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Singapore Parliament

Higher fares will be needed in face of rising subsidies for public transport: Khaw Boon Wan

SINGAPORE Transport Minister Khaw Boon Wan said on Monday that the government is currently subsidising more than 30 per cent of public transport operations, and indicated that higher fares would be necessary to keep subsidies in check.

"Between 2016 and 2017, the total cost of running the rail network has increased by around S$270 million," Mr Khaw told Parliament.

"As the fares paid by commuters do not cover operating costs, the rail companies are operating at a loss. In the latest reported financial year, SMRT Trains incurred a loss of S$86 million. SBS Transit's train division also lost tens of millions of dollars."

Mr Sitoh Yih Pin (Potong Pasir) had sought an update on the current level of rail reliability and how such continued efforts are going to be sustained and funded.

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The increased expenditure had largely been on the back of multi-year efforts to raise rail reliability. Mr Khaw noted that the MRT network is now clocking nearly one million train-kilometres between delays - a seven-fold improvement from 2015.

He added that over the next five years, the Government expects to spend S$4.5 billion on operating subsidies. This would be on top of S$25 billion to be spent on building new lines.

Mr Khaw said until recently, Public Transport Council (PTC) fare adjustments were not implemented to the full extent of what the formula allowed.

"If we had strictly followed PTC's fare formula, the operators would have been better able to cover the costs of the intensified maintenance," he said.

He said the government will continue to operate under the current PTC formula, which is valid till 2023. "But we must have the discipline to implement the formula fully, as we adjust fares over the next four years," he said.

"In due course, the PTC will need to review the fare adjustment mechanism to reflect the increased operating cost to support the intensified maintenance, and the additional operating subsidies from the Government to the MRT system," he added.

Meanwhile, he said the government will provide operators with "a temporary enhanced maintenance grant".

THE STRAITS TIMES