LTA Is $1 Billion In Debt Cuz Fares Are โ€˜Far Belowโ€™ Cost Of Govt Contracts

We could hear hoards of angry mobs causing a furore when it was announced that public transportation fares may go up by 7% by year-end.

Thomas even said he had never seen such bullshit before.

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Image: YouTube

Before you lunge at your colleague in frustration and contempt, I implore you to put your pitchforks down. LTA mightโ€™ve had a valid reason to have to implement this:

LTA Is $1 Billion In Debt 

Yes, the Land Transport Authority (LTA) is $1 Billion in debt.

Wait, what? I thought they were rolling in the dough.

Image: Giphy

Well, apparently not.

According to The Straits Times, public bus operations have incurred โ€œlossesโ€ amounting to $1 billion in the 2018/2019 financial year. This was revealed in the latest annual report released by the LTA.

Letโ€™s break the figures down:

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The revenue LTA received from bus fares was $834 million and โ€œother incomeโ€ was $78 million. This totals to $912 million in operating income.

However, expenditure came up to $1.925 billion. As a result, there was a deficit of around $1 billion. To give you a comparison, this amount is 50% higher than five years ago. In the private sector, this shortfall would translate to losses, and your goody friends would be retrenched.

Fares Are โ€˜Far Belowโ€™ Cost Of Govt Contracts

If it isnโ€™t already obvious, the reason is that fares are โ€œfar belowโ€ the cost of government contracts.

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Lest youโ€™re unaware, hereโ€™s a little explanation as to how government contracts work:

  • The government owns all assets and collects fare revenue.
  • Transport firms bid or negotiate to run route parcels for a fixed sum over a fixed period.
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The Ministry of Transport told The Straits Times that despite the widening deficit, Singapore ranked second-lowest in terms of cost in a 2018 comparative study done by Nanyang Technological University (NTU).

The study found that Singapore buses cost four cents per place-km. This was higher than Hong Kongโ€™s 2.3 cents, but lower than western cities like London, Toronto and New York.

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However, it may be worthwhile to note that the study didnโ€™t include other Asian cities such as Taipei, Seoul and Tokyo.

According to Singapore University of Social Sciences (SUSS) transport economist Walter Theseira, โ€œNow the real question is whether the price LTA is paying for bus services today is the lowest it can go, for the level of service quality desired.โ€

True and true. Want a more efficient public transport system? Pay more lor.

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