Ridership Demand Considerations in New Fare Adjustment Formula

9 Mr Zhulkarnain Abdul Rahim asked the Minister for Transport (a) with the replacement of Network Capacity Factor to exclude ridership in the new Fare Adjustment Formula, how will fare changes take into account lower ridership or demand; and (b) besides the Thomson-East Coast Line, whether the Capacity Adjustment Factor has considered the anticipated opening of additional stations in the Downtown Line, Circle Line and Jurong Region Line from 2025 to 2028.

The Minister for Transport (Mr S Iswaran): Mdm Deputy Speaker, my reply will also address questions by Ms Hany Soh¹ and Mr Shawn Huang which had been filed for a subsequent Sitting on the same topic.

The Public Transport Council (PTC) has released its recommendations on changes to the fare adjustment formula and mechanism to reduce volatility of fare adjustments, while ensuring fare affordability for commuters and the financial sustainability of the public transport system. The Government has accepted the PTC's recommendations. The new fare formula will be applied from this year's Fare Review Exercise, which will be carried out in the later part of this year. There will be no changes in fares until then.

The new fare formula replaces the Network Capacity Factor with the Capacity Adjustment Factor, or NCF with "C". Both measure public transport capacity, which benefits commuters through improved connectivity and faster journey times. The difference is that NCF was computed every year and factors in ridership alongside capacity – it is positive when capacity grows faster than ridership and negative when ridership grows faster than capacity.

In its first three years, the NCF ranged from 1.6% to 3.9%. But the NCF was not designed for situations such as the COVID-19 pandemic, when ridership fell sharply. As a result, NCF was suspended when it spiked to 50% in the 2021 Fare Review Exercise.

To reduce this variability, the PTC proposed "C", which is fixed for the next five years at 1.1%. This reflects both the actual and planned growth in public transport capacity from 2020 to 2026, largely arising from the opening of the Thomson-East Coast Line (TEL). Aside from TEL, "C" also takes into account short segments of the North-East, Downtown and Circle Lines which will open during this period. The Jurong Region Line is slated to open from 2027 and will only be considered in the next fare formula review.

The PTC opted to exclude ridership from "C" because of uncertainties in ridership recovery over the next few years, with changing commuting patterns and flexible work arrangements. While ridership at the system level is at about 90% of pre-COVID-19 levels, the recovery has been uneven. For example, journeys to the Downtown Core are still at about 70% of pre-COVID-19 levels and ridership could be considered in subsequent fare formula reviews when ridership fully recovers. In the meantime, fixing "C" at 1.1% for the next five years will reduce potential variability in fares arising from the uncertain recovery of ridership.

Whatever the formula, the Government remains committed to keeping fares affordable. And that is why on top of fully funding the public transport infrastructure, we subsidise public transport operations at more than $2 billion every year or, as I have said just yesterday, more than $1 for every public transport journey. As a result, households now spend a smaller share of their income on public transport compared to a decade ago.

In addition to the broad-based subsidy that all commuters enjoy, more than two million commuters – one in two Singaporeans – including students, seniors, persons with disabilities (PwDs) and lower-wage workers pay concessionary fares which are up to 70% lower than adult fares. And these groups either receive their concession cards automatically or are invited to apply for them.

Monthly passes can help heavy users cap their public transport expenditure. For example, seniors can purchase a monthly concession pass for $64 to enjoy unlimited journeys on buses and trains for about $2 per day. Concession card holders can purchase a monthly pass at mass rapid transit stations and bus interchanges or through the SimplyGo mobile app or website if they have upgraded their cards. Singaporean and Permanent Resident adults can similarly enjoy unlimited journeys by applying for an identifiable card and purchasing a monthly pass through the same means.

The PTC had suggested that more could be done to raise awareness of these passes and prompt heavy public transport users who benefit from such passes to do so. The Government will look into how to support this suggestion.

Finally, when fares increase, the Government makes available Public Transport Vouchers (PTVs) to eligible households to help defray their higher public transport expenditure. Arising from the fare adjustment last year, 600,000 PTVs with a value of $30 are available for resident households with monthly household income per person of not more than $1,600. The 240,000 households that received a PTV from the previous exercise, and continue to meet the eligibility criteria, have automatically received their PTVs via post. Other eligible households can apply online or at the community centres. Those not eligible can also appeal online or at community centres. This information is publicised via posters in buses and public transport nodes. And I seek Members' assistance to inform your residents as well, so that more can benefit from these schemes.

Mdm Deputy Speaker: Mr Zhulkarnain.

Mr Zhulkarnain Abdul Rahim (Chua Chu Kang): Thank you, Madam. Firstly, I thank the Minister for the clarifications. I also wish to thank the members of the PTC led by Mdm Chairperson, our Nominated Member of Parliament, hon Ms Janet Ang. I thank the work that they have done to make sure that the fares remain fair and equitable for all.

My supplementary question is: given the connectivity plans for the future lines and the projected increase in ridership, does the Ministry foresee that the current transport subsidy assistance schemes available will be tweaked further? For instance, increasing the PTVs or maybe have a more calibrated approach to the PTVs, as I had suggested in one of my Parliamentary Questions – for instance, for those who do not qualify strictly for the PTVs, maybe a smaller quantum of less than $30 be provided to cushion the impact of any projected increment.

Mr S Iswaran: Mdm Deputy Speaker, I thank the Member for his questions. His first point, his essential point is whether transport subsidies – and I think by this he means specifically for commuters – will be increased, given that we are increasing the scale. So, if I may, as a starting point, reiterate that in the provision of public transport in Singapore, our aspiration has always been to raise the quality and accessibility. At the same time, to make sure that it is affordable for Singaporeans and also ensure the long-term financial sustainability of the provision. This is essentially the triangulation that the PTC seeks to achieve through its recommendations and the Government seeks to attain through the implementation of various policy measures.

Having said that, in terms of the level of subsidy that we accord public transport, it is at different levels. The first and at the systemic level is what we do for buses and trains. And I have said this before, today we provide about a billion dollars each for buses and trains by way of subsidy from the Government. I would add that any fare increase that is not implemented is also rolled over and that adds to the subsidy and/or the support that is accorded public transport from the Government, the public purse. So, because we deferred a significant portion of the fare increase last year, we now have another $200 million of subsidies – a fare deferral consequence. That is at the system level.

Secondly, we have provisions for targeted assistance and that was what I was elaborating on earlier. Whether it is concession fares, where there is the normal adult fare, and then those who hold concession cards can pay at a reduced rate. And also, there are the cards that you buy per month, the season passes if you like, which as I have explained, for example, it is at $64 for senior citizens at this point, which is approximately $2 a day for unlimited travel. So, we do that for seniors, for PwDs, for lower-income workers, for students and so on.

And then, finally, when there is a fare adjustment made – in other words a fare increase – in tandem with that, we typically implement PTVs or issue them especially to help those who are in the more vulnerable brackets, and that is what we did in the last exercise.

To the Member's question on whether there is scope to increase or enhance the support that is accorded, I think that is an area that we continue to work on across all three levels. So, whether it is in terms of the systemic support through subsidies, through the targeted support that we do through concession fares and so on, and also through specific moves in tandem with any fare adjustment through PTVs. And we are continuing to see how we can improve this to better meet the needs of specific groups of commuters.

Mdm Deputy Speaker: Ms Hany Soh.

Ms Hany Soh (Marsiling-Yew Tee): Thank you, Madam. And I thank the Minister for his reply. I have one supplementary question and one suggestion.

The supplementary question is in relation to whether the Ministry has been tracking the redemption rates of the concessions, our monthly passes and the PTVs respectively? Are we beginning to see an uptick trend in terms of these applications and approvals, from pre-COVID-19 to post-COVID-19 period?

And the other point, in relation to the suggestion to increase awareness and provide more help, is whether we can explore to train the relevant staff at the respective train stations, where members of the public or commuters applying for the concession passes can also enquire about the availability and application of the PTVs?

Mr S Iswaran: Madam, I thank the Member for her question and suggestion. Whether we track for concessions, basically, this is a function of how much the concession card holder uses, whether it is for a train or a bus, because every time they use it, they will tap and get that discounted fare – that is the concession card formulation.

I do not have a precise number, but I think ex ante, as I have said, our public transport ridership is still recovering from the COVID-19 pandemic. We are now about 90% of the pre-pandemic level and it also is a quite variegated outcome. Because when you look at the Downtown Core, the recovery is lower. But when you look at some of the heartland areas and the industrial areas, it is much stronger. I think it is a reflection of changing habits and work-from-home, and so on. So, we need to see how this thing pans out.

But specifically, then, what it means is we think the usage patterns amongst some of the specific groups, like seniors and so on, has recovered in tandem with this overall rise. And I would be happy to give a more specific response if the Member wants to file something more precise on that.

Then, on the issue of take-up rates of the PTVs, as I said, they work in different tranches. One tranche is when we just send it out by post to all those who were previously eligible and continue to be eligible; and they get it automatically. Then, there is the second tranche where they can apply and the application can go through the website and also to the community centre and so on. And then, the third tranche is when they make appeals and so on.

Our take-up rates, I know that they are quite significant. We were quite generous in providing for PTVs in the last round – 600,000. And the reason was because of the combination of both the fare increase and the economic circumstances. It is not fully taken up, but I know that more than half, or quite a significant proportion, has been taken up, or in that order of magnitude.

The key point is we are ready to help not just as a first cut, but also where there are instances where additional help is needed, we are happy to look into this and render the necessary support.

On the point about staff being well trained, I agree with the Member fully. That is why we do emphasise this. It is not just about how you can access concession fares or PTVs and so on. That is one important element. It is also about things like inclusivity, rendering assistance to those who may have difficulties moving around, information on wayfinding and so on, because these things are important complements to what we already do through the infrastructure. So, the Member's point is well taken, and this is an ongoing effort to improve the frontline service level that we have in our public transport system.