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Minister's Speech For The Second Reading Of The Public Transport Council (Amendment) Act 2005 
Posted on Monday, October 17, 2005 - 12:00 AM

The Bill proposes to amend the Public Transport Council Act in the following key areas: (i) Introduce a bus service operator licensing regime; (ii) Introduce a regulatory regime for ticket payment services; (iii) Enhance the Council's regulatory power to effect fare adjustments; and (iv) Introduce a penalty to deter fare evasion.

The speech is as follows:
Mr Speaker, Sir

I beg to move that the Bill be now read a second time.

2. Sir, this Bill seeks to amend the Public Transport Council Act (Chapter 259B).

3. The Public Transport Council or PTC Act was first enacted in August 1987 to provide for the establishment of the Public Transport Council to license bus services and approve public transport fares.

4. The PTC Act was last amended in 1999. The Ministry and the PTC have reviewed the PTC Act in the light of developments in the public transport industry. The Bill provides for the following key amendments which will improve the regulation of the public transport industry:

(I) the introduction of a bus service operator licensing regime;

(II)the introduction of a regulatory regime for ticket payment services;

(III) enhancement of the PTC's regulatory power to effect fare adjustments;

(IV) the formalisation of the Fuel Equalisation Fund;

(V) the introduction of a penalty fee system to deter fare evasion; and

Lastly, other amendments to improve the PTC's operational and regulatory effectiveness.

5. I will elaborate on these areas and highlight key provisions in the Bill.

(I) To Introduce a Bus Service Operator Licensing Regime

6. Sir, the PTC Act will be amended to provide for the introduction of a Bus Service Operator Licensing regime to regulate providers of basic scheduled public bus services at both the operator and the network levels. Currently, the Act only empowers the PTC to license individual bus routes, although in practice, the PTC has been administratively imposing requirements and performance standards at the operator or network level.

7. Clause 11 empowers the PTC to license and regulate basic bus service operators, namely SBS Transit and SMRT Buses. The PTC already audits basic bus service operators on their service and performance standards, and will continue to review these standards going forward. With the Bus Service Operator Licensing regime in place, PTC will be able to enforce such standards and licensing conditions by imposing financial penalties of up to $100,000 for any breach of conditions or standards, and in the extreme, by revoking the licence. The PTC will continue to regulate niche bus services such as the Scheme B and fare-charging condominium services through the issuance of Bus Service Licenses for individual routes.

8. These provisions in the PTC Bill will further enhance the PTC's effectiveness in ensuring the quality of public bus services and protecting the interests of commuters. However, in enhancing the PTC's regulatory effectiveness, I would also emphasise that the PTC would be mindful to avoid over-regulation and unnecessarily raising compliance costs for bus service operators.


(II) Regulatory Regime for Ticket Payment Service

9. The Bill provides for the introduction of a regulatory regime for ticket payment services. The ez-link card system has become the predominant mode of payment for public transport since it was first introduced in the year 2002. To safeguard commuters' interests in areas such as fees for usage of ez-link cards and service standards for sales, replacement, refund and top-up services, we will introduce a regulatory regime for ticket payment services.

10. The PTC will therefore expand its scope to also regulate the two major providers of ticket payment services, namely EZ-Link Pte Ltd and Transit Link Pte Ltd. Clause 11 empowers the PTC to impose and enforce ticket payment service requirements and standards. Similar to the Bus Service Operator Licensing Regime, the PTC will be able to enforce regulatory compliance through financial penalties of up to $100,000 or by revoking the licence.


(III) To Empower the PTC to Effect Fare Adjustments

11. The amendments will empower the PTC to effect fare adjustments if necessary. Members will recall that the Government accepted the fare review framework proposed by the Committee on Fare Review Mechanism in March this year. Under this framework, the PTC may initiate and direct fare adjustments in accordance with the fare adjustment formula, instead of being limited to considering applications by public transport operators to adjust fares. For example, the PTC may consider a downward adjustment which could take the form of a fare rebate or a fare reduction when the formula calls for it. Clause 13 amends the Act to empower the PTC to do so, and to set and enforce conditions of approval for fare adjustments in accordance with the fare adjustment formula as set out in the Third Schedule.


(IV) To Formalise the Fuel Equalisation Fund

12. The Bill provides for the formalisation of the Fuel Equalisation Fund. This Fund was set up in 1992 as an administrative mechanism to soften the impact of volatile fuel price fluctuations. Public transport operators are required to make an annual contribution to their Fund accounts when fuel or electricity prices are lower than the reference price. They can apply to the PTC to draw down this account in periods of sharp and transient increases of fuel prices to cushion them against higher operating costs.

13. To ensure that the PTOs continue to comply with the requirements on the Fuel Equalisation Fund, Clause 11 inserts Part IVC to formalise the Fund. With this amendment, the PTC will have powers to enforce annual contributions to the fund and impose financial penalties for non-compliance.

(V) A Penalty Fee System for Failure to Pay Appropriate Fares

14. The Bill provides for the introduction of a penalty fee system for fare evasion on bus and rail services. The current Act provides for fare evaders to be charged in court. Upon conviction, offenders are liable to a fine of up to $1,000 or a jail term not exceeding 6 months or both. So this already existing. As it is a drastic step to bring an offender to court, the PTC and the PTOs have not resorted to this provision. As such, without a provision for a penalty fare, today, ticket inspectors can only require fare evaders when caught to pay the correct fare. This, coupled with the very low possibility of being caught, does not provide much deterrence against cheating. Even in the case of rail, where passengers have to enter and exit through fare gates, operators have also encountered cases of underpayment, non-payment and abuse of concessions.

15. The 2 PTOs estimate that fare evasion on buses occurs on about 1.8% of passenger trips. Even though this figure may appear to be low, we should not condone fare evasion. Otherwise, the majority of commuters who pay the correct fares will be subsidizing the small minority who abuse concession passes, avoid paying or intentionally underpay fares. Hence, to provide greater deterrence against fare evasion, the PTC will be introducing a penalty fee of $20 for the underpayment and non-payment of fares; and $50 for the abuse of fare concessions. Such a penalty fee system has already been implemented in cities such as London and Sydney where penalty fees of ₤20 and A$100 are imposed respectively.

16. Clause 14 inserts Part VA to empower PTC to set penalty fees and regulate the imposition and enforcement of penalty fees. The PTC, with the approval of the Minister, will appoint a select group of employees from the public transport operators as Public Transport Officials to check for fare evasion, and to collect the penalty fees if applicable.

17. I would like to highlight that Part VA is formulated with a balanced and calibrated approach, and with appropriate safeguards to preserve the commuters' rights. Commuters will be able to appeal to the PTC if they feel that the penalty fee has been unjustly imposed. Fare evasion will constitute an offence only if a fare evader refuses to pay the penalty fee. Fare evaders who refuse to pay the penalty fee can be subject to a composition fine of up to $500 or ultimately face court action. Offenders convicted in court for the first time will be liable to pay a court fine not exceeding $1,000. Repeat and recalcitrant offenders will be liable, upon conviction, for fines of up to $2,000 or up to 6 months' imprisonment or both. While the penalty fee system will be a new measure introduced through this Bill, as I mentioned earlier, court fines and imprisonment to deal with fare defaulters are not new, as they are already provided for in the current PTC Act.

18. The PTC will work out the operational details of the penalty fee system, for implementation early next year. The public will be given ample notice prior to implementation. The PTC will provide more details in due course.

19. Sir, some members of the public have commented that since we are providing for penalties for fare evasion, penalties should also be imposed on the transport operators for over-charging. Sir, overcharging occurs when system faults on trunk bus services result in incorrect fare stages being updated. This is not a deliberate attempt by the operators to cheat commuters. In fact, depending on whether a commuter is boarding or alighting when the fault occurs, he could be overcharged or undercharged as a result. I can assure Members that the PTOs do not profit from such system faults. On the contrary, they are penalized, as they have to absorb the revenue losses from undercharging, whilst commuters who are overcharged can get a full fare refund or a voucher for a free bus ride.

20. Let me highlight to Members that LTA and the PTOs have worked hard to refine the Vehicle Location System on buses. This is the system that automatically updates the fare stage in the computer onboard the bus. Their efforts have significantly reduced the instances of overcharging. Cases of wrongful deduction of bus fares have fallen drastically to only 0.006%. This is a remarkable and commendable achievement in a large-scale system. But with a total of 2 million daily trips on trunk bus routes, this still amounts to about 120 cases a day. As such, LTA and the transport operators will see if they can further reduce the number ..

Consequential and Technical Amendments

21. Sir, Clause 11 makes consequential and technical amendments incidental to the above amendments. The amendments cover provisions for the PTC to issue directions and codes of practice, as well as provisions for licensees of bus service operators and ticket payment services to appeal to the Minister against certain decisions by the PTC concerning bus service operator licensing, the licensing of ticketing payment services and the Fuel Equalisation Fund or the codes of practice.

Other Amendments

22. The remaining amendments proposed in the Bill are to refresh the PTC Act or to improve the PTC's operational and regulatory effectiveness. Sir, these amendments serve to update the procedural provisions covering the quorum of meetings and the term of office of PTC members;

23. Mr Speaker Sir, I beg to move.