Amount of Operating Subsidy for Public Bus Operators in 2017 under Bus Contracting Model

Mr Gan Thiam Poh asked the Minister for Transport (a) whether he can provide an update on the implementation of the bus contracting model; and (b) what is the estimated amount of operating subsidy that LTA is prepared to provide for the bus industry in 2017 and of which, how much is attributed to the lower bus fare with effect from 30 December 2016.

Our public bus industry fully transitioned to the bus contracting model in September 2016. This includes the two packages of bus services awarded to Tower Transit and Go Ahead through open tenders and the 12 packages that are operated by the incumbent operators, SBS Transit and SMRT. Over time, the operators of the 12 packages will also be appointed through open tenders, starting with that of the Seletar package to be awarded in the first quarter of 2017.

Service levels have improved under the contracting model. Bus services now operate at scheduled headways of 15 minutes or less during peak hours. As operators compete for bus captains with improved remunerations and working conditions, more Singaporeans have been attracted to the industry. The number of Singaporean bus captains has increased from around 2,400 to 3,000 over the past year.

All these improvements have, however, increased operating costs and public subsidies. After factoring in the recent fare reduction, we expect to incur $3.5 billion to $4 billion in subsidies for bus services over the next five years. To prevent the subsidies from ballooning over time, we will continue to impose cost discipline on the operators through regular competitive tenders and also through regular rationalisation of bus services, where ridership is low and the commuters have shifted to new Mass Rapid Transit lines. We must also maintain price discipline through regular fare adjustments.