increases. The fact that all transport companies are allowed to increase fares in tandem this time round also puts to question the assessment of operating cost impact for each of the companies, the fact that we allow all of them to increase at the same time. I cannot believe that both companies have similar rate of cost increases. The second issue is one of composition of the PTC. I feel that we should have more people from the private sector involved, particularly industry captains from different industries, especially those who face stiff competition in their industry. Such people would be able to ask better questions related to cost increases, cost reduction efforts and productivity improvements, return on investments and other financial measures to determine the true efficiency of the transport companies before agreeing to any fare increases. In my opinion, with the heavy Government representation and the representation of the transport companies, this important role cannot be well-performed. So, I call on the Government to review the composition of the Council as soon as possible so that this would give confidence to Singaporeans that their interest would be taken care of in the future. Another issue I have is on how this round of increases took place. It is my impression that the fare increases, which the PTC just approved, seem to have been a result of a set piece of standard operating procedures (SOPs) which the Government seems to have adopted many years ago. The people responsible in executing these SOPs just went on to implement this set piece without due consideration of what is really happening in the real world. What probably went wrong this time is that the SOP did not consider the economic condition of the country and the financial position of Singaporeans. I feel that the people responsible for initiating the PTC review should have been more sensitive to the real world problems and not just implement the SOPs which may have been set many years ago. In this respect, Sir, I feel that the Government and the civil service need to come out with more convincing answers to the questions on issues like price increases. The attitude reflected in the replies, especially those given in the newspapers' Forum pages are no longer acceptable and reflect a certain level of arrogance in the replies. I think this is something that is not convincing enough for Singaporeans. In conclusion, I feel that the real issue at hand is that we have been using a PTC system and a charter, which is now out-dated, and there is an urgent need for this to be reviewed. It is understandable why the PTC ended up allowing a fare increase this time round because the PTC and its charter have been designed to allow this to happen. Had the guidelines been different, I am sure the decision would have been different. For example, at this point of time, many Singaporeans actually shifted from using their private cars or taxis to buses and the MRT. I can almost predict that the public transport companies would have seen an increase, and not a decrease of revenue this time round. How then could the PTC have approved the fare increases this time? We therefore need a new formula that would determine a new balance for the future.

Sir, even as I rise to comment on the Motion, I am mindful of the financial challenges that Singaporeans face which this economic downturn has presented, and that many have been unemployed for a prolonged period of time. Sir, I accept that the Public Transport Council can be requested or urged to broaden their considerations and to be more exhaustive in their deliberations. But I cannot support the motion that the PTC be asked to review their decision, let alone have the Government stay, revoke or reject the PTC's decision, as suggested by Mr Chiam See Tong and Mr Steve Chia. Doing so would question the very existence of and the purpose for constituting the PTC. It would threaten the very independence that was crafted into the Bill back in 1987. Sir, at that time, one of the main functions was to consider applications for fare adjustments, taking into account two frequently divergent objectives: firstly, for transport operators to remain financially viable whilst, secondly, safeguarding public interest. The basis is that if transport operators are not viable and have to offer poorer quality of service, then commuters at large would suffer. Yet, Sir, commuters' interests and ability to afford the proposed fare hikes must weigh heavily, especially in difficult times. Hence, the Public Transport Council, understandably, has a difficult balance to strike and on an on-going basis. I would agree with Mr Tan Soo Khoon that perhaps there could be more disclosure on the criteria for evaluation of proposals, whether it is for new services or for fare adjustments, and to have more transparency on the process itself. Or perhaps, the composition of the Public Transport Council should be re-looked at to ensure that, firstly, there is a wider representation of views and interest and, secondly, there is a clear management and separation of conflicts of interest. Sir, on competition, although Mr Mah Bow Tan has explained why free market competition is not necessarily desirable, I would like to echo the call to the Minister for Transport to review the competitive and regulatory framework for transport services. I believe the circumstances are different and should justify a fresh review. Regardless of any changes to the transport services sector, or to the composition of the PTC, the PTC's very independence of the Minister and Ministry officials that was conceived at the outset, must be preserved. Sir, to make a villain of the PTC, as alluded to by Mr Steve Chia and Mr Low Thia Khiang, is unwise. Any hint of moderating or influencing the decision of the PTC cannot be allowed, without a debate on the very existence of the PTC itself, its integrity, its very institution, an existence that this very House had created back in 1987. Hence, while I am in total sympathy with the plight of families in need, I caution against unwittingly destroying the very integrity of the Public Transport Council. 5.10 pm

Mr Speaker, Sir, thank you for allowing me to join in the debate. Like the MPs who have spoken earlier, I know many Singaporeans are unhappy over the transport fare increases. There is a general sense of unhappiness, and not just from bus commuters. They are frustrated that the Government seems to be hearing-impaired, or deaf to their pleas, at a time when we are still not yet out of the recession. I face this unhappiness too when I walk around my constituency. Their sentiments have been well expressed by the MPs before me. I would not repeat them. We need to respond to these concerns. As a responsible Government, we cannot govern in a vacuum. To govern effectively, we need the understanding of the people. Rising Aspirations I spent many years running public hospitals. I acquired a habit of walking the hospital wards, talking to patients and their relatives. They came from all walks of life, from the middle class to the lower income groups. But regardless of their background, they all have aspirations for a better life. This is as it should be. As Singapore graduates from third world to first world status, Singaporeans naturally expect to live like their counterparts in the first world. We therefore have high expectations of our public transport service. We demand continuous improvement - more choices, greater frequency, strict punctuality, greater comfort, no breakdowns. When I grew up in the kampong, I was used to waiting, without any shelter, often for an hour, before a dirty, hot and noisy bus would finally turn up. It was a different lifestyle then. People were more patient. Nowadays, my daughters would give me an earful if the MRT service was disrupted, even for a few minutes. Fare Increases are Inevitable The Government is committed to meeting the rising aspirations of Singaporeans. We are committed to making continuous improvements. And over the years, our transport operators have, by and large, been able to meet these higher demands. But it is not realistic to expect such improvements to come with no adjustments in fares. It is just not possible to deliver better services at the same price over a long period of time. Mr Chiam said that if only public transport could be like the mobile telephones where you see prices coming down with more and more competition. In telecommunication, it is possible, thanks to technology breakthroughs. Prices, in fact, have dropped. Unfortunately, in most other industries, such opportunities are not easily available. Because public transport is labour-intensive, cost increases due to wage increases are hard to avoid. Like other workers, transport workers deserve pay rise too. Let us be fair to the many honest, hard-working bus drivers, train operators, who work long hours, often past midnight, so that the rest of Singapore can work all day, and play all night. This is not to say that there is no scope for productivity gain. There is. And it is precisely productivity gains which have largely allowed the PTC to moderate transport fare increases over the years. First, two-men-operated buses became one-man-operated. Next, single-deck buses became double-deck buses. Then, we joined two buses into one, to save one driver. And it is not just productivity gain through hardware. The quality of bus drivers and train operators today is quite different from the old days. They are now better trained and better skilled. And they also need to be IT-literate, given the penetration of IT and Internet into public transport. In a few years, with 3G, with wireless Internet, I expect buses and trains to become mobile offices where commuters continue to work and play while moving from one place to another. So the demand on our transport operators to be more sophisticated in its service offering is bound to rise further. And we will push the transport operators to seek productivity gains. But let us be honest, we cannot avoid some fare increases once in a while. Unfortunately, in the heat of the debate, both in the media and in the coffee shops, some misunderstandings have cropped up, and we need to first correct such misinformation, before we can choose the best course forward. Misunderstanding No. 1 - fare increases are due to frills - air-conditioned interchanges, fanciful bus shelters, TV in buses. Many said "Commuters do not need them, remove them and fare increases can be avoided." Whether these are frills, we can debate about it. But the key point is that the transport companies did not pay for any of these. They got them for free. Government pays for air-conditioned interchanges. Why? Government decided on air-conditioned interchanges because integrating the interchanges into high-rise commercial buildings makes much better use of land, instead of keeping bus interchanges as stand-alone buildings. But having integrated them into buildings, air-conditioning them becomes necessary. Likewise, fanciful bus shelters and TV Mobile, are services provided by other private companies because they expect to make money through advertisements. Since the transport companies did not pay for any of these services, they did not, and would not have been allowed to use these to ask for fare increases. In other words, commuters are not made to pay for these. Misunderstanding No. 2 - fare increases are to fatten the profits of bus and train operators. Is it really? This can be easily verified. You cannot hide fat profits. In any case, management has no incentive to hide fat profits, as otherwise their bonuses would get affected. The big problem in Wall Street today is that some management has been tempted to produce fat profits through creative accounting. The fact is that our transport operators are not making fat profits. Yes, I have heard Mr Tan Soo Khoon quoting various figures to show the point that they are making fat profits. But if I were the bus and train operators, and I notice quite a few of them in the public gallery, I will immediately push out data to show to the rest of Singapore that indeed this is not the case. Misunderstanding No. 3 - fare increases are due to losses by transport operators in non-transport activities. Some people have speculated that huge losses by transport operators in properties and newspaper venture have caused the fares to be increased. Again, this is simply not true. We require all non-transport activities of the operators to be run by separate companies. They are fully ring-fenced from the basic public transport activities. Misunderstanding No. 4 - fare increases are not opposed by an uncaring PTC. Some people feel that PTC is on the side of the operators and is only interested in ensuring their profitability. They complain that PTC is not diligent in protecting consumer interests, and this criticism is most unfair. Let us check the record. PTC, as Mrs Lim Hwee Hua pointed out, was set up 15 years ago, 1987. Over this period, average wages in Singapore have more than doubled. To be precise, 136%. The general price level, CPI, has gone up much less, by 29%. On the other hand, transport fares have lagged behind wage growth by a very big margin, and have largely kept pace with general inflation. In fact, depending on which criteria you use, one can argue that the average bus fares have been below the CPI increase over this period. So the fact is that PTC has actively protected the interests of the commuters. PTC members are serious, caring individuals, doing a national service, and doing a good job to the best of their ability. They certainly do not deserve the abuse which has been thrown on them over the last few weeks. The Chairman of PTC incidentally is in the gallery up there. In forming the PTC, we have deliberately included members from all walks of life, to give it a wide representation. In the current composition, it includes an accountant, an industrialist, a labour unionist, a media editor, an economist. While transport operators are also members of PTC, they cannot take part in decisions in which they have an interest, such as fare revisions. They are there so that the PTC will have first-hand knowledge of the industry that it is regulating. Nevertheless, we need to address the widespread concern of Singaporeans and respond to their grievances. But in so doing, we should not inadvertently undermine the foundation which has delivered the present state of our public transport system. Yes, our public transport system is not perfect. The MRT and LRT can go with less breakdowns. Buses can still be more punctual, and commuters would like to see many more bus services added even when the loading is not great. And, we will certainly work with the PTC, the operators, with the commuters, to make our public transport system better. But if we take a pause, and think back on what we had 10 years ago, 20 years ago, it is a vast improvement. And for those who have used public transport in other cities, whether in the first world or in the third world, they know that we have not done too badly. Just last week, someone e-mailed me to relate the experience of one Singaporean now working in London. According to him, it has now become common for people to expect to come in late to office because the trains there frequently break down at peak periods. I used to be amused by the picture of the old rickety Indian bus, overflowing with commuters. Some have to climb onto the roof where, in fact, the best "seats" are. The next best "seats" are for those who recklessly hang themselves outside the bus by clutching onto doors and windows. Those with seats inside the bus turn out to be the most uncomfortable - hot, steamy, sweaty and suffocating! But you have to see it with your own eyes to appreciate this experience. So, the fact is that over the years, we have evolved a good public transport system, and it rests on four key pillars: Pillar No.1 - Responsive to Rising Expectations. The operators know that they have to be responsive to the rising expectations of Singaporeans. As education and income level rises, our service level has to rise to match it. Pillar No. 2 - Leveraging on Private Enterprise. We let private enterprise operate the service. This is to take advantage of the financial discipline of the market, and their greater capacity for innovation and speedy execution. There were some suggestions from Steve Chia just now, or is it Low Thia Khiang, "Forget about profit motive. Move to cost plus". Yes, we can do that. But then it would immediately lose the incentives. Profit is not a dirty word. It is precisely because of profit that drives innovations. From the discussion this afternoon, I gather there is not a good appreciation of the CPI + X framework. But time does not allow me to go into the nitty-gritty of this system. But the CPI + X system was precisely to allow us to incentivise operators to innovate and to seek out and benefit as much productivity gains as they could, subject to the framework within which they are entitled to certain price increases. Then, it is the job of the PTC to decide what is a reasonable rate of increase, and that is the CPI + X framework. So, if you fully understood what the CPI + X framework is supposed to achieve, all this discussion about profitability and so on is irrelevant. It has nothing to do with profitability. Within this CPI + X framework, we decide what is a reasonable rate of fare increases which is commensurate with the affordability level of the population, then it is the job of the operators to go all out to make profit out of this approved system. That is the only way to drive innovation. That is the only way to drive productivity. Pillar No. 3 - Targeting Government Subsidy on Infrastructure. We provide a huge Government subsidy, but we have been careful to target it at infrastructure and capital investment. We cannot leave public transport purely to the market, because then many Singaporeans would not be able to afford the full fare of public transport. So there is a role for Government in funding, but we have deliberately not subsidised the operational cost of public transport. The operators will have to make the operation viable. I was delighted to read the Streats' article last week, July 2, in which it quoted a Madam Soh Lay Hoon who stays in Jurong but works in Ang Mo Kio. Her house is about a 10-minute walk from the Jurong East MRT station. She can either walk there or take a feeder bus. She chooses to get up just a little bit earlier so that she can walk to the station in time. That way, she saves on shuttle fares every day. This is a very sensible, down-to-earth approach. Now, do we want to distort such sensible decisions by, for example, subsidising feeder fares? Pillar No. 4 - Preserving the Independence of the Regulator. We set up an independent regulator to regulate the transport operators. When PTC was set up 15 years ago, there was a full debate in this House. I was then a young civil servant and I remember the debate. This House gave birth to the PTC. Mr Tan Soo Khoon and several veteran MPs in this House could claim paternity to the PTC. We know that public transport fares had to be adjusted periodically if we are to enjoy continuous service improvements. But fare adjustments are unpopular and we should try to de-politicise it as much as possible, if at all possible. In fact, a point was brought up during the debate in 1987 on whether some MPs should sit in the PTC. It was quickly rejected as unwise. Instead, the independence and professionalism of the PTC was stressed by several MPs, both during that debate, as well as this afternoon. We can argue over the composition of the PTC, whether we could widen its representation to include, eg, grassroots leaders, as suggested by some MPs, or to exclude the transport operators. We can debate whether the PTC could have better explained its recent decisions to the people. We can discuss whether PTC should revise its modus operandi, eg, to make its deliberations more transparent. There is nothing wrong in criticising the decision of the PTC. They have a difficult job of balancing, not profitability, but the long-term interests of commuters and the short-term effects on them. Inevitably, judgment has to be made. We can certainly disagree with PTC's judgment, as honest people would. But we cannot fault them for not being diligent. They are certainly not apologists for operators, as Mr Tan Soo Khoon put it this afternoon. But we certainly should not inadvertently weaken the PTC by undermining the independence of this important public institution. To weaken the PTC will, in fact, be to go against commuters because PTC is there to protect them. We should strengthen PTC; we should not weaken it. I, therefore, have grave misgiving about the Motion as currently worded. The first part on urging the PTC to review its decision must surely undermine it. If we over-ride the PTC, by getting it to reverse its decision, or even if by getting them to delay the hike, as suggested by, I think, Mr Leong Horn Kee, then what is the point of appointing the PTC? Fare Increases During Recession But MPs are correct to say that the timing of the fare increase is bad, as we are still recovering from the recession. PTC is, of course, fully aware of the economic backdrop, but it operates on the principle that regular small fare increases are better than large infrequent increases. It is to make it easier for commuters to adjust. I support this principle. But PTC may want to revisit this principle, to see if there is scope to apply it with greater sensitivity at times of recession. Certainly, fare increases can be better explained. I would, therefore, urge Mr Tan Soo Khoon and others to relook the Motion to see how it can be amended to make it clearer on the follow-up action of the PTC without undermining its authority or independence.

(In Mandarin): Mr Speaker, Sir, in the face of globalisation of the economy and jobs are under threat, we are treated with waves of increases in prices and charges. Accordingly, this round of bus and MRT fare hikes gives rise to worries and concerns to the people. We should have no difficulty understanding why the people have so much grouses and unhappiness, despite the fact that the Consumer Price Index (CPI) has been dropping over the last six months. So, to a certain degree, the total cost of living has not been as bad as what many people have perceived it to be. But the more important thing is that the Government must assure the people that when times are bad, and when the people are pressurised with a rising cost of living, it remains pro-people and cares for the people. In this round of public transport fare increase, we can see that a lot of people are very unhappy. But the fare increases have already come into effect from 1st July. Any amount of argument and deliberation will not able to turn back the clock. It is a done deal. Or is it really so? In my view, there are four lessons that we should learn from this round of public transport fares increase. They are: (1) Implement only when all systems are ready. (2) Balance between profitability and public interest. (3) The timing is everything. (4) The need for greater transparency. Why do I say the systems are not in place? I say no because of two reasons. First, the implementation of the ez-link card is not fully on track. Senior citizens who have applied for the card have not yet received them. TransitLink only decided last week to issue interim cards to senior citizens. I am glad it has done so, as otherwise the senior citizens would have no choice but to pay higher fares using the existing magnetic farecards. But the problem does not appear to be confined to senior citizens. Students are also waiting for their ez-link cards to be issued. Second, the teething problems of the ez-link card have not been fully resolved. Judging from various feedback, the problems with the ez-link cards faced by commuters are very real. My residents told me that adjusting the fares at this moment is unfair to the senior citizens, because many of them have yet to receive their ez-link cards they had applied for. This is to say that we are forcing the senior citizens to pay more when they use the public transport system. Last week, it was announced that provisional ez-link cards would be issued to the senior citizens. I am not sure whether this can effectively solve the problem of these senior citizens. Moreover, the students are still waiting for their ez-link cards. Under such circumstances, many citizens are not able to use the ez-link card, and when they continue to use the TransitLink card, they have to pay higher fares. To them, the increase is not 3 cents but 5 cents. To those who are not used to the automatic system, they have to pay cash and, hence, to them, the increase is 10 cents. If we can wait until the ez-link card is completely in place, then make the fare adjustments, the inconvenience to the people will be reduced. Secondly, we must balance between the transport companies' profits and public interest. People, in general, are unhappy with the fact that the public transport companies are asking for fare increase despite the fact that they are making huge profits and thus no urgency to increase fares. There is an article in the Straits Times suggesting that public transport should be a service to the people and not for profit. Therefore, there is no need to rush into fare increases at this time of recession. The article commented that the thing that hurt the commuters most was the Government's failure to see beyond rational argument and its inability or unwillingness to empathise with the people. These are strong words. In another newspaper, Streats, a similar view was also reflected. It was felt that in recent years, the public transport system seemed to have lost its original direction. The writer said that fare prices and services should not be entirely determined by cost and profits alone. Should public transport operators be entirely profit-oriented? The writer claimed that our public transport policy has lost its direction, and this is a question that many people have raised and, I think, it is necessary for us to study the issues closely. Undoubtedly, our public transport operators are listed companies. According to the public, they are making money, especially, recently, when the whole economic environment is bad, they are still profitable companies. Sir, let us look at the past records. There were no changes to the fares from 1982 to 1990. Between 1990 and 1996, the average fare went up by 1.3%. In 1996, however, it was reported that SBS and TIBS lost $9.6 million and $5.6 million respectively. Thus, in 1997, PTC agreed with the bus companies to increase the fares by 5 cents across the board. But in order to reduce the impact, the 1997 adjustment was only confined to the non-airconditioned buses only. For those who took airconditioned buses and paid with their fare-cards, they did not have to suffer the fare hike. As for MRT, only those who travelled with single journey ticket needed to pay 10 cents more. In the next three years, 1997-2000, the fare was not adjusted. I was particularly impressed that in 1999, the bus operators gave a 5% rebate to all commuters. Then, in 2000 and 2001, new fare stages were added, and commuters on feeder services had to pay 10 cents more respectively. Fortunately, with these moderated adjustments, the operators are still making money. The question is thus: why increase when they continue to make such high profits? I think this is one question that many people are asking. I believe that many people are not happy with the work of the PTC. But, of course, we must also calmly look at the contributions by the PTC over the past few years. We must look at the facts objectively. Look at these facts: - For those who use farecards, there has been no increase in fares for passengers travelling short distances below 14 fare stages, in airconditioned buses since 1990, the fares remained between 60 cents and $1.20. - Over the past decade, fares have gone up primarily for long distances, so as to better reflect costs and cut down the indirect subsidy of short distances over longer ones. - When fares go up in the past, those who use farecards continue to enjoy transfer rebates, thus minimising the impact of fare increases. - In this round of adjustments, senior citizens travelling longer distances in the MRT actually pay less, from 70 cents to 64 cents. In my view, the PTC has done a reasonable job drawing the line between profitability of transport operators and maintaining public interest, and allowing the operators to remain profitable without profiteering. But this begs a further question - last year, the PTC turned down the applications to increase fares due to the prevailing economic conditions then, why can it not do so again this year? After all, the economic situation has not really improved that much. Why can they not postpone the increase? Many people feel that the timing is wrong. Timing is everything, especially when we have many bad news. The Ministry of Manpower has also told us about the highest record of unemployment in the second half of the year. The unemployment rate will be raised from 5% to 5.5%. To Singapore, which has been enjoying full employment for many years, this is a hard reality to accept. At this time, the announcement of fare increases will give rise to more concern and worry on the part of the people. From another angle, I feel that PTC has not done very well to a certain extent this time round. In the past, whenever the fares were increased, some form of rebates for those who have to transfer from one service to another was given to compensate for the increased fares. But this time, they have not given any discount. I do not know why they cannot do it this time. To the ordinary workers, if they have to take a shuttle bus to the MRT and then hop on to another shuttle service to get to the final destination, the effect on them is not 3 cents, but 3 cents plus 4 cents plus 3 cents, ie, a total of 10 cents. So, to those who do not know how to use the ez-link card, such as the senior citizens, then it is 10 cents plus 10 cents plus 10 cents. So two ways, it is 60 cents. I do not understand why we cannot arrange for some rebates for commuters who have to transfer from one service to another. Lastly, CASE has always been advocating strongly and consistently that there must be transparency in our commercial organisations. The PTC announced the fare increases on 11th June. So far, we have not heard further from them. No explanation has been given. So from 11th June until now, the various views have been expressed and reflected very strongly in the media. But the PTC and their operators have been keeping quiet all this time. Until two weeks ago, suddenly, they issued a long reply. My residents commented, "Such a long reply, how to read?". So, nobody knows what is actually happening. This is a very disappointing situation. We often say, what goes up must come down. By the same logic, what goes down, must come up. However, people hope that this applies only on the share market. When we talk about bus fares and public service charges, it can only go up but never come down. People find this hard to accept. We must let our people understand why this is the case. I think some sort of clarification or explanation is necessary. Transparency is very important. As in the film, "I Not Stupid", we must not be treated as though we are all ignorant people. If necessary, the authority must explain to the people so that they can understand. Let me give Members another example. On 2nd of July, there was a report in Streats where one commuter was quoted as saying, "If our people want to enjoy a world-class transport system and not willing to pay more, then it is a joke. Because we all know that there is no free lunch." Sir, I believe that when prices are increased, if it is explained properly, our people will understand the situation better, and thereby be more amicable to such additional burden. We must not ignore the feelings of the people. We must explain to the people the circumstances why it is necessary to take certain action. The bus operators must also tell the people clearly, whether they have done their best to improve productivity to save cost. Mr Tan Soo Khoon had made a comparison with the Hong Kong situation - why Hong Kong could do it while Singapore could not. More importantly, if we do not explain clearly to our people, then more people will fail to understand and they would feel more painful, more disappointed and more worried. Sir, overall, I endorse the principle that small increases from time to time are better than one large increase all of a sudden. But to most people, I think the adjustments here and there - a little bit here, a little bit there, a little bit everywhere - and if we add up all the little bits, it is one big deal. Many people find this hard to swallow. This is a very important issue that we must rectify and find a solution. Most importantly, I hope that the lessons learnt this round can be registered beyond this round of fare increase. They too are pertinent for other service providers, especially for those who are reported to be contemplating fee increases, such as school bus operators and SingTel. I hope that they can learn the lesson and increase their transparency, and they should explain clearly to the people the rationale for their intention. Before I conclude, I would like to ask the Government a few questions. First, on statutory costs. From the public debate and public transport operators' reply, it appears that statutory cost is one of the key factors that drives up fares. My question to SMRT and SBS is: what is the extent of statutory costs in operating their businesses? Further, I understand that the Government has allowed public buses to enjoy concessions in road taxes and exemption from COE, why can the Government not exempt public buses from ERP charges? Surely, this will further cut down statutory costs and give one less reason for bus operators to increase fares. Second, on the airconditioned bus interchange. SBS has clarified that the cost of building the airconditioned interchange at Toa Payoh was borne by the Government. I am concerned that operational and maintenance cost that operators have to bear in future can be very high, and it will become a key factor for future fare increase. My question is: what is the estimated operational cost of running an airconditioned interchange compared to a non-airconditioned one? The SBS also said that it does not get any rental income from tenants at the interchanges and neither do the tenants help pay for upkeep of common areas. I have several questions to the Government: did the Government allow SMRT to get rental income from the tenants at the MRT stations? If so, would this arrangement be extended to public bus operators to offset cost of maintaining the interchange? In its letter published in the newspapers on 24th June, the SBS said that "If we are able to work with the authorities to share some of the cost of maintaining the interchange for instance, it will also not be a factor when considering future fare increases." I was surprised by SBS' statement. If the Government can defray the costs of maintaining interchanges, SBS' operational costs will surely go down, and this must certainly be a factor for SBS to consider in future fare increase. I hope that the SBS, LTA and the Minister for Transport can address the various questions that we raised in this House and those raised by the members of the public.

Mr Speaker, Sir, while there are early signs of our economy bottoming out, it is still some time yet for a broad based recovery to materialise. The employment situation, in particular, is likely to worsen before it improves. The Government has repeatedly called on the people to be patient and flexible. We are asked to tighten our belts and accept lower pay so as to stay employed. We are urged to make sacrifices so that we could bring in new investments and restart the economy. The people having been convinced, we took the bitter medicine, albeit with a bit of sugar. However, such sacrifices should be borne by all in an equitable manner. It therefore should not surprise the Government when our people reacted strongly when the various Government agencies and the public transport operators raised their charges one after another. Sir, feedback from our residents showed that the decision of the Public Transport Council to allow bus and MRT to raise their fares has probably pushed our people over their tolerance limit. They came to me and said, "Towkay, tong mui teow loh ler." Sir, they raised three issues with me. Firstly, they questioned the basis for the increase. Secondly, they wanted to know whether the timing of the increase is appropriate. Lastly, they were worried and uncertain about future increases. Sir, firstly, the basis for the increase. The Public Transport Council claimed that the increase is in accordance with an agreed formula, the famous CPI + X. Questions were raised on the basis of this formula. Why should the PTC adopt a formula that allows the operators to increase their fares according to CPI increases, let alone the plus X factor? The Government has stated clearly that it is not its intention, nor its policy, to subsidise public transport and that the public transport companies should operate on a commercial basis. However, by adopting a formula that is pegged to CPI + X factor, is the Government not endorsing a form of subsidy, and yet this subsidy does not come from the Government, or from the commuters? This is particularly hard to justify since both SBS as well as MRTC have been profitable. The fare increases will add a significant amount to their bottom line. Yes, we must allow our companies to make profit, even if they are providing essential services. These are what companies are for. Their shareholders must see a return. But their return must be taken in context. The reality is that many companies have suffered lower income, if not losses, over the last two years. Take the listed companies, for example. On average, listed companies in the year 2001 saw a reduction of over 40%, on average, in their profits. Many of them have to adopt aggressive restructuring and cost reduction programmes just to stay alive. Some have to accept short-term losses to ensure long-term viability. These are inevitable outcomes in time of a severe economic downturn. If the public transport operators are truly commercially run, they will not be able to escape similar challenges. However, let us take SBS, for example. They suffered only a 20% drop in their profits in the year 2001. They have performed better than the market, in general. The public transport operators made proposals to the PTC for rate increases. But do the commuters have a chance to make proposals to the PTC, or representation to the PTC, to object to these increases, or to propose a reduction instead? Sir, I would like to argue that a more equitable basis to determine bus and MRT fare adjustments should take into account the performance of the overall economy as well. Even if CPI goes up, which may be possible even in a recession, fare increases may still not be justifiable if the overall economy and companies, in general, are not doing well. This is, in fact, the situation we are in right now. Indeed, if the economic performance had been taken into account, the PTC might have taken a different view and its decision might have been different. Perhaps we should consider introducing some competition. Singapore Airlines reacted very quickly to the changes in industry by initiating fare cuts to maintain its market share. They need to do this because of international competition. PSA also finally acknowledged the threat from competition and decided to reduce its fares. But there is no competition in bus transport or MRT. When we raised the ERP, commuters can choose not to drive and take the bus instead. But when we raised bus and MRT fares, our commuters do not have the alternatives. I would like to urge the Government to consider allowing some form of competition. Sir, the second issue is regarding the timing of the increase. The absolute dollar amount of the increase may not be as much an issue as the timing of the increase. PTC should be applauded for its efforts in deferring fare increases in previous years in view of the difficult economic environment then. The economy has not fully recovered. In fact, it has somewhat worsened, especially in the employment situation. Many people have lost their jobs. More have taken a pay cut to save their jobs. With reduced income, our people would be very wary of cost increases, especially in the essential services. Sir, we are like sailing through a storm in a boat, faced with economic difficulties. Yet, in the middle of the storm, the passengers were asked to top up their fares. So, the question is: is it the right time to ask them to top up their fares? As a result, many have wondered why the PTC could not have deferred the increase for, say, another six to nine months, when the outlook will be a little bit clearer. Alternatively, PTC could approve the increase but defer the implementation to next year. This way, commuters would also have more time to prepare for the increases and they would probably accept PTC's decision more readily, knowing that PTC has taken the current economic and employment situation into account. Thirdly, our people are fearful of what else is there to come. First, the Government increased the ERP, citing its objective and intention to curb usage of private cars and to encourage the use of public transport. Then, we increased the public transport fares, apparently in contradiction to the Government's policy. In between, there were increases in HDB carpark charges, electricity rates and others. I understand that SingTel has also submitted application to increase its fixed line charges. With almost monthly announcements of rate hikes in one form or another, residents have become very wary of more such increases to come. They come away with a strong sense of frustration. Over time, the frustration will turn into desperation, and desperation will turn into anger and disappointment. I would like to urge the Government to assure the people that it will critically scrutinise future increases in Government-related rates and fees and that, unless absolutely necessary, fee adjustments would be deferred until the economy recovers strongly. I would also like to urge the Government to disclose early impending fee hikes, if any, and to give more time before implementation, so that our people would have sufficient time to make their own plans or adjustments. It does not help to keep proposed fee hikes under wraps and spring a surprise on our own residents. Mr Speaker, Sir, we understand that the PTC has a tough and thankless job. But its decisions will affect the entire population, some more than others. In fact, the lower income families will be affected more than those who own cars. It is, therefore, important for the PTC to take into account not just the CPI but all relevant factors, such as the economy and the employment situation, before arriving at its decisions. It should also be more transparent in its decision making process, so that our people can be assured that their interests are being taken into account. The Government has been fearful of bending to public pressure and of adopting populist policies. But this is probably not an issue of whether the fare increases are popular or not. The issue is obvious: we are debating whether the approach is appropriate and the increases are timely. We are all talking about remaking Singapore now. So, let us acknowledge that perhaps the process of the fare hikes could have been better handled, and let us work together to improve the process. I believe that, this way, we will then be able to continue to enjoy the confidence, the endorsement and the commitment of our people.

Mr Speaker, Sir, let me state at the outset that, like many of my colleagues before me, I believe, on the whole, Singapore operates a fairly efficient and effective transport system. In general, despite occasional hitches and some desired service improvements, such as in the case of the LRT, buses and the mass rapid transit are comfortable, on time and carry commuters to their destinations without much fuss. But the widespread unhappiness over the fare hikes - grudgingly accepted by many commuters from 1st July onwards, for lack of other options - cannot be dismissed as simply the grumblings of a complaining and self-serving electorate. The outcry has taken place amidst a very difficult and uncertain economic situation, a slew of pronouncements on fee increases and fears - repeatedly acknowledged by the Government - of mounting job losses. Even analysts, who are normally guided by hard numbers and cold rationale, were puzzled over the fare hikes, as both SBS and SMRT have registered decent profits for last year when the economy was in recession. Ironically, this has also come at a time when civil servants are reminded by their chief of the need to formulate policies that are reasoned, ie, appealing to the mind and reasonable, ie, appealing to the heart. Or, to quote a Chinese phrase, he qing he li which, loosely translated, means "in accordance with emotional sensibility and logical reason". It is interesting to note that in the Chinese phrase "emotional sensibility" actually precedes "logical reasoning". Without unjustly elevating the importance of this issue, I would venture to say that, in effect, there is a real danger that all the recent rhetoric of a more open, consultative and responsive government will fall on deaf ears, if we do not take heed of the emotional undertones surrounding this issue and squarely address them. Sir, although my colleagues before me have already eloquently highlighted and debated on the many reasons for the public disquiet over the recent fare hikes, I feel that as this matter affects the purse strings of some seven out of 10 Singaporeans and tugs at the emotional heartstrings and logical reasoning of even non-commuters, I am duty bound to give my take on this matter, based on feedback I have received from my residents as well as other Singaporeans who have written or spoken to me. I would like to particularly reiterate three nagging issues which, I hope, the Minister can address in order to allay public consternation over these hikes. Firstly, the timing of the fare hikes. Quite apart from any reasoned, logical argument, the fare hikes, although small, should not have been approved in such times, when economic conditions remain harsh, the unemployment rate is growing and there is, to quote DPM Lee himself, "breakneck disquieting change". A deflationary environment generally gives rise to price falls, and so the combination of higher parking charges, higher electricity tariffs, higher GST and higher public transport fares is particularly hard to swallow. Furthermore, rising costs in many industries do not naturally translate into higher prices. Ultimately, in a competitive environment, prices are set in the user market by the forces of demand and supply. For instance, as quoted by my colleague, Mr Tan Soo Khoon, the 25th June issue of Streats quoted the Chairman of the Singapore School Transport Association as saying, "The economy is so bad, how to increase fares? If parents cannot afford it, they might decide to send their children to school by other methods, and that will make it worse for us. Even if an increase is necessary, it would be better to wait until next year." Indeed, following this, the 2nd July issue of Streats further reported that the school bus fees will be raised by between $10-$40 per month, but probably from next year, when the economic storm would have most likely passed over. This begs the question: why can the public transport operators not do likewise? Granted there is, of course, never a good or right time to raise fares but, surely, the transport operators and PTC could not have picked a worse time. Indeed, many would agree that there could definitely be a better time to do so.

6.10 pm Secondly, on communication of the fare hikes. Sir, I am also somewhat concerned about the manner in which the PTC's decision on the fare hikes has been communicated, or perhaps not communicated to the commuting public. This, in my view, has exacerbated the problem and deepened the bitterness of the citizens. As one Singaporean wrote to me, it is not so much the issue of affordability that has got the normally passive "boh chap" public infuriated, but rather that it was uncompassionate and weakly justified. It went against the spirit of "he qing he li". The PTC was reported as saying that annual reviews of fare proposals are the norm so that there should be no surprises from now on, implying that the public should be prepared for annual fare increases, thus giving ex ante justification to future hikes, even before they happen. Coming at a time when the Government is earnestly re-looking at every nook and cranny on how to reduce costs, this is an especially difficult pill to swallow. Furthermore, the rationale cited for the increase is that the higher fares are meant to cover public transport service improvements and wage increases. The public, and I myself, Mr Deputy Speaker, Sir, confess that we have great difficulty coming to grips with this line of reasoning at a time when many Ministers are urging wage restraint and belt tightening. It has also been said that the bus and public transport companies need to earn a reasonable rate of return for their shareholders. What is a "reasonable" rate of return that is acceptable for public transport companies? It must be noted that the transport operators are much like monopolies for the routes they cover and, as one of the PTC's term of reference is to review applications for fare hikes taking into account the need for operators to remain financially viable, it would appear that the financial viability of the operators is virtually guaranteed. This being the case, the risk to the operators is low and, thus, the expected rate of return to the operators should also correspondingly reflect this low risk. Minister Yeo cited the practically default risk-free Government bond rate, and concluded that the 6% return that SMRT was expected to earn after the fare hike was "reasonable". Accepting the fact that listed companies need to show a reasonable rate of return and profit figures, it is conceivable that, like all business entities, these profit figures and, thus, the rate of return, would fluctuate over time. In fact, many private companies are losing money or just breaking even, under current adverse economic conditions. Hence, in such times, it is only reasonable that transport operators should not expect their desired rate of return or the level of profit to be maintained. Therein lies the public's alarm over the justification that has been given - that public transport operators need to make a reasonable rate of return, as if maintaining their rate of return or level of profit is a birthright. It can, of course, be argued that public interest is not safeguarded if listed transport companies operate at a loss, since service standards will plummet and these companies, to protect their shareholders, will cut corners. While this may be true in the long term, it is hard to accept this in the short term when the transport companies are still showing healthy profits and when the rest of Singapore Inc. are reeling from the effects of recession. Sir, I would like to ask the Minister if the public transport companies have proven to the PTC that they will be in the red in the next six to 12 months, if fares are not increased? If so, what are the compelling reasons and information that had been offered in support of their claim? Even accepting the rationale that small regular hikes are better than big jumps, have the transport operators shown the PTC that if the hikes were deferred for, say, a year, there would be a need for increases that would be so astronomical as to be clearly unpalatable to commuters? If so, what is the magnitude of increases they are forecasting? Thirdly, I would like to highlight the issue on the role of the PTC. Like many of my colleagues before me, we feel that central to this whole debate about the fare hikes is the role of the PTC, which has come under the spotlight. In the present scheme of things, the PTC is the watchdog to ensure that the increases in fares are not excessive. The recent episode, however, does raise some questions as to what exactly PTC does in discharging its duties as a final arbiter in the pricing of public transport fares. What exactly is the PTC's role? The Public Transport Council Act states that the PTC fulfills several functions, one of which is to review any application by public transport companies to revise fares. Section 24 of the Act specifically states that in carrying out this review role, the PTC must take into account two factors, namely, the need for the applicant to remain financially viable and the need for public interest to be safeguarded. The Act does not spell out in what manner these two somewhat conflicting objectives are to be balanced. Presumably, that becomes an administrative choice for the PTC to make, having regard to the circumstances. There is currently quite a widespread public perception that the scales have tilted in favour of the former, perhaps at the expense of the latter. Another aspect of the PTC's role, which has come under scrutiny, is the formula employed to cap any approved increases in transport fare, CPI + X%. We are told that they rely on the formula of CPI + x% as a capping for the fare hike in any one year. X, we are also told, takes into account service improvements and is pegged at 1.5% per annum from 2001 to 2005. How is this 1.5% determined? Given the formula, how does the PTC evaluate the case for fare hikes and how does it finally decide on the actual quantum of increases? What factors does it really consider? Is this in the interest of the shareholders or the interest of the commuting public? How does the PTC ensure that all relevant factors, including the state of the economy and the employment situation are adequately and appropriately taken into account? Furthermore, what is the nature of X? How does it account for service improvements? And by what measures are these service improvements determined? And whose measure is it, the transport companies or the commuting public? These are some questions that arise as one looks. Yet, another aspect is the composition of the PTC. An examination of the present composition reveals that the majority of the members comprise professionals, academics and Government officials, many of whom, it would be fair to say, do not take public transport. The composition could thus be changed or widened to include more union members and grassroots leaders who are more attuned to the needs of the public transport users and thus can give better feedback regarding public transport service, reliability and ground sentiments. All said, Mr Deputy Speaker, Sir, I think the Public Transport Council should be public enough for its deliberations and decisions to be made more transparent. After all, the PTC Act states that every member, officer and employee of the Council shall be deemed to be public servants. It would therefore not be too much to ask the PTC to solicit as much feedback as possible, especially from commuters and those that can appropriately represent them before any decision on fare hikes is made. Additionally, the PTC must list and explain in greater detail the factors it considers when deciding on such changes. In order for the decision to go down well with the public, it must be reasoned and reasonable. Surely, the public interest is served by doing so. Ultimately, because our system is a monopoly, the real answer must lie in the controlled introduction of a competitive element that acts as check and balance price increases and the degree to which the so-called service improvements are truly what the consumers desire. A watchdog can only do so much. It is noted that the Minister for Transport has already indicated that the Government is prepared to allow additional players to operate feeder services in HDB towns on a trial basis. Sir, I would like to urge the Government to implement this as soon as possible to inject more competition, provide commuters some choice and also establish additional pricing benchmarks. Sir, in conclusion, I would like to urge this Government to re-look at our public transport policy and make changes, such as to the mechanism for fare increases so that equity, as much as efficiency, will characterise our approach to the electorate. With regard to this current unfortunate increase in public transport fares, I appeal to the Government to prove the cynics wrong by taking concrete steps to show that it has listened to the people and taken heed of their concerns and frustrations. I would urge the Government, at the minimum, to look at ways to mitigate the impact of the recent fare hikes, particularly on Singaporeans who cannot afford the fare increases, such as the unemployed and the poor. Sir, I beg to support the motion.

(In Mandarin): Mr Deputy Speaker, I support the Motion standing in the name of Mr Tan Soo Khoon. Our recession has not fully recovered. Many ordinary citizens are faced with the predicament of wage-cut or retrenchment and, all of a sudden, the Public Transport Council announced that it had agreed with the public transport operators' request to increase the bus and MRT fares. The reason given for the fare hike was that the profit was not enough for the operators. At this time of difficulty, increasing the fares of the bus and MRT is adding more problems to our citizens. On top of that, there were various increases, for example, refuse charges, electricity tariffs, etc. So, people cannot help but ask why has the Government not taken into consideration the problems in this time of recession. The Government should be more sensitive in dealing with all future price increases. With this recent increase in bus and MRT fares, on the surface, it is just an increase of three cents per trip. But, taking a conservative number of three million passenger-trips per day, there is an additional $24 million of profit after tax for the operators. What is the implication of this? Now, the public transport company's net profit is about $100 million. This three-cent adjustment would have generated an additional 24% increase in the after-tax profit for the public transport operators. As it is, the public transport operators are already making profits, the 24% increase would push the profits to an unbelievable high figure. Why do I say that? From the annual report of the SBS bus company, we could see the net tangible asset per share has increased by 10 cents every year, from 30 cents in 1997 to 60 cents in 2000. It meant an average growth of 25% in the NTA every year. The same was also reflected in the annual net profit after tax from 1998, 1999 and 2000. The after-tax profit is more than 20% of its net assets. These public transport operators have earned more than 20% in profit from our commuters, and yet they feel that this was not enough. They want to increase another 24% in their profit through this fare increase. If they do this now, it is very insensitive and many people are already saying that these public transport companies are too greedy. The bus companies are earning more than 20% of profit. Is it reasonable? This is a very interesting question. As we all know, in all investments if the risk is greater, the return must be higher; otherwise, the investors would have lost everything if anything goes wrong. But for those investments with little or no risk, should the return on investment be as good as those with a high risk? This is something that the PTC should look into. As we all know, if we want to invest conservatively in a safe and secure environment, we can always put our money in fixed deposits or buy some securities or bonds. We can only earn about 5-6% in returns. But let us look at the public transport operators' investments. There are a few characteristics. First, in Singapore, there are two monopolised territories for these two companies to operate. Sir, the citizens have no choice. They have to take the bus services provided by these two operators. There is definitely no competition in the market and through TransitLink, Government had restructured all those unprofitable routes to cut loss and, of course, their profits would go up. For those bus routes which are not so profitable, they can use other means. For example, they would ask the PTC to make some fare adjustments so that their profits could be secured. This is a sure-win investment for the public transport companies. The risk is almost zero. In a risk-free investment, yet they are making profits of more than 20%. In my personal view, their profit is much too high. I hope that the Government could look squarely into this matter. Do not allow these public transport operators which are operating on a monopoly and with no risk any more protection to secure hefty profits. We should alleviate the burden of the commuters. This present round of price hike is wrong, in timing and in magnitude. I think the PTC should look seriously into this matter. They should not side the operators at the expense of our commuters. I think they should look after the interest of the commuters first, the ordinary citizens of Singapore.

Mr Deputy Speaker, Sir, I was a member of the Cost Review Committee. It was convened twice in 1993 and 1996. At that time, people were very unhappy about the cost of living. In 1996, people were concerned about transport cost. At the same time, they were concerned about other costs - medical treatment, housing, education. The Cost Review Committee also looked at the plight of the poor and the elderly. It also studied household debts and warned against over-consumption in housing. The impact of GST was also examined. The reports of the Cost Review Committee are still worth reading. Perhaps the relevant Ministries can update the information. This would tell us whether costs have gone up unreasonably and whether anything needs to be done. A study of the old reports would also tell us the basic components in the cost of different services. I think it would be good for all Singaporeans to understand these bread and butter issues. Sir, people are unhappy today because they are worried. Business in the HDB heartlands is still poor. Workers are worried about jobs. Wages have been trimmed. So, of course, they worry when prices go up. And public transport cost is a big item of expenditure. They have to spend on transport every day. So, when fares go up, they get very upset. They worry more about whether they can cope. Worse still, what if they lose their jobs? The feedback I got is not that they object to fare increase. They know that fellow workers in public transport also have to earn a living. What people are unhappy about is the timing. Is the fare increase reasonable? Sir, the Cost Review Committee recommended that fare increases be made in small steps so that people can cope. Last year, for those who paid cash, feeder bus fares, ie, airconditioned buses, went up by a big jump, from 60 cents to 70 cents. That rankles, and it still rankles. Now, it goes up another 10 cents, together with other fare adjustments. The story is the same for non-airconditioned buses. It went up from 50 cents to 60 cents, and now to 70 cents. Those who use the ez-link card can now pay 58 cents for non-air-conditioned buses and 63 cents for airconditioned buses. After one week, most commuters find the change not so significant, but there are others who do. The feeder bus fare is still high in their view, especially for short distances. I think the problem is not whether the fare increase is large or small. It is how it is implemented. Why the hefty jump in feeder fares? Hardest hit are the housewives and retirees. Why not small steps? I cannot understand why the old fare card cannot allow increases of less than 5 cents. If there was a software or hardware problem, why was it not fixed earlier? Now, there is the ez-link card. It is new. Surely, the public transport operators must expect teething problems in implementation. If so, was it wise to raise fares at the same time? Do they know that those who do not use cards are the poorest Singaporeans? They cannot afford it. They do odd jobs, and so they do not have enough money to store in the card, or they are afraid to use it, especially the old. So they use cash. The fare increase is highest for those who pay cash. So those who cannot afford it are the ones who pay most. Should not the public transport operators do something for them? The basic issue seems to be not so much whether fares can go up, but the timing. How it is done, and whether public transport operators understand their customers? Maybe it will help if the public transport operators appoint one or two laymen, people who can understand their customers, on the Board of Directors. Maybe it will also help if there is more than just one unionist on the Public Transport Council to provide a stronger voice for the working class.

(In Mandarin): Mr Deputy Speaker, Sir, when someone mentions 9-11, we know he is referring to the tragedy that happened to the World Trade Centre in New York, an event that shocked the whole world. In Singapore, an announcement by the Public Transport Council (PTC) on 11th June created a storm in Singapore, and the general public here responded almost immediately with unhappiness, to a magnitude rarely heard of in the past. I shall call it the "6-11" event. The people, in general, commented that what should not have gone up, have gone up, but those that should have gone up, do not go up. In a time of economic downturn, the various charges - tariffs, fees, prices, bus fares, parking, ERP etc, - ought to have gone down to alleviate the burden of the people, but they have gone up instead! Other things such as wages, share market, etc, should have gone up, but they tumbled down. This "6-11" event has brought about a big debate in the media and at the coffee shops. As to the media debate, generally, we see all sorts of topics discussed and debated in the various language newspapers. But since 6-11, we read nothing but complaints and arguments against the bus and MRT fare hikes. We have read the reply of the Prime Minister, the Minister for Transport and other leaders. As mentioned by some Members of Parliament who have spoken before me, members of the public were asked whether they had read and understood these explanations. More often than not, they would reply that they had not because the speeches were complicated or too lengthy. Those who had the time to read these speeches did not understand them. Those who could understand them did not read them. This is what the Hokkiens would say, khua bo (see no), and bo khua (no see). The general feeling, as reflected in the media, is that the Government has its reasons but it cannot explain it clearly to the people. In the coffee shops, we hear people complaining that the Government has not been fair to them. They said, "The Government says business cost is high. To save the companies and our jobs, they cut our wages. They compare our wages to those in China. Then, when Government says our bus fares are cheap and affordable, they compare them to those in the United States and Europe. Why does the Government not compare our bus fares with China and Vietnam, and our wages with Europe and USA instead? You cannot compare our durian with the lychee in China, and our pineapple with the grapes in the USA. Let us compare apple with apple, or orange with orange." After "6-11", whether it is in the public media or in the coffee shops, the general feeling is unfavourable to the Government. While the Government has the reasons but cannot explain them, the people have their grievances and who is going to listen to them. We have so many Members taking part in this debate on the Motion. I am joining in not just to add a number. I also have something to say. I had taken public buses during my school days. To get home from school, I had to take two buses. Very often, in order to save 5 cents, I would walk all the way from Tuan Mong School in Tank Road, took a short-cut and cut across Fort Canning Hill to take a bus along Dhoby Ghaut to get home. This was to save one bus-trip from Tank Road to Dhoby Ghaut. On one occasion, I was robbed of my wrist-watch when I was walking across King George V Park. My father bought me another watch. It was subsequently that I learnt that he had to borrow money to buy me the watch, as he realised the importance of keeping time. So, I empathise with the poor people. I know and could appreciate that to the poor people, 5 cents is not a small matter. To them, every cent counts. Of course, time has changed. I was a Director of SBS for three years. I subsequently resigned to avoid a conflict of interest. During those three years, I had the opportunity to learn and understand the operation of the SBS. At one of the shareholders' meetings, a shareholder asked, "I have been buying your shares, why are your share prices not going up? What have you people been doing? I am an old man. Why is it that you never give concessions to the senior citizens? Why is your dividend so little?" These three questions are easy to answer. You want your share prices to go up, you must make more money. When you make more money, you can then give more dividends. When you want to make more money, you cannot afford to give concessions to the senior citizens or even the shareholders. You have the answer, but it hurts the feelings of people. I know the difficulties of the bus operators. Even now, I occasionally travel by public buses. People have asked me, "You are a Member of Parliament, why are you taking public buses?" I do so to have a first-hand feel of the bus commuters. I have a better understanding of the behaviour of the commuters and their expectations. I realise that our bus services have changed, but there are certain aspects which remain unchanged. Mr Khaw Boon Wan said that there were some misconceptions over the grounds for this round of fare hike, and he mentioned the four pillars of the public bus services. I agree with his views. Mr Deputy Speaker, Sir, in this debate on the Motion before the House, there is no question of who wins or who loses. At the end of the day, all of us in this House, and the people outside this House, will have a better understanding of the rationale and background of the decision-making process. I say after the debate, we will be clearer about the reasons and Singapore can progress. To complement SMS Khaw Boon Wan's four misconceptions and four pillars, let me present my four views. First, the Government must know the background of the people they talk to. The feedback is that the Ministers' speeches are long, and the Ministries' press releases too technical and too academic - too many statistics, too many figures. People do not understand. When they do not understand, there will be misunderstanding. Ministers and senior civil servants must know who are the people they are talking to. Speak the language they understand, so to speak. We must tailor our text to suit the audience. Secondly, check the timing whenever you want to increase fees. We are not against fare increases but please, pick the right time to implement them. This time round, we see and hear price increases, one after another, and sometimes everyone is rushing to increase the fees, and at this time of recession too! So, when we want to up the prices, we must look at the timing. The timing must be good. Thirdly, we must see long term. Both the people and the Government must always bear in mind the long-term implications of all changes. Just now, former Speaker Mr Tan Soo Khoon said that people were remarking that all these price increases were carried out only after the General Election. If we are not careful, one of these days, the PAP may just disappear, and it will be a very sad day indeed. So, do we want the PAP Government to disappear just because of this fare increase? One must look at the long term. Finally, I hope that the enterprises, the Government and the people will look at the big picture. Our region is in trouble. We are in for uncertainty. Everybody must look at the big picture. This is very important. In short, my four views are, first, the Ministers and senior civil servants must know their target audience when they speak. Secondly, when we increase prices, we must watch the timing. Thirdly, when we do things, all must look at the long-term implications; and, fourthly, everybody must look at the big picture. SMS Khaw Boon Wan talked about a woman who chose to walk instead of taking a feeder bus. Let me tell a little joke to conclude my speech. When the fares for feeder bus went up last year, some people remarked that instead of taking the feeder bus, why do you not chase after them instead of riding in it. This way, you keep fit and, at the same time, save on the bus fares. That being the case, why chase the feeder bus? Why do you not chase the taxis instead? This way, you save more!

Resolved, That the debate be now adjourned. - [Mr Mah Bow Tan].

Mr Tan, debate to be resumed on what day?

Tomorrow, Sir.

So be it.

Resolved, That Parliament do now adjourn. - [Mr Mah Bow Tan]. Adjourned accordingly at Twenty minutes to Seven o'clock pm.