Tag Archive | "editor-at-large"

Where did that ‘$100′ figure come from?

Where did that ‘$100′ figure come from?

Tags: , , , ,


Today newspaper’s Conrad Raj’s op-ed quotes a mysterious ‘$100′ figure. Do you know where it came from?

By Belmont Lay

Where did Conrad Raj get that $100 figure from? Do you know?

The best op-ed piece of this year was published yesterday. Did you miss it?

It is titled “Time to reconsider the N-word” and it’s written by Conrad Raj, the editor-at-large for Today newspaper.

His point? The nationalisation of our public transport should be welcomed in the wake of the recent train failures and security breaches in the past two years.

Nationalisation does three things:

1. It promotes efficiency

2. It promotes cost-savings

3. It puts commuters ahead of shareholders

And nationalisation replaces SMRT and ComforDelGro with a single entity. It could be a statutory board or state corporation.

This article should be applauded for various reasons besides its frankness.

But one paragraph in his article left some readers, including me, slightly confused. And in it, lies what is perhaps a hideous error in counterfactual thinking that threatens to upend the entire thesis.

This is the paragraph:

“Each Singaporean will be able to save at least $100 a year on public transport – based just on the profits in the last financial year of the two companies, S$161 million for SMRT and $220 million for ComfortDelGro. More savings can come from greater efficiency.”

A few people I’ve spoken to, either completely didn’t get it or thought “$100″ was merely a random figure plucked out of thin air.

Perhaps due to space constraints, Conrad didn’t get to elaborate this point. Which is really a pity.

But it’s worthwhile to ferret out the logic behind it.

Here goes: (Note that this is my personal take on it. I’ve no idea if it is correct)

I believe Conrad made the assumption that there are presently 3.8 million Singapore citizens. This information is perhaps somewhat inaccurate, but a liberal assumption that helps him make his point. The 3.8 million figure can be found here.

Based on the figures Conrad quoted, the combined amount of SMRT and ComfortDelGro profits summed up to approximately $381 million last year ($161 million + $220 million).

Assuming all 3.8 million citizens take public transport: $381 million divided by 3.8 million citizens comes up to roughly $100 per citizen.

Therefore, if public transport is nationalised, which means the system doesn’t run for profit, it would, in theory, cost each citizen $100 less a year. Because this amount won’t be going to shareholders but back to everyday commuters.

So far so good?

And this is where we throw a spanner in the works.

Leaving ComfortDelGro out of this for the moment, note that SMRT profits are reaped from three aspects: Ridership, rental and advertisements.

Therefore, if public transport is indeed nationalised, which means it shouldn’t be profit-driven, can we even make the assumption that rental and advertising rates remain competitively high, or as high as what SMRT is currently pricing it to generate part of the $161 million profits that are to be construed as cost savings?

Would rental and advertisements even exist as avenues to generate revenue when public transport is nationalised, since being profit-driven is not even the main motive?

If not, would ridership alone generate enough revenue to cover its own cost?

Last but not least, am I getting this whole argument wrong and this isn’t exactly what Conrad meant and had in mind?

In light of all these questions, do re-read that befuddling paragraph from what is perhaps still the best op-ed piece published this year:

“Each Singaporean will be able to save at least $100 a year on public transport – based just on the profits in the last financial year of the two companies, S$161 million for SMRT and $220 million for ComfortDelGro. More savings can come from greater efficiency.”

There are two things we can do at this point in time:

1. Can we try to crowdsource this question to get to the correct answer?

Please?

The suspense is killing me.

2. We can leave it as it is and pretend nothing happened.

Feels like The Matrix, doesn’t it?

Editor’s note: If the Singapore Armed Forces can always be run without profit, you should never doubt that public transport can ever be run without profit either. It’s a matter of will and the imposition of structure.