Reviewing Public Transport Fare Adjustment Formula

Mr Gerald Giam Yean Song asked the Acting Minister for Transport (a) whether the Ministry will review the current fare adjustment formula, which allows a maximum allowable hike of 14.4% in 2025, in view that this figure appears to be detached from average wage growth; (b) what is the maximum number of years a deferred quantum can be carried forward; and (c) what is the policy rationale for this limit.

In setting public transport fares, the Public Transport Council (PTC) aims to keep fares affordable for commuters, while ensuring that our public transport system remains financially sustainable. In deciding the fare adjustment each year, PTC is guided by a fare adjustment formula which reflects the costs of providing public transport services, including national wage growth, core inflation and energy prices.

For this year's fare exercise, PTC has taken into consideration the fare formula output of 1.5% and the deferred fare quantum of 12.9%, which represents costs incurred in previous years that have not been passed through into fares. This results in a maximum allowable fare adjustment quantum of 14.4%, out of which PTC decided on a fare increase of 5%, with the rest being funded through a Government subsidy.

There is no limit to how long the deferred fare quantum can be carried forward. In the fare reviews over the past two years, the deferred fare quantum has been reduced from 15.6% in 2023 to 9.4% today.