“You are providing a public service, you know! How can you make so much profit? How can the poor, the needy, the disabled, etc afford to pay so much? Where are your moral principles? Blah blah blah.”
It seems every time a “public” service provider raises prices, someone will drag out these eternal words to condemn the greedy profiteering companies– the latest victim being Comfort, which has just raised taxi fares.
But is it fair? Is every company/organisation that provides a service to the public necessarily providing a “public service”?
In fact, what does it really mean, to provide a “public service”?
Fundamentally, public service means providing services to benefit the public at large, with no expectation of making a profit, and indeed in many cases, at a loss. The driver of public service is the belief that everyone, rich or poor, young or old, is entitled to use the service and that no one should be deprived of the service because one cannot afford it.
To take an example, primary and secondary education is a public service, provided through public schools at practically no cost to the children or their parents. Similarly, healthcare is also provided as a public service, through polyclinics and public hospitals which clearly charge much less than market rates as shown at private clinics and private hospitals.
Of course, public service does not mean that the service is FREE. Someone, other than the consumer/user, still has to pay for all or most of it. In most cases, it is the Govt that pays for public services through subsidies, which means it is really taxpayers who pay for it.
Thus the distinguishing hallmark of a “public” service is that the country believes it is so vital that it must be made accessible to anyone and everyone, even if public coffers have to be used to provide for it.
Now we come to the crux of the complaints.
Is “public” transport a public service? Are taxis a public service?
In Singapore, public transport is provided by private operators– lets leave aside the fact that these operators are owned by the Govt’s investment arm, let’s also leave aside whether it should have been privatised in the first place.
This means that public transport is NOT operationally subsidised1, unlike other public services.
Therefore, at the very least, public transport operators will want reasonable assurance of a decent profit before they will make the necessary capital investments.
Critics who expect public transport operators to remember their “social mission” and not to make “excessive” profit should understand that such arguments cut no ice with directors and shareholders of public transport companies, who are in business only to make a reasonable profit.
That is why, where there is public interest at stake, we need the Govt to step in with price regulation. There is thus no point directing your anger at public transport companies because it is not their job to make public transport affordable– it is the Govt’s job to control fares and ensure they are affordable. There is thus also no point lecturing public transport operators on their “social” mission, because they tendered for the contract only to make a reasonable profit, not to serve the country.
In fact, it is the Govt’s job to step in when it is financially impossible for operators to make fares affordable if all costs were included. That’s when subsidies have to be provided to companies. In healthcare, the govt provides subsidies to Singhealth and NHG for hospital stays. In public transport, the govt provides bus interchanges, train stations and rolling stock for SBS and SMRT use almost free of charge.
The fact that the Govt spends taxpayer money on the infrastructure for public transport makes it a public service. This is also the leverage that gives the Govt the moral high ground to regulate bus and MRT fares.
For taxis, the picture is completely different. The Govt does not subsidise taxi depots or other infrastructure, it does not provide operating subsidies for users of taxi services. Indeed, taxi companies are left to fend for themselves. If they make money– good for them. If they lose money, that’s their own problem. The Govt doesn’t care. It does not provide any reasonable assurance of profit for any taxi operator. Indeed, it doesn’t even provide any guarantee of non-competition; new taxi operator licences can be issued any time.
In return for accepting these risks, taxi companies asked for, and the Govt has deregulated taxi fares, thus allowing taxi operators to set fares without govt oversight. Unlike bus/MRT services, the Govt thus has no moral high ground to regulate taxi fares.
The only regulation the Govt can make is to ensure that taxi services meet their quality of service conditions, and that all fares are metered and clear to passengers so that there can be no more “pirate” taxis.
So how can taxi services be a a public service when no public funds are used to provide it and no commitment is made to make taxi services available to anyone and everyone who needs it?
Hence, for critics to continue harping on taxis as a “public” service is meaningless and pointless. It shows not only a lack of understanding of our regulatory framework, but also shows a fundamental lack of understanding of what “public” service means.
I repeat– public service means a service is so important that taxpayer money must be used, if necessary, to make the service accessible to anyone and everyone who wants it.
If you still think that taxi service should be a public service, then please come out and call on the Govt to subsidise taxi operators.
And while you’re at it, please say you are prepared to pay more taxes as well. Because as you know, public services are not FREE, someone still has to pay for it.
1. Opex is not subsidised, but some capex (eg in the form of train stations and bus interchanges, tunnels, rolling stock, EZ-Link machines etc) is paid for and owned by the Govt, which then leases it to the operators at minimal cost.