The subway – in Singapore, this is the one form of transportation that a large portion of our populace use to move themselves around the island everyday. Private vehicle ownership is prohibitively high, no thanks to the road/land space we don’t have. Singapore’s subway is privately operated by the Singapore Mass Rapid Transport Corporation Ltd (otherwise known as the MRT in local speak). Since it’s inception in 1987, some of the more common criticisms the MRT faces are rising fares (increasing by a couple of cents almost every year) and crowding. I shall leave the issue of “crowdedness” out because this is a matter of population and I have already addressed that in earlier posts.
My concern is there are suggestions by opposing theorists that we should dissolve the SMRT and convert our train systems into either a not-for-profit model, or have completely free services for all. Allow me to argue why these systems cannot work for a population of 5 million and a land space 600-ish square kilometers.
Problems of a zero-fare train system
If commuters don’t pay, then funding will have to come from the government – this means that taxes must be increased to foot the bill. At the end of the day, you’ll end up paying for this (and probably more also).
Let’s consider this a moment. The idea is magnanimous: Everyone travels to work on the cheap, we don’t have to worry about increasing fares (even if it’s by the cents) and the “poor” get to move around at subsidized rates. But how realistic is this proposition?
The operating costs for the SMRT amounts to some S$716 million (total operating costs, the SMRT operates buses and taxis also). Those of you who have worked in non-profit organizations before will understand how difficult it is to acquire funding for even a few million dollars for charitable projects. Here are some of the dangers that can happen in such a model:
– Realities of running into cash flow problems are too high
– Engineers, operators and safety personnel will not be paid competitive market rates, this will result in difficulty in attracting manpower
– If revenue is dependent only on advertisers, commuters and property rental, it is difficult to build a financial buffer against economic downturns, rise in cost of electricity and fuel and normal economical inflation.
– It will be difficult to expand and improve the system…something we desperately need to accommodate an increasing population. More stations, more trains, better maintenance and more staff are always required to serve the needs of a young nation with a growing commutership.
I am mildly claustrophobic, affected largely by the London Underground bombings of 2005. When I am traveling deep underground, the last thing I want are safety compromises, security breaches, technical disruptions, unknowledgeable staff/drivers, prolonged train stoppages mid-tunnel and worst of all – strikes.
The problem plaguing the London Underground has always been the shortage of funds. When that happens, the government will have to intervene with an injection of money – again, this means tax payers will end up footing the bill.
Transit is a business – it works well and efficiently because people remember that it is a business. We pay for our transport and we can trust SMRT to get the job done right and get it done safely. If it is not a business, then discipline dwindles, the organization will adopt a “this is a non-profit” attitude.
A non-profit model for our train systems is not sustainable, is unfair in even the short run and will result in more painful problems that a mere couple of cents more per ride, per year can give. (The Public Transport Council is the governing body that is in charge of keeping the SMRT in check by the way, but more on them next time)
Anyway, the profit after tax for the SMRT is S$162 million (from all SMRT businesses) for 2009. Each year, the profit realized by them has brought us from this:
All this – and our transport system is barely 2 decades old.