Sustainability of Rail Reliability Levels

3 Mr Sitoh Yih Pin asked the Minister for Transport whether he can provide an update on the current level of our rail reliability and how such continued efforts are going to be sustained and funded.

The Minister for Transport (Mr Khaw Boon Wan): Sir, our MRT service has now stabilised. Our intense efforts to improve rail reliability are producing results. Reliability measured by Mean Kilometres Between Failure or MKBF shows significant and sustained improvement. In the 12 months ending in June 2019, the MRT network achieved an MKBF of more than 950,000 train-km – almost one million train-km. This is a seven-fold improvement over 2015. Commuters have felt the difference. Recent surveys by the Public Transport Council, or PTC, show that commuters’ perceptions of MRT services have improved.

Our MRT is now on par with other world-class systems like the Taipei Metro and Hong Kong MTR.

These improvements are the result of a concerted multi-year effort. It required rigorous operations and maintenance, disciplined investment and countless personal sacrifices by thousands of public transport workers who have worked day and night to improve the network. We should give them our thanks. I would also like to thank commuters for their patience and understanding. In particular, for the Early Closures and Late Openings or ECLOs, which have given LTA and the rail operators precious engineering hours to step up maintenance and renewal as our MRT lines age.

Our efforts to improve rail reliability have, however, come at substantial expense to both the operators and the Government. First, the rail operators have ramped up their operations and maintenance to support the much higher level of reliability. Between 2016 and 2017, the total cost of running the rail network has increased by around $270 million. 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 $86 million. SBS Transit’s train division also lost tens of millions of dollars.

Second, the Government has spent around $1.9 billion to take over ownership of all rail operating assets. While the $1.9 billion is once-off, the Government is now also responsible for the proper and timely renewal of these assets, and this is a huge and continuing financial liability. Under the rail financing framework, the Government pays for the full upfront cost of civil infrastructure and the first set of operating assets. The subsequent operations and maintenance of operating assets are supposed to be fully paid for by the operators, through the collection of fares and non-fare revenue such as advertising. The depreciation cost of operating assets is supposed to be largely recovered by the Government through licence charges.

But in practice, as fares have been inadequate to cover the cost of operations, Government subsidies have exceeded their intended scope of funding the civil infrastructure and the first set of operating assets. With intensified maintenance to reach the current level of reliability, the Government operating subsidies have increased further. Over the next five years, the Government expects to spend $4.5 billion on operating subsidies; so this is nearly $1 billion a year. This will be on top of the Government spending $25 billion on civil infrastructure, to build and equip new lines.

LTA and the rail operators are working closely to keep costs under control. We are redesigning our systems and processes. For example, LTA is using its asset renewal programme to install new technologies, such as condition monitoring sensors. For new MRT lines like the Jurong Region Line, LTA is actively engaging the rail operators upstream on the design of the system, to ensure that it is designed and built with efficient downstream operations and maintenance in mind. The rail operators are also pooling their engineering and maintenance capabilities and collaborating with ST Engineering to cut out duplication and raise productivity. All these upstream interventions are necessary, but they will not fully offset the higher costs of operating and maintaining a highly reliable rail network.

You may ask: why did fares fall below operating cost? PTC’s fare formula is supposed to keep fares in line with macroeconomic cost factors, such as inflation, wages, fuel costs and increases in the network capacity, with a productivity extraction. But until recently, the PTC fare adjustments were not fully implemented. If we had strictly followed PTC’s fare formula, the operators would have been better able to cover the costs of the intensified maintenance. As it is, the additional costs have been partly covered by increased Government subsidy and partly absorbed by the operators who have been incurring substantial losses. So, this is clearly not sustainable.

PTC’s current fare formula is valid until 2023. We will continue to operate under this formula. But we must have the discipline to implement the formula fully, as we adjust fares over the next four years. 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. Meanwhile, Government will provide the operators with a temporary enhanced maintenance grant. The details are being worked out between MOT and MOF.

Mr Speaker, we have stabilised our MRT service. But we have to sustain these efforts over the long term, in order to prevent problems from gradually building up again. This requires discipline: on the operating side to ensure that LTA and the operators invest in upgrades and preventive maintenance of the rail system long before problems become apparent and serious, and on the commuter side to implement regular fare adjustments to keep the rail system financially viable and Government subsidies under control, so that we can sustain a high quality and affordable public transport network.

We have entrusted the important task of fare review to the PTC and they will be fair to commuters, taxpayers and operators. I seek the Members’ full support for the PTC as and when they make recommendations on transport fare adjustments.

Mr Sitoh Yih Pin (Potong Pasir): Mr Speaker, I thank the Minister. I would just like to ask one question. Now that we are at the sweet spot of 950,000 MKBF, does the Transport Ministry strive to achieve a higher number? The reason why I ask this is because in life, whilst it is always good to have nicer things, ultimately, somebody needs to pay for it.

Mr Khaw Boon Wan: Sir, I fully support the sentiment that the Member had just expressed. As an engineer, we know that after one million MKBF, we can always try for two million, three million, four million. But it all comes at a cost. The question is, are commuters prepared to pay at such a high level of reliability? It is little bit like the quality control chart, which in engineering that we studied. We know that once you have hit a certain sweet spot, as the Member put it, you can still achieve higher quality control but the increment cost required is extremely high. In fact, the curve is not like that or plateauing; the curve is exponential.

And the same thing with rail reliability, at one million MKBF which is what we have targeted. We had surveyed the performance of metros around the world, only a handful consistently achieved a million or crossed a million. And a million, in fact, is a very good, reliable level of service. It does not mean no more delays of more than five minutes, but it means that the frequency of occurrence is tolerable. It will not be often that you encounter such delays. And, if you want to achieve an even higher level of reliability, then one must be prepared to pay for more.

My own sense is if we can consistently maintain this one million MKBF, that should be good enough. But if for various reasons, future Singapore commuters are demanding an even higher level and are prepared to pay for that greater level of reliability, well, for that, we leave it to the next Transport Minister.

But do not forget one thing, that having crossed a million, it does not mean it will always be up there.

I am a chronic heart disease patient, and I know that I have to take the medication for life. I have just done my blood test – almost perfect picture – my doctors are happy, I am happy, my family is happy, but it does not mean I can stop the medication. The moment I stop the medication, I know what will happen. Likewise, with the railways.

Mr Dennis Tan Lip Fong (Non-Constituency Member): Mr Speaker, I have two supplementary questions. One, I agree with the Minister that having an improved MKBF does not mean that MKBF will always be at that level. In that light, I would like to ask the Minister whether this would be a suitable time to consider introducing service quality as one of the factors in the Fare Review formula. I say this because this will help set the bar for service quality and help to deter decline in service quality in future years.

My second supplementary question is that I would like to ask the Minister does LTA monitor the frequency of delays of less than five minutes, and if not, are there any plans to do so? This is really to enhance the commuter experience on an everyday basis.

Mr Khaw Boon Wan: Sir, we monitor all delays. We track all delays, we log all delays and we analyse all delays, whether it is one minute, 30 seconds, five minutes or 10 minutes. That is how we are able to churn out the data.

Secondly, service quality and how do you track it. One major service quality is MKBF – frequency of delays – which is what we are monitoring.

Another is "crowdedness" of train. That is why we included the Network Capacity Factor, in the Fare Formula, as a proxy for crowdedness.

Mr Speaker: Assoc Prof Walter Theseira.

Assoc Prof Walter Theseira (Nominated Member): Thank you, Mr Speaker. Minister, I understand that the current fare levels do not cover system operating cost for rail and they have not for some time. I just have two supplementary questions related to that.

The first is what is the targeted proportion of Government subsidy for rail operating cost in the longer run. And, second, what kind of changes are we looking at to fare levels? Do we have to expect fare levels in the longer run to reach that target level?

Mr Khaw Boon Wan: As I have said, this was before my time when there was a big public debate, resulting in the White Paper on public transport. The he Government, and I suppose this House, reached a certain long-term view about how one should fund public transport. And it was as what I had articulated in my reply just now. The intention was the Government will pay for the infrastructure – that means the tracks, the viaducts, the underground tunnels – plus the first set of operating assets, which include the trains. Subsequent train operations, which include future replacement of the operating assets, have to be paid for from the fare revenue plus non-fare revenues, which include advertising. And if we achieve that, then the operating subsidy would have been zero. But now, it is more like more than 30%.

So, we had a certain long-term view about what operating subsidy should be; it should be zero. But instead, there is a substantial gap. Can we close it overnight? I think that is not practical. So, my more limited objective in the medium term is to be able to cover the recent level of intensified maintenance, which has cost the operators a lot of money but has delivered the current level of reliability, which seems quite satisfactory. I think we should try to recover that. How? At what pace? I think PTC will take that into account. But as I said at the reply – we have just adjusted the formula last year, and we have done one round, four more rounds to go. I think let us keep to the formula. Meanwhile, the operators have to be helped. And that is why the Government is footing the bill through this temporary enhanced maintenance grant.

But the key point is, over the next four years, let us have the discipline to implement fully the fare formula adjustments which are needed. But I will leave it to PTC to elaborate their case. I would urge Members to fully support them. But at the same time, bear in mind, that this additional maintenance expenditure, which has to be continuously incurred, which allows us to achieve this current level of reliability, has to be paid for.

At the end of the day, let us do not forget, as a total system, who pays for the system. It is people like you and me, taxpayers as well as commuters. The Istana does not have a printing press of money. The money has to come from either taxpayers or commuters. And we just have to find a balance – what is an appropriate level.

Mr Pritam Singh (Aljunied): I thank the Minister for his reply. My question pertains to rail reliability. Over the last few months – April, May, June – we have had reports in The Straits Times about various resignations in SMRT. Can the Minister share with the House, what has been the impact of this reported string of resignations on SMRT's plans towards sustained rail reliability for the long haul?

The second question pertains to resignations from maintenance and engineering roles, functions which have traditionally been raised in this House as an area for improvement. Is that an issue of concern for the Ministry? Given the maintenance and engineering resignations from within SMRT, does it constitute a significant number such that Singaporeans ought to be concerned that we start slipping in terms of the targets that the Minister has set?

And finally, given the number of corporate related resignations from SMRT, is there any concern that the Ministry has about morale within SMRT and whether the system can continue to move forward reliably?

Mr Khaw Boon Wan: There was a recent report, not quite by all media, but a Straits Times report. It was only in The Straits Times. Probably one particular journalist who reported that there was a major upcoming resignation by the Head of Trains in SMRT. I read it and I immediately texted Chairman of SMRT. He was in the air then. As soon as he landed at the airport, he replied to me that "it is fake news". The Straits Times gave an apology, but in tiny font size.

Mr Pritam Singh: Yes, I understand apologies usually are like that. We have had to deal with some of these as well; and it is always a small section somewhere and you wished it were larger. Generally, the larger point, of course, is about those numbers that the same reporter – I believe you are referring to – has report consistently on SMRT issues. Thirty, I believe was the number for Human Resources-related resignations. And my concern is whether there is a deeper issue within SMRT that the public ought to be concerned about.

Mr Khaw Boon Wan: Sir, with the change of leadership of SMRT, which has been leading it in the last three years, the team that I have worked together, both above-ground and underground. I know them well; it is a very good team of people. Sometimes, some attrition is useful.

Mr Yee Chia Hsing (Chua Chu Kang): Speaker, I would like to ask the Minister, what is the MKBF for East-West Line because my constituency is in Jurong and the East-West Line is actually quite old? So, is there a plan for even individual lines to reach a MKBF of a million as it is now just an average across the country.

Mr Khaw Boon Wan: At my level, I look at the whole network. But yes, I also look at individual lines. After all, there are only five lines. So, it is not too difficult to track them. Out of five lines, three are already above a million, and the other two, which includes East-West Line, are not too far behind. East-West Line continues to make progress. The reason, I did explain a few days ago, between North-South Line and East-West Line, both are almost 30 years old and we are changing out some of the core assets items. We started this process with North-South Line, so North-South Line benefited from this earlier renewal process. North-South Line now is 1.4 million MKBF. East-West Line will eventually catch up and exceed one million.

Assoc Prof Walter Theseira: Mr Speaker, I thank the Minister for his explanation of targeting operating subsidy levels. I understand the original target subsidy level was about 0%. Today, it is about 30% or so. I would like to ask the Minister, would he have any views on the target balance between commuters and taxpayers going forward. The operating cost subsidy level going forward, should it be closer to 0% or 30%. What are his views on this?

Mr Khaw Boon Wan: I am an engineer. I am formula driven. So, the more important thing is discipline. The fares have to be adjusted through a formula, which is what we all agreed, and having debated, discussed and settled on the formula, and the formula will last for a period, in our case, five years. I think much more important is to achieve that discipline – each time the adjustment comes out, the calculation, what is the output, stick to it. That, I think is much more important.

If you do that and if you are able to do that for four more years, including trying to see how this enhanced maintenance, which has given us today's outcome, can be better funded through additional fares, then I think we would be, in the short term, in a much more comfortable position then what we are today.

Should we drive towards zero? We must never give up on this hope, but if it is not possible in the medium term, it does not matter. The key point is we must not allow the operating subsidy percentage to continue to rise. If from 0%, it now deteriorates to 30% and continues to deteriorate, I think that would be a bad outcome. But if we can reverse it, which I think we can, if we are able to stick to the formula plus taking a look at how the enhanced resources that we have put in can be recovered, then I think, we will be home.

Mr Sitoh Yih Pin: Mr Speaker, Sir, I feel compelled to ask this because some of us only look at what is happening now in the rail system. I checked my notes last night and at the first Transport Ministry COS, after the the last General Election, in April 2016, the Minister mentioned to this House that this Government will solve all the rail problems by the end of this term of Government. I was sitting there and when I heard the Minister say it, I nearly fell off my chair. That night, I wrote to the Minister and I told Minister, we have set ourselves an uphill task and I was concerned that we may have over-promised. I know the problem would be solved but I was cautious as to whether it could be solved within four to five years.

I think today, compared to 2016, it was a seven-fold increase in MKBF. So, I think with that in mind, Minister, can I ask, what are your thoughts between April 2016 and now; and whether going forward – I know you have said it is for the next Transport Minister to decide – maybe some goals and objectives.

Mr Khaw Boon Wan: Then and now – then my hair was white, now my hair is black. Chemistry helps! [Laughter] It is not my style to over-promise because in politics, we all know this mantra: under-promise, over-deliver. But, when I look at the situation at that time, and having interviewed the various stakeholders, I decided that, no, this is an occasion to break the rule and to set a stretch target in order to, rally the whole troop – the tens and thousands of workers out there – towards a common goal and get them inspired. That is why I opted for this figure.

It was not a million initially, in fact, I started off with 800,000. That was set after looking at the global data of the other metros. I thought 800,000 was something doable, during this term of Government. As we go along, we found that, hey, we actually can push further. So, I rounded it up to a million.

But, as I have articulated just now, having reached the million, the more important thing now is to have the discipline to ensure that the financial adjustments are made in time, and at the operational level, do not be complacent, because you can just walk backwards very easily. Especially for the old lines, the North-South and East-West Lines, after you have renewed the core assets group, even if you do very little, they may be able to deliver a very reliable service because that is how engineering systems work. They talk about this bathtub curve. It is very critical that LTA and the operators and the leadership are fully aware of this. It does not mean that once you have achieved some level of reliability, it will always be there; you can walk backwards very quickly. It may not be immediate but it will show up in a few years' time, as we experienced not too long ago.