Thursday, March 1, 2012

Op Ed on Singapore's bus funding injection announcement

Update:  I appeared on a panel discussion of this topic on the Talking Point program on Channel News Asia TV. The full video can be viewed HERE (for a few months I think). It is the 21 - 03 - 2012 episode.


Singapore's Budget 2012 announced a large funding injection into the bus system. This has caused much debate.

I felt the need to write something to explain that I see a wider importance in the announcement. The initial Government explanations have focused on the need to improve bus services while we wait for the MRT system to grow further.  But I think the funds should be used strategically to enable two important reforms. In fact, I suspect that this may be the intention, although it has not yet been clearly explained.

So, with some trepidation (it has become a hot political issue since I started writing it), I submitted an Op Ed to the Straits Times. It appeared in the ST Review section on Thursday 1 March. Subscribers to the Straits Times Online can read it HERE

More of my writing on public transport regulation issues is hereherehere (PDF) and here (go to April 2007 edition).

If you want more background on why a simpler, hubs-and-spokes (or even better a grid) bus network would be an improvement even though it would force more transfers, the Human Transit blog is a good place to look. Or get the Human Transit book.

Here below is the text of the Op Ed. 

Straits Times, 1 March 2012. 

Don't miss the bus on that $1.1b
Funds for more buses will ease transition as system is reformed
By Paul A. Barter

THE $1.1 billion government funding injection for the bus system has ignited debate by seeming to skewer the taboo against operating subsidies. It has provoked calls to make 'cushy monopolies' face real competition. Some say the money just enriches shareholders. Others say: Nationalise!

This Budget bombshell is indeed important but for a reason not often remarked upon. To appreciate its revolutionary potential for Singapore's bus system, look at two policies from the 2008 Land Transport Masterplan (LTM).

The more important of these policies is to restructure the route network towards a more efficient structure. Rather than a complex tangle of 305 routes with much duplication, the idea is to have a simpler and easier to understand hubs-and- spokes network with fewer routes but more frequent services connected with each other. Once this is done and routes stabilise, the Government can proceed to the next stage, of parcelling out routes for competitive tender in a shift towards a so-called 'procurement approach'.

I hope the Government remains committed to these two interconnected changes. The bus system is now the weak link in Singapore's public transport. If pursued, these two shifts will be much more significant than a temporary boost to the bus system while the MRT expands.

And here is the key point: That $1.1 billion funding injection is critical to the success of these two reforms. But we will need to hold our noses and accept some messiness in the arrangement.

In fact, reform of bus routes has been taking place gradually since 2008. The shift to a hubs-and-spokes network means fewer lines but better service frequencies on each line and less waiting time. This shift was the key agenda behind the Land Transport Authority's (LTA) takeover of bus line planning to reduce wasteful networks, and the shift to distance fares.

But there is a political problem here. Reforming bus routes involves taking away some direct services commuters are used to. It requires more transfers. Such changes are unpopular and will spark howls of protest, especially when current bus frequencies are too low and improvements from reform take time.

So there is a need to boost bus frequencies first. Waiting times must be reduced and transfers made more attractive before planners go on to major reorganisation of bus routes. That $1.1 billion injection can buy buses to ease the pain of transition.

Once the network has been reformed, the LTA can continue the shift towards a procurement approach to industry regulation. Under this system, the Government would do more of the system planning, while private operators put up competitive tenders for the right to run bus lines.

How does this compare with the status quo and the alternatives raised?

Singapore's longstanding approach is a common one around the world. It involves giving out monopolies ('franchises') to private companies under regulated fares. Bus franchise holders retain some autonomy on timetables and routes, and do their own marketing. Some cities also keep franchisees on their toes with competitive tendering, as in Hong Kong.

This set-up served Singapore quite well over 35 years or so. But it is reaching its use-by date. Integration improvements have reached a limit. Necessary financial balancing across the public transport system faces obstacles. The route network was allowed to become too complex. Rivalry for passengers between the two operators can be wasteful.

So, according to the 2008 LTM, Singapore should move towards a procurement approach.

How might this work? One successful example is the 'Scandinavian model', practised in Stockholm, Copenhagen, London, Seoul and Perth. A government- owned coordinating agency plans the routes and timetables. Yet there is competition via regular competitive tendering. Private sector companies run the buses but there is a single logo and colour scheme. The companies are profit-making, yet there are usually operational subsidies.

This model is well suited to ambitious integration efforts. Apart from marketing and ticketing, it allows for cooperation with other industries, including taxis and car-sharing. Public objectives are set clearly, and the services procured in an accountable manner.

But what about other alternatives, such as nationalisation or open competition? We can quickly dismiss on-the- road competition where swarms of minibuses crowd onto lucrative routes but neglect others. The experience of Britain, which opened bus systems (outside London) to a more staid version of competition on the road was also disappointing.

As for government-run monopolies, many are inefficient and overstaffed, as in parts of India and North America. Some government-run public transport systems do much better, as in Zurich. Swiss-style public transport is actually similar to the Scandinavian model but with only minor private sector involvement.

Of the three, a procurement approach makes most sense for Singapore's efforts to improve the public transport system, not just the bus network.

But there is a more immediate issue: how to make sure the new funding works as intended, so that the $1.1 billion injection really lays the foundation for longer- term structural improvements.

Injecting funds successfully requires mechanisms to link the funding with clear public objectives. Current arrangements, which rely on quality of service standards as their main tool, may not be good enough.

A temporary arrangement is needed to link this funding with outcomes. One approach could be to use contracts so that payments are for specific, measurable improvements chosen by the LTA, not by the operators.

Ensuring that this $1.1 billion injection actually delivers better service is important not just to reassure the public. It is also a key to the success of crucial reforms to the route network and for a shift to a procurement model. These two reforms are Singapore's best hope of achieving a truly excellent bus system within the decade.

The writer is an assistant professor at the Lee Kuan Yew School of Public Policy, at the National University of Singapore, where he teaches infrastructure policy, urban policy and transport policy.

The article is copyright Straits Times.

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