Debated in Parliament on 12 Nov 2013.
Mr Liang Eng Hwa asked the Minister for Transport (a) whether the taxi fare charges can be less complex than what it is now; and (b) whether the current fare structure has been effective in ensuring that there are adequate taxis on the roads and which are able to meet the travel needs of commuters.
Mr Lim Biow Chuan asked the Minister for Transport (a) whether taxi companies are at liberty to impose different taxi charges for different types of taxis; (b) whether commuters are expected to scrutinise the type of taxis which they flag down before deciding to board the taxi; and (c) how does the Ministry expect taxi commuters to be able to distinguish the different types of taxis before flagging the taxi.
Mdm Speaker, may I have your permission to take Question Nos 11 and 12 together?
Yes, please.
Mdm Speaker, taxi fares were deregulated in September 1998 to allow taxi companies to set their own fares, so that they can be more responsive to market conditions. The taxi fare structure has since evolved with different surcharges to better match taxi supply with demand by giving incentives to taxi drivers to serve locations and time periods where demand is high. The charging of different fares for different types of taxis by
Page: 28
the same operator is not a recent phenomenon, although we are seeing more of it lately, which taxi operators have attributed to the different cost and rental rates for different models. The varying rental rates depend on the model and age of the taxis which some see as a fair reflection of preferences of the taxi drivers.
Although fares are deregulated, taxi companies are required to publicise fare revisions at least one week in advance in the media and on their websites. Taxi fare information must also be made available on taxi stand information panels, on LTA and PublicTransport@SG websites, and on fare decals in taxis.
We recognise that the current taxi fare structures are complex and confusing for commuters. LTA will work with the Public Transport Council (PTC) and the taxi companies to study how the fare structures could be made simpler and easier for commuters to understand, taking into consideration the impact on taxi drivers and availability.
Madam, I thank the Senior Minister of State for the response. I would like to ask the Senior Minister of State whether it is a case of these complex charges that are incentivising taxis to concentrate on specific areas or even some specific practices to maximise the mileage, and whether that is counter-productive, as having too many complex charges lead to different behaviour. Secondly, would LTA consider a single call booking system rather than have the present system where each commuter calls each company to book a fare? And would that be a better system for consumers?
Madam, as is the case for many types of services, there is uneven distribution of demand at specific times of the day and at specific locations. What is quite evident today is that operators are sensitive to the mismatches between demand and supply and have made efforts to address them through various surcharges. So, whilst it is unsatisfactory from the commuter's standpoint, they have gone some distance to addressing supply and demand mismatches. The taxi drivers themselves are quite familiar with the different surcharges and they respond accordingly.
As to the Member's question on whether we should have a single call booking service, this is something that we can look into. But I should add our priority right now is to address the need for greater simplicity to fare structures.
Page: 29
Mdm Speaker, I want to ask the Senior Minister of State whether she agrees that there are frequent complaints by the public that it is difficult to find taxis at peak hours and many a time during off-peak hours. My second question is whether the Senior Minister of State would agree that allowing taxi companies to impose different taxi charges for different types of taxis is unfair to commuters and unfriendly. It does penalise commuters because they really do not have a choice in what taxis come their way. So, would the Senior Minister of State reconsider the decision not to interfere with the market and to disallow taxi companies from charging different taxi fares for different types of taxis? Finally, would the Senior Minister of State give her opinion as to whether the different fares charged would benefit taxi companies or do they really benefit taxi drivers?
A very long string of questions. I apologise in advance if I did not get every one of them. I think the key point to note is that demand and supply are going to vary at different times of the day. As I explained earlier, taxi service is not different from any other types of service and it has the same issue of uneven demand. So, there will be occasions and at certain locations where the demand is very high, and we do need to find a way to get the taxis to ply those areas at those times, and pricing is one way in which the operators have achieved it. Rather than try and talk about the question of whether it is fair or unfair, we have acknowledged that it is complex, and it is confusing. We are interested to try and find a better way to let the commuters understand what the fare structure is. Simplifying it is what we would like to do right now. I hope that addresses his question.
Mr Lim.
They already have different surcharges for different times, for different locality. So, their charges help to bring taxis to where the peak demand is. I am saying that these are different taxi types and why do we allow different taxi types to charge different taxi fares?
Mdm Speaker, as I have said earlier, we are looking at whether it should be simplified further. To his question of whether the same taxi company, same taxi operator, ought to charge different fares, the answer is that it is not a recent phenomenon. It has been going on for some time. It is just that we have seen more of it lately, and we are going to address this issue of how we can simplify it. As to whether we will allow the taxi companies to do so in future, that is a question that we are trying to come to a conclusion on.
Page: 30
I would like to ask the Senior Minister of State, in MOT's effort to try to simplify the fare, could MOT also ensure that the rental that is levied on taxi drivers is also simplified? Today, many assume that higher flag-down fare means drivers earn a better take-home income. But the take-home income has not changed due to the increase in rental fares. Having a mere increase in the flag-down fare simply means that they partially offset the increase in costs. So, in MOT's effort to try to simplify the flag-down and other fares, I hope MOT will balance the views that taxi drivers also have to bear higher rental costs.
Mdm Speaker, I think we want to be very careful about doing that. The rental agreement is between the taxi driver and the taxi operator. Right now, what Mr Ang is asking is whether the Government should get involved in this agreement between the taxi operator and the taxi driver. I am not so sure that that is the outcome that we really want to see, because at the end of the day, the taxi drivers will have to compare among which of the operators offers a rental scheme that best meets his requirements and he has to decide which one of it is a fair one from his point of view. In the context today, there is more than one taxi operator. So, there is competition in the market and it is up to the market to come forward with an agreement that taxi drivers find acceptable.
Mr Ang. Last question.
I understand what the Senior Minister of State is alluding to, as far as options available to taxi drivers are concerned. But in today's context of a lot of the hiring agreements, the terms that are drafted in the agreements are highly disadvantageous to the taxi drivers to be able to move from one company to another company. There are a lot of incentive programmes packaged into the agreements whereby you cannot simply leave because another company offers you a better deal. They will have a package to say that if you drive for two years, you get this incentive; if you put in this amount of deposit, you have to drive for five years, and so on.
As far as the driver is concerned, he is unable to shift just because the rental is cheaper elsewhere. So, in a sense, the market is not working as effectively to allow a driver to have that portable scheme to be able to navigate between options just to save cost.
Mdm Speaker, I think our question has gone far beyond the original scope and the questions that were posed by Mr Liang and
Page: 31
Mr Lim. Just very briefly, Mr Ang, I think it is an issue that perhaps the National Taxis Association (NTA) would also like to look into because it concerns the terms between the taxi operator and the taxi driver. I believe that it falls also within the remit of the NTA to look into.
PAPERCUTS