Bus Contracting Model - Two comments

Two transport experts welcome the new bus contracting model and suggest improvements.

Jun 04, 2014

PTC has to set expectations right

By Park Byung Joon For The Straits Times

AS A long-time advocate of the implementation of a full operating subsidy model for the public bus services in Singapore, I was delighted to read that the Government is moving to a bus-contracting model.

Under this model, the Government takes over the ownership of buses and assets, and contracts the running of bus routes to private bus operators for a fee. Fare revenue goes to the Government.

This is different from the current public transport model where the Government pays for and provides the infrastructure, such as railways and bus depots. The Government thus subsidises capital spending in public transport, especially for the MRT train system.

But these assets are held by the public transport operator, which has to pay operating expenses and the cost of depreciation for trains and buses. The operator recoups these in the form of fare revenue. In this way, it is ultimately the commuting public that pays these costs.

But commuters could expect only a level of service that the fare revenue could pay for. It has become increasingly obvious that the public demands a higher level of service than what is available with the current fare levels.

The concept of public transport has also evolved. No longer regarded simply as a service for people who do not own private vehicles, public transportation is also vital for the nation's economy and social integration. Once this latter concept is accepted, the idea that the Government should fund public transport whenever necessary should be embraced.

There are many ways that taxpayers' money can be used. One is to simply inject public money into private operators and hope, or pray, that they will spend the money wisely.

Another way is to nationalise public transport. In this model, the Government does not just own infrastructure and assets. It also takes on the responsibility of operating public transport on a daily basis.

Among the models available to policymakers, I believe the full operating subsidy model - known in Singapore as the government contracting model - is the best approach.

Under a nationalised public transport scheme, the Government must prepare daily operation plans, maintenance schedules, the recruitment of bus drivers and so on.

Some criticise this model on the grounds that it leads to the undesirable intrusion of Big Government. An equally important issue, perhaps, is whether it is practicable. It is always better if the relevant minister does not have to worry about whether there are enough bus drivers to run the system on a daily basis.

Under the government contracting model, however, the Government only needs to set the desired service level for the bus service and to evaluate the chosen operator based on the pre-specified quality standard. The details of running bus services will be the responsibility of the operator which offers the best price for delivering the service level specified by the Government.

If we believe in the power of the free market, we can be reasonably confident that competition among operators from all over the world will give the Government, and eventually Singaporean taxpayers, the best service and best price (or at least, something very close to it).

At the same time, however, it is important that local officials have the tools necessary to ensure that the system works smoothly.

The role of the Public Transport Council (PTC) may need to be expanded beyond setting fares. After all, the service level required of bus operators will be higher than what can be afforded by fare revenue alone. The difference between the two will have to be borne by the Government.

If commuters pay lower fares, taxpayers will have to pay more to cover higher public subsidies. Through the fare adjustment exercise, the PTC will determine the portions recovered via fare revenue and taxpayers' top-up.

A fundamental truth in life is that we get what we pay for. The bill that taxpayers have to pick up could be huge. There must therefore be a mechanism by which a consensus can be reached on the desired level of service and how it will be financed.

In addition to the fare adjustment exercise, the PTC may have to take on the vital role of striking a balance between the desired service level and the price people have to pay.
The writer is head of the master's programme in urban transport management at SIM University.


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Regulatory role needs separation

By Bruno Wildermuth For The Straits Times


IN THE past, the Land Transport Authority (LTA) had failed to properly separate the regulatory function from its other functions, such as building the rail systems.

Instead, it had often held the operators responsible for faults that were clearly the result of poor quality control during construction and a clear lack of stringent acceptance-testing procedures.

With the new bus-contracting model, a good way to separate the two functions will be to have the regulatory function assigned to another, independent entity, such as the Ministry of Transport.

One missing feature that can be incorporated into the bus-contracting model is published and strictly adhered-to timetables for the bus services.

All major cities in the world operate bus services on published timetables. This requires that 100 per cent of the services be performed.

Currently, the LTA lets operators get away with performing only 96 per cent of the scheduled trips without a penalty.

As a result, operators do not have any standby drivers in case one of the scheduled drivers reports sick or otherwise fails to show up. Instead, the scheduled frequency is then adjusted for the reduced number of buses operated.

In order to properly monitor timetable adherence, timing stops need to be identified and strictly monitored.

This can be done with the analysis of the ez-link database and does not require any costly, high-technology systems.

Examples of this approach can readily be found in Australian cities visited by the Ministry of Transport.

The MRT was originally designed to provide basic service for the heavy movements in major corridors where rail service is far more efficient than bus services. To that extent, even improved bus services will not be able to replace the MRT.

Unfortunately, the lack of proper attention by the LTA to the upgrading needs of the original MRT North-South and East-West lines, such as the long overdue replacement of the outdated signalling system, have caused the MRT's current lack of adequate capacity and hence popularity.

The LTA will have to prove its capability to plan for more appropriate bus services, given that the current routes are anything but efficient and often far too long to operate reliably. The LTA needs to find the relevant talent to plan better bus services.

With the LTA planning the bus routes and presumably the required frequency of service, who will be responsible for determining a realistic and achievable timetable and hence the required number of buses?

Will it be the LTA or the bus operator bidding for the route?

This is an important issue that does not seem to have been addressed by the LTA's announced changes.

If the LTA establishes the timetable, which then turns out not to be achievable, then who will hold the LTA responsible?

If the task is to be part of the bus operator bidding for the contract, then the LTA will need to provide all the necessary data available to establish a realistic and achievable timetable. A clear indication of the process is required from LTA.

The writer, a veteran transport consultant, was closely involved in planning for the MRT in Singapore in the 1970s.