Assoc Prof Jamus Jerome Lim: Thank you, Chair. I thank Minister Iswaran for his explanation. I feel I should clarify that the proposal that I had explicitly states that the subsidy should be borne by MOT expenditures, not by other riders. He spent quite a bit of time, I felt, attacking a little bit of a straw man.
It is fair to say that $300 million, $400 million is not a chump change, but as I also mentioned in my speech, we should be clear that this is about 3% to 4% an increase in the Ministry’s budget, when you set it within context.
I did also seek a compromise and this was not touched on in Minister Iswaran’s clarification. Which is that even if MOT believes that an unconstrained subsidy is unaffordable, what of the possibility of free ridership during off-peak hours? The marginal costs in this case are likely to be minimal, mainly in the form of foregone revenues, since buses and trains are already operating with spare capacity in this case. And in fact, during the description of what happened during COVID-19, ex-Transport Minister Ong Ye Kung mentioned that buses were ferrying air.
So, I wonder if instead of ferrying air, could we instead ferry the elderly and the disabled in our society?
Mr S Iswaran: Mr Speaker, I thank the Member for his question. Let me start by saying it is not exactly a straw man argument at all. Because, fundamentally, there is a need to explain where the money is going to come from. By the Member’s estimate – I am not saying that I agree with his estimate – but his estimate is $300 million to $400 million. And then, he says it is 3% to 4% of the Ministry’s budget.
I would urge the Member to look at the budget carefully. The Ministry’s budget of $11 billion includes two-thirds which is development expenditure. What the Member is proposing, is a recurrent operational subsidy of $300 million to $400 million. So, in other words, it is on the lower base which we are looking at.
Specifically, the Ministry’s operating budget in the last couple of years has been increased because of COVID-19-specific measures. So, if you discount that further, what you are actually proposing is an increase in the subsidies – if I use my $2 billion reference point – of about 20% to 25%. That is a significant increase!
Should we incur such an increase? I think it is something we should debate. But I think then, we should also, to be intellectually rigorous, examine where the Member and his party stand when it comes to sources of revenue. Because you have to square the circle.
Last year, we increased fare revenue and I know that the Leader of the Opposition made a point about how fares have increased and that is contributing to cost of living. In other words, the Workers’ Party looks askance at increases of fares. And yet, we are also arguing about spending more. And where do we get that from? From the Government revenue? And the Member and his party also take a dim view of several of the revenue sources that have been proposed by the Finance Minister.
So, we have to square the circle. And it is by no means a straw man.
9 March 2022
Ministry of Transport