Regular fare increases may be needed to ensure that the new bus contracting model remains financially sustainable, Transport Minister Lui Tuck Yew said in Parliament yesterday.
Under the current model, operating costs have exceeded fare increases from the middle of the last decade.
From 2005 to 2012, the annual fare increase was 0.3 per cent on average, while wage increases and fuel costs were much higher, Mr Lui said.
"There will be a need for us to make sure we have regular fare increases of the right quantum," he said.
This will be determined by the new fare formula and the Public Transport Council.
Holland-Bukit Timah GRC MP Christopher De Souza had asked how the Government could ensure that the new contracting model would be financially sustainable in the long term.
In addition to fare increases, Mr Lui said all requests for new routes or higher service standards must be "judiciously" assessed. Running more new routes with low ridership will mean government subsidies have to go up, he said.
So the Land Transport Authority is working out a framework on the threshold "that a new route ought to meet before we can agree for it to be operated".
Costs will also rise when buses are run more frequently, he said. "And so we again have to be quite judicious when we raise service standards to make sure that we do not overstep and hence ultimately result in a much bigger bill in terms of the subsidies that we have to pay."
Non-constituency MP Gerald Giam and Nominated MP R Dhinakaran asked for details on the budget and subsidies set aside for the new model, which will see the Government own all bus infrastructure and buses, and carve up existing bus routes into packages for competitive tendering.
Mr Lui replied that it may not be in the Government's interest to reveal a budget or how much it is prepared to subsidise, as this could skew the bids.
This article was first published on July 08, 2014.
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