Monday, July 31, 2006

Scourge of councils

Taxi Everywhere in Singapore? - has a Public Transport Council (PTC) in place of Adam Smith's Invisible Hand of the Free Markets. This is as much as an admission that Singapore's public transportation does not operate under any free market framework at all. It must take an 'authority', duly constituted by the government and empowered by Parliament, to regulate the public transport market in Singapore. Clearly, the invisible hand is too scary to 'manipulate' compared to a visible one.

Under newfound teeth due to the PTC Act of April 2006, it is now able to flex its muscles to get the public transport operators to ship up or be fined tens of thousands of dollars. On the face of it, this is good news for commuters, especially those that depend on the trains and buses everyday travelling to and from work. Surely now transport operators will be more careful that their buses and trains run on time, and that there will not be any breakdown in services - at least not as serious as the one that happened to SBS Transit's NEL subway line last Monday, 24 July 2006. Less waiting time and more predictable services will reduce the stress that workers already suffer from in the office.

But who really foots those multi-thousand dollar fines should the transport company be found wanting? You guessed right - the commuters. First, transport companies must now put in place a greater level of control and monitoring infrastructure to ensure that they do not slip up. That means more manpower, and probably more sophisticated software and hardware systems that may cost hundreds-of-thousands of dollars for a start, not counting long term maintenance costs. Second, the transport companies may have to increase redundancies (e.g. more idle buses and train cars) so that they can react and recover from emergencies quickly, as required by the PTC. Third, they will probably need to buy more insurance to buffer any huge expenses that might be imposed in the event that they do get fined, in spite of all the millions already spent. All these translates into higher operating costs which, ironically, our transport companies have often submitted to the PTC as a basis to justify increasing their fares. This is an expensive merry-go-round for consumers.

So, does penalising transport companies really benefit the commuters? I am rather doubtful. Unless disruptions to transport services is blatantly negligent, I think the PTC should just leave the transport companies alone. Singapore commuters are a rather spoilt lot. One major disruption in 4 years of NEL's operations is nothing to be alarmed about. Transport companies will take the lessons to heart and rectify the situation without prompting. To start imposing punitive fines here and there will only hurt the commuters' pockets in the long run.

While it is a good thing (in the absence of true competition and a free transport market) that the PTC now has greater powers, it should exercise its powers judiciously and not inadvertently hurt the commuters it is tasked to protect. The best and most effective power that disciplines still is free competition.

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