The Public Transport Dilemma

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Recently, the Land Transport Authority has levied a $387,176 fine on SMRT, the sole rail operator in Singapore (excluding KTM railway), for a seven-hour delay that affected over 57,000 rush-hour commuters in January.

This comes about despite a supposed government initiative to privatize essential public services, such as transport in this case. There is clearly a contradiction of the government's policies here. On the one hand, the government desires to have the efficiency of a privatized rail operator, yet it still seeks to retain some form of control as seen in
the Rapid Transit Systems Act, under which the LTA can fine rail operators up to $1 million if they are found to be negligent in service disruptions (which was the basis of this fine).

One may ask, how is there any contradiction?

Well, it's quite simple. A private company is supposed to be free from government intervention, unless of course the private company commits any commercial crime or anything that goes against the law that governs such private companies (i'm not so familiar with this).

Yet, the LTA is levying a fine based upon something outside the jurisdiction of such laws. As far as I know, private enterprises are meant to be governed by the laws of economics, which essentially follows that if they cause such long delays, they are essentially the ones that suffer a loss of business as people seek alternative forms of transport.

In relying on the
Rapid Transit Systems Act to govern SMRT, the Singapore government has conceded that these basic laws of market competition do not apply to a small market like Singapore. Especially so when the only available infrastructure is owned by one company.

What to do then?

While I can't really say this duality - where the appearance of SMRT is a private company while it is in reality a public company in that the government has such a high level of control over it - is inherently wrong, it does make much more sense to me to simply leave everything under the control of the government.

Not only does this create a better appearance for the government, as one that is concerned with the welfare of its people, but it also dispels all fears about a private company monopolizing the market and thus jacking up prices.

Apart from that, I'm quite sure that there are limits as to how far the government can use the Rapid Transit Systems Act to curb the inherent evil in a private company wielding a monopoly. In Singapore, the case is pretty much clear that essential services as such should be kept under the purview of our highly efficient government, not only to fend off the potential ills of a monopoly such as incessant price hikes, but also for simplicity. After all, direct control would be much simpler and less bureaucratic than the indirect one of using the Rapid Transit Systems Act where as we have seen, has potential to be challenged.

But before I am accused of ignoring the government's rationale of a privatized company having greater efficiency than a public one, let's re-look the requirements for a privatized company to be efficient in the first place. The main reason why privatized companies are usually thought to be more efficient than public ones is because they operate in a free market system, where they are not protected by the government, and will thus have to maximize efficiency in order to survive. Yet, the situation of Singaporean's rail transport is clearly much different. As explained earlier, the small nature of Singapore, the infrastructural dominance by SMRT, and the construction works already in progress, simply mean that the monopolistic situation is unlikely to change any time soon. In such a situation, it makes little sense to argue that SMRT will be as efficient.