30 July 2011

Freezing Bus and Rail Fares to Fight Inflation

The recent application by the two public transport operators for a 2.8 per cent upward revision to bus and train fares has met with scathing criticisms by the public.

There are two main areas of complaint.

Firstly, the service is not up to expectations.  I will deal with this in a later post.

Secondly, raising bus and train fares will add to already high inflationary pressures, especially when wages are not keeping up with inflation.  The consumer price index in June was 5.2 per cent higher than that 12 months ago.  CPI inflation is expected to be between 4 and 5 per cent for the whole year.

Earlier this year, many vendors of cooked food were persuaded not to raise their prices to fight inflation.

Large supermarket chains committed not to raise the prices of their housebrands for several months.

At that time, I wrote [link] that it was unfair to expect any business, big or small, not to raise prices of the goods and services that they provide if the cost of their inputs had risen and was continuing to rise because they were subjected to a profit squeeze.

Why have there been no calls to landlords (especially the statutory boards such as JTC and HDB) not to raise rentals, nor to Inland Revenue Authority of Singapore not to raise the annual value of properties (the precursor to higher property tax), nor to Energy Market Authority not to allow electricity tariffs to be raised, nor to CityGas not to raise the price of town gas, nor to the oil companies not to raise the price of petrol or diesel?

The public transport operators have to give their employees wage increases and bonuses.  They have to contend with higher energy costs.  They have to buy new buses and equipment.

It is unfair to deny them an upward fare revision so as not to contribute to more inflationary pressure for commuters.

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