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For change to work, LTA must understand bus operations better than operators do

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The recent announcement that Singapore's public bus transport was going to be overhauled brought my mind back to the last time such a major change was attempted.
It was 1984 and I was in the then Ministry of Communications, in a room outside the office of the Permanent Secretary.
With me, waiting to see the boss, was the man who was about to change the face of public transport here.
He had responded to the call to inject competition into the bus service - then monopolised by Singapore Bus Service (SBS).
When I asked him how he felt about the undertaking, he stuck out his tongue and smiled.
Before he could elaborate, the door opened and we were both ushered into the meeting.
To this day, I am not sure what to make of his response.
Was he wary of taking on the mighty SBS, or relishing the new challenge?
Whatever it was, Trans-Island Bus Services (Tibs) soon started operation, and thus began Singapore's experiment with two bus operators.
It was a period in Singapore's history when competition became the new mantra to bring about better and more responsive service.
In telecoms, StarHub and M1 were started to take on SingTel.
Even Singapore Press Holdings caught the competition bug, starting a short-lived TV business to take on MediaCorp.
But it was all done Singapore-style - carefully managed with none of the free-for-all that characterised markets elsewhere.
Perhaps no other service exemplified this better than public bus transport, with the market now split between two big players, SBS and SMRT (which bought Tibs).
So, what went wrong with this two-operator model?
You are likely to get different answers depending on who you ask.
Speak to the operators and they will complain about their inability to raise fares to cover their revenues, especially their bus operations.
This, they argue, affected service levels because insufficient revenue means less investments in buses and drivers to keep up with rising demand and expectations.
For commuters though, the story couldn't be more different.
They see two profitable publicly listed companies more intent on pleasing their shareholders than commuters.
In the case of SMRT under its previous management, they saw a company more focused on its retail property business than its public transport obligations.
So, is the recently announced overhaul of the system, with the Government owning the assets and outsourcing operations to outside parties, the solution?
Perhaps it is, though it isn't the right question to ask because there isn't one right solution for public transport.
Around the world you will see many different arrangements working, with varying degrees of success.
A nationalised system can work as well as one operated through the free market, or one based on a contracting system with many players.
What's more important is to be clear what conditions are necessary for any one arrangement to work, and then to make sure those conditions prevail.
So, what will make a contracting system work?
I can cite at least three factors.
First, it is critical that the Land Transport Authority (LTA) be a strong regulator and planner with the expertise and professionalism to do its job.
It requires the LTA to have a deep understanding of the travelling pattern of commuters to a greater degree than currently, so that it can work out how to meet the demand as efficiently and effectively as possible.
This is a big and complicated job, and to do it well, the LTA will have to understand bus operations even better than the operators do.
Regulators are usually at a disadvantage compared with those running the business because a great deal of the knowledge comes from operating the system and solving problems along the way.
But for the contracting model to work, the LTA will have to do better.
It will have its work cut out for it.
The second important condition is to ensure the well-being and professionalism of workers in the bus companies, especially bus drivers.
What we must guard against is a repeat of what happened to the cleaning industry when companies started to outsource the work.
The result was that the wages of cleaners suffered because, in trying to win the contracts, cleaning companies bid ever lower prices.
And if they failed to extend the contract at the next tender, these workers were laid off, or ended up working for a different winning bidder sometimes at even lower wages.
No one bothered to improve the skill of cleaners; they were interested only in lowering costs.
Things are much better now with the introduction of the progressive wage model, but the experience showed how workers on the lowest rung of the ladder end up with the worst deal.
How to ensure the same thing does not happen to bus drivers?
This is a critical issue because, no matter how new the buses, or how well-planned the routes, a pleasant and reliable bus service depends on committed and well-trained drivers.
Their interest and well-being need to be taken care of in the new model.

Finally, the success of this change depends on Singaporeans agreeing how much bus services need to be subsidised.
It is a sign of how the thinking has changed, that the question being posed is not whether it should be but by how much.
Indeed, the Government is already subsiding bus operations substantially with the $1.1 billion bus plan.
But it couldn't continue pumping money indefinitely in the present set-up, not when the two operators are publicly-listed companies which channel a large part of their earnings to their own shareholders.
In the new model, government subsidies will raise fewer objections because the state now owns all the assets.
But the issue still remains: How much subsidy?
This question cannot be left unanswered and determined from year to year depending on how much shortfall there is.
At some point, the Government has to decide what the level should be, and peg fares accordingly.
It would be another sticking-the-tongue-out moment.

by Han Fook Kwang, Editor at Large

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