Will The Real Public Service Please Stand Up?

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.

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About politicalwritings

Someone who sees beyond PAP and "opposition" in Singapore politics. To understand more please see the Top 10 link below.
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22 Responses to Will The Real Public Service Please Stand Up?

  1. XXX says:

    Many things in S’pore are not subsidised. They are offered at market prices, or close to market prices. Famous ones are utilities: electricity, gas, water. HDB is another one — don’t let the financial engineering accounting fool you; HDB is making big profits selling BTOs. Town Council conservancy fees are also market rates, that is why TCs have been able to accumulate hundreds of millions of dollars in reserves, until don’t know where to put and end up in Minibonds and Pinnacle Notes.

    • Thanks for comments. But what has this got to do with the story? In any case, how can you determine what is the “market” price?

      As an example– utilities. I have no idea what the “market” price should be because I don’t have access to the management accounts. Do you? And the worst thing is, we can’t compare against other countries because they don’t publish the full costs either. Hence, who is to say what the true “market” price is if everything was left to a free market? Thus who is to say whether it is subsidised or not, if we do not know the true cost? What we do know is that tariffs are regulated, which is a clear indication that it is a politically sensitive topic. And because it is politically sensitive, there is a point beyond which the regulator cannot let tariffs rise beyond– or the Govt will be toppled. That’s the reality.

      HDB– same thing. Again, Mah Bow Tan never released the full management accounts. We do know the tender prices for construction. We do know what resale units sell for in the area– presumably resale transactions reflect the true “market” price. Are you aware that HDB sells new flats for less than resale (ie “market”) prices? If you think about it, for 99-year leasehold property, every year that passes, the value should drop by 1%. Hence new properties should sell cheaper than resale propertie. We can dispute whether this constitutes a “subsidy” and whether it is substantive, but the fact that the govt sells new flats cheaper than old flats is undeniable.

      You talk about financial engineering, you should understand accounting as well, mark-to-market valuation means the govt is losing money on every HDB flat sale– that’s according to globally established and accepted accounting standards. Of course, same thing– it’s politically sensitive, and has already claimed the scalp of one housing minister. This govt has got to decide how much to lose on each sale without losing the whole Parliamentary majority.

      Town councils? That’s not a public service per se in that the govt doesn’t promise to pay for it out of taxpayer money. Instead, town councils have to collect their own fees– every town council, PAP or oppposition, can decide how much to collect– the govt doesn’t interfere. If you think they’re collecting too much, you should protest to your MP, PAP or opposition– but this has nothing to do with the central govt. Indeed, I’d say the competition between PAP and WP town councils is healthy– it lets people see who can run town councils most cost-effectively.

  2. George says:

    This is from your article above:
    ” 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. ”

    Nothing is more telling where you are coming from than this sentence of yours! If you want people to leave aside the FACT that the govt investment arm own these operators so that YOU can make those SPURIOUS and inapplicable points that follows, you must think that people are stupid. You expect people to debate with you with one hand tied behind their backs!

    Hey dude, let me say this to you:

    1. It is a fact that the govt is directly involved and pretending that this is NOT an issue so that you can make your irrelevant points is infantile. What purpose and use do your ‘arguments’ serve, except to evade the issue?

    2. How do you like it if someone use YOUR money to make even more of your money from you? This is EXACTLY the situation here. Govt invest in the local transport companies using taxpayers’ money. It then allows the companies to regularly increase fare with weak and poorly justify excuses so that it would collect ever higher dividend year after year as the main shareholder.
    (In the first place it has no business to do this in the first place in a truly CAPITALISTIC ECONOMY. Govt has no business to compete with the very businesses it wants to attract to set up shop here. NO BUSINESS BELIEVES IT IS A LEVEL PLAYING FIELD ANYMORE WHEN ITS BIGGEST COMPETITOR IS THE CHIEF LANDLORD HIMSELF.)

    3. BY THE WAY, SINCE GOVT MONEY COMES FROM THE PEOPLE, IT IS THEIR MONEY THAT THE GOVT HAS USED TO INVEST WHICH MAKES THE PEOPLE THE ULTIMATE SHAREHOLDERS. DON’T YOU THINK AS SUCH IT IS ONLY FAIR THAT THE SHAREHOLDERS SHOULD ALSO RECEIVE A SHARE OF THE ‘ACTION’ IN THE FORM OF FARE REDUCTION AND DISCOUNT? RIGHT NOW, THIS IS NOT THE CASE. THE GOVT KEEPS EVERY CENT AND ONCE IN FIVE YEARS USE IT TO BRIBE VOTERS WITH WHAT IS RIGHTFULLY THEIR OWN MONEY IN THE FIRST PLACE! ISN’T THIS CREATIVE ACCOUNTING PAR EXCELLENCE ON THE PART OF THE PAP GOVT? BUT PEOPLE ARE NOT STUPID ANYMORE. THEY CAN SEE THROUGH IT.

    4. By the way, IMO, a govt of a country that operates a capitalist economy have to be at least partly politically socialist in practice in order to ensure that its poorest and needy (found in EVERY country on earth) are at least taken care of at a minimum and basic level.

    • Thanks for comments. Don’t think you get it. Anyway, lets try to respond.

      “1. It is a fact that the govt is directly involved and pretending that this is NOT an issue so that you can make your irrelevant points is infantile. What purpose and use do your ‘arguments’ serve, except to evade the issue?”

      What is there to evade? What is the “issue”?

      “2. How do you like it if someone use YOUR money to make even more of your money from you? This is EXACTLY the situation here. Govt invest in the local transport companies using taxpayers’ money. It then allows the companies to regularly increase fare with weak and poorly justify excuses so that it would collect ever higher dividend year after year as the main shareholder.

      (In the first place it has no business to do this in the first place in a truly CAPITALISTIC ECONOMY. Govt has no business to compete with the very businesses it wants to attract to set up shop here. NO BUSINESS BELIEVES IT IS A LEVEL PLAYING FIELD ANYMORE WHEN ITS BIGGEST COMPETITOR IS THE CHIEF LANDLORD HIMSELF.)”

      I agree with you. Govt’s job is to govern, not to be in business. However, we are in a different model from the western democracies. We are like China, with all our state-owned enterprises. We have to live with the hand we are dealt. But if you’re not happy with this hand, please elect a party that will divest all govt holdings as the next Govt.

      Until that happens, we only have two choices:

      a. Believe that what our Govt says is true, namely that it does not interfere in the commercial decisions of its companies. Hence, what happens happened because it had to happen that way. Even if companies were owned by purely private investors, the outcome would still be the same.

      b. Disbelieve what our Govt says. In other words, it interferes in the commercial decisions of its companies. Specifically in this case, it ordered Comfort to raise fares so that it can squeeze the people dry, and at the same time, create more unhappiness that will cause it to lose votes snd possibly lose power.

      I leave intelligent readers to weigh which is more likely, on a balance of probabilities.

      “3. BY THE WAY, SINCE GOVT MONEY COMES FROM THE PEOPLE, IT IS THEIR MONEY THAT THE GOVT HAS USED TO INVEST WHICH MAKES THE PEOPLE THE ULTIMATE SHAREHOLDERS. DON’T YOU THINK AS SUCH IT IS ONLY FAIR THAT THE SHAREHOLDERS SHOULD ALSO RECEIVE A SHARE OF THE ‘ACTION’ IN THE FORM OF FARE REDUCTION AND DISCOUNT? RIGHT NOW, THIS IS NOT THE CASE. THE GOVT KEEPS EVERY CENT AND ONCE IN FIVE YEARS USE IT TO BRIBE VOTERS WITH WHAT IS RIGHTFULLY THEIR OWN MONEY IN THE FIRST PLACE! ISN’T THIS CREATIVE ACCOUNTING PAR EXCELLENCE ON THE PART OF THE PAP GOVT? BUT PEOPLE ARE NOT STUPID ANYMORE. THEY CAN SEE THROUGH IT.”

      I leave readers who have an understanding of business to determine whether what you say above makes sense. As for pork barrel politics, I think there are far easier ways to go about it without all this acrimony, don’t you think?

      “4. By the way, IMO, a govt of a country that operates a capitalist economy have to be at least partly politically socialist in practice in order to ensure that its poorest and needy (found in EVERY country on earth) are at least taken care of at a minimum and basic level.”

      Not sure what you mean. But certainly, it is a Govt’s job to take care of people’s incomes, employment and health. That’s why in most democracies, parties in power get booted out when the economy tanks.

      PS. By the way, I’m perfectly happy to debate with you on whether public services should be privatised, when I have the time. There’s no easy answer of course– in some countries, the state runs it; in other countries, it’s a PPP model; in yet other countries, it’s corporatised; in yet other countries, it’s fully privatised. If you know what all these terms mean, please write your points and I will take it up with you in a separate post when I have the time.

    • JH says:

      Sidenote to George: Please don’t type in ALL CAPS. It’s like shouting on the Internet and most people disregard posts made in ALL CAPS. I’m sure there is real substance in your arguments and it’s a pity if anyone misses it simply because you are typing in ALL CAPS.

      And back to the issue, I believe that politicalwritings has replied to your point1 in point2. Your point is that the government is responsible for the price increases since it owns the companies indirectly isn’t it?

  3. George says:

    ‘What is there to evade?’
    Since you insist on pretending, let me make it even simpler: Why insist on talking about a green cow when it is actually red? I can’t help you if you still insist on ‘misunderstanding’.

    Well, I am not without work or business experience. You are right, I believe people can tell if I mean what you are trying to say I mean.

    You are not able to or unable to make out the wood because of the trees. That’s clear to me.

    • As lawyers are known to say, if you don’t want to explain to me (the opposing counsel), fine– please explain to the Court.

      I do not know what there is to “evade”. If you don’t like to explain to me, please explain to the audience here.

  4. George says:

    Yah, maybe ‘evade’ is not quite as appropriate or accurate as ‘denial’ – to be in denial, that is.

    No, it would serve no purpose to spend any time on your ‘PS’ remarks above. Suffice it to say, when the principles are wrong, the details are just so much detritus.

  5. George says:

    No sweat there, dude. I am sure readers will note the trend in your articles. You have a right to your views of course, but readers would be able to decide for themselves your real agenda.

    A word of advice if I may. Don’t underestimate your audience -they range from your impressionable minds, to mature young adults to those who have actually lived through the experiences and occurrences you can only read about.

    So it is dumber to think that others are dumb. Also, it is not too difficult to discern honestly held views from those that are fake, merely said for superficial effect – because the ‘heart’ factor would be clearly missing.

  6. George says:

    There you go again! lol

  7. CharadeBuster says:

    In a truly free market, inefficient companies or rent seeking companies are soon sidelined by newer more efficient operators.

    In sg, is the taxi market really free or does a new cab company need to seek permission from the government to operate?

    Free markets will determine the true pricing of any good. How can the gahmen leave pricing to ‘market forces’ when there is a lack of a proper free market in the first place?

    What will happen if the gahmen frees up the taxi market and let numerous other private taxi firms operate without all the hefty rentals?

    Opps, if they do that, then TH, which holds much of the shares in Comfort and SMRT, will have it’s profits affected.

    How did we get into such a sticky setup?

    • Thanks for comments. I suggest you check LTA site to see if there’s any restrictions on new taxi operators. I don’t believe so, but I believe operators have to maintain a minimum fleet size. Makes sense anyway, this is a scale business.

      Fyi, companies have actually been sidelined and exited the business. Eg Prime Taxi.

      I believe there is a free market, but it doesn’t help in this kind of situation, because of the pricing power of dominant players. It’s like petrol, the market players just play follow the leader.

      However, as I explained earlier, since the Govt doesn’t see fit to regulate taxis as a public service, it has no moral high ground to enact price regulation.

      Whether rentals are “hefty” or not is determined by the companies themselves. How can the govt step in? That goes entirely against your call for free markets.

      The market is free, operators can enter or exit as they like, and set prices as they like. What else do you want?

      What we need is someone like Tony Fernandez or Virgin Branson to shake up the market with a new business model and a new business compact between taxi drivers and operators. Right now they are all using the same remisier-type model.

      Imagine if you had salaried taxi drivers who are paid $X,000 a month base + commissions for every additional passenger-trip KM above base. Imagine if taxis offered loyalty programs, frequent flier miles, etc.

      We don’t have operators who want to break the mold. That’s why we have such a sticky setup.

  8. henry says:

    Based on your definition of “public” service, you are right in saying that the taxi business is not a public service.

    Yet, it does not help to know that more than half of the board of directors at Comfort Delgro are affiliated with NTUC, Government linked corporations and ex politicians. Does it suggests anything? What goes on in the minds of people when they learn that there are people who have direct contact with the Governement, sitting on the board?

    Perception vs reality? is now the responsibility of the public?

    You have started a blog and written some thoughts that you wish to allow the public to engage you. Certainly you will get opposing views and perhaps agruments that may not suit your frame.
    This is to be expected during a dialgoue.

    Yet, your intent remains vague.

    I sense that you want engagement but on your terms. If that is correct, then how will blogging help? It cannot be for monetising since there is hardly any advertisments.
    Educating the public on topics? Sharing techniques in debate? practice English? Improve typing skills? spelling?

    That the Singaporean is not focused and unclear about how to present his/her views?

    Tell us, what do wish to hear? ideas and thoughts that are aligned with yours?
    Are you seeking for like minded people? or do you wish to expose people who are unable to
    debate with you, and in the process, proclaim victory and collect each of YOUR comment as trophy?

    • Thanks for comments. My intent and mode of engagement remain simple. I think everyone can see from all my replies that, for those who engage me in fair debate, I engage them in fair debate. For those who just want to attack me, I bite back.

      You wrote: “What goes on in the minds of people when they learn that there are people who have direct contact with the Government, sitting on the board?”

      Why don’t you tell us, instead of asking us to guess?

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  10. henry says:

    Well, ComfortDelgro has its roots as a co-operative. Unionists from NTUC was appointed to the board and all this was openly supported by the Government.
    Along the way, ComfortDelgro adopted business practices that focused more on profits and was listed on the stock exchange.
    The people sitting on the current board also understand this. The public remembers some of this too, and view the taxi service as a “public” service. The Government’s imprint on many businesses
    blurrs the distinction between “public” and “profit”.

    Yes, its business model is to be profitable.
    And since that is your thrust in your post, you have made your point.

    The history does not count
    Only the current facts do.

    However, as the business ( who is closely affiliated to the Government) choses to ignore public sentiments and adhere only to facts, the public too, can choose to react via the ballot box.
    ( which you have stated in your recent post, and by the way, is much clearer than the previous one)

    Governments have been known to fall, triggered by public sentiments and not on facts alone.

    • Ntuc is a union of unions, and it started certain ventures as cooperatives, such as fairprice. But is every single venture run by ntuc a cooperative? If so, then ntuc prices should always be lower than market for everything– from insurance to car sharing to taxis to snow city, etc.– and nothing that ntuc is involved in should be profit-oriented.

      Is it in its articles of association that comfort is a cooperative? It would be strange for a listed company to be constituted as a cooperative.

      Notwithstanding the above, the idea of a cooperative is to pool resources together and run a business for the benefit of its members. That’s why they give rebates to members each year, ie to distribute excess profits and return savings, in proportion to spending, to members.

      Isn’t that a little different from public service?

      Yes, I know you want comfort not to think of money-first. I’m afraid that’s not possible, until you pull them from the main board and alter their articles of association.

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