1.                  Mr Chairman, Sir, the ERP is a very hot topic but it is also a very important topic. Cedric Foo is absolutely right, that we should ask ourselves the fundamental question - “Why ERP?”  The popular answer, like Mr Low Thia Khiang said, is to collect revenue. Just put up a gantry on the road and collect money. It is a popular answer, but it flies against the facts. Since 1998, every time we adjusted the ERP system and relied more on usage charges, we have brought down ownership costs quite significantly. The annual revenue foregone on combined vehicle ownership tax cuts - ARF, excise duty and road taxes - came up to more than $1.2 billion every year on a permanent basis. ERP revenue currently only comes up to about $100 million per year. So it is not a revenue measure but a congestion measure. Mr Low Thia Khiang asked if Toa Payoh has ERP and why the PM’s ward is not affected. But that is not the way we do things. ERP is a congestion measure, and if there is congestion anywhere, ERP will have to be effected. Like Ms Lee Bee Wah correctly said, if you are in Ang Mo Kio GRC, your key access roads to the city have ERP on them. It is not like Toa Payoh which just has the morning ERP, Ang Mo Kio residents are also affected in the evening on the way home.

2.                  So what is the purpose of ERP? I have said that it is a congestion measure, to help us ensure that we have a liveable city. So that even as the economy and population grow, we need ERP to ensure that we are a city in a garden, and not a city in a car park.

3.                  To further drive home this point, I have asked LTA to display the ERP charges on top of all ERP gantries. Now we have the display of charges at the side for some of our gantries. But it is at the side and too small to be seen as you drive past. So I have asked LTA to put it prominently on top of the gantries. There will be a car icon with its charge for the particular half hour and another icon for the other categories of vehicles. When the signs are up, motorists would know how much it costs to drive through the next time. This will help motorists make a considered decision. If motorists drive less, the Government is happy to collect less ERP revenue. We will fully implement all these signs by the end of this year.

4.                  I am glad that Members understand the need to manage road usage, and I am encouraged by it. Some members of public have emailed me, saying that they see the congestion that has been building up over the past few years. Therefore, putting up ERP is the way forward. Let me now address some key issues which Members have raised.

Controlling Vehicle Population

5.                  Mr Seah Kian Peng and Mr Hri Kumar’s principle argument is that we should cut the vehicle growth rate more drastically. I have said this before, but I think it is best to repeat this point. There is no single measure to solve road congestion. We need a suite of measures – vehicle population growth, ERP, build roads, and public transport improvements - a holistic approach.

6.                  First, even if we cut the vehicle population growth rate to zero, we will still need to make the recently announced ERP changes as they are necessary to deal with congestion today caused by the existing 850,000 vehicles.

7.                  Second, just as it is not wise to rely simply on ERP, it is also not wise to rely only on the vehicle quota system. Mr Seah Kian Peng wanted a sense of perspective on how we got to today’s situation. Members who have long memories will recall that in 1994 when COE prices went above $100,000, as mentioned by Mr Hri Kumar and if you check the Straits Times, you would find that there was great public unhappiness then. Many Singaporeans felt that we should not just rely on one measure – the very high ownership taxes - but to also rely on usage measures. The Government did just that and introduced the ERP in 1998. The vehicle ownership costs have come down quite significantly. For example, a new Toyota Corolla used to cost about $122,000 in 1997. In 2007, it cost just $61,000. The tax component has also dropped from $40,000 to $20,000 in the same period. So the background is that there was great unhappiness when car prices were high, and Singaporeans’ aspirations to own cars were not met. So we changed the system by lowering the ownership costs, so that you pay as you use. It is a fair system. Today, we have made it easier to own cars. The argument is why do we have to pay to use the cars. It is a matter of balance and this balance changes over time.

8.                  We have consulted widely, and we have decided to halve the vehicle growth rate to 1.5% for the next 3 years. After which, we will review the figure. Mr Low Thia Khiang asked whether there is an optimal figure. In the longer term, it is not possible for the vehicle growth rate to be faster than the projected road growth of 0.5%. I think a few members have mentioned this, including Mr Cedric Foo and Mr Seah Kian Peng, that we cannot sustain the growth rate. For QY2008, LTA will be issuing a total COE quota of 115,946. So after this, it will go down to 1.5% in QY2009 and hold for 3 years. We will review after 3 years to see if we need a further reduction. Some have argued otherwise, such as Mr Hri Kumar and Mr Seah Kian Peng. I am not in favour of a drastic “shock and awe” approach, whether it is to cut the vehicle growth rate to 1% or cut it down to 0% at one go. My own preference is that when we make big changes, we give people time to adjust as it impact their lives. But we are not saying that we will reduce to 1.5% for the next 10 to 15 years. It is just for 3 years before we review again. We are not locking ourselves in for the long term.

9.                  Mr Seah Kian Peng asked whether we could have a differential tax structure for the first or second car owners. But congestion is a function of both the total vehicle population as well as the intensity of usage. Therefore, once the supply has been decided, how we shift the costs will not change the supply.

Effectiveness of ERP

10.             Several members have questioned the effectiveness of the ERP. They argue that, given the cost of cars in Singapore, once people have bought their cars, they are going to drive no matter how expensive ERP is. This is an over-statement. Yes, for some people, they will continue to drive regardless of the price but not all will do so. If this was so, all ERP-priced roads today will be congested and if the ERP system was a failure, other cities such as London, Milan, and New York City would not have followed us. New York City, for example, just passed legislation and they are going to institute the ERP from the 60th Street onwards in Manhattan. I met the Danish Transport Minister this week on Monday. She was here with their Parliamentary Committee for Transport to study our ERP system. They wanted to see how the system has worked for Singapore and if they can introduce it in Copenhagen.

11.             Let me stress that the purpose of the ERP is not to stop everyone from driving. This is absolutely counter-productive as the roads would then be sub-optimised after we have invested so much into our road network. On a congested road, the idea of ERP is to discourage the people at the margin. A 5 to 10% shift is enough to relieve pressure. Let me give you an example. In October 2007, the travelling speed on CTE in the evening between 6 to 7pm was quite slow. Mr Chiam is not here today, but he brought up this point to me separately. In the evening, we have a gantry after the PIE exit but not from Bukit Timah to PIE. Therefore, the traffic has been very slow – 34kph. When a new ERP gantry was installed before the PIE exit in November last year, there was a 10% drop in traffic volume. This 10% shift was enough to improve speeds, up to 50kph, which is a 50% increase in travelling speeds!

12.             Mr Lim Biow Chuan asked whether LTA would review ERP charges downwards for the CTE, PIE and ECP when the KPE is fully opened in September 2008. LTA monitors travelling speeds on all our expressways and roads, to ensure that our road capacity is optimised. Depending on the traffic flow on these expressways – CTE, PIE and ECP – if indeed there is significant improvement after we open the KPE, then LTA would adjust the rates downwards. This is how the system works.

Exceptions to ERP

13.             Some members, in particular Mr Siew Kum Hong, understand the rationale for ERP. But some have asked if equity considerations could be taken into account. It is not possible to tailor fit ERP based on individual circumstances and needs, as this then involves making a value judgement. Let me give you a few examples. For instance, is a housewife who drives her children to school more meritorious than her neighbour who drives to work? Is it meritorious that you visit your grandparents, or bring your sick pet to the vet, and therefore need not pay ERP? If we say “Yes” to these individual circumstances, we will soon find that there will be many meritorious drivers in Singapore. Once you make value judgements as to what trips are more meritorious than others, you end up with a poor solution to fight congestion. From a traffic perspective, everyone who drives on a congested road contributes to the congestion, and should pay accordingly. This is not just efficient but also fair, because you pay as you use.

14.             Ms Lee Bee Wah suggested that we abolish ERP in the evening to be pro-family. If we did do away with the evening ERP, would it be more pro-family? Absolutely not. It would be the exact opposite. We know that if we did away with ERP, the roads will quickly get filled up with cars. Roads like the CTE will get jammed up with all the drivers wanting to take the shortest route home at the time in the evening. If you take away ERP, the road space does not expand. It remains limited. If we leave the traffic unregulated, we would end up with a huge jam. The shortest route will take the longest time. And I assure you that there is no joy in driving home in the evening, getting stuck in a jam and not knowing what time you would get home. The end result is that everyone suffers. Not just those who drive, but also those who take the buses because everyone is stuck in the same gridlock. So what is uniquely Singapore? For a compact, densely populated city state like Singapore, the uniquely Singapore thing is not to get caught in the jam on your way home. This is the sentiment of those who have been to Singapore from overseas. I met Hans Rat, a member of the LTA International Advisory Panel and the Secretary General of UITP (International Union for Public Transport), who said that if land transport was a religion, Singapore would be a holy place. Congestion is what hurts families. ERP is not the problem, but part of the solution.

15.             It is not true that people do not mind a slow drive home in the evenings. For example, Mr Inderjit Singh told me that his wife who picks up her son every evening from school to bring him home is appreciative of the huge improvement in travelling speeds on the CTE.

16.             Minister of State for Transport Lim Hwee Hua also told me that the additional gantry has cut down the travelling time by half, when she uses it to visit her ward.

17.             Members of the public have sent us emails on this. Let me quote one to you. Mr Neo Aik Chuan wrote to LTA. He stays in Woodlands, and thanks to the evening ERP, he is now able to get home earlier and spend more quality time with his family.

Immediate Improvements to the Public Transport System

18.             The next issue is one which Ms Jessica Tan brought up. She makes the point that we should ensure that there are viable public transport alternatives before we phase in the ERP changes. She is right and I agree that this is critical. This is why LTA will effect immediate public transport improvements before the ERP changes are phased in. I have previously mentioned these measures in the House, but for Members’ benefit let me repeat what we would do before the ERP changes are effected in July 2008.

Bus Improvements

19.             For basic bus services, we will reduce the headway during the peak periods from 15 minutes to 12 minutes by June 2008 and 10 minutes by August 2009 for the corridors affected by the impending ERP expansion.  The outcome is shorter waiting times and less crowded buses.

20.             Second, LTA will allow basic buses to run parallel along sections of the North-South and East-West rail lines, to give people more choices and less crowded trains.

21.             We will also increase the number of premium bus services. Already, there are 54 premium bus services at the end of last month. 12 new services were added since January. We will have at least 72 by end of June 2008. The operators will also provide return trips in the evening on high demand services. Many have experienced the benefits of these premium bus services as an alternative to driving. For example, Business manager Mr Loo Chiew Hooi, who left his Toyota Corolla for a premium bus service, was quoted in the Straits Times last year. He said, “The premium bus service is like having a chauffeur. You can catch up on the news or read a book. You don't have to be stressed about the driving.”

22.             The fourth thing we would do is to increase the train trips. Last month, SMRT and SBST injected an additional 93 train trips during the peak periods since February 2008. I recently visited the Toa Payoh and Ang Mo Kio MRT stations to see for myself and I found that trains are now more frequent. The key is not just to get everyone into the trains, but also how long you need to wait for the next train. It is about 2 to 3 minutes. We have increased the frequency and the trains are less crowded.

Train Improvements

23.       Mr Lim Biow Chuan asked if the long-term rail infrastructural projects can be completed faster, especially the new rail projects such as the Thomson Line and the Eastern Region Line announced earlier in January. Such large-scale infrastructural projects require a series of detailed engineering studies and planning, before the actual construction can take place. The indicative completion date for these new lines that I have announced in January is LTA’s best estimate of what is possible. Certainly, if it is possible to move faster, we will, but it is premature to indicate otherwise at this point. 

24.       As for the Circle Line, again, if we could open the entire line, we would. But that is not possible, as the line is built in stages. The only reason why we could bring forward Circle Line 3 was because it was least affected by the Nicoll Highway collapse. As for the other stages, there is still considerable work to be done. So the schedule will be 2009 for Circle Line 3 and the rest will be from 2010 onwards.

25.       Mr Cedric Foo, in his speech earlier, asked about an optimal mix between rail and bus services in our transport planning. We need to look at the issue not so much as between bus and rail but to look at the public transport system as a whole. Our starting point is that when the commuter has to make a choice between making a car trip or a public transport trip, he would look at public transport as a whole. And that is why we have come up with all these measures such as total journey times, as mentioned by Mdm Cynthia Phua. The issue is not about rail versus bus but really how to optimise the system as a whole. In a hub-and-spoke system, buses play an important role because they feed into the rail system and as Mdm Phua has said, there is a need to ensure that the feed-in is optimal. And that is what we will do.

Dedicated Traffic Radio Channel

26.       To Mr Lim’s suggestion for a dedicated radio station to provide traffic information, this is something that LTA is looking into. LTA will work with a local radio broadcaster to disseminate traffic updates and land transport information through their existing free-to-air FM radio channels.  These updates will be more frequent and regular than what radio listeners now get. This service is expected to be launched in the third quarter of this year. LTA also continue to study the feasibility of setting up a dedicated radio channel, taking into account the feedback and experience from its work with existing radio channels.

Off-Peak Car (OPC) Scheme

27.       Mr Cedric Foo asked whether MOT would allow for more liberal conversion to off-peak cars. We currently have no plans to liberalise further. At present, existing car owners can already easily convert their normal cars to OPCs by just paying a $100 administrative fee and changing the colour of the vehicle number plate. Those who convert to OPCs enjoy tax rebates that are similar in quantum to a new OPC, with the rebates given in the form of annual road tax reductions and additional Preferential Additional Registration Fee (PARF) rebates.

28.       Mr Foo suggested easing the restrictions to help make OPCs more popular. But these restrictions have been carefully calibrated. If we were to change them, then we might need to adjust the concessions as well. It is a matter of balance.

29.       In 2003, new OPC registrations were about 1,000. It has gone up 11 times now with 11,180 new registrations in 2007. So, OPCs have gone up in popularity.

Park and Ride Scheme

30.       Mrs Josephine Teo suggested that we should do more to encourage car owners to Park and Ride. I agree that the Park and Ride scheme provides another option for car owners to use public transport to get to work. We should facilitate inter-modal transfer - whether taking cars or bicycles to the MRT station and then changing the mode.

31.       She also made the point about promoting public transport - that it should not be "either or" – either car or public transport. What we want is an integrated multimodal system and not a unimodal one.

32.       The existing scheme is attractive - motorists pay $70 for a Park and Ride Set which includes a Season Parking Ticket for the month and a $40 Park and Ride ez-link card. 

33.       However, there are some issues that we are looking at. One is that there has been abuse. Some people who use the Park and Ride Scheme are not doing intermodal transfer but use it as a cheap office carpark. For some of the carparks near the MRT or bus stations, we need to balance between the needs of visitors to the area and residents. To build new carparks near the MRT stations, we need to balance land use needs. Should the land be used for a carpark or should it be for commercial or residential uses? It is important to ensure that the incentives are properly aligned and not abused. Hence, we need to weigh the various considerations. We will facilitate intermodal transfer and we will take into account the suggestion. LTA will look into this matter and review it.

Taxi Services as an Alternative to Cars

34.       Ms Jessica Tan asked what is the role of taxis in our land transport system. Taxis are at the high-end of the land transport system. They provide personalised service to the commuters. Taxi association members told me that this is a chauffer driven service. So it has to be priced accordingly and the public would have to decide whether they want to take it or not. The Government’s role is to facilitate the workings of the market. LTA’s recent scan of waiting time at taxi stands found that it has come down quite significantly. It is also easier to get a cab through the phone.

Helping Taxi Drivers with Operating Costs

35.       On the impact of the recent fare revision, Mr Seah Kian Peng quite rightly pointed out that we should not rely simply on anecdotes but on the facts. When I last spoke on this, I told the House that the preliminary figures from Comfort Delgro have been encouraging.

36.       The latest data that LTA has, which is based on 3,700 taxis from the different taxi companies, shows that the average daily gross earnings of 1-shift and 2-shift taxis (i.e. 2 drivers sharing one taxi) for the month of January 2008 are $216 and $308 respectively.  Compared to the drivers’ gross earnings in November 2007 (before the fare increase), the January’s earnings have increased by about 4.8% for 1-shift taxis from $206 and 0.6% for 2-shift taxis from $306.

37.       To get a feel of the ground, I met recently with the leaders of the various taxi associations. They told me that LTA's data squares with their own soundings. The majority of taxi drivers have seen an increase in earnings and lower operating costs as they do not need to drive as much to earn what they used to. But I am sure that there are also some taxi drivers who are not doing so well. What is important is for the taxi companies and taxi associations to help them do better. I understand that this is being done, as they advise their members how they should change the way they operate in this new environment.

38.       Mr Ang Mong Seng suggested that we reduce the statutory costs for taxis by reducing the ERP charges and the road and diesel taxes. Dr Lam Pin Min suggested waiving ERP for taxis. As I have explained, our ERP charging policy is based solely on road space taken up by a vehicle. Since taxis occupy the same amount of road space and hence contribute to congestion in the same way as cars, it is only equitable that they should be charged the same ERP rate as cars.

39.       As for diesel and road taxes, taxis are already enjoying concessionary rates.  In fact, based on the average annual mileage of taxis, the current taxi diesel tax of $5,100 is already a concession as they should be paying something like $6,150. For road tax, taxis pay $1,200 regardless of capacity and from July this year it will be cut by 15%.

40.       Mr Seng Han Thong gave some suggestions given the changing landscape and operating environment for taxis. He said that there are issues that they should work closely with LTA to see how best to move forward. I agree with him and we will take up his offer.